WEBVTT - Masters in Business: Stockwits Howard Lindzon (Audio) 0:00:03.240 --> 0:00:06.400 This is Masters in Business with Barry rid Holts on 0:00:06.559 --> 0:00:10.120 Bloomberg Radio. Welcome to the podcast this week. I'm Barry 0:00:10.160 --> 0:00:13.480 rid Holtson. You're listening to Masters in Business on Bloomberg Radio. 0:00:14.080 --> 0:00:16.840 This week. I have an old friend in as a guest, 0:00:17.440 --> 0:00:22.400 Howard Lindzen, who has a storied background in the world 0:00:22.560 --> 0:00:26.840 of angel and venture investing. I know Howard for a 0:00:26.840 --> 0:00:30.360 good couple of years, primarily from his time when he 0:00:30.440 --> 0:00:34.920 was running the stock Twits network, which was the largest 0:00:35.920 --> 0:00:40.520 financial social network out there, as well as a number 0:00:40.520 --> 0:00:43.000 of other investments that he's made over the years that 0:00:43.040 --> 0:00:46.680 I've been familiar with in the technology space. Howard is 0:00:46.680 --> 0:00:49.920 a Canadian, so that makes him nicer than most people, 0:00:51.000 --> 0:00:53.800 but also gives him a slightly different perspective on how 0:00:53.840 --> 0:00:56.279 things are here in the States. And and we've seen 0:00:56.320 --> 0:00:59.920 a number of different Canadians like Howard and Paul Couldraw, 0:01:00.160 --> 0:01:02.840 you know, there's such folks come down from Canada and 0:01:03.120 --> 0:01:06.600 just you know, have a slightly different perspective which lets 0:01:06.600 --> 0:01:09.319 them see things a little bit differently. And I think 0:01:09.360 --> 0:01:13.560 you'll find this and amusing and interesting conversation with no 0:01:13.680 --> 0:01:20.760 further ado. Here's my conversation with Howard Linson. This is 0:01:20.880 --> 0:01:25.920 Masters in Business with Barry Ridholts on Bloomberg Radio. My 0:01:26.000 --> 0:01:31.720 guest this week is Howard Linsen, entrepreneur, angel investor, hedge 0:01:31.720 --> 0:01:34.479 fund manager. What what else can we add to your curriculum? 0:01:34.560 --> 0:01:40.040 Vitae married nineteen years, two kids, two dogs, two kids, 0:01:40.040 --> 0:01:42.920 two dogs. I get my best ideas from the dogs 0:01:42.920 --> 0:01:45.320 and the kids. You know. I read somewhere that your 0:01:45.360 --> 0:01:47.960 hobbies are driving your kids around and staying awake, and 0:01:48.360 --> 0:01:51.480 I will save the answer to what that actually means 0:01:51.960 --> 0:01:55.040 till till later. So let's talk a little bit. Remind me, 0:01:55.120 --> 0:01:59.560 resumet and sleep are two big absolutely, So let's talk 0:01:59.600 --> 0:02:03.560 a little bit about your background. You grew up in Canada, 0:02:04.280 --> 0:02:09.760 in Toronto, and then not like it's like New York 0:02:11.000 --> 0:02:16.120 considered Canada, Montreal's Canada, Yukon territories as Canada. So you 0:02:16.160 --> 0:02:18.919 don't think growing up north of the border impacted the 0:02:18.960 --> 0:02:25.160 way you view the economy, economic activities, and technology. Good question. 0:02:25.240 --> 0:02:28.240 I think Toronto's boomed for so long that I don't 0:02:28.240 --> 0:02:31.640 think we were subject to some of the some of 0:02:31.680 --> 0:02:33.920 the stuff that probably happened in the United States. Tront 0:02:33.919 --> 0:02:36.840 has just been in such a long boom. Maybe it's 0:02:36.840 --> 0:02:40.040 because they couldn't leverage themselves. I feel the city has 0:02:40.040 --> 0:02:42.880 become like in l A without an ocean. So I'm 0:02:42.919 --> 0:02:45.720 not I'm not barish on Torona. I don't like it 0:02:45.760 --> 0:02:46.960 as much as I used to in it. But I 0:02:46.960 --> 0:02:48.840 moved away when I was young. I moved to Arizona 0:02:48.880 --> 0:02:52.679 when I was nineteen. So but you still effectively grew 0:02:52.760 --> 0:02:54.640 up north of the border. Oh yeah, I grew up 0:02:54.760 --> 0:02:57.320 love the city. All my friends were there. I grew 0:02:57.360 --> 0:03:00.520 up in a wealthy neighborhood, so I was lucky. Uh 0:03:00.600 --> 0:03:03.520 And so maybe I just didn't see the differences as 0:03:03.560 --> 0:03:06.480 much as you know. We grew up watching CBS affiliates Buffalo. 