Mary Grove — 75% of VC Dollars Go to 3 Cities. She Left for Minnesota. | Mary Grove, Bread & Butter Ventures [music] Um, well, thanks for coming on. Uh, I appreciate it. Uh, did some research on yourself, managing partner at Breadand Butter Ventures, based out of Minneapolis, Minnesota. Um, tell me a little bit about yourself. uh your 15 years inside Google and how you got started with bread and butter. Well, Johan, thanks for having me on the show. I'm a big big fan of your work and appreciate the the opportunity to chat and yes, as uh as you said. So, so my name is Mary Grove. I am managing partner at Bread and Butter Ventures and just thrilled to be, you know, working in pursuit of of building uh a venture capital firm from the Midwest to support and invest in founders nationally in a few key sectors. And so the story of of bread and butter and the story of how I came to the work just to back up a bit. So my background is has always been in in tech and kind of early stage investing. I was really lucky to grow up in a a scrappy immigrant entrepreneur family where my parents both immigrated separately from Thailand to the US in search of economic opportunity and a chance to build for the family they would go on to create and the family that they were providing for back home. [snorts] And it was inspirational to grow up in this environment. My parents both had backgrounds in healthcare as well. And my mom was an operating room nurse for for 25 years. My dad ran a clinic and um growing up in that environment too informed a lot of the work that I get to do today. So fast forward, I went to college, I studied at at Stanford and you know was very serendipitously in the backyard of of tech in Silicon Valley at a really interesting time and a pivotal moment. So, I was lucky to get to join Google right out of school and thought I would go for one year on the way to law school, but that ballooned into um just shy of 15 years when I when I left and it was a a great adventure. So, really got to work on a few things from the IPO deal team when the company went public in 2004 and then worked in a team called new business development helping incubate new product partnerships and work on emerging market expansion for about seven years. and then got to help build what is called today the Google for startups organization which is looking at how does Google leverage its time its talent its technology financial resources to really fuel the next generation of of Google's to be built launch and grow so that was chapter one and and really where I grew my deep love for working with very early stage companies number one and number two this concept that we have an opportunity to democratize access to capital in more places and look at emerging markets whether that's across the United States or across the world and that has been I'd say a throughine of of the work. I love that perspective because an emerging market could be within nationally within borders of a certain country with a country as big as the US. You could consider a state like Minnesota emerging market. Um, right. And you don't really have to leave the borders of the country. Emerging in in so many senses of the word, right? There's there's so much opportunity. You're absolutely right. And a lot of when I was at Google, a lot of my work was in emerging markets internationally, right? In the Middle East. Um I spent a lot of time there for example, which was was such a highlight. But in the US, you're right. And if you talk about the democratization of access to capital, for example, still today, 75% of venture capital dollars from a funding perspective still go to three markets. Silicon Valley, New York, and Boston. So if you look at every other ecosystem by definition is emerging in that sense. Y and I I say so with a great degree of optimism about the possibility because because I chose to physically move from Silicon Valley in New York where I'd spent 20 years to the middle of the country and to be building our firm and our family here has just been such a a wildly interesting ride. And so I'm excited to talk more about that. But our our whole thesis is rooted in exactly that. It's capitalizing on these markets that are that are hidden gigantic global opportunities. You can't imagine now you and I are family people. You have kids. I have kids right? You can't imagine some of these young founders starting and raising a family in downtown San Francisco, could you? I can imagine doing it everywhere, right? But the circumstances are are very different. And I think yeah, one of the things that Minnesota too where my my chosen home state now is consistently rated one of the top places in the country to raise a family in fact and there's a lot of things going for for us here. But I think ultimately it's that sense of community but from the perspective of building a company markets like Minnesota and many others around the country. One of the biggest draws is the capital efficiency of building a business in a market like this, right? It's it's just talent is more affordable, cost of living is more affordable, the cost of office space is more affordable. Some of the fundamental pillars of of building give you a huge advantage. Now that you're seeing like a lot of the capital go to San Francisco with the AI boom, does does that is that hard for you to see leaving there? And um yeah, how do you how do you make that counter case to the people and to the founders that that you want to build for you? Well, I I would say that it's not that the capital is leaving to go to San Francisco. It's never left San Francisco, right? It's sort of it's been concentrated there. And and you're right, a lot of the new funds that are emerging