He’s also the founder of The Box Group, which makes angel investments in early stage technology companies.
Andrew: Hey everyone. It’s Andrew Warner. I am the founder of Mixergy.com,
home of the ambitious upstart, and I’ve been hearing a lot of compliments from my friends about the TechStars New York program which is led by David Tisch. Thing is I don’t know very much about David, and I couldn’t find much about him on the web. And when I admitted my ignorance online I got an intro to David by TechStars co-founder, which led to today’s interview. TechStars of course is the incubator and accelerator program that start-ups are fighting to get into because of its mentor-ship program and David, your leading the New York program, welcome to Mixergy.
David: Thanks Andrew, thanks for having me, I really appreciated it.
Andrew: So, here’s what I do know, apart from being at TechStars, you through a company called Box Group have made a bunch of investments in start-ups, right?
Andrew: How many investments?
David: Box Group has made about 26 investments in start-ups; all tech start-ups, all basically web software. I think 20 of them are based in New York, and 6 of them are not in New York. So, it’s a private fund that I operate. It’s basically myself and my two brothers, I invest on behalf of, they are both younger than me, so it’s just money that we have put aside from family and from other things that we have done in our past to invest. So I think we are at 26 companies as of yesterday.
Andrew: OK. I’m writing notes here to make sure we follow-up on what we’ve talked about. I’m an obsessive note-taker, I don’t know how people on TV can do a proper interview without taking notes, maybe they’ve got better memories than I do.
David: They probably have somebody next to them taking notes for them.
Andrew: Right, and then in their ears saying, ‘ask them this ask them that’.
David: Yeah, exactly.
Andrew: So I want to find out about the investments and your investment style. You and I before the interview started, also talked about No More and some of the successes and the failures at No More, why it didn’t launch. We’ll bring that up in this interview. We’ll go through the whole history. But, to give people a flavor of your investment style can you tell us some of the start-ups you invested in at Box Group?
David: Sure, so I’ve invested in Boxie [SP], Group Me, Flavors.me, anything that ends in the sound E I tend to dive into. Those are probably three of the more well known ones. I’ve done some stuff recently that isn’t really out there yet, but I think has a lot of trendiness and a big name to it.
Andrew: [??] investment.
David: I try to be the first guy there. So, as an Angel investor I’m not writing the biggest check, but if I can be the guy to help put a round together, if I can be the first person to say ‘Yes’ I think that’s where I try to find my own area. Because I think that first Yes is the hardest yes you’re going to get, and ideally if I can be the person to help start the momentum for rounds you can put together, or to bring that deal to another investor that’s a really good spot to find myself. I tend to write between $25K and $100K checks with the ability to follow on when it makes sense to. But, if I can be a $50K check in a $500K or a $1 million round and I helped put that round together with other really sophisticated quality investors, that’s the way that I try to approach a new deal.
Andrew: The New York Observer said you can move faster than any other investor in New York, because you don’t have to get permission from anyone, you don’t have to go to a committee. Why don’t you, where’s the money coming from and why don’t you have to answer to a whole bunch of people and get them to all say yes?
David: I’m just an angel investor and so I think the term Angel Investors got them brought to that next level up of people of institutionalized where there’s LP’s. So, micro VC’s super angels, they have LP’s to report to and they have a thesis that their probably banking a lot of their investments on. As an Angel, which is the class of investors who got a little bit swept away here in a lot of the investing noise, you’re investing out of your own pocket and you’re aligning yourself purely with the entrepreneur because your in it for the same reasons they are. I think it gives you an ability to be more flexible and invest with your gut or at a pace that makes sense to you, without having to really figure out if it fits in a broader scheme.
Andrew: Do you have an example of an investment that you made that if you had to think it through or get permission to do it, you probably wouldn’t have been able to justify it at the time but your gut said go for it and you were able to pull the trigger sooner than others?
David: Group Me is a great example. I was on of maybe the first or the second person to say yes to Group Me, I’m not sure. But, I met the Jared and Steve, the founders of Group Me, at an event. We ended up grabbing breakfast the next morning and watched the World Cup; I think it was the first US Soccer game. We spent about 2 or 3 hours together watching the Soccer game and chatting about Group Me and at the end of that meal I said ‘Oh man, I’m totally down’. I think if I waited another day, I would have been out of the deal. It got oversubscribed so quickly, that if I wasn’t able to act at that moment I was out of it.
Andrew: What was it about them then, or what was it about the soccer watching experience with them, that made you say, I got to put money in these guys? And Group Me, by the way, is a Tech based messaging system, right? You and I and a few friends can get together using Group Me and chat and I can also create other groups with other friends and we can just stay connected that way, right?
