May 21, 2025
[Full Podcast transcript at end of page]
Every once in a while, you meet someone who’s not just talking about building better ecosystems—they’re doing it. That’s Dan Magnuszewski.
We brought Dan on Beyond the Core because his story is a case study in what venture building can look like outside the coasts. He co-founded ACV Auctions and took it public. Now, he’s doing something arguably harder: launching a venture studio in Buffalo to back the next wave of founders and “unsexy” ideas.
There are three big takeaways from this conversation:
Dan isn’t waiting for the next generation of founders to bump into each other at a meetup. He’s assembling the team, the capital, and the infrastructure to make the collisions happen on purpose. That’s what studios are for—and when it works, it de-risks the entire early-stage funnel for undercapitalized regions.
What Radial Ventures is doing isn’t just about Buffalo pride. It’s about leverage. Buffalo has decades of industrial expertise, real customers, and a surplus of “unsexy” problems. Most investors don’t look at those markets. Dan is building companies specifically to serve them—and that might be the edge.
The way Dan talked about Radial’s AI-powered validation workflow was one of our favorite moments in the episode. AIs debating memos. Instant research. Rapid prototyping. All designed to get to conviction faster. That kind of thinking is exactly how venture studios will increase their hit rate—and lower their cost per venture.
Dan said something that stuck with us: “There’s no one coming to save Buffalo—we have to do it ourselves.”
That’s the spirit we believe in. Whether you’re in Buffalo, Cincinnati, Detroit, or anywhere between the coasts—if you’re building venture studios to unlock your region’s potential, we’re cheering for you. And we’re learning from folks like Dan on how to do it better.
— Ben & Marcus
Ben Yoskovitz 00:00
Obviously you're a big believer in growing Buffalo's ecosystem. But what do you say to folks that are like, you have to do YC, you have to go to San Francisco. It's the only way to do it.
Dan Magnuszewski 00:11
There is always that pull, or at least the narrative, that you can't do it anywhere other than these places. And for me, the more people tell me to do something, the more I want to show them that I'm going to do the opposite and I'm going to show them wrong. So don't tell me what to do, basically. So I was really convinced that you can build and there was, there were some examples of people who built successful tech companies in Buffalo prior. But for me, it was like, We can do this. We can raise venture capital, and this is what I'm going to do. And we were able to do it, and we raised from some of the biggest funds in the world, and we're able to do it and scale it here in Buffalo, and it's interesting.
Ben Yoskovitz 00:55
Dan, thanks for being here. It's great to meet you and really excited to talk to you about a whole bunch of things, including the venture studio that you're you've launched in Buffalo called radial ventures. I know you have a long history in the tech space, as a founder, as an investor, I think you know way back when, as a programmer and system analyst and a whole bunch of stuff. So we won't go through the whole long and winding road history. Want to focus on the venture studio, but maybe first how you got there, and I think ACV Auctions is a company you started that you took public. Would love to, you know, learn a little bit more about your background, to kick off and dig in on ACV. And then we'll jump into the wonderful world of Buffalo. Sure,
Dan Magnuszewski 01:43
perfect. Thanks for having me. Really excited to be here. So, yeah, my background is really, you know, has a interesting winding between very technical and going then more towards the business side. So software engineer ended up running an incubator and venture fund here in Buffalo, New York called Z 80 labs back in 2012 that was really a big pivot, you know, for me, doing startups and doing technical work, and then getting into the venture world and understanding how that works, and got to work with some really great venture capitalists. And from there, kind of got bored doing a lot of the investing advising, showing up every week to the advisory meeting. Hey, remember that stuff we talked about, how are we doing? Oh, oh, we're still in the same spot. Okay, we got to move faster. We got to do, you know. And you know, at my core, I'm a builder, and I like building product. I like building companies. And so for me, that wasn't enough excitement. So started looking at what I was going to do next, and actually had someone apply to our incubator, and had this idea in automotive. He was a used car dealer. He was out in Albany, had moved to Buffalo and was working at a new car dealership, and really saw inefficiencies in the wholesale market for used cars. Interesting enough. My My dad was kind of a small time used car dealer, and so in my past, I was used to, you know, I understood about auctions and somewhat, how it worked, and car dealers. And so for me seeing that, it's like, okay, this is interesting. I can build this. And so we started the conversation from there, and really kind of ran them through the program in terms of, you know, what are we building? Who's, you know, who's the customer. And fortunately, I knew enough about that, and we got to the point where it started nights and weekends working on it. I pulled in another founder, Jack Greco, to kind of round out the team, and we started building. And like I said, it was nights and weekends. And eventually left the left the incubator, and we went full time on it. We sold our nice houses, and part of the beauty of Buffalo is you can downgrade to a nice 1500 square foot, four bedroom house in a nice neighborhood with a 15 year mortgage and have a $1,200 a month bill. So it was great, but we did that and really started growing ACV, this is around 2015 and raised a million bucks locally, which was a pretty significant raise at the time, got the product to market within about five, six months, sold the first car we launched on our marketplace, and we were kind of off to the races From there
Ben Yoskovitz 04:41
and so. So tell us about, I mean, you did take the public, public, I guess, in 2021, right,
Dan Magnuszewski 04:47
