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Hey, everyone. It’s Andrew Warner, founder of Mixergy.com, Home of the Ambitious Upstart. I’ve got with me today, Howard Lindzon. As you can see from the arm band, he is the guy behind StockTwits, the co-founder of the company. StockTwits is a community-powered idea and information service for investments. He is also well-known for launching Wall Strip, the witty investment show that ran on the internet, and was sold to CBS. And he is the investor behind companies like LifeLock, and Bitly, and TweetDeck. And a guy who’s incredibly patient, because this is now your second interview here on Mixergy. Because the first one, we had some audio trouble. Let me ask you this.
Interviewee: Yeah, that was my fault. I don’t know. I’m just not that good at this stuff.
Andrew: [Laughs] You don’t even know the internet. You’re just figuring it all out for the first time. What I’m…
Interviewee: It’s the World Wide Web. It’s not the internet.
Andrew: I see. So the World Wide Web. I’m imagining… Well, let me ask you this. Let’s ask about the social part of the World Wide Web. Why are you so engaged socially? You’re a guy who’s investing in companies, who I’m sure has a lot to do. Why do you spend time doing interviews with people like me, and Tweeting, and blogging, and doing everything else?
Interviewee: Well, I actually like the interviews you do. When we did Wall Strip, the whole world was about, “Oh, my God. It’s got to be three minutes.” And I don’t think the world’s changed that much from there, but I believe we’ve now, with bandwidth dropping the way it is, and you watch the Travel Channel and Cooking Channel, I think now it’s about super-niches. And I don’t like the sound bite era. So we’re totally into just experimenting with long-form video. We’re using Skype. We’re using a company out of L.A. We’ve tried live streams. So we’re experimenting. And I’m not really, I don’t think I could say anything that would hurt us that much. So you know, StockTwits is an idea platform, and you know, you’re wrong a lot. So give it out there, get it off your chest, and move on.
Andrew: This is StockTwits.tv, where you’re doing a lot of long-form video.
Interviewee: Yes.
Andrew: I see. Do you consume a lot of long-form video?
Interviewee: That’s a good question. No.
Andrew: You don’t? Well, do you consume a lot of long-form audio, maybe on your i-Pod?
Interviewee: Never have.
Andrew: Really? So why are you convinced that this is the future?
Interviewee: Because our audience tells us they love it. I’m not saying it’s the future for everything. I think good content is important. I think people watch poker for, when I watch online poker. People will watch that stuff. Fascinating people will watch that like these people are celebrities. And so when I watch online poker for an hour, jogging or something, just to see what the market was like in this niche, I realized that one thing they didn’t have is the people, you can’t play the guy’s hand. You’re like watching this chubby guy who was, may not be able to do anything else in the world, and you’re yelling over his shoulder. He can’t hear you, doesn’t change the hand, you can’t play along with him. So, I think we’re trading, we got this community of guys who want to share, and so you’re just looking over their shoulder, but you can trade along with them. So, it’s not so much the content that matters, it’s the fact you have that training wheels with that person, that connection that helps you. So, it’s not very sexy content that we’re creating, but it’s an hour long of ideas from someone that you trust.
Andrew: All right. I want to spend the majority of this interview going over your biography, finding out how you made the investment decisions that you made, why they worked, and what the rest of us can learn from them. Most of the investments, in fact, all of the investments I’m going to be talking to you about are individual companies that you invested in directly, not ones you found on the stock market. So let’s spend a little more time on this. When you say that the audience tells you that they want longer video, how do you know it? How are they telling you?
Interviewee: Just direct e-mail, direct messages, through Phil and the rest of the company. We’re hearing feedback that they’re confused by one thing, but StockTwits video kind of gives them that anchor to the site. It kind of helps them spend the time around the site. And gives them that comfort kind of feeling like a channel does. I don’t think, working on a company right now in stealth based on what we we been doing in StockTwits TV. Because I don’t think there’s anybody, there’s no lean-back.
Interviewee: There’s no lean-back. You go to YouTube, and it’s just like you’ve got to click actively around. You’ve got to watch a 30-second clip. And then what do you do next? Whereas Americans in the world are used to leaning back in their chair. And if you went to like the Exi site, it should be an Exi channel, curated by people that run Exi, and it should just play. Right? You can surf, but all, you know, it’s just programmed 24/7. So you don’t have to actively… So this, this whole clip culture is really very different. And that’s why I don’t think they’ve merged that well. People are still used to leaning back and watching, you know, getting taken care of, getting fed.
Andrew: I interviewed LeLaporte a while back, and a few weeks after I interviewed him about how he bootstrapped his online media company, he announced that he made 1.5 million dollars. He’s got hundreds of people watching some of his shows. So I see how big they are. I see the potential of online video now, and especially the lean-back type that he’s producing and you’re talking about. But it’s also pretty expensive to create content. What do you think people are looking for?
