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Howard Lindzon on Business Ideas Before the Internet · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with Barry rid Hoolds on
• 0:06
  Speaker 1: Bloomberg Radio.
• 0:08
  Speaker 2: This week on the podcast, I have an extra extra
• 0:11
  Speaker 2: special guest. My friend Howard Lindzen is a guest. This
• 0:15
  Speaker 2: is a little off of our regular format only because
• 0:21
  Speaker 2: Howard and I know each other for forever and less
• 0:25
  Speaker 2: than a guest. Doing a Q and A is just
• 0:27
  Speaker 2: kind of me goofing around with Howard and having a conversation.
• 0:33
  Speaker 2: Howard has had, like, really this shockingly blessed career. He
• 0:39
  Speaker 2: launches wall Strip in the early two thousands, and before
• 0:43
  Speaker 2: you know it, he's in the middle of a bidding
• 0:45
  Speaker 2: war with a bunch of different people The Street, dot Com,
• 0:47
  Speaker 2: and CBS wanting to buy it. He rolls that cash
• 0:50
  Speaker 2: into his next venture, which becomes a wildly successful angel fund,
• 0:58
  Speaker 2: which now is in its fourth edition. He was a
• 1:02
  Speaker 2: pre IPO investor in companies like Facebook and Twitter. Literally
• 1:10
  Speaker 2: the first check in to Robin Hood, which went public
• 1:14
  Speaker 2: in twenty twenty one at about a thirty four billion
• 1:17
  Speaker 2: dollar valuation, So you can imagine that first check multiplied
• 1:22
  Speaker 2: a little bit from twenty fourteen or so. I know
• 1:27
  Speaker 2: him from Linzen Palooza, from his early media work, so
• 1:36
  Speaker 2: strap yourself in for a fun conversation about what it's
• 1:40
  Speaker 2: like to be at in the room where it's happening,
• 1:45
  Speaker 2: to quote Hamilton, but to be at the intersection of
• 1:48
  Speaker 2: media and finance and technology as the world is blowing up.
• 1:55
  Speaker 2: I thought this conversation was fun and fascinating, and I
• 1:58
  Speaker 2: think you will also with no further ado, my discussion
• 2:02
  Speaker 2: with social leverages. Howard lindsay, Hello, Barry, So what do
• 2:08
  Speaker 2: you think of these dicks?
• 2:09
  Speaker 1: Pretty nice better than my you know, Canut is a
• 2:13
  Speaker 1: like mcgver of sound. He's my producer, went to school
• 2:17
  Speaker 1: together at a ISU and we have this room like this,
• 2:20
  Speaker 1: no lights, everything's padded. It's all about sound.
• 2:22
  Speaker 2: This is this is professional. First of all, everything at Bloomberg.
• 2:27
  Speaker 2: The equipment is just like the best of the best.
• 2:30
  Speaker 2: The people are great, they don't fool around. The only
• 2:33
  Speaker 2: thing I'm waiting for in the studio is a robotic
• 2:36
  Speaker 2: camera so we could do little video clips. But yeah,
• 2:38
  Speaker 2: I think video but that's coming also all right, awesome
• 2:41
  Speaker 2: if it's interesting and cool and cutting edge, these guys
• 2:44
  Speaker 2: are right right on it. So let's talk a little
• 2:46
  Speaker 2: bit about your background. I've known you for forever and
• 2:51
  Speaker 2: over the course of most of that time, your work
• 2:53
  Speaker 2: has really operated at the intersection of finance and media.
• 2:59
  Speaker 2: How did those two ent combined? How did that come about?
• 3:02
  Speaker 1: What they came about? Because the Internet did its thing.
• 3:06
  Speaker 1: You know, I think they called Web two. That's when
• 3:10
  Speaker 1: I'm very much not a technical person.
• 3:14
  Speaker 2: The I grew up, I thought it was Web three.
• 3:17
  Speaker 1: No, they called now, they called the now they call
• 3:20
  Speaker 1: it web three.
• 3:22
  Speaker 2: In the two thousands.
• 3:23
  Speaker 1: Back in the two thousands, we were coming through that nasty.
• 3:26
  Speaker 1: I wasn't involved in tech back then, but you know,
• 3:29
  Speaker 1: by five, people thought, you know, we were in an
• 3:33
  Speaker 1: everything was real estate. But in Lato five Earli oh six,
• 3:37
  Speaker 1: YouTube came on the forefront and I saw YouTube, and
• 3:42
  Speaker 1: I'm like, this is for whatever reason that was. There
• 3:45
  Speaker 1: was many competitors or one hundred youtubes, but you know,
• 3:48
  Speaker 1: the YouTube and its ilk. As soon as I saw YouTube,
• 3:51
  Speaker 1: everything changed for me.
• 3:52
  Speaker 2: Really Yeah.
• 3:54
  Speaker 1: And you know before that, obviously the Apple Store of
• 3:56
  Speaker 1: my first walking into an Apple store in seeing the
• 4:00
  Speaker 1: iPod and being able to play with it inside the store,
• 4:03
  Speaker 1: so I was like, oh, one oh two, But that
• 4:06
  Speaker 1: was more hardware and music and not Internet related to me,
• 4:10
  Speaker 1: you know, because I came from the financial background, so
• 4:14
  Speaker 1: everything was DOS and Windows. So first year one to
• 4:18
  Speaker 1: oh two, you have Apple and they blew out the
• 4:21
  Speaker 1: store model, the retail model, which no one thought.
• 4:24
  Speaker 2: And then you bother the headlines from that era about
• 4:26
  Speaker 2: why the ice Apple store was destined to be such
• 4:30
  Speaker 2: a failure or just hilarious.
• 4:31
  Speaker 1: Well, because Gateway had failed, like everybody was doing it and.
• 4:35
  Speaker 2: There was no differentiated between Dell, Gateway, HB. Apple was
• 4:39
  Speaker 2: its own animal and they controlled their ecosystem. Very different
• 4:42
  Speaker 2: creature then different creature.
• 4:45
  Speaker 1: I didn't know what Apple was, even though you know,
• 4:47
  Speaker 1: because you in the financial world you were on DOS
• 4:50
  Speaker 1: or Windows.
• 4:51
  Speaker 2: I was one of the few on a Mac and
• 4:53
  Speaker 2: uh hard slogging. It was tough. Not everything was available.
• 4:57
  Speaker 2: In fact, there was a period of time where it
• 5:00
  Speaker 2: looked like Microsoft Office wasn't going to be made available.
• 5:04
  Speaker 2: That would have been the death blow to Apple. The
• 5:07
  Speaker 2: any trust case against Microsoft is the only thing that
• 5:09
  Speaker 2: kept Apple a lot. They needed a quote unquote competitor,
• 5:13
  Speaker 2: and now the two of them are the two Mac
• 5:16
  Speaker 2: daddy's in the space.
• 5:17
  Speaker 1: Yeah, I was living in Phoenix in an Apple store
• 5:20
  Speaker 1: open up to build more and I stumbled it across
• 5:23
  Speaker 1: the Street, never really an Apple user, and it just
• 5:27
  Speaker 1: blew my mind the store.
• 5:28
  Speaker 2: So that raises an interesting question. How does a kid
• 5:30
  Speaker 2: from Arizona, from Phoenix get interested in venture investing not
• 5:36
  Speaker 2: exactly known as a hotbed of early stage core companies.
• 5:40
  Speaker 1: Well, I'd have to go further back. It's okay. You know,
• 5:43
  Speaker 1: I grew up in Toronto, and I grew up born
• 5:46
  Speaker 1: in sixty five and so in my formative years, you know,
• 5:50
  Speaker 1: there was TV. There weren't really great video games, matel
• 5:53
  Speaker 1: and television cal Eco. But you know, when I'm fifteen
• 5:57
  Speaker 1: years old, Second City Television comedy was in the water.
• 6:02
  Speaker 2: Like Chicago and Canada was a giant feeder into the US.
• 6:08
  Speaker 2: Martin Shore. Go down the list of all the gree
• 6:10
  Speaker 2: I grew.
• 6:10
  Speaker 1: Up watching them live to stand up at Yack Yuck's.
• 6:14
  Speaker 1: So there was Jim Carrey. There was a chain so
• 6:19
  Speaker 1: much like you know you went to Stanford and got
• 6:22
  Speaker 1: into face. You know, you went to work in tech
• 6:24
  Speaker 1: in this generation in two thousand and I mean sorry,
• 6:27
  Speaker 1: in nineteen eighty, I was fifteen years old. I'm sneaking
• 6:30
  Speaker 1: into comedy clubs watching you know, Jim Carrey and Dave
• 6:34
  Speaker 1: Thomas and you know, like everybody could show up on
• 6:39
  Speaker 1: a night here in New York. I went to the
• 6:40
  Speaker 1: eleven thirty show, a comedy, so just see nobody famous famous?
• 6:45
  Speaker 2: Who was funny? I don't care who was famous? Who's
• 6:47
  Speaker 2: you know?
• 6:47
  Speaker 1: I don't even remember their name. There was only one
• 6:49
  Speaker 1: out of six that I thought were funny. But you
• 6:51
  Speaker 1: go at eleven thirty here, so hopefully that's but you
• 6:56
  Speaker 1: hopefully go that late show to see maybe a Chris
• 6:58
  Speaker 1: Rock or somebody shows up to actis So in nineteen.
• 7:02
  Speaker 2: Eight, just put out a new show. So he's off
• 7:04
  Speaker 2: the market for a while.
• 7:05
  Speaker 1: Good point. So in nineteen eighty I would go to
• 7:09
  Speaker 1: these clubs and that was who my idols were, and
• 7:11
  Speaker 1: I was just you were. Second City was on television,
• 7:14
  Speaker 1: so I had a comedy bug and you had Johnny Carson.
• 7:17
  Speaker 1: Those were like the shows that a weird.
• 7:18
  Speaker 2: Kid would How did that lead to woolstrip.
• 7:22
  Speaker 1: Long and then you take a break. I moved to Arizona,
• 7:25
  Speaker 1: go to Asu from Toronto. Yeah, from run Away from Home.
• 7:30
  Speaker 2: Had it with this gold and snow. I'm going where
• 7:32
  Speaker 2: the sunshines and I don't care about anything.
• 7:35
  Speaker 1: Made that move. Loved Arizona Golf cycling obviously the weather.
• 7:42
  Speaker 1: I go to ASU do my MBA and I graduate
• 7:46
  Speaker 1: in nineteen the middle of the pretty bad recession, the
• 7:51
  Speaker 1: SNL crisis. So I got my MBA eighties right, No,
• 7:55
  Speaker 1: it's the SNL crisis, Charlie Keating, SNL boy and Golf
• 8:00
  Speaker 1: of War breaks out right and pretty bad recession. Yeah. Yeah,
• 8:04
  Speaker 1: So that's when I started in business and became a stockbroker.
• 8:10
  Speaker 2: And I did not know that about you. You became
• 8:13
  Speaker 2: who you were broken for.
• 8:14
  Speaker 1: It was the prince. It was called the Principal, Eppler,
• 8:16
  Speaker 1: Garon and Turner. So it was a little regional, you know,
• 8:19
  Speaker 1: and they all got rolled up. I think eventually it's
• 8:21
  Speaker 1: wreck Dane Rauscher, which is no royal bank, like it's
• 8:24
  Speaker 1: you know, everything got rolled up. I got. I learned
• 8:27
  Speaker 1: how to sell pat ryle with my first mentor you know,
• 8:32
  Speaker 1: back then, you wore a suit, you went into work,
• 8:34
  Speaker 1: You go to Nordstroms, you get a suit, smile and do,
• 8:36
  Speaker 1: smile and die, you know.
• 8:39
  Speaker 2: I worked with those guys.
• 8:40
  Speaker 1: Yeah, and you just had there was no software, there
• 8:42
  Speaker 1: was no uh you know, you.
• 8:44
  Speaker 2: Just asked for a quot tron. They're like, what do
• 8:46
  Speaker 2: you need a quote run for take up the phone.
• 8:48
  Speaker 1: So that was my first real job. But I needed
• 8:51
  Speaker 1: to do a job to just stay in the United States.
• 8:55
  Speaker 1: And so even with my master's degrees, you know, back then,
• 8:58
  Speaker 1: I needed to figure out how to stay in the US.
• 9:00
  Speaker 1: So I became a stockbroker. Anyways, one of my cold
• 9:03
  Speaker 1: calls became a home run. So you smiled and dowed.
• 9:08
  Speaker 2: What do you mean one of your cold calls became
• 9:10
  Speaker 2: a home run? So you know this by the way,
• 9:14
  Speaker 2: I thought I knew your origin story.
• 9:15
  Speaker 1: Now this is the real one.
• 9:16
  Speaker 2: This is this is the Mandalorian. We're going pre Boba.
• 9:19
  Speaker 1: Fett if it's okay, because you have to know, because
• 9:22
  Speaker 1: it was really make your own luck. And everything's a
• 9:24
  Speaker 1: cold call. So you know, I'm smiling dialand there's no
• 9:29
  Speaker 1: internet to search wealth, and so you open the local
• 9:33
  Speaker 1: business paper and there's this kid smiling holding a squeeze
• 9:36
  Speaker 1: like a product called the Grip, and I figure he's
• 9:39
  Speaker 1: got money, So I dial the guy. He goes, yeah,
• 9:41
  Speaker 1: come on down, and I go on down. He pitches
• 9:43
  Speaker 1: me right, So I'm you know, I got my MBA money.
• 9:46
  Speaker 2: I want to do the next ground.
• 9:47
  Speaker 1: He goes, I need twenty five grand to make payroll. Anyways,
• 9:50
  Speaker 1: he had the stress balls.
• 9:52
  Speaker 2: And you know, I love where the eyes pop that.
• 9:55
  Speaker 1: No, no, no, it's just I'll get into like the details.
• 9:58
  Speaker 1: But anyways, a beautifully con instructed stress ball called the Grip.
• 10:01
  Speaker 1: It was four tension. It was four balloons tension wrapped
• 10:05
  Speaker 1: around this Siberian millet.
• 10:06
  Speaker 2: That's the technical, serious piece of hardware.
• 10:09
  Speaker 1: Yeah, serious piece of squeeze ball. Anyways, I give him
• 10:13
  Speaker 1: twenty five grand that I don't have, right, and I
• 10:16
  Speaker 1: did being a stocktorker.
• 10:18
  Speaker 2: Did you just commit to the money and then you
• 10:20
  Speaker 2: had to go scramble?
• 10:21
  Speaker 1: Oh I had to scramble.
• 10:22
  Speaker 2: Okay, but you know, get into the details. We're going
• 10:26
  Speaker 2: to find twenty five grand.
• 10:27
  Speaker 1: From one of the last conversations I have with my dad.
• 10:30
  Speaker 1: We never got along, but one of the last conversations
• 10:34
  Speaker 1: I had my dad, I have an MBA. I cut
• 10:37
  Speaker 1: this deal with Mark Scattered, who's a great founder and
• 10:41
  Speaker 1: he's a very young guy as a fireman, who created
• 10:44
  Speaker 1: this product. And I'm like, Dad, I found it. I
• 10:46
  Speaker 1: need twenty five grand to get going. And my dad said,
• 10:49
  Speaker 1: send me a business plan. I'm like, dude, I'm your son.
• 10:51
  Speaker 1: I went to business school.
• 10:52
  Speaker 2: He just wanted you to go through the exercise.
• 10:54
  Speaker 1: And I didn't want it, so I scrambled my own
• 10:59
  Speaker 1: money together.
• 11:00
  Speaker 2: Yeah, and I like your dad's idea. You should have
• 11:03
  Speaker 2: created a business plan just so you have it under
• 11:05
  Speaker 2: your belt now.
• 11:10
  Speaker 1: No, so obviously I did the business plan. I'm kidding
• 11:13
  Speaker 1: and h but he didn't give me the money, so
• 11:15
  Speaker 1: you could just go figure it out. And uh figured
• 11:19
  Speaker 1: it out. Gave Mark the money. He went and paid
• 11:23
  Speaker 1: off some bill, his MX bill, And now I'm the
• 11:25
  Speaker 1: owner of a business that has no money again. Long
• 11:28
  Speaker 1: story short, the product was a hit. The product is
• 11:30
  Speaker 1: called the grip. I came in, We built out what
• 11:33
  Speaker 1: was called this ad specialty business corporate logos, putting it
• 11:36
  Speaker 1: on business. Long story short, the product got onto QVC
• 11:40
  Speaker 1: and where you're in the QBC Hall of Fame, there
• 11:43
  Speaker 1: is a QVC.
• 11:44
  Speaker 2: How many units of this thing?
• 11:45
  Speaker 1: Tens of millions.
• 11:47
  Speaker 2: So just put some jingle in your pocket.
• 11:48
  Speaker 1: Yeah, this was our first real hit pre internet.
• 11:51
  Speaker 2: Did you ever sell that business?
• 11:54
  Speaker 1: So the business still exists. Mark Scatted is a great entrepreneur.
• 11:57
  Speaker 1: He's still a huge No. So I was never Lee
• 12:00
  Speaker 1: and own. There was an escort and this is when
• 12:02
  Speaker 1: you really This goes back to the Rodney Danshfield Back
• 12:05
  Speaker 1: to School movie. It's like, get who's going to pay
• 12:07
  Speaker 1: the team stairs? So we so I learned everything about
• 12:10
  Speaker 1: business from this. We had incredible margins and software didn't
• 12:14
  Speaker 1: basically exist back yet, and so you had a made
• 12:18
  Speaker 1: locally made locally in Arizona. Wow. And we would sell
• 12:22
  Speaker 1: tens of millions, and we were like the Dura Flame
• 12:24
  Speaker 1: and everybody started copying us. But we had these incredible margins,
• 12:28
  Speaker 1: and that's how I got involved in stocks, meaning we
• 12:31
  Speaker 1: were making so much money you had to find a
• 12:33
  Speaker 1: home for it. You had to find a home for it.
• 12:34
  Speaker 1: And luckily there was a bull market. This was in
• 12:37
  Speaker 1: the early nineties, so there.
• 12:39
  Speaker 2: Was you still had almost a decade left before everything correct.
• 12:42
  Speaker 1: So indirectly I became a hedge fund manager and manage
• 12:45
  Speaker 1: our cash at the Squeeze Ball Company.
• 12:47
  Speaker 2: At the Squeeze Ball Company, you're managing tens of millions
• 12:50
  Speaker 2: of dollars because it's flowing in that way.
• 12:52
  Speaker 1: Correct. So the Internet in ninety five or ninety six
• 12:55
  Speaker 1: becomes I guess a thing, right, and I walked into
• 12:57
  Speaker 1: Mark's office. I go Mark before then, but hold but
• 13:00
  Speaker 1: I go mark, we got to own our domain, and
• 13:02
  Speaker 1: so the grip was g ri ipp. So remember the
• 13:07
  Speaker 1: first experience of the Internet was that when I tried
• 13:10
  Speaker 1: to buy the domain, it was owned by a penis
• 13:13
  Speaker 1: extension company called the Grip. They were squatting on the
• 13:17
  Speaker 1: Grip's website. So here's what's fine. I didn't want to
• 13:21
  Speaker 1: buy the domain. I'm not paying this guy for the domain.
• 13:23
  Speaker 2: What was he asking for it?
• 13:24
  Speaker 1: Do you remember? Honestly, I don't remember, but I was like,
• 13:27
  Speaker 1: we'll just we'll just we'll put three p's. I don't
• 13:30
  Speaker 1: know what my idea was. But anyways, so our product's
• 13:33
  Speaker 1: on QVC. So we now don't have a domain name
• 13:38
  Speaker 1: in QVC. We're like a home run product on KVC.
• 13:41
  Speaker 1: Who's our customer Seventy year old women buying stress balls
• 13:45
  Speaker 1: for you know, therapy, you know, squeezing, you know whatever.
• 13:49
  Speaker 1: They were selling it as women were buying it good
• 13:51
  Speaker 1: for and so QVC would call sin. We have hundreds
• 13:55
  Speaker 1: of complaints from old women that are going to a
• 13:57
  Speaker 1: website to buy your product. Again, and that's how I
• 14:01
  Speaker 1: learned the Internet. Now that's a good origin story. So
• 14:04
  Speaker 1: that is how I got into tech and knew what
• 14:06
  Speaker 1: the Internet was, and then I didn't do the Internet
• 14:09
  Speaker 1: again until two thousand and six.
• 14:12
  Speaker 2: Wait wait, wait, wait, bro back before we're gonna not
• 14:15
  Speaker 2: skip that deck. So you learned the lesson about a
• 14:19
  Speaker 2: domain squad.
• 14:20
  Speaker 1: Own your own domain, master of your door.
• 14:22
  Speaker 2: But you did were you master of your own domain?
• 14:25
  Speaker 1: Oh? You learned that early. You have to.
• 14:26
  Speaker 2: But did you not stop and think, hey, there's some
• 14:30
  Speaker 2: money to be made in gramming some domains. This guy
• 14:33
  Speaker 2: did it to us. Let's now own taxi dot com.
• 14:37
  Speaker 2: Or there was no Netscape browser.
• 14:39
  Speaker 1: That's how early I remember the Netscape browser wasn't nine or.
• 14:44
  Speaker 2: No, the IPO was ninety six, because I remember so
• 14:46
  Speaker 2: then it was right on the cuff. I remember being
• 14:48
  Speaker 2: on a trading desk and not being allowed to trade it.
• 14:51
  Speaker 2: Rid Holt's you're a movie, don't don't touch that ipo?
