Matt McIlwain

What Venture Capital Firms are Looking for in Entrepreneurs

Season  1Episode  2060 MinutesMarch 27, 2024

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As the managing partner at Madrona Ventures and a Forbes Midas List member, Matt McIlwain knows a thing or two about spotting entrepreneurial gold. Sit down with us as Matt unravels the threads of passion, timing, and visionary thinking that mark the trailblazers leading tomorrow’s industries.

His journey reveals how the art of early-stage investing isn’t just about funding—it’s about forging relationships with founders whose execution is as brilliant as their ideas, and nurturing the relentless curiosity that drives innovation.

This episode of personal anecdotes and professional wisdom intertwines stories of Matt’s soccer-fueled youth and diverse cultural influences with the profound impact of mentorship on his growth.

From Dartmouth to Harvard to Wall Street, every step of Matt’s path showcases the significance of connecting with individuals who guided, challenged, and shaped his trajectory. Whether discussing public policy’s role in American industry or the intricacies of management consulting, Matt’s reflections underscore the transformative power of people who believe in your potential.

Venture with us into the intimate realms of Matt’s philosophy on family and identity, where success is not measured solely by business milestones, but also by the richness of relationships and the steadfastness of values.

Matt’s narrative extends beyond career highlights as he shares his approach to parenting and the importance of time and connection with children.

Join Jeff Hopeck and Matt for an inspiring conversation that’s about much more than business—it’s about the very essence of who we become on this journey.


Key takeaways from Matt:

  1. Always stay true to your values.
  2. Seek out an amazing mentor to help guide you through life’s journey.

 

Tune in to hear more inspiring stories from fascinating individuals.

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Timestamps:

0:00 – Investor Insight

3:44 – Growing Up

17:44 – College Experiences and Making Connections

26:24 – Life Lessons and Career Development

32:11 – Public Policy to Management Consulting

35:42 – Early Ventures and Long-Term Success

49:13 – Family, Business, and Identity Shaping

56:23 – Building Meaningful Relationships and Values


Show Transcript

Matt McIlwain: 

What I’m listening for is how passionate are they about the problem they’re trying to solve? Then you’re listening to see do they understand why now? Why now can this problem be solved better than it’s ever been solved before? And then the third thing is is like what’s the solution they have? Why this? How can they solve this problem? What’s their vision? By the way, that’s usually the thing that’s least perfectly formed when we invest. And then the most important question is why us? Why is this founding team the best team in the world to go solve that problem with these ideas? You know in this way better than anybody else in the world. I think the thing that I find, maybe as a singular word that you really want to look for in an entrepreneur is its curiosity. If you’re genuinely curious, you’re admitting I don’t know something you know again. You got to be sincere about it. You got to be genuinely listening. I thought the customer wanted X and they actually want Y.

Jeff Hopeck: 

Folks, welcome to another episode of Interesting Humans, and I’ve got a real treat for you today. I have Matt McIlwain Forbes Midas List, which is just so interesting. I’m going to have Matt unpack that shortly, but he’s a managing partner at Medrona Capital. They were an early investor into a company. You may have heard of Amazon Obviously joking, but he’ll unpack that as the show goes on. And what I think is just so interesting about Matt it’s the combination of the business success with something very important he makes time for family and I think when you put those two together it’s remarkable, because this isn’t a business show about business success etc. It’s a show of interesting people and Matt’s story today, as he’s going to unpack, is just that. So, matt, before we get started, first off I do want to say thank you for joining us here in the show.

Matt McIlwain: 

Appreciate you, no it’s my pleasure, really delighted to be with you and excited to have this conversation.

Jeff Hopeck: 

Great and it’s going to help so many people. Which is just the most important part is the legacy. So thank you from the bottom of my heart, because this is a passion project for me, so I appreciate you being part of it. Why don’t you start off? Tell us, what is this Forbes Midas List thing about?

Matt McIlwain: 

Well, it’s kind of funny how some of these things like the Forbes Midas List become things that you get known for but maybe overly important to some. It’s very nice recognition. This is a list that Forbes have been putting out for I think over 20 years now, where they rank the or they select the folks they view as sort of the top 100 folks in the investment venture capital world, really specifically venture capitalists. They kind of exclude angel investors and other kinds of strategic investors and it’s individual focus, which I don’t totally love because Madrona, our venture firm, has very much had a team effort, a team culture, kind of a team incentive system. But when you are the lead investor and you’re on the board of a company, you get sort of disproportionate credit for the success of that business. And so they look at all these different venture investors and they say, well, who’s been having and the companies that they’ve invested in and been on the board of the most success and you can end up on that list over time.

Jeff Hopeck: 

I can’t wait to unpack that. We’re going to hold off a little bit, but I cannot wait to come back to that. It’s awesome. It’s awesome. What I want to kick it off with is young Matt. I want to learn all about you, so tell us, start off, what do you remember from your childhood memories, et cetera.

Matt McIlwain: 

Well, maybe start with my parents. My dad passed away a handful of years ago. My mom’s still alive, but the cool story about them is they met in the US Army. My mom was a kid from Nebraska. She wanted to get out in Nebraska as quick as she could, and so when she graduated from high school she joined the US Army, and my dad had grown up in upstate New York, a place called Utica, and I think back in that day, you know you kind of guys were joining the Army a lot and so they met actually met at Fort Knox, kentucky, and got married. My dad, my mom, never went to college. My dad was the first in his family to go to college and he got a job with General Electric. So I was born in Utica, new York, upstate New York, and a lot of fun family memories are going back there in the summer times.

Matt McIlwain: 

But when I was five, we moved to Singapore.

Matt McIlwain: 

Ge moved my dad and his job to Singapore, and that was really awesome for all kinds of reasons.

