Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisn't Thal and I'm Tracy Alloway. Tracy UM.
Speaker 1: You know, we've done a few episodes on SPACs, and
Speaker 1: obviously at this point, I don't think anyone has missed
Speaker 1: the incredible spack boom that we've seen over the last
Speaker 1: several months. But I have to admit I still have
Speaker 1: like tons of questions about like how they work and
Speaker 1: where this all came from. I was just thinking, if we, uh,
Speaker 1: if we timed our all thoughts back episodes for every
Speaker 1: time a new SPAC entered the market, we'd be doing
Speaker 1: what like two or three episodes per week for each SPAC.
Speaker 1: It's been insane the number that have come to market. No,
Speaker 1: it would be way more than two or three episodes
Speaker 1: per week. Tracy. You know that last Friday, so we're
Speaker 1: recording this on I think it's Tuesday, February. Last Friday,
Speaker 1: there were thirteen SPACs filed in one day last Friday,
Speaker 1: and then I think there were like another five that
Speaker 1: like we're out by like Monday morning the next week.
Speaker 1: So we would never we would just be all SPACs
Speaker 1: all the time. There's no way our producer Laura would
Speaker 1: be able to handle the handle the long, our long
Speaker 1: suffering producer. So here's one thing that I always think
Speaker 1: of when we talk about SPACs. I get a little
Speaker 1: bit nervous when the focus is on a particular capital
Speaker 1: markets tool, Like it's never a good indicator for where
Speaker 1: you are in the cycle. When people start talking about
Speaker 1: the actual packaging of the product versus the content. Yeah,
Speaker 1: that is a pretty I agree. I mean that is
Speaker 1: kind of weird. People are more interested in the phenomenon
Speaker 1: of SPAC than like the companies. The other question that
Speaker 1: I have, and this is something it is like where
Speaker 1: do they come from? Because one of the things that
Speaker 1: we've see is that a lot of them like are
Speaker 1: associated with a very well known name, like for example,
Speaker 1: you know, like Colin Kaepernick for example, the quarterback um
Speaker 1: has a SPACK. And what I was like, did he
Speaker 1: reach out to someone say I want to do a
Speaker 1: SPAC or did someone reach out to him and say, Colin,
Speaker 1: you should really be involved in our spect There's like
Speaker 1: a bunch of names like I saw, Like I swear
Speaker 1: to god, it's so weird. Like the former editor in
Speaker 1: chief of Cosmo, the magazine is involved in a spack
Speaker 1: that to take the clearing company behind, like we will
Speaker 1: like it's it's just there's a bunch of weird stuff.
Speaker 1: But I like where did these come from? And who
Speaker 1: like brought in the where did he? You know, whose
Speaker 1: idea was it to bring in the former editor in
Speaker 1: chief of Cosmo to do a spec our former Bloomberg
Speaker 1: News colleague Betty Lewis doing a spec Like where did
Speaker 1: that come from? I have all these questions I want
Speaker 1: to know, like wh was that? It was it over
Speaker 1: some zoom, Like how did this happen? Well, when a
Speaker 1: venture capitalists loves a company very much, they get together,
Speaker 1: right now, that's not where spacts come from. Um, yes,
Speaker 1: I agree, Like, obviously this is a hot phenomenon in
Speaker 1: markets right now. It does feel like a bunch of
Speaker 1: people are jumping on the bandwagon. But how does the
Speaker 1: actual process work? Who approaches who? And then of course,
Speaker 1: like how does the actual process of raising money and
Speaker 1: finding a company to acquire or merge with work? So
Speaker 1: I'm very excited about our episode today because I think
Speaker 1: we might at least answer some of these questions and
Speaker 1: where they come from. What the opportunity is with someone
Speaker 1: who it's very, very open and honest, and I think
Speaker 1: will be really help us demystify the whole thing. We're
Speaker 1: going to be speaking with Howard lenz In. Um. He
Speaker 1: has a VC. He's a founding partner at the venture
Speaker 1: capital firm Social Leverage. Bunch of big winners, right. He
Speaker 1: was an early investor in robin Hood and stock twits
Speaker 1: and Toro and a company called Manscape dot com, which
Speaker 1: will learn more about. But I basically like know Howard
Speaker 1: lens In and a lot of people do because he's
Speaker 1: been on Twitter for a long time talking about tag
Speaker 1: and investing, extremely open and when I he's always sort
Speaker 1: of one of these people that I think just has
Speaker 1: this sort of uncanny intuition about where the puck is going,
Speaker 1: as they say in hockey. And it's like sometimes I
Speaker 1: see him and he's talking about stuff and I'm like
Speaker 1: this is crazy, but he always ends up sort of
Speaker 1: being right and sort of has this just sort of
Speaker 1: feel of where the market's going, where stocks are going,
Speaker 1: where VC is going, where tech is going. And now
Speaker 1: he is the CEO of a spec and he is
Speaker 1: uh recently, I think late January filed the S one
Speaker 1: for Social Leverage Acquisition Corps, and we're going to learn
Speaker 1: more about his process and why he's doing it and
Speaker 1: how it came about. Here all the wisdom of Howard Linsen. So, Howard,
Speaker 1: thank you so much for joining us intro. I totally
Speaker 1: mean it. I mean I followed you online. We've talked
Speaker 1: for probably a decade now, over a decade, I think
Speaker 1: probably like two eight. You were probably one of the
Speaker 1: first people that thought Twitter was good to be a
Speaker 1: really big thing, and you thought Twitter was going to
Speaker 1: be a big thing for markets, which it turned out
Speaker 1: to be in particular. So I've always sort of enjoyed
Speaker 1: following your stuff. But you know, like, where did this
Speaker 1: come from? Like let's just start like where did one
Speaker 1: Where did the idea of the light bulb come off?
Speaker 1: To launch us back? So it's a great question because
Speaker 1: there is an origin story for everything, and you get
Speaker 1: the I'm from Toronto, so you get as back when
Speaker 1: you're born. It's like it's like a Tim Horton's doughnut
Speaker 1: that you you're entitled to a spack that goes to
Speaker 1: zero and record time. The So I think, you know,
Speaker 1: growing up in Toronto with the the mining and Saskatchewan
Speaker 1: and drilling for oil and belize, and that was Canada.
Speaker 1: Like I mean, you didn't call your broker and asked
Speaker 1: for a tech growth stock. You got served as back
Speaker 1: and you didn't have a good experience with them spacks.
Speaker 1: So I have to say I had a very twisted
Speaker 1: I would curl my mustache. If I had a mustache,
Speaker 1: I would play with it all the time. Color me surprised.
Speaker 1: I was My last pre COVID memory of a fun
Speaker 1: time was that this incredible dinner at Carbones, which is
Speaker 1: like an institution, you know, for some reason in New York,
Speaker 1: hard to get into Italian place. And I was sitting
Speaker 1: at a table with Adam Bain as a friend and
Speaker 1: really amazing entrepreneur and former CFO of Twitter, former CEO
Speaker 1: or CFO. He's had every every job there. He's kryptonite,
Speaker 1: this man. You know, I'm kind of cousins with him.
Speaker 1: I'm actually like fourth cousins. You're like the Adam Baine
Speaker 1: of media. You're like me, are you really looking for
Speaker 1: a compliment right now? We're going to do our own
Speaker 1: sac No, but keep going. But I am actually very
Speaker 1: weirdly related to that guy. And you know me because
Speaker 1: it's funny because you talked about some stuff. One of
Speaker 1: my favorite companies that ever was a seat investor was
Speaker 1: your company that you worked for with Henry. I was
Speaker 1: one of Henry's first investors at Ali Insider, Business insider,
Speaker 1: whatever the hell they call it these days in the
Speaker 1: trade n f t S. And you'll probably have me
Speaker 1: on in six months to talk about n f t s.