• 14:54
  Speaker 1: Correct? So so am my genius? Because again, I'm not
• 14:58
  Speaker 1: an Internet 'm a car Many kid, and I'm like
• 15:01
  Speaker 1: haphazard VC, not haphazard hedge fund. Like I'm a hap
• 15:06
  Speaker 1: hazard VC. I mean, I didn't set out in life
• 15:09
  Speaker 1: to be a hedge fund guy. Our business turned me
• 15:11
  Speaker 1: into a hedge fund. I didn't set out to be
• 15:13
  Speaker 1: a venture capitalist. I was an entrepreneur, but it pade
• 15:16
  Speaker 1: me access. So sorry to go back to those ten years.
• 15:20
  Speaker 1: I am now my big idea of the Internet, and
• 15:24
  Speaker 1: a lot of people know the story in general because
• 15:26
  Speaker 1: it happened to a lot of hedge funds or people.
• 15:28
  Speaker 1: It's like Internet stupid. No one really is using it
• 15:32
  Speaker 1: other than to, you know, to swear at people. It's
• 15:35
  Speaker 1: kind of like pre Twitter. I don't nobody uses it
• 15:37
  Speaker 1: except to like talk sex and check the weather. So
• 15:41
  Speaker 1: you know, if anybody's going to use the Internet, the
• 15:43
  Speaker 1: FedEx is going to benefit. So through that whole late boom,
• 15:47
  Speaker 1: I was the guy like not owning Internet companies.
• 15:50
  Speaker 2: But looking at logistics.
• 15:52
  Speaker 1: Yeah, like thinking like and FedEx would go down every
• 15:55
  Speaker 1: day for some reason. You know, I really got that
• 15:57
  Speaker 1: first trade horrifically wrong.
• 15:59
  Speaker 2: If you took that to its natural conclusion, then you're
• 16:03
  Speaker 2: owning things in the nineties like Cisco and Juniper Systems
• 16:08
  Speaker 2: and AMD and Global Crossing, which is, you know, the
• 16:12
  Speaker 2: blocking and tackling of the Internet. But you had to
• 16:14
  Speaker 2: have at least a little tech.
• 16:17
  Speaker 1: I know. My problem is I grew up and try
• 16:19
  Speaker 1: them conservative. I'm like very like fundamental, and I didn't
• 16:23
  Speaker 1: understand the internet. Not conservative politically.
• 16:25
  Speaker 2: No, no, no, I mean you don't strike me as
• 16:28
  Speaker 2: somebody risk averse very really. Yeah, we'll talk more about
• 16:33
  Speaker 2: that in a little bit. So the rest of the
• 16:36
  Speaker 2: nineties you just sat on.
• 16:38
  Speaker 1: Your hands, Yeah, sat on my hands, missed the Internet boom.
• 16:42
  Speaker 1: Also didn't get killed.
• 16:43
  Speaker 2: Right, So you come out of the crash.
• 16:46
  Speaker 1: Just hating the market. I didn't understand the market.
• 16:49
  Speaker 2: What's down eighty one percent between friends on the NASDAK, right,
• 16:52
  Speaker 2: that's that's not a big deal.
• 16:53
  Speaker 1: Didn't even know the Nasdaq basically, So what when.
• 16:57
  Speaker 2: Did the idea for wall strip pop into your head?
• 16:59
  Speaker 1: So now the one lucky investment that I made, and
• 17:03
  Speaker 1: it was a dumb investment, much like you know the
• 17:05
  Speaker 1: dumb investments people made in twenty one. So in nineteen
• 17:08
  Speaker 1: ninety nine, Hu I invested in this. Some guy pitches
• 17:12
  Speaker 1: me on a series Q or whatever they were doing
• 17:16
  Speaker 1: right then of cars Direct, which was.
• 17:18
  Speaker 2: Like I recall that cars Direct was like a.
• 17:20
  Speaker 1: Hot late stage end of end of the bubble era
• 17:25
  Speaker 1: where you could sell cars at a loss, but we'll
• 17:28
  Speaker 1: do it in volume and a little bit. Yeah. Yeah,
• 17:30
  Speaker 1: And so someone pitched me like the series Q and
• 17:34
  Speaker 1: I was like in cash right, like I was missing
• 17:36
  Speaker 1: the whole internet bubble. So I remember then, yeah, I'll
• 17:39
  Speaker 1: put some money in this and that was the top.
• 17:40
  Speaker 1: The minute my wire hit cars Direct now as an
• 17:44
  Speaker 1: added bonus to invest in cars Direct. To induce me
• 17:47
  Speaker 1: into car they were going to throw in this other
• 17:49
  Speaker 1: internet company. You know sometimes you like go to the
• 17:51
  Speaker 1: horse races and they give you like handicapped horses, like
• 17:54
  Speaker 1: an extra for betting on one horse then.
• 17:57
  Speaker 2: Probably won't finish the race, right, Well, they said, what
• 18:00
  Speaker 2: did they throw in?
• 18:01
  Speaker 1: They threw in this company, Viva dot Com.
• 18:05
  Speaker 2: Viva.
• 18:05
  Speaker 1: I didn't even look it up, so they said, listen,
• 18:07
  Speaker 1: it is the two for one. Uh. Anyways, the bubble.
• 18:11
  Speaker 2: Ends cause Direct goes.
• 18:13
  Speaker 1: I think ten years later we sold for a few
• 18:15
  Speaker 1: cents on the dollar or something bought it. But this
• 18:18
  Speaker 1: Viva dot Com was run by Scott Ingram, who's a
• 18:21
  Speaker 1: friend of mine. In an LP now and meet him
• 18:25
  Speaker 1: at your events, probably one of our events. Anyway, Scott,
• 18:29
  Speaker 1: Viva dot Com becomes rent which was uh means rent
• 18:33
  Speaker 1: like it was just they couldn't they couldn't buy rent
• 18:35
  Speaker 1: dot Com during that boom, right during the crash, he
• 18:38
  Speaker 1: goes and buys the domain rent dot com and builds
• 18:40
  Speaker 1: the largest, you know kind of rent marketplace, and eBay
• 18:44
  Speaker 1: buys it for four hundred and fifty million dollars. And
• 18:47
  Speaker 1: you were so my seed? I seed. That was my
• 18:51
  Speaker 1: first seed win by mistake.
• 18:54
  Speaker 2: Right and wish. There have been many seed wins.
• 18:57
  Speaker 1: By so that was that gave me my first Internet win.
• 19:00
  Speaker 2: Were you like a cap table owner or just a
• 19:04
  Speaker 2: rounding air.
• 19:05
  Speaker 1: A rounding air, But for me it was still real money.
• 19:08
  Speaker 1: So I go and I became friends. I used to
• 19:11
  Speaker 1: call Scott Ingram and go, how are you still alive?
• 19:15
  Speaker 1: Like I was just like my one Internet investment, right,
• 19:17
  Speaker 1: and he just thought I was humorous, like as a
• 19:20
  Speaker 1: fifty k hundred k investor checking in on my investment
• 19:23
  Speaker 1: and we would talk about the.
• 19:25
  Speaker 2: Inillion dollar comedy. How's my ten grand doing?
• 19:28
  Speaker 1: Yeah? So I was fascinated that a businessman could build
• 19:32
  Speaker 1: businesses on the Internet. And so now flash forward to
• 19:36
  Speaker 1: you know, my hedgehunk guy, I hate CNBC. I don't
• 19:40
  Speaker 1: have money for a Bloomberg. You know, I'm just a
• 19:42
  Speaker 1: retael Yahoo finance kind of guy.
• 19:45
  Speaker 2: Righty, it's right?
• 19:46
  Speaker 1: And e trade and in oh six, YouTube comes out,
• 19:49
  Speaker 1: and I have this idea that I'm going to build
• 19:51
  Speaker 1: going back to my comedy and going back to how
• 19:54
  Speaker 1: I grew up and going I'm going to build CNBC
• 19:56
  Speaker 1: on YouTube. That was it.
• 19:58
  Speaker 2: That was my idea satirical take on financial television. No
• 20:02
  Speaker 2: playing it straight, but I always thought there was a
• 20:05
  Speaker 2: lot of tongue in cheek and everything you guys did correct, right,
• 20:08
  Speaker 2: It wasn't straight up, it wasn't Second City, it wasn't
• 20:12
  Speaker 2: supposed to be funny vin Yettes. You played it straight,
• 20:15
  Speaker 2: but there was a subtext of, hey, this stuff's ridiculous.
• 20:18
  Speaker 1: Correct the first show, meaning I I that's what hooked everybody,
• 20:22
  Speaker 1: That's what hook but we never got beyond that before
• 20:25
  Speaker 1: CBS spot up. But going back, I had this idea
• 20:28
  Speaker 1: one show song. Yeah, I cold call Fred Wilson, who
• 20:32
  Speaker 1: I didn't know at the Union.
• 20:33
  Speaker 2: Square backs down here in New York.
• 20:36
  Speaker 1: So I used to leave these whack job comments on
• 20:39
  Speaker 1: his blog. He had this blog, and back in the day,
• 20:42
  Speaker 1: blogs had blog rolls, you know that.
• 20:44
  Speaker 2: Bloger had comments up until like nine. Finally I just
• 20:48
  Speaker 2: show up.
• 20:49
  Speaker 1: Fred was like Twitter. Everybody was there talking to Fred,
• 20:53
  Speaker 1: and I would leave these whack job comments like what
• 20:56
  Speaker 1: like fun, I can't believe you're giving Yeah, became the
• 21:01
  Speaker 1: bouncer at Fred's site.
• 21:03
  Speaker 2: You're the Motley fool then.
• 21:04
  Speaker 1: Because I was the guy who didn't care about venture
• 21:07
  Speaker 1: I was just there. I can't believe he's sharing all
• 21:09
  Speaker 1: this wisdom about venture free for free. Anyways, I finally
• 21:13
  Speaker 1: pitch him. I say, Fred, you're gonna be in Phoenix.
• 21:17
  Speaker 1: He's never met me. I said, I'm gonna take you
• 21:19
  Speaker 1: to a Sun's game. And this is like Internet two
• 21:22
  Speaker 1: thousand and five. Fred was already I don't feel I
• 21:25
  Speaker 1: was famous.
• 21:26
  Speaker 2: He had already.
• 21:27
  Speaker 1: He wasn't famous that he wasn't famous like he is today.
• 21:29
  Speaker 2: Well, because post dot com implosion, nobody cared about career
• 21:34
  Speaker 2: was the VC but they had been making money for
• 21:37
  Speaker 2: a while.
• 21:37
  Speaker 1: Correct. But he had done so many big deals in
• 21:41
  Speaker 1: the first run, right, and the biggest one being I'm
• 21:46
  Speaker 1: having a senior moment. But anyways, it'll come to me.
• 21:50
  Speaker 1: I go, Fred, come to the Sun's game. You know,
• 21:52
  Speaker 1: I'm trying to just become his friend, right, And he agrees,
• 21:56
  Speaker 1: brings the Sun and we go to the Sun and Joanne,
• 21:58
  Speaker 1: his wife, was like, Fred, you can't just go out
• 22:00
  Speaker 1: with people on the internet. This is not that long,
• 22:03
  Speaker 1: but Fred just we became friends. I pitched him on
• 22:07
  Speaker 1: this idea.
• 22:07
  Speaker 2: Nobody stalk someone for three years to murder them.
• 22:10
  Speaker 1: They normally think about Brad and social media where we're
• 22:14
  Speaker 1: at today.
• 22:15
  Speaker 2: Yeah, think about how many people you know today from
• 22:18
  Speaker 2: social media. You never would have known. It's been flipped
• 22:21
  Speaker 2: on its head.
• 22:22
  Speaker 1: Unbelievable. So he counts in. He kind of becomes my
• 22:26
  Speaker 1: mentor in that, and I find out that he was
• 22:29
  Speaker 1: Street dot COM's first I didn't even know this until
• 22:32
  Speaker 1: after he invested, So luck would have it. Not only
• 22:35
  Speaker 1: did he get my idea to create TMC on YouTube,
• 22:37
  Speaker 1: he was there when Kramer was building the Street dot
• 22:40
  Speaker 1: com and that was late nineties. Yeah, show Fred.
• 22:44
  Speaker 2: By the way, I have said that the very first
• 22:47
  Speaker 2: financial blog was Todd Harrison's trading diazing. That was a
• 22:52
  Speaker 2: real time series of update embedded in the Street dot
• 22:55
  Speaker 2: Com that you know, here's a guy who was Kramer
• 22:59
  Speaker 2: burk Witz's trader. I mean a lot of the best
• 23:03
  Speaker 2: trades that Kramer did as a hedge fund manager, you know,
• 23:07
  Speaker 2: tapping out before everything went to hell in two thousand.
• 23:11
  Speaker 2: I think that's Todd saying, listen, every risk measure we
• 23:13
  Speaker 2: look at is terrible. I remember reading this, you gotta
• 23:17
  Speaker 2: get out and he avoided the disaster. Full credit to
• 23:21
  Speaker 2: Harrison on that, but real time, hey, we'll put legging
• 23:24
  Speaker 2: into this position. He used to use the bull and
• 23:26
  Speaker 2: Bear medical stor. I got one right exactly in all
• 23:31
  Speaker 2: the comments, it was all live.
• 23:33
  Speaker 1: It was Street dot Com to give credit. Was the
• 23:36
  Speaker 1: place your blogs. Listen.
• 23:38
  Speaker 2: I have my partner Josh Brown pulls the Street dot Com,
• 23:43
  Speaker 2: the Motown of finance, Barry Gordy and everybody who came
• 23:47
  Speaker 2: out of Motown. I could give you a list of
• 23:49
  Speaker 2: one hundred people you know in finance today that trace
• 23:52
  Speaker 2: their roots back to Street dot Com. Present company included.
• 23:55
  Speaker 1: Yeah, and I was a customer. And I was a
• 23:59
  Speaker 1: Kramer fan at the time because I came from the
• 24:02
  Speaker 1: Street myself, right.
• 24:04
  Speaker 2: And he was running a fund he was he was
• 24:06
  Speaker 2: very active.
• 24:07
  Speaker 1: It was like it was real. And so I find
• 24:10
  Speaker 1: out Fred was his investor. It was like, wow, so
• 24:12
  Speaker 1: I got the right investors. I raised six hundred grand
• 24:16
  Speaker 1: for wall Strip, which is a lot of money, right,
• 24:20
  Speaker 1: and and well, at then Web two hasn't wasn't really
• 24:24
  Speaker 1: a thing.
• 24:24
  Speaker 2: Two thousand and five. Yeah, I mean back then it
• 24:29
  Speaker 2: was you know today everything is Amazon Cloud. It doesn't
• 24:32
  Speaker 2: take a lot. Back then, you had to have servers,
• 24:34
  Speaker 2: you had to have had people, you have like just
• 24:36
  Speaker 2: building out the back.
• 24:37
  Speaker 1: End was a massive and no revenue idea. Right, there
• 24:40
  Speaker 1: was no infrastructure for revenue. Right, There's no ad networks
• 24:44
  Speaker 1: and there was no so everything from So when we
• 24:47
  Speaker 1: did an AD, we had to like make the ad,
• 24:49
  Speaker 1: insert the ad ourselves.
• 24:50
  Speaker 2: Like we were able to track it, be able to build it.
• 24:53
  Speaker 1: So lucky as luck would haven't. The show was a hit,
• 24:57
  Speaker 1: and by hit, I mean not like millions of views,
• 25:00
  Speaker 1: because but in relative terms at that time, if you
• 25:03
  Speaker 1: went to YouTube, it was cat videos and it was
• 25:06
  Speaker 1: people filming their television and getting takedown notices of like
• 25:10
  Speaker 1: dukes of hazard or whatever. So it was just a
• 25:12
  Speaker 1: giant lawsuit.
• 25:13
  Speaker 2: The woman you had as an anchor, ye, fantastic, Lindsay Campbell.
• 25:16
  Speaker 2: Lindsay was awesome and she went on to go into television.
• 25:20
  Speaker 1: When we sold, Lindsey got a part in the show
• 25:25
  Speaker 1: that was The Errors Show, the Mob Show on HBO,
• 25:30
  Speaker 1: The Sopranos. She was a teacher in a couple episodes.
• 25:34
  Speaker 2: For early seventies. Your memory is really terrible. You should
• 25:37
  Speaker 2: be a little bit.
• 25:38
  Speaker 1: I can't log on the internet to just search IMDb
• 25:41
  Speaker 1: basically IMDb. Are you on a screen or It's okay people,
• 25:45
  Speaker 1: It's a thing that honestly happens that you just tip
• 25:49
  Speaker 1: a your tongue all day long.
• 25:50
  Speaker 2: So I have this to look forward to in ten years.
• 25:53
  Speaker 1: You do. And by the way, I'm going to have
• 25:56
  Speaker 1: to stand up for the last half of this because
• 25:58
  Speaker 1: I feel like I have to pee. So so Lindsay Campbell,
• 26:01
  Speaker 1: we found uh but what what a time? This was great.
• 26:06
  Speaker 2: She was talk about all everything lined up perfectly at once.
• 26:10
  Speaker 1: Yeah, and so we had this idea. This a funny story.
• 26:14
  Speaker 1: So there Fred was a master. And Fred introduced me
• 26:19
  Speaker 1: this is how the internet worked. Before the Internet, there
• 26:22
  Speaker 1: was no iPhone yet, there was not even still was
• 26:25
  Speaker 1: really coming into its own.
• 26:26
  Speaker 2: Right, You're still a few years away. By the way,
• 26:28
  Speaker 2: I have a vivid recollection of Lindsay and a cameraman
• 26:32
  Speaker 2: with her holding a wired mic back to running around
• 26:35
  Speaker 2: Lower Manhattan Midtown, asked throwing the mic on the streets? Step, Yeah,
• 26:40
  Speaker 2: what do you think of this? And you know she's
• 26:42
  Speaker 2: a pretty girl. People were like more than happy to
• 26:44
  Speaker 2: talk to her. Guys in suits with today we would
• 26:47
  Speaker 2: call them finance bros. But she would be on Wall Street.
• 26:50
  Speaker 2: So what's going on with the markets?
• 26:51
  Speaker 1: And the way we edited it was hysterical.
• 26:54
  Speaker 2: That was a show.
• 26:55
  Speaker 1: So so the idea was we're going to create CNBC
• 26:58
  Speaker 1: on YouTube. Fred and handing me a list of eleven people,
• 27:02
  Speaker 1: He said, Howard he didn't investor fin Yeah, he said,
• 27:05
  Speaker 1: why do you call him? Pee? Pee peep? Roger Ehrenberg, Hey, Roger, Hey, Horod.
• 27:09
  Speaker 1: I read your blog blah blah blah Fred Fred's investing. Uh,
• 27:13
  Speaker 1: if you drop Fred's name, everybody wrote a check. So
• 27:16
  Speaker 1: I go. Of course I didn't know this at the time,
• 27:18
  Speaker 1: so I go. Fred said to give you a call.
• 27:19
  Speaker 1: He goes, yeah, I'm in for twenty five. Hangs up,
• 27:22
  Speaker 1: pee peep. Brad Felt, Hey, Brad. Fred Wilson said I
• 27:25
  Speaker 1: should call it, sure, twenty five k peep. Anyways, I
• 27:29
  Speaker 1: call Fred back like a day later, I go ten
• 27:33
  Speaker 1: for eleven. Okay, who's the eleven. That's a funny story.
• 27:36
  Speaker 1: So this guy Mark Pinkas who's gone on to start Zinga,
• 27:40
  Speaker 1: and he was investor in Facebook and LinkedIn. He partners
• 27:44
  Speaker 1: with Reid Hoffman. Fred is an investor in all his stuff.
• 27:49
  Speaker 1: He was a name on the list. So I call,
• 27:51
  Speaker 1: I call Mark Pinkas. I'm on a roll. I'm like
• 27:53
  Speaker 1: god attitude. So I call Mark Pinkas picked up. He goes, Okay, hey, hey,
• 27:57
  Speaker 1: it's Howard. Fred said to give me your number. I
• 28:00
  Speaker 1: do the pitch. He goes, it's the dumbest idea over here.
• 28:03
  Speaker 1: And he goes and then he goes like this and
• 28:05
  Speaker 1: tell Fred not to give up my phone number anymore.
• 28:08
  Speaker 1: He hangs up of it. So when I call Fred back,
• 28:14
  Speaker 1: so I called for I don't know. That's a hard no.
• 28:16
  Speaker 1: And anyways, if you know Mark, and I do, he's
• 28:19
  Speaker 1: an LP. He's the friend as much as you can
• 28:21
  Speaker 1: be a friend with Mark. He's super smart investor and
• 28:23
  Speaker 1: started a thing. Guy I called Fred Becker. Guy, your
• 28:26
  Speaker 1: your genius. I go, ten out of eleven people just
• 28:29
  Speaker 1: wrote a check over a star Tek phone call pitch
• 28:32
  Speaker 1: for an internet YouTube company. I go, I don't know
• 28:35
  Speaker 1: what's going on here, And I said, but there's this
• 28:37
  Speaker 1: one guy who not only thinks it's the dumbest idea,
• 28:41
  Speaker 1: but told me not to give He said to you
• 28:44
  Speaker 1: not to give out his phone number anymore for a laugh,
• 28:47
  Speaker 1: just for me. He knew who was Yeah, he goes,
• 28:48
  Speaker 1: oh that's Mark. Don't worry anyways, So told him back
• 28:52
  Speaker 1: and he didn't say call him that. But this is
• 28:54
  Speaker 1: a funny Mark story that I haven't told too often.
• 28:58
  Speaker 1: Is about three months later we I never I didn't
• 29:02
  Speaker 1: know what doc Listen. This was like a loosely the
• 29:05
  Speaker 1: internet deals were not handshake deal like I'm a try
• 29:09
  Speaker 1: like Fred like, this was like a two person operation.
• 29:13
  Speaker 2: Read Sebashian Melbury's book on on the Power law and
• 29:17
  Speaker 2: venture capital. Million dollar deals were literally done on a handshake.
