Acquired - Special Episode: Jason Calacanis

Episode Date: April 29, 2020

We're joined by the one and only Jason Calacanis for this very special episode, wherein we chronicle Jason's journey from a kid porter in the barrooms of Brooklyn to building the largest independent media business in tech, becoming the "3rd or 4th greatest seed investor of all-time" (and the original Sequoia Scout), launching one of the top accelerators in the world, and constructing a one-man empire that may just disrupt the entire capital stack in our industry. We dive into how it all ties together, and where the money and power is shifting in the ever changing sands of Silicon Valley...Sponsors:ServiceNow: https://bit.ly/acqsnaiagentsHuntress: https://bit.ly/acqhuntressVanta: https://bit.ly/acquiredvantaMore Acquired!:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Merch Store!

Let me just make a little ad here. Yeah, please. Hi, this is Jason Calacanis for acquired.fm. Is that the domain name, acquired.fm? That is it, yeah. All right, listen. You're listening to this. You're either a founder, an aspiring founder,

an investor, or an aspiring investor. For $100 a year, you're gonna get hours of content that's not available to everybody else. That's also known as an edge. You are in a competition with other investors. You are in a competition with other investors, you're in a competition with other founders. You need an edge. If I could tell you, you get one, two, three good insights a year, even one, would you pay $100 for an amazing insight that gave you an edge against your competitors? Of course you would, you'd pay $10,000. So why wouldn't you pay

$100? Because it's content, you're thinking about it the wrong way the lp program and acquire.fm is not it's not content it's an edge and it's an underpriced edge so buy it for a hundred now before they raise the price to what it should be which is five thousand a year this is jason galacastro acquire.fm see you in the slack how's that for an ad huh you can have that mic you can actually take your mic you can literally have my end you can have my i swear we did not ask him to do that everyone no i just love i love doing thank you welcome to this special episode of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts.

Acquired is all about stories. Ordinarily, we tell the story of a great technology company or a great leader or a great adaptation. Today, we are telling the story of someone who doesn't just have one story. He has a whole anthology across all of those categories, the one and only Jason Calacanis. So just to give our audience a small sampling of all of the enterprises that Jason has started and is involved with across his career. David, I bet you can't do this all in one breath. No, no. Jason has founded four companies by our count,

Silicon Alley Reporter, Weblogs, Mahalo, and Inside.com. Did we miss any? No, those are them. Those are the four. And Inside.com is the same cap tip, which is the pivot of Mahalo. So arguably one. Did not know that. People don't know that.

We'll get into that. Three conferences, three podcasts angel all in and of course this week in startups which is now over a thousand episodes the youtube channel around all of those you were the first sequoia scout you were literally the prototype of the sequoia correct and the and still the greatest returner and still the greatest returner but who's counting it's not a competition, but I won. Maybe some time might have something to do with it. Well, anyway, we'll get into that. You've made over 200 angel investments in your career. You're a blogger. You're an author. You have a newsletter. You started the Launch Accelerator, the venture fund around that,

the syndicate around that. You are the self-professed. We have you on record as saying you are the either third or fourth best angel investor of all time. For sure, yeah. For sure, I'm out Rushmore. Chris Saka, Ron Conway, obviously ahead of me. And then there's a bunch of people nobody knows who did incredible angel investments in Google and Apple, but they don't feel the necessity to put it on the cover of a book

like I did. Speaking of, quote that we want to wrap this up with from your book, most folks think I'm lucky. Some say I'm a complete fraud and a handful think I'm a brilliant hype man. I don't agree with any of them. I agree with all of them. Jason Calacanis, welcome to the show. Big fan of the show.

Thanks for having me on. And David, thank you for doing that intro because your voice is so much better than Ben's. I mean, that is a radio voice you have, David. It's so soothing. And Ben and I are just like scratchy records, but Ben's got good insight. So I'm glad to be here. I'm a big fan of your podcast. Got to have something to rely on, Jason. Exactly the insights. Thanks for joining me. So, okay. Today, probably most people listen to subscribe to Jason on one of these many channels we've talked about. Today, we're going to talk about two sort of less discussed parts of Jason's story. One on the main show here is how Jason has built his whole empire across all these properties and how it all ties together in his mind. And then two, right after this on the

LP show, we're going to talk about what the bigger picture is behind said empire, what Jason's secret master plan is, a la his friend Elon, and why it might represent a wholesale deconstruction of the entire startup ecosystem. So you can click the link in the show notes or go to glow.fm slash acquired. I'm a member. I pay a hundred bucks a year or something. Well, thank you. We appreciate it.

It's worth it. The LP show is like the best parts. It's like you cut the nice, like the ribeye and that's like the best part. It's like the New York strip of the podcast. It's great. Well, we hope that the whole podcast is good, but we appreciate the- The LP stuff is the tightest, I have to. It's great. Well, we hope that the whole podcast is good, but we appreciate the-

Yeah, but the LP stuff is the tightest, I have to say. You guys put the most work into that and people just pay for it. You want good content to exist, pay for it. If only all of our guests were like you, Jason. Okay, listeners, now is a great time to tell you about longtime friend of the show, ServiceNow. Yes, as you know, ServiceNow is the AI platform

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by clicking the link in the show notes or going to servicenow.com slash AI dash agents. So Jason, you've talked a lot about growing up your childhood. So we'll do that briefly here. You're born in New York, right? Brooklyn. Brooklyn. Yeah. You know, when you come from New York, you don't say New York, you say, not only do you say the borough, you say the part of the borough. So I'm from Bay Ridge, which is literally the last stop on the train. Love it. Tell us a little bit about your family and what growing up was like for you. Yeah, I grew up in the 70s and 80s, which was a fantastically interesting time to grow up as a young person. We were free range kids to the extreme. And Brooklyn was not hipsters back then. It was working class and connected guys and the Hells Angels and cops and bookies. And it was a

little bit more rough and tumble. My dad owned a bar. He was essentially the mayor of Bay Ridge in a way. People loved my dad, John the Beard, and they loved his bar. And I worked at his bar, my two brothers and I, my older brother, my younger brother, Jamie and Josh, from a very young age. My mom was a nurse and she ran the emergency room in Brooklyn at Victory Memorial Hospital and then later ran the ICU. She's a nurse practitioner and she's got, I think, three graduate degrees. So I had this amazing, hardworking mother doing three or four jobs, had this amazingly hardworking dad. And it was a blue collar lifestyle. We owned our house, but barely. We were always living month to month. But there was a lot of love and a lot of craziness growing up in a bar. I literally grew up in a bar and made espresso for mob bosses,

made baked clams for Tony Bennett, would go get cigarettes for the Coke dealer, would put bally's in cappuccinos for police officers in uniform coming in at two or three o'clock to have a steak or burger because my dad would let them come in at any time. It sounds like not just a bar. This is more like a pub. It was a pub, exactly. It was kind of like a pub. And the cops would come in anytime they wanted,

but usually they come in between lunch and dinner. And my instructions were just give them whatever they want and just charge them 10 bucks each. And they would proceed to drink four or five Irish coffees each. Did they order them as Irish coffees? Yeah. No, there was the wink and then there was the wink. You know, they were in uniform, so they just wanted to have a cup of coffee.

Hey, kid, give me a cup of coffee. And whenever I got the bookie, Artie Maresca, or the guy who dealt cocaine his pack of cigarettes or whatever. They would just say, here's 20 or here's a 50 sometimes or sometimes even 100. Go give me a pack. Give me two packs of Marlboro Lights. I go out and get two packs of Marlboro Lights. It was $2 or $1.50 a pack. And they'd say, keep the change.

This is like the Brooklyn version of Bob Iger's story with the chairman, Frank Sinatra, going out and getting a mouthwash. Exactly, exactly. And so I basically got exposed to commerce at a very young age, and I became very interested in power and money, perhaps too interested in it. My first real job was a guy owed my dad like two grand he had lost playing backgammon to him. My dad used to have a backgammon in a poker game. When the bar closed at four, the fun began from four until seven or eight in the morning. They had after hours, which was mainly cops and Hells Angels and mafia guys and hippies. All playing together. Yeah, yeah, yeah. And I would come and I would do the porter work at 7 a.m. So I would come and

sweep up the place on Saturday and Sundays when I was 10, 11 years old with my grandfather, rest in peace. And we were the porters, fancy way of saying janitors. And my dad would be there playing cards or whatever. Anyway, this guy got, he was in for two grand, too large to my dad. And he couldn't pay. And he needed a little time. So my dad was like, that's fine. He said, here, I know the kid likes the Star Wars. Here's the Empire Strikes Back. And Empire Strikes Back was in the theaters. And he handed my dad a VHS tape. And my dad had gotten a VHS player that had fallen off a truck. This is before Blockbuster, obviously.

This was like 1984 or something. I don't know, 85? No, 83, 84, something like that. They were just starting to have video rental stores, but something like Star Wars would never be allowed there. It may become five years later. Anyway, long story short, I was like, this is incredible. I have Empire Strikes Back.

And I had my friend bring his VHS over and I made copies of it. And my first job was Jason's Hot Tapes. I would make copies of the Empire Strikes Back and sell them for 20 bucks. I thought you were going to say you started running screenings. No, that would be a better idea, actually. But anyway, it was before Jason learned about marginal costs. Exactly. I was like, wait a second.

How much does a VHS tape cost? My math teacher says, hey, Calacanis, stay after. I'm like, oh, God, I'm going to get pinched. And so he says, I know you're selling this tape. I said, yeah. He goes, you think that's an okay thing to do? And I was like, no, I probably shouldn't be doing it. He's like, do you have these tapes with you? And I said, yeah. He goes, you think that's an okay thing to do? And I was like, no, I probably shouldn't be doing it. He's like, do you have these tapes with you?

And I said, yeah. He goes, how much are they? I said, they're 20 bucks. He said, okay, I'll take one. And I said, here, it's on the house. I gave him the tape. So it was literally, I mean, when I saved my life, I was watching Goodfellas.

I was using this Chrome extension called Scener that we invested in to watch Goodfellas with some fans of the show. And I just tweeted. It's like group viewing. You know, like there's Netflix party and there's a Scener. So now that everybody's home, you can watch Netflix with your family, whatever. So I put on Goodfellas. And I was just watching this kid growing up and I was just having flashbacks. I mean, literally my life was like the first act of Goodfellas.

Well, Jason, I'm going to deviate from our little outline here a little bit. But like I know you're a prolific poker player. Like I don't know if semi-pro is the right word, but you play with pros. You're friends with pros. Yeah. A lot of your investing patterns sort of match poker patterns. Informed by, yep. Yeah.

