Alexander McCobin: Wearing our values on our sleeves is important more than to exclude opportunities and founders, it's to attract them. 

There's been a fundamental misunderstanding for most people about what capitalism means.

Too often people think that capitalism is fundamentally evil, greedy and destructive because it's all about the numbers.

At the end of the day, capitalism is the greatest driver of human prosperity and flourishing because it aligns interest between individuals.

Don't just keep track of the ones you invest in. Keep track of the ones that you don't. 

Get to a mindset of there is an integration between doing good for the world and doing well in business.

Profit is just one metric of what that value creation is.

The biggest impact a business can make is developing an incredible product or service that's making the world better and is making a profit at the same time because it creates a sustainable way to continue making that impact.

Andrew Kazlow: Welcome to the Diligent Observer, the first podcast exclusively focused on helping angels see what others miss. I'm [00:01:00] your host, Andrew, and every week we explore what works, what doesn't, and why through conversations with experienced startup investors and operators.

My guest today is Alexander Kobin, the founder and CEO of Liberty Ventures, a network of values aligned investors committed to the principles of Capitalism and liberty as the former CEO of Conscious Capitalism and founder for students for liberty. Alexander brings a unique philosophy to early stage investing, and in this episode we explore how principled business can be a force for good.

His approach to evaluating founder values during due diligence and while wearing your investment thesis proudly helps attract the right people and repel the wrong ones. I hope you enjoy learning from Alexander as much as I did. 

Alexander, thank you for being with me today.

Alexander McCobin: Thanks for having me, Andrew. It's great to be here.

Andrew Kazlow: Okay. So Alexander, I want to start with my favorite question and that is what is exciting to you right now?

Alexander McCobin: So [00:02:00] 2025, I think is going to be an incredible year, not just for Liberty Ventures, but for the whole business ecosystem in the United States. There's so much energy right now around the concept of innovation and entrepreneurship. So many people looking to build impactful businesses and especially to work with other people who share their values, commitments to the principles of capitalism and Liberty.

And so there's a lot going on with the Liberty Ventures ecosystem that I'm sure we'll get into. But I'm just excited about the energy and it seems to be the renewed culture of entrepreneurship, business and innovation that is infusing all the conversations that I'm having and what we're just seeing across the country right now.

Andrew Kazlow: Can you give an example or two of recent events or recent activities that lend you to kind of seeing this excitement?

Alexander McCobin: So, like I said, it's coming from conversations I'm having. I'm talking with business leaders in Europe right now who are talking about relocating their headquarters to the United States [00:03:00] because they think it's going to be the cradle of innovation. I'm seeing more people talking about starting businesses and actually going out and working on them that have been in the back of their heads for a long time and they want to actually take action on.

We're seeing a lot of interest from LPs in the Liberty Ventures Network to back entrepreneurs who share their values. So to a certain extent, it is just a feel. It's a vibe, but we're also starting to see actions with a lot of progress being made and a lot of activity around entrepreneurship that we really need and is going to be really exciting for the US economy. 

Andrew Kazlow: Well, I'm excited to break down what that means. You mentioned kind of mission-driven business. And I spent the holidays reading the book that's behind you, which is Conscious Capitalism. For those of you who aren't watching this, by John Mackey and Raj Sasodia. I hope I'm saying that right. Amazing book that really puts forth this concept that business can be and is, in its best [00:04:00] use case, a force for good, not purely for the purpose of maximizing profits. You could explain this a whole lot better than I could. So, Alexander, I'd love if you could just walk me through the concept of what is Conscious Capitalism, why is it important, and what's the impact that this concept has had in your life?

Alexander McCobin: So, I've been very fortunate to get to know and work with some incredible leaders over the course of my life and career, including John Mackey, the founder of Whole Foods, who is one of the founders of the Conscious Capitalism Movement, as you said. And I had the opportunity to serve a CEO of Conscious Capitals in the nonprofit for six years before going off and starting Liberty Ventures.

