Andy Bromberg - Startup Investor School Day 4

There was one note that someone had that I thought was a little interesting. He pointed out that, Karl, thank you, that we haven't really talked about taxes. I can't imagine why we haven't talked about taxes.

Well, taxes are an interesting issue when you're doing angel investing. Actually, if you're new to this, you actually realize it's a pain in the butt. Because when there's an exit, it's not like a simple thing; you have to do this thing called an installment sale. Because usually there's an escrow, and you get paid. You have to figure out how to what your basis is; it's a pain in the butt. So I'm not going to talk about it.

But there's also this other thing that's worth investigating called qualified small business or section 1202, which can have an impact—significant impact. In past years, it had a huge impact on your potential tax liability. So look it up. I won't say any more than that.

Was there a question on taxes? Because I don't know anything about taxes. Oh, okay. Hi-five!

Just a quick summary of yesterday before we get going. So yesterday was our day of angelic advice. The web—whether you realize it or not—those people up here are amazing investors. So hopefully, you paid close attention to their words of wisdom. I always do. I've learned a ton from all of them.

Aloud talked about how he finds billion-dollar companies, which, you know, if the game you're into is to make money. Here, actually raise your hands if the main reason you're angel investing is to make money. I think only like two or three of you raised your hands. Raise your hands! Like none of you are here to make money. What are you doing here? Because maybe it's because you want to change the world and you care about things, which is great.

But you know, investing in billion-dollar companies gives you more fuel to do that. So it's still a good idea. And he talked a lot about how he helps companies. One of the things you hear—if you ask people, again, it is a dear very tight network. If you ask people about Aloud, they'll all tell you he's incredibly helpful. And you know why does that matter?

Well, that matters because everyone knows he's incredibly helpful. So you want him on your cap table.

Page Maan is kind of special, and if there's one thing you should take away from Page Maan, other than the fact that he is really helpful, it's that anybody can get deal flow, right? Anybody can figure out how to get deal flow. And getting deal flow matters because you have to have choice.

Jeff talked about portfolio construction and asset allocation, and I think the takeaway for me there—what I've really learned from Jeff—is that even, you know, most of us who are angel investors are not pros. We are amateurs, we're dabblers in the game. We're doing it for personal reasons. That doesn't mean you can't be professional and rigorous about how you go about doing this.

And that's the right way to do it: to be organized, to think about your portfolios, to remember that it's a long game, and to pay attention—pay attention to what goes right and wrong. He pointed out, like, you know, his portfolio construction was ex post facto, right? He looked back and said, "Oh yeah, I have a portfolio now that's awesome."

That doesn't mean you have to do it that way. Budgets matter, check size matters, sectors matter, etc. And then Andreia talked about personal brand and how much that matters. Do not ignore that. Do not think that every one of those folks isn't successful in particular because they have fantastic personal brands.

And I like to relax—whispers think like a boss. That's back to what I was saying before about being professional and thinking through how you're doing this.

And I think Ali had a little bit of a different perspective on things, which is interesting. He points out that so many of the great companies, huge companies, have been built on the backs by software founders who were software engineers. That's kind of interesting, right?

I mean, Microsoft, Facebook, Amazon, Google, Yahoo, Netflix—all of those, there's quite a bit of market cap. You add those up together, so it's something to think about. Think about...