Odd Lots - Howard Lindzon Tells Us Why He Launched His Own SPAC

Episode Date: March 1, 2021

SPACs, sometimes referred to as blank check companies, are incredibly hot. After being a sort of sleepy and sometimes sketchy backwater of the finance world, the last several months have seen them go on an absolute tear, with several of them fronted by celebrities like Alex Rodriguez or Colin Kaepernick. On this episode, we speak with longtime investor and VC Howard Lindzon about his journey towards launching one of his own: how it came about and why he is excited about the model.See omnystudio.com/listener for privacy information.

Thanks for listening to OddLots. Follow the show on Amazon Music for more future episodes or just ask Alexa play the podcast, OddLotts on Amazon Music. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. Tracy, you know, we've done a few episodes on SPACs. And obviously at this point, I don't think anyone has missed the incredible SPAC boom that we've seen over the last several months. But I have to admit, I still have like tons of questions about like how they work and where this all came from. I was just thinking if we timed our odd lot SPAC episodes for every time a new SPAC entered the market, we'd be doing what, like two or three episodes per week for each SPAC. It's been insane, the number that have come to market.

No, it would be way more than two or three episodes per week, Tracy. You know that last Friday, so we're recording this on, I think it's, Tuesday, February 23rd, last Friday, there were 13 SPACs filed in one day last Friday. And then I think there were like another five that we're out by like Monday morning the next week. So we would never, we would just be all SPACs all the time. There's no way our producer, Laura, would be able to handle the long, suffering producer. So here's one thing that I always think of when we talk about SPACs.

I get a little bit nervous when the focus is on a particular capital markets tool. Like, it's never a good indicator for where you are in the cycle when people start talking about the actual packaging of the product versus the content. Yeah, that is a pretty, I agree. I mean, that is kind of weird. People are more interested in the phenomenon of spec than like the companies. The other question that I have, and this is something, is like, where do they come? from because one of the things that we've seen is that a lot of them like are associated with a very well-known name like for example you know like Colin Kaepernick for example the quarterback

has a SPAC and what I was like did he reach out to someone say I wanted to do a SPAC or did someone reach out to him and say Colin you should really be involved with our spec there's like a bunch of names like I saw like I swear to God it's so weird like the former editor-chief of Cosmo the magazine is involved in a SPAC that to take the clearing company behind, like, Weebolt. Like, it's just, there's a bunch of weird stuff. But I, like, where did these come from? And who, like, brought in the, where did the, you know,

whose idea was it to bring in the former editor-chief of Cosmo to do a SPAC? Our former Bloomberg news colleague, Betty Lou is doing a spec. Like, where did that come from? I have all these questions. I want to know, like, where was it over some Zoom? Like, how did this happen? Well, when a venture capitalist loves a company very much, they get together. No, that's not where SPACs come from.

Yes, I agree. Obviously, this is a hot phenomenon in markets right now. It does feel like a bunch of people are jumping on the bandwagon, but how does the actual process work? Who approaches who? And then, of course, how does the actual process of raising money and finding a company to acquire or merge with work? So I'm very excited about our episode today, because I think we might at least answer some of these questions and where they come from, what the opportunity is. with someone who is very, very open and honest, and I think will be really help us demystify the whole thing. We're going to be speaking with Howard Linson. He is a VC. He's a founding partner at the venture capital firm, social leverage, a bunch of big winners.

He was an early investor in Robin Hood and Stock Twits and E. Toro and a company called Manscape.com, which we'll learn more about. But I basically know Howard Linsend and a lot of people do because he's been on Twitter for a long time, talking about tech and investing extremely open. And he's always sort of one of these people that I think just has this sort of uncanny intuition about where the puck is going, as they say, in hockey. And it's like sometimes I see him and he's talking about stuff and I'm like, this is crazy. But he always ends up sort of being right and sort of has this just sort of feel of where the market's going, where stock. are going, where VC is going, where tech is going. And now he is the CEO of a spec. And he is recently, I think, in late January, filed the S-1 for Social Leverage Acquisition Corp. And we're going to

learn more about his process and why he's doing it and how it came about. Here are all the wisdom of Howard Linsen. So Howard, thank you so much for joining us. Wow. That was a cool intro. I totally mean I mean, I've followed you online. We've talked for probably a decade now, over a decade. I think probably like 2008, you were probably one of the first people that thought Twitter was going to be a really big thing. And you thought Twitter was going to be a big thing for markets, which it turned out to be in particular. So I've always sort of enjoyed following your stuff. But, you know, like, where did this come from?

Like, let's just start. Like, where did the idea of the light bulb come off to launch us back? So it's a great question because there is an origin story for everything. And I'm from Toronto, so you get a SPAC when you're born. It's like a Tim Horton's donut that you're entitled to a SPAC that goes to zero in record time. So I think, you know, growing up in Toronto with the mining in Saskatchewan and drilling for oil in Belize. and that was Canada. Like, I mean, you didn't call your broker

and ask for a tech growth stock. You got served a SPAC and you didn't have a good experience with them SPACs. So I have to say I had a very twisted, I would curl my mustache. If I had a mustache, I would play with it all the time.

Color me surprised. I was my last pre-COVID memory of a fun time was at this incredible dinner at Carbone's, which is like an institution, you know, for some reason in New York. Hard to get into Italian place. But I was sitting at a table with Adam Bain, who's a friend, and really an amazing entrepreneur.