Speaker 1: But anyway, so I'm sitting in February and Carbones, and
Speaker 1: there was two things that you talked about at the time.
Speaker 1: With Adam Bain. We were talking about what the hell
Speaker 1: is going on with this COVID thing, what are we
Speaker 1: gonna be doing? We didn't know it would be locked
Speaker 1: down a week later, two weeks later forever. And uh,
Speaker 1: what is this spac that you speak of? Like everybody
Speaker 1: was very Everybody was talking about Virgin Collactic, which was
Speaker 1: an Adam Bain production with Chama that was done by Spack,
Speaker 1: and as a Canadian, I was very I looked at
Speaker 1: him and I was like, oh God, what are you
Speaker 1: doing to people, Adam Bain, You're supposed to be a
Speaker 1: nice guy. He took the time to to walk us
Speaker 1: through how Chamath was thinking about Spacks. So we're kind
Speaker 1: of like ground zero because you know, if you had
Speaker 1: told me that COVID would strike two weeks later and
Speaker 1: the country would shut down, I would have said, yeah,
Speaker 1: I saw that coming kind of But if you said
Speaker 1: it would lead to stocks only go up and barstool
Speaker 1: Dave and Chamath being the new Warren Buffett and spacks
Speaker 1: backs back discussions on your show by the following year,
Speaker 1: I would have laughed. I would have giggled like a
Speaker 1: like a child. And so so he explains to us
Speaker 1: what a what a spack is and how they were
Speaker 1: using it more importantly for growth ideas. Right, So spacks
Speaker 1: have been around an elegant really an elegant feature, right
Speaker 1: for a punch of entrepreneurs that have influenced right, kind
Speaker 1: of like they talked about director, consumers these days are
Speaker 1: around the influencer network and so in in the most
Speaker 1: simplest term, I understood the edit that the wedge the
Speaker 1: pivot of a spack to be still about the promoter
Speaker 1: slash creator slash influencer, but more about how they were
Speaker 1: going to use it. They weren't just going to use
Speaker 1: it to go speculate on a mining uh. Discovery facts
Speaker 1: have always been this elegant feature. It's been around for
Speaker 1: a long time, and much like the swipe became an
Speaker 1: important thing on the iPhone with Tinder SPACs, subtle chain
Speaker 1: was the fact that we had the cloud, we had
Speaker 1: this growth, and for ends, we had zero interest rates.
Speaker 1: We have these new influencers like Chama, we have a
Speaker 1: lack of I p O s. And then I think
Speaker 1: one of the most important things was you also had
Speaker 1: this late stage money in the hands of what we
Speaker 1: found out where some empty suits let's call them, or
Speaker 1: like promoters themselves and weren't creating any value like we
Speaker 1: work like soft Bag story and like t row price
Speaker 1: and fidelity, So that late stage money, all these things
Speaker 1: were combining together for a perfect moment for spects. But
Speaker 1: we didn't know that. But you know, along the way,
Speaker 1: like we're soft Bank was writing four or five million
Speaker 1: dollars checks based on an Uber ride, you know, based
Speaker 1: on their feelings about a CEO at the Uber. And
Speaker 1: I think that whole concoction, that whole moment in time
Speaker 1: back last year, guys like me learning from Adam Bay
Speaker 1: in a ground zero how they were you know, tinkering
Speaker 1: with the with the back towards growth and towards uh
Speaker 1: big ideas versus drilling a hole in the ground and
Speaker 1: you know, rolling up something in real estate or something
Speaker 1: in finance. Was this, Oh my god, if soft bank
Speaker 1: can do this, we can do this, you know. That
Speaker 1: was my epiphany, was like, we would make fun of
Speaker 1: soft Bank and there and their silly investments in the
Speaker 1: way they folded money into the market, And how is
Speaker 1: that different than us back, Like it's it's it's really
Speaker 1: just an expression on how you feel about the the
Speaker 1: person running this back. So so you have this epiphany
Speaker 1: that you can start your own spack do whatever soft
Speaker 1: Bank does. How do you actually get the ball rolling? Like,
Speaker 1: what does that inception process look like? Well, for me,
Speaker 1: that's a good question for me, it was like, well,
Speaker 1: I'm not going to do this. I'm like, the last
Speaker 1: thing I want to do is go through the process
Speaker 1: of hiring an expensive law firm, uh, to do an
Speaker 1: S one, going on a road show, uh, and pitching
Speaker 1: people you know in a room about you know, because
Speaker 1: this is still about raising money. You know. It's back
Speaker 1: is all fancy term and it looks so sexy because
Speaker 1: we're a public company and we have a lot of cash.
Speaker 1: But really behind all that. It's just a lot of
Speaker 1: boring and very detailed and careful disclosures about what this
Speaker 1: you know entity will do and you know what is
Speaker 1: its purpose? Who is on the team, Why did you
Speaker 1: assemble this team, what do you plan to do? What
Speaker 1: are your high level of focuses? So so you need
Speaker 1: a quarterback for all this, And lucky for me at
Speaker 1: that dinner was my friend Doug Horlick, who's an next
Speaker 1: Goldman guy, and he just his ears perked up when
Speaker 1: he was listening to Adam Bain and he was like
Speaker 1: taking notes. We're all like joking around and and enjoying
Speaker 1: our our last meal. It turns out pre COVID. But
Speaker 1: he came out of that meeting dog and he said, Howard,
Speaker 1: you're the perfect guy to be the CEO of a spack.
Speaker 1: You have this huge audience of which you can talk to.
Speaker 1: People trust you. You've got all this uh trust built up.
Speaker 1: You know, why shouldn't you quarterback back? And I said,
Speaker 1: you know, I don't want anything to do with this,
Speaker 1: with the regulatory and in the hoops and the detail. Um.
Speaker 1: But he said, I got your back. I know how
Speaker 1: to do this, and off we went. So Now I
Speaker 1: had a partner, Doug Horlick, who really had a lot
Speaker 1: of experience in markets. He also knew who to call
Speaker 1: in the banking side, just pitched the idea and see
Speaker 1: if they would be as excited as he was about
Speaker 1: this idea that than that. So that was the first
Speaker 1: step that we needed someone too that I felt there's
Speaker 1: no way I was going to go down this road
Speaker 1: with just Doug. We needed someone who had public market experience, right.
Speaker 1: So sure the media hasn't having a field d and
Speaker 1: say oh anybody should have us back, right, and we
Speaker 1: all we all fall prey to that. It's just whatever
Speaker 1: whoever's got the hot tape. But really I would say,
Speaker 1: do not do this unless you have someone at your
Speaker 1: side who has tremendous public market experience. And for me,
Speaker 1: that was Paul Grimberg, who happened to be an LP
Speaker 1: and was president of Encore Capital, which is, you know,
Speaker 1: a global financial lending business, and also the chairman of
Speaker 1: Axos Bank, which is a large public bank, profitable public bank.
