Chris (00:01.772)
What's up founders. Welcome back to next round. I'm your host Chris, and I'm super excited for this guest today. This is Kelly Pidger per Drew. hope I'm saying that right. Purdue in the easy co-founder and managing partner, moonshots capital. Like this guy's had 110 investments, 27 exits, 12 unicorns, putting the work over the years. Kelly, welcome to the show.

Kelly Perdew (00:12.317)
You got it, Purdue.

Kelly Perdew (00:30.387)
Thanks for having me, Chris. Happy to be here.

Chris (00:33.784)
So one of the things I noticed that you're really big on is extraordinary leadership. And that's like your main thesis. What does that really mean to you?

Kelly Perdew (00:44.563)
So for us, we're looking at thousands of companies, literally, for each investment that we make. And when we first started raising capital from institutions, they wanted to know.

Well, what's your thesis? Like, why should we give you money to invest? Like, what's going to differentiate you? And we had made probably 70 angel investments and syndicate investments before that. So we ran a regression analysis on all 73 companies and wanted to determine what factor that we could control for at the time of investment had the biggest impact on the

a positive outcome, right, getting to some form of distribution, either an IPO or &A activity. And the factor that we could control for at the time of investment was the quality of the leadership team. And for us, having both of us graduated from West Point, the United States Military Academy, where they spend millions of dollars training you in leadership per se, and then again,

training you how to train leadership after you graduate from West Point when you're in the army, it was something that was pretty near and dear to our hearts. So we really look for what we call extraordinary leadership in the founders that we invest in. And that can be evidenced in a lot of different ways. Typically, it's not everything went great for you your whole life. It usually involves overcoming or some crazy challenges about

Chris (02:17.281)
Yeah.

Kelly Perdew (02:22.759)
third of our founders are military veterans. So we really highly value the leadership training that you get in the military. We also like division one team athletes, right? You've shown that you can, as a team member, sacrifice yourself, overcome really difficult objectives, train hard for a long period of time, show discipline, all the things that you need to do to be successful as a founder. So we have a specific rubric.

that we look at and we give kind of grades across those different characteristics to see like what we think about you in terms of your leadership capability.

Chris (03:01.58)
I like that thesis because it's very consistent and it's something you can always go back to over and over again. And you create a kind of a process to put every single company through to really expose what the leadership level is and what the impact is it has on that specific company.

Kelly Perdew (03:17.595)
Absolutely. A couple of characteristics that are very important to us are what we call one, like, coachability. Right? So my co-founder and I, like to lead rounds. We like to be on the board and help those founders after we put the money in. Not just like, here's your money. Good luck. Go make money for us. We really want to help.

And I know some founders who are first time founders are maybe reluctant or heard horror stories of having venture capital board members, but the good ones really do add a significant amount of value. And I think most of the good ones that I've met.

have operational backgrounds, so they actually have experience being in the seat of the founder, and they can help the founder avoid mistakes that they made when they were operating. So it's really helpful to get great board members who have operating experience who can help you out.

Chris (04:12.462)
You've spoken before about how military training puts you in operating under stress, limited resources, ambiguity mindset. What's one principle from your army experience that you still live by today as a VC?

Kelly Perdew (04:27.389)
So that's a great question. It's interesting, like, if you think about our society, right, we put our sons and daughters under the responsibility of these military people in harm's way. those military leadership, that leadership takes that responsibility very seriously.

Obviously, it's incredibly important. What we have found when we're investing, like I said, about a third of our companies have military vets on the founding team. Military veterans have that same feeling of responsibility about other people's money.

So when you invest in a military vet, they really take it seriously because they know that money is, you know, some family's college education or maybe the payment for a new home or whatever it is, right? It's hard, hard to earn money and they don't treat it willy nilly, right? They're very serious about taking care of that money and managing it correctly.

Chris (05:30.374)
that makes sense. makes sense. So is there a part within the startup founding environment where the military mindset is less applicable or even counterproductive?

Kelly Perdew (05:41.193)
Another good question, Chris. I think that one of the things that I personally, like every, you know, it's interesting because a lot of people don't know people from the military. They only see it on movies and you get the, yes sir, no sir. Like you get a lot of that stuff.

Chris (05:52.684)
Yeah.

It's always a level 10. It's always the highest level.