0:03:06.600 --> 0:03:09.000 We saw Buffalo burn during the seven News. Everybody was 0:03:09.040 --> 0:03:13.519 burning down Buffalo. Cheek to Wauga, Tonawanda. Those our news 0:03:14.080 --> 0:03:16.639 in Buffalo. And the Bills. We were bills, and I 0:03:16.639 --> 0:03:19.600 don't know we were bill. So you moved to Arizona. 0:03:19.639 --> 0:03:22.720 You get an undergraduate degree in Canada, graduate degree in 0:03:23.680 --> 0:03:25.919 UM the United States? How did you find your way 0:03:25.960 --> 0:03:31.320 to angel technology investing? The I came out of a 0:03:31.360 --> 0:03:35.240 school called Thunderbird right after the Gulf War, whose logo 0:03:35.400 --> 0:03:39.200 looks like it's right from the trans never really cared 0:03:39.240 --> 0:03:42.960 about my degree, never mattered to mean, that's worthless. That 0:03:43.120 --> 0:03:46.200 logo looked it was right off of the Transformers movie. 0:03:46.280 --> 0:03:48.520 It was right off the Transfort So the dean was 0:03:48.560 --> 0:03:51.560 Optimus Prime and and I didn't know. They went why 0:03:51.680 --> 0:03:54.680 how does the school go bankrupt? How mismanaged is their endowment? 0:03:55.480 --> 0:03:58.440 They just college doesn't have TARP. That's why to go bankrupt. 0:03:58.480 --> 0:04:03.240 There you go no bailouts. But there's no bailout from 0:04:03.360 --> 0:04:06.720 Howard's graduate school. Listen, it was a dual degree with 0:04:06.880 --> 0:04:11.840 a s U and Thunderbird, which is not So it's 0:04:11.880 --> 0:04:13.960 a good question. I don't know, because you could give 0:04:14.000 --> 0:04:16.560 yourself a doctorate if they don't assist anymore, you could 0:04:16.600 --> 0:04:20.120 promote yourself. I gotta be honest. Is this a funny story? 0:04:20.279 --> 0:04:22.400 The But I'll go quickly because there's more important things 0:04:22.400 --> 0:04:24.360 to talk about. I think I had missed two classes 0:04:24.400 --> 0:04:26.159 and we were in a fight over whether my degree 0:04:26.240 --> 0:04:28.440 was there. I waited a couple of years, walked in 0:04:28.520 --> 0:04:30.560 really dumb and asked for my degree one time, and 0:04:30.600 --> 0:04:33.679 they gave it to me. So I do have that degree. 0:04:33.920 --> 0:04:36.000 But more importantly, I don't know I think it's still 0:04:36.560 --> 0:04:39.039 I don't know. I you know, I don't I know. 0:04:39.120 --> 0:04:41.359 I have the most Twitter followers because they invited me 0:04:41.400 --> 0:04:44.200 to school. They never liked me, but I got invited 0:04:45.360 --> 0:04:50.479 social I got the claim to fame. The dean called me, 0:04:50.560 --> 0:04:52.240 who's now a George Mason who was a really good 0:04:52.279 --> 0:04:56.120 guy to President Angel Cabrera, not the baseball player, And 0:04:56.320 --> 0:04:58.120 uh he called me one day, goes, oh, we're very 0:04:58.160 --> 0:05:02.279 interested in social media and you are the so so 0:05:02.360 --> 0:05:04.800 how did you become the man? How? Let's start first, 0:05:05.200 --> 0:05:09.000 how did you find your way to angel investing? Yeah? 0:05:09.040 --> 0:05:11.600 What a? What a? What a? First of all, very 0:05:11.720 --> 0:05:15.920 I think a lot of angel investing is uh, first 0:05:15.920 --> 0:05:18.280 of all passion. Second of all, it's no different than 0:05:18.279 --> 0:05:23.479 anybody with domain expertise, little luck, little passion um. But 0:05:23.560 --> 0:05:25.919 that's how do you be successful once you're there? Okay, 0:05:25.920 --> 0:05:27.960 how do you go from I'm a business major? Two, 0:05:28.279 --> 0:05:30.120 I have an idea. Why don't I seed a bunch 0:05:30.120 --> 0:05:33.560 of startups? Well? I only seeded one. I graduated. I 0:05:33.600 --> 0:05:35.599 was illegal in the States. It was hard to work. 0:05:35.640 --> 0:05:38.240 I didn't have it was the Gulf War we had. 0:05:39.640 --> 0:05:42.400 And do you want to graduate from school? Uh? The 0:05:42.400 --> 0:05:47.240 country was at war. I was um. It was a recession. 