Speaker 1: So what a perfect moment for me to know someone
Speaker 1: like that, and I called Paul. Has raised money around
Speaker 1: the world his jobs and overseeing audits of public companies
Speaker 1: and overseeing, you know, the growth of profitability of a
Speaker 1: public bank. And I said, is this is this something
Speaker 1: you can help me with? And you got really excited,
Speaker 1: he says, oh, man with your network. And so we
Speaker 1: got Paul Grimberg on. So now we have the makings
Speaker 1: of a band. As you would say, it's like the
Speaker 1: traveling willberrys of finance. I've got a Goldman person, I've
Speaker 1: got a public market chairman of a of a great
Speaker 1: bank in the New York Stock Exchange. And now I
Speaker 1: just got to keep filling out the band. And so
Speaker 1: my next piece of the publics how to find some
Speaker 1: partners that have targets. So so now if you are
Speaker 1: going to do its back, you've got to, like I said,
Speaker 1: find someone to put the banking relationships together and and
Speaker 1: ensemble a road show. You also need someone to get
Speaker 1: you through the s process. And I would say, don't
Speaker 1: just hire scattering or some expensive attorney, which we did,
Speaker 1: but you need someone to guide these attorneys, and you
Speaker 1: need someone who understands how to do all the filings.
Speaker 1: And that I found with Paul Grimberg. We had the
Speaker 1: core of a SPAC team pretty quickly. But there's still
Speaker 1: so much more that you have to put together. So
Speaker 1: I want to go back to a point you made,
Speaker 1: and you you know, it's like, we look at all
Speaker 1: these SPACs run by public figures, and there's like, you know,
Speaker 1: the the Use back and the Colin Kaepernick spack and
Speaker 1: the founder the co founder of Facebook's back or the
Speaker 1: co founder of Dell's back or the Betty Loose back,
Speaker 1: and you mentioned and then of course the spacks we're
Speaker 1: going to get. And you mentioned the importance of that
Speaker 1: public network the promoter someone who's kind of basically an influencer.
Speaker 1: Can you articulate specifically why in this current iteration of
Speaker 1: the SPACs, whatever the SPAC cycle, what exactly your network,
Speaker 1: your platform allows you to do and really allows you
Speaker 1: to sort of contribute to the spec value creation. Okay,
Speaker 1: this is all high level because I can't even explain it, like,
Speaker 1: and you're asking me to explain something that I laugh
Speaker 1: because I wish I could film the whole processes from
Speaker 1: the eyes of a Larry David of finance. Right, I
Speaker 1: look at this is all rather silly. I mean, it's
Speaker 1: very important and I take this thing extremely seriously. Hopefully
Speaker 1: the origin story helps with that. It's not like I
Speaker 1: woke up, had lunch with Adam Bain and said, well,
Speaker 1: like I joke and I said, well, Adam Bank can
Speaker 1: do a spec. I can do a spec. Like that's
Speaker 1: an easy, funny joke. But reality is Adam was explaining,
Speaker 1: and that's the genius. It's just not a one minute
Speaker 1: It's a very complicated process that people need that people
Speaker 1: generally take seriously. I have to imagine because sec and lawyers,
Speaker 1: and it's expensive. It's not free. So so getting to
Speaker 1: the to the next part of it is um The
Speaker 1: key thing here about the markets to understand is we
Speaker 1: talk about the creator economy, right, Like, for there was
Speaker 1: all these years where I was like, man, people like
Speaker 1: my writing and they respect my work, but like, should
Speaker 1: I set up a Shopify store to like, how do
Speaker 1: I monetize all this daily writing on my blog and
Speaker 1: my tweets and all these people that think I'm funny
Speaker 1: or smart so so so I felt, as someone who
Speaker 1: writes for free and gets all the feedback that maybe
Speaker 1: I should have, I'm not monetized singing myself properly, right,
Speaker 1: Like everybody has that feeling someone tells them they're great.
Speaker 1: You know. Spacts are basically a perfect tool for financial
Speaker 1: you know entrepreneurs, right. You know I have a farm
Speaker 1: with two great partners, Tom and Gary. But when we
Speaker 1: commit to a fund, we have to commit to twenty
Speaker 1: five investments over three to five years. Together. We have
Speaker 1: to go through the money raising process and you're in it.
Speaker 1: You got to write an album. It's like Bruce Springsteen
Speaker 1: in the East Street Band. If I would just say,
Speaker 1: you know, music is like the closest thing to it
Speaker 1: with a spack, I could put a separate band together,
Speaker 1: like I said the Traveloy Wilbury to just try and
Speaker 1: produce one hit. Okay, And there's a lot and something
Speaker 1: more elegant about that, right when you consider how many
Speaker 1: people can I just ask a real specific question. Is
Speaker 1: it on the fundraising side that the platform helps, as in, okay,
Speaker 1: we want to back the Howard Linson spac is either
Speaker 1: from the people who buy into the I p O
Speaker 1: or the pipe that's part of the process. Or is
Speaker 1: it on the deal acquisition part that people wanted that
Speaker 1: a company thinking about going public wants to be part
Speaker 1: of it? Like, what specifically is the brand the Howard
Speaker 1: Lendson What part does it help with the most that
Speaker 1: you know Joshmo would have a harder time with That's
Speaker 1: a good question. It really helped with all of them
Speaker 1: and color me as surprised as everybody else because I
Speaker 1: had Doug tell me, how are they're going to love
Speaker 1: you that you don't understand they know what stock twitches
Speaker 1: and they know what Twitter is, and I would laugh,
Speaker 1: I said, I don't think so, right. So it was,
Speaker 1: you know, it was very you know, it was very
Speaker 1: much curby R exuberant I call it versus curb your enthusiasm.
Speaker 1: I was. I was saying, guys, we're gonna go here,
Speaker 1: and these headphones are gonna laugh us out of the
Speaker 1: room because they don't even know what Twitter is. But
Speaker 1: I think I guess they do. From the road show,
Speaker 1: I learned that I actually have a little bit of
Speaker 1: cashet in that world, and I think it helped the
Speaker 1: game stop at Wall Street bets and and and read
Speaker 1: it and Twitter and TikTok and social media and investing
Speaker 1: things that you know I was talking about with you
Speaker 1: and Henry Blodgett, you know, fifteen years ago, all of
Speaker 1: a sudden, I am someone with some grab a toss
Speaker 1: in that space. And I can't explain why it's now,
Speaker 1: but it's just that perfect kind of moment that I
Speaker 1: might have gotten lucky or you know, the people that
Speaker 1: talk me gently said, Howard, this will be this. You'll
Speaker 1: you'll kill them on Broadway, which is like you're going
Speaker 1: to kill them on a zoom road show. And they're
Speaker 1: gonna be prepared and they're gonna know what stuck to
Speaker 1: its is and and to be honest Rail, you know
Speaker 1: they did like the hedge funds that and the asset
Speaker 1: managed from black Rock on down below. They know that
Speaker 1: public companies have two things to sell. They have the
Speaker 1: company itself, the product where the widget, whatever that company is.
Speaker 1: And then when you're public, you also have your product
Speaker 1: is the ticker. And you have to tell this story. Right,
Speaker 1: There's there's Tesla the company, and then there's Tesla the
Speaker 1: men's right, and some people are saying they're interchangeable today,
Speaker 1: but the narrative is become And again this isn't just timing.
