Timothy McLoughlin: My guest today is one entrepreneur that I’m pretty sure we didn’t misjudge Cole Johnson, CEO of the Looma project. How are you doing Cole? Well, thanks for, thanks for coming on. Why don’t we just take a minute? Why don’t you tell our guests a little bit about the Looma project and what you’re doing?

Cole Johnson: Yeah, so Looma is built on the simple belief that a growing number of consumers want to know the people and the stories behind the products. This is not a trend; it’s not going away anytime soon.  Gen Z cares, more than millennials about, you know, knowing kind of where their stuff comes from and the sort of humanity and their purchasing and supply chain transparency and things of that nature.

And so, we think it’s kind of a 50 plus year bet. And so ultimately, we believe that, this narrow, but growing niche that we would define as human centric point of decision video, will become an ultimately a multimillion, billion-dollar market. And we want to be sort of the dominant provider and distributor of those videos.

So that’s kind of our, our long-term vision. We’re starting with this first product called loop at shelf maker stories, which is a network of tablets that we install exclusively in grocery stores that play short, typically 30 second videos connecting producer to consumer. And, yeah, the hope is pretty simple.

We want, we want you as the shopper to be able to walk into your local grocery store and see the farmer that grew your spinach, and the winemaker that made your wine and the story of the local coffee roaster and things of that nature. Ultimately, we sort of feed the data we collect from loop back into our production engine.

I would just how well, you know, over time we become better at understanding what kinds of stories impact what kinds of people and how that translates into person behavior. So that’s it about Looma. 

Timothy McLoughlin: So, Cole, I can’t be the only one that has stood in a wine aisle at a grocery store and just looked around and tried to figure out where do I even start?

Which 1:00 AM I supposed to pick up? If I pick up that bottle and I too cheap? But if pick up that bottle, you know, is my wife’s going to be upset about how much I spent on that? But like, I, I just am trying to figure out what to get and your stories that you’re providing are going to help me feel that connection to maybe the wine maker and just make it a little bit quicker, a decision without embarrassing myself, something like that.

Cole Johnson: Yeah. That’s right. We tend to target categories that we consider to be sort of high consumer anxiety where you walk in and you’re like, I have no idea what wine to buy, or what, you know, I don’t know anything about seafood, that kind of thing. And so those categories tend to lend themselves to being a good fit for us.

Timothy McLoughlin: All right. we’ll Cole, thank you for helping lower my consumer anxiety, I appreciate that.  So, Cole, the reason people invest in companies and Co-founders Capital where I’m at, we led your seed round. So, we’re investors in the Looma project and we invested in you. And a lot of it has to do with the management team and their life experience and their history. So how many years had you been working in this industry before we made this investment? Maybe tell everybody a little bit about that story. 

Cole Johnson: Nice, happy to. So, I started when I was an undergrad, my goal from pretty much day, one of my freshman years at UNC was to start my own thing, in school and then pursue it after graduating.

So worked on a number of ideas, almost all of which were, were terrible, including the early iterations of Looma, and ultimately stumbled on something that we felt like potentially had some legs. So no know, industry background, I think Alec, one of our other board members has said that I’ve had to learn the industry by inferring from the people that I’m selling to, which is one of the fastest ways to be fortunate, to learn, in the industry. So very little experience. 

Timothy McLoughlin: So, to one of Cole’s points is we didn’t know anything about this industry either before we invested in Looma and one of co-founder’s ideas, principles, and how we go about diligence is talking to customers. That’s where you learn the most, you learn about the competitors you learn about the industry.

And so, talking to potential customers is what I think Cole did on the job and what we tried to do at co-founders to just immerse ourselves in that industry and try to learn as much as possible as quickly as possible. But Cole, as you know, when we decided to make this investment, or when we started down the path, we probably didn’t learn this industry and get comfortable around this investment as quick as you would have liked us to.

Can you talk about how long before we first met you and you first came into our office to pitch this idea before we actually wound up writing a check? 