0:05:47.240 --> 0:05:50.480 You had Charles keating, Phoenix was a mess s and 0:05:50.640 --> 0:05:53.760 l Christis was the center of the mess. And you 0:05:53.800 --> 0:05:55.920 know I the only job I could get was as 0:05:55.920 --> 0:06:01.040 a stockbroker for the Principal Group, which became Eppler became 0:06:01.120 --> 0:06:05.159 many things. Principal Group. Yeah, yeah, yeah yeah. But when 0:06:05.160 --> 0:06:07.039 I was doing I was cold calling. It was the 0:06:07.040 --> 0:06:09.640 only job I could get. They sponsored me and I 0:06:09.680 --> 0:06:12.800 cold called this kid Mark scatter Day and he had 0:06:12.839 --> 0:06:14.599 invented a product called the grip. It was a stress 0:06:14.640 --> 0:06:18.440 ball to two meetings later, I realized he didn't have money, 0:06:18.480 --> 0:06:19.839 so I wasn't gonna get him as a client. But 0:06:19.880 --> 0:06:22.359 I had invested in twenty five grand hard during twenty 0:06:22.440 --> 0:06:25.120 five grand, I went to my dad's and Dad backed me. 0:06:25.279 --> 0:06:27.599 We got this great product. Blah blah blah. He asked 0:06:27.600 --> 0:06:29.880 for a business plan. It's a business plan. This is 0:06:29.920 --> 0:06:32.320 just yeah, this is just a home run product. Come on, 0:06:32.720 --> 0:06:35.880 and uh, Unfortunately was probably one of the last times 0:06:35.880 --> 0:06:39.480 I talked to my dad. So you failed backwards into 0:06:40.000 --> 0:06:43.000 through through this product in events are investing exactly. This 0:06:43.040 --> 0:06:46.640 product became the pet Rock. It's in the QBC Hall 0:06:46.680 --> 0:06:51.359 of Fame. Uh. It was giant success, giant success, forty 0:06:51.360 --> 0:06:54.960 million in revenue. Um really got me going in my 0:06:54.960 --> 0:06:57.320 hedge fund world because Mark and I had all this 0:06:57.400 --> 0:07:00.680 cash to manage, and the nineties were point what a 0:07:00.680 --> 0:07:03.880 boom time. It was roll up city and UH in 0:07:03.920 --> 0:07:07.320 our business, which was the specialty business, it became you know, 0:07:07.360 --> 0:07:10.680 I had learned about roll ups. I learned about the 0:07:10.720 --> 0:07:14.680 healthcare indstory, fight Corps and all these uh healthcare roll 0:07:14.760 --> 0:07:17.680 ups if you can remember. And it was a bullmarket 0:07:17.720 --> 0:07:19.840 of like a epic proportions in the night. It was 0:07:19.880 --> 0:07:22.560 a low vall bowl market, and I thought I knew 0:07:22.560 --> 0:07:25.400 what I was doing. It was just a good lucky 0:07:25.720 --> 0:07:28.640 first Angel investment. And really the core of that Angel 0:07:28.680 --> 0:07:31.200 investment was, oh my god, this is the best product 0:07:31.720 --> 0:07:35.240 I had ever felt. Earlier, I used a quote of 0:07:35.280 --> 0:07:37.120 yours and I want to repeat it. And have you 0:07:37.160 --> 0:07:40.800 explained it a little bit? You recently said in print 0:07:41.440 --> 0:07:44.280 There's never been a better time to build the business 0:07:44.320 --> 0:07:48.280 in America than today. Explain I say it every time 0:07:48.280 --> 0:07:51.320 I get asked. November my favorite, the best time I 0:07:51.360 --> 0:07:53.480 ever said it was in front of a bunch of 0:07:53.520 --> 0:07:57.120 Canate Torontonians and two after I'd sold wall Strip and 0:07:57.160 --> 0:07:59.680 it was the crash VIX was a hundred. I posted 0:07:59.680 --> 0:08:01.440 a chart to the SMP on the VIX and I said, 0:08:01.440 --> 0:08:03.400 what are you people doing watching me? You should be 0:08:03.360 --> 0:08:06.240 a building a business. That's really when I started plunking 0:08:06.280 --> 0:08:09.560 down a lot of my money. But today I say 0:08:09.680 --> 0:08:12.280 the same thing. Here's what Well, let me just back up. 0:08:12.640 --> 0:08:16.600 Wall Strip was one of your earlier investments. It was 0:08:16.680 --> 0:08:20.920 a satirical um sort of like the Daily Show for finance, 0:08:21.080 --> 0:08:24.520 only online and three to five minutes segments. You