Speaker 1: And this some time in market and spacts might not
Speaker 1: have happened if COVID, you know, hadn't happen, or if
Speaker 1: if there was only two ways to really go public,
Speaker 1: which is Goldman and Morgan Stanley, right, like, there's only
Speaker 1: two pipes that get you onto the onto the stage. Well,
Speaker 1: of course all this going on SPACs became interesting, but
Speaker 1: the most important thing to me was like the reception
Speaker 1: was very strong for someone that understood social media, for
Speaker 1: someone that understood the importance of helping a company that
Speaker 1: is does choose to go public through respect how to
Speaker 1: build a narrative, right, how our team can help just
Speaker 1: as well as hero Price or Fidelity or soft Bank
Speaker 1: or any late stage VC. How our team that we
Speaker 1: assemble can help a company actually accelerate themselves post going public,
Speaker 1: because the SPAC or the I p O is just
Speaker 1: one day in the end, right, Like, how you choose
Speaker 1: to go public, and you've probably heard this a hundred times,
Speaker 1: it's just one day and then the bell gets wrong,
Speaker 1: the stock gets traded, and the next day no one
Speaker 1: remembers if you were public through an I p O
Speaker 1: or through a spack. And I started seeing that happen
Speaker 1: with drafting, you know, as someone who started stock to it,
Speaker 1: I was seeing this happen with Virgin Galactic. I'm like,
Speaker 1: I was just as surprised as the next guy. The
Speaker 1: draft Kings was a successful spack, so you know, you
Speaker 1: start seeing a few successes and you start trying to
Speaker 1: glean from podcasts. You know, I've had Jason Robinson on
Speaker 1: my podcast We Found It Um Draft Kings, and I'm
Speaker 1: asking him questions, you know, with him not knowing that
Speaker 1: I'm in the middle of doing a back and I'm
Speaker 1: listening and I'm getting his his brain explaining to me
Speaker 1: how this whole process went down. So there's all these
Speaker 1: ways to quickly learn and draft behind other people that
Speaker 1: do it as well, which is different than any other
Speaker 1: moment in time. So, Howard, one thing I've always been
Speaker 1: curious about is what this s back road show actually
Speaker 1: looks like in terms of the fund raising process. So,
Speaker 1: you know, normally, when you have a road show to
Speaker 1: I don't know, do an I P O or to
Speaker 1: sell a bond or something like that, you have a
Speaker 1: specific product or company that you are pitching to investors.
Speaker 1: But of course, in this case, you have the shell
Speaker 1: of this fact that you are launching and a sort
Speaker 1: of mandate or idea about the kind of companies that
Speaker 1: you're interested in buying or merging with. How do how
Speaker 1: do those conversations actually unfold and what do they look like?
Speaker 1: And also how did you decide on your acquisition um
Speaker 1: target industry? All good questions, the the and all the
Speaker 1: important things that have to happen. So I was learning
Speaker 1: in real time, you know I call I say it
Speaker 1: learned by doing, by seeing other people that were contemporaries
Speaker 1: or mind doing it, and having the lucky ability to
Speaker 1: talk to these people, and having the capital in the
Speaker 1: network to be able to form a team to go
Speaker 1: do this. The road show was mesmer you know, it
Speaker 1: was staggering to me. It's like, wait a minute, we
Speaker 1: don't have to get on a small plan and go
Speaker 1: to Toronto in the middle of the day to do
Speaker 1: one meeting in Montreal and then I back up to
Speaker 1: New York to do this. And I think the bankers
Speaker 1: have discovered this too too. It takes two to tango.
Speaker 1: Let's do math and say your raise three d million,
Speaker 1: Well banks charged two percent. So on a three million dollars,
Speaker 1: Remember who makes six million dollars risk free? Are the banks?
Speaker 1: And so the banks have a new toy of which
Speaker 1: of that six million. In the olden days, let's call
Speaker 1: it pre COVID. The olden days of road shows, you
Speaker 1: it was very expensive for a bank to put on
Speaker 1: a road show. You know, flights had to be made,
Speaker 1: schedules had to be made, meetings had to be canceled,
Speaker 1: Pineapple how to be ordered for the food room, and occasionally,
Speaker 1: you know, a little booze, a little steak. So you know,
Speaker 1: the bank's margins have gone from on a road show
Speaker 1: to ninety eight point nine percent. And so the banks,
Speaker 1: you know, we can make fun of zoom and oh
Speaker 1: it zooms the next day. I'll have heard some very
Speaker 1: smart people saying I look back and go, I don't
Speaker 1: think they've ever been on a banking zoom road show.
Speaker 1: You're not going to put that genie back in the bottle. So, banks,
Speaker 1: if you told me that I could raise three million
Speaker 1: over Zoom amongst some of the top financial hedge funds
Speaker 1: and investors in the world, I would have laughed you
Speaker 1: out of the room. On top of laughing you out
Speaker 1: of the room for all the other things I've told
Speaker 1: you about today, that would have been the one I
Speaker 1: really would have had a good chuckle at. But yes,
Speaker 1: Zoom and the road show is an incredible, magical, weird,
Speaker 1: very useful way to raise capital and tell stories. And
Speaker 1: I think that would be one of the most incredible
Speaker 1: long term financial effects of COVID will be Yeah, kids
Speaker 1: should go to school, of course, they should go to
Speaker 1: school and socialize. You know who shouldn't go anywhere and
Speaker 1: socialize or hedge funds and they found their toy. Uh,
Speaker 1: and they're using social networks to do their due diligence
Speaker 1: because hey, it's a lot better than going through customs
Speaker 1: New York Toronto or Toronto to London. Uh. And by
Speaker 1: the way, we have LinkedIn and we have social networks,
Speaker 1: and we have UH, we'll have more tools to to
Speaker 1: background check people. And there's a lot you can get
Speaker 1: a lot more meetings done and a lot more capital
Speaker 1: raised over zoom if everybody is is committed to the process.
Speaker 1: And that's that's where we have so many stacks because
Speaker 1: both the suppliers and the demand on both sides are exploding.
Speaker 1: The marketplace is getting endless supply and endless demand right
Speaker 1: now because both sides want the product. So what does
Speaker 1: the pitch actually look like? Though? In the road show,
Speaker 1: so you say I'm starting it back, I'm Howard Lindson.
Speaker 1: We're thinking of buying these types of companies and like,
Speaker 1: what's the value proposition there? Well, I mean the value
Speaker 1: proposition is do these First of all, we're in a
Speaker 1: zero rate, We're in a low interest rate environment. So
Speaker 1: the that's not they're not stupid people of the hedge funds.
Speaker 1: You know a lot of the enticements, the warrants which
Speaker 1: are now quickly coming down to zero as we're seeing.
Speaker 1: But the other thing is do I trust this group
Speaker 1: of people to get a deal done? If we give
Speaker 1: this group money, will they go out and do a
Speaker 1: good job finding a target and finding a company and
Speaker 1: getting out of their way or getting in their way
Speaker 1: and making the change that happen that create uh, you know,
Speaker 1: market beating returns out of the out of the target
Speaker 1: that they find. It comes down to performance and can
Speaker 1: I bet on this team to get a job done.