Former CFO of Twitter. Former CFO or CFO. He's had every job there. He's kryptonite this man. You know, I'm kind of cousin. with him. I'm actually like fourth cousins. You're like the Adam Bain of media. You're like, yeah, yeah, yeah. Are you really looking for a compliment? We're doing right now. We're going to do our own back. No, but keep going, but I am actually very weirdly

related to that guy. And you know me because, it's funny, because you talked about some stuff. One of my favorite companies that ever was a seed investor and was your company that you work for with Henry. I was one of Henry's first investors at Ali Insider, Business Insider, whatever the hell they call it these days. The trade NFTs. And you'll probably have me on in six months to talk about NFTs. But anyway, so I'm sitting in February in carbones. And there was two things that you talked about at the time with Adam Bain. We were talking about what the hell is going on with this COVID thing?

What are we going to be doing? We didn't know it would be locked down a week later or two weeks later forever. And what is this fact that you speak of? Like everybody was talking about Burgeon Galactic, which was an Adam Bain production with Chimoth. that was done by SPAC. And as a Canadian, I was very, I looked at him. And I was like, oh, God, what are you doing to people, Adam Bain?

You're supposed to be a nice guy. He took the time to walk us through how Chimoth was thinking about SPAC. So we were kind of like ground zero because, you know, if you had told me that COVID would strike two weeks later and the country would shut down, I would have said, yeah, I saw that coming, kind of. But if you said it would lead to stonks only go up and barstool Dave and Chamath being the new Warren Buffett and SPAC, SPAC discussions on your show by the following year, I would have laughed. I would have giggled like a child. So he explains to us what a SPAC is and how they were using it more importantly for growth ideas, right?

So SPACs have been around an elegant, really an elegant feature. for a bunch of entrepreneurs that have influence, kind of like they talk about direct-to-consumers these days or around the influencer network. And so in a most simplest term, I understood the edit, the wedge, the pivot of a SPAC to be still about the promoter slash creator slash influencer, but more about how they were going to use it.

They weren't just going to use it to go speculate on a mining discovery. Spacks have always been in this elegant feature. It's been around for a long time. And much like the swipe became an important thing on the iPhone with Tinder, SPAC's subtle change was the fact that we had the cloud. We had this growth in France. We have zero interest rates.

We have these new influencers like Chumas. We have lack of IPOs. And then I think one of the most important things was you also had this late stage money in the hands of what we found out were some, you know, empty suits, let's call them, or like promoters themselves and weren't creating any value like we work, like SoftBank, sorry, and like T-RoePrice and Pidelity. So all that late stage money, all these things were combining together for a perfect moment for SPACs, but we didn't know that.

But, you know, along the way, like we're, SoftBank was writing four, five hundred million dollar checks based on an Uber ride, you know, based on their feelings about, you know, about a CEO at the Uber. And I think that whole concoction, that whole moment in time back last year, guys like me, learning from Adam Bain at Ground Zero, how they were tinkering with the spec towards growth and towards big ideas versus drilling a hole in the ground

and rolling up something in real estate or something in finance was this, oh my God, if SoftBank can do this, we can do this. And that was my advice. epiphany. It was like we would make fun of SoftBank and their silly investments in the way they bullied money into the market. And how is that different than a SPAC? Like it's, it's, it's really just an expression on how you feel about the person running the SPAC. So, so you have this epiphany that you can start your own SPAC, do whatever SoftBank does. How do you actually get the ball rolling?

Like what does that inception process look like? Well, for me, yes, good question. For me, it was like, well, I'm not going to do this. I'm like, the last thing I want to do is go through the process of hiring an expensive law firm to do an S1. Going on a roadshow and pitching people, you know, in a room about, you know, because this is still about raising money. You know, SPAC is all fancy term. it looks so sexy because, oh, we're a public company and we have a lot of cash. But really, behind all that is just a lot of boring and very detailed and careful disclosures

about what this, you know, entity will do. And, you know, what is its purpose? Who is on the team? Why did you assemble this team? What do you plan to do? What are your high level focuses? So you need a quarterback for all. this and lucky for me at that dinner was my friend Doug Horlick who's an ex-Goldman guy and he just

his ears perked up when he he was listening to Adam Bain and he was like taking notes we're all like joking around and and enjoying our last meal it turns out pre-COVID but he came under that meeting Doug and he said Howard you're the perfect guy to be the CEO of a SPAC you have this huge audience of which you can talk to, people trust you. You've got all this trust built up. You know, why shouldn't you quarterback spec? And I said, you know, I don't want anything to do with this with the regulatory and the hoop and the detail. But he said, I got your back. I know how to do this. And off we went. So now I had a partner, Doug Horlick, who really had a lot of experience in markets. He also knew who to call on the banking side, just pitched.

idea and see if they would be as excited as he was about this idea than that. So that was the first step. Then we needed someone that I felt, there's no way I was going to go down this road with just Doug. We needed someone who had public market experience, right? So sure, the media has having a field day and say, oh, anybody should have us back, right? And we all fall prey to that as just whatever, whoever's got the hot tape. But really, I would say, do not do this unless you have someone at your side who has tremendous public market experience.

And for me, that was Paul Grimberg, who happened to be an LP and was president of Encore Capital, which is a global financial lending business, and also the chairman of Axos Bank, which is a large public bank, profitable public bank. So what a perfect moment for me to know someone like that. And I called Paul, who's raised money around the world in his jobs and overseen audits of public companies and overseen the growth of profitability of a public bank. And I said, is this something you can help me with? And he got really excited. It says, oh, man, with your network. And so we got Paul Grimberg on. So now we have the makings of a band, as you would say.

