These ad execs have a venture fund they’d like to sell you

Mike Duda comes from the world of advertisIndex.html" target="_blank">Ing. Index.html" target="_blank">In fact, he spent 13 years at the renowned ad agency Deutsch, becomIndex.html" target="_blank">Ing the youngest partner Index.html" target="_blank">In the company’s history until another creative, Brent Vartan, came along and stole the title. Little wonder that Index.html" target="_blank">In 2010, when Duda struck out on his own to create Bullish (formerly known as Consigliere Brand Capital), he stole Vartan, later makIndex.html" target="_blank">Ing him the firm’s second managIndex.html" target="_blank">Ing partner.

It isn’t that the two wanted to outgun their former employer exactly. Index.html" target="_blank">Instead, the idea from the outset was to create an ad agency that also happens to be an Index.html" target="_blank">Investment firm. Index.html" target="_blank">In a way, they stole a page from many Silicon Valley service firms that, begIndex.html" target="_blank">InnIndex.html" target="_blank">Ing Index.html" target="_blank">In the go-go dot com era of twenty years ago, worked for pay and, when the right opportunities arose, for equity.

It’s turned out to be a pretty good approach. Bullish, which is based Index.html" target="_blank">In New York and works on a pay-for-performance compensation model, has managed to sneak checks Index.html" target="_blank">Into some of the biggest consumer new brands out there, Index.html" target="_blank">IncludIndex.html" target="_blank">Ing Warby Parker and Peloton and Harry’s and Casper, companies that have happily agreed to Index.html" target="_blank">Include Bullish as a syndicate partner Index.html" target="_blank">IncludIndex.html" target="_blank">Ing because of its advertisIndex.html" target="_blank">Ing know-how.

Index.html" target="_blank">In the meantime, to keep the lights on as those privately held companies have contIndex.html" target="_blank">Inued to operate privately, Bullish has also managed to land more traditional big-league clients, Index.html" target="_blank">IncludIndex.html" target="_blank">Ing Anheuser-Busch, Pepsi, Nike and Walmart. It also counted GNC as a client and reportedly turned heads when it dropped it Index.html" target="_blank">In order to Index.html" target="_blank">Invest $250,000 Index.html" target="_blank">In the three-and-a-half-year-old vitamIndex.html" target="_blank">In supplement startup Care/of.

With Bullish now contemplatIndex.html" target="_blank">Ing fund two, we decided to sit down with Duda last week to learn more about how the whole thIndex.html" target="_blank">Ings operates, and where he and Vartan are shoppIndex.html" target="_blank">Ing now.

TC: You’d spent your career Index.html" target="_blank">In advertisIndex.html" target="_blank">Ing. What circles were you travelIndex.html" target="_blank">Ing Index.html" target="_blank">In that you were also seeIndex.html" target="_blank">Ing seed-stage startups — good ones — Index.html" target="_blank">In need of fundIndex.html" target="_blank">Ing?

MD: It was through outlier circles. Like, Index.html" target="_blank">Interactive">Peloton struggled to raise money, so it got104 angels to Index.html" target="_blank">Invest, Index.html" target="_blank">IncludIndex.html" target="_blank">Ing high-net worths, and us, who looked Index.html" target="_blank">Institutional, though I laugh at that now. [Founder and CEO John Foley] didn’t know how to play the VC game. He’d been the president of Barnes Noble and he had this idea that people thought was crazy. He had a PPM for his fundraise — he didn’t have the [traditional] ten-page PowerPoIndex.html" target="_blank">Int. So a lot of people Index.html" target="_blank">In New York passed, and those same people now fundIndex.html" target="_blank">Ing the Mirrors of the world and Tonals of the world.

It was a similar situation with Birchbox. It trouble raisIndex.html" target="_blank">Ing money because its founders are women, and most of the guys they were talkIndex.html" target="_blank">Ing to were like, ‘Well, my wife would get bored of this after a couple of months.’ But the target audience doesn’t have a seven-car garage Index.html" target="_blank">In Palo Alto. It’s a mom of two Index.html" target="_blank">In Cleveland who subscribes to the New Yorker.

On the agency side, we worked on Revlon for two years, so we get that a consumer doesn’t have to be like just someone we know. It isn’t, ‘Oh, it’s a product for women; let me ask my wife.’ We actually do focus groups to [fIndex.html" target="_blank">Ind] consumer Index.html" target="_blank">Insights.

TC: So the pitch is that it isn’t just money you’re brIndex.html" target="_blank">IngIndex.html" target="_blank">Ing but a full marketIndex.html" target="_blank">Ing group, too.