had 0:08:24.640 --> 0:08:30.440 lindsay correct, Libell threw was terrific, right, and um you 0:08:30.480 --> 0:08:33.120 sold that to CBS for a nice jump to change. Yeah, 0:08:33.160 --> 0:08:35.280 we started six months. I cold called Fred Wilson, who 0:08:35.280 --> 0:08:38.200 would backed Cramer at the Street dot com. Fred gave 0:08:38.240 --> 0:08:40.400 me my first fifty K, introducing me to a bunch 0:08:40.400 --> 0:08:43.160 of other vcs. I used the term loosely because they 0:08:43.200 --> 0:08:45.760 all invested without meeting me. Twenty five Grand Brad Feld, 0:08:45.840 --> 0:08:48.560 Mark Pinkas. It was a who's who at the maybe 0:08:48.600 --> 0:08:51.720 not at the time on Fred's phone call, the funniest 0:08:51.720 --> 0:08:53.760 being Mark Pinkas, who said no at first and said 0:08:53.760 --> 0:08:57.600 tell Fred to stop giving up my phone number. Mark 0:08:57.640 --> 0:09:00.560 went to under starred Zinga but he it has been 0:09:00.679 --> 0:09:03.560 a big success. But he did invest, but never really 0:09:03.559 --> 0:09:06.480 give me any at kudos. Marks a pretty tough kid. 0:09:06.600 --> 0:09:09.839 So but so by the way, Fred Wilson runs at 0:09:10.040 --> 0:09:12.600 hopefully we get him in here, hopefully we so. So 0:09:12.800 --> 0:09:16.800 just a little background, Fred runs Venture from my mentor. 0:09:16.840 --> 0:09:20.640 He started Union Score Venture, which has been wildly successful. 0:09:20.800 --> 0:09:23.440 I would say the best East Coast media VC of 0:09:23.440 --> 0:09:27.880 all time. Right and after he's made people enough money 0:09:28.520 --> 0:09:30.360 at a certain point, he calls up and says, hey, 0:09:30.400 --> 0:09:33.400 I'm putting some money into this throw or fifty and 0:09:33.440 --> 0:09:35.880 most people don't even He looked at it as an 0:09:35.960 --> 0:09:39.480 art project. Obviously YouTube it just started. We had chatted 0:09:39.520 --> 0:09:41.440 on his blog for a long time. I never really 0:09:41.480 --> 0:09:43.839 needed anything. I was taking ideas from him. Term sheets. 0:09:43.840 --> 0:09:45.599 Had to build a term sheet. This was you know, 0:09:45.720 --> 0:09:48.200 this was my way into the into the truly learned, 0:09:48.320 --> 0:09:52.720 real education. For it was Fred the school. Fred was 0:09:52.920 --> 0:09:55.480 this is who's going to pay the teamsters type stuff 0:09:55.520 --> 0:09:58.920 from Rodney Danger Phil. So I would cut and pay 0:09:59.040 --> 0:10:01.400 stuff from their blog and build term sheets. And I 0:10:01.440 --> 0:10:04.960 was so grateful. And there's oh five and the uh 0:10:05.040 --> 0:10:07.520 when I saw YouTube. I said, it's time to disrupt them. 0:10:07.600 --> 0:10:10.840 See let's build a show reverse it cramer, a female 0:10:10.880 --> 0:10:12.960 cramer that there's nothing about the markets. Let's see if 0:10:13.000 --> 0:10:14.959 we can educate her and teach her about trend Following 0:10:15.320 --> 0:10:18.640 Fred plunked down, we put our first show on online. 0:10:18.679 --> 0:10:21.320 It was really funny. The Apple Show was the original show. 0:10:21.360 --> 0:10:25.280 It was like, let's get long Apple. Obviously continue to 0:10:25.320 --> 0:10:28.800 be long Apple probably a probably about twenty bucks counting 0:10:28.880 --> 0:10:31.960 for oh now it splits, it's probably like six bucks, 0:10:32.040 --> 0:10:35.280 five six bucks, So home run idea. We covered Nike 0:10:35.400 --> 0:10:38.920 next to Paul Day's companies that I felt. The idea 0:10:39.040 --> 0:10:41.520 was stocks making all time highs that I felt were 0:10:41.520 --> 0:10:45.760 in trends that were everlasting. Obviously what not quite ever lasting, 0:10:45.760 --> 0:10:50.120 but long long lasting, everlasting themes. But the point is, yeah, 0:10:50.240 --> 0:10:52.079 trying to find companies that you didn't have to day trade. 