It's like the traveling willberries of finance. I've got a Goldman person. I've got a public market chairman of a great bank in the New York Stock Exchange. And now I just got to keep filling out the band. And so my next piece of the puzzle is how to find some partners that have targets. So now if you are going to do a SPAC, you've got to, like I said, find someone to put the banking relationships together and ensemble a roadshow. You also need someone to get you through the S-1 process, and I would say, don't just hire Scadden or some expensive attorney, which we did. You need someone to guide these attorneys, and you need someone who understands how to do all the filings, and that I found with Paul Grimberg.

We had the core of a SPAC team pretty quickly, but there was still so much more that you have to put together. Hello, I'm Michelle Hussain, and for more than 20 years, I was at the BBC. But all the time I was delivering the head. I wanted to go further than the news of the day, to spend more time with the people shaping our world. And that's what I'm doing here on this podcast, speaking to people from Nigel Farage. This is love you trying ever so hard. To tech journalist Karaswisher. And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run-up in their stock prices. This will be a place where every weekend you can count on

one essential conversation to help make sense of the world. So please join me, listen and subscribe to the Michelle Hussein show from Bloomberg weekend, wherever you get your podcast. It doesn't ask interesting questions. So I want to go back to a point you made. And you know, it's like we look at all these SPACs run by public figures. And there's like, you know, the US SPAC and the Colin Kaepernick SPAC and the co-founder of Facebook Spack or the co-founder of Dell's SPAC or the Betty Loo Spack.

And you mentioned, and then of course the 26 Chmoth Spacks we're going to get. And you mentioned the importance of that public network, the promoter, someone who's kind of basically an influencer. Can you articulate specifically why in this current iteration of the SPACs, whatever, the SPAC cycle, what exactly your network, your platform allows you to do and really allows. you to sort of contribute to the SPAC value creation. Okay, and this is all high level. Yeah, of course.

Because I can't even explain it. Like, you're asking me to explain something that I laugh, because I wish I could film the whole process from the eyes of a Larry David of finance, right? I look at this is all rather silly. I mean, it's very important, and I take this thing extremely seriously. Hopefully the origin story helps with that. It's not like I woke up, had lunch with Adam Bain and said, whoa, like I joke. And I say, well, if Adam Bain can do a spec, I can do a spec,

back. Like, that's an easy, funny joke. But reality is, Adam was explaining, and that's the genius. It's just not a one, it's a very complicated process that people need, that people generally take seriously. I have to imagine because the SEC and lawyers and it's expensive. It's not free. So getting to the next part of it is the key thing here about the markets to understand is we talk about the creator economy, right? Like there was all these years where I was like, man, people like my writing and they respect my work. But like, should I set up a Shopify store to like, how do I monetize all this daily writing on my blog and my tweets and all these people that think I'm funny or smart? So, so I felt as someone who writes for free and gets all this feedback that

maybe I should have a house. I'm not monetizing myself properly, right? Like everybody has that feeling. Someone tells them they're great. You know, SPACs are basically a perfect tool for financial, you know, entrepreneurs, right? You know, I have a fund with two great partners, Tom and Gary, but when we commit to a fund, we have to commit to 20 to 25 investments over three to five years together. We have to go through the money raising process. You're in it. You got to write an album. It's like Bruce Springsteen and the East Street band, if I were to say, you know, music is like the closest thing to it. With a SPAC, I could put a separate band together, like I said, the travel and Wilburys to just try and produce one hit. And there's a lot and something more elegant about that,

right, when you consider how many people. Can I just ask a real specific question? Is it on the fundraising side that the platform helps as in, okay, we want to back the Howard Linson's back, is either from the people who buy into the IPO or the pipe that's part of the process, or is it on the deal acquisition part that people want that a company thinking about going public wants to be part of it? Like, what specifically is the brand, the Howard Linson name? What part does it help with the most that, you know, Joe Schmo would have a harder time with? It's a good question.

It really helped with all of them. And color me as surprised as everybody else because I had Doug tell me, Howard, they're going to love you that you don't understand. They know what stop Twitch is and they know what Twitter is. And I would laugh. I say, I don't think so, right? So it was a very, you know, it was very much curbier exuberance, I call it, versus curbier enthusiasm. I was saying, guys, we're going to go here. And these hedge funds are going to laugh us out of the room because they don't even know what Twitter is.

But I think, I guess they do. from the road show I learned that I actually have a little bit of cachet in that world. And I think it helped that the GameStop and Wall Street bets and Reddit and Twitter and TikTok and social media and investing things that, you know, I was talking about with you and Henry Blodgett you know, 15 years ago. All of a sudden, I am someone with some gravitas in that space. and I can't explain why it's now. But it's just that perfect kind of moment that I might have gotten lucky

or the people that talk me gently said, Howard, you know, you'll kill them on Broadway, which is like you're going to kill them on a Zoom roadshow and they're going to be prepared and they're going to know what Stock Twits is. And to be honest, Joe, you know, they did. Like the hedge funds and the asset manager from BlackRock on down low, they know. that public companies have two things to sell. They have the company itself, the product, whether the widget, whatever that company is.

