Jason Calacanis stopped by the Recode Media studio to talk to Peter Kafka about the new book he has coming out in July, “Angel.” The conversation ranged from Calacanis’s history in the New York media scene to his current position as a seed-level investor in Silicon Valley startups. He also runs an incubator and could be doing TV soon, too.
You can read some of the highlights from the interview at the link above, or listen to it in the audio player below. We’ve also provided a lightly edited complete transcript of their conversation.
Peter Kafka: This is Recode Media with Peter Kafka, that’s me. It’s powered by Digital Media. I’m here with Jason Calacanis, podcaster extraordinaire. I have a lot to live up to here. Hey, Jason.
Jason Calacanis: Hey, it’s great to be here. Thanks for having me.
Give us your full, not your full bio, just give me your two-sentence bio, the top of your Wikipedia.
Well, you can go right to the controversial section, because it seems like two-thirds of my Wikipedia page is controversy.
Just tell people, everyone who’s listening knows what you do, but in case they don’t.
I’m an entrepreneur. Yeah. I’m an angel investor in 150 companies, is what most young people know me for today. People who are over the age of 40 know me as the Silicon Alley Reporter. I started a magazine when I was in my 20s here in New York. In between I did Weblogs Inc., which is a blogging company that did Engadget on a blog.
If you’re reading Engadget, or you’re hanging out at AOL and reading something that’s not Huff Po, you’re probably reading something Jason helped start.
Sure. We sold that to them. Then I started a company, Mahalo, which got incredibly big incredibly fast and got smaller even faster, then iterated and made it Inside.com and I’ve been tooling away at that startup for what seems like a lifetime.
Decade. I think of you as, among other things, the guy who invested in Uber. One of many.
It is a defining moment in my career.
You invested in Uber early, as an angel investor, and you were set for life.
I was probably the third or fourth investor in Uber. I’ve known Travis for 20 years. I knew him as a journalist, and I had interviewed him famously when he was doing a company called Scour. Scour was Napster, except he had this clever idea to have it also support media types like video or PDFs or documents. He got sued for a quarter trillion dollars, $250 billion. The largest lawsuit in the history of media at the time. I don’t know if there’s been a bigger one.
That’s a good claim to fame.
Yeah, and that sort of can tip you off onto one of the defining characteristics of Travis, who is a very good person. I know he’s been much maligned recently. He’s a fighter and he tries to do big things. I interviewed him on the night Michael Ovitz’s people had threatened to beat him up, literally, and he’s told this story before.
This was when he was running CAA?
Well, Ovitz had invested in Scour, not knowing what they did. Michael didn’t understand that much ...
This is a classic Los Angeles investment: “This technology stuff sounds cool.”
Then of course Hollywood Reporter and Variety call up and say, “Scour has stolen the ‘Last Action Hero’ 18,000 times. What is your message? You worked at Disney.” He was like, “I don’t know what you’re talking about.” Someone on his team had invested in it and then the guys came and were like, “Tell Travis that if he ever mentions Michael Ovitz’s name they’re going to break his legs.”
You know, “Last Action Hero” is a terrible movie. They should be thankful that someone was distributing that thing for free.
In this day and age it would have been something where they would have released it on BitTorrent to get an audience.
Yeah. It’s kind of worth watching now, because it’s so terrible. It has a great scene at the end where it’s running through the ... Is it the beginning? Where they’re running through the field, shooting a gun?
I don’t remember.
It’s terrible. We’re dating ourselves.
I want to talk about your entire Wikipedia entry, but I do want to sort of start with Uber. How do you get in a position where you can invest in Uber? I know we were talking before, you’ve got a book coming out about how to be an angel investor. It should be one chapter, right? Invest in Uber, now you’re done.
Not exactly. I have actually a theory on how to invest, and I’ve worked on it for the past five or six years. It turns out I’m probably a better angel investor than I was an entrepreneur, but I did okay as an entrepreneur, hitting a lot of singles and doubles along the way, one home run. I have a theory about angel investing, which is basically you’re investing in the person and that the more outlandish the idea is, and the less people understand it, the greater the chances you should invest in it are. In other words, you have to get very comfortable with the concept of losing seven, eight, nine out of 10 bets.
This is your own money.
Yeah. Well, in the case of the early days, I had become what’s called a Sequoia scout. I never considered myself an angel investor and I passed on Twitter and Zynga, which two of my very close friends, Evan Williams and Mark Pincus, were starting. I had advised both of those founders on if they should pick Sequoia or Fred Wilson. They both wound up going with Fred Wilson, but they both were talking to me because they didn’t know who Fred was really.
Sequoia Capital, one of the most famous investors in the world. Fred Wilson, one of the most famous investors and had an amazing run over the last decade. Sequoia passed on both of those investments and Fred won both of them, famously. I think because of that I had the ear of Michael Moritz and Doug Leone and a young venture capitalist at Sequoia named Roelof Botha, who had worked at PayPal with Elon and Peter Thiel, and was the CFO.
Roelof and I have become very close friends over the years. He’s on the board of Inside and did the investment in Mahalo. He came to me one day and said, “Hey, you’re so good at finding these companies and you know everybody.” You’ve got such a great network, which you get from being a journalist. You would obviously be an amazing investor. Sorry to Kara Swisher for poaching you, but you would do really well because of your network.
Oh me, I was being complimented. I didn’t pick up on that. I thought you were complimenting yourself.
Yeah. You would be phenomenal. You would be phenomenal because of your network. Journalists make the best investors because they have incredible bullshit detectors. They ask the right questions and they have great networks, typically. We know how to work with people.
Yeah. I quit podcasting. I’m going into investing.
Well, you would get a job immediately. Anyway, point is, he said, “I have this idea. If we give you a bunch of money, would you invest it?”
Our money, Sequoia’s money.
Sequoia’s money, and “We’ll just split the returns 50/50.” I said, “Sure, what’s the catch?” They said, “Nothing.” I said, “I like that idea.” I just started investing. I invested in 15 or 20 companies. In that group were Thumbtack, which I was the second or third investor in after Marco’s parents, and Uber and a bunch of others.
Not to get too VC nerdy here, but when you’re a scout for Sequoia, is the idea that you say, “Hey, I’m investing on behalf of Sequoia.” Is the idea, “I’m just Calacanis. I’m a cool guy and I’m not telling you about the fact that this is actually Sequoia’s money.”
At the time we kept it very quiet — not because we were trying to be sneaky but because we didn’t want to have a signaling risk, where people would say, “Sequoia invested in Thumbtack and now Sequoia’s not doing the next round.” That’s a continuity problem in the venture capital industry that can cause problems. What they just said was, “You’re investing. We’re your LP. We’re your limited partner. We’re the backer.” Then I would wind up having my own fund for $10 million, which I just deployed and invested in another 105 companies.
The Uber investment is part your money, part Sequoia’s money.
It was Sequoia’s money, but I get half the return, they get half the return.
You get half the return. You made that investment when?
God, I guess that was 2009 or something.
It was the first round they had to raise. It was the $4 million valuation.
I remember when Uber came out. I remember reading TechCrunch articles about them and thinking, “This is a car service for Bay Area people who don’t want to get car service.” It didn’t seem like a thing to me. When it came to New York it was an expensive car service. Still didn’t get it. When did it click to you that, “Oh, this is a big deal.”
Well, it clicked to me that it would be very disruptive for Carey car service and those other car service companies, because it would take a third of the cost out, and the drivers would make as much or more money and get more rides. It was immediate to me that I thought this could be a billion dollar business. A $70 billion business in six, seven, 800 cities. No, I didn’t actually see that, but Travis did.
I had Travis on my podcast “This Week in Startups” early on, and if you watch the investment, I said, “You know, I think this could be a billion dollar company.” Travis says to me, “Do you think?” They were just going into two more cities. I think Chicago and New York and then eventually Los Angeles. Travis, during that podcast, says, “Yeah, we’re going to deliver stuff. We’re going to do food. We’re going to do all this stuff. We’re going to have everything and it’s going to be a logistics network.” He had the vision from the beginning.
Right. I remember that part of the pitch. “Oh, you don’t get it. They’re not just a car service. They’re a logistics network.” You keep hearing that, and by the way, they keep playing, it’s a car service still to this day.
Well, it’s a car service ...
Like they play around with food. They play around with deliveries.
