Leading MassChallenge’s $16 Billion Startup Engine: Cait Brumme

Cait Brumme, CEO of MassChallenge, joins Jack for a sharp conversation on what founders actually need beyond funding: grit, customer proximity, the right network, and the ability to commercialize in hard markets. Drawing on her background across impact investing and Harvard Business School, Cait breaks down why MassChallenge is built to help early-stage companies get to real traction, not just better pitch decks. The episode dives into hiring, leadership, and the balancing act every founder faces between conviction and adaptation. Jack and Cait also get into the future of AI, where it can create massive upside, where it can quietly erode human connection, and why the smartest builders will stay grounded in reality while everyone else chases noise. It’s a strong episode on building durable businesses, solving meaningful problems, and keeping the human edge in a world moving faster by the day.

Cait Brumme
MassChallenge

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Host: Jack Moran

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Transcript

Cait Brumme 0:00

So you have to bring that confidence to the table and that belief in yourself. You're an entrepreneur, so you know that each day when you wake up, there are a hundred ways your company could die. There are a million things that you have to do. So without that real um, you know, sense of purpose, but also the tenacity and grit to go after it, um, you you won't make it.

Jack Moran 0:22

Welcome to Shaking Hands, where we provide the platform for entrepreneurs and thought leaders to share their stories in order to hopefully influence others to get out of the rat race and chase their own dreams. If you have any recommendations for guests or questions that you want to be asked, please don't hesitate to reach out. Anyways, if you enjoy the podcast, please like, comment, subscribe, and share in order to keep the podcast growing. Otherwise, I'm your host, Jack Moran, and this is Shaking Hands.

What MassChallenge really does

Cait Brumme 0:59

Yeah, so um Mass Challenge, we're we're a global nonprofit. Actually, we're headquartered here in Boston. We've been here for over 16 years, uh, but we're, you know, we have offices across the world today. So we're in um Switzerland, UK, Israel, and Dallas, Texas. And we work with about 350 early stage entrepreneurs a year. Um, we're our thesis is that entrepreneurs need social capital as much as financial capital, and that's even more critical when you're talking about we have our healthcare companies over there when you're in areas like healthcare life science, security resiliency, climate food, which is where we focus. The network access, the knowledge access, the credibility that comes with working with great partners is as important as the funding side. We were just talking you bootstrapped your company. Um, and so you know, we built this awesome portfolio of programs that help companies in very early stages of market readiness, early commercialization, so that they have an increased likelihood of success.

Jack Moran 1:58

What are kind of the deal structures that you're doing? You said that you um aren't equity partners in a lot of these companies?

Cait Brumme 2:03

Yeah, so um in in that way, like no deal. They have to uh they have to commit to engage in our program. So uh and uh and if they do that, then we'll help them along their way. We do give away non-um equity um grants, uh follow, follow-on grants to a subset of companies, so they you have to apply and compete for those. But um since we're we're not investment partners, there's not a lot of structure to their engagement.

Jack Moran 2:26

So, what does that like program look like? Like, how are you actually helping out the business? At what's uh you explain a little bit what stage they're coming in, but walk me through that kind of journey if I'm a founder and I have an idea at the napkin. What would this even be an opportunity for me, or I need to be a little bit, you know, have a proof of concept, um, have that per unit due diligence? Like, how does it kind of work? Yeah, that's awesome.

Cait Brumme 2:46

So we we have like two, you could think of sort of two offerings, two products for for entrepreneurs. Um, our early stage program, we call it traction, is typically companies that are in this sort of um pre-seed seed stage. So a couple of employees, if they're raising money, they've raised a couple hundred thousand to you know a million plus in outside funding, dilutive or non-dilutive. They have a prototype, you know, more than just past the napkin idea, though we do work with discovery stage companies and we love them too. But most companies have, you know, gone through some initial MVP or prototype and are really looking for support and accelerating, you know, their understanding of the market or end users, their um go-to-market, uh, and then also strategic exposure to like critical customers or other stakeholders that they have to work with. Um, again, since we specialize in sort of healthcare life science, dual use space, um, food systems, um, and financial services, most of those companies are are really looking for accelerated access to industry or other key partners.

The founders actually need

Jack Moran 3:50

You talked kind of about like the soft skills versus hard skills, but what have you seen to be the pattern or the commonality that most companies coming to you don't have and need?

Cait Brumme 3:59

Yeah, don't don't have and need. Um so what what they almost always have, which you absolutely need, is like tenacity, grit, a full-bodied belief in what you're doing. Uh, and that is like um beyond critical. I think why is that important? Why is that so important? I think because you believe that the world should be different than what everyone else um sees today. So you you see a gap, you can imagine work happening different, a solution changing lives, and everyone else thinks that this is insane, you know, in in most cases. So you have to bring that confidence to the table and that belief in yourself. You're you're an entrepreneur, so you know that you know, each day when you wake up, there are a hundred ways your company could die. There are a million things that you have to do. So without that um real um, you know, sense of purpose, but also the tenacity and grit to go after it, um, you you won't make it. I think the the challenge like is you also need to be able to voraciously learn. Like you have an idea, it's gonna run into the market forces and the real customer feedback, and you have to be able to hold that like truth straight in your head, and then also adapt to the market feedback to find the product market fit. And I think that's the that's the challenge that many founders face is how do you balance those two in a way that that lets you sort of get through the gauntlet, but iterate on your initial idea so that it can find product market fit.