correct. Yeah, so, and it was a, obviously a long, interesting path going, you know, going through it, we had raised $350 million total from the Bessemer. In Bain and Tribeca and Softbank capital, armory square, and a whole bunch of others. Over that time, the team grew from the three of us in 2015 and I think it was a little over 2000 by the time we went public building the engineering team in Buffalo, we actually opened another engineering office in Toronto. So as we, as we grew and expanded the team, you know, interesting things of, you know, going from a single product company, becoming a multi product company, then becoming a multi office company, and dealing with a lot of that hyper growth, we were growing 350% year over year for five years. And, you know, so there was a lot of in especially during that time, blitz scaling was a big buzzword that you really don't hear much of anything about anymore. Doesn't quite work right now, but at that time it was really, how do you grow? How do you get into, you know, new products, new adjacencies within the within the business. And, you know, for us, in really, for me, it was a great example of, you know, how do you scale and mature your team so that you can add more people and go faster? But at the same time, it's, you know, we started, we're an auction platform where you could, dealers could sell used cars between each other, as opposed to sending their vehicles to a physical auction where it ran once a day, you know, once a week. So we built that out and but then we had to start thinking, okay, look, what's next. And we had a really interesting, unique advantage, where we had our software in inspectors hands across the country, inspecting 10s of 1000s of cars a month. And, you know, we kind of looked at and said, This is an interesting advantage. A lot of times you think having people is maybe a disadvantage as a software. But in reality, you know, we had people that were trained by us, staffed by us, using our product and collecting inspection report data on it. And this was really the first point where we kind of realized, okay, there could be something there, but it's not core to what we're doing. And we spun out and we weren't calling adventure studio anything, but then we called it R and D, right? So I basically built a walled garden where I said, Okay, we're going to dedicate these resources. We're going to work on moonshot projects where we can build hardware, we can capture unique data, and we can start doing some machine learning and computer vision stuff on this and see what's there. But it may actually fail and not not work, but we'll keep the core business going, and we'll make sure we're dedicating the proper resources to these long, you know, long, low risk or high risk,
Ben Yoskovitz 07:53
high risk, yeah, so you ended up becoming a big company that was spinning out little companies, that
Dan Magnuszewski 07:58
was the goal, and we kept it internal. And so the goal was, hey, we want ACV to be the first customer. And so, yeah, we started building out these products. Learned a lot about how you have to kind of guard the resources. Every company, at its core, has a longer roadmap with not enough resources, and there's always that urge to just pull a couple engineers over just for a little bit, which ends up diluting us. We did a really good job of keeping that separate, but we were able to build out products in the inspection space that were we were able to get patents. We were able to now add a whole bunch of validity to the core marketplace of what we were doing was we understood, you know, what the big change was there. And obviously going into COVID, when everything went online and became remote, we had that advantage of being able to perfectly describe a vehicle, you know, just through sounds and vibrations and undercarriage, photos and stuff
Marcus Daniels 08:59
like that. I think it's it's fascinating, too, given the fact that you're such a builder, and you effectively spun out from an incubator and then took it the distance, right? That's, in many ways, the dream that a startup founder has. And then you had the insight being part of the organization, public, to look at growth, innovation beyond the core and not the stifle. Stifle it when you think about just the portfolio construction, as you just described, of some of these ideas that were on the adjacency what? What lessons have you learned? You know, being in a large organization that can apply wealth to kind of the studio frameworks? Yeah,
Dan Magnuszewski 09:35
and I mentioned some of it, it's really around. I mean, at first, you have to have leadership bought in right from the from the board level on down, and saying, here's the opportunities we see. May go to zero, may take a lot longer, but here's here in the future is where it starts tying in, and here's the benefits, and here's the doors that can can open. And for us, you know it was. Seeing, hey, maybe we are more than just an auction company. We may be a whole automotive landscape, and what are the different pillars there? So, yeah, it's getting that buy in and having that discipline to say this team is focused on these very hard things that will take a while. You have to keep the communication going at the at the board level. And honestly, people get very excited about this stuff too. So it's always, Hey, how's this stuff going? Maybe more, a little more interesting than the incremental update product. So, but we use that as as an interesting way to bring in new people and keep people excited. And really, from the investor standpoint, as we were going out, raising rounds of capital, doing this added hundreds of millions of dollars to our valuation, because we're now viewed as this automotive solution company. And really, we can do inspections, we can sell now we're adding financing, and all of this stuff makes you more than just a one trick pony. And they're and they can, they can see that, you know, it's more than just whatever the initial thing it is that you're trying to solve with the company. So, so it's great, but there is that discipline that you really need to have and in focus. And it is tough at times, even when you have the buy in, and, you know, there's, there's some big, you know, product release you're trying to get out, or deadlines you're trying to hit. And you know, being able to say no and maintain that focus is huge,
Ben Yoskovitz 11:34
right? So you didn't spin them out into separate entities. They were effectively product lines, subsidiaries, lines of business inside ACV auctions,
Dan Magnuszewski 11:43
correct. The goal was, in the mandate I kind of had from the beginning was we're building this as though we are going to spin it out, and ACV is the first customer. I don't, I don't, I know there. I don't know. The current plans have been out for a while. Those haven't been spun out fully. But you know, the way we built it and the way we thought about it, and at least the mentality of the team was thinking beyond just okay, we're going to tightly integrate with what we're doing, and we're going to do it the same way we're going to do all this. It's, How can anyone connect into this. How can you know? We move data around. How can you know, when you think through it that way, you build better solutions, and it gives you that optionality that you then don't have to go back and rewrite things and rebuild from scratch.