And then when you're public, you also have your product is the ticker. And you have to tell this story, right? There's Tesla, the company, and then there's Tesla the Mems, right? And some people are saying they're interchangeable today, but the narrative is become, and again, this is just timing

and this place and time in market, Spacks might not have happened if COVID, you know, hadn't happened, or if there was only two ways to really go public, which is Goldman and Morgan Stanley, right? Like there's only two pipes that get you onto the stage. Well, of course, all this going on, Spacks became interesting. But the most important thing to me was like the reception was very strong for someone that understood social media, for someone that understood the importance of helping a company that is, does choose to go public through a SPAC, how to build a narrative, right? How our team can help just as well as T-Roe Price or Fidelity or SoftBank or any late-stage VC, how our team that we assemble can help a company actually accelerate themselves post-going public. Because the SPAC or the IPO is just one day in the end, right?

Like how you choose to go public, and you've probably heard this 100 times, it's just one day. And then the bell gets run, the stock gets traded, and the next day no one remembers if you were public through an IPO or through a SPAC. And I started seeing that happen with drafting. You know, as someone who started stock twit, I was seeing this happen with Virgin Galactic. I was just as surprised as the next guy that draft kings was a successful SPAC. So, you know, you start seeing a few successes and you start trying to glean from podcasts. I had Jason Robbins on my podcast who founded Draft Kings, and I'm asking him questions with him not knowing that I'm in the middle of doing a SPAC.

And I'm listening and I'm getting his brain explaining to me how this whole process went down. So there's all these ways to quickly learn and draft behind other people that do it as well, which is different than any other moment in time. So, Howard, one thing I've always been curious about is what the SPAC road show actually, looks like in terms of the fundraising process. So, you know, normally when you have a roadshow to, I don't know, do an IPO or to sell a bond or something like that, you have a specific product or company that you are pitching to investors. But of course, in this case, you have the shell of the SPAC that you are launching and a sort of mandate or idea about the kind of

companies that you're interested in buying or merging with. How do those conversations actually unfold and what do they look like? And also, how did you decide on your acquisition target industry? Yeah, all good questions. The, the, and all the important things that have to happen. So I was learning in real time, you know, I call, I say it learn by doing, by seeing other people that were contemporaries or mine doing it and having the lucky ability. to talk to these people and having the capital in the network to be able to form a team to go to this, the roadshow was mesmer, you know, was staggering to me. It's like, wait a minute, we don't have to get on a small plane and go to Toronto in the middle of the day to do one meeting

and then Montreal and then I'll back up to New York to do this. And I think the bankers have discovered this too, right? It takes two to tango. Let's do math and say you raise 300 million. Well, banks charge 2%. So on a $300 million dollar rate, remember who makes $6 million. dollars risk-free are the banks. And so the banks have a new toy of which, of that $6 million in the olden days, let's call it pre-COVID, the olden days of road shows, it was very expensive for a bank to put on a road show, you know, flights had to be made, schedules had to be made, meetings had to be canceled, pineapple had to be ordered for the food room, and occasionally, you know,

a little booze, a little steak. So, you know, the bank's margins have gone from 30% on a roadshow to 98.9%. And so the banks, you know, we can make fun of Zoom. And, oh, Zoom's the next day. I've heard some very smart people say. And I look back and go, I don't think they've ever been on a banking Zoom roadshow. You're not going to put that genie back in the bottle. So banks, if you told me that I could raise $300 million over Zoom among some of the

top financial hedge funds and investors in the world, I would have laughed you out of the room. On top of laughing you out of the room for all the other things I've told you about today, that would have been the one I really would have had a good chuckle at. But yes, Zoom and the roadshow is an incredible, magical, weird, very useful way to raise capital and tell stories.

And I think that would be one of the most incredible, long-term financial effects of COVID will be, yeah, kids should go to school. Of course they should go to school and socialize. You know who shouldn't go anywhere and socialize or hedge funds? And they found their toy. And they're using social networks to do their due diligence because, hey, it's a lot better than going through custom New York, Toronto or Toronto to London. And by the way, we have LinkedIn and we have social networks and we have, we'll have more tools

to background check people. And there's a lot, you can get a lot more meetings done and a lot more capital raised over Zoom if everybody is committed to the process. And that's where we have so many stacks because both the suppliers and the demand on both sides are exploding. The marketplace is getting endless supply

and endless demand right now because both sides want the product. So what does the pitch actually, look like, though, in the roadshow. So you say, I'm starting a SPAC. I'm Howard Linson. We're thinking of buying these types of companies. And like, what's the value proposition there? Well, I mean, the value proposition is do these, first of all, we're in a zero rated in, you know, we're in a low interest rate environment. So the, that's not, they're not stupid people of the hedge funds. You know, a lot of the enticement is the warrants, which are now quickly,

coming down to zero, as we're seeing. But the other thing is, do I trust this group of people to get a deal done? If we give this group money, will they go out and do a good job finding a target, finding a company, and getting out of their way or getting in their way and making the change that happen that create, you know, market beating returns out of the target that they find. It comes down to, you know, performance and can I bet on this team to get a job done? And so we put together a team that really exuded this ability to get it done. You know, we brought on a board of executors. We brought on, you know, Ross Mason who founded Mulesoft,

the $6.5 billion company that was acquired, a 16-year overnight success that was acquired by Salesforce. You know, Ross knows open source software, Ross knows enterprise software. Any CEO in that space would be thrilled to have Ross chatting with them about how to build an open source or enterprise company. So just like a team in sports or a, you know, a perfect band, you know, our job was to assemble a team that could get a deal done, not just get a deal done, but then help that company really become, you know, go from two to 10, let's say, go from a $2 billion dollar valuation in the private markets to a $10 billion valuation over a few years in the public market. So this is exactly what I was curious about next. And it is, and I think this is really

helping me understand this even further, is how much of the pitch is about not just the ability to identify and get a good deal done, but about you, Howard Linson, and your team being part of this public company that exists and as you say tell it story and essentially sell the stock ticker and what is the sort of the structure of the deal such that you are incentivized to not you know okay it's public i'm going to wash my hands of it and go launch the next 25 spacks but actually have some skin in the game so that it does outperform uh over the long term and you do use your network and your skills to help it do well. Yeah, that's, I think, another ultimate question.

