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Andrew: Hey everyone, it’s Andrew Warner, I’m the founder of mixergy.com, home of the ambitious sub star and today’s guest I think proves that the top people in the text start up world come to do interviews here on Mixergy. Today’s guest is John Steinberg. He is a venture capitalist, angel investor, vineyard owner here in Mendoza, Argentina, and a van ticket collector, I’m going to ask him about that. His investments have included Spinner, e-vite, infostates, seagate, stubhub – whose founder came here to talk about how he launched that company and sold it for 310 million dollars to e-bay? John, welcome to Mixergy.
Interviewee: [Again, I say…]
Andrew: So I plan to ask you about the investments that you’ve made, I plan to ask how you got to investing in the first place, but why don’t we talk about this, these ticket stubs that you have. What is that?
Interviewee: You know, I am a person who follows their passions and from a very early age, having grown up at Omaha, Nebraska I was a quarter big, go big red corner ask fan and went to my first game when I was 3 years old and thought that ticket stubs were a great way to remember the moment. And actually mark the moment. In a way actually that other ways don’t. And over the years it also is for me a really interesting blending of what technology is or isn’t, as we move to bar scans, as tickets have become more fungible; stub hub, and actually I picked my interest in that; but also the art aspect of a lot of stubs. And what the future of a stub is as you can see it’s dramatically changing. And even the technology in stubs are counterfeiting. So for me it actually is… it covers a lot of my passion from art and technology, and my love of sports. I’ve got about 50,000 stubs at this point. I bought a fair amount on e-bay and never sold a stub. If anyone out there has any sports ticket stubs that they don’t want, I would love them. I hope to donate them all to a museum collection at some point. And if anybody has today’s opening South Africa game stub, that’s a beautiful one so… anyway, that’s where it comes from, and I continue to collect.
Andrew: You know what, I used to be a collector in my… I guess in my childhood and in my teens and then at some point I just had to stop because I have all these collections waiting for something big to come of them. Either for them to all get so valuable so that I could sell them or for them to finally be a complete set which they never are; and I had to just stop myself. Is this the only collection you have or are there secret stashes that you’ve got around the house?
Interviewee: Well, its funny I actually had… I don’t tell this to very many people but I actually had one of the world’s largest bad magazine collections. However, I came home from college one day and my brother had given them away! So this is the only one after that debacle.
Andrew: Okay, and I saw that you’re an investor in a vineyard in Mendoza. I happened to be here in Buenos Aires, I visited some of the places that I’ve seen you blog about or get asked about in past interviews. Where did this interest in wines come from?
Interviewee: Well, it’s interesting. I, having grown up in Nebraska, we weren’t farmers but we were literally surrounded by farm land and corn fields and so… and I used to spend my summers on farms. So when I went to Stanford, being so close to Napa, one of the first things I did is I went out to Napa just because I thought it was beautiful. And making wine is, a lot of it is farming. People think of it as some romantic story tale kind of business. But a lot of it is getting in the dirt and being a farmer and I like that aspect of it, to be honest with you. But really, it started when I went out into the West Coast from Nebraska in so Napa and fell in love with it and ever since then, I’ve always, wherever I’ve travelled, gone to the wine regions as part of a trip because I think they’re just beautiful places including… early I even went into the South Africa wine region, Speaking of the world cup today – saying which by the way, if people haven’t been there, is one of the most beautiful places in the world. But about 5 years ago, I just had a week that I could go travel and I would call travel a little bit of my heroine and I need to get out of the country on a regular basis. And people had been talking about, I kind of had my bucket list of travel places and Argentina was on it, and I went there on a whim, not really knowing what I was going to do but using the power of linkedIn and Facebook, ended up meeting some incredible people. One of the things I did, was just through my Stanford alumni directory also looked at who was in Argentina and one of the guys was a guy by the name of Santiago Achaval, who turns out we went to [Es-Dios], we went to Stanford Business School. And he was a class behind me. We didn’t really know each other very well and he had kids, and was married at the time and lived off campus. But he agreed to meet and the way that I tell the story is I went to his vineyard, Achaval Ferrer and had a glass of wine with them, that glass became two glasses, that became a bottle, that became an asado, that became several bottles, and after 5 hours I said, ‘Santiago, if I buy some land would you be the wine maker?’ And we shook hands and said, ‘Yeah, that would be fun!’ and literally that’s how it happened and the way I think about it is I’m going to preempt any of your audience saying the joke about how you make a small fortune. The way you do that is you start with a large one and go into the wine business. It seems like everybody tells me that, but it’s a brutally hard business. But from a business aspect I think we have several things that are in our favor. One is our, as you know, our costs, compared to Napa valley or other places are significantly different. I’m not saying it’s a complete apples to apples comparison but I do think that we can create a 30, 35 dollar bottle of great Mulbeck that compares really well with a 75 dollar Napa valley cab and even at that price point difference; we still have a cost advantage. The second thing is Santiago. Since we agreed to do this he has gotten the highest rating by Robert Parker in the country, he’s gotten the highest rating by spectator, he’s been top 10, 4 years in a row now as spectator, and this is all for Achaval Ferrer but now this will be his second label. Also he was named wine maker of the year in the world last year by wine & spirits, and literally just in the last couple of weeks, spectator called him master of Mulbeck in a country that is known for Mulbeck. So he’s in Fuego, as I like to say, and its really exciting working with him because he has the business mind, but he also has the wine making side. So part art part science, and that’s really exciting. So we have the cost advantage, we have Santiago advantage if you will, and we also have the advantage of a region that has always produced great wine but wasn’t very international in outlook, but now you’re seeing a lot more Argentine wine come into this market. Our market is the US market, and so we’re a boutique winer, we’re going to sell a couple of thousand cases, kind of on the __, we’ll have mostly Mulbeck, we’ll have the vignette, we’re mostly going to sell around the 30, 35 dollar price point so not the low end, but not the highest end either. We’re really trying for huge value in that bottle of wine for what people are going to get.