Marcus Daniels 12:32
So, and did you pitch effectively a vision over what sort of time horizon, you know, building out multiple ventures? Or was it just seeing how it would go and then take more of an executive decision based on priorities? Yeah,
Dan Magnuszewski 12:47
we had a couple initial ideas around what we wanted to build and and there was two really, you know, big ones that being in the business we understood. So the first one was the sound of an engine. So we essentially said, you know, we can record, you know, we're looking at inspecting 50,000 cars a month. We can get the sound of those engines and build it out in a way where we know we're going to do a bunch of machine learning on top of it. So tag it, make sure the data is clean, and we can basically build Shazam for car engines, right? So you can understand, is there an issue then? Then eventually you get the models get better. You can tell what the issue is. You can so we started building that, you know, from that premise, and built some hardware to ensure we were doing it. And so we're like, Okay, we're gonna, we're gonna work on this one. First, we think we can get some good traction on it. You know, we had rough timeframes, but especially when you're doing some hardware stuff as well, it gets a little fuzzy, but, you know, but we had enough latitude to say, here's the plan, we're going to do this, and then we have this other really interesting idea, and we'll, we'll do some research around how we can get it done. And that was really, how do you scan the undercarriage of a car without having physical infrastructure, permanent infrastructure, built out because we had dealers that would get the cars that they bought off our platform, put it up on a lift and see that there were issues. But putting it up on a lift is tough and time consuming. No dealer would let us do it. So we built these little devices you drive over and basically scans the undercarriage and, you know, allows us to say, is the catalytic converter missing? Is there rust or rod or any of that kind of stuff. So, so we knew there were tricky problems without, you know, there were kind of non trivial problems to solve. And we were given a good, you know, enough of a leash, but made incremental progress along the way to where it was exciting. And as you know, our business was growing, and we started seeing how this can help prevent different arbitrations on the platform and increase customer, you know, happiness and all that great stuff. There was still that buy in to. The longer term future. And I think it took, you know, the first product, I think we maybe about a year to really get it out. And then the other one was a fast follow, you know, probably a, you know, another six months or so after
Ben Yoskovitz 15:14
Were any of them material from a revenue perspective, because you said, you know, the by virtue of doing this kind of beyond the core innovation work, new venture building, it added, you know, I think you said hundreds of millions of dollars of value. I don't know if that was on the fundraise side or on the stock side, post going public. So that's one part of it I'm curious about, because we get this question a lot from folks like, I want to go build I'm a big company. I want to go build new ventures. I'm trying to measure the value creation, because I'm not sure it's just going to be revenue. Because we make whatever we make billions of dollars, 10 million bucks down here doesn't matter. But there's other value that gets created as a result of that. So maybe you can just speak a little bit to how you thought about the value creation, and did any of them become material from a revenue perspective?
Dan Magnuszewski 16:06
Yeah, so for for these in kind of the area we were going in, and I guess to answer your first question, it was really more in terms of market cap, right, in terms of million dollars, in terms of market cap, being able to close, you know, expedite your fundraising, or maybe even allowed us to close certain funds that we were we were pitching from a from a venture side. So there's, there's that piece that's a little squishy, but, but definitely, you know, that was an area they were very excited about. They wanted to drill into. We would bring them to Buffalo and show them around our facility and meet the team. And you know, that was always a big highlight. So I'm confident, but yes, it's definitely a squishy piece on the other side, part of the auction business and the business of ACV, you're selling, you know, pens, a hundreds of $1,000 asset to people who haven't physically seen and chucked the car, and they're relying on us to do that. So the better tooling we have, the less issues that come up. In terms of, you missed something on the inspection. It's not what I thought it was, and then needing to either unwind it or deal with, you know, different compensation, because we also had a product that was around assurance, right? So you can, in essence, a warranty where you could say, Okay, I'll pay for this and the company will cover anything that's missed. And so for us, it was really more, how do we cut those costs down? How do we remove those bad experiences that cause customers to turn out and and, so that was really more the lens we viewed it as, because we weren't kind of going out and selling it.
Ben Yoskovitz 17:46
So it wasn't a revenue generating thing for you. It was more a value prop to the core customers. Create more value, lower churn, lower problems. Were you ever able? Were you able to quantify it ever?
