Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, we've been
Speaker 1: talking a lot about tech startups VC, but you know,
Speaker 1: this space is so big and it's so opaque because
Speaker 1: we don't really know what's going on with VC fund
Speaker 1: of performance. They don't really know what's going on with
Speaker 1: startup earnings or most likely startup losses, that I feel
Speaker 1: like it can never hurt to get more perspective. Yeah,
Speaker 1: we've had this conversation before. You know, it's easy enough
Speaker 1: for a publicly listed stock. You just look at a
Speaker 1: line on a screen and you get some sense of
Speaker 1: how things are going much much harder in venture capital world.
Speaker 1: And then, just to add to that, you also have
Speaker 1: this really interesting culture and dynamic around VC and angel
Speaker 1: investing where it seems like everyone is incentivized to pour
Speaker 1: more money into stuff and to get the valuations up.
Speaker 1: And then the question is what happens when that dynamic
Speaker 1: starts to go away or at least becomes a little
Speaker 1: bit more challenged, which is what has happened over the
Speaker 1: past few months. Right, all kinds of interesting dynamics publicly
Speaker 1: listed companies like Amazon or Facebook. They might come on
Speaker 1: struggling times, but I don't think anyone really doubts the
Speaker 1: viability of the business with startups. Of course, some of
Speaker 1: these companies may just not have business models that work.
Speaker 1: They may be a long way from anything resembling profitability,
Speaker 1: and have might have to make tough decisions about growth
Speaker 1: for survival. All kinds of sort of tricky questions arise
Speaker 1: in the private tech world that you just don't see
Speaker 1: when we're talking about public stocks exactly. So let's talk
Speaker 1: about it more. I want to jump right in. We
Speaker 1: have a big guest today. We're gonna be speaking with
Speaker 1: Jason Kellacanis. He is a popular podcaster on the All
Speaker 1: In podcast. He is an author, he's an angel investor
Speaker 1: who has done over three deals over eleven years, very
Speaker 1: outspoken on former journalist, former journalist, former blogger specifically over
Speaker 1: many years, and he's going to talk to us about
Speaker 1: the state of the world. Jason, thank you so much
Speaker 1: for coming on. Odd lots O big fan of the show.
Speaker 1: Thanks for having me. You know I d M do
Speaker 1: you you know a while back about having you on,
Speaker 1: and then I looked in our d M history. We
Speaker 1: haven't really talked to much, but I saw like in
Speaker 1: like two thousand nine, You're like, Hey, I'm going to
Speaker 1: be in New York and meeting some people for dim sum.
Speaker 1: Do you want to come? And I don't think I
Speaker 1: responded or I definitely didn't go. But I should have
Speaker 1: because you've had like a pretty great like thirteen years
Speaker 1: or ten years since then, so I should have been
Speaker 1: this such a humble brag. I was too busy to
Speaker 1: respond to the big angel investors m me to grab line.
Speaker 1: I blew it because you've you know, I'm here, but
Speaker 1: you've had a good This is uh, this is my
Speaker 1: credo as an angel investor. Actually, I have twenty or
Speaker 1: so people in my investment company, Launch and the syndicate
Speaker 1: dot com. Yeah. The first thing I teach new investors
Speaker 1: is never underestimate anyone, because we will see people from
Speaker 1: you know, a random assortment of beginnings and weird products
Speaker 1: and terrible ideas and and uh, all of a sudden
Speaker 1: they changed the world. And so you know, if you
Speaker 1: if you look at the first version of like uber
Speaker 1: the app, Travis hated it, and I was like, really ugly,
Speaker 1: and you know, he was just beside himself at it
Speaker 1: Wash you invested in it. I think that round was
Speaker 1: four and a half million dollars. Yeah, five million dollars
Speaker 1: something like that. In Calm dot com was worth five
Speaker 1: million dollars. When we invested, Density was around four million dollars.
Speaker 1: Density dot ioh that's another unicorn we invested in so
Speaker 1: and that cohort. When I started angel investing was right
Speaker 1: after the Great Financial Crisis two thousand nine, two thousand
Speaker 1: and ten. What happened was I um was running a
Speaker 1: company called Mahalow dot com which is now called inside
Speaker 1: dot com. It's still running to millions of dollars a
Speaker 1: year in revenue. And Sequoia rule off Botha, who was
Speaker 1: the latest partner there. He was he had just started
Speaker 1: as a partner there, working with Michael Murritz and Doug Leoni.
Speaker 1: And they said, you know, you introduced us to all
Speaker 1: these really cool companies. Would you be a scout for us?
Speaker 1: And I said, how did that? How would that work?
Speaker 1: And they said, well, we'll give you money and then
Speaker 1: we'll split the returns. And I said, well, don't you
Speaker 1: get and two percent? Like management? Vie said, oh, we
Speaker 1: get more than that. We you know, we're pretty good
Speaker 1: at this but this is gonna be small potatoes. So
Speaker 1: we're just gonna ask you and uh Sam Altman and
Speaker 1: you know this other person to be Scouts for us.
Speaker 1: And Sam famously did Stripe as an investment in the
Speaker 1: Scouts program, and I did Uber and Thumbtack and a
Speaker 1: couple of others, and three of the first seven deals
Speaker 1: I did became unicorns. So you mentioned Credo at the
Speaker 1: very beginning, and before we had this conversation, I was
Speaker 1: looking on your Twitter account and you tweeted something that
Speaker 1: intrigued me. You referred to a basic technique that you've
Speaker 1: learned in the dot com era. Trust the founder, but
Speaker 1: believe the product and customers. What did you mean by
Speaker 1: that and how is it relevant? Now? That's a great question.
Speaker 1: So you know, when you're journalist, which is where I
Speaker 1: started in the nineties, when I was coming to the
Speaker 1: dot com era, people were really well media trained. They
Speaker 1: were spinning, you know, really crazy yarns, and I was
Speaker 1: just trying to figure out, like, is Scott Karnet from
Speaker 1: About dot Com the real deal? And is you know,
Speaker 1: this woman from my village the real deal? Or are
Speaker 1: they you know, Charlottean's and you know, is this double
Speaker 1: click thing that Kevin O'Connor is doing, is it real?
Speaker 1: You know? That was kind of the job of a
Speaker 1: journalists asked questions and then maybe when we actually used
Speaker 1: the products and when we actually talked to customers or
Speaker 1: we talked to employees, we actually then got the ground truth.
Speaker 1: And so it was that skills that I learned as
Speaker 1: a journalist doing Silicon Only Reporter, my second magazine when
Speaker 1: I was in my twenties in New York in the nineties,
Speaker 1: which was awesome New York in the nineties was fantastic
Speaker 1: um and so got a very similar conversation on all thoughts.
Speaker 1: Just recently about clubbing, we had the Globe dot Com
Speaker 1: CEO Stephen patter Not. Yeah, I got some good stories
Speaker 1: about those guy, do not I covered them. I'll tell
Speaker 1: you that for in a second. But anyway, you have
Speaker 1: to look at the reality of what a startup is.
Speaker 1: A startup is a group of people a founder plus
Speaker 1: whoever they can recruit, building a product that then has
Speaker 1: some contact with customers. And when evaluating startups, it's important
Speaker 1: to meet great founders and hear what they have to say.