Jack Moran 5:29

And you you said a powerful world. You said that these founders have the ability to imagine, and you're dealing with a lot of these entrepreneurs that are probably kind of that random abstract-minded um profile. And I read your bio, it seemed like a lot of what you're doing is bridging that gap from strategy to operations, taking you know, these people that are very creative, like probably a little bit in the clouds, and creating the systems to bring that back into reality. So, talk about that a little bit. What does that look like for a foundation?

Cait Brumme 6:00

That's that's awesome. So we we often work with founders who have um a supervision for, say, the cause like that they're trying to solve, but are very far from the customer. So that's sort of you know one um bridge we're trying to um or help, you know, way we're trying to bridge them across. And I can share a little bit about like we have our healthcare companies over here. That's a very common, you know, challenge in healthcare is you're motivated every day to save patient lives. And the hospital's trying to do that, but they're also trying to save costs, right? And so, like, how do you actually build your business case and sort of sell into that and then operationalize that? I think the other type of founder we see is is the amazing inventor. And so, you know, they're inspired by the um uh the technology or the science, scientific process progress. They imagine that if they just bring this gift that they've discovered to the world, the world will accept it. And um that's sort of a different form of vision and creativity and and purpose that also has to connect back to the business, the business side. So a lot of a lot of what we do is um is help founders really understand like how do how do the markets work that they're look trying to enter? Um, who cares within certain cus companies that become customers, how do decisions get made? Um how do they you know structure their story not to investors but but to these folks who need to adopt or buy or or at least give them feedback. And then I think the other side of that is how do they how do they grow their network so that they can um you know continue to get access to the resources that they need as as they go. If if I'm a doc, uh I was just on with a you know a doctor founder. She works a hundred-hour um work week in surgery. She's trying to launch a company at the same time. She spent her whole life in medical school. Like she needs to get access to folks who have brought this. Is actually sort of a more of a consumer-facing healthcare company. She needs to get access to someone who's done that before because she's never seen that. She needs to get access to people who could help her find pathways to funding because she's never done that before. So there's just also this cracking open of the network side that that we think is super important and really powerful for founders that extend beyond, you know, just the teaching, the blocking and tackling, or even the funding.

Jack Moran 8:22

So you broke up like kind of three stages there that I want to go into each of them, like the kind of market analytics, then the messaging or the branding based on those analytics, and then the growth once you have that messaging. So, where are you guys like getting these analytics that they're utilizing to develop their messaging to go to that market?

Cait Brumme 8:41

The companies do their own work. So, we, you know, one of our founders was um Dash Disponde, and he would say, don't coddle the entrepreneurs. Like they have to build their own companies. So you could think of us as like helping them understand that it's important, getting them access to people who can help them do it and do it well and then convert it into value. So it's not Mass Challenge doing that work on behalf of our companies. We're not a consulting firm or even sort of an operating team. Um, we're a network of uh resources advisors. We've got 3,000 experts sort of on call that are uh interested and passionate about supporting companies. And, you know, our work is really to identify high potential companies through a method we've refined over time, uh, and then to connect those entrepreneurs to the people who can uh make a difference in where they are in their journey.

Jack Moran 9:33

So, specifically for a question I'm kind of selfishly asking. Yeah, something that I've had a difficulty with, and I see a lot of entrepreneurs um struggle with this as team building. Like, what is kind of the solution for that? It's like finding other people that can push along, you know, your mission. Um, but the deal structures um, you know, as an early entrepreneur bootstrapping, I'm not able to pay, you know, an executive $250,000 salary. So I have to have someone buy in on this mission and maybe um use equity as a currency or, you know, and believe in me that we're gonna get to this exit.

Cait Brumme 10:06

Yeah. Hey, look, uh people are the unlock and they're the hardest part of building a company, I think. You finding the right talent at the right time, selling them on the mission before you have the the funding to win them over. Um, you know, for us, I think we spend a lot of time with our early stage founders on what, like what do they want their role to be over time? What is their unique skill set, and therefore what who else do they need at the at the table to make them and their companies successful? I think that's um a really critical piece of work before you sort of hit the hit the ground running on on hiring. Um, timing is another one. So you you mentioned like hiring in a big time exec comes with a lot of cost. It can also come with a lot of friction at the um wrong moment. And so thinking about the right sequencing of talent can be really important, you know, particularly for very early stage companies. I think the um sometimes high holding on hiring until you really know you've got something can be really important because more more people is more coordination, that's more time. Absolutely. Um, it can actually slow you down and until you um, you know, know you're in stride. Uh and then the the last piece of it, you you had talked about the the mission side of it. I think for early stage companies um that sense of purpose is so critical. Um and the mercenary market can be attractive, you know, great names, great talent, get great training, um, et cetera. But you're gonna need these folks to uh run through walls for you. They're gonna need to take pay cuts at the beginning, and they may need to take pay cuts when your revenue doesn't come through at the right time. Like you need people who want to build something. I think that's a very unique type of person who can thrive in um not just ambiguity but dynamic environments and wants to build a company, not just play a role.

