For this week’s episode I chatted with Hal Callais, Managing Partner and CIO of Callais Capital. Callais Capital is a southern Louisiana based alternative asset management firm that invests in tech companies in the South and Mississippi River Delta region.
Hal is from a multi-generational family of entrepreneurs in Louisiana. He is very connected to the geography of the region and has been playing a crucial role in New Orleans’ blossoming startup and innovation scene.
I thought this was a really interesting conversation, a way to see into a nascent ecosystem and get a sense of what it is like in the earlier days of an entrepreneurial boom. We talk about everything from tech and innovation in New Orleans to the evolution of this ecosystem post Hurricane Katrina. Enjoy.
MPD:All right. Welcome Hal. How you doing? All right. Thanks for being here. All right, so let's dive in. I think it's good to baseline the conversation. Would you give everyone listening an overview of Kelly capital? So they have a little sense of what you guys do and what.
Hal Callais: absolutely. So, uh, Kelly capital, we are a an alternative asset manager. We, uh, we specialize and really focus our attention around young companies, typically in the seed series a series B kind of categories and you know, we're investing um, programmatically and. I've been doing so for about I guess seven years, eight years now.
MPD: That's great. Now. And you guys are based just outside new Orleans, or it is the office in new Orleans. How are you guys structured?
Hal Callais: Yeah. Um, yeah, so we are technically, we're based in a town called Tibideau there's an actually the answer have fun spelling it if you're not from here. And, uh, you and you know, but we only have three of our team here.
And, uh, you myself being one of them, we're about an hour outside of. My brother and mark are based in the Wallace. They kind of work you know, out of their house. They, kind of, uh, Mark's got his office in uptown, new Orleans and, it's, uh, spend a lot of time.
MPD: Okay, perfect.
So let's talk about your investing. What's the typical investment profile? What type of companies are you looking for?
Hal Callais: Sure. Uh, yeah, so we We view the world as a generalist, right? So we like to look at companies based on metrics and fit within a market. Generally the companies we're investing in are growing pretty quickly have a concept and a lot of the groundwork put into place and laid out.
So those, I may not be producing revenue. We'll consider them based on contracts in the pipeline validity of this model. If it's a space we're really passionate about it, we know a lot about, and we have really. But generally it's a lot of the companies are software mobile tech enabled services.
We do some e-commerce, we've done some CPG Yeah. And kind of everything between you know, I guess, you I, I really like software. I really like software as a service, um, you know, and you know, we do a lot of direct consumer, but we do a lot of enterprise as well. Just kind a blend, you Julie based on the opportunity, the market segment, the market sector and and kind uh, the overall profile of the company and how it's selling into.
MPD: geographically you're focused locally to you, right? So it's new Orleans.
Hal Callais: So we're focused really a way we describe it as the perpendicular lines of and and the Mississippi river. So think kind central us and Gulf coast primarily, we'll go up to Georgia, the Carolinas on occasion.
You know, but really our bread and butter and knitting is the core of the Mississippi river Delta, kind of the whole watershed.
MPD: And it is most of are most of your deals in that area or, what's the concept like, are there cities that you find yourself in other than new Orleans?
Hal Callais: Yeah. So yes we do. Yeah. So, speaking about like Louisiana and it sounds distinct, startup ecosystem, kind of thought process, is, uh, you uh, is that you there's certain bespoke, like hubs, where there's a little clustering of deals. So it's almost you know, you think about San Francisco in New York and there's like cluster of like segments of the single.
Yeah, it was how it fits together and just Louisiana and a microcosm. You know, we find the same thing happens in Mississippi. Same thing happens in Alabama for, uh, parts of Texas and all these territories where this clustering around the big cities you know, Louisiana just, Kind of going back to that example is that, we've got, we've done a bunch of deals out in new Orleans.
We don't want in Lafayette. I've, I've done a deal in in Alabama. I don't think I've done any Mississippi yet. We there's a couple that we're talking to that we're pretty excited about. And, uh, there's a few more in burdening Alabama, Birmingham and Movil areas are interesting. You know, Alabama has got its own whole market really well developed in the staff.
Same thing goes with parts of Houston and in Austin, you know, that's the San Antonio as well, we're looking at those markets as well. We view a lot of those more collaborative markets, whereas like we view ourselves and same thing with Missouri and working with some of the funds there and you know, but we view ourselves as more of a lead in primary in some of our home markets, that's kind the stuff that we need to lead and really.
You know, spent a lot of time cultivating relationships and building uh, Got
MPD: it. And you're typically leading if it's local.
Hal Callais: That's right. That's right. Yes. And we find that a lot of funds that we work with really like that, because typically we're the small guy, we'd like to think we punch above our weight class.
Um, you know, we we worked really well with a lot of other funds and, we, we take a market approach, we're members of NBC. And and so we work with a lot of groups that are part of NBCA and that vibe or follow a lot of those documents and structures and all that stuff. So we tend to try and be as middle of the fairway and market as we can you know, to, number one, make sure that the deal is fair for all parties.