Dan Magnuszewski 18:02
I think they have over time. I mean, I think it's been a little after I've left, but they've gone through and looked at arbitration, especially as I said, you start understanding the dynamics of engine noises and what those are associated with. You can then go back and say, Okay, this is something we would not have caught, you know, if it's a blown head gasket, that could be a very expensive, you know, so they have gone through and, like, looked at at it from that perspective. I don't have the exact numbers on it, but, but yeah, it definitely is something that, as you're cutting away, you know, what, what could be your biggest expense as a company, that becomes a very impactful thing, especially as you as you go public, and now you're reporting this stuff out quarterly, lot easier when you're private and you're just going to your board and you know, we're working on it. We're we're getting better. The Street has a much different, much different opinions on that quarter by quarter. So
Marcus Daniels 19:01
on that topic, Dan, just the evolutions you described from, you know, building out and yet, so much success with the venture studio model so far. Did it evolve into having more an established venture board to help with some of that communication, because you're public, and just some thoughts or any insights from that kind of experience of being able to kind of scale and grow the venture studio model,
Dan Magnuszewski 19:21
yeah, yeah. I mean, within it, we, you know, we had good communications with, you know, on investor days and things like that. We didn't have, I guess, a more public board on it. But, you know, we built a really great team internally. We had a team of great investors and board members and and really other industry advocates that we were, we were working with. So from that perspective, we had it, but we didn't have an official board that was in place, kind of managing a lot of it. It was really more, you know, CTO, the people I had leading it, and us going and presenting up to other execs on the board.
Ben Yoskovitz 19:59
Got it. Yeah. Interesting. So let's jump to Radial ventures. So a couple of years later, you decide, with a few other folks, to launch a venture studio for the buffalo ecosystem, because the whole time you're in Buffalo building ACV, you were in Buffalo before that, so clearly care deeply about the local ecosystem. So tell us about making that jump from, hey, we've done this at ACV a few times. We built a couple of things. They're creating value for us. And then just, and I know you were involved in 43 north, which is, you know, an accelerator program for the buffalo startup ecosystem, very successful, and now you decide to do radial ventures, so maybe walk us through how do you get to that place? And then we can dig into things about the studio design and what your plans look like.
Dan Magnuszewski 20:51
Sure, yeah. So a long kind of path in terms of way back when I was running Z 80 labs, we had $5 million fund. We were kind of the first real tech focused incubator for high growth companies. And so you get a lot of, you know, we were seeing a lot of early stage founders, you know, not. You know, could be single founders. Maybe they had parts of the team. They didn't have a lot of money. But, you know, we weren't putting money in unless, like, they had the team and were full time and could raise matching funds. And so we kind of got in this chicken and egg kind of scenario at that stage. And you know, me as a, I said, as a builder, it was like, if we had a team, when the, when these, you know, the good ideas coming in, interesting markets, stuff we wouldn't have thought about, but they just need help on that execution piece, right? They need and so that was a piece where I felt, and it wasn't part of the model of what we were doing, but I felt it was something that was missing. And so as time went on, and really, with ACV, it was a I kind of put some of that into practice, where I had a network. There was an idea that came in. We worked through the idea. We started working through the product and the go to market, and pulled in, you know, different team members that we needed, and were able to grow it, and investors and all that stuff. So that was maybe, like the initial test case. Can, can, can we do that? Can we do it in Buffalo? Can I leverage my network to be able to do this and take a good idea and grow it into a large business? So getting out after ACV, started doing a lot of angel investing, advising of companies, and, you know, really started seeing, you know, similar things with you know, when your first check in kind of stage, first time founders, you see that they're starting, you know, they're trying to learn through stuff, and you're advising, but it's not your company to run, right? And so you can, you can almost do only so much, and you can't go and join all these companies full time and go and build it yourself. So so it kind of leads you to this conclusion of, okay, if I'm putting capital in and hoping people figure it out, or should I get the band back together and get a team of people who have gone through that zero to one, have have failed, have succeeded, have gone through that scaling of a company as well. So you know the longer trajectory, you know the political you know what you need to do now to prevent a $3 million rebuild and opportunity cost loss down the road. So So started talking. And Eric rice is a guy I've known for a long time here in Buffalo. He's had successful exits with Campus Labs. And this was something we were kind of chatting about even back in the 80 Days in 2012 to 2014 or so, and the 43 North Foundation was established. So 43 North the business competition, they give million dollar prizes out there's 5 million in total prizes every year for companies to come to Buffalo build their business. ACV was one of those companies that won the million. So they had equity stake in it. And on our IPO, they did very well on that, and the Foundation was established to invest in the startup tech ecosystem here in Buffalo, so that there's a couple pillars around talent and corporate connectivity. And one of those was venture studio, and it was a piece that we saw was missing from the buffalo ecosystem. There's a ton of other programs now, in terms of accelerators and advising and early stage capital. There's tons of this stuff now. But for us, it's, let's not wait for two people to meet at the right event with the right idea. To get the right traction. And be it, you know, let's just force that to happen, and we'll kind of take the company creation into our own hands. And so this 43 North Foundation has $100 million initiative that they've kicked off, and 20 million of that currently is going into getting the venture studio going, and getting to where we're creating new companies here in Buffalo, and really handling the full end to end, from engineering to go to market. And how do you take that idea, put everyone you know, put all the right stuff around it, and try to de risk it as much as possible to hopefully see more and more of these ACVs pop
