Courtney and Carter Reum are the co-founders of M13, a venture capital firm with $1.9 billion in assets under management and 54 exits. The firm operates offices in LA, New York, and San Francisco, with a 40-person team where only one person has traditional VC experience - the rest are former operators.

The conversation covers M13's investment philosophy of targeting companies seeking product-market fit versus those ready to hyperscale, with focus areas in future work, health, commerce, and money. They discuss their hands-on approach through their "propulsion team" that provides operational support to portfolio companies.

The discussion explores LA's venture ecosystem, the firm's AI strategy, and their disciplined approach to portfolio construction. Carter and Courtney also share insights from their book Shortcut Your Startup and discuss the importance of pattern recognition in early-stage investing, referencing Malcolm Gladwell's Blink as a framework for understanding venture intuition.

M13's Portfolio Performance and Investment Strategy

M13 has been Series A investor in 15 unicorns and achieved 54 exits with top decile DPI performance, focusing on owning about 20% of companies they invest in.

Portfolio companies have raised $800 million behind M13-led rounds over the last three years, achieving Series B funding 30% faster at 25% higher valuations than median Series B.

The firm targets writing 30-35 checks per fund, believing they need $3 billion outcomes to return the fund rather than $25 billion outcomes required by larger multi-stage funds.

"We believe ideas are cheap, execution is dear. There are five or 10 companies going after every idea right now. They're all well pedigreed, they're all well funded" - Carter on competitive landscape.

AI Investment Philosophy and Market Positioning

M13 has spent over $1 million building AI development platforms, focusing on harnessing collective intelligence rather than competing in foundational models.

Carter uses the 1920s car analogy: while others invest in car companies, the real money was made in LA real estate and gas stations - the second and third ripples from technological innovation.

"Innovators competing with innovators who are competing with the best tech companies on the planet" - Carter on why foundational AI models face unprecedented competition.

The firm conducts 60-day AI sprints with portfolio companies like Pietra, tracking daily queries and implementing AI-first strategies across their portfolio.

LA Venture Ecosystem and Geographic Strategy

LA created $450 billion of enterprise value in the last cycle, though Carter notes the city is "taking a siesta" during the current AI boom centered in San Francisco.

"LA venture market is still 10X Miami's" - Courtney on comparative market size despite migration narratives.

The firm expects LA to lead in second and third AI ripples, particularly in creator economy and media disruption, given 200 million people worldwide identify as creators.

M13 operates as a national firm with offices in LA, New York, and San Francisco, adapting to where innovation is happening while maintaining LA roots.

Pattern Recognition and Decision-Making Framework

Early stage investing relies on intuition and pattern recognition, with Courtney referencing Blink by Malcolm Gladwell: "intuition is just that constant pattern recognition."

Carter describes his brain as "a weaker form of something like the Facebook algorithm," constantly taking in data points until they coalesce into actionable insights.

The firm's philosophy from Shortcut Your Startup emphasizes that "best entrepreneurs, you have to have a microscope in one eye and a telescope in the other."

"You don't need to be an expert in everything, you just need to know an expert in everything" - Carter on leveraging network knowledge.