And the reason I did that is because there is such a powerful concept behind Conscious Capitalism. Then to take a step back, it's important to understand the context in which this was developed and where it fits in, in 2025 going forward. Because there's been a fundamental [00:05:00] misunderstanding for most people about what capitalism means, that John and other business leaders initially sought to dispel, which is that business is only about money and making a profit,

for shareholders in particular. Now, this is something that became widespread thanks to Milton Friedman's article in the 1970s that social responsibility of business is to maximize profit. I might have gotten a couple of words wrong there, but basically that's it. And that became standard in business schools and in boardrooms and in just the public understanding of what business is all about.

To a certain extent, what Friedman was trying to do wasn't wrong in that he was trying to emphasize that shareholders have an important place in a business, and managers need to remember that they are accountable to shareholders who are the owners of a business. But where he went slightly wrong was to say that, everything a business does needs to just come back to that particular goal.

[00:06:00] And what John sought to dispel with Conscious Capitalism is the idea that that's the only thing a business is about because there are so many other people to consider in a business, there are so many different ways to maximize that profit or to return to shareholders that doesn't just put them at the forefront of everything a business does.

And in fact, the best way to go about maximizing shareholder value and delivering returns is not to make that the sole focus of a business. Similar to how as human beings. And this is getting a little philosophical, but Conscious Capitalism does. 

As humans, if we want to be happy in life, one of the worst things that we can do is say, I'm going to make all of my decisions based on what's gonna make me happy right now, because as I start doing that over a weekend, I start to get ready to feel absolutely miserable when Monday rolls around with whatever hangover and mistakes that I made and guilt and all that comes back.

And in fact, what we see time and time again, both from [00:07:00] philosophical reflection and from our own personal experiences, is that the best way to maximize our happiness is actually to have some higher goal than happiness as our north star, our driving purpose that we work towards a higher cause, our family, or bigger project than just us.

By focusing on those other things, happiness comes as a byproduct of working on that and doing it, and it's the same thing for profit. So when businesses adopt a higher purpose that they're trying to affect in the world, they're trying to serve a community, they're trying to remove a challenge that most people face, extend life expectancy or whatever it is.

That actually provides a better north star that can generate profit while also taking care of all the other stakeholders that a business impacts, employees, customers, partners, the community and so forth. And it's not to say that shareholders don't matter or that profits not important. They absolutely are.

But this is a better way of [00:08:00] understanding the role of business in society to create new value. And profit is just one metric of what that value creation is, but a business can and should look to other metrics as well to evaluate how it's doing and creating that value. This is both a great strategy for individual businesses to grow, but it's also a great way for us to communicate the meaning of capitalism to more people, because too often people think that capitalism is fundamentally evil, greedy and destructive because it's all about the numbers.

It's all about maximizing that profit for shareholders and no one else matters. And so much of that is a misrepresentation of what capitalism really is. Where at the end of the day, capitalism is the greatest driver of human prosperity and flourishing because it aligns interest between individuals. It respects individual agency where people voluntarily choose what they produce, who they trade with, what they're going to consume, and it allows people to just lead [00:09:00] more fulfilling lives.

And it takes a reconceptualization of what capitalism is to help more people understand that. And so all of that is a long segue to get to the point that the underlying purpose behind Conscious Capitalism was to emphasize that capitalism business are fundamentally good things, and that we ought to have more business leaders who are both living out those principles and articulating it to others in order to help them understand

the power of capitalism is a force for good and to make humanity better off. Now, there are some infights within the say Conscious Capitalism community right now. Some people don't necessarily see it that way, which is a shame, but at Liberty Ventures and principled business, we've wholeheartedly lean into that premise, that capitalism is fundamentally good. In that when we lean into the principles of capitalism

as business leaders we're able to create more flourishing societies and we're able to help more people understand [00:10:00] the power of capitalism as a force for good.  

Andrew Kazlow: One of the stories I love from the book was John's journey from originally being very anti business, anti everything, to actually starting a grocery business, which ended up becoming Whole Foods. And in that journey, he shares a line that I really love. I wrote it down. He says, "I learned that business is founded on cooperation and voluntary exchange." And just so well-aligned with what you just explained, this concept that you don't have to purchase from my business if you don't want the product, you don't like the way I run things. And it's such a powerful force, as you have said. What is your story? Like, how did you get into this world?

Alexander McCobin: I read from your bio that you almost did become a philosopher. You thought you were going to become a philosopher, which would be fun to talk more about. But tell me your story. How did you find yourself in this seat? 