David: Yeah, and it’s a product I think that, A; attracted me to the product, because it appealed to normal people. Outside of the tech bubble this was a product that, whether it was kids and their friends, could use. It was parents and a family could use, it was a group of people trying to coordinate, and there was just a natural use case for the technology that I though was very clear. And Steve and Jared, to me, were laser focused, hungry, really smart and we go a long really well personally. I think that, that helps and in numerous instances with investment that I’ve made I’ve played the role of friend to the entrepreneur. I tend not to sleep very much, I’m up really late at night, and I’ll get an IM frequently at 2:00 am around a problem in the company or an employee issue, or founder conflict, something along those lines. If I can be there as a friend, and I think as Jared and Steve were building out their round, we were in communication almost as friends more so, than investor. I think that’s something I can do because I relate to guys who are raising money at age 25, because I’m 29, maybe a lot easier than an intimidating investor with a much bigger check.
Andrew: You must be us at all hours? Last night at 3:12 am you signed up for a Mixergy premium account. I’m assuming you signed up so that you can check out my past interviews to prepare for this interview, is that right?
David: I did.
Andrew: Is that normal for you to be up until 3 in the morning when you’ve got an interview the next day or when you’ve got work the next day?
David: I tend to go to be between 2 and 4, so I’d say 4:00 am is on the later side, last night was a late night. I get up at 8 or 9 and normally have some breakfast meeting before coming to TechStars. But, I just wanted to see your interview style. David Cohen, who usually sits next to me but is not here today, had told me you were a great interviewer so I had just watched his interview. I found I was able to read the interviews much quicker that I was able to watch them. So I read about three interviews and then I went to bed. You ask great questions. I think more than anybody you do a ton of homework and I was trying to figure what curve balls I was going to get.
Andrew: Well, let’s keep going and we’ll both figure out what curve balls I’ve got. Let me ask you this, this is not a curve ball, I know my audience is dying to know this, or at least the ones who are hoping to work with you. How do they get to watch a Soccer match with David Tisch or somehow get David Tisch to be their friend and potentially pitch them? Apart from TechStars?
David: Pretty successful, I thin the first way in for any investor is to find a warm introduction. So, find someone in line that work, whether it’s in entrepreneur I’ve invested in, a investor I’ve invested with, someone I work with, like at TechStar. There are hundreds of people that can make an introduction to me. Maybe it’s my high school friend. Whatever the angle is to get in, I think getting that warm introduction to an investor is the best way to get their attention, because it’s coming from someone that they’ve already deemed credible. As a cold email, i think the biggest mistake for people who write cold emails is not personalizing them. I tend to reply to every email that I get, that’s why I stay up until 4 am. But, it’s the emails that might be totally random, but they put it in some context, and they’re going to say, ‘Hey David, this is why I’m reaching out to you. I see this as this might make sense in your background given myths, and I’d love to grab some time, or I’d love you to take a look at what it is I’m doing.’ I think that that ability to understand your recipient and show some effort on your part might generate the same effort back from an investor.
Andrew: So what are some things, for example, that people can use that you would especially connect with?
David: Looking at my portfolio, there’s so much public information out there, even though I don’t have a ton. My AngelList portfolio talks about the types of markets that I’m interested in. I’m a huge sports guy, I try to see as many sports internet places I can. So, if someone looks into my background a little bit, they’ll see temperament in sports left and right. So, I tend to get a lot of random sports deals that come through my email address or my Flavors.me contact forum. I have a law background, so I tend to a lot of legal start ups in that space. I invested in a company called LawPivot, again which was also through angel list, I’d seen it on tech crunch and I said that’s brilliant, that is so smart and like three days later it showed up on Angel List, and I clicked the intro button. We spoke, I think, that night or the next night and I committed to investing on the phone. It was pretty obvious. I’ve done some homework on the entrepreneur before the phone call to understand how credible they were, but it was simply pretty obvious.
Andrew: What did you find out about the entrepreneur behind LawPivot that made you say, ‘Yeah, you know what; this guy’s got some stuff’? This is Niten right?
David: This is Jay Mandel from [??] in Apple. I went on his LinkedIn profile saw who we were connected between and I shot off a couple emails and just asked some questions; How well do you know him, any thoughts, and I got enough background to the point where Jay got rave reviews and was incredibly well known, and well liked and credible. So, coming into that phone call I knew that there was a high likelihood that the team was going to be what I was looking for and so hearing their vision and matching that with a credibility factor was what led me to that decision.
Andrew: So, if I were an entrepreneur who wanted to get a hold of David Tisch and at least get David to consider what I’m working on. I might go to BoxMe, GroupMe, Flavors.me, Goodsie, Adstock, CollegeOnly, whatever, there’s a list of companies that you have you’ve invested in. Talk to the founder, ask him about you, and then ask him for an introduction from the person who seems like they’d be the right person to make the intro.
