#7: Lee Zapis (Zapis Capital)

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Lee Zapis (Zapis Capital) [00:00:00]:
So people will tune in and and listen to, you know, all the terrible news that's, you know, about to be followed. And, when you sort of step back and open yourself up to other points of view and optimistic points of view, you realize that the world is, in spite of what we're going through today, you know, we're way better off than we were, you know, 100 years ago, 50 years ago, 30 years ago. I mean, with the advances that, you know, that have been made. There's not a really good reason not to be optimistic. And I think as an entrepreneur, you have to be, you know, you go into something thinking you're going to succeed or else you wouldn't you wouldn't do it.

Jeffrey Stern [00:00:38]:
Let's discover the Cleveland entrepreneurial ecosystem. We are telling the stories of its entrepreneurs, and those supporting them. Welcome to The Lay of the Land podcast, where we're exploring what people are building in Cleveland. I'm coming to you live from Cleveland. Today, I had the pleasure of speaking with Lee Zapis. Lee was the former president of Zapis Communications, which had owned and operated WZAK and other radio stations across Cleveland, Akron, Youngstown, as well as Atlanta and Boston. And under his leadership, through a a transition to focus solely on what was coined as urban contemporary, a blend of of r and b, of smooth jazz, and of pop, WZAK had become Cleveland's number one radio station when it was ultimately sold in in 1999. Between then and now, Lee continued his entrepreneurial journey, founding a multitude of other successful Cleveland based companies.

Jeffrey Stern [00:01:35]:
And in parallel, on the investing side, he had formed Zapis Capital Group, where he is investing in companies, many of which we will have and will feature on this podcast across Northeast Ohio spanning technology, health care, real estate, and media. We cover a lot of ground in this conversation, and I I think you all will enjoy it as I did. So without further ado, here is our conversation.

Lee Zapis (Zapis Capital) [00:02:04]:
My father had started in the radio business in the 1949, but as a hobby, not really as a thought of it as, you know, ever to be a full time business. Me and my mom did a radio show for many years, and then in the early sixties, started an an FM station here in Cleveland with a few other partners. And then over the years, you know, I kinda grew up around the business and I always joked that it was no different than friends of mine who grew up in the restaurant business. You know, it was just they go and hang out, and they kinda see the way things ran, and you sort of observed. And so that was me with the radio business and I stayed in town and went to Cleveland State, got a degree in communications. And then in the early eighties, we switched the format of WZAK, which was our station from, nationality broadcasting to an urban contemporary format. And it's been urban ever since then, 1981. So and it's still ranked one of the top station in the city and recognized as a you know, one of the leading stations in the country.

Lee Zapis (Zapis Capital) [00:03:00]:
That's why I lived in Atlanta for a while. We bought a station down there for a while. We owned it for about 4 years, and that's why I moved down there to run it. And that was also an urban station called KISS 104.1, it's called. And we were competing with v 103, which was the big legendary urban station. It was a lot of fun. In hindsight, I wish we could have kept that station because Atlanta, like I said, has been growing like crazy. But we've done okay.

Lee Zapis (Zapis Capital) [00:03:23]:
You know, radio in in Cleveland is really kind of considered the entertainment business. You know, I always joke with my friends who worked in LA radio that they were kind of on the bottom of the food chain when it came to entertainment. You had movie stars out there, rock stars, TV stars, you know, all kinds of, people. And then you had radio. Whereas in Cleveland, all we really had was radio. It's maybe some of the local news celebrities, but we were at the top of the entertainment food chain here in town. So it was a great time. Great industry.

Lee Zapis (Zapis Capital) [00:03:51]:
Great way to be exposed to a lot of different things in business. Early on in the, history of this life of the station, we hired 2 key people. A gentleman by the name of Mike Hilber, who is our sales manager, who was extremely, you know, effective at his job and kind of drove the beginning success of the radio station. And then a few months later, we hired a guy named Lynn Tolliver, who was our program director and did mornings, did afternoon. He was a very, very well known air personality, and he built a really great team around the programming side. And, you know, Lynn and, Mike were together with us from basically a year after we'd switched the formats till the time we sold in the station in 1999. So that was that was really the key to our success, having a real strong group of managers, whatever you wanna call them, and then the the staff that they each assembled underneath them. That was really kind of the, the linchpin of our success is the people that we had working at the station.

