Jake Chapman is a Co-Founder and Managing Partner of Alpha Bridge Ventures. A former attorney, he spent time at Cooley before founding a few start-ups. After one of his companies was acquired he began his transition into venture investing. Read how Jake got in touch with his “Why?” and began investing in the future that he believes in. Here’s his story!
Tell us about what you’re currently building.
Currently, I am about two years into the process of building a new venture firm called Alpha Bridge Ventures. We closed Fund One at the beginning of this year and have deployed about half of our capital. We’ve invested in 25 companies and will invest in another 20 or so before we go out and raise another fund.
Tell us about your journey from high school to now.
I grew up in Southern California, and I was rejected from almost every university I applied to. I was admitted to UC Berkeley, but I wasn’t admitted as a regular admit. I was a spring admit, so I was almost good enough to be a regular admit, but not quite. Berkeley was my number one choice anyway, so I was excited!
After my undergrad, I spent my first year of law school at the University of San Francisco School of Law because the Berkeley School of Law rejected me. I ended up transferring over to Berkeley, so I went to Berkeley twice. Even though both times Berkley didn’t really want me, I still made it in.
I graduated from law school and went to work at a law firm called Cooley Godward. It was one of the big firms in the Bay Area down in Palo Alto. I worked for a fairly small, little-known group run by Craig Dauchy called Venture Fund Formation. It was certainly not a group that any law student is thinking that they’re going to target their career towards.
I’ve always been a techie, but venture was definitely new to me. I started working there back in 2007, right before the last economic crisis, and I was there for about three years before I left in 2010. Once I started working there, I quickly realized that I loved what my clients were doing–I was spending all my time on TechCrunch reading about the companies they were investing in and learning about the venture business when I should have been spending my time doing my legal work. I wasn’t really cut out to be a lawyer, and I was much more interested in the business side of the equation. So when I left Cooley, I left knowing that I wanted to get into venture, but also knew that I probably wasn’t going to be able to go from being a lawyer to being an investor–particularly in 2010, when we were still really in the doldrums of the last down cycle.
After I left, I ended up founding a couple of companies. First, I founded a legal tech company called Plus Law. We were building tools for small firms, things like case management, finding new cases, and some other lead generation and marketing technology. That company was a massive failure. I maxed out my credit cards, and the month we decided to shut down is when we finally got our first revenue in the door. Maybe if we could have held out a few months longer, we could have built it into a real business. But the timing was just really bad: we hit the end of our personal runways and my daughter had just been born, so I had to get a real job. After I paid down my credit cards, I co-founded an advertising technology company called ProGrids. My co-founder came from the advertising world, and we were building an affiliate marketing style business, similar to product listing ads. Our technology was pretty good, and we were better than Google’s ads in a lot of ways, but it was really hard to hit critical mass. That business was a minor success and was acquired by an e-commerce conglomerate called Sazze.
After the acquisition, I came on as Sazze’s General Counsel and VP of Corporate Strategy. VP of Corporate Strategy is the most amorphous title ever. What it really meant is that I helped out with special projects, and helped them allocate internal resources. We had a bunch of projects going on internally, and you could think of me as a venture capitalist who was only making decisions based on a very small subset of projects. I ultimately convinced them to launch a corporate venture fund, which I think is what the founders of Sazze really wanted to do anyway. We launched Sazze Partners while I was there, and I ran that for a couple of years.
While I was running Sazze Partners, I invested in a company called Domuso, which was founded and invested in by Keith Wasserman, and after that, I started building a relationship with Keith and his co-founder Damian Langere. They were thinking about starting a venture fund, and they asked if I would come to Gelt and start and run a venture fund for them. I loved my time at Sazze, but it’s a corporate fund and corporate funds are very different animals than traditional venture funds. We were investing off the balance sheet, which has upsides and downsides: the upside is you don’t have to go fundraise all the time, the downside is if you have a bad quarter, and your best company wants to raise a follow-on round, you might not have the money to invest in that round. I thought it would be a good move, so I left Sazze, went to Gelt, and launched Gelt Venture Capital.