David: Yeah, or you send me a cold email and you explain why you’re sending it to me and who you are. I think the other problem in a cold email is not providing enough background on who you are and what your doing. I think for any investor, just generally pushing to move the medium from one to another before the person suggests that, is a mistake that a lot of people do. Asking for a meeting when you’re actually having a good email back and forth, is silly because you’re engaging at that point and to not continue that engagement through that mechanism, and instead force a change, you might lose that conversation. I see that happen all the time where their like, ‘Hey David, I have a really cool start up you have to check it out, we’re going to disrupt the market, when are you around for coffee?’ If we can engage in an email I might actually be really interested in grabbing coffee with you but I need a lot more information. It might be a total waste of your time to sit down with me and I don’t think that’s a good idea from your perspective. The best way the write a cold email is to make it as warm as you can.
Andrew: You said earlier that the money you’re investing comes from family and other things you guys have done in your background. What other things?
David: I ran a baseball card business when I was younger, it was probably 1994-1997. And, I was traveling around the country with a friend of mine who had his license at the time when I was like 15, and at 16 I was able to drive myself. We were selling baseball cards nationwide. Baseball cards started moving online, on the American Online message boards, so this thriving entrepreneurial community of baseball card traders on AOL. And then this link started showing up for this website called Ebay. So, the whole industry shifted over to Ebay. I literally started making a ton of money off of selling baseball cards on Ebay to the point where I went to my father and said, ‘Dad, I really like this thing.’ And it was going public either that month or a couple weeks later and I convinced him to take my Bar Mitzvah money and dump it into Ebay stock. That worked out really well so, I sold it x amount of months later at a really nice return and I’ve parlayed that money really nicely on the public stock market and Tech Stock stuff. I invested in Amazon, I invested in Microsoft, in years that they really took off, and I got out right at the right point. Literally, that’s a bucket.
I played professional Poker while I was in law school which was pretty good time and I did pretty well at that. I’ve given myself an ability to take money and invest it in things that I care about and I come from a fortunate background where I can make choices to be more flexible with money because of that.
Andrew: What is the fortunate background?
David:My grandfather was an incredibly successful entrepreneur. He built a company called Loews which is a holding company basically. It operates today. a hotel chain, energy stocks, an insurance company, it is a fortune 100 company. My grandfather started that on a loan back in the 30′s or 40′s probably. He borrowed some money to buy a hotel and turned it into this large business. So, my father and my father’s brothers and the rest of my family has all taken that drive and really been able to build on top of what my grandfather did. I come from a family of really hard working successful people and it’s given me both incredible work ethic and I think an internal pressure to perform.
Andrew: I went to NYU, where I studied every day at the building that your family built. At the Tisch School. Or the Tisch building of the Stern School, right?
David: Yeah, I went over to the Tisch School at NYU I think about 3 weeks ago for the first time in my life. The Tisch school is the performing arts school at NYU, and growing up I was explicatively told that I don’t have anywhere near enough talent to ever go to the Tisch School, so it was no where on my radar.
Andrew: That’s not true, you ended up doing very well for yourself and you went to… What school did you go to? You went to good schools.
David: No, the Tisch School is just an incredibly exclusive performance arts school.
Andrew: Right, but the Tisch building is for the business school, isn’t it?
David: Right. I went to UPenn as an undergrad and then I went to NYU Law School immediately following that.
Andrew: I admire the hell out of your family, I used to read about them. And, in New York you can’t walk without seeing something that your family built. Whether it’s the hotel on Lexington Avenue or the school, or the Wall Street Journal where they were in the paper all the time. So, I admire the hell out of your family, I feel like your family story pushed me when I was younger to do more. You mentioned that it pushed you. How?
David: I think when you see everybody around you that’s so successful you have a drive to sort of be equal or better than that. I think in my DNA, my grandfather was an entrepreneur and he created something from nothing and so I’m fortunate enough to be able to take chances in my life and to play it safe and not take those chances I think is silly and I just want to be able to leave the same impact people in my family have left. So, whether that’s in education, whether that’s in health care, just in general philanthropy is such a huge part of my family to be able to be successful enough to do big things and to give back is I think part of what I was raised in.
Andrew: Could you, through investing, in tech start-ups equal the legacy of your family members?
David: Probably not.
Andrew: Why not?
David: That’s a great question. This is what I love to do so if I can make a name for myself and differentiate in this world and stand out that’s awesome. Whether that matches the history of building a fortune 100 companies or my uncle currently run Loews. They’re doing huge stuff on a much more public scale than I think the tech industry at this level has. So, I would be incredibly content if I built anywhere near as successful a career as most of the people in my family have.
