This Week in Startups - E1073: The Power of Accelerators E8 Mike Jones, CEO of Science shares insights on what makes a great Direct-to-Consumer Founder, investing early in Dollar Shave Club, economics of a venture-studio & more!

Episode Date: June 10, 2020

0:32 Jason speaks on current events and intros Science CEO Mike Jones, how they met after selling their companies to AOL 6:02 What is Science and how has it evolved since being started in 2011? Why did they pivot away from the startup studio model? 12:43 What are the economics of a venture-studio? 15:25 Defining the 3 scenarios of a "lifestyle-business" 18:41 Founders sharpening their skills through hardship, how Mike experienced that at MySpace 25:48 Investing in Dollar Shave Club, insights on what makes a great DTC founder 38:25 Short-term/Mid-term/Long-term impact of COVID 48:37 What is gained and lost in fully-remote work? 57:28 Thoughts on eventually going back to work?

This week in startups, The Power of Accelerator series, is brought to you by LinkedIn jobs. A business is only as strong as its people, and every hire matters. To post a healthcare or essential service job for free, visit LinkedIn.com slash power. And Dell for entrepreneurs. Level up your hardware today and save up to 43% by going to Dell.com slash twist. Hey, everybody. Hey, everybody. Welcome to another episode of This Weekend Startups.

I'm your host, Jason Callicanish. You can follow me on Twitter. Twitter.com slash Jason or Instagram. com slash Jason. But I'm hiding all my photos and archiving them on Instagram because I don't want to support Facebook and Zuckerberg anymore. It's a crazy time right now, obviously, the pandemic and then the social unrest. And what we've seen in terms of the protests, obviously, it's very difficult to talk

about business at a time like this. It's difficult to run a business at a time like this. There's so many distractions. But as I've said, a number of times on the show, what matters to people in their lives? Well, being alive, right? Their safety and security. And we've seen that in both of these crises that we're facing people's lives are at stake. But shortly after, you know, you ask anybody, what else are you concerned with? Livelyhood comes up next. And entrepreneurship and startups, and people having that support in the earliest time of their startup, not raising $100 million in your series CD or E, but getting that first $100K in the door,

that's really what matters. That's the hardest check to write. That's the hardest time for a company. And that's why I really wanted to start this series, The Power of Accelerators. And so I'm just giving permission to everybody who's listening. I know you're suffering. I know you're probably losing your mind watching television.

You have to pause that sometimes because the news is horrific. And you do need to focus on livelihoods and creating jobs. That is going to be the second order impact that we need to solve for as we go into the second half of 2020. And there's nothing wrong with wanting your business to be vibrant and to be able to hire people. And at the same time, being concerned about social justice, being concerned about the pandemic and people's health. So I just put that little disclaimer and inspiration maybe for some of you who are founders and just you wake up and you have to make a decision, do I run my business or do I put on CNN? Do I check Twitter trending topics and look at these disturbing videos?

Or do I hire the next person and make sure my business is vibrant? You know, a little bit of both is okay, but you certainly don't want to get paralyzed and forget about your business and not be able to run it to the point at which it goes away and then you can't hire people. And then we have more unemployment in the country. We started this Power of Accelerators series because, and we use the term accelerators as a catch-all for incubators, accelerators, in the case of mass challenge,

a challenge type event, which also helps me on the early stage. And today representing the startup studio is Mike Jones, an old friend of mine. Not that he's old, but we are getting old, Mike. Welcome to the podcast.

We are getting old. I know. We might have met each other 20 years ago. It's been a long time. It's pretty close to that. We met. You were doing, a company called

UserPlane which was kind of like widgets for websites Yeah, live communication, chat, instant messaging,

video, audio, we powered a lot of the kind of original, I don't know, I guess, real time streaming

systems for websites. And interestingly, that's been broken up now and you see things like TalkBox or Twilio

and other services providing that as a service. So you were very early on sold it to AOL. And at the time, I think,

did you sell first AOL? Or I think I sold first and you sold the year next year. Yeah, no, I, you sold first, and I remember one of the first kind of executive meetings because it was this like super formal executive meeting, and you stood up in the middle of it and just did this huge proclamation about kind of shaking up AOL and the way that the approach