You're absolutely right. Before I went to graduate school for philosophy, I was a passionate teenager interested [00:11:00] in the world of ideas and principles of justice, liberty, prosperity. And while I had started a few businesses just for the fun of it, both for profit and nonprofit as a teenager, I thought the only way to actually change the world to become freer, more just, more moral was to become a philosophy professor. Went off into graduate school and plan to live in the ivory tower.

Alexander McCobin: But for a number of reasons, I started to really focus on one of the nonprofits that I had started when I was an undergrad, a group called students for Liberty. And I realized at a certain point that I was having a bigger impact and I was personally more driven in building that organization up than just engaging in reading and writing papers.

And as much as I love philosophy, this seemed to be more of my calling building an organization and so dropped out of graduate school, went to Students for Liberty full time and focused on building this movement of young people around the world who are committed to the principles of a free society and providing them with leadership training to go and make a difference in their [00:12:00] communities. By the time I left, we were running over a 100 conferences a year for more than 20,000 students, over 1,500 trained volunteers.

Our alumni were doing everything from leading protests in Brazil that led to the impeachment of the president for corruption, to starting unicorns in Silicon Valley like Thumbtack and others. But, I was also working with some incredible donors to the organization to make all of this possible, including John Mackey.

And after John wrote Conscious Capitalism and had started the nonprofit in order to spread that philosophy, I got recruited to leave Students for Liberty and go run Conscious Capitalism, the nonprofit. And I believed in Conscious Capitalism. As soon as I read the book, it was very aligned with what I was actually doing in graduate school, I was going to write my dissertation on.

And when I was there, I got to work with not only john, but hundreds of other incredible business leaders. At a certain point I realized two things, one, as I already [00:13:00] mentioned, there was a bit of an internal dispute over what Conscious Capitalism actually means. And I take a very pro capitalism stance, and I think that's what Conscious Capitalism really is.

I mean, the whole first chapter of the book is about how capitalism is great. But there were, there was a lot of effort being spent trying to convey that to people who hear the term Conscious Capitalism. And think it's a critique of capitalism rather than a defense of it. But second, in working with so many of these incredible business leaders, I realized that we not only needed a nonprofit to provide a space for these leaders to talk about these ideas with each other, any good conscious capitalist wants to go out and build an impactful business and work with others in building their businesses.

And that was the impetus behind starting Liberty Ventures. Initially as just an angel investor syndicate to share deal flow with like valued investors to back like valued entrepreneurs. But as we [00:14:00] started to invest in companies and we've facilitated investments and 16 companies in the last almost 2 years since we started.

We began to get requests for other services to provide advisors to companies, to help recruit talent to join teams, to even just start to put on events to make sure that these leaders are connected with each other. And so Liberty Ventures has evolved into something much bigger than what I initially envisioned.

Where we are putting on events every month now. We have a membership network called our Leadership Circle to help people leverage the access to the over 15,000 like valued business leaders that we've identified in the network now. We're putting on events like big conferences in New York with Joe Lonsdale, Steve Forbes, Matt Cole. And small summits like one with Richard Branson coming up at his home, Necker Island for

40 of the investors and CEOs in our network to come together and share how they're advancing business as a [00:15:00] force for good. So it's a variety of things, but it all revolves around this ecosystem of like-valued business leaders and helping them find ways to do business with each other and scale impactful businesses to make the world freer and more prosperous.

Andrew Kazlow: Well, it's exciting to hear about all the work that you're doing. I'd love to double click and get a little bit more tactical on your investment philosophy and how you guys evaluate opportunities. You've done 16 deals. You've got a lot more in the pipeline. It sounds like. But we're a show for the angel investor in the world.

And so I'd love to hear your frameworks a little bit more about how you actually double click when you meet somebody to assess, like, is this a person whose values and mission aligns with the values of Conscious Capitalism? Is this somebody that I can get behind that I believe in. It has the same ethos, how do you do that?

Alexander McCobin: What's your framework? What's your process for assessing teams really? 