And, uh, you number two is that it's, financeable whether, by additional capital that's syndicated in the round or it's my future rounds of funding, right? We don't have anything walkie going on. That's gonna prevent someone else from funding.
MPD: Every VC has got a sales pitch that they give to entrepreneurs.
Obviously, when they're raising money, they got a sales pitch. When they give to entrepreneurs to meet them, they're talking about why entrepreneurs should pick them. What's the, a Kelly capital pitch. Why should entrepreneurs work with you
Hal Callais: No. I mean, our, our approach is really in our pitch to the founders that, we've, we've got a lot of experience and a lot of a pretty wide network, um, you know, between myself and my partners, we've all spent a good bit of time, really cultivating, developing relationships that, uh, that really span across our markets.
It span across time and, and I have a benefit of, growing up as part of a. Entrepreneurial family and, uh, really focusing in on you know, what it takes and what's required of that and the entrepreneurial journey, which is, it's a hard journey, our view is that, like I, I tell my founders this all the time.
I'm not your ideal. Like, you don't want me being CEO of your business. That's not my skillset. I'm not good at that. What we are good at is we're good at financing. We're good at putting together deals. We're good at working through deals. We're good at setting companies up for exit and it or strategic follow on, or a lot of other cold strategic transactions, making sure that nothing weird is going on, making sure that everybody's being taken care of.
I also tell our founders that my goal is for them to make a whole lot more money than me and eventually become my investors and other fonts. And
MPD: you mentioned the firm comes from a long family line of entrepreneurs. Would you tell the story of
Hal Callais: that? Sure. So, I guess technically speaking, I'm fourth generation.
My great grandfather was part of the I guess a cohort of shrimpers and trappers you know, in Southern Louisiana and. You know, whenever they discovered oil, he had a boat and the old company said, Hey, we have no idea how to get these supplies or people to these boats because the marshes are terrible.
We can't bring people from outside the area and. And you know, an entire industry was born from that. And my great-grandfather being one of the early pioneers and having you know, basically wrapping and creating business and incorporating it in the 1950s. And then, my group, my grandfather was a serial entrepreneur.
He's still, he went to a person whose family to go to college and leave. And he graduated math and electrical engineer. Started a cable TV business that it was crazy kind of turned out well you know, and then, having a business that cashflow in good times and bad. You know, allowed him to invest in redeploy the capital into other industries, ended up getting into the garbage business buying and, uh, buying a couple of different banks.
We've had four different commercial banks over the years. We had a car dealership that didn't go super awesome, um, you know, we had electronic stores, same thing. Didn't do super awesome. But you tried. And you know, but on the whole, we've been lucky more often than not. And so I grew up, uh, uh, spending a lot of time with my dad laid hours of the office and going to the cable company and, tinkering with electronics and playing with stuff.
And, it was kind a great experience seeing what it takes and understanding that, um, and, uh, I was just put into a fortunate position where I was able to to really execute and focus on what I wanted to do and, and I love this word.
MPD: That's great. Is the cable Brent brand still around?
Hal Callais: It's been purchased twice since then. So yeah, so the, of all those businesses, we have one bank that's left. If you will, everything else we mentioned, what's the bank. It's not super based. It's called a United community bank. So 500 million in assets, so like not teeny tiny, but not we were actually a bigger presence in Baton Rouge and we doing the wall.
MPD: Okay. Right on. Very cool. Okay. And so how did you come from all of that? I can see the entrepreneurial thread but tech venture capital to the different beat. And you're in it. So what was the, what was the transition for you?
Hal Callais: Yeah um, you know, it's funny, you don't know what you want to do until, what you want to do. And, uh, and for me you know, so I worked at the bank. I started working in the bank on. Through college and you know, I was always you know, I was the guy that put in the back room and say, go do math.
You know, they wouldn't let me talk to people. And he goes, it's for the best is mutually. Uh, and so I, so we, uh, Yeah. So really, w we were selling our boat company you know, the energy services business in 2013. You know, great timing. We're very lucky. We sold it, that October, October, 2013 you know, the oil crashed in November.
Uh, pretty, pretty. And so we were very lucky and you know, and so at that time, we had an liquidity event. I was having liquidity for the first time in my life. And you know, and I was working at the bank and, uh, I was also soft talking to a couple of different groups that were trying to recruit.
You know, one couple, you they wanted me to move to San Francisco. One wanted me to move to a Atlanta when we moved to um, to new Orleans. And then another one wanted me to build a practice you know, in my market, you know, the buyer region cause I guess when we call it and so, uh, she knows, we've uh, so I guess I was just ah, you know, I've got.
I know I invest my own money. I know that I don't like a lot of these financial advisors. Yeah. They, they have a time, they have a place and they have a reason for being, and I get that, it says a very respectable job, that's, it's not you know, I'm not a big picture alligator, I'm gonna get my hands in the weeds analyst and work through stuff, and I spent a lot of time with the bank on automation projects and trying to be innovative from within.