management. And it was clear that you had a real big opinion there. It was awesome. And for me, like stepping into that organization and seeing you do that, it was actually a pretty neat moment for me and I remember it. Yeah, well, Ted Leonsis and John Miller had pulled me aside and said, we're buying your company in part because we want you to be a change agent here. We need you to shake the place up. So under no circumstances hold back. And I was like, are you sure? Because, you know,

you just basically let the ball into the China shop. But it was a time of change, right? And weblog kind of redefined that entire system for them on how they created content. I mean, it changed the DNA of that business. It was a really important deal for them. Yeah. And we learned a lot while we were there as well. I was reminiscing today. about we had done Netscape, which was dying, and we had made it into like a dig or Reddit clone, except we hired people to be, we hired people to be the moderators, basically. We just went to dig and Reddit. We looked at people who were the top posters because they had like karma systems and points.

And we said, hey, would you like $1,000 a month to just post three or four interesting stories a day? And the crazy thing about that model is it worked. I would say 50% of the people we offered the deal to. took it and then Netscape stopped losing customers, users, and then actually started to uptick. So it's kind of interesting. And now Reddit is actually going to do this. They're actually going to, they put cryptocurrency in the wallets. They put a cryptocurrency wallet in every Reddit app, you know, like download for people's phones. And so I think they're going to use cryptocurrency to kind of reward people for content moderation and content interaction. Yeah, it's great.

Basically, like if you run a subreddit, you might be able to make, $10,000 a year in cryptocurrency. It's pretty interesting. Explain to people what science is and how it's evolved over the past decade or so. Sure. We began as a studio, which for us was defined originally as a holding company. So we were set up originally as a holding company where we would work with early stage founders in exchange for some portion of kind of founder-grade equity, typically common shares.

And we would act kind of initiatives as co-founder slash invest. with them, but we would have much more of an operational role than a traditional investor. And in the first kind of four years of science, as that holding company, you know, we built businesses with founders. We started business of scratch and we acquired companies. And so we had this kind of holding company system. And I think at that point, we were looking at IAC and different kind of conglomerates and wondering whether you could create an early stage, you know, incubator studio that would have both earlier and later stage companies all within a single vehicle. That was the actual very, very beginning.

And then what worked out as you expected it and what didn't work, I think, in terms of this model? Sure. So, I mean, we had a handful of businesses that were highly disruptive that worked out in a really rapid fashion. And the first one was Dollar Shave Club and the second one was Dog Bay Cay, which eventually became Rover. And both of those businesses went on to, you know, grow really rapidly, raised a lot of capital. And suddenly we looked much more like a venture fund because we had a minority. position inside these businesses. We were on the board. We had some operational influence, but we looked more like a traditional investor as they grew. Some of the businesses that didn't work

is some of the companies we started in house, we just couldn't get to scale. And suddenly when we looked overall at science and the structure, we realized that this holding company structure was really not the right structure for early stage. And we knew that we had to make the progress to becoming a more traditional venture fund. And over time, that kind of got reinforced to us. And so why is it that the startup studio model didn't work when you look back on it if you were being super critical and self-aware? What would you say the limitations of the model were? And then I guess how many swings at bat? How many actual companies or projects did you try?

Because we all know 80% of startups in the early stage go to zero and fail. So if you only did eight or nine, like maybe you did. didn't have enough that you started to actually know if it would work. Yeah, we tried a lot. I mean, so the port that, the concept of taking experience operators, I mean, similar to you and I when we actually had built businesses ourselves and putting them around founders to get their companies up and running quicker and to scale quicker, that worked. And that continues to work. So that concept of a studio that provides more than capital, I think continues to be a highly viable model and greatly successful for founders. I think the concept of consolidating all that structural

into a non-traditional entity, that doesn't work, mainly because, you know, startups have a long path to liquidity. They typically don't generate a ton of profit. You're obviously on this path of fundraising, and you need to work within traditional capital sources, which obviously was a fund. But over the past, you know, nine years, like we've tried probably over 120 different concepts. So we tried a lot. And the nice part is that things that didn't work, we were able to kill really quickly with very low capital exposure, which is a huge benefit to the model, meaning that like you kind of figure out the things that are going to fail early, which means that you don't have to sink half a million dollars, millions of dollars into a concept that clearly

isn't going to work. The other positive of the model is when you test that many things, you end up with really strong pattern recognition. So we end up becoming experts in particularly direct-to-consumer, you know, startup. So whether that's product, services, marketplaces, mobile, you know, I think we're uniquely positioned there because we've done so many of them and because we're so connected to the metrics that drive them and the personalities to the founders and the approaches the businesses, I think we have a better eye towards selecting those and we know how to grow them very effectively now.