Jack Moran 12:05

Absolutely. So I want to go back a little bit, backwards a little bit. How did you get into this? Like, what's your background?

Cait Brumme 12:11

Yeah, so I've I joined Mass Challenge eight years ago, which um feels like a really, really long time. I took over as CEO, almost four now. Um, and I spent most of my career sort of in roles that are crossing big companies, small companies, public, private, um, investment philanthropic. I'm um uh obsessed with the idea that like business and markets are what drive massive change and that when you look out into the world, there's still like more we want from uh everything we've accomplished. If I think specifically to the you know venture capital startup ecosystem, um uh the start, you know, we what we see in in our companies is this awesome group of companies at the starting line, but when you get to the ending line, like a much narrower set, and that's not just sort of the statistics of venture, it's it's like those in the hardest areas where adoption is really hard are are still not where we want them to be. And that's so that's what drove me to Mass Challenge. I I started in the private sector consulting sort of in education, data systems, in private equity. I was a public market investor. Um, and then the last 15 years, I've really been, you know, working in models like Mass Challenge that firmly believe that we could increase the surface area of investment and um venture capital to create you know more progress and prosperity for more people.

Jack Moran 13:39

So in Mass Challenge's growth cycle, what was the alignment that led to you being the CEO? You know, where was that overlap in your skill set that they were like, you know, that filled that? What was the void that they were trying to fill in?

Cait Brumme 13:51

I mean, you assume I had a skill set that they uh that they were adopting. So I joined Mass Challenge at its 10-year birthday when our founder was stepping off. So that was what was really attractive to me is there's an amazing platform. It had been a startup itself and sort of grown into its first generation of you know, entity, organization, institution. And it just felt like there was something magical there that could be even more. Um, and so originally joined on our program side, was managing director, leading our flagship Boston, and then took over more responsibility over time. Uh, and I I you know I stepped in. The CEO who had been in place was the COO at the time. Her job had really been to sort of help mature and scale the organization post-entrepreneurial leadership, and our founder, John Hawthorne, was like a force to be reckoned with. And um, and she made the decision to step aside post, you know, post-COVID, um, having led the organization through that and tapped me in. And I think it was because like I care really deeply about the work that we do. Um, it's awesome that I've been hands-on, like in our programs with our companies. So I I really understand what we do and what we don't do well, and what we could do more, um, and had a real sense of like where we want to go next.

Commercialization over hype

Jack Moran 15:13

So, what are those like attributes right now, the things that you guys are doing super well and the things that you're focused on that you want to um improve within the company?

Cait Brumme 15:22

Yeah, awesome. Okay, so I think we've built one of the totally best portfolio of programs for early stage entrepreneurs who want to focus on commercialization. So there are a lot of accelerator programs out there that are pretty good around like valuation, fundraising, getting to your seed round. Those are great. Um, our programs kick ass when you want to think about like how do I actually commercialize in a really hard area? We're really proud of that work.

Jack Moran 15:49

It's also what do you mean by that commercialize in a really hard area?

Cait Brumme 15:52

Yeah, like not only how do I raise funding, you know, as a digital health company, but like how do I get in with a payer and they'll pay me to do my work so that I can grow my revenue.

Jack Moran 16:04

So the smart money.

Cait Brumme 16:05

The smart, the smart money, it's the customer side of the equation. Um, again, we also work sort of probably in comparison to um many of our um equity accelerator peers, we're more hard tech, more bio, more, and so in those arenas, like the commercialization piece is um a profound question. Like it's not obvious. I'm thinking we have two founders across the way who have replicated a dog's nose. So they can smell cancer, they are they can do biosensing for chemical weapons.

Jack Moran 16:39

I thought you're using that as a metaphor.

Cait Brumme 16:40

No, not a it's they that's they could um help produce fragrances. So they have this amazing technology with a variety of application areas that could be, you know, very business relevant to, you know, great for humanity. Um what do they do? What do they do first? How does it work? Who cares? Like that, that's when I say like the commercial, commercialize, that's what we're really focused on to get more of these exceptional inventions or ideas on a pathway to um credible, durable businesses that then can be VC backable or private equity backable or self-fundable or what have you.