MD: A marketIndex.html" target="_blank">Ing group with people from places like Deloitte and A.T. Kearney and Goldman Sachs and RBC who try to understand what’s really goIndex.html" target="_blank">Ing on among the says 330 million Americans out there – – not just Index.html" target="_blank">In New York, San Francisco, L.A. or Boston, which are the hotbeds for consumer Index.html" target="_blank">Investment Index.html" target="_blank">In VC. We look at stuff that could be disruptive for the normals, which is sometimes unsexy stuff like a stationary bike with a TV.

TC: A $3,000 stationary bike is for normal people?

MD: There were 1.6 million stationary bikes beIndex.html" target="_blank">Ing sold Index.html" target="_blank">In the U.S. every year [when Foley first began pitchIndex.html" target="_blank">Ing Index.html" target="_blank">Investors]. Harry’s takIndex.html" target="_blank">Ing on Gillette before Dollar Shave Club came along [is another example]. The jeans I’m wearIndex.html" target="_blank">Ing are from a company called Revtown Index.html" target="_blank">In Pittsburgh, Pennsylvania, founded by Henry Stafford, who was the North American president of Under Amour and [previously worked for both] American Eagle and Gap. So this was a first-time entrepreneur who had corporate experience was paranoid about raisIndex.html" target="_blank">Ing too much money and promisIndex.html" target="_blank">Ing Index.html" target="_blank">Investors too much too soon. And we’re attracted to entrepreneurs who don’t want to raise tons of capital before they build a profitable busIndex.html" target="_blank">Iness.

That’s not the case with all of our Index.html" target="_blank">Investments, obviously. Casper and Peloton have both raised a fair amount of money, but their growth kIndex.html" target="_blank">Ind of followed suit.

TC: Why jeans?

MD: I thIndex.html" target="_blank">Ink [Stafford[ was kIndex.html" target="_blank">Ind of ticked off and wonderIndex.html" target="_blank">Ing why do people have to choose from either the Gap or a $200 pair of jeans. He wanted to build a great pair of jeans that sell for under $100 and that he can sell through great advertisIndex.html" target="_blank">Ing. The pair I’m wearIndex.html" target="_blank">Ing right now is $75 and it’s a great pair of jeans. Not that I have the ability to stretch, but if I could put my foot over my head without them on, I could do it with them on, too, because they’re stretchy and durable and well-made. Also, from an operations from busIndex.html" target="_blank">Iness standpoIndex.html" target="_blank">Int, this is an adult who has built up busIndex.html" target="_blank">Inesses before and brIndex.html" target="_blank">Ings that sensibility so that we can get the scale right. Though a direct-to-consumer brand, it’s not too precious to go Index.html" target="_blank">Into physical retail earlier, either.

TC: Most direct-to-consumer brands are showIndex.html" target="_blank">Ing up Index.html" target="_blank">In the offlIndex.html" target="_blank">Ine world faster. 

MD: DTC 2.0 is defIndex.html" target="_blank">Initely goIndex.html" target="_blank">Ing to be more about goIndex.html" target="_blank">Ing where your customers are. When Harry’s went Index.html" target="_blank">Into Target, it was a genius move, because there are people Index.html" target="_blank">In Overland Park, Kansas who may not see its digital banners, but they’re Index.html" target="_blank">In a Target, and they’re like, ‘That’s new, that’s Index.html" target="_blank">InterestIndex.html" target="_blank">Ing.’ So it’s another form of marketIndex.html" target="_blank">Ing.

TC: What about social media? All the platforms are already saturated. Who’s doIndex.html" target="_blank">Ing really novel thIndex.html" target="_blank">Ings out there, Index.html" target="_blank">In your view?

MD: I’ll maybe start with the stuff that just annoys us. First, I thIndex.html" target="_blank">Ink a lot of VCs and other people Index.html" target="_blank">Involved with early-stage companies thIndex.html" target="_blank">Ink marketIndex.html" target="_blank">Ing is a customer acquisition cost and it’s not. If you have to rely on Facebook and Google, you’ll never grow because your [costs] never go down.

When we thIndex.html" target="_blank">Ink of DTC companies, we’re lookIndex.html" target="_blank">Ing for is, what can you do that gets talk value, not just at your Index.html" target="_blank">Initial PR launch but that [produces] advocates Index.html" target="_blank">In a kIndex.html" target="_blank">Ind of flywheel talkIndex.html" target="_blank">Ing about you. People do talk about this stuff. People like to be the one to discover somethIndex.html" target="_blank">Ing before anyone else and like to talk about it.

TC: What about TV spend? I’m always astonished to see fairly new brands spendIndex.html" target="_blank">Ing what I’d guess is a lot of money on television ads.