So do you maintain like an internal team to build stuff to this day and market stuff to this day? Or have you deprecated that? So we maintain a studio and a venture fund in a side-by-side model where there's a studio that works with founders. That studio provides certain skill sets to those founders, definitely on the growth marketing side, but also quite a bit on business development and strategy and finance, etc. And then we have a venture fund that sits alongside. And the goal of the studio is to basically tee deals up for the venture fund. So once the studio works for those companies kind of proves out the market viability,

find those initial customers, works with those founders, then it brings it to the fund. And then the fund begins a systematic way of investing in those startups to kind of help them rise and then eventually we go out to external funders. Got it. Okay. So when we get back from this quick break, I want to know how do you deal with what people in the industry call this sort of signaling risk. You incubated something. It did okay.

And then you teed up for venture and maybe you're not comfortable putting a venture check in, but it's still a good business, but maybe it doesn't have the venture return potential. How do you navigate that with the founder when we get back on this week's startups? Now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. And to help LinkedIn is offering free job posts for healthcare and essential service organizations that need to quickly fill critical roles with the people who help all of us. If you or someone you know are hiring for one of these organizations, LinkedIn's active community of over 675 million members

can help you quickly find the right candidates. LinkedIn jobs screens candidates for the skills and experiences you're looking for and put your job post in front of qualified people who meet your requirements. So you can find the right person, to quickly fill critical roles. Here's an example from our portfolio. Takeoffs.io is an AI-enabled building materials marketplace. And I just got off the board call with them and they're doing great. Well, last year they were looking to hire an AI engineer to lead their team.

And this is really difficult because it requires a very specific use case and a very unique set of skills that not everybody has. Trust me. Well, they use LinkedIn jobs to find the perfect candidate with a PhD in computer vision. and this employee has been with them for over a year now. And as I heard in the board meeting just moments ago, they have rolled out several major projects that are a game changer. So here's your call to action to post a healthcare or essential services job for free. Visit LinkedIn.com slash power.

That's right. LinkedIn.com slash power. All right, Mike Jones is with us. He is the co-founder, along with Peter Fam, of Science, which is a venture and a venture firm. and a studio, as you've heard here on this weekend startups, and they're based in Los Angeles. When you do the venture studio thing,

walk us through what the economics might be like, is that a founder comes to you with just an idea, and then you co-founded essentially with them, you're both equal partners, or did you negotiate it every time, and then we'll go on and tackle that signaling issue. Sure. So, you know, it definitely varies based on where the company is

in its progress. We definitely have co-ownership in certain businesses. So, for instance, we're working with a founder based in Australia who has been developing an app with us for over two years. We provide engineering. We provide capital. He's providing his skill set and capital engineering. And we co-own the project. So that's a 50-50 ownership. But in most cases, when people pitch us projects, they're at some level in their journey. Either they're at the very, very beginning, or maybe they're already selling, or maybe they're either at scale. And we're, we're at. And we're, we end up, you know, owning a portion of common shares that might be at the low double digits, right? We almost, you know, honestly, I can even think of the last deal where we had the majority

ownership into anything. We're always going to be low double digits. And part of the understanding is as they work through that studio, the fund will begin to invest. So over time, our position as common shareholders will get diluted. And basically, we work with them on the capital need. And then we typically deploy, you know, million to, you know, up to $10 million into an individual deal. So we become very long-term partners and, you know, with these founders. How do you make that determination after you've done the year of work to get this app up and running to then put venture money in or not?

Because maybe your LPs would be like, hey, are you going to say yes to everything? And when you say no to something, how do you decide to say no? And then what happens to that company? Does it shut down or does it go to another firm? And then how do they explain, I don't know, to another venture firm? they go down the street to our friend Mark Suster at Upfront and he says, oh, Mike, why didn't you invest? I guess it's not going well or what's the issue? How do you deal with that signaling issue that the Scouts program had at Sequoia as well? Yeah, it's happened kind of in three different ways, right?