Lee Zapis (Zapis Capital) [00:04:47]:
And there were some really very, very talented people that made the whole difference in that business. Because the reality is, you know, every radio station, if you're in a specific format, has this access to the same music, you know, the same weather forecast, the same whatever. It's the people that you assemble that present that content that makes makes the difference. And I'm still a big believer in in radio and local radio. You know, streaming is fantastic. It's, you know, another great option for people. But when you listen to a radio station, you're you kind of you think of yourself as listening to a, you know, you're part of a community, and you're there's a joint shared listening to that radio station, you might not be together the same place to listen to it, but you are listening, you know, to the same, you know, to linear programming. And I think that's really makes people feel connected to the station and, again, the people that are presenting that music and programming is the key to that success.

Jeffrey Stern [00:05:43]:
If the content isn't the differentiating factor, you know, when you talk about growing and and building this to to be the best in Cleveland's top station, how did you go about, you know, differentiating yourself and the business to to build that team, to attract the talent, and to, know, propel yourself to where you guys ultimately, you know, build it?

Lee Zapis (Zapis Capital) [00:06:04]:
I think, you know, back then, the the term corporate culture really wasn't, widely known or maybe it wasn't even known at the time. I don't know when that term was coined. But there was, in hindsight, if you look back on that, there was a corporate culture that we had developed and it it stemmed for the, you know, from my father on down. I mean, you know, it was a family business and we took a lot of pride in it. And, you know, it was kind of our family identity. We had a philosophy or my dad had a philosophy that permeated from the top down that we didn't know, you wouldn't ask somebody to do something that you wouldn't do yourself. And I think that was an important part of the, our success. We had a great team and I think we had a warm and inviting environment.

Lee Zapis (Zapis Capital) [00:06:46]:
You know, we had a, very diverse staff, young and old, black and white, Latinos. I mean, there was, you know, there's just, a lot of respect for everyone and what each person brought to the table. And I think that's really what helped attract and keep talented people.

Jeffrey Stern [00:07:05]:
Yeah. What, what role do you think that you know, family played in in your growth as an entrepreneur and in the business? How was it, you know, working in the in the family business with with your father and how does that add to the dynamic, I guess, of of the work you were doing?

Lee Zapis (Zapis Capital) [00:07:20]:
You know, I think, you know, my dad was always very entrepreneurial minded. He was always open to new ideas, trying things. You know, he was he had the attitude, well, if that guy can do it, so can we. He never had any limitations. Both he and my mom never said, oh, you can't do that. He was always very, open to new ideas. And I think that rubbed off on me and he was a perpetual optimist. He was very optimistic and, and I think I've become more optimistic as I've gotten older.

Lee Zapis (Zapis Capital) [00:07:46]:
And, I think, you know, that all came from him. And, you know, from a family business, you know, it's like a double edged sword. You a lot of people are like, oh, you're lucky you've gotta you work in the family business. And, you know, there's a lot of benefits to it, but there's also the downside is that if you screw up, you know, it's not just your job that's, you know, you're gonna lose. You know, you could, you know, put the whole business on, you know, put the company out of business, and then you've got Right. A whole family that's kind of depending on it, not to mention our family, but other people's families. So there's a lot of interesting dynamics in the family business. And I think, for for it to be successful a family business to be successful, I think you always have to keep growing and giving people new opportunities or else it's really kind of it stymies their, you know, upside.

Lee Zapis (Zapis Capital) [00:08:31]:
So you need to be able to, you know, constantly innovate and expand the business to be able to grow and give people not only in the family but outside the family new opportunities. And that's what we tried to do with adding new markets and trying to grow and expand. And so that was, one of our key differentiators.

Jeffrey Stern [00:08:52]:
I feel like optimism and entrepreneurship are kind of 2 sides of the same coin in a lot of ways. And I'd love for you to just expand upon what you mean by you feel you've gotten more optimistic as you've gotten older.

