Working In Venture Capital With Clark Landry Of Hawke Ventures

Scott Kelly sits down with Clark Landry, Managing Partner at Hawke Ventures, to share how his early days in startup brought him to the vast world of venture capital. He explores their fund’s particular focus on e-commerce, AdTech, and MarTech, allowing them to support companies at their earliest stages. Clark outlines the attributes they look for in founders, from their revenue growth, team building strategies, to product-market fit. He also talks about their current limited partners and investors, as well as the role of AI tools in their venture capital approaches.

—

Watch the episode here

Listen to the podcast here

Working In Venture Capital With Clark Landry Of Hawke Ventures

Scott, I thought it was so exciting for us to have Hawke Ventures back and you got two people on.

We got both Clark and Erik. It was great to get both of them.

We’re making this a two-parter, which I love. We won’t do our closing thoughts until after the second one. We’re going to do Clark Landry first and then Erik Huberman second. You and I had the pleasure of doing a great webinar with Erik, so we thought we’d end with that one because we know him a little better. Clark Landry really surprised me. He’s young and he’s energetic and he is just got so much going on. He is a really experienced operator investor in MarTech and AdTech verticals, which I think really is a specialty of Hawke Ventures in general.

It is. They specialize in MarTech and advertising tech and Clark was in the industry, so he knows the industry well. His expertise really allows him to really not only make smart investments, but to help these companies once they make those smart investments.

I’m a little bit in the ad and MarTech industry, so like I’m my foot in them. All the names that they just name drop on their website and in other places are just really well known like Scopely and Edgecast and Adconion. These are just some names of companies that they’ve worked with and had prominent exits with. That’s just amazing.

Yeah, they’ve had a really good run building a great agency and making a lot of acquisitions in the space, but they’ve also made some really smart strategic investments. I think when we listen to Clark and Erik, you’ll realize that they proof it by it being a good product that they could put out their advertising clients.

That’s what they already have a built-in model for how to use it, which is just really great as well. Let’s hear from Clark Landry and then there won’t be a close everyone. We’ll be coming back to that on the very next episode.

I’m excited to have Clark Landry from Hawke Ventures. Clark, welcome to the show.

Thanks for having me, Scott. I really appreciate it.

Introducing Clark Landry

Clark, before we get into what you do at Hawke, and I’m really intrigued by your thesis, maybe share a little bit of background about yourself prior to starting with Hawke.

Sure. I’ve done a variety of startups over the years. Actually, I started back in 1999. I moved out to Los Angeles right after school. I was an investment banking analyst for about five months, and then got recruited to go work for an online game site called iWin.com. They made me the media buyer at iWin.com. I told them I knew nothing about media buying and they said, “Don’t worry, no one else does either, so figure it out.”

It was an amazing opportunity for me to learn a lot about AdTech back then, media buying, and just getting a fuller understanding of exactly how that world worked. iWin was eventually acquired by a company called Uproar, which was acquired by Flipside, which was part of the Vivendi rollup back in the day. While was at iWin, I helped get a company off the ground, an online advertising network called Traffic Marketplace.

I was seeing a lot of interesting arbitrage opportunities. I didn’t have a whole lot of money to go after all the opportunities that I was seeing. I went to my boss and said, ‘I hope you don’t fire me for this, but I’ve been doing some online advertising arbitrage on the side with the limited funds that I have. I’m seeing so many more opportunities than I can take advantage of with the funds that I actually have. What would you think about putting some money behind this? Let’s find a CEO and actually turn this into a real company.” He was on board with that. We ended up recruiting someone to come over as the CEO who, and is a very good friend of mine to this day, Evan Rifkin. That company also ended up getting acquired by the Vivendi as well.

Share what the advertising arbitrage is for our readers.

Sure. Back then, it was a lot easier to do than it is in these days. A lot of it back then was finding affiliate offers where you would get paid out a certain amount per conversion you were able to generate. You would go and buy advertising space generally on a CPM basis. We were getting paid on a CPA basis, so it wasn’t guaranteed that things were going to work.

More often than not, you could figure out a good matchup between a site you were buying from and the offer that was getting paid out on. You might go out there and pay and buy a bunch of impressions at a $3 CPM, whether they’re banner ads or pop of ads or what have you. Hopefully, you would generate enough sales for the affiliate offer that you would actually end up making money. More often than not, we were able to do that.

I was feeding a lot of these ideas to the CEO and the other people at the online advertising network. It actually ended up backing into being an online advertising network because we were buying so much inventory and doing so much arbitrage that we decided why not go out to other media buyers and say, look, “We have this ad network where we’re buying all this inventory. Instead of us buying it $3 and then seeing what we can do on the arbitrage side, why don’t we turn around and sell that for $5 CPMs to other media buyers?” That company grew fast and ended up getting sold and it was my first win as an entrepreneur.