Speaker 1: I would argue it's more important to use the product
Speaker 1: and talk to the customers. And that has been something
Speaker 1: that in crypto as one example, or the dot com
Speaker 1: era as another example, or in a boom market that
Speaker 1: people forget and so you know you can trust but
Speaker 1: verify as a really good management philosophy. And this is
Speaker 1: my philosophy of startups, which is, yeah, sure, talk to
Speaker 1: the founder, but don't forget to talk to the customers,
Speaker 1: and don't forget to use the product. Can I ask
Speaker 1: a question about now that you've seen several cycles of
Speaker 1: booms and bus and participated them, and if my memory
Speaker 1: is correct, and tell me if I'm wrong. My memory
Speaker 1: is that your Tech magazine in the late nineties either
Speaker 1: you held onto it too long. You didn't sell at
Speaker 1: the top, and so you had a chance to make
Speaker 1: the same amount of money, but you held on too
Speaker 1: long and then it went to zero. And then you
Speaker 1: did another media thing in the early two thousand's weblogs, Inc.
Speaker 1: Which kind of competed with Gawker. And I kind of felt,
Speaker 1: like Mimi felt was at the time you sold too early,
Speaker 1: or that you overcorrected from the magazine experience because you're like, well,
Speaker 1: I just gotta get some Is that correct? And sort
Speaker 1: of like, what did you learn about climb and bus
Speaker 1: from those experiences? Yeah, as many um folks who have
Speaker 1: gotten rich said, you know, like how did you get rich?
Speaker 1: Selling too soon? Uh? Is like a really good credo
Speaker 1: as well. You learn these heuristics over time. And so
Speaker 1: Alan Meckler had offered me twenty million dollars for selicon
Speaker 1: HOI Reporter, you know before the boss. I didn't take it.
Speaker 1: I was just a poor kid from Brooklyn. But you know,
Speaker 1: I still like in our report it was at eleven
Speaker 1: million dollars in revenue at seventy five employees, and I
Speaker 1: built it off my credit cards. So I was kind
Speaker 1: of on a rush. I had done New York, you know,
Speaker 1: to the nines, like you know, it was on Charlie Rose,
Speaker 1: had a ten thousand word New Yorker profile. I mean
Speaker 1: I had checked every box in terms of you know,
Speaker 1: feeling my oats as a you know, the next media mogul.
Speaker 1: You know, I felt pretty good about things. And then
Speaker 1: the dot com bust happened, and I wound up selling
Speaker 1: the assets of Silicon Reporter to dal Jones and got
Speaker 1: two years of salary. They fired me a week after
Speaker 1: I sold it. To them and paid out my two
Speaker 1: year contract because they didn't want me there because there's
Speaker 1: too much of a too much trouble. And then I
Speaker 1: started weblogs, Inc. And when I started weblogs, Inc. The
Speaker 1: goal was to create a hundred blogs and put ads
Speaker 1: on them. And the idea of putting ads on blogs was,
Speaker 1: you know, antithetical to the concept, and people like Dave
Speaker 1: Winer and other folks were like, Hey, you can't have
Speaker 1: ads on blogs, and I was like, I think we
Speaker 1: could on a weblog have ads. And Nick Denton and
Speaker 1: I started going at it, competing against each other, and
Speaker 1: a O L offered me thirty million dollars for an
Speaker 1: eighteen month old company, and I was like, well, that's
Speaker 1: ten million more than I was going to get for
Speaker 1: Silicon Reporters. So and I only have one investor, Mark Cuban,
Speaker 1: and I was like, yeah, I'm going to secure the
Speaker 1: bag and uh, you know, that's how I got my
Speaker 1: first chip and it was one of the greatest trades
Speaker 1: I ever did. Now Denton wound up selling for a
Speaker 1: hundred fifty million, but then gave it all to UH
Speaker 1: Computer Tel And I would guess via, I'm going to
Speaker 1: guess that Nick and I did about the same on
Speaker 1: exits for that, except he spent ten years of his
Speaker 1: life on it in two years on a trial, and
Speaker 1: I did it for eighteen months. So there's also the
Speaker 1: value of time. What was the transition like from journalists
Speaker 1: to angel investor? Because I imagine journalism probably gives you
Speaker 1: a decent set of skill sets to do due diligence
Speaker 1: on a company and do your research and you know,
Speaker 1: go out and meet and talk to people. But on
Speaker 1: the other hand, I imagine there's quite a bit of
Speaker 1: maybe culture clash between really cynical journalists yeah, and optimistic
Speaker 1: changing the world Silicon Valley types, or at least that's
Speaker 1: how I imagine it. That is actually the perfect summary.
Speaker 1: And I is just talking to Molly what about that
Speaker 1: today because she just did this transition. So I would say,
Speaker 1: if you're a good journalist, like you know, really good
Speaker 1: journalist who knows has answered questions, knows how to understand
Speaker 1: a story, triangulate the truth by talking to multiple sources,
Speaker 1: I think you start on second base. I think you're
Speaker 1: basically of the way there, and if you have a network,
Speaker 1: you might be six of the way there. If you
Speaker 1: had a brand, you might be sixty of the way there.
Speaker 1: So the only thing you have to learn it you're
Speaker 1: exactly correct. As journalists, we're telling stories, and yeah, we
Speaker 1: want to be cynical. We want to really assume that
Speaker 1: what's being told to us is some percentage of the truth.
Speaker 1: But Raschaman style, like the Kurosawa film, there's usually three
Speaker 1: versions of the truth, yours mind and the actual truth,
Speaker 1: or there could be even more versions in a story
Speaker 1: that's super complicated, like say their nose or whatever. So
Speaker 1: you start triangulating the truth and that goes back to,
Speaker 1: you know, the tweet that you quoted earlier, which is, hey,
Speaker 1: for me, there's really three things here. There's the team,
Speaker 1: there's the product as customers that it can also be
Speaker 1: compared letters in there. So you start triangulating around those things.
Speaker 1: You do have to switch from and it happens organical
Speaker 1: because when you start working with founders and backing them,
Speaker 1: you then put yourself in a position of power. You
Speaker 1: put yourself in a position to be the person who
Speaker 1: is not telling their story but enabling their story, and
Speaker 1: then you move from the sort of cynical approach to
Speaker 1: this optimistic approach. Now, the fact is half of the
Speaker 1: founders you'll meet will be some version of incompetent, not ready,
Speaker 1: you know, delusional, or you know, in some small percentage
Speaker 1: of the cases, you know, frauds, crooks, Charlatan's, and then
Speaker 1: the top half will be earnest, qualified and you know,
Speaker 1: ready to change the world. And so your job is
Speaker 1: to figure out which which group you're betting on and
Speaker 1: making sure that you invest in the right group. And
Speaker 1: you're not gonna get it right every time, but you
Speaker 1: do have to come to it with a radical optimism.
Speaker 1: And so you are basically making a long list of
Speaker 1: things that can go wrong in a business, and then
Speaker 1: a short list of things that can go right. And
Speaker 1: then if you're really trying to go for an outli
Speaker 1: or success a meditation app or you know, a cab company,
Speaker 1: which were my two biggest hits to date, you're going
Speaker 1: to have to say, Okay, I'm gonna rip up the
Speaker 1: list of what could go wrong and just assume the
Speaker 1: founder will figure out ways to navigate that with their team,
Speaker 1: and then look at what could go right. And if
Speaker 1: you figure out what can go right, then you could
Speaker 1: hit a hundred x a thousand x two thousand x
Speaker 1: investment and that power law is what venture is about.
Speaker 1: You mentioned power law distribution, and this is something that
Speaker 1: has come up a number of times when we've been
Speaker 1: talking about VC lately, this idea that the model basically
Speaker 1: rests on. You know, you throw money at a bunch
Speaker 1: of companies and you're really hoping that one of them
Speaker 1: will hit it out of the park. And I guess
Speaker 1: my question is, given the current dynamics, you know, it
Speaker 1: seems like some of the froth is going out of
Speaker 1: the market. Is that sustainable, Like should you always be
Speaker 1: aiming for the biggest company or could it make sense
Speaker 1: in VC land to maybe aim for not unit horns,
Speaker 1: but like nice looking horses with medium growth trajectories that
Speaker 1: do well but aren't necessarily superstars. Yeah, it's just not
Speaker 1: possible to make the single and double concept work. Um.
