(upbeat music) - Hello, I'm Nido Qubein, welcome to Side by Side.

My guest today is the co-founder of Piedmont Capital Investments, helping technology companies turn ideas into realities.

Today we welcome Ms.

Louise Brady.

- Funding for Side by Side with Nido Qubein is made possible by: - Coca-Cola Consolidated makes and serves over 300 of the world's best brands and flavors to over 65 million consumers across 14 states and the District of Columbia.

With 17,000 purpose-driven teammates, we are Coca-Cola Consolidated.

- The Budd Group has been serving the Southeast for over 60 years.

Specializing in janitorial, landscape, and facility solutions, our trusted staff delivers exceptional customer satisfaction, comprehensive facility support with The Budd Group.

- Truist, we're here to help people, communities, and businesses thrive in North Carolina and beyond.

The commitment of our teammates makes the difference every day.

(upbeat music) - Louise, welcome to Side by Side.

Your life is fascinating.

You have done so many things, and I'm not sure a lot of people who know you know about all the accomplishments that you've had in your life.

For example, I'm not sure that people know that you majored in economics and industrial relations at University of North Carolina and Chapel Hill.

But you went on to be a major partner in Piedmont Capital Investments, which invests in all kinds of companies, mostly technology companies.

Am I right on that?

- Correct.

- And we're living in the age of technology, and most of us are scared of what's coming next, what with AI and all of that.

Give me an idea of what kind of company you pick and why.

- It's a great question.

It's all about people.

We're looking for good technology, but the people are what makes it happen.

So the founder of the company, we're earlier stage.

So, and the first fund, it was, we were starting companies, spinning companies out of university.

We got great advice from, well, you know, Henry Kravis.

Good buddy, and he said, we went and visited with him and said, well, what would you do if you're starting a fund?

How would you go about it?

He said, you're in North Carolina.

You've got the best universities.

You should go to universities, find the smart professors, spin their technology out into a company because corporations aren't innovating anymore.

They're buying innovation.

So that's how we started out.

And then fast forward to the most recent fund.

Now we're not starting companies.

We're still doing earlier stage to mid-stage venture.

But really, when it comes down to making the decision, it's about the people.

- Yeah, but how do you know, Louise, if this person really is as promising as he or she suggests they are?

And how do you determine, we're talking about people, you're talking about behavioral patterns, their culture, their beliefs, their skills.

How do you determine that?

- It's learning, but I think being in person with them is really important, especially nowadays where so many people, you're on Zooms and you can get a lot of good work done, but we really focus on face-to-face and meeting monthly or if not every other week so that we're with the person and really see how they react in stressful situations, how they react in social situations.

And because at the end of the day, you know in every company we've been in, something's gonna happen.

Nothing goes along like clockwork.

- Yeah, you can't predict it 100%.

- That's why they use the word pivot in our industry.

Something's gonna blow up and you're gonna need to readjust or pivot.

And so you wanna be in the foxhole with somebody that's gonna be good to work with.

So that's why it's all about the people.

- So give me an idea, how many companies would you say you're invested in?

- Currently about 35.

- And that's a lot of companies.

And you take a minority position or majority position?

- We take a minority position.

- Minority position.

- And we don't lead deals, 'cause we're not really experts of anything.

We have a discipline we like to follow and industry trends that we follow, but we're not an expert in anything.

So we don't feel like we should be leading the deals or pricing the deals.

- Well, you're an expert in lots of things.

You just may not be an expert in that particular industry or that particular product.

- We try, always learning.

- Yeah, so what are the two or three things?

If people, you said people are sort of the cornerstone for you, obviously you didn't mean just people.

You meant also what they bring to the table in terms of ingenuity, creativity, innovation, new ideas, so on.

What are the two or three things you look for in people?

- They've gotta be scrappy.

They've gotta be hardworking.

You love it if they don't take no for an answer and keep at it, because some of the problems are really hard to solve.

So you want somebody that really is not gonna give up, that lives and dies by their idea or their product or whatever it might be, and just has an insatiable appetite to succeed.

- So initiative is a big deal.

- Yes.

- Get up in the morning and go get 'em tiger, you know, that type of thinking.

- So it's high energy.

- Yeah, tell me about a company, you don't have to name any names, but a company that you got involved in, and man, it went great, and you were thrilled with that.

But of equal importance, tell me about a company you got into, and all your hard work and all your forecasting and all your future view just didn't come to be.

And then I wanna know, why did this one succeed and why did this one not?

- Okay, it's kinda funny, so when we started, when I left the traditional banking investment business and went into venture, everybody told me, oh, if you get one deal out of 10, that would be wonderful and that's what will make you successful.

I was like, absolutely not, we're gonna get eight or nine out of 10 right.