All About Hawke Ventures

Congratulations. Obviously, you made the conversion from entrepreneur in the AdTech space to investing in the AdTech space. Talk a little bit more about Hawke because obviously I’ve known Erik for quite a while and yourself and they got a great model on the advertising side. They’ve really expanded what they do and not just offering services, but really investing in the space. Maybe share a bit about the thesis at Hawke and what you guys are looking for.

Sure. It’s been fantastic working with Erik and his partner Tony, who run Hawke Media and who founded Hawke Ventures, as well as working with the principal that I work with, Mara Chaben Anstett. She’s phenomenal. Yeah, so the fund was started by Erik and Tony. They were seeing a lot of interesting deals in the AdTech, MarTech and eCommerce enablement spaces and didn’t really have a vehicle to do much about it. They were doing some one-off investments here and there. They invested in Klaviyo, FabFitFun and a few others that are doing quite well.

They decided to start a fund. I’ve been managing partner of the fund for a while now. They started Fund 1 with a $5 million proof of concept fund that’s actually doing phenomenally well. They’re up about 3x on paper and biggest winner is a company called Postscript, which does SMS marketing. That company is doing just phenomenally well. We raised a second fund, a $20 million fund, to again, focus on AdTech, MarTech and eCommerce enablement companies at the pre-seed and seed stage.

Our typical check size is about $500,000 and I feel like our real secret sauce is that we sit alongside Hawke Media and that we utilize Hawke Media for several things. One is just diligence on deals. We’re always talking to people at Hawke Media about companies that we’re looking at saying, “Are these the types of products that you would want to use with your clients?” That’s invaluable to us and we really appreciate all the work that Hawke Media does in helping us out on that front.

Once we’ve invested in companies, we love to invest in companies where we can drive sales volume for our portfolio companies through Hawke Media and Hawke Media’s clients. Obviously, we only want to do that when it’s a genuine fit for Hawke Media and Hawke Media clients. More often than not, it is because we really try to find the types of companies that would be a good fit for those clients of Hawke Media.

We view that as our secret sauce and our way to add value. We add value in a variety of other ways, whether it’s helping fill out rounds for portfolio companies. We work very well with other vcs and coordinate on that front quite a bit. Yeah, we’re actively deploying out of Fund 2 right now and we’re planning on going out to raise a Fund 3 of $50 million. We’re going to start that process soon.

Hawke Ventures’ LP And Investors Profile

It’s great that you have that unique niche because the whole premise of me setting up this show was to really shed a light on the thousands of venture capital firms that aren’t the large brand names that you hear the press all the time, but are getting phenomenal returns by having a particular niche in the space. I love the fact that you use it not just for diligence, but ongoing support for these portfolio companies. Let’s talk about the LP side of the investor side. What’s the makeup of some of the investors in the current fund and what would be the profile of an investor in the next fund coming up?

Our anchor LP is Bank of California. They’ve been phenomenal to work with. They’re on our LP advisory group and we talk to them all the time. The rest of the group is mainly family offices and wealthy individuals, most of whom are in the AdTech and MarTech space. We’re able to go to our LP base and ask them questions about things when we’re looking at specific deals.

It’s great to have that backing of people in the AdTech and MarTech space that really know what they’re doing and have decided to invest in this fund. We got Jeff Green, the CEO and founder of Trade Desk, as an LP. I was an early investor in Trade Desk, so he was kind enough to come on board as an LP. We got a variety of just phenomenal investors in the fund that have been very successful in the AdTech, MarTech and eCommerce enablement space.

Obviously, you probably see a lot of deal flow, but who are you primarily partnering with or is there anyone in particular, any firms that you spend more time syndicating with?

I wouldn’t say so. It varies depending on the deal. I can’t really think off the top of my head once that we coordinate with more than others, but we’ve got a pretty broad range of groups that we will send deals to and they’ll send deals back to us when they’re looking to fill out rounds. The whole AdTech, MarTech, eCommerce enablement space as a VC, there aren’t a whole lot of us running around. We tend to know each other and we play nicely with others.

The Role Of AI In The Venture Space

Hawke has been in the AI space before it became popular in recent months and years. Talk to me how AI is playing into your thesis and your decisions for the portfolio.

I’d say that there are a lot of AI-focused companies that we’ve seen recently and I’d say it’s challenging to get through the noise because there are a lot of people doing the same thing with using AI, setting up campaigns, using AI, optimizing campaigns, using AI. I have to say I’ve probably seen 10 to 12 companies that are doing very similar things in that general space.

However, there are some interesting use cases for AI in advertising and MarTech and whatnot. I think we may make a bet in that general optimization space. We’ll see what happens there. I’d say it’s an exciting area to be looking at, but there are also a lot of companies going after a lot of different AI-related functions.