0:10:52.120 --> 0:10:55.199 So uh. We raised six hunder grand sold to CBS 0:10:55.280 --> 0:10:59.360 for five million in six months. Now, so I became 0:10:59.400 --> 0:11:01.080 a little bit of a almost ten x and six 0:11:01.160 --> 0:11:03.520 times that came a little bit of a celebrity. So 0:11:03.559 --> 0:11:07.760 that was kind of the fun little interlude to started 0:11:07.760 --> 0:11:12.080 parlaying that money into Angel investment. The comment, there's never 0:11:12.160 --> 0:11:15.200 been a better time to build. Here's here's here's what 0:11:15.240 --> 0:11:18.760 I said. Go ahead. In nineteen eighty when I started 0:11:18.760 --> 0:11:20.600 a company, it was you had to spend three grand 0:11:20.640 --> 0:11:23.720 on a box, just a box. To get a telephone 0:11:23.760 --> 0:11:25.800 in your room, you had to spend a rent with 0:11:25.880 --> 0:11:28.960 your name on it. You had, um, you had. You 0:11:29.000 --> 0:11:32.319 had to buy PCs for four or five grand. Uh. 0:11:32.440 --> 0:11:36.400 It was just ridiculous. Today you do it at Starbucks 0:11:36.480 --> 0:11:40.040 with the laptop that you can let your parents you Now, 0:11:40.120 --> 0:11:42.760 anybody can start a product. The other thing is number 0:11:42.760 --> 0:11:45.160 one way to get into business by yourself, to start 0:11:45.200 --> 0:11:48.839 a franchise. Right, Okay, so so even today, UH to 0:11:48.960 --> 0:11:51.120 toot one of my portfolio companies. We you know, with 0:11:51.280 --> 0:11:53.559 Lending Club going public and on Deck Capital going public. 0:11:53.600 --> 0:11:56.400 Now we're going to see the verticalization of these platforms 0:11:56.400 --> 0:11:58.480 were getting money. I invest in a company called apple 0:11:58.520 --> 0:12:02.680 Pie Capital, which helps franchise e s UH crowdsource money 0:12:02.720 --> 0:12:06.600 to open their first UH franchise operations. So the franchise 0:12:06.800 --> 0:12:09.880 ors are now because the banks aren't lending going on 0:12:09.920 --> 0:12:12.640 these platforms or someone being apple poecat like a kick 0:12:12.640 --> 0:12:16.640 Starter for angeling starter but in a very specific niche 0:12:16.679 --> 0:12:19.880 of franchisees. Yeah, which is business in America. It's the 0:12:20.040 --> 0:12:22.440 it's the it's the pulse of America. Fran I want 0:12:22.440 --> 0:12:25.160 to open to McDonald's saying McDonald's because we're not doing 0:12:25.160 --> 0:12:27.400 business with me yet. But companies in the Midwest, whether 0:12:27.440 --> 0:12:30.199 they're like this big jewelry franchise or a pizza franchise 0:12:30.400 --> 0:12:33.280 where it's approven franchise, if you follow the instructions, you 0:12:33.280 --> 0:12:36.440 can make the money. Uh, and they can't. Banks can't 0:12:36.440 --> 0:12:39.880 fund them. So now you know that's a great yield 0:12:39.920 --> 0:12:43.400 type play for institutions. So put two hundred thousand across 0:12:43.440 --> 0:12:47.000 a diversified portfolio of franchises. So when I say never 0:12:47.040 --> 0:12:49.080 been a better time to start a business, you go 0:12:49.120 --> 0:12:51.800 start a franchise company right now. A business you can 0:12:51.920 --> 0:12:54.840 go start, You go get a job anywhere you've got 0:12:54.880 --> 0:12:58.040 Craigslist LinkedIn. Uh, there's no excuse not to be able 0:12:58.080 --> 0:13:02.280 to just show up at a company and just approve yourself. Yeah, 0:13:02.360 --> 0:13:04.360 you can go learn to code for thirteen grand and 0:13:04.440 --> 0:13:06.920 one of these private schools and Nila, build a game. 0:13:06.920 --> 0:13:08.840 Build I'm not saying you have to go build something 0:13:08.880 --> 0:13:11.480 because there's a lot more skills and marketing and sales 0:13:11.559 --> 0:13:13.800 and getting your first customers and figuring out all that 0:13:13.840 --> 0:13:15.959 to do. But you can get your skills free. You 0:13:16.200 --> 0:13:18.480 get your skills for basically free. It's more than just 0:13:18.559 --> 0:13:22.520 the basic technology, it's everything that surrounds coming up with 0:13:22.559 --> 0:13:26.960 an idea, making it sellable, and then doing everything surrounding 0:13:26.960 --> 0:13:29.280 it beyond the technology. And you can do this while 0:13:29.280 --> 0:13:30.839 you have a job. So, I