Well, the odds end up being a little bit more towards a former.

But I guess the success story would be our printing company, which we spun it out of university out of UNC with a professor, chemistry professor, but he was in all three national academies.

- Is that the one that Nike uses with the shoes and all that?

- Adidas, Adidas uses it for the mid-soles.

And it was the first unicorn in North Carolina.

So that was really fun, it was very successful, moved it out to the Bay Area for access to talent, the software and hardware talent.

And that one's been a big success story.

It has not been a straight road, it's been up and down, up and down.

- Of course, of course.

- But it's one we're proud of.

- And why did that one succeed?

- I think early on we went out to Silicon Valley and partnered up with Sequoia Capital, which is another well-known venture fund.

And I think that was really a smart move because they're in the network of the software and hardware engineers, so we had access to talent.

And again, it all goes back to people.

We hired some of the best talent.

We hired our engineering lead from Tesla.

He was one of the first few employees who ran the whole engineering at Tesla, so we brought him out to help build our printers.

So you do smart things like that and it ups your success rate.

- Of course, yeah.

And then other people hear about that and they're knocking at your door.

- Correct, and then you have access to capital because you've got good names that are investing in it.

So it paved the way for a smoother ride because of picking good partners.

- Everyone wants to latch on to something successful.

What about the one that, golly, it didn't work out and kept you up at night and stressed you out?

- It's interesting, and there obviously have been quite a few of those.

Sometimes it's the littlest thing.

We did quite a bit of biotech early on, and in biotech, you could say it's binary when you're doing early stage like we were.

There was one company that we were really excited about because it was gonna help wet AMD and all kinds of eye issues.

And the problem set that we were solving for is that people have to go in monthly and get a shot in their eye and it's not comfortable and nobody wants to do that.

So this was gonna be one where you could get a shot once every six months or maybe once every nine months.

So the adherence would have been better, therefore the results would be better.

It ended up that strangely, rabbits are the closest things to human eyes, oddly enough, and so you do all your tests in rabbits.

And the rabbit models, they did really well, but when it went into humans, there was a weird swelling in the back of the eye that was not predicted and that nobody thought.

And we just couldn't get it.

We tried to change the way it went into the eye, but you're not gonna give that to humans if they're swelling 'cause you never know what could happen.

So it's just unfortunate.

The team was great, the technology was great, we just couldn't get it delivered.

- Oh yeah, well that makes sense.

That's not the people are okay there.

It's the actual delivery of it or mechanics of it, et cetera, that might work out.

Very, very interesting.

Well, what about exit events?

At some point you wanna exit, right?

You think of yourself as venture capitalist, not necessarily private equity.

- Right.

- And that means what?

That means you hold on to the investment?

At some point you wanna exit the investment.

- We definitely wanna exit.

This is not a lifestyle thing for any of us.

The difference between venture and private equity is venture we go earlier stage.

So it's more risk involved because you're not sure it's gonna-- - It's not proven yet.

- Correct.

Private equity, they buy the venture companies.

And a lot of private equity now is like the public markets.

It's just they're large companies.

They just don't wanna be in the public market.

They wanna operate privately, but they're larger, more well-established companies with large revenue, predictable income, things like that.

In venture, we're not there always.

Well, not always.

Most of the times it's pre-revenue or a very small amount of revenue, but the product is somewhat ready to launch or is already launched.

But what we did differently in the first fund when we were starting companies versus the second fund where now we're going a little bit later in the venture stage, that saves us five to seven years.

When you're starting a company and incubating it, it adds.

So it's probably a 12, 13-year cycle that we've seen from early stage and seed investing.

When you're seeding the company, when what we're doing now, which is series A, B, and C, which is a little bit later in the venture world, we're hoping the hold time is more like three to five.

- That's private equity.

That's the span of years for private equity hopes to get in, three to five years.

- And we are real friendly with private equity 'cause we want them buying our company.

- Yeah, well, so does that.

Well, they're looking at EBITDA and so on and looking at multiples and that's, it's all about profit and so on.

I'm intrigued by what you do.

I know that you work with Bank of America.

I know that you work with Wells Fargo.

You're an accomplished banker.

You know what you're talking about.

You also serve on significant boards, public boards like Comcast and like Travel and Leisure, Wyndham, Travel and Leisure.

But what intrigues me about what you're doing is that you take a risk with talented people who have an idea in a free enterprise system and you see the potential in the idea and then you grow the idea and make it successful in most cases, you hope in most cases.

And when it doesn't work, you take it on the chin and you have to like the I thing, what happened to that business?

You just shut it down, just shut it down.

You just, you take the losses and move on.

You hope you learn from it and you move on.

What did you learn by the way from that one?

Did you learn something that you could have predicted early on?