Interviewee: Well, I don’t know. If I knew, I’d be doing it more. I just know that we’re doing what we’re passionate about in finance. So it’s not expensive for us because, you know, my salary or whatever, a small salary that we do is built around, you know, many different aspects of our business. And our content contributors are not charging us. We’re sending them a camera. We’re helping them set everything up right. But they want to build their own brand, so we’re just giving them the platform. So I think the key question there is, will NBC, you know, if they put 10 million dollars towards like 100 shows, would that be a good business idea? That is not one I would invest in. I’m an advisor to a company called Next New Networks. And I think I’m persona non grata because, you know, the first meeting, I came in and I said, “You should shut this down. You know, like I don’t get it. Like I don’t think, you know, this short form, micro-niched video thing was just… I don’t get excited about it.”
Andrew: I see. And the videos that I remember seeing on Stock Twits, are pretty much one person, or a couple of people, in a camera. Not a lot of cuts. Not a lot of production. And you feel that that’s going to work in the future.
Interviewee: It’ll work for us. It’ll get better everyday, and right now our audience is in the four or five hundred a show. So, we’re not promising anything, we’re just delivering ideas from people that, if you tuned into Brian Shannon, it’s because you’re a fan or because you’re just trading for two hours and you want to watch him trade. Kind of just an added component to the chat room. It’s not meant to go national on NBC or on CNBC, although I’ve always said that if CNBC ran game shows, the ratings would be just as good as long as there were the tickers floating around it. Nobody’s listening to what’s going on in the middle of the screen.
Andrew: Yeah, most people are working and can’t have the audio on.
Interviewee: Yeah, it wouldn’t matter if they had monkeys having sex, that would actually have better ratings.
Andrew: That would be an interesting challenge to create. You can probably have a couple of videos of monkeys having sex, and maybe another channel of just puppies sitting in front of the camera, and have the ticker underneath and see how well that does.
Interviewee: That’s Friday at noon, we have that show.
Andrew: If I could put that up on the Mixergy Network, that would be the next show.
Interviewee: That’s our highest rated show on Fridays.
Andrew: So, I want to come back to video when we talk about Wall Strip, but let’s go over this in the form of a biography. Last time we talked, you said that you were an entrepreneur from an early age. Even going back to when you were 10 years old and selling jewelry. Can you tell that story again?
Interviewee: We went to New Mexico. My father was doing some oil, like there was back in the ‘oil bubble’ days, the ’80s. And, back then there was nothing to do in New Mexico except get cheap turquoise jewelry from people at the side of the road. And, it was just, I just thought people would love that in Toronto. So, my dad bought four, five hundred dollars worth of stuff, which is like a truckload. And I just started selling it to people at school, and to my parents friends, and it worked out.
Andrew: I’ve noticed that selling and being in business is a talent that you develop over time. It’s a skill also that you learn. What were you learning as you were selling as a kid, as you were starting these little businesses?
Interviewee: I think you’re learning that, that’s a good question. I think at that age…
Interviewee: I think at that age, I don’t know what you’re learning. I think you’re spending all your money. I mean I guess some kids save everything, but I was going to the candy store, or playing video games. It was just an independence thing that I loved about it, of not having to ask for money, which as a kid, that’s what you’ve got to do. If you’ve got to ask for money everyday, then you’re not in control of things. So I think, you know, it’s a freedom issue. And but what you learn, oh, coffee. Coffee break. An espresso. You can understand this where you live. You guys drink this by like the truckload.
Andrew: No, I’m in Buenos Aires. They barely have coffee over here. We have Yerba Mate.
Interviewee: Oh, what is that?
Andrew: Yerba Mate, it’s ground holly, essentially, that you put in a cup, with a straw that has a sieve in it, and some hot water on top. And you drink through the straw with the sieve, and it makes sure that the holly doesn’t get in your mouth. Just the good flavor of it in the water comes in at this.
Interviewee: Is there caffeine in that? What is that?
Andrew: Actually there’s a whole lot of caffeine, but it’s not like coffee, in that it doesn’t, you don’t come down from it. It just keeps you going in an even way.
Interviewee: Nice.
Andrew: And you can sip it for a long time. It’s great.
Interviewee: Why aren’t we shipping that into the United States? Well, that sounds like a business.
Andrew: Yeah, I’ve got to get one of these to you. I’m telling you this especially, for people who are sitting at their desks all day long, and need that constant energy, not the quick rush that comes from a Red Bull, they’d love this.
Interviewee: Why not? I love that. That’s really cool. And then we just put an acai in front of it, a-c-a-i, and then it cures cancer.
Andrew: [Laughs]
Interviewee: And then we’ve got a business. All right. What…
Andrew: See, now this is why people get into business with you.
Interviewee: 50/50.
Andrew: Oh, 50/50, I’m the guy with the idea. Twenty for you, eighty for me.
Interviewee: Ah, 60/40.
Andrew: Let me ask you something.
Interviewee: Yes. Send me five of those. I love those.
Andrew: OK, I’ll get them for you.
Interviewee: In Tuscon, I’ve never seen one ever. Where would you sell those?
Andrew: You know what? Most people would just have them kind of in the family, or they would go and buy one that’s a special one that they plan to keep forever. But you’re saying where would you and I sell them. Probably online. Maybe we’ll do a Yerba Mate show. You and me, every week we get together. We drink Yerba Mate, we go high energy on a subject. And we just rip it apart. And then everyone says, “I want what these guys are drinking. I can’t get that at the store. Where do I get it?” Then we give them our markup online.
Interviewee: I’ve got to say to you, we’ll do a show called “Pitch Me”. And it will be sponsored by that product. I love that product.
