Tom Kuegler: Wasabi Ventures co-founder doesn’t care if TechCrunch talks about your startup [Q&A]

It was 1994 when a massive failure completely altered the course of Tom Kuegler’s life. Kuegler, who grew up in Essex and went to Kenwood High School, had just lost the election for the Maryland State House of Delegates seat in the sixth district during his senior year at Loyola College in Maryland. So he started an Internet company. Four years later he met Chris Yeh, and the two of them founded Wasabi Ventures.
“We wanted to start a new style of VC firm, one that would concentrate on the early, early startups,” says Kuegler, now a 41-year-old general partner with Wasabi Ventures.
As of late, Wasabi Ventures has made news in Baltimore. In the spring it teamed up with Kuegler’s alma mater—now Loyola University Maryland—to establish an accelerator program on campus. In September, Wasabi will sponsor the first Startup Grind event here. And later this fall, Wasabi Ventures will open a permanent office in Charm City. Technically Baltimore asked Kuegler, who goes by “TK,” why he’s stuck on investing in Baltimore.
 
TB: Wasabi Ventures plays with the big boys out in Silicon Valley. Why come back to the East Coast, let alone Baltimore?
TK: I still consider Baltimore home. If somebody asks me, ‘Where are you from?’ I say Baltimore, even though I haven’t lived here in 20 years. I live in New Hampshire now. Beautiful tax-free New Hampshire. No income and no sales—better than Delaware.
TB: So you love Baltimore, and you want Wasabi to love Baltimore too?
TK: Yeah, yeah. And the real logic here is that it’s an ecosystem. Baltimore is really at the infant stage in its ecosystem, in the startup world. And you have to even break startup into different venues. When I talk about startup world, I talk about the software startup world in any form. [Baltimore] doesn’t have much of a software startup world. It’s at its infant stage. In two weeks, if I was really diligent, I could meet the 50 really serious early-stage startups in Baltimore that are in the software, mobile, edutech space. In two weeks I couldn’t meet them all in Austin. I couldn’t meet them all even in Boulder, Colorado in two weeks.
TB: OK, but then why set up shop in Baltimore?
TK: The great thing and why I love Baltimore, besides growing up here, is that it’s got all the pieces that would make a good startup ecosystem: good universities, good infrastructure, close to D.C., it’s on the Northeast corridor. It could have a better tax structure, but you could make that case about almost every city on the East Coast. The other piece of having a presence here is contributing to the ecosystem. That includes doing a ton of educational and edutainment type of things.
TB: Like Startup Grind?
TK: Like Startup Grind. Because if you give a place for a bunch of startup-minded folks to congregate via whatever, that contributes to the ecosystem. It’s not always just money, it’s not even always people [and] it’s not even always mentoring. Sometimes it’s: Oh, they understand what a startup lifestyle’s like and they’re an outlet.
TB: You mean Wasabi? Wasabi understands what a startup lifestyle is like? How is that different from other VC firms?
TK: We are pretty much focused on the early, early stage, and most people don’t play there. When I’m talking early, I’m talking a guy with an idea, or two guys with a prototype. A good chunk of what we’re involved with is pre-product, pre-revenue. Nobody plays there. About 60 percent of the deals we put people in as well. I have 18 full-time engineers. I have seven full-time sales people. I have six marketing coordinators. It makes us like co-founders. We take those services, inject them into the company and we take it out for equity. There’s no cash. We don’t have any LPs. The two LPs are also the two GPs. So Chris and I, we bet generally with our own money. So we’re not beholden to a bunch of LPs who are saying close the fund [and] get me a return.
TB: Not that I’m saying you’re shallow, but why decide to work in that space if money isn’t always the endgame? You are a venture capitalist. 
TK: Everybody gravitates to where they’re comfortable and where they have the most fun. I’ve never stopped being a startup guy, a founder. So this lets me be a founder 30 times a year. We’ve done 200 companies in the last 10 years under the Wasabi umbrella. That means I got to participate in about 200 startups in 10 years. That’s pretty fun, if that’s what you like.
TB: Wasabi has been at this for a little more than a decade. What, in your mind, has changed about the startup world in that time?
TK: The one thing that drives me crazy a little bit about the last 15 years in the startup world is we constantly are thinking, ‘What’s my exit?’ Well the guy that started this coffee shop, he’s not thinking about the exit. He’s just thinking about building a company, a business that works, pays his bills, pays him a little bit of money and over time might grow into something decent. I think often in the technology world we can have companies that could become that. Just grow organically and don’t think about an exit. You build a business that actually pays the bills and you’re growing it—what’s wrong with that? Yes, that probably means you’re not at the forefront on TechCrunch every third day, but who cares?
TB: Tell that to TechCrunch.
TK: I actually have an intern where part of their job is to track our portfolio of companies and how many times they’re mentioned in TechCrunch, because the more times a company gets mentioned in TechCrunch, the worse the company is. Some of our most successful companies were never mentioned on TechCrunch because they’re not sexy enough. Doesn’t mean they’re not making good money [and] the founders aren’t doing pretty darn well. And no, Google’s not buying them next week for $200 million, but if they still own 95 percent of their company and they’re making $4 million a year, and they got a staff of five, that’s a pretty damn successful company. What’s wrong with that?