Speaker 1: And so we put together a team that really exuded
Speaker 1: this ability to get it done. You know, we brought
Speaker 1: on a board of executed as we brought in you
Speaker 1: know Ross Mason who founded Mule, saw the six and
Speaker 1: a half billion dollar company that was acquired, a sixteen
Speaker 1: year overnight success that was acquired by Salesforce. You know,
Speaker 1: Ross knows open source software, Ross knows enterprise software. Any
Speaker 1: CEO in that space would be thrilled to have Ross
Speaker 1: chatting with them about how to build an open source
Speaker 1: or enterprise company. So so just like a like a
Speaker 1: like a team in sports or uh, you know, a
Speaker 1: perfect band. You know, our job was to assemble a
Speaker 1: team that could get a deal done, not just get
Speaker 1: a deal done, but then help that company really become
Speaker 1: you know, uh uh you go from two to ten months,
Speaker 1: they go from a two billion dollar valuation and the
Speaker 1: private markets to a ten billion dollar valuation over a
Speaker 1: few years in the public markets. So this is exactly
Speaker 1: what I was curious about. Next and it is and
Speaker 1: I think this is really helping me understand this even further,
Speaker 1: is how much of the pitch is about not just
Speaker 1: the ability to identify and get a good deal done,
Speaker 1: but about you, Howard Lindon and your team being part
Speaker 1: of this public company that exists and as you say,
Speaker 1: tell its story and essentially sell the stock ticker. And
Speaker 1: what is the sort of the structure of the deal
Speaker 1: such that you are incentivized to not you know, okay,
Speaker 1: it's public, I'm gonna wash my hands of it and
Speaker 1: go launch the next SPACs, but actually have some skin
Speaker 1: in the game so that it does outperform over the
Speaker 1: long term, and you do use your network and your
Speaker 1: skills to help it up do well. Yeah, that's I
Speaker 1: think another ultimate question. I think for us, first of all,
Speaker 1: it was completely our money. So maybe in the olden
Speaker 1: days and I say this in someone who's been burned
Speaker 1: by winning spacts when they were younger in Canada, but
Speaker 1: we didn't know how the sausage was made. So you know,
Speaker 1: some broker called you and said this is going public
Speaker 1: and it's uh f ME Drill Incorporated, and you're going
Speaker 1: to buy the stock. It's how the product was sold
Speaker 1: that was probably shady. You know, the product hasn't changed
Speaker 1: that much, but I said, like the tactics of which
Speaker 1: they were put together and sold have so you know,
Speaker 1: I believe what's something that's different And it's up to
Speaker 1: the investors to read the s ones and ask the
Speaker 1: right questions. Is who owns the stock? Like who put
Speaker 1: up the money to get this band together? And for
Speaker 1: us it was all our own money. So the the
Speaker 1: almost ten million dollars that there's a pay to play here,
Speaker 1: and I think some of the ones you have to
Speaker 1: be careful. One where that ten million dollar comes from,
Speaker 1: not the group involved, but maybe some retail investors or
Speaker 1: some shell that was put together with creatively from a
Speaker 1: pile of old shells that already has all the filings, etcetera,
Speaker 1: started from scratch. That we've got to invest in the
Speaker 1: law firm, the the s one, the the who's going
Speaker 1: to pay the two percent to the bank, the D
Speaker 1: and O insurance? You know, are there going to be salaries?
Speaker 1: This could take two years of time and that so
Speaker 1: you've got to set aside eight to ten million dollars
Speaker 1: depending on what you're going to raise for those two
Speaker 1: years that you've got to operate this public company. So
Speaker 1: there's no free lunch, and the returns if you don't
Speaker 1: have to negotiate down your your your fees can be fantastic,
Speaker 1: you know. But the risk is still there, you know.
Speaker 1: And I think what good allocators are capital asked for
Speaker 1: is like who put that risk capital together? And how
Speaker 1: long is that risk capital going to be tied up?
Speaker 1: How do you align the spack operators with the public company.
Speaker 1: And and a good board at a good public company
Speaker 1: is gonna put the clamps down on all the stuff
Speaker 1: that happened. And I think where Chamath and Adam Bain
Speaker 1: and this new batch of of good intentions backs like
Speaker 1: people that are going to be great band leaders and
Speaker 1: people that know how to put together a symphony. And
Speaker 1: by a symphony, I mean a great public company that
Speaker 1: grows faster in the public market than ever do in
Speaker 1: the private markets. It's going to come down to, you know,
Speaker 1: intentions and execution, and the more risk capital and the
Speaker 1: more alignment that the back operator has with the long
Speaker 1: term goals of the public company, the better. So it's
Speaker 1: up to both sides to kind of tie each other
Speaker 1: into the long term here. So for you, though, just
Speaker 1: if I can follow up real quickly, what is the
Speaker 1: requirements or what is the expectation on the part of
Speaker 1: these hedge funds that you're going to be with it
Speaker 1: for a while? Good question, I mean, until you find
Speaker 1: the target that the sharp knives probably don't come out
Speaker 1: right where everybody really puts the screws to each other
Speaker 1: and says, we'll agree. This deal happens if you guys
Speaker 1: lock up your shares for two years. Right, there's no
Speaker 1: nothing's written in stone. Everything's up for negotiation. Now. Some
Speaker 1: maybe Chamath has more power because he's done more and
Speaker 1: he says no, we're only gonna lock up. I can
Speaker 1: only speculate, but you know each deal will be different.
Speaker 1: You know, as the clock takes back towards two years,
Speaker 1: if you haven't found a deal, you're going to lose
Speaker 1: a lot of your negotiating power as a spack operators.
Speaker 1: So so so many things can can change, and I
Speaker 1: think the media has had a field day just kind
Speaker 1: of putting everything neatly compartmentalized. But there's a very complex,
Speaker 1: very elegant product. But with all kinds of complex ways
Speaker 1: that they will in each one will be structured differently
Speaker 1: when they're finally expressed as a public company. Got So,
Speaker 1: how is the acquisition search actually going at the moment,
Speaker 1: because in previous podcasts on the subject of SPACs, Joe
Speaker 1: and I have heard the competition is pretty intense. Uh,
Speaker 1: spacks are starting, you know, every week, if not every
Speaker 1: day at this moment in time. We've heard of spack
Speaker 1: offs where you know, multiple spacts will compete for one target.
Speaker 1: How's it going? Woo doesn't like spacking up, So that
Speaker 1: was keyed up. That was so teed up. I don't
Speaker 1: even know if that could run on Bloomberg. The The
Speaker 1: ultimate question is what you just asked, is like, what's
Speaker 1: it like out there on the gridiron, And let me
Speaker 1: just tell you that I'll give you the same answer
Speaker 1: if I can be a venture capitalist and I say that, yeah,
Speaker 1: loosely or whatever. I mean. It's a bull market and
Speaker 1: we've had our winds and we've got a great track record,
Speaker 1: so we're very proud of that. But we are in
Speaker 1: a software boom, bull market and zero interest rate economy.
Speaker 1: So I'd like to pat myself on the back, but
Speaker 1: remind myself that pretty good tail wins out there. It's
Speaker 1: all about, you know, and you get something done. What's
Speaker 1: important here is that you move, you know, quickly. We
Speaker 1: have we have just legally gotten through the process. And
Speaker 1: this is the end of my quiet perier where we
Speaker 1: actually can talk two companies about our spack and prepare
Speaker 1: you know, explainers about what we think we can offer
Speaker 1: and send that around. But I never worry about the competition.
Speaker 1: And and the world is big. We've gone through this
Speaker 1: very long period of indexing and like set him forget,
Speaker 1: and we're coming out of this period where every American
Speaker 1: is basically holding the same portfolio. Right. We came out
Speaker 1: of this long period where you should you should only index,
Speaker 1: and you should buy Vanguard, and you should put your
Speaker 1: retirement money in Black Rocks SMP index, and you should
Speaker 1: have a seventy thirty portfolio or sixty forty portfolio like
Speaker 1: Tony Robins. All of a sudden, it is the is
Speaker 1: saying that's the way to manage your money. And guess what.
Speaker 1: I think what we've seen in the last year is
Speaker 1: the what we saw with Uber and transportation is what
Speaker 1: we're seeing with Robin Hood and e Toro and trading.
Speaker 1: Is when you put a beautiful button on top of
Speaker 1: a very complex thing. Uh, this next generation likes to
Speaker 1: push the button and spin the dice or roll the dice,
Speaker 1: and so we have this incredible unbundling of the indexes.
Speaker 1: And so I think there's hundreds of new public companies
Speaker 1: that can survive. And when you and that may not
Speaker 1: sound like a lot, but it really is. I'm talking
Speaker 1: about good public companies. Right where we we the market
Speaker 1: could support probably a thousand new public companies, of which
Speaker 1: there will be two hundred great ones or a hundred
Speaker 1: great ones, and so are we don't think it's that
Speaker 1: competitive if you know where to look. And just as
Speaker 1: VCS they told you that unless you're in Silicon Valley,
Speaker 1: you can have great returns well social leverages in Phoenix
Speaker 1: and San Diego. And we're tough, you know, performing venture
Speaker 1: capital fund. So I've never really boughted to that competition.