And you know, and, you always hit a ceiling, right? It's just a heavily compliance-driven industry. It's much more like utility business or anything else. And it just wasn't as super exciting for me, um, even not, not, I was on path to be the CEO, but it just, it wasn't what I really wanted to do.
And you know, some of these opportunities were lawyering and and so I thought it was interesting as I went on a couple of interviews talking, just kind understanding what was happening. Ultimately, I was like you know, taking a step back here, right? I want to, what I learned or what I discovered was I want to own my own business.
I want to have some amount of discretionary authority over the capital that I'm investing. And I want to leverage my own capital with the capital of others, at the very least initially will be other family members. And I feel. I should be paid for that service. You know, of course, you give good deals cause family, you just want to make sure my, that my, my older it's covered.
I'm not trying to kill anybody. I'm more for the capital gains and for the experience and for establishing track record and positioning. And so, um, so that's how we start, and, uh, I pitched my brother and my dad and I said, Hey, I'd like for you guys to do this with me let's form a general partner.
And let's raise a series of mean partnership vehicles and and kind see what happens, pursue some strategies and be opportunistic and invest our money, raise money from the family. They can pick and choose what they want to do, no pressure, all that kind of stuff. And, and it's kind work and that's, you know, and so over time, right?
Initially we started off doing some real estate. We started doing some lending. We started doing all these different things that were like really close to my original. Classical education, if you will. Right, right. But like the, the interesting thing here, or what I think is interesting.
But it's my story. So everything's interesting for me. Um, is that, There was really not a lot of alternative investment companies here. There's not like I can count on one, maybe one and a half hands. How many, how many firms there are in Louisiana that are doing some form of alternative investment and you know, that ranges from hedge funds, private equity funds, and a couple of micro VCs.
And, uh, and you know, there was a lot of self-esteem. Doing this job partnership structure made a lot of sense. I was able to check the boxes for all the things I was looking for. But I like, what is a fun, how do you run a funded business? You know, just never saw it and never, ever interacted with it came across it.
And so I had to do a little bit of call it scrappy, figuring it out. And you know, I spent the first you know, six to nine months or so I was cold calling service providers and I was saying, Hey. I'm starting to find a picture of your business. And, they would pitch me their business and fund admins or accountants or law firms to some extent.
And I would write down the terms. I didn't know what they meant and I Google them and that would take me down the Google rabbit hole. When I learned the business from the ground up. And you know, and so that's a, that's how I learned the fun kind of business. But really going from there, transitioning over to like why tech?
So kind of, maybe the answer to some of the question of like how I got to a fund business, but then getting to one text. Over the course of those iterative funds, right? There's interative SPV vehicles and testing strategies. I started doing tech and I started realizing very quickly.
Now I love this stuff. I feel like I was bred for this, but I mean, just similar as the other thing, I didn't have a lot of experience.
MPD: And when you say doing tech, you just, you're seeing tech deals. Started getting interested in,
Hal Callais: yeah, that's right. And started doing a cop you know, getting hosed on him, doing things right.
And things poorly and were like, why the hell? Why did I lose money on this? I, I followed this checklist that I found online. I learned all this stuff. Yeah. What did I do wrong? And, uh, so I gotta, it's not necessarily that I did anything wrong. It's that I just didn't understand, the business as I do today, which is completely night and day.
Another thing too, is that it's not enough to just read books and understand what the market is, or what pontificators out there with with microphones are saying, Hey, Venture funds do this. We take bets on only people and that's all that managed revenue. Doesn't matter. This doesn't matter, it's like, it's a, but localizing kind of some of the marriage of how does, how do the fundamentals of traditional venture work versus a localized market like ours, where there's not a lot of exposure.
There's not a lot of education. And there's a handful of groups that seemingly own all of the mouthpieces in the market. And so, you so really it was this hard learning period that I had to have and figuring out, just how to make this work. And uh, ultimately I ended up meeting one of my partners today.
He he was representing a company that we were investing in and we hit it off. He was a boy and you know, and we hit it off. And then all of a sudden we just started looking at all a bunch of stuff together. He had, he had spent about three years or four years or something that Wilson some scene and you know, in Palo Alto, And I moved back home to build a practice focused around startups and Louisiana and waltz.
And, um, and so since then, he's done like 500 venture deals represent a lot of people in those same market coverage, so becoming an expert himself. And um, you know, and so his pairing with mine, my experience, his experience, and then my brother. Also playing a big role in helping us get all of these things in place.
It really led to the cultivation and development of this of the strategy that we're executing on today. Which is a very, well-defined very specific and focused strategy around the elements I mentioned earlier, so how do we get there? It's kind a long story.
I'm taking a path to have this podcast.
MPD: That's great. How many years did it take you to go from a to Z on that? To, from a morphous to,
Hal Callais: yeah. So I realized that investing as a family group had a lot of inherent disadvantages versus investing as a fund such as, so this that's a whole nother topic unto itself, right?