Matt McIlwain: 

You know it was beautiful weather, a lot nicer than upstate New York, and I also learned to play soccer, which became the sport that I’ve been most passionate about all my life there and then we eventually came back to the States, one short year in Illinois and then into Miami Florida and so I went to junior high school, senior high school in Miami Florida and of course there I learned a whole different style of soccer. The most the kids in Singapore were Dutch and British and most of my buddies that were playing soccer in Miami came from a lot of different backgrounds, mostly, you know, south and Central America. So that’s a little bit of an overview of where I live, kind of taking you all the way up through high school. And I went to big public high school in Miami and played soccer, played football, you know, loved the friends and the experiences there. It was a great place to be a kid and growing up, and I’ll stop there if we want to dig any deeper. Oh, absolutely.

Jeff Hopeck: 

So books? Were you a reader? What were you interested in? Did you use sports?

Matt McIlwain: 

Yeah, yeah, I did like a few things. I was kind of a. I always loved the business world and so, rather than you know sort of books per se, in that world, I, you know, got involved with a lot of different things. There was actually something called junior achievement, if you remember that, and I was a pretty big fan of junior achievement and got involved with that and I was always thinking up different business ideas and you know making dollars, you know kind of running my own little lawn mowing business and you know ref and soccer games and things like that. So that was one dimension, I’d say.

Matt McIlwain: 

Another dimension was, for whatever reason, I always loved you know kind of political philosophy. I know that sounds a little high brow and stuff, but I was super intrigued Really. I think that starts with human nature and understanding how humans work and think and act and then why we choose to give up our rights to this thing called government and then what’s the role of government and how about the different thinkers and how they’ve thought about that over time. So even in high school I took a class that was basically reading and reading and reading, basically reading the you know the great books, right, the Aristotle’s and Plato’s and John Locke’s and people you know, people that over history tried to make sense of the relationship between humankind and government and political philosophy. So that’s something I still love to this day, honestly.

Matt McIlwain: 

The third thing is, you know, I, at a pretty early age, really found that my personal faith was an important part of who I was and so, you know, went to, you know, church growing up but then made a personal commitment to that and that well I’ve been. You know, just like all of us right, have been far from perfect in my life’s journey that that faith journey has been also a really important dimension to me, fortunately from an early stage, and there’s been a number of things over the years different groups and friends that we’ve done, different kinds of you know starting, you know Bible studies and fellowship groups over the years and all the different places I traveled post high school, sure. So that’s another key part.

Jeff Hopeck: 

Okay, so focusing on the time from, let’s just say, five, six years old to not to college yet. So let’s stop before college, because that’s its own, that’s its own story and I I’m excited for that to get into that. Did you have any mentors at all through different phases?

Matt McIlwain: 

Anybody you walked with. Yeah, there was a guy that his name is Mike Cajun and he was my fifth grade Sunday school teacher and he was probably 18 or 19 at the time I was 10. And but I’ve thought, wow, this guy is both, you know, so much older than me, but but so cool, and and and he had some really neat things to say about this faith journey and so, you know, he became a mentor. He, I think, then went off to college and he came back when I was in middle school at least one summer and you know, was also our, you know kind of our summer youth pastor, and then we stayed in well enough touch that actually, you know, many years later, when I was 30 and got married, he actually was, you know, was the, you know was the minister who married my wife and I, you know, many, many years later. So he really had that influence right over a lot of years and we’ve still stayed in touch with each other and so he’s probably amongst the most, I would say. The other one is I had a lot of sports coaches over the years that were influential in different ways.

Matt McIlwain: 

I had a soccer coach named Dennis Hackett in high school and he was, you know picture. I mean, this is, you know, kind of you know, late 70s, early 80s. And here’s a guy that had served in the Vietnam War. He’d been through a lot of hard things in life and he really, I think had been like a football coach that they said, hey, can you be the soccer coach for us? And he’d, you know, and I had happened a few years before me and he’d learned to be a.

Matt McIlwain: 

He was just a great coach, you know, he could have probably been coaching basketball or swimming and he would have been great at it too. He just was kind of a person, he just happened to be the soccer coach. And you know, our senior year he won the state championship and soccer and my Florida was pretty competitive soccer, but there was something about him. And then, you know, then, further on, my college soccer coach that’s another story of just kind of seeing how coaches like that have a positive influence in your life. You know even a guy like that who had sort of a tough exterior but you could tell that his heart was really into the players and our growth and our personal development as well as our ability to work together as a team.

Jeff Hopeck: 

That’s remarkable. What, what Particular comes to mind like? Forget, put on the side, just like you said, his ability to help you grow in a sport. What, what did he pour into? I’m guessing he poured into you, you feel yeah, helps you develop as a person.

Matt McIlwain: 

You know, yeah, and in coach Hackett’s case, you know I was I was probably one of the like the kids that loved academics the most in the on the team, and and, and I did have a lot of passion about that. But I think he helped me realize that sometimes you can’t overthink things and to the extent that you’re overthinking things, you’re just not being your best natural self out on the field. And, and that was absolutely the case and I was almost overcomplicating things. Sure, you know, because practice was there so that you were prepared and understood the system and understood what we should be doing, so that when you were just out there on the field you could just like almost instinctively, play the game.

Jeff Hopeck: 

Sure, and and so he really helped me go from overthinking things to just, you know, kind of being out there and playing naturally sure any any particular Mantras, encouragement, anything from your parents that you remember here, and is it whether it was a child or all the way up into high school.

Matt McIlwain: 

Yeah, no, that’s, that’s a good one. You know, my dad was more kind of understated, quiet person, and His way of showing that he loved you was by doing stuff, and so he was very Genuine about the things that he would do for you. You know whether that was, he would always make, you know, brunch for us after church. We’d come home and make cheese omelettes, you know, you know, and, and you know that was the thing and that, and you knew that was how part of how dad, you know, community is like. He also loved golf, and I was really the only of the three boys I was the middle of three boys and and, and I was the only one that really loved golf too, and so that was a great thing that we would go do together, but it was more about doing it together than necessarily a lot of deep conversations.