Marcus Daniels 25:44
up. Such an amazing story, I think the full life cycle. I'm curious if you can put a bit of a spotlight in some of the unique assets that Buffalo's ecosystem has to make it such a fertile ground to be, you know, established as venture studio in this domain. Sure, yeah,
Dan Magnuszewski 26:00
and it's obviously an underrated market, but, and I think we don't have, you know, we don't have the Googles and others here, which, which, in a way, is a downside, but in a way, it's a, it's a nice opportunity, right? So I think buffalo in general, like, it's kind of the as we've been talking there's good momentum, right? We have buy in from some of the state level participants in terms of funding and programming. We've had the grassroots movement in terms of, you know, me and others, back in 2009 just putting on Startup Weekends and other events, and that's kind of evolved. We have the universities where they're, you know, they're training students in entrepreneurship, and even the hardcore computer science students are in startup competitions. And, you know, learning about building business. So we've, we've built a lot of these pieces over, you know, over the last 15 years, I'd say Brad Feld, startup communities. Book was like a big thing. We were we were all about, and he says it takes 20 so I guess we're five years away, but, but, you know, so I think there is really good momentum. The University of Buffalo has 3000 computer science students. It's one of the, as some of the most computer science students in the country. And like I said, there's just a lot of this programming and the community itself is seeing startups in this type of type of work, and generating the a lot more of these smaller companies that can grow and scale to be the path for economic development, unless we need to bring a factory back, or we got to, do, you know, a lot of these older school and so as we're getting more innovative leaders and younger leaders coming in and maybe taking over legacy businesses, they're now seeing that and saying, how do we how do we help? How do we get involved? Because more startups, more, you know, more jobs, all that stuff is really, you know, really great for existing corporations and businesses. So,
Ben Yoskovitz 28:05
right? I mean, you know, I've, we're in Toronto, it's not the coast, it's not San Francisco or New York. I used to live in Halifax, worked at a company that exited to Salesforce. So, you know, I've lived the secondary, tertiary market world, but, and obviously you're a big believer in growing Buffalo's ecosystem. But what do you say to folks that are like, you have to be you have to do YC, you have to go to San Francisco. It's the only way to do it. Don't waste your time. Be it buffalo, be it Toronto, be it Halifax, be it some anywhere other than there,
Dan Magnuszewski 28:46
right? Yeah, no, it's, it's a great question, and it's one that you know, all through my career, it's been, oh, you're in tech. You're like, you got to go to San Francisco. You got to go, Yeah, you got to go to the valley. You got
Ben Yoskovitz 28:59
pressure for you, as you were raising money for ACV, also like, just move already,
Dan Magnuszewski 29:03
honestly, there. That's an interesting story. So I and I can get that, because I think you feel that a little more on the west coast. A lot of our investors were actually out in New York City. And it's usually good to you're going to raise from West Coast, or you can raise from New York City. Never show the two blonde but, but so, so in New York, 50 minute flight from Buffalo, very convenient, right? So we're there, and I mentioned we opened a engineering office in Toronto, and later on at ACV. And as we were evaluating where we were going to open this other office. We went, you know, through all the, you know, all the different cities, and where should we go? And we're like, Well, you know, we could do New York. We have people here. They're like, You are not allowed to come to New York. It is too expensive. Google's throwing crazy money at everyone. We can't. And they're basically like, you're not. Going like we see what rent is and we see what salaries are in Buffalo you are not coming to New York City. So, so it was kind of a funny but, you know, there is always that that pull, or at least the narrative, that you can't do it anywhere other than these places. And for me, the more people tell me to do something, the more I want to show them that I'm going to do the opposite and I'm going to show them wrong. So don't tell me what to do, basically. So I was really convinced that you can build and there was, there were some examples of people who built successful tech companies in Buffalo prior but, but for me, it was like, We can do this, we can raise venture capital, and this is what I'm going to do, and and we were able to do it, and we raised from some of the biggest funds in the world, and we're able to do it and scale it here in Buffalo. And, you know, it's, it's, it's interesting, but yeah, there's always the the new city, you know, Miami for a while, and, you know, Austin and whatever. Oh, you got it. Oh, you got to go there. I'm like, wow, if you have to go there to be successful,
Ben Yoskovitz 31:09
I love the buffalo winter so much. You love it. I had to stay. You had to hang
Marcus Daniels 31:13
it on, yeah, heads down to execute with the great weather conditions to do
Dan Magnuszewski 31:18
that, right? Can have a Miami Beach and trying to get work done. Come on.