So if you most, most of the time, the families and family offices that are doing investing, that I've seen that I've worked with, that I've come across, wait for a lot of inbound deal flow. And what I've seen is that a lot of times. The inbound deal flow. Isn't always the highest quality.
And and, and a lot of times that deal flow you know, it's just, it's different. Um, also the companies that a family or looking to invest in, in fond, aren't always established in the tried and true venture way. So sometimes they may have a little weird terms on, sometimes they may have this or that.
And so it's not always. The most hosts, you finding them fundable by somebody else, right? Because they've been advised by their uncle who runs an accounting shop and. I was trying to help try as best to help him, but he just doesn't know the market. You know, and you know, it just that the deal channels for family offices are inherently different unless, you're somebody like one of the, some of these families that are really substantial, big names that.
Teams of people, they do it really well. But they run it like a venture fund inside their own shop. But that's a whole nother lift. So I'd say that most of you there's so many family offices out there and a lot of them just, it's just a lot of inconsistency. And you know, whenever I was going and I was talking to the company, you're looking at a deal, you know, just, I was always just thinking okay, well, if it's a good deal, I'm gonna try and do it and I'm gonna do my due diligence.
And whereas if you're fond, you're focusing and you're thinking a different differently. You don't have the time specialize in it as a family, unless you're doing a very specialized family or office oriented strategy. And you know, there are, there's give and take pros and cons, right? Like a family office by definition should be extremely fast.
And so therefore they should be much more nimble and should be able to deploy capital like that. As long as you're looking at the right things. And you're getting to the, answering all the questions because you have. A very, uh, defined decision maker group. Um, but, uh, as a foreign, it's different.
And what I've also found is that a lot of companies you know, like I'm pretty sure there's are all the companies that we funded and our fund have, all of them. Been looking for a venture fund to fund them. They were not looking for a family office to fund. Whereas I've seen other startups that loop for family offices to fund them.
And so everybody plays a different role in the market. I'm not trying to knock one side or the other family office versus this or that. Yeah. It's everybody kind of plays in the market. Increasingly family offices are being more and more. And they're trying to do more and more in-house and avoid the fee load of working with the venture fund.
But they're the ones that really do that well in my experience are very few and far between, and most of the time they have dedicated staff does. I'm sorry. That was like super long winded. I keep trying to hedge myself and stuff,
MPD: but it's great. Let's take the, I got the point on that one.
Let's jump over to new Orleans. Cause I think there's a super interesting conversation. I know I'm narrowing a little bit. The scope of the geography. You're really servicing and talking about new Orleans, but it's ugly. It's the closest hub fair to say. When we talk about niche venture markets on a national scale, the stuff tech crunch is focusing on and all the other great tech rags out there.
You're talking about Miami and Austin, new Orleans, small. I looked it up before the call 2010 census 300 less than 350,000 folks.
Hal Callais: You combine Lafayette and like the I'm sorry, the new Orleans greater new Orleans region. I think. Okay.
MPD: I was going to ask you if there was a broader MSA there
Hal Callais: that's right.
But if you look just within the city, it's, 350 say anything about Rouge, just like Baton Rouge has got a good slate of people. There's actually been talks to, I don't know. It was just here in conversations about people saying, oh, we should combine new Orleans and Baton Rouge and a single MSA, because then we'll get bigger numbers.
And it's like, why don't you focus on bottom up economic growth rushes me.
MPD: Okay but not a huge population overall, relative to on a city level. Not small, but more medium. And not everyone's going to be in tech. How large is the tech ecosystem? What's you know, how do you measure and think about what's going on down there in terms of scale?
Hal Callais: No, that's right. So there's, it's not huge. There's a lot of aspiring people and there's a lot of people adjacent to it. There's been a couple of wins within the. And you know, and S there's been, there's been a couple of wins within the state, a couple within new Orleans that are pretty advanced tourist squidge is sold for 75 million after I forget how old they are.
They had been around for a number of years. You know, and then I think lucid, loosens gotten pretty big as a bunch of employees. And I think a level-set has raised all the way through a series C you know, they're more traditional. And either formally zeroing and then there's a, and then RESILIA is drawn very fast and it's one of our portfolio companies in our current fund.
And, uh, you I think they're on a good track. But, you know, I think but as far as the tech ecosystem goes, it's not super big. You're right. And so that's, that's a lot of you know, it has a lot of very high culture elements to it that a lot of. I mean, you all just want to, like one of the most notorious, very culturally driven cities, um, you know, in new Orleans used to be a big energy hub as well. A lot of the energy from there left for Houston as soon as, Texas had basically no income tax and and so a lot of, you know, Texas engineered their entire economic system around being very favorable. Energy production attraction.
You know, new Orleans lost a lot of the dome assault businesses out there. Louisiana, we have one fortune 500 company and it's energy and, uh, introduce, utility company, um, but yeah. There's a number of companies as a number of like nonprofit initiatives.