Speaker 1: Single and doubles is what public market investors do or
Speaker 1: late stage investors do, and all the frauth's out of
Speaker 1: the market, and we've we've now cut into the we're
Speaker 1: now pouring out the cappuccino. So it's really been quite
Speaker 1: a contraction. Now. It's it is unbelievable how hard this
Speaker 1: has fallen for certain companies and how far it's corrected,
Speaker 1: and that's the best time to invest. So absolutely, I'm
Speaker 1: I'm not happy about a downturn, obviously, but I am
Speaker 1: extraordinarily optimistic about the returns will see on the companies
Speaker 1: we invest in over the next three years. This is
Speaker 1: going to be the best possible time to put money
Speaker 1: to work, and I'm I'm redoubling my efforts trying to
Speaker 1: invest in twice as many companies in the coming years
Speaker 1: because valuations have come back down to reality. And I'd
Speaker 1: say two out of three companies I wanted to invest
Speaker 1: sent over the last two or three years. If I
Speaker 1: didn't invest, the number one reason I didn't invest was
Speaker 1: because of valuation. The companies just the math didn't make
Speaker 1: sense to invest in a company that has no product
Speaker 1: in market at a fifty million dollar valuation, or if
Speaker 1: it's crypto, it might be a hundred to a billion
Speaker 1: dollar valuation, which just defies logic. And you know, I
Speaker 1: grew up with mentors like Michael Mritz, Doug Leoni, Bill Gurly,
Speaker 1: you know, George Zachary, people who had been in the
Speaker 1: game for a long time. And then my contemporaries and
Speaker 1: I chum up David Sachs, etcetera. You know who who
Speaker 1: grew up investing together. Over the last decade, we all
Speaker 1: looked at revenue and customers and try to build models.
Speaker 1: And the last two years people throw that out the
Speaker 1: window and it just didn't make sense to a lot
Speaker 1: of us. So I spent the last two years raising
Speaker 1: money for my existing portfolio and selling positions and existing
Speaker 1: companies largely and mean still investing in the earliest stages.
Speaker 1: But now I'm it's young um time. All right, I
Speaker 1: have a thousand questions, But since you mentioned cham, I'm
Speaker 1: going to ask you a question that's kind of about him,
Speaker 1: but it's actually much more about a lot of investors
Speaker 1: these days. And I think you've even talked about it
Speaker 1: on one of the All In episodes. But we're in
Speaker 1: a moment where, thanks to crypto and I guess thanks
Speaker 1: to SPACs as well in the case of Chama, a
Speaker 1: lot of vcs are invested in publicly liquid assets. Cryptocurrencies
Speaker 1: are the most common. But of course, you know, Cham
Speaker 1: for much of one brought all these spacts, would talk
Speaker 1: about them, They've all done basically terribly in many cases vcs.
Speaker 1: You know, throughout history, vcs were invested in companies that
Speaker 1: public retail just didn't have access to for several years.
Speaker 1: Now in any of them are invested in cryptocurrencies that
Speaker 1: the public can trade. Do you think this is a
Speaker 1: problem that so many investors historically VC type investors are
Speaker 1: basically either tacitly or explicitly pumping their bags on social
Speaker 1: media for retail. Good question, Yeah, it's a great question. Um,
Speaker 1: it's really two different groups. So I'd say SPACs and
Speaker 1: crypto are very different, and I'll explain why. So let
Speaker 1: me start with crypto because that's where the problem is.
Speaker 1: So crypto has created an entire shadow, in my mind,
Speaker 1: illegal stack um that is skirting securities regulations. I believe
Speaker 1: the overwhelming majority of tokens are securities, but they're being
Speaker 1: dumped onto retail investors, and this is being done explicitly
Speaker 1: by venture firms. I won't mention any names who are
Speaker 1: buying into companies early getting into tokens, and then those
Speaker 1: tokens are being listed on exchanges and the public can
Speaker 1: buy into them. The public is buying into them a
Speaker 1: common enterprise in order to get a financial gain. They
Speaker 1: have no interest in using those tokens for any utility.
Speaker 1: These are not Chuck e Cheese tokens. They're not United Miles.
Speaker 1: We all know what's going on here, and to then
Speaker 1: liquidate your position in the second or third year of
Speaker 1: the crypto company. I'm not going to mention any specific
Speaker 1: companies here or firms, but you don't need to be
Speaker 1: a genius to just look at the activity out there.
Speaker 1: This is going to blow up in the faces of
Speaker 1: the venture community. Regulators are very permissive in our country.
Speaker 1: Our country, generally, our legal system is you're innocent until
Speaker 1: proving guilty. But I think there's a lot of guilty
Speaker 1: parties that you know, flipped securities and called them tokens.
Speaker 1: And I think the sec Justice Department is in the
Speaker 1: first inning of taking action against these companies. And sure
Speaker 1: it would be better if they had given us clear guidelines.
Speaker 1: But having been in the room for these discussions over
Speaker 1: the past five years, people suspended disbelief. They shopped for
Speaker 1: attorneys who told them what they wanted to believe about
Speaker 1: tokens and the how we test that. You know, listen,
Speaker 1: I'm no lawyer. Don't take advice for me. I'm just
Speaker 1: a kid from Brooklyn. This was actually the ultimate irony,
Speaker 1: which was that like, if you went to a regulator
Speaker 1: and asked permission, they would often tell you know, but
Speaker 1: if you just went ahead and launched it after doing
Speaker 1: your own legal study, they usually wouldn't say anything. Yeah,
Speaker 1: so people knew Tracy that what they were doing was fughazi.
Speaker 1: They knew that this was a grift. I have no
Speaker 1: sympathy on anybody who gets their risk lapped or gets
Speaker 1: a speeding ticket or worse, because I would like to
Speaker 1: see accreditation laws be changed so that people can take
Speaker 1: a test just like a driver's test or in the
Speaker 1: few states that have gun owner test gun permit tests.
Speaker 1: We could just educate people. Maybe it take a three
Speaker 1: our course, you take a fifty question tests, doesn't have
Speaker 1: to be a series seven. But hey, this is diversification. Hey,
Speaker 1: these are risky assets, these are non liquid assets. This
Speaker 1: is preferred shares, these are common shares. You know, here's
Speaker 1: how governance works, here's how boards work. Just so you know,
Speaker 1: a normal person who's not in the top six percent
Speaker 1: of the country who are credit investors, could participate in this.
Speaker 1: That's what the SEC needs to do. That's what our
Speaker 1: government needs to do. Have a path for people to
Speaker 1: be educated to participate in these things. What the country
Speaker 1: doesn't need is for sophisticated investors to then create a
Speaker 1: path for people to circumvent the securities law and then
Speaker 1: flip tokens. I have spent the last five years being
Speaker 1: criticized because I've said all along, you know, if you
Speaker 1: can't use the product, if you can't talk to the customers,
Speaker 1: you know, calling back to your asking me about that
Speaker 1: tweet I did, and my experience as a journalist. If
Speaker 1: you can't talk to the customers, you can't use the product,
Speaker 1: then it's probably either a fraud where it's a pre
Speaker 1: launch company. You and I think the majority of these
Speaker 1: tokens that are being sold are either pre launched companies,
Speaker 1: which would value them at three to ten million dollars,
Speaker 1: or their frauds or they're run buying competence, or their
Speaker 1: frauds run buying competence. It's some combination of those three buckets.