Lee Zapis (Zapis Capital) [00:09:06]:
I think, you know, when you're younger, so it's easy to be cynical and think you're, you know, clever and being, oh, I'm, I'm just being realistic. And, no, you're not. You're being pessimistic. You know, you sort of have to have this optimistic attitude. I heard a great line recently. Somebody said, nobody's ever written a book on how to be a pessimist. You know, it's it's kind of a fundamental human condition. And I've heard people talk about sociologists, anthropologists about how, you know, they talk about how why bad news spreads faster than good news.

Lee Zapis (Zapis Capital) [00:09:35]:
It's because, you know, we're wired that way. So 1000 of years ago, you know, it wasn't important to hear about what a beautiful sunrise it was. It was important to hear, hey, there's a bear lurking in the woods and if you're not careful, it could, kill you when you're and then also, you know, I think from that stems being pessimistic like, oh, what was me? You know, the the world is gonna end and we're never gonna go back to normal. You hear a lot of that, you know, during the pan you know, this whole pandemic thing, whether, oh, this, you know, we're doomed. And, you know, if you watch media, local media or national media, the news, I mean, their whole business model based on getting people scared and worked up and, you know, so they tune it. So people will tune in and and listen to, you know, all the terrible news that's, you know, about to befall them. And, when you sort of step back and open yourself up to other points of view and optimistic points of view, you realize that the world is, in spite of what we're going through today, you know, we're way better off than we were, you know, 100 years ago, 50 years ago, 30 years ago. I mean, it was the advances that, you know, that had been made.

Lee Zapis (Zapis Capital) [00:10:41]:
There's not a really good reason not to be optimistic. And I think as an entrepreneur, you have to be, you know, you go into something thinking you're going to succeed or else you wouldn't wouldn't do it. And I think as an investor, you're optimistic that something is going to succeed or else, you know, if you weren't, then you shouldn't be investing anything. And I was talking about somebody today for coffee. We were talking about entrepreneurialism and the fascinating thing about it is that you have to be, if you're not optimistic, then it's probably, you should just get a regular job where you can do whatever and collect a paycheck. But as an investor, if you're not optimistic and and you do your due diligence and go very much, you know, do as much due diligence and study things, call people, do whatever. I mean, the the reality is you should never, do an early stage investment because 90% of them fail. But it's that 10% that succeed, and that's what most people are betting that their investment is going to be one of those 10% that succeeds.

Lee Zapis (Zapis Capital) [00:11:40]:
You know, I think optimism is a great asset to have as an entrepreneur or as an early stage investor.

Jeffrey Stern [00:11:48]:
Yeah. I think that that makes a lot of sense. The general belief that the future and what you're working on or investing in from the investor or entrepreneur's perspective is going to be better in some degree than than the present is kind of at the heart of, to me, like, what it is to try and build a company or invest in someone trying to build a company. We'll get to, you know, how how you approach investing and kind of the the work you're doing at the moment, but I'd love to just kind of paint the picture of of how it was that you went from, you know, building WCAK to to be the station that it is and ultimately, you know, exiting that and and your your journey from the role of entrepreneur to investor. Why did you leave Zappos Communications? What was your, you know, thought process, and and how did you ultimately come to the world of investing?

Lee Zapis (Zapis Capital) [00:12:38]:
Well, I've I've always had an interest in technology and, you know, the application of technology to, at the time it was to the radio industry. And, it was experimenting with new ways to get audio from one place to the other. And in Cleveland, we are, we are fortunate and we're fortunate to have a company that was based out of here called Telos, t e l o s, run by a guy named Steve Church. And Steve was quite the visionary and an engineer and just, you know, brilliant, brilliant guy. Lucky for me, his offices were right below ours when we our offices were on Superior and 17th Street or 18th. He was the first guy in the world, to my knowledge, that licensed MP 3 technology from, this Fraunhofer Institute in, Germany. And he licensed it for use to use it broadcast equipment, but he also developed a, codec to do audio over the internet. He introduced me to this, MP 3, and I'm like, holy shit.

Lee Zapis (Zapis Capital) [00:13:40]:
You know, I knew it was gonna be, you know, really revolutionary, but I had no idea it was gonna be turned into what it had, you know, has turned into. So I had this interest in, technology from being introduced to it, from Steve Church and his partner, Frank Foti, who still is running the company. Steve, unfortunately, passed away a few years ago. So I got interested in that. We we're the 1st station to use digital audio workstations, storing our audio on, hard drives. And back then, it was like hard drives were very small and very expensive. But I went, I used to get a magazine called Red Herring, which was like a, the magazine of the Internet age, you know, kind of covered all the different Internet companies. In fact, it was during the dotcom boom.