So did that start here? When was your early poker game? I was exposed to gambling at a very young age. I didn't participate in it. My exposure to poker came when I was in New York. A friend of mine, Adeo Ressi, who started the Founders Institute, just started a $20, $30 poker game. And myself, Scott Heiferman from meetup.com, Nick Denton had come to a couple of games. Jeff Dodge is from Razorfish. And now One Drop, which I'm an investor in. Just a bunch of like the Silicon Alley folks would play cards and I'd play cards with them. And it was like one of those card games where people said, what's better, a straight or a flush?

And somebody had to like look it up kind of thing. Yeah. You have the little card next to you on the table where you're sort of referencing it. Yeah, literally. That was like that. It was just an excuse. And we used to play down at a place called Forlini's, which is still down in Chinatown, which is like an Italian restaurant. I'll leave it at that.

And we used to play in the back. But then when I moved to L.A. and I spent a decade in L.A., a lot of my friends, like Sky Dayton, was playing cards. And my friend Kevin Pollack, who I was friends with, the actor, he was playing cards. Those games were $200 buy-in or $500 buy-in, so you had to be a little more serious about it. And then I, you know, the stakes started going up. I tried to study the game. I was terrible at it.

And then I started getting invited to this game. This woman, Molly, kept inviting me, and she'd be like, oh, Toby really wants you to come to the Four Seasons, and Leo really wants to see you. And I was like, Toby and Leo want to see me lose 20 grand. Like, they don't want to see Jason Galagadis. So I never went to Molly's game, but she invited me frequently because I was a fish for a while, as we say in the business.

But yeah, that's when I got exposed to it. And then one of the early D conferences, myself, Bill Gurley, Mark Pincus, and Sky Dayton were all there. And we said, hey, you guys want to play cards? And we went up to, I think it was Mark Pincus' room. We just took the folding table. We started playing cards. And then we started hosting this game at the D conference, which later became Recode. It became very famous, this poker game. And then we have a weekly poker game that everybody knows about here in Silicon Valley. You know, it's just my best friends and Phil Hellmuth and Draymond from the Warriors, Chamath, obviously, and David Sachs.

Just a really good group of guys who get together. And we've been playing virtually now, which is kind of fun. And now you have a podcast around it. Well, Chamath was just like, Chamath was one of these guests on my podcast who he just burned the building down and he nobody really knew who chamath was until he came on my podcast and um you know we started having him at the events and then cnbc got their hooks into him and now he's just like throwing bombs for a living well i'm sure he gets like just incredible page views whenever he goes on cnbc and yeah it's just a problem for me though

because he's like let me come on your podcast and just say everybody's a fraud in venture capital i'm like i know you made your money and you're retired and running a family office now chamath but i i'm raising funds right now yeah doesn't really help me to have you on the podcast saying that this is a giant ponzi scheme and he's like literally pouring gasoline over himself, lighting himself on fire. And I got to like step six feet back to burn the building down. This is great. Because this is the perfect segue into the media business.

Yeah. So you go to Fordham. Yeah. Was it right after Fordham? At night. At night. You start as a reporter. So what draws you into the media business? Because my mind this is the this is the well obviously you're growing

up years and everything you know with that shaped you then but starting in the media business is the wedge that brings us all to the Calacanis empire now yeah so this is a very interesting thing what happened was you know I I would go into Manhattan I was just in awe of the people in Manhattan and people who were rich or famous and who were powerful because I had no power growing up. And I was in a very dangerous situation. And I was watching people who were powerful. And I was like, okay, the book is very powerful. The Head of the Hell's Angels is very powerful. This cop is very powerful. I am not powerful. My dad is powerful. He's got all these people in his bar. And I was watching money go around, and I was just fascinated by these topics, probably too much. And I saw magazines,

and magazines are how information was really transferred in the 80s and 90s. And so I just started subscribing to every possible magazine. In the 80s, I got all the PC magazines and Bytes and all that kind of stuff. And then I started, you know, Esquire, this paper magazine, Time Out New York. So you were kind of a geek even back then. Yes. It wasn't just that you were like, you know, reading Esquire or like The Source or whatever. Like you were reading the tech blogs.

I was reading all the tech stuff and I was really into technology. I had a PC Junior computer that my dad had bought me with cash from the restaurant or a Parker game. I was doing a little phone freaking, which is like getting phone codes. Anyway, I was involved in a bunch of scams. Yeah. Well, the phone freaking thing was kind of scary because the way Sprint worked in the early days is you just dialed an 800 number and then it asked you to put in like a five or six digit number

and then you either got a dial tone or it went, it doesn't take a genius to figure out if you put up a war dialer, which is just a random dialer on your modem that dialed all these different random numbers in the morning, you'd have two or three codes. So then you start using somebody's code

until it got turned off. And so we were doing all kinds of scams and stealing floppy disks and selling chess master. Anyway, I got out of all that and I just went into IT. And so I worked in the computer lab at Fordham. I was making $2.50 an hour, which was the minimum wage in 1987, I think. Then I went to $3.50. Then I got fired from that job because I had partitioned a hard drive and created a hidden hard drive where I put a bunch of video games.

And I was selling video games and work perfect. So you're entrepreneurial. Well, yeah. I put a bunch of video games and I was selling video games and word perfect. So you're entrepreneurial. Well, yeah, I was a criminal. I was selling word perfect out of the Fordham computer lab and I got busted. And then I started selling SPSSX or whatever that's called, like the 10 disc, like $400 statistics package. And this is like a really bad idea because now I'm 17, 18. It's starting to get worse than Star Wars tapes.

It's a little bit worse than the Star Wars. So I stopped all that and I realized I could just make six or seven bucks an hour. Then I went to work for Amnesty International. I started making 10, 12 bucks an hour doing IT. And IT just opened my eyes to like, whoa. And I saw the internet early. I saw modems early.

And it really opened my eyes. And then I thought, maybe I'll write a book or whatever and then i was watching this this zine movement had happened z-i-n-e and so zines meant you published on photocopy paper and you called it a magazine and in tower records they had a section for zines and i used to go there and look at these crazy zines and 2600 was one of them in 2600 they would just self-print it self-publish it and it was just hacking stuff right is that named after like 2600 bod yeah it hurts yeah i think it was hurts which is i think

the when captain crunch made the whistle that would then give you dial tone i think it was the 2600 hertz we can look it up online while we're here but anyway they used to always meet in manhattan in the city the city bank building in the lobby where the phones were. And there was a sort of culture in New York of hacking and media at the same time. And I started a magazine called Cyber Surfer about dial-up because somebody had told me that Starlog and Fangora, that magazine wanted to create a magazine about CD-ROMs and dial-up. So I started Cyber Surfer magazine, which nobody knows about. And I got in a fight with the publisher after five issues. He sued me because I had trademarked the name. He didn't know I trademarked the name. I had no contract with him. I was 23 years old.

Whole thing blew up. And then I was like, the Silicon Alley thing is going to become something. So I started Silicon Alley Reporter as a 16-page photocopy. And Fred Wilson bought the first ad in it, along with Jeff Datchus from Razorfish. No way. He bought an ad for Flatiron? For Flatiron Partners, $250. And he bought four ads at once. So he gave me $1,000. Wow. Advertising their services as a venture capital. He just put the logo, Flatiron Partners. And this is 1995. I got two people to give me $1,000. I printed it up. It cost $2,000. And I just started handing it out at parties and i didn't understand how silly i looked walking around town with a luggage cart like i was like a street salesman with a stack of photocopies and i would drop them off at everybody's offices because once i got like

a thousand copies of this i didn't have the money to ship it anywhere so i would go to razorfish's office i would go to site specific i would go to i village i would go to Razorfish's office. I would go to Site Specific. I would go to iVillage. I would go to all these places and ask them if I could put 20 copies in the reception area. And they'd say, sure. So you're going to these early internet companies. Dropping it off. And they would say, oh, you're dropping it off.

And I'd say, yeah, I'm the delivery boy. And they'd say, oh, that's very cool. I said, I'm also the editor. And there was a joke in the magazine. I put CEO, editor, and delivery boy on the top. And what it was was it was like quite charming to people that i believed in it so much that i would carry it with me and then people also thought i was like this is why when people say like they think i'm

a hoxter or a hype man or a fraud people thought that back then because i would go to parties with a stack of them in my hands and i'd be handing them out to anybody who would take them because i just wanted to be famous i who would take them because I just wanted to be famous. I just wanted to be powerful. I just wanted people to know my name. It's so interesting because it's so akin to the early days of blogging. I mean, it's just analog blogging where the, I'm sure any real publisher was looking at this like, oh, it's some kind of joke. I can't believe you're calling yourself a zine. Like it's not a magazine. You know, this is like- It's literally what people said to me.

And I said to them, no, I have a full page photo on the cover that's what makes it a magazine they said no it's a newsletter i said no newsletters have text on the cover of the magazine this has a full page photo and then a guy named carol martesco emailed me because he saw the email in there um and he said hey i do this magazine i'll call res and i do this filmmaker magazine. He was doing filmmaker magazine, et cetera, and he knew how to do magazines, and he was like 10 years older than me. And he said, I can print this on real magazine paper for you. I said, how much did it cost? He said, it's going to cost $30,000. And I said, well, I have like $20,000 in ads now.

This is by the fifth issue. And he said, don't worry about it. I can put it on my credit. I know the person. He printed it for me just for free, just to do it for me. And then he's like, do you have the money? You have to pay the printer. And I was like, yeah, I got to collect the money from the advertisers.

And so then I went around and just asked people to give me the money. And I would bring them two or three grand. Thank you, Carol Martesco. Shout out. I was still friends to this day. And he basically mentored me on how to do that. And then at a certain point, my assistant, Linda Miller, said, Jan Wenner called. And I said, OK. He said, Jan Wenner called. And I said, okay.

He said, yeah, you know, from Rolling Stone. And I was like, yeah, it's like year two of the magazine. I was like, okay, great. And then I went to lunch, and then she came back. Did you call Jan Wenner back? And I was like, no. I was like, I'll call him tomorrow. I come back the next day, and she goes, did you call Jan Wenner back?

And I said, I don't want to do any press right now. And she goes, no, no, he's not a journalist. John Wenner created Rolling Stone. And I said, oh, he wants to meet with you. And so I went up, I met with John Wenner, and he had all my magazines on his table. And he said, hey, I want you to come work for me and do a magazine with me.

I want to do like a digital version of Rolling Stone. And I said, no, I want to do my own thing. And I was up in his office, and he had marked all the pages. So wouldn't that have made you famous? Like, why wouldn't you do that? I also realized, I know, realized I would be a number two.

And I never wanted to be number two. So it's about the fame and the power. Or it was in this era. Fame, power, money. Fame, power, money. That's all I wanted. I just wanted to have fame, power, money. All of those things.