There are a few things that I learned over the last couple of years that are really [00:16:00] important here, and it starts not with how to evaluate deals, but actually how to get deals in the first place, because so much of angel investing, investing in early stage opportunities is just seeing a ton of deal flow to be able to say no to a lot of things and start to get a sense of which opportunities are the good ones versus which are the bad ones.

Alexander McCobin: To attract that deal flow, it took a while to build up a process. And I learned that a couple of things. First, so much of this comes from just referrals. It's just knowing the right people because there may be some websites out there where you supposedly can see a lot of deal flow. Like, you've got Angel List, you've got some other platforms trying to do this now.

But for the most part, it's just other investors, other entrepreneurs talking about you, talking about the opportunity with others and sending deals over. And that requires building up a certain brand, a certain reputation. And there are a few ways to [00:17:00] go about doing that. Most of the time, people are developing that in a certain industry or geography, like a certain city or state or they've worked in a company before that starts to attract deals.

One of my early advisors was a friend, Mike Gibson from 1517, which spun out from the teal fellowship back in the day. Mike and his partner, Daniella were the first people to run The Thiel (20 under 20) Fellowship. And they developed a unique way of building their brand for 1517 and attracting deal flow, which was actually to say from the outset, they're not looking at an industry.

They're not looking at a geography. They're just looking for founders who have opted out of the college system where they want to find, people who are just so bright and talented, they shouldn't go to college. They should be building this business instead. To a lot of people, that sounds crazy.

Why would you say no and not look at all of these incredibly smart people who have college degrees, PhDs and so forth, who are probably likely to succeed at [00:18:00] business for them? It's part of their thesis that they're looking for the people who have a counter narrative, who have a different approach and they want to be the first place that anyone who thinks they're good enough to start a business instead of go to college will go to for support.

And they've done incredibly well doing that. I highly recommend Mike's book, Paper Belt on Fire. It is a fantastic road map for how to build an angel investor mindset or a venture capital firm in a very different way. And all of that's to say our approach has been something similar, but our focus is on wearing our values on our sleeves.

We believe in capitalism. We believe in the principles of capitalism and want to work with other business leaders and entrepreneurs who share those values because we are able to build out a network to provide support for them, making the right connections beyond any money that we put in, providing advice for how to run a principled business rather than one that can be corrupted [00:19:00] by outside Influences, especially investors, which happens all too often that has started to attract incredible interest and both from entrepreneurs and LPs and advisors who just know that we're the firm in the syndicate in the network that does that now and they want to send us opportunities.

So in our first year, we looked at a little over a 100 deals that came through this past year. we looked at, I think, over 490, something like that. And I expect that to just keep going up this year. So the first thing is find a way to just get a lot of deal flow to look at opportunities to begin with.

And for us, being very clear about what we're interested in, looking for values aligned founders has been critical to developing that reputation and brand and bringing people in. Then we can get to the question for angel investors of how do you evaluate companies? How do you know if this is someone to work with?

And actually another lesson I took from Mike [00:20:00] and what they've done in 1517 is to not feel the need to make high pressure, quick decisions. Starting an angel investing, it always seems like, Oh, you've only got a few weeks to decide the founder wants to close right away. And you've got certain terms you have to stick with. 

Andrew Kazlow: Every time. Every time. 

We're always closing in four weeks.

Alexander McCobin: That's right. And you're supposed to make a decision after one conversation and looking at the deck. And some investors do that, and they've been very successful. But what I've learned to do is actually say, I want to build up a relationship and really understand this person and the company over time before we make a decision.

And that's been incredibly useful, actually, so that I'm not just making the decision on a deck or gut feeling or just a single conversation. I'm able to see what they're doing over time and learn how the founders are approaching building out the business. And that really provides a lot more data and insights to all the things that you should be looking at as an angel investor when it comes [00:21:00] to evaluating a founding team.

You know, are they intelligent enough to figure out what to do? Do they have the grit to make it through the challenges? Are they attracting other good people to support them in building this up? Do they have the charisma to actually sell the vision for what they're doing? Are they going to pivot when they need to?

Instead of just asking abstract questions and having them tell me that I'm watching what they're doing over months or nowadays, actually, potentially years to see what they do and evaluate whether they really have what it takes to make this a successful company. That takes more time.