Lee Zapis (Zapis Capital) [00:14:24]:
And I went to, a Red Herring conference in Atlanta. It was part of Comdex, and it was it was kinda like a Shark Tank pitch. I mean, business would get up there and present to a bunch of different investors and, say, hey, you know, schedule another meeting and decide to invest. And I met 2 gentlemen there. They were sitting at a table when they knew each other. They were both from Silicon Valley, and I came in. They welcomed me to sit with them. They kind of really were helpful to me in kind of teaching me the whole, you know, technology investing side of the business.

Lee Zapis (Zapis Capital) [00:14:54]:
One guy, David Bloomberg, he's still, I still stay in touch with him not as regularly as I used to, but he's, BC out in Silicon Valley. At the time, when I met him, he was specializing in emerging Israeli technology companies. Then the other guy was a guy named Thanos Triant, and he was a CTO, I think, I'm trying to remember at, some big companies. He was off doing, technology investing. They were, you know, very helpful to me, showing me, the ropes. And I made my first investment back in 1986 with a company at the time it was called Snap Technologies. Nothing to do with the current Snap people. But the, they ended up changing their name to Embark.

Lee Zapis (Zapis Capital) [00:15:34]:
And they their whole business, was working with, MBA programs to manage their online, application process. And, you know, this is, you know, sound today, it sounds like pretty mundane and lame, but back in 1996, it was pretty revolutionary. You know, a lot of things were being, you know, moving online. And so that was my first, taste of technology investing. And that company, it didn't do as well as we hoped because, the dotcom bubble burst and they, convinced the window to go take go, do an IPO by just a few months. And they're being acquired by Princeton Review. But I stay in touch with the the founders of the company and one guy I still talk to on, once or twice a year. The other 2, I haven't talked in a while, but, you know, I had a good relationship with them.

Lee Zapis (Zapis Capital) [00:16:22]:
And, you know, that sort of started me on the whole, you know, technology investing. So, you know, I've made a lot of mistakes along the way, but have have had some nice successes. And, you know, in this business, it's, you know and I remember this, one of the first things I, David Bloomberg taught me was that, you know, it's how how can that possibly work? You know, how does that make any sense when you only have one success out of 10? And he laid it out for me with the example you've got, you got a $10,000,000 fund, you put a $1,000,000 in 10 different ventures. 3 of them go bust. You know, 3 of them sort of break even. 3 of them give you a 2 or 3 times return, and you're still in the hole. But the 10th one returns a 100 times to 1, and, you know, it's made up for all your failures and then some and everyone thinks you're a genius. You know, so that's kind of like the model and that's kind of the the, you know, what I kind of, you know, try to do.

Jeffrey Stern [00:17:15]:
Yeah. Building on that model, because that's kind of from the numbers perspective, how how it plays out in terms of, you know, quantity of deals you're investing in and the expected outcome of those. But in terms of the approach that you take when you are thinking about which companies to invest in and ultimately, you know, which companies not not to invest in, It's more, I I would imagine, than just a, you know, a random numbers game when it comes to your decision making process. And so how is it that you think about the thesis, the philosophy of of Zapis Capital? How is it that you're you're thinking about companies here in Cleveland and, you know, the approach that that you're taking when in both your diligence and deal flow, looking for companies and as companies approach you?

Lee Zapis (Zapis Capital) [00:18:00]:
No. My deal flow is kind of, you know, I have decent deal flow here in town. It's to be honest with you, I don't know why how people find me. But, but here in town, we're, you know, fairly active in the whole early stage investing space. And so we get to look at a lot of different deals. And for us, it it comes down to the people for sure. You know, we all we're big believer in the jockey instead of the horse. You need the horse too, but, you know, you have the greatest horse in the world.