• 29:20
  Speaker 2: He'll come by Monday for a check. Well, the lawyers
• 29:23
  Speaker 2: get the documents. It wasn't like a team of it weren't.
• 29:26
  Speaker 1: Even standard docks. Everybody. Fred was the the He's the maestro.
• 29:32
  Speaker 1: So I'll trust you know, I'm going to get to
• 29:34
  Speaker 1: the docks. Anyways. It's tough, is moving very fast. YouTube's
• 29:38
  Speaker 1: getting sued. We're distributing our video across one hundred of
• 29:41
  Speaker 1: these YouTube channels. Anyways, three months goes in and I
• 29:44
  Speaker 1: get a break. I get like New York Times, the
• 29:47
  Speaker 1: Gray Lady is going to do a piece on wall strip.
• 29:51
  Speaker 1: There were maybe getting six to ten thousand views an episode,
• 29:54
  Speaker 1: which is not nothing, but it's nothing in today's world.
• 29:57
  Speaker 2: In today's world. But then, oh yeah, who was getting
• 30:00
  Speaker 2: ten thousand views in a day?
• 30:02
  Speaker 1: Not just ten times? It was who was watching? Right,
• 30:04
  Speaker 1: That's what I learned about the difference between audience and
• 30:08
  Speaker 1: the right audience, right. And so Fred was We were
• 30:11
  Speaker 1: all promoting. It was a very cute show, as you know,
• 30:14
  Speaker 1: and I was writing in and starring in and producing
• 30:16
  Speaker 1: it and I didn't know what I was doing, but
• 30:18
  Speaker 1: it was the internet. Anyways. But three months go by
• 30:22
  Speaker 1: and you know, we're doing the books. There's no revenue.
• 30:27
  Speaker 1: The books are pretty easy to do quickly. Oh we
• 30:30
  Speaker 1: burned thirty grand.
• 30:32
  Speaker 2: That's called accounting.
• 30:36
  Speaker 1: No money is coming in correct. I was wearing that
• 30:38
  Speaker 1: hat at night. There was not much accounting to do
• 30:41
  Speaker 1: except how many months we have left before we have
• 30:43
  Speaker 1: to call Fred for more money. So anyways, ten you know,
• 30:47
  Speaker 1: I'm doing the books and there's an extra so we
• 30:49
  Speaker 1: get in the New York Times whatever, and now I'm
• 30:51
  Speaker 1: like famous, and uh, there's an extra ten grand in
• 30:55
  Speaker 1: our account and I'm like yelling at my team and yo, Lindsey.
• 31:00
  Speaker 1: Did we do revenue that I don't know about it.
• 31:02
  Speaker 2: Mark just dropped off a check and nobody.
• 31:05
  Speaker 1: Anybody never told anybody. After he knew we were successful,
• 31:09
  Speaker 1: sent him the tent. So I called Fred, I got
• 31:13
  Speaker 1: this mother, you know, I called this guys like.
• 31:17
  Speaker 2: He was the first, like at the higher valuation.
• 31:20
  Speaker 1: Now I ended up we ended up selling the CBS
• 31:23
  Speaker 1: long Story shirt a few months later, and he I
• 31:26
  Speaker 1: returned multiples on that late money and we've been friends
• 31:29
  Speaker 1: ever since. So he was like my newman at the time,
• 31:33
  Speaker 1: you know, like in Seinfel, I'd see that Checkicoman thinkers.
• 31:37
  Speaker 1: So so anyways, it was just that's what the Internet was.
• 31:40
  Speaker 1: It was very cottagy, it was Web two. It was
• 31:44
  Speaker 1: just coming out.
• 31:45
  Speaker 2: Of such a mark of like the seventies and eighties
• 31:48
  Speaker 2: that way you're telling me. Even in the two thousands,
• 31:51
  Speaker 2: it was still shockingly rudimentary, rudimentary.
• 31:55
  Speaker 1: There was no y combinator, there was no text, there
• 31:57
  Speaker 1: was no way this y combinator. Probably seven eight that
• 32:02
  Speaker 1: late all right, God, I think because I used to
• 32:05
  Speaker 1: go to those events the don't want to be twenty
• 32:07
  Speaker 1: thirty people there.
• 32:08
  Speaker 2: I remember the nineties. If you were interested in venture capital,
• 32:13
  Speaker 2: and you were on the East coast. The only way
• 32:15
  Speaker 2: you could learn anything was like Fast Money or I'm sorry,
• 32:19
  Speaker 2: a Fast company or Wired magazine, but there was really
• 32:24
  Speaker 2: not a lot of media coverage of what was going
• 32:26
  Speaker 2: on in the West coast.
• 32:28
  Speaker 1: To his credits, she used to write a smart money magazine.
• 32:32
  Speaker 1: I was a disciple, and then he started in an
• 32:34
  Speaker 1: internet company.
• 32:35
  Speaker 2: People don't realize he had an internet. If you're not
• 32:38
  Speaker 2: a fan of Kramer today.
• 32:41
  Speaker 1: Which I'm not, I'm not going to argue with.
• 32:43
  Speaker 2: You, but you have to realize how influential and importance
• 32:47
  Speaker 2: a player he was in the in the nineties, in
• 32:51
  Speaker 2: the two thousands, he was really you know, between between
• 32:56
  Speaker 2: running the hedge fund Kramer Berkoitz, between launching the Street
• 33:00
  Speaker 2: dot com when nobody really thought, I know, let's do
• 33:03
  Speaker 2: a real time finance site that's actually operated by people
• 33:10
  Speaker 2: running real money, not just a bunch of ministers without portfolios,
• 33:14
  Speaker 2: and all the time dropping in on TV doing his hits,
• 33:17
  Speaker 2: like when he had his finger on the pulse when
• 33:20
  Speaker 2: he was running money. He was the man for a
• 33:23
  Speaker 2: long time. And now it's a different world, it's a
• 33:27
  Speaker 2: different environment, and he's in a different role. But regardless
• 33:31
  Speaker 2: of what you think of him today, you've got to
• 33:33
  Speaker 2: give him props for what he did in the nineteen nineties.
• 33:35
  Speaker 1: He looked away and Fred has great Kramer stories. Anyways,
• 33:39
  Speaker 1: what made starts with a wall strip grate is, you know,
• 33:43
  Speaker 1: we were doing five six thousand views and I had
• 33:44
  Speaker 1: this idea to get Kramer's attention. We would spoof Kramer, right,
• 33:49
  Speaker 1: I remember that great story. So I, so I go.
• 33:52
  Speaker 1: I said, we can't spoof Kramer. You can't. You can't
• 33:55
  Speaker 1: upset the guy. What we'll do is have our Kramer
• 33:58
  Speaker 1: give cancer and medical advice. So he's going to have
• 34:01
  Speaker 1: a show. He's going to be Kramer that people will
• 34:04
  Speaker 1: call with medical question.
• 34:06
  Speaker 2: Oh god.
• 34:06
  Speaker 1: And so we got this method act. Lindsey found one
• 34:09
  Speaker 1: of her friends who was a method actor who looked
• 34:11
  Speaker 1: a lot like Kramer, and we said, listen, go into
• 34:14
  Speaker 1: that room, listen to one hundred hours of Kramer, be
• 34:18
  Speaker 1: Jim Kramer, and then we're going to create like a set,
• 34:21
  Speaker 1: and you were going to give advice with people calling
• 34:24
  Speaker 1: in for medical proms. Anyways, he was so mad Kramer.
• 34:28
  Speaker 1: Oh no, he doesn't have a sense of humor like
• 34:33
  Speaker 1: So Anyways, this leads to our acquisition. So Kramer wants
• 34:39
  Speaker 1: to buy us to get us off the end. Oh
• 34:41
  Speaker 1: really yeah yeah? So Street dot Com calls me after
• 34:44
  Speaker 1: the show and goes, we'll buy you. I'm like, by me,
• 34:46
  Speaker 1: I don't know. I was for set, like, I didn't
• 34:48
  Speaker 1: know what I was doing. We had no revenue. I
• 34:50
  Speaker 1: had ten grands showing up in the ether. We had
• 34:54
  Speaker 1: nothing but expenses. Barry, it wasn't like the nineties where
• 34:57
  Speaker 1: you had to build a business like my he was
• 34:59
  Speaker 1: a little bit of green.
• 34:59
  Speaker 2: Now this is like by so we'll do another parody.
• 35:04
  Speaker 1: This is how I got into VC. So straight Tack says,
• 35:07
  Speaker 1: we'll give you this amount of money and I say deal.
• 35:09
  Speaker 1: Like I'm like, I'm like Kramer and Seinfeld. I'm like,
• 35:12
  Speaker 1: just build hot coffee on me. Don't accept the first offer.
• 35:16
  Speaker 1: I'm like, deal, Kramer, you got me. So I call
• 35:19
  Speaker 1: Fred Wilson. I go, Fred, I go, you know, friend's
• 35:22
  Speaker 1: my board. I go, Fred, what do I do? He goes,
• 35:23
  Speaker 1: I didn't know you want to sell? You call them
• 35:26
  Speaker 1: back and like he you know, Friend's like.
• 35:28
  Speaker 2: He walked you through to Yeah, he says, I guess
• 35:30
  Speaker 2: there's a competitive bidding.
• 35:32
  Speaker 1: Correct Fred, Fred makes it makes a few calls like
• 35:35
  Speaker 1: the next damn at CBS, and I have no idea.
• 35:38
  Speaker 1: You got to understand, you know me, right, I'm literally
• 35:42
  Speaker 1: a nobody, clueless, clueless, you know, obviously good instincts. I'm
• 35:47
  Speaker 1: not going to completely terrorize myself, but good instincts, great
• 35:50
  Speaker 1: people around me. Lesson number two, you've got to know
• 35:54
  Speaker 1: your cap table. You've got to build trust. You've got
• 35:57
  Speaker 1: to have great people around you. So I made the
• 36:00
  Speaker 1: one call, Fred goes Howard, you want to sell, gotta
• 36:04
  Speaker 1: have it. If you didn't know you wanted to sell,
• 36:06
  Speaker 1: let's get blah blah blah. Actually know, I'm in CBS's
• 36:09
  Speaker 1: office at black Rock. This table is big as Bloomberg headquarters.
• 36:13
  Speaker 1: And you got Quincy Smith, who is a great guy. Uh,
• 36:17
  Speaker 1: he's running CBS Interactive. And Mike Markus is a dear
• 36:20
  Speaker 1: friend of mine.
• 36:20
  Speaker 2: Today when wasn't marked, they had already acquired market Watch
• 36:24
  Speaker 2: by then, right.
• 36:24
  Speaker 1: Yeah, a long time earlier. Yeah, Bill Bishop and those guys,
• 36:28
  Speaker 1: great guy Newby, And they go, hey, here, you want
• 36:32
  Speaker 1: to sell. And I don't even know how to prepare
• 36:35
  Speaker 1: for this, man, I go maybe, and they go, what's
• 36:39
  Speaker 1: Street dot COM's number? And like I literally was no,
• 36:44
  Speaker 1: I made up a number. Yeah, and they go, we'll
• 36:48
  Speaker 1: double it, and I go, deal again. Agad, I've hit
• 36:51
  Speaker 1: the table. I'm like nobody in the room with me
• 36:56
  Speaker 1: to like stop me. And then I go, but you
• 36:58
  Speaker 1: know what. The one thing I said, you know what,
• 37:00
  Speaker 1: let me call my board and I remember quinc. They go,
• 37:04
  Speaker 1: we'll wait. I'm like, I thought i'd have twenty four hours.
• 37:07
  Speaker 1: We'll wait here, and I'm like, so I trample out
• 37:10
  Speaker 1: of the boardroom. I call Fred on my starteker. You go,
• 37:13
  Speaker 1: Frett CBS offered me Doublewstreet dot Com. He goes, well,
• 37:18
  Speaker 1: do you want to do the deal? And I said, dude,
• 37:20
  Speaker 1: I mean it's a lot of mon It's been six months,
• 37:24
  Speaker 1: I said, I think I do. We have no revenue.
• 37:26
  Speaker 2: I mean, I don't see how we're going to make
• 37:28
  Speaker 2: this work. Yeah, I'm like, it's a rescue plan before
• 37:30
  Speaker 2: we run out of month.
• 37:31
  Speaker 1: Correct.
• 37:32
  Speaker 2: This was, and and they have the infrastructure to monetize
• 37:36
  Speaker 2: it if they want.
• 37:36
  Speaker 1: To do that. I for a minute think I'm going
• 37:38
  Speaker 1: to be famous. My and my old think me coming
• 37:41
  Speaker 1: out of the room, I'm going to be on Letterman.
• 37:44
  Speaker 1: I'm going to.
• 37:44
  Speaker 2: Have a show, right, Women on the crappy little website
• 37:49
  Speaker 2: for a.
• 37:50
  Speaker 1: Barely I was now an executive at CBS. Right. Yeah.
• 37:55
  Speaker 1: It was like if there was a balloon coming out
• 37:57
  Speaker 1: of my head. I'm like, just bring me green eminem stat.
• 38:02
  Speaker 2: So you want the green M and ms out of Yeah, And.
• 38:06
  Speaker 1: So I call, I said, Fred, goes, walk back in
• 38:08
  Speaker 1: there and you tell them that you won't shop the
• 38:12
  Speaker 1: deal if they add another.
• 38:13
  Speaker 2: Too too right, And I said.
• 38:16
  Speaker 1: Can I do that, fredday? Because you hang up and
• 38:18
  Speaker 1: you walk back and I go, okay, and I'm wearing
• 38:23
  Speaker 1: like my crocs, I think, and sunglasses. I'm not prepared
• 38:27
  Speaker 1: for this meeting. And I walked back in and I said, listen,
• 38:29
  Speaker 1: I talked to my board and you know, for an
• 38:32
  Speaker 1: extra two I won't shop it. And they go deal
• 38:34
  Speaker 1: and I go, hang on, they go get the out
• 38:36
  Speaker 1: of our offer. So that was how my deal with
• 38:40
  Speaker 1: CBS st Oh my god, that's hilarious. And literally half
• 38:44
  Speaker 1: my investors had not finished signing their paperwork when we
• 38:47
  Speaker 1: returned the money, so it was just had an MBA.
• 38:53
  Speaker 1: I was supposed to know what I was doing. I'd
• 38:55
  Speaker 1: like to tell people, you know, people look up to me,
• 38:58
  Speaker 1: you know, but i'd like to give the on story
• 39:00
  Speaker 1: is what made that successful, right idea right time. I
• 39:04
  Speaker 1: had no ego about the exit that I was building
• 39:07
  Speaker 1: something better than anybody else. I had incredible people around me,
• 39:12
  Speaker 1: lindsay running the show over exceeded anything that you could expect.
• 39:17
  Speaker 1: I found these people on Craigslist, right, they were just
• 39:20
  Speaker 1: and it was a miracle craigs on the internet, on
• 39:24
  Speaker 1: the Internet. So I don't know, it was just one
• 39:27
  Speaker 1: of the greatest stressful, fun interesting times in my life.
• 39:32
  Speaker 1: And I met great people and that's kind of what
• 39:34
  Speaker 1: got me started a point. We're out of time. Let
• 39:37
  Speaker 1: you know now, how.
• 39:38
  Speaker 2: I asked one question, thanks for coming. That's all the
• 39:40
  Speaker 2: time we have the sale of woolstrip. The next step
• 39:44
  Speaker 2: from there was that social leverage. Tell us a little
• 39:46
  Speaker 2: bit about that.
• 39:47
  Speaker 1: So so wallstrip. I'm working at CBS, and uh I
• 39:52
  Speaker 1: pitched them this idea, what like my best idea I've
• 39:54
  Speaker 1: ever had. So you know, there was this moment where
• 39:57
  Speaker 1: I said I was going to be famous and CBS goes, Okay, Quench,
• 40:01
  Speaker 1: she goes go meet the TV people. They're gonna love you.
• 40:03
  Speaker 1: They did not want to meet me. So I have
• 40:05
  Speaker 1: this idea for a show for them because they asked
• 40:08
  Speaker 1: me to pitch them a show. I thought they bought
• 40:11
  Speaker 1: my shot. I thought they owned me. So I stay
• 40:14
  Speaker 1: up for three days. I'm writing furiously a show idea.
• 40:17
  Speaker 1: And my show idea is very simple. It's like after Dark,
• 40:21
  Speaker 1: where ever a guest comes on Letterman or their after
• 40:23
  Speaker 1: show that that guess when I come over to this studio,
• 40:26
  Speaker 1: the creepy studio, and there'd be a comedian and they
• 40:28
  Speaker 1: would just talk about what's in their wallet? You know,
• 40:31
  Speaker 1: the celebrity would talk about money. Yeah, oh okay, there
• 40:35
  Speaker 1: would just be a show about money. Hey, show me
• 40:37
  Speaker 1: a wallet. What credit card do you use? Have you
• 40:39
  Speaker 1: ever been screwed by your financial manager? You know what
• 40:41
  Speaker 1: I mean? If you got to go to Vegas and
• 40:43
  Speaker 1: need ten grand, how do you do it right? It'd
• 40:45
  Speaker 1: be an interesting look to how famous people spend.
• 40:49
  Speaker 2: If you get in to eat hot wings at the
• 40:51
  Speaker 2: same time, that's a show.
• 40:53
  Speaker 1: That's a show. So they threw me out of the building. Yeah,
• 40:58
  Speaker 1: and that was my end. I was so by that day.
• 41:01
  Speaker 1: That was hard. I was Clarence Beaks from that print,
• 41:04
  Speaker 1: Who's Clarence Beaks? I was collecting a paycheck and no
• 41:08
  Speaker 1: job and Twitter. You know, in the background Twitter now
• 41:11
  Speaker 1: starts and I saw Twitter and I said, this is Bloomberg.
• 41:16
  Speaker 1: My first call was to Fred Wilson with Twitter. We
• 41:18
  Speaker 1: were all making fun of Twitter back in the day
• 41:20
  Speaker 1: before iPhone, you were everybody was. I was using it
• 41:24
  Speaker 1: and I was telling people where I went to the bathroom. Hey,
• 41:27
  Speaker 1: I took a pe at this restaurant. And the vcs
• 41:30
  Speaker 1: thought I was funny because it was really vcs on
• 41:32
  Speaker 1: Twitter at that time too.
• 41:34
  Speaker 2: It was journalists and venture capitalists.
• 41:36
  Speaker 1: So I went to friend, I said, Fred, this is Bloomberg.
• 41:39
  Speaker 1: If I if the president ever, this is like a
• 41:42
  Speaker 1: blog poster. When the president tweets about the economy, the
• 41:47
  Speaker 1: market will move. And Fred goes, that's very clever. You
• 41:50
  Speaker 1: should start a company. I go, Fred, I'm working for CBS.
• 41:53
  Speaker 1: And that's where stock twits came out. I went to
• 41:56
  Speaker 1: Jack and Ev at the time and I said.
• 41:57
  Speaker 2: So, now at this time, Twitter's pretty small, and you.
• 42:00
  Speaker 1: Walking Twitter is very small. Yeah, what is.
• 42:02
  Speaker 2: There fifty million people on Twitter? No, not that any
• 42:06
  Speaker 2: uh ten million people.
• 42:08
  Speaker 1: Brew to invested. I passed on that investment call.
• 42:12
  Speaker 2: Yeah, it was a you know, you could have sold
• 42:14
  Speaker 2: it to some idiot for forty four billion dollars.
• 42:16
  Speaker 1: This show is not Howard's a genius. It's called Masters
• 42:19
  Speaker 1: and dismals. You have to have losses to become a master.
• 42:22
  Speaker 1: So true.
• 42:23
  Speaker 2: So I that is very true, young grasshopper.
• 42:26
  Speaker 1: So I go to Jack and Av and I said,
• 42:29
  Speaker 1: Twitter dot find this is my pitch to them. I
• 42:32
  Speaker 1: go Twitter dot finance dot com. I said, people will
• 42:35
  Speaker 1: talk about stocks on here, and they were like, Kumbaya,
• 42:38
  Speaker 1: what about green peas and all that stuff?
• 42:41
  Speaker 2: That's just that's screenpiece Twitter. This is finance Twitter.
• 42:44
  Speaker 1: And finance Twitter, the original fin Twitter idea. And they
• 42:47
  Speaker 1: were like, you should just you know, we have an
• 42:48
  Speaker 1: open API, which is a trap plug in. Yeah, plug in,
• 42:52
  Speaker 1: So build your entire company on our continuing goodwill and
• 42:56
  Speaker 1: whim correct. So this was not smart I made. It's smart.
• 43:00
  Speaker 1: You know, it depends how you look at it. You know,
• 43:02
  Speaker 1: some days I love the idea, some days I'm like wow.
• 43:05
  Speaker 1: But I went back and I said, listen, I got
• 43:08
  Speaker 1: two choices. I can either just give it away for free,
• 43:11
  Speaker 1: which you know, I started the cash tag dollars something
• 43:14
  Speaker 1: AAPL dollars on r I m M. Because my idea was,
• 43:18
  Speaker 1: how do you separate people talking about green apples, from
• 43:21
  Speaker 1: people saying they love the Apple store.
• 43:24
  Speaker 2: The stock symbol, yeah, like a hashtag only a.
• 43:26
  Speaker 1: Dollar because people already and finance spoke the language of tickers. Yep.
• 43:30
  Speaker 1: It was a clever hack, uh, And I created it
• 43:34
  Speaker 1: with the team and we just started tweeting with dollar
• 43:36
  Speaker 1: signs and it caught on.
• 43:38
  Speaker 2: Right.
• 43:38
  Speaker 1: So now I had a decision to make because people,
• 43:41
  Speaker 1: because I told my last company, all the vcs were like, Howard,
• 43:44
  Speaker 1: what are you doing? What are you working on?