UberPOOL is more of a bus, when you think about it. You’re getting on and off three or four people. Then if you look at the food, in San Francisco, Uber Eats is running the table, and I think in some other cities it is. I think that’s going to be a meaningful business.
Mechanically, if you have half the returns from this investment.
It’s a lot of money.
Millions of dollars, tens of millions of dollars?
It would be tens of millions.
To you. Uber hasn’t gone public. I think they’ve been really restricted in selling secondary shares.
Sure. I think there’s a very limited number of people who have access to that opportunity.
How does anyone cash in some of that Uber stock, which is private but is worth an enormous amount of money? There’s a lot of people who invested early in Uber.
I think that they’ve publicly talked about programs to allow employees to sell. The early investors in the company I think have a different set of rights than the later investors in the company. A lot of this idea that you couldn’t sell your shares was for later investors in the company. They tightened that up. Mark Pincus was one of the first to tighten up the secondary sale process, is what we call it in the industry. Also Elon Musk tightened it up for SpaceX. Now SpaceX has a very routine, I think it’s every six months or every quarter, they allow the trading of secondary shares of SpaceX between employees and outside investors, but it’s very controlled.
Have you been able to pocket any of your Uber money?
I cannot comment on my holdings in the Uber corporation.
I would assume there’s a big gray market for this stuff, where folks who maybe don’t have the right to sell this stuff are probably lending it, maybe it’s off the table.
There’s all kinds of crazy stuff that occurs. I would never do anything like that.
No, because you’re above board and you did not just wink at me.
I’m friends with Travis and it’s an honor and a privilege to be able to invest in these companies, so I always feel like if you’re on the team, you’re on the team and you play by the rules. There are a lot of people who haven’t played by the rules, for sure, in these companies, and have sold things or done these kind of funky instruments. Those things could cause problems down the road for people.
Again, we’ll talk about your history, but you’ve made money a couple different times, significant money a couple different times.
Is this your biggest win?
Yeah, I think ultimately it will wind up being my biggest win, for sure. I’m not quitting angel investing yet. A number of the other companies I’ve been involved with in addition to Uber, Dine, Wealthfront, Thumbtack, and a whole bunch of $100 million companies that you probably haven’t heard of yet, are doing really well. Now I invest probably on average $250,000 to a million dollars in companies. I wind up owning 5 to 15 percent of companies.
If you’ve made many tens of millions, I’m going to guess, from Uber alone, right?
And Weblog, which is a $30 million show in 18 months.
Right, but I’m saying just from Uber alone. You made a ton of money from there. All the conventional wisdom to do well in angel investing is to not invest because you’re going to lose most of your money. You’ve already had a huge home run. Why not stop?
That’s a great question. I think most people call in rich when they hit ... Chris Sacca stopped investing, and a lot of other angel investors you know have done blog posts. Whether it’s Tim Ferriss or Tucker Carlson, just, “Angel investing, I’m out.” Because it’s hard. It’s very hard to sit down at a poker table or a blackjack table where you lose eight or nine out of 10 hands. I happen to have the brain chemistry, I believe, that is exactly designed for gambling, and I’ve found an outlet for my degenerate gambling that is actually considered acceptable by society. If people knew the amount of money I gambled playing poker, they would really be absolutely mortified in some cases.
You’re angel investing to fund your poker habit.
Well no. I’m up in poker, thankfully. I’ve had a pretty good run. I have thought about, hey, do I want to do something else with my life? I happen to get a particular rush out of being the guy who believes in you when other people don’t. I get a particular rush out of being part of the team that’s three or four people, and when I introduce it to other people, they don’t get it and they pass on investing. If you look at Uber ...
You like being an I-told-you-so guy.
Yeah. I do like putting stuff in people’s face and I do like being a contrarian. Not to the extent that Peter Thiel does.
You have Twitter for that reason.
Well, I love Twitter for that reason. I love to mix it up. I’m an opinionated person. I like to debate. I’m from Brooklyn, where you live now, in Bay Ridge. I think I can say that. You’ve said it on the podcast.
Yeah. It’s not a secret.
I have a certain DNA and I think that angel investing plays really well into it.
I have another why don’t you quit question. We mentioned Mahalo, which I think I myself have written about three different major pivots.
Three different iterations, yeah.
Smaller pivots in between. Started off as a human-powered search engine. Bunch of other things. Now is a newsletter company.
Yup. Three iterations basically, three or four.
Ten years into it. Again, you were successful twice before. Again, enormously successful from Uber. What is the point of continuing to get this thing to work?
To get a return to my investors who had faith in me from the beginning. If I feel there’s a chance that I get them a return, if it’s 1 percent or 2 percent, I’m going to work like a dog. I’ve actually recently put my own money into the company because I realized, we figured it out and there’s a great chance we could return the amount of money that has been invested into the company and then some. I like tinkering.
They had probably written this down, years ago.
100 percent. Everybody’s written it off.
They’ve written it off, and by the way, the standard for a VC investment is a return of zero.
Of course. Nobody’s mad at me that it didn’t happen. Mahalo got to the 140th largest site in the United States. We had a $10 million run rate on AdSense alone, Google’s ad network. We had I think 15 million uniques.
The original idea was you can take on Google by having human beings figure out where to tell you to go.
Exactly, and to have search that included more than just 10 blue links. We were right about many things. The thing we were wrong about is exactly how cutthroat Google would be in dealing with other content companies. They just took a swath of companies, from eHow to us to Associated Content, and they just decimated the entire space, with multiple search engine optimization Panda updates, etc. It made me a little bit bitter for a while, because I felt like I was a big partner to them, but I learned a big lesson, which is, those big companies really don’t care about anything other than themselves.
Even if you’re friends with Larry or Sergey or Marissa or Megan Smith, I was friends with all of these people, I don’t think it matters, your personal friendships in business. I think I was quite naïve as a person from Brooklyn who believed in loyalty, that they would take care of me and that they would treat me fairly. I don’t feel I was treated fairly by them, but it was an important lesson for me as an entrepreneur.
Then you were an app at one point. You were a news app and a discovery app. Rather than go through every iteration of Mahalo, you’ve been grinding it out for ten years. I’ve written about multiple ...
Sure. One of the problems is at some point money.
Why not stop?
You know what the thing is? It keeps making money, and I kept getting it to break even and some promising idea. I really think that newsletters, which is what we’re doing now. We have 20 newsletters, and I just had a real profound lesson I learned with the Inside News app, which was you can get 500,000 people to download an app, but only 1 percent or less will use it a day. Then I realized, wait a second, I took the same information that was in the app and I emailed it to the same audience, and 40, 50, 60 percent opened it every day. We just saw this like 50X and I said, “Wait a second, there’s something there.”
I remembered I had done email newsletters in the past, I had the Skimm and Red Tricycle, one of my investments, are doing very well. Now we’re launching one newsletter a week in 2017. We’ve got 20 right now. We’ll have 60 or 70 at the end of the year. We have a half million opens a week or so, and hundreds of thousands of subscribers. I think it could be just like, it’s already close to breaking ...
I love that the email format comes back in vogue. Every five years everyone sort of rediscovers it. “Hey, this is a really good way to deliver information.”
It’s a bit of a revenge startup for me too, because what I like about it is I’m not beholden to anybody. If you look at what’s happened to the media space, everybody was beholden to Google for SEO and then the Huffington Post and everybody became beholden to social networks. It’s really perverted, the nature of the news business, which you’ve talked on this podcast many times about. I think email just cuts out all of these middlemen.
Subject line saying, “Here’s what’s in the email.” You open it. You either like it and you open it again next time, or you don’t, you’re done.
It creates a profound difference in how journalists do their jobs, which is if you hit send and you are just in a panic about people hitting unsubscribe, you focus on quality. If you’re trying to game social media, you’re like, “What’s the most salacious headline that I can trick somebody into clicking?” If you look at what Gawker did and the sort of downward spiral of media that Nick Denton led. Then Huffington Post sort of joined. This spiraling to the bottom of playing fast and loose with process journalism. Printing whatever comes in to the tip line, and not doing actual fact-checking or being fair in any way.
Jason, people had salacious journalism since there was a printing press. Before a printing press.
For sure, but they didn’t drag everybody else down with them. If you think that now you have journalists who, a whole generation of journalists who think it’s okay to just print whatever comes in to the tip line. You’re part of a very old-school organization.
I still find it fascinating that you’re putting your own money into this thing, because you could walk away. You could restore old cars.