So one is that the company becomes profitable, you know, at really, really early stages because they're in commerce or services. And at the end of the day, it's really not a venture investment. You know, they're generating capital. They become break even. It's going to look more like a lifestyle business, and we don't think it can drive venture returns. Define for people in the audience who don't understand the lifestyle business versus venture returns, what that means to you, and in terms of numbers and practical reality. I mean, you know, it depends on the market segment, but, you know, we can pick on commerce for a second. So, you know, very few commerce companies that were involved in, whether you're making a product or a service, that, you know,

very few commerce companies that can't exceed, call it, you know, $20 to $50 million in revenue will ever really be worth a lot in the market, right? So if we're talking a beverage company or a service business, you know, we need to believe it gets to hundreds of millions of dollars in revenue in order to drive, you know, a fairly substantial return. But there's definitely commerce businesses we've worked with in the studio that'll probably be a great $2 million a year, $5 million a year business that'll support a nice little founding team. You know, maybe they'll throw off a little bit of profit every year. But the end of the day, they're just not going to hit that next level of scale. Whereas in that case, it really wouldn't be appropriate for our venture fund because the venture fund won't drive the kind of returns the venture fund would need.

Got it. Okay. So that's the scenario one and you said there were three scenarios. So thanks for explaining that. Yeah. So scenario two is really where either between the market, i.e. the competitive force of the market, the unit economics of the businesses or certainly the personality of the founders. It's just not really going to be a business that we want to pursue. Right. So that could be that, you know, we had a really interesting business in, you know, education technology. By the time they got to market, there were so many competitors. It was clear they weren't going to be able to break out. We didn't think they'd get to scale. The founders started having challenges. And suddenly for us, it didn't look like a great investment. I would argue it probably wasn't the right investment for anybody at that point. Now, we had already invested some capital. But when it came time for us to really decide whether we were going to deploy more capital. It just ended up not being the right story. And in their case, other venture capitalists aligned with our view, not because of us, but as they went to the market, no one else saw something that we didn't see. Everyone kind of saw the same thing. You know,

and those founders went off to go do different startups. And sometimes when that happens, they come back to us, right? And we do different startups with them. But in that case, it was just the, for whatever reason, the startup didn't work out. Okay, so you have number one, it's not going to hit venture scale. Number two, it's not clearing market with other investors. And it might just be a failed experiment at this point. That's right.

And that's nobody's fault. And then the third one, and that's an uncomfortable conversation. But it's not a horrible conversation because you're saying, hey, go. get a term sheet and come back to us. And if you can't, well, that tells you everything you need to know. That's right. Well, and I don't know if you feel this way, Jason, but in my perspective, a lot of these founders, I believe at some point in their career, they actually probably will be successful. So a lot of time, my discussion with that, saying, look, this business may not be the right business for you because of all these other reasons. So the sooner you stop doing this business

and you try another business, you might actually get closer to that moment of success. So in many cases, I'm like, look, you need to be okay with us saying this wasn't the right idea, but immediately let's go try the next thing and next thing. And if you want to try it with us, I'm super excited because now I know you and we're excited about building stuff with you. So I'm really, I'm really actually okay if we do that through a rapid succession because we save people a lot of money. We save them a lot of time. Hopefully they get closer to whatever is going to drive their success. But founders are not always that quick to realize it. Why is that that salty dogs like us with a little gray in our hair and beards can come to that conclusion and maybe the new

founders, the neophytes, maybe don't? I think it's because, you know, at the early stages of a company, the founder, their personality and their vision and worth of themselves is so tied up into that exact company concept. They see themselves as one thing. I am this startup and I need to be, you know, a bull, you know, a bull just driving to the success of the singular startup because that's what I said I'm going to do. And, you know, sometimes the paradigm I would use, or the metaphor I'd use is saying sometimes you're using a butter knife trying to cut through marble. You can be grinding at that thing all day for years on years, but you're never going to cut through marble with a butter knife, right? So my perspective is they need to separate and believe that, like, look, there's them as a