Andrew: I’m sorry, so that brings a question in my mind.
Interviewee: Sure.
Andrew: You go in, you sit down with this guy, who you didn’t even know in school, but he happened to go to your school. You have a great asado, great barbeque with him and a great conversation, boom, you go into business with him, and he ends up not only being a great manager of your new vineyard, but also being one of the top guys in the space. Picking people; picking the right people is one of the most important aspects in business. I want to go deeper because if we leave people, if we leave Andrew here with the simplistic understanding of ‘hey, if you have, if you click over wine, then you’re fine,’ then I think we missed the bigger lesson. How did you know he’d be the right person to bank on?
Interviewee: You know, you can learn a lot about a person over a couple of bottles of wine over a 5 hour conversation. Santiago impressed me then, and continues to impress me with his unending curiosity and thirst for figuring out how to ever be better.
Andrew: But you could tell that in a five hour conversation with a guy? How?
Interviewee: This is a guy that never was in the wine business until he went to Stanford and fell in love with Napa. We both shared that story. He went back and said, ‘I’m going to go back and follow my passion.’ He’s an engineer by background, so he’s got the scientific mind, but he also went to business school. So as he talked about, I actually asked him, ‘how did you get into this? Tell me about your learning.’ He studied with the best. By his books , books stand next to his bed, he’s got books that he’s reading constantly about new techniques, learning more and more. I could tell. And by the way, I loved his wine.
Andrew: His wine?
Interviewee: His wine. I tasted his wine, I loved it. So that’s… I wish I could do that with entrepreneurs sometimes. Show me your code, show me your product. This is a guy I actually got to taste the expression of everything he’s about through his wine. So for me it was really obvious. And I’m going to say this too. And maybe this is fair or isn’t fair. I mean, he went to Stanford Business School. And that’s not a bad filter. It’s not a perfect filter, but it’s not a bad one, but it’s a starting point.
Andrew: And then do you have safe guards in place in case this doesn’t work? Or you do, of course.
Interviewee: Yeah. So we think about that all the time, we talk about it all the time. We never have a conversation where we don’t talk about risk factors. He is an incredibly important part to this whole puzzle, and so I have keyed in a life insurance on him as an example. We’re taking investors in and we’re building a founders club around this. And I just wanted to be able to tell people that the answer to that very question. What happens if… so yeah. We’re constantly thinking about that.
Andrew: Okay. I also I’m dying to ask you… I want to get to the text stuff. But I’m also dying to ask you about Vines of Mendoza. You’re an investor in Vines of Mendoza too?
Interviewee: Yeah.
Andrew: This… how do you explain to people who’ve never been there? By the way, this is how I met them. I did [lial] reports this week in tech. Mike, I think it was, from Vines of Mendoza, happened to listen to me, he said, ’if you’re ever in Mendoza, stop by.’ That very minute I was planning to go over to his… not a restaurant; his wine tasting room in Mendoza. We missed each other, I ended up going to an asado, I loved the place. It was beautiful. So, anyway, how do you describe to people what it is?
Interviewee: Well you know, I think that’s a great experience. Sounds like you’ve talked to Mike. And they were instrumental in my getting involved there. Vines of Mendoza is a start up that is basically focused on selling private vineyards mostly to foreigners. People who will say, ‘maybe I can’t afford Napa, or I just love Argentina and I want to own a 3 to 10 acre vineyard of my own and I’ll make some wine, I’ll sell some fruit, maybe I’ll build a house on it, and we’ll create a community.’ And my land is literally next door to the vines and Mendoza private vineyard. And they service our land. So they’re a great neighbor because they keep watch on it, they do very high quality work, I actually helped them raise money and I helped… I was on their advisory board for a while, I’ve introduced them to a lot of the owners, and I’ve introduced them most importantly to Santiago. So he’s the consulting wine maker there. So they are… I think they are I think, a really exciting start up and we’re thrilled to be next door to them. And I talk to them all the time and it’s actually a really nice symbiotic relationship. And by the way, one of the things, I don’t think you’re going to ask is what, you know the really hard question in my line – how do you manage something that far away? Something that has… a country that has different laws, it speaks a different language, whole truly different, well, I wouldn’t have done this without Santiago, for sure; number one. But two – knowing that the vines is there also, it gives me great comfort. And people need to think about that as they are thinking about risks. That’s a risk factor. The politics of the country is a risk factor, the distance is a risk factor, so all those I thought I had to mitigate in some way and having these relationships are an important part to that.