Kelly Perdew (05:58.163)
Yeah, like super hyped up, know, not able to be creative, like just following orders kind of stuff. And I think really nothing could be farther from the truth. I think that, you know, the U.S. military actually teaches you to be creative, to solve problems. Like you need to take that hill. Nobody maps out exactly how you take that hill, right? You have to figure out and solve for it, right? As the leader of that platoon or that company or whatever your mission happens to be. So there is creativity required.

your question was about what doesn't necessarily work all the time and one of my challenges was when I got into the civilian sector and taking all that military leadership training is like

We have timelines, giving orders, you understand that you're getting orders also, right? Not only when you're a leader, you not only know how to give orders, you know how to take orders, right? It's a flow, right? Command and control works because it's very fast communication, you move quickly, you make decisions fast, and everybody moves the same direction. Well, if you haven't had that training before, receiving an order, you need to like, couch it a little bit differently. Also, it depends kind of what type of person you are.

Chris (07:04.289)
Yeah.

Kelly Perdew (07:10.443)
very creative person who's very good at design and flow and does a very good job of what they do, but timelines might not mean the same thing to them that they do to a military person. yeah, figuring out how to communicate some of those more cut and dried, black and white items to the creative sector was one of my challenges that I had to deal with over time.

Chris (07:22.356)
Yeah, they're not as disciplined. Yeah.

Chris (07:37.87)
So if audience from prayer, I don't know if you guys know this, but Kelly did win the apprentice, right? He's one of the winners. So after winning the apprentice, you gain visibility and build networks that you leverage in business. How did that win accelerate your trajectory? Like how did that impact you on the business side?

Kelly Perdew (07:57.309)
Well, after I won season two of The Apprentice, I spent about 15 months in New York City working with Donald Trump. I got to see him operate. got to see the way he understood and used the media to his advantage, which obviously was a foreshadowing. My co-founder says The Apprentice is the gift that keeps on giving over time. watching him really operate and understand the nuance of how the media works is

Chris (08:14.914)
Yeah.

Kelly Perdew (08:27.243)
has a direct application to founders. If you're competing... Any company that we invest in is obviously in a competitive marketplace, right? You're really going for these billion dollar companies. You want to create massive impact on the world. And if you as the founder are not using or don't understand how to use the media, you're at a...

big disadvantage to your competitors who do understand how to use it because it's not always the best product that wins. It's not always the best service that wins. Frequently it's how you market it and what you do when you're marketing it and you know...

famous example is like, you know, the VHS versus the Sony Beta Cam. Like by all product elements, the Beta Cam was so much better, but VHS ended up winning. So really how you attack the market, how you understand how the media works, how you work your marketing is absolutely critical from a business standpoint.

Chris (09:09.297)
yeah.

Chris (09:23.912)
One of my follow-up questions to that is how could a founder implement that? You know, if they can't get on the apprentice, how can they build that personal brand? Cause I think personal branding is just extremely important for a founder today where you could have some VCs and angel investors that know about you before the meeting even starts.

Kelly Perdew (09:42.547)
For sure, understanding your brand and being authentic to your brand is very important. And there are a lot of different ways that you can do that.

Blogging about what you're passionate about and hopefully that's an alignment with what you're building your business around like really understanding the audience and speaking to that audience is critical your And it can't be what I what you know inauthentic right people see through that pretty quickly So if you become a subject matter expert on what you're targeting and you're consistently

talking about it, writing about it, and becoming a subject matter expert to the external people, it will help you, like you said, it's kind of the difference between marketing and sales, right? If you're selling, it's like, hey, I'm really good at this, hey, I'm really good at this. And marketing is like, Chris, you say to me, Kelly, I heard you're really good at this. It hits differently, right, when you see that coming from somebody else. And the amount of tools that exist today, including using different types of AI, again, with human in the loop so that it's authentically

voice, it's authentically what you want to be saying, the amount of effort and work required has diminished significantly to still get the same amount of reach. So the tools exist and if you stay authentic and if you're on point to what you're trying to create value around, there's the ability to really create a voice so that like you said when you walk in the room you're already known as being an expert in that category.

Chris (11:09.102)
100 % agree, man. So you've invested in dual use technologies like defense and commercial and hardware heavy bets before they were even popular. So what's your approach for balancing the tension between military government customers and commercial viability?

Kelly Perdew (11:27.143)
So, one of the, you know, it is super, super hard for all the audience listening that are founders. You've selected a career that's probably one of the hardest things in the world to do, but also one of the most rewarding. If you wanna make it like 10 times harder, try to get the government as a customer.