Never say done. Yeah, but just think about how glorious it will be when I sell this and I put it in everybody’s face.
All right. That’s motivation, at least.
I’m a very competitive person. You become aware of who you are over time. I realized that’s not a bad thing, to be a competitive person who doesn’t want to lose. You just have to know when to turn that on and when not to. I think I’ve learned that over the years. There’s a time to turn it on and there’s a time to not. Sometimes you need Dennis Rodman on the court, sometimes you need Steph Curry.
All right, so using that metaphor, brief time out. We’re going to hear from one of our sponsors.
Back here with Jason Calacanis. You’ve been on pause. You’ve been on time out mode, now we’re back on.
We have you up to date on what you’re doing today. Newsletters.
Yeah. Angel investing. I have a little incubator. Finishing my book, “Angel.”
You got a book coming out.
There’s a TV show, there was a TV show?
It’s still in the works. Harvey Weinstein and I created a show around my incubator. One of the big networks has participated in the pilot of that, but it may not ...
What does that mean?
They paid for it.
Something has been shot. The Jason Calacanis talk show.
Something has been shot. The pilot has been shot.
I can’t see it.
You can’t, no. I mean, this is how the TV business works. One of the large networks paid to do all this. The way it works is, they have windows to execute on and when you’re on one of these larger networks, something’s got to come off TV for you to go on. It’s sort of like waiting for a runway, to be able to taxi to a gate. That didn’t happen in a certain amount of time so now the rights revert back to us, or Harvey, and he can put it in another place and so it might wind up in another place. You may have seen me doing more CNBC.
You like talk.
You podcast, you’re on TV.
The podcast’s doing great.
It’s got to kill you that Gary V. is going to be on TV, Apple TV.
No. Doesn’t. I’m happy for him.
You and Gary V. are in the same business.
I got offered to be on that show.
Yeah? You got offered to be on the Apple TV show?
Before Gary V.?
I’m not sure of the timing of it.
You were going to be a judge?
I was already under contract with this other show with Harvey Weinstein. I kind of feel like I need to be the only guy, or the guy on the show, and that’s not because of ego only. It’s mainly because I think what I do is unique, and I didn’t want to do a shiny floor “Shark Tank” ripoff. I kind of feel like they did that, it’s great, but I think a lot of people are trying to be a little bit derivative. I wanted to do something truly unique.
That’s the nature of TV. That’s one of the reasons it’s hard to make a TV talk show. Everyone’s, “Well, we’ll just do Charlie Rose but faster or younger or cheaper.”
I wanted it to be authentically, I’d rather do something that’s authentic and unique. The approach that I had with Harvey was ... The people who shot it, it was very interesting, I don’t know if you’ve ever seen the 24/7 series with Pacquiao getting ready on HBO. They do this incredibly cinematic, 24-frame-per-second, so it looks like a movie. That’s how we shot it, and we shot it with those people.
Is it a talk show, but filmed that way?
No. It’s me and my incubator, without giving too much, here are the seven companies in my incubator and we’re working on building these companies.
It’s not Jason talking. It’s Jason talking, but it’s not a Jason interview show.
No. I have other opportunities around that, that may happen in the future. I have my podcast, that does close to a million dollars a year and has four full-time people. When people come from radio networks or TV networks and they want me to do a talk show, it’s typically they want to pervert what I do in the podcast. I just said it before, obviously I’m post needing the money, so I want to do something authentic. I like working with my team. I reach 150,000 people every episode of “This Week in Startups.” It’s funded and it’s profitable and it does well, and I control it. I control my destiny.
I’d rather keep playing the long game. I’ve been doing my podcast for seven years and we’re 700 episodes in. I do it twice a week. I’m getting better and better. I try to get a little better every episode. Get better guests. Have better conversations. Be a better host. Why would I go to some network that has less and then they want to pervert it and make it stupid and corny? If I want to go three hours with Chris Sacca or two hours with Travis from Uber, I want to be able to do that. I don’t want to have somebody just sort of put me in a box.
Now that being said, I have enjoyed doing what I’m doing on CNBC.
Yeah. If you’re on CNBC, you’re in a box. You’re in a 90-second box.
It’s not 90 seconds. That was kind of the rub there. They were like, “Hey, come on for 90 seconds.” I was like, you know.
Not enough. You can swear.
I just said no. I mean, come on, I’m going to come across town. I’m going to wake up that early. When I do, people don’t realize this, but when I do CNBC, I do a meeting with three of my brain trust people from 6:00 am to 7:00 am to talk about the topics and to refine my position and to really do research. Then I go on.
You’re not just showing up and bullshitting?
I think you’re doing it wrong then.
No. I think actually the reason why they’ve invited me back and given me 15 sometimes 20 minutes, is because I actually am prepared. In talking to some people who have done really well in radio, they said, “It’s interesting that you’re doing that.” I was talking to somebody who had worked with Howard Stern a lot, and who had been in the industry for decades. He said, “That’s exactly how Howard works, and other people.” They put hours and hours into 10 minutes or 20 minutes of show.
I don’t know if I want to be a news anchor on a CNBC. I don’t think that’s my role. I’m more of a commentator. If I wound up having a talk show on a CNBC or a network like that, talking about what I’m a specialist in, which is angel investing and private companies. That would be a lot of fun for me, so I’m open to all possibilities right now.
You are awesome at talking. You’re awesome at selling. I remember thinking, I had a list of really great sellers, like if I needed someone to save my kid’s life. They could close a sale.
No, seller. You tell a great story. It was you. I can’t remember the other ones. Bill Nguyen was one of them. Wound up he had a music company, Color. Did you happen to end up in the media? Because it seems like you could have been selling condos. You could have been selling real estate. You could have been selling whatever.
Did you want to be in media or did you fall into it?
You know, it’s interesting. I wrote this book about angel investing, and it’s specifically not a biography, because I was like, 46 years old is a little ridiculous to write a biography and I’m not that successful so I don’t think it’s worthy of killing a bunch of trees. Maybe in 10 years I’ll write one. It made me really reflect. The book-writing process is fascinating, because really you spend 20, 30 days, for five or six hours, writing 2,000, 3,000 words at a clip. Then I was working with one of my best friends, who came and just read the work in real time as I did and gave me candid feedback.
I started reflecting on who I am and how I got here, exactly to your question. I realized when I was young I was very powerless. Growing up with an alcoholic father who had a bar taken away from him by the feds because he didn’t pay his taxes. I was basically, at the age of 17, my dad lost everything and was on the brink of going to jail for tax evasion. I think it just became my superpower that I had to fight and I had to be somebody. I had to get across that bridge to Manhattan and I had to be important in Manhattan, was how I felt.
You grew up in Bay Ridge, Brooklyn.
You’ve seen the movie “Saturday Night Fever.”
That’s it. That’s where I grew up.
That’s the whole plot of that movie is, these guys are in New York City but they’re so far removed from Manhattan. They’re in another world.
It was true.
John Travolta goes to Manhattan, it’s like going to an alien place. Meets a cool girl there. It’s totally removed. It’s an hour outside.
Brooklyn was not cool.
It’s deep Brooklyn. It’s way out there.
It’s way deep Brooklyn. Yeah, it’s like the last stop on the R train, literally, or as we call it, the rarely. The end train’s the never.
Still the same.
I used to ride that train into Manhattan, and I was fixing laser printers and setting up computer networks and I said, I would look at Paper Magazine or New York Magazine and I’d say, “How are these people famous? What does it mean to be famous?” I would read Spy Magazine and I was trying to figure out how people got money and how they got fame. I decided I needed to start a magazine, because I was watching Kurt do Spy Magazine.
Kurt Andersen. I was watching David do Paper Magazine. I was watching Graydon do Vanity Fair and I was watching Jann Wenner do Rolling Stone.
This is back when magazines were still a big deal.
Magazines were it in the late ’80s, yeah.
A good couple decades. ’70s, late ’80s. That was sort of the coolest thing you could do.
That was entrepreneurship, and you would be an impresario. The person who ran a magazine was the most powerful person. I wound up meeting Graydon, David, Kurt.
How do you meet them if you’re a schlepper dude from Bay Ridge?
It’s a good question. I went to a party and David Hershkovits was at it, from Paper Magazine. I walked up to him and I said, “I’m Jason Calacanis.”