Matt McIlwain: 

The other thing I remember about my dad is that he was really great when there was a crisis. You know you know different levels of crises, right, I had some. You know, my brother and I, who was only a year older than me, shared a car in high school and somehow I got it stuck in a ditch one night like 11 30 at night. And you know, sure enough, my, you know, there was no cell phones. And Tuesday I’d like go into somebody’s house and see if you could use the phone, and why your parents and all their stuff. And you know, with no fuss, no much, my dad, just like back to that doing, he came down Help me get it out. Everything was okay. You know how to get it there. I probably had to pitch in a little bit for the repair.

Matt McIlwain: 

And then my mom was more the kind of and still is kind of an energizer bunny. You know, she was just. You know she’s so engaged in our lives and making sure we were prepared for things and, you know, always there to be our champion. You know, you know, just in a lot of different ways. I remember one time when I, we won the soccer game and this guy from the other team, when we kind of done a good job, we’d beat him pretty, pretty handily, but he was not happy, actually came up and popped me in the face and my mom went running out of the field. You know, happily some might, some of my players took care of that, but but mom was out there on the field to making sure this guy wasn’t gonna get away with that.

Jeff Hopeck: 

That’s incredible. So, in this same time frame? Yeah, did it ever pop in your mind what you wanted to do in life?

Matt McIlwain: 

Well, you know, I, I did really love the, the entrepreneurship Elements, you know, kind of going all the way back to the kind of, you know, business and company building. But I did also love this, you know, you know, go, if you go from political philosophy event eventually the public policy. And so that was actually. That’s actually been more of a tension in my life over the years between More and you know, you know, private sector versus the public sector. I’ve leaned a lot more to the private sector, by the way. But there’s been a few steps in the journey, you know. You know, like in college I was a government major and an economics minor. When I went to grad school I did both a degree in business and a degree in public policy. But most of my professional career, really all of my professional career, has been, you know, primarily in the private sector okay, then when did you know what school you wanted to go to a college?

Jeff Hopeck: 

Or did you sort of throw your resume out everywhere, everywhere your application, or do you know exactly where you were going?

Matt McIlwain: 

You know it was. It was funny. I Was completely naive on this stuff and back in that day you know both I, I think there was a lot less sophistication in the world of applying to colleges and certainly what I experienced with our kids and and and then secondarily, you know, I mean I was a good soccer player but I wasn’t the best player on the team and you know, a lot of these schools didn’t recruit down in South Florida all that much. They should have been recruiting more in that era but they weren’t. You know, I mean, some of the regional teams did, but not as much in the Northeast at that time and so, and candidly, I was probably, I probably was better known as the kicker on the football team and so I had a lot more people wanting me to try to be the kicker in their college football teams. But I love soccer, so, but I didn’t really get recruited at all and I had these good grades and stuff. So I applied to a handful of schools.

Matt McIlwain: 

Honestly, I thought that, you know, princeton was the place that, yeah, that I thought was the best fit. Yeah, I wasn’t sure about, like, going up to college in the wintery, you know New England but but I remember going to this event that some Dartmouth alum hosted in Miami, just a general kind of event about, you know, the college, and they literally remember those old little Carousels of slides. They showed like the carousel slide, it was just like beautiful place and they served us like inciter and donuts, like this is kind of cool. It’s not Miami but anyway, and so I just I’m gonna apply to this place and you know, very fortunate to get in and so. But I only applied to a few places and it was probably silly in retrospect because I usually could have not gotten into any of them. Right, didn’t get into Princeton, as an example, but I did end up going to, did end up going to Dartmouth.

Jeff Hopeck: 

Where else did you apply? Just curious.

Matt McIlwain: 

You’re gonna be like. You are just crazy. The only other places I applied was Duke and Harvard and got into Duke and got waitlisted at Harvard, so Interesting went to.

Jeff Hopeck: 

Dartmouth, which Harvard, harvard’s down the road though for you. But you didn’t know, you didn’t know that was about that, no right, okay. So you so off to off to Dartmouth. You go to what’s day one like there.

Matt McIlwain: 

Well, dartmouth’s got this cool thing called first-year trips. He’s gone freshman trips. So you go and you meet, you know, a bunch of students and you go on a hiking trip or a biking trip or whatever. And I did this hiking trip and so, you know, I remember my mom took me and I was ready to kind of do my thing, and so she was there for a day and left, and and I met this guy named Randy Jacobus and he was from New Jersey and we were just talking.

Matt McIlwain: 

It was sort of fun because it was just like I remember meeting Randy and realizing this guy’s gonna be a friend for life, you know, yeah, and and and then another guy named Ross Jones that I met shortly thereafter, and and Ross and I played soccer together, which was fun, and so it just really felt like there was just a bunch of Interesting people from different places in the world in this. You know, this was like August, you know, late August, beautiful place, beautiful time of year, and in New England. And then of course there was soccer and so trying to make the soccer team, and so they had that whole dimension and all all the folks that you know you got to know through that. So it was kind of fortunate even though I was this you know public high school kid from Miami who you know didn’t know a lot about a lot of things I found, I was able to find, you know, some, some good friends really really early on. Oh, that’s awesome.

Jeff Hopeck: 

So you’re okay, you’re in college. Now let’s stop, let’s pause there. Let’s look backwards in life. Anything pivotal that’s that stands out, were you heading in a direction and somebody grabbed you by the collar and brought you back. Anything pivotal at all up until college.

Matt McIlwain: 

Hmm, Um, oh yeah.

Matt McIlwain: 

I think that in the up and to college era, you mentioned faith, yeah, that’s a big one, yeah, I mean, I think that decision to say I’m gonna make a lifelong commitment to this guy named Jesus that did some amazing things for us, and say that that’s gonna be a core anchor of my identity and what I wanna try to do in life, absolutely that’s a key thing and I think a lot of people have really great faith backgrounds and different perspectives on faith and I have a lot of respect and certainly out here in the West Coast venture world you’ve got great people with different perspectives and I think I’ve had an opportunity to you build personal relationships with people.

Matt McIlwain: 

You can have a conversation about your perspective and their perspective. So that’s been something that’s been really important throughout my life. I think you probably just the actual getting into one of those kinds of colleges right From where my background was. I think that in and of itself was a sort of step function in terms of the opportunities it created, the doors that it opened, the relationships that I got some exposure to, and I think those are pretty key kind of steps along the journey there, Sure.