I think for us, first of all, it's completely our money. So maybe in the olden days, and I say this, and someone who's been burnt by owning SPACs when they were younger in Canada, but we didn't know how the sausage was made. So, you know, some broker called you and said, this is going public, and it's AFME drilling, incorporated, and you're going to buy the stock.

It's how the product was sold. it was probably shady. You know, the product hasn't changed that much, but I said, like, the tactics of which they were put together and sold have. So, you know, I believe what's something that's different, and it's up to the investors to read the S-1s and ask the right questions, is who owns the stock? Like, who put up the money to get this band together?

And for us, it was all our own money. So of the almost $10 million that there's a pay to play here, And I think some of the ones you have to be careful one where that $10 million comes from not the group involved, but maybe some retail investors or some shell that was put together with creatively from a pile of old shells that already has all the filings, et cetera. Ours has started from scratch. So we've got to invest in the law firm, the S one, the who's going to pay the 2% to the banks, the D&O insurance, you know, are there going to be salary? raise. This could take two years of time. So you've got to set aside $8 to $10 million, depending on what you're going to raise for those two years that you've got to operate this public company. So there's no free lunch. And the returns, if you don't have to negotiate down

your fees, can be fantastic, you know, but the risk is still there, you know. And I think what good allocators or capital asked for is, like, who put that risk capital together and how long is that risk capital going to be tied up. How do you align the SPAC operators with the public company? And a good board at a good public company is going to put the clamps down on all the stuff that happened. And I think we're Chimoth and Adam Bain and this new batch of good intentioned SPACs, like people that are going to be great band leaders and people that know how to put together a symphony. And by a symphony, I mean a great public company that grows faster in the public markets than ever doing the private markets, it's going to come down to, you know, intentions and execution.

And the more risk capital and the more alignment that the SPAC operator has with the long-term goals of the public company, the better. So it's up to both sides to kind of tie each other into the long-term here. So for you, though, just if I could follow up real quickly, what is the requirements or what is the expectation on the part of these hedge funds that you're going to be with it for a lot. Good question. I mean, until you find the target, the sharp nyes probably don't come out, right, where everybody really puts the screws to each other and says, we'll agree this deal happens if you guys lock up your shares for two years, right? There's no, nothing's written in stone. Everything's up for negotiation. Now, some, maybe Chimath has more power because he's done more

and he says, no, we're only going to lock up. I can only speculate, but, you know, each deal will be different. You know, as the clock ticks back towards two years, if you haven't found a deal, you're going to lose a lot of your negotiating power as a SPAC operator. So, so many things can, can change. And I think the media's had a field day just kind of putting everything neatly compartmentalized, but this is a very complex, very elegant product, but with all kinds of complex ways that they will, in each one will be structured differently when they're finally They expressed us a public company. Got it.

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the Killing of Bob Lee, beginning April 16. What separates good leaders from transformational ones? I'm Jessica Chen, and in season two of Leading By Example, we'll sit down with executives like Grace Chen of Bertie Gray to find out. It's important to understand where you spike, but also really acknowledge where you don't and find people who can fill those gaps.

Listen to Leading by Example, executives making an impact on the IHeart Radio app, Apple Podcast, or wherever you get your podcasts. So how is the acquisition search actually going at the moment? Because in previous podcasts on the subject of SPACs, Joe and I have heard the competition is pretty intense. Spacks are starting, you know, every week, if not every day at this moment in time. We've heard of SPAC-offs where, you know, multiple SPACs will compete for one target.

How's it going? Who doesn't like spacking on? Oh, dear. So that was teed up. That was so teed up. I don't even know if that could run on Bloomberg. The ultimate question is what you just asked, is like, what's it like out there on the gridiron? And let me just tell you that I'll give you the same answer.

If I can be a venture capitalist, and I'd say that loosely or whatever, I mean, it's a bull market and we've had our wins and we've got a great track record. So we're very proud of that. But we are in a software, boom, bull market and zero interest rate economy. So I'd like to pat myself on the back, but remind myself that pretty good tailwinds out there. It's all about, you know, can you get something done? What's important here is that you move, you know, quickly. We have, we have just legally gotten through the process. This is the end of my quiet period where we actually can talk to companies about our SPAC

and prepare, you know, explainers about what we think we can offer and send that around. But I never worry about the competition. And the world is big. We've gone through this very long period of indexing and like set and forget. We're coming out of this period where every American is basically holding the same portfolio, right, we came out of this long period where you should only index and you should buy Vanguard and you should put your retirement money in Black Rock's S&P index. And you should have a 70-30 portfolio or a 60-40 portfolio like Tony Robbins,

all of the sudden is saying that's the way to manage your money. And guess what? I think what we've seen in the last year is what we saw with Uber and transportation is what we're seeing with Robin Hood and Eitoro and trading is when you put. a beautiful button on top of a very complex thing, this next generation likes to push the button and spin the dice, or roll the dice. And so we have this incredible unbundling of the indexes. And so I think there's hundreds of new public companies that can survive. And when you, and that may not sound like a lot, but it really is, I'm talking about good public companies, right,

where the market to support probably a thousand new public companies, of which there'll be 200 great ones or 100 great ones. And so we don't think it's that competitive if you know where to look. And just as VCs, they told you that, oh, unless you're in Silicon Valley, you can't have great returns. Well, social leverage is in Phoenix and San Diego, and we're top, you know, performing venture capital fund. So I've never really bought into that competition.