I ran Gelt VC for a couple of years, and it was a great experience. I made a bunch of investments there, including Lambda School and Fight Camp, and I think that fund is going to do incredibly well. When I was getting ready to launch Fund Two, I wasn’t really sure what I wanted to do–I wasn’t sure if I wanted to change the strategy a little bit, and wasn’t sure where I wanted to be in 10 years.
So I went on a 3-day retreat for venture investors, put on by Reboot. Over that 3-day period, I had a bunch of epiphanies. The first thing I realized is that I wanted to be running my own firm, and I wanted to be able to recruit partners. Another thing I realized is that I’ll never be the right investor for a company that I’m not personally excited about. I was investing in all sorts of companies, in basically every sector imaginable, even though a lot of those companies I just didn’t find interesting at all. I thought the businesses were interesting, but the companies were not personally exciting. You know, there’s someone out there who is excited by marketing automation software, and that’s who the company should be getting the money from, not me. I realized that what I was excited by generally fell into the category of deep tech. I grew up as a huge sci-fi fan and watched a lot of Star Trek growing up. I love the vision that Gene Roddenberry had for a world of radical abundance and equality, where there are replicators who can make things and where everyone is freed up to be an explorer in some fashion–whatever that means to them. That really resonates with me. That’s the future I want to live in. So in my role as a venture investor, I get to allocate capital to help build the future I want to live in, and that’s what I should be doing. I should only be allocating capital to help build that future. Through this realization, I really got in touch with my “Why?”
The meta-epiphany of that weekend was that these three days had totally changed the course of my life, and I felt like I’d gotten in touch with my purpose and what I should be doing. I began asking questions like, what if I did this for the founders that I invested in, but on a daily basis? What if we can always support them like this? How powerful would that be? That was the kernel that ultimately grew into being Alpha Bridge. It took another year and a half of planning (with my partner Howie Diamond) and then meeting our partner Kari who has a background in clinical psychology before we came up with what Alpha Bridge really is.
When you started Alpha Bridge, was Atlas part of the plan? (Editor’s note: For those not familiar with Atlas, it is a company of experts dedicated to holistic founder development in the areas of executive leadership, physical health, and emotional/cognitive resilience.)
When we started Alpha Bridge, we knew we were going to do something along the lines of Atlas, but we didn’t really know what it was going to be. Initially, we had actually brought in Kari as a contract-consultant to do a study for us and figure out the commonalities amongst founders–where they struggle most and where we could be the highest leverage. She interviewed more than a dozen founders, three hours each, went really deep, and put together a detailed report for us. That report was so good, that we realized that we obviously had to hire her to build this for us. Once she had done that, she had done such a great job we realized that she should just be a partner and run it. It was a long, gradual process, and Atlas has changed a lot since we first launched it. It’s very much a startup, and we’re trying to be agile. We’ve made a ton of changes since our first cohort and have learned a ton. It’s always evolving to the needs of the founders.
What did you learn about building from law school and from working as an attorney?
I think the number one thing I learned from law school–and I’m not the first person to say this–is critical reasoning. It’s a way of thinking about the world. It’s really about developing your ability to create analogies and arguments, poke holes in things, and spot issues. As an investor, all of those are skills that you use on a daily basis, and when you’re looking at a new company, all of those things come into your diligence process. For example: what are all the things that can go wrong with this business? You’re showing me this chart or metric, and how can you be manipulating the numbers to make this look better than it really is? What questions do I need to ask to get to the real story? And all of those are skills that you pick up in law school.
Then there’s the more tactical things like negotiation. You learn about BATNA, ZOPA, and all of the basics around negotiation theory, which come into play on a regular basis. Then there’s the legal side of things. One of our top expenses is legal, and that’s even with me doing a lot of our light legal work. There’s a lot of complicated stuff that I’m not qualified to do, but there’s also a lot of stuff I can do and that saves us time and money.
Tell us about your time at Vom Fass.