And we just try and talk about new Orleans and sound, so, um, you there's a handful of these, they run accelerator programs, someone incubators, some do all these different things, but for the vast majority of them, they're all like non-profit organizations. Which is, you know, in my view, I'd like to see more for-profit incubators accelerators.
I think that would. To drive and write the sentence. Right. Now a lot of these groups are chasing over each other for, uh, for fundraising to exist, and it's tough. That's a hard model run while at the same time, trying to support entrepreneurs and early stage companies, um, really the initial tech boom, if you will, that we had in worlds was what a lot of people attribute to post-Katrina revitalization, right?
Suppose hurricane Katrina, there was a huge. A lot of damage and then a lot of stuff started getting fixed. So you started bouncing back and coming back and you know, and on the deal end of that, cost of living was very low high cultural epicenter, and, uh, and so it became this magnet for a lot of people, and they had a couple of handful of tech companies were starting up around the time. That was like right around the time my partner mark came back from Silicon valley, started doing his legal practice and. And you know, it's this interesting, you know, Nexus was formed, right.
All of the state level economic development programs are localized in Baton Rouge, and some of them have state mandates, but most of the time they really focused around the Baton Rouge area. So I always just got its own thing going on, the time to LSU. New Orleans ties into two lane a lot.
You know, and you know, the Lafayette, it has its own new thing going on. It's funny you realize that I didn't, but uh, university of Louisiana, Lafayette has the second oldest computer science program in the country. Yeah, the oldest one was MIT.
MPD: Oh, interesting. And are they pumping out a lot of engineers or is it okay?
Interesting. Where are those folks going? Are they staying in the area when they graduate? Are they getting post?
Hal Callais: Yeah. Uh, so there's a couple of big companies that have done these economic development deals in Lafayette, but they don't get nearly as much publicity as you see in the world. I think CRI has one uh, you know, there's just a couple of gaming companies like EA and some of those have a have like spots and Baton Rouge.
Uh, IBM to, but then, in Lafayette it's it's a lot of engineering, but people don't always stay there, um, you know, waiters summed up a ton of them. You know, waiter was acquired by a spec. You a couple of years ago, they've been beaten down in the public equity market. I think I don't understand why I think they're doing pretty well.
But you know, there's a food delivery company. But you know, they were based there and they had they have. At one point they like 2000 employees.
MPD: How, let me jump in here for a second. So you mentioned earlier that a lot of energy company, a lot of the energy business move to Texas when they changed their tax laws,
when that bounced out, what sectors have been predominant when you're looking at investing, are there strands? Is it e-commerce, is there still energy stuff happening? What's common day.
Hal Callais: Yeah. So it's interesting. You asked that if you were to ask certain people in certain circles in some of these you know, call it cause economic development non-profit groups, they would gravitate towards, they'd say energy.
Manufacturing you know, some chemistry and then, and then food and beverage are kind big staples, um, I would say that, me personally, my, my thing is I, I think we've still, haven't quite found a niche yet. We still haven't quite, we haven't broke. We haven't broken out of the energy emphasis.
Louisiana is still tied to a lot of it. Uh, as far as GDP goes, as far as job creation, a lot of it revolves around manufacturing and manufacturing related to energy. It's like, God forbid we do anything outside of energy. You know, and and that's, that's one of the things that I preach.
I get very preachy about you know, so forgive me. Know I think that what I'm doing and what people like me are trying to do within the state and finding ways to diversify our economy and finding ways to invest in support new emerging businesses and helping cultivate a local startup because system is the best, most efficient way to really drive future economic growth and really drive.
Yeah, I really attract people in for our values of culture and for a lot of the outdoorsy things that we have to do. The only thing that all the time, so the best thing we can do is probably legalize pot. And then you know, then we have legalize pot, we have lots of outdoors activities and and so party city with lots of deep culture and low costs of living.
I mean, it's it's like the missing part of the trifecta or whatever, Yeah, it's a it's kind goes in there. But, you know, I think yeah, I'm sorry.
MPD: What are, what is the state doing and the local community doing to attract and develop the startup community? I did a little research before this.
I bumped onto new Orleans tech.com and one of the things they referenced was some tax incentives. What are the tax incentives for people listening, who are thinking about wait, we're post COVID remote work. Maybe I'll hole up in new Orleans and build my business down. What do they have to look forward to?
Hal Callais: Yeah, so there's a handful of really nice tax incentive programs, um, you know, I, before, before I talk about it and I say the danger of that from an investor perspective is to just consider that like tax incentives don't make a bad deal. They make good deals better. That's the only thing to say.
And that's, that's how I view it. And that's how my partners view it. It's like, Hey, we get some awesome, that's not why we're invested but in essence, um, what you can get. So angel investor tax credit was it kind of one of the big ones. I think you can get 25% of your investment cost back in taxes and tax.
