Importance Of Business Execution With Paul Anthony Claxton Of Digerati Investments

Digerati Investments has achieved tremendous wins in the venture capital space by focusing on one single approach: execute, execute, execute. Scott Kelly sits down with their Managing General Partner Paul Anthony Claxton to discuss the importance of proper business execution to achieve the right level of sales. He explains why founders should prioritize customer acquisition over product ideas, particularly among AI-focused venture firms and early-stage technology companies. Paul also discusses how he applies his military background in his VC career and why he is more excited about what happens behind the scenes of AI instead of the automation itself.

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Importance Of Business Execution With Paul Anthony Claxton Of Digerati Investments

One thing I’ve learned over the course of doing these shows over the last several months is that the venture capital majority has a lot of different paths. Our interview was with Paul Anthony Claxton of Digerati Investments. He started out as a Marine, with ten years of service and four tours in Iraq. He shared his transition, which you will learn from this interview, from military intelligence to tech roles to venture capital. His firm, Digerati, focuses on early stage AI native companies that drive significant impact by changing how we live, work, and do business.

Claxton emphasizes the importance of an operator mindset in assessing founders, prioritizing execution and customer acquisition over product ideas alone. He also highlighted the firm’s unique approach to due diligence using his proprietary engine called ScaleCurves, which focuses on the company’s current state rather than just future projections. We are going to get some great insights from a non-traditional path to venture capital from Paul Anthony Claxton. Give it a listen. We will be back with some feedback.

I am glad to have Paul Anthony Claxton of Digerati Investments. Paul, welcome to the show.

Scott, thank you for having me. I’m glad to be here.

Paul’s Journey From Marines To Venture Capital

Paul, before we get to the fund, why don’t you share a bit about your professional background prior to launching the fund?

I was a US Marine for ten years, four tours in Iraq, starting with the invasion of Iraq. Traditional infantryman, gun slugger, whatever you want to call it. Towards the end of my career, I fulfilled some collateral duties where I actually ran the Command and Intelligence Center. NASA war room type look, TVs, computers all over the place. I ran that over roughly 120, 30,000 square mile area of operations with 5,200 personnel reporting to me and five lieutenant colonels.

I reported to a couple of generals in the Pentagon. I did that for a while. I left the Marine Corps in 2010. I continued my plight in tech. The start of my tech was in that command center war room where we were beginning to deploy battlefield tech, what I would call cutting-edge battlefield technologies like drones, IED robotics, etc. I continued that. I did project management and marketing. I led IT divisions for a larger Fortune 500 company.

I got to dabble in quite a few things in about six and a half short years in corporate. Let us take a different direction here. You see how I do as an entrepreneur. I have been bootstrapping companies for about ten years now, products, etc. We are working primarily and solely in my area of expertise, which is AI robotics operations and scaling early-stage initiatives. I was actually referred to a VC firm some years ago. I got into supporting them.

I got into the investment space. I have cut my teeth in this space. I have war stories on the prevailing side. Also on the attrition side as well. I have cut my teeth in the space. I have Digerati Investments, which is a really early-stage VC firm focusing on impact investing. AI native companies are building products. The way I surmise impact is, does it change the way that we do business, live, and work?

If it does that, we probably have something to talk about. Series C and Series A, which are our focus outside of venture capital. I am a thought leader, an emerging thought leader within my space. I have my own AI podcasts. I lead some chapter initiatives for an AI collective organization in San Diego. I do a lot more within the field of AI. I will pause there. That is a little bit about me.

How AI And Robotics Impact Digerati Investments

Thanks for that. Thank you for your service. As you mentioned, you understand the battles of war, figuratively and literally. I appreciate that. Let us expand a little bit more on the fund. Talk about where you see AI and robotics impacting your decisions on how you pick founders, how you pick companies, and how you invest.

Ultimately, I look at how AI impacts my decisions. Number one, due diligence. As a VC, if you are not incorporating AI in the aspect, hopefully every aspect of your due diligence, you are shortchanging yourself. You are shortchanging your LPs and your founders. If you are not doing that, then you are not differentiating yourself. The way that I would do that is that every VC firm is unique. I would incorporate some proprietary process into your thesis in terms of how you conduct due diligence and how you invest. We have certainly done that.