founder and then there's the startup they're currently working on, right? And if that startup doesn't work out, they as a founder hopefully got smarter and they take the lessons from that startup that failed and the time that they've invested and they realized that actually was a level up for them. So although the startup didn't work out, they became stronger, right? And then they take that strength and they go to that next startup and go to the next startup, right? And we've, I mean, just like you've seen, like, I've seen companies work for five years and really never find growth. And I've seen companies work for five weeks and see immense growth, right? And, you know, and sometimes it could be the same type of founder. It's just that they're attacking

different problems that the market either is or isn't ready for, right? But there is that thesis that somewhat, I think, built into this America dream where it's almost like, well, just try harder. Just grind harder, grind harder, grind harder, and the reality is, That is true when it's talking about you as a founder, go grind harder, right? But that business you're grinding against might be just a butter knife into marble. And there's no amount of grinding that's going to solve that problem. And the founder, because they are the founder, and from their position, their point of view is, I got to get through the marble and I got a knife in my hand, so let's keep going.

Yeah. And they don't see themselves in this, whereas we as maybe the old salty dogs who've been through this before, we see it and we look and go, oh, there is an important. possible task, cutting the marble, but look at how diligently and how much, how strong that founder has gotten trying to do something impossible. It's literally like watching in martial arts, somebody just punch the bag over and over again. It's like, bag's not going anywhere. Yep, that's exactly right. But you're getting stronger, right? That's right. And I mean, obviously you know this as well. When we all select these individuals and they pitch us and we invest

into them. At the end of they were investing into them as a founder, right? And we think it's them plus that business, but there's always a possibility it's them plus a different business, right? The other thing I found is that the moment founders take money, if they feel like it's not working out, their goal seems to be, I will still cut this marble until I'm literally on my last dime to show conviction to my investors that I executed the strategy I sold them, right? And yet I often encourage them, like, look, if you're clear that the strategy isn't working, and you know at the early stages, tell your investors and suggest an alternative, suggest your pivot, or return the capital. But don't feel like you have this obligation to bleed this thing dry

when you're clear that the strategy isn't going to work. Which you did at MySpace. Well, yeah, I mean, at MySpace, we, yeah, exactly right. We butter knife to that marble, you know, through three different phases. And then clearly, you know, went to basically News Corp and said, you know, no amount of money solves this problem. You know, it's a fundamental problem. We need to walk away from this problem. Wow. What was that? like for you emotionally, if there's, you know, that sunk in amount of time you put into it? Well, it's, I mean, it's, you know, it's disappointing, right? For sure, right? Like, and I wasn't just disappointed for myself, but I would say that, you know, it's one of those things that you certainly

know great people around you when you're in a wartime setting. And, you know, when MySpace entered the first phase, which was like mass layoffs and mass reconstruction of the business, the second phase, which was a highly publicized launch and combat, you know, combat with Facebook. in the third phase, the kind of realization of where we are, you know, you had some incredible people that dedicated their lives to that mission. And it's disappointing that we didn't succeed in that mission, right? But, you know, I think I felt that disappointment of the entire team. Like, look, it's not going to work. But there was a sobering moment being like, look, there's a lot of good reasons why this isn't going to work. And no matter how much time and capital we put into this, I don't see a recovery coming.

So then let's just move into this model of like, let's extract value. How do we extract value, preserve as much as we possibly can and let everybody walk away with some level of. of pride at the end of this journey. All right. When we get back from this quick break, I want to know what you saw in Dollar Shave Club and then what your broader perspective on is with the flood of D2C products that have tried to follow their path to becoming a unicorn when we get back on this week. Have you been itching to upgrade your workstation? Well, I do it all the time. In fact, I just got this brand new Dell. That's a Chromebook because I love Chrome OS because it helps

me focus and it's really stable and now Dell makes Chrome laptops and this one comes with an HDMI port, an Ethernet cable port, it comes with a memory card, it comes with a SIM slot so I can put a data sim in there and never have to connect to my phone and have that working all the time. It's amazing to get all my ports back at a great price with a Dell laptop and Dell for entrepreneurs wants you to have the same experience I've had, which is saving money and leveling up all your hardware. Dell for Entrepreneurs was created to support founders by providing resources and tools that help startups grow and scale their technology. Scaling your company means more than just hiring,