Jack Moran 17:20

Yeah, and it's awesome that you guys are prioritizing that receivable. There's like an epidemic in the US where everyone just wants to raise money um, but they're not focused on doing the sales when it's like you could um bring in that million dollars or whatever you need to raise just by like focusing on your business. Totally. You know, yeah, I think um I'm sure you've become allergic to it.

Cait Brumme 17:40

I'm sure like we we are, you know, we're uh what what we would say is like vent venture capital is an amazing, you know, instrument. Um, and it's really critical to the startup ecosystem. Obviously, sort of capital is a lifeblood. Um our like observation, and you know, sometimes it's a concern, is that it's become the end goal. Uh and it can um and it can come in very unhealthy ways. Um and and so like for companies that are doing really hard and important things, one is um capital alignment with that mission is really important and can be hard. You know, so that's whether that's the time horizon, whether that's the end goal. Um, I think this the second piece is like pumping companies who have uncertain paths full of money early on doesn't do them any favor before they're really ready to scale. And so I think that's the the other piece of the puzzle. We're you know, super believers in companies who who perhaps have um higher capital needs really looking at blended capital stacks, sort of risk capital, equity capital, but also non-dilutive capital from government or other grants so that they they can you know grow and mature their um their technology and their uh businesses before they you know get the um tailwind uh and the requirements of venture. Um but so it's it's like a necessary evil, you might you might say. And and we think there are a lot of great actors in there. It's it's just like it's it's not the focus. Right. And I think for for founders, um we're really proud of working with them on building exceptional businesses first and then looking out and saying, how do I want to fund this second?

Jack Moran 19:26

And I want to get into kind of like that VC philosophy and how you guys are like kind of hedging the risk in VC. Um, but just to go back a little bit, yeah, um, when you come in as CEO of Mass Challenge, what are those first 90 days look like? Like what's your like strategy to you know get the the company under your umbrella and start like making impact?

Cait Brumme 19:47

Yeah, oh my gosh. So um, and I think I've I you know two different kinds of CEOs. One is outsider versus insider, and and so it's it's a little different. Um being an insider, like sort of promoted from within, if you would. Okay. Um uh different type of listening tour. So one is like understanding my role and what's different. Like that, it's pretty different from running programs to being sort of responsible. So a lot of time with my board, with our team, um, making sure like I was crystal clear on my new role. I think the second is rallying, rallying the troops in those first 90 days, um, making sure you're connecting with everyone in a different capacity, helping share your excitement and your plans that that lie ahead. Um, we were also, I was sort of coming out of COVID as we were returning to the office. So that was a really, you know, different time, hard time for many employees to figure out. So there was a lot of time for me also in the first 90 days on on like the culture of Mass Challenge and what it means to um be together again, to be preparing for a bigger mission, um, an audacious plan. And then the fourth was like taking a hard look at my team. And and so um I did make a couple decisions that I needed different people in different seats um to you know be able to tackle uh my plan. And and um that was you know really critical in the first 90 days so that you don't waste time um uh overall.

Leadership, politics, and silos

Jack Moran 21:22

Yeah, so this is probably not a topic that everyone loves to talk about, but I think is a reality. Like, what are the landmines that you have to be cognizant of not like stepping on when you come into a new environment, like the politics of the company, or you know, so on and so forth, um to interface and start like, you know, having impact with people.

Cait Brumme 21:43

Totally. I mean, I think there's one is like what is the um culture of how business is done is really important to know when you're coming into a company. I mean, ideally you're vetting it beforehand so that you are entering into a, you know, a culture of business that works for you. But I think that that's one that's really important. And what I'm talking about.

Jack Moran 22:04

What were you looking for? Yeah. And that those criteria.

Cait Brumme 22:07

So since I'd been at Mass Challenge, I had sort of underwritten that before. So I can talk a little bit about what I wanted to change. But for me, that our culture is highly collaborative, which is important to me, entrepreneurial, meaning sort of we believe in new and novel developments. We believe in experimentation. We love minimizing time from idea to action and keeping those cycles low. And we try and balance all of that also with sort of high accountability and autonomy as well. So we we by design take the best of our entrepreneurs and combine it with the best of our sort of community ethos and uh and and that's sort of the really critical to the business of our work. So that was important to me to preserve. Like it's a magical part of who we are. What I was focused on that I liked less was the entrepreneurial spirit had led to a variety of silos forming where you had sort of entrepreneurs, internal entrepreneurs running different parts of the organization. And so like intrapreneur, intra, you call it intrapreneurs. And we had structurally been set up for that. We had a sort of managing director for every market, they had their own PL, et cetera. And um I didn't think that's what our our customers, our entrepreneurs needed. They they want access to the breadth of mass challenge and then the depth of individual knowledge. And we were structured so that they really only had access to the depth, the depth piece. And by the way, it's the same with our our industry partners who sort of come to us to be more effective in their work with entrepreneurs. And they looked across us and want to work with mass challenge, period, not with mass challenge Dallas, Mass Challenge Switzerland, Mass Challenge UK. So culturally and then also structurally, that was something that was important to me to address for us to be able to show up as one mass challenge for the people we serve, to be um uh, you know, super customer-centric in terms of how they want to engage. And we're like a multi-sided market, if you would. So we've got our entrepreneurs, we've got our experts, we've got our industry partners. Um, and so each of those um, you know, stakeholders need to be able to work with us in ways that are meaningful to them, not limited by our structure.