Cole Johnson: I don’t know is the truth to calculate. I love like in count that number of months, I think it was, it was probably a little over two years. And in fairness, when I approached you and David the first time, I think I asked for you guys to invest and had no idea how far Looma was from being an investible entity. So, so you guys were pretty gracious and saying, no, but we’d love to sort of mentor you for, for a little while. 

I remember actually very distinctly remember the first meeting and the reason I remember it is because I left so early, I was so nervous for it, I left so early that I got in a wreck I don’t know if you remember this. I got in a wreck on my way to the meeting with you guys, somebody hit me and like her front fender, like flew off or bumper, whatever flew off.

And we like ran out in the middle of the road and like picked it up and whatever moves it over. And she got towed and I still made it to the meeting. I was like three minutes early. So that was my, I think that was my junior year, at Carolina and then yeah, you guys, it was probably honestly closer to three years.

You guys advised me for, you know, the next couple of years while I was in school. And then one year after graduating, before we ended up closing the deal. 

Timothy McLoughlin: Yeah. So, Cole looking back, you know, maybe we could have given you money a little bit sooner and, you know, accelerate it a little bit quicker, but I think everything worked out at the end.

I also specifically remember telling you a few times that we weren’t going to make this investment in your company. Do you remember that as well? 

Cole Johnson: Yeah. I remember those very, very well. 

Timothy McLoughlin: Yeah. So again, now that everybody can hear us talking, I’d like to go back and apologize for all those things I said to you, because now we’ve invested, but maybe I told you it was maybe I was, so I was a, what are you dumb like a fox, right?  I told you exactly what you needed to hear. I’ll go with that route. 

Cole Johnson: Yeah. We can go with that route. No, honestly, I think there’s a lot of truth to that. I mean, we were not, Looma was not an investable entity the first like five times I asked you guys asked us to invest and not even sure it was an investible entity when you actually ended up writing the check, like we’d gotten there today.

Yeah, I mean, it was very early and I was very grateful that you guys consistently just said. No, you never said, look, we’re not going to write, you know, we’ll never write a check. You just said, Cole, look here are the next three things we think you need to do. Go ahead and do those. And we’ll meet again next quarter and we’ll give you the next three things that you need to do. 

And I think it was finally I about given up I’d think I’d stop asking you guys to write a check.  And of course, it was then that David I think called one day and said Cole, you know, we’ve consistently told you what to do when you’ve gone out and done it. And we kind of like when our entrepreneurs do what we tell them to do, so I think we might write a check. 

Timothy McLoughlin: And we’re certainly glad we did, but that was the conversation David and I had, which is this entrepreneur has done everything we asked him to do. So, at some point I think he should be rewarded and we were going to be rewarded in the long run.

So, Cole I’ll skip ahead a few years and you just raised another series A round of financing and things are going well. You’ve raised several million dollars at this point. I think the company’s doing great, but you’ve raised money from angels. You raised money from venture capital funds.

You raised money from members of angel groups.  So, you’ve gone through several diligence processes with different types of entities or individuals. What’s been a real frustrating part of the diligence process as an entrepreneur?  What have investors asked you or done that you know, grinds your gears a little bit?

Cole Johnson: You know, I should be candid in saying that I haven’t been through that many and they’ve both been, so I’ve been through two raises and they’ve both been pretty non-standard. So, the most recent raise was with a local angel group that we didn’t really have to end up, you know, sort of shopping the deal and they were excited, based on the pretty much the first meeting, and so it was a bit of a unique experience. And then obviously you guys were a very unique experience in that I was, you know, still very young and sort of figuring out what it took to get something off the ground and also didn’t shop that deal.

So, I should caveat my response by saying that both were a little bit anomalous. I think in the first diligence process, it probably was just the length, and, you know, I told you at the time I felt like it was, it was dragging and I felt like the goalposts were shifting a little bit mid process. We also had, I mean, you remember, we had some very anomalous events happen. Like we had to get legal approval by the ABC to operate in the state of Carolina, and that took a few months. There were some anomalies for sure, but I think that one, you know, probably drag a little bit, 

I think in the most recent raise, honestly, it was fairly smooth. I think it was smoother than, you know, raises often can be, I think there is a list of questions that I got pretty frequently that I felt like weren’t great questions. It’s kind of the same three or four questions, you know, but you know, you learn to address them and, and move quickly into sort of the meatier questions.