And I just like, number two, no. And then all of a sudden I became the king of New York because the internet hit. Magazine went to 75 full-time people 12 million dollars in revenue i built it off my credit cards i was on charlie rose i was on the cover of the new york times and in three four years i went from being a nobody to writing for paper magazine and when i would walk into any club or whatever people knew what silicon eye reporter was and i could get into any party and then i made a list and ranked the top 100 people in the industry, and I ranked it just to tweak people. Then people would beg me to move up

10 rankings, and I got everything I wanted. Power, the minus list is still doing that to this day. Yeah. I did my first event in 1995 called Ready, Set, Pitch. You can look it up in the New York Times. There's an article about it, Ready, Set, Pitch. And it was just, I asked people to pitch their best idea for a startup. And Ted Leonsis gave the keynote. So it's pretty funny. As you're getting all this power, what's going through your mind? Like, are you already starting to think about?

More. Are you thinking about, I parlay this into investing or I parlay the X? I want it to be the next media mogul. I wanted to be Eisner. I wanted to be like Iger. I wanted to be- Ovitz. Ovitz.

I wanted to be somebody like that because media was the power back then. It wasn't really about the tech companies. The tech companies were kind of like this cute little thing on the side. This is AOL. This is Time Warner days. This is- Yeah. That's what I wanted to be.

I wanted to be one of those media executives and be the CEO of a giant media company. Barry Diller, someone like that. So you end up selling Silicon Alley Reporter to Dow Jones, right? Yeah. It kind of collapsed and we wound up selling. I got two years of salary. But the year before, Alan Mackler from Internet.com had offered me $20 million for it. And I owned like 85%, 90% of the company. So it was like the, one of the most difficult times of my life because I had my chance to be rich.

And then I was poor again. Was it the.com crash? Yeah, the.com crash. And then 9-11, and I was there for 9-11. My brother's a firefighter. We didn't know where he was. That was the second fire he ever returned to. So it was a very scary day for me. You know, after 9-11, I was kind of left with this, oh, everything is a fraud. Everybody thinks I'm a fraud. Everybody thinks I got lucky. You had all this power. And it was gone. It was gone.

Did it disappear? Did it really disappear? Well, you know, it really was trying for me because everything I had done had gone up into the right and everything I touched turned to gold. And then when you have the Midas touch and then you start touching stuff and nothing changes, it really is humbling. It's literally like you go from feeling like you're Superman and then you can't fly. And you're like, what's going on? Is a kryptonite in my shoes or something? And it was a very humbling experience for me and And it made me really angry. I remember vividly, I just felt very angry at the world and at myself for not taking that 20 million. So it wasn't just angry about what was happening. It was like you were specifically

angry about passing on that deal. I was angry at passing on that. I was angry that the market collapsed. I was angry about 9-11. I was just angry about everything. But I also had skills at that point and confidence. And so I said to myself, I am coming back and I'm going to come back and I'm going to dunk on everybody. And I will show everybody that not only am I not a fraud, that I can do this again and I can do it quicker, faster, and better. And I started looking for an idea. And I was studying and studying and studying. And two people who worked for me after the whole thing collapsed had moved on and started blogs. And they were doing really well with their blogs.

And one of them was Rafat Ali, who was doing this paid content.org. And I had admonished him because he started it when he was working for me. I was like, listen, kid. I didn't realize Rafat worked for you. Yeah, he was one of my writers. I think I was his second job. He had worked for Inside.com and then for me. And he had owned the Inside.com domain at one point so there's a whole sordid history there

of who got to own inside.com at the end of the day i could tell that story too at the end but uh anyway i was like and then shenny jardin went to work at boing boing and i found out they were both making like four or five grand and i was like wait a second that's like kind of what that's more than i think that's more than what I was paying you per month, per month. Just on ads on their blogs. Exactly. So I was like, wait a second. These people are working in their underwear.

They have no editor. And it dawned on me, the right writer and editor is a hindrance. They're taking out what's special about what the person said. This is like taking out the production. It's bob dylan just on stage with a guitar it's better when it's not produced it's better when it's acoustic and there was that thing that was going on um mtv had unplugged and i said this is mtv unplugged for journalism blogs it just clicked in my mind clear as day when you saw kurt cobain on mtv unplugged you wanted to throw the other records away that were studio produced and i said blogging is going to be a thing so i started looking for other blogs and

this i knew this kid nick denton who started first tuesday and he started gawker i said hey nick you know want to have lunch? We went for lunch. He said, I'm thinking about doing a blogging thing. I think this could be big. If somebody did it for business, it would be huge. You're doing this Gawker gossip thing. I'm not interested in that. But if somebody did a business version and then he wrote a blog post and he said, the

worst thing that could ever happen to blogging is Jason Calacanis bringing his unique brand of like whatever to it. Corporate sellouts. Well, that's what he said. Because I was like, you know, this would be an advertising juggernaut. Cause think about it. You get rid of all of the, you get rid of like 80% of the staff.

You just have the one great writer and one great salesperson. Did Valley wag exist at this time yet? No, no, no, no, no. Valley wag.

He created much later. It was just Gawker. I mean, like I've worked at the wall street journal. I mean, you did too for a while. Like there, you know,

it's a wonderful organization. There are a thousand people in that building. Yeah. Like, you don't need that to do this. No, you don't need a building. Yeah. You don't need middle management. I mean, you don't need anything.

So I was really taken by Denton's vision for this. And I was like, are you going to do more? And he's like, yeah, we're doing this. We're going to do a political one, I think. And we're going to do this one on gadgets. Like, you know, like the fetish thing in Wired Magazine. magazine we're gonna just make that into a whole thing and i was like oh that's interesting so he writes his blog post trashing me and i was like you and so you know like i'm a pretty aggressive guy and i was like so my partner brian alvey

who i convinced to do this with me this is was 2003. None of us had any money. We're doing it all for free. The economy was flatlined. I said, I'm going to destroy him. Which it turns out you were not the last person to have that thought. No, no, no. I was not the first. I might have been the first, but not the last.

I said, I have to destroy Nick Denton. How am I going to do this? And I said, oh, I know, talent. There's nothing worse than losing talent. Elizabeth Spears, she's writing Gawker. I'm going to make a run at her. And I had heard that he was paying the writers $1,500. And the MacBook Air had just come out. I contacted Elizabeth and I said, let's have coffee or whatever. And she agreed to have coffee or something. And there's like a photo of it actually of me talking to her at a bar that somebody took in the early days. And she's looking at me like I am the Antichrist.

And I was like, you are a unique talent. Nick Denton will never give you equity. I will give you equity. You will become a millionaire. I'll give you a MacBook Air and I'll give you two grand a month, which is a 33% more raise. She was like, yeah, no, I'm going to go work for New York Magazine. And I was like, that's the worst career move you could ever make, Elizabeth.

Magazines are going to die. Blogs are going to take over. There's no way magazines can ever keep up with blogs. Whatever they print is going to be old news and you're already proving it. You're number one at blogging and you're going to become number 500 at a magazine. So she wouldn't do it um and

then shenny jardin said to me oh you picked the wrong target i was talking to her because i was trying to recruit her and she's like no no i love this boing boing thing i don't want to do anything commercial i was like all right that's fair enough i said who should i target she goes oh you picked the wrong target i said what do you mean oh nick's not making any money on gawker gawker doesn't make any money loses money i was like okay tell more. She goes, 100% of the revenue is coming from Gizmodo. I said, oh, okay. He goes, do you know Peter Rojas? I was like, yeah, I've heard of him. He's like, that's the one you want. So I went to Peter Rojas and I called this guy I knew who was running Jewel Baku, which was like a fancy sushi place on the Lower East Side. And he was the owner and his wife. And it was like a pretty hot ticket.

And I asked Peter to come have sushi with me. And his wife, Jo, or his girlfriend at the time, she says, can I bring my girlfriend? I said, of course. We go there. And I'm prepared to knock their socks off with his omakase. And I said, you guys have anything in terms of dye?

And they're like, we're vegans. I said, OK, yeah, that's no's no problem i said give me one second i go back to the guy i said listen this is i'm trying to close this deal it's like this is really important like they're vegans he's like don't worry about him right back he runs to the korean grocery on the store he comes back with two big shopping bags full of things and he makes them the most amazing omakase with vegetables yeah and so i said to Peter, I said, Peter, you know, Nick Denton is a bad actor and equity is what you need. And if you join me

and you create a Gizmodo killer, I'll give you equity in the company and you will become a millionaire and we'll be in it together. You'll be a partner. And he goes, well, Nick said he's going to give me equity. I said, he'll never give you equity.

When did he tell you that? He told me that like six months ago. I was like, yeah, how's that going? I said, I will give you equity on day one, fully vested, everything, just like me. And he said, okay, let me think about it. And he came back and he said, okay, I'll do it. I said, great.

This is so great, because by the way, at this point in time, this is, I'm probably 17, 18, 19 years old at this point. I'm reading Gizmodo every single day. And I always wanted to know what happened. How did Engadget become better? I never knew. Yeah.

This is the story. And he says, oh, my girlfriend Jill made a logo. And Jill made the first Engadget logo. I was like, great. He said, can we pay her for it? I was like, sure we can. And I was like, what does she charge for a logo? And he's like, 300. I was like, give her 500. It's fine. Because Mark Cuban had given me $300,000 for 15% of Weblogs Inc. How'd you get to know Mark? I had no mark because I had written

broadcast.com is a billion dollars worth of hot air in Silicon Valley Reporter. And he blew a gasket. And I said, well, your revenue is like 10 million. He's like, do you know what the revenue is next quarter? I was like, no, you're a publicly traded company. Of course I know. And he's like, well, why don't you wait? And then revenue went from 10 to like 60, you know, like quarter over quarter.

And I was like, okay, it's not a billion dollars in hot air. And I did a mea culpa kind of situation. And we became good friends, Mark and I, for a long time. And he put 300K in. We started Blog Maverick for him. Brian Alvey came up with the name brian brian alvey came up with all the good names the best collaborator i've ever had in my life and uh and peter and uh so peter said listen you know i just i feel really bad about this stuff

with nick danton i said you shouldn't feel bad this guy promised you equity and he gave you nothing and you've given him this incredible brand that's going to become worth millions of dollars you should feel zero guilt he he robbed you of your vision and we're going to take it back and he's like yeah yeah you maybe you're right and i was like yeah because listen i i've been in fights and you know if somebody takes a swing at you like somebody gets a if somebody sucker punches you uh you have to teach them a lesson um so they don't do it again because if you don't teach them a lesson, what I learned is they will come back. It has to be such a beat down. It has to be so painful that the person says,

I should have never punched that. I should never sucker punch that guy. That's how powerful the beat down has to be. It can't just be retribution of one for one. If they punch you, you have to annihilate them this is what i learned about violence when i was growing up and i've since disavowed this but this is literally what i saw on the streets of brooklyn in the 70s and 80s so i said uh when are you going to tell nick and he said well he's you know he's been working so hard for like a year or half or

whatever and he's just burnt out he's been working seven days a week on this and he said he's going to take his first vacation i said oh really he's like yeah and he's like a year or half or whatever, and he's just burnt out. He's been working seven days a week on this. And he said, he's going to take his first vacation. I said, Oh really? He's like, yeah, yeah. And he's going down to Brazil or whatever. And all these famous people are going,

I was like, when is he going? He's like, he's going Sunday. I was like, Oh, what time is he leaving? I don't know what time he's leaving.