How do you even get in the ... You were literally a bridge-and-tunnel guy. How do you get into this cool-ass party?
It was a Bardi’s party. I knew a girl who I was dating, Trixie, and she got me into the party. I walked up to him and I said, "I’m a huge fan of your magazine."
Was that your intent? “I want to crash this party and start climbing the ladder”?
Absolutely. I was beyond a ladder climber. I was the guy who would literally go through the kitchen and sneak into the party to meet people.
For that reason? You wanted to ...
Specifically wanted to be ...
To start climbing.
To start climbing, for sure. I had a competition and a fight in me, like the guy from “There Will be Blood,” that was probably inhuman and not healthy. Anyway, I met David and I said, “David, the internet’s going to be big and I know all about it.” Whatever. He says, “Yeah I know. I’m putting Pipeline on my computer. I’m going to have the internet.” I said, “Oh that’s great. Can I put it on your computer for you and show you how it works?” He said, “Sure. Come by Paper Magazine tomorrow.” I started writing a column for Paper, it was my first writing gig.
In your what? Early 20s?
22, 23. Something in that range. Then he got me into all these parties, but I just had to get rid of my khakis and my blue shirts and stop dressing like I was from the Gap because it was quite embarrassing. I used to carry Paper Magazine in my messenger bag, and then when I’d go to parties, I would take it out to get into the party and show my name on the masthead. This is how ridiculous I was.
That was your business card.
They wouldn’t give me business cards, it’s just “columnist.” Literally, I would walk to the door, I’d say, “Hey, I work for Paper Magazine, can I come in?” They would look at me and they’d be like, “Absolutely not.” Then I’d take it out, I’d show my name on the masthead and they’d be like, “Oh yeah, the internet. That’s cool.” They would let me in. It worked, like two out of three times, which was enough for me.
This was mid ’90s?
It was early ’90s, yeah, like ’94, ’95-ish. Then I started Silicon Alley Reporter, which was a 16-page photocopied magazine.
The idea was this is a newsletter/community newspaper for people who do internet in New York, which was like hundreds of people.
Interestingly, it was back to this idea of trying to get power as a young person who felt no power and who really wanted to be something in their life. I saw that people made lists. I was like, lists are important so I’m going to make a list. Silicon Valley 100. I made the list but we only had 60 people. Then I started emailing ...
Who was No. 1 on the list?
I think we made Esther Dyson number one the first year and Double Click the next year. I thought picking somebody who didn’t have a company but was an angel investor and predated it, and she had PC Forum and I wanted to go to PC Forum but I couldn’t afford a ticket.
You thought all this through. “I’m putting together a list because people like lists.”
Here’s how I’m going to pick who’s on the list.
Right, and so then I said, “I’m going to number the list.” Everybody in the organization said, “Don’t do that. It’s too divisive.”
Because you’ll upset someone who’s No. 4 who wants to be No. 3.
Exactly. I said, “Exactly. That’s why I’m going to do it.” I emailed the 60 people. I said, “Do you know anybody who’s doing anything in the internet business?” They all replied, “Well, I have a lawyer.” We put lawyers on the list. I have a PR person, Brooke Hammerling’s a PR person who’s been on your show. I put Brooke on the list. I just put anybody on the list who had any association. Once I started the list, all of a sudden people were like, “Oh.” PR people started contacting me. “Oh, where am I going to be on the list?”
Because the internet was a thing but it wasn’t a thing you did in New York, and New York was not a place where you went to do internet things. If you were ambitious and an internet person, you went out west.
Right, so I had the market to myself basically. In a vacuum. It was a great play to become powerful, and that magazine became $12 million in revenue. I built it off my credit cards. I became very powerful. I was profiled in the New Yorker in like a 6,000- or 7,000-word piece, which was ridiculous.
I like that you’re just tossing off the word count, because you know exactly how many words that was.
I know this because I was talking to Ricky Van Veen and Josh Abramson, who had been profiled. I was talking about that experience. They were both similar profiles. They’ve now done a couple of these. They did one about Bryan Goldberg from Bustle. They’re all very similar. They’re all about a youngish guy who’s making his way in the internet. Youngish guys and they’re brash and they’re confident, but they’re also kind of rubes. They don’t really know what they’re doing. There was a great example in your piece, I remember very clearly, about you having a rack of the similar suit, the same suit.
Anyways, so Ricky Van Veen and Josh Abramson had one of these. I asked them about the experience. “Well, Jason called up after it was published and made sure that we knew that his profile was longer.”
For sure. Yes.
You know exactly how many words it was.
The funny part about it was, Larissa says, “Hey, meet me over here.” We both lived in Chelsea. “We’ll have a little conversation. I’m going to bring my friend Malcolm with me.” We go and it’s Malcolm Gladwell, from “Tipping Point” fame. He’s talking and nobody really knew who he was, the book hadn’t come out yet, “Tipping Point.”
He said, “You know Jason, what you are is you’re like …” I don’t have a Malcolm Gladwell voice, but it’s a very, like, he’s kind of up here somewhere. “It’s very interesting. You’re like a connector. There’s a guy who’s got a thing, where if you know the number of people, it’s a Dunbar number, and you know a lot of people. You’re a connector. Larissa, you should call your piece The Connector.” She named the piece “The Connector.” Then I was on Charlie Rose and the New York Times and all that kind of stuff.
I had achieved what I wanted to do, which was to be important. I wound up selling it in a fire sale to Dow Jones.
You sold post crash.
Post crash. Huge mistake. Alan Meckler offered me $20 million for it before the crash. Then I wound up selling it for two or three year’s salary after the crash. I had two or three years salary, and then 9/11 happened and I was particularly depressed and impacted by that. In fact, I wound up having PTSD and going to therapy for PTSD a number of years ago. A number of years after 9/11, when I realized I had it, because every time I would hear an ambulance, or I would see pictures of the World Trade Center coming down, I would start crying. I would get very physically upset about it. My brother’s a fireman. He lost a lot of friends.
I’ve since made peace with it, but after that I was very particularly depressed about the state of the world. That became the sort of defining moment of my life, was just pre-9/11 and post-9/11. I was absolutely obsessed with it. It just really bothered me for a long time. Still does. I wound up starting Weblogs Inc. after that because I had nothing to do. Nobody would hire me. Dow Jones fired me right after they bought the company.
Was that the plan? Did you know you were going to be fired?
You thought you were going to run the newsletter for them.
I thought I would be like a Dow Jones person for a year or two and make $300,000 or something. It’s a big deal to make hundreds of thousands of dollars at that time.
By the way, still is.
Yeah, I guess so. I thought it would be a big deal, and the guy says, I remember it was like yesterday, “Hey, can you come to by the conference room?” It’s in San Francisco. I said sure. I go to the conference room, “Hey, let’s take a walk.” We’re taking a walk around this conference room in San Francisco and he goes, “You know, I think there’s so many things you’re capable of. Being here, you’re going to be so boxed in and there’s just so much more for you.” I just looked at him and was like, “What do you mean?” He’s like, “We don’t really have a place for you here. We think you should go on to your next adventure.” I was like, “I have a three-year contract.” He goes, “And we’re going to pay you every penny of it, but you’re not going to be coming to work next week.” I was like, “Okay.”
I went to my girlfriend, then wife, I was like, “I think I’ve just been fired.” She was like, “What? How are we going to pay the rent?” I was negative 10,000 at that point in my life. Then I convinced some friends, because I had seen Rafat Ali, who was on the program, who had worked for me for maybe 30 grand when he came out of school, at Silicon Alley Reporter. He had gone on and done a blog.
This is Paid Content?
Paid Content. He was doing it while working for me. Rafat came to me, and I’m an investor in his company now, Skift, which is doing really well, and he said, “Hey boss, I know you found out that I’m doing Paid Content on the weekends. Am I going to be fired?” I said, “Listen kid, let me explain something to you. You don’t have an editor on Paid Content. You need an editor. You work for me. Blogging is stupid and it will never go anywhere. You’re wasting your time when you could be writing stuff and having editors, and listening to the editors who are trying to give you advice on where to put the comma, because you don’t know where the comma goes. Smarten up. I don’t care what you do on your weekends, but do something more, like get a book and learn some grammar.” I just basically, whatever.
You gave him the high hat.
