Small ideas that turned into big wins | Nitin Rai

Mark Cleveland

Welcome to the Parallel Entrepreneur podcast. I'm your host, Mark Cleveland, and today I'm going to introduce a guest, Nitin Rai, who is a trailblazing parallel entrepreneur, venture capitalist, and a champion of underrepresented founders. As the founder and managing partner of Elevate Capital, Nitin leads the nation's first institutional VC fund focused on empowering underrepresented founders, including women, people of color, minorities, LGBTQ, and veteran entrepreneurs who have limited access to capital. His leadership has resulted in investments in more than 70 diverse startups. Nitin's entrepreneurial journey began in Silicon Valley, where he worked as a software engineer at an AI startup in the 80s before founding First Insight Corporation in 1994, which he still owns and operates today. Nitin serves on numerous boards, leveraging his experience to guide companies like Time Study, The Cut, and Journey Track toward impactful growth.

Hey, Nitin, welcome to the Parallel Entrepreneur.

Nitin

Thank you. Thank you for inviting me.

Mark Cleveland

I would like to ask you a few questions really about some of the crazier moments that you've experienced as a board observer or a board member.

You're an investor, you're not in control of the organization, but you see things happening that are inspiring and fantastic. And once in a while, you see the wheels start to come off. And we all know that venture capitalists don't make 100 % perfect bets, but they do have a really reliable compass. So when you're sitting in these meetings and watching management struggle with issues, what are some of the greatest pieces of advice you wish you could have delivered at that moment or that you may have delivered at that moment? And how could we learn from that right now?

Nitin

I'm going to have two examples. One would be as a board member investor in a company and one as myself as CEO with board members. Because I think both are an interesting contrast. With founders or first time CEOs, the biggest challenge with them as a board member is many of them are intimidated, especially when they have to present bad news. And I find interesting. And I wouldn't say like these are blowups of any sort, but you'll see entrepreneurs just sort of rambling on, staying away from what I call the bad news, right? They're kind of glancing over it or they're adding a lot of puffery, right? So the key is to like sort of get to the bottom of the puffery. And the bottom of the puffery lies in the numbers.

And when entrepreneurs are shying away from that is when it gets tough and you have to have this tough conversation. There was one board meeting where this entrepreneur just doesn't want to delve into the details and wants to just sort of control the meeting and control the narrative and control the conversation. And it was sort of like almost like a dictation of here it is what we did. Thank you very much. Game over. We're no longer in that company. That entrepreneur is buying us out. A most successful relationship of an investor and entrepreneur is when there's mutual transparency. And entrepreneurs who don't want to be transparent because they don't want to share the bad news because for whatever reason, they think they want to control the narrative and the conversation and how things would go, usually are those companies where we don't add value. And in those kinds of situations, we respectfully dissipate. And that's what we did. In my own personal situation, we had a situation where an investor got on the board to represent a set of investors and basically was not willing to lean in, to be supportive, to inquire rather than be judgmental. The moment you're judgmental and you are trying to really ask for something that isn't possible right now, right? And you're not willing to engage and be collaborative, then the situation can go out of control. And in this case, he lost his cool. One of our other board members also lost his cool. And there was a massive verbal battle, and he lost. And eventually, we ended up buying him out and a whole bunch of other investors. And so I've seen both sides of it, where in the second case, where I was the CEO, it pretty much became explosive. I learned, the lesson I learned from that was, is to always be in control, be mindful, you know, have some boundaries around how you communicate. And if things aren't going right, doesn't mean you have to lose your cool. It means you need to engage in a different way and try to get through the crux of why that's happening and solve the problem.

Mark Cleveland

So you talk about engaging in a different way. And one of the questions I've asked myself recently is why is it that entrepreneurs have such a difficult time leading from the heart? It sounded like that meeting might've been sort of, weren't, we weren't leading from the heart and talk to me about that.

Nitin

Yeah.

