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

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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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.
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Mother Blames TikTok For Daughter’s Death in ‘Blackout Challenge’ Suit
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.
The mother of a 10-year-old girl who died after allegedly trying a dangerous online “challenge” has sued Culver City-based TikTok and its Chinese parent company ByteDance, claiming the social media app’s algorithm showed her videos of people choking themselves until they pass out.
Nylah Anderson, an intelligent child who already spoke three languages, was “excruciatingly asphyxiated” and found unconscious in her bedroom on Dec. 7, according to a complaint filed Thursday in federal court in Pennsylvania. She spent five days in pediatric intensive care until succumbing to her injuries.
The lawsuit, filed by her mother Tawainna Anderson, claims TikTok’s algorithm had previously shown Nylah videos depicting the “Blackout Challenge,” in which people hold their breath or choke themselves with household items to achieve a euphoric feeling. That encouraged her to try it herself, the lawsuit alleged.
“The TikTok Defendants’ algorithm determined that the deadly Blackout Challenge was well-tailored and likely to be of interest to 10-year-old Nylah Anderson, and she died as a result,” the suit said.
In a previous statement about Nylah’s death, a TikTok spokesperson noted the “disturbing” challenge predates TikTok, pointing to a 2008 warning from the Centers for Disease Control and Prevention about deadly choking games. The spokesperson claimed the challenge “has never been a TikTok trend.” The app currently doesn’t produce any search results for “Blackout Challenge” or a related hashtag.
“We remain vigilant in our commitment to user safety and would immediately remove related content if found,” the TikTok statement said. “Our deepest sympathies go out to the family for their tragic loss.”
At least four other children or teens have died after allegedly attempting the Blackout Challenge, according to the Anderson lawsuit. TikTok has grappled with dangerous challenges on its platform before, including one in which people tried to climb a stack of milk crates. That was considered so dangerous that TikTok banned the hashtag associated with it last year. In February, TikTok updated its content rules to combat the dangerous acts and other harmful content.
The Anderson lawsuit comes as lawmakers and state attorneys general scrutinize how TikTok and other social media can be bad for teens and younger users, including by damaging their mental health, causing negative feelings about their body image and making them addicted to the apps.
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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.
Netflix's New Culture Memo Addresses Censorship and Corporate Secrecy
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Netflix promised change after its poor first-quarter earnings. One of the first targets: the Netflix Culture document.
The changes, which Variety reported on Thursday, indicate a new focus on fiscal responsibility and concern about censorship. While promises to support honest feedback and open decision-making remain, the memo’s first update in almost five years reveals that the days of lax spending are over. The newly added “artistic expression” section emphasizes Netflix’s refusal to censor its work and implores employees to support the platform’s content.
The “artistic expression” section states that the company will not “censor specific artists or voices” and specifies that employees may have to work on content “they perceive to be harmful.” The memo points to ratings, content warnings and parental controls as ways for users to determine what is appropriate content.
Censorship has been a contentious issue within Netflix. Last year, employees walked out in protest after the company stood by comedian Dave Chappelle’s special, “The Closer,” which many said was transphobic. The streaming service has since announced four more specials from the comedian, who was attacked on stage at Netflix’s first comedy festival. The show will not air on the platform, as Netflix did not tape the event.
The reaction to Chappelle’s 2021 special ripples further in the updated memo. After firing an employee who leaked how much the company paid for the special, the new “ethical expectations” section directs employees to protect company information.
The memo also reflects pressure borught by poor first-quarter earnings. Employees are now instructed to “spend our members’ money wisely,” and Variety reported that earlier passages that indicated a lack of spending limits were cut. Variety also found that the updated memo removed promises that the company would not make employees take pay cuts in the face of Netflix’s own financial struggles.
These updates come as employee morale has reportedly dropped and editorial staffers at the Netflix website TuDum were laid off en masse. Those employees were offered two weeks of severance pay—and Netflix has now cut a section in the memo promising four months of full pay as severance.
As the company that literally wrote the book on corporate culture faces internal struggles, it's unlikely that making employees take on more responsibility while prioritizing corporate secrecy and discouraging content criticism will improve morale.
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
‘Raises’: Mahmee Secures $9.2M, Wave Financial Launches $60M Fund
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Venture Capital
Mahmee, an integrated care delivery platform for maternal and infant health that connects patients, health professionals, and healthcare organizations to increase access to prenatal and postpartum care, raised a $9.2 million Series A funding round led by Goldman Sachs.
FutureProof Technologies, a climate risk analytics platform, raised $6.5 million in capital led by AXIS Digital Ventures along with Innovation Endeavors and MS&AD Ventures.
Anja Health, a doctor-backed cord blood banking company, raised $4.5 million led by Alexis Ohanian's Seven Seven Six.
Funds
Wave Financial LLC, a digital asset investment management company, is launching a $60 million fund to deploy capital via cryptocurrency.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.