are, you know, AI focused funds. So are we. And I I think it's a good thing that there is more, you know, more activity more funding happening in general and I really don't see borders if you will. So from a breadandbut ventures perspective for example you know we invest nationally in companies in three focus areas. So food tech which is the the tech stack of the global food supply chain digital health which is the you know the tech infrastructure and tech enabled care delivery side of of digital health and then the third is vertical SAS so enterprise SAS more broadly especially focused on supply chain manufacturing future of work and the reason we've chosen those three sectors one it maps to our team's expertise and backgrounds but two I think equally important point it maps to the enterprise backbone in Minnesota, which before I moved here, I I really didn't know. Minnesota is home to the highest concentration of Fortune 500 companies per capita in the nation. And companies that you know and are really familiar with ranging from EcoAB, Cargill, General Mills, Target, 3M, Mayo Clinic, Hormemell, you know, you think about Securian Financial, all headquartered here, right? global companies but headquartered here. We have an unfair advantage in helping companies access market, go to market more quickly by leveraging that. So my counterargument or my my pitch if you will when we're talking with founders or talking with LPs about investing in the in the firm and the funds, it's that we really aren't trying to replicate Silicon Valley and build the next Silicon Valley. We are trying to build in the heart of America in the middle of the country in these durable built to last industries from the ground floor and it makes total sense to me having seen both and I have no um anti-Silicon Valley sentiment. I absolutely love it. I grew up there professionally and I think there's so much merit to it and equally I think there's so much merit just to speak to to our own state now to building unique modes and unique advantages in ecosystems like like the Midwest. One of the modes that I see right away is that your go to market strategy because of the connected network that you have in the Midwest there with those big companies, you could really take innovative technology and find a market really instantaneously if you have a good network. Right? Am I wrong on that? you you can access one of the the beautiful things that we've built is you know how does bread and butter leverage this Minnesota advantage that I speak of? We've done so by building formally what we call the breadandbut innovation circle which is 19 enterprise partners large Fortune 500 large enterprise partners formally working with breadandbut with our companies and with each other right in support of early stage innovation and you're absolutely right Johan that the flywheel of getting insights from industries getting top- down insights on what are their strategic priorities pain points what's around the corner marry that with bottoms up trend depends on what are we seeing? We're seeing 2500 deals top of funnel per year. We're really being able to aggregate themes around what is what's the pulse right now from the ground floor in both directions. So for example in healthcare thinking about um you know the urban rural access challenge thinking about how to enable care delivery at high quality for more people in more places. Thinking through remote patient monitoring chronic care management is been a huge topic. For example food as medicine and addressing long-term health through food at the core is another big theme that's emerging. We're seeing that both from the healthcare side and from the big enterprise side, on the food side, which is really interesting from a supply chain perspective. We're seeing tremendous use cases for leveraging AI to do everything from forecast planning to demand planning to responding to RFPs to managing, you know, customer contracts. And a lot of the automation that we've been talking about for years is really kicking in. But we're able to access from, you know, level zero, if you will, from the ground floor, um, much more quickly, no matter where the companies are based. Being able to work with the corporations here is a is a big big advantage. Yeah. And it's like having pragmatic use cases. I it's uh there there was a a meme that I saw. it was Canada specific, but um the the Alberta, you know, part of it was very uh thinking about profit and an actual business, whereas the coasts were more up in the sky um with weird use cases. But in the Midwest, it kind of mirrors that to to the Alberta approach. is like it's very pragmatic. You have businesses that are real businesses with real uh global markets and if you can apply your latest and greatest tech there like that is the use case that's going to scale, right? And it's it's real people solving real problems in tangible industries often bootstrap because they have had to. And so you can find these very generational profitable businesses building in in steel manufacturing for example and you know it feels like the best kept secret but it is really the throughline of that those bread and butter if you will you know sectors of the modern economy and we have seen so much trying to build this permeable membrane between these titans of industry and the emerging tech in their verticals. I'll give you, you know, a recent example of how we have worked with industry. We are, we just led um the round of our newest healthcare investment, a really exciting company called Q rounds that that happens to be based in Minnesota. And they've built a communication platform that is utilized in hospital settings to do two things. One, it optimizes