I don't think it's with all entrepreneurs. It's with some entrepreneurs. And these entrepreneurs, I characterize them as a bit on high on the narcissistic scale. And you need a healthy level of narcissism, right? You need, you know, you're taking a risk. You are pulling people in. You're drawing people in. You need to have that kind of energy to really get through, you know, all the crap that you have to go through, right? It's not a straight line. It's many curves, many battles, many roadblocks, and you're constantly fighting. And so I think the ones that are kind of more on that extreme side, you know, they want to control the, I mean, you need to have control, right? You can't be out of control. But sometimes the control can get out of hand, right? And if you are, you know, you're a control freak, you want to control every piece of the narrative. You want to control the flow of information to your investors or to your board. I think that can create difficult situations, and especially when things are not going right. So it's in those twists and turns and battles and hurdles and so on and so forth where you should be more leaning in versus having your arms crossed and not sharing the information or hiding things.

The smart investors are gonna detect that, right? And they're gonna detect it because they're gonna ask for data. And if you can't present the data in its entirety, they're gonna know because they've been through this before, multiple times. And I think those are the entrepreneurs that tend not to be very successful in a collaborative setting. They might eventually succeed, maybe just as their own, maybe as a sole opener, but... if you're to take capital from investors like us, we expect transparency. And part of the transparency is because we have gone through your journey before. We've been there, done that. And we're not trying to control you. Like me, especially as an entrepreneur turned VC, the last thing I want to do is act like an idiot VC who doesn't know what they're talking about, has never built a company before, but is operating from a point of metrics or numbers or whatever it is your background is. We're lean-in VCs and we want to help you and that's why we wrote you a check. And so we expect the same thing back in terms of transparency.

Mark Cleveland

So as a founder and owner of a global company and investor, participant, cheerleader in 70 other organizations, you're right now in the middle of, you're raising your third fund and you have other sort of dedicated funds. Let's talk about the mechanics. Once you've found a heart-led entrepreneur and we have transparency in the plan, transparency in the continuing operations and they're taking advantage of your life lessons and your contributions. What do you find is the challenge in raising capital these days and where's the opportunity?

Nitin

Well, the challenge in raising capital right now is there's just a backlash against VC. And I think it's just what happened in '21, '22 with sort of the downturn. There was a lot of frothiness during the pandemic. A lot of capital, a lot of dry powder was available to invest quickly in companies at high valuations. And we're seeing sort of the trickle down effect of like institutional capital putting big chunks of money in PE funds, venture funds, and a lot of investment got put out, but the returns haven't happened yet. And many funds got created and follow-on funds got created in a very rapid rate. So every two years, the big fund is creating the next billion dollar fund. The average size of a large VC fund years ago, 10, 15 years ago, was like $400 million.

Today you have funds that are $12 billion, $15 billion funds, And so the velocity, the size, it's like the big bubble. I mean, this happened in 2000 when I was an entrepreneur. And then you see a downturn in the markets and there are no IPOs, there's no liquidity, then there's an effect on liquidity at all levels, right? So what's happened today is, and then the interest rates going up, where you can park money at 4.6 % or private credit at 12 % to 15%. Easy liquidity, active liquidity, whereas holding a company for 10 years or 14 years, if you're in these big VC funds, before you see any liquidity. So all of those have had a sort of a downstream effect, a negative effect on fundraising for early stage, whether it's early stage VC fund, emerging VC funds and early stage capital. It's hard to find money right now. There's a dry spell. Companies are getting funded, but they are AI companies, part of the AI bubble, getting money from the top 30 funds that have taken most of the allocation for venture funding in the last two years. So yes, we're in a famine right now. Hopefully, the peace will come at some point.

Mark Cleveland

So that's interesting.

Well, yeah, good quality companies seem to get investments. Good quality AI companies. So you're talking about that as a bubble, you know, entrepreneurs create bubbles, ride bubbles, survive bubbles.

Nitin

Good quality AI companies seem to get investments.

Investors create a bubble, not the entrepreneurs. Entrepreneurs are just creating products and innovating and creating, you know, they're in the idea scale. They don't create the bubbles. It's the investors who create the bubble. Just so you know.

Mark Cleveland

That's a good clarification.

So how do you identify which companies you're going to invest in? Besides the underrepresented part, there must be a formula because you've got 70 companies working so well.