Jeff Hopeck: 

and then? What did you decide to study in school? Was it obvious from day one?

Matt McIlwain: 

That’s a great story actually. I love that question. I started out as an engineering major. Now you’re sitting there going wait, you just told us all about it, you look business in here, and my dad this was one of the few times he did put his finger on the scale a little bit and said you know, I wish I had gotten an engineering degree. You should really think long and hard about that. And so I tried that for the first two years.

Matt McIlwain: 

And you know, my second sophomore season in soccer wasn’t very good. It was the top time. My mom’s mom passed away that fall and I was a little bit burnt out. Happily, dartmouth was on quarters and all the Dartmouth students you know that were sophomores all were on together for the sophomore summer, which meant you could take another quarter off. And so I took my sophomore winter off because I was a little burned out. It’s cold up there and hand over in the wintertime and I work as a waiter at the Breaker’s Resort in Palm Beach, florida, and that was awesome, you know. And then in the spring term I was studying in Spain. So I was basically away from campus for six months and studying in Spain was not the hardest thing I did you know, in college.

Matt McIlwain: 

But I came back and I took this class from this legendary professor you can talk about mentors and people that helped change trajectory.

Matt McIlwain: 

His name was Vincent Starzinger and he was the head of like in the government department sort of the political philosophy you know kind of area and he had a introduction to political philosophy class that he happened to teach that summer and I took it and loved it, did really well in it and I remember writing this letter home yeah, you know the old fashioned writing letter home here, dad and mom, I’ve decided to change my major to government and here is why and I hope you understand, you know, and all that stuff and I think that especially my dad thought I was crazy and making a big mistake, but it was, I think. You know. A lot of people ask you all the time about college experiences and I really do believe it’s about you know learning how to critically think and be able to communicate, how you critically are thinking through things and listening and learning from others, and doing that within areas, domains that you are passionate about, sure, and it almost doesn’t matter what that domain is, except for the fact that you better be passionate about it.

Jeff Hopeck: 

That’s it Right. Did you finish college playing soccer?

Matt McIlwain: 

I did finish playing soccer and actually our junior year the coach retired and a new coach was hired and his name was Bobby Clark and he is still to this day. He’s kind of a legendary soccer coach, in particular in college soccer in the United States. He went on from Dartmouth eventually, well after my time, to coach Stanford and then Notre Dame Eventually won the national championship when he was the coach at Notre Dame. But what was really neat about the experience we were kind of a turnaround story at Dartmouth and he was the coach that turned that program around from an OK team to really a national power again. Well, after my time we were the early days of the turnaround.

Matt McIlwain: 

But the thing I learned from Bobby and he was a Scottish guy who had been the goalie for the Scottish national team, come to play in the old NASL soccer in America and he really there was a role on the club for everybody and you might not love the role that you had as much as the role you thought you deserved, but he made it a community thing and so and I got injured pretty bad and didn’t get to play as much as I wanted in some different things, but he kind of embraced me and so many others of. There’s at least a role for you on this club, on this team, if you want that to be, that you’re willing to put in the work and you’re willing to make a difference. And he had just some great expressions that I still remember to this day, like when you ran a bad drill he would say oculods, would you do the same thing, only different? Which basically is like you didn’t do that. You didn’t do that very well, but try to get in. You can do a little different, you can be a little better. I believe in you.

Matt McIlwain: 

And so he built this sort of real community club approach to the program. And not only has he been incredibly successful. One of his sons has this incredible nonprofit that a bunch of us have helped out with over the years, and there’s a whole lineage of people from that Dartmouth soccer era that’s very, very special. The other thing I would say about that is I think that’s one of those you try to share with your kids that they’re going to be amazed and surprised over life. Who kind of shows back up in their lives and so treating everybody with respect just because you should do that, but also because you’re going to be surprised and hopefully delighted and amazed at how these different folks they’re just not sort of a short chapter in your life they often come back in in different and surprising and wonderful ways, sure.

Jeff Hopeck: 

Bobby had a way to approach that. Yeah, yeah, I hear an interesting theme, so the characteristics of this coach that you’re explaining are similar to one that you’ve had way, way, way back. Yeah, so you said was much more about just developing you as a player?

Matt McIlwain: 

Yeah, would you agree with that? I agree. I think that the I was very fortunate to have some really terrific coaching mentors of different dimensions to them and then probably some what I would call more teaching mentors, in a lot of ways that Mike Kanjan, who is the youth pastor, or I had a guy named Mike Mason in New York when I was first in investment banking after college who really taught me a lot about investment banking, a couple great mentors and other times in my life career I was going to have Tom Alberg here at Madrona over the last 25 years as well, on just how do you think long term about building companies, and could go on. But Jeff Kemp is a guy that you may have heard of. His dad was Jack Kemp, who is the pro football player. They’re both pro football players, but Jeff and I were in a men’s Christian Fellowship group for many years and he’s just been a great mentor because he’s five, six years ahead of me in age and parenting and probably one of the friends that I’ve looked to most to.

Matt McIlwain: 

Hey, can you give me? I’m at this stage of trying to be a good dad and be a good husband. What do you got for me?

Jeff Hopeck: 

Right. Ok, let’s fast forward. You’re walking on the stage, you’re graduating Dartmouth. Did you know what was next? Or is there a little period of time, a little holding period?

Matt McIlwain: 

Yeah, no, it’s funny. I was fortunate to be graduating from college when the economy was booming in the mid-80s. It was 1986, 87, which is when I graduated and so I went to work on Wall Street. I went to work in investment banking and on the one hand it was just great and in fact the interesting thing was I did a lot of interviews with investment banks and got a lot of opportunities there. I went and also talked to all these management consulting firms the BCGs, mckinsey’s and they were all like you’re a good guy, but you’re just not right for us, and so it was important to see. I got some pretty clear signal which direction to go at that point in my career. And so I went and worked on Wall Street, loved it. That was also the year of the big market crash, if you remember that kind of Black Monday 1987.