Speaker 1: And I invest in the first bucket pre launched companies
Speaker 1: or you know, about to launch m vps all the
Speaker 1: time in my accelerator. But I don't take the shares
Speaker 1: of those companies and put them on a listing and
Speaker 1: tell people have fun staying poor if you don't buy
Speaker 1: these tokens and you don't get it, okay, Boomer and
Speaker 1: all this other bullshit that these very sophisticated investors did
Speaker 1: to the public. So I don't have strong feelings on
Speaker 1: a shoe, but it's a complete utter grift. Do you
Speaker 1: think there's gonna be a criminal response in some cases? Certainly?
Speaker 1: You see, you think the regulators are only in the
Speaker 1: second ending, so that would imply that there's a lot
Speaker 1: more coming, Like what is this? Look? Yeah, I mean
Speaker 1: these it's just a little f t Alwa was flipping
Speaker 1: and grifting, you know, property Justice and the Southern District
Speaker 1: Company York and Florida's you know district attorneys, Like there's
Speaker 1: a large group of district attorneys who would like nothing
Speaker 1: more than to get the pelt of a crypto you know,
Speaker 1: grifter and put it on their wall for when they
Speaker 1: run for mayor or governor. And people have lost a
Speaker 1: lot of money, so there's a lot of people. Wouldn't
Speaker 1: have been a political appetite for, say, prosecutions, because people
Speaker 1: like when the line goes up, but when the line
Speaker 1: goes down, I assume people want to see someone pay well. Also,
Speaker 1: you know, that's when somebody who's in your local jurisdiction says, hey,
Speaker 1: my aunt took a second mortgage on our home and
Speaker 1: bought this cryptocurrency and they lost their money. And three
Speaker 1: of our friends also did it. And so now there's
Speaker 1: an actual victim, as you're pointing out, Joe, because the
Speaker 1: tide's gone out, and those people essentially got a free
Speaker 1: option because you know the cynical view, but they got
Speaker 1: to buy the cryptocurrency. If it was up, they could
Speaker 1: sell it like these retail investors. And now that it's
Speaker 1: gone down, since it was illegal, all of them can
Speaker 1: now go after these companies. And so that's just starting.
Speaker 1: And we're like two pitches into the first ending. We
Speaker 1: are not even close to the second ending of this.
Speaker 1: It is going to become five years. If if what
Speaker 1: I learned from the dot com eraor is any guide,
Speaker 1: it's going to be years of litigation and pain and suffering.
Speaker 1: Now do people go to jail? We just had somebody
Speaker 1: on the FBI's most wanted list who was the bitcoin queen.
Speaker 1: So I don't remember a dot com person being on
Speaker 1: the FBI's most wanted list. So if that might be
Speaker 1: the canary in the coal mine. When the FBI's most
Speaker 1: wanted list winds up being three or four crypto people,
Speaker 1: I think you've got pete grift just on this topic.
Speaker 1: You are invested in robin Hood, and robin hood is
Speaker 1: pretty highly leveraged to crypto nowadays. At least did they
Speaker 1: make a mistake, you know, I think it's fine for
Speaker 1: people not speaking about robin Hood. I think it's fine
Speaker 1: for people to participate in crypto if there are accredited
Speaker 1: investors and if they're educated. I sincerely believe people should
Speaker 1: be able to do what they want to do with
Speaker 1: their money. They're allowed to go to Vegas, they should
Speaker 1: be able to do that. So on the retail side,
Speaker 1: I do think people should be able to buy tokens
Speaker 1: or crypto. I just think it should all be regulated.
Speaker 1: And I think you know what coin base and robin
Speaker 1: Hood and all of these platforms really need to think about,
Speaker 1: is you know, when they put these tokens up, who
Speaker 1: should be buying them? And what knowledge base do they need?
Speaker 1: And I think I'm a big fan of the freedom
Speaker 1: for you to do with with your money what you want,
Speaker 1: but I also think there's a responsibility of the people
Speaker 1: creating the tokens to do it. And now what is
Speaker 1: the liability for platforms. I think that's somewhere in between.
Speaker 1: So you know, the people who are creating these things,
Speaker 1: those are the people who are responsible. And those early investors,
Speaker 1: I'd say, the platforms and other folks like they're one
Speaker 1: percent responsible for this. Like people should be able to
Speaker 1: buy and sell whatever's back, they should be able to gamble.
Speaker 1: I'm a gambler. You us know that, So I feel
Speaker 1: fine about that. But I also think that the silver
Speaker 1: lining of all this is people are very critical of this,
Speaker 1: you know, gen Z stocks, Robin Hood, Generation, Meme stocks, crypto.
Speaker 1: I actually think what we've done is we've made one
Speaker 1: of the most the most sophisticated generation financially that's ever
Speaker 1: been created. What these twentiesome things have learned in their
Speaker 1: first couple of years or decade of investing dwarfs, what
Speaker 1: the generations before them knew. I know, young people who
Speaker 1: are trading puts and calls and shorting socks and buying
Speaker 1: crypto and alternative assets. So I think all that's really good,
Speaker 1: and I think you'll learn by doing so, even if
Speaker 1: people did, you know, get burned a little bit by
Speaker 1: game stop. I am super permissive of young people and
Speaker 1: retail investors being able to do what they want with
Speaker 1: their money, and I do think they understand the risk
Speaker 1: they're taking. So even the people who bought Crypto, I
Speaker 1: think they knew what they were doing. They wanted to
Speaker 1: make an absurd return in a short period of time,
Speaker 1: and if they got burnt, that's on the It's like
Speaker 1: going to Vegas and just putting all your money on
Speaker 1: like one hand of blackjack. You knew what you were doing.
Speaker 1: You knew it was stupid, bad, But you have the
Speaker 1: freedom to do that, and you should have the freedom
Speaker 1: to do it. That's my personal belief. All right, So
Speaker 1: what do you think about your podcast co host and
Speaker 1: uh say, this is my fintech that I'm taking um
Speaker 1: public in aspect, it's to me what Geico was to
Speaker 1: Warren Buffett and tweeting and posting about public companies. Okay,
Speaker 1: so let me talk about SPACs generally so that I
Speaker 1: don't get reaggregated and say, jakel through your mop under
Speaker 1: the bus, that was gonna be, that was gonna be,
Speaker 1: that was gonna Here's the thing about SPACs. If you
Speaker 1: want to participate in SPACs. You've decided to do what
Speaker 1: venture capitals do for a living, which is these companies
Speaker 1: are highly, highly risky. You're deciding to invest in Amazon, Netflix,
Speaker 1: I Village, double Click, you know, pick the company Facebook,
Speaker 1: and then all the failed companies before they were traditionally
Speaker 1: ready to go public. In other words, you know, in
Speaker 1: recent years, people have had billions of dollars in revenue
Speaker 1: in the public. If you want to invest in a
Speaker 1: company with tens of millions of dollars or millions of
Speaker 1: dollars or a hundred million dollars in revenue, you're now
Speaker 1: playing the VC game. This is a high volatility game.
Speaker 1: This is like playing pot limit Omaha. You know in Macau.
Speaker 1: You're not playing in your Texas hold them game anymore
Speaker 1: where it's predictable. You're playing a high variance game. And
Speaker 1: so we were investors in the private market for a
Speaker 1: company called Desktop Metal. We love this company, we love
Speaker 1: the founders, we love everything about it. They decided to
Speaker 1: do us back. Okay, great, Now we're at ten dollars
Speaker 1: company's worth you know whatever, a billion more than it's
Speaker 1: private market evaluation. And now it's trading at two dollars
Speaker 1: and forty eight cents still a great company, bird, Joe B.