So if you put a million dollars in a company, you'll get $250,000 in tax credits, the qualifications and all that, all the government stuff you know, and and then you then they have the technology commercialization taxes. You know, where basically if you're using a state-based research institution and you're commercializing some innovation into, or you're bringing it into commerce and there's some incentives related to some of the research and then there's a digital media tax credits, right?
It's why we have a handful is why we have a couple of decent sized development shops. So basically you track hourly how many development hours you have and you could submit. And, um, that's been a very juicy and center for a long time, that's, that was a big carrot for DXC technologies and why they came and posted up in new Orleans was that, and then the employees and and jobs program that, uh, that the state economic development hash and then they had another one research and development tax credits.
If you work with one of the research institutions and you commissioned some research projects and whatever. Then those will work. As soon as those I've seen happen more with chemistry and hard technology, nanotechnology related businesses and affiliation with a university or two. And then, you know, they have a couple of tech transfer programs as well in new Orleans you know, from two lane and celebrate.
And, uh, and you know, there's a handful of startups that are in those areas.
MPD: Okay. So the region's got some development talent, some hubs for that. It's got a great quality of life, a low cost of living. There's some tax incentives that sound pretty material, particularly the angel one sounded pretty.
Yeah. Uh, who are you seeing in down there investing with you? Is it mainly local folks? Other micro VCs, other family offices, or are you seeing, VCs from Austin or Atlanta coming in, or are you seeing folks from Silicon valley, Los Angeles coming out all of the above, all of the above, they're all showing up and they're, it used to be that a lot of VCs didn't want to invest outside of their geography because they'd have to deal with the board meetings.
And it wasn't, that was before the remote days. I don't know how remote is going to totally change that call. But I assume it's opened up a little bit, the ability to invest in different geographies conveniently. Yeah.
Hal Callais: And so that's what we've been seeing increasingly. You know, they've always you know, funds from outside of the area have always tinkered, I've always been the periphery, right?
Like I'm always like, oh, Hey, I'm coming to town would be great to grab lunch and, see what you guys are looking at and working on. Um, you know, there was a deal that we did that had raised a lot of money from. And from some call it mid-sized firms and they liked that I was local.
I said, you we need you to go drive by the office and make sure they're working. Let me know, we'll give you a call. And it was like, yeah. But you know, so that's what we're finding is that we're working really well with a lot of funds that have an interest and and kind you know, just looking out, branching out a little bit, um, but yeah, geography is not been the same. And it's a good question. Like I that's a good, it's another good question is like really how many, all our virtual board meetings going to be the norm from now on. They were starting to become the norm even before COVID I don't know who seemed, I was definitely seeing that with a couple of companies anyway.
MPD: More often than it used to be that's for sure. I think this, the video chat used to be crappy. You couldn't have a reliable signal. You get dry. And now it's pretty reliable. So I just feel like the timing of that with COVID and looking at figuring out remote, all of mine are virtual right now.
All of them.
Hal Callais: And it's perfectly. Yeah, I'm with you. I I have kind like craved to do an in-person, um, or at least do one, like, um, after we closed the last day we did, after we closed down, we you know, it was like, Hey, look, let's, uh, let's get together and do a in-person board meeting.
And then we could do virtual after that. I just want to everybody in the same room. Just like establish the cadence, establish a relationship, kind of solidify, cause you have that initial post-closing firstborn meaning like
MPD: chatting and becomes a little more personal.
Hal Callais: And you know, there's things I miss about it too.
Seeing people, of course, you know, most of the time I'm sitting on boards that other people are flying in for it. I'm not the one having to go out. So of course I can, I like that, it's fine for me.
MPD: Okay. All right, so that the region has a lot to offer.
It's growing you're whether you know it or not, I'm sure there's other people who would claim some of this title, but you're positioned as one of the godfathers of the region, putting a lot of effort in early, which is cool. I think you're gonna have a lot of impact. What does it need?
What does it need? What does new Orleans need that whole region down there? What, what needs to be better to take it up a notch? I watched a little anecdote. I watched New York, I would say the second, third leg in New York. People said this before on the show, have a short memory in tech, but New York was doing a lot of stuff and probably the eighties and definitely the nineties.
And I got involved in 2006 on the venture side and it has come such a long way since then, drastic change, exponential change, but it's putting together the infrastructure of kind of a whole community and culture. Training all these pieces what's needed down there. And how can the folks listening to this?
Hal Callais: Um, so, you one of the things that we've seen and, we've kind come to the conclusion was w we really need is we need like a culture of doers. We need people in our markets who actually go and do things, let's not talk about it. Let's not commission a study. Let's not research this.
Let's not like flirt with the idea of it. Let's do it. Yeah. And We believe that some of it is that there may be some misperception or just a risk aversion to going and doing something or trying something, but it's, it's broadly, broadly kind intended, as you know, being a founder CEO is very hard, right?
It's not an easy job. You know, the bigger your company gets, I think the, the, the challenge has changed. But, it's not easy. It's never easy. It was easy. Everybody would do it.