Matt McIlwain: 

Still remember my dad, who didn’t reach out very much. He was kind of the quiet guy calling me and saying is everybody OK? There Is everything going to go right there up in New York. I’m like we’re doing just fine, dad, we’re going to make it through. But it was like a 25% drop in the stock market that day. It was just crazy. So that was the era that I was in investment banking for a couple of years and then I ended up going back to grad school. And then the irony alert is that, coming out of grad school, I ended up going to work for one of those management consulting firms. They all just liked you Well. I guess the grad school finishing was necessary, or something.

Jeff Hopeck: 

Where was grad school? Why did you choose it?

Matt McIlwain: 

Yeah. So back to this interest of both business and entrepreneurship, a growing interest starting around then too, in some technology areas and then government. So I went and did a joint degree at the Kennedy School of Government at Harvard and then the Business School at Harvard, so this was 89 to 92 just from a timing perspective Loved them both, great growth learning experiences. I was super interested in something called privatization. A lot of these big countries internationally, and some in America too, were trying to get rid of government-owned assets. They owned roads and airports and electrical utilities and things that they didn’t necessarily need to own. So how do you change that? I almost went back into banking to do more of that. I actually spent a summer at the World Bank thinking about that kind of stuff but got interested in this management consulting area and ended up in Atlanta actually working for McKinsey for a while.

Jeff Hopeck: 

Okay, and that was after Harvard.

Matt McIlwain: 

That was after Harvard.

Jeff Hopeck: 

Okay, I missed one part. So what was it? Two degrees, you said joint degrees. What did you refer to it as?

Matt McIlwain: 

Yeah, there’s a separate graduate schools. There’s the Business School, and you get an MBA from there, and then there’s the Kennedy School of Public Policy, and you get a Master’s in Public Policy from there. Okay, so I did those both at the same time, which meant that I could get through them without quite as much student debt.

Jeff Hopeck: 

How long does that take? How?

Matt McIlwain: 

many years. It was three years for those two programs. Was it more?

Jeff Hopeck: 

in school, was it more in class? Was it more out and about intern kind of stuff?

Matt McIlwain: 

Yeah, back then it was more in class. Back then it was more in class. I mean, there were some applied things, but there was a lot of classroom. There’s a lot of community events and programs and, for instance, I had a professor at the Kennedy School, a guy named Steven Breyer, who went on to be a Supreme Court Justice In fact I think he just recently retired, memory serves me, but a terrific Supreme Court Justice. And so you had some really great exposure to, on the business school side.

Matt McIlwain: 

Some of the key leaders the Jack Welch’s at GE and whatever that would come on campus and at the Kennedy School, was more folks in the public sector by and large. And you kind of remember too. I mean, this was an era where people were really worried that the United States had lost its way and were advocating for more top-down government policy, so-called industrial policy. That was not a philosophy that resonated with me, not to say there isn’t a very important role for the federal government and the worry was that we were losing competitiveness to Japan in particular because we couldn’t make TVs as well as they could. Well, in the meantime, we had things like the internet brewing, we had things like biotech brewing, we had things like some interesting telecommunications styles of businesses that were cooking up, and so I was a little more confident that America, with entrepreneurship and some of these emerging technologies, was going to carry the day. But that gets back to some of the public policy political philosophy stuff that I like so much, sure.

Jeff Hopeck: 

So the same company that passed on you the first time, did you apply to them the second time? Or did they poach you? Did they find you? How did that all work?

Matt McIlwain: 

Yeah, there is a pretty robust corporate recruiting and one of the nice things of doing the joint degrees is I actually had these two summers to work internships, and one, as I mentioned, was at the World Bank in DC and one was as a summer intern at this McKinsey and I think that was great because they could kind of try me on, see if I knew what I was doing in that construct and I could do the same. And it was a really neat office. It was a pretty small office for McKinsey at the time and Atlanta was this up and coming place. I mean, this was just after Atlanta got picked for the 1996 Olympics and there was a lot of excitement and it was a much better cost to living than any of the places up in the Northeast. And my family, my parents, had actually moved from South Florida to Minnesota but they were about to retire and move back to Florida and I kind of knew that was likely to happen too. So being in Atlanta was kind of a nice place to be.

Jeff Hopeck: 

Sure. So you go to McKinsey. What do you start off with? What’s your role?

Matt McIlwain: 

Yeah, the whole thing about these management consulting firms is there. There’s really a couple of skill sets you can really learn there. One is how do you take a complex problem that a client has and break it down into manageable pieces and go get data and bring it all back and work with the client to kind of figure out okay, do we have this right, do we have the right kind of plan to solve this problem? I worked with some great companies UPS was a client that, actually one of my favorite ones and they had a problem where they were really the best in the business but somebody else was sort of kind of taking them on within the very large customers, and so they had to come up with a whole strategy to serve their large customers better, and a lot of the answer was deploying technology in different ways, and so we really helped them think about that and shape like how can you use shipping systems and tracking systems and other kinds of next generation customer service tailored to your most important customers, your biggest ones? And so there was really cool projects like that. And then over time you kind of move from doing a piece of that work to kind of being the quarterback, integrating that work, you know, across both the client teams and the internal McKinsey teams. It’s a great learning experience.

Matt McIlwain: 

I went from there to go work for a big operating company and this is kind of a funny story because people ask me all the time like where did you, how did you get into venture capital? And I like to say well. I like to say well, I was selling auto parts. And the story there is I had another terrific mentor, a guy named Doug Ellis, who was kind of a business mentor in Atlanta, and he introduced me to some senior execs at this holding company called Genuine Parts Co and they had Napa Auto Parts was their biggest business and they had other office products, industrial products. So I ended up going to work with them.

Matt McIlwain: 

This was right around the time the internet’s becoming a thing. You know 1995, 96. And you know a lot of the job I ended up doing. There was helping think through how do we embrace these new technologies, how do we think about new business models, who are our new partners, who are new customers? A lot of those turned out to be folks that you know were backed by these people called venture capitalists and they were startups. That were the companies that we were talking to.