Jack Moran 24:38

Very interesting. Yeah, so I'll I'll move back into that question of that VC philosophy that is obviously a risky environment when you're dealing with early stage companies that aren't as established. How are you guys well, what is your investment criteria? And then how are you profiling both that business and the individual to determine if it's someone that you want to invest time and resources into?

Cait Brumme 25:04

Yeah, that's so this is awesome. So, but the neat thing about not being an investor is we can take a slightly different approach. And so I'll I'll speak to our approach and then how it is similar or different um to the venture capital firms that say venture capital because it's that early stage.

Jack Moran 25:20

That early stage.

Cait Brumme 25:22

So um for us, we've said since the earliest days we look for high impact, high potential, which is is like fuzzy. What is that? Um we have a set of criteria that um we so all of the companies we work with go through a sort of rigorous application process, not dissimilar to a Y combinator or Textstars, but the selection, ultimate selection mechanism and the criteria are different because of our mission and our model. So companies sort of um apply with an in-depth um application, their deck, uh, various materials. And we use uh our community of experts to do initial vetting against a set of criteria that we've studied over time with MIT and Harvard and others. So it's pretty cool. Like the wisdom of the crowd works as well as venture capital selection, which um is amazing, is amazing to see. And they give us feedback and then ultimately sort of a ranking for each company on criteria like sort of quality FIP, their assessment of the market opportunity, the team, um those standard criteria, and then sort of comments directly to us. And we use that data to identify the subset of companies that we'll invite to come interview with us directly. We also in that process use third-party experts to give us um uh objective data back, their own assessment. Uh, and what we find is those, they're their scores, um, particularly when we have a diverse panel of experts. And by diverse, I mean um uh sort of roles in the world. So if we have a panel of experts that represent sort of large executives, venture capitalists, um, technical or industry SMEs, et cetera, um, their scores collectively are pretty highly correlated with long-term outcomes. And so it's a data set that's um uh you know super valuable to us as we as we down select the companies. Um those those scores correlate because of our criteria back to sort of a high impact, meaning if this company is successful, will they be disruptive in the area that they're going after? So not sort of a precious definition of impact, but meaning impactful on the area they're going after. Uh, and then potential, which is is this company viable based on based on you know what you can tell in the earliest days? Um, what's awesome is our outcomes are um suggest that it works pretty well. So our IPO rate is you know roughly consistent with with Techstars, which has you know more of an investment-driven lens and model. Our company survival rate is about 65%, which is significant for the industry average. Wow. Um and uh and so our you know, uncommon model actually is pretty good at picking companies that are that are high potential along the way. And then our job is just to increase their likelihood of success, um, make them readier to go to market, readier to raise capital so they have a better chance of you know solving the problems that they set out to solve.

Why startup environment matters

Jack Moran 28:22

And it's interesting, it's almost like you guys are materializing the saying you're a product of your environment by surrounding these founders with an environment of like um advanced resources. Yeah. Um, it is increased, increasing their success rate.

Cait Brumme 28:38

Yeah, it's it's actually pretty cool. We're um we're like super nerds about our work. So we do a lot of partnerships with um with our research institutions. So, you know, MIT's done experimental research on our on our method. We've looked at our mentorship program, et cetera. And and what we can say with certainty is we do increase their likelihood of success. So if you're selected for Mass Challenge, our selection process seems to work, not in picking the winners, which is not our, which is not what we're trying to do. So that's where we differ from a venture capitalist. We're not trying to say that's that's the one. We're trying to say which of these companies have a high likelihood of doing something great if we surround them with better resources. Wow. Uh, and then surrounding them with resources that we can see in the data actually do increase their likelihood of success. So that's sort of our our obsession, and we think that's how we increase the surface area of startups and venture capital to change the world in in even you know greater ways.

Jack Moran 29:38

It must be super inspiring to kind of be at this epicenter, especially in Boston with like the institutes around here, to be in this like you know, channel of this knowledge.

Cait Brumme 29:47

Yeah, it is. Um, I mean, the the startup ecosystem generally is is so cool. Uh it's so inspiring, it um it's so optimistic. And then to do it here in Boston, which I think is a little has a different culture. There are you know pros and cons uh, you know, to that, but really has a culture of like wanting to work on hard things is particularly mean meaningful. So the companies that we work with, I mean, they come from all around the world, but I think they tend to be attracted to our platform because and specifically because we're here, you know, headquartered in Boston, doing hard stuff and want to be surrounded by others that are working on important things and taking on complex challenges. And so you get that awesome reinforcing, you know, community network effect of um, you know, people that are are gonna change the world.