Lee Zapis (Zapis Capital) [00:18:28]:
But if the jockey isn't skilled, you know, you're not making that much success. We also we want an opportunity to make 10 times our investment. Not that it always works, but we've had a number of them that have returned that. We prefer software as a service. We like that model, b to b software as a service. We like to invest in companies where we think we can add value beyond just writing a check and, you know, getting an update every 6 months. You know, we wanna get involved. You know, some of the companies that I've invested in in the past, I've, you know, attended trade shows with them, worked a booth, gone on sales calls, you know, done pretty much what I could to help these entrepreneurs be successful.

Lee Zapis (Zapis Capital) [00:19:07]:
And those were younger guys that were kind of early on in their careers, you know, so I was able to lend, you know, a little bit more credence, you know, actual, you know, that with, Charlie Logee's company, there's really there's not much I can add to his group, but, you know, that's an example of, you know, betting on. I like Charlie's idea and I like Charlie. I've known him for years, and I think he's, you know, gonna be successful because he's just got that drive. You know, some people call it grit. Some people just, you know, they're relentless. One of my favorite entrepreneurs and a woman I invested in a number of years ago, Karen Karen Katz, got a company called Playlist. And although, we're, you know, playing around with that name, and she is relentless. She will not let any, she's dealt with all kinds of adversity around the company.

Lee Zapis (Zapis Capital) [00:19:59]:
She just she's like a pit bull. She will not let go and she will shake, shake whatever until something comes loose. I mean, she is just a terrific entrepreneur and again, optimistic. And because if she wasn't optimistic, she would, you know, the things that you end up coming across, you know, would probably most people just kinda throw up their hands like, gosh, shoot, there's that said, I can't go any further. I've talked about that too and kind of when I look back at my radio career, we had all kinds of crazy things happen. We actually had a workplace shooting, years ago. That was just, one of the more horrific things that I've ever had to deal with. I said to somebody, if somebody were to say to me 5 years before that happened or 10 years whenever we started the company that you would have this and this and this.

Lee Zapis (Zapis Capital) [00:20:46]:
I I would have maybe at the time, I would have said, gosh, I can never I'll never be able to get through those kind of things. That's just crazy. Let's just give up now. You know, you don't wanna look too far ahead into the future and get yourself all worked up. You just have to think every day is gonna be better than the next or the, last one.

Jeffrey Stern [00:21:03]:
Yeah. It sounds like people, have been when you think about success, both from your time as a builder, and what you look for as an investor, really one of the most important things to you. I'm curious how you gauge, you know, people and and grit and those qualities when either, you know, you're trying to build a team or you're looking to make an investment. What what what is it that you're looking for and, you know, how is it that you're you're gauging the the qualities that you're looking for in in those in those kinds of people?

Lee Zapis (Zapis Capital) [00:21:38]:
It's hard to measure it. You sort of get a sense after a while. But I like people that are that seem like they have something they to prove to themselves or to somebody else, kind of like having a chip on their shoulder in the sense that I am going to succeed, and nobody's gonna stop me. And I'm just going to, you know, grind it. You know, it's like, there's all kinds of cliches that they talk about. It's not how many times you get fall down, fall down so many times you get up, you know, those kind of things. I'd like to think that I have a sense of somebody's, grit when I meet them and get to know them. First of all, I have to like the person if I'm gonna be investing with them and I'm gonna be spending a lot of time with them.

Lee Zapis (Zapis Capital) [00:22:20]:
I want it, I want it to be somebody that I enjoy talking to. And so, you know, that to me is key. It just comes from a certain sense of having done it for a while. And of course, Rich Von Jerna, who's my partner and our CFO, he's a huge resource. And I think he helps on the people side as well, kind of judging. And my wife's great too. She's always, she's been helpful. And the few times I had to listen to her, I, like, regretted it, you know, and then, she saw something that I, maybe, I didn't pick up on.

Lee Zapis (Zapis Capital) [00:22:49]:
One of the things I've had a problem in the past with, as far as when it comes to people, is that I think I've learned a lesson, but I maybe fallen in love with an idea and then thought that maybe I could fix the people that were trying to execute the idea. And you really can't fix somebody in a startup kind of environment because the the time is limited. You know, there's only so much money. There's only so much time. You have to, make a go of it. So you can't really spend your time trying to get somebody on board, that maybe isn't the right fit.