Andrew: All right.
Interviewee: But you’ve got to, all right, you’ve got to send me one. But continue on with this interview.
Andrew: All right.
Interviewee: The, so I didn’t learn that much then. I think what I learned was the freedom, the freedom of it. I just love the freedom of, the instinct of like this deal is good. And as I’ve gotten older, the biggest question I get as a small investor, as an angel investor, is ‘hey, man, why did Fred not invest in stock with you? Or why did Benchmark pass on that deal? Or, how come they can’t raise money?’ I’m going, well, wait a minute, I’m in. Like, what are you talking about? Why do you need this blanket of who’s in the deal? The point is, what I’ve learned over time, and I’m 44, is that you do the work and in the end your mommy’s not in there to tuck you in and give you the blankie. And if you’re going to be a great investor, you’re going to be wrong, but you got to pull the trigger. And the pulling the trigger is like, what do I need, and I think, that’s what you got to do. You got to have passion of the idea that you’re invested in, the CEO and you are the management team. You got to have an idea of what they’re going to do, because the money you wire is going to be pissed away in some other direction, or the plan is going to change very quickly. And, it’s going to be huddle on the third day because the plan changed, Google bought somebody, a direct competitor. But, none of these guys can help you. It’s all about the, you got to have your own instinct to trust, and knowledge about the space or the investment. So, I think that’s the biggest thing that from 10 to when you’re 30, some people are born with that instinct. I think you can learn it, especially in a specific sector, if you focus and learn. And then thirdly, if you’re always going to look for people to just tell you it’s great, it will probably be too late. And you won’t get the deal that you originally had. All kinds of things go wrong.
Andrew: Do you know anyone who you watched learn it? You said, he didn’t walk into this knowing that you got to sometimes, you didn’t walk into it knowing how to be an entrepreneur, but in time, he learned it.
Interviewee: I don’t. I haven’t backed guys a second time maybe because I started this whole thing like 5 or 6 years ago. So, it’s a good question, it’s a great question.
Interviewee: It’s a great question. I may come back to it. I can’t think of that. Michael Lazaro at Buddy Media, which is like one of my… Michael Lazaro and I are, I don’t know if I told you this story last time, but Michael Lazaro runs a company called Buddy Media. And it’s just a classic story of social web. When I had GolfNow, and I think he’s one of the best, in my whole portfolio of stocks, I have two great, great young CEOs. Michael Lazaro, and it’s a husband and wife team at Buddy Media, and you should interview him. And also Brett Wilson at Tube Mogul, which is a video analytics company. And I definitely will set those up for you. Two great CEOs. And I think I would just back them, you know, the next time and the next time and the next time, because they just have what it takes. And you just learn, the fact that they can take your money, manage the investors, adapt to changing models, and you know, grow businesses, those are the kind of guys you want to try and find.
Andrew: Do you have an example of how they do that? Either Buddy Media or Tube Mogul?
Interviewee: I think they surround themselves, again it’s instinct. And I think they surround themselves with people that aren’t just “yes” people, but are like going to say, “You know what, Dude? We are going in the wrong direction. And we’ve either got to slow this down, or we have to, you know, completely change course.” When I invested in Buddy Media, we were so excited. I was like, I threw in very early, and I convinced Mark Pinkus from Zenga and Peter Thiel from PayPal to also throw in. And it was a social currency. This was back in 2006, or 2007. After I’d sold Wall Strip, I met Mike Lazaro in a CBS meeting. And he came out of the meeting, “Well, I don’t want to work at CBS anymore.” And we had become friends quickly, and by that evening, I was investing in his new startup. And his idea was a social currency. Within six months, if we had just stayed that course, there’d be no business. And now he’s adapted, and he’s got a kind of like WordPress for Facebook platform, and they’re doing a couple million a month in sales. But you know, it’s not a social currency company.
Andrew: What was a social currency?
Interviewee: It was just like going to be, it was called Buddy, it was called Ace Bucks, and you would just earn bucks, you know, for surfing around Facebook, and doing certain things. And then you could exchange it for other, you know, it was a currency to swap goods and…
Andrew: I see, kind of like All Advantage, but instead of giving you real cash, they were giving you social currency that you could then swap with other people and get things online with.
Interviewee: Yeah, it’s, that and worse. So, it’s really a horrible idea. But Mike’s a great CEO, and he’s adapted, and Brett at Tube Mogul, when I invested, I thought it was the greatest idea, because it was just in the video syndication business, so it helped you. Like at WallStrip, we posted our video once, and then magically Tube Mogul with its software, would send it to every sharing site, and it was free. So I go, well that’s a genius business. So when I invested, then YouTube gets bigger and bigger. Instead of a lot more competition, and companies are going out of business left and right and not being able to afford to pay for syndication. So he really had to adopt his model very quickly or he wouldn’t be around.
Andrew: So what did he do that was different? How did he adjust it?
Interviewee: He became more of an analytics and data company around how long people are watching video. And he made an acquisition, [In-Play Product], and now they are the guts of many, Bright Cove and measuring the real analytics. And then indirectly become a very big video ad network.