the physician queue of inpatient rounds when the doctor does the rounds in the morning. And at two, it answers that ever important age-old question. You know, when will the doctor be here for the family? Providing time transparency of okay, Mary's in the in the queue for 9:45 is her rounding time. Do you as my family member want to RSVP to join in person? Do you want to join virtually? Oh, the doctor got pulled into a meeting now. That time is pushed out to 10:45. It's it's a health equity play, too, in terms of who has access to be at the bedside. Not everybody can be at the bedside of their loved one for let's say a month. And so it actually allows family members to join and provides real time language support if that's needed. And so we we talk about the workflow optimization on the one hand. It's vertical SAS healthcare SAS. From a patient experience perspective, it's gamechanging and it's super intuitive. And so with Dr. Mike Pittz, the founder and CEO of the company. We met him a few years back when it was an early idea and earlier than Brennan Butter would invest and we stayed in touch, but they were reintroduced to us via Fairview Health System, one of our partners on the enterprise side who had been deploying Hurounds internally for over 2 years and resurfaced it for us saying, "Hey, the ROI data here, the outcome data is incredibly compelling. It's worth, you know, taking a look as I think about the round of funding. " So we ended up reconnecting being blown away by what they're building and led their seed round earlier this year. So as an example of keeping that relationship and then also validating with industry early and now trying to lean in to help them scale nationally uh you know Q rounds across the across the country. You you have a a very big insight into this. Are we in an AI bubble? Like, are we seeing valuations at the sea level too high? Um, what do you think? I think that we are in an AI bubble. Absolutely. I don't think we're near the peak of the bubble. And I think AI in a sense is an adjective across building companies or operating or working adapting to this environment. So there are some pure native AI companies. Absolutely. And then there is the adjective across every company I think needs to understand where they are in the AI continuum and have a a look around the corner perspective on that and being able to articulate that in sales meetings with customers with investors with potential investors. And the strategy can actually be we're not embracing AI. we maybe use it internally to optimize our efficiency, but we're not an AI native company. I do think that yes, you're seeing a lot of the the coastal in particular, you know, idea on paper huge valuation out the gate that we saw in a little bit in in 2021 too and we've seen in in previous cycles. But our approach is a fewold. One, absolutely try to remain uh fluent current educated testing building, shipping stuff as a team internally to experiment. Two is trying to you know do lean into tech diligence too when we invest in AI companies which we we absolutely do. And then three is work with the portfolio as I alluded to earlier to understand what what are the AI components of their strategy and then how does that help or hurt our our pitch and I would argue you know I'm a healthcare investor where I spend most of my time investing in B2B technology that sells into health systems health plans provider networks that is a we're in the early innings from an enterprise level adoption still and some of the companies currently having the most success are not lenient to AI and in so I think it's it's part of it is understanding the timing curve and where where and when that's going to land when you have long enterprise sales cycles. So thinking about absolutely dreaming about tomorrow and the future but also being very pragmatic about what's the business today I guess and real benefit to the patients real benefit to the doctors um and how this technology can actually help that's a that's an interesting perspective were you around for the um do bubble do you take uh well you don't have to answer that I was I was alive. [laughter] I was in I was in college and so and here's the thing. So I have I graduated I joined Google in 2004 as I you know joined as that year the company was going public and so I have enjoyed for most of my career in tech. We've been in a you know a really strong market minus the the 0809 the financial crisis the housing crisis. Um and that time I was working at Google. So from a venture perspective you know we've been enjoying a pretty long run of market conditions and that's changed that's that's you know a general statement I think within specific sectors things have transformed a lot in the last six years with the pandemic as well. Think about, you know, we invest in in the food system and in healthcare. And there were actually tremendous tailwinds for both of those industries coming through the pandemic. A lot of investments in teleaalth and infrastructure, a lot of investments in supply chain, a lot of investments in you know some of the the um the emergency um protocols where regulations were momentarily suspended. For example, in teleaalth, right? reimbursements were flowing. A lot of innovation could be tested during that time actually. So I feel like we're we're always, you know, it's it's always cyclical. But if you go back and look at the markets from returns perspective, the venture fund vintages coming out of those cycles performed extraordinarily well from the dot, the 08 09 and even coming out of the pandemic. And so I'm I'm hopeful and confident it's a great market to be building a company, but also to be to be investing from a venture