Speaker 1: I'm not investors in those companies. I know people who
Speaker 1: are investors in them. Those are all getting crushed too.
Speaker 1: Why Because the big feature of being private when you're
Speaker 1: nascent is you get to figure things out right and
Speaker 1: you're you're not onto public scrutiny. These private companies go
Speaker 1: through pivots. They have revenue you know, surge and then collapse,
Speaker 1: and then they have competitors show up, and then they
Speaker 1: have things break, they have regulations. The greatest feature of
Speaker 1: Uber and Airbnb going public after ten years being private
Speaker 1: was that these businesses were very stable relative to the
Speaker 1: spack companies that are coming out. So again, do your homework.
Speaker 1: If you want to play VC as a retail investor,
Speaker 1: you better be in it for ten years. I invest
Speaker 1: in companies in decade increments. I still own my robin
Speaker 1: Hood share, still own a lot of my Uber shares,
Speaker 1: and I decided to hold both of them for the
Speaker 1: second decade. Right. That's the problem with SPACs is that
Speaker 1: people came into them and thought these were very mature companies,
Speaker 1: and if you looked at any of the data, you
Speaker 1: knew these were private market companies. Going public earlier. Now,
Speaker 1: this is how the market worked in the eighties. We
Speaker 1: just haven't had it during our lifetimes. People who told me,
Speaker 1: you know who were vcs in the eighties, the Microsoft's
Speaker 1: and the Lotus of the world will go public in
Speaker 1: years three, four, five, six, We decided to have companies
Speaker 1: go public in years eight eleven, So, you know, recently
Speaker 1: in our lifetimes as adults, you know, in the nineties
Speaker 1: and two thousands. So I'm glad there's more inventory to
Speaker 1: people to choose from. I think going into the spack
Speaker 1: you know, disastrous companies and you know they've all lost
Speaker 1: what collectively in some cases more, you know, go into
Speaker 1: those and look for bargains. I think, I think you'll
Speaker 1: find some there. But for somebody to take these electric
Speaker 1: car companies that haven't delivered cars yet and then value
Speaker 1: them at a hundred billion. I was on you know
Speaker 1: all In and My in my other podcast this we
Speaker 1: can start ups talking about how ridiculous these Lucid Rivan
Speaker 1: whatever SPACs were. It was a whole cohord of them.
Speaker 1: And so buy or beware if you're going to play VC.
Speaker 1: The VC game is to get to know the founders,
Speaker 1: to talk to the early customers. Nobody did that work.
Speaker 1: You gotta do that work if you want to bet
Speaker 1: that early. I was about to ask exactly this question,
Speaker 1: because it feels like to me, with SPACs and the
Speaker 1: VC space more broadly, to your point, it feels like
Speaker 1: a lot of it comes down to whether or not
Speaker 1: in the sponsors are acting in good faith, or whether
Speaker 1: or not they just see this as a tool to
Speaker 1: get a bunch of money. And you know, the money's there,
Speaker 1: people are throwing it around. Why not start us back
Speaker 1: and just get a piece of it and we can maybe,
Speaker 1: you know, figure out what to do later, or maybe
Speaker 1: that's not even part of their plan. How do you
Speaker 1: actually go about, you know, evaluating founders or sponsors on
Speaker 1: that basis, How do you figure out whether people are
Speaker 1: in it for the right reasons? Yeah, I would just
Speaker 1: look at the core business. Like so, let's take BuzzFeed
Speaker 1: trading out of dollar sixty nine at the time recording
Speaker 1: this two eight million dollars in market cap. That company
Speaker 1: has three or four hundred million in revenue. I think
Speaker 1: they're going to do four hundred million this year, and
Speaker 1: their run rates about four million, so they're trading at
Speaker 1: less than their run rate there there price to sales
Speaker 1: ratio is like point six or something on point seven.
Speaker 1: This is crazy, Like this company should never go on
Speaker 1: public Media is a terrible business obviously, but you just
Speaker 1: have to look at the revenue. You have to live
Speaker 1: in growth. I don't, but I'm looking at it. I
Speaker 1: know this sounds crazy. I have to look at the
Speaker 1: growth rate and the spend. And I don't know if
Speaker 1: Jonahs made massive layoffs over there, but if you laid
Speaker 1: people off and this is a profitable company, well then
Speaker 1: we'd start looking at and saying, Okay, I don't know.
Speaker 1: If it starts growing twenty times earnings, fifteen times earnings,
Speaker 1: ten times earnings, maybe two or three or four times
Speaker 1: price of sales ratio, you could actually see it being
Speaker 1: a takeout candidate for somebody. So and I'm not giving
Speaker 1: financialized here, but I do look at Peloton. I do
Speaker 1: look at you know, BuzzFeed and some of these that
Speaker 1: have gotten really walloped and say huh, and how much
Speaker 1: cash do they have? Like we're going to get to
Speaker 1: the point, Joe, where like in the dot com era,
Speaker 1: the company has more cash cash on hand and marketable
Speaker 1: securities will be greater than their market cap, in which
Speaker 1: case you could buy the company, sell the asset, and
Speaker 1: then distribute the cash and make a killing. So I
Speaker 1: think that's why Zendesk is being taken private. I don't
Speaker 1: know if you saw. Have they got over a billion
Speaker 1: dollars in revenue, over a billion dollars in cash? They're
Speaker 1: getting sold for ten billion or something or going private
Speaker 1: for ten billions. So that's when you know, you know,
Speaker 1: we're bouncing on the bottle. But you just have to
Speaker 1: again to your question, Tracy, look at the customers, look
Speaker 1: at the product. They will tell you the truth. The promoters,
Speaker 1: the the press, the analysts, the CEOs like, all of
Speaker 1: that is secondary to the customers. Anybody who talks to
Speaker 1: customers who own a Tesla or who are an Airbnb host,
Speaker 1: or who are Uber drivers, or who take Uber or
Speaker 1: take Lifter, use door Dash or Calm, they'll tell you
Speaker 1: they love the product right or they love participating in
Speaker 1: the marketplace. Or if you just look at how long
Speaker 1: have they been an Uber driver, how many rides have
Speaker 1: they done, how many door dish delivers have they done?
Speaker 1: That will tell you a better story than any promoter
Speaker 1: or any CEO. And these promoters will live and die
Speaker 1: with the track records. I think Trumath will have a
Speaker 1: great track record at the end of the day. Now
Speaker 1: he's my friend, I'm and I'm by I am as
Speaker 1: proviased source. But I know he's very thoughtful. And you know,
Speaker 1: people should understand if they're going with SPACs and they're
Speaker 1: playing VC, you're playing a very high volatility game. It
Speaker 1: should be counterbalanced. That should be the small portion of
Speaker 1: your portfolio, and the rest of your portfolio should be
Speaker 1: balanced with you know, index funds and you know blue
Speaker 1: chip companies and bonds and real estate. Right, That's what's
Speaker 1: getting lost here is you know these really high risk,
Speaker 1: high reward companies and opportunities. What percentage of your portfolio
Speaker 1: should they be. When people ask me about angel investing,
Speaker 1: I'm like, if you really love doing this, low single
Speaker 1: digits is what I would tell my mom or my
Speaker 1: brother if they want to do the work and make
Speaker 1: sure they can afford to lose the money. Same thing
Speaker 1: with SPACs, same thing with crypto. So you mentioned, okay,
Speaker 1: like in this back wreckage there might very well be
Speaker 1: some diamonds in the rough that come out. And you
Speaker 1: also mentioned in the very beginning that you think this
Speaker 1: is like a great time to be investing in early
Speaker 1: stage companies because valuations have come down so much? Do
Speaker 1: you think this is a great time to get aggressive?