Andrew: So how did these guys, how do entrepreneurs do it so quickly? I mean, the way you’re telling it now, it sounds like this happened over years. But it’s over months that the whole industry changes. How do they get to adjust so fast? How do they get to notice it and react?
Interviewee: That’s two out of ten. The other eight went out of business. I’ve got plenty of investments that 25 or 50 grand that just are flubbing around, right? They missed, they just didn’t catch the change of trend or the change, it’s not even a change of trend. It’s just like, the industry is like a herd of animals and they’re just, oh my God, video short-form, oh my God, long-form, oh my God, the platform. So, it’s just a combination of all those things and it’s, I think it’s just a lot of intuition and instinct and not taking too much money. And it’s also how you structure the business at the beginning. I no longer invest in companies that have, they send me a deck that has no web site. I just can’t, there’s just too much that can go wrong pre-design. So, I look for companies that have at least one customer and have a product. So, you know…
Interviewee: So you know, a lot of mistakes I made were like here’s the idea. A great entrepreneur, but they can’t get it coded even. So you try and remove, you know, where I’ve learned my sweet spot is, is paying a little more to get in the deal, but having a product that’s ready and selling.
Andrew: And I noticed that a lot of people… I was going to through and just talk about the biography, but I’m realizing that it really would just be redundant. It would be just like the first interview. And I think people should just go back and listen to that first interview, even with the bad audio.
Interviewee: Yeah.
Andrew: And we’ll give them something that’s a little bit different now. We will dig in deeper to some of these issues now. I see a lot of guys now, they’re going from being entrepreneurs, to being angel investors. And they’re putting in 25, 50 thousand dollars in a deal. Well, what kind of return can you really get on that, on such a small investment in a hopefully growing company?
Interviewee: I think from my own experience, it’s a terrible strategy. I think it’s one that will not get you rich. I think it worked for Ron Conway a little bit, but that, you know, that’s like saying Warren Buffett’s value strategy works for everybody. I mean so I’m addicted to entrepreneurs, I guess. And I’m a sucker for a good sales pitch, but I would warn anybody that doing it as a business strategy is not a good strategy.
Andrew: The smaller investments, the 25, the 50 thousand, why isn’t that a good strategy?
Interviewee: You have no say in the deal. Generally, your investing partners have less of a clue than you. Bickering. I mean when are you going to get the next call from the CEO? Now granted, I’ve had the… And so that’s the advice I… That’s a really good question because if nobody asked me that question, and I don’t understand why people do 25, 50 and less. It’s the type of investment where they’re also on the advisor board, and they have some special skill that… Or they’re going to get paid some extra amount of stock for being an advisor. I just don’t see how that’s a strategy.
Andrew: Do they do it? I could see for some people it’s 25 thousand dollars. That’s what they would bet at a… That’s what they might lose in a few hours at Vegas. Here they get to take that kind of a risk, and at the same time, they get to raise their profile bar, saying that they’re not just an entrepreneur who runs this one business. But they’re also an investor in a bunch of other businesses. And so for credibility, and because it’s not that much money, I could see how it makes sense. But is there a business reason, maybe you’re getting in in the beginning so you hopefully get to invest more later on. Is there something there?
Interviewee: Yeah. Well, you have to have more to invest more later on. So part of my problem is I went into that idea back in ’05 with my hedge fund, and I didn’t have enough money to follow on. And unless you have real money to follow on, you can’t get the full benefit of your winning investment. Just like stocks. I think when you move into a stock, and I’m a trend follower, and you don’t have more money to add to that position because you think, oh my God, it’s already went up, that’s how you don’t pyramid. So, I think any good investment strategist, if you look at Fred Wilson even, who’s a mentor, as he pyramids in, Twitter, he piled in as the valuation went up, right? Something about exit velocity that he teaches or that he subscribes to, and I agree with that strategy. Obviously, you got to know when to get off, which is kind of an art form. There’s no science to that. But if I have a $500,000 portfolio, and I just want to make just angel investments, I think the way to do it if you’re going to do $25,000 investments is to make sure that you only make 4 or 5 investments, and keep the rest of that money for follow on investments in the 1 or 2 that are really are going to work. So, you’re not going to get a completely diversified portfolio, and that’s why I don’t recommend it. Angels are only going to dedicate $500,000 to this thing. They’re better off picking 1 or 2 that they believe in at the right valuation and pile in.
Andrew: I see. And what happens if somebody who only puts in $25,000 and watches the business actually take off and do well?
Interviewee: I can give you an example of a few that I’m in. So, for example, Tweet Deck. I was an investor, I loved the product, I cold called, I’m embarrassed to say, the CEO, Ian. And I said ‘Ian, I got to invest in’, I didn’t care, I said, ‘I just got to invest in Tweet Deck.’ I’m living on this product, right? It’s amazing. And he said ‘no, I got a California investor. He’s an English guy’. And so immediately, he didn’t like me. And he goes, I’m not interested. So, it was really bugging me. I wanted to invest money in this company because I had been thinking about Stock Twitts and what it could do…
Interviewee: …I had been thinking about StockTwits, and what it could do. And so I called John Borthwick at BetaWorks, where I was an investor. And I said, “You’re English. You call him. And you know, let’s do this deal together.” And he goes, “Howard, I’m not English. I’m South African.” I said, “Well, I mean, same thing.” So John Borthwick, John Borthwick, he picked up the phone, and they cut a deal. And so I’m in. You know, John got that deal put together. And I’m a small investor in that first group. And so we put in a small amount of money, at a very low valuation, pre one million dollar valuation. But now the company’s in the 10, 11 million dollar range raising money successfully. And you know, I don’t have enough control to like to say that I agree necessarily with their business plan. You know, StockTwits Desktop has developed its own, you know, Adobe Air product for the financial community.