I said, okay. Oh, I looked up online, like flights to Brazil or whatever. I couldn't kind of figure it out. And I was like, all right,

well, listen, I want you to write a blog post about this. We're launching the site at 2 p.m. on Sunday. And we literally launched the site the first day of his vacation. He landed with his people going, Gizmodo has no blogger.

We have all these advertisers, and there's a competitor. Oh, my God. And that was the approach I used to take to competition. I don't do that anymore. Well, by the way, and the postscript to that is Denton and I became very good friends after that for a long time and still are.

And I consider him one of just the great publishers of all time. But you can't graze over that. So how do you become friends with someone after that? Oh, he reached out. He reached out afterwards. He wrote a blog post actually saying, you know, Jason really stuck it to me, but we're going to be great competitors. And then I launched Joystick, and then he launched Kotaku. Then I launched Autoblog. Then he launched Jalopnik. And when we were head to head, we always had three, four, five times the traffic as him. But it created this rivalry that everybody followed. It became Coke, Pepsi. It became, oh yeah, pick media company

versus media company. And everybody was following this great competition between this brash Brooklyn kid and this aloof, you know, quiet. It probably made you both better. Oh, I mean, it's incredibly much better. But, you know, it was like literally this like quietly gay, you know, very understated Brit versus this brash Brooklyn bulldog. And it just played really well in the press. And you can, if you type Denton Calacanis into Google and look at some of the posts from back then, it's hilarious. And it was just a good time.

But he reached out to me and he said, listen, I think we should have a, you know, Jason, respect, respect for what you did there. I understand, you know, Peter, best of luck with Peter. And, you know, we went for a cup of coffee or whatever. And we're sitting there and he said, I have a proposal for you. And I said, yes. He goes, I think that if we're going to have this spirited competition, that's great. Good for the game and all that.

And you're a worthy competitor. And obviously, you've been able to. You're just waiting for the knife to come out. Well, yeah. And I'm just like, OK. This could escalate. Yeah. And he said, I'm proposing a no-poach agreement.

And I said, what does it mean? He goes, well, we just, you know, there's no need. There's so many writers out there. We're not enemies. What we're fighting against is the magazines and the newspapers. You know, we're up against the New York Times, and that's enough competition for us. And I said, you know, that makes a lot of sense. So we will, we agreed to not poach each other's

writers. Well, Jason, I got to tell you just a quick personal note, and this will surprise zero long-time listeners of the show. I think the number one website that I checked every single day in high school was the unofficial Apple weblog. T-U-A-W. There's an interesting story to that. We called it the Apple web blog and Steve got upset. No way. Yeah. And we got a phone call and I said, okay. We actually had called it the unofficial Apple web blog and Apple called. Steve told his people to call.

We had a pretty close relationship with Steve, or at least Peter did. And, you know, Steve responded to our emails. Steve always realized the power of the media. Well, yes. I mean, Steve was the master. And I had spoken to Steve in person two or three times and over email a half dozen times during the Engadget time. Peter, much more. He really loved Peter. And Steve was really great. And anyway, they had some sort of problem with it. And they said, you can't use Apple in the name. And I said, okay. And I just said, it's back when you could buy domain names. And I said, the unofficial apple weblog i said let's make it an acronym twa and

then just build a logo and i think jill ferenbacher you know peter's now wife uh mother of his kids i think she built that one as well took the little leaf of the apple and just threw it above the twa and called it a day well that was kind of i think that was brian alvey's joke is like it sounds like it's french so let's put it as like an accent, that was kind of, I think that was Brian Alvey's joke. He's like, it sounds like it's French, so let's put it as like an accent de grave on top of it. And I was like, sure, let's troll them. And we do a lot of crazy stories like that. And long story short, that company lasted 18 months.

We sold it for $30 million to AOL. This is all of Weblogs Inc. All of Weblogs Inc. We had $ hundred thousand dollars in revenue to date and probably 200 000 looking forward so depending on how you count that they paid three they played a big multiple but but the real question though is like looking back now was that actually a good idea to sell of course yeah i mean if you that gave me the money to become dangerous and it gave me that foundation you know when you get that

you know the first 10 million is the hardest. And once you get that under your belt, you're dangerous. Nobody can stop you. I mean, I was already dangerous because I didn't care. But once you get the cash, then you really have the ability to not care. So it's like if you hadn't sold and that were still an independent company, that would be worth a lot more money. I mean, listen, here's the joke. Denton woundon wound up selling i think for 150 or something like that and then half of it went to um this new company that had put in the bridge financing and then some amount

went to hulk hogan and peter teal and then some amount got left over i think we wound up netting about the same it just took him 12 years it took me 18 months right uh but you know you know what i was you got to start writing your next chapter exactly the thing is i i what the the It just took him 12 years and it took me 18 months. Right. But, you know, what I was- You got to start writing your next chapter. Exactly. And you were back in the game. The thing is, the great thing about Silicon Alley Reporter crashing and burning was I learned very early on that I was more than the brand. Because the brand Silicon Alley Reporter had gotten so big and I was so identified with it that I started-

People would call me the Silicon Alley reporter. That was like what people would refer to me as. And because it crashed and burned, I was forced to disconnect myself from that. And Bob Dylan was always my favorite artist. And I had always studied and been obsessed with how he went from like folk to electric and rock to gospel and this yeah he just kept reiterating and then he started collaborating with mark knopfler of dire straits and did empire balesque

and you know all these other really infidels these very interesting albums um and i'd seen bob dylan maybe 20 times um you know in in person. And he was always my favorite. And I was like, don't look back. And I just told myself, you cannot look back. And I never look at my press scripts. The amount of press I got in the 90s between being on Charlie Rose, being on 60 Minutes, all that stuff. I knew that I was never going to top that. That was a moment in time.

And I didn't want to top it. Who cares? I put all that press in boxes. I taped't want to top it who cares like i put all that press in boxes i taped it up and it's literally in my brother's garage in new york still i don't want to ever look at those clips don't look back only forward next brand next brand next brand don't worry about the last brand yeah and that's how i looked at myself at that point i looked at myself and i said you know what kurosawa did all those samurai films and then he went into noir and the noir stuff was better.

And nobody even knows about the noir, you know, the film noir stuff he did. High and Low, Shred Dog, you know, all this kind of stuff. Is it after then, the next chapter, you get money, you're back in the game after Weblogs. I'm in the game, baby.

Is that when you moved to LA I had been living in LA um when we start uh right after we started weblogging yeah and at this point do you still want to be famous like once you've adopted this mentality of don't look back are you still fame driven no fame wasn't I I really wanted to build. I had gotten into the mode of building, not to say empire building. Was that from hanging out with Silicon Valley types? I think it was. I think also when you get the win under your belt, it takes the edge off. And I always tell that to young founders.

Winning really takes the edge off. And you will be successful. It may take two or three companies. If 60%, 70% of these things fail, don't worry about it. Just start 304. You're going to have a a hit and nobody remembers like we're sitting here when people meet me they don't know what mahalo is they don't know what silicon eye reporter is they don't even know any of this stuff nobody has any sense of history but people are all caught up in their own history i i for sure had a mahalo account yeah i mean mahalo did really well i mean that's

a whole nother story but yeah now that's another one right where you just you build a brand that becomes so big and you kind of get associated with it and then you have a big flame out and it's like who cares just move on next one we'll get there but i do want to talk about the mahalo pounce twitter that sort of tumblr like yeah let's let me put a pin in that and david keep running with your your line here well okay so this is this is a diversion but we side track but we got to cover it when you're in la how do you meet travis kalanick well i when i was doing silicon eye reporter we had started a an edition called digital coast reporter and i had interviewed travis when he was doing scour

which was his first company. Oh, wow, yeah. Which of course was sued. And he got sued and all that stuff. And he told a famous story. And that was the night, allegedly, when Michael Ovitz's people came and were in the audience at my event.

I used to do a CEO interview and I interviewed him. So that was that famous story. And then he did Red Solution. We'd always been friends and we'd always liked each other. And that's how I wound up investing in Uber because because when he was raising money for it he wasn't going to be the ceo uh he was like hey i'm doing this company it was like a you know ryan and him

and and ryan was ceo ryan was gonna be ceo and then i was gonna invest a little bit of money and i was helping ryan raise money and then he said you know what i'm gonna be the ceo that's what happened with ryan i was like oh this is looking a little shaky, whatever. And then I just made it as the first scout bet and I introduced, I think first round and definitely Cyan were at the Open Angel Forum, the little event I used to start where I matched angels and- So at this point, you're running Mahalo at this point? Yep. So I didn't actually even realize, was Uber the very first scout investment?

I think it was the third. I think I had, in the first seven, there were three unicorns. And this is Sequoia Scout. As a Sequoia Scout, I had, in the first seven, Uber,

Thumbtack, and Datastacks. So three companies, three unicorns, one of them public, DecoCorn. We'll see about the other two, but I think the other two

got a chance to go in public too. And so our listeners understand here, and we didn't list all the companies that you've angel invested in, but we think the other two got a chance to go in public too. And so our listeners understand here, and we didn't list all the companies that you've angel invested in, but we're going to keep touching on them as we go. Like, so when you're investing as a scout, that's not your own money.

So how did the economics work on that? It was 50-50. So it's 50-50, basically splitting the carry, the profits off that investment. Split the profits, yeah. Yeah, it's crazy. They since dropped it, I think to 35 or 30, like a profits, yeah. Yeah, it's crazy. They since dropped it, I think, to 35 or 30,

like a normally high carry. How did this happen, though? Did you go to Ruloff or did Ruloff come to you? I had lobbied Sequoia. I had emailed Sequoia and lobbied them to invest in my friend's poker game, Zynga Poker. Wait, wait, wait, to invest in the poker game? My friend created a virtual poker game, Mark Pincus, called Zynga poker. Wait, wait, wait. You invested in the poker game. My friend created a virtual poker game.

Mark Pink is called Zynga. And our dog used to play it. Oh, that kind of never heard of it. And I said, hey, you should invest in this. And they couldn't get there. But my other friend, Fred Wilson. You were a portfolio entrepreneur. I was a portfolio company.