Speaker 1: But let's talk about like the last few years. One
Speaker 1: of the things that's come up on our show is
Speaker 1: like the right like all these people who had like
Speaker 1: sub stacks and rolling funds on Angel List suddenly getting
Speaker 1: into the angel investing game over the last two years,
Speaker 1: maybe starting in March COVID or a little bit before that.
Speaker 1: Like how bad is the pain going to be of
Speaker 1: all these different startups? Like what is the survival rate
Speaker 1: going to be? And how prepared are these founders for
Speaker 1: an actual downturn the likes of which maybe we haven't
Speaker 1: seen in roughly twenty years. Yeah, startups die, you know,
Speaker 1: so that's your starting point, right, um, And then you
Speaker 1: know you're fund is tends to be you know, a
Speaker 1: typical venture capitalist has thirty names and a fund thirty companies,
Speaker 1: and you know the top two companies will be ninety
Speaker 1: five of their return. So that's kind of par for
Speaker 1: the course, right, that's what you expect. Now. A lot
Speaker 1: of founders raised money when the market was hot, and
Speaker 1: a lot of them were in denial and thought every
Speaker 1: round of financing, we get easier, and why shouldn't they
Speaker 1: think that. They got into an accelerator, they raised an
Speaker 1: angel round, they did a pre Series A, they did
Speaker 1: a Series A. All of that was pretty easy, and
Speaker 1: it got easier each stage, and then Series B they
Speaker 1: had people asking them to take their money, and then seriously,
Speaker 1: they had people throwing money at them and not doing diligence.
Speaker 1: So just imagine you're a founder, you're thirty five years old,
Speaker 1: and that's the market you were born into. Okay, you're
Speaker 1: going to think about the world a certain way. Okay, yeah,
Speaker 1: it's gonna get harder, but how hard could it get?
Speaker 1: Like every round of financing you've done to now has
Speaker 1: been easier than the next round. So everything you've experienced
Speaker 1: has been a complete head of age, and whatever you
Speaker 1: learned up to this point is not going to service
Speaker 1: you going forward. It's kind of like being like the
Speaker 1: smartest kid in your school and then you wind up
Speaker 1: going to Harvard and it's like, yep, you're a dime
Speaker 1: a dozen where you are the most beautiful actor and
Speaker 1: talented person in your you know, uh, summer stock and
Speaker 1: your your high school musical and then you go to
Speaker 1: Hollywood and it's like, Yep, you're just like everybody else.
Speaker 1: There's nothing unique about you. Sorry. You know, that's what
Speaker 1: the transition people have to go through now. And many
Speaker 1: of the people who I watched up close and personal
Speaker 1: became better at raising money from vcs thank getting money
Speaker 1: from customers. That is the big red flag. You have
Speaker 1: to be better at servicing your customers than servicing your investors.
Speaker 1: It's important to be able to get investment, but ultimately
Speaker 1: that investment is all in service of delighting a customer,
Speaker 1: retaining a customer, and expanding the spend with the customer.
Speaker 1: And that's, you know, the change people have to make.
Speaker 1: I've seen a lot of people who thought they were
Speaker 1: Jedi knights and all of a sudden they get into
Speaker 1: a serious Jedi battle and they lose two or three limbs.
Speaker 1: This is like serious Jedi ship. Like you think you
Speaker 1: are a Jedi, You think you know how to use
Speaker 1: a lightsaber, and then you come up against a Sith
Speaker 1: board and you lose your hand, period, end of story.
Speaker 1: Like that's what's happening here. People were pretending to be
Speaker 1: Jedis they're pretending to be entrepreneurs and they are just
Speaker 1: not cut out for you know, we've seen obviously the
Speaker 1: announcements of layoffs, right we we know they're picking up,
Speaker 1: and we've seen them are founders even today in July.
Speaker 1: Have they sufficiently marked their mind to reality or are
Speaker 1: they still Are there still many who are in a
Speaker 1: state of denial. Most are still in denial. Sort of
Speaker 1: related to this topic, there's been a lot of talk
Speaker 1: recently about the end of the millennial subsidy, or I
Speaker 1: guess like the urban lifestyle subsidy, the idea that all
Speaker 1: these conveniences that people took for granted before, like ordering
Speaker 1: a car through Uber or ordering food via grub Hub
Speaker 1: and things like that, that the cost of those are
Speaker 1: all going to have to go up as the company's
Speaker 1: sort of pivot from spending lots of money to grow
Speaker 1: their market share to actually making a profit or at
Speaker 1: least trying to. Now, how is that playing out? Like,
Speaker 1: do you see evidence of that in the companies that
Speaker 1: you're either invested in or very very familiar with. Yeah,
Speaker 1: I mean we would be the best example of it.
Speaker 1: You know, they were losing a dollar a ride and
Speaker 1: then they went down to losing sixty cents a ride,
Speaker 1: and then twenty cents a ride, And so for anybody
Speaker 1: who was an insider, it was abundantly clear that at
Speaker 1: any point in time when the competition with lift and
Speaker 1: other services, or door dash, for on the east side
Speaker 1: of the business, when that competition abated and those second
Speaker 1: third tier players ran out of money and stopped getting
Speaker 1: free capital, then the network effects would benefit whoever was
Speaker 1: in the leaded right, and so Uber clearly was in
Speaker 1: the lead. And we actually see that manifesting itself over
Speaker 1: the last couple of years, which is to say, drivers
Speaker 1: are getting paid more money, drivers are drawn to the
Speaker 1: Uber platform, the prices of ubers have gone up. Uber's
Speaker 1: revenue has surged. And now what we'll see this year
Speaker 1: I predict and and Dar has been pretty clear about
Speaker 1: this is the money printing machine will turn on, just
Speaker 1: like Amazon can do that. And I want to stop
Speaker 1: right there real quickly, because when we recently had Jim
Speaker 1: Chainos on the show and he said, you know, look
Speaker 1: for many of these so called sharing economies, whether it's
Speaker 1: door dash or grub hub or Uber or whatever like
Speaker 1: that should have been the most amazing. Everyone was home
Speaker 1: ordering stuff online with stimulus checks from the government and
Speaker 1: they couldn't make money in and his lines like if
Speaker 1: they can't make money in when when will they? And
Speaker 1: so why do you think it's a way? Why do
Speaker 1: you believe that? I mean you still hold your uber
Speaker 1: shares or something. So why like what's you know you
Speaker 1: think they're gonna that's doable, that they can turn the
Speaker 1: corner and that they're there existing craziness. Are two things
Speaker 1: to look at. Number One, stock based compensation is for
Speaker 1: these companies has been a large portion of their losses
Speaker 1: um and so if stock based compensation changes a little bit,
Speaker 1: and that's been a big back channel in Silicon Valley
Speaker 1: and with the large fund holders of private equities, is hey,
Speaker 1: maybe we need to talk about stock based compensation now
Speaker 1: that all these layoffs and hiring freezes have happened at
Speaker 1: the fangs and you know, certainly layoffs and uh, salary
Speaker 1: cuts even I think are going to start next. That's
Speaker 1: going to be the true sign that we're in something
Speaker 1: dark is when people's salaries get cut. Wait for that.
Speaker 1: That will be the true time's coming down. I think
Speaker 1: the way it works is and this is like the
Speaker 1: cynical inside or stuff that people don't like to talk about.