Timothy McLoughlin: Yeah. I think we, we all do that. I think there’s like a go-to set of investor questions, which maybe don’t always apply, in certain cases, depending on what the stage of the company is or what industry they’re in, but Cole, you were able to raise money during a global pandemic. Not a lot of people were able to do that. I think you closed your round just a few months ago in the middle of COVID. Anything interesting come out of that, any specific challenges that you faced? 

Cole Johnson: Yeah, certainly. I mean, so we put the rays on, so we were initially planning to raise in January, and I think we had set a close date of April 15th.

And so, we pressed pause, I don’t know, I guess it was end of March. So, it, you know, the raise had some fits and starts. So that was, you know, it was painful. But I mean, honestly Tim, we got really lucky that the short- and medium-term impacts of the pandemic have been neutral to a little bit negative.

And we think that the long-term impacts are almost all work in our favor, and we’re sort of just beginning as you know, we’re just beginning to see that the fruit of that born out. And so, I think we have lots to be grateful for. 

Timothy McLoughlin: Yeah, I actually believe you, when you say that the long-term effects are going to be beneficial to you, however, you won’t be shocked to hear that every single company that pitches to us since tends to tell us that COVID is a really, really great thing for their business in the long run.

So, but I believe you Cole I’ve worked long enough with you to, to believe you. Talk to me about your investor relationships. Not just co-founders it can be co-founders but other ones, when do you find engaging with your investors, and in what way do you engage with your investors, that is particularly helpful?

Cole Johnson: My answer to this question will change dramatically 12 months from now, because up until this most recent raise, we had a very small group of investors. Think we had four people on the cap table. And we now have, you know, through raising through angel groups, I think we have north of 75 or something.

So, the dynamics of investor relations are in the midst of changing pretty dramatically. I think we’re moving in the direction of like one of the benefits of having a fuller cap table it’s just the network that comes with it. So, like, you know, to be able to put out investor update that I put out a few weeks ago and say, hey, here are the three introductions.

Like here’s the three people we’re trying to get to within this organization. Can anybody give me an introduction? And I have like eight people respond and say, yeah, I can help you with that. That’s been really valuable and I’m excited to see how that again, how that unfolds over the course of the next few months.

But yeah, I think to date it’s been really nice to have such a small group of folks that were really dedicated to Looma’s success for a long time. And so, it’s just a lot of conversations as you know, with you and David and Alec and maybe one or two others. 

Timothy McLoughlin:  Looking back, what questions did you ask potential investors that you were happy about? Or what questions do you wish you had asked, before you had taken on an investor’s money? I think often entrepreneurs forget that they’re allowed to ask questions of investors as well. 

Cole Johnson: One question I’ve asked, not everybody, but a decent number of potential investors, that may be a little bit unique is, are you going, like, how will you respond if we go to zero?

And it’s really important to me that we don’t, we never take capital from anybody that’s like look, Cole if this thing goes to zero, I’m not going to be able to like preserve the relationship. And I think that’s true of some people, and it’s not even necessarily like I’m not the critique those people, they are just, there are investors that have a hard time preserving the relationship if the investment goes south and that it’s never worth it to me, that anybody in our cap table that has that mentality.

And so, I think there are, I just have the conversation with a friend of mine recently that invested in and just said, hey look, I would love to have you on board, and I think that can I add a lot of value, but I want to make sure that you recognize that there’s a lot of risks. There will be a lot of risks for a long time.

And this thing could still get to zero and I need you to be, you know, our friendship. It’s not worth our friendship getting in the way that, so that’s one of the more unique questions that I’ve asked them that I think led to some valuable conversations and just a different sort of relationship than maybe we would have had with a few of my investors and I would have had, if I had not asked it.

And then trying to think of the questions that I’ve, I should have asked, but did not. You know, I don’t have any like investor horror stories yet. I hope I say, yeah, and hopefully I never do. So, it’s not like, oh, here are the three times that things really went poorly and I should have been able to sniff it out ahead of time. So, I don’t know. I’ll think a little longer, maybe, maybe ask me again in a couple years. 