America is a huge country. I say it's an emerging market in many ways because you can do investing outside of San Francisco and New York right now. So the flyover states are emerging markets just like Malaysia is an emerging market. So I think the targets are way more than people estimate or guestimate, just like most people can't analyze and tell you where a stock's going to go. I don't believe that the media or the analyst can say how many public companies. is there can or should be. So I think we're in this like wild west where if you find a great company,

you can get support for that great company and you can find shareholders for that great company because everybody has a brokerage account in the palm of their hand. I just want to point out while we're having this conversation, February 23rd, 947am Eastern Time, NASDAX down 3.5%. So maybe this is the top.

Maybe this is the, this would be perfect. Like, no, I don't really, I don't really think that. There's no way the top. I think that. You think so? Well, no, I personally think that if I can do a spec, that would be, you know, it's that old saying, you know, if they're going to, if this club's going to accept me, then, you know, why would I join the club? I think, you know, it's easy to just yell out this will be the top of that, be the top. There has been so much speculative behavior and I was writing about today in NFTs, like, because I can't get enough.

I can't get enough action in the real markets. I got to develop a digital card market. We've seen all the signs, right, that there should be a pullback. And it's not just, you know, a year ago, it was just Tesla. And today it's not just Tesla. It's like Ethereum, it's Bitcoin, it's alt coins, it's NFTs, it's, you know, GameStop. I mean, there are so many reasons why you could say it was the top. And eventually, somebody will have a tweet that they

They hold up five years from now and saying I called the top. But, you know, it's just not a very practical way to go through life, yelling out, bearish statements. You know me. We joke about this all the time. It's like, it's just stupid idea to just run around yelling, looking for the top or looking for the bottom. Right now, it's a participation economy. Some of us are luckier than others. And there's a lot of supply.

The way I look at it is there's going to be some vicious sell-us because there's a lot of smart people. creating products for the investing world, and there's just a lot of supply. So, sorry, can we just dig into the froth idea a little bit more? Because you on your blog have been, like, slightly critical. I mean, you've praised SPACs as a graceful product, an efficient product, and all of that, but you've also been sort of critical of some of the stuff going on around it. So I think you said something like the stock market has its own fantasy sport SPAC. So just how crazy do you think everything is at the moment?

Well, I'm very much an investor or trend follower. I call it 8 to 80 companies. I like to invest in public companies that I really feel, I understand. Maybe not to quarterly financials. I'm not listening to all the conference calls. But, you know, when I wake up and I call them 8 to 80 companies and I think about Google, I can compartmentalize Google and say, you know, if you believe the Internet is growing, then, you know, Google is fine.

And there's going to be, and it's growing too. And so in the SPAC world, what's so unique is there's so many different ways to express a SPAC. And so for me, I don't like the SPAC ideas that are in these very nascent markets like electric vehicles where the revenue is five years out. It's just not my style. So I can be cynical of SPACs, but still want to create a SPAC because for our SPAC, we're looking down the middle of the road of enterprise and e-commerce mainly, where we think big, profitable cash-flowing companies can be built in the next Shopify's and the next Twilios. And they're out there. You know, when we invested in Robin Hood along the way and it got to a billion dollar valuation, which wasn't that long ago, people, still were like making fun of it. And, you know, in many other eras at a billion dollar Robin Hood

company would have been a public company. And now it's, you know, give or take a few billion, they're saying $30 billion in the private market. Like that $30 billion is still was locked in the private markets that move from one to $30 billion. So I think the investors need more choice. Wall Street and Main Street or advertising Wall Street got away with telling this story about passive investing and cut your fees. And we all ended up with the same product. And we all ended up with Wells Fargo and Verizon in our portfolios. And we hate those companies. I can tell by the media writing poorly about their practices that we hate those companies. So why do we own those things if we hate them.

That bothers me and SPACs. Even if you make fun of them, we have a chance, and I call it fantasy, we have a chance to align our capital with people that aren't going to get us into the next Verizon or Wells Farter. We're going to take people to space

or we're going to build an electronic vehicle or we're going to get the next Twilio public and bet on us to do that. So I think there's that fantasy part where you can actually not just be an armchair, quarterback, but you can feel like you have some skin in the game, whether it's 1,000 shares or 10,000 shares. And you have access because you talk to Howard Linson on Twitter. So maybe you, with your tweets, can subtly influence how the game is going to be played. So I think that's part of

the fantasy part of it is that the people making decisions are on Twitter and on stock tweets and sharing their insights. And you feel like you have some kind of say in the game. And I think that's coming back to the markets, and I don't think there's anything wrong with that. I want to talk a little bit about Robin Hood, but before we do that, I have one more sort of SPAC's question. This might be a little speculative, but, you know, like you hang out, obviously, in very impressive circles, and you go to Carbone with Adam Bain, who, even though he is like a fifth this is coming back to haunt me. Even though he is like a fifth cousin of mine, I don't think, you know, he didn't invite me there. So, but, you know, we look at all these specs and, you know,