Speaker 1: But what people do is they lay off a bunch
Speaker 1: of people. Then they reset the salaries and hire people
Speaker 1: back at lower salaries. And so that's de facto a
Speaker 1: salary cut, right. So if you lay off a third
Speaker 1: of your staff and then you put the positions back out,
Speaker 1: but they're at a lower price and people can work
Speaker 1: from home and they can work from anywhere. That's the
Speaker 1: way for like a Facebook or an Apple to reset
Speaker 1: it without saying to the people who currently work with them, hey,
Speaker 1: by the way, we're cutting your salary. They just say you.
Speaker 1: Apple just says you have to come back to the office.
Speaker 1: So you don't come back to the office. Okay, so
Speaker 1: you don't want to work here anymore. You were overpaid.
Speaker 1: Now we're going to put those salaries at a different number.
Speaker 1: In some companies, if things get really dark, they might
Speaker 1: just say, hey, we're the management team is taking cuts
Speaker 1: and everybody else is taking ten and then they just
Speaker 1: challenge people. If you don't like it, you can leave um.
Speaker 1: And if things get really dark. I think it's a
Speaker 1: fifty that we'll see this happened in the second half
Speaker 1: of the year. You know, I've seen the layoff approach.
Speaker 1: First it's a reorganization, then it's layoffs, then it's mass layoffs,
Speaker 1: then it's pulling the offers that have been done. Remember
Speaker 1: those were a lot of big headlines. Oh I had
Speaker 1: an offer at this company, it got rescinded. The next
Speaker 1: piece is the salary cuts, so that that's the true
Speaker 1: bottom signed look for that. It's not guaranteed, but it
Speaker 1: could happen. And so we got to this with you know, Uber,
Speaker 1: and if they couldn't make it in twenty I think
Speaker 1: a lot of these companies got too big. Facebook, Google, Uber,
Speaker 1: Airbnb all could operate with less people and in a
Speaker 1: market where the public markets want to see cash flow,
Speaker 1: it's just time to shift gears and do that. Airbnb
Speaker 1: like oh a third of people during the pandemic. I
Speaker 1: think Uber did something similar. And so these companies were
Speaker 1: getting rewarded in a low interest rate environment where they
Speaker 1: could just keep raising capital for growth top line. Now
Speaker 1: people want to see the bottom line. Uber is perfectly
Speaker 1: positioned to do that. And what you have to do
Speaker 1: if you're one of these rockets scientists is just say,
Speaker 1: are you gonna take less Ubers or do less door
Speaker 1: Dash or less uber eats, if it costs one dollar
Speaker 1: or two dollar more, the answer for plus of use
Speaker 1: cases is I'll absorb the one or two dollars. And
Speaker 1: the proof of that is that's actually happened. Ubers have
Speaker 1: become more than two or three dollars more expensive now
Speaker 1: for uberpool, Will it make a difference if somebody was
Speaker 1: paying six bucks and now they have to pay nine. Yeah,
Speaker 1: there are some people who might say I'm going to
Speaker 1: take the subway, but that's not the people who are
Speaker 1: the profit anyway. And the prophet is in the whales
Speaker 1: and the and the bigger rides and the and the
Speaker 1: more luxurious rides, the Lincoln Town cars, etcetera. So yeah,
Speaker 1: it's pretty easy to figure this out. If Uber charges
Speaker 1: two dollars per ride or delivery or doorshus the same thing,
Speaker 1: which they're all doing, and they cut their staff and
Speaker 1: they cut stock based compensation, these things become money printing machines.
Speaker 1: Now I get Jim's point. Jim's point is like, why
Speaker 1: didn't you do that before? Well, we weren't being rewarded
Speaker 1: for that before the investment community told us to do
Speaker 1: the other thing. And so when you saw Derek come back,
Speaker 1: I think it was last year and he just said, listen,
Speaker 1: I met with all of our large shareholders. They said
Speaker 1: they want free cash flow, they want profits. I'll give
Speaker 1: you that. He's pragmatic. Uh, you know, he's a dog.
Speaker 1: You know, he knows what he's doing. He's not his
Speaker 1: first time at the rodeo, and so he's willing to
Speaker 1: make the cuts and raise the prices and and that's
Speaker 1: what everybody's gonna do and they get rewarded for that,
Speaker 1: and then you know what will happen. Everyone's gonna be like,
Speaker 1: why aren't you growing faster? And something that's just the
Speaker 1: pendulum of being a seat EEO and a board. They're like,
Speaker 1: we want more than you're over your growth. Can we
Speaker 1: get to So you gotta play the game as the
Speaker 1: rules are saying, to play it on the field, you know,
Speaker 1: And the rules of the game are now show us profits.
Speaker 1: The companies that showed profits, you know, didn't get the
Speaker 1: funding previously. What's your base case for how bad things
Speaker 1: might get? And then secondly, you know you mentioned that
Speaker 1: in the current down cycle, you're still taking a bunch
Speaker 1: of meetings and there's still opportunities out there at an
Speaker 1: even lower valuation. How much money is actually out there
Speaker 1: on the sidelines and ready to get deployed in the
Speaker 1: current cycle. And how much does that help. There's a
Speaker 1: ton of what I call, you know, dead or boring money,
Speaker 1: money in bonds or boring assets and safer assets, and
Speaker 1: so yeah, people are scared right now. I think there's
Speaker 1: a lot of existential and macro issues. We talked about
Speaker 1: it on All In, you know, every week, and so
Speaker 1: you know, some people like David Sacks is incredibly obsessed
Speaker 1: with the Ukraine. It's like become his entire Twitter feed
Speaker 1: and it's like I thought you were assass investor, David,
Speaker 1: like you know, but this is a perfect example, Like
Speaker 1: he is very scared about that escalating. He's a very
Speaker 1: smart individual, one of smart people I've ever met in
Speaker 1: my life. So smart people right now are very concerned.
Speaker 1: Some of them are concerned about Taiwan someone they are
Speaker 1: concerned about, you know, or they were concerned about COVID.
Speaker 1: Everybody's got a different thing that makes them scared in
Speaker 1: the world. I don't operate that way. I because I
Speaker 1: get to invest in the early stages. I know, great
Speaker 1: companies are built all the time, and great companies are
Speaker 1: built when there's wars going on in the world, when
Speaker 1: there's famines going on the world, all these terrible things
Speaker 1: can occur. And Google and Uber and Facebook and robin
Speaker 1: Hood and other great companies are gonna be made independent
Speaker 1: of those things. Entrepreneurs are gonna keep creating. And in fact,
Speaker 1: when the market is the most troubled, that's when your
Speaker 1: selection gets easy. Year Because if you're creating a company
Speaker 1: in two thousand and eight, two thousand nine, two thousand
Speaker 1: and ten, well you have to be a true maniac.
Speaker 1: I mean, you have to be a true mission driven
Speaker 1: founder who is going to do this no matter what.
Speaker 1: And I've just seen it so many times in my career.
Speaker 1: People who were starting companies in the early nineties were maniacs.
Speaker 1: People were starting them after the dot com bust at
Speaker 1: nine eleven were complete utter maniacs, myself included. And people
Speaker 1: who started them after two thousand and eight were complete
Speaker 1: and utter maniacs. And that's when the great companies are formed,
Speaker 1: and then they grow through the down and up markets consistently.
Speaker 1: That's really what it's all about. So I don't worry
Speaker 1: about these things. I do not live in fear like
Speaker 1: a lot of my other contemporaries and get obsessed with
Speaker 1: these things. I just like to focus on the founder
Speaker 1: and the customer and the product. It's really you know,
Speaker 1: it's one of the great things about just being a
Speaker 1: simple kid from Brooklyn. I don't need to overthink this.