Andrew: Okay, let’s get into how you became an investor because I was looking at your LinkedIn profile the way I usually do to start research on one of my guests, and I saw Microsoft – during Microsoft’s Peek when they were doing… when they were on top of the world and then you go on to AOL, and then I see a big blank space, yada yada yada, you’re suddenly an advisory partner at Rusty Canyon and you’re at your own venture firm.
Interviewee: Yeah, I’ve always gone back and forth between being an entrepreneur and running investments, that’s kind of always been, whether early in my career I did real estate investing from Stanford I went to Microsoft because back then believe it or not I was entrepreneurial I was small, I never thought I would stay for 6 years but because it was so interesting I did and then after that I left Microsoft and I help start a company call Virtual IO which is a start up and then I did a chain of car washes as a start up and then I got back in the investing side where I actually raise two venture funds, one was called [Stainback] venture one and second one [Stainback] venture two and I tried to think and I do in everyone of this situation, what can we bring to the table that’s going to be different, so and times it’s technology, some times it’s a distribution model, sometimes it could just be location, but what can we do differently and so for the venture fund what I said was “Am never going to compete with __ , Sequoia and Benchmark and all the [NEA] and all this big guys” , am never going have that kind of gun powder, I am never going to have the reach, the resources, what can I do? Well at the time I was very! Deeply connected to Microsoft, at the time everyone cared about Microsoft in terms of are they competitive? Are they put into acquired and Seattle is a very natural place for the valley to partners with, and so I basically came out and said “am they bridge from Seattle to San Francisco”, am going to be that guy that kind of go to between the two places and am going put a little bit of money in other peoples deals and the trade off is am going to help be there guy in Seattle, so I literally did deals with every firm I just named, and so I put $250 or $500 thousand dollars in, they viewed it as not terrible dilutive to what they were doing but a bigger value add because I could provide this outpost to them and this watch guard for them and things they cared about with as relates to the companies they were investing in, in that sense.
Andrew: Can you give me an example.
Interviewee: Sure, I mean there is lots of examples, but you know if you are company going into, remember this is back in since 5-10 years ago, if you are a company going into the enterprise space, you would love to have a guy who can tell you what is Microsoft doing around that, are they going be in that space, what are they working on behind closed doors, are they potentially going to acquire to be in that space.
Andrew: Can you give me a specific example of a company you have invested in and then went — and then were a go between?
Interviewee: Well sure, I mean Spinner wanted to know was Microsoft going into the music business, I mean just flat out and what were there plans around that, and I do a lot of investing and enterprise deals and Microsoft that continues to be the straight today people will always be asking, you know how can we work with them?, how can we be part of there ecosystem? One company I did was …,a company that focused exclusively on the Microsoft partner channel for selling CRM and great planes and basically because we had such close ties to Microsoft we could b, you know literally we could go walk into Jeff Rakes or Palmer or Gates and say “hey we want to work with you guys, here is a company, you know and could you direct us to the people at Microsoft that we should be connected with”.
Andrew: I see, alright, what did you start with? What was the first investment? Was it real estate? Was it..? It wasn’t the car wash, was it something outside of tech? Was it tech? Or what was it?
Interviewee: So, you are going way back, but I mean I would say actually my first start up was a chocolate chip cookie delivery company on the Stanford campus.
Andrew: Okay.
Interviewee: I did that for a couple of years and then I also had a T-shirt company.
Andrew: In school? While you were still at Stanford both those businesses?
Interviewee: Right.
Andrew: Can you tell me about them?
Andrew: I mean there were simple little business but I knew you know during finals week everybody wanted cookies, you know at mid night you did always want dominoes and so you know I had dorm wraps and had me set up a network on campus and you know it paid some bills and gave me extra spending money and then the t-shirts company we were gone on a football games and there were couples versus starters and we got t-shirts tweets along the road and again they were just opportunities again were people weren’t doing in both cases nobody was doing those things, so decided to do it.
Andrew: What’s a door wrap? You said that you had door raps to promote the cookies.
Interviewee: We had dorm raps.
Andrew: Oooh, dorm wraps.
Interviewee: We were literally; if they would get a certain number of people buying cookies they get free cookies. Which is still fun.
Andrew: You know am sorry to linger on this but am really curious and I also think that this early business say a lot about the evolution of the investor and entrepreneur, so let’s see instead of just buying cookies, the way I imagined you did, and then just having them around for somebody to come by, you had a whole system in place, what was that system? How did you start it? How did you build it? Tell me.