Nitin

The formula is innovation and product, right? It's the product and the problem that they're trying to solve. So, you know, we don't invest in hypey companies, right? Who's riding the wave with chat GPT, you know. Just because AI is a bubble doesn't necessarily mean I'm going to invest in an AI company. All right. We have invested in AI companies, but these are companies that have, you know, have solved some really good problems in vertical industry. So we're a vertical SaaS AI focused company fund, where we look at the idea and the problem that they're trying to solve. But more importantly, we're also looking at where is the liquidity on this idea. And we don't chase moonshot deals and pie in the sky ideas. That's the big VC funds in Silicon Valley or New York.

Most of our founders have come from industry. They're not a 19-year-old in a hoodie who wants to change the world. They have ideas that could change a process or fix some problem in a business setting or health care or one of these vertical industries where they experienced it and nobody else was solving it, so they basically built it or came up with the idea and validated the problem. So we look at all those sort of things before we write a check and we validate that, right? Mostly from their customers or potential customers.

Mark Cleveland

Sure, you're seeing true demand in the innovation side.

Nitin

Yeah, right.

Mark Cleveland

So what percentage of the entrepreneur population out there that you're supporting have co-founders and are there patterns in that that you observe over your career?

Nitin

Majority of them have co-founders. There are some that are single founders, and the single founders usually have built a team. So they may have like Time Study was a single co-founder. She was a consultant. Kishau Rogers was the founder. And she essentially built the product as part of a consulting business. Ania Rodriguez from JourneyTrack, you interviewed her.

She spun her company out of a consulting business, right? Put a million dollars of her own money. Allie Magyar, who was one of the early exited founders in Elevate, she already had an event management business and created a product out of problems she was encountering as an event manager working on Microsoft's biggest event in Las Vegas. And Microsoft became one of her biggest clients as a result.

So single co-founder, but built a team. So we see a mixed bag. where we find what is really interesting is a lot of women actually are single co-founders, but then they build a team as part of their success. And they come more baked with their ideas as a result.

Mark Cleveland

Yeah.

Nitin

And tend to be more successful as a result, and tend to be more transparent, and tend to be more leaning in, and tend to be wanting your help and demanding that help in general.

Mark Cleveland

Okay.

Yeah, taking care.

Nitin

Taking care, yeah, tend to be more diverse as a result of that.

Mark Cleveland

So how do you find yourself balancing your time and energy between these ventures? What gets your attention and what process or what hack can you share?

Nitin

Well, first of all, I I have a team. I always believe in having a team of people in anything that I do, whether it's First Insight or even in Elevate. I mean, I have, you know, a principal who I've trained, coached, who's grown with me for eight years in the fund. Came in as an associate and then has now become, I think eventually he's going to become a partner. So I'm, I'm very good at delegating things. I also in the fund have other investors in the fund that we call venture partners that are themselves successful founders that are willing to roll up their sleeves and participate in either being on the board or being advisors or some even taking C-level roles. So we democratize this idea of mentor capital that we provide that's very unique to our fund, the fund of our size. You see a lot of that happening with large PE funds where they have consulting groups and and groups that are focused on supporting the portfolio more than just taking a board seat. we utilize as many resources as we possibly can that can be helpful to our portfolio companies, including other companies that we partner with that have teams of people that are founders. We partnered with a company called ETW early on that provides that kind of help and support to these founders that are basically CEO coaches that work with these founders. So that's how we do it.

Mark Cleveland

So as you inventory skills and you've talked about the leadership traits, transparency, leaning in, what are some of the skills that you think entrepreneurs, parallel entrepreneurs should develop? If you said, these are the top five skills that I really want to see people investing in themselves in, how would you characterize that?

Nitin

Mm-hmm.

Delegate.

You need to be able to delegate. You need to be able to trust yourself to delegate. Control freaks cannot be parallel entrepreneurs, in my opinion. They can't. You need to be able to trust others and be able to support them through that trust. I I honestly did three different things and four different things. I I ran a nonprofit for many years called TiE Oregon and then became chair of TiE Global, which is a global nonprofit. So I was doing four things at one point. And the only way I could do that was that I would always recruit people to help me in that sort of leadership position that I would take and be able to delegate to others to actually do the work.

Mark Cleveland

Yeah, a core skill.