I have got my own product. I call it ScaleCurves. It is a due diligence engine for us to see what the companies are doing well, what they are not doing so well. What are the blind spots? This is an industry that is largely built on future state projections. It is important to know where we could go. What we could be. What is more important is what we are now? What are we actually now? Where are we actually at right now? The only way that we can know that is by focusing on what we are doing well and what we are not doing so well. Eliminating as many blind spots as possible.

Paul’s Execute, Execute, Execute Approach In Investing

How does your military background experience play into how you assess founders that you are going to invest in?

I bring an operator mindset. What that means is execute. Mark Cuban says tongue in cheek, I do not know if this is word-for-word, but essentially he says, “If you have sales, you do not have anything.” At the end of the day, sales are king. You have to have the numbers to back up what you are talking about here. At the end of the day, are we executing towards the goal?

We can be great if we are building a product here. It can be a great product. If we are not getting it in front of customers in the right people, it does not matter. We need to get that product in front of people for it to even matter. That is number one. Also, people. What is the character of the people? Business is war. VC is the front line of the battlefield, in my opinion. I want to know who I am working with.

With that being said, we have a saying in the Marine Corps called, “We train how we fight.” I have to have every bit of confidence that the people I am working with are going to have my back when we are stuff get shaky. When things do not go as planned, do we shake and crumple, or do we band together? I need to have confidence. I need to have confidence that people are going to follow through. They have loyalty to the cause. Those ethos are very much Marine Corps-inspired. They translate well into VC.

Finding Excitement In The Picks And Shovels Of AI

In your background in the VCs space, any success stories you want to share, any companies that you have invested in that you are excited about currently, or potential trends or things you are looking at right now as potential investments?

I would say right now, in terms of trends and types of companies that I look at, what I am really excited about is, quite frankly, what I feel the majority of people do not get excited about. It is not what social media advertises. It is not what you hear in the tabloids. What you hear a lot about in the tabloids are the user-centric AI products and services. That does not really excite me too much.

I am more excited about the picks and shovels, the things that are behind the scenes that make AI even possible. That fascinates me. When you are putting a prompt in ChatGPT, do you know how much ingenuity and engineering, and resources have to go into it for you to even be able to do that one prompt? I want to see the technologies and the products that are making that more efficient and sustainable.

Things that are reducing the AI power drag on our environment. The AI pollution epidemic. The labor epidemic where people are, we have got sweatshops basically out in mining facilities across the world that are making AI possible, but they are also suffering the repercussions, the negative side effects. This does not get talked about. It is the ugly face of AI. I want to do things.

I want to work with companies that are making that better. I really care. AI is not going anywhere. AI is not going anywhere. It is the origin of the automobile when we had Teslas. They were putting out an enormous amount of pollution into their environment. They were inefficient. They broke down all the time. Look at how far we have come from the Model T4. Now we have Teslas. We have evolved a long way.

I want to bring the evolutions to the industry because just like vehicles that go anywhere, and they never said we have not, we never moved from the horse and buggy, but we did. AI is not going anywhere. It is important to me that, as a leader in this space, I am not just in this space to invest and make money and grow companies and make money for our LPs, but I am in this to do that, and I am also in it to do it the right way in a way that sustainably evolves AI.

Investing In High-Net Worth Individuals, Family Offices, And Banks

Let us talk about the makeup of your LPs. Not necessarily by names, but who are they investing in your fund currently? Who are you investing alongside?

High net worth individuals, family offices, and banks. That is primarily where our focus has been. There is a strategy behind that because we look for the solidarity, I would say, that the institutional capital banks can provide. We also look for patient capital in the vision that a high net worth, super high net worth, or family investor can provide as well. That vision that says, “Look, this is a legacy for our family. This is a legacy for our name. We want to put our name behind something that truly matters. We want to be a part of that.” That is the type of capital that I like to go after. I like to work with, yes.

Why Choose Digerati Investments Right Now

For potential investors, LPs, and others listening in, why your fund, why now?

Why our fund, why now? That is a great question. I do not think there is any right answer to that. The right answer may be the wrong answer for someone versus someone else. In terms of me, why our fund? It starts with me. I am the founder. I am the GP. Where I have come from, I come from an unorthodox environment. I do not bring your average story to the table. If you are to ask me, “Why am I here?”