Interviewee: Well actually one of the people in my dorm, it all started when she..I tasted her cookies and I thought these were unbelievable and I said to her “could we do this on a bigger scale?”and she loved baking, now I suppose would have become Mrs. Fields but that wasn’t our goal, I mean it was truly an opportunity to have so extra spending money and you know it started in our dorm and then it started in the dorms around us and pretty soon people were hearing about this things, and back then we didn’t have the internet, we couldn’t do internet orders, so it was basically the telephone , but because we had the dorm wraps in the different dorms , the people knew they could go and say I really want to get some cookies and then we started doing you know the dorm, every dorm have monthly meetings, and we would supply the monthly meetings and we figured out , you know how do we would take it to another level? and the other thing I did speaking of which may be I shouldn’t talk about, but a couple of friends we started the first Calcutta at Stanford where we would be bid off the NCAA march madness basketball tournament, and so every year we would have this 64 teams in the tournament, we would have an auction and that too created at the end of it then we had to quit because it got too big , we had a $50,000 pot, and it became crazy the first show was a couple thousand bucks but then the law school heard about it the business school heard about it, we got a bunch of people, so you know college campuses are fantastic research labs for trying out ideas, and I really would encourage people who are in school, in college, in universities to view it as a great chance, I mean what is the down side on this things our cost were minimal.
Andrew: She baked all the cookies her sell?
Interviewee: She did, well then we had to get a crew.
Andrew: Okay, wow, alright, then you go to Microsoft, do you do any investing while you are Microsoft? Is there where you did real estate?
Interviewee: I did, I would on the side I actually, one of my goals earlier on was to try and do one house a year, fix it up and sell it and fortunately Seattle was growing at the time and Microsoft was contributing greatly to that and so there is this one big project but almost every year I would find it and fix it up and do that and I probably did 10 of those over the first10 years.
Andrew: Did you do it yourself? The fixing it up thing.
Interviewee: I hire out, I would find a house, I didn’t have time when I was at Microsoft I literally went to sleep there. There was a period where I slept there 3 nights in a row just because we had to much work to do, so I couldn’t do that but you know I got a team kind of an out, you know outsourcing is now normal but back then it wasn’t, but we kind of had an outsource team that would go in and do a variety of task and to get it ready to sell it.
Andrew: Now again, it’s hard to even have somebody come in your house and fix the bathroom, to redo the kitchen is a night mare for the whole family, you managing somebody while you are working and sleeping at Microsoft, how are you able to do that? How did that work out?
Interviewee: I just very lucky because I have a lot of energy, I don’t need a lot of sleep, and am just, I get very, there’s lots of adrenaline around ideas am passionate about pursuing new ideas looking at business models and so for me it is just something I did , you know I always had a job from the time I was fourteen and in college even though I would take big work loads I would always have a job and so you know kind of being that guy that does the extra things is just kind of normal for me.
Andrew: I could see that by the way of the energy, most people they’ve got a Skype video camera in there face, they still a little bit nervous, still a little quiet and you are just in there, I love it, by the way just to give people reference, you were at Microsoft from 88 to 95, you got there before windows 3.0 came out, you got there before Microsoft Office took off , before it even came out, you were there just before all this big things happened.
Interviewee: Am just lucky.
Andrew: Do you have any stories about Bill Gates or Steve Barmer from back in the day?
Interviewee: You know it’s funny, I wasn’t going to go at Microsoft , I thought it was too bigger company I really wanted to do something on my own, may be real estate investing I didn’t want…, I really got cashed I will do the interview because I have never been to Seattle, and they are like we will fly you up and I like Seattle, but the reason I went there was it was the most interesting set of interviews I have ever had in my life, it was twelve back to back interviews with hardcore cases, people were fired up about what they were doing, and the way they did interviews back then is that people would say “here is what am working on , tell me what you would do?’, so they weren’t made up sought of prying this guy, the others are famous Microsoft questions, those were fine, but it was really about what people are working on , so you got a great sense of what people are working on, and I thought if this people are this fired up this smart am going to learn a lot here, and I will probably stay here for a year and leave, but this could really be an interesting thing and I tell you I have never been around, and I just feel very fortunate such smart , such passionate people and it showed in the early days and that’s why I stayed there. And I was just a goon, in fact you can’t see it but across the street that building is Google San Francisco, I look into there ping pong room and I was just there before this interview and I was saying to the guy as we were eating our cokes for breakfast, quiet a breakfast back then, we didn’t have that Microsoft , we were thrilled to have free coke and I was saying to them being at Microsoft is different than you now being at Google, because being at Google people know is a very special place and that they are rising and they are the kingpins, we at Microsoft we never felt that, we thought like God we are being attacked by Lotus and we are behind and 123 and we are perfect kicking our butts and God you know if we just get an operating system up that people loved and the graphical user interface we got to get that adopted, so you know we, true story when I made the decision to go to Microsoft there was a an option pricing model called the Black–Scholes model and so I run that as part of my, and I got paid my salary at Microsoft first year was $40,000 a year, and I ran the four year vesting Black–Scholes model and it was going to equate to about $50,000 all in, so I was going to make about $50,000 a year for four years, so I simply didn’t go in there for the money and I didn’t think that it was going to run into debt. So again I followed it because one of my tendency is surround yourself with great people and these people seem like they were amazing and by the way what’s seem interesting just to complete sign up but I want to mention it, I am, in addition to vineyard I still do a little bit coaching and advising to start ups, and I am currently advising a Microsoft Spin-out from, the guy who started it was my first interviewer at Microsoft some twenty years ago and he is now doing a start up, so you know surround yourself with great people stay connected to them and good things happen.