Nitin

If you can't delegate, it's not possible at all. And you gotta realize what leaders do. Leaders inspire, leaders strategize, and leaders know how to harness the potential of people. And we do that with, we do 30 investments, and we're a small team of three. Three or four people in the fund, right?

Mark Cleveland

I think trust is the

Nitin

And what are we doing? We're investing in human potential. How do you harness that human potential? Well, you bring other people who can help you do that. So it's all about finding the right people and then being able to delegate and obviously hold them accountable.

Mark Cleveland

So how many exits have you navigated, managed? Talk to me about what the lessons are in experiencing managing an exit.

Nitin

So if I play the tape back, I started investing as an angel in 2009, '10. And I did 17 investments. I had five exits out of that and early exits, and some of them very, very successful. Actually, my most successful investment is a female entrepreneur who arm twisted me to write her a check and really was kind of foundational to me eventually becoming a VC. Part of the risk taking was also being able to give the time to these companies to, to mentor them, coach them, guide them, support them, help them, and really help them on fundraising. So in terms of number of exits, I've had about five as an angel, and then seven out of my first fund, between 18 months to four years and building a very successful return portfolio in Fund One. We return 18 % cash on cash on an average of six years of the fund life. Return all the capital plus to the investors out of that first fund, which is a top quartile fund, about 18 % IRR on that fund. yeah, liquidity matters. Returns matter. But why that is important is because we want these founders to create generational wealth for themselves and their families and their employees. That's why we do what we do. And then you get the returns from the investors at the same time.

Mark Cleveland

Is there a target that you like to see or an approach you like to see with entrepreneurs sharing the wealth with the employee and management team? And how would you describe it?

Nitin

So typically, these companies allocate 10 to 15 % of the company to their early employees. I mean, here's the number that we look at, that I look at, right? In that our first fund, we had a 4x average cash return in three years out of these companies. And some of these companies have had multiple exits. So it's not like it was a one and done.

There's one company that's almost a unicorn now, where we got out early in about 18 months and we got a 7.2 exit, cash on cash exit on that company. So it varies, but we're looking at, if we can get an entrepreneur to get $12 to $15 million net out of their first run in a three to five year period, I mean, that's not bad.

And some may have multiple bites at the apple. But that's kind how we started in our first fund. And that was sort of the track of my track as an angel investor. I really baked that. We had a 3X cash on cash in about four years as an angel in those deals. So we just sort of replicated that in fund one.

Mark Cleveland

Right, right.

I get a kick out of you saying that one of your most successful investments, you know, she strong armed you into making it and totally.

Nitin

Totally. John and I were doing many things, including giving her my trade show booth and finding her other investors. I mean, she is probably the most amazing person. Her name is Monica Enand. She started a company called Zapprove in the middle of the 2008 crash and survived on a dinghy and eventually raised money from two different PE firms, one of them, Vista, one of the most respected private equity firms on earth, and then sold her company like two years ago, merged it with a competitor who wanted to buy her, like was begging to sell the company and sold it at a very high multiple in the middle of a bust. And you know, and you talk about resilience and grit and then giving back as an angel. She actually invested with her husband in some of my angel deals and got exits.

Mark Cleveland

the kind of stories we all want to hear.

Nitin

So, you know, she basically is foundational to the thesis of Elevate. She created the thesis without actually telling me what the thesis should be.

Mark Cleveland

Awesome.

Okay, now let's sit with that for a minute. She created the thesis without telling you what the thesis should be.

Nitin

Right. Early liquidity, invest in women.

Mark Cleveland

So tell me about the role models for you or the mentors who inspired your approach. We just learned a little bit about one inspiring.

Nitin

Monica is an inspiration, you know, in terms of an entrepreneur who, I mean, there's so many, mean, my, you know, the people who inspire me the most are the people who I have invested in, you know. I mean, I have some great mentors from the past. I had a mentor who, his name is Bob, who was my, became my CFO, wrote me a check on a whim, taught me a lot of things about finance.

Talking about the numbers, I had a coach, her name is Jill Woodridge, who I hired when I started for First Insight because I knew nothing about business or sales. She taught me everything I know about sales and self-actualization, being intentional, cash flow, which I still use on a daily basis, how to sell, how to sell somebody's problem, how to listen to one's concerns and problems and offer a solution. But really, entrepreneurs like Allie Magyar, Ganesh Shankar, their passion, their drive, and they're willing to take feedback and lock arms with me are all inspiring. So I learned a lot from these entrepreneurs. Ania Rodriguez is an inspiration for me.