And I said, hey, this Twitter thing is going to be big. And this Zynga thing is going to be big. And I was pushing Ruloff. And I have an email where I told Michael Moritz, you have to get the Twitter deal. You have to get the Zynga deals. These are very important companies. And then my friend Fred Wilson- What did they say?

I said, they went the next day actually and tried to close Twitter, but they couldn't get their head around the valuations or whatever it was at the time. I'm not sure their exact objections. Both of those cases, Fred Wilson had invested and actually introduced me to Mark Pincus. And Mark Pincus and Evan Williams and I were talking Sequoia or Fred Wilson. And I was a Sequoia CEO. And I said, listen, when you are a Sequoia CEO, your phone rings off the hook. Everybody wants to do your Series B. I raised my Series B for Mahalo before launching the product six months after I had raised my series a and i went from an 11 million dollar valuation to 100 million dollar valuation wow and this is in 2006 yeah 2006 yeah and mark pinkis and

evan were like how did you go from 11 million to 100 million before the product launched in six months i was like i don't know and uh they were going for like 30 or 40 million i think each and uh they were further along and their products were launched i said listen fred wilson's east coast he's awesome he's like one of my best friends for a long time he got me helped me get in business his wife joanne worked with me at silicon reporter as a salesperson and you know but and also joanne wilson his wife worked with me at silicon reporter and the reason it was so successful is she was the salesperson. And she was, I mean, it was two bulldogs. Like, she's a tiger.

And she's now a great angel investor herself. Absolutely, yes. And just one of the great collaborators I've ever had in my career. And anyway, long story short, I said, listen, you're picking between Fred, who's like the up-and-coming hustler, who will work hard. But, you know, he's like the up-and-coming hustler, who will work hard. But he's East Coast, and a lot of people, Fred thinks Sequoia is the gold standard. Fred would tell you to take Sequoia's money. But I think Fred is great too, so I actually think it's a coin to us you can't lose. And they were both struggling to take, who would take that deal? I think that gave me the credibility with Sequoia that they said, Jason keeps sending us these great deals.

There's many more companies now. Jason has this collaboration with Arrington for TechCrunch50, and they broke up, and now he's doing this launch festival on his own. And Ruloff came up with this idea. What if we raised like a $2 or $3 million fund, and we just gave everybody the ability to make 25, 50K checks. And there was this issue of signaling in the industry back then where if Sequoia gave you money and they didn't give you the next round,

your company was dead. That was the end of your company because you were then- Obviously, the trick is do what you did and just raise your next round before anything even happens. Well, that works too. But the idea is like you would,

if your venture fund did not follow on, you were damaged goods and nobody else would. And the higher profile of the fund, the higher profile of the signaling risk. So Sequoia was acutely aware of this. So they just said, the Scouts program, we won't announce. It'll be on the DL. You can tell people what it is when you make the check. You don't have to.

You can. We just weren't sure what to do. And so I just went around town and I said, okay. I started this thing, Open Angel Forum, and I tried to kill something called kuretsu forum which was charging people five thousand dollars so i went to war with them and they got really upset and called michael moritz on the phone and told him like who is this employee of yours he's like not employee of ours well he said he's gonna kill the he's gonna kill the kuretsu forum and he's like why would he say that and moritz called me and and he said, Jason, did you tell them you were going to murder them?

I was like, yeah. You really love these situations where you take a mild-mannered Brit and you really anger them in a way where they have to have a talking to. No, no. Michael Moritz was not angry. He's like, why would you tell them? He probably loved him. I'm just curious.

And Moritz is cool as ice. He's the greatest. And I said, well, they're charging founders $5,000 to meet angel investors. He goes, oh, that's terrible. I said, yeah, so I want to kill them. He's like, oh, okay, carry on. That was the end of the phone call. It was great.

So great. Oh, so great. So anyway, I started Open Angel Forum. And I just started Thumbtack, StyleSeed, Datastacks, all these signposts. All these great companies just came. And Uber actually. And Uber came. And Uber came.

Yeah. And on the spot, myself. Sokka was there, but Sokka knew Travis before. And Cyan Bannister invested in Thumbtack. I introduced Cyan Bannister to Thumbtack and Uber. She's always been very gracious about giving me credit for that. And first round, I think I introduced them, but I think that maybe they claim I didn't or maybe somebody else in the firm had heard about it as well.

Who knows? You know, like a success has a million fathers, fathers and orphans. Okay. So all this is go, what's going through your head as this is happening? Like you're running Mahalo. Mahalo's super hot. Yeah. I mean, they anointed me.

You know, Sequoia anointed me. Now I became dangerous because now I wasn't just East Coast anointed, I was West Coast anointed. You understand? Yep. And nobody really had ever anointed, I was West Coast anointed. You understand? Yep. And nobody really had ever done that. That was a very unique thing. And I knew it. I think a lot of our audience probably has not ever heard of Mahalo.

So fill us in real quick on that. So anyway, I had this idea. I emailed Michael Moritz, John Doerr, and Mark Cuban. And I said, I have an idea for my next company. I didn't know any venture capitalists. Even through all of this, I really didn't know any of the West Coast venture capitalists. But I knew John Doerr and Michael Moritz were the number one and number two. Probably in reverse order, Michael Moritz and John Doerr. But anyway, there's an argument about that. I had run into

Moritz one time at a conference. He wouldn't remember me. But I emailed Michael Moritz and I said, I have my next idea for a company. I sold my last company to AOL for $30 million, 18 months after I started it. Would love to get your advice. Shortest email possible with a little microphone drop in it. And Moritz called both of my phone numbers and emailed me, and his assistant called me all within one hour of me sending the email. I was going to ask, how many minutes did it take to respond?

John Doerr, somebody on his team, got me the next day. I was in both their offices next week and also Mark Cuban said, because I think when we sold, we turned this $150 into $5 or $6 million. So he said, put me down for a million or whatever you want, Jason.

I think there was actually a second payment coming and he just cc'd his attorney and said, whatever the second payment is for the AOL thing, it was like a million bucks. He said,

just throw it into Jason's next thing, which is, you know, a very Mark Cuban thing to do. Okay, so here's the question. Did you actually have the idea or did you just's next thing, which is a very Mark Cuban thing to do. Okay. So here's the question. Did you actually have the idea or did you just send me an email? I did. I did have the idea. And my idea was I had gone to, Wikipedia was like the thing at that point in time.

And I went to Wikimania, which was like their conference up in Boston. And I studied the wiki software. I started playing with it. And I made a little proof of concept where Google was dealing with web spam at the time. And the order of the links weren't very good. My wife's Korean. And I had heard about Daum, D-A-U-M dot net, and comprehensive search in Korea. And in Korea, Daum owned the blogging company and the picture hosting company.

And when you did a search, they would show links, pictures, and blog posts on one page. I made this comprehensive search, and I said, it's going to be called 20.com, the top 20 links for any keyword. I went into the meeting, and I put three pieces of paper on the table. I don't think I've ever told this story. I said, iPod, look at these 10 blue links. These are the search results.

One's Yahoo, one's 20.com, and one is Google. Which one do you like best? And Moritz and Ruloff pointed to the one, and they turned it over. I said, turn it over. And they said, 20.com. I said, turn the over to over. Boom. I did it again.

I said, Kauai Vacation. And they picked mine again. And they said, why is yours the best? And I said, I had a human look at the Google result and make a Wikipedia page. And they said, that's great. And Michael Mears said, oh, that's a great idea. What are you looking to do? I was like, I want $3 million for 25% of the company.

And he said, okay, work with Roloff. And he walked out. And he was on the board of Google. And he's like, I can't do this, but Roloff can. And it's not competitive with Google. It's a wiki, whatever. And that was the board of Google. He's like, I can't do this, but Rulof can. It's not competitive with Google. It's a wiki, whatever. That was the start of it. And then my friend Elon put some money in. He was working at a rocket company.

He just called me. He's like, I think you're smart. I'll put some money in. You want a diverse buyout of hardware. And then Rupert Murdoch put some money in. CBS put some money in. Just a bunch of people. Whatever.

I was on the top of my game. Got the company at $10 million in Google AdSense revenue. And then Matt Cutts felt like we were getting too big and eHow was getting too big. There was also Cosmix, right? Yeah, Cosmix, wikiHow. There was a whole cohort of us making content. And let's pause for a minute just just to catch everyone up on matt cut so matt solved a really hard problem for google over the course of a decade which was basically link spam it's how do we stop people who are gaming google

and getting too high in the rankings and getting too much traffic and abusing us yeah and i think matt actually is leading a really important initiative now in the federal government at the U.S. Digital Service. Well, what would happen is our pages were so good that Kauai Vacation would rank in the top five and people would blog about it, link to it, and ask us to update the links. And then we started putting content on the pages. So we had content on the pages. So basically Google, this was all on their roadmap, but I created what was on Google's roadmap five years, 10 years before they got there. Because if you Google quiet vacation on Google.

You get that now. So I was five or ten years ahead of them. And they were going to do it with machines. Marissa said, I don't think Jason's right. We had this debate at a conference at one point. Somebody asked her about Mahalo. She said, I don't think humans can scale. We're going to do it with robots.

Anyway, then they basically took 90% of our traffic away. And the punchline was they took 90% of their own revenue away because the way we were monetizing was with their tools. And then I said to Matt, and I called up Sergey Brin, and I called up everybody I knew there. And I was like, what are you guys doing? You just killed my site. I have to lay off 100 people. And we got in this big public spat. And they're like, yeah, we don't know. And I was like, well, we're partners. And Matt Cutts yeah you know we don't know and i was like well we're partners and matt cuts is like we don't have partners and i was like i forwarded him the email from the adsense team that said partner meeting and that they you know and partner lunch and partner this and part of that and he's like yeah that's a different group i'm like but you're still google and they literally

took everybody who would eventually become competitive with them and they just neutered us and this is why i think you know google will face antitrust action like they did in Europe, maybe here eventually. And I think Yelp's right. What they did to Yelp. Yeah, it was the same thing. Was equally bad. I mean, they basically studied us,

copied us, killed us. But I mean, I learned a really important lesson there, which is like, don't have a dependency. But the problem was, you know, just the thing grew so quick. I was like, we're making, we're on a $10 million runway. We're making just a lot of money every day at the peak in adsense and this is all hunky dory i was like

they'll never shut us off we're we're sending we're giving 30 cents of every dollar to them yeah and i was wrong you know they had a long game they just didn't want mahalo.com and other things to exist so they killed us and then i pivoted it to inside and it's still going today 12 years later and you know it's it's actually doing it's still going today, 12 years later. And you know, it's, it's actually doing really well for email newsletters. What's old is new again. Exactly.