perspective. Yeah. And um those events definitely give you a lot of perspective and it's you're just not too focused on uh one thing. You can see the trends over long term which I which I bet is a great skill to have as a as a VC. Well, and what was what was your experience in that time if you from a kind of venture perspective? Oh, man. I I just remember going down the stairs at my local mall and seeing um Bill Gates on the TV talking about Enarta DVD uh CDs and how encyclopedias on disc were the next big thing. And then there was a small kiosk with uh the internet being demoed on a Netscape navigator browser uh with with with Mr. Starchy Tuberhead and like it was like the formation 9697 the formation of the internet right there and and how people viewed it differently. Um even a titan like Bill Gates and how they pivoted too with Internet Explorer. But uh it it's just a great it was so hypy very hypy at the time. You you had the word internet or you had the word web in your name. It was people playing stocks. It it it felt very similar to nowadays. It really now the joke is you just get theai domain, right? I mean it it feels uh so so while I was still in school in that cycle having lived through and being at Google through the kind of the the mobile revolution cloud computing quantum now AI it does feel like a different era fundamentally has shifted and you know I have nine-year-old twins and experiencing the world and introduction to tech through their lens through their eyes it is a completely different I mean it wasn't that long ago that we were in their age you know and it fundamentally feels like like lifetimes ago and I think there are there are positives and negatives but really just trying to I would say embrace but also embrace with caution right we we much invest in tech that is has human in the loop or human at the center when you speak about healthcare specifically I fundamentally believe that the applications of AI to health care will be the most important applications of our lifetime and I'm really excited about it and the caution comes from it's lives its patient lives at stake right and so when in our work with health systems we and health plans we think through that continuum of applications of AI on the front end to infrastructure the administrative backend operational efficiency as as one bucket then we think about the application of AI to augment things like clinical decision support where ultimately human is at the center still and then optimizing care delivery, right? And and personalized medicine and the ability to harness the power of data which we all know to be so powerful but so many health healthcare organizations simply cannot utilize the treasure trove of data that they have. It's unstructured. It's there isn't a team internally to support it. And so we've made investments in companies like NimbleMind AI as an example, multimodal data platform specifically for clinical healthcare data to really harness the power of it and to standardize it and to utilize it and to be able to train LLMs with it. And so I do think that's the next frontier and we, you know, we want to be here on the early side. Yeah. No, I seen a an article recently about how AI is helping diagnose things earlier, uh curing things earlier. It's it's really amazing how how this is helping. Um do you think going back to the macro level like do you think AI is as big as the internet or bigger in a way? Gosh, that's a great question. I wish I had a crystal ball. I think it I think it could be. It does feel like we've entered a new era and it's it's happening fast. I have a lot of you know there's I have concern for example about the environmental impact and some of the longer term elements that we are talking about as front and center right now but I I do think and just robotics in general too has been an area we've spent a lot of time investing in specifically currently with respect to the to our food tech investing and the supply chain and restaurant tech right we have a an awesome company called XRobotics that is robotics and automation for within the restaurant setting and they're live within um with within the pizza preparation line for example at at restaurants and just thinking through that future where it feels like you know it was a movie 10 years ago and we're actually seeing from a supply chain logistics manufacturing a lot is happening from that from the automation side so I I do think it is the next frontier of how we think about labor of how we think about workforce of how we think about communication and I'm very cognizant to that I feel fortunate to be in that generation that I think has will have experience and bridge both analog digital and I don't know if you AI it's third category right we had the VH I heard of you must be Gen X is that what uh yeah so it's just a it's a fascinating time to be alive hey you know what we might even be the first generation or one of the generations to also go to uh space fairing as well like who knows like this we still have many years left right and I know and uh on on that note it's like you see all of this abundance in terms of intelligence in terms of digitization in terms of our knowledge everything is just kind of like exponentially going up even scientific discoveries uh human productivity. What do we do with all of it? It's just a small little world that we're on. We're on a small pale blue dot here. Um I know what I think's going to happen. What What are your thoughts? Like what happens to to to us as a as a as a race, as a civilization? You you think you know what's going to happen? Oh, yeah. I know what's going to happen. What's going to happen? We're we're going to be multilanetary. I think that's that that's