Timothy McLoughlin: It’s interesting to hear that feedback from entrepreneurs because you know, investors have their list of questions where sometimes the answer isn’t as important as the reaction, the initial reaction. For example, let’s say this company is doing well or not doing well, and the right thing for the business, 12, 24, 36 months from now is to bring in a new CEO and replace you in the company. That’s not a question that we look for, what is exactly word for word the answer that comes out, but more the initial reaction tells a lot more because it’s easy to know that the answer is whatever’s best for the business, but how it’s said. Is a lot more important? 

So, Cole looking back, any startup is a grind, you were young, you were kind of starry-eyed, you know, you came out and you’re like, I’m going to take the world over with this new business. What’s been the hardest part, you know, over the last few years that you didn’t know it was going to be as hard as it is? 

Cole Johnson: I’m still young and starry-eyed, and don’t realize how hard this, this is. Oh, my goodness. I mean, the answer is just like, it’s just how hard it is. Like that is itself the answer. I mean, just the extraordinary amount of resilience that it takes, and maybe this is a little bit less true when you do have a little bit more experienced in like, you know, you’re coming to the, into the company with a better network.

You’re usually going to be with a better network and a better sense of what the product needs to be and what the market’s looking for and things of that nature. But yeah, I suspect it’s kind of always really freaking hard, but it’s just, it’s the number of times that, you have to be able to get punched in the face and like go home and mope and whatever, and then get up the next morning and be like, all right. 

You know, we’re going to solve this and you get up and you sort of, you know, build some energy and plot out a course, whatever. And then you just get punched in the face again. And it’s the ability to get up that like second and third and fourth time that I’m not sure if I would’ve known, you know, going into this, how many times we’d get punched in the face. If I would have like said yes to it. 

So, I think that, that the answer to the question is just, I didn’t realize the hardest part is how hard it is. I didn’t realize just how difficult it could be. And I should add that it’s also a ton of fun and it’s really rewarding, and even if Looma failed tomorrow, it would be like, I would be so grateful for everything that, you know, it’s provided and all the relationships I’ve built. And so like, I don’t want to, you know, make it out to be too grim, but it’s really hard 

Timothy McLoughlin: Cole, one of the things that you’re super thoughtful about is building a team and a culture in your organization. What challenges do you think that’s had?  What benefits do you think that’s had? And how do you make sure your investors and everybody are aligned with what you’re trying to build at Looma? 

Cole Johnson: So, for us, I mean, it, it very much starts with mission alignment and that’s true of both recruiting, employees and potential investors. Like we don’t want investors that are only interested in the financial outcome. We want investors that are excited by the potential that Looma has to, what we consider to be sort of redeeming the consumption narrative and even bridging the gap between producer and consumer, and even to some extent, sort of promoting meaningful work, which is a really core part of what we do is we want to capture and share stories of people that just really love what they do.

And it happens. It just so happens that that’s really strongly correlated with sales performance, which is a beautiful thing in itself. But anyways, so I think it starts with, you know, it starts with strong mission alignment.  I can talk through some of the things that we look for when we’re recruiting a lot of it comes down to like our top few characteristics. We’re looking for humility and wisdom, and integrity and emotional intelligence and grit and joyfulness and fun. Those are sort of our core characteristics they’re looking for.

And then there’s also a number of other things like, we’re really big believers in just like sort of what we consider to be pursuing truth, which is like a comfort level around rejecting hypothesis. That turned out to be false. Like every startup is initially a single hypothesis and then you build sort of a set of hypotheses around it, and it’s really easy to go out and just sort of try to prove that hypothesis at all costs. And it takes a lot of humility and diligence to recognize that you’re going to be wrong sometimes. And so anyways, that’s something that we look for pretty closely. And then there’s another part of your question that I’m forgetting? What was it?

