Helping microcaps reach $10M in revenue & become cash flow positive

My name is Kai Sato, and I have always been fascinated with companies. To me, they are puzzles that can never be completely solved, constantly navigating elements, like cultural evolution, capital allocation, and creative destruction. Therefore, they must adhere to “kaizen.” 

After 15 years of building private companies as a co-founder, advisor, board member, and investor, I got involved with a microcap, first as an advisor and then serving as co-president & CMO, after the company raised over $21M and uplisted to Nasdaq. The experience was enlightening, especially because I’m personally a long-term value investor and very much a Buffett/Munger disciple. The fledgling companies, investment banks, lawyers, accountants, and IR firms that comprise the ecosystem, were often misaligned with common shareholders, even though they desperately wanted people to buy their stock. And, while many microcaps aspire to be the next Amazon or Netfilix, both of whom “grew up on Nasdaq,” most of them aren’t willing to do the foundational things to create company value. Most notably, they don’t focus on finding product-market fit, hiring devoted employees, and delighting customers, which were Amazon and Netflix cornerstones as microcaps.

Don’t believe me? Put your favorite microcap through this template (Dear Microcap CEOs, 6 Things Sophisticated Investors Need to See Before Buying Your Stock) and see how it fares. If it passes with flying colors, please let me know so that I can highlight them. However, the vast majority of microcaps can’t answer these questions, or, worse, they don’t think that they need to, which is why I created this website: to support microcaps building great companies for the long-term. As this message has begun to resonate, I’ve been asked to speak about this topic at industry conferences: The 1% of Microcaps: 3 Crucial Phases for Reaching $10M in Revenue & Becoming Cash Flow Positive.

For more background, I’m the son of a failed entrepreneur that led to our family’s bankruptcy and also my becoming the patriarch around 10 years old. I earned a scholarship to attend Cate School as a William New, Jr. Scholar. I earned a merit scholarship to attend USC as a Presidential Scholar, where I studied business administration and the business of the entertainment industry. And through the years, I’ve been published in Inc., Entrepreneur, and HuffPost, spoken at a number of industry conferences, like SXSW, and been quoted by publications, like the Associated Press, US News & World Report, and The Los Angeles Times. 

After college, I co-founded a software company in what’s become the sportstech industry; it later became one of the later-stage companies in the first Dodgers Accelerator and has continued to thrive. Like a lot of founders, I naturally began to advise and then invest in startups but found that I didn't love it when founders would take your money but ignore your battle-proven advice. 

I later became the chief innovation officer of a mid-sized company and helped it find growth avenues internally and externally, including corporate venture capital. That led to becoming the entrepreneur-in-residence of an accelerator and a good bit of international business dealings, helping build startups in Norway, Ireland, Singapore, and Kona, Hawaii. I’ve also advised select corporations and family offices on venture investments, helping source, vet, and structure deals that add unique value to their existing assets.

During COVID, I wrote my first book, which helps startup founders improve their marketing efforts, provided that they have a good product. It’s called Marketing Architecture: How to Attract Customers, Hires, and Investors for Any Company Under 50 Employees.

At the same time, I was also the co-president and chief marketing officer of a Nasdaq-listed microcap, focused on decarbonizing existing office buildings. Especially now that I’m a parent, I remain committed to aiding innovation that will combat climate change.

Through the years, I've realized that my greatest vocational passion is investing, mostly in smaller public equities. As Warren Buffett has said, “I am a better investor because I am a businessman and a better businessman because I am an investor.” That’s certainly been the case for me. As much as possible, I’ve tried to straddle the two vantage points, now mostly focused on small and microcaps, many of which are just publicly-traded startups. They can often ignore the foundational value-creating concepts that Silicon Valley has already proven to work.

On the investment front, I’m also a general partner at Mauloa, a unique private equity firm. Mauloa, which means “endless” in Hawaiian, is a patient, sophisticated financial partner whose core philosophy aligns its interests with business owners through non-control, equity positions. Mauloa brings endless perspective by making $15M to $30M investments into cash flow positive companies for growth and recapitalization. Mauloa further demonstrates its moniker by leaving business owners in control of their own destiny, without the burden of a predetermined exit horizon.

On the personal front, our family cares deeply about helping disadvantaged youth through education. I also love golf and have created Caddyshack to Corner Office to help young people learn about a sport that can dramatically change their lives, even if they don’t know how to play.