Fed up with Chest-Thumping Culture of Tech, Garrett Wants to Reengineer Himself and Crosscut

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Fed up with Chest-Thumping Culture of Tech, Garrett Wants to Reengineer Himself and Crosscut

In 2018, Brian Garrett, burned out from a decade running Crosscut Ventures, embarked on a month-long summer road trip. He packed up his old minivan with nothing but a mattress, some golf clubs and a fly fishing pole. He had just turned 45 years old and felt he was halfway through life. This was his vision quest.

It was the first time Garrett had stopped to contemplate his own mortality and the seed fund's future, and he decided he needed to make drastic changes to improve himself and his company.


"The realization I had was what got me here may not serve me well in the next half of my life and what got Crosscut here may not serve us well as a firm, so let's re engineer everything," Garrett told dot.LA.

Today, as Garrett and his partners deploy $125 million in its fourth fund, the firm is taking on wellness. Crosscut will commit 1% or more of all capital invested in their portfolio companies toward programs for team and individual coaching and development.

Garrett realizes this gentler approach might seem too touchy feely for some founders, but he's ok with that.

"There will be a self selection," Garrett said. "The people who are interested in health and wellness will self select Crosscut."

Sitting in a sunny conference room in Crosscut's Main Street Santa Monica office, Garrett was candid about his new approach to life and business. He also opens up about his own wakeup call, and how his job has gotten much harder than when he first started Crosscut 12 years ago.

Why do you feel that this wellness initiative is something you wanted to do?

It was really watching the chest-thumping "I'm killing it" culture of tech, the way certain people were behaving in the venture industry, the way certain entrepreneurs were thinking that a round of financing was the success milestone, as opposed to just a chance to keep proving that their ideas were worthy. But what I was always blind to was my own frameworks and methodology. There's always something else to do. it was always late nights and there was always one more LP to communicate with and always one more deal to review. I wasn't able to see how that was impacting the way I was received by others in the ecosystem. So I came off a little too distracted or aloof. I came off a little too transactional walking into an event or meeting with entrepreneurs, and that's not good. That's not a positive for Crosscut's brand.

How did you realize that?

We do surveys across the ecosystem and we get feedback from entrepreneurs. When you hear that, and you know how you want to be experienced in the world, it's a wake-up call. The way I want to experience the world is to be open hearted, and to have deep connections with people. That's how I live my personal life or try to live my personal life, but I wasn't doing that in my work because I was so overwhelmed and there was so much to do. And I think it led to some flat experiences with me, which is my own fault.

It's interesting because it seems like this is very much about your own personal well being, but also the firm's performance. And you see this as very intertwined?

For sure. The realization I had is when we were here from 2008 to 2012 the market was so nascent that we could see everything that L.A. was doing. Because we were the only seed fund in the market (and) we had leverage. If you look at where the market has moved, there are 25 to 30 funds all chasing deals in L.A. now and there is a ton of Silicon Valley money down here hunting. To think that we could just sit in our office and still see everything is a foolish notion. So then how do we re-engineer our firm to be more competitive and to have a stronger brand and reputation to compete for the entrepreneurs that we think are worthy of backing?

It sounds like your job is a lot harder now than it was when you started?

For sure. It was much easier to generate multiples on a $5 million fund than it is to generate multiples on $100 million-plus fund. We have a pretty clear point of view around small checks, small ownership investing and what doesn't work. If you're managing institutional money it has to be high conviction, high ownership. And then you have to get lucky. You have to end up being in a Honey and own a material amount of that business to generate the types of returns that come from those exits. What I'm confident about is that L.A. is going to start producing more and more of those types of deals.

What percentage of your founders have wanted to go through the program?

We just rolled it out and we haven't closed a lot of deals in the last four months. We were sort of cautious at the end of the year, so we're working it into a deal that we're doing diligence on right now and using it as a differentiator of our capital. If you really look at the game of venture, we are salesmen of capital in a very competitive ecosystem with a lot of really good funds that are raising more capital and chasing opportunities. We have to go out there and use our brand and reputation and constantly defend that brand and reputation as ideally being better faster, etc. So we have to continue to look at different programmatic services and things that we can offer up to differentiate our capital from everybody else.

So this is part of your pitch to differentiate you?

Ideally, yeah. I think there are a set of entrepreneurs that gravitate towards big ego, capital sources and big-branded names that think give them gravitas. Our approach has always been to treat the entrepreneur fairly and support them in their journey and try to win with a nice set of partners that do the right thing and act the right way and really support you both personally and professionally.

But this is an industry where you hear about Elon Musk sleeping in his office every night and VCs wanting to squeeze out every last drop…

I don't believe that's healthy in the long term. I think there's a time and a place and I've certainly put in my nights. But I think what I've experienced is that a little bit of balance goes a long way towards actually working smarter and making better decisions. I used to work until two or three in the morning every night. There's always something to do when you're running a venture firm. But eventually you get to a place where you burn out and realize you have to work smarter, not harder. I want to bring that dialogue to the table right out of the gate. I want to arm the entrepreneurs that we back with the mindset and the tools that better enable them to realize there's a finite period of time that you're able to sustain that kind of effort, but it's not something that you can keep doing for the long term and it's never to the advantage of the business long term.

Do look back now and see instances where you rode your founders too hard?

We as a firm have never needed to ride our founders hard because they're self motivated. I just think what's happened in our industry is that there's almost a fear of speaking candidly and telling the truth to your investor set for fear of disappointment and fear of failure, and not wanting to let them see that you're struggling. I want to change that dynamic in our ecosystem here in L.A. because I don't think that's a healthy dynamic. You have to have real transparency at the inception of the relationship. We want to be your first text when good or bad happens to the business. We're patient and we'll help you navigate through the problems, we're not going to lose our shit, and we're here to help you build business. No one setback is going to make us waver in our commitment to helping you succeed.

It seems like this is easier for you to do as someone who's now on their fourth fund and been doing this a long time. It would be harder for someone who wasn't established because there's probably more pressure to show that you can work 24 hours and not admit your mistakes.

Yeah, I think that's the way our entrepreneurial culture has been trained but it doesn't mean it's right. I'm willing to stick my neck out there now and say it doesn't matter how experienced you are, it is not the right path to success – the burnout mindset. I wish I had known what I know now, and I'm happy to bring that framework into younger entrepreneurs that are enthusiastic and high energy and have been trained to believe that it's got to be 24/7. And by the way, there will be a set of entrepreneurs that believe that and they won't be interested in Crosscut. That's okay. I think as venture capitalists in this industry we have to act and behave in the way that we want to see our entrepreneurs to behave.

You said earlier you were making fewer deals at the end of last year. Is that because you're not able to find as many attractive deals at valuations that you find reasonable?

We have an ebb and flow to our business over any 12-18 month period. Whether you're distracted with things happening in your portfolio or whether you're fundraising, those are all things that impact a partnerships ability to move quickly and find things they have conviction around. I wouldn't read too much into anything that happened at the tail end of last year. We're writing checks now. We finished our LP meeting in January. The entire team is oriented towards finding the last four or five deals in this fund and making them meaningful ones. So I think we just happen to be slightly cautious about what's coming in 2020. For us, it's high conviction, high ownership, strong syndicates, and maybe over-capitalize a little bit to protect ourselves if there's a downturn and the next round capital is hard to find. That's the approach that we take when we're headed into uncertainty.

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🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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