Jeffrey Stern [00:23:20]:
Yeah. What what you had said earlier, I don't remember where where I read this, but I think the phrase was chips on shoulders put chips in pockets.

Lee Zapis (Zapis Capital) [00:23:30]:
Yeah. Yeah. I think there's something to be said for it. I think just, you know, that's why I also like immigrant entrepreneurs. You know, a lot of them come here feeling like they have an opportunity that they have to take advantage of. And so I think that's a big part of the immigrant's successes in this country. Yeah.

Jeffrey Stern [00:23:46]:
I think that's actually a good segue. I wanna I wanna tie back into Cleveland specifically for for a moment. If you had to to make a request for startups in Cleveland, what what is your request for startups in Cleveland? And and just to to add some some context, at least in terms of of where I'm thinking about this question, you know, talking to entrepreneurs here in Cleveland, I think there is from a a venture capital perspective, it feels to me like lack of access to early stage capital is cited often as a prevailing ailment of the space and ecosystem here. And so, you know, I'm curious your perspective on unlimited access to capital and early stage funding in Cleveland. But from your perspective as an investor, you know, what what is it that you wish, you know, more people were working on here specifically or things that from the entrepreneur's perspective that that that they could, you know, be thinking about or are focusing on? And, yeah, I would just love to hear your take on that.

Lee Zapis (Zapis Capital) [00:24:44]:
Well, I think Klima has always had that, wrap of having not a very healthy early stage funding sources. And I don't think it's gotten any better. Maybe even gotten worse over the years. I know Columbus has done you know, it seems to have done very well. They have dried capital down there, which has been very successful. You know, they've had some big successes. And we've had some big successes here in town too, but, you know, they didn't really kind of create this large number of cap table wasn't such that dozens of people became multimillionaires because of a successful exit. And that sort of helps feed the ecosystem, you know, and I think Pittsburgh has had that success because of Carnegie Mellon and they, you know, kind of early on, they were more advanced than we are.

Lee Zapis (Zapis Capital) [00:25:26]:
And I I think that that's still probably the case in Pittsburgh. So I think it'd be nice to be able to, have more angel and early stage investors here in time. There's lots of money here. It's just, you know, for whatever reason, there's hasn't been a huge appetite to do early stage investing other than the North Coast people, North Coast Angel Fund and those and their funds. You know, Jumpstart's done their thing. But other than that, there's really not too many people doing it. And I think that would really, I think would be helpful. You know, Scott Shane is working on something.

Lee Zapis (Zapis Capital) [00:25:59]:
Bill Manby, Don, Macron is working on something. There's

Lee Zapis (Zapis Capital) [00:26:02]:
you know, there's a lot

Lee Zapis (Zapis Capital) [00:26:02]:
of people doing things. You know, maybe I'm just not coming to maybe I'm just not hearing about the deals like I used to. I think it would be helpful for the community as a whole. So it's more money for early stage investing.

Jeffrey Stern [00:26:15]:
Why do you think that is the case if there is capital to be deployed? And then, you know, there are people here building startups. It feels kind of like a chicken and egg problem to some degree of of what comes first, but it sounds like both pieces of the the puzzle are are there.

Lee Zapis (Zapis Capital) [00:26:32]:
It is kind of perplexing because, you know, Jumpstart's been at it for a long time. I mean, they're they do a great job of advocating for the, startup community, the technology community. And, you know, and maybe maybe I'm limiting it myself to just looking at, you know, technology and software investing. I've always just liked that model that whole kind of build it once and sell it a 1000 times or a 100000 times versus, you know, a piece of hardware that needs, a lot of, capital intensive. Although that, was that mister, is it mister Bean? That was a nice success. I don't know the gentleman who was behind it, but they're the ones I think that sold to Ring and then Ring was bought by Amazon. Is that the way it went?

Jeffrey Stern [00:27:15]:
Yeah. Yeah. I do recall hearing about that.

Lee Zapis (Zapis Capital) [00:27:17]:
Yeah. That was a couple years ago. And then, of course, RV share has had a great success. They just raised another $100,000,000 and and within 3, that was another $100,000,000 raise. I mean, shit in my world, a $100,000,000 would be a nice exit. So there's, you know, there's people in Nurse Challenge here, and perhaps if some of those companies are are successes, you know, look, say for, you know, eventually, RV share will end up being sold and the founders, whatever, will see a big payday and perhaps they'll be motivated to help the Northeast Ohio startup ecosystem by, you know, maybe creating a fund. And again, that's, you know, it would be nice, but you can't really count on that. And, so the people have to kind of do it themselves and, you know, go outside of Northeast Ohio and look for capital.