So it is not for the faint of heart. It is very, very difficult to do it. A lot of people think, if I can just get the government as a customer, then I'm set forever. Like you do get long-term contracts set. But I like to say, when you're selling to the government and you go into like you have your sales meeting where you're talking about progress on everything, I have never been in a sales meeting.

selling to the government where there was a surprise to the positive. It is always negative surprises. And you don't miss by a month on a closing a deal. You may miss by a quarter or you may miss by an entire administration. So like four years.

Chris (12:15.79)
Wow.

Kelly Perdew (12:29.861)
It is very difficult and you need to surround yourself with experts who know how that government contracting system works and people who can legally influence and understand exactly how the process works so that you have a better chance at making it. It is not for the faint of heart. So as you mentioned, dual use, we like products that without bifurcating the roadmap for the product are able to service both

Government side and commercial side right so company like that ID me online identity verification right they allow civilians regular people to verify their identity with You know say and I was in the military to Under Armour so that I get a 10 % discount in the checkout flow right I can prove it I can also with that same system higher level security what same system can say hey I'm Kelly Purdue, and I'm gonna turn in my taxes with the IRS

Chris (13:18.925)
The end.

Kelly Perdew (13:27.899)
So that same type of product can service both a government, federal agency, and a commercial under armor retailer.

Chris (13:37.24)
I got a question on that because you mentioned the missing by entire administration. That is so interesting. So do you see any new frontier areas after this potential administration? Like how do you see that playing out long term?

Kelly Perdew (13:50.862)
When you mean new frontier, are you talking about different types of technologies or?

Chris (13:54.755)
Yeah, like with the AI stuff, with warfighting AI, those kind of things.

Kelly Perdew (13:59.397)
so absolutely the focus and emphasis and the things that we've learned from watching the war in Ukraine unfold have some pretty extreme warning signs for how the US does business. We can't have a four to 10 year cycle for procuring a new type of technology, whether it be a drone type of weapon or a drone defense. It needs to be like they're iterating in Ukraine on a weekly basis.

latest is monthly and that's just not the way our government procurement system has been designed or set up. So figuring out new, the government is working on new ways to operate for procuring things and then on the civilian side, the technology side and the venture capital side, they're also all, that whole, all those groups are working together to try to accelerate the pace by which the soldier down range is able to get something that's gonna help them on the battlefield.

Chris (14:56.63)
that love that. So in other interviews you've emphasized the transition from being like a hands-on founder to hands-off and parts of the company. I think this is one of the biggest challenges that I hear from founders is how do I let go of my baby? How do you try to get founders to get out of that I have to do everything phase?

Kelly Perdew (15:18.099)
So there's been a saying going around lately that I think Jensen coined a little bit, but it's like founder mode. It's like getting into the nitty gritty detail and owning every little piece of everything that's going on. And I've watched successful companies build and I've watched unsuccessful companies build. the founders absolutely have to go apply themselves to whatever is the biggest problem with the company at the time, whatever that happens to be.

The only way to really truly scale a business though is to hire people better than you are at the things that they can do and then trust but verify as your first step for handing off responsibility. But you're gonna have to let go. I think one mistake some founders make is they think they've got the right person and they trust and they stop verifying.

Chris (16:03.298)
You

Kelly Perdew (16:15.897)
As the founder, you always have the right to go back in and I don't want to say micromanage, know, peel back, look inside, see what's really going on, if they're doing what they're saying. In fact, it's your responsibility, right? If you're going to hand that responsibility off, you have to verify that it's being executed. But you have to let go of the baby. mean, kids grow up, you got to launch them. You got to let them go a little bit. They're not going to grow.

Chris (16:34.755)
and

Chris (16:44.449)
And how often do founders fail in that transition? Because I talked to some founders who never want to let go of that. They just refuse to completely. Is that like a deal breaker for you as a VC?

Kelly Perdew (16:54.441)
Yeah, it depends on the business. There are very few founders who can go from zero to one. That's like you see the 95 % failure rate or higher, right? Especially if you're talking about venture-backed, high-tech. Zero to one is really hard. The one to 10, and I love Elon describing this, Getting to MVP hard, getting to production.

10 times harder, getting to scale another order of magnitude harder. So the individual who's able to manage the product, the team growth, the marketing, the financial build, all the way through an IPO, there are very few humans who have that capacity that are in the right spot at the right time that are.

know I'd eat enough to be able to do that right so it is important to find founders who you know if I think there's a disproportionately higher number of the you know Unicorn companies that have the founder from the beginning through the end But it's still super like if you look at the total number of companies It's a very very very small fraction of 1 % that are able to do that so Really self assessing seeing what am I good at?