Jack Moran 30:42

What do you think are the sectors um that have the most growth or opportunity right now?

Cait Brumme 30:47

Oh, yeah. I mean, a AI, if that's even a sector, is obviously like in all the headlines. And when you look at even the data of where, you know, company formation and venture capital, um, that's that's sort of like the the headline. I think maybe under under the hood on that, and and we're we tend to be more interested in like where is technology being applied than in technology itself. Um, we're super interested and excited about AI and healthcare. Um, so that's that's one area. Our uh we do work in sort of defense tech, space tech. That area has boomed over the last eight years since we got started. Um uh uh and seems to have an enormous amount of legs and complexity. I mean, we saw Anthropic in the news, sort of grappling uh now with what it means to be a partner of the Department of War. We think that the federal government has an enormous role to play in supporting and advancing really important technologies that that should exist. Um, and sometimes they're an enabler and sometimes they're a customer. So that's an area that's been exciting to see grow and have you know larger standings. Um fintech sort of had a couple down years, but seems to be having a little resurgence with um the Genius Act. Um we're we're excited to see that area continue to you know grow and evolve when we think about um you know access to resources, when we think about you know financing, um, et cetera, there's uh there's a lot that remains to be to be done there, um, uh and including sort of democratizing access to a variety of tools that we know change lives. And and so that we're we're excited to see that area get back on its legs. Um climate has been brutal in the US, obviously. We're we're not in an area where um that's um as top of mind, but I think big picture, um, we still remain pretty uh bullish um on sustainability, energy resilience, rightfully so. You know, grid power management, which you know, um maybe we can't call climate anymore, but are all part of that like durability, resiliency of our world, of our energy resources, et cetera. And we've seen some of our companies continue to make just awesome progress in that area. Young entrepreneurs that are getting started, they care. And so over the long arc, I think we we um you know, we are still very pro um uh some of that hard tech working on um uh sustainability and more.

Jack Moran 33:31

Yeah, I think it got the sustainability got a bad rap because you know people were nefariously like utilizing those funds and that mission um for things that, you know, other than sustainability. So now there's bad this bad stigma around it. But I mean, how can you get not be behind the mission of sustainability? It's such a like intuitive concept.

Cait Brumme 33:50

Such an intuitive contact. I mean, I think it also anything that gets politicized is tricky because then you sort of go through cycles. I I think the um the positive that I would I would pull out um of the sort of last couple of years that have been more challenging for climate finders is to really focus them on getting from cause to customer, um, which is just critical. Like at the end of the day, they they um uh you can't sort of sell into um reduced emissions because that isn't a business model yet, you know, based on, and so it's it's really forcing them to identify who cares for what reasons, um, and how do I sell into them? And and that's that's ultimately, I think, extremely um positive for um that whole sector.

Is AI overhyped?

Jack Moran 34:40

So going back to what you were saying about AI, um there's kind of like two camps of thought with AI, but we're we're seeing these like astronomical valuations with these AI companies. Do you over do you think people are overestimating AI or underestimating the impact that it can have within a company?

Cait Brumme 34:56

Oh my gosh, this is like the the question of of the year. So my um my best assessment would be that um there are a number of companies that are wildly overvalued today, and that we are underestimating still the full potential of the market. And it's just tough to be in that early company batch that may be overvalued but not able to realize the full market value. But I think what, I mean, certainly what we're seeing, it including, I mean, I know all of us are sort of actively and every day playing with the new AI tools that are coming out that are disrupting our lives and letting us really get an intuitive sense of the um enormity of this transition. But I think when we look at how AI is then being applied across these, you know, other categories we work in, there's so much more that's still coming and how it will impact business models, where it will open new um markets that we haven't really had before, how it will change business models. I I think we don't we don't know yet, except to say it's it's it's gonna be significant.

Jack Moran 36:15

Are you excited or scared at the implementation of AI and the collateral damage that will come with it, if any?

Cait Brumme 36:23

Yeah, so I I'm definitely in the um uh cautious optimistic camp. I mean, you can't not be optimistic at what this technology can unlock when we think about, you know, I don't know, financial underwriting to increase credit access to folks who otherwise didn't have credit access when you think about early diagnosis that saves lives. Like there's scientific discovery is is one that's been, you know, really uh well hyped, I think. So all of those are so positive overall that I think you have to be optimistic. And we we have to stay optimistic and focus on the really positive use cases to will this market into those areas where it can have the most extraordinary positive impact for humanity. I think it's also really important to be clear-eyed and um uh and proactive in some of the risks. And so I'm I'm you know uh I don't think it's um AI at any cost to beat China. I don't think that's a great, you know, national um stance. I think we want to have the the best, most competitive AI that also, you know, protects humans in the right ways. And so we need smart regulation in the right places to to make sure that this technology develops in a way that is for humanity, not against it. And then I think, you know, there's two very different camps on the um impact on labor and workforce. And uh, and so, you know, my view on this is we just got to keep really close eyes on it. I don't think dismissing it or uh, you know, overhyping it is healthy or productive or leads to the types of like nuanced, hard um answers that we'll need, and uh it'll probably change over time. Um but at the end of the day, it's also what people feel. Like if people feel as though AI is displacing them, if people feel as though AI is toxic to their families, et cetera, like those feelings are as real as reality. And so from you know, from a startup technology ecosystem, from a you know, national cultural, we we we want to make sure that um we have that balanced view.