Mark Cleveland

Yeah, we had an opportunity to connect with Ania for episode two, and I thought we were almost going to go into your episode. She was talking about how, how you walked with her on this journey to raise money. And you've mentioned it several times. This is like a, an interesting thing I want to drill into. It's a, it sounds like maybe you're the lead, maybe you're a partner, but you're sourcing, you're finding, you're discovering this talent, this opportunity. Some of it comes to you. Some of it you, you search out, I'm sure.

But there you want tell me tell me.

Nitin

Ania I searched out.

I was looking for somebody like her in Miami, and then there she is. So it all goes back to that intentional and being intentional, and then the universe sort of start bringing people to you. It's just, it's weird, but I believe in it. When you are having a strong intention, things just come your way.

Mark Cleveland

Yeah.

Nitin

And then you have to be smart to recognize it and then grab that opportunity.

But, you know, the reason I invest in who I invest in is I identify with their struggle, because I struggled. It's all my lived experience that I had. I've run into the glass ceiling. I've been discriminated on salary. I've been told we're going to ignore an immigrant. I've been told all kinds of things, right? And objectified and all of that as a minority. So I went through that myself. Today Indians are Indian engineers or Indians.

We don't count, we don't matter. But back in the day, we're good donkeys, good engineers, but not cut out for leadership or entrepreneurship and so on and so forth. And we have to fight our way through. And so that struggle that I went through, I see that in all of these entrepreneurs that I'm investing in. And it's not tied to their color or gender. mean, any entrepreneur that struggles, I identify with them.

And I tend to bond with them. And then as you bond with them, then you learn more about them and what they're trying to do. And then I'll identify with the problem that they're trying to solve. So I, you know, First Insights a vertically-niched software company. And there were so many people who told me and laughed at me saying, why would doctors ever use an electronic record? You should do something else. And, but my eye doctor is the one who created the solution.

So I understood what he was trying to solve and I could see down the road that everybody would use it. And so that's what I identify with.

Mark Cleveland

Yeah, no pun intended.

Nitin

it's very unique markets and unique ideas. I mean Monica's idea was very small for others to say, that's small, small idea. It's not a big idea. I don't want to invest in a small idea. Well, that small little idea became a big idea.

Mark Cleveland

You've talked about listening as a core capability that you have a superpower. What would you say are your superpowers?

Nitin

I don't know if I have any superpowers, man. I just identify with the entrepreneur. I think, actually, if you want to call it a superpower, let's call it a superpower. I can detect, I have a nose for this, right? I have an early detection algorithm in my head of a successful entrepreneur. And I will know in about 30 seconds to a minute if this is somebody that I want to consider investing in. And then I take about a month to decide if I shouldn't, but I have a nose for it. And I think part of it, and I don't know if it's a superpower or, but it's all experiential because you find one, then you find a second, you find a third, and then you start pattern matching, right? And...

Mark Cleveland

Are you?

Nitin

And at the core of it is because I think my superpower is that I really do identify with the struggle. don't use all these stupid metrics. What metric do you have to detect human potential? There is no metric. It's intuition. And so I think I have this intuition about people. And I just follow my intuition.

Mark Cleveland

Do you have a mindfulness practice specifically, and how does it help you?

Nitin

Yes

I am a serious yoga practitioner. I mean, I did yoga as a kid, but for me, back then as a kid in India, it was more like an exercise. But I discovered yoga in 2006. I grew up with my dad, both my parents were very spiritual, but my dad chanted and was very, very spiritual. And maybe that rubbed off on me. But I think it was the rediscovery of yoga in 2006 when I was in India on a visit. And then following this practice, it's called iyengar yoga, which is a very scientific form of yoga. And meditation is sort of built into your yoga practice. I think that has helped me hone my intuition skills better.

Big believer in inversions, which is very core to iyengar yoga. I I was in a headstand today for like three minutes. And the headstand just does something to your head. All the part of the blood, the inversions, they bring all this blood into your brain and it does something to you. It wakes, it awakens you in a way that nothing else awakens you. And then combining it with a

Mark Cleveland

Inversion.