Andrew: Hmm-hmm.
Interviewee: And so my heart’s not in, you know, I don’t use the product. Right? It’s a great product, etc. And now I’ve got 25 grand in the deal I’ve got no sale in any of the… So I’m just kind of either… I’m just hanging on. Or I’ve got to call and sell into the next round. Right? And luckily, that would probably work. But when you’re dealing with friends, etc., in angel rounds, you know, it’s hard to call up and just say, “Hit the bid. You know, I want out.” So those are the kind of conflicts that happen when you go in small, and you don’t really have a say in the direction of the business.
Andrew: All right. And say it gets sold for… Well, what share of the business do you end up with, with that?
Interviewee: Well, 25 grand. It just becomes… You can’t look at it what percentage of the business. You look at it as a valuation issue.
Andrew: Hmm-hmm.
Interviewee: So if the company’s valued at a million, and you don’t get that literal on the way, and it sells for 20 million, then your 25 grand is worth 20 times the amount of the money.
Andrew: I see.
Interviewee: So I never look at it as what percentage of the business I own. And I think most of the great VCs say they don’t look at it that way, although most VCs really want to get 15 to 20 percent of a business, at least.
Andrew: Why invest in all these companies, instead of just start your own, and put managers in place, who are going to be able to guide it?
Interviewee: It’s a good question. I mean it depends on, you know, I just don’t want to start a business to start a business. With financial, I feel like I have an edge. And so that’s why I continue to invest in this one space much more heavily than with 25 grand. WallStrip, I put a lot of time and money into MyTrade, which we bought the domain name and sold to Ameritrade the year after. And then CoVestor. We just made an investment in a company called Y-Charts.com. So, we’re piling in, trying to fill a niche, which is this financial web niche. So, I agree, I think if you have an edge in an industry, you should be like focus. If you’re good at poker, what the hell are going to learn in Monopoly? Play poker. If you could play poker for a living, in the financial web, I feel like I have an edge. And I wrote about it last week, it’s like, I went to Y-Combinator and TechStars, and I’m like… I’m not a venture capitalist, and there was like 50 venture capitalists in the room. So, I’m never going to compete at that level. But who wasn’t in the room was YahooFinance, Motley Fool, street.com, Bloomberg wasn’t there, Reuters wasn’t there. So, that’s my competition theoretically. And they’re not there kicking the tires of all these web start ups, right? And thinking about how those tools could be built into [??] companies. So you go look at the site of thestreet.com, which is a mess, right? It’s just bolted on. They take all these products after they’re successful, Twitter, and they just put a button on the site. But it’s more about the social DNA. So, at StockTwits or if you really want to build a business, you got to understand, you got to build your site and your business, the DNA has got to much different than it was 10 years ago around the web. Your site’s got to be light, it’s got to be able to pull in video. It’s got to be able to do all these things like bing, bang, boom without 10 programmers. So, that’s the advantage that we have, and tha
t’s the advantage that you want your entrepreneurs to have in their space. They’ve been there before. They understand the model. They understand the people that it will take to get them to the goal line, and then they understand how to do it fast. Fast is really important as well.
Andrew: And when you’re going off to the show, to the show off days at Y-Combinator and TechStars, you’re looking for potential partners or are you looking for future acquisitions, or are you looking for ideas that you can integrate with or without those start ups?
Andrew: …without those startups. What are you looking for?
Interviewee: I think you could do this. Those are the exact same three things that you’re looking for.
Andrew: Hmm-hmm.
Interviewee: First of all, you’re always hoping that Reuters and Bloomberg aren’t there, so that you can breathe. And they’re never there. But, and they can afford to pay up, remember. So in their world, they’re like, “All right. We’ll pick which ones are successful.” Right? And that makes sense to them. What are they going to invest, you know, $250,000. But you know, you want to fish where you have a chance of catching fish. So when I go to these events, it’s like I take to the CEOs that I think their products, in our niche, would add value to our community. So, and potential acquisitions, as well. But features, you know, built-ins, exclusive licensing deals to products, that will help, you know, build the Stock Twits communities, branding, all those things.
Andrew: What have you done so far with one of these younger companies?
Interviewee: Well, with Chartley, it was just like… Tim called me up, and he said, “I’ve got this great idea. You guys should come. You should do this.” And I said, “You know what?”
Andrew: This is Tim Sykes.
Interviewee: Yeah, Tim called me up, and he said, “Well, you know, I can’t believe you guys are doing Chartley”. And I said, “I can’t believe you ever built it for me. I’ll give you, you build it and we’ll buy it.” And so he hired a developer, and he built Chartley, and we bought it. So that was something that, you know, like why we have our roadmap, and you can really mess with your developers, if you take all this time to build a roadmap, and then start changing it the minute you’ve got it. And I wrote this morning that roadmaps, you know, I believe roadmaps are meant to change, but a good CEO will pluck out things and say, “You know, I’m not going to take two weeks of development, or three weeks of development, to make this, and stall everything off. You know, if I can get the right price, and have someone code and design it right, I’ll just pay the money, and bring it in. Speed matters. So you’ve got to value the speed versus the cost, and the disruption to the staff, and your employees, etc.