Andrew: What’s the company?
Interviewee: It’s called more price, they are doing something really interesting around creating a mobile front end for share point, if you don’t know what share point is, it’s a juggernaut for Microsoft it’s basically a workgroup work flow, a product that is included in the office week. It’s on a hundred million users; that’s right now and growing to 250 shortly.
Andrew: I got this note here about the car wash, I got to get to the tech, but car wash? That too? How did you get into the car wash business?
Interviewee: So,
Andrew: Before you get into that can you just lower your camera a little bit, I want to make sure that you are fully in the frame, yeah it’s perfect.
Interviewee: So I left Microsoft and, I want to do something entrepreneurial again and I want to go somewhere that is not a lot of MBAs, there has not been a lot of innovation and may be there was a good cash flow component, there was kind of a reoccurring revenue and there was another guy at Microsoft who had found this guys who are, not franchising legally but sought of in the concept of franchising car washes. And I went over to eastern Washington and it reminded me of Omaha, Nebraska, quite frankly and it felt comfortable , I thought let’s bring a different marketing and branding ideal to a car wash, and so we invented the concept of something called the go-spot-go and we built a chain of five car washes in Spokeham. And I learned a lot. You know I would at the end of the day, we didn’t lose money, we didn’t make money. You know I go back to what said about Microsoft and I wasn’t very passionate about car washes, I wasn’t surrounded by amazing people and I didn’t really, it turns out that the people who sold me the car wash concept, were later indicted and went to jail for misrepresenting the numbers and so forth. So you know arguably I should have done a better job, on my due diligence although I spent a lot of time with these guys, they were very good, so a lot of lessons learned on that deal. And you know now I can say I know car washes, I do. It did pay off at the end by the way, it did pay off the other day because there’s a brand new car wash in Seattle and I went up to the guy and said “yeah, let’s talk car washes” and he did give me a free car wash after we shared stories.
Andrew: Are you in an office or are you in a hotel room because you’re staying in San Francisco?
Interviewee: I have a work-leave-lock in San Francisco, so I live half in Seattle, half in San Francisco.
Andrew: I see. Alright. What about virtual IO?
Interviewee: So amazing company at the time, one of the bigger ideas, you know the founders were a team that were real visionaries, very hard working, very bright people, and they raised me, there was a book written by virtual IO, the concept was virtual reality headsets, so definitely a question of timing, ahead of its time, I came in as VP of marketing, and loved the vision of the thing. And we raised $50 million which back then was a huge amount, founders taught me a lot fundraising, they were extremely good at it, but ultimately the product didn’t deliver to the consumer promise. Returns were high, people defects were high, people had a different expectation of what the experience would be, you know you’re now seeing 3D movies, you’re seeing 3D TVs, this stuff’s coming, but we were 10-15 years ahead of time.
Andrew: Yeah, and its still today coming, its still a few years in the future.
Interviewee: Right, that’s right. I think its still five years.
Andrew: What about e-vite? How did you get into that and how did that turn out for you?
Interviewee: Well, so e-vite is a great story, Stanford MBA I met these guys and really within half an hour I said I love this idea. I like their energy, I love their idea, it just made sense to me. And even to this day, I was so excited about it and they’re like “I don’t know if we’re going to take money, and maybe we should do a venture around” and I said “look you guys, if you let me put money into this deal, I will paint my car with e-vite all over it and I will drive it around”. He said “okay, you’re in”. And to this day that is my car. I have a Volkswagen bug from 1999 with pink and purple poking dots on it, says e-vite and you know I tried to give it to this Smithsonian but they literally said there was no room. That they thought it was interesting. And keep wanting the, you know e-vite exists. So the outcome was we had, it was a classic part of the bubble. We had some really big offers to buy e-vite and because the big venture funds came in, they were like “no, we shouldn’t take, lets make up a number two, three million dollars, we need a billion dollars”. Now as an angel investor in that deal, I would have been thrilled with three hundred million dollars, I mean literally that would have been, I would have been done, I would have retired, it would have been awesome but, but as the angel and a small player I had no voice around the table. And, I you know I would pull them aside and go “hey, we don’t really have a revenue model here. We’re growing and we’re the de facto number one place to go for invitation”. We don’t have revenue. So what do you think we should be selling this now? So you know, [Heinz] says twenty-twenty but you know in the end, City Search Ticket Master bought it, not for very much money. And its still today and they’ve really done very little with it. It’s very disappointing to me but even today its still is number one player in that space.
Andrew: And it’s hard to dislodge them?
Interviewee: It’s very hard, it’s just shocking to me. Like if I was Google, Google counters’ growing like crazy. Why wouldn’t you build e-vite functionality into that?
Andrew: Do you know…
Interviewee: Hey, hey you guys over ther. We’re here.