Nitin

breathing at the end, the pranayama, the relaxation practice. I think it sharpens you.

Mark Cleveland

Do you find other entrepreneurs who are chewing through nails and trying to recognize and achieve and address their struggles? Are they paying enough attention to their self-care?

Nitin

the number of investments that I make, not everybody I can get to that level with. We're not their therapists. We're their business coaches.

Like I said, they're not 19 year olds in a hoodie. A lot of them, majority of them are women. 70 % of our entrepreneurs are women, right? They're juggling a lot. They have families, they have children, they're moms.

And so, you know, we try to be as helpful as we can,

I mentor a lot of young entrepreneurs. mean, would say majority of my mentoring cadre in Miami are in their late 20s, early 30s. But my focus is around helping them distill their ideas and talk about my own experience, giving them ideas and suggestions. I I don't tell them what to do. And women entrepreneurs, never tell them what to do because they know what they need to do. They want to just bounce ideas off you and validate the ideas and offer suggestions. And I think that's, and that works really well for both of us, to be honest with you.

Mark Cleveland

The challenges that you faced as an entrepreneur, the victories, how do you celebrate them?

Nitin

How do I celebrate?

One of the things that I've learned as I've gotten older is,

I want to live in bliss as a person. You know, I want to be content. I don't believe in the scale of happiness and this and this. I just want to be in blissful state of mind and presence every day of my life. And what I do as a mentor, as a investor, seeing these folks becoming successful gives me a lot of joy and bliss because I'm a giver at heart. And so it just satisfies this the need that I have, which is I just derive so much joy from giving and then seeing the results of it. So for me, if celebration is bliss, then that's what I get.

I'll give you one example of a celebration, but that wasn't my idea. But I want to recognize this entrepreneur for what she did.

Her name is Allie Magyar, founder of Hubb. She sold the company, and this was in the middle of the pandemic crisis, which she built it up, saw an opportunity, sold it, right? What does she do? She takes her entire board and her entire management team to Lanai, all expenses played at the Four Seasons, at the holistic resort of Four Seasons, and pays for everything, the food, the whole nine yards, and... massage, you talk about the whole nine yards, they came with the works for three days for a whole weekend. I've had entrepreneurs that not even bought me a cup of coffee after their liquidity event. But for her to do that, and she is such a giver, that was truly a celebration. Because she shared it not just with her investors, but our board members, but also her team at large.

And what was really great was every one of those team members that got equity was able to buy a house. There's another entrepreneur, Nat Parker. I didn't attend his celebration, but his core team, this company, Gold Sherpa, that I invested as an angel, every one of those entrepreneurs, team members, was able to afford a house. Now that to me is celebration.

Mark Cleveland

Yeah, this is a virtuous cycle.

Nitin

Total

virtual cycle of give back. That's what I do.

Mark Cleveland

Right. And you're a catalyst for that.

Nitin

I am a catalyst for that, yeah. And that's what gives me the joy and that's what gives me the bliss. And that's what keeps me going is because I just want to have that joy of seeing these people successful.

Mark Cleveland

I think there's a celebration in America about entrepreneurship that needs to continue to cast the light on successful entrepreneurs who build companies, employ people, help them buy a house. They're generous in this circle. There's also a misconception about, I think, what makes people think that the driving force in successful people is greed. I think it might be TV shows. I haven't really seen that.

Nitin

That's Wall Street. That's not entrepreneurs, just FYI. I I would say most entrepreneurs, including some of the very big ones, were not driven by greed. As I was watching an interview, Jeff Bezos was talking about wealth creation, not his wealth creation, but the wealth that Amazon led to, which was like, I think he was talking about he owned like 10 % of, he owns 10 % of it, of the total value of

Mark Cleveland

Yeah.

Nitin

of Amazon today, and 10 % is 200 billion, 2 trillion, or now maybe it's 3 trillion, whatever that number is. But he talked about the fact that he never took more than $80,000 of salary, and he never took additional equity in the company. He got what he got. But what he strived for was to create value for his investors and employees. And that's worth 2.3 trillion, right?

