The Venture Spotlight - Indy Driver, Team Owner and Angel Investor Sam Schmidt

The Venture Spotlight - Indy Driver, Team Owner and Angel Investor Sam Schmidt

This edition of The Venture Spotlight features a 30 minute interview with Sam Schmidt, a professional indy car driver who suffered a horrific crash about 10 years ago leaving him paralyzed from the neck down.  Now Sam heads a racing team and also periodically makes investments in startups.  Most recently, Sam invested in Korrio, a Seattle startup company looking to revolutionize the administration of youth sports leagues.  Here is my interview with Sam.  Scroll down for some video of him talking elsewhere about Korrio and his other exploits.

Bearman:

 

Schmidt:

Can you give our readers a cliff notes version of your background - how you got into racing?

I grew up in a racing family, and in fact, a job in the motorsports arena is what brought my parents to California from Nebraska when I was two. My dad put me on a motorcycle when I was five, and so I've always had that competitive nature. I've always wanted to compete at the Indy 500 and I was fortunate to do that from 1997 to 1999. But then I had a bit of a curve ball thrown my way when I was paralyzed from the neck down [as a result of a crash at Walt Disney World Speedway on January 6, 2000]. At that point, a lot of things change. You spend six months in the hospital, you go through that whole process. It kind of turns everybody's life upside down, but at the end of the day, you've still got to figure out what you can do to go forward. I take two and a half hours to get up every morning. So, I still fell back to motor sports as an occupation and became a team owner at that point, as well as started the Sam Schmidt Paralysis Foundation for spinal cord research because I still to this day believe that a cure is only a matter of time and money.

 

Bearman:

How did you become an angel investor?

 

Schmidt:

I had, in parallel with my racing career, been involved in those types of investments. I got involved with a start-up sunglass company called Arnette back in the 90s, and there were three of us. We did quite well in the fashion for snowboard type of retail industry. We sold that to Bausch and Lomb, and that kind of catapulted us into some other things.

 

Bearman:

You were an angel investor in that company?

 

Schmidt:

Yes - we came up with the funding to grow the company and sold it about four years later. In parallel, still racing, still earning championships and wins on the race team side. Ironically, I met Steve Goldman and Tim Bauman of Korrio through racing. In Steve's previous life, he was hand selected to run Isilon Systems. One thing led to another and Isilon Systems became a sponsor of our race team for a three-year period. Then Steve left Isilon, took a hiatus and kept me in mind when he decided to start Korrio. He knew that our kids are the same age and that I was facing the same challenges with my kids and their athletic worlds - there was a complete lack of technology and lack of organization from the team/club information distribution side. Nobody wanted to draw the short straw being a soccer mom because it's just a nightmare trying to get everybody on the same page. Steve flew down, told me about Korrio, and I signed up immediately because, not only did I know he had been successful in previous ventures in the tech industry, but I related to his product on a personal level and that's kind of how I make my investments. First and foremost I have to see a need for the product personally and then, of course, beyond that it's all about the people.

 

Bearman:

Well frankly, that's probably the same investment philosophy of a lot of venture capitalists.

 

Schmidt:

I don't really look at myself as a venture capitalist because I continue to work on a day-to-day basis in my own company with the race team and I've still got the foundation - growing and building that. I'm paralyzed from the shoulders down, and can't provide a lot of hands-on input. I have to work through other people, so, that's been a real life change for me because I think racecar drivers by nature are pretty A-type personalities, very anal and control freaks. So, the whole not being able to do things with my own hands has been really a life changer, but I've learned a lot of patience over the years, and here we are.

 

Bearman:

When did you first become involved with Korrio?

 

Schmidt:

We were on the ground level - there were about five of us that were initial investors in Korrio. That was about September of 2010. They launched the company in January of 2011 and just finished the first full year of business.

 

Bearman:

Where has Korrio gone from that point to today?

 

Schmidt:

Well, given that Steve and the people he selects to surround himself with, he did that at F5, he did that at Isilon, and now he's doing it with Korrio. Of course, now it's an entirely different world. I didn't have nearly the juice it takes to play in the F5 world and the Isilon world because of all of the hardware and software that was required. But now, obviously, with cloud technology and the way things are structured, we were able to get it off the ground with substantially less financial involvement than it would have taken him four or five years ago. He orchestrated that to a T. He had a great business plan, superb advice from some people in the field, and was able to call upon his previous relationships and a couple of other areas to get it off successfully. So far, they've hit all of their performance goals that were extablished at the beginning. It's growing conservatively, yet right on plan. I think Steve and Korrio draw a lot of parallels to that and the success we're having in the motor sports field. We came into the Indy car series and had a race team last year about the same time Korrio started up and we immediately came out with a lot of success. We sat on the pole in the Indy 500 last year in our first season, and are on an upward spiral as is Korrio. I think he talked to people, he saw a lot of parallels, a lot of analogies between the speed of technology and the sport side of Korrio to our Indy car series program. At the end of the day, the success in both industries is strictly tied to putting the right people in the right positions. Eighteen months ago I'm sitting there with four employees and now I've got 40. He's on a somewhat similar growth path. I can't speak on the tech side of it because I'm completely illiterate in that area, but I know on the user side of it that it's exactly what we need to manage our lives on a day-to-day basis. I've got a 12-year old and a 14-year-old. My daughter's been playing club soccer for seven years. She's traveling this weekend to Salt Lake, a couple of weekends later to L.A., and the last week of June she's in Chicago with her ECNL Club. So, we really see Korrio as that link. What's great about it is it's expanding in a way where it really incorporates keeping all of our family and all of our integral contacts advised as to what she's doing without having to use several different tools.