Andrew: Actually I talked to [Harry Lin] who run that product for a while, here on Mixergy I talked to him, and he said that any time he wanted to innovate, he just found himself locked. He found himself handcuffed. It was either that they were depending too much on the revenue that the company was making and it’s making a lot of revenue and they didn’t want to risk it, or the technology was just too hard to adjust, or they would adjust and the user would say “what is this?” I came here because I know it’s dependable and I know what I am doing now I m suddenly confused. And the people he was worried about weren’t so much Google, he was worried about Facebook getting into this space.
Interviewee: And well I mean Face book should, will I mean it’s just natural. You know it’s interesting you asked me about people earlier. The team that started e-vite they’re doing really interesting things and just one small example is the president back then founder was Joash Silverman. Joash now runs Skype. And Skype, the numbers on Skype would blow you away. Their daily ads are on the hundred of thousands. Every single day. Daily new subscribers.
Andrew: Oh, hundreds of thousands of new people?
Interviewee: Every day.
Andrew: Oh wow!
Interviewee: So it’s a little sleeper that is not a slipper. And Joash is doing a great job there and you know, I saw that in him. I saw that when we started with e-vite.
Andrew: I remember that, he also was big on stands to get attention. Anything to get people to understand that e-vite was in the space. I do talk about people; here’s another thing that I am seeing: you’re involved on lots different businesses. Most people one, they can’t do one their whole lives. Here you are touching lots of different companies, making most of the work. How do you do it? What advice do you have for the rest of us who are trying to make one or two or three companies work? In our lifetimes, not even over the course of a single year but in our lifetimes.
Interviewee: Well you know I don’t want to go to the level of platitudes and clichés, but there are a lot of things, a lot of the things you hear people say are true. I would say this though: being lucky is part of it. But being lucky is you know, somebody once said ‘luck is the residue of design’, so lets just, I am going to give you an example that is peripheral, but may be it will illustrate my point. If you’re in San Francisco today, and you’re looking for a job, you have so much information about what companies are rising. Whether its, you know and I am not just talking about Google across the street. And I am not just talking about Zinga. Although those are interesting companies. Why would you go work for a company that wasn’t on the rise? Wouldn’t you work really hard to get to know people…I call people at Google today. Not because I want to go work at Google, because I know they’re doing interesting stuff, and I know they’re going to do interesting stuff after Google. Yeah, I love the __ and bacon I had one this morning but I know these people are really smart. Put yourself in front of success. That’s, I have to say, at the end of the day, I never was the smartest guy in the room. I never was the one that had the big vision and executed perfectly. I just made sure I know, knew the people who could do those things. Or was part of the crowd doing those things. And I think its just funny that may be people don’t do that. You know, I love people who come and say, I really have passion about this, I want to start this company and one of my first questions is “so, have you connected with others who have done that? Who have had success?” when I was, and I am not suggesting that this is the only way, but when I moved to Seattle, the first thing I did is I set up monthly coffee dates with successful entrepreneurs in Seattle that I didn’t know. And one of my very first ones with Howard [Shorts]. I said “Howard you don’t know me but I would love to buy you a cup of coffee and talk to you for half an hour because I love what you’re doing”. And he thought this is weird, no one’s ever done that, okay. Howard and I today are friends, I mean, and he’s a true inspiration for me. So I just got to tell you, get in front of success. We are so lucky today, you can figure out where that successful boat is going. Get in front of it.
Andrew: Okay, now once I am in front, what next? What do you do? So let’s say here I am, I meet you, or somebody else meets you. They say this is a smart guy, he’s obviously in touch with everybody, I want to stay in front of him so that we can work together. Now did they just keep pestering you with emails to say “hey Jones, so anything big going on?”It’s going to be annoying to you and you’re going to start tossing it to spin. What do we do?
Interviewee: So look, people want to be with other interesting people. Yesterday I met with the founder of [Stamhope]. I haven’t seen Jeff in a long time, but I wanted to see what he’s working on. And he wants to know what I am working on. And we’re going to exchange ideas, so you’re going to be invited back to the dinner party if you’re a good conversationalist. If you’re bringing a new perspective. Right? So get together like, this isn’t the only way, but the [D Conference] just happened in San Diego. The TED Conference]. Those are all great examples of people getting together to exchange really interesting ideas. Those are great examples of being connected to people that are changing the world, okay? I love those things, I get inspired by those things, I love to share what I learn from those things and I get new ideas from those things that I want to share back with those people. And so, for me that’s my way. I am not saying that everybody has to do it that way, but that’s my way. And it really is, you know what I love is I am on LinkedIn, and I am on Facebook and I am using them very experimentally. As you’ll see I have a lot of friends on those places, but I love the idea that we’re so connected now, that I can put out into the universe “hey I am going to Buenos Aries for the first time. If anybody knows people, doesn’t mind connecting us, you know from that, from doing that on LinkedIn, I was met at the airport by someone I didn’t know, I stayed in somebody’s house I didn’t know, I had lunches and dinners the whole week, with people I never met before, who are now lifelong friends. Just by putting it out there. And I am not saying putting it out there nilly willy, you got to bring something to the dinner party too. Right? But don’t be afraid to put it out there. I didn’t…
Andrew: What did you bring to the table
Interviewee: I didn’t because all the time, and I really do try and do this as much as possible. “Hey, would you just meet for a coffee I got this idea?”I won’t typically do it until I hear part of what the idea is. And I ask a few questions: how well have you thought about this? I don’t want to be that first conversation but I definitely want to help people think through ideas and connect them if I can, so I would just encourage people to really, first of all, we all have resources. We all have networks. Use the network you have, use the resources you have right now, okay? Start to build on that. And then as you build on that, one of my chief tenets in life is ‘momentum creates momentum’. Create some momentum for yourself. If you’re having a bad day, figure out a momentum starter. I don’t care if its go work out, do ten push ups. Create momentum. That is my, I really believe in that concept. It’s the concept as there are two types of people in the world: those that suck energy and those that give you energy. Why would you want to be around people that suck energy? Right, and that’s where I try and do the business stuff. I don’t know, it’s probably not exactly the answer you’re looking for.