Powerful statement. Is Jeff Bezos greedy? Maybe. I don't know. I don't think he is. I think he just wanted to innovate and create a business. And he did. But I developed so much respect for him from that interview. It's so inspiring to hear that. But that's sort of how I looked at things as well. It's about creating wealth for others. And you rise with that. You rise with that.

Mark Cleveland

So creating it. Yeah. And creating is a I think it's a core part of humanity. I'd like to believe that I am divinely inspired and my creation can sometimes be art or sometimes it might be a business. We've had a conversation about you collecting art, me collecting art from.

Nitin

Yeah, I live with art now.

Mark Cleveland

The art of business and the creation of a business as a piece of art, I think is worthy of exploring.

Nitin

Everything is art to me, by the way, it's not science. There may be some science behind it, but it's all art. I mean, entrepreneurship is an art, it's not science. Detecting a successful entrepreneur is art, because it's a lot of intuition. There's a lot of creativity involved in that.

Mark Cleveland

So feeding your intuition and creativity, you talk about a lot of relationships.

Entrepreneurship is nothing if not managing relationships and contributing to those relationships.

I think that we can and should celebrate the unlimited creativity of human beings. And in our case, often it's expressed as a business enterprise. Not all of them succeed. But I guess what's the definition of success?

Nitin

Mm-hmm.

Let me answer it in two parts. So when I grew up, my dad taught me that failures are the pillars of success, right? So I got that part. But as an entrepreneur of color, as a minority entrepreneur in this country, failure is not an option for me. When I came here as an immigrant engineer, failure is absolutely not an option. So I don't celebrate failure, just so you know, right? I am all about making sure that every one of my investments is successful. But we model it in our minds that maybe half of them will not succeed. The other half will succeed. The ones that don't succeed usually is tied to the failure of the entrepreneur, not necessarily. I mean, some are market failures. Some are not in their control. But majority of them fail because the entrepreneur failed. It's just... just as simple as that. So I'm not sure if I'm answering your question, but I think for us, the desire, the absolute desire to succeed is really what's inherent in the people that we're investing in. When we look at them and we evaluate them, it's that they just have this sheer desire to succeed. And so as a reason, we have a very low failure rate in the fund.

And women in particular are not designed to fail. And it's an opportunity that people don't recognize, which is, you know, it's such a paradox that, you know, women are caregivers and, you know, they take care of people. And I don't want to be, and I'm just saying that, you know, with all utter respect to women. I mean, women can do a lot, they're very multifaceted, but at the core of it, you know, they know how to survive. And that's a skill that guys don't have as much as women do. And that to me is a recipe for success in whatever they pick, that they're not going to give up so easily. So that's why I love to invest in women, because I know they're not going to fail in general, you know. So.

Yeah, failure is not an option.

Mark Cleveland

Ha ha ha.

Nitin

It's not an option. It's okay to fail. But I just loathe people who say, oh, I'm celebrating failure. Fail fast. Okay, that's a Silicon Valley young white male thing. Go fail fast. And somebody else is going to notice you again and write you a check. But if you're a person of color, if you're a minority, if you're a female, imagine you're walking in with a failed idea and saying, I'm raising my next, oh, I got this new idea and I want you to write me a check. They'll say, why did you fail on that first one? Oops, not interested.

Mark Cleveland

Well, you mentioned Silicon Valley and I went one of my experiences include spending quite a bit of time on Sand Hill and I got conflicting feedback and, you know, all different lessons from that experience. But one of the things that I picked up here in Nashville, where we've got a really great community of entrepreneurs and create a creative culture at the very base of who's in Nashville.

There was a point in time when it seemed like the only thing that happened that mattered was in Silicon Valley, or maybe that's the marketing effort. What's happening that matters in other communities around the United States in your experience and what's the connective tissue? What's the pattern matching that you're seeing?

Nitin

Well, Portland's a great example, which is where I started my company. I moved from Silicon Valley to Portland to work for a bigger company. And then I decided when I started my company, I decided I was going to be in Portland because that's where my network was. I think cities like Portland, Nashville, Denver, Austin, Miami, Miami's the last two, three years has really changed course because people have moved here. And I think the non-Silicon Valley, I mean, Seattle is a great example, right? It wasn't a hotbed and then Microsoft happened and then there was a low period for a while till Amazon happened. So a lot of these, what I call secondary cities, are usually, they're smaller ecosystems.