• 43:45
  Speaker 2: Right?
• 43:46
  Speaker 1: And I'm the idiot that just said well this and
• 43:48
  Speaker 1: people and I said, but I don't know, like how
• 43:50
  Speaker 1: am I going to make money? You know?
• 43:52
  Speaker 2: I don't really get that.
• 43:54
  Speaker 1: Yeah, so I felt trapped to the very things we
• 43:57
  Speaker 1: make fun of other people for is like and just
• 44:00
  Speaker 1: goes to today's lessons. You know, just because you have
• 44:02
  Speaker 1: an idea doesn't mean it should be venture backed. So kids, today,
• 44:08
  Speaker 1: that's a lesson for you. Not everything needs venture capital.
• 44:11
  Speaker 1: But at that time it was nirvana, right because there
• 44:14
  Speaker 1: was just organic growth very important. Lesson organic growth is
• 44:20
  Speaker 1: growth other kind of growth, not so growthy growth, organic.
• 44:25
  Speaker 2: As opposed to well it.
• 44:28
  Speaker 1: GBT, that's organic growth. The world loves organic growth because
• 44:34
  Speaker 1: it's a mystery, it's a miracle. Well, two thousand and
• 44:37
  Speaker 1: six was a miracle. You have Twitter, LinkedIn, Facebook, aws,
• 44:42
  Speaker 1: the coming of the iPhone, the app store, you know
• 44:44
  Speaker 1: what I mean, this was all to come.
• 44:46
  Speaker 2: Well, we were still the crashes. Is far enough in
• 44:50
  Speaker 2: our recent history five six years earlier that some of
• 44:54
  Speaker 2: the wounds are starting to heal. People are starting, the
• 44:57
  Speaker 2: market is up off the low's pretty essentially before the
• 45:02
  Speaker 2: eight o nine prices market, So people are starting to
• 45:05
  Speaker 2: look around and saying, hey, what's going on out here.
• 45:08
  Speaker 1: But it was organic growth. You didn't have to force
• 45:11
  Speaker 1: somebody like a crypto walle to force feed it down
• 45:14
  Speaker 1: their throat. This is the future. It was just happening.
• 45:17
  Speaker 2: Plus, you had all of the late nineties infrastructure built out,
• 45:21
  Speaker 2: the miles of fiber optic cable and all of the
• 45:25
  Speaker 2: various hardware upgrades. Was just waiting for something to be
• 45:30
  Speaker 2: built on top of it. Web two oh as you
• 45:33
  Speaker 2: called it. And these were all those companies that were
• 45:35
  Speaker 2: taking advantage of cheap postcrash prices.
• 45:39
  Speaker 1: Yeah. So the smartest thing I ever did in this
• 45:40
  Speaker 1: where social ever start is I took everything I made
• 45:43
  Speaker 1: and just redistributed it to everybody I saw doing a.
• 45:47
  Speaker 2: Startup around just every company shing.
• 45:49
  Speaker 1: That I saw. I wrote a twenty five. I ran
• 45:53
  Speaker 1: out of money quickly, but I layered the world with
• 45:56
  Speaker 1: my twenty five.
• 45:57
  Speaker 2: Give us some names that we might be familiar with.
• 46:00
  Speaker 1: The most famous is golf now, LifeLock, Buddy Media, to Mogul,
• 46:07
  Speaker 1: ticket Fly, tweet Deck, Bitly, Surmise, Beta Work, the uber Yeah,
• 46:16
  Speaker 1: so okay, so angel List. I was an investor in
• 46:19
  Speaker 1: So all these things came from me just being in
• 46:24
  Speaker 1: the mix and knowing Fred and reading blogs and just
• 46:27
  Speaker 1: being part of the community. And I was at the
• 46:32
  Speaker 1: right place. Intimes, this doesn't happen very often. I think
• 46:34
  Speaker 1: the AI some AI machine experts now are going to
• 46:37
  Speaker 1: be in this place. But we that was organic growth.
• 46:41
  Speaker 1: That was the first real Internet. The Internet of ninety
• 46:45
  Speaker 1: nine was infrastructure and promise. The Internet of five and
• 46:49
  Speaker 1: six was the user's mass user onboarding. So you have
• 46:53
  Speaker 1: you know, as well as I've done, I was supposed
• 46:56
  Speaker 1: to do well if you were alive and writing checks
• 47:01
  Speaker 1: in two thousand and six to twenty eleven. Hard not
• 47:04
  Speaker 1: to make money, correct, So so remember that as a
• 47:07
  Speaker 1: master's in business lesson being in the right place at
• 47:10
  Speaker 1: the right time with the checkbook matters.
• 47:13
  Speaker 2: So that alignment doesn't come along very often. How do
• 47:17
  Speaker 2: you recognize, like at the time and you just spreading
• 47:21
  Speaker 2: the manure, hoping all the plants grow, are you thinking, wow,
• 47:24
  Speaker 2: this is a target rich environment and I got to
• 47:26
  Speaker 2: have a little bit in everything.
• 47:27
  Speaker 1: It's a good question because I didn't have that much
• 47:29
  Speaker 1: money the idea, and you run on a money fast
• 47:32
  Speaker 1: even when you're reading.
• 47:35
  Speaker 2: Yah, fifty checks and you're you know, that's.
• 47:38
  Speaker 1: Fifty checks in quickly. You know, I was flying Israel,
• 47:40
  Speaker 1: I did e Toro, and I'm and I'm also running
• 47:43
  Speaker 1: stock twits, which is also an extra benefit because everybody's
• 47:46
  Speaker 1: pitching me ideas, you're right in the middle. It leads
• 47:49
  Speaker 1: to the Robin Hood story later. But so everybody's pitching
• 47:51
  Speaker 1: the ideas. I'm running a company, I'm writing twenty five
• 47:55
  Speaker 1: k checks, I'm talking to everybody that matters, and there's
• 47:58
  Speaker 1: organic growth. No one was faking it. It was just ballooning.
• 48:03
  Speaker 1: Whatever you did had traffic, not fake. It may not
• 48:07
  Speaker 1: be leverlasting, but it was real.
• 48:10
  Speaker 2: So the name social leverage obviously comes from the people
• 48:14
  Speaker 2: that you met on the first round that you began
• 48:16
  Speaker 2: to socialize with. Suddenly everybody's in everybody else's deals, everybody
• 48:21
  Speaker 2: else is seeing what's going on, so happens.
• 48:24
  Speaker 1: And also, most importantly, the end of financial leverage. So
• 48:27
  Speaker 1: there's a play on words going back to my comedy
• 48:29
  Speaker 1: is like, we are coming out of this era where
• 48:33
  Speaker 1: we realize that financial leverage is not a strategy, it's
• 48:36
  Speaker 1: a tool. Okay, So my play on words here was
• 48:40
  Speaker 1: that social leverage is infinite. You and me doing this podcast,
• 48:45
  Speaker 1: me starting my own podcast. This all is leverage from
• 48:48
  Speaker 1: the network. Right, financial leverage almost brought down the system.
• 48:52
  Speaker 2: So your social leverage is deal flow, connections, fun, access
• 48:57
  Speaker 2: to start founders, access.
• 49:00
  Speaker 1: Low capital requirement. It was just a moment of the
• 49:05
  Speaker 1: opposite of what brought down the system. But no one
• 49:07
  Speaker 1: really dove in. Most people think, hey, you give them
• 49:10
  Speaker 1: back to social good. Go No, I'm pro oil. So
• 49:14
  Speaker 1: there is people go, I don't want to invest with
• 49:16
  Speaker 1: a guy who's investing in the social good, And.
• 49:18
  Speaker 2: I'm like, well, do you drive a car then shut up?
• 49:21
  Speaker 1: Yeah.
• 49:21
  Speaker 2: But by the way I digression, I don't understand the
• 49:26
  Speaker 2: whole low carbon investments. We're gonna not give any money
• 49:30
  Speaker 2: to the carbon producers instead will give money to the
• 49:34
  Speaker 2: carbon consumers. How are you moving the needle there? If
• 49:37
  Speaker 2: you're against oil and want to see alternatives come up,
• 49:42
  Speaker 2: isn't there a better way to do it than saying
• 49:44
  Speaker 2: we're just going to give money to people who use carbon?
• 49:47
  Speaker 1: Yeah? Well, climate now is a big category for PCs
• 49:50
  Speaker 1: and I'm not in it, but there's big developments happening.
• 49:54
  Speaker 2: If you want to invest in alternative energy, well put
• 49:57
  Speaker 2: your money in there because there's a ton of promise.
• 49:59
  Speaker 2: That fine, But to say no, Mobile, we're just going
• 50:04
  Speaker 2: to invest in ups and FedEx, Amazon, you know this
• 50:07
  Speaker 2: way will not spoil the environment is just kind of misguided.
• 50:12
  Speaker 1: Yeah. So social levels is just to play on words.
• 50:14
  Speaker 2: Right, So so we're from well from from social leverage.
• 50:21
  Speaker 1: Where do you go from there?
• 50:22
  Speaker 2: How do you as a venture investor? How do you
• 50:26
  Speaker 2: think about what you're putting money into? Are you? What
• 50:30
  Speaker 2: is it about the management team? Is it about the
• 50:33
  Speaker 2: product idea? Is it about the valuation?
• 50:36
  Speaker 1: What?
• 50:36
  Speaker 2: What's the decision making process?
• 50:37
  Speaker 1: It's a great question. Everybody's different. You know. Luckily my
• 50:40
  Speaker 1: mentors Brad Feld, Fred what these are like some of
• 50:44
  Speaker 1: the great stars?
• 50:45
  Speaker 2: Yeah, Rock start begging Fred to come in the show.
• 50:49
  Speaker 2: Seven years He's like, I don't really do podcasts, all right,
• 50:53
  Speaker 2: Well I'll corner him. I met him somewhere else.
• 50:55
  Speaker 1: How Morgan shows up Roger Ehrenberg. So so I got
• 50:58
  Speaker 1: very lucky because at that time, remember you're coming out
• 51:02
  Speaker 1: of a nasty bear market. These guys were not. So
• 51:05
  Speaker 1: this is like as like, yeah, these people were coming
• 51:09
  Speaker 1: out of getting their ass kicked for five years and
• 51:11
  Speaker 1: lawsuits and IPOs that went down ninety five percent. So
• 51:14
  Speaker 1: these were not famous people. These were people that were
• 51:18
  Speaker 1: deemed idiots again and truly not idiots, but you know
• 51:22
  Speaker 1: what I mean, they were out of favor.
• 51:23
  Speaker 2: You're only you're only as good as your last trade.
• 51:25
  Speaker 1: Correct. So these people were beat up, but they were
• 51:28
  Speaker 1: all smart and they in my team capital. They had capital.
• 51:33
  Speaker 1: They survived, They kept their reputation attack by communicating with
• 51:37
  Speaker 1: their investors. There's a cycle, and they caught the next cycle.
• 51:41
  Speaker 1: Now this cycle. They what what happens to great investors
• 51:45
  Speaker 1: after they go through a cycle. If they're great, they
• 51:48
  Speaker 1: become great investors because they have memory and they have
• 51:52
  Speaker 1: a new muscle that they learned that markets go down
• 51:55
  Speaker 1: right right like guess what. Fred hates the stock market
• 51:59
  Speaker 1: because he meant, you know, he became a VC. He's like,
• 52:02
  Speaker 1: my job is to invest early, and if I have
• 52:04
  Speaker 1: a chance to sell, I'm not going to be greedy.
• 52:07
  Speaker 1: So luckily I had this great group of mentors, and
• 52:10
  Speaker 1: like you, they were blogging. Not only were they blogging,
• 52:13
  Speaker 1: they were blogging about stuff that I couldn't get in
• 52:15
  Speaker 1: a textbook.
• 52:17
  Speaker 2: They were wis blog of vc AVC.
• 52:20
  Speaker 1: And brad feldfel dot com and wrote ther Eremberg at
• 52:22
  Speaker 1: the time, and there it's like, well was Erenburg's blog
• 52:25
  Speaker 1: I event information arbitrage and he was a great writer.
• 52:31
  Speaker 1: You and obviously I have stocks now I have hundreds
• 52:35
  Speaker 1: of writers. And then you know, they just gave this
• 52:41
  Speaker 1: stuff away and they owned their domain, so there wasn't
• 52:44
  Speaker 1: any problems. Like you wrote on Fred's blog, you had
• 52:47
  Speaker 1: to go to Fred's blog. He linked to other people,
• 52:50
  Speaker 1: they picked up the phone. Everybody was moving fast. It
• 52:53
  Speaker 1: was just organic get the speed going. And so it's
• 52:56
  Speaker 1: just a miracle. And what we focused on was good
• 53:00
  Speaker 1: people and big ideas because you could glob onto Facebook
• 53:05
  Speaker 1: and Twitter, so that that attracted.
• 53:08
  Speaker 2: So how did you become a pre IPO investor in
• 53:11
  Speaker 2: stocks like Facebook and Twitter.
• 53:14
  Speaker 1: So at Twitter fred because of Wallstrip, he wrote, the
• 53:18
  Speaker 1: first they led, the first three million dollar round on
• 53:21
  Speaker 1: Twitter had a seventeen million valuation. Think about that right,
• 53:25
  Speaker 1: Like today that seems normal. Back then I was Wallstrip
• 53:29
  Speaker 1: was like a four hundred k valuation. I was doing
• 53:31
  Speaker 1: deals one on two, six hundred grand on one million.
• 53:36
  Speaker 1: Like founders were giving up forty percent of their business.
• 53:38
  Speaker 1: We were coming out of like a hard time like
• 53:41
  Speaker 1: we use kids today, but back then it was like
• 53:45
  Speaker 1: you're giving up meaty chunks of the business. So things
• 53:47
  Speaker 1: had to move very fast. But really you were betting
• 53:50
  Speaker 1: on people. It wasn't so much price because everything was
• 53:53
  Speaker 1: cheap because you were coming out of that open Much
• 53:55
  Speaker 1: of it didn't happen yet.
• 53:56
  Speaker 2: Mark Andriesen said, all right, so imagine we overpaid double
• 54:00
  Speaker 2: for Facebook. Who cares it's a six thousand percent return
• 54:05
  Speaker 2: instead of a twelve thousand percent. What does it make
• 54:08
  Speaker 2: a difference?
• 54:08
  Speaker 1: It does now at these levels, at these So what
• 54:11
  Speaker 1: happened is that story got you know when you say
• 54:14
  Speaker 1: it a thousand times and the twelfth kid graduating twenty
• 54:18
  Speaker 1: years later says the same thing.
• 54:19
  Speaker 2: It doesn't work It's a difference, and that's why I.
• 54:22
  Speaker 1: Flash forward today. But back then, yes, so twitterh so Twitter,
• 54:27
  Speaker 1: I had passed. I said, fret, how am I going
• 54:29
  Speaker 1: to make twenty times my money? I had my VC
• 54:31
  Speaker 1: hat on for an hour and I go fret. Twitter
• 54:34
  Speaker 1: would have to be worth half a billion dollars for
• 54:37
  Speaker 1: me to make worth my while. So of course I passed.
• 54:40
  Speaker 1: Now Fred taught me a lesson there and he said, Howard,
• 54:43
  Speaker 1: if you love everything about the product and the team,
• 54:47
  Speaker 1: Gorgier knows about the press. But I'm Canadian. This goes
• 54:51
  Speaker 1: back to what I said, I'm conservative and believing I
• 54:53
  Speaker 1: just mentally couldn't do a model like these guys because
• 54:56
  Speaker 1: social leverage hadn't been around that long. Network effects were new,
• 55:00
  Speaker 1: So it was mind boggling to think that the president
• 55:03
  Speaker 1: would tweet like Trump or the La Musk would be
• 55:06
  Speaker 1: the richest guy in the world at the time.
• 55:08
  Speaker 2: So this is, by the way, mentioning the president tweeting.
• 55:13
  Speaker 2: You have to look at the four years of the
• 55:15
  Speaker 2: Trump administration exactly what I asked, golden opportunity for Twitter
• 55:21
  Speaker 2: to turn into something. How did they blow that opportunity?
• 55:25
  Speaker 1: That?
• 55:25
  Speaker 2: I guess that post mortem is not your expertise, your
• 55:29
  Speaker 2: pre mortem, you're your much earlier states.
• 55:31
  Speaker 1: Well, my pre mortem was going to Jack and Evan
• 55:34
  Speaker 1: visualizing that for them and saying, wrap a terminal around Twitter,
• 55:38
  Speaker 1: delay the feed thirty seconds for everybody. So imagine you know,
• 55:43
  Speaker 1: I go to Ted Mertch as a friend of mine.
• 55:45
  Speaker 1: He was Bloomberg here for twenty years. I used to
• 55:48
  Speaker 1: come to this building. He's the guy who put the
• 55:51
  Speaker 1: sung hero.
• 55:52
  Speaker 2: He put Twitter on the terminal. So because for a
• 55:56
  Speaker 2: lot of people, Twitter became the new tape and they
• 55:59
  Speaker 2: were Bloomberg was smart enough to say, we have to
• 56:01
  Speaker 2: have this in our feed. People can't find out about
• 56:04
  Speaker 2: it after the fact, and they came up with a
• 56:06
  Speaker 2: very clever way to cure it.
• 56:07
  Speaker 1: Bloomberg didn't come up with the key, Howard and Ted
• 56:11
  Speaker 1: came up. Well, I mean I used to call on Ted.
• 56:13
  Speaker 1: I used to come in here, go to the sixth
• 56:15
  Speaker 1: floor or a suit, complain that there was no candy,
• 56:19
  Speaker 1: and go what kind of mental cases don't have candy
• 56:22
  Speaker 1: in there in their in their hallway? And I would
• 56:25
  Speaker 1: call on Ted. It was I would call Ted, I
• 56:29
  Speaker 1: don't understand. I go, you guys are this is a
• 56:32
  Speaker 1: dangerous problem for you to have outside the walls like
• 56:35
  Speaker 1: Jurassic Park. I go, trades are happening.
• 56:38
  Speaker 2: You can't have trades away.
• 56:40
  Speaker 1: And so I said, one day, your headphones are going
• 56:41
  Speaker 1: to start screaming at you that news is breaking outside
• 56:44
  Speaker 1: the terminal. So Ted understood all that, he went and
• 56:47
  Speaker 1: cut the deal of the century. I imagine with Twitter,
• 56:50
  Speaker 1: some poor sales kid nipped inside Twitter comes to Bloomberg
• 56:54
  Speaker 1: like a like a cob into a and try to
• 57:00
  Speaker 1: be order. Tries to meet Twitter's quarter in twenty eleven,
• 57:04
  Speaker 1: comes home with like a thirty million I don't know
• 57:06
  Speaker 1: what the number is, like a ten year Bloomberg deal.
• 57:09
  Speaker 1: What it was? Good time? So this is me yelling
• 57:13
  Speaker 1: at Doctor's going idiots like I go Jack. That's why
• 57:16
  Speaker 1: I was always mad at management. Don't sell to the
• 57:21
  Speaker 1: one customer who violutely needs the data. So this is
• 57:25
  Speaker 1: where Twitter's mistake was, and Fredick agrees with it. I
• 57:28
  Speaker 1: would go to FREDI go fret, get over to that
• 57:31
  Speaker 1: board meeting, and you tell Jack and Ev to delay
• 57:33
  Speaker 1: the feed thirty seconds. Somebody will call you and pay
• 57:37
  Speaker 1: you a billion dollars to get it in real time
• 57:42
  Speaker 1: and charge that company. And that's going to be Bloomberg, Reuters,
• 57:46
  Speaker 1: some Warren Buffett, Goldman, Sachs, somebody they can afford to
• 57:50
  Speaker 1: pay you. And if Justin Timberlake farts at a concert,
• 57:55
  Speaker 1: if someone reads it a minute later, it doesn't matter, right.
• 57:59
  Speaker 1: But if a player injures itself in sports, or if
• 58:02
  Speaker 1: the president tweets or been Lodden gets shot, right, the
• 58:07
  Speaker 1: futures will move. And that was their business idea. They
• 58:10
  Speaker 1: kind of had ten employees and they blew it. Yeah,
• 58:14
  Speaker 1: and so I always still give about that idea.
• 58:16
  Speaker 2: I still don't understand why Twitter didn't or doesn't acquire
• 58:20
  Speaker 2: stock to It's it's such a now.
• 58:22
  Speaker 1: It's not even about structors. They should have bought DraftKings.
• 58:24
  Speaker 1: They should have Robinhood. They should have been a broker dealer.
• 58:27
  Speaker 1: There should have been a gambling they should have made
• 58:30
  Speaker 1: money off the transaction.
• 58:32
  Speaker 2: They think they have this crazy idea that they air.
• 58:35
  Speaker 2: They're the town square.
• 58:37
  Speaker 1: You know what's in the town scores. A lot of
• 58:39
  Speaker 1: poop and a lot of crazy people. You know why
• 58:43
  Speaker 1: you can't drink out of the nile because people peeing
• 58:45
  Speaker 1: it for a thousand years. The town Score is a dirty,
• 58:48
  Speaker 1: dirty place.
• 58:49
  Speaker 2: So you end up with a sort of area that
• 58:55
  Speaker 2: is central to so many people's It's got nexus of
• 58:59
  Speaker 2: so many industry correct and so many journalists and celebrities
• 59:03
  Speaker 2: and finance people. And you know, there's medical Twitter, and
• 59:06
  Speaker 2: there's black Twitter, and there's finance Twitter, and there's you know,
• 59:10
  Speaker 2: I get dragged into I mentioned I set up a
• 59:13
  Speaker 2: list of watch companies, right, watch Twitter, Like you have
• 59:18
  Speaker 2: all these communities, and it's astonishing that nobody's figured out
• 59:22
  Speaker 2: a way to monitor it.