What do want to be good at and grow into? What do I have limits on? The founders who truly understand themselves and can maybe become the chief product officer when it's time for a professional CEO who's done this before. It's going to make you massively wealthier than you would be if you tried to run through it and bumped your head on everything and couldn't figure out how to get through IPO. Or you just won't even be able to attract the capital because you don't know what you're doing. You've never done it before.

The board, whoever doesn't have faith in you to be able to do it. The other piece of it is you may not want to. Once you realize the reporting required, you're going to be spending a whole lot of time doing administrivia, not building product or talking to customers. And if that's what really got you excited about doing this in the first place, maybe that's not what you want to keep doing. And again, maybe you just want to go.

Chris (18:49.561)
That's interesting perspective.

Kelly Perdew (19:13.223)
reap the rewards of everything that you built and tap out. Or you have four other ideas for companies and you like going from zero to one, you're really good at that. So it's very much an individual discussion, but don't ignore it, don't wait too long, think about it. And I always urge my founders to have a personal advisory board.

people who aren't vested in the business but are invested in you. And you can check in with them quarterly a couple times a year just to make sure your head's screwed on straight. You're not doing things like, my first startup I gained 30 pounds, stopped working out, stopped talking to my friends, lost my girlfriend.

Chris (19:39.983)
That's good.

Kelly Perdew (19:56.233)
and I wasn't checking in with anybody. And for all the founders we back, I'm like texting them on three days a week, selfies in the gym going, do you yourself first? You pump and wait, you paying yourself first, like important stuff. So a personal advisory board who aren't vested in the success of the business, but are vested in your success, or it's an important concept, I think.

Chris (19:56.845)
Wow.

Chris (20:07.001)
Ha

Chris (20:23.247)
love that concept. We don't talk about that for founders a lot. The idea of self care, it's about just grind it out and work as hard as you can. Like in San Francisco right now, they have this thing where it's nine, nine, six, where the guys are essentially working nonstop. Don't take any breaks. Don't go out. Don't do anything. And I just think it's the most unhealthy thing you can do even in your early twenties. I just don't think it's smart. It doesn't seem like a good strategy.

Kelly Perdew (20:47.593)
The reality of the world competitive environment It depends where you want to play right if you're going up against a Chinese robotics company There's a different mentality a different normal if you will for what's required to go accelerate so it's like

Chris (21:06.233)
Yes.

Kelly Perdew (21:10.429)
You know, you go to the gym, there's like the pro, the professional MMA guys over there. Do I want to go compete there? You may be good enough to go compete there, but if you're go compete there, guess what?

you're gonna get roughed up. You're not gonna have, it's not gonna be yoga and lattes weekends off and I'm taking two weeks to go on vacation. Like if you're in that MMA aggressive competitive environment where the real big monetary wins and losses are, then yeah, that's what you gotta sacrifice.

Chris (21:25.135)
Yeah.

Chris (21:44.144)
100%. So you mentioned that Moonshot sees thousands and thousands of companies every time you have a new fund and you're, you know, investing in companies. So outside of leadership, how do you really filter out that pipeline? Like what else matters a lot to you as a VC?

Kelly Perdew (22:03.145)
So for specificity, for instance, for our fund too, we saw 5,019 companies and we invested in 16.

Chris (22:13.539)
Man, that's insane.

Kelly Perdew (22:13.981)
So it sounds daunting, and it is very difficult to get venture capital funding just by the numbers, literally just by the numbers. So yes, the extraordinary leadership of that founding team is the most top end critical for us. Other important elements are size of the market they're going after.

We need it to be a very large market in order for them to get a large exit. You can't have a billion dollar company in a 200 million dollar market. So it's gotta be a big idea. We wanna know that that founding team has not just the leadership components, but why should they win?

Like what's the origin story? Did that founder or those founders come from that industry and intimately understand the customer requirements that's needed? Like what is it about those founders that makes them likely to be the team that can win in this space? Another big piece for us is can Craig's and mine, the whole Moonshots teams network of investors

and of the people that we've worked with and founders, does that network also give them an unfair advantage? Like I said, we do a lot of dual use. Craig and I are West Point graduates from a long time ago, so our cadres in your groups are now running things in different places, and we have an unusual set of access into the government side. So.

Chris (23:44.847)
Hmm.