Marcus Daniels 31:21
Yeah. You know, one interesting thing. I mean, you talked about so much momentum in the Buffalo ecosystem. You know, you kind of touched on it a little bit. Maybe you can double click on how you able to get successful private, public partnerships, collaborations. Because I think in many ways, you know, when we look at unlocking and creating unfair advantages for any startup anywhere, regardless if it's in the coast or a secondary startup market. Unlocking those assets really becomes a real reinforcing factor of creating value, and why you want to stay being headquartered where you are. So maybe you can talk a bit about about the success you had that, because even in major startup ecosystems, it's really hard to kind of unlock that value, and you've been able to do it,
Dan Magnuszewski 32:01
yeah, yeah. I mean, I feel like, you know, being in the community and being someone who is an advocate for what we're trying to do, and can sell that vision and and, you know, you have to be fortunate to have people in in the private sector, but also in government and in the universities, really start to, you know, maybe put their egos down a little bit. Maybe you want to help their ego and encourage them to participate, depending how you play, but, but really, you know, have that common goal. And really what we did was say, like, this is our path forward, right? You know, as I mentioned before, there's, there's not a big factory or like Google or anything. No one's coming to save you, like we have to save ourselves. And how do we do that? And it's really just trying to work together and finding the right folks that can be the advocates. Obviously, if you have people who have built companies that are successful, and you know, you can leverage those folks that give credibility to this, that it, it is more than just a government program. This is, there's real people behind it who have been there, done that, that are helping shape it. And how do you, how do you continue to build that? And that's that's, fortunately what we had with a couple entrepreneurs and venture capitalists that are from Buffalo and lived in Buffalo, that wanted to see buffalo go in this direction, and were able to sell that story and leverage, you know, their reputations and what, what they've done to do it. But, you know, it definitely took time, right? None of this was like I said. It's, we're 15 years in or whatever, so it's, you know, little by little. How do you get funding? And then you have to have some success, right? And if you can get those, you know, those success points, I think that's what opens the eyes to people who maybe weren't initially in and you can start growing that support, that entrepreneurship startups, you know, comp existing corporations, helping startups you know, be that first customer. You know, take the meeting with them, invest in them. You know, all these different aspects that play into kind of building on that momentum. So are
Ben Yoskovitz 34:13
you in the studio? Are you looking at whether it's industries or verticals, or ideas or founders that you think could could drive business through collaboration in Buffalo, like, oh, we, we have this industry or this big, well known company, and if we could just solve problems for them, that would be a great way to start a company. Are you trying to align that? Or when you look at the venture Studio, you say, we're going to look at any idea. Certainly you're trying to build big businesses. But do you want to try to start with that first customer or partner being local?
Dan Magnuszewski 34:49
We're doing a little of both in and so. So the on the one side, we're looking for companies, and really what we're seeing in the beauty of Buffalo. You see a lot of these unsexy businesses that aren't in Silicon Valley or these other places, right? So we're getting exposure to really interesting industries that you're like, Wait, how big is this like? How many people still do this this way? So we're able to go in and look at those and look at for us, what's interesting is, what are these companies in industries where growth is limited by, you know, can you find the right people? Can you can you hire them? Can you train them? Can you retain them? And now we're looking at all the stuff coming out with AI and a lot of these agentic systems that are out there, and they, they can solve a lot of those, those problems. And so, how do we take a lot of this new AI stuff coming out, apply that and solve the limiting factor on growth for these companies. And a lot of these companies and industries are in our backyard. And, you know, so, so there's companies we go to as part of our validation process before we even going. Fortunately, Buffalo is a small enough town. Everyone's like, you know, a phone call away for for us in our network, to where we can say we have this, you know, we're going and we're trying to, you know, work through this idea. What do you think about this? Here's how we're thinking about going about it. Here's how and getting feedback. And the feedback is usually, you know, we got, oh, I wanted to build this myself, but it's not what we do. Can I invest? You know, so we're actually getting investors along with just customers, which is a nice problem to have, but, but, so, so there's that, that approach. We've also had big companies come to us and say, we like what you're doing. We look at our business model, we're looking at the broader market. There's some real headwinds coming our way. And we know, we, you know, maybe we need to go from being more hardware focused to software focused,
Ben Yoskovitz 36:46
right? So they're proactively coming to you doing like, hey, this, this damn guy in this studio thing might be able to solve our problems
Dan Magnuszewski 36:53
Exactly. And so how do we? And that's what we're trying to learn. How do we? How, as we go in, we understand the problems with the business, understand the problems with the industry, and we're trying to pull out, you know, are there commonalities there, or something that we can do and build into a company? Solve it for them, solve it for the broader market. And so that's the piece. You know, we're six months in or so, so we're still kind of figuring that piece out, and whether that needs to be maybe another entity under the studio that is focused solely on the corporate obviously, in different corporations, there's you know, there's, you know, the pace and potentially the technologies and where they're at in that life cycle to where it's like, wow, we we actually need to do a full digital transformation before we can even get to The point where we're looking to leverage your data and spin out a new company. So we're trying to think through how we do that, fortunately, in terms of the foundation, you know, a lot of their goal is, how do we bring in the corporate players in and show them what's you know? So we're trying to figure out how we can take advantage of that and help these companies, but also spin out new companies. So piece we're still figuring out, but there's definitely appetite, yeah,