Andrew: So, Chris Dickson, I believe; here’s a quote from the observer, and I believe he’s talking about you. Tell me if you think he is and tell me what you feel about this. “There’s a class of older angels who have built Tech companies” and that point I think he’s talking about himself. OK, “There’s a class of older angels who have built Tech companies and can really add a lot of value to young start-ups. What screws up New York is all the random rich people from Wall Street and Real Estate who know nothing about tech but still want to invest. It’s the same network that keeps new restaurants opening.” What do you think?
David: I definitely didn’t take that ‘personally’, I don’t think that, that might be referring to me. I know Chris; I don’t know that we have had that conversation. I can ask him if it was about me. My DNA is in Tech, I’ve worked in Tech for the past five years, I have an ability to invest money in stuff that I love doing and help other people start companies and I believe I provide a significant amount of value to almost every single investment I made. I’m happy to put any of the entrepreneurs up to say that and whether that’s on actual product stuff, whether that’s on building an investment group for them, whether it’s on making significantly valuable customer or business development.
Andrew: Can you give an example of that, of how, ‘beyond money’ you’ve helped entrepreneurs that you’ve invested in?
David: The first year when I was invested in Boxee or pretty close with Abner [SP] on the product where we were, you know, on but ends at understanding how to layout something I was supposed to cut cable on. Groupme, I spent a significant amount of time with Steve and Jared talking through the competitive differences between them and some of the other group text messaging plays that were out there and whether it made sense to emulate some of the features that the other sites had or just try to differentiate. On the flip side I’ve made introductions to large media companies that ended up being in partnerships with some of the start-up I’ve worked with. Boxee and Groupme ten to be the two that fit that bill again really nicely. Other companies I’ve helped raise the entire round. I made an introduction for a company a week ago to Avisida [SP] that led the round that their about to raise. Those are the things that I can do and I’m writing a small check, I’m not looking to compete against other investors either. I think if I’m not adding value, you shouldn’t take my money. And, if you don’t believe I’m adding value, it’s stupid to take my money. That’s something I’m incredibly comfortable saying to an entrepreneur and if somebody’s looking at me as just a check or a dumb rich kid, it’s not going to be the right stiff for anyone of us.
Andrew:You’re the one who, as I understand it and tell me if I’m wrong, brought TechStars into New York or pushed David Cohen to say yes to TechStars in New York?
David: I think so, he credits me with that.
Andrew: That’s what I’ve been reading online, I didn’t know that he credited you with it but I’ve been seeing it online. Why was it important to you to bring TechStars to New York?
David: When I left my last job at KGB, I felt there was a missing piece in this infrastructure in New York. The start up scene was really blossoming and there was no structure at the bottom. When I looked there I looked at this accelerator model, I spent about two months studying why accommodator at TechStars to understand what it is that they’ve done to get to level that they’ve gotten to and to potentially start my own. In two months at work I realized how incredibly hard and successful these two programs were.
Andrew: You were going to start your own version?
David: I just thought like kind of trying to start talking to some people in New York and put something together because the city was missing that piece, and so I didn’t know what it was going ot look like but I did some homework to try to figure out what it might take.
Andrew: Before you go on with the story, I got to ask you about that. I keep reading about people who are launching incubators all over the country. It almost seems to easy when you’re hearing about how many people do it and how quickly they get it up and running, but I can’t imagine that it is. What obstacle do you see or what are some of the challenges that you saw when you were considering launching one from scratch?
David: I that there’s a significant logistical operation that’s behind al of these programs. The amount of moving pieces involved.
Andrew: For example?
David: We’re a mentor-ship program so we have in New York a hundred mentors that work with our program and work with our companies in getting those guys and mentors to want to be part is a significant challenge. Why are they going to give their time and spend significant amount of effort working with early stage companies when have real jobs and other things that they do in their lives. I think with the amount of programming; we at the end of our programming have a demo day where TechStars put 3-500 people in the room to watch these 10-11 companies pitch, and we raise money in New York from 27 different New York based investors. That’s a lot of people involved in a very small organization. So, the logistics is setting that up.
Andrew: Of bringing all of the mentors together and bringing all of the investors together and making sure that they all come when you need them to.
David: Yeah, and to actually add value and be a quality program for entrepreneurs. The concern I have with the amount of accelerators popping up is, are they maintaining quality. We invest a small amount of money in a company; we take a slice of equity. If we’re not adding exponentially more then the amount of equity we’re taking from a company, we’re not doing a good job. There’s not a company that’s went through TechStars that would regret giving up the equity that they would give up to be part of this program. If that ever changes we’re doing a terrible job running our program.
Andrew: So, what do you get as an entrepreneur who gives TechStars a piece of business beyond the money? What do the get?