Kelly Perdew (23:46.097)
Is there a way that we can leverage our network to also or to give that team additional unfair advantages in winning in this space? That's another consideration for us. So there are a lot of things that go into the decision on who we're going to back.

Chris (24:02.617)
So I got to ask you this, what is an immediate red flag? When you see one of these 5,000 companies, when you see this thing, you immediately turn away. Like what's one of those things that just turns you off from a deal instantly?

Kelly Perdew (24:15.539)
So I think you're asking about once we're into discussions and they've gotten through the filters of is the market big enough? Absolutely. So when a founder doesn't have intimate knowledge of the end customer and hasn't spoken to who his customer or her customer base is going to be, it's just like they're.

Chris (24:22.601)
Yeah. Sort of, sort of, sort of past the first phase where you're like, okay, we're interested. Yeah.

Kelly Perdew (24:40.529)
It's esoteric. They're thinking this is a great plan or a great idea with no feedback from a consumer or customer. That's a no-go, right? Lack of knowledge about the specificity of the solution. need that origin story, that founder origin story of why the eureka moment happened, of why this is gonna be the solution and what's the burning desire or drive that makes this like...

Somebody comes up with an idea in a business school class at Harvard or MIT because they think it sounds interesting and it looks like a big market and maybe good. Those can work out, but it is so hard to build a really big important business that it can't just be a monetary return that that founder's looking for. It has to be intrinsically important to them to solve this problem. That's super important for us.

Chris (25:35.408)
I always tell founders, think what helps you a lot is talking to customers. And I say you should have a podcast to do it because this is what I've been doing for a decade. So I found that the easiest way to talk to customers is to have a show and say, hey, I talk about this thing and you go and talk to prospects. You can get five to 10 a week. Easy.

way easier than outreach or anything else. You can just sit there and you have in-depth conversations. You can learn all about the things they care about, what they don't like, how they label themselves, all the details you need. You do that for six months. You can talk to over a hundred people super fast and get really in-depth conversations and a lot of data.

Kelly Perdew (26:15.367)
You learn, you build content that helps surround what you're trying to focus on. It's great idea.

Chris (26:21.999)
100%. So, just a couple more questions for you. So what's the plan? What's the goal for fun three? Like the next phase you're going into, what is your longterm vision here?

Kelly Perdew (26:34.077)
Yeah, so Craig and I have not changed our vision. I love helping these founders that we invest in realize their vision, make it real. Like ID.me is an example that we talked about that's dual use. Blake Hall I met 15 years ago and the company's pivoted.

twice, he still has the same fundamental concept, like he wants to protect an individual's information, and when they exchange that information, they get the right value for it. But it now, most recently, valued at over two billion.

has 157 million US adults using the wallet and have been credentialed in identity. It's pretty amazing that that's the impact that, know, he's a military veteran, salt of the earth, super high integrity, wants to help people and to be a part of watching that evolution and helping that in the little ways that we've been able to help along the years, along the last 15 years. I would do this for free.

Right? You found your calling when you were like, I would do it for free.

Fundraising, even though it has the word fun in it, is not fun, including for a fund. So it's, you you founders, you know, what's it, that's a German word for when you take pleasure in other people's pain, shoulder and fries or something like that. So the founders who have, you know, have a hard time fundraising, just know the people you're raising the money from, the venture capitalists also have a difficult time fundraising. It's not easy either. I'd say it's about 10 times harder.

Chris (27:52.544)
Hahaha.

Chris (28:14.017)
It's some shared pain.

Kelly Perdew (28:15.911)
Yeah, there you go. But our mission is still to help extraordinary leaders build amazing, world-changing companies. And I love it.

Chris (28:18.074)
Aw man.

Chris (28:28.459)
Incredible man. This was really insightful. I know the founders are going to love this one. can founders reach out to you and, and, and ask any questions? Are you one of those VCs who accepts the outreach?

Kelly Perdew (28:40.199)
Absolutely, take I do to kind of give back calls a week on You know, but that's there's a lot of inbound so I don't get all of them We have a we have a blog we have a blog on medium called leadership prevails Where we write about different categories of information if people are asking for stuff and then I'm on LinkedIn is Kelly Purdue and I've got I think I hit my amount that I can accept direct connections from but I published on LinkedIn every every week

Chris (29:10.903)
All right, man. Thank you so much for being here. You were just an incredible guest. I know the founders are going to get a lot of value from this, man. This was amazing.

Kelly Perdew (29:18.961)
Awesome, thank you, Chris.