Speaker 1: America is a huge country. I say it's an emerging
Speaker 1: market in many ways because you can do investing outside
Speaker 1: of San Francisco and New York right now. So the
Speaker 1: flyover states are emerging markets, just like Malaysia's an emerging market.
Speaker 1: So I think the targets are way more than people
Speaker 1: estimate or gu estimate. Just like most people can't analyze
Speaker 1: and tell you where stock's going to go, I don't
Speaker 1: believe that the media or the analysts can say how
Speaker 1: many public companies there can or should be. So I
Speaker 1: think we're in this like wild West, where um, if
Speaker 1: you find a great company, you can get support for
Speaker 1: that great company, and you can find shareholders for that
Speaker 1: great company because everybody has a brokerage account in the
Speaker 1: palm of their hand. I just want to point out
Speaker 1: while we're having this conversation February seven am Eastern time now,
Speaker 1: as the extent three and a half percent. So maybe
Speaker 1: this is the top. Maybe this is the this is
Speaker 1: this would be perfect. No, I don't really I don't
Speaker 1: really think that there's no way at the top. I
Speaker 1: think that you think so well. No, I I personally
Speaker 1: think that if I can do us fact, that would
Speaker 1: you know, it's that old saying, you know, as if
Speaker 1: they're gonna if this club is going to accept me,
Speaker 1: and then you know, why would I join the club?
Speaker 1: I think, you know, it's easy to just yell out,
Speaker 1: this will be the top of that, the top. There
Speaker 1: has been so much speculative behavior. And I was writing
Speaker 1: about today and n f t S because I can't
Speaker 1: get enough uh you know, I can't get enough action
Speaker 1: in the real markets. I got to develop a digital
Speaker 1: card market. We've seen all the signs right that there
Speaker 1: should be a pullback. And it's not just you know,
Speaker 1: a year ago is just Tesla, and today it's not
Speaker 1: just Tesla. It's like ethereum, it's bitcoin and it's alt coins,
Speaker 1: it's n f t s, it's you know, game stop.
Speaker 1: I mean, there are so many reasons why you could
Speaker 1: say it was the top, and eventually somebody will have
Speaker 1: a tweet that they hold up five years from I'm
Speaker 1: saying I called the top. But you know, it's just
Speaker 1: not a very practical way to go through life yelling
Speaker 1: out bearish statements, you know, I mean we joke about
Speaker 1: this all the time. It's like, it's just stupid idea
Speaker 1: to just run around yelling looking for the top or
Speaker 1: looking for the bottom. Right now, to participation economy, some
Speaker 1: of us are luckier than others, and there's a lot
Speaker 1: of supply. The way I look at it is there's
Speaker 1: gonna be some vicious sell us because there's a lot
Speaker 1: of smart people creating products for the investing world, and
Speaker 1: there's just a lot of supply. So sorry, can we
Speaker 1: just dig into the froth idea of a little bit more?
Speaker 1: Because you on your blog have been like slightly critical.
Speaker 1: I mean you've praised facts as a graceful product and
Speaker 1: efficient product and all of that, but you've also been
Speaker 1: sort of critical of some of the stuff going on
Speaker 1: around it. So I think you said something like the
Speaker 1: stock market has its own fantasy sports SPACs. So just
Speaker 1: how crazy do you think everything is at the moment. Well,
Speaker 1: I'm I'm very much an investor trend faller. I call
Speaker 1: eight to eight companies I like to own. I like
Speaker 1: to invest in public companies that I really feel I understand,
Speaker 1: maybe not to corraly financials. I'm not listening to all
Speaker 1: the conference calls, but you know, when I wake up
Speaker 1: and I call them eight to eight companies and I
Speaker 1: think about Google, I can compartmentalize Google and say, you know,
Speaker 1: if you believe the Internet is growing, uh, then you
Speaker 1: know Google is fine and there's going to be as
Speaker 1: growing too. And so in the spack world, what's so
Speaker 1: unique is there's so many different ways to express a
Speaker 1: SPAC and so for me, I don't like the SPAC
Speaker 1: ideas that are in these very nascent markets like e
Speaker 1: like electric vehicles, where the revenues five years out. It's
Speaker 1: just not my style. So I can be cynical of
Speaker 1: of of SPACs, but still want to create a spec
Speaker 1: because for our spact, we're looking down the middle of
Speaker 1: the road of enterprise and at e commerce, mainly where
Speaker 1: we think big, profitable, cash flowing companies can be built
Speaker 1: in the next you know, shopifies, in the next Twilios
Speaker 1: and they're out there. You know, when we invested in
Speaker 1: robin Hood along the way and it got to a
Speaker 1: billion dollar valuation, which wasn't that long ago. People still
Speaker 1: we're like making fun of it. And you know, in
Speaker 1: in many other eras that a billion dollar Robin Hood
Speaker 1: company would have been a public company. And now it's
Speaker 1: you know, give or take a few billion, they're saying
Speaker 1: thirty billion dollars in the private market. Like that thirty
Speaker 1: billion dollars, it still was locked in the private markets.
Speaker 1: That that moved from one to thirty billions. So I
Speaker 1: think the investors need more choice. Wall Street in the
Speaker 1: main street or the advertising. Wall Street got away with
Speaker 1: telling this story about passive investment and cut your fees,
Speaker 1: and we all ended up with the same product, and
Speaker 1: we all ended up with Wells Fargo and Verizon in
Speaker 1: our portfolios. And we hate those companies. I can tell
Speaker 1: by the media writing poorly about their practices that we
Speaker 1: hate those companies. So why do we own those things
Speaker 1: if we hate them? That bothers me and SPACs even
Speaker 1: if you make fun of them. We have a chance,
Speaker 1: and I call it fantasy. We have a chance to
Speaker 1: align our capital with people that aren't gonna get us
Speaker 1: into the next Verizon or Wells Fargo. We're gonna take
Speaker 1: people to space, or we're gonna build an electronic vehicle
Speaker 1: or We're gonna get a the next Twilio public and
Speaker 1: bet on us to do that. So I think there's
Speaker 1: that fantasy part where you can you can actually not
Speaker 1: just be an armchair quarterback, but you can feel like
Speaker 1: you have some skin in the game, whether it's one
Speaker 1: thousand shares or ten thous and shares, and you have
Speaker 1: access because you you talked to Howard Linson on Twitter,
Speaker 1: so maybe you with your your your your tweets can
Speaker 1: subtly influence how the game is going to be played.
Speaker 1: So I think that's part of the fantasy part of
Speaker 1: it is that, um, the people making decisions are on
Speaker 1: Twitter and on stock twits and and sharing their insights,
Speaker 1: and you feel like you have some kind of say
Speaker 1: in the game. And I think that's coming back to
Speaker 1: the markets, and I don't think there's anything wrong with that.