a joke. It's like, oh, the editor-in-chief of Cosmo had us back and Colin Kaepernick had us back and all these. Like, where in your, from your sense, are these coming from? Is someone approaching them out of the blue at places, I don't know, I guess no one's going to Carbone now because of the virus, but is someone, are there like groups of dealmakers out there who it's like, you know what, we have everything we need, we have the lawyer, we have the operations guy, we have the guy that knows the cloud, we have the Goldman guy. What we don't have is the person with a big Twitter following and it's like, you know who would be great? Colin Kaepernick, whatever it is.

Like, is that kind of how, is that your sense of how these are coming about? Or are they more like the conversations you had? Like, what's, you must have some feel for what's going on. Absolutely. I did not call Colin Kaepernick or any athlete to get involved in our SPAC or entertainers. Because not that they shouldn't be, right? It's a free country. And this is just another financial tool.

And we've seen this with tokens. and we've seen this in advertisements for products. This is just another product. If a promoter slash creator of a spec is thinking that a celebrity will make their spec better, you've just for sure turned me off the deal. I'm not going to tell other people what to do. But if I'm reading an S1, the last thing I care about is if an athlete or a celebrity is involved. unless that athlete or celebrity has incredible domain experience

or investing experience around what I think they might target. So when we put together our team, it was more about how will founders, very fast-growing companies respond to us, right? Like, you know, what do our trading card? Like if they have a quick one-pageer about social leverage acquisition court, how do we make sure they take our call? And if there's four other bidders around the table,

why would they go with us? And that's how we thought about the team. And that's why Ross Mason is involved in Mike Marquez and Brian Norgaard from Tinder and Mike Lazaro started Buddy Media. When we put this team together and it was mostly orchestrated by me is I wanted to be able to, when we want our founders to light up and be ecstatic that they have Brian Norgaard in there to help around product and growth. Or Mike Lazaro, who sold his company for 800 million to Buddy Media or and worked as chief

strategy officer for a few years under Mark Bennyoff. And so, so, you know, we thought about our SPAC as, like I said, it's an incredible band that we're trying to put together to produce one incredible hit. And obviously we'd like the band to stay together and do two and three and four, but I think it's very elegant that you put it together and do one company. The idea that you can even do more than one company seems crazy. So I think it's just so. interesting that you can expand all your energies to go create that one great hit.

And if you watch any of these music documentaries, it's kind of the same thing. When they go back and tell you how they made the song, it's like, wow, I didn't know that person was involved in the lyrics. And I didn't know, but generally, it's not some fluke that a great song get built. There's a backstory. And I think it's important for investors to really understand the backstory and how long that team's been put together. Because maybe the Colin Kaepernick one has a specific, I have a specific, I have a bit, and I think,

I haven't read the S-1, but has a very specific reason they're using Colin Kaepernick. So, again, there's more than one person, but I am a little bit leery of things that get promoted with someone famous because behind the scenes, you need someone great in the boardroom, and you need people that help guide through quarterly earnings and earnings missus. And let's be fair that even I'm not good at that stuff. So you have to put people on your team that know how to do all these things. Well, let's real quickly and sort of running out of time. But, you know, I am curious, obviously not too many people, investors in Robin Hood,

which everyone knows all the controversies and everything that's going on right now. So first simple question, has the recent controversy, do you think it derailed it or slowed it down at all? Because the downloads are still huge. Like, is there a trajectory for this company still as good as it was? I don't have a seat inside the border. I will say that we did try and invest, even though we're early seed investors, a bunch of our LPs and myself got around. You know, when we thought through it at the end of the day, we decided to try and invest a little in this round. Because I look at it from a very high level, Joe.

I mean, forgetting about the communications and who called who. Sure. There was an incredible security. And by security this time, I mean, everybody pushed the exact same button, give or take. you know, how they pushed it and how much leverage they decided to put, once they pushed the button, everybody decided to push kind of the GameStop button at the same time in the same direction. There's two camps. It happened at Internet scale. And I don't think anybody had seen this. Anybody developing models for a hedge fund had their models. And I said,

oh, a three standard deviation move would put GameStop at 80. So we're not, you know, so at 80, they felt like, oh my God, the world's never seen this. Well, guess what? Once the world hasn't seen something. The model doesn't count for anything. And a lot of great people that shorted GameStop at 80 ended up with GameStop at $300, like an hour and a half later or a day later, meaning the models that they were basing their trade on imploded and it imploded at Internet scale. And I think that combined with the middle of the night phone call for probably more deposits. just the game went tilt. And I think the three and a half billion that was used to patch this, you know, security breach, let's call it.

You can call it what you want, but really it's a security breach by a lot of people doing the exact same thing at the same time. It's kind of like an attack that they'll say bots will attack a site and you have cloud flare to protect your site from something like that. DDoS. Yeah, DDoS attack. This DDoS attack happened. and there was just basically a run on the bank and not on purpose, let's say, but it just happened. And we can pitch and moan about how the game rules were changed.