Basically. Then Xeni Jardin had been working for me, and she went to Boing Boing. Then I found out they’re both making like five, six grand a month doing this blogging thing. I was paying them, whatever, 30, 40, 50 grand a year at the time. They’re making more money working in their underwear from home, half time, and they were happy and they were their own bosses, so I said, “Wait a second. Blogging is going to be something.”
Blogging thing has legs.
That’s when I went, “I have to go do blogs.” It was interesting because at that point in time, the only person doing blogs was Nick Denton. I knew Nick and I went to see him and I said, “Hey, I have this idea, I want to run it by you because you’re doing Gawker. I think I’m going to do a business blog. What do you think of that?” He’s like, “Well you know, blogs don’t work for making money. You can’t have advertising on blogs. People will not accept it.” Because at that time there was no advertising on blogs and blogging was supposed to be counterculture. No advertising. Dave Warner had said, “No advertising.” All this stuff. There were rules about blogging.
Anyway, the next day after I have the meeting with him, he writes a whole blog post about how I am like the worst thing that could ever happen to blogging. Blogging doesn’t need a huckster like me coming in and trying to sell it. He just basically scuttled me before Day One. I was like, “That mother melon farmer. I am going to knock him out.” Not physically, but I’m going to.
You could. You’re a martial arts dude.
I am, but I said, “I am going to get my revenge on him.” Then I went to Elizabeth Spiers, who’s been on the program. Very smart person.
I like that Jason is listening to this program, every episode.
I listen to every episode, for sure. Well you know what? There’s no media ... I’m obsessed with media, so I love it. I went to Elizabeth Spiers. I said, “Listen, how much is he paying you?” She said like 1,500. I said, “I’ll give you two grand a month.” I had just gotten Mark Cuban’s money. He put 300 into the company. I said, “And I’ll buy you a MacBook Air.” Which had just come out. The little manila sleeve that Steve Jobs put it in. I said, “I’ll give you a MacBook Air.” She looked at me and she said, “Nah, I’m going to go to New York Magazine and I’m going to write features.” I said, “Elizabeth, you’re going to go from being the No. 1 blogger in the world to the number 87th most important person at New York Magazine.”
Gawker exists. There’s Gawker.com. Nick actually has a business even though he’s telling you there isn’t one.
You say, “I want to do more of these.”
I had totally forgotten that you and Nick had this rivalry for a long time.
We had this big rivalry. This is where it gets good. Then I call Xeni ... Elizabeth turns me down, which is pretty smart. There’s actually a photo of her looking at me like I’m a martian, that somebody published later on. I think it was one of the moments I was trying to convince her, at a party, to come work for me.
Xeni said to me, “Oh, you picked the wrong target. You want to go after Peter Rojas. Gizmodo is what’s making all the money.” I said, “Oh, okay.” I go find Peter and I email him and I say, “‘High and Low.’ Nice reference. It’s my favorite Kurosawa film.” Because he had mentioned “High and Low” in one of his blog posts. He wrote back, “You’ve seen ‘High and Low’?” I said, “I’ve seen all the Kurosawa films. Of course I have.” I said, “Can I buy you dinner?” He said, “Sure.” I get a reservation at Jewel Bako. I get Peter Rojas to come.
Fancy East Village sushi.
East Village sushi place. It was the best place at the time. I knew the owner. My friend knew the owner so he gets me in with Jack and I said, “Listen, I’ve got a big deal I got to close. It’s got to be the best sushi dinner ever.” He goes, “I got you, Jason. Don’t worry about it.” We go. Peter shows up with his girlfriend at the time, Jill, now his wife and mother of his two kids. I was like, “Oh, you’re going to love this place. The best sushi.” He goes, “Oh, we’re vegetarians.” Fuck me. I go to the guy ...
The best rice you can buy.
I go to the guy, “They’re vegetarians.” He goes, “I gotcha, Jason.” He runs out. He goes to the Korean deli on the corner. He comes back with two bags of vegetables, makes the most amazing vegetable thing. They’re like, “How did you ... ?” I was like, “Oh, they do vegetable stuff here all the time. I come here for the vegetable stuff.”
Then back to being the salesman. I said to Peter, “How much is he paying you?” He said 1,500. I said, “I’ll give you two and I’ll give you a MacBook Air and I’ll give you equity.” He goes, “Well, Nick promised me equity.” I said, “When?” He said, “A year ago.” I said, “Well, what happened?” He goes, “Well, I’ve emailed him four times.” I was like, “Well, he’s going to screw you and I’m going to make you a millionaire. Come work with me. I’ve got Mark Cuban’s money and I got the guy who’s going to build the software for us, Brian Alvey, who’s a genius.”
He agreed. Then he says, “But I can’t leave until Nick gets back from his vacation, because I don’t want to ruin his vacation. I’ve got to tell him.” I said, “What?” He said, “Yeah, he’s going to Brazil with Bjork and all these fancy people. He kept talking about it at the office.” I said, “Oh really? When is he leaving?” He goes, “He’s leaving Sunday.” “What time?” “I don’t know, 11 or something.” I said, “Find out what time he’s leaving.” He finds out when he’s leaving. I said, “Okay, I want you to email your resignation while he’s on the fucking plane.” I literally did that. He got off the plane and got Peter’s resignation and he wrote a blog post about how he had been hosed by me, blah, blah, blah. Because we used to always talk about how we were beating each other up.
Right, but your intention here was not just to fight with Nick Denton. You wanted to make money from blogging, which really still was ... I mean, if anyone had heard about it, they thought of it as sort of a hobby thing you did for giggles. It wasn’t a business.
It was a hobby. It was literally journaling. It was supposed to be your diary.
Right. “Here’s what I had for lunch today.”
It’s supposed to be a personal diary. It’s what I did. Before Twitter. Then after that Nick came to me and he said, “Truce?” I said, “Okay.” We had a truce after that.
You start with Engadget, you’re writing on gadgets.
Engadget, then we did Autoblog, Joystick, all this stuff.
It’s hard to remember this, but there was a period of time where there was a perfectly viable business where you would say, “I have the new whatever.” Not the iPhone, by the way, just literally any gadget there was. “We’re now going to take pictures of me opening the box for it.”
Unboxing was created by Peter Rojas.
Now that all exists over on YouTube.
Liveblogging was created by Peter Rojas.
This is all a new big deal and it had real audience, and then eventually attracted advertisers and became a real business.
It became a real business. We knew that it was because Samsung came to us and said, “We want to buy out Engadget for like 10, 20k a month.” I was like, “What? Great.” Again, we were paying bloggers $1,000, $2,000 a month. They said, “Do you have anything in video games?” My sales exec came to me, Shawn called and said, “Do we have anything in video games?” I was like, “Yeah, we have a video game blog.” He says, “We do?” I said, “Yeah, it’s coming out next month.” They pay $10,000 a month for the exclusive for six months on the video game blog, which we launched as Joystick, and that did phenomenally well. Then Volvo did our podcast on Autoblog, so we did the first podcast ever on a commercial blog.
You build up this network pretty quickly, right?
Well, it was part of my playbook, was to go fast and hard and to make the bigger companies realize that we were ambitious and that we could execute, and to make all the other players who were trying to make a business out of blogging realize that they would never be able to compete with us. It was intimidation tactics and it was honey for the inquirers.
Then pretty quickly you sold it, right? How long did it take?
Eighteen months after we started it we sold it for $30 million.
That fast. Okay, that’s when finally the light went off for me like, oh blogging’s a thing.
If you think about it. We sold it more than 10 years before Nick wound up selling Gawker. I’m guessing Nick and I made similar amounts of money.
Because he had to give $50 million back to the investors. They had to give 30 or 40 million to Hulk, and they had to give tens of millions to lawyers.
Yeah, and then he’s paying some of the employees apparently, too.
Yeah. Thankfully. Nick and I, we got together when I was in New York. I have a certain kinship for him. I don’t think he’s a bad person. I think he went through a dark period in his life where that blog did things it should not have done, and he enabled young people to go for traffic so relentlessly that they really didn’t think about if they were being fair to people or if they were playing by the rules.
I think it’s more interesting to talk about you than Nick, though.
We’ve had a lot of Nick Denton talk here. Also, by the way, you were not running a paragon of virtue over at Weblogs Inc.
Sure I was. Absolutely.
Smiling, too. Did you know, “I want to sell this thing 18 months after I start it”? Was that the plan?
I was broke. I was negative 10,000.
You had Dow Jones money to pay your rent.