So what's, what's going through your head at this point in time about like, okay, what is your next act? Like, like, well, the scouts thing I didn't take too seriously.

I just thought it was a fun diversion. Um, and then they got about, I don't know, halfway through the program and ruloff said to me you know nobody else is making investments i think like sam did stripe or something you did uber and you did four and sam did two sam altman had done stripe and uh they said you know this fun we might not do another scouts thing so you know you've got like a million

left in the fund and i was like oh you don't have to tell me the buffet fund is uber stripe thumbtack data stacks data stacks i mean that fund is the greatest fund in sequoia's history on a percentage return basis i believe i don't know that for sure not on cash though not on cash on multiple cash on multiple cash it's definitely in their top five i would think but they're saying to you we don't know if we're going to do this again. Well, it was very early days. We didn't know. And they're like, we still have all this money left in the fund.

So we're like, if you want to make some more. So I did 19 investments. I put $700 to work. It became worth over $100 million in total, largely due to an Uber. And then my friend Naval had been coming to the Open Angel Forum because he was doing venture hacks, and he was an angel investor. And he said, listen, I'm going to start this thing AngelList. And it's kind of competitive.

And I was like, no, you're doing online. Online is dumb. Nobody's going to invest online. It's all in person. And he's like, yeah, I disagree. And I was like, yeah, I don't know, Naval. I don't see anybody investing blindly online. He said, well, this is a new thing, SPVs and syndicates.

And I was like, explain that to me. And he explained it to me. And I was like, I don't understand it. Explain it he said well this is new thing spvs and syndicates and i was explaining that to me he explained it to me and i was like i don't understand it explained it to me again explained it to me again and then he sent me a link and it was you know angel.co slash jason says syndicate and it said you know set up your syndicate here and i filled out the stuff and i tweeted it and then he called me the first what are you doing and i said what and he said you're not supposed to tweet it i said it says on the page tweet your syndicate he could say i didn't launch it yet it's launching on on Monday. And I said, oh, I'm sorry. You want me to take it down? He's like, no, don't worry about it. TechCrunch got the embargo, but they're upset. I was like, nobody's going to see it. company in person. And that's what Sequoia was doing with you. They were giving you money. Yeah. No, I'm not, listen, Ben, I'm not saying I'm the smartest guy in the class. All right. I never said that. That's not my claim. I'm a hustler. All right. That's why I made that self-deprecating joke in the book that you were

so nice to read. You know, like I am a hype guy. Um, I'm not a complete fraud. I, that's kind of me being self-deprecating, but, uh, you know, I'm definitely hype guy. I'm not a complete fraud. That's kind of me being self-deprecating. But, you know, I've definitely been lucky, and I'm definitely good at hyping things. So, I mean, that's why Naval sent me the link. Anyway, a bunch of people joined. Tim Ferriss launches his. I don't think we should glaze over this. Like, the set of people you've already talked about, clearly there's something special about the way you build relationships. Yes.

I mean, you're keen to spot yourself, like yourself as a hustler, as someone that works hard, as someone that is extremely driven. But lost in, I think, the way that you think about this is, oh my God, are you good at building relationships and making it so people want to help you, like helping them, knowing that over the next 10 years, that's going to be a good bet. I think enthusiasm is contagious. So I've always been very enthusiastic in what I do. And I always pick up the check. And I always set up dinners with a lot of people. And I always introduce people to other people

with no intent of capitalizing on that. Like Tim O'Reilly invited me to a food camp early on where Larry Page came in his helicopter and landed it outside of food camp. And I was like, Larry, what are you doing? Like, realize how douchey it is to land your own helicopter? He's like, do you think so? I was like, dude, come on, man.

Just land it at the airport. I mean, we know you're rich. Like, you don't have to fly your goddamn helicopter from Palo Alto. He's like, you're probably right, Jason. I totally admonished Larry. It was pretty funny. But he did literally have them clear the field so he could land his helicopter. He was taking helicopter lessons at the time at Foo.

So I'm not speaking out of school. He literally landed his helicopter there. Anyway, Tim O'Reilly said something about like – I can't remember the exact phrase. You'll find it. Put it in the notes. But he said something about like if you extract very little from the network you're building, you do really well. You don't need to extract all the value. Yeah, it's like the Bill Gates platform quote.

Something like that, yeah. But he evolved. He said it better. We'll come to it, but this is sort of thing about networks. Anyway, so I was always just introducing people to everybody. In fact, I remember when I was at the top of my game within Gadget, I was at Sundance, and my friend David Sachs was producing a movie there called Thank You for Smoking. So we were all there. I just saw Weblogs Inc. Elon, myself, Saks were all hanging out, my wife and his wife at the time, and Saks' new girlfriend, who's now his wife. And Walt Mossberg is there, and he says, hey, let's have lunch, because he knew I was there. I was like, yeah, sure.

And I was like, hey, let's meet over here. I'm going to bring my friend Elon. He's like, who? I'm like, Elon Musk. He's doing this thing, hey, you know, let's meet over here. I'm going to bring my friend Elon. He's like, who? I'm like, Elon Musk. He's doing this like thing or whatever. And you know, Walt Mossberg was very big there. And he's like, he wrote me this admonishing email. I agreed to have lunch with you, not Elon Musk.

You forcing me to have lunch with this person like is just unfair, like our friendship, whatever. I was just like, oh, okay. I won't bring him. I'm just trying to help you out. You know, Walt was very sensitive at the time. I was trying to get to Walt. And so he felt like I was trying to put Elon in front of him. And Elon didn't bring him. I'm just trying to help you out. You know, Walt was very sensitive at the time. Everyone was trying to get to Walt. And so he felt like I was trying to put Elon in front of him.

And Elon didn't even know. I was just like, Elon's here. Elon wasn't running Tesla at the time. He was just an investor. And he was doing the SpaceX stuff. I was like, you should meet my friend Elon. So you're good at- I was always good at just connecting people and meeting people together and just hanging

out with people. Like my book agent, John Brockman, had introduced me to Sam Harris. You know, Sam was on my podcast and he did like an AMA for Mahalo. And he said, how do you do podcasting? I was like, you know, you're built for podcasting. He's like, you think I should do a podcast? I was like, absolutely. You're built for it. He's like, what do I need? I'm like, a guest and a microphone. He's like, oh, I was like, you can use my studio. Anyway, I convinced him to do a podcast and now like the rest is history. And I introduced Sam to Elon. And then we all started talking about AI.

And Elon introduced Sam to the concept of AI and all this AI stuff going on in the book Superintelligence and all that. And then the people who write Westworld, Christopher Nolan and Lisa Joy, then met elon and sam and if you like literally the entire season this year i'm watching it i'm like this is a conversation i had with the four of these people like 34 years ago it's pretty surreal i always picked up the check and i always brought everybody to dinner that's why i got good at this and i'm you know that's how we're not doing playbook this episode but this is the uh little that's. That's your mini playbook. Just always buy dinner. Okay. So I got to ask though, that playbook, that mindset, that wanting power and connecting

people. Yeah. As Mahalo is, you know, post Panda. Yeah. The Panda is the update that Google did. Yeah. Why do you not go join a venture capital firm and become a traditional venture capitalist self-awareness yeah i mean you can't have to be a vc as we all know

well here's the thing it's called the venture partnership and that's not what i do right like i like to make my own decision and i'm like the solo artist. Like you put somebody like me in a band, the band will break up. Like not a good idea. Right, your hero is Bob Dylan, not like Eddie Better. Yeah. You know, like I could play, you know, I could play with Tom Petty and the Heartbreakers, but I'm going to write my own albums. I want to do my own thing. I don't want to, I want to keep it small and authentic and true to what I want to do. And I did have a bunch of venture firms over the year make runs at me and then maybe want to incorporate my little empire into their empires. It would be a pretty good feeder. You could plug what I'm doing into something bigger.

If you were a billion-dollar late-stage fund, imagine having the only real viable Y Combinator competitor out there as the top of your funnel, the only real AngelList co-exister competitor. These things are not really competitors when you think of them, they're really co-existers. But we're the number one largest syndicate in the world and AngelList is the largest collection of syndicates. But if you took the top two or three syndicates together, they would be smaller than ours on AngelList. And then you look at our program,

like really only people who compete with AngelList, with a Y Combinator heads up. Like the only reason we've had people pick us over Y Combinator and people pick Y Combinator over us or go to Y Combinator and then come to us. Like we're really the only, I think, accelerator who can say that. All right, listeners, our next sponsor is a new friend of the show, Huntress. Huntress is one of the fastest growing and most loved cybersecurity companies today. It's purpose built for small to mid-sized businesses and provides enterprise grade security with the technology, services, and expertise needed to protect you. They offer a revolutionary approach to manage cybersecurity that isn't only about tech,

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huntress.com slash acquired or click the link in the show notes. Our huge thanks to Huntress. Jason, I want to tee this up in this direction. So you want to be a solo artist, not join a band, or I'm sorry, at this point in time, I'm just playing through what's in your head. You want to be a solo artist, but you also deeply understand returns to scale. As you're thinking through This Week in Startups, The Syndicate, which I want to really understand mechanically how that formed and how that works. How are you thinking about scaling what is working for you? Yeah. So I had started the podcast as Calacanis Cast and we did 40 episodes or so of that just on an open microphone in a room. And I did it with Ron Conway and I did it with Ev Williams because my friend Dave Weiner

had started, who's created RSS, said, hey, Jason, check this out. You can attach a file to an RSS feed. I was like, oh, you could put a PDF in there? He's like, yeah, you could put a PDF in there, but that's the same thing. And I was like, oh yeah, again, I'm not the smartest kid in the class. He's like, check this out. And it was an there, but that's the same thing. And I was like, oh, yeah, again, I'm not the smartest kid in the class. He's like, check this out. And it was an RSS feed with MP3s. And I said, oh. He's like, now check this out.

And he sent me a little script. And it took the RSS feed, and then it wrote the MP3 files as an album into your iPod. And the reason it's called podcasting is because you could sync your ipod on your mac to an rss feed that then put it there so the idea was you would plug your ipod in at night to sync and to charge to your mac and also in podcast you would download at night all those things and when you got on your commute you'd have a couple podcasts on there and i was like wow and then they convinced steve jobs to add it to itunes to itunes and there's a famous clip of me talking with six or seven yeah and there's a famous clip of me talking to steve at the d conference um and ask him a question about it and i asked him about making money if we'd ever sell advertising on podcasts or whatever and he said

you know it's a really good idea you should just just email me, Jason. And I said, yeah, the email I always email you at? And he said, yeah. And the whole audience laughed. But I just said it as a joke, like, you know, wise ass. You know, because I did talk to him on email. And so I thought it'd be funny to say, you know, like the email we always talk on. And the whole audience cracks up. It's a very funny clip. But anyway, I did the podcast because I just thought it'd be fun. And to me, it was just a fun way to promote my friends. And so, you know, I had Brian Alvey on, my longtime collaborator, as a first guest. David Sachs came on early.