• 59:23
  Speaker 1: Because it was an open protocol. Like when Fred invested,
• 59:26
  Speaker 1: he envisioned it as an open protocol. What do they do?
• 59:28
  Speaker 1: They closed it. It's okay to close it to the
• 59:31
  Speaker 1: people that can afford to pay to open it, not
• 59:34
  Speaker 1: to the regular people. Charging me eight dollars for something
• 59:38
  Speaker 1: i'd pay five grand is not good business, right. Charging
• 59:41
  Speaker 1: me eight dollars for something I'm not willing to pay
• 59:43
  Speaker 1: eight dollars for is not good business. So that was
• 59:46
  Speaker 1: the mistake. You have the Nile River, it's just filled
• 59:49
  Speaker 1: with data, right, and you decide to let everybody pissing it.
• 59:53
  Speaker 2: Right, And that's the crazy thing is Twitter is a
• 59:56
  Speaker 2: data source, is really.
• 59:58
  Speaker 1: Especially in an air of machine learning. Right, So this
• 1:00:00
  Speaker 1: word elon could come out. Okay, having a unique data
• 1:00:04
  Speaker 1: set we're jumping around here, but having a unique data
• 1:00:06
  Speaker 1: set in twenty twenty three, like stock twits, does quadruples
• 1:00:09
  Speaker 1: our value because people are doing things. You can't get
• 1:00:12
  Speaker 1: to apply our model, your LM or your model to
• 1:00:16
  Speaker 1: real time financial people that talk about stocks all day long.
• 1:00:19
  Speaker 1: You have to have our data.
• 1:00:20
  Speaker 2: Yeah, so let's circle back to social leverage. We talked
• 1:00:24
  Speaker 2: about what you've done on the media side. We've talked
• 1:00:26
  Speaker 2: about finance side. What else does social leverage focus on?
• 1:00:30
  Speaker 2: Is it just you know, finance and media or do
• 1:00:35
  Speaker 2: you look at tech and other things?
• 1:00:37
  Speaker 1: So, yeah, we're investing out of our fourth fund. It's
• 1:00:39
  Speaker 1: one hundred million dollar fund. We went from six million.
• 1:00:42
  Speaker 2: And you're closed. You're done, We're closed.
• 1:00:44
  Speaker 1: Yeah, so we we we raised six million for our
• 1:00:47
  Speaker 1: first fund. That fund had Robinhood in it, right last.
• 1:00:50
  Speaker 2: The second we'll talk about Robinhood.
• 1:00:52
  Speaker 1: Second fund had some more Robinhood and a company called
• 1:00:54
  Speaker 1: Customer and a few other great companies h both.
• 1:00:57
  Speaker 2: How big was the second fund?
• 1:00:58
  Speaker 1: Twenty just two of us and then we brought on
• 1:01:01
  Speaker 1: our third partner, Gary Bennett, who had sold US company
• 1:01:04
  Speaker 1: to Salesforce and we were doing a lot of enterprise
• 1:01:06
  Speaker 1: and healthcare. And that's our third fund, which was forty right,
• 1:01:09
  Speaker 1: and we we liked the capital constrained model. And then
• 1:01:11
  Speaker 1: our fourth fund will which will be like where we
• 1:01:14
  Speaker 1: settle in at the future is one hundred million dollar fun.
• 1:01:17
  Speaker 2: And you're still doing very early see right.
• 1:01:19
  Speaker 1: One to two million dollars check. We lead rounds. We
• 1:01:22
  Speaker 1: don't have sharp elbows, meaning we don't have if someone
• 1:01:24
  Speaker 1: wants to put their name first, they can't put their
• 1:01:27
  Speaker 1: name first. It's about the ten years stuff. So we
• 1:01:30
  Speaker 1: like to win. Now, what's changes. Social leverage has evolved
• 1:01:35
  Speaker 1: because the markets move. So I was very heavy and
• 1:01:38
  Speaker 1: financial services stuck, which was a great lead. Jon Engine.
• 1:01:41
  Speaker 1: We invested in Rally, Royd road cooy Fin E, Toro, Robinhood, Alpaca,
• 1:01:48
  Speaker 1: Very Finance. Why charts you know, so I didn't realize
• 1:01:51
  Speaker 1: you and why yeah first check and so so yeah,
• 1:01:55
  Speaker 1: sixty thousand dollars check to Sean Carpenter when running White
• 1:01:58
  Speaker 1: Charts and it's a great business. The old chard i
• 1:02:01
  Speaker 1: Q which just sold to S and P. So we
• 1:02:04
  Speaker 1: really I covered if you were going to build a
• 1:02:08
  Speaker 1: Bloomberg terminal. And again this is Twitter screwing this up.
• 1:02:12
  Speaker 1: Twitter should about all these companies and just giving it
• 1:02:15
  Speaker 1: stuff away, right, just giving it away for fifty one
• 1:02:18
  Speaker 1: hundred bucks a Mike, create a two hundred dollars a
• 1:02:20
  Speaker 1: month Bloomberg terminal that's open.
• 1:02:22
  Speaker 2: They've never no one has ever been able to do.
• 1:02:25
  Speaker 1: That, including me. If I don't have the bay the terminal,
• 1:02:28
  Speaker 1: it'll still happen. There'll be a roll up post this crash. No,
• 1:02:31
  Speaker 1: there'll be a role. I think, well, there will be
• 1:02:33
  Speaker 1: an effort. I'm not saying it'll be correct. Why wouldn't you.
• 1:02:36
  Speaker 1: You can buy fintech askeids for ninety cents off the
• 1:02:39
  Speaker 1: doll You.
• 1:02:40
  Speaker 2: Could go back over the past twenty years, and every
• 1:02:43
  Speaker 2: three or four years there's a story about this is
• 1:02:46
  Speaker 2: finally the end of the Bloomberg terminal, and six months
• 1:02:49
  Speaker 2: later they're at old time highs in terms of users. Sorry,
• 1:02:52
  Speaker 2: nobody has ever been able to do it.
• 1:02:53
  Speaker 1: Let me be clear, Berry, you cannot disrupt them. Didn't
• 1:02:56
  Speaker 1: mean it that way, but I mean that's been the
• 1:02:58
  Speaker 1: intense stupid intent. There's things you can't be right, Okay,
• 1:03:03
  Speaker 1: you can't beat open So I'm not going to go
• 1:03:05
  Speaker 1: take on open AI. I meant it works. Okay, you
• 1:03:09
  Speaker 1: can't take on the Bloomer. That doesn't mean rich people
• 1:03:12
  Speaker 1: won't try. But network effects are very powerful. Okay, centralized
• 1:03:18
  Speaker 1: network effects are very powerful. The second thing that Bloomberg
• 1:03:21
  Speaker 1: has is the right customer, of course, and the third
• 1:03:24
  Speaker 1: thing that Bloomberg has is a will to not lose.
• 1:03:27
  Speaker 1: What Bloomberg got right was esthetics, talent, uh, not not
• 1:03:33
  Speaker 1: giving an.
• 1:03:33
  Speaker 2: Inch, stability, rock when support right? When was the last
• 1:03:38
  Speaker 2: time you heard about the terminal going down? But Twitter?
• 1:03:42
  Speaker 2: You know, every other week you were hearing about that
• 1:03:45
  Speaker 2: for how long?
• 1:03:45
  Speaker 1: Early on Twitter could have set up a customer support
• 1:03:47
  Speaker 1: desk for five hundred a month and said call us,
• 1:03:50
  Speaker 1: we'll build you lists instead of what you know they
• 1:03:53
  Speaker 1: sell the hard work.
• 1:03:55
  Speaker 2: I have a behavioral finance list. I have a I
• 1:03:59
  Speaker 2: have everybody in my phone. I'm on a list. I
• 1:04:00
  Speaker 2: see everything that everybody tweets in case anybody that says
• 1:04:04
  Speaker 2: anything non compliant. Compliance tracks that. Also, the watch list
• 1:04:09
  Speaker 2: is just sort of fun. I have a car list
• 1:04:11
  Speaker 2: that's fun like that, sort of curated lists. I still,
• 1:04:16
  Speaker 2: to this day don't understand why Twitter doesn't promote these
• 1:04:18
  Speaker 2: sorts of things. They're amazing science and technology. I have
• 1:04:21
  Speaker 2: a list like that that has like seventy thousand followers.
• 1:04:24
  Speaker 2: I don't know how that true.
• 1:04:26
  Speaker 1: I'll give you my thesis. My thesis is organic growth,
• 1:04:29
  Speaker 1: Well great is also a drug and it got it
• 1:04:33
  Speaker 1: infected people's brains, meaning, hey, we already won America, let's
• 1:04:37
  Speaker 1: go to China. You know how long it took like
• 1:04:39
  Speaker 1: Bloomberg to open at second office. I imagine ten years.
• 1:04:43
  Speaker 1: You know fast, Twitter and Facebook and even Robinhood were
• 1:04:47
  Speaker 1: opening offices in China year two like no one. So
• 1:04:50
  Speaker 1: I'm saying organic growth was a drug that forced people
• 1:04:54
  Speaker 1: to think that they were smarter than they were, grow
• 1:04:57
  Speaker 1: faster than they were. And oh and by the way,
• 1:04:59
  Speaker 1: there was zero percent interest rate and venture capitalists were
• 1:05:02
  Speaker 1: lining up to give you money. Howard.
• 1:05:05
  Speaker 2: In addition to running a venture fund, Social Leverage also
• 1:05:11
  Speaker 2: hosts a podcast called Panic with Friends. So I got
• 1:05:14
  Speaker 2: so many questions to ask you about. First, what what
• 1:05:18
  Speaker 2: is this podcast? Then you you talk about well.
• 1:05:22
  Speaker 1: You started there was there was podcasts a thing now
• 1:05:25
  Speaker 1: a little bit.
• 1:05:26
  Speaker 2: Should I look into this?
• 1:05:28
  Speaker 1: You should? So, I think the podcast is popular in
• 1:05:32
  Speaker 1: general because you get to have these conversations with people
• 1:05:36
  Speaker 1: conan being a perfect example. I listen to comedy podcasts,
• 1:05:39
  Speaker 1: so I listened to Kore and Conan is just so talented.
• 1:05:43
  Speaker 2: So he he happens to be just quick digression, which
• 1:05:47
  Speaker 2: you and I both can't help but do. When I
• 1:05:50
  Speaker 2: was pitching Masters in Business to Bloomberg, I pitched it
• 1:05:55
  Speaker 2: as Mark Maron meets Charlie Rose and Mark Man is
• 1:06:00
  Speaker 2: one of the original pot And by the way, that's
• 1:06:03
  Speaker 2: back when Charlie Rose pants on who nobody knows going
• 1:06:06
  Speaker 2: on but Mark Marin. He was the first guy doing
• 1:06:12
  Speaker 2: long form interviews with people in his industry. And he's
• 1:06:17
  Speaker 2: a stand up and a television show producer. But it's
• 1:06:21
  Speaker 2: let me bring in my friends from the world to
• 1:06:23
  Speaker 2: stand up comedy and let's dissect what makes something fun.
• 1:06:26
  Speaker 1: Correct so inspired like like Jerry's show, inspired by What
• 1:06:31
  Speaker 1: You Do, inspired by Conan. I started my own podcast
• 1:06:34
  Speaker 1: in March tenth of twenty twenty. So the market the
• 1:06:37
  Speaker 1: vix was like.
• 1:06:38
  Speaker 2: Oh, so weird, not quite shut down yet, I feel
• 1:06:41
  Speaker 2: like to shut.
• 1:06:42
  Speaker 1: Down in the you know, and I'm like, people were
• 1:06:45
  Speaker 1: freaking out. As kind of a service to myself and
• 1:06:49
  Speaker 1: my next yeah, and a service to my network to
• 1:06:52
  Speaker 1: be able to talk to like Fred Wilson and Jim
• 1:06:55
  Speaker 1: O'Shaughnessy and you. I said, why don't I just for
• 1:06:58
  Speaker 1: the thirty days document the panic and start the show
• 1:07:03
  Speaker 1: called Panic with Friends, where we are our calm voice.
• 1:07:06
  Speaker 1: So my first inclination with COVID was this will pass. Obviously,
• 1:07:10
  Speaker 1: because by the.
• 1:07:11
  Speaker 2: Day, everybody I think had the same.
• 1:07:13
  Speaker 1: Maybe my best call, but it wasn't like I had
• 1:07:15
  Speaker 1: some great insight. It was just, oh my god, people like,
• 1:07:19
  Speaker 1: at least we could do is take a deep breath.
• 1:07:22
  Speaker 1: So I have this idea, we're gonna We're gonna do
• 1:07:24
  Speaker 1: the opposite of panic, even though the show's called Panic
• 1:07:26
  Speaker 1: with Friends, And I would get my calmest friends that
• 1:07:29
  Speaker 1: have been through many cycles and just chat with them
• 1:07:32
  Speaker 1: about the panic. And at the time that now the
• 1:07:34
  Speaker 1: market closes, I'm doing a show a day. A great guest.
• 1:07:37
  Speaker 1: Jomo Shaughnessy is my first guest, and it was just
• 1:07:40
  Speaker 1: really good advice. It's like that, and then I start
• 1:07:42
  Speaker 1: bringing in traders. When the VIC hits eight and I'm like,
• 1:07:44
  Speaker 1: what are we buying? Oil was negative? I bring on
• 1:07:46
  Speaker 1: my favorite oil trader and we were just like, if
• 1:07:50
  Speaker 1: you listen to my podcast, you made fortunes because we
• 1:07:53
  Speaker 1: were there, and I was so proud of just being.
• 1:07:57
  Speaker 2: Makes the voice of reasons.
• 1:08:00
  Speaker 1: Guys, you don't have to buy, but if you're not
• 1:08:03
  Speaker 1: thinking about buying during these weeks, you will you may
• 1:08:09
  Speaker 1: not want to ever be an investor.
• 1:08:11
  Speaker 2: Let me ask you.
• 1:08:11
  Speaker 1: I was the idea of the show.
• 1:08:12
  Speaker 2: Let me ask you a question because I had a
• 1:08:14
  Speaker 2: similar experience. I'm curious as to what yours was. What
• 1:08:17
  Speaker 2: sort of pushback did you get to that rational Hey
• 1:08:21
  Speaker 2: down thirty percent in a few weeks buying opportunity? What
• 1:08:25
  Speaker 2: did people say?
• 1:08:26
  Speaker 1: The show wasn't like it was more a show of like,
• 1:08:29
  Speaker 1: you know, I have a big audience, not for the
• 1:08:30
  Speaker 1: podcast at the time, but I would just I figured,
• 1:08:33
  Speaker 1: if people ever go back and look for about thirty
• 1:08:37
  Speaker 1: days of podcasting after day, I was going to put
• 1:08:40
  Speaker 1: a piece of work out there that would be timeless. Now,
• 1:08:44
  Speaker 1: I didn't expect to be doing the show for three
• 1:08:46
  Speaker 1: more years, and it should be called Frolic with Friends
• 1:08:49
  Speaker 1: at this point. But I was really proud of it.
• 1:08:51
  Speaker 1: But we just kept going. Canodos are one of my
• 1:08:53
  Speaker 1: best pals.
• 1:08:54
  Speaker 2: It's also you don't realize how much fun it is
• 1:08:57
  Speaker 2: to sit down with somebody. You and I know each
• 1:08:59
  Speaker 2: other for a long time. How often do we get to
• 1:09:01
  Speaker 2: sit down and bs about what we do for two hours?
• 1:09:04
  Speaker 1: It's also it's a blast, It's not just a blast.
• 1:09:06
  Speaker 1: It keeps me ahead of the curve.
• 1:09:08
  Speaker 2: And you got to think about who you're talking to.
• 1:09:11
  Speaker 2: There's some prep work that you wouldn't do otherwise. Hey,
• 1:09:14
  Speaker 2: let me look into seed investing before I sit down
• 1:09:17
  Speaker 2: with Howard. Oh look what I've learned. I mean you
• 1:09:20
  Speaker 2: you must have those sort of experiences. It's that although
• 1:09:22
  Speaker 2: you have a staff that does all the research, I.
• 1:09:24
  Speaker 1: Don't have the staff do everything other than connute myself.
• 1:09:28
  Speaker 1: And you know, I just love the idea that my daughter,
• 1:09:33
  Speaker 1: my wife listened to it and they like it. As
• 1:09:35
  Speaker 1: long as they like it, I'll keep doing it. Every
• 1:09:38
  Speaker 1: time I say I quit, my wife goes, I listened
• 1:09:40
  Speaker 1: while I'm hiking, and go all right, I'll keep.
• 1:09:41
  Speaker 2: Doing So what do you What have you learned from
• 1:09:43
  Speaker 2: hosting a podcast?
• 1:09:44
  Speaker 1: Well, I've learned that people are great, right, I've learned
• 1:09:48
  Speaker 1: obviously because I don't.
• 1:09:49
  Speaker 2: Want you so the opposite of what you learn from Twitter.
• 1:09:52
  Speaker 1: Yeah, I learned that just there's so many smart people
• 1:09:55
  Speaker 1: and I also learn a lot about myself in I
• 1:10:00
  Speaker 1: don't know anything, and I do love to make my
• 1:10:04
  Speaker 1: guest laugh. Like part of the thing is if you
• 1:10:06
  Speaker 1: can make the friends and the Jim o'shaughness is and
• 1:10:08
  Speaker 1: the berries laugh, that is the only gift that I
• 1:10:11
  Speaker 1: was born with, is to probe and make them giggle
• 1:10:15
  Speaker 1: or just look at themselves a little less seriously. Right,
• 1:10:19
  Speaker 1: So when I see a flaw in person, whether it's
• 1:10:21
  Speaker 1: Kramer or whether it's you know, Trump, I look at
• 1:10:25
  Speaker 1: it like, man, these are bad life decisions. Like Jim
• 1:10:28
  Speaker 1: could have been me. He could have he had the
• 1:10:30
  Speaker 1: center of the universe. I look at Jim, and he
• 1:10:32
  Speaker 1: went media. He could have gone venture. Right, maybe he
• 1:10:35
  Speaker 1: did do venture and he doesn't talk about it.
• 1:10:36
  Speaker 2: He did okay for himself.
• 1:10:38
  Speaker 1: To be fair saying he didn't make money, I'm saying
• 1:10:40
  Speaker 1: he's slapping on makeup. But he could have been, and
• 1:10:43
  Speaker 1: he could have been.
• 1:10:44
  Speaker 2: He's got a daily grind that looks from the outside
• 1:10:48
  Speaker 2: like it's you had to pick one of two lifestyles.
• 1:10:51
  Speaker 2: I think Andreasen's lifestyle is a little more less less
• 1:10:55
  Speaker 2: stressful than the lifestyle that correct.
• 1:10:58
  Speaker 1: So I feel like I chose the their side of
• 1:11:00
  Speaker 1: the road. I could have gone down the media side,
• 1:11:03
  Speaker 1: but I still look at the media more like the enemy.
• 1:11:06
  Speaker 1: But I also don't look at it like Trump and
• 1:11:09
  Speaker 1: Elon must look like it. They're out to get me,
• 1:11:12
  Speaker 1: and I know they are out to get them and
• 1:11:14
  Speaker 1: whatever clicks.
• 1:11:16
  Speaker 2: And they're out to get paid. So you know, whenever
• 1:11:18
  Speaker 2: I'm going to interrupt again because I feel like, no,
• 1:11:21
  Speaker 2: we're friends, I feel like this is a conversation, not
• 1:11:24
  Speaker 2: not a Q and A. And I apologize to those
• 1:11:27
  Speaker 2: people who are expecting a Q and A whenever I hit.
• 1:11:31
  Speaker 2: People talk about media bias, and a lot of it
• 1:11:35
  Speaker 2: is just lazy journalism and what is extreme, what is outrageous?
• 1:11:40
  Speaker 2: What is sensationalistic? How do we get the views? How
• 1:11:43
  Speaker 2: do we get the clicks? It's not the sort of
• 1:11:47
  Speaker 2: I think the right misunderstands the left and the left
• 1:11:51
  Speaker 2: misunderstands the whole thing. It's a business and it's about
• 1:11:55
  Speaker 2: generating and capturing attention, not we're put wishing the left
• 1:12:00
  Speaker 2: versus the rights out of view. Fox News is its
• 1:12:02
  Speaker 2: own animal. It has its own origin story that comes
• 1:12:07
  Speaker 2: from a very different place. But when you just look
• 1:12:10
  Speaker 2: at media in general, yellow journalism has been around for centuries,
• 1:12:14
  Speaker 2: literally centuries.
• 1:12:15
  Speaker 1: Yeah, I just loved the idea. I was born with
• 1:12:18
  Speaker 1: the gift to laugh at myself, so.
• 1:12:20
  Speaker 2: Let's talk about So let's talk about laughing at yourself.
• 1:12:24
  Speaker 2: And I'm going to insert myself even deeper into the conversation.
• 1:12:28
  Speaker 2: I wrote a column in twenty twenty one for Bloomberg
• 1:12:32
  Speaker 2: what my worst trades taught me about investing, and I
• 1:12:36
  Speaker 2: mentioned you said it's twenty fourteen. I remember it's twenty fifteen,
• 1:12:39
  Speaker 2: but I wouldn't swear to it. The line I said
• 1:12:42
  Speaker 2: is Howard, that's the dumbest investment idea I ever heard.
• 1:12:45
  Speaker 2: I'm omitting the F bomb that was in the middle.
• 1:12:47
  Speaker 2: You and I were talking. We were in San Francisco.