I had run through it. I was out of that money, and I had the scar tissue of not selling to Alan Meckler for $20 million. I had in my head that my dad had lost everything, and I had lost everything with Silicon Alley Reporter. I said to myself, “I’ve got to bank a win here. I’ve got to be financially independent.” I had really wanted to be a millionaire by the time I was 30 and I wasn’t. It’s very immature and I know people in my industry like to say it’s not about money, but when you’re broke and your mom’s a nurse and your dad’s a bartender ...
The only people who say it’s not about money are people who are already rich.
Exactly. I was like, “You know what? I need this money. I need to transform my life and not have to worry about money again.” When the $30 million offer comes from Jim Bankoff and Ted Leonsis called me, my Greek brother, and says, “Don’t worry about it. We’re going to take care of you.” I was like, “I’ve got to just take this.”
Jim, my boss. Hello, Jim. Came to you?
Yeah, so what happened was somebody said, a guy named John Borthwick, who now runs Betaworks.
Also on this show. Everyone is on this show.
Yeah, so John Borthwick was working at Time. He said, “Hey, have you seen the new Time Warner building?” I happened to be in New York for a trip. I said, “No.” He said, “Come up. I’ll buy you a scotch or whatever.” We had a scotch and we were up there. He said, “Do you know this guy, Jim Bankoff at AOL?” Portha was doing strategy for them. I said, “No. I don’t know who you’re talking about.” He said, “This guy over here. You should go meet him. He wants to do something in blogging.” I said, “AOL’s kind of a dial-up business.” He said, “Yeah, that business is going away. They need to be a content business and Jim thinks blogs will be it.” I think Jim had talked a little bit to Denton as well. I met Bankoff, he was super nerdy, mid-level executive, like in a bad suit.
Sorry, Jim. Good friend, though. He was so smart, and so focused. He actually, in a way, was like a more-put-together version of myself. A hustler, but in the corporate world. He wanted to be important. He had started, I think, as Ted Leonsis’s chief of staff of whatever. He was like this internal hustle machine inside of AOL. He looked at our business and said, “Hey, that could be the start of this. This could be the start of turning AOL into a content business.”
We know this business is going away. We need to replace it with something else. Sort of having this conversation now with Time Warner and Verizon.
It’s somewhat parallel, different.
It’s exactly parallel. They basically said, “This could be the start of something.” What Jim’s key observation was is that we were putting together content pieces for $5 each. A blog post was $5. At AOL they were spending $300 or $400 per piece of content. They couldn’t reconcile this. Once they realized our process was better, and we only have five full-time employees but we had 400 or 500 freelancers, they wanted the playbook. So they took the playbook and they executed on it. Brian Alvey, my partner, who had built the software Blogsmith, then powered TMZ and some other projects that Jim had set up, with our software.
Show us how to make cheap content. Show us how to make efficient content.
Scaled content, is the way we would say it. If you come out with the story about the BlackBerry that’s just out, instead of writing one long 1,000-word Walt Mossberg piece, let’s break it into 10 200-word pieces, one about the headphones, one about this. Then you get the SEO lift and you have specific stories and you have a cadence coming out all day long, as opposed to Walt publishing twice a week. We’re publishing 20 times a day. He’s publishing two times a week. Jim understood the playbook, so much so that he took the same playbook and created Vox based on it. He in fact stole our teams. “Stole” is I guess a strong word.
All those people left independently of their own and they just happened to reassemble over at Vox Media.
I’ve read the story.
It was a huge conspiracy, but anyway, be that as it may ...
There are very serious rules about poaching at Vox Media.
The Engadget team became The Verge team, the Joystick team became the Polygon team. All these folks he pulled out of there, and it was fine. It’s all fair.
They just all walked out the building one day, one after another.
At the same time.
They just randomly ended up at another building down the road.
Exactly. Jim did very well by me. He treated me very well internally, and I lasted a year there. It was a good run for me, because I realized I needed to be an entrepreneur, I couldn’t be inside there.
Wait, people don’t talk about this enough. You finally do get your score, right?
$30 million. Most of it’s yours. After taxes you still are a millionaire.
I remember I was at Forbes.com and I had just sort of figured out that blogs were a thing. I remember emailing you, the sale had happened, is it true? You said, “Come see me.” I think you were hanging out at the Copacabana.
There was some sort of internet gathering, and then everyone was coming to pay tribute to you. Jarvis and Esther Dyson, they all kind of kissed the ring.
Well, I was the first person to actually, you know. I had achieved what I wanted to, which was I set out to have some power and to have some money.
How do you mark that? Again, like this is, how do you celebrate and then how do you decide, “I want to do more of this.” Or, “No, I’m done. I hit my mark.”
Yeah. I had to, again, take a deep look at myself and look at my childhood and look at where I was and who I was as a person. I’ve always been very self-aware and introspective, despite how it may look from the outside, and a little self-deprecating. I said, “You know, I am good at certain things, like starting stuff. I’m good at seeing opportunities. I wonder if I should do this again.” I had a long talk with my wife about it and I said, “I think I got a couple more of these in me. I’m only 33 or 34 or whatever.”
Statistically, you’ve already hit the lottery.
Exactly. I said, “I think I could do this again.”
You’re not going to do it again.
I have this idea for doing human-powered search, basically combining Wiki with Google, and I said, “I’m going to email three people and I’m just going to see what their responses are.” She said, “Who are you going to email?” I said, “I’m going to email Mark, because he’s my friend and we made money together, Cuban.” I said, “And I think the top two VCs are John Doerr and Michael Moritz. I don’t know in which order.” Because I really had never met them. I said, “I’m going to email those two guys and I’m going to email them my idea.”
I email Moritz and I say, “I have an idea. I sold Weblogs Inc. after 18 months for $30 million. I have my next idea. We were both at the same conference but we didn’t meet. I was wondering if I could get your advice on it.” He called me on two different phone numbers in my sig file and emailed me in one hour, Michael Moritz.
That’s very flattering, but the idea that you should go do this again instead of saying, “Look, I wanted to be a millionaire. I clawed my way across the bridge, or under the tunnel, or both. I succeeded. I failed once, now I succeeded.” That should scratch the itch, right? If you’re a normal person, or if you’re the kind of person who does that to begin with, you want to keep going.
You know, again, back to that fire inside of me. I kind of felt like I needed to be No. 1.
So it’s neurosis, not fire.
Yeah, I mean, on a bad day it could be neurosis if you’re not self-aware of it. It could make you grind your teeth, which I certainly have done in my life. If you realize that you have this in you and you realize where it comes from, which I do, watching your dad’s restaurant get taken away by the feds, with shotguns, and your dad losing everything as an entrepreneur, it puts something into you.
What it put into me was a fire that I can turn on at any time, and I can at any time be at the top of my game and compete with anybody, is what I believe. It may not be true, but I believe it in my heart. I just say to myself, “I’m a top-10 angel investor right now. Why not be No. 1?” I’ll just go for it. Why not try to write the best business book of all time?
See, I figure everything you say is sort of half bullshit. On the other hand, you are doing it. You’re still trying to make Mahalo/Inside work, when you shouldn’t be.
Yeah. No, it’s authentic.
By the way, the reason I believe that you’re half bullshitting is because you told me this once. You said, “You should do what I used to do with Michael Arrington.” I can’t remember who else it was, we would have a fake fight on the internet once a week. We would stake out some ...
“Didn’t matter what we believed.”
It was how we would game Techmeme at the time.
You didn’t do this with a wink, right? You were, “Such and such is terrible. It must be stopped.”
We started it as, Mike and I, who were very good friends at the time.
This is Mike Arrington, the founder of TechCrunch.
We were very good friends at the time, before he had his problems. He would write something and I would write something. We’re very similar in our bombastic approach and opinionated approach. Then what would happen is, because we both had such followings in the blog world, whatever we were fighting about ...
This is 2005-ish.
Yeah. 2005 to 2009.
The blog world is small and if you shout loud enough, people in that world will pay attention.
Yeah, and if you have an opinion about something, so if he hates Apple and I love Apple, or he hates something Yahoo did and I love it. Whatever it is, all of a sudden it goes to the top of Techmeme. Then in the top of Technorati, which was a search engine on blogs. We become the top story, then everybody piles on. Jeff Jarvis has something to say. Dave Winer has something to say.
Right, it’s pro wrestling except even the commentating is becoming part of the event, and the people in the audience are becoming part of the event.