MPD: Right. But when you say we need a culture of doers, founders, and CEOs who are moving the ball forward, they are doers.
Who are you talking about is that you need more founders and CEOs or there's other people around the ecosystem that are.
Hal Callais: So I would say that there are some founders who are not doers and some things that we see those are, they're not doers. And there's a big difference. I said, yeah, you may have left and may have started a company.
But I mean, are you really operating a lifestyle business? That's masquerading as a startup? Are you really running the business for any purposes other than. I guess keep kicking the can down the road. So your rich investor doesn't lose their shirt. And I think some of that comes from, I guess there's a long life.
There's there's a lot of leisure. I wouldn't say there's a long, a lifespan to some companies that should have been quickly recycled. And it's like, it's not that it's a bad business. It's not that it's a wrong business. It's just like the time. The effort that it requires energy has to go into it or or the funding's not there for that business.
Or maybe it's just not fundable company. And it's on life support because why aren't you people putting money in and they're forcing them to figure it out? You have a lot of song companies that seem to be raising money constantly with no progress.
MPD: Is that pressure coming from the investors who were putting good money after bad, because they don't want to lose it, write down an investment or.
The founder's not driving or both. We call these companies, the walking dead, by the way we have a, there is,
Hal Callais: yeah, there's a lot of reasons. And it's like, I think that some of these businesses. Get on a really good path for venture like growth. But I think really what you need to come to grips with, or what people need to come to grips with is look, if you're not going to be a hyper-growth company, then you're not a venture company and not a venture backed or a venture backable company, you are a lifestyle business.
And there's absolutely nothing wrong with that. Same thing goes with Hey, you did your best to figure this out. If you can go and try and sell the company for some amount of money, because you have some amount of value and sure. It's it's not a hundred million dollars. It's not $50 million.
Maybe it's three, maybe it's two, but it's something, you do that. And then you recycle the talent. You recite, you get people excited about the next opportunity of the fabric and take those lessons and replicate or learn or reinvent a lot of those things. Or what I see is that, I, that to me would fall in some of that category.
Another thing too. There's a lot of people out there that talk a big game and say, oh, we're going to do this. We're going to do this. And nobody does, um, you know, I, some people who are listening that may know me, they were like, oh, you've done that to me. It's find out it wasn't on purpose.
I promise you.
MPD: No. Okay. But when you say they're having evidence, squat talk a big game, what is that? It's say they're gonna put money in it. Is it build a company and don't, it's all these things. Okay.
Hal Callais: Yeah. So it's, yeah, things like that. It's, it's it's a lack of like really trying to put some Gusto behind it, really move it forward and really put your heart and soul into it or halfway do it, or, oh, I'm going to do this and keep my foot in one door and the other, or
MPD: why do you think that's missing?
You're describing that as a. Yeah. I think that dynamic is probably everywhere. Just to question what ratios and what proportions you're saying is though it's more common maybe than other places. Why is that?
Hal Callais: Yeah, that's a good question. I don't know. And maybe it's because there's not a lot of what I would classify as institutional focus venture.
So maybe. Hey, we've got deadlines. We've got things. We've got to take care of this. Can't sit sorry, but we, we have to move on. We have to do something else or, Hey, look, we'll support you and try and help you find a job after this. Or, we'll, you just anything like that.
Like one of the things I loved about Bradfield. Uh, what was that person when he did those? People talk that Eric got everybody all excited. No, it wasn't deals. That's a good one. So I started communities, I think, serving. And and then that one, you only, one of the things they did was they would do uh, almost a funeral for companies that didn't make it.
I think like that's the kind of cultural element. Just, it sounds fantastic to me. I think it's look, you you tried, you did your best, you hustled and you worked very hard, but there's no shame in hanging up the towel. That's just, that's just part of this game. If you want to play in this world and you want to be in this industry, this kind of segment of the market, that's just a fact of life, nobody likes to do it, but there's no reason it has to be all or nothing.
There are polices along the way that are varying degrees of success. I mean, how many people, you know, there's, I can tell you that there's a handful of founders that, that we've had. That we work with that is not their first company and their first company, wasn't a smashing success.
Right. And, it's just part of that journey, it's iterative like anything else. You know, I think that's part of it. I think part of the issue too, is that what I found is not just Louisiana, but it's also other markets that emerging startup ecosystems have. A lot of times they're filled with individuals that will celebrate mediocrity if it seems their needs, right?
You know, some of these ragtag consultants or some people who do a lot of consulting work or work with a lot of early stage companies. A lot of times they're not trying to pick the best clients. And, but they still, a lot of those individuals that get out there and talk about it in public and represent themselves as being a leader in the ecosystem, the leaders of the ecosystem.