And I totally have empathy for people that have been, feel that they got screwed over here because this happened to me in other trades, is that owning GameStop at 300, even for an hour, is a little bit risky. After it was, you know, let's just be honest with ourselves. The people that were playing that game were looking for trouble. even if, and they may not have deserved it, but they were looking for it. I think what Robin Hood comes out of this and just brokerage in general is much stronger to see internet scale and yes, people got hurt for sure financially.

But I'm glad it happened over in this corner of the market, not, you know, everybody pushing S&P was we saw in March. Everybody's selling their 500 stocks at the exact same time. It's some incredible volatility and some scary moments. And I think the system will get stronger. And so I think for Robin Hood, the risk is always when you're a leader is, if there's a number two, there's a lot bigger risk of getting stuff wrong than if there's no clear number two. And I think what we found with Robin Hood, and color may surprise that I've been saying this for years,

like, why is there no lift to their Uber? It's very rare that you find a leader like Robin Hood go from one to 30 billion. if there's intense true competition. And what we found with Robin Hood and post-Robin hood is their product so good and so much clearly better than any venture-back competitor, any incumbent, that they got through this rather well and should come out stronger, both financially,

and from understanding what the hell just happened with GameStop, because now there's something that they can put in their models. So in the end, love it or hated, it's a strong win for Robin Hood. Howard, that was fantastic. I swear, I swear that was actually, I feel like I have such a better grasp of SPACs now than I did an hour ago after having listened to you, walk through the mechanics. I was like exactly what I needed in looking for. And I really appreciate you coming on a lot.

Yeah, I figure, you know, learn by doing. I appreciate you letting me tell the story. You know, I didn't know anything myself. I was skeptical when I talked to Adam Payne. I was like, oh, my God. I can't believe you're doing this. Well, looking forward to seeing how it goes. Maybe we'll have you back after the process is all complete.

All right. See you, Tracy. Or to talk about, wait, what was it? The NFAs, the token? NFTs, non-fungible tokens. NFTs, there we go. Banana. Take care of Howard.

You know, I swear, like I said at the end there, Howard, that really did actually answer a bunch of questions in my head. Are you going to talk about doing an all-bots back? No, no, because no, because we don't have, you know, what would we do? I don't have like those connections or anything like that. So if anything, I feel more confident that I probably couldn't launch us back. But I just sort of get, I think, a little bit better, like what the premise is now. And, you know, you said the point in the beginning.

It's always a little dicey when people start talking about like the vehicle more than the company. And actually, I don't disagree with that at all. But in terms of even after listening to it, but in terms of. terms of like why now, why they're coming together, why they're coming in together in the way they are, why they're coming together with the speed that they are. Like, that actually really did help out clarify a lot of things. So one thing I thought was really interesting and it sort of ties together the SPAC conversation with Robin Hood and GameStop that we were discussing at the end. But Howard mentioned this idea of SPACs as a sort of rebellion against the index world or

you know, the tyranny of passive investing. And I think that we are seeing that to some extent with the tech stocks and this idea that, you know, people are buying companies that they like to use, you know, the Reddit joke. They like GameStop. They like AMC. They like Tesla for whatever reason. And SPACs are kind of unlocking a whole new group of those types of companies that people could potentially invest in. I think that's interesting. And I do think like people are getting frustrated with this idea that they're just going to pour their money into an S&P 500 fund and wait for, you know, 40 or 60 years until they retire. That's boring and also like a little bit sad. It is boring and sad. I just feel like it's kind of like being told to eat your spinach.

And I do think like eventually. Right. This is good for you, but you're not going to enjoy doing it. And I get it. It's like you're not supposed to enjoy. It's tough because you're not really supposed to enjoy. investing, investing isn't supposed to be fun. On the other hand, this is this impulse that is latent and exists in all markets throughout time. So it's kind of almost like, how long can you suppress it? Like gambling, the urge to speculate has been part of respectable financial markets and all time. And so we can write articles and say, just passively index and rebalance and Jack Bogle and low fees and stuff like that. But just because we say it doesn't,

and just because it's maybe right, doesn't mean that people are going to accept it. And we're clearly seeing that, especially over the last few years, and GameStop was part of that. Robin Hood is part of that. And Spax are part. Yeah.

Yeah. That's a good way of framing it. All right. Shall you leave it there? Oh, go ahead. Yeah, I was just going to say one more thing, though. You know what I was just thinking about with Howard? It's like, there's like a famous quote

of George Soros or something he said like when I see a bubble I don't get scared of it I run towards it and I kind of think that's like Howard's approach it's like he can recognize

that there's some maybe some disturbing stuff going on with specs he can recognize that there's some disturbing stuff et cetera but as an investor I've always thought

of like the 13 years I think I've been following him now he had a good nose for like which bubbles to run towards as opposed to you know the sort of like typical

mentality of like, oh, I'm going to stay far away from that. Yeah, I mean, people get rich during bubbles if they're able to time their exit. So there's definitely opportunities there. All right. Should we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway.

You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. Follow Howard Linsen on Twitter. He's at Howard Lenzhen. Follow our producer, Laura. Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for

listening. A lot of short daily news podcasts focus on just one story. But right now, you probably need more. On Up First from NPR, we bring you three of the world's top headlines every day in under 15 minutes. Because no one story can capture all that's happening in this big, crazy world of ours on any given morning. Listen now to the Up First podcast from NPR. What separates good leaders from transformational ones? I'm Jessica Chen and in season two of Leading By Example, we'll sit down with executives like Grace Chen of Bertie Gray to find out. It's important to understand where you spike, but also really acknowledge where you don't and find people who can fill those gaps.

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