Andrew: I see. Let’s see what else we could talk about here from what you’ve done so far. LifeLock. LifeLock doesn’t seem to fit in. I’m looking at the list of companies that I’ve got here. They’re social, they are high tech, not high tech, but internet tech, and then you’ve got LifeLock. How does it fit in?
Interviewee: I think, here’s the thing.
Andrew: And by the way, I love the company. I’m not putting it down. I’m just saying ‘how does it fit in?’
Interviewee: You’re the only one. I mean, there’s a company that for a young company, is pretty hated as a brand. But here’s the thing. LifeLock is actually my bread and butter. I love investing in businesses that have revenue. OK, if you look at my successes, rent.com, golfnow.com, LifeLock, limos.com, and StockTwits.com, they were all built with, WallStrip was really the [outlyer]. But they were all built with the consumer web, not the social web. So, in GolfNow, when I invested in GolfNow, they were already the aggregator of last minute tee times. Rent.com was matching buyers and, it was a transaction consumer web business. LifeLock, although not first to market, had customers, had a marketing strategy, right? I mean, these are the ones you make money in, like LifeLock. When I invested in LifeLock, first of all, it was the third person to the market. And so what I learned as a small investor who wanted to do bigger deals is, make sure I wasn’t investing the first business in that space. So, in LifeLock, there was already two Venture-backed companies doing identity theft protection on the web. So, I loved the idea of it, so when I Google searched identity theft, LifeLock came up. I clicked on LifeLock, Phoenix, a Tempe based company. And I just cold called the CEO, and I said, ‘I just got to invest in this space.’ He says ‘well, we’re raising money’, and he dropped off a business plan in my mailbox at my house, and it was a 10-page business plan. To this day, it was the best business plan I’ve ever read. If you read their business plan today, it was the same exact business plan as in 2005. We’re going to get Howard Stern, we’re going to get Rush Limbaugh, and we’re not going to use web marketing other than banner ads. We’re just going to pound away in old line media selling our brand. And [hi Kim], that’s my daughter just walked in. Kim, going to, is my friend there?
Kim: Hi. Is that you?
Interviewee: Say hello.
Kim: Daddy, can I borrow a [??] I didn’t know if you’d mind.
Interviewee: Use the light.
Interviewee: Yeah, but use the light. You’re accident prone. Use the traffic light.
Kid: Wait, so I’m on with you.
Interviewee: Yeah.
Kid: Oh.
Interviewee: So come back. I’ll see you in a little bit.
Kid: Oh, OK.
Interviewee: OK, that’s what happens in Coronado.
Andrew: [Laughs]
Interviewee: So when…
Andrew: Dan Blanc in the audience loves that. He’s saying, “This is great”.
Interviewee: [Laughs]
Andrew: It’s reality.
Interviewee: My office in Coronado is a block away from the house. So…
Andrew: Where’s Coronado?
Interviewee: It’s the furthest western part of the United States, so it’s just over a bridge outside of San Diego. It’s a long one.
Andrew: I see. And it’s a little island?
Interviewee: Yeah.
Andrew: Oh really?
Interviewee: And it’s me and like 5,000 Navy Seals, so we kick ass over here.
Andrew: And incredible internet. This is some of the best internet I’ve ever received.
Interviewee: Yeah, well this is a pretty high-speed office now. So I think we were talking about LifeLock.
Andrew: We were, yes.
Interviewee: I love consumer web companies. All the other stuff, like Bitly and TweetDeck, are more products, not… And so I haven’t proven much success in the products phase. All right, I definitely, unless I invested very small amounts. But with LifeLock, I invested a lot of money, a lot of my friends’ money. With GolfNow, we did four million dollars. With Limos.com, we did two million dollars, our group. With Polaroid, it was a 13 million dollar investment by our group. So I like to push the chips in when there’s a consumer, so it’s actually I love those businesses better.
Andrew: I see. And actually, let’s go on to a different set of questions. I see that we’ve got about 13 minutes left in the interview. I want to ask you about Y-Combinator and TechStars, and some of these newer incubator or seed funds. They’re not offering that much money, but they’re offering a lot of mentorship, and a lot of advice, and a lot of support.
Interviewee: Hmm-hmm.
Andrew: If somebody were to say, “I don’t want their money. I just want to put together that kind of support network for myself, so I can build a successful business, and then go out and get funded. How could they do that? How can they piece those pieces, those elements, together?
Interviewee: Well, I mean it’s all about leverage, right? That’s what I call social leverage.
Andrew: Hmm-hmm.
Interviewee: I think you can do it. I think it’s silly. I think when those type of vehicles are available, and now TechStars is in Seattle, Boston, and now we’re going to do one in L.A., I’m actually an investor in TechStars. So…
Andrew: TechStar’s going to do one in L.A.?
Interviewee: Yeah, I’m pushing for one. Yeah.
Andrew: OK.