Jack Moran 38:45

And that leads into my next question. We're kind of in the tail end here, too, of um the questions that I have. But what do you think that how are people utilizing AI in a way that you think they they shouldn't be? Like what aspects of a business shouldn't it be replacing that someone right now may be utilizing it to replace?

Cait Brumme 39:10

That's a hard question. That's a really hard question. Most of the AI applications that we're seeing are are looking hard at like worker efficiency automation, extending access and resources. So we're um you know, thoughtful about what that means long term for employment and job opportunities, et cetera. But I wouldn't say we wouldn't want people doing those. I think we want our small companies, our big companies to be figuring out where this technology can make them stronger, et cetera. If I can answer the question in a different way, I think the one that I worry the most about, which I think um the CEO of Anthropic has talked about, is more where you get to full concentration of power and wealth. And so where AI deployment and the ownership of that limits the opportunities of others to create and build and generate ideas. And that's probably anything that's doing that, I would be anti. I'm very pro AI disrupting how we work, creating opportunity for people to build in a way they've never built before. That's all awesome.

Jack Moran 40:39

Yeah, I think like if we can free up people's time to be more creative, that's a positive impact. Huge positive. Um, but I think that when where I would answer that is like when you start to replace that creative with technology and you replace that personal connection. When I see people emailing me with AI slop, it's like that is where I think people are utilizing the technology in the wrong ways. Um, and and your highest impact is that human connection. So replacing that with technology is a anchor more than it is like a uh an additive.

Cait Brumme 41:16

Yeah, I think that's look, I think um parents and educational institutions have a really hard thing to balance, which is you want you want the next generation to be totally fluent in these tools. Um, you know, same as the internet. You would not want people um to be graduating, not able to use, you know, that core functional, that core base infrastructure, but you also want them to learn how to think and to grapple with hard things and to um work their brain in new ways uh to digest information and process it yourself. Like I think we want our human brains to continue to do that work. It's been what has made us uniquely human alongside communication and creativity and love and all of that stuff. But being able to like process your outside environment and imagine a different future is what's allowed for human progress. And I don't, I don't think we want to give up that skill uh yet. And so that, you know, um keeping that teamed even as AI becomes so effective and productive at some of that, you know, core brainstorming or idea generation work, I think is really important and is gonna be something that employers, I know we're we're talking to employers about the creativity, educators, parents are gonna have to think about.

Jack Moran 42:37

Yeah, I think it's that's what's scary for me, is it absolutely can create a handicap. I look at you know, my own life. My parents talk about this story how when I was a child and we'd be traveling as a really young kid, I had a very good sense of direction. I could tell exactly where we were from my car seat. But later in life, I got a cell phone. My parents were split up, so I, you know, traveling between them, I got a cell phone and I would utilize my GPS when I would ride my bike around town. And now I have the absolute worst sense of direction. And it's like my brain basically was like, okay, I have this outside um technology that I don't need to put focus in or attention into this sense of direction anymore. So I'm relying on this machine and now I don't have it anymore. And now maybe that's freed up energy for me to do other things, but it's just like, where does that end? Like, hopefully, we don't get to the point where we're no longer able to think on our own because we're relying fully on technology. That's uh putting a lot of leverage on you know technology.

Cait Brumme 43:37

Yeah, it's so I'll give you an um alternative example, which is on your creativity part. So I have a 10 year old son who's um got the Mark Roberts um hack pack. So like shout out to Mark Rober. He does uh he does awesome stuff in this. And so he's um he's built an AI chatbot that for pre coding kids who haven't sort of Can't do the full coding, can still hack. And um, and so what's cool to see is it allows my son to just imagine all the cool shit that he wants, whatever. Right now he's working on a you know, um nerf laser that can automatically shoot people who come into his rooms. Wow. And he can just focus on all the ways he wants that to be better instead of the technicality of the coding. Now, I think as a parent, I want him to do both over time, but right now he's just focused on imagining like all the different things that he could layer on and then working with the coding agent to make that happen. And so that's that's makes me modestly optimistic that um uh really creative humans, which we are like as a species, will take advantage of some of these tools to you know imagine at even greater um levels than we have today when we're no longer constrained by you know some of what um was was holding us back.