• 1:12:49
  Speaker 2: I have a vivid recollection of the Ferry building being
• 1:12:52
  Speaker 2: behind us. We were out on the deck behind where
• 1:12:55
  Speaker 2: a couple of those restaurants were, and you were pitching
• 1:12:57
  Speaker 2: me on this ridiculous idea for an app that's going
• 1:13:01
  Speaker 2: to give away free trades to millennials on their phone.
• 1:13:04
  Speaker 2: That's like, you know, the world's moving to passive. Who
• 1:13:07
  Speaker 2: wants free trading? Where is this going? So first kudos
• 1:13:11
  Speaker 2: to you to investing in robin Hood when I was
• 1:13:15
  Speaker 2: too stupid to see it. But second, how did you
• 1:13:18
  Speaker 2: come across the robin Hood opportunity and what made you
• 1:13:22
  Speaker 2: so enthusiastic about it?
• 1:13:24
  Speaker 1: The first of all, it was it was just E
• 1:13:27
  Speaker 1: trade two point zero. So my big idea, like even
• 1:13:29
  Speaker 1: with Wallstrip was CNBC on YouTube. Robinhood was just an
• 1:13:33
  Speaker 1: extension of what each trade.
• 1:13:34
  Speaker 2: Each trade on the phone, so each trade to me,
• 1:13:36
  Speaker 2: if you would have pitched it to me like that,
• 1:13:38
  Speaker 2: because my first gig in the business was at EA Trade,
• 1:13:41
  Speaker 2: I would have been all over it.
• 1:13:42
  Speaker 1: Yes, so it's my fault, I totally, So again I'm in.
• 1:13:46
  Speaker 1: It was in a power position on some level because
• 1:13:49
  Speaker 1: people needed stock twits to spam to get users, so
• 1:13:52
  Speaker 1: we were at gateway to traffic much like Twitter. Uh
• 1:13:55
  Speaker 1: huh okay. So, but the people that came to me
• 1:13:57
  Speaker 1: were people were financial apps, and because I was too
• 1:14:01
  Speaker 1: wimpy to build my own brokerage in twenty thirteen, just
• 1:14:05
  Speaker 1: like you said, vcs are not perfect. They are like moths.
• 1:14:10
  Speaker 1: And at the time, the world of VC was enamored
• 1:14:14
  Speaker 1: with disrupting Vanguard, so the VC model was all the
• 1:14:19
  Speaker 1: V eight trillion get to tell you my hack. So
• 1:14:23
  Speaker 1: the vcs were seeing the world one way. I saw
• 1:14:26
  Speaker 1: the world another way. So the VCS were like, we
• 1:14:30
  Speaker 1: got to go after the assets under management. I was like,
• 1:14:32
  Speaker 1: who cares those are worth? You know, red dollar? You
• 1:14:36
  Speaker 1: need to get the customer and you need you know.
• 1:14:38
  Speaker 1: So it wasn't like any genius insight. It was just
• 1:14:41
  Speaker 1: all the money was trying to disrupt Vanguard, and Vanguard
• 1:14:44
  Speaker 1: wasn't disruptible. You couldn't build a product that was twenty
• 1:14:47
  Speaker 1: times better than Vanguard, whereas E trade they were spending
• 1:14:51
  Speaker 1: billions on advertisements.
• 1:14:52
  Speaker 2: So great emphasizing but expensive average.
• 1:14:55
  Speaker 1: So at the time in twenty thirteen, you could look
• 1:14:58
  Speaker 1: through the financial statements of Schwab and TD public statements
• 1:15:01
  Speaker 1: and they were spending one hundred and fifty dollars for
• 1:15:04
  Speaker 1: a customer acquisition. So this is the math that I applied.
• 1:15:07
  Speaker 2: You could acquire them for next to nothing.
• 1:15:09
  Speaker 1: How about zero and lesson zero? Right? Meaning I show
• 1:15:14
  Speaker 1: my friend my free trade on my phone. He didn't
• 1:15:16
  Speaker 1: see a TV commercial.
• 1:15:17
  Speaker 2: What does that cost you less.
• 1:15:19
  Speaker 1: Than one bucks? Because one the one customer led to ten.
• 1:15:22
  Speaker 1: So it was like Uber.
• 1:15:23
  Speaker 2: Grows, but you're giving them a free trade, You're giving
• 1:15:25
  Speaker 2: them a free share of stock. Understand that, but what
• 1:15:28
  Speaker 2: is that twenty bucks?
• 1:15:29
  Speaker 1: Thirty bucks? Not even you can't think like that. As
• 1:15:31
  Speaker 1: a seed investor, you can now that interestate you five percent.
• 1:15:35
  Speaker 2: If Schwab is spending a buck fifty per client and
• 1:15:38
  Speaker 2: you're spending one share of a five dollars stock, your
• 1:15:41
  Speaker 2: cost of acquisition is five dollars. It's meaningless.
• 1:15:44
  Speaker 1: Who cares, right, So at worst it was five dollars,
• 1:15:48
  Speaker 1: but at best it was still negative because that person
• 1:15:50
  Speaker 1: told five other people. You got to understand how that
• 1:15:53
  Speaker 1: type of networking was virals organic, so it was Snapchat
• 1:15:58
  Speaker 1: but with trading. So think about this, do the map.
• 1:16:01
  Speaker 1: If I acquire a million users and I'm a Schwab
• 1:16:06
  Speaker 1: and I did that for ten dollars, you'd be CEO
• 1:16:08
  Speaker 1: of the company. Bring me the kid that got me
• 1:16:12
  Speaker 1: a million users without a tv AD Right now, your
• 1:16:17
  Speaker 1: all your workers were trying to kill you because they'd
• 1:16:19
  Speaker 1: be slow down, dude, you're you're not supposed to work
• 1:16:22
  Speaker 1: that hard. But this was my idea was like, if
• 1:16:25
  Speaker 1: you can acquire a million users at zero, you're worth
• 1:16:28
  Speaker 1: one hundred and fifty million dollars.
• 1:16:30
  Speaker 2: Yep.
• 1:16:31
  Speaker 1: So if I invest at an eight million dollar valuation.
• 1:16:33
  Speaker 1: Let me put up the check. I'm up nineteen times
• 1:16:36
  Speaker 1: my money in an ARB trade. So it was just
• 1:16:39
  Speaker 1: an AR bike.
• 1:16:39
  Speaker 2: And again, you you should have explained that to me.
• 1:16:42
  Speaker 1: Well, at the time, I probably had gas from something
• 1:16:45
  Speaker 1: I'd eaten in San Francisco and I had other things
• 1:16:48
  Speaker 1: on my mind. No, but the idea then was it
• 1:16:51
  Speaker 1: was very hard for other people to see that because
• 1:16:54
  Speaker 1: they were looking for a business model.
• 1:16:56
  Speaker 2: Well, now that you've explained that, it's easy to say.
• 1:16:58
  Speaker 1: And so what I didn't get right for me? Again,
• 1:17:00
  Speaker 1: a lot of this is luck. I didn't expect it
• 1:17:02
  Speaker 1: to be thirty bill you know. So we did sell
• 1:17:06
  Speaker 1: some along the way, and that was the beauty of
• 1:17:09
  Speaker 1: this market. Markets have become they're a liquid a little
• 1:17:12
  Speaker 1: bit right now. But there became liquidity in the private market,
• 1:17:16
  Speaker 1: which is what I also helped build by investing an
• 1:17:18
  Speaker 1: angel List and others. So I was just part of
• 1:17:21
  Speaker 1: that whole generation which was fun, which created liquidity in
• 1:17:25
  Speaker 1: the system.
• 1:17:26
  Speaker 2: So how early were you in robinhood? We were the
• 1:17:28
  Speaker 2: first check, you were literally the first check. Yeah, they
• 1:17:31
  Speaker 2: go public for thirty five billion dollars. That that's got
• 1:17:33
  Speaker 2: to put a few jingles.
• 1:17:35
  Speaker 1: Yeah, we're we're on a few lists for fun returns.
• 1:17:39
  Speaker 2: So you've you're selling a little bit along the way. Yeah,
• 1:17:43
  Speaker 2: but it's got to be one hundred x plus, right,
• 1:17:46
  Speaker 2: I know you can't disclose that, but yeah, it's huge.
• 1:17:49
  Speaker 2: So now you're in a very different situation instead of
• 1:17:52
  Speaker 2: thinking about.
• 1:17:53
  Speaker 1: Yeah, now you pay me to come on the podcast.
• 1:17:54
  Speaker 2: Right, right, But but for other people we have, we
• 1:17:58
  Speaker 2: have clients who sold businesses, we have other people who've
• 1:18:01
  Speaker 2: had these giant wind falls. Suddenly it's a very different calculus.
• 1:18:06
  Speaker 2: You're saying, all right, I'm no longer worrying about multiplying this.
• 1:18:09
  Speaker 2: How do I go about protecting this giant pool capital?
• 1:18:13
  Speaker 2: And how do I not get killed tax wise?
• 1:18:15
  Speaker 1: So?
• 1:18:16
  Speaker 2: Do you collar this? Do you sell it? What do
• 1:18:18
  Speaker 2: you do when suddenly the bank calls and says, hey,
• 1:18:21
  Speaker 2: there's a couple extra zeros in your bank account, put
• 1:18:25
  Speaker 2: it at the end of your your balance. What sort
• 1:18:28
  Speaker 2: of financial response do you take to that?
• 1:18:31
  Speaker 1: Well, the first thing you do is I tell everybody,
• 1:18:32
  Speaker 1: is you hide it from your your wife and kids? Right, yeah,
• 1:18:37
  Speaker 1: my kids.
• 1:18:38
  Speaker 2: Sorry, that Robin Hood thing didn't work.
• 1:18:39
  Speaker 1: My kids think I'm in trying to still disrupt bankguard. No.
• 1:18:43
  Speaker 1: So the first thing you do is try and just appreciate,
• 1:18:48
  Speaker 1: like you know, the good fortune. Yeah, yeah, set up
• 1:18:51
  Speaker 1: the trust.
• 1:18:51
  Speaker 2: Gratitude all that stuff is fantastic.
• 1:18:54
  Speaker 1: Then set up the trust and you realize that you
• 1:18:57
  Speaker 1: have replying to your children.
• 1:18:59
  Speaker 2: Right you start moving money into various trusts. You're worth
• 1:19:01
  Speaker 2: more dead than alive. You don't want them to know that.
• 1:19:03
  Speaker 1: Yes, yes, yes you you he.
• 1:19:05
  Speaker 2: Incentive to detach the break lines. We don't want that.
• 1:19:10
  Speaker 1: I mean, there's nothing special. We as a conservative person.
• 1:19:13
  Speaker 2: Do you do you color the because that's a big money.
• 1:19:17
  Speaker 1: We We distributed the stock to r LPs so so so.
• 1:19:21
  Speaker 2: A lot of so it's up to them to do
• 1:19:23
  Speaker 2: with this goes to.
• 1:19:24
  Speaker 1: Degreed at the end of the secon. Yeah, you know again.
• 1:19:26
  Speaker 1: I was mentored by Fred Wilson. We've been joking.
• 1:19:29
  Speaker 2: Fred says, hit the bit.
• 1:19:30
  Speaker 1: Fred is always because he went through nineteen ninety nine,
• 1:19:33
  Speaker 1: He's not he went through.
• 1:19:34
  Speaker 2: He's not looking to optimize.
• 1:19:36
  Speaker 1: He's not looking to optimize.
• 1:19:38
  Speaker 2: That is the regret minimization strategy. That's what Fred deploys.
• 1:19:42
  Speaker 1: I've made a few mistakes in my life and investing
• 1:19:45
  Speaker 1: that Fred laughs at or not laughs, but I appreciate you.
• 1:19:48
  Speaker 1: And there do you think where I've optimized over optimized
• 1:19:51
  Speaker 1: for entry? Right? Okay? Fred has always said if everything
• 1:19:55
  Speaker 1: lines up optimized, don't worry.
• 1:19:57
  Speaker 2: About it, optimize for exit.
• 1:19:59
  Speaker 1: So so I've always optimized correctit, meaning I'm never going
• 1:20:03
  Speaker 1: to sell the top right, and I'm generally going to
• 1:20:06
  Speaker 1: sell on the way out.
• 1:20:07
  Speaker 2: You don't even get a ribbon when you top to
• 1:20:09
  Speaker 2: I've top ticked two stocks in my life when I
• 1:20:12
  Speaker 2: was on a trading desk. You don't ring the ball exchange,
• 1:20:16
  Speaker 2: no one, No one gives you a plaque. It's like, oh,
• 1:20:18
  Speaker 2: that was a lot of efforts for nothing.
• 1:20:20
  Speaker 1: So our job is to return capital as fast as
• 1:20:23
  Speaker 1: we can.
• 1:20:23
  Speaker 2: You did that.
• 1:20:24
  Speaker 1: There's a there is a thing in the venture industry
• 1:20:26
  Speaker 1: that's kind of a joke, which is you know I
• 1:20:28
  Speaker 1: R R. Well, y r R might mean something if
• 1:20:31
  Speaker 1: you're returning cash, right, so.
• 1:20:33
  Speaker 2: The eternal rate of return, yes, but you're returning actual share.
• 1:20:37
  Speaker 1: So in our thing, it's dollars return, so it's DPI,
• 1:20:41
  Speaker 1: and so the higher your DPI, now your I R
• 1:20:44
  Speaker 1: R is what matters. When you have a five to
• 1:20:46
  Speaker 1: ten DPI and you've returned that much cash on cash.
• 1:20:49
  Speaker 1: People return your calls. So I was mentored by the
• 1:20:52
  Speaker 1: people that said, focus on DPI. So if you have
• 1:20:54
  Speaker 1: a chance to return your cash, you if you return
• 1:20:58
  Speaker 1: your cash in twenty sixteen, we returned some cash in
• 1:21:01
  Speaker 1: robin in twenty sixteen, very early. But say those LPs
• 1:21:05
  Speaker 1: bought bitcoin, right, they did, okay, Meaning my job isn't
• 1:21:09
  Speaker 1: to manage their money. My job is when when I
• 1:21:12
  Speaker 1: entered a company, I said, if this gets to a billion,
• 1:21:16
  Speaker 1: I got to sell some and it got to a billion.
• 1:21:19
  Speaker 1: You can't change. Yeah, of course you can change. But
• 1:21:21
  Speaker 1: I'm an early stage investor. I mean sell everything.
• 1:21:24
  Speaker 2: You sold a little bit to take some house money
• 1:21:27
  Speaker 2: off the table. You still had a big slug waiting
• 1:21:29
  Speaker 2: to see if it did any better.
• 1:21:31
  Speaker 1: Yes, and it did so even from there, it's thirty five. Oh,
• 1:21:36
  Speaker 1: it's unbelievable. Now we made the decision and our LPs
• 1:21:39
  Speaker 1: agreed that we are as soon as we can sell,
• 1:21:42
  Speaker 1: we will return the shares to the LPs. Let them
• 1:21:45
  Speaker 1: decide me. They have their own tax problem, LP, they
• 1:21:47
  Speaker 1: have their other issues. Let us return the stock market.
• 1:21:50
  Speaker 1: They want to hold it, they can hold it for me.
• 1:21:53
  Speaker 2: What are the rules for early events pre IPO investors
• 1:21:56
  Speaker 2: six months, so you basically give them pre ip shares.
• 1:22:01
  Speaker 1: No, we give them we have to wait legally for
• 1:22:03
  Speaker 1: the shares to be cleaned up. We cleaned them up
• 1:22:06
  Speaker 1: day one. Give them their shares, their free trading can
• 1:22:10
  Speaker 1: hold them and give them to their kids. That's not
• 1:22:12
  Speaker 1: our job. We distributed market.
• 1:22:14
  Speaker 2: And the IPO was one twenty twenty one.
• 1:22:16
  Speaker 1: Yeah, late twenty twenty one. Now, a lot of people
• 1:22:18
  Speaker 1: around this time started cutting up their funds like Andresen
• 1:22:21
  Speaker 1: and Sequoia to be permanent capital. These are the signs
• 1:22:25
  Speaker 1: of the top where they're like, hey, we now have
• 1:22:28
  Speaker 1: an evergreen fund that will hold these stocks. You know.
• 1:22:31
  Speaker 1: So there were all these signs late twenty one one.
• 1:22:34
  Speaker 2: That's not a great call there. Yeah.
• 1:22:36
  Speaker 1: So so again, you know, we consistently try and return capital.
• 1:22:41
  Speaker 1: That is our job.
• 1:22:42
  Speaker 2: So all told, your experience with robin Hood ended up
• 1:22:45
  Speaker 2: being pretty pretty pretty good.
• 1:22:49
  Speaker 1: Yeah, pretty good. We had a few other ones, but ye, Robinhood.
• 1:22:53
  Speaker 1: What was fun about Robinhood is that we saw other
• 1:22:56
  Speaker 1: people didn't like it, and that still goes to our
• 1:22:58
  Speaker 1: strategy today is when you're betting on people, you have
• 1:23:01
  Speaker 1: to have domain experience which we had in Robinhood. We
• 1:23:05
  Speaker 1: have to get the timing right. That's a little bit
• 1:23:07
  Speaker 1: of luck. The world was ready for an app like this.
• 1:23:10
  Speaker 2: And then the pandemic certainly didn't hurt.
• 1:23:12
  Speaker 1: Didn't hurt, but the execution that they had early was fantastic.
• 1:23:16
  Speaker 2: Really quite fascinating. So I have a very vivid recollection
• 1:23:20
  Speaker 2: of you being on my partner's podcast, Compound and Friends,
• 1:23:26
  Speaker 2: Josh Brown and Michael Batnick, and I want to say
• 1:23:28
  Speaker 2: it was like October twenty one, is that about right?
• 1:23:32
  Speaker 2: And you're like, the market screaming higher, We're up from
• 1:23:35
  Speaker 2: the lows. At the end of March twenty twenty the
• 1:23:39
  Speaker 2: markets up sixty eight percent for a calendar year, and
• 1:23:42
  Speaker 2: twenty twenty one the S and P five hundreds up
• 1:23:45
  Speaker 2: twenty eight percent. And you couldn't have been more uncomfortable.
• 1:23:49
  Speaker 2: You just said, wherever you look signs of problems coming.
• 1:23:53
  Speaker 2: What were you seeing in October twenty one that made
• 1:23:56
  Speaker 2: you and not just public markets. You were talking about
• 1:23:59
  Speaker 2: private marketaluations, demands from founders and startups. Like everything you
• 1:24:04
  Speaker 2: said was bubblicious.
• 1:24:06
  Speaker 1: So earlier in the year, in April, you know, I
• 1:24:07
  Speaker 1: rarely do serious interviews, and I came on Joe's podcast
• 1:24:11
  Speaker 1: with Tracy and they were great and they were like
• 1:24:12
  Speaker 1: asking me questions and it went I was like, you know,
• 1:24:16
  Speaker 1: this is stupid. And we had raised one hundred million
• 1:24:19
  Speaker 1: in late twenty twenty one. Again we went from six,
• 1:24:21
  Speaker 1: as I said, to twenty to forty one hundred. That
• 1:24:23
  Speaker 1: hundred was easy really, So when it was easy, it
• 1:24:27
  Speaker 1: was like it was like it was like the Costanza
• 1:24:31
  Speaker 1: venture capital. At that point, I'm like, this has been
• 1:24:33
  Speaker 1: so hard for us. We're good. Why are the people
• 1:24:37
  Speaker 1: giving us one hundred What have we done to deserve this?
• 1:24:39
  Speaker 1: So we was kind of like castandzing ourselves, and so
• 1:24:42
  Speaker 1: we stopped writing checks, which is one of our best decides.
• 1:24:45
  Speaker 2: So wait, hold on a second before we get to that.
• 1:24:47
  Speaker 2: So you raise one hundred million, now you have a
• 1:24:50
  Speaker 2: track record that's you know, Robin Hood.
• 1:24:52
  Speaker 1: Or people wired us money.
• 1:24:54
  Speaker 2: So was this there's too much money around people have
• 1:24:58
  Speaker 2: become reckless with their ca capital or is this a
• 1:25:01
  Speaker 2: little imposter syndrome. Hey we're good, but we're not that good.
• 1:25:05
  Speaker 2: This is a problem. Or a little bit of everything.
• 1:25:07
  Speaker 1: A little bit of everything plus a lot of it's
• 1:25:10
  Speaker 1: not my own money. Right, and I'm conservative, and I'm like,
• 1:25:13
  Speaker 1: nothing makes sense to me, and I'm getting three minutes
• 1:25:17
  Speaker 1: to decide on a deal. We're still doing business on zoom.
• 1:25:21
  Speaker 1: I'm not a zoom guy, right, I just like this.
• 1:25:24
  Speaker 2: You need to see people's body line.
• 1:25:26
  Speaker 1: I can't take three months to do it now, meaning okay,
• 1:25:29
  Speaker 1: I lose Stille in three months. But like, shouldn't I
• 1:25:31
  Speaker 1: have dinner with you? Shouldn't I see if you're like
• 1:25:34
  Speaker 1: treat the staff well? Shouldn't I see what your co
• 1:25:36
  Speaker 1: founder looks like. I don't even know how tall you are.
• 1:25:40
  Speaker 1: So again, God bless the people that wrote checks. So
• 1:25:43
  Speaker 1: my partner Gary wrote a few good checks during COVID
• 1:25:45
  Speaker 1: I didn't.
• 1:25:46
  Speaker 2: So starting in early twenty twenty one, the social leverage
• 1:25:52
  Speaker 2: bigot is shut.
