Let’s talk about the companies Zell Capital has in its portfolio. One that jumps out is Dolr which seems to be a fintech company that is shrewdly tapping into the student debt market and another company in the Zell portfolio is Telly with a business model of providing a free 4K HDR smart TV that offers spot-on analytics to advertisers.
Will Zell: We are excited about both Dolr and Telly. They are wildly different companies but both are strong examples of our thesis. Dolr is a platform that helps people with student debt to accelerate the payoff of debt. The primary way is through a new benefit where employers can contribute up to $5,250 per year to an employee’s student debt with the same incentives of a 401k contribution, where it is tax free for the student and a tax write-off for the employer. We believe that this is a compelling benefit for employers to offer to employees, and that there will be strong demand from employees for this type of benefit. We ultimately feel that this benefit will displace other benefits and be widely adopted, and we believe in the team at Dolr and their platform to be a leader in this space. Telly is revolutionizing the television experience in the home. First, they have created a beautiful, multi-screen television with an attached soundbar and a lot of other cool tech. The primary screen is 55 inches 4k and there is a secondary screen below it that is about 12 inches tall and the same width. If you purchased this tv it would likely be around $1,500. But you don’t have to purchase it. Telly is giving it away for free!! They are able to do this because they can now place an advertisement on the bottom screen that appears more frequently than ads during commercials. This way they can meaningfully increase the ad revenue per household. By making the tv free they can have rapid distribution as well. We have had one of their beta units for a month and it is a great product! In terms of our thesis, it is a great fit. They are delivering a significantly better experience (great tech, a cool second screen with a bunch of content) at a lower cost (free!).
Are you seeing any specific trends in the VC space that excite you about how Zell Capital will grow as a fund?
Will Zell: The biggest trend in VC is not really exciting, but is one where I see opportunity. There is a major pullback in VC happening now as 2020 and 2021 were crazy in terms of the amount of money that was invested in startups and at ridiculous valuations. I am not a fan of hype cycles or momentum investing. We are seeing massive, painful corrections now, but I see that as opportunities. You will always have amazing entrepreneurs building the future and now a lot of the noise is being filtered out of the space.
Finally, what has been the main skill you have developed as an investor so far that was not as readily utilized when you were focused on starting operating companies?
Will Zell: I still do both. Building a fund and investment firm from scratch is an entrepreneurial journey. We are also trying to do things differently. I would say the greatest skill developed and used daily is empathy for the founder’s journey. I love the early stages but they are some of the most brutal and vulnerable parts of the journey. It is like being on a ship in olden times, looking to discover new land, but battling the unrelenting force of nature. The “market” is an unrelenting force of capitalism. We take a lot of time to be there for our founders, in the fight with them, as we have been there before. We know what it is like to have ships at the bottom of the ocean and to discover new lands. Having that breadth of experience is helpful in the work we do.