Just, you know, Jason Nazar was starting a company. Just having people on when I was in LA. And then Bing was going to launch it. Somebody from Microsoft called me and like, hey, we love this podcast thing you're doing. We want to tell you about something secret. And I was like, what is it? He's like, we're starting a search engine. I was like, everybody knows. He's like, yeah, it's called Bing. I'm like, well, we love this podcast thing you're doing. We want to tell you about something secret. And I was like, what is it? He's like, we're starting a search. And I was like, everybody knows.

He's like, yeah, it's called Bing. I'm like, well, that's a terrible name. And he's like, well, anyway, we want to advertise on your podcast. This is 11 years ago. And I was like, okay. You hadn't thought about, you hadn't put two and two together.

There was no advertising in podcasts. It was just like blogs. It was just a thing. But of course it was just like when you're starting Silicon Alley Reporter, WebLive, it's the same thing. Anytime a new medium comes out, I assume it's going to work.

This is my big trick in life. Whatever something comes out, I just assume it is going to reach critical mass and I behave as such. So when blogs came out, I was like, okay, I assume it's going to work. I'm going to go full bore as if it's going to. When podcasting came out, I went full bore. Whatever everything comes out, if I'm interested in it, Twitter, the same thing.

I just went full bore on Twitter. When has that not worked? Oh, God. Probably more times than I can count. But I mean, it's- But it doesn't matter when it doesn't work. Yeah, I mean, I have a Tumblr. There's a bunch of-

Path.com, FriendFeed. There was a bunch of, path.com, friend feed. There was a bunch of other things. But if you take the Robert Scoble, relentless enthusiasm, like spastic, like, oh my God, this is going to change everything. Google Buzz, Google Plus, you know, like I was all in on their services too. And that was all wasted time.

But you know, when it does hit, people remember the hits. Like it's just the same thing about it that you guys know about investing. And asymmetric returns, yeah. Yes, asymmetric returns, correct. if you get in early and you have the the you know you're baking in whatever that service is you got there early you're gonna you're gonna have a head start on everybody else so then it just worked for me and then

they bought they were like how much are the ads and i was like um uh three thousand dollars and like okay uh per ad i was like yeah but you have to buy ten and they're like, okay, per ad? I was like, yeah, but you have to buy 10. And they're like, okay, $30,000. And you just sent me $30,000. And they're like, what is the ad? I was like, I'll just talk about Bing. And so they literally would just pull up Bing and I'd be like, hey, check out this feature.

Check out that feature. Thanks, Bing. Bing, Bing, Bing. And then that'd be the end of the ad. It was pretty funny. Remember those. So great. Yeah, we just goofed off.

And we'd have puppets on the show. It was just this like vaudeville kind of approach to it. But then it started getting a little, you know, went from like, you know, 500 to a thousand people would see it to 10,000, 20,000. You know how this stuff goes, 200,000, 300,000.

All of a sudden it becomes a thing. And what's the listenership on this week in startups now, just to give people a sense? Over 200,000 per episode, yeah. Yeah. So you guys are right on my tails. It's a niche podcast by design.

Like I could make it get bigger by dumbing it down or going shorter or having post-production on it. But I just told everybody I'm not interested in that. And Joe Rogan has taken the same approach, the same Howard Stern-like approach. You put the recorders on. As long as it's interesting, you go. And we have three ad slots.

And we sell them out every year. And it does a couple million bucks. And that's enough to pay for a seven, eight- that works on the podcast now that's awesome and how does that play into your angel investing so to take us well it's very simple yeah i mean yeah i would say on the podcast hey uh you know here's a company i invested and i'm having them on the podcast or in the case of calm.com somebody had told me alex was like a genius and i was like why and he's like well did the million dollar homepage i was like oh that was genius he's like, well, I did the Million Dollar Homepage. I was like, oh, that was genius. He's like, yeah, I do a meditation app. I looked at it.

It was a webpage where you went and it just played a meditation in a loop. And I was like, yeah, I'll have him on the podcast. I need a guest. Back then it was just like, can we get any guests? And so Alex came on and on the episode, he said, hey, can I put 25K in for like 1% or 2% or whatever? And he's like, yeah, we talked about it. You did this live on the episode?

I did it live on the episode. And I was always trying to get somebody to do that and nobody would do it. But I thought it was funny. It was entertaining for me. Anyway, long story short,

he, you know, I put 50K in for my fund and this AngelList thing had just come out and I made it the first deal on AngelList. And my expectation was

that maybe another 25K would come in or 50K because they had like, you know, I don't know, like, I don't know,

100, 200 people had signed up. So I was like, yeah. And $328,000 came in. 25k would come in or 50k because they had like you know i don't know like i don't know 100 200 people had signed up so i was like yeah and 328 000 came in and uh the company was worth 4 million or 5 million at the time we had a six or seven percent position that company's worth 1.4 billion now it's the most successful syndicate in the history of syndicates in fact it's probably the top three syndicates combined would be smaller than the composition. And for people that have never used AngelList, how does that work where you're like, hey, I'm in for 50? How is it that like- Well, the original deal was AngelList would take 5% of the carry. I would get 15%. I subsequently negotiated an 18 and 2 deal, which led to a lot of animosity. Eventually AngelList and I broke up. That's another story to tell.

But, you know, Naval and I are friends still, but we were just a little too big for it. And that's, you know, like back to being very clear about, like, I'm not the bull you want in your China shop. Like, I know that some people think, like, wouldn't it be great to buy Jason's company and put it as part of this big venture firm? The answer is no, because I'm going to do what I want

and it's going to knock shit over inside your place, right? Like, it's not good for you. It's not good for you. It's not good for your partnership. If you're trying to build a partnership and you want five or six people to sit there and have a really good conversation and dialogue about an investment, that to me would be purgatory.

That's your nightmare. It's literally my nightmare. I want to make an investment because I look in the founder's eyes and I push the chips in. I do not want to have five people sitting in my seat while we discuss if I should go all in on this poker hand. That's the opposite of what should happen in early stage investment.

The second you debate it is the second you lose the outliers because the outliers make no freaking sense. So anyway, consensus equals death in the early stage. Consensus at later stage equals protecting downside risk and due diligence and all that stuff. It's very important. I get it. Can we digress for a minute before we pick back up with the story of your empire? But talk to us a little bit about your philosophy because I think it's super incisive about the difference between bets and like informed by poker, shaping your bets experiments versus investing.

Yeah. So here's the thing imagine a poker table existed in the world where you would buy in for ten thousand dollars and there were ten players so it's a hundred thousand dollars on the table but every 100 hands you could win a million dollars or $10 million. So there was uncapped upside. Somebody just gifted $900,000 extra dollars or $9.9 million extra dollars to that table. It would change the way people played. It would change the game. There would be, and that's called the World Series of Poker, by the way, for pros. Because the World Series of Poker, when they have that series of like 50, 60 games,

all these amateurs come from the world, dead money, people who are easy to pick off. It's like for the pros, for Phil Hellmuth, it's literally like if you started the NBA finals and the Warriors had to play against the high school team. We'd be like, well, we're just going to win a lot of games here. It's the only way to get asymmetric upside in poker. Correct. I mean, there are ways, but yes, asymmetric for sure. So anyway, once you realize that, that frees you from you trying to understand if the idea

is going to win or not. That's what trips early stage investors up, which is why I wrote my book, is because I felt I had figured something out and I wanted to share it with the world which was, this is the greatest casino in the world, in my opinion. And nobody knows about it. And the people who do know about it do not want to talk about it. And then another group of people think it's the stupidest thing in the world and a scam. And why is that? Well, most people come into angel investing who i meet who think it's stupid and they had five hundred thousand dollars in their bankroll and they gave 250 000 of it to their daughters sorority sisters boy for ex-boyfriend's brother and because you're going to build an

instagram competitor that has links in the comments because instagram doesn't support links in the comments like that's the reason they're going to exist. And they put the $250 in. The product never gets released. They give that $250 to a dev shop in Estonia that never finished. They ask for another $250. They give the other $250. The product comes out.

Nobody cares. They shut it down. Those people go work at Boston Consulting Group or whatever. And they made one bet. So it was literally like walking up to Blackjack and putting your entire stack on one hand. Like it's just not enough.

Or like in poker, like betting, you're going all in before the flop. Yeah. Before you look at the cards, you're just like, I'm going to sit at this table and put it all in on the first hand, which I know some people who do that for fun. For people that are not professional investors, it sounds ridiculous to dumb it down this far. But like, even if you're only making five, six, seven angel bets, and you're not really creating a 12, 15, 20 company portfolio, it's mathematically the same thing. You're taking way too concentrated of a bet. Really, and you need to really hit 20 or 30

or 40 in what I've seen in angel investors who succeeded, and you have to be investing in a certain pool of entrepreneurs. If you're a nobody who starts out, any deal flow that gets to you, by definition, has been picked over by all the qualified people. If you're reading scripts in Hollywood as a first-time director and the script got to you, that means every director has passed on it and never got to the good director. So just understand that. Okay, so this is what I want to go deeper on because I think there's a really important insight here. How do you square what you said a minute ago about the early stage consensus kills because you want the crazy stuff you can't predict with this aspect of you need the high quality?

What is the signal and the quality? Yeah. So what I teach, we have a course called Angel University that goes along with Angel, the book. And in that course, I explain to people that when you make your first 20 or 30 bets, make as small a bet as possible, which means using syndicates is a good idea.

Forget about mine. Just sign up for everyone because it's free to read the deal memos and you'll learn. But if you do that, you're playing at the lowest stakes poker table while you learn like literally if you could play one dollar blackjack if you want to learn blackjack sit at the one dollar blackjack table instead of the hundred dollar a hand because you're gonna lose a minimum and it doesn't matter if you lose it's just the education it's like paying for an educational course and i tell people only invest in companies, startups that have gotten their product to market and have some customers,

hopefully paying customers, but if not, customers who are using the free product that you can at least talk to. You've now eliminated, as you guys know, 90% of the failure rate. 90% of the tritium in startups comes from- Don't ship a product. They never ship the product. Then you get down to that 10% of that, 90% of those never get a paying customer. So if you were, as you're a starting angel investor, to only invest in companies with some amount of revenue, even as little as $2,000 to $10,000 a month, you probably have eliminated 80%, 90% of the risk. So start there while you're learning. And then as you get more sophisticated, just like in poker, if you want to play under the gun with Phil Hellman at the table and you want to play 9-10 suited,

okay, maybe, if you've been playing for 10 years. But you don't want to take those kind of risks and bet on a meditation app or a couch serving app when you're just getting started. There's five times you could have invested in Calm, maybe three, four, five times in Calm, three, four, five times in Robinhood. Even these outliers, Airbnb, you probably have four or five chances to invest in Airbnb as an angel investor. It's a misnomer that you're going to miss the deal. Like what Y Combinator does to angel investors and telling them, if you don't invest quickly within these 48 period, the deal's closed and you miss them forever. It's like just literally not true. It's literally they try to create a false sense of urgency. They train the founders to do this.