Speaker 1: I want to talk a little bit about Robin Hood,
Speaker 1: but before we do that, I have one more sort
Speaker 1: of SPACs question. This might be a little speculative, but
Speaker 1: you know, like you hang out obviously and very impressive circles,
Speaker 1: and you go to Carbone with Adam Bain even though
Speaker 1: he has like a fifth This is kind of back
Speaker 1: to haunt me, even though he is like a fifth
Speaker 1: cousin of mine. I don't think you know, he didn't
Speaker 1: invite me there. So, but you know, we look at
Speaker 1: all these SPACs and you know kind of joke, it's like, oh,
Speaker 1: the editor a chief of Cosmo head us back and
Speaker 1: Colin Kaepernick had us back and all these like we're
Speaker 1: in your from your sense are these coming from? Is
Speaker 1: someone approaching them out of the blue at places? I
Speaker 1: don't know. I guess no one's going to Carbone now
Speaker 1: because the viers. But is someone Are there like groups
Speaker 1: of deal makers out there who it's like, you know what,
Speaker 1: we have everything we need. We have the lawyer, we
Speaker 1: have the operations guy. We have the guy that knows
Speaker 1: the cloud, we have the goldman guy. What we don't
Speaker 1: have is the person with a big Twitter following as like,
Speaker 1: you know, who would be great, Colin Kaepernick? Whatever it
Speaker 1: is like, is that kind of how is that your
Speaker 1: sense of how these are coming about? Are they more
Speaker 1: like the conversation do you had, like what's you must
Speaker 1: have some feel for what's going on. Absolutely, I did
Speaker 1: not call Colin Kaepernick, um or any athletes to get
Speaker 1: involved in our spack or entertainers because not that they
Speaker 1: shouldn't be right. It's a free country. And this is
Speaker 1: just another financial tool. And we've seen this with tokens,
Speaker 1: and we've seen this in in in advertisements for products.
Speaker 1: This is just another product. If some if a promoter
Speaker 1: slash creator of a spec is thinking that a celebrity
Speaker 1: will make their spec better, you've just for sure turned
Speaker 1: me off to deal. I can't. I'm not going to
Speaker 1: tell other people what to do. But if I'm reading
Speaker 1: an S one, the last thing I care about is
Speaker 1: if an athlete or a celebrity is involved, unless that
Speaker 1: athlete or celebrity has incredible domain experience or investing experience
Speaker 1: around what I think they might target. So when we
Speaker 1: put together our team, it was more about how will
Speaker 1: founders it very fast growing companies respond to us, right like,
Speaker 1: you know, what do our trading card? Like? If they
Speaker 1: have a quick one page or about social leverage acquisition corps,
Speaker 1: how do we make sure they take our call? And
Speaker 1: if there's four other bidders around the table, why would
Speaker 1: they go with us? And that's how we thought about
Speaker 1: the team, and that's why Ross Mason is involved in
Speaker 1: Mike Marquez and Brian no regard from Tinder and Mike
Speaker 1: Lazarow started by the media. You know, when we put
Speaker 1: this team together, and it was mostly orchestrated by me.
Speaker 1: Is I wanted to be able to when we we
Speaker 1: want our founders to light up and be ecstatic that
Speaker 1: they have Brian Norgard in there to help around product
Speaker 1: and growth, or Mike Lazzaro who sold his company for
Speaker 1: eight million to Buddy Media, or and worked as chief
Speaker 1: strategy officer for a few years and under Mark Bennioff,
Speaker 1: and so so you know, we we thought about our facts.
Speaker 1: Like I said, it's an incredible band that we're trying
Speaker 1: to put together to to produce one incredible hit. And
Speaker 1: obviously we'd like the band to stay together and do
Speaker 1: two and three and four. But I think it's very
Speaker 1: elegant that you put it together and do one company.
Speaker 1: The idea that you can even do more than one
Speaker 1: company seems crazy. So I think it's just so interesting
Speaker 1: that you can expand all your energies to go create
Speaker 1: that one great hit. And if you watch any of
Speaker 1: these music documentaries, it's kind of the same thing. When
Speaker 1: they go back and tell you how they made the song,
Speaker 1: it's like, Wow, I didn't know that person was involved
Speaker 1: in the in the lyrics, and I didn't know. But
Speaker 1: generally it's not some fluke that a great song get built.
Speaker 1: There's a backstory, and I think it's important for investors
Speaker 1: to really understand the backstory and how long that team
Speaker 1: has been put together, because maybe the Colin Kaepernick one
Speaker 1: has a specific I haven't read the s one but
Speaker 1: has a very specific reason they're using calling Kaepernick. So again,
Speaker 1: there's more than one person. But I am what I
Speaker 1: am a little bit leery of things that get promoted
Speaker 1: as it was with someone famous, because behind the scenes,
Speaker 1: you need someone great in the boardroom, and you need
Speaker 1: people that help guide through quarterly earnings and earnings missing
Speaker 1: and let's be fair that even I'm not good at
Speaker 1: that stuff, so you have to put people on your
Speaker 1: team that know how to do all these things. Well, uh,
Speaker 1: let's let's real quickly and sort of running out of time.
Speaker 1: But you know, I'm curious obviously now too many people
Speaker 1: investors in Robin Hood, which everyone knows all the contra
Speaker 1: versas and everything that's going on right now. So first
Speaker 1: simple question, um, has the recent controversy do you think
Speaker 1: it derailed it or slowed it down at all because
Speaker 1: the downloads are still huge, Like, is their trajectory for
Speaker 1: this company still as good as it was? And I'm not.
Speaker 1: I don't have a seat inside the border, man. I
Speaker 1: will say that we did try and invest, even though
Speaker 1: you know we're early seed investors, seed investors, you know,
Speaker 1: A bunch of our LPs and myself got around, you
Speaker 1: know when we thought through at the end of the day,
Speaker 1: we decided to try and invest a little in this
Speaker 1: round because we I look at it from a very
Speaker 1: high level, Joe, I mean forgetting about the communications and
Speaker 1: who called who um, there was an incredible security. And
Speaker 1: by security this time, I mean everybody pushed the exact
Speaker 1: same button, give or take. You know how they pushed
Speaker 1: it and how much leverage they decided to put once
Speaker 1: they pushed the button. Everybody decided to push kind of
Speaker 1: the game stop button at the same time in the
Speaker 1: same direction. There's two camps. It happened at internet scale,
Speaker 1: and I don't think anybody had seen this. Anybody developing
Speaker 1: models for a hedge fund had their models and I said,
Speaker 1: oh three standard deviation move would put game stop at eighty.
Speaker 1: So we're not you know, so at eighty they felt like,
Speaker 1: oh my god, the world's never seen this. Well, guess what.
Speaker 1: Once the world hasn't seen something, the model doesn't count
Speaker 1: for anything. And a lot of great people that shared
Speaker 1: a game Stop at eighty ended up with Game stop
Speaker 1: at three hundred dollars like an hour and a half
Speaker 1: later or a day later, meaning the models that they
Speaker 1: were basing their their their trade on imploded, and it
Speaker 1: imploded an internet scale. And I think that, combined with
Speaker 1: the middle of the night phone call for probably more
Speaker 1: deposits um just the game went tilt. And I think
Speaker 1: the three and a half billion that was used to
Speaker 1: patch this, you know, security breach. Let's call it, you
Speaker 1: can call it what you want, but really it's a
Speaker 1: security breach by a lot of people doing the exact
Speaker 1: same thing at the same time. It's kind of like,
Speaker 1: uh an attack that they'll say, bots will attack a
Speaker 1: site and you have cloud flare to protect your site
Speaker 1: from something like that. Yeah, do do o S attack?
Speaker 1: This dodos attack happened, and there's a it was just
Speaker 1: basically a run on the bank and not on purpose,
Speaker 1: let's say, but it just happened, and we can we
Speaker 1: can pitch a moan about how the game rules were changed,
Speaker 1: and I totally have empathy for people that have been
Speaker 1: feel that they got screwed over here because it's happened
Speaker 1: to me in other trades. Is that owning game stuff
Speaker 1: at three, even for an hour, is a little bit
Speaker 1: risky after it was you know, let's just be honest
Speaker 1: with themselves. The people that were playing in that game.