MD: With digital marketIndex.html" target="_blank">Ing, the accountability is not there as much as people thought. And that’s why about a year ago, you started see the [men’s wellness company] Hims start spendIndex.html" target="_blank">Ing $6 million or $7 million a month on TV advertisIndex.html" target="_blank">Ing durIndex.html" target="_blank">Ing March Madness. Was that a flawed strategy? No. TV works. That’s why you see companies that reach a certaIndex.html" target="_blank">In size go to TV; it’s like some sort of validation that this a real company. TV is a storefront for companies that may not have one.

TC: I do wonder how these brands, many of which are great, deal with fickle customers. There are some old brands that I will always love — Patagonia, Hermes – – but a lot of newer brands that I love but I will throw over Index.html" target="_blank">In two seconds for a newer, shIndex.html" target="_blank">Inier brand when it also has a compellIndex.html" target="_blank">Ing product.

MD: It’s more like someone is probably not servIndex.html" target="_blank">Ing you well enough. They’re lettIndex.html" target="_blank">Ing you forget about them. Is it Amazon’s fault that RadioShack and JC Penny are goIndex.html" target="_blank">Ing out busIndex.html" target="_blank">Iness? Probably not. They weren’t servIndex.html" target="_blank">Ing the customer. If you build a relationship with your consumer rather than advertisIndex.html" target="_blank">Ing to her, you have a much better chance of keepIndex.html" target="_blank">Ing that person as a customer longer term. Patagonia makes great stuff, but so do other people. It’s that the company’s values are bigger than the product itself [that keeps people comIndex.html" target="_blank">Ing back].

TC: You’re goIndex.html" target="_blank">Ing to start raisIndex.html" target="_blank">Ing a fund later this year. How it will it be different than what you put together the first time around?

MD: We undershot our proposition the first time around. BeIndex.html" target="_blank">Ing an executive at an ad agency, I wanted to be more conservative rather than sell the dream and not achieve it. It was actually harder to raise $10 million than what I was told it would have been if I’d been raisIndex.html" target="_blank">Ing $25 million or $30 million. But we wanted to show proof of concept. Now, a lot of people have left the seed and pre-seed area as Index.html" target="_blank">Investors have raised bigger funds and we see a great opportunity, Index.html" target="_blank">In a world where there is literally trillions of dollars Index.html" target="_blank">In play, to get Index.html" target="_blank">In as early as possible, then play pro rata defense [to maIndex.html" target="_blank">IntaIndex.html" target="_blank">In our stake]. And Index.html" target="_blank">In our case, we’ll probably offer up later rounds to the [limited partners] who support us.

TC: A lot of seed and pre-seed deal flow comes to Index.html" target="_blank">Investors from Series A Index.html" target="_blank">Investors. Which are those firms Index.html" target="_blank">In your universe?

MD: By and far, the most helpful firm to us was First Round Capital. Without their time, we wouldn’t be where we are.

I’m datIndex.html" target="_blank">Ing myself, but back Index.html" target="_blank">In 2009, they did office hours. They were commercializIndex.html" target="_blank">Ing this angel VC Index.html" target="_blank">InvestIndex.html" target="_blank">Ing thIndex.html" target="_blank">Ing. And I went to one of their office hours and [firm founder] Josh [Koppelman] spent 10 mIndex.html" target="_blank">Inutes with me and gave me his card and it was like a ‘Dumb and Dumber’ moment. I called my wife, and I was like, ‘He’s sayIndex.html" target="_blank">Ing I have a chance!’ Then I flew to San Francisco to do another office hours . . .

TC: You flew cross country expressly for another of these office hours?

MD: Yes. And 78 people showed up. And it was like the land of broken toys. There were older gentlemen Index.html" target="_blank">In three-piece suits, and a 19-year-old guy who showed up with a Rock’em Sock’em Robot and people who flew Index.html" target="_blank">In from San Diego and Portland. And they just gave every one 10 mIndex.html" target="_blank">Inutes and I was like, ‘Here’s our proposition. It’s a marketIndex.html" target="_blank">Ing agency with a fund.’

And 75 of of the 78 people got 10 mIndex.html" target="_blank">Inutes, and two got 30 mIndex.html" target="_blank">Inutes, and one of them — me — got an hour and a half with Chris Fralic and Kent Goldman, who were kIndex.html" target="_blank">Ind enough to spend time with someone who kIndex.html" target="_blank">Ind of wanted to do what they do Index.html" target="_blank">In a different way. Really, they’re the ones who gave me the confidence that this could work.

Photo above, left to right: Mike Duda, Brent Vartan. Courtesy of Mike Duda.