Timothy McLoughlin: I was asking maybe some of the, some of the challenges around…

Cole Johnson: Yeah. Nice. So, you know, candidly Tim, it’s all, you know this very well. It’s been about hiring time for us, like we’ve been really diligent with the culture we’re building and who we’re bringing into the team. And, you know, fortunately we’re at about 15 full-time employees we’re now. So, we’re fortunately at a stage where, we can take a few more risks and we can move a little bit faster and, and we need to move faster in this upcoming season.

But we really went slow on those first 10 hires. And I mean, you’re smiling because you know that there times you sort of, you said Cole, you need to pull the darn trigger. And so anyway, so that’s, that’s been challenging and even right now, we just had a conversation earlier this morning at a leadership meeting around them. Like, what does it take to basically cut our hiring time in half? Cause that’s what we think needs to happen in the next kind of six to nine months. 

Timothy McLoughlin: I think for the audience that’s listening to this, it’s important to know that investors talk to each other and before investors, you know, invest in your last round, they call me and say, hey, what, what’s it been like working with Cole?

What are the strengths and weaknesses? And this is something I can say to you openly, because it’s something that we’ve talked about before, which is part of the entrepreneur investor relationship, which is, you know, one thing I think they need to do is move faster, hire faster. But I always caveat that with the, but.

When Cole does pull the trigger, it’s very thoughtful.  There’s been a lot of time spent behind it and it normally works out. So, I think all of that is true. 

Cole Johnson: Tim, talk to us about investing at, you know, the earliest stages. Like what was that conversation with you and David like around, we want to invest in somebody that doesn’t have grocery experience or that started this in college. 

Timothy McLoughlin: Right? So, it’s a fair question, Cole, I’ll let you get a question in on me. I think, I think that’s only fair since I’m peppering you right now. Well Co-founders Capital a couple things, one we’re used to invest in pre-revenue so that wasn’t new to us. We are used to investing in first-time founders so that wasn’t new to us either. However, investing in somebody right out of school, not that it was completely new, but it’s pretty rare in the venture industry.

I do think though, there’s something to be said about working with somebody for two to three years and getting to know their character, their ability to execute. They’re not entrenched on an idea and not willing to move off of that idea. If the data they’re getting back from the market is, is different than what the original idea was. 

And then there’s something to be said about activity. You need an entrepreneur that is willing to have a ton of activity and know that it’s going to fail a lot of times, but that activity is going to help them, you know, do the right thing a few times and move the company forward. And I think working with you Cole for those years let us know that you had the activity level, you weren’t entrenched on any ideas, you were extremely coachable, and so that made it a little bit easier to write that check and have that discussion with David.

And then the last part is just talking to customers in the market, right? Customers in the market were begging for a solution like this, a solution that you could provide. This was a real pain point. And so, they know their industry better than I’m ever going to know it, and better probably better than you might ever know it, right. Cause they’ve lived a whole career in it. So, when they tell us that this is a solution that they need and we listen. Right? 

Timothy McLoughlin: So, Cole we’re talking to our audiences, folks that are thinking about investing and what they’re going to hear more than any other word in any pitch is the word conservative. When folks come in and they talk about their financial model, that financial model is always conservative projections. Yet you, despite all of the 27 investments that we made, you were one of the only entrepreneurs that hit, relatively hit, their financial projections out of the gate, maybe a slight delay, but pretty much we’ll say that you, you hit those. Why do you think, what did you do differently than other than other entrepreneurs that come in and pitch?

Cole Johnson: So, I think part of it is my instinct is to be pretty conservative. I’m a really big fan of under promising and over delivering and, that’s pretty core to our success. Like we train all of our new employees, like, look, if you’re going to tell a client or get something on Friday, that means you should be expecting to get it to them on Thursday.

So, I think it’s just sort of core to how I operate. And I think there are a few mentors, including you and David that have sort of trained that into me from pretty early on. 

Timothy McLoughlin: Cole. What if you want to be conservative in your financial model, but you also want to get investors excited about the opportunity, how does an entrepreneur balance those two things when they’re pitching? 