And it's nonsense. Not only is that round not closing immediately, there's going to be four rounds after that you can get into. No great investor invests at demo day. Well, especially now with safes and not price rounds. Like it's rolling. I mean, it's not. It's rolling.

Yeah. Super rolling. There's one thing you said that I think is really insightful. When you're not Phil Hellmuth and you're playing poker for the first time, just invest in things that have shipped and have revenue. And then once you get better and better and better and you become Jason Calacanis, you can invest in Calm. Why are you comfortable at the level you're at investing in a no-revenue meditation website?

Why was that okay? So I can take you to the background. It was very simple. I had known Sam Harris. I had done positive visualizations. I had heard that term, and I used that in sports because I was a psychology major. I had done positive visualizations to get through the New York City Marathon, which I did 11 of. I didn't know it was called meditation, but I just positively visualized myself along the route. And then when I did the run, I had had that in my mind, how good I was going to feel at each part and how the Bronx and the wall was going to be difficult.

Then when I saw Calm, I talked to Sam Harris about it because he was studying, you know, he's doing CAT scans of brains and he was a meditator and into psychedelics and all this stuff. And he put me in touch when I was doing my research on Calm with a woman who ran the mindfulness center at UCLA. And I found out that Phil Jackson, who I'd known when I was in LA, when he was coaching the Lakers, I had become friends with him. And he had Kobe and Shaquille O'Neal meditating. And I just, it clicked for me. Wait a second. Phil Jackson, innovator, Sam Harris, innovator. There's something at UCLA around the corner from me in Brentwood. They're studying it. They have a program. They're teaching people this. Oh, they're studying it on PTSD soldiers. This is

the future. But unlike yoga, which also started in Santa Monica, this can be delivered through your ears. Wait a second. Yoga you have to do in person, and yoga's everywhere. But meditation is delivering in your ears. If this does work, and it becomes as popular as yoga, there could be 100,000 people paying for this. It could be like a $10 million a year business. It's probably worth $4 million. This could be like the future.

And that's when it all clicked for me, and it was like an easy bet for me to make. And then the subscription service came out and Apple allowed subscriptions. And when I think we invested in, when we invested in Comm, I think they had done $10,000 in revenue, you know, selling a month. Okay, so it was a post-revenue startup. They had post-revenue. Yeah, yeah, they did.

But with Robinhood, they didn't. Robinhood hadn't launched yet. So that was another one where I just, you know, I saw them and it made sense to me. So you can get signaling. I'm not saying you can't do this, but if you want to reduce the amount of pain you're going to go through and you want to have a less painful junior year, like your junior year as an angel investor when you hit the J curve is so painful because you think you're an idiot. You've deployed all your money, nothing's breakout yet, and you can't keep investing.

Oh, and half your portfolio can't raise money and is shutting down, and the other half can barely raise money and they're begging you for a bridge. Like literally the junior year, everything tells you to quit. And then all of a sudden, you're four, five, or six, Travis calls up and he's in six cities and he's closing around with Menlo at 300 million. And you're like, wait a second, 5 million times 60, and holy, that's a lot of money. And you start saying, oh, whoa, this could work. And once you hit one of those unicorn type investments, then all of a sudden it clicks in your brain.

Your brain chemistry changes. You have to have the brain chemistry change from being risk averse and outlier averse to outlier obsessed. I am outlier obsessed. I do not care about losses. I literally, and that took me a long time because remember I was such a rabid competitor. The idea of being fine with losing all the time, like imagine losing 29 nights in a row at poker, but on the 30th night, you hit a 5,000 X or a 200 X. Right. It's because you're playing in this very

special poker table right now where the losses don't matter, supposing that you actually are fishing in the right pond where you do find those magical ones. Correctamundo. I think there's one more layer though that I don't think we've touched on yet that I've heard you speak about before, which is shaping your bets into this. And as you're making these angel investments,

keeping them very small and thinking of them as experiments, to me that seemed as a really good mental trick to be like, to me, that seemed as like a really good mental trick to be like, it's not a loss. It's a failed experiment. Correct. And this is why I started the Launch Accelerator three years ago. We have a hundred companies I've gone through. And I basically was like, what was Paul Graham's original idea? Oh, six or seven companies? Great. I'll just copy that. Seven companies. And Paul was the draw, right? And now it's the legacy's the draw. Paul Graham's not the draw.

It's the legacy. So I said, okay, well, if Paul was the draw, I know I'm a draw. So let's see if it works. And I just said 6% of preferred for 100K, which is a $1.7 million implied valuation. So we'll go with that. We'll just start accepting seven people at a time and deploying 700K at a time. But then I added something, which was, you know, YC, imagine if YC and AngelList got married or merged. What would that look like? Well, that's what I had.

And I had left AngelList and I had started the syndicate.com. It took me a while to get that domain name, but I got it. Coveted that one. I'm a domain name coveter. I'm a brander. Anyway, the point is I started saying to people, I'll put in 50K for – the original deal was like 50K for 5%. I'll put in 25K for 5%. Then I'll put 25K at whatever your recent round is and then I'll syndicate it. And then it was too hard to just syndicate all of them because not all of them wanted to do

the syndicate. So then I just said, okay, we'll put in 100K. It's the same deal as Y Combinator at the time. So then we're betting on these for a 1.7, rounded up to $2 million valuation. And then one of the companies raised a round, and I was like, I always told myself, we'll put more money in, in the seed round round and we'll try to get to 10% ownership. And then like two of the best companies raised rounds and the founder was like, well, we have no room for you. I'm like, what? I was like, I introduced you. So I called up those people who were doing the rounds and I read them the riot act.

I said, I introduced this company. How dare you try to muscle me? I said, you're swinging an elbow at me? I said, I'm the point guard. I passed them the riot act. I said, I introduced this company. How dare you try to muscle me? I said, you're swinging an elbow at me? I said, I'm the point guard. I passed you the ball. And now you're not passing the ball back when you're triple team? Like pass the ball, move the rock.

And I got both of those people to give me allocations. And then I was like, well, this is not how power is supposed to work. Like if I'm the point guard, I have the power. I have the power to freeze you. So then I said, okay, now the freezing will begin. So I wrote into our documents that we have the right to do half the next round. It's a hefty pro rata, my friend.

Not if you're Jason Calacanis. And not if you're the founders. It's a feature, not a bug. It's a feature for the founders who we work with because they can start their fundraising with me as an anchor and they do. And do you, so do you pick winners? Do you say, hey, you three,

you guys are getting the half the round from me. Yeah, we've evolved it over time. So in order to make it more fair to everybody, what I say to them is, if you're tripling revenue, if you're doubling revenue six months, we're likely to just preemptively make you an offer if your performance is in the top 5%. And we've done that. And then we'll let other people invest in it, but we'll actually price it around and put it in 500K or 250K and get them started.

I said, for everybody else, if you're not just crazy outlier, where you're tripling revenue every six months or something during the program, just go ahead and... We'll still leave room for other people. When you get your term sheet, give it to us. We'll have five business days or something to make a decision, and we'll let you know what allocation we want to take. But we'll usually do it in a day or two, which is actually what Y Combinator announced they're doing now. That they're doing now, yep. Yeah. So they switched to my position. Because I think they were experiencing the same thing, which was they were getting boxed

out of their winners. And so now we just say, give us a term sheet. And if it's a reasonable term sheet, it's not like something outrageous or non-traditional. Like we had one of our successful companies do a deal for common shares at a ridiculous price with some non-traditional private equity firm and we passed we said we'll just stick with our six percent but other times we'll put in 500k and so for a company like fitbot a major breakout for us they came to us with just two thousand dollars a month in revenue i think or maybe a thousand and they've been public about

you know hitting um eight figures in revenue they were public about that at the launch festival. They gave a keynote. And I offered them live on stage 2 million out of 50 million posts. But anyway, we wound up putting more money in a couple of times. You know, we built our position up to, you know, over 10%. So that's what I'm trying to do now is just get to 10%, 15%, 20%. And eventually, you know, with our fund, the syndicate, you know, and the accelerator, we republic, whatever crowdfunding syndicate you like, with a seed fund, like Homebrew or Pear or whatever. So that's what I'm constructing right

now. We don't have a proper series A because we don't need to because the fund plus syndicate kind of hits the one, two million dollar number. But the next fund perhaps will be able to do a full A, like a $5 million A. But I don't need to do that. I kind of like being in the early stage. It gets less interesting for me to go and do the big checks. And there's so many specialized people at that. I'd rather hand it off to Sachs or Chamath or Bill Gurley or, you know, Ruloff or somebody like that. We want to thank our longtime friend of the show, Vanta, the leading trust management platform. Vanta, of course, automates your security reviews

and compliance efforts. So frameworks like SOC 2, ISO 27001, GDPR, and HIPAA compliance and monitoring, Vanta takes care of these otherwise incredibly time and resource draining efforts for your organization and makes them fast and simple. Yeah, Vanta is the perfect example of the quote that we talk about all the time here on Acquired. Jeff Bezos, his idea that a company should only focus on what actually makes your beer taste better, i.e. spend your time and resources only on what's actually

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like Vanta's 7,000 customers around the globe, and go back to making your beer taste better, head on over to vanta.com slash acquired and just tell them that Ben and David sent you. And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired. Well, Jason, this has been like so fun. We got to do this more often because it's incredibly fun to riff with you. I think this is a good place to call it for the main show here. And for the LP show, I think what we're going to do is we're going to dive into

your investing, the way that you're sort of, frankly, deconstructing the jobs of a VC firm, sourcing, evaluating, winning the deal, helping, and then future access to capital. It's really interesting what you're doing. And I also want to discuss the way that all these things tie together and how you sort of view the flywheel or the funnel or how you sort of visualize it. And then I know you've got some- Good insider stories. Good insider stories, for sure. The couple you brought up. And also, frankly, the way you see the world. I'm sure there's a hot take in there. I got a hot take post-corona. Yeah. Yeah, yeah. So- All right.

Listeners, thanks so much for going on the journey with us here. Spend the hundred. Spend the hundred bucks. Become an LP member like me. All right. Listeners, thanks. LPs, we'll see you on the other side.