Matt McIlwain: 

And then Madrona, the venture capital firm that I’ve been a partner with now for 25 years, was an early investor, as you mentioned, in Amazon, and so we looked actually at one point at doing a joint venture between Amazon and Napa Auto Parts and Madrona in the late 90s. It would have been an absolute disaster. I mean this was way too early. Oh my gosh, it could have worked at some point in time, probably 10 years later, and so I mean it’s a long story short. We didn’t do that. But then, after Madrona raised its first real big fund at the end of 1999, they called up and said hey, how about coming out, moving from Atlanta with your four-year-old and your one-year-old and your amazing wife and coming to Seattle? And that’s how we got out to Seattle almost 25 years ago.

Jeff Hopeck: 

Wow, so OK, so they found you. Did you have a contact inside of Madrona that you worked with in the past? Or how did they hear about you, I guess, or how’d they know you?

Matt McIlwain: 

Yeah, no, we had. So we had worked together on that potential joint venture that I mentioned that would have been between, you know, amazon and Napa. I’d also worked with them on another company that they had backed that was partnering with one of our businesses, and so I had gotten to know them actually pretty well by this point. And you know, again, at Madrona there’s just been some incredible mentors actually, you know Jerry Greenstein, who actually ran Delta Airlines for a while in Atlanta, but he was one of the founders of our firm. This guy, tom Alberg, who helped build a company called Macaw Cellular that became AT&T Wireless. So you know these were folks that were really accomplished business execs and Tom had joined the board of Amazon by that point and so, you know, had a kind of a front row seat to what Jeff and the team was doing there, and so I’ve learned a lot from them over the years on company building and investing and taking a long term perspective.

Matt McIlwain: 

I think one of the things that we’ve been able to do well is get involved really, really early when it’s, you know, two people and a dog, that’s about it, you know, and an idea, and then having those, you know, sometimes they just don’t work out at all Right. You know you lose all your capital and you spend a bunch of time and you wish things went better. And sometimes they’re successful, sometimes they’re. You know companies like you know Snowflake or Smartsheet or Appdeo, which are names that people may or may not be familiar with, but ones that we’ve helped build over time.

Jeff Hopeck: 

Now, what’s your philosophy? Getting involved with a company?

Matt McIlwain: 

Yeah. So I would say our philosophy is something that you could call founder market fit. And so when a founder or founding team it’s usually a team comes in the door, what I’m listening for is how passionate are they about the problem they’re trying to solve? And you know it’s a problem they’ve often experienced themselves. It’s a problem that’s really frustrating to them. It’s a problem that they believe there’s a better solution. Then you’re listening to see do they understand why now? Why now can this problem be solved better than it’s ever been solved before? And the why nows can be societal, the why nows can be technological, the why nows can be some kind of major events. I know COVID, right.

Matt McIlwain: 

Covid led to a bunch of things that people wouldn’t have been willing to try or adopt that scale five years ago, but now have. And so what’s the why now story here? And then the third thing is what’s the solution they have? Why this? How can they solve this problem? What’s their vision? By the way, that’s usually the thing that’s least perfectly formed when we invest. But you’re then looking at that triangle of problems or why? Why does this exist? Why now? Why this? And then the most important question where? This is where the founder part of founder market bit comes in is why us? Why is this founding team the best team in the world to go solve that problem with these ideas in this way, better than anybody else in the world? And so it’s a little bit of a framework, if you want to call it that, for a philosophy of what we’re looking for in high potential founders that could fit a certain market opportunity Sure.

Jeff Hopeck: 

What, in addition to capital, do you guys offer?

Matt McIlwain: 

Yeah, if anything. So yeah, no, I think it’s a yeah. I think that we think that capital’s pretty accessible, and so, if that’s all you’re offering, there’s lots of places to get it. Sure, we take this. We have this long-term commitment approach, so we actually have a phrase. We call it being there from day one for the long run, and the long run means there’s inevitably going to be ups and downs.

Matt McIlwain: 

Every company, no matter how successful it’s been, that I’ve been involved with, has had days where they had near-death experiences. So how can we take our collective set of experiences and help navigate through the highs and the lows over the course of time? Then the other thing is you’ve got to be really well plugged into the technologies and the business model evolution that’s mattering now, that somebody’s going to write about five years from now, but we’re living today with our companies and, not surprisingly, one of the big hot areas is applied AI. Well, we started investing in AI in 2011. So almost 15 years ago now, and we have a whole set of reasons why and how we were doing that.

Matt McIlwain: 

And then there’s this access to the companies and partners that can matter. So, happily for us here in Seattle, we got a long history with Amazon. We got actually a very strong and long history with Microsoft, and there’s actually pretty big offices for Google and Facebook, meta and Apple here as well. So there’s your sort of five highest kind of by market cap companies that all have either their headquarters here or big presence here, and so we can really help you navigate what they’re doing and how you might be able to partner with them, and so this is kind of that rolling up your sleeves and adding value along the journey with your experience and your relationships and, hopefully, a little bit of know-how. That’s awesome.

Jeff Hopeck: 

Tell me a story when it didn’t work as planned, and then would you learn from it.

Matt McIlwain: 

Yeah, well, I’ll tell you maybe two stories. So one is we had this company that we backed in 2007. And back then that’s remember those 15, 16 years ago, maybe 17 years ago now and their whole idea was you know, why don’t you try to collaborate, you know, on just work processes, work management, you know basic kind of team project management type of stuff, and maybe we can just do that bottoms up and people can discover us online and we’ll have a simple solution for that. They had a great idea. They built a great back end. They didn’t build as good a front end, and then the financial crisis came along and they were kind of on their like last dollars of capital and you know, we, you know, kind of had a lot of confidence that they thought that they could build a better front end, and so we decided to put like a little bit more capital in with them and you know, they started to get things a little right and little by little. And you know, that company today is this company, smartsheet that did a billion in revenue last year. And you sit there and go think about it 2009, without another million bucks of capital they would have been done, you know. And so, and the really cool thing in that case is that the co-founders one is still the CEO and the other one is still on the board, so they’ve been able to grow and learn themselves at every step of the way into, you know, building that business for the long term. You know. But you know, on the other side of the coin, about that same time, we had a company that was some great computer science professors and you know they had this whole idea. This is like before. This is just as Amazon’s cloud business is starting, and we backed them and you know they grew a fair bit in revenue but they couldn’t find their way into like a real breakout business and so you know we in the end are going to, you know, kind of lose money on that one. You know, and I think that just, you just learned that you know. You know, sometimes it’s a leadership that can really matter and leadership that’s continuously curious and continuously growing. Sometimes it’s really getting the early product market fit right. So you go from founder market fit when you back them, a beginning to what we call product market fit, which is when your product actually solves the problem through the customer’s eyes and the customer’s experience, the benefits they need. So, any rate, you know we could spend hours more talking about a lot of different journeys.