I remember my time as investment banker in the ‘90s and it seemed like everyone put dot-com on their company regardless of whether they had the internet presence. It seems that is obviously in similar case now a lot of people are putting AI as their end of their company just to play along with that. I appreciate that. Is AI playing a role in due diligence deal sourcing with your firm?

We haven’t really been utilizing it a whole lot on deal sourcing and diligence, to be quite honest. I think it’s something that we probably should be digging deeper into and being what products are out there and services that can potentially help us out on that front. To date, we have not done a whole lot in that area.

Investing In Early-Stage Companies

Outside of your focus and thesis on MarTech and AdTech, what other attributes do you look at when a company comes to you for an investment?

We really like to see companies that have product market fit. We do look at pre-seed and seed deals, so it is early stage but we like to see at least a little bit of real product market fit. We like to see paying clients. Even though it’s very early, we like to see an up and to the right revenue chart. It’s a cliché, but team is number one for us.

We have to know that it’s a world class team going after a very interesting problem space that’s big enough where if they succeed this can be a fun return for us. Those are the types of things we look at. I’d say of the group, I tend to be more focused on revenue growth even at the earlier stage. I’d say of the four team members, we tend to focus on different parts of the equation, but revenue growth is big for me.

Why Choose Hawke Ventures

A recent study and, like I said, the genesis of this show was learning that there were well over 3,200 venture capital funds out there in the marketplace. Out of all of those funds, why your fund and why now?

I’d say a couple things. One is we’ve had great success with Fund 1, Fund 2 is looking really promising and so performance is one thing to look at. I think Fund 1 has got to be a top decile fund for its vintage and we’re very confident that we’ll get there with Fund 2. We’re still deploying out of Fund 2. That’s an ongoing process.

Why us? Why now? ECommerce is growing extremely rapidly as we all know, online eCommerce, and I think we just sit in a unique position where because we have this relationship with Hawke Media, we’re able to take a company that’s already doing quite well. We really turbocharge it by getting them in front of hundreds of potential clients through Hawke Media.

The Hawke Media partnerships team has been phenomenal to work with. They’re great in terms of, again, helping us evaluate which companies they’ll be able to do this with, right. Once we invest in these companies, have them actually push those products to Hawke Media clients and really have that worked out. That worked out great with Postscript. It’s working out very well with several other companies that are in the portfolio.

Plans For Launching Fund Three

Obviously, it looks like you’re going to be launching Fund 3 soon. Anything different or expanded that you’re going to do in Fund 3 that you didn’t do in Fund 2 or 1?

I think we’ll be writing slightly bigger checks, for one. I think we’ll probably have some more funds in reserve for follow on. We don’t have a whole lot of funds in reserve for follow on right now, just given the nature of the size of the fund. We want more shots on goal and in order to do that, we’re taking funds away from what we might have for follow-ons. More follow-ons, larger initial checks, potentially leading some rounds.

We’ve led some deals in the past, but it’s not our typical MO. I think just taking the existing strategy and just ratcheting it up a bit with more money under management. Obviously, to raise that fund, we will need to get out there and get some additional institutions behind the raise. The challenge is to get to $50 million off of $250,000, $500,000 checks, though we very much appreciate all of our lps that are in for those amounts.

It’s different getting to $20 million with those types of checks versus getting to $50 million. We’ve been having conversations with some pension funds, some university endowments, just some preliminary conversations saying, “We’re probably going out in the next couple months. We wanted to let you know. We wanted to give you a little bit of a picture of what we’re planning on doing and hopefully, we can have a conversation once we’re fully in market.”

Episode Wrap-Up And Closing Words

Anything final that you want to share with the readers?

Not that I can think of. I’m extremely excited to be ad hoc ventures. It’s been a great ride so far. We’ve got access to phenomenal deal flow. We’ve done some great deals over the years since I’ve been managing partner. We’ve got a great team. Erik and Tony have been phenomenal in terms of providing us the support that we need and their feedback, which is always just great to get, while also giving Mara and myself a level of autonomy where we can go out and do what we need to do without feeling like we always have someone watching over our shoulder. That’s a real testament to Erik and Tony and their management abilities and whatnot.

Where can people learn more about Hawke Ventures and get in contact with you?

The best way to contact me is just at Clark@HawkeVentures.com. You can also go to HawkeVentures.com. There’s a list of our portfolio companies there. If anyone’s interested in the fund, please reach out to me. I’d be more than happy to do a presentation, go through our pitch deck and just tell people more about the fund and about what we’re trying to accomplish here and what we’ve accomplished to date.

Clark, thanks for being on the show. I appreciate it.

Thanks, Scott. I really appreciate it.

Important Links

• Hawke Ventures
• iWin
• Clark Landry’s Email
• Clark Landry on LinkedIn