It's a slow process. Founders may not like it because they want money right now. As an investor, you may not like it because you want to deploy capital you want a faster return, but it's working out well for us and better understanding who we're investing in and what the company's about.

When you make an investment like this, it's a long term game. And so it's saying we need to take some time to date for a little while before we have a marriage and are committed to each other for a long time. Of course, they're the normal things you [00:22:00] should look for.

Is the market they're addressing big enough for this to actually be successful? Do they have a unique service or product that no one else is going to be able to copy or build or that they're going to do so much better and faster it will take over or figure out how to pivot to do that? All of that really matters.

But, every investor is looking for similar stuff with the founders. And as I said before, like the intelligence, the grit, the charisma, the ability to attract people to succeed. But I think one of the key things really is to be willing to have those conversations and watch the company and the founders for a little bit of time and even start helping them out before investing to see what they do with those connections or the resources that are provided to make a decision of what you think they're going to do and be able to do

to make that investment decision.

Andrew Kazlow: So for Liberty Ventures specifically, say more about kind of the unique slice of diligence that you guys do around this values alignment piece because obviously you're going to do all the other things, right? Is this a real [00:23:00] respectable person? Do they have the basic intelligence? Have they made good decisions?  

How do you suss that out whether or not they're a fit for your thesis?

Alexander McCobin: First off, wearing our values on our sleeves is important more than to exclude opportunities and founders, it's to attract them. Because what we found is that when we talk about liberty, capitalism, the principles of capitalism, there are some people who get really excited about that because they share those commitments and those values are deep in their bones and they want to find values aligned investors

and supporters so that they don't need to tiptoe around what they believe in. So that they're able to maintain a certain culture in their company and not have it challenged by their investors. So they really want this kind of capital and support for what they're doing. There are others we found that are turned off by this, actually. Even entrepreneurs, as ironic as that is, or counterintuitive, where they start to say, well, yeah, but don't you have some concerns with capitalism?

[00:24:00] It has to be the system we have to work in, but we really want to do these other things. And we pretty quickly find that there's a lack of alignment from a simple conversation or by just sending a link to our values page and saying, do you agree with these? How do you live them out? And What's your interpretation of them? And so it's pretty easy for us to suss them out. But beyond using that as a way to attract great deals and build out this community of like valued founders. It's important to us because in addition to providing capital to our portfolio companies, we also want to provide connections for them.

We've built out a tremendous network of like valued business leaders who want to work with others who believe in capitalism and are living out the principles of capitalism. And If we have a portfolio company that doesn't share those values, it's going to be challenging to make that connection because there's a certain affinity people have to those who share their values.

There's also just an understanding of what they're trying to accomplish in the [00:25:00] world, what they're trying to build with their business from those values. And so if they're not going to come from that same starting point or have that same worldview, it's just going to be a lot more challenging to add more value to the portfolio companies.

That then if they already do  

Andrew Kazlow: I love it. Alexander, I think there's such a powerful lesson here that is truly translatable to almost any investor community. And that is that having a clear thesis, having a clear distinctive, a clear niche. It's so, so important because it both attracts the right entrepreneurs and investors, and it pushes away those that aren't a fit.

So for the university affiliated investor community, put the university affiliation up front, make it obvious, make it clear. For the value focused group, whether it's a faith orientation or a concept or a belief system, like make it very explicit because that's going to both attract and repel the right kinds of opportunities rather than having this [00:26:00] generic, we invest in early stage companies.

Okay, great, so does every other investor community. Having some secret sauce is so so so important at a community level because it really does naturally create the kind of community that aligns with that vision.

Alexander McCobin: 100%! 

Now, one of the challenges for us with this is that being about building an ecosystem of values aligned business leaders, I want to help anyone who believes in the principles of capitalism and liberty to succeed in business. That we obviously aren't going to invest in every startup that's run by values aligned leader for a variety of reasons.

We say no to almost all of them, of course. But what we're trying to do is figure out what other ways we're able to support them to build out that community and help them on their journey even if an investment is not the right thing at this time, from our perspective that's why we put on so many free events, webinars for them to learn from.

We have a nonprofit arms to get members of the Liberty Ventures Network to speak [00:27:00] to other groups, whether it's to angel clubs or startup groups or student organizations to inspire them to go on the entrepreneurial journey or run a free accelerator for entrepreneurs to get going in what they're doing.