David: You get basically; I see this three core values. I see mentor-ship, you have networking, and you have exposure. I think that all three of those are incredibly valuable. Our program mentor-ship is not a word we just throw around and it’s not a wall of pretty faces that we put up online. The way our mentor-ship program works come and meet as many companies as their potentially interested in with the goal of picking one that their really interested in. In spending a significant amount of time with that one company throughout the rest of the program. So, each o four companies in New York have between 5 and 10 mentors working directly with them on a multiple times a week basis.
Andrew: For example, who are some of the mentors?
David: Who are some of the mentors? Chris Dickson is one of mentors, Fred Pilson is one of our mentors and Dennis Crowley and Naveen are our mentors. In New York, what’s really nice is that we’re able to tap into larger businesses. So, we have Rob Wiesenthal, who’s the number 2 at Sony, we have the head of product at ESPN.com, we have people from Conde Nast, Highmake [SP] and Bloomberg.
Andrew: So, who’s brings those in, does David Cohen have contacts at Conde Nast that he could bring in a mentor from Conde Nast, or do they just reach out to you guys, because of your reputations so big, or is it you that’s going out there and connecting them?
David: Most of the contacts in New York, outside of the Tech startup scene are mine. Those are people that I have build relationships with over time or people that I’ve just engaged with through this industry.
Andrew: How do you get them to say yes? I understand that Chris Dickson and Fred Wilson might be interested in seeing who’s coming through TechStars and what has to be mentors; I understand that in this space we value the people in this space. How are you convincing people outside this space to come in?
David: I think there’s multiple reasons, everybody’s different. Someone at ESPN.com who’s been running product there, they have a start-up itch inside of them and they can’t scratch that at all. They’re running a huge successful portion of that company but to be able to see what’s new, to be able to just tangibly be around entrepreneurship, I think is really attractive for Ralph Poplov [SP], who is who I’m referring to. For Rob Wiesenthal at Sony sees this as a handful of different values is being around start-ups, potentially seeing something that is a partner or acquisition for somebody down the line. Or it’s guys, and being around a group of young people who are doing really cool things and the energy that this TechStars program has is really attractive to people coming from the big company world down here. I think that we’re downtown, we’re below 14th street, I think that there’s an energy here that people in the media world and big company world want to be around. You look at foursquare and how they’ve really differentiated themselves from their competitors and it’s through relationships with big media companies and it’s through business development that whose endorsement really took off, and being in New York really enabled that to help make it a lot easier than being elsewhere. I think that that’s some of the values we’re trying to surround this TechStars program with as well; a pipeline to business development, a pipeline to partnerships and a pipeline to potential acquisitions now.
Andrew: Going back to the story, you saw that it was hard to build your own incubator and unlike the hundreds of people out there in the country who seem to think that they can put it together overnight you said, ‘I can’t do this overnight, I shouldn’t do it on my own when TechStars available. I should bring TechStars in.’ I’ve talked to lot o f entrepreneurs and investors who wanted to bring TechStar into their city. They couldn’t do it. Why were you able to do it? How did you get David Cohen to say ‘sure’?
David: After I looked I sort of put it away in the back of my mind, and I started working on a start-up of my own, in the sports gaming space. I was building a Tee mount and started to do some more angel investing. I went up to this conference in Boston, Angel Boot camp, which was an awesome collection of people talking about angel investing. I saw David Cohen walking around the room by himself and I walked up to him and said, “Hey man, why aren’t you in New York?” and he said “who are you?’ and we started talking, I gave him a little bit about my background and that conversation ended that day. I went to Boston’s demo day the next day looking at companies and David again was off in a corner by himself as he tends to be. He’s very removed, at times in the best way, he sort of watches over everything which we have slightly different personalities in our energy, I guess, in a social setting. David was standing there and was like ‘all right so really why aren’t you in New York’, and he explained “we’re looking at couple other cities, New York, L.A. being two of them and we’re looking for someone to run the program”. He laid out a list of five criteria as to what he’s looking for, and I started rattling off some names of people I thought were qualified to fill that role. At the end I said, “I have maybe 3 of those 5 things but I’m very interested in this opportunity, but I’m probably under qualified.” And he said. “Well if you’re serious, I’d like to talk about a few people who have brought op your name.” And I’m like Oh cool. So, I ended up flying out to boulder the next week and I think this is where we really hit it off. Instead of trying to figure out an itinerary or booking an interview I said, “How ’bout I just get on a plane, fly to boulder for 4 or 5 days, hang out and see if we like each other.” He goes, “That’s exactly what I would like to do.” So, literally I got on a plane, booked a hotel room and just hung out at TechStar in Boulder for five days without nay contacts without any agenda outside of an hour long interview with Brad Felb and the guys at foundry group. There was no set agenda, we would grab meals here and there, we had chats but it was more of let’s get to know each other and see if we like working with each other. I think we both walked out of that after a period feeling really good about it.