the whole thing. like we have a lot of abundance in terms of uh like I said all of those different things probably energy very soon and the only thing left is just to to to leave this planet and and uh do something else with it. I'm not going personally. I like the earth but you know some other people can go. I think it's very likely there there absolutely is is life within other ecosystems. I mean that just a mathematical probability. I I've been really focused lately on on trying to be I think because of this this massive shift of digitization so rapidly. I've I've actually been and while leaning into that as much as possible, also trying to lean back into the human humanity and the human connection side and the mindfulness side and the, you know, and trying to raise great humans too. Just really has has made it so poignant, if you will. Yeah. And I think in in the because of growing up at Google professionally all those years, I've always uh hoped to be, you know, such an early adopter and on the aggressive side of of all of that. And I remember um you know, my husband was really early at YouTube and he built out the news and politics team there, too. The first time that YouTube was used in a presidential election was the '08 presidential race. and you know this the hope and promise of what the internet what social media could be in these contexts. And you fast forward, you know, a couple decades later and you see how that has evolved right into the the fake news and and some of the challenges of you we we we build so rapidly that sometimes the the community parameters around that or the regulatory framework around that isn't built in parallel. And so I think it's thinking trying to to step back amidst all the excitement and and actually think at a systems level to your point about what are the what are the long-term implications and what do we need in place to navigate that thoughtfully before it is a disaster to to fix. Yeah, it's an exciting time to be alive. um what what keeps you the and I and I really did like that point that you had about um human- centered and um it it AI is really giving people the opportunity to say do you embrace parts of humanity, you know, like do you cherish it even? And I and I think I have a thesis of why like the TCG market, the comic market, the collectibles market is doing really well because the these are are artifacts of human sort of like culture. Um, and it's just uh people equate it with like a on a human level, right? Like they've played games with Pokemon and Magic and all of these different comics and and that's why it's going nuts right now. So, so that's kind of like my thesis on on why that is. I think there's this this has been the summer of or the spring of nostalgia for the '9s, the [clears throat] big trend of everything from fashion to just the whole concept that we, you know, if we arranged to meet for lunch at noon, you either show up or you didn't. If if I'm running 10 minutes late, I can't just text you and tell you. You have to wait there and wait it out and figure you leave, do you not? and you know just that that the beauty of of that to serendipity and the I think there is a nostalgia for those of us who experience that that time frame and and it's it's well it's interesting just to see will we revert to that um a bit more over the coming years. It's funny you mentioned that because that's how I met my wife. I was I had a date with her and I was I don't know 20 minutes late and she just decided to stick around because she was uh she was intrigued. Um well, she was intrigued but also like it it took her a long bus ride to get there. So it's like you know I'll stick around and and then uh she could have gone she could have left and take another bus and go back but uh she stuck around and uh that was very human element right there. It was meant to be. Yeah. Exactly. Exactly. Um well I thank you so much for coming on. The the last thing I wanted to ask you on was like you you had supported so many entrepreneurs at Google. Um you now have your own firm. What is what are you excited about moving forward and what kind of companies you vested in? And lastly what are some of the pains that you experience being out of major markets like you just mentioned? Sure. Some of the things I'm excited about I there's such a sense of and and the business model of venture, right, is 100%. It's financial return. We we know the business model and we're we're we're laser focused on that. And I I believe I feel so fortunate that the sectors that we have that we have chosen to invest in that we get to invest in every day are some of the most fundamentally important problems for humanity around the food supply chain, around healthcare, you know, around the future of of the planet. I I truly feel it's a joy and a privilege and an intellectual gift frankly to see thousands of of opportunities a year and then ultimately to roll up the sleeves and go deep with with dozens and we have 85 companies in the portfolio currently and I could you know talk your ear off all day long about some of these solutions for and the power of a company that um I was meeting you know earlier today with with Caitlyn Christine the founder and CEO of Gabby one of our portfolio companies in women's health and Gabby as a as a virtual breast specialist helping drive helping women understand their risk assessment and ultimately drive early detection of breast cancer and using an AI powered algorithm right and it's it's they are have already driven detections that have saved lives and when when that's the the goal I mean it's so fundamentally so I I'm really excited about the application of of AI in this next era to problems like that and to some of