And we're coming up with more ways to support them because so much of this for us is not just the investment side. It is building out the community and ecosystem, and so it requires more than just providing capital. It can be a little challenging because we want to help everyone in so many ways and have to draw some hard lines sometimes, even for founders that I really like and want to see succeed.

But we all have to recognize limits and figure out then what we can do or just keep the door open to potentially an investment in the future or some other way of supporting them when they're more developed and it's a better fit.  

Andrew Kazlow: Alexander, I'm so glad you brought this up because from the outside, just recently having met you, it seems like you have a real affinity and strength in building and coordinating these community [00:28:00] events. You've been doing it in some form or fashion for a decade now, it sounds like. And I think this is an area where Investor communities often struggle because putting on great events takes a lot of work, it takes a lot of energy, it can be expensive, but it's so valuable at the same time for everybody that participates.

The relationships, the organic connections that just evolve. You clearly see tremendous value there and that's why you're investing so much today and historically. Talk more about like, how do you select what kinds of events to put on? How do you think about the expense here?

Cause none of this is happening for free, right? You and your business incur significant costs to put on all these events. Talk about the power that they have had and how you maybe tactically like think about organizing and managing such a full event schedule.

Alexander McCobin: You're absolutely right from the outset. This is a lot of work and it is an expense. And that's why a lot of people shy away from [00:29:00] doing it. It's tough. There's no easy way to do it. But I think events and investing and building out the community can be incredibly valuable because it creates new opportunities. It strengthens the ties and commitments people have to what we're doing with Liberty Ventures. And also helps clarify what we're doing to a lot of people, especially since we're starting from such a different place than so many others.

We're talking about the values of founders rather than what an industry or a type of business that's being created. So, it is really helpful for us. And it's helpful that I've been doing events really since I was 18. And so, you know, going on two decades now, I'm getting old. But there are a lot of different ways to do it.

It can start with something as simple as virtual events, webinars to bring people together. It can actually be pretty low cost. You find an LP or a founder in a city and see if they are willing to host something at their apartment or at a local coffee shop or something to [00:30:00] get going.

And then you can build up to larger summits and conferences. It really is going to vary from organization to organization and also purpose to purpose for what you're trying to get out of the events. In my experience, it has been invaluable not just Liberty Ventures, but any organization I've been

part of a run to build out that community because at the end of the day, community requires people actually coming together. Whether it's in a physical or virtual space to build relationships and to work on some kind of common project because they have some common affinity. And if you're not bringing them together, it's tough to really say that you have a community of some kind.

Andrew Kazlow: Okay. So let's do a thought exercise cause I'm curious what you would say here. Let's assume that you were just placed in charge of growing an angel community. Let's say they've got 10-ish members and the historical cadence has been a quarterly pitch meeting.

And that's about it. If you were in this situation, uh, let's say it was a university affiliated investor community and you were taking over and you [00:31:00] wanted to grow the community. You wanted to invest in some more events, more activities to bring together folks that are from that university or connected. How would you think about where to start?

Alexander McCobin: So, here's one of the great things about doing events and building communities. You don't have to do it on your own, especially for an angel group associated with the university. I would start by finding professors or administrators or even some student groups that have some kind of alignment with the investing that you want to do. Reaching out and offering to support them in having them put on an event with the angel group.

Maybe it's bring speaker into a class. Maybe it's organize a pizza party with potential entrepreneurs in a student group and an entrepreneurship club. Maybe it's something else. But don't feel like you have to do this on your own to begin with. And I would say, start small. Speaker events are always great.

Just networking opportunities for young people, for [00:32:00] entrepreneurs is always seen as valuable. And really build up from there, but just go and get something started and find the right partners to help with it.  

Andrew Kazlow: I love it. Ready, fire, aim, go try some things, figure out what sticks.

Alexander McCobin: Exactly.

Andrew Kazlow: Okay. So Alexander, I want to understand a little bit more about this, something you said earlier, and that is that, investors can sometimes get a business off track. And you all help entrepreneurs think through how to maintain their values and ensure that their business grows in a way that it maintains these principles of Conscious Capitalism. I'd love if you could share some examples, maybe some stories where entrepreneurs were feeling that tension. Where we're perhaps drifting a little bit and you all kind of walked alongside them and how you actually did that. Because our audience is oftentimes investing when these companies are very young, very pliable, interested in feedback, the advice from these early [00:33:00] investors.