Right, so what we realized was, “We can do this any time we want.” We would be having a steak or smoking a cigar or walking around Atherton, in his crummy rental house, which had like six or seven journalists in it while he was asleep. He would be up all night blogging. He was a maniac. It was charming in a way. We would just come up with something we would want to fight about. We’d take a position and we would just, we would go for it. We were masters at getting and capturing the dialog.
Now I kind of feel like I just authentically do what I do. When you see me on CNBC or you see me writing a blog post, I really focus now, in this sort of last third of my career, on the authenticity of what I’m doing.
I was making it up before, but now I’m telling the truth.
No, it’s not a Glenn Beck thing.
Or a Donald Trump thing.
We were precocious back in the day, is the way I would say it. We were just precocious. We liked to fight and it was a competition of ideas. Now I don’t feel like I’m in competition with anybody’s ideas. I think having a couple of successes in life sort of makes you confident in who you are. I’m confident in who I am. I know I’m good at what I do.
Speaking of Arrington, you guys were pals. You had a falling out. You had a conference business together. Now you’re still doing conference, right?
I still do my Launch conference. He had come to me and said, “I can’t figure out how to make TechCrunch profitable.” I said, “Do a conference.” He said, “I don’t know how to do conferences.” I said, “Well, I did them my whole career. I’ll show you.” He said, “Do it with me.” I said, “No, no. I’ve got to do Mahalo.” He said, “Do it with me, please. I don’t know how to do this. I’m not good onstage. You’re good onstage.” I said, “Okay, I’ll do it with you.” We do it. We start an LLC.
We do three years. We make a couple million dollars each in profits. Then one day he’s just like, seven years, eight years ago he says, “You’re not my partner anymore. You can sue me if you want to.” Like an idiot, I sued him, which ... suing Mike Arrington is like trying to like jump on the back of a honey badger. He’s a bit of a fighter, but then he started to have all these personal problems with a lot of women saying bad things about him. Then I knew it was over when one day Brooke Hammerling told a story on your podcast. She didn’t say who it was, but it was Mike Arrington who said something really horrible about her.
I’ll let you and Brooke and Mike take this one outside.
Well, essentially, he called Brooke a word that you should never call a woman. Your boss, Kara Swisher, came to me and said, “What the F?”
You can swear on the show.
I said, “Wow. There’s no way Mike ever called Brooke that word.”
Well, we weren’t headed that way. I was asking why you’re in the conference business. You had a break-up with Mike Arrington.
Yeah. Well no, in 1995, here, when I was doing Silicon Alley Reporter, I did a product called Ready Set Pitch, at Pseudo.com with Josh Harris. Ted Leonsis was a keynote speaker. I had 10 people pitch ideas. They didn’t have the product, just pitch ideas. That was my idea for a pitch competition and I still do Launch festival, which is a 10,000-person event. Takes place in April.
The idea is, you’re telling a lot of would-be entrepreneurs, or entrepreneurs, “I’m going to get you access to people who can help you.” To investors or press or whoever.
All those things.
Then do you charge them?
Originally we charged people for tickets. Originally we let people on the stage for free, which was a big distinct difference, because at the time, Demo was charging $20,000 to be onstage. We said, “It’s going to be free to be onstage.” Since I don’t have to make money from the conferences anymore, we allow 10,000 founders to come for free if they fill out a little form. Then we give 140 founders a free table. We give them a free presentation onstage, and we give them a free speed-dating session with 10 investors. All that’s for free. Then this year we added equity crowdfunding, which is, now civilians, people who are not accredited investors, 96 percent of the United States, can now invest in ... I think maybe 15 of the companies there will be investable through a platform called Seed Invest.
Where does your revenue come from?
We have sponsors.
It’s sponsor driven?
It’s 100 percent sponsor driven, and Jason Calacanis driven. If we lose $100,000 or $200,000 a year, I write it off.
I don’t need to buy a ticket for Launch, I can go for free.
You can, as a journalist you go for free. As a founder you go for free.
As a Joe Schmo.
As a founder you go for free. We give the first 10,000 tickets for free to founders. If you’re at a big company we ask you to pay, and the tickets are $300 to $1,500.
Yeah. I’m a little baffled by the model where they charge the startups to attend.
Web Summit, TechCrunch. They all charge $5,000, $10,000, $15,000 to the startups, and the startups are so desperate for attention that they fall for it. It’s really sad.
Surprising that it’s still a model in 2017.
There’s always new entrepreneurs who are desperate to get above the noise, and then somebody sells them and they say, this is how the pitch goes from like a Web Summit or something, “You’ve been selected to present at the Web Summit in the VR, virtual reality summit.” The founder’s like, “Oh my God, that’s incredible. Yes, let’s set up a phone call to discuss it.” They discuss it. They tell them how amazing it’s going to be. Then they send them a bill.
They literally do it that way. Then when they send them the bill, the founder’s like, “Oh my God, I can’t afford this.” They’re like, “Okay, well, we’re going to give you a 50 percent discount on the $15,000. It’s only $7,500.” These founders come to me after I’ve invested and they said, “Oh my God, we got selected.” I said, “Selected to pay $15,000?” They’re like, “No. Selected to pay $7,500.” I’m like, “You haven’t been selected. You’ve been duped.”
It’s the same as when you go to Hollywood and you meet with an agent who then says, “Yeah, you just need to get photos and an acting lesson.” They get a kickback from the photo and acting lesson person down the hall, who charges you. That’s such a big scam in that industry that SAG and all of those organizations put out warnings. It’s against the rules for agents to charge their customers. In our industry, the only person who’s really ever fought against it is me.
Let’s say I’m a clever person with a startup idea. I want to get to you. You’ve got a full mailbox.
How do I get to you?
There’s really a very simple path. One, you’re going to want to go to founders who I’ve invested in. That’s your No. 1 path. If you go to them, you ask them for feedback. If you can, get in touch with Marco from Thumbtack or anybody in my portfolio. Henry from Café X, the robotic coffee company.
Go to the CEOs of the startups you’ve invested in.
The founders, the CEOs, and say, “Hey.”
Do I say, “Here’s what I want to do”?
You could say, “I know Jason’s an investor. I have an idea for this. I wanted to show it to you and get your idea and feedback on it, and then maybe if you could invite ...”
They must get dozens of those a month.
They get some. Just like, listen, sometimes I feel like I’m Travis and Elon Musk’s social secretary, because anybody who wants to invite them to an event comes to me first because they know I’m friends with them, which obviously I don’t forward them on, but sometimes somebody comes up with something that I do need to tell Elon or Travis about, because it is relevant. Yeah, that can work.
The second thing is to go to somebody I’ve co-invested in. The third thing is to send me a link to a product, because I always click on the links, and if it’s a beautiful product I’m intrigued. The fourth thing is to send me a chart that shows some sort of traction or some ability that you know your metrics. My thesis on angel investing — which I get into in the book, “Angel,” coming out July 18th. Plug. — is people who are craftspersons and who have craftsmanship in their work, they will always have it. Whether they’re in the early stage or the late stage. When I first saw Uber or Thumbtack or Wealthfront, you could see there was some amount of polish and consideration in their product. There always is in those early stages. When I see a particularly well-designed product, or somebody understands their metrics, I know that that person cares in some deep way.
What if I know how to make an awesome product, but I am not a sales guy? These people have to exist, right?
Of course they do. Yes. They typically pair themselves with somebody who is a sales person.
Find someone who can sell for you.
Or they learn it over time. Zuckerberg was not a sales person. In fact he was the opposite. He got Sean Parker to sell him to Silicon Valley, famously. He also learned over time, but at the end of the day, metrics speak. If it’s growing, it’s growing. That’s what I’ve learned about Silicon Valley. People talk a lot about diversity and they talk a lot about, “Oh the industry is biased in many ways.” The No. 1 bias in the tech industry is toward performance. If you want to trump all the biases that are out there, if you’ve got a chart that looks like a hockey stick, nobody cares who you are. They don’t care where you come from.
You had a really provocative and thoughtful post during the Ellen Pao trial, where you were explaining why the VC industry was biased against her but it wasn’t misogynistic. They were biased basically for a legitimate reason. Can you tease that out for us?
Well sure. I don’t remember exactly my position in the piece, to be honest. I write a lot. In general ...
You were talking about the structure of a VC firm and why it’s set up not to accept new faces.