Marcus Daniels 38:09
and just curious a bit more how you're applying AI into your studio processes, and just as you're building and funding from that server to one phase, maybe you can talk a bit about
Dan Magnuszewski 38:17
that, yeah, yeah. So we're totally AI forward on all the stuff that we're doing. You know, we're really, really, the first part that we we set it up is our validation process, right? So, you know Gemini deep research, and you know all these different tools and Aden that we're using. How do you, how do you take an idea and not have to hire an analyst that's going to go spend a couple weeks do a bunch of research. So we've built this nice funnel in. If you go to our website, you put in your idea, and we take it through, we build a memo out, we then have another AI that goes and beats up what that memo's assumptions are to make sure it's not AI is arguing with AIS, yeah, AI is fighting each other instead of people yelling at each other. So it's great, lot quieter. And then we, then we, you know, what we're building out is now running that through, running that through, like, what's our preference? Like, what companies do we want to build? Is this a consumer company? Is it? So we can start doing some ranking on it, but then also understanding, okay, here's, here's the proposition, here's the idea, here's the competitive landscape, here's potential, you know, you know, business cases and stuff, business models. Now we can need to find, okay, who do we know in this industry that could go and run this? Our goal is to build the company up, get it going, and as soon as we can bring in, you know, ideally, the the idea person is the subject matter expert that'll go along with it. We understand that may not always be the case, but we want to build that leadership team out so as part of this process, it's who's in our network that we know that's in this industry, and what is that, that dream team, that's part of our bench, that we can. Put in and see. So if we have two ideas, and they're both multi billion dollar potential opportunities, but one, we have a great founder with industry experience, we may go with that one first and get that going, and then in the background, we say, hey, we need to go find someone in this industry with this experience that's interested in coming and running this, but, you know, the goal so that that's how we're we're leveraging it. And the beauty is that process takes five minutes to do, and so we're not bound by, you know, you know, we still have a backlog of ideas. We got to go vet and figure out we're getting that pretty instantaneously. And it's, it's been super helpful for us evaluating the ideas,
Ben Yoskovitz 40:44
right? And can you share a little bit more about how the studio works? So equity take amount of time something's gonna be in the studio? How you thought about the services that the Studio provides to let's say, the founder submits an idea. It gets through that AI, you're like, that's a real thing. You vetted it. You're like, we want to go do that. How does it work? From there, you're incorporating the company, putting capital into it, just whatever you're comfortable sharing about, like, how did you think about the deal structure? Because also, we see, you know, in our experience, a lot of chatter around how much equity does a studio take, so that the downstream investors are okay with it. And so I'm curious about how you you've worked through those design
Dan Magnuszewski 41:27
parameters? Yeah, yeah. So, so in terms of the structure of it, so there's an idea that we, you know, we want to move forward with. We've only moved forward on one so far. Like I said, we're still getting the studio and this first company going. But, yeah, once, once we have that idea that, you know, we'll, we'll go and do some rapid prototyping. So really, before we start actual development, we still want to go and validate. I mean, with the tools today, in hours, you can have a fully functional prototype that we can go and go on our network, go to the right people, pitch, show it to them, get feedback. And so at that point, yeah, if it's a go, then what, what we'll be doing is deploying a fully cross functional team, you know, depending on what it needs, onto that, so that you were basically fully, you know, founders involved with it, working with the entrepreneur, assuming the entrepreneur is coming along and and building that out, and hitting those different proof points, a big thing that we're trying to do in that process is, you know, so there's so much repeat, and obviously a lot of the AI coding helps solve a lot of this, but all these startups are building all the same base level systems, and a lot of times in an early stage, you're not you're throwing stuff up, and you're trying to get it going, and if the company fails, then that's okay. But in the instances where, and I've gone through this and seen this at many companies, where you don't have the proper diligence and in the right structure in place, from your server infrastructure, your code infrastructure, monitoring all this stuff, your data platform. And then you got to go back a year and a half later when you're trying to scale new customer. So we're trying to build a platform on all that to where we can have a push button start, you get, you have all of the stuff that's common best practices right out of the gate, and we can start building on top of it. So the goal there is to help cut that time down, you know. How do we reduce the cycle time it takes for us to get that product out, get it, you know? And really start selling it and getting it to a point where we're saying, this thing has legs. We have the leadership team that we know that we can come and build it. We can go and spin this out. We can put some capital in it. We have a bunch of VCs that we work with that are interested, and we can bring in the other VCs, fund, the fund, it, spin it out. Go back to the next thing. Yeah, I
Marcus Daniels 43:58
was gonna say, can you talk a bit more about when you're engaging, or how things have changed and how you're engaging external investors, co investors. So you just alluded to a little bit of it right there with having already good VC partners, but also family offices, other angel networks. How are you thinking about it differently now?
Dan Magnuszewski 44:14
Yeah, so we're still figuring that out. Fortunately, we're funded enough to where we don't have to do that to get started, but we have worked with a bunch of VCs in the past, and VCs that invested in me that they're interested in participating. We're still working that out and what that's going to look like, and is it another fund that we create? Are they investing in the studio? These are still pieces that we're trying to figure out. You know, we'd love to hear what you've seen in terms of best practices, whether it's investment in the studio or it's invest, you know, investment on the way out. You know, as you're spinning these things out, you have that group that's, you know. Able to get a first, first bite of the apple?