- Most of the biotech investments, again, it's more binary and we're not deep experts, but you become pretty deep in it.

But you learn there's so many things that can go wrong when you transition from a mouse model or rabbit model in that case to a human.

there's just so much lost in the translation.

So there's so many different things that-- - Again, it varies.

- Come up and happen.

And you try to solve for all of them and you do all of the studies ahead of time.

And that's why we have to go through phase one, two, and three before you get approval because things can happen.

There can be side effects.

So they're all different scenarios that are fighting against you.

But our premise is some of these are worth investing in and worth fighting for because we need cures for cancer.

We need cures for Alzheimer.

We need to make all these different disease states approachable so we can stop them.

And so somebody's gotta swing for the fences and do it.

And that's what early stage investors do.

- Yeah, that's amazing.

You're an economics major, so you understand geopolitics and economics and all that happens around us.

How much of your business is influenced by external factors, i.e.

what happens in maybe even governmental regulation, rather than internal factors, like the example you gave us about the rabbit and the human.

- Right.

It depends on the cycle.

Right now, it's very influenced.

And we try to ride the wave of where the administration of the time is going.

For example, we're really focusing on American resiliency right now and electrification.

And because we see that this administration is putting a lot of money and interest in on-shoring and energy, so what we're trying to do is play into that.

We're also playing into the defense area because there's a lot of influence and money going toward that area.

So we're making investments in space, which is kind of the new frontier.

All of us think of it as the new frontier, but they've been using it as a branch of military for years now.

So we're trying to find innovative companies that fit within the macro trends that we're seeing.

So yeah, the regulations and the movements going on in Washington and around the world are definitely factors.

And what we're doing, a great example of one company was when we were doing some with the whole green movement and clean energy, and we had a carbon capture company.

And all of a sudden it's not in vogue anymore and the American companies aren't really reporting on it, don't care as much as they used to.

And so in the boardroom discussions, they kind of stopped talking about it.

So this company, we did a sale process 'cause we knew that we needed to go ahead and get out of it.

And we ended up selling it to a Japanese company where it is still important.

Europe is still important.

Japan, it was just in America, we were shifting for the time being.

So we find an opportune time to exit.

- With the involvement in 35 companies, first of all, I don't know how you keep up with 35 companies.

You must work very hard.

- Good partners.

- Good partners, getting reports, understanding what's going on, because that's sort of a daily observational process.

How do you manage risks?

I know the front end, you explained how you pick the right people and the right idea, but then there's inherent risk all along.

You've told us about the eye risk, now you've told us about another one.

What are the parameters that you look for in managing risk?

Financial risk, reputational risk, perhaps human risk.

I don't know what the risks are in your business, but it's clearly financial.

And clearly reputational.

- It's a great question.

Most of our portfolio companies, we either sit on the board or have somebody really close to us.

- So you're hands on.

- Yes, so we're hands on.

And I think in the boardroom, that's where you talk about all the risk and external factors.

And you just have to manage around it.

I mean, every business is different.

Every industry has different risks to it.

So you've got to manage it and it's always got to be top of the agenda on the board meetings.

Okay, let's look at what alligator's biting at us and try to solve for that.

And competition's always one of those.

Regulations, another.

Supply of money is another 'cause that really changes over time.

And so we always want to have a good long runway of cash to be able to operate and get to the value inflection point.

- Yes, capital is important.

You learned that as a banker.

Capital is very, very important.

- When the money is flowing, take it.

Don't worry about the valuation.

Take the money so you can accomplish your goals.

- So Louise, what excites you the most about what you do?

I mean, I've known you for a long time.

I've admired you both with your family and admired you in business.

You're a very successful business person as well, businessman as well.

You seem to have your act together.

Every time I see you, you seem to have your act together.

And yet, you're so involved vertically and diagonally.

And you've gotta have stress in your life.

I mean, you don't do all of this without some stuff that keeps you up at night.

What excites you the most?

What scares you the most?

- I think what excites me and what I love about what I do is that I learn every day.

It's like my learning curve is straight up because we're talking to these brilliant people and they're trying to pitch their technology.

So then we have to dig into the space and the industry and go deep on it.

So every day I'm learning, which is fascinating.

So I hope I can always do that.

And I think having high energy is important.

And if you are doing what you love, then it's not really work.

It's the same thing as volunteering in the community.

If you're helping others and feeling good about what you're doing to help others, then it's more about you feeling good than actually the output for other people.

- Yeah, and I should say that you're involved in a number of volunteer things, but I know, for example, Shift Ed, which helps all these students who have a need to go to college and have financial need.

And you've stepped up to help them in a big way.

And there are many other things that you're involved in and we all thank you for that.