Vom Fass was my first angel investment. They are an oils, vinegars, and specialty spirits retailer that my wife and I ran into on my post-bar trip to Europe. We came across this little store where you can sample everything, including the alcohol, and it was a really fun experience. I thought the concept was amazing, so when I got back to the U.S. I shot an email off to the German CEO and expressed my interest in being the master franchisor if they ever considered coming to the U.S. Long story short, that didn’t go anywhere. I had too much going on in my life, and it was not a good time to start a business. However, a couple of years later, a father-son team actually did decide to bring the concept to the U.S., and the CEO remembered my email and gave it to this father-son team. They reached out and asked if I wanted to be an investor, or be involved in some fashion, and I ended up investing and taking a board seat. There was even a transition period after I left Cooley where I ran their logistics for a while.
It was an amazing experience. That company took nine years to exit. After the exit, I looked back through my emails, and every year, like clockwork, there was an existential crisis for the company. The company should have failed nine times over, but it never did. I think that’s a real testament to the CEO, Justin Gibson, and his father, David Gibson. They never gave up. There were probably 100 opportunities to give up on that company and they didn’t. The exit wasn’t huge, but it was a win for all the investors and a great learning experience.
How do you think about self-care?
Self-care is a little bit different for every person, and it’s a very personal thing. We often say that CEOs and founders “eat last.” They sacrifice themselves for their team, and often when you’re getting a business off the ground there are a lot of sacrifices. Maybe you’re paying salaries, but you’re not taking one for yourself. You’re working nights and weekends, and it’s very easy to become alienated and cut off from your friends because you’ve got too much work to do. So I think the number one thing for those folks, when it comes to self-care, is making sure you budget time to not be working. And that’s particularly hard right now when everyone’s at home. It used to be that you go to the office, and then you come home, and there’s this real physical, visceral transition. You know that’s work time, this is home time, but that doesn’t exist right now, because everyone’s at home all the time, so it’s easy to work 24/7. Making sure you budget in that transition and take some time for yourself, is the most important thing.
What does growth mean to you?
I think of growth as moving along the line, towards self-actualization. It’s trying to be the best “you” that you can be, and reaching fulfillment–whatever that is for each person. A lot of that is getting in touch with your “why?” I think “why?” is the most important question that we should all be asking ourselves. Why do what we do? Why do we feel the way we feel when other people do certain things? Just really understanding what motivates and drives you forward, and being okay with that. It’s your personal journey towards self-actualization.
How do you think about overcoming obstacles?
Obstacles are certainly a part of growth. There’s no growth without challenge. If you were born without any obstacles and you never had them, you would end up staying at a very regressed level. So when I think of overcoming obstacles, I guess I see them as a silver lining. No matter the actual outcome, there are lessons to be learned in the fight that should make you better for the next one.
What piece of advice would you give a builder?
I’m a huge proponent of Pareto optimal solutions–the 80/20 rule. It’s just a rule of thumb, but it applies in so many aspects of life and in business building. The 80/20 rule, for folks who aren’t familiar with it, is that in a lot of aspects of life, you can get 80% of the benefits for 20% of the effort, and the last 20% of the benefits will take the other 80% of the effort.
What some people don’t realize, is that the 80/20 rule is actually recursive, which means that, while there’s an 80/20 rule, there’s also a 4/64 rule. So for 4% of the effort, you can get 64% of the benefit, and that plays out continuously. That means that you can learn a ton about a subject from very little effort, and while you won’t be a master of the subject, you can really understand it on a basic level. One way to think about this is if you’ve ever gone down a Wikipedia hole and spent four or five hours reading through Wikipedia pages, cross-linking, and going back and forth, the amount you can learn in one evening is phenomenal. One page of text on a topic teaches you, I don’t know, 20% of what there is to know about that topic, and then you can spend a lifetime learning the other 80%. But again, Pareto also applies to tons of stuff that you do in your business. If I’m talking to a bunch of CEOs, and we’re talking about how to grow sales, that means finding out who are the easiest customers to acquire and the cheapest customers to acquire and stopping work on the other bucket, and just focus on those 20% of your efforts until you’ve totally tapped it out. I think you can apply Pareto infinitely to your business.
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