Andrew: Is Brad Felb a co-founder of TechStars, I know he’s an investor, is he considered a founder too?
David: Brad, David, and Jared Polis, the congress man, and David’s old partner from his first company are the four founders but, David runs the program and Brad is incredibly involved still at this point in all four of the programs.
Andrew: What were the five criteria?
David: The five criteria were; a successful start-up, a failed startup, and angel investment, a good network of entrepreneurs and I always forget the fifth one. I need to ask him that, because I think he made them up on the spot.
Andrew: What are the two that you didn’t have?
David: I didn’t have a successful exit out of a start-up and probably the fifth one that I can’t remember.
Andrew: So, that kind of lead in to my next set of questions, which is about NoMore. You were working at KGB from about 2007-2009 and in 2009 you went on to create NoMore. KGB is the largest directory assistance company, we now know them because they have these commercials on television for how you can text them any question and get your answers and so on. What were you doing working for them before you launched the business?
David: I joined KBBI [SP], I left as a lawyer and then I worked in Real Estate finance for about 20 minutes and I left there to start a tech company. I did that for about 5 months with two friends and realized that I didn’t know what I was doing so I need to go get a job. So, I marched around looking for a job and met the guys at KGB. They’re this huge BnB Company in America. They’re B is C in Europe and so they were trying to become B to C by launching new products in America and I met the CEO and we really hit it off and ended up joining there as a product manager in a spin off group that was working an internet start up utilizing their local data that they had from their B to B business here. So, I joined as part of a team of 13 as product manager and there was I think 7 engineers in the room, an MBA who was from Northwestern who is running the group, and maybe a few more engineers. I spent about 3 months in this group and didn’t really know what was going on. I tried to understand this big company; I tried to understand what we were doing. We started having meeting with CEO and basically the executive team at KGB over the big, they were called info techs at the time, and we exchanged our names at KGB for the strategic decision. We got called up to the CEO and we started talking with him about what we were doing and so one day I got a phone call that said, “Hey David, I need you to come up to the main office, and bring all your stuff with you.” I sort of assumed I was getting fired at that moment. So, I looked at my boss at the time, and I said, “Look, I think I’m about to get fired.” I went up town and got called into a room and was told, “Hey David, while you came up here Kevin when down town to fire everybody else.” So I said, “Ah, OK.” So, I was wrong, and so that day my entire team got fired except me. And they told that they just hired a team of five people to bring in from a big media company to start a new group an they wanted me to be part of it and sort of be a co-lead of that but this team was coming in all together so I just started feeling crazy. That new team came in and I worked with them for about 2 months then they all go fired. And so I was still sitting there again. At that point I went back to the CEO and I said, “Look, I believe I’m a difference maker, I believe can do this, give me a chance to go build something on my own or I have to leave because this is crazy. This doesn’t’ make sense, I don’t know what I’m doing, I don’t know what you’re doing, we got to do something real.” At that point I started spinning off my own division outside of the big company and built it to about 16 people over the course of the next year and a half so, the origins are no more than probably late 2008, maybe even sooner, it might have been early 2008 when we really started that. The goal was to spin an RnD style product group out of the company, try to isolate us away from this big call center culture allow us to build an internet culture with a call center culture, there couldn’t be two more opposing environments. So, we had our own office we started building out a team, I found a guy who was running the RnD group Octamide [SP] I knew him through being a lawyer, he was the brother-in -law of a lawyer I worked with that’s got an [??] and he was a sensational technologist and he left Octamide and joined me. He gave me a guy from Google that spent about a year at Google after graduating NYU wanted to move back home. He jumped out to me in a job post that I did and joined. And so the three of us basically started building out this group. We built it as I said to 16 people working on a real-time intelligent congruent aggregator. In about early 2008 we launched a web based product that looked and felt very similar to what the flip board does today on your IPad. That was the second project we launched, before that we launched a project that was very similar to Quickie or Mahalo. We had all this information within inside the big company and the thought was to expose it in a more dynamic way than a lot of the current local information providers and sort of a more dynamic Wikipedia. That was the first product that we moved to the real-time contra aggregator, and each of these that we launch we launched it and the CEO killed our products about 3 weeks later for not having enough traction. They said, “This doesn’t feel right, and do something else.” and we’re like “OK. That four month period to get here was awesome let me just try that again.” So, we’d have to back to drawing board and come with a brand new idea.
Andrew: Did they explain why it didn’t feel right?