Andrew: No, it’s exactly the answer I am looking for. That and maybe you don’t even have the answer to this question but where do you get your energy? I feel like I got a lot of energy, but I would like your kind of energy. Everybody’s who’s watching us would love to have that kind of energy. Where does it come from?
Interviewee: You know its, I am truly inspired by people. I can’t and I don’t know, may be its genetic, it’s certainly not from an artificial substance, I can’t even drink coffee.
Andrew: What’s in the mug?
Interviewee: It’s green tea. But its, I love being around steep bombers pounding the table, throwing things and fire up because that gives me energy. Right, may be its crazy but I get fired up with that stuff. And I can’t tell you why or how, but its, its truly, I wake up every single day and I am psyched. Now, not everything is perfect, not everything is going exactly as planned but you know there’s a lot to be thankful for.
Andrew: I got two other companies in that and then we’ll come back to Microsoft. Amazon, we talked before the interview with the live audience there about Amazon, you missed that opportunity you said, can you tell us about that?
Interviewee: I can, it’s slightly embarrassing but I guess it’s the truth so I should tell it. I had an opportunity to be one of the first ten investors in the company, I had a $ 10 000 check written and I was going to hand it to Jeff and that day I tore it up. And that would have been worth twenty-twenty five million dollars and the thing that I learned from that is Jeff is the answer. You know I said — noble can do this, you know [Wall mark] can get in this thing you know, why is, why is Amazon going to be the one? You know and what I didn’t realize, I think Jeff is brilliant, and I did not appreciate how well he understood, he’s kind of a geek, how well he understood marketing and PR. How well he understood that by being the first in the E-commerce base, we don’t even talk about E-commerce anymore you know. But being the first in the E-commerce he would become the poster child. If any, if Newsweek, time the economy anybody was writing a story on E-commerce, they had to talk about Amazon. Because they were one of the first examples. And Jeff utilized that more brilliantly than I’ve ever seen anyone do it. And he also, he did stuff that was very kind of counter intuitive. People now forget, they lost so much money, and they would say yeah, that’s our plan, like what do you mean, we know we’re losing money, we got to build the , we got to spend the bill its infrastructure, and he was right. And people were like “oh that’s interesting. Boy that didn’t quite make sense to me but, oh, okay”. That’s great. So I blew it. I will be the first to say it and I really respect what Jeff’s done and he’s doing. And think today he still doesn’t get. You hear about Steve Jobs, you know you hear about Google, I think Jeff is truly one of the greats.
Andrew: I think he’s started to get that respect again. There was a time that everyone said “uh, he must be an idiot. Look at what happened to the whole web 1.0, he’s the poster child that brought that failure” and then they came around again. Total Beauty, run by my friend Emerald, he and I went to high school in Brooklyn together, I saw that you’re on the board. How did you get involved with them and what is about them?
Interviewee: I was a minor founder, I guess I will say I was that early, early advisor but my friend John Hittle connected with Emerald and they co-founded a really, and I helped them early on, talked about business ideas and I love Emerald l. I think he’s doing a fantastic job there. I love the fact that he’s a guy who worked in a big company PNG and you wouldn’t necessarily think that a guy there could make the switch to an entrepreneurial kind of role. And he’s done it. And I give him a lot of credit. And you know another piece of advice: go where the space is big. You know beauty is a big space. Travel is a big space. Wine is a big space. You know go where the space is big. Because sometimes that the bigness of the space is like a rising tide. You get to take advantage of the fact that there are so many opportunities. And I think yeah, there’s other players in the beauty space but there’s room for more than one player. So I love what those guys are doing. And he’s a great example of an entrepreneur back again. Emerald if you’re out there listening to this, tell me what you’re going to do next, and I am there.
Andrew: Smooch fest. That’s something I saw on an older article on you when I did a research. You apparently –.