mean, you know, I 0:13:30.920 --> 0:13:34.040 always recommend people don't take the leap until you really 0:13:34.080 --> 0:13:35.840 are committed to being an entrepreneur. A lot of people 0:13:35.880 --> 0:13:38.720 call themselves entrepreneurs. I think we're at a stage where 0:13:39.160 --> 0:13:41.480 there's a lot of entrepreneurs. There's these people that you know, 0:13:41.559 --> 0:13:43.640 have a job, they think they have another business. You 0:13:43.640 --> 0:13:45.560 don't have a business until you're doing it full time. 0:13:46.600 --> 0:13:49.640 You're not committed. Uh no real investors going to give 0:13:49.679 --> 0:13:51.439 you money if you haven't taken the leap away from 0:13:51.520 --> 0:13:54.600 or at least guys like me aren't. But um, you know, 0:13:54.679 --> 0:13:56.440 it's never been a better time to take that leap 0:13:57.679 --> 0:13:59.760 to do research. All these things that used to be 0:13:59.760 --> 0:14:03.160 behind needs now in the wall are now there. Uh. 0:14:03.240 --> 0:14:06.480 Your phone is forty bucks a month, eighty bucks a month. 0:14:06.960 --> 0:14:09.720 That is your your your business. You've got relate i Q. 0:14:09.880 --> 0:14:11.760 You can go build a CRM product, you go use 0:14:11.760 --> 0:14:13.960 a CRM product on your own, start your business Gmail, 0:14:14.679 --> 0:14:19.720 relate i Q. That sounds like it's all very straightforward stuff, 0:14:19.800 --> 0:14:21.880 not a lot of out of pocket cost. One of 0:14:21.920 --> 0:14:25.440 the things I wanted to talk specifically about today. You know, 0:14:25.480 --> 0:14:28.480 we always hear about the the idea, here's a world 0:14:28.560 --> 0:14:32.680 changing idea. But as an investor in startups, I want 0:14:32.680 --> 0:14:36.920 to throw five bullets out and you tell me what's important, 0:14:37.000 --> 0:14:40.920 what's less important, what's not important? The founders, the idea, 0:14:41.400 --> 0:14:45.280 the technology, the business model, or the valuation. What are 0:14:45.280 --> 0:14:48.480 those things matter most? I see them and getting so 0:14:48.600 --> 0:14:52.040 I would throw out a technology doesn't not important, Well 0:14:52.080 --> 0:14:54.360 I don't think so. So over the tech behind Uber 0:14:54.440 --> 0:14:57.240 not significant doesn't work unless there was Google Maps. That's 0:14:57.280 --> 0:15:00.920 theoretically it's not even their technology. Well it is, but 0:15:00.960 --> 0:15:03.600 I mean you gotta blend it with Google Maps. Where 0:15:03.600 --> 0:15:05.480 would over show up? They wouldn't know where to show up. 0:15:05.680 --> 0:15:07.680 So you know, I can talk about that with all 0:15:07.680 --> 0:15:09.640 the things that I do. You know, a mashing just 0:15:09.760 --> 0:15:13.360 like speech up. So I think Tommy domain expertise in 0:15:13.440 --> 0:15:15.400 the founders matter. You know, I'm forty nine years old. 0:15:15.440 --> 0:15:17.800 I'm not writing checks like a surpriad chicken anymore. This 0:15:17.960 --> 0:15:20.880 gray and prey. I'm looking for founders with domain expertise, 0:15:20.920 --> 0:15:23.320 because you're gonna have to get You're gonna get hit 0:15:23.360 --> 0:15:25.360 over the head. There's gonna be false starts, there's gonna 0:15:25.360 --> 0:15:28.360 be all kinds of issues. I think we're you know, 0:15:28.800 --> 0:15:32.120 uh still called Valley has been fanatical about these young kids. 0:15:32.160 --> 0:15:35.480 I think as the market boom matures, uh, you know, 0:15:35.520 --> 0:15:38.400 having some domain experience matters. So founders matter. The idea 0:15:38.480 --> 0:15:41.960 obviously matters because with the founders they have to have 0:15:41.960 --> 0:15:44.480 passion around the idea and some knowledge around the idea. 0:15:44.600 --> 0:15:50.720 So um, it's a founders first, uh value technology lass 0:15:50.800 --> 0:15:53.480 valuation second last. Because if the founders are great, the 0:15:53.520 --> 0:15:55.360 market idea is great, and the idea is great, you're 0:15:55.360 --> 0:15:57.960 not gonna have that much choice