A lot of times they lie right there. They're working with the only clients that can get the most legitimate startups and founders. Are the ones that are, they're out there doing it right there. They're hustling, they're making a work and they're being chased. And make no mistake. Most of the deals we're doing, we're competing, and we're competing with other firms and, and we win because of relationships because of experience because we really try and do our best to help founders, and you know, and we work well with others, yeah. Well, what's your message for VCs listening in other geographies or local, how can I help? What's
your. I think there's a lot of ways to do things together. And I think there's a lot of ways to work together and to support one another, um, you know, as competitive as the industry gets, I think that there's usually some solution that everybody can benefit from or together with.
I think that the more exposure that our companies have to legitimate companies on the coast, And partnership deals and relationships, Cosell and reselling, aberrations, whatever those things really make a big difference, there's, um, and it's, a lot of times integrations and those deals, you know, we've all seen it that, The companies that are like really onto something really firing and I'll send her cylinders and are really going to, I really the hot deal, they don't have to chase those deals, but there are good companies that might not necessarily be in that ultimate, super deluxe star class that are, that if you give them a little bit of assistance or maybe they, there are a lot of good companies, there's tax incentives, all those things.
I mean, you I'd say that Hey, give me a call. I'd love to help. I'd love to see what I can do to help, because I want to encourage more people to do things because I think it's part of long-term long-term value of our strategy. Our strategy is great for now and you know, our companies are fantastic, but.
We need to continue to redeploy and reallocate and innovate and all of these things. And we need to work with people from across the country across the world. That's how this stuff works. It doesn't work if you're in isolation.
MPD: This has been insightful and you're talking about the future now, and I'd love to follow that thread for a second.
What do you see as the future of Kelly capital? Where do you see the firm in 10 years? How does it.
Hal Callais: Yeah I mean, we've already evolved a good bit. You know, we continue to develop and build you know, but we want to continue to focus on this thread, on this niche, we want it.
You know, we want to do our part. We want to work with founders who, we're really going to be doers. So we're going to work hard who are going to give and really try and lean into into the marketplace, and you know what, I strategy's really focused geographically now, for, for a lot of reasons, but I mean, we're looking at companies and deals, outside of Louisiana, we're looking all over the place.
I have a couple of portfolio companies in New York actually. You know, but it just really is. I'd really like to see more people working together and it being less of this winner take all mentality, and I think that and I think that how we interact with the market and how we continue to try and push the ball forward, at least with our companies and helping our companies by connecting them and having them work with other companies that are not maybe necessarily locally uh, face exposing them to things outside of the.
Those are the things that lead to compounding growth. For us, it's really keeping the ball moving in the direction that we're pushing. And, um, and expanding from there, expanding on that and really trying to drive home. You know, a lot of this stuff that leads to you know, to really benefit for everybody.
That's, that's a big part of it, is that, you the thing is that this is. You know, the market is a wild and unwieldy thing, and you know, you have to do your best to work within its confines and to work within rational thought and not taking on this risk. And so there's always a balance and there's always a fine line that everybody toes and really trying to.
Figure out the direction, their business, but it's not a zero-sum game. And I think that's one of the biggest problems that I see in the marketplace. And you know, I think that our goal is to really continue to drive the ball forward, be a leader where we can, where people will have it.
And you know, there's early, we've got plenty of stuff to do, not, I'm not looking for new stuff. But, I genuinely want people to succeed, and just because I can't work with them doesn't mean that I don't want them to succeed, and so our future is going to be continuing our model, continuing to build upon what we've established and continue to expand, and, um, you obviously working more with people like you, mark. And and really trying to figure out what's the right ways that we can have cross portfolio collaboration. What's the ways that we can work together and make everybody win. There's winnable scenarios for every month. It's not a zero sum game.
So I don't know. I'm I'm still stuck on my previous topic and answering my question on the future, but I don't know how succinct you want me to be on that.
MPD: Great. It look I think you and I share a core belief. That innovation and entrepreneurship drive sociopolitical economic values and success.
And so I think what you're doing is not just a great business opportunity, but a social. Thank you for doing it, keep it up.
Hal Callais: Absolutely. The way I tell it, just to be clear, I feel like I owe it to the record to say, but, um, and I say this to my investment is that, look long-term, if we do a good job doing what we do, then all of these things come to fruition or these things have a much greater probability or chance of occurring.
Um, but it all stems from. Sean returns, minimizing risk and working with founders who are going to be really dedicated, devoted, and running real businesses and share vision. Those are the things that, I mean, if we don't have returns and none of this matters, it's all good.
You know, that's the way I look at it. Hey, you got it, man. Let me know if you want to go fishing.
MPD: I'd love to.
That was great. I love learning about the venture scene along the third coast and the Mississippi river valley. Sounds like an innovation hub to keep an eye on. I bet you a lot's going to happen down there. If you liked what you heard, please hook us up with a like, or a five-star review. And feel free to share with a friend.
You can find me on Twitter at MPD. And to hear more of my conversations with innovators, subscribe on YouTube, Facebook, or any major podcast platform. Just search for innovation with Mark Peter Davis.