Matt McIlwain: 

I think the thing that I find maybe as a singular word that you really want to look for in an entrepreneur is its curiosity, and you’re like, okay, you know, why is that such an important word? Well, curiosity, in my view, is an act of humility. If you’re genuinely curious, you’re admitting I don’t know something and not recognizing you don’t know is humility in action. And so, again, you’ve got to be sincere about it. You’ve got to be genuinely listening. I thought the customer wanted X and they actually want Y, and if you’re good at that, or I thought my employees wanted X but they actually want Y, or my partner wants my business partner, the company I’m working together with, to take this product to market. So I think having good clarity of humility and self-awareness comes in curiosity.

Jeff Hopeck: 

Yeah, that’s awesome. I wish you could sit in one of our meetings when we talk about that. We have that debate at the roundtable. Maybe next time we’ll FaceTime you in. It’s incredible what do you think are the most important? And you hear grit, and you hear passion, and you hear determination. And it’s incredible, and I teach my own kids.

Jeff Hopeck: 

So I have seven, five, three and one, so I’m starting that language with them already, and that’s the word that Chris and I have landed on is you can have all the other things, but without curiosity to know, like why is that the way? That is, what made that? How did that get here, right, yeah, I know it’s incredible, it’s almost like its own book.

Matt McIlwain: 

Yeah, I think that’s good. One of my buddies says he calls it the Trail of Ways. Well, why, but no, but why but why? Yeah? Why you just keep asking this trail of lies and eventually you get to ground truth on something.

Jeff Hopeck: 

I love that the Trail of Ways. All right, Shark Tank. I’m dying I am dying here, so it’s been around a long time. It’s good for many. Is it great for many? Is it great for all? What are your thoughts there?

Matt McIlwain: 

I think it’s clearly successful from an entertainment perspective and it gives you a little bit of glimpses into the realities of being an entrepreneur and risk taking. And I admire the financial terms they get. They’re way better than the ones we get here on the real-world West Coast technology investing. But I think it’s a sort of superficial version of whether realities of what it you know, not only the process of deciding who you’re going to partner with. You know, because that you know. Again, if it’s just capital, that’s one thing, but if there are people that are going to roll up your sleeves and add value, what’s the alignment around that? And then, of course, the hard part, which is the company building journey. You know we spend time sourcing deals, we spend time seeing if we got that alignment, you know. And then a lot of the hard work is building the company over many, many years.

Jeff Hopeck: 

But it’s fun.

Matt McIlwain: 

It’s entertaining.

Jeff Hopeck: 

Oh it is. Yeah, it is. I think a lot of people don’t understand that there’s a concept called after the tank, Aha.

Matt McIlwain: 

Yes.

Jeff Hopeck: 

So are you. I don’t know if you’re familiar with that, but the way it actually works, those deals aren’t done deals on TV. Because I had a friend who went on and his deal looked done and everybody talked about it is oh my goodness, did you see so-and-so? He got a deal with so-and-so, but the reality is now I want to put no names, company name, nothing. He went into after the tank and they did their due diligence. So it’s when the team I guess the financial team or the auditors, I’m not sure exactly, but have their meeting, they looked at his books and were like we’re not doing this deal. So he didn’t get a deal. Yeah, but-.

Matt McIlwain: 

Well, look, that happens sometimes. I mean, yeah, I mean you know it doesn’t happen all that often in our world, because usually by the time you’ve been willing to give somebody a term sheet, you know you’ve done enough of that kind of thing, that you know the surprises are not very frequent, but they happen sometimes. So yeah, sure, but it’s pretty rare.

Jeff Hopeck: 

I was just curious to hear from you All right, what has been, what is your philosophy and if it changed, great on like, walk us through that on family with business and juggling all that.

Matt McIlwain: 

Yeah, well, I’ll start with just family, first of all. You know, my wife, carol, is absolutely amazing, and then we have three kids 27, 25 and 20, girl, boy, boy, in order and I think one of the things that we’ve tried to model out again we’re far from perfect at this is we have this expression around the house, which is that we love you no matter what, and we said that often enough that they now say it back to us. So it kind of I think it sunk in over the years, and I think one of the things we learned maybe I don’t know five, six years ago is that the kids really heard that, as you know, even when we make a mistake, you’re still going to love us, and that’s true and we’re glad they heard that. But we realized that, especially in this world that they are growing up in, where there’s so much more, you know, sort of pressure and constant evaluation, like your identity is being evaluated every day in social media and one form or another that you know there’s really nothing that they can do that’s going to make us love them anymore. So we’re not going to love them less if they make a mistake. We’re not going to love them more if they are successful.

Matt McIlwain: 

My daughter is at Harvard Business School right now. I think that’s awesome. Sure, she’s got a very successful podcast. She was named to Forbes 30 under 30. I mean I could go on Great. You know my sons have been very successful in their early stages of their lives. You know my you know middle son lives in New York and he works for a big private equity growth equity shop and blah, blah, blah right, but we love them the same, or we’re trying to love them the same. You know good days and bad days and I think that that gives you a sense of identity and family hopefully as well, an identity in your faith, because you know our family is never going to be perfect. You know that it will sustain you in a world where your identity is always being challenged in the pressure of social media and whatever aspects of life that that is allowed in.