over what the valuation is. 0:15:58.200 --> 0:16:01.240 My biggest mistakes so far have been in passing based 0:16:01.280 --> 0:16:06.480 on valuation Twitters and Twitter at twenty million valuation in 0:16:06.520 --> 0:16:12.720 two thousands and seemed crazy. Luckily, I am an investor 0:16:13.480 --> 0:16:16.400 through Bitley and tweet Deck and many other companies in 0:16:16.480 --> 0:16:21.480 that system they bought. They bought some Eyes, which was 0:16:22.520 --> 0:16:25.160 the search engine of Twitter. So luckily I ended up 0:16:25.200 --> 0:16:27.160 with a lot of Twitter shares and then a very 0:16:27.200 --> 0:16:30.600 low profect the same valuation. And I basically tweet deck 0:16:30.880 --> 0:16:32.800 as well, the same thing. So I backed into a 0:16:32.880 --> 0:16:35.720 lot of Twitter shares. But and and Twitter inspired me 0:16:35.760 --> 0:16:38.440 to start stock Twitter, which is now, like you said, 0:16:38.520 --> 0:16:43.000 the largest social network for traders. So founders idea, um, 0:16:43.160 --> 0:16:45.360 business model matters. I think as we get late in 0:16:45.360 --> 0:16:47.040 the boom, you gotta have a thought about how you're 0:16:47.040 --> 0:16:49.000 going to do business. So you now just hinted it. 0:16:49.240 --> 0:16:52.320 My next question as we get like technology last and 0:16:52.400 --> 0:16:58.120 valuation last. So here's the other question. So is the 0:16:58.240 --> 0:17:01.520 startup market frothy? We've been here for five years, Ah, 0:17:01.640 --> 0:17:05.160 Silicon Valley, it's a bubble, it's this Is it frothy? 0:17:05.320 --> 0:17:08.119 Does it? Is it? Always? Is this abnormal? Tell us 0:17:08.160 --> 0:17:12.240 the state of technology investing in Well, like I said, 0:17:12.240 --> 0:17:14.639 I don't think there's enough entrepreneurs. There's there's Cash has 0:17:14.680 --> 0:17:18.240 become a commodity. Uh. Platforms to invest, whether it's angel 0:17:18.320 --> 0:17:20.960 List or Kickstarter or apple Pie Capital or lending Club, 0:17:21.280 --> 0:17:24.119 have become helped cash become a commodity interest rate to 0:17:24.240 --> 0:17:26.879 zero or forcing people to invest. So that's where the 0:17:26.880 --> 0:17:29.159 bubble is. The bubble is in the commodity of cash, 0:17:29.200 --> 0:17:32.440 I mean bubble cash that they've created another one. Bitcoin 0:17:33.040 --> 0:17:35.400 capital isn't as valuable as it once was because there's 0:17:35.400 --> 0:17:37.600 so much. There's so much of it and leields are 0:17:37.600 --> 0:17:40.200 so low. So don't kid yourself what we are shortage 0:17:40.240 --> 0:17:43.040 of our great entrepreneurs, but domain experience. Who knows anything 0:17:43.080 --> 0:17:44.720 about But you go back a kid or to do 0:17:44.760 --> 0:17:46.720 a blockchain or a bitcoin thing. They may know a 0:17:46.760 --> 0:17:49.359 little bit about tech, they know nothing about how the 0:17:49.640 --> 0:17:52.480 regulations work in the industry works. So there's a huge 0:17:52.560 --> 0:17:55.679 disconnect there. The second disconnect is, you know, there's a 0:17:55.680 --> 0:17:58.359 lot of great ideas, but good luck finding an entrepreneur 0:17:58.440 --> 0:18:01.280 the execute soup to nuts on that. Including myself, it's 0:18:01.359 --> 0:18:03.560 very hard to do that. I haven't turned out to 0:18:03.560 --> 0:18:05.359 be able to do everything I wanted with stock twids 0:18:05.359 --> 0:18:07.360 because there's a lot of moving parts to how all 0:18:07.359 --> 0:18:10.240 these things work and timing in raising the right capital, etcetera. 0:18:10.240 --> 0:18:13.040 It's a very subtle thing to be a great entrepreneur. 