So curious to hear maybe some stories. If you've got them top of mind, for what this has looked like over the last couple of years.

Alexander McCobin: Thankfully, I don't have many stories of investors pushing companies that we've invested in to go off track. And that's because we've picked companies that really are sticking to their values. We talk with other investors coming in and we help make sure there's alignment there. And so maybe that's one of the things that is also really helpful that we do.

We try to talk with other investors coming into the company to make sure that we're aligned with them too. And there's a common vision for where to take this because tension between founders and investors slows the growth of a company down. And that's one of the big challenges to avoid. You want to make sure the founders and the management team are just focused on developing the best product service focused on their customers and growing the company, not having to manage and deal with investors who have a different vision for what to do.

But I have heard horror stories from others who have been through this, which helped [00:34:00] inform our thesis, where I've talked with founders who at the extremes have actually been kicked out of their company because investors thought that they weren't prioritizing certain projects and goals enough that weren't necessarily related to the core business of the company. But the investor thought was really important or the founder said something wrong and got criticized for it and their investors didn't want to back them up and thought this revealed a divergence of values in a way they couldn't overcome. That's the worst case scenario and just bad cases. I have heard about many CEOs who have spent an inordinate amount of time talking with their boards or their investors about what their priorities are going to be. About what kind of impact they're trying to make in the world and not spent it with their product team, not spent it on sales, not spent it talking with customers.

And that's an incredible risk to starting a business because, [00:35:00] everything needs to go into thinking about product-market fit and talking with customers and working on the product to make sure that you're going to have a successful business.

Andrew Kazlow: I think one of the hardest things in my view about prioritizing any kind of impact or non directly financial objective, especially early on in a company's life, is this distraction concept. This idea of, oh, it's a distraction from the core. What's actually important? How do you address that belief or that feeling? 

How do you help entrepreneurs think about maintaining any of these, other elements, like, doing good for society in some specific way without over indexing and spending an inordinate amount of time on that, which could, in theory, distract from the core business of it. If we're not making money, if we're not generating a profit, then we can't afford to do any of these other things. Talk about that tension because I feel like that's one of the things that's hard to [00:36:00] explain and hard for the average entrepreneur and investor to think about in a concise way.

Alexander McCobin: I think there's a bit of misunderstanding about what it means to actually make an impact with a business here that is really important. And this is where the tension comes in. Too often, and even investors and management, and people in general think that, there's a difference between making a profit and making an impact and that you have to engage in trade offs between them.

That's wrong. The biggest impact a business can make is developing an incredible product or service that's making the world better and is making a profit at the same time because it creates a sustainable way to continue making that impact. impact. We need to get away from the idea that there's one part of business, which is making money and that we need to feel guilty about and then make up for by making a positive impact,

and take away from making money and instead get to a mindset of there is an integration between doing good for the world and doing well in business. And those actually do go hand in [00:37:00] hand. And that's the way I approach it when I talk with founders and others, even our LPs and explaining how we approach making an impact.

We're not going to separate those two. We're going to focus on how you integrate them together so that you're making money while making a positive impact in the world. And if there is a divergence, something's wrong.

Andrew Kazlow: So you would argue in that, in the example that I gave that if there was something that was totally different, right? Maybe give me an example. Like let's talk about some practicals here because this is I'm not a very philosophical guy. Can you get more tactical for me and give an example of what this could look like?

Alexander McCobin: So one of the companies we invested in last year is called Space Perspective. It's taking people to outer space by a balloon rather than rockets. And yes, that's more environmentally friendly. It's great to use that technology. But it's also about giving people a different perspective.

That's why it's in the name. To understand the connection between everyone in the world, the importance of the planet and so forth. And they are set up to do [00:38:00] incredibly well. Their wait list is, it has thousands of people signing up for tickets of hundreds of thousands of dollars to go up in this. And the best way for them to make that positive impact, to help more people have that perspective to by engaging in space and seeing the world from up there and thinking about the importance of the planet is to get more people to buy tickets and go up there.