Interviewee: And…
Andrew: I think L.A. would be great.
Interviewee: I think…
Andrew: There’s such an entrepreneurial spirit there.
Interviewee: Yeah, the problem with LA is getting in and getting out because people hate it, but I think LA is a big city for the web, I agree. So, I think you should tap into all those opportunities, give up a little piece of the company. I believe totally in speed. If you ask me, and it’s a style thing, if I got to give up 5 or 6% of company to go faster at the beginning, I’m all over that. I’m worried about an entrepreneur that says ‘I need to control 95% of this. I want to go my way.’ That’s a red flag for me.
Andrew: But it seems the money is becoming less and less important. It seems like the trend is towards no money at all invested but a lot of mentorship and a lot of this experience. No, you don’t think it will never get to a place where there is no money invested.
Interviewee: You got to have the money. Don’t listen to anybody. You got to raise money. There’s times when going to TechStars or Y-Combinator is wrong, but most of the cases it’s right. Get that money, 40 grand, 100 grand, 150. Get your product working. Iterate, iterate, iterate. You can work on your product, I respect Soren and Chris, and all the successful companies I’ve had, [Golf Now], they iterated like crazy. You can’t make your product perfect. At StockTwits, we got a thousand ideas that will work, but you got to get out there with your features, and then Facebook does this pretty well, too. And then just iterate, but that costs money and you got to pay your coders, and so you need money. I think you got to get that first money in, and you got to match a business developer with a real developer. You got to have two people that are completely opposites. And they better trust each other because they’re going to be fighting often about the code versus sales.
Andrew: What about what the founders, is it the Founders’ Institute? Yeah, that Dale [Arressi] is putting together where he… What do you think of that?
Interviewee: I don’t know him, where is he at?
Andrew: He is the guy who created thefunded.com. He…
Interviewee: Yeah, I’ve heard about him. I heard he’s an interesting dude. Don’t know anything about it.
Andrew: OK, he’s got a, from what I understand, the Founders’ Institute that he put together, I think charges start ups a few hundred bucks and then it gives them all this mentorship and takes a small percentage.
Interviewee: Yeah, I don’t know if I like that model.
Andrew: Because it charges the entrepreneur.
Interviewee: Yeah.
Andrew: Yeah.
Interviewee: I’ve only, because 20 years ago when I was starting, I would spend 500 bucks here…
Interviewee: …when I was starting it, I would spend 500 bucks here and a thousand there to get a meeting, and I never got anything I wanted.
Andrew: What’s the best way for someone to get to see you, or someone like you?
Interviewee: That’s the question. So you cannot believe how many emails I get a day saying, “Hey, I saw you. I’ve got the next Google. Here’s…” And they don’t even send a deck. They just say, “You know, I just need ten minutes of your time”. Well, those are the ten minutes that are really hard for me because I don’t know who you are. You know, I don’t know if you’re smart, or you’re dumb. And I have no plan. So if you’re going to pitch me, I need your quick background, why you’re passionate about this space, what your experience in this space is. You know, send me your LinkedIn profile, I guess. I don’t use LinkedIn, but I’ll do it for that. And then send me like a two or three slide deck of how this product will get off the ground. And then, more importantly, I try and tell people that if it’s just an idea, that it’s just not fair. I can’t. I’m not going to talk you in or out of an idea. But if there’s a website that I can surf, and sign up for, and feel like I can understand, that’s something. And I think, like anything, read my blog, contribute to the community, you know, try the things that I love, and then see if there’s like a fit. Like, you know, it’s not just about money, it’s about style, and about energy, and a few other things.
Andrew: But you would take an email that was randomly sent to you, if it was written the way that you’re suggesting?
Interviewee: Yeah, I get them all the time. And I have TweetUps. Yesterday there was like four people in L.A. that we had dinner with that were incredible, like people in the community. And they have their own ideas.
Andrew: Hmm-hmm.
Interviewee: They’ve never pitched me. But they were pitching me at dinner. So, and that’s great. I mean I’m already at dinner. I want to hear the ideas. So yeah, I do it all the time. But I also do not respond to a lot of emails that just approach me in the wrong way.
Andrew: I see. How can I do these interviews in a way that’s more useful to entrepreneurs?
Interviewee: I think they’re great. I think we should make these like a Friday segment on Stock Twits TV. So I’m happy to run these as a segment. If you want to do a “Pitch Me” segment, maybe, where once a week we have entrepreneurs vote in and pitch us, you know, in a two-way sketch. So we’ve been working on this “Pitch Me” show for StockTwits TV,
Andrew: Hmm-hmm. Hmm-hmm.
Interviewee: for entrepreneurs. I think you’re doing, you’re talking to the right people. I see who you’re interviewing. I think it’s good work.
Andrew: Are there questions that you would want the answers to?
Interviewee: No, I think if you get interesting people and you can engage them, there is no one question. I think there’s always ‘hey, what’s your mobile device? Boxers or briefs? Have you killed anybody? What’s your worst investment? How did it feel?’ It’s a style, I think you have a good style in interviewing. I think some people just can’t do it.
Andrew: Some guests or some interviewers?
Interviewee: Oh, the interviewers make or break it. Letterman is a great interviewer. Jay Leno is a terrible interviewer. So, I never watch Jay Leno.