Cole Johnson: Yeah. Gosh, I don’t, I mean, I don’t have a great answer. You have to have a big enough tam. Maybe you cut out the medium term a little bit and just focus on the short-term and the long-term you say okay, in the next six to 12 months, here’s what we think we can accomplish. And you try to be really conservative with that because you want to come back at six-month mark and say, hey, we’re, you know, at schedule or ahead of schedule, so that’s the short term and then in the long-term I think you want to focus on, like, let’s just talk about the Tam and explain.

So, for, in our case, like I said at the beginning, we think human centric, point-of-decision video will become a multi-billion-dollar opportunity over the course of the next few years, we don’t have anybody that’s putting any sort of discipline or rigor into understanding the science behind it, and we think we can win.

We think we can be the dominant both provider and distributor of that space, and you know, I can talk more about why we believe that, but it’s kind of like, hey, here’s the direction we’re rowing the boat in and where we think we can ultimately get to, here’s what the next six to 12 months look like. I’ll give you my three to five years but they’re probably going to be wrong, and so I’m going to put a whole bunch of asterisks next to them. Hopefully that’s somewhat helpful 

Timothy McLoughlin: No that I think that’s a great answer. All right Cole are you ready? Here’s the hypothetical you’re ready? All right. So Looma’s wildly successful. It exits for just a ton of money. All your investors are happy and you got to, you know, a big bunch of money coming into your bank account, so you’re going to start angel investing. You got a $100K check in your hand. You get to meet with 10 startup companies. You have to invest the a $100K check into one of them, but you only get to ask those companies. One question. What question are you asking him? 

Cole Johnson: Yeah, nice.  I should inform the audience that I was informed of this question and it ahead of time. So, I spent my morning shower thinking about it. I was 10 minutes late to work and still have a good answer to the question. So, I think it depends on the stage. So I’m going to answer it as if it’s, you know, it’s someone similar to where I was, you know, when I was pitching you guys a few years ago, so super kind of pre-seed and probably first time or, you know, not, not super experienced founders, , You know, I think,  and it’s because I think the question, you know, as we get closer to series A, I could ask, it’s going to be a lot more around product/market fit, but in the earlier days, I think it’s going to be about something we’ve already talked about, which is just resilience.

I know it’s a little bit cliche, but like, I want to know that these guys can get punched in the face and get back up a few times. And so, I think the question I would ask is, I don’t know if I’d actually ask this question, but I want to ask, like what’s your backup plan? And I think there’s two ways to sort of strike out on the answer.

One is the obvious one is like, oh, you know, I’m going to go back to like, I’m going to go back to McKinsey or whatever. And it’s like, okay, you know, whatever these guys have a clear out, that’s just, it’s, it’s almost too easy. And I think when there is a really easy out, it’s just, it’s really, really dangerous. So that’s the sort of the obvious way to answer it wrong 

The maybe less obvious way is that, I do think the other end of the spectrum is a little bit dangerous too, which is there are a lot of founders that are like, I cannot fail. I will not fail like this. It’s impossible for me to fail. There could be a few drivers of it.

Sometimes, like the most dangerous driver is just ignorance, like a failure to realize that there’s actually a lot of luck involved in this. Like, we’ve talked about the pandemic and we had some competitors get, you know, really, really negatively impacted by the pandemic, the way that we were not. And so, anyway, that’s, I think there’s, you know, that’s one element to answering it too strongly and the like, this is impossible for me to fail. 

But then the other is that there can be an intensity that’s a little bit too strong. That’s almost like some people have told me that there’s almost like I have to go out for vengeance. Like I refuse to give up in a way that’s a little bit dangerous. And so, I think the answer that I’d be looking for is sort of this humble recognition that like, there’s a lot of, it’s really difficult to predict what’s going to happen, and there’s a lot of randomness to this, but that there is some, I would be looking for some intensity in the eyes. It’s like, I’m not going to give up and I’m going to give it my darn best effort. 

All right. Well Cole. Listen. I know you’re an entrepreneur, so I’m sure you got another meeting coming in about two minutes right after this. So run in, crush that meeting, but thank you so much for stopping by dropping some knowledge on us. So, it was great seeing you and I’ll see you at the next board meeting. 

Cole Johnson: Indeed. Thanks Tim.