There's no divergence between these things. For them to start backing off and thinking they need to do. X, Y and Z other projects to take care of the planet instead of that is the distraction not only from making money, but also from their way of making the world a better place. And that's a big part of this, perhaps that,

if we're taking metrics and objectives that are from the outside being imposed on the business, it's really easy to get distracted. And that's where, as I was saying before, I think investors can actually cause challenges for the company. [00:39:00] When the company itself is laying out its strategy for how to advance humanity to make a positive impact and develops a business model around how to do that and leans into it,

that's how you're able to synthesize these two concepts seamlessly with each other.

Andrew Kazlow: Super helpful. So I think the takeaway for me here is making sure that the impact and the product are a lot, like it is one thing. And so that it doesn't feel like a distraction. If there is something that is drawing attention away from the core business outcome, that is generating a separate impact, that could be worth cutting out because it is distracting from the core focus and instead finding ways to thoughtfully integrate everything into a single stream. That's where the greatest impact is actually going to materialize. Am I tracking?

Alexander McCobin: Bingo. You got it.

Andrew Kazlow: Beautiful, beautiful, super helpful. And again, I think that's translatable to any philosophy, any values aligned investment thesis. Like there are [00:40:00] faith forward investor communities, other key kind of value drivers for investor groups. And I think this concept of finding ways to align the product or service with the impact that is being sought. It's so, so important. So it really comes back to those early investors.

The early days are very important for cutting out the things that are a distraction and making sure that the organization is dialed in and focused on the central thing, the central mission for the business.

Alexander McCobin: 100%.

Andrew Kazlow: Alexander, any other lessons learned or thoughts for the investor community? You've learned a lot over the last couple of years. You've dove in feet first. You're rolling out of fund now. Any other lessons learned? You'd like to share?

Alexander McCobin: The other thing I've been doing that's been really helpful for me is actually keeping track of all the investments that we didn't make as well. In running a syndicate, of course, there were a number of companies that I was excited about and wanted to invest in, but wasn't able to activate enough investors to set up an SPV and get [00:41:00] behind.

And it's been both fun and also really encouraging to do that, to see which of those investments, if we had made them would have been really successful and what we can learn from that and which ones that we said no to that didn't work out to reinforce. What companies we should be investing in, in which we, we shouldn't to give an example of this. There's a company called the Enhanced Games that is creating a competitor to the Olympics that actually allows the athletes to use performance enhancing drugs to test the limits of the human body.

And you know, there are all kinds of reasons for this that a lot of drugs are already used in the olympics. It's just not admitted to and they catch people all the time. It's safer by making sure that people are working with doctors and you're tracking what people are doing. And it's about really seeing what humans can do.

We had the opportunity to invest incredibly early on and I saw this and I know the founder. He has been incredibly successful. This is such a revolutionary concept. I wanted to invest and couldn't get anyone to support it because [00:42:00] so risky. It's such a crazy idea, even just from a PR perspective. And lo and behold, three months later, Peter Thiel came in with a $30 million investment, the valuation skyrocketed from what we would have gotten in at, and I kicked myself in there off, building their first games coming up soon. And it's actually been really fun to watch that, and to track that, and think to myself, okay, what made this actually a really good investment? Why did we say no? How do I avoid making that mistake in the future? And so that would be my other recommendation to other angel investors. Don't just keep track of the ones you invest in. Keep track of the ones that you don't. So learn from that as well.

Andrew Kazlow: Yeah, I love that hard to stay organized but some important lessons there I think especially as you do that for years and years. You can look back decades and see what did and didn't materialize

Alexander McCobin: That's right.

Andrew Kazlow: Well alexander, this has been amazing. We will wrap there. Thank you so much for joining me today, and I very much look forward to our next conversation.

Alexander McCobin: Me too, Andrew. Thanks [00:43:00] for everything that you're doing. This has been great.

Andrew Kazlow: Thanks for listening to this episode of The Diligent Observer. I'm your host, Andrew, and if you're an angel investor looking for essential angel intel in five minutes every week, I think you'd enjoy my newsletter. I send my best stuff, interesting deals, and more straight to your inbox so you never miss a thing.

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