Interviewee: Yeah, you’re like the guy who does the [James Lettein] the — I found this high school year picture book of you. So that was back in the days, the bubble days, and I’ll tell you smooch fest started from the notion that well, really what we’ve been talking about. That networking and connecting with people is an integral part of the eco-system that makes silicon valley what it is. It is amazing. In this town, and I fly in for ten days a month, in this town, every single night of the week there is two, three, four ten different events you could go that have entrepreneurs connecting in someway. And in Seattle it wasn’t happening. And I just thought to myself “lets get, let’s make, and it doesn’t have to be complicated. Let’s just say, once a month we’re going to have an opportunity for people to connect.” And the thing started with thirty, forty people and by the end it was almost a thousand people, I had, actually finding a venue for it was crazy. And to this day I still have people who thank me because there were marriages that came out of it, but really my goal was just to let people have an opportunity to meet other people and share ideas.
Andrew: How do you make those useful? Because a lot of us go to events that are just supposed to be business passing events and they’re not really as useful as some of the events you mentioned earlier: the Ted’s and the rest of the world. How? How…
Interviewee: Well again you know it, couple things I do and they may or may not work for the audience. I really try and have one great conversation. Right, that’s a goal I go with into these things. And if I have had one great conversation, what’s a great conversation? Someone that has an idea that I haven’t thought of. Someone that clearly inspires. Someone that, you know maybe down the road there’s an opportunity. Great conversation where I am going to stay connected to the ideas of that person. That is a successful event. The other thing is I have made a concerted effort to make sure that I know people at Google, at Facebook, at LinkedIn, at Zinga. Okay, right. And so I know that somehow I am going to need to know what’s going on at those companies or get some insight and I just want to make sure, and at these events those people go to. Right? The other thing that I have always done is that I try and find a young person, who’s clearly passionate. Who’s clearly doing some right things and get to know him. Because it’s not about the event, it’s not about next week. It’s about the next ten years.
Andrew: We’ve talked a lot about the big successes and one little thing that you’ve missed: about a failure? A big failure that may be changed the course of your life afterwards.
Interviewee: Well, I have had a lot of failures so that’s not a problem trying to find one. The thing about being an entrepreneur, the thing about you know venture capital by the way, is all about failure. If you’re a successful venture capitalist you’re like the baseball player and history covers in the whole thing. Its, most of what you do is failure. So you can’t be afraid of failure, and do your best to learn every single time. And the worst one for me right now and I guess it’s not maybe in the failure category but it’s been a very tough road. Last year I started a company called EMICUS. And EMICUS comes out of the notion that the country and the world have a problem around disaster response. Whether it’s Katrina, or Ike or earthquakes or hurricanes or floods we don’t do a very good job and yet technology now is such that there are solutions out there, if we could somehow collaborate and come together on this. So, EMICUS, E.M.I.C.U.S was an idea that you go and you have a portal where using social media, using citizen journalism, using crowdsourcing, you could actually do a mass shop an put on a map. Where’s water, where’s gas, where’s shelter, what traffic changes are happening, where are places you shouldn’t go and allow both authenticated reports and also the citizens to update this. Now I believe that this is needed and will save lives. But getting different constituencies to actually come on board and partner on this, we failed. We have some, but it’s been really hard. And it’s frustrating to me because at this point I don’t care if I ever see a dime from it but it should be in the world. Right, I, it has to be in the world. And so you know we — we’ve talked to them, we’ve said — give it to you and that’s what we cant really do that, you know, and now we’re at the point where the team which was a very passionate team has had to move on and go get paying jobs, it turns out I understand that. But you know we’re last, kind of last effort here is to find you know, give it to Google, give it to yahoo, give it Microsoft, give it to an insurance company but give it to someone so it’s in the world. And I am pretty frustrated that we didn’t get that done. But it doesn’t mean am any less passionate about the reason for having done it.
Andrew: I See. And it does look like something Google thinks is important also. And I’ve heard and I’ve seen them try to bring this together. And still no one’s done it. And definitely not the way that you’re talking about.
Interviewee: Exactly.
Andrew: And the big hit was that Stub hub? The biggest?
Interviewee: The big hit, I don’t know, I mean I have been very fortunate. I haven’t had the grand hit, but I’ve had some nice wins and Stub hub was one of them for sure.
Andrew: Okay, alright well thank you for doing the interview with me, how can people connect with you? What’s a good place for them to find you?
Interviewee: Well, you know if you want to…unfortunately I have too many friends on Facebook which frustrates me, but I could certainly limit to certain number but Hand of God Wines on Facebook if you’re interested in following what we’re doing, certainly as twitter is Steinman and if you want to send email its fine: HYPERLINK “mailto:jon@handofgodwines.com”jon@handofgodwines.com and I hope to see you in Buenos Aries I’ll be there in October or December.
Andrew: If I am not here then may be I’ll see you back in the US when I come back
Interviewee: Fantastic.
Andrew: Cool, good to meet you Jon. Thank you all for watching.
Andrew: And “Go USA”.
Interviewee: Go USA. You should see the hawkers over here, they’ve got the white and blue everywhere, if I am the one guy cheering the US, we’ll see what happens.
Andrew: Its fantastic yeah, so, alright man.
Andrew: Thank you. Bye.
Interviewee: Cheers. Peace.