We talk about some of the things that I have been through. I mentioned before, I have war stories. The VC is not built to be friendly. All the successful VCs and the billionaires out there did not get to be billionaires and successful VCs because people are nice to them. What I am saying is that money is not friendly. VC is an industry that is built to break even like the most resilient minds. I have pushed through that.

When you talk about like, why me, why here, or why me? Why now? It is because I have been through both the corporate war room. Also, like, “I am a Marine. I bring a different mic to the table.” I am the person who went to Harvard. Even though I went to Harvard, I did not go to Harvard and then get a Morgan Stanley job.

I have a very unusual trajectory in the VC. I really bring a different approach to it. I focus on creative finance within the regulatory confines of the industry. What we can do to improve some things in VC. A lot of people think VC is broken. I do not believe that. I just believe it is shifting right now. For example, I know a day or a C, for example. We have had conversations about the Safe note. Can we do something better than the Safe now?

Can we bring something into the market? I am working on things to do that. I have got an instrument I created called the reloadable note, which I am working on with a lawyer right now to fine-tune. Hopefully, we can get some people using my reloadable note. Maybe it will become a standard. Maybe it does not, but these are things that I do. These are some things that you might not see a lot of VCs doing.

Always Remain Cognizant In The VC Industry

Any final thoughts or things you want to share with our listeners?

The main thing is that I think when it comes to the current state of the VC industry, do not be oblivious, but remain cognizant of the environment of yesterday, today, and what the future potentially holds. You do not understand that VC is an aspect of the finance industry, but this industry is more about relationships than it is finance.

Just understand that, be careful about listening to the rhetoric of the VC industry. It is a pure lot broken. The industry is just at a major shift right now. It is going through some stage in its life where it is shifting from a middle-aged person to a senior person. It is important to realise that and realise what it means from an LP perspective as well. How the industry has performed over the last several years.

Why is that performance causing some mindset shifting? Getting into the mind of an LP,  and why do they need a VC? You see more LPs maybe doing direct deals, etc. Now as a VC is a general partner, how do you navigate that? How do you respond to that? That is important. Not sticking with necessarily the old, because that is how it has been done before, but realising this is how it has been done before. The industry is struggling. Let me see how I can maybe do something different that is timely and relevant. That is important to keep in mind.

Get In Touch With Paul And Digerati Investments

Where can our audience learn more about your Digeradi investments and get in contact with you?

The best way to get in contact with me is via Paul Anthony Claxton, LinkedIn. I am the only VC with that name. My personal CV site is PaulClaxton.io.

Everyone, I encourage you to like, comment, and share my interview with Paul. Paul, thanks for being on the show.

Thank you for having me.

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Welcome back. It was really interesting to see Paul from Digerati. He uses the things that he learned in the military to apply to how he invests and the founders that he invests with. He has some great takeaways. Digerati seeks visionary capital, high net worth individuals, family offices, and banks as LPs who value long-term vision and legacy over quick returns. He has a user-centric approach with AI. The firm is more excited about the picks and shovels of the technology that make AI more efficient, sustainable, and addressable with environmental labour changes.

There is an evolving landscape, which we have talked about before. Paul agrees with that. There are shifting ways to innovate. Reloadable opportunities to build a financial model that has not been around in the past. The thing I really enjoyed about the interview was how he approached the founders he invests with. He is a big believer in execution. He stresses the importance of demonstrating sales and getting products in front of customers.

A great product idea is not enough without effective execution. Something I could not agree with more. Obviously, as a Marine and as a member of the military, character and loyalty matter. He wants founders who show strong character, resilience, and loyalty, especially when facing challenges. As the VC space is likened to a battlefield, and I could not agree more, it takes a certain type of person to become a founder. It takes a certain type of person to invest in those founders.

At the end of the day, the same thing I have mentioned many times in my conversations, the same applies here with Paul. Relationships are key. Finance is a big part of VC. Building strong relationships and understanding the mindset of investors is crucial. We had some great takeaways from a non-traditional path to venture capital with Paul from Digerati.

We have got some more great entrepreneurial-type investors and financial-type investors, specific investors from the US, from Europe, the different industries, and different stages. We have got a lot more coming on the show. I encourage you to like this show, comment, and share with fellow investors and fellow entrepreneurs. We will see you soon on the show.

Important Links

• Paul Anthony Claxton
• Paul Anthony Claxton on LinkedIn
• Paul Anthony Claxton on X
• Digerati Investments