As you look forward, and all of us are talking about AI, and some of us know a little something about it, and some of us just fake it 'cause we don't understand really the enormity of matter that's coming around the corner.

What is it that you see about the evolution of technology and as it affects our daily lives?

- AI is gonna be around for a while.

I liken it to when the internet came around.

It is that big.

So that's why there's so much focus on it.

That's why the markets are rallying because we do think it's got a long period to evolve.

And some people are scared.

They think it's gonna take away jobs.

I like to think of it the opposite way, that it's gonna make jobs more efficient so people aren't doing menial jobs that they don't wanna do.

They can do a job that they actually would prefer to do.

So we embrace AI and we are definitely following that trend.

- You understand it?

- Of course, I know enough to be dangerous.

(laughing) - Explain it to me.

- Does anybody really understand?

So the problem set, there's so many layers and we have a few companies that we've invested in that are trying to work with large language models or predictive software and everybody's trying to work their way into the software stack so then it's sticky and everybody's dependent upon 'em.

But the solutions are all different and we've got a handful of technology companies that are around the software AI space.

AI really, I feel like what it's doing is it's predicting.

Whatever you plug in, it can then take a massive amount of information and synthesize it very quickly.

I mean, that's basically what it's doing.

It's a supercomputer going through all the data but the problem with it, Nido, is that they're hallucinations.

And hallucinations can be a big deal.

The difference, and I know ChatGPT kind of opened this up for everybody with OpenAI, but they had a big hallucination rate, like 30 plus percent.

- What does that mean, hallucination?

- It's not fact.

- I see.

- They're pulling things but it's not fact.

So then like Perplexity, this sounds like a commercial, but Perplexity is another one and that's the one I use and I love it but their hallucination rate is much lower.

- I see.

- So they're in the 80s, per se.

- So the accuracy is much higher.

- Correct, so they're all trying to get better and better and Chat's already gotten a lot better than the initial launch but that's what they're all trying to get to is accuracy 'cause that's what people are scared about with AI is that it's not accurate.

It's like fake news or somebody doing something to your video and it's like, that wasn't my video.

They played with it.

So I think the accuracy's gonna be really important before people will really trust it and embrace it and they're getting better and better about that.

But it's inputs and create better outputs.

- So how do we prepare a workforce that is gonna be adept and skilled to deal with these enormous technological changes in a very short period of time?

I mean, I just heard just the other day that, for example, Amazon is gonna lay off literally tens of thousands of employees because they're using AI applications, whatever that means, to create higher efficiency and lower costs and so on.

What is it that you tell your children?

What is it that we tell young people today about, here's what you must do to be prepared for this new genre of civilization?

- I remember when my kids are in their late 20s and early 30s but when they were going to school, it's like you have to take a coding class 'cause to me, that was so futuristic.

Now it's not futuristic, nobody needs to do it 'cause the computers will do it.

But I feel like it's, and that's again why I love being involved with ShiftEd, which is an educational platform, because it's just shifting the way that we're gonna be teaching our kids.

There probably will be a gap of people that don't shift over and learn the new ways and so we may lose, you know, five or 10 years worth of capable people, sadly, but I think now all of the educational systems understand the problem set and the opportunity and so they're teaching to it and it's been interesting.

I was involved with UNC Chapel Hill and in their educational system, you know, they're really trying to use it and not be afraid of it and you know, you're not gonna get a bad grade.

We want you to use this to write this and so they're teaching them like the right prompts to get the better answer.

So I think it's all gonna be in educating our kids and I don't think really that all of our kids need to go to a four year degree.

I think a lot of them can go and learn a trade and they can use AI in that trade to make themselves more successful and therefore have a, you know, good, strong, six figure income and work for themselves or somebody else, but nobody can take that skill set away and I think we're gonna be pushing more and more for that type of education and finding out what is really the best use of that person's abilities and desires and they're pushing it down to the high schools to figure that out.

- Things are changing and changing very rapidly and I hope we can all keep up with all this stuff, but you certainly are and I admire you.

- I try to.

- I congratulate you and thank you for being with me today on Side by Side.

- Absolutely, I enjoyed it.

Always nice to be with you, Nido.

(upbeat music) ♪ - Funding for Side by Side with Nido Qubein is made possible by: - Coca-Cola Consolidated makes and serves over 300 of the world's best brands and flavors to over 65 million consumers across 14 states and the District of Columbia.

With 17,000 purpose-driven teammates, we are Coca-Cola Consolidated.

- The Budd Group has been serving the Southeast for over 60 years.

Specializing in janitorial, landscape, and facility solutions, our trusted staff delivers exceptional customer satisfaction, comprehensive facility support with The Budd Group.

- Truist, we're here to help people, communities, and businesses thrive in North Carolina and beyond.

The commitment of our teammates makes the difference every day.