these most fundamental problems that are at the end of the day data challenges in many ways. And so, you know, expect to see us being continue to be super active uh in these areas and think about as we usher in the next wave of manufacturing of supply chain. A lot of these industries are operating with analog infrastructure and then that shift to digital is transforming over the next you know 1 2 3 5 10 years. And so Ventures is well positioned for for that. So that's one. Two, to your question about, you know, I love being in that in the underdog um kind of swimming against the current a bit too, if you will. And what we're trying to do from a venture perspective and the business model, that's not new. what is new is volitionally choosing is identifying I think opportunity going there and trying to unlock it and harness it nationally from a specific place and that's what I feel we're in the early inning still of our breadandbut thesis around this Minnesota homefield advantage and our innovation circle with our 19 partners we're six years into that strategy now of leveraging of building and leveraging that corporate at work. And I'm so excited because I really think that is the the bread and butter, if you will, of of the team and our work. It's how do we create that flywheel back of industry, you know, companies being built, selling into industry, exiting, doing it again. And we have the opportunity of our lifetime and it's sitting right here. So my call to action, you know, to to folks, whether that be LP Capital, founders, and an interesting stat, so we've raised, you know, we're playing out of our fourth fund now. Collectively, it's almost evenly split. About half our LP capital is from Minnesota based limited partners and about half is from coast to coast and from Boston to the Bay Area, everything in between. And I I really like that because I think that, you know, we aren't trying to build in a silo. We aren't investing in companies only based here. We aren't investing in companies that only serve Minnesota or the Midwest market. What we are trying to do is to shine a light on these incredible opportunities. And we absolutely invest in Silicon Valley, New York, and Boston 100%. We think that, you know, opportunity is everywhere. and to try to build those networks of of helping companies who are based in the middle of the country access capital as partners on the coast. You know, it's it's really to build that one giant impactful ecosystem. So, it's been great, but I it has been it is a challenge when there isn't the same density here. We have phenomenal companies being built here who often will move to the coast right when they hit series A or B or C and well while I think that you know that has made sense historically because they you go where the capital is I think less and less it's making sense because investors are investing everywhere. You're making decisions virtually. You're supporting companies virtually. It's not about the 50 mile drive radius anymore. So I'm I'm really excited about the the new frontier. Yeah. And it seems like you're I just picked up on it, but like you seem to be doing a lot for women's health, which is like know a lot of on is chronically been underfunded, you know, in in certain ways. I talked to I talked to other founders like that serving that ecosystem. moms um who apparently are the uh well not apparently I know this for a fact the the biggest spenders in the household controlling the controlling the economic spend of the United States yes it is it is women who control that largely by the percentages moms from a household purchasing perspective and yes you know it's interesting because we have we have a quite a large women's health portfolio and another company you know Delfina in the maternal health space AI powered you know maternal health platform form that does maternal fetal monitoring to predict complications using AI and then to to create and execute a care plan, right, to help um another another great example. But I do think that women are half the population. So we're not when we talk about underserved market, it's underserved absolutely from an investment perspective, but from a from a user perspective, it's maybe the greatest economic opportunity of our time, right? it's to build for the other half of the population. And I'm so excited because a lot of the healthcare models currently have been trained using data that's that's not uh you talk about Gabby, the breast cancer uh detection company I mentioned earlier. Their algorithm is built on the largest most diverse data set in the world, which is so exciting, right? because it's the the current algorithms for breast cancer risk assessment were not trained using data of people who look like me. And so that's just a really fundamentally exciting thing where you know all this data exists. The ability to to harness it to structure it and to use it uh is is where we're focused. That's so cool and and that's a that's a absolutely great sort of perspective and thesis. So, thank thanks Mary for coming on. I'll uh let you get back to your idealic life out in Midwest. And uh come visit us, please. And I thank you so much for this opportunity. It's such a such a fun conversation. And yes, to anyone listening, you know, I really just um it's inspiring to see opportunities in other places and would just invite invite all of you to come spend time with us in Minnesota or virtually, right? bread ventures.com is our website and we do have open office hours there that that you could book to have a virtual chat with with any of our partners. Um we'd love to get to know you and just uh do more together. So, thank you for the time, Johan. You're welcome, Mary. Thank you.