Speaker 1: We're looking for trouble, even if and they may not
Speaker 1: have deserved it, but they were looking for it. I
Speaker 1: think what robin Hood comes out of this, and and
Speaker 1: just brokerage in general is much stronger to see Internet
Speaker 1: scale into. And yes, people got hurt for sure financially,
Speaker 1: but I'm glad it happened over in this corner of
Speaker 1: the market, not you know, everybody pushing SMP was we
Speaker 1: saw in March everybody selling their five stocks at the
Speaker 1: exact same time to some incredible volatility and some scary moments.
Speaker 1: And I think the system will get stronger. And so
Speaker 1: I think for robin Hood, the risk is always when
Speaker 1: you're a leader, is if there's a number two, there's
Speaker 1: a lot bigger risk of getting stuff wrong than if
Speaker 1: there's no clear number two. And I think what we
Speaker 1: found with robin Hood and color me surprise that I've
Speaker 1: been saying this for years, like why is there no
Speaker 1: lift to their uber? It's very rare that you find
Speaker 1: a leader like robin Hood go from one to thirty
Speaker 1: billion if there's intense, true competition. And what we found
Speaker 1: with robin Hood and post robin Hood is their products
Speaker 1: so good that um and so much clearly better than
Speaker 1: any adventure backed competitor, any incumbent, that they got through
Speaker 1: this rather well and should come out stronger, both financially
Speaker 1: and from understanding what the hell just happened with game stoff,
Speaker 1: because now there's something that they can put in their models.
Speaker 1: So it's it's in the end, you know, love it
Speaker 1: or hated it's it's a strong wind for robin Hood. Howard,
Speaker 1: that was fantastic. I swear, I swear that was Actually.
Speaker 1: I feel like I have such a better grasp of
Speaker 1: specs now than I did an hour ago. After having
Speaker 1: listened to you walk through the mechanics, I think exactly
Speaker 1: what I needed looking for. And I really appreciate you
Speaker 1: coming on out lot. Yeah, I figured, you know, learned
Speaker 1: by doing I appreciate you. Let me tell the story.
Speaker 1: You know, I didn't know. I didn't know anything myself.
Speaker 1: I was skeptical when I talked to Adam Pain and
Speaker 1: I was like, oh my god, I can't believe you're
Speaker 1: doing that. Well, looking forward to seeing how it goes.
Speaker 1: Maybe we'll have you back after after the process is
Speaker 1: all complete, all right, see a Tracy or to talk
Speaker 1: about wait, what was it the N phase? The token NONN?
Speaker 1: There we go and take care of heart. You know,
Speaker 1: I swear, like I said at the end there Howard,
Speaker 1: that really did actually answer a bunch of questions in
Speaker 1: my head. Are you going to talk about doing an
Speaker 1: all thoughts back? No? No, because no, because we don't
Speaker 1: have you know, what would we do. I don't have
Speaker 1: like those connections or anything like that. So if anything,
Speaker 1: I feel more confident that I probably couldn't launch us back.
Speaker 1: But but I just sort of get I think a
Speaker 1: little bit better, like what the premises now now And
Speaker 1: you know you said the point in the beginning. It's
Speaker 1: always a little um dicey when people start talking about
Speaker 1: like the vehicle more than the company. And actually I
Speaker 1: don't disagree with that at all, but in terms of um,
Speaker 1: even after listening to it, but in terms of like
Speaker 1: why now, why they're coming together, why they're coming in
Speaker 1: together in the way they are, why they're coming together
Speaker 1: with the speed that they are, Like that actually really
Speaker 1: did help out clarify a lot of things. So one
Speaker 1: thing I thought was really interesting, and it sort of
Speaker 1: ties together the Spack conversation with the Robin Hood and
Speaker 1: game Stop that we were discussing at the end. But
Speaker 1: Howard mentioned this idea of SPACs as a sort of
Speaker 1: rebellion against the index world or you know, the tyranny
Speaker 1: of passive investing. And I think that we are seeing
Speaker 1: that to some extent with the text stocks and this
Speaker 1: idea that you know, people are buying companies that they
Speaker 1: like to use, you know, the Reddit joke. They like
Speaker 1: game Stop, they like AMC, they like Tesla for whatever reason,
Speaker 1: and uh, SPACs are kind of unlocking a whole new
Speaker 1: group of those types of companies that people could potentially
Speaker 1: invest in. I think that's interesting, and I do think
Speaker 1: like people are getting frustrated with this idea that they're
Speaker 1: just going to pour their money into an SMP five
Speaker 1: hundred fund and wait for you know, forty year, sixty
Speaker 1: years until they retire. That's boring and also a little
Speaker 1: bit sad it is Borg and said, I just feel
Speaker 1: like it's kind of like Big told the eatar spinach.
Speaker 1: And I do think that eventually this is good for you,
Speaker 1: but you're not going to enjoy it too. Yeah, and
Speaker 1: I get it. It's like you're not supposed to enjoy
Speaker 1: It's it's tough because you're not really supposed to enjoy investing,
Speaker 1: and investing isn't supposed to be fun. On the other hand,
Speaker 1: this is this impulse that is latent and exists in
Speaker 1: all markets throughout time. So it's kind of almost like
Speaker 1: how long can you suppress it? Like gambling the earth
Speaker 1: to speculate has been part of respectable financial markets and
Speaker 1: for all time, and so we can write articles and
Speaker 1: say just passively index and rebalance and jack Bogel and
Speaker 1: low fees and stuff like that. But it just because
Speaker 1: we say it doesn't and just because it's the maybe
Speaker 1: right doesn't mean that people are going to accept it.
Speaker 1: And we're clearly seeing that, especially over the last few years.
Speaker 1: And game Stop was part of that. Robin Hood is
Speaker 1: part of that and uh spacks are party. Yeah, that's
Speaker 1: a good way of framing it, all, right, Shall we
Speaker 1: leave it there? Go ahead, Yeah, I was just gonna
Speaker 1: say one more thing though. You know what I was
Speaker 1: just thinking about with Howard. It's like there's like a
Speaker 1: famous quote that of George Soros or something. He said
Speaker 1: like when I see a bubble, I don't get scared
Speaker 1: of it. I run towards it. And I kind of
Speaker 1: think that's like Howard's approach. It's like he can recognize
Speaker 1: that there's some maybe some disturbing stuff going on with spacks.
Speaker 1: He can recognize that there's some disturbing stuff, etcetera. But
Speaker 1: as an investor, I've always thought of, like the thirteen
Speaker 1: years I think I've been following him now, he had
Speaker 1: a good nose for like which bubbles to run towards, uh,
Speaker 1: as opposed to you know, the sort of like typical
Speaker 1: mentality of like I'm gonna stay far away from that. Yeah.
Speaker 1: I mean, people get rich during bubbles if they're able
Speaker 1: to time their exit. Um, so there's definitely opportunities there.
Speaker 1: All right, shall we leave it there, Let's leave it there.
Speaker 1: This has been another episode of the All Thoughts podcast.
Speaker 1: I'm Tracey Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm Joe wi Isn't thal. You can
Speaker 1: follow me on Twitter at the Stalwart. Follow Howard Linson
Speaker 1: on Twitter. He's at Howard Linson. Follow our producer Laura Carlson.
Speaker 1: She's at Laura M. Carlson. Follow the Bloomberg head of
Speaker 1: podcast Francesca Levi at Francesca Today, and check out all
Speaker 1: of our podcasts at Bloomberg under the handle at podcasts.
Speaker 1: Thanks for listening one