• 1:25:53
  Speaker 1: Off almost in twenty twenty because March twenty twenty I
• 1:25:56
  Speaker 1: start the podcast and there was so much opportunity in
• 1:25:59
  Speaker 1: the public market right that it was saying, how are
• 1:26:02
  Speaker 1: you not buying these stocks? What are you worried about
• 1:26:05
  Speaker 1: private markets when you can make ten x on a
• 1:26:07
  Speaker 1: public stuff with liquidity? So I lost. I got lost
• 1:26:12
  Speaker 1: in the public markets. And of course you know, some
• 1:26:15
  Speaker 1: cool companies got funded. But really those first three months
• 1:26:17
  Speaker 1: of COVID were like you would like a motorcycle accident,
• 1:26:21
  Speaker 1: You get up and you go, we're not dead. And
• 1:26:23
  Speaker 1: so it wasn't like I was in the mood of
• 1:26:25
  Speaker 1: check writing. But by like June of twenty twenty, market
• 1:26:28
  Speaker 1: was open, baby, and people were writing checks right. And
• 1:26:31
  Speaker 1: for a couple months I was excited. You write checks,
• 1:26:34
  Speaker 1: We have money, people love us, we know what we're doing.
• 1:26:38
  Speaker 1: So we wrote a few checks. But then I like,
• 1:26:41
  Speaker 1: by the end of the year, I'm.
• 1:26:42
  Speaker 2: Like, this has gotten crazy.
• 1:26:44
  Speaker 1: The prices were tripling, and people would be that on
• 1:26:47
  Speaker 1: treason line. Hey, if you're going to make a thousand
• 1:26:50
  Speaker 1: on your money, what's the difference if you paid triple
• 1:26:52
  Speaker 1: on the opening price. But that math, if you really
• 1:26:54
  Speaker 1: put it in a calculator, becomes a problem. Becomes a
• 1:26:57
  Speaker 1: problem just if you're wrong. Because now the IRR, which
• 1:27:01
  Speaker 1: doesn't important to me, is important. If you've invested someone's
• 1:27:06
  Speaker 1: money and it takes three extra years, you're not going
• 1:27:09
  Speaker 1: to beat anybody, right. And so my job is not
• 1:27:12
  Speaker 1: just about DPI. It also is about IRR because I'm
• 1:27:15
  Speaker 1: going to put your money to work. The clock starts ticking,
• 1:27:18
  Speaker 1: and you know, delaying an exit three years is a
• 1:27:21
  Speaker 1: real thing. So the risk I just felt the asymmetric risk.
• 1:27:25
  Speaker 2: So wait, let's let's let's just talk about IRR briefly.
• 1:27:29
  Speaker 2: Typical venture funds. If I commit one hundred dollars to
• 1:27:32
  Speaker 2: a venture fund, a great fund, I'll get a capital
• 1:27:35
  Speaker 2: call right away for right, and then the next January
• 1:27:40
  Speaker 2: I'll get another call for twenty five bucks and then
• 1:27:43
  Speaker 2: the fuss so maybe over the course of three four,
• 1:27:45
  Speaker 2: five years, three to four years. So this way they
• 1:27:48
  Speaker 2: can keep They're not sitting with your cash worrying. This
• 1:27:51
  Speaker 2: is just showing zero return or back when you know
• 1:27:54
  Speaker 2: the tenure was two percent. Is showing almost no return
• 1:27:58
  Speaker 2: you have to worry about you can until they call it.
• 1:28:01
  Speaker 1: Yeah, and so we It wasn't like a lack of
• 1:28:04
  Speaker 1: seeing things, you know, because e commerce was booming after COVID,
• 1:28:07
  Speaker 1: and you know, everybody was believing that, you know, the
• 1:28:10
  Speaker 1: future was e commerce and it still is. But people
• 1:28:13
  Speaker 1: were locked down and behaviors were changing. People as they
• 1:28:16
  Speaker 1: thought that would be forever. You know, we're never going
• 1:28:18
  Speaker 1: to go to it.
• 1:28:18
  Speaker 2: It went from this is temporary to everything's different.
• 1:28:21
  Speaker 1: Now we will see the future, right, And I didn't
• 1:28:24
  Speaker 1: see the future the same way because I live in Arizona.
• 1:28:28
  Speaker 1: I was hiking. Phoenix wasn't closed. There was no clue
• 1:28:30
  Speaker 1: to Phoenix. Sure so, and what happened is this phenomena
• 1:28:35
  Speaker 1: of what took four years. The bcs were putting one
• 1:28:37
  Speaker 1: hundred percent of the money to work in twelve months
• 1:28:39
  Speaker 1: out raising their next fund. So there was a lot
• 1:28:42
  Speaker 1: of fomo. And I have to admit that the fomo
• 1:28:45
  Speaker 1: for sure caught up with me personally, so as schmuck
• 1:28:49
  Speaker 1: insurance against me not writing checks, I did write. And
• 1:28:53
  Speaker 1: I remember Packy being on Joshua Sure and I was
• 1:28:55
  Speaker 1: making fun of the whole thing.
• 1:28:56
  Speaker 2: Paki is great.
• 1:28:57
  Speaker 1: I have twenty five K in one of his funds,
• 1:28:59
  Speaker 1: and I was yelling at him. I'm like, you know,
• 1:29:01
  Speaker 1: I gave you money. It didn't mean to just blow
• 1:29:03
  Speaker 1: it in a casino.
• 1:29:04
  Speaker 2: For people who don't know who pack he is, just.
• 1:29:07
  Speaker 1: Give He's just a really smart young.
• 1:29:11
  Speaker 2: Guy, got very young. He watched his first fund right
• 1:29:14
  Speaker 2: into the teeth of the mess.
• 1:29:16
  Speaker 1: Yeah, and so he was. He was really a fun thinker.
• 1:29:19
  Speaker 1: And again we were all locked around house reading smart people,
• 1:29:22
  Speaker 1: and he had good opinions and he was into crypto,
• 1:29:24
  Speaker 1: and I'm not into crypto, so I said, I started
• 1:29:26
  Speaker 1: placing personal bets with money that I had made just
• 1:29:29
  Speaker 1: in case I was wrong, but not my LP's money.
• 1:29:32
  Speaker 1: I wasn't willing to make crazy bets with LP's money
• 1:29:36
  Speaker 1: that just goes to social This is what we called.
• 1:29:38
  Speaker 2: The fun account pull off five percent trade away. If
• 1:29:42
  Speaker 2: you blow it up, who cares. It's a small part.
• 1:29:44
  Speaker 1: So one of the insts I got from my schmuck
• 1:29:46
  Speaker 1: insurance money is that no, I was a schmuck for
• 1:29:50
  Speaker 1: writing the checks, and the people that I gave the
• 1:29:52
  Speaker 1: money to God blessed him as smart as they were.
• 1:29:54
  Speaker 1: I think we're schmucks too, not like bad people, just
• 1:29:58
  Speaker 1: caught up in the moment. Evaluations don't matter.
• 1:30:01
  Speaker 2: But that's why we have schmock insurance and don't use
• 1:30:05
  Speaker 2: our LP's money for these dumb ideas. At times when
• 1:30:09
  Speaker 2: you think this isn't gonna work out, Yeah, but I can't.
• 1:30:12
  Speaker 2: I feel like I have to still be in the game.
• 1:30:14
  Speaker 1: Yeah. I feel our best work as a firm was
• 1:30:17
  Speaker 1: not writing even though we had great returns for our
• 1:30:20
  Speaker 1: first funds, I feel our best work was not writing checks.
• 1:30:23
  Speaker 1: In twenty one and twenty two.
• 1:30:25
  Speaker 2: That's what Buffett says is, you know, unlike the public markets,
• 1:30:28
  Speaker 2: where you have to be invested, you could stand at
• 1:30:31
  Speaker 2: the plate with the bat at your shoulder and not
• 1:30:33
  Speaker 2: take a swin.
• 1:30:34
  Speaker 1: Now and Treason's defense, he would argue for your timing
• 1:30:38
  Speaker 1: the market. And so again, I don't know if it's
• 1:30:41
  Speaker 1: right or wrong. And in a way I did time
• 1:30:43
  Speaker 1: the market, and so maybe I just got lucky. But
• 1:30:46
  Speaker 1: my beef for the last six months, and it's quite public,
• 1:30:49
  Speaker 1: my beef is with my own industry, is that they
• 1:30:52
  Speaker 1: were talking out of both sides, meaning they were writing
• 1:30:56
  Speaker 1: those checks and then also say fed stupid things are overvalued,
• 1:31:01
  Speaker 1: and I'm like, you can't have it both ways. You
• 1:31:03
  Speaker 1: should have been.
• 1:31:03
  Speaker 2: More so that what did you see in twenty twenty
• 1:31:08
  Speaker 2: one that you thought was egregious and ridiculous? What were
• 1:31:12
  Speaker 2: the signposts that led you to say this is just
• 1:31:16
  Speaker 2: out of hand.
• 1:31:17
  Speaker 1: Well, not meeting founders and just assuming that you could.
• 1:31:21
  Speaker 2: Create twenty one at that point. Oh, it was worse
• 1:31:23
  Speaker 2: because we were wide. You know, we're pretty open. By
• 1:31:25
  Speaker 2: twenty one, we were open, but.
• 1:31:27
  Speaker 1: The money was raised and being deployed, and no one
• 1:31:30
  Speaker 1: was taking their time. Everybody felt like get this money,
• 1:31:34
  Speaker 1: ye rush, and the LP's had it, the GPS had it,
• 1:31:38
  Speaker 1: the media had it. And don't get me wrong, I
• 1:31:41
  Speaker 1: had it, but I didn't have it with other people's money.
• 1:31:44
  Speaker 1: I had it with my own money. So we probed right,
• 1:31:47
  Speaker 1: Like I gave money to a lot of young managers
• 1:31:49
  Speaker 1: just to see because I was a young manager myself.
• 1:31:52
  Speaker 2: But that was like sixty seven years ago, right, you
• 1:31:56
  Speaker 2: haven't been a young manager since World War Two.
• 1:31:58
  Speaker 1: So no, but you know, and O five six, when
• 1:32:00
  Speaker 1: I started wall strip and got the bug, I was
• 1:32:02
  Speaker 1: in my you know, I hadn't seen that much. So
• 1:32:05
  Speaker 1: maybe I didn't know what was going on. Maybe I'm
• 1:32:07
  Speaker 1: the old guy. And so as I said, to keep
• 1:32:11
  Speaker 1: that social leverage going, I feel the most important part
• 1:32:14
  Speaker 1: of being an angel investor and I don't consider myself
• 1:32:16
  Speaker 1: a venture capitalist. I consider myself a seed kind of more.
• 1:32:19
  Speaker 1: An angelure is you have to invest, can't just commentate.
• 1:32:25
  Speaker 1: And so by investing, that helped me see how dumb
• 1:32:29
  Speaker 1: I was. And it's not that other people are dumb.
• 1:32:33
  Speaker 1: That the markets are markets and they're open, but you
• 1:32:37
  Speaker 1: could see the mistakes piling up and now here is
• 1:32:41
  Speaker 1: where we're at.
• 1:32:41
  Speaker 2: So so you put a couple of percent of you.
• 1:32:44
  Speaker 1: Yeah, we've deployed thirty percent now but three year old fund.
• 1:32:48
  Speaker 2: But but last year, with your own pocket, you put
• 1:32:52
  Speaker 2: a couple of percent of your net worth. Oh yeah,
• 1:32:55
  Speaker 2: what you call schmuck insurance is just hey, I'm just
• 1:32:58
  Speaker 2: keeping a toe in the water. You didn't any big
• 1:33:00
  Speaker 2: crazy bets.
• 1:33:02
  Speaker 1: No, And I got very lucky because robin Hood benefited
• 1:33:05
  Speaker 1: from covid E Toro. I also was an early investor
• 1:33:08
  Speaker 1: in a couple of crypto funds that had Salana. So
• 1:33:11
  Speaker 1: I mean, I was a lucky participator in this boom,
• 1:33:18
  Speaker 1: which made me think maybe I had to speculate to
• 1:33:23
  Speaker 1: just keep the oil going. And so I made a
• 1:33:26
  Speaker 1: lot of personal luckily, not like anything significant, but it
• 1:33:30
  Speaker 1: taught me a lot about what the end of a
• 1:33:33
  Speaker 1: cycle looks like. So we just saw it.
• 1:33:35
  Speaker 2: So here we are in the second quarter of twenty
• 1:33:38
  Speaker 2: twenty three. When you look around, our evaluations remotely as crazy.
• 1:33:42
  Speaker 2: It was a rough twenty twenty two for both stocks,
• 1:33:46
  Speaker 2: bonds and private What do you see today and what
• 1:33:50
  Speaker 2: are you looking out at?
• 1:33:51
  Speaker 1: It feels like like I've been talking about for a year.
• 1:33:54
  Speaker 1: I'm like bond boy, I never thought i'd be I
• 1:33:58
  Speaker 1: never had owned a bond or a treasure.
• 1:34:00
  Speaker 2: Hey, you could get tax free munis now. I don't
• 1:34:02
  Speaker 2: know if Arizona does a lot of muni writing, but
• 1:34:05
  Speaker 2: you know, if after tax you're getting four to four
• 1:34:07
  Speaker 2: and a half percent, that's fantastic. You haven't seen that
• 1:34:11
  Speaker 2: in decades.
• 1:34:11
  Speaker 1: Yeah, four years ago I invested in Max my interest
• 1:34:13
  Speaker 1: my friend Gary, because he was he was aggregating. He
• 1:34:16
  Speaker 1: was sending out your cash to many different accounts and
• 1:34:19
  Speaker 1: getting you one percent, and I was like one percent
• 1:34:22
  Speaker 1: better than zero. So I invested in that company. No,
• 1:34:25
  Speaker 1: everybody made fun of that company, right, and that was
• 1:34:27
  Speaker 1: a company that's now important because you can get five
• 1:34:30
  Speaker 1: percent on your cash on the internet, distributed through FDIIC
• 1:34:35
  Speaker 1: through many.
• 1:34:36
  Speaker 2: So it's quarter million per bank. So you're way way.
• 1:34:39
  Speaker 1: Below software years ago. So again like it it just
• 1:34:45
  Speaker 1: by participating in the markets, you see things. But we
• 1:34:48
  Speaker 1: are in a much different environment than I've ever seen
• 1:34:52
  Speaker 1: now because we have so much cash raise not deployed.
• 1:34:56
  Speaker 1: The money is out there the young generation, you know,
• 1:35:03
  Speaker 1: it's very mobile, they're very smart, and you know, it's
• 1:35:09
  Speaker 1: just a confusing time because interest rates have shot up
• 1:35:12
  Speaker 1: and we're seeing the first signs of breakage, right, we're
• 1:35:14
  Speaker 1: seeing things break well.
• 1:35:16
  Speaker 2: Silicon Valley broke that that was kind of a crazy
• 1:35:18
  Speaker 2: run on the bank that you could blame a handful
• 1:35:21
  Speaker 2: of venture capitalists for starting. I think they were trying
• 1:35:23
  Speaker 2: to do the right thing by their by their portfolio companies.
• 1:35:29
  Speaker 2: But you know, we could have just easily rowed that out.
• 1:35:33
  Speaker 1: And well, I don't give them that credit. The Silicon
• 1:35:36
  Speaker 1: Valley Bank left a black hole for nine months in
• 1:35:39
  Speaker 1: the bouncy and the Internet found it. And when the
• 1:35:42
  Speaker 1: Internet finds it and something tips, everybody wants to take
• 1:35:45
  Speaker 1: credit or not take credit for it. The Internet found
• 1:35:47
  Speaker 1: a hole, right, and it just imploded. Much like game Stop.
• 1:35:52
  Speaker 1: Silicon Bay Bank was the opposite of Game Stop. Game
• 1:35:54
  Speaker 1: Stop had a different type of hole. There were some
• 1:35:56
  Speaker 1: people showing in short interests and they had models. The
• 1:36:00
  Speaker 1: hedge funds had models that turned out to be outdated,
• 1:36:03
  Speaker 1: right meaning wrong.
• 1:36:05
  Speaker 2: They were wrong.
• 1:36:06
  Speaker 1: The models were not accounting for eight million Robin Hood
• 1:36:10
  Speaker 1: people clicking a green button at the same time, and
• 1:36:14
  Speaker 1: that's what created game Stop. And the same thing happened
• 1:36:17
  Speaker 1: to Silicon Valley Bank and ree everybody hit withdrawal at
• 1:36:21
  Speaker 1: the same.
• 1:36:22
  Speaker 2: Time, Silicon Valley Bank had hedges on their long treasury
• 1:36:28
  Speaker 2: positions as long duration, which the long duration trade is
• 1:36:33
  Speaker 2: the wrong trade while rates are going up, so the
• 1:36:36
  Speaker 2: hedges offset that and they took the hedges off. They
• 1:36:39
  Speaker 2: rang the bell and gave themselves.
• 1:36:41
  Speaker 1: Get said it in Wall Street. They were wreckable. They
• 1:36:44
  Speaker 1: left themselves wreckable, and they were the Internet wrecked them.
• 1:36:48
  Speaker 1: The GameStop hedge funds were wreckable because they didn't understand
• 1:36:52
  Speaker 1: Internet scale. They hadn't seen a model that had Robinhood
• 1:36:56
  Speaker 1: people pushing this button over at the same time with
• 1:36:59
  Speaker 1: lever on short term options. So their three standard deviations
• 1:37:03
  Speaker 1: was an old model. That was it.
• 1:37:05
  Speaker 2: All right, I only have you for a handful of
• 1:37:07
  Speaker 2: minutes before you have to go to your next meeting.
• 1:37:11
  Speaker 2: So let's jump to our favorite questions that we ask
• 1:37:14
  Speaker 2: all our guests, starting with you know, you talked about
• 1:37:17
  Speaker 2: being locked down and podcasting and streaming. What were you consuming?
• 1:37:22
  Speaker 2: What's been keeping you entertained over the past couple of years.
• 1:37:25
  Speaker 1: Well, I'm a media guy. I'm passing about like a
• 1:37:27
  Speaker 1: twenty four all these like like a great studio producing stuff.
• 1:37:31
  Speaker 1: So I'm a media hound. I watch everything on Hulu
• 1:37:34
  Speaker 1: I ask you. You just gave me Daisy Jones and
• 1:37:37
  Speaker 1: the sixth which is fantastic. And I know the guy
• 1:37:39
  Speaker 1: at Amazon that did it. I actually met at my event.
• 1:37:42
  Speaker 2: He's a buddy of my bat Nicks. I bumped into him.
• 1:37:45
  Speaker 2: He reached our blogs Lindsay and Palooza.
• 1:37:47
  Speaker 1: Here's what's so fun about our business?
• 1:37:49
  Speaker 2: So celebrities reading me, Yeah, and they like me. When
• 1:37:53
  Speaker 2: people reached.
• 1:37:54
  Speaker 1: Out, freaking me out.
• 1:37:55
  Speaker 2: So so Ben Klimber of Odinky told me a story
• 1:38:00
  Speaker 2: when I had him on the podcast that he's running
• 1:38:02
  Speaker 2: this blog on watches. It's kind of but not quite
• 1:38:06
  Speaker 2: a business yet. And he gets an email from some
• 1:38:09
  Speaker 2: guy named John Mayer who says, listen, I want to
• 1:38:12
  Speaker 2: talk to you about watches. I got a bunch of
• 1:38:15
  Speaker 2: watches I'd love to have stuff by. So he calls
• 1:38:17
  Speaker 2: the guy back and lo and behold, it's not some
• 1:38:19
  Speaker 2: guy named John Mayer. It's the rock star John Mayer
• 1:38:23
  Speaker 2: who shows up at their studio brings him back. Then
• 1:38:26
  Speaker 2: he rolled heavy, wrote a big bag of watches. Now
• 1:38:30
  Speaker 2: security is a little different, and they that was the
• 1:38:34
  Speaker 2: first talking watches and that blew up and became a
• 1:38:38
  Speaker 2: regular feature. So when you put yourself out there in
• 1:38:41
  Speaker 2: the public. You have no idea what's gonna what's magic.
• 1:38:47
  Speaker 2: By the way, which I was writing in public at
• 1:38:50
  Speaker 2: your Coronado Island event, is where I met the guy
• 1:38:55
  Speaker 2: I would eventually hire and become my partner. And he's
• 1:38:59
  Speaker 2: become I'm a star. Josh Brown is the partner Rehult's
• 1:39:02
  Speaker 2: Wealth Management. But for you, I never would have met Josh. Yeah.
• 1:39:05
  Speaker 2: And by the way, but for me writing a blog,
• 1:39:08
  Speaker 2: Josh never would have cared who I was.
• 1:39:10
  Speaker 1: The best part of my job and people won't believe
• 1:39:12
  Speaker 1: it because I get the money. Is that you met Josh,
• 1:39:15
  Speaker 1: is that we launched thousands of people on stock puts
• 1:39:18
  Speaker 1: into investing, tens of thousands of people that my kids
• 1:39:22
  Speaker 1: friends call me for how to do their who to
• 1:39:25
  Speaker 1: get recruited at a health tech company. Placing young people
• 1:39:30
  Speaker 1: in careers is the greatest feeling in your life. The
• 1:39:34
  Speaker 1: COVID nightmare of kids working from home in zoom it depresses. No,
• 1:39:39
  Speaker 1: we're not. It is the biggest problem right now. But
• 1:39:42
  Speaker 1: we're already off topic. In terms of media. I love
• 1:39:45
  Speaker 1: it all. I don't take a Jones, give me give
• 1:39:48
  Speaker 1: me another one. Beef my friends at eight twenty four,
• 1:39:51
  Speaker 1: So I.
• 1:39:52
  Speaker 2: Just added that is that it's very dark and interesting.
• 1:39:55
  Speaker 1: Yeah, and it's A twenty five is very.
• 1:39:57
  Speaker 2: Good and very old. Guy who's on it is also
• 1:40:00
  Speaker 2: very good.
• 1:40:01
  Speaker 1: Very good.
• 1:40:01
  Speaker 2: I haven't watched it yet.