Marcus Daniels 45:02
Yeah. I mean, we've seen different models work. It always depends on the context with respect to corporates or just vertical studios themselves. But ultimately, you know, we're seeing a trend of getting investors in earlier, into that zero to one process like you described, applying AI, the cost per venture has been reduced the acceleration of getting traction in the market, but also really getting the right aligned co investment partners around the table that are aligned on what kind of company you're trying to build, like you've taken a company the full distance. In some cases, I think the nature of venture building doesn't necessarily require traditional venture capital to achieve some of the missions and visions of each portfolio company, but it's something Ben and I have been spending a lot of time just engaging diverse groups of investors, and we certainly see the trend right now where it's not just traditional venture capital, even though traditional venture capital is certainly a lot more interested in in the product of a venture studio,
Dan Magnuszewski 46:02
yeah, and it's, and that's the conversation we're having. It's really around these are very de risked. They're in, like, even just down to the product and infrastructure side, like, it's stable, you're not, you know, you don't have these concerns. You don't have these concerns. There's always other concerns. But if you can limit the other concerns, or the concerns are a little more execution based, as opposed to product or tech or any of these other aspects, or team based. It makes it a lot, I think, a lot more attractive of an investment. And that's why I think we've seen, we've had people reach out to us. We haven't been actively going out, but it's been more inbound. So we're trying to figure that piece out, and that's something we're we're working on, and that it definitely goes to the the fact of, you know, what, what percentage are we taking? And that's something we're looking at, whether it's a founder coming in, and do they have, you know, 25 years experience, and they've come with a full network, and they've pre sold some stuff to where they, you know, they're coming in rolling. Or is it someone out of school and they kind of had this idea, and it's interesting, but no operational and, or this is also, you know, for us, it's also an opportunity for people who, you know, maybe, you know, married, three kids, a mortgage and all this other stuff, and they're working in their corporate gig, but they have this great idea, but I can't quit my job and go all in on this, but there's a big opportunity here. And so how do we structure the equity for someone that's doing that, and maybe serving as an advisor or SME, but we'll bring in that management team. So yeah, I've read a whole bunch of the whole bunch of the max Pog stuff and other things around, you know, and even talking to other venture studios and VCs around, having too much of an equity stake and curious to hear kind of your where you guys are seeing the percentages or numbers. But I know it is a big thing where some VCs are like, we don't invest in venture studio companies because we don't invest Yeah.
Ben Yoskovitz 48:06
So the latest data that I've seen, it's not massively inclusive of every studio, is about 25% at seed. So you know now is that, before the seed round, after the seed round. How big is the seed round? It's all it's all over the map. But, you know, we're almost at time. Dan, maybe one question. Last question, I'd love to get your thoughts on. And we see this a lot with corporates that are trying to get venture studios off the ground. Is about ROI. And you know, there's an ROI, a financial ROI. Money is going in, time is going in. And they might look at it from that perspective, but they might also look at it from the perspective of brand ROI, which you talked about with ACV, you know, saving money, saving time. So when you think about this studio, you know, you have the capital from 43 North foundation to do it. How are you thinking about ROI? You know, for you, it'd be maybe financial ROI for the studio, but also ROI for Buffalo. And how are you thinking about measuring that and what the most important thing is for you? Yeah,
Dan Magnuszewski 49:12
yeah. And it is interesting, because we are, is venture philanthropy, in a way, right where we're, you know, we have an obligate, a fiduciary obligation, to help. You know, we want this foundation to grow in, you know, in in terms of its value, and increase the amount of programming and things we can do for Western New York and buffalo. So we definitely have the monetary return. And really, it's around, can we build very successful companies that grow scale here in Buffalo? There's also the other aspect of, you know, in really something I'm looking at is successful new companies created that would not have existed without us being here, right? And. And so that's a huge metric. Obviously, successful growth. I think there are changes in terms of what is success. What you know, you know, is selling a company successful. It's great from a liquidity standpoint, and putting money in people's pockets so they can then go and do their next companies, or whatever they want to do. But does that mean the company's being shut down or shelved, or, you know, depending on the stage of the company or or someone gonna buy it and kill it? You know, all these things happen. Or in, you know, depending on the IPO market, which is obviously more of a macro thing. But I think if we can see, see more and more of these companies grow, continue to hire. I do believe that companies are going to be a lot smaller with AI and all these different automations and things in place. So from that perspective, our job is to create more of these companies. We're not going to be creating 2000 person companies. So now we got to create even more 130 people, 10 people companies, but building really interesting, you know, jobs and things like that for people and be able to retain more of that, that college talent that may be going to, you know, any of the fangs, or, you know, the mag seven companies. How do we retain that here for people who want to stay here and work in startups and give them that opportunity. So So for me, it really is, you know, are we returning, are we returning the fund and in multiples, and are we creating new, exciting companies, which is more of that? There is a way to quantify that, but there's also just kind of the feeling of that and how, you know, what's the energy we're building around it? You know, how are people viewing moving back to Buffalo or staying in Buffalo, you know, and really, just getting that next generation training, that next generation of entrepreneurs that are coming up, and that was the thing I love with ACV. We there was a lot of people that may have come from not a startup, or maybe a 01 startup that never hit one, and got to see the growth and the pace you have to move at and what decisions you need to make, and what are bad decisions, or what are good this. You know, you kind of learn all that so they can go and be the next founders. Because, you know, they've had some time in the trenches, they they have their scars, and, you know, are ready to go. And so for us, it's, it's a lot of that, and as much as we can track that, you know, that that's our goal. But yeah, it's, it's a lot of different aspects, which is a little interesting. Yeah,
Marcus Daniels 52:42
so, so, Dan, can you just finish off here by just telling us how we can find you online?
Dan Magnuszewski 52:47
Yeah? So, radio ventures.com I'm Magna chef on on Twitter and Instagram and LinkedIn and, yeah, I'm around. But radial Ventures is the website and in the company.
Marcus Daniels 53:02
Thanks again, Dan for joining us. Excellent.
We always enjoy conversations about innovation and startup building so please get in touch.
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