Matt McIlwain: 

So, that’s a kind of a core thing, I think. On the business side, you know, there’s definitely been seasons where I’ve had too much on my plate and it’s been harder to be present for each of them as much as I wanted to be. But I’ve been intentional about trying to do that and I actually got great advice. I mentioned this Jeff Kemp earlier. Jeff, one of the things he shared with me when our daughter was about 12, he’s like you know, find something individually you’re going to do with each one of your kids and that’s going to become normal and it’s got to be something they pick. And so with her, it was originally mornings with Madison her name’s Madison and so we would just go have hot chocolate and hang out.

Matt McIlwain: 

She’s older now. Now it’s sometimes it’s drinks with dad, but you know, but we still do it 15 years later, right, you know which is the cool thing? And then with the boys, one of them it’s about sports and the other one it’s about performing arts, because those are things that they’re into. And so I think it’s you don’t want to be over-programmed about it, but being somewhat intentional of finding those one-on-one things with each one of your children. I think it’s been something that’s been helpful. And then you know being a real great teammate with Carol, my wife, on. You know how do we, you know kind of work together to help each of our kids in whatever season. You know they tend to have their patterns of things they consult me more on and things they consult Carol more on, and then we want to be coordinated a little bit too on all of that.

Jeff Hopeck: 

Yeah, oh, that’s awesome. I’ve one finish, one finishing question, but you mentioned something that’s powerful. So the very last episode I did. We had a guy on by the name of Justin Whitmull, early and he wrote a book. He’s a lawyer in Washington DC and he wrote a book called Habits of the Household and I think it’s fascinating how what you just touched on he has this. He has this system for bedtime that he recommends and I’ve been doing it with with our kids. It’s, it’s, I mean, it is bliss, it’s unbelievable to watch and now to listen to how their minds have changed at not only bedtime routine but during the day. So you go, I actually did it with them before I come in on this show. Right now I go. Can you see my eyes? Cause remember seven, five, three and then obviously the one year old. Can you see my eyes? Yes, yep, can you see that? I can see your eyes? Yes, do you know that? I love you, no matter what bad things you do?

Jeff Hopeck: 

And the first the first 15 or so times saying that you can really see them and they’ve, they brought it up, especially my seven year old, really, even if I do bad things. And then, very next question do you know that I love you no matter what good things you do? Yep.

Matt McIlwain: 

That’s great.

Jeff Hopeck: 

Who else loves you like that? So I think it’s fascinating that you’ve been doing that. But you do not know, in that author which is incredible, because he that’s really awesome. So that’s really cool and you and you’ve touched on that. Yeah, all right, finishing question for you what, looking back at your life there, like where you, where you are right now, looking back at your life, what were the pivotal areas that truly shaped the human that you are today? Not just business, but the human.

Matt McIlwain: 

Well, I certainly think you know Mary and Carol, that was a big one, you know, she’s an, you know, an awesome human being and amazing, amazing spouse and a great pair for me. And we have a whole long story where we met in New York and then we we dated for a while and then we didn’t for years and we both ended up in Atlanta and all that sort of stuff. So it’s a that’s a long, cool story. In my twenties I I took some time to well, my twenties, two things happened. One was when I was in New York, a couple of buddies from college and a few other friends we started this non-denominational Christian fellowship group in our apartment in Manhattan, midtown, manhattan, and you know, back to that concept of people and relationships, you know so many of the people from that group over the years including that’s where I met Carol originally you know had had, you know, been friends and shaped my lives and hopefully we’ve had a positive influence on their lives. So having that community early out of college, I think was a really big, big deal.

Matt McIlwain: 

And you know, and then a few years later, after grad school, I I sort of created this, you know, sort of life mission of having depth in your relationships and the courage of your convictions, the depth side being you know your faith, your personal relationship with your creator, your spouse, your kids, your immediate family, kind of this concentric circles idea of relationships and trying to prioritize them that way. And then the other being you know, if you don’t have a point, if you don’t have like a set of values, then how can you actually have a values based point of view on any issue of the day, you know? And so that’s having conviction about something. But then courage is, I think, having the judgment to know when and how to share your views and to really listen to others. Back to that curiosity point, and so again, far from perfect on living out that mission, but that’s kind of defining that in my twenties I think was pretty foundational to how I’ve tried to live out life since then.

Jeff Hopeck: 

Fascinating. So grateful that you were put in my path. This was awesome.

Matt McIlwain: 

Thank you it was great.

Jeff Hopeck: 

This was such an awesome interview. Thank you so much. So thanks for taking the time at folks. This was this was a remarkable episode. Again, it’s it’s not a business story, although there’s substantial business success in the Amazon thing, which is remarkable but we have a family man here and I think that’s just what, what is so interesting about your story, matt. So thank you again for joining us. Folks, as always, really really appreciate if you can take a moment and rate us, leave us a review on on whatever platform you’re watching us. Brand new, this episode will be on YouTube. So, matt, you’ll be the very second person now to be on our YouTube.

Jeff Hopeck: 

And then, lastly so this legacy I like to say it’s a lot more than just a lot. It’s a podcast episode, it’s a true legacy. It’s my, it’s my, my passion project. You’re going to have a dedicated place on our website with your own. It’s like basically having your own website within ours, which will have your video. It’ll have your podcast episode as well. It’ll have the transcription and an entire blog post of the just the personal, you know connection that we made here today. The questions, because my vision for the whole thing is this lives way beyond. Where would my kids get older? They can press, play and listen to these stories and just I mean. It’s basically like having you know, matt. I sit here and I take notes, I mean.

Matt McIlwain: 

I page after page, so I’m filling these notebooks up, so it’s special.

Jeff Hopeck: 

So just want you to know that it’s, it’s, it’s. I’m grateful personally that you, that you joined us.

Matt McIlwain: 

It’s a lot bigger than just Thanks for having me on and look forward to spending more time with you in person down the road Me as well, Matt.

Jeff Hopeck: 

Okay, Great that everything went. It was great being able to chat with the folks and learn.

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