• 1:40:04
  Speaker 1: So someone who reads my blog, Robbie Nandne, who is
• 1:40:06
  Speaker 1: a partner at A twenty four which was like the
• 1:40:08
  Speaker 1: A sixteen Z date of Media Big Studio, and he
• 1:40:13
  Speaker 1: just emailed me on my blog one day, goes Dad,
• 1:40:14
  Speaker 1: I'm fascinating, you know, And I'm always fascinated that smart
• 1:40:18
  Speaker 1: people are reading me. And you know, longtime reader, first
• 1:40:22
  Speaker 1: time commenter, you get that all the time too, and
• 1:40:25
  Speaker 1: it just amazes me who reads what I write? And
• 1:40:28
  Speaker 1: I'm not so fascinating and trying to meet the biggest celebrities,
• 1:40:31
  Speaker 1: right the fact that Robbie is a creator and did
• 1:40:33
  Speaker 1: the Romi Show, and I'm fascinated by like media because
• 1:40:38
  Speaker 1: I did it like myself, and I don't know. It's
• 1:40:40
  Speaker 1: like it's like, you know, with the Wizard of Oz
• 1:40:45
  Speaker 1: when you meet the wizard like you knows a s
• 1:40:48
  Speaker 1: getting to see behind the curtain and realizing nothing's going
• 1:40:52
  Speaker 1: on behind the curtain. You have to see it to
• 1:40:55
  Speaker 1: believe my CBS meeting, as stupid as it was was,
• 1:41:01
  Speaker 1: to have that meaning and be in that room, you
• 1:41:03
  Speaker 1: can't make it up.
• 1:41:04
  Speaker 2: I picture the episode of Seinfeld where they're pitching the
• 1:41:08
  Speaker 2: Seinfeld Chronicles to NBC. To me, that's the show. What
• 1:41:12
  Speaker 2: something happens, that's the show. Why are you watching it?
• 1:41:15
  Speaker 2: It's on television not yet.
• 1:41:17
  Speaker 1: So to know that I lived it. People can't take
• 1:41:20
  Speaker 1: that away from me. And to know when to meet
• 1:41:22
  Speaker 1: people that create great content. And we have a documentary
• 1:41:25
  Speaker 1: that you're coming to see.
• 1:41:27
  Speaker 2: So this is financial advice. You can say it on the.
• 1:41:30
  Speaker 1: This is not financial advice. It's going to be fantastic.
• 1:41:33
  Speaker 2: By the way, we had the Dosee guy at future
• 1:41:36
  Speaker 2: Proof and it's it's like curby your enthusiasm for money.
• 1:41:41
  Speaker 2: It's so cringey watching this guy go from nothing to
• 1:41:45
  Speaker 2: the greatest dollary and then you're watching him blow it
• 1:41:48
  Speaker 2: up and you ask a screen Adam, you know what's
• 1:41:51
  Speaker 2: gonna happen. You see it coming, and he is just
• 1:41:54
  Speaker 2: so oblivious to what's the freight train barreling down at him.
• 1:41:58
  Speaker 2: It's very hard to take your eyes.
• 1:41:59
  Speaker 1: Odds me making money or getting my money back or
• 1:42:02
  Speaker 1: five percent zero show Labor of Love with Chris Temple
• 1:42:07
  Speaker 1: created this incredible documentary. The reviews are insane. By the
• 1:42:12
  Speaker 1: time this comes out, you will know that it is
• 1:42:14
  Speaker 1: by Tribeca Film Things Right, it's one for one on
• 1:42:18
  Speaker 1: my movie. I have a red cashmere suit to wear
• 1:42:23
  Speaker 1: to the opening. What is the goal? My t score?
• 1:42:27
  Speaker 1: My testosterone score. It's a new thing that I'm launching
• 1:42:30
  Speaker 1: where people wear their te score around their neck.
• 1:42:32
  Speaker 2: What is the what is the launch date of this
• 1:42:34
  Speaker 2: is financial advice?
• 1:42:35
  Speaker 1: The opening date the Tribecca debut is in June.
• 1:42:39
  Speaker 2: Oh so you still have Monster? Yeah, so so so
• 1:42:42
  Speaker 2: I love media clearly. Let's let's talk about mentors. You
• 1:42:45
  Speaker 2: mentioned Fred Wilson. Who else helped shape your career besides Fred?
• 1:42:49
  Speaker 2: Or Is Fred really the most significant mentor?
• 1:42:52
  Speaker 1: No, obviously, I mean again, I don't speak to him
• 1:42:56
  Speaker 1: all the time, but he allows me to check in
• 1:42:58
  Speaker 1: and ask him questions. A lot of my LPs are
• 1:43:01
  Speaker 1: my mentors, even though they give me money. I'm there
• 1:43:04
  Speaker 1: like I've surrounded myself like Paul Grimberg, who's chairman of
• 1:43:07
  Speaker 1: Exos Bank, and I've met.
• 1:43:09
  Speaker 2: Some really interesting LPs at your last event.
• 1:43:13
  Speaker 1: So my LPs are my mentors. Roger Ehrenberg, Brad Feld,
• 1:43:18
  Speaker 1: people that trusted me, and you know, they don't They
• 1:43:23
  Speaker 1: know that I'm weird. They believe in me, but they
• 1:43:26
  Speaker 1: know also that I don't know what I'm doing, and
• 1:43:29
  Speaker 1: so they pick up the phone because they to this day.
• 1:43:31
  Speaker 2: Do you feel like you don't know what you're doing?
• 1:43:33
  Speaker 1: Yeah?
• 1:43:33
  Speaker 2: Are you really that deep into the imposter syndrome thing?
• 1:43:36
  Speaker 1: No, I'm not deep into it, like they've not even.
• 1:43:39
  Speaker 2: I joke about it. I'm like, I don't think it
• 1:43:40
  Speaker 2: really exists. He's like, no, No, you got to talk
• 1:43:43
  Speaker 2: to people who want sociopaths like you, it actually exists.
• 1:43:48
  Speaker 1: Yeah, I think I'm I think I don't have it.
• 1:43:51
  Speaker 1: I just have been humbled ridiculously a few times. That's
• 1:43:55
  Speaker 1: fair that I have to be really careful and again writing.
• 1:44:00
  Speaker 2: Both private and public markets are a very humbling place.
• 1:44:04
  Speaker 1: Yeah. So if I'm Elon Musk and.
• 1:44:05
  Speaker 2: You have a lot to be humble about is the
• 1:44:07
  Speaker 2: old joke.
• 1:44:08
  Speaker 1: So if Elon Musk, what bugs me about it is
• 1:44:11
  Speaker 1: is there nobody whispering in his ear that he looks
• 1:44:14
  Speaker 1: like an ass. I would hope that my wife and
• 1:44:16
  Speaker 1: my daughter would come to me and stop me before
• 1:44:19
  Speaker 1: I embarrass myself day after day. Now, is he embarrassed? No,
• 1:44:23
  Speaker 1: So again, I'm not judging.
• 1:44:25
  Speaker 2: But that's just hoping that he should be.
• 1:44:27
  Speaker 1: I'm hoping that my wife and my daughter who read
• 1:44:29
  Speaker 1: my blog will say, you're full of yourself. You need
• 1:44:31
  Speaker 1: to tone it down and guess what, they're pretty good at telling.
• 1:44:35
  Speaker 2: Me that that's the importance of having some no men
• 1:44:39
  Speaker 2: around you. I tweet something that's tenth as idiotic as
• 1:44:43
  Speaker 2: Elon Musk, and the the tweet is barely live when
• 1:44:47
  Speaker 2: bat Nick comes storming into my office, idiot, delete that.
• 1:44:52
  Speaker 2: You know that you're like junior partner here and I'm
• 1:44:56
  Speaker 2: the chairman.
• 1:44:57
  Speaker 1: I don't care.
• 1:44:58
  Speaker 2: That's the dumbest thing you have a tweet. Take that down. Okay,
• 1:45:02
  Speaker 2: I don't even think about it anymore. Maybe that was
• 1:45:05
  Speaker 2: my response five years ago. Now Batnick says that's a
• 1:45:08
  Speaker 2: bad tweet. I'm like, okay, I don't even think about it.
• 1:45:11
  Speaker 2: It's automatic. What Elon Musk needs is a Batnick. If
• 1:45:16
  Speaker 2: he had a Batnick, he wouldn't have pissed forty four
• 1:45:18
  Speaker 2: billion dollars away.
• 1:45:19
  Speaker 1: Well, he has people cheering him on.
• 1:45:21
  Speaker 2: Yeah, he's the opposite. He has anti Batnicks. He has
• 1:45:23
  Speaker 2: people the soulging his worst instincts, rather than saying, that's
• 1:45:29
  Speaker 2: a lot of money for a really crappy property that
• 1:45:32
  Speaker 2: nobody's ever been able to monetize and its business model
• 1:45:35
  Speaker 2: is awful, and you're running two or more other companies,
• 1:45:39
  Speaker 2: maybe you should just keep tweeting for free.
• 1:45:42
  Speaker 1: Nobody said that that. Yeah. I wrote about this recently.
• 1:45:44
  Speaker 1: We wanted to disrupt television and we got television times
• 1:45:49
  Speaker 1: one hundred, so we wanted we wanted to get rid
• 1:45:51
  Speaker 1: of Jim Kramer. We got twenty Jim Kramer with more
• 1:45:55
  Speaker 1: power than we thought. That's what they would have. Jim
• 1:45:57
  Speaker 1: Kramer is lightweight compared to the Chama, David Sash and
• 1:46:01
  Speaker 1: Laughing el Mos, the Peter Thiels. You just don't know
• 1:46:04
  Speaker 1: if they're happy about the system blowing up. You can't
• 1:46:07
  Speaker 1: tell if they like it, and I guess we shouldn't
• 1:46:11
  Speaker 1: like it. I love the system. I don't think it's perfect.
• 1:46:15
  Speaker 1: I love the things work. They're not working great, but
• 1:46:18
  Speaker 1: relative to everywhere else, it's a miracle.
• 1:46:20
  Speaker 2: Jamath turns his business into a family office. I think
• 1:46:23
  Speaker 2: he's happy with it. I can't. I can't tell you
• 1:46:26
  Speaker 2: about everybody else. Some of these guys, I think if
• 1:46:30
  Speaker 2: their daddy's hugged them when they were younger, we could
• 1:46:33
  Speaker 2: avoid it a lot. I don't know a lot of adjida.
• 1:46:35
  Speaker 2: I don't want to play pop psychologists to any.
• 1:46:38
  Speaker 1: No one hugged me, okay, and you worked at all? Right,
• 1:46:40
  Speaker 1: that's right. I did have Jack one time saying on
• 1:46:43
  Speaker 1: Twitter to one of my tweets that I needed a hug.
• 1:46:46
  Speaker 1: And I think one of the proudest father moments I
• 1:46:48
  Speaker 1: had was that my daughter came right into the thread
• 1:46:51
  Speaker 1: and said he got plenty of hug ah. So that's awesome.
• 1:46:55
  Speaker 1: When your daughter is defending you to check its dorsey
• 1:46:59
  Speaker 1: on Twitter her and he disappears from the conversation. He
• 1:47:02
  Speaker 1: just never responded, can't respond. My daughter destroyed him. He
• 1:47:07
  Speaker 1: didn't know what he was walking into this. That was
• 1:47:10
  Speaker 1: my problem with Twitter. I go, Jack, you don't know
• 1:47:12
  Speaker 1: how to use your own product. My twenty four year
• 1:47:15
  Speaker 1: old daughter just shamed you off your own product. That's
• 1:47:19
  Speaker 1: she's a great girl. Like she's great. She lives Upper East,
• 1:47:21
  Speaker 1: so I'm really proud she's here. One of the proudest
• 1:47:23
  Speaker 1: things I have. Yeah, So one of the proudest things
• 1:47:26
  Speaker 1: I have is my daughter lives in New York living
• 1:47:28
  Speaker 1: the entrepreneur as a father who's an entrepreneur, an American
• 1:47:33
  Speaker 1: born Canada, but an American. To see to have your
• 1:47:35
  Speaker 1: daughter live in New York, the entrepreneurial city in America, Huh,
• 1:47:40
  Speaker 1: this is that's good, Daddy, she likes New York. You
• 1:47:44
  Speaker 1: want your kid to like New York.
• 1:47:47
  Speaker 2: You it's not for everybody. I try it, but right, yeah,
• 1:47:52
  Speaker 2: or any large city like Chicago or my I.
• 1:47:55
  Speaker 1: Was not the same city. New York is closest to
• 1:47:58
  Speaker 1: being the same city. Ain't the same city.
• 1:48:01
  Speaker 2: That's really interesting. Let's talk about books. What are some
• 1:48:03
  Speaker 2: of your favorites. What are you reading right now?
• 1:48:05
  Speaker 1: I have not read a lot of books in the
• 1:48:06
  Speaker 1: last twenty years. Three books that define that I still
• 1:48:10
  Speaker 1: remember vividly and as the Agasy book. Ob Yeah, the
• 1:48:16
  Speaker 1: Shoe Dog Book, which is going to spawn one hundred movies, obviously,
• 1:48:20
  Speaker 1: just his first.
• 1:48:20
  Speaker 2: Yeah, that was that was good. It was good. I
• 1:48:23
  Speaker 2: don't know if i'd call it great, but it was so.
• 1:48:25
  Speaker 1: It was a business book, yeah, Meaning if you're an
• 1:48:28
  Speaker 1: internet entrepreneur and haven't read Shoe Dog, you're not going
• 1:48:32
  Speaker 1: to be a good entrepreneur. To see that he went
• 1:48:34
  Speaker 1: ten years before he got to ten million in sales.
• 1:48:37
  Speaker 1: These kids today with their global growth in the first week.
• 1:48:40
  Speaker 1: So No Shoe Dog was great. Reminiscent of Stock Operator
• 1:48:43
  Speaker 1: was great. There's just not that many books that I get.
• 1:48:46
  Speaker 2: Hey man, that's that's three solid books right there. You're
• 1:48:49
  Speaker 2: okay with it. Our last two questions, what sort of
• 1:48:52
  Speaker 2: advice would you give a recent college grad interested in
• 1:48:55
  Speaker 2: a career in either seed investing or venture capital.
• 1:48:59
  Speaker 1: Well, first, be nice to your parents because you're gonna
• 1:49:01
  Speaker 1: need capital, right, and the first thing is right, stop
• 1:49:06
  Speaker 1: thinking about who's reading it. You know, we're an investment
• 1:49:08
  Speaker 1: in Beehive, which is like a newsletter writing product, or
• 1:49:11
  Speaker 1: whether you're going to do it on mirror wherever you're
• 1:49:13
  Speaker 1: going to or Twitter wherever it's easiest. Start writing and
• 1:49:17
  Speaker 1: stop worrying about who's reading it. Write what you want
• 1:49:21
  Speaker 1: to write about, and that's how you build a domain experience.
• 1:49:25
  Speaker 1: You have to have be passionate about something because that
• 1:49:28
  Speaker 1: will help you see around corners. Whether if my son
• 1:49:31
  Speaker 1: is golf for my daughter she's not quite sure yet.
• 1:49:34
  Speaker 1: It's New York and it's like operations. If you don't
• 1:49:38
  Speaker 1: do it and do it you can't possibly know that
• 1:49:41
  Speaker 1: you're going to be good at it. So the faster
• 1:49:43
  Speaker 1: you figure out something that you want to do, And
• 1:49:46
  Speaker 1: I think the easiest thing to do is write that's
• 1:49:49
  Speaker 1: something that people should do. The second most important thing
• 1:49:52
  Speaker 1: is forget about the job title. Go work at a
• 1:49:55
  Speaker 1: company whose product is flying off the shelf. So when
• 1:49:59
  Speaker 1: we were kids, you and I and I was a
• 1:50:00
  Speaker 1: stockbroker and whatever your first job was. You're a lawyer.
• 1:50:04
  Speaker 1: Our job was to just follow directions right right, Like
• 1:50:09
  Speaker 1: our job was simply you get out there and you
• 1:50:12
  Speaker 1: follow this rule book and you make two hundred calls
• 1:50:15
  Speaker 1: a day and so and so and so and so
• 1:50:19
  Speaker 1: you know what I mean, like pick up that phone.
• 1:50:21
  Speaker 1: We've seen the movies. Wait a minute, what's the.
• 1:50:22
  Speaker 2: Question you used to get a grid? How many do
• 1:50:24
  Speaker 2: an axe every call?
• 1:50:25
  Speaker 1: And I forget the question? Yeah, what's the question?
• 1:50:28
  Speaker 2: So what advice would you give these kids who want
• 1:50:30
  Speaker 2: to start out? And see it our VC investments.
• 1:50:32
  Speaker 1: So so the thing is you've got to go and
• 1:50:36
  Speaker 1: not worry about the title. So that if you're not
• 1:50:39
  Speaker 1: worried about the title, go work at a company whose
• 1:50:42
  Speaker 1: product is flying off the shelf. Don't go push a
• 1:50:44
  Speaker 1: rock up a hill. So forget about the title what
• 1:50:47
  Speaker 1: your pay is. You are going to see things that
• 1:50:49
  Speaker 1: you won't see anywhere else. If you work at a
• 1:50:51
  Speaker 1: company whose product is flying off the shelf, there'll be
• 1:50:54
  Speaker 1: so much work to do, they'll be you won't have
• 1:50:56
  Speaker 1: to hide out. You could shine because there are holes
• 1:50:59
  Speaker 1: to fill. So the biggest mistake young people make is
• 1:51:03
  Speaker 1: they want to just get a job for a certain
• 1:51:04
  Speaker 1: salary and work at a bank. Go like, whether it's Manscape,
• 1:51:08
  Speaker 1: one of our companies, or whether it was the messaging app,
• 1:51:11
  Speaker 1: whatever is flying off the shelves, Get yourself in that room,
• 1:51:15
  Speaker 1: Take a maintenance job, take an office manager job, but
• 1:51:18
  Speaker 1: just get in the door.
• 1:51:20
  Speaker 2: And our final question, what do you know about the
• 1:51:23
  Speaker 2: world of seed investing that you wish you knew seventy
• 1:51:26
  Speaker 2: five years ago when you were first getting started.
• 1:51:30
  Speaker 1: You know, luckily, I think it's such a new thing
• 1:51:32
  Speaker 1: that I don't know if there was anything. I think
• 1:51:34
  Speaker 1: that the thing that I got lucky more than no,
• 1:51:37
  Speaker 1: is it was just the right time right like that
• 1:51:40
  Speaker 1: there was people like Fred and Roger writing and Brad
• 1:51:42
  Speaker 1: Felder writing. So what do I wish I knew?
• 1:51:46
  Speaker 2: And I don't mean buy Apple at two dollars. I mean,
• 1:51:49
  Speaker 2: what would have been useful earlier in your career that
• 1:51:52
  Speaker 2: you now feels a bit of hard won wisdom.
• 1:51:55
  Speaker 1: I think I got lucky because going to the market
• 1:51:58
  Speaker 1: first and exit seeing how markets crash and really seeing
• 1:52:04
  Speaker 1: like how a cycle worked before I got into angel
• 1:52:07
  Speaker 1: investing was actually lucky. So I would say to those
• 1:52:09
  Speaker 1: people who think they want to be seed investors, is
• 1:52:12
  Speaker 1: open a Robinhood account, even if it's one like learn
• 1:52:15
  Speaker 1: what it feels like to lose money. Learn what it
• 1:52:18
  Speaker 1: feels like to both make money and feel you for
• 1:52:22
  Speaker 1: it right and feel like you're an idiot, and that
• 1:52:24
  Speaker 1: will get you a feel and now you know. Obviously
• 1:52:28
  Speaker 1: you can go to Vegas or go on draftings and
• 1:52:30
  Speaker 1: get the same thing. But those are very much not
• 1:52:33
  Speaker 1: positive expectancy type things.
• 1:52:35
  Speaker 2: Like the stock market, whereas the market is. Yeah, Howard,
• 1:52:38
  Speaker 2: thanks so much for being so generous with your time. Really,
• 1:52:42
  Speaker 2: this has been a delight we have been speaking with
• 1:52:44
  Speaker 2: Howard Linsen. He is the co founder of stock Twitz,
• 1:52:48
  Speaker 2: the founder of wall Strip, the managing partner and founder
• 1:52:52
  Speaker 2: of Social Leverage, a pre IPO investor in Facebook, in Twitter,
• 1:52:58
  Speaker 2: and the really the first check into Robinhood. Is that right?
• 1:53:02
  Speaker 2: That's amazing. If you enjoy this conversation, well, be sure
• 1:53:07
  Speaker 2: and check out any of our previous four hundred and
• 1:53:09
  Speaker 2: ninety six discussions we've had over the past eight and
• 1:53:13
  Speaker 2: a half years. You can find those at YouTube, iTunes, Spotify,
• 1:53:19
  Speaker 2: wherever you find your favorite podcasts. Sign up for my
• 1:53:22
  Speaker 2: daily reading list at ridults dot com. Follow me on
• 1:53:25
  Speaker 2: Twitter at Ridolts, Follow all of the fine family of
• 1:53:29
  Speaker 2: Bloomberg Podcasts at Podcasts. I would be remiss if I
• 1:53:33
  Speaker 2: did not thank the crack staff that helps me put
• 1:53:36
  Speaker 2: these conversations together each week. Samantha Danzinger is my audio engineer.
• 1:53:42
  Speaker 2: Harris Wold is my producer. Attika Balbrunn is my project manager.
• 1:53:46
  Speaker 2: Sean Russo is my researcher. I'm Barry Ridolts. You've been
• 1:53:51
  Speaker 2: listening to Masters in Business on Bloomberg Radio
• 1:54:00
  Speaker 1: FO