Correct. What people don’t understand about the structure is these are 10-year vehicles. They’re set up more like a poker game or a golf club, or a book club, male or female, where a bunch of friends get together and they’re set up as a partnership, an LLC. The dynamic is, people typically get a couple of friends together who think the same, and who want to spend a lot of time together, to go on a 10-year journey. It’s not like a company that has 10 new job postings every month and they’ve got a process. You add one person every 10 years. If you look at someone like Benchmark, which I think is still all male, they haven’t added partners in a very long time. Sequoia’s added some female partners.
When someone says, “It’s a boy’s club.” You say, “Yes, it is. It’s this group of boy’s club.”
Club is the operative word. My advice was — and listen, I don’t think that that’s necessarily right. What I would say is, if they are clubs in that fashion, the best way for the club to get cracked is for women to start their own venture funds. A number of women who heard me say that have actually started them. There is a movement now for women to get together and go to other women as LPs and to start these funds themselves. I think that’s a quicker way to cracking this, just on a pragmatic basis, because of the life cycle of funds. It doesn’t mean I agree with people starting only male or only female organizations.
That’s about the VC world. Then what do you think about diversity as an issue sort of in the startup world? Do you still see the majority of people who are getting funded are white guys who look like Mark Zuckerberg? Sort of famously. Is that important to you, as an investor, to stop that, or it doesn’t matter to you?
As a cis white male, I can whitesplain and malesplain this exactly for everybody who’s confused. No. I’m being facetious here. My opinion obviously does not count, because I am a cis male.
It does count because you’re writing a check. That’s why it counts.
It does, actually. What I’ll tell you is, what I’ve done in my life, and I don’t do it very publicly, I’m quiet about it, is there is absolutely a pipeline problem. To say there’s not a pipeline problem is ridiculous.
Pipeline problem means it’s mostly white dudes coming through the pipeline.
Also there’s a lot of Indian people and there’s a lot of Asian people. Even in our industry, we don’t just talk about minorities. We have actually separated into two groups. Underrepresented minorities and minorities. We’ve actually parsed and said, “Hey, of these four minority groups, just picking four, African-Americans and Latinos are underrepresented minorities, and Asian and Indian people are overrepresented minorities. White people fit somewhere else.” We’re really parsing very deeply what’s going on in our industry. I think the industry takes it very seriously. For the industry to release the statistics and deal with the pain of having to try to move the needle on these, I think is a very good sign.
When you’re writing a check, does that factor into your decision?
Absolutely not. I will say, I do think the women who I’ve invested in, and I’ve invested in many women, have outperformed the men and taken it more seriously. That is an interesting trend. I asked one woman about that. I said, “You’re really working really hard here. You’re really doing a very diligent job. I appreciate it and you’re keeping me informed.” She said, “Well, you know, if I don’t make this work, I’m never going to get funded again.” I said, “I would fund you again.” She goes, “No. You don’t understand. I’m a woman. I have one shot. If I fail here, I will not get funded again. It’s not like being a guy where I get funded and I learned and I’m going to get funded again. This is my shot. I cannot assume that I’ll ever get funded again.” I thought that was very telling.
What I’ve done is, if we don’t see enough people in certain groups, and Freda Kapor, Mitch Kapor’s partner, who’s also an Uber investor, we talked about it. She said, “You know Jason, you can change the world because of your position in the ecosystem. You could change the world to be what you want. If you want to say only CEOs onstage, yeah, you may live and die by the statistics of CEOs, but why not include another group of people onstage, maybe a different title. Product managers, whatever.” That really sort of got inside my head, because I used to have this standard, we only will accept the CEO at our conference.
Yeah, it’s an issue.
It’s an issue because there’s a small number of female issues. You guys struggle with this at your event. You’re like, “Okay, are we going to ask Marissa and Meg Whitman and Sheryl Sandberg?” even though she’s not a CEO. She’s in a very high leadership position in a very successful company. “Are we going to ask these people again and again?” Eventually they’re going to say, “I’m kind of busy and I’ve done every event you’ve ever done.” You struggle to get ...
The audience has seen them a bunch of times.
The audience has seen them a bunch of times. I really don’t need to hear from her again, or them, whoever it is. We’ve worked on it really hard. The thing I think that works pretty well is, everybody sort of creates a box of who they’re willing to meet with as an investor. I meet with this type of people so I can be this efficient.
What I said to myself is, “Hey, it’s my time. I can do what I want with it.” If a person doesn’t fit into the box of where my sweet spot is, what I call the Goldilocks zone, not too hot, not too cold, when I invest I like to have the product and the market and have a modest amount of traction, but not Uber, Airbnb-like traction. In other words, not too hot, not too cold.
If somebody is pre-launch and they’re underrepresented, I’ll meet with them. Some people would say, “Well wait, you’re not going to meet with guys who are in that stage?” The answer is, no.
That’s your affirmative action, is taking the meeting with someone that you wouldn’t normally meet with.
Affirmative action is one of those words that has a lot of baggage, and so I think one of the problems with the whole discourse is, we’re two white guys sitting here talking about it. Whatever words we use, we’re going to get barbecued. I’ve talked about it very publicly on Twitter, and I get myself in a lot of trouble all the time, consistently, but it’s my time and I can choose what I want to do. Yes, I will meet with people earlier upstream. I’m actually even thinking about creating more programs.
We’re creating something called Founder.university. They came out with a sub domain, .university. We’re in that program actually going after people who have the potential to launch companies, who might be in the underrepresented minority groups in our industry, the tech industry, and women. To try to fix the pipeline issue and say, “Hey, if this is the moment where people are dropping off ...” Which is when they’re learning about stuff but right before they launch, “Maybe we can build programs in that area.” Which is exactly what Freada and Mitch do.
They have a program out in Berkeley, which I went to visit last summer, where they take people who have been accepted to college and they actually make sure that their math skills and their computer science skills are really good so when they do go to college they don’t fail. That they actually succeed. Because one of the problems is, you’ll have these kids who are underrepresented get into college, but then they wind up not doing well in math or there’s some pieces that they have missing.
Give them a structure.
They kind of tighten the ship. They just tighten the ship a little bit, so when they come into college they’re ready and they don’t fail in Year One. That’s what I think has to happen. We have to just look. I want to see the world change.
I’ve got three daughters. I want my daughters to come up and be bosses. I want them to be a girl boss. I want them to lean in. I want them to rule the world. I want to see the world change, and I know I can impact that change. I want them to start companies, invest or do whatever gives them fulfillment. I don’t want them to be limited and I certainly don’t want them to make 85 cents on the dollar.
Speaking of time, money, numbers.
There it is.
We’re past the one-hour mark. It’s the magic mark. We’ve passed Hershorn.
We’ll be back for hour two.
We’ve passed Lefsetz. We’re going to end, one real quick question. If you’re still listening, here’s your bonus for you. What is the single biggest mistake someone makes when they pitch you? What’s the thing you want them to stop? Top of your head. First thought, best thought.
Yeah. It would be pitching when you’re not ready. You have to understand, what is the zone in which the person will invest? If you’re going to Sequoia, they’re doing Series A. If you’re going to me, I’m doing seed investing. You have to know your audience. Do the research and understand when I do invest. I’m not going to invest in an idea of an unknown person, so asking me to have coffee to discuss your ideas is a massive turnoff. It makes no sense.
I have a thing. Here’s the thing. Come talk to me about the thing that I’m making already.
Show me the thing you’ve made, because I make my decision on craftsmanship. Even if you make an MVP or something very small with your sweat equity, with your own 5,000 hours, 500 hours, $5,000, $10,000. Make something in the world to separate you and help me understand that you’re going to take this seriously and do a good job. You have to be able to build something and put it in the world. People still are in this wacky belief system that their idea matters, when it does not. All that matters is what you build in the world.
You hear that, people? Your idea does not matter. You heard it from Jason yourself.
Thanks Jason. This is great.
My pleasure. Thanks for having me.
We’re at the hour. You said we should brace for impact.
Brace for impact. Did I succeed?
I think I can still walk. I’m good.
You’re good? Okay. We didn’t turn over too many stones.
No. We’ll see what the Twitteratis say.
We’ll see what you edit out. We’ll see what the exact ...
We don’t edit.
Executive producer, anything you’re going to edit out?
Beth is saying no. We’re going to go with everything.
This article originally appeared on Recode.net.