David: I think there were a lot of macro reasons that were affecting our group and trying to innovate a big company without 100% understanding of how challenging that is just on its face from that big company is really hard. So, there are moments when I think we had full permission to be what we needed to be to get this off the ground and then there moments when the big company really interfered in a bad, bad way.
Andrew: How? They told you to shut down that’s one way, how else?
David: They brought in a guy at one point when we were actually getting our stride we were about 7 or 8 people working in our own office downtown, we were being incubated. The goal was, and this was a pitch to the big company, was give us 2 to 3 years and in a 1 1/2 years we’ll come back to the company with something that’s incredibly valuable long-term and it’s going to build substantial revenue stream. This big company answers you phone call if you call 411. Last that I checked, the 411 market is not growing exponentially, so the company is looking for new significant revenue streams and you can’t launch a $100 million business in 3 months. It’s unrealistic. So, the pitch was, give us some time to go build something and we’ll come back with something that has the potential to be a significant revenue stream. Which was the volume that we all believed we had brought in from corporate to go do that. So, you do and you get their buy in for a series of months and then that goes away one month out of nowhere, and that’s what sort of recurred. We ere 7 or 8 people and we were maybe a month away or maybe 3 weeks away from launching when we got a call again to come up to corporate and we were told they had hired a boss for the group. The guy left Yahoo and was in a very, very meager managerial level to run our 8 person group. Two months later he was not running our 8 person group, and so we had this two month hiccup for no reason. We had all said “hey look this is a bad decision, it makes no sense but if you really want to do it, awesome can’t wait” and then two months later he was no longer involved in our group. There’s a lot of that that continued to occur. I think when he left our group the trade- off we had to make was we had to move into the corporate office up town on 60th and Madison in return for our own PNL. But that meant that we were intimately next to the call center culture of the big company so trying to convince engineers to come up to our 60th and Madison office directly across the street form Barney’s, and they would come back from lunch and say “Hey David were getting looked at funny in the coffee shop, because we’re not wearing suits.” Culturally it’s tricky. We tried to intervene in a big company and the big company culture just kept getting in the way. If you go back and look at the team we had built there that the Tech crunch had sniffed out it was stunningly talented. Everybody is off at a realistically big name company or off doing their own thing that’s gotten them significant venture funding at this point.
Andrew: If I were running a company and suddenly I see that a big company, one with lots of experience, lots of money, lots of people. If I saw that they were creating a competitor to my business, I’d start to worry. But what I’ve discovered is that there’s really not that much to worry about because they can’t get it together. Why can’t they get it together? Why do you think their companies can’t look a year out and say’ you now what this is a small portion of our overall balance sheet, of our overall PnL. If they lose it all its fine, let’s take a shot at them, let’s give them a year or two to at least figure it out. Why don’t they do that?
David: It’s culture. I think 99% of it is culture so you’re just not fitting in with this larger corporate structure that’s been built over time to support a significant amount of revenue and a significant amount of value. You’re brand new and you need to do things your own way. I had to fill out expense reports and send them to the Philippines and wait six weeks to get my check back. That’s a procedure that was built over time because they had a call center in the Philippines and that made sense for the big company. To throw that into an internet start-up is such a mismatch of ways. I think that those little things just ship away at a talented engineer’s or a talented product person’s desire to go and work in that culture. Why does someone work at Google or Facebook or Amazon or Foursquare or one of these things? It tends to be a very similar job and the two differentiators you’re offering them are the problem that they’re working on and the culture of the company. Those are the differentiates and so as a big company, you can’t offer a really interesting problem and have the cultural permission to go solve it in a way that makes sense, that’s not ideal. Our CEO had absolutely no respect for the computer scientists who were working on my team and that was a consistent disagreement that we had.
Andrew: How can you be so open about that? I would expect that you would hide it and not bring up the CEO or job title, but you’re being very open. Are you going to ask me by the way to edit this out after the interview?
David: No, I tend to be pretty honest, I am who I am and I don’t believe I have malicious motives. I think with the Chris Dickson question too, if that was pointed at me, it was pointed at me and I’m happy to defend myself, but I’m really not trying to hide anything. We were working at a big company that just didn’t have the stomach to innovate. If you go look at a lot of the other stuff this company has done, it’s incredibly unimpressive at times. So, it’s been incredibly me to. So, they want you to deal product at some point. Three years after GroupOn actually became a viable business.
Andrew: I saw that on their page, I opened it up on another tab, I don’t know what happened to that tab I should have looked to see if it was still up and what’s going on. Oh, I think it might have been down. I think, I got to check that out later.