0:18:13.359 --> 0:18:16.280 And so I'm biased in the sense that my big 0:18:16.320 --> 0:18:19.400 winds have come from great entrepreneurs. So when we look 0:18:19.400 --> 0:18:22.240 at when we look at the issue of of the bubble, 0:18:22.960 --> 0:18:25.720 is this just too much cash taste chasing too few 0:18:25.880 --> 0:18:28.200 entrepreneurs or do you think this is a full blown 0:18:28.240 --> 0:18:31.400 bubble that ends the two thousand ended? And no, this 0:18:31.480 --> 0:18:33.679 is not. I mean, let's let's let's really look at 0:18:33.680 --> 0:18:35.880 this market. And I see crashes and oil, I see 0:18:35.920 --> 0:18:39.080 crashes and currencies. I see crashes in Russia, and I say, well, 0:18:39.280 --> 0:18:41.320 you know, the bubbles have never been like this, where 0:18:41.320 --> 0:18:44.520 this SMP continues to rise through it and race continue 0:18:44.560 --> 0:18:46.600 to decline. So I would say I went down almost 0:18:46.600 --> 0:18:50.960 from the peak. I don't I think what we have 0:18:51.119 --> 0:18:55.440 a bubble in h is this idea of being an 0:18:55.560 --> 0:18:58.320 entrepreneur and that's dangers. So it's it's not it's you know, 0:18:58.440 --> 0:19:01.280 similar to nineties and everybody said, hey, I could be 0:19:01.320 --> 0:19:04.800 a day trader. Similar, exactly similar. And when people thought 0:19:04.800 --> 0:19:07.119 they could be a day trader, everybody thinks they can 0:19:07.119 --> 0:19:08.679 start a company. And I'm saying, if you have a 0:19:08.720 --> 0:19:11.600 good job, don't kiss a goodbye so quickly. And if 0:19:11.600 --> 0:19:14.240 you don't have a good job, absolutely start looking to 0:19:14.440 --> 0:19:18.439 build your network. I mean now anybody can build their network. 0:19:18.480 --> 0:19:20.760 My fund is called social leverage. The whole premise based 0:19:20.800 --> 0:19:24.520 on financial leverage was a bubble that was the last 0:19:24.560 --> 0:19:26.919 true bubble and then ended in two thousand eight, and 0:19:26.920 --> 0:19:29.560 we still are paying the price for that. But social 0:19:29.600 --> 0:19:32.320 leverage is a brand new boom, and that's people using 0:19:32.320 --> 0:19:37.119 the networks LinkedIn Twitter, Facebook to accelerate themselves, kind of 0:19:37.160 --> 0:19:40.720 like the peloton, to accelerate themselves through learning curves, mentorship, 0:19:40.960 --> 0:19:42.960 what I did with Fred and Brad in terms shoots, 0:19:43.000 --> 0:19:44.520 and what you can do on stock, Twits and Twitter 0:19:44.600 --> 0:19:48.040 now to accelerate yourself. I want to talk a little 0:19:48.040 --> 0:19:51.600 bit about some of the lessons learned from investing. You 0:19:51.600 --> 0:19:55.760 mentioned earlier you passed on Twitter. That's a giant mess. 0:19:55.800 --> 0:19:57.959 You ended up backdooring into a lot of Twitter shares. 0:19:58.320 --> 0:20:02.040 But how does one deal with, Hey, this is a 0:20:02.040 --> 0:20:04.199 good investment and it turns out not to be or 0:20:04.240 --> 0:20:06.080 this is a band investment it turns out to be great. 0:20:06.359 --> 0:20:08.280 What do you learn from that process? What do you 0:20:08.320 --> 0:20:13.000 take away from that? Oh? You know the number one question. 0:20:13.040 --> 0:20:16.639 I guess if you're gonna call me a master in business, 0:20:17.080 --> 0:20:20.920 it would be because it goes down to the basics, right, 0:20:21.160 --> 0:20:24.440 you can learn all this stuff and textbooks. Um, and 0:20:24.520 --> 0:20:26.639 I have a kid's fifteen and seventeen. I wonder if 0:20:26.640 --> 0:20:28.639 I want them even go into business school because it 0:20:28.640 --> 0:20:30.960 really comes down to pie, right, how do you slice 0:20:30.960 --> 0:20:34.119 the pie? And then it comes down to foundation. How 0:20:34.240 --> 0:20:37.520 do you structure the company? You know at the beginning, 0:20:37.600 --> 0:20:40.679 because the mistakes you make at the beginning over those 0:20:41.040 --> 0:20:43.320 simple things of understanding how you're splitting up a pie 0:20:43.320 --> 0:20:46.040 and what you really own, the type of shares you own, 0:20:46.040 --> 0:20:48.440 the type of shares everybody else owns, and the way 0:20:48.840 --> 0:20:52.560 you structure the company. Meaning if then then that, if this, 0:20:52.680 --> 0:20:54.480 then that you have to assume you've been through this. 0:20:54.560 --> 0:20:56.399 You have to assume how you're gonna fight with your 0:20:56.400 --> 0:21:00.920