And in a small ecosystem, there's a lot of collaboration, which you won't see in the Valley. There's collaborative, but it's all broken up into little fiefdoms. Valley used to be that way. In the 80s, I thought Silicon Valley was very collaborative. When I was there as a startup, working in a startup, very different culture, very different approach. That, I think,

I don't know if it's the same because it's so big. New York's the same way. It's very siloed. It's very siloed because I lived in New York for about a year and a half part time. I think these smaller ecosystems, New Orleans is a great example. Because they don't get so much capital and they don't get so much of this and that and whatever the value has, people tend to bond together and collaborate more heavily. And that tends to ...

It creates a different kind of ecosystem than Silicon Valley or New York. And I think there's more high touch. There's more people are more willing to help each other than be competitive. And it's not that they don't have good ideas. It's just that their ideas tend to be more vertical in nature rather than some pie in the sky thing.

Mark Cleveland

Nitin, if you could talk to your younger self, what would be the first or second pieces of advice that you would give yourself?

Nitin

Be patient.

I missed out on literally two IPO opportunities, two startups I worked for. The very first one that I worked for eventually went public. And the second startup, not the second one, but the third one in Seattle went public. I was just impatient. I was just too much on the edge. Be patient. I'm very patient now. I own my 30 year old startup.

But I think, and also like don't underestimate yourself. You know, I struggle with, what is that syndrome? where you, imposter syndrome. It's like.

Mark Cleveland

imposter syndrome.

With a 30 year old startup that is very successful and all this experience you have.

Nitin

Yeah, I still suffer from imposter syndrome. So part of it is like, don't underestimate yourself. know, go with your gut and go with your intuition. Trust your gut more.

And don't react.

Mark Cleveland

Respond.

Nitin

Listen, sort of, yeah, just process before you make a decision.

Mark Cleveland

Yeah, that sounds like some really good advice.

Tell me about the most recent book you've read and what's on your nightstand for your next book.

Nitin

Honestly, I have not read a book in a while. There's one that I've been reading, which is in my iPhone. This book is, see if it's not coming to mind, but it's an author, William Derenpil, who writes a lot about India. And this book is called Anarchy. And I'm still reading it. It's been about two years. And I read little chunks of it. And every time I read a chunk, I have to put it down because I get so incensed. It's intense and it's incensed because it basically is documenting the loss of my country to the colonials and how greed and divisiveness created that, where India, which was never a country, was a collection of principalities, went from being

Mark Cleveland

Mm.

Nitin

one of the wealthiest nations, the wealthiest nation with the highest GDP, you know, controlled 30 % of GDP in the 17th century, went down to the poorest country in 200 years. And just reading that is, it's fascinating because the guy, you know, he documents it through research and he's telling a story and you visualize it, because that's what reading does, like you visualize and It is just so intense that I haven't even finished the book yet. And there's like several other books that are, there's another book that I read called The White Moguls. But the book that I most identify with is a book called Light on Life. And it's sort of like my Bible by Mr. BKS Iyengar, who is the yoga guru that I follow. It's an interpretation, his interpretation in English

Mark Cleveland

Wow.

Nitin

of the yoga sutras of Patanjali, which is really collective wisdom around yoga. And yoga is not a form of exercise. It's a way of living. And it has eight petals. And each petal is sort of a different thing. So yeah.

Mark Cleveland

It's a way of living and we're here to live. Here to create. We're here to build. We're here to celebrate strength and wisdom and beauty, but always within the confines of respect, self-respect, having something to do with how you treat yourself and others. It's important.

I'm interested to know what three words define your life.

Nitin

O my God, I don't know, three words.

Centered, calm, patient.

Mark Cleveland

Thank you for joining us today on the Parallel Entrepreneur. That is the best close I've heard in years. Nitin, thank you for being centered, calm and patient while we got you on our podcast to share your wisdom. I'm so grateful. Thank you.

Nitin

Well, thank you so much for this wonderful conversation and inviting me to your podcast. It's been a pure joy. Really appreciate it.