Lee Zapis (Zapis Capital) [00:28:05]:
You know, Stan Garber and Alex Yakobovich who did, SCOUT. I mean, when they were ready to start start Scout, they came to see me and they were, you know, ready to, raise money at a certain valuation. And I thought it was too high. And I, you know, like I tell every entrepreneur, you know, early stage, valuation is more of an art than it is a science, you know. And, you know, they went out to California and they got a bunch of money early on at a much higher valuation, than I thought I was ready to to agree to. And I was fortunate enough to get in on that deal early on. But, you know, they didn't limit themselves to just Northeast Ohio. So I think as a entrepreneur, you know, it's nice to be able to do it in your own backyard because there's a cost in trying to go out and raise money.

Lee Zapis (Zapis Capital) [00:28:50]:
I mean, there's a lot of time involved, time that's, being taken away from trying to build your product and, grow your customer base.

Jeffrey Stern [00:28:58]:
You mentioned that your focus or the deals that you like to invest in more really just stem kind of from technology and the lower marginal cost of distribution. And but I think that you've taken kind of an industry agnostic approach investing across technology, health care, real estate media. And again, tying it back to Cleveland, what have you kind of seen as the the drivers of change in the city over the last decade? You know, you've spoken to how it's changed and how it's stayed the same. And in some ways, you know, people really often point to health care as where a lot of the innovation and progress and technology is is at play here in Cleveland. I'm curious your perspective on on that as well.

Lee Zapis (Zapis Capital) [00:29:41]:
Health care, obviously, people gravitate towards here because of, the clinic in and they cast a big shadow. So we're really fortunate that Northeast Ohio, we've got these world class health care facilities and, you know, there's ideas being spun out of there quite often. And so that's kind of the natural thing everyone sort of wants to gravitate to. But there's also, you know, obviously manufacturing cornerstone of, Northeast Ohio for generations. I guess you you wanna think of it that way. And I think that's, you know, probably where, you know, our other strength lies. I think there's just a lot of very, very smart people here in Northeast Ohio. Hardworking, not flashy.

Lee Zapis (Zapis Capital) [00:30:20]:
You know, you can get things done here. You know, the nice part about Northeast Ohio is it's a small community. And if you've got a good reputation, then, you know, you can it'll open a lot of doors for you. On the downside, if you don't have a good reputation, you're not gonna really get a lot of traction. You might have to move. In the last say, 10 years, I think, you know, I'm not really sure that, we've moved the ball in a significant manner, but, you know, we've had had, you know, more successes. All the efforts that have been put forth over the years has had a positive effect. I think the entrepreneurs I come across, I think, are more realistic.

Lee Zapis (Zapis Capital) [00:30:54]:
I I don't see really any get rich quick kind of schemes where entrepreneurs put a business plan together and their soul kind of they were more motivated by having a, you know, big exit than actually solving a problem. The entrepreneurs I I talked to are really more about building a great business than having an eye on an exit as soon as possible. You know, we always say that, you know, if you run a profitable business or, you know, at least break even, we like a business that can get to break even fairly quickly because then you don't you have a lot more flexibility. Then if you run that if you run that kind of business, you'll always be able to find an exit, you know.

Jeffrey Stern [00:31:35]:
When you think about great businesses, and I imagine, you know, dozens, hundreds that you have had the opportunity to meet with and potentially invest in over the, you know, the past few years, What are the the ones that that got away from an anti portfolio perspective? Are there ones that, in retrospect, you, you know, wish that you had, you know, different information at the time or thought about differently? And, yeah, I would love to hear your retrospection on on maybe some of the ones that that got away.