Andrew: What makes for a useful interviewer?
Interviewee: I think humor. I think you got to be able to make that person laugh or just say stuff that gets that person thinking. I think when they’re set calling for the interview, they got to know who you are. So I think, obviously, it would be smart to create a clip. I don’t know if you have one but maybe a 2 minute roll of the people you’ve had on mashed together. So, when you’re asking for an interview, you say ‘here’s a 2 minute clip of all the people that I’ve done.’ I think that would be a good marketing pitch for you.
Andrew: OK, and you say…
Interviewee: Have you got one of those?
Andrew: Actually, I don’t. I’m not really into video. I’m into asking the questions.
Interviewee: I know, but you got to have a piece. You got to have like your best foot forward. Should be like a 2 minute ‘Best of Andrew’, and a quick montage of who you’ve done…
Andrew: Maybe I could do one with someone in the audience. Maybe someone in the audience will e-mail me, and we’ll put one together. And you got an idea for a show that you’re talking about here? A pitch-me show? Where we get maybe you, do you want it to be just you, or do you want you and a couple of other investors, and we bring on entrepreneurs to talk about their business and you give them feedback?
Interviewee: Yeah, both. I think there should just be a pitch-me segment where people through Twitter can send in their business plans during the week, and we pick one. And they get to live-pitch me and maybe one or two other people. Via Skype.
Andrew: Via Skype. Which is bring them on the way you and I are on right now. Have a third caller in there, they talk, and then you give them feedback.
Interviewee: They show us their deck, and we then we give them feedback.
Andrew: And who finds the people? And who sorts through them to make sure they’re good? Do you have somebody who can help us?
Interviewee: I mean, I have a firm, I have an analyst and stuff, so that’s what we do…
Interviewee: I mean I have a firm, you know, I have an analyst and stuff, so that’s what we do.
Andrew: All right. I’m all for it.
Interviewee: OK, yeah. I mean that’s what social leverage wants to do. And you know, it’s all about screening. You’ve got to look. To get good at this, it’s like stocks. You’ve got to look at thousand of charts to get the two that you really like. And the same thing with business plans.
Andrew: OK, OK, I’ll follow with you on that by email, too.
Interviewee: OK. No problem.
Andrew: One final question. You introduced me to Chris Dixon,
Interviewee: Hmm-hmm.
Andrew: for an interview later on. Do you have a question that you think I should ask him?
Interviewee: Yeah, I’m saying why won’t he change up his glasses and go thin on the rims for a little while? Just change it up.
Andrew: All right. You see.
Interviewee: Hmm-hmm.
Andrew: Done and done.
Interviewee: Hmm-hmm.
Andrew: I’ve got to have you write the questions for me in the future.
Interviewee: Just tell me who your guests are, and I’ll always email you a couple classic questions.
Andrew: But it’s got to all about their pants, their belt, their glasses…
Interviewee: Very.
Andrew: And the way that they pronounce certain words, like “moan-a-tize”.
Interviewee: Well, you shouldn’t ask the question. You should like you just asked me. Say, “Hey, you know, I was talking to Howard, and he had one question for you”.
Andrew: [Laughs]
Interviewee: And that way you can endear it. If you say it, he’s going to be mad at you. But if you say, “Hey, I was talking to Howard, and these glasses, he needs to know. What’s with the thick glasses?” And then…
Andrew: Can I just attribute questions like that to you? Like if there’s a really ballsy, not really fitting with the main goal here of educating people type of question, can I just ask it, and say, “You know, I think what Howard Lindzon wants to know is…”
Interviewee: Sure. What is it?
Andrew: I don’t know. It might be about somebody’s funny mustache, and I’ve been dying to ask them. Or something else that’s not really relevant to business. I attribute it to you, and suddenly it gets a little bit of credibility. Like your hair.
Interviewee: Yeah, like the hair. Someone could call. You would have said, “Listen, Howard, I’m talking to Fred Wilson. And really, what is with the hair?” That way you’re not really making fun of my hair. Fred Wilson is.
Andrew: I see. I got Fred Wilson coming on in a few weeks, too, or maybe actually, it’s next week. What should I be asking him from Howard Lindzon?
Interviewee: Exactly. So, you could ask Fred, say ‘hey, Fred, now that you’re a superstar, how come you won’t return Howard’s e-mails?
Andrew: All right, I will ask him that.
Interviewee: He will laugh.
Andrew: I thought maybe you’d ask him some questions about his shirt or about his haircut…
Interviewee: No, you can just say ‘listen, he has no style, his style is all in his investments.’ But Fred wears the same stuff from the ’80s. He doesn’t care about clothes.
Andrew: All right, I’ll be asking him about that. I’ll say ‘why, why don’t you care about clothes, when Howard Lindzon is such a fashionable guy? Even has the right armband.’
Interviewee: Fashion-ista.
Andrew: Now the other arm. The other wristband.
Interviewee: All right, thanks for doing this with good audio. I feel like I’ve been vindicated.
Andrew: Well, thank you, really. Thank you for coming back on here. Thanks for doing two interviews. And guys, thank you all for watching. I’ll see you in the comments.
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[This interview was done with the help of Giang Biscan, Mixergy’s producer. Thanks Giang!]