Speaker 1: I don't got no Ivy League education. I didn't go
Speaker 1: to Stanford, I didn't get perfect s A T S.
Speaker 1: I just look at what the product does. I look
Speaker 1: at what the customer thinks of the product, and I
Speaker 1: placed my bets, and you know what, that's a better
Speaker 1: way to do it. In my mind. It's simple. Just
Speaker 1: put the ball in the basket, take a good shot,
Speaker 1: rebound the basketball, and then on the other side, you know,
Speaker 1: take a good shot and put the ball in the
Speaker 1: basket and then yeah, fu, yeah, let's go. I mean,
Speaker 1: that's what else would I do? No, I mean, I
Speaker 1: just would like to see New York win a championship.
Speaker 1: I did a little spreadsheet a year ago, during the pandemic.
Speaker 1: I was kind of trying to figure out what I
Speaker 1: would do with the last decade or two or three
Speaker 1: of life I have left. When my friend Tony, she
Speaker 1: died the day after my birthday, and kind of rocked
Speaker 1: my world a little bit, and I just thought deeply
Speaker 1: about what I want to do and what actually gives
Speaker 1: me joy and fun. And yeah, I like skiing, and
Speaker 1: I like hanging out with my friends and laughing and
Speaker 1: doing podcasts and writing books and watching the Nick Game.
Speaker 1: Yeah every week I felt. Yeah, we had him on
Speaker 1: the show year ago. Yeah, it feels the best. I mean,
Speaker 1: he's he's amazing, great human being. Uh. I mean, even
Speaker 1: with all the outburst and craziness, which I thought when
Speaker 1: I met him was for TV, and now I realized
Speaker 1: he's just it really is truly who he is. I mean,
Speaker 1: we've had some epic battles at our private poker game.
Speaker 1: But when I had my little like existential fifty year old,
Speaker 1: you know, Jacal crisis, I just thought, well, fuck, if
Speaker 1: I keep infesting at this rate and I go up
Speaker 1: or I double the number of dollars I invest every year, Yeah,
Speaker 1: there's a chance I could be traced Commas and I
Speaker 1: could buy the Knicks or make a run at them.
Speaker 1: So why not create an outrageous goal. So my my
Speaker 1: two outrageous goals are to you know, invest over the
Speaker 1: next ten years and be one of the top five
Speaker 1: investors in the history of Silicon Valley and have a
Speaker 1: long shot chance of leading a syndicate. That's why I
Speaker 1: bought the domain name the syndicate dot com, and I
Speaker 1: invest in a hundred deals a year at the syndicate
Speaker 1: with eleven thousand of credited investors, it's the largest one
Speaker 1: in the world. If I keep doing that, I might
Speaker 1: be able to lead a syndicate to buy the next someday,
Speaker 1: and that would be a great thing to do in
Speaker 1: my six these you get that or run for office.
Speaker 1: So it's one of those two daughter. My daughter's in
Speaker 1: Nicks fans, so hopefully you can turn them into winners.
Speaker 1: Jason Calcannis, that was a lot of fun. Thank you
Speaker 1: so hope that was entertaining. It was very entertaining. Thank
Speaker 1: you so much for coming out in a lot my pleasure. Thanks. Hey,
Speaker 1: don't forget to rate and subscribe everybody. Oh yeah, we
Speaker 1: got it, we got I'm a podcaster. I gotta have
Speaker 1: him to rate. Tell a friend about the pot. That
Speaker 1: was fun. Yes, I'm thinking, sorry, I'm thinking. Do you
Speaker 1: remember that Simpsons episode where like Homer Simpson goes to
Speaker 1: work for Hank Scorpio and he wants to buy the
Speaker 1: Dallas Cowboys. He confesses his dream is to buy the
Speaker 1: Dallas Cowboys, and at the end of the episode, Hank
Speaker 1: Scorpio buys him the Denver Broncos. No, I don't remember that.
Speaker 1: I was thinking, you know what Simpson's episode, I think
Speaker 1: I gonna reference, Well, you know, Jason was talked about
Speaker 1: I just do this ten more years. I thought you
Speaker 1: were gonna refer to the one where Homer bought um
Speaker 1: Halloween pumpkins before Halloween and just thought that just keep holding,
Speaker 1: just keep holding the pumpkins and draw a straight Actually,
Speaker 1: actually that's not Yeah, that's not a bad episode too,
Speaker 1: to reference. Because one thing that keeps coming up in
Speaker 1: in all of our episodes lately is just the like
Speaker 1: sicklick reality of human nature and this idea that for
Speaker 1: years investors were comfortable with these companies growing market share,
Speaker 1: spending money, raising more money um in public or private
Speaker 1: markets in order to do that, and then suddenly it's like, oh, no, no,
Speaker 1: you you really do have to return a profit. And then,
Speaker 1: you know, I think Jason is right, at some point
Speaker 1: in the cycle, people will come back and be like, no, no,
Speaker 1: it's time to grow again. This is your opportunity. He
Speaker 1: made about to the chainos point about like, oh, well,
Speaker 1: why weren't they making money in twenty And it's like
Speaker 1: market wasn't telling them to make money. The stocks were
Speaker 1: going straight up. I hadn't really thought about that, but
Speaker 1: you know, it's something that comes up. It comes up
Speaker 1: on our energy episodes. It's like, what are investors rewarding
Speaker 1: at a given time? And so if that on paper, yeah,
Speaker 1: it's a good environment for some of these gig economy companies.
Speaker 1: But if the market is still in that mode of no,
Speaker 1: we're not going to reward you for cutting expending, We're
Speaker 1: not going to reward you for slamming the brakes on
Speaker 1: growth in the name of profitability, maybe I could see
Speaker 1: how that's a counter argument for why weren't they profitable
Speaker 1: at that time? Absolutely, it just feels like there's a
Speaker 1: tendency for people to run too far in either direction,
Speaker 1: and it's really hard to stamp out because to some
Speaker 1: extent that's human nature. Right. Yeah, By the way, the
Speaker 1: issue with all these legacy vcs getting into unregistered securities,
Speaker 1: arguably with crypto tokens and then tweeting about them, and
Speaker 1: then retail investors buying them on exchanges. I thought Jason's
Speaker 1: comments were pretty pointed on that, and like, it does
Speaker 1: seem to me like this could be lawsuit season or
Speaker 1: investigation season. And I do wonder if any of these
Speaker 1: sort of legacy vcs will regret pivoting towards talking about
Speaker 1: publicly traded instruments as much as they did. I'm very
Speaker 1: curious to see how it shakes out. I still think
Speaker 1: the regulators should have been there from the beginning. I mean,
Speaker 1: some of these tokens quite clearly resemble securities offerings you
Speaker 1: vote and dividends can theoretically create. So that sounds yeah, absolutely,
Speaker 1: so why not say that that's illegal or it should
Speaker 1: be a registered security? And where were the regula whatever? Yeah?
Speaker 1: But yeah, I mean it does feel like some sort
Speaker 1: of shakeout or reckoning is coming, but I guess it's
Speaker 1: hard to predict. All right, Um, should we leave it there?
Speaker 1: Let's leave it there. This has been another episode of
Speaker 1: the All Thoughts Podcast. I'm Tracy Alloway. You can follow
Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Why
Speaker 1: isn't all You kind of follow me on Twitter at
Speaker 1: the Stalwart follow our guest Jason callicanas On Twitter, He's
Speaker 1: at Jason, Follow our producer Kerman run Is at Carmen Arman,
Speaker 1: and follow all of the podcasts Bloomberg onto the handle
Speaker 1: at podcasts. Thanks for listening.