Lee Zapis (Zapis Capital) [00:32:08]:
Yeah. Yeah. I don't think there's anyone that I, you know, had the opportunity to invest and I didn't, because of, you know, I missed it. You know, like, oh, I didn't. Gee, I didn't think of it in those terms, you know, that kind of that thought process. There's a bunch of them that I wish I got into, but didn't have the opportunity like explorers for 1, you know. I think Steve McHale is one of the smartest guys I've ever come across and and Charlie of course, you know, you know, they're just really smart guys that and again, I they both have that kind of determination that they're going to succeed. So that's, you know, Explorus is, you know, one up there.

Lee Zapis (Zapis Capital) [00:32:43]:
You know, Cover My Meds is another business that I didn't get an opportunity on. And, of course, all the ones that were successful, Jay, I wish I was in on. But but but to be honest with you, I told somebody that, you know, seeing when Facebook was out raising money If

Lee Zapis (Zapis Capital) [00:32:56]:
they had pitched me Facebook at the time,

Lee Zapis (Zapis Capital) [00:32:58]:
I might have, gone,

Lee Zapis (Zapis Capital) [00:32:59]:
you know what? I don't think so. It was already Myspace and there seem to be kicking ass and there's Friendster, you know, social network for, you know, college kids. You know, I don't see it. You know, that that very well could have been my attitude, you know. And of course, you know, Mark Zuckerberg has a, a little quirky. And so I might have been turned off to that or who knows. But, there's not really anyone that I kinda look back on and kick myself for not recognizing.

Jeffrey Stern [00:33:27]:
To close out a question that we really like to ask everyone on the show as we try and, you know, map the land is for, you know, the the kind of buried treasure that that you have in in Cleveland? You know, what is your your kind of favorite hidden gem of the city that you appreciate?

Lee Zapis (Zapis Capital) [00:33:47]:
A hidden gem? Gosh. I'm not sure if there's a hidden gem, but there's I think the metro parks are probably our greatest asset, even more so than the lake. I mean, the lake is fantastic. But, you know, a lot of most people don't have access to the lake, but the metro parks are just a phenomenal resource and asset to Northeast Ohio. My niece has a fantastic gallery in the Colonial Arcade called Dovey Gallery, and she does a fantastic job. She's a jewelry designer, you know, studied in Italy and represents a lot of different artists. And so I think that, you know, if I, you know, really thought about it, and, of course, I'm biased, but I think it's a wonderful shop and a great place to to meet artists and, you know, pick up unique, items.

Jeffrey Stern [00:34:32]:
Alright, Lee. Well, if if people have any questions or things that they would wanna follow-up with with you about, where's the best place for for them to find you?

Lee Zapis (Zapis Capital) [00:34:41]:
And they can reach out

Lee Zapis (Zapis Capital) [00:34:42]:
to me on LinkedIn. Although, know, if they have a question, they can reach out to me on LinkedIn. I never accept people's offers to connect on LinkedIn unless I've met them in person or done business for them. But they can send me an email to lZapis@Zapiscapital.com. And, you know, with any ideas, I'm happy to give advice to anybody who is seeking it and, with the caveat that it's, you know, it's free advice. So it, you know, it's really not worth much.

Lee Zapis (Zapis Capital) [00:35:09]:
But it's, you know, I'm happy to look

Lee Zapis (Zapis Capital) [00:35:11]:
at people's decks, give them feedback on their investor pitch if it's something that they think would be of interest to me. You know, we like elder care. We've been in that business for 30 some years. Our family. You know, media, of course, is, kind of I was thinking myself primarily as a media marketing guy. You know, we like, software as a service, you know, b to b stuff. And I would much rather invest in a business development professional that had an idea for a product, but maybe didn't have the funding or know how on how to develop it, than a product person who's developed some really awesome products, what they think is an awesome thing, but has no idea on how to sell it.

Jeffrey Stern [00:35:53]:
Lee, thank you so much for coming on and sharing your your story and your background. Really appreciate having you on the on the show.

Lee Zapis (Zapis Capital) [00:36:01]:
Thanks, Jeffrey. Nice talking to you.

Jeffrey Stern [00:36:03]:
That's all for this week. Thanks for listening. We'd love to hear your thoughts on today's show, so shoot us an email at lay of the land at upside dot f m, or find us on Twitter at podlayoftheland, at thetagan, or at jefe. We'll be back here next week at the same time to map more of the land. If you or someone you know would make a good guess for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave a review on iTunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show.