 

Bearman:

So tell me a little bit about how you view Korrio in its industry. Are there competitors?

 

Schmidt:

Absolutely, there are. Because we have seen them as my daughter has played soccer here in Nevada. It's been a bit of an evolution. I think it started out with this IT thing. It was so fragmented because the soccer mom, five or six years ago, was using a spreadsheet to hand out contacts list. There was no formal consolidation of all the information. I think the next stopover that came along was Got Soccer, which again handled a couple of different parts of the program. Then it was Team Snap. All of this was over probably a six year period, where our internal club that we were playing in was experimenting with different software. So, ironically, when Steve came to me, of course, it was just in the beta testing format and we couldn't utilize it here per se, but I could see the value from the fact that we didn't have it and I was constantly asking Steve when are we going to have this in a situation to where we can use it down here? Korrio encapsulates so much more than any other product out there. So, since it's grown so much in Washington and a couple other areas, I feel comfortable going to the clubs here and saying, okay, we must have this system now. Proven. Tested. All shaken out.

 

Bearman:

I guess you just answered my next question which is it sounds like you're through beta testing essentially, and I think what you're saying is, they have the product that they want and now it's just a matter of getting it out to the masses? Is that right?

 

Schmidt:

Exactly.

 

Bearman:

So, for you personally, it sounds like you're an angel investor in a few companies. I assume you're just doing that on a personal basis. But do you see that as changing over time or are you perfectly happy doing sort of opportunistic investments on a small scale and really focusing on those deals?

 

Schmidt:

Yes, I think so - exactly. I think that, when I had my accident, I was going 35 different ways and it was very easy to be spontaneous. If I needed to be in New York tomorrow, you just book a flight and you go. Things were just a lot different. So, now, not having that spontaneous ability but also still being interested in investing and watching things grow, you've just got to balance it all. I don't have a need, per se, in personally building something from scratch and having to manage several hundred or thousands of employees. With my kids being the age they are, they are a huge priority. I strongly believe in family first and it's nice, especially with Korrio, that it all ties together - what my personal philosophies are in investing and what my kids are doing.

 

Bearman:

Some of our readers may have personal interests in racing and/or cars, so just a couple of questions on that front before we wrap up. It sounds like you don't really have regrets necessarily in terms of racing. Is that fair to say?

 

Schmidt:

Correct - no regrets.

 

Bearman:

Are you recommending or encouraging your children to get into racing?

 

Schmidt:

My kids were six months and two-and-a-half when I got hurt, so there was that whole evaluation process about would I allow them to be racers. It was more about making sure my wife was cool with whatever. At the end of the day we made the decision that whatever they want to do, we want to support them fully, and make sure they have the best tools and the best education. They had the ability to do whatever they decided to do, and ironically, neither one of them wants anything to do with racing. I guess there is a bit of relief that neither one of them is interested in it, but we didn't discourage them from doing it either.

 

Bearman:

For someone who may be interested in becoming a professional driver, what's your advice for getting into this sport?

 

Schmidt:

Number one, nowadays, just like pretty much every other sport that's out there, if you want to be a professional at it and actually get paid to do it at the top level, you have to commit to it solely at a very young age. It's the same thing as if you wanted to play tennis or golf. It seems like kids are just starting younger and earlier. So, I typically tell them, look, you've got to participate at whatever level you can afford to do properly. First and foremost, you've got to have the right safety equipment, you've got to have the right equipment, you've got to learn the fundamentals, and pay for teachers, and just do it right. So many people in racing feel it's extremely important to move up the ladder really quickly and get to the top rung really quickly. What I look for in younger drivers is gathered upon a lot of races, a lot of championships. I don't care if that's been at go-carts or Formula 2000 or whatever rung of the ladder that is. I don't look for guys that have just kind of done it all, but not that successfully. You have to win championships before you go to the next level. So, I tell the young guys, do what you can afford to do properly. Win races, win championships, that's what professional car owners and sponsors look for... WINNERS! Hmmm, sounds like a pretty good investor strategy, huh?

 

Bearman:

I'll admit I'm biased on this one because I had a Lotus Elise, but for the everyday car enthusiast, what car off the manufacturing line would you recommend for casual racing?

 

Schmidt:

Well, it's funny because I have often told my wife for the last 12 years I've been paralyzed that it's probably a good thing I am paralyzed otherwise we'd be flat broke because there are so many incredible driving opportunities out there right now. I mean, look at a factory Corvette ZR1: $125,000 but 670 horsepower off the assembly line, all the technology, everything from traction control to whatever. A buddy of mine actually owns a company here in Las Vegas called Exotics Racing which I feel is probably the best ultimate experience out there, because you can literally go out there, they have a 2.3, 2.4 mile road course. And they have 20 exotics, each of them averaging $150,000 to $375,000 a piece. And for literally $60 bucks a lap you can go out and thrash them as hard as you want. Even if I owned a Lamborghini Gallardo or something like that, I'd probably go out there and give them money to thrash theirs instead of abuse mine. But I do have a couple of professional driver friends that drive out there for them and they've driven the 458 Ferrari, they've driven the 993 Porsches. All the Lamborghinis are represented out there and, above all, they say the best all around performing car in that inventory out there right now is the Audi.

 

Bearman:

The R8?

 

Schmidt:

Yes. I was a little surprised. But they said the Audi R8 has got a good combination of pure sports car, horsepower and performance. The new 458 Ferrari does come close with a paddle shifter, automatic shifting and automatic you know down shifting, braking. Just a lot of technological advances. But, in their opinion, it's almost too easy to go fast in the 458 because it's so easy to drive. The Audi R8 is still a nice combination and you've got to have talent to go fast.

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