Jack Moran 45:01

Yeah, and I think that you know, I heard something recently that will be kind of like the common ground between those two camps is like it there was a certain point in time where people would get their exercise through their work. There was a lot of labor-oriented jobs. And now that we've, you know, through the industrial revolution, we have more technology, and now people don't get that naturally through their jobs, and they have to go exercise at the gym or have a treadmill in their house and or they'll become you know overweight. And so it's kind of the same thing, is like we have to, you know, utilize this technology because it has so many awesome implications. But the important thing is to continue to exercise those muscles so that they don't deplete by not utilizing them. Totally.

Cait Brumme 45:46

We'll have like brain treadmills a couple of years from now, make sure we're still working them, even if we don't have to.

Jack Moran 45:52

So, kind of a final question here in this realm is what are you seeing? You know, we've talked about like all the new models and where the growth is. What are you seeing as like kind of dated models that are becoming obsolete that may have been, you know, um high growth at one point?

Cait Brumme 46:11

Oh boy, I mean, I think the the big sort of point of discussion debate is just around the software industry and um what AI means for software overall. I think one camp would say as um sort of AI and the um, you know, specifically um it's the the coding type applications make it really easy to build your own software. Like, why do you need to buy? And all of a sudden I can build everything I need, and and so you're gonna see that industry shrink and collapse. Um, and and I think there's others that would say it's there's real areas where you just don't need to build, like they have a real specialized view of business processes that would take you a long term, long time to replicate, like the sort of actual product development piece of it is is hard. And so even though you could build it, you won't you won't build it. And so, no, we won't see the software market shrink. I think that's probably the one that's going to be most interesting to see play out. Certainly, we're um uh hearing, you know, um uh from many founders that you know it's a point of worry, there's more pressures um definitely in some cases, sort of the sales cycle are um are impacted. I would guess we would at least see pricing pressure on that. And so that will dramatically change those models, which have, you know, basically driven the last 20 years of the venture capital industry since um uh uh they wrote, you know, software is eating the world.

Why Cait backs hard companies

Jack Moran 47:46

Do you prefer asset heavy or asset light companies? Yeah.

Cait Brumme 47:51

So in our in our mission, we we love the companies doing really hard things. Um and so that many of those are asset heavy or they're complexity heavy. So that comes with a additional like non-physical cost. So we're we're just super fans of those types of companies that are working on hard things that have where the playbooks haven't been written, you know, at the same level of depth where the pathway from idea all the way to full adoption or traction is hard. So that's that's our preference. And we're not venture capital investors. So we get we get to go all in on those companies and believe in them every day because that's um that's the privilege of our mission and our model.

Jack Moran 48:38

Fantastic. So I have two more just fun, quick questions. Okay. Number one is what is your own definition of success?

Cait Brumme 48:46

Oh boy, it it's kind of cheesy, but um, I really want to have a positive impact on the world. That's awesome.

Jack Moran 48:54

This is actually the exact same as mine. Yeah. I always say that. They're like, what does that mean? I'm like, I'm not 100% sure, but like that's where my needle's pointed.

Cait Brumme 49:02

Yeah, I don't know, but I in in my current role, I get to feel that in two ways, which I feel huge privilege around. One is the companies we work with, we think are awesome for humanity and for the founders and their teams. And so, in our own way, you know, I get to change the world by supporting them. And then the huge privilege of leading an organization, but also a small organization where you can really feel your impact every day on the employees and the company is awesome.

Jack Moran 49:34

And then, final question is what's one thing that you know now that you wish you know when you embarked on this journey?

Cait Brumme 49:41

Oh my God. I've learned so much um since stepping in as CEO. Hardest transition of my life. I mean, uh that that is the case. But I think the biggest thing that I have learned is um it's all gonna be okay. Like when you're leading a company, you see a lot of shit come through. You have to deal with hard employee issues, you have to make hard calls about partners. We've lived through now several geopolitical events where you have to navigate the impacts of those. So I think the one thing that I would, you know, say to others is um it's gonna be okay. Like you'll see this once, you'll see it again, and you'll know that it um you're gonna make it through.

Jack Moran 50:28

Well, that's a testament uh and really speaks to your character because it's so important to have that resilience and see the light on the end of the tunnel and remain positive in such a chaotic world that we get faced with so much and ad so much adversity. And it's the people that have that mindset and almost that delusional confidence in themselves that end up having the like, you know, biggest impact on the world. So I appreciate you uh spending the time with us. Is there anywhere if people want to engage with you or want to learn more about Mass Challenge, where can they find you? Where can they find your collaterals?

Cait Brumme 51:01

That's awesome. So definitely come visit us on our website, um masschallenge.org. Um, super available on LinkedIn also, so you can look me up there and send me a message as well.

Jack Moran 51:12

All right, fantastic. I appreciate you coming on.

Cait Brumme 51:14

Yeah, thank you.

Jack Moran 51:15

That's awesome.