David: I think culture is really what it boils down to and if there’s not an appreciation for what everybody, we were expected to work like a startup and nobody had significant up sight in the spin off. I think that that is really challenging so I had engineers that would work with me at midnight on Christmas because they actually cared to build a product we were building to develop that culture when there’s no equity. For the engineer is crazy hard and we were able to do that because we all got along so well and we all had a mutual respect for each other. It didn’t work out because I believe the big company killed it. I will never probably work with as talented a team as I worked with at that organization. I had twelve engineers and three designers and a product person on our team who were absolutely sensational and just to think of the opportunity that was blown for a big company by having, you know we had Jeremy Miller, who invented Jabber working through the big company. That opportunity for a big company to have somebody so talented within your organization and to let that go to zero is crazy.
Andrew: All right. One more question and then I’ll admit my own personal flaws as an interviewer. So, the question is, why’d you go onto investing instead of launching another company, especially considering the people who you had working with who you could have taken and launched a business with?
David: I’ll do that. That’s what I was doing before I joined TechStars and so I was working on my own company and putting together a good team. I had it going pretty well and we were about to get going for real. This TechStar opportunity was just incredibly compelling and it’s totally unique. I think a really awesome way to do bigger stuff than just build something of my own. I think this is incredibly beneficial to me in Extedia [SP] we are doing some broad stuff, you know TechStars network which launched, you know Start up America at the White House. This organization is really doing bigger things and I think being part of something that is trying to make such a genuinely positive impact on this Eco-system. I wanted to be part of. I put down doing my own company to do this. My assumption is that when I’m done with TechStars I’ll go back and build a company.
Andrew: So, you will at one point be done with TechStars you think, and let somebody else run the New York office.
David: I have no plans to stop doing this. This is awesome, whether that’s 3 or 5 years or whatever that number is from now. I assume my next step will be to build a company of my own.
Andrew: So here’s my weakness. I’ve heard from people that you’re this fun guy who’d got these great stories. I don’t even know how to approach these mysterious stories that people said, “you should get together with him in person, and ask him”. What are these stories that people are telling me about?
David: Give me some reference and I’ll, if you give me a…
Andrew: I can give you zero references, it’s just like you got to hear his stories. Are they travel or something? I give you nothing there this is a weakness of mine.
David: Your not even giving me any bait. I’m not that fun, I work until 4 am every night and then wake up at 8am and go again. I don’t really have a. I used to work in sports; I worked for the giants for a handful of years growing up.
Andrew: Maybe it’s that is there a story around the Giants?
David: I’ve been concussed on an NFL sideline at age 15. Knocked out cold and had to be woken up with smelling salts.
Andrew: Oh really!?
David: A pretty unique experience.
Andrew: Get out! Who knocked you out?
David: Mario Bates, who is a running back on the New Orleans Saints. So, I was on the sidelines, I was a water boy filling up water and I didn’t turn around on time and by the time I turned around I just got trucked by a guy probably 5 times the size of me and fell and hit my head and was knocked out cold. I don’t know that I have a video, I know I’ve seen it, somebody else had it at some point of me just lying unconscious on the sidelines of an NFL game.
Andrew: This is like a trophy for someone at you age or for someone that was your age at that time, right?
David: Yeah, I think it’s awesome, it’s a battle wound. I’d love to get knocked out again on an NFL sideline and see how that goes.
Andrew: I think I got to a lot of really good information. I think if I really want to dig in deeper I’ve got to get out from behind this desk over here and get away from Skype, have conversations with you and other people in person and really get to know you. Since I can’t do it right now, I’m going to say to whoever’s listening that they should find an opportunity and get together with David Tische in person. You will have a drink with people or coffee or watch soccer match?
David: For sure. I’m happy to meet new people, I think you learn something from just about everybody.
Andrew: I know that David Cohen has an open door policy, am I right about this, in boulder Colorado. If you’re an entrepreneur you can come in and sit for the day in the office, right?
David: Yeah, I don’t know if its 100% that open, I think you need to have somebody say who you are, and have some sort of identity. And in New York we have, an awesome office here and we tend to be really welcoming to the community to get involved in what we’re doing.
Andrew: Well, I hope to pop into the office in New York.
Andrew: Thanks for doing the interview. Did I throw any curve balls here?
David: Excuse me?
Andrew: Did I throw any curve balls here?
David: No you were good, that last one I just didn’t have a great answer ready.
Andrew: It’s my fault, I got to find out more of these stories, but I don’t like to push people on personal stories. If they tell me that they had a conversation with you one on one and you told them a great story, and I say what’s the story, they go “ah, you should ask him.” I don’t like to push because at that point I feel like it’s a personal story; it doesn’t really relate to business, what am I going to have them reveal that. So, I back off. But I’ll have to learn a little bit more about you.
David: Thanks so much for having me, I really appreciate it.
Andrew: Thanks for doing the interview.
David: have a nice day.
Andrew: thank you all for watching. Bye.