you know that. It means getting high-quality laptops, network, storage, and printers to provide your employees with the best tools to succeed. I love these curve monitors. That to me is a super unlock. Everybody on my team has to have that beautiful 34-38-inch curve monitor. I have a 49-inch monitor at home, and it makes me super productive. And actually, these two huge monitors I have here in the studio, these are amazing 4K Dell monitors we got, and they look amazing. Founders that register for Dell for entrepreneurs

have a wide range of free resources for startups, such as free IT consulting from experts who are ready to help you with any IT-related questions. They'll analyze your cloud spend, and they'll find ways to save you money because you're likely spending too much. And you'll get access to capital for buying hardware with Dell financial services, founders can qualify for financing their entire IT project,

and they can pay it back in low monthly payments, so you don't burn all that cash that you need to build your business. Of course, they give you great rewards like up to 6% cashback on all Dell products. Here's your call to action. Every founder should take advantage of this program right now. Level up your hardware today and save up to 43% by going to Dell.com slash twist and registering for Dell for entrepreneurs. That's Dell.com slash twist to save up to 43%. Thank you, Dell, for supporting the program, and thank you for making these awesome monitors and laptops that I love and use every day. All right, our guest today, oh man, Mike Jones, been doing this for a while now, Mike. That's right. I might be younger than you. It's possible. I am tired sometimes.

Me too. I'm 49. What are you? 45? 44. 44. I'm almost 45 in like a month. Okay, yeah. Is you born 74 or something? 75. 75. Okay, yeah, I'm older than you. You do feel tired sometimes, don't you? Oh, we see this, you know, it's a little groundhold day sometimes, right? We've been through this journey a lot.

Yeah, it's really, really interesting sometimes when you wake up and it's like, oh, here we go. Here's the same exact disaster all over again. But it's kind of nice in a way because the blood, I don't know about for you, but now when I see that disaster, my blood pressure doesn't change. And I'm like, oh, a complete utter disaster. Great. Okay. I know what we need to do. Roll up our sleeves. Okay, put your boots on. Totally agree. That's why experience matters in this. I mean, like, there's a lot of pattern recognition. Yeah, when you've been through your 50th layoff, you know, and you're shutting something or your 100th shutdown, it's like, okay, here's the playbook. Here's how we all recover from this. And, you know, people can move on with dignity and the least collateral damage.

Let's talk about Dollar Shave Club. I think arguably, I mean, would I be correct in assuming that that is the biggest cash return you've ever put on the board? Yeah, for science, for sure. Yeah. And probably me in my career, yeah. Yeah, I would think so as well, yeah. And so when, tell me about how you met them, and then let's get into this broader discussion about D to C, and if you think what they did is actually replicable or there's

too many people trying to do it in every category. Sure. Yeah, so we, at the very beginning of science, I developed a theory around content and commerce, and this belief that legacy brands didn't know their customers. And there was an interesting opportunity on direct-to-consumer commerce. You know, in L.A., you know, it's a small network. We had heard about a company and a friend then directly referred me to that company. Her name is Jamie Cantorwitz.

And I remember she was like, oh, I met this guy. He's pitching everybody. I kind of heard a little bit about him. She said, you've got to meet this guy. And, you know, Mike came in and told this vision he had. It was really broad, but it really started with the Razor. Look, you know, the razor is a disruptive purchase. And can you, I remember the statement where he was like, can you believe that if you buy a razor in a store, it's in a locked case? Like, you are a criminal and you have to unlock the razors to buy it in the store. And how inconvenient this is ridiculous. And you know, it's $25, $20 for this pack of blades. This is ridiculous. I'm going to launch, you know, dollar shave club. And I've already sourced the razors. And here's, you know, he happened in that pitch to show us this video, right? He was reluctant, you know, and he's like, here's this video. It's rough. He had shot at himself. And obviously, you know, I think at that point, we were really

compelled, right? Because I've been thinking a lot about content and commerce and the disruptive DDC, you know, every business, you know, class case I've ever been in talked about, you know, the razor model. You know, you give away the handle, you sell the razor. And it feels like the thing that your father and your grandfather would consistently tell you about business, you always got to be selling razor somehow. And it just a lot of things clicked, right? And so, we offered him, you know, terms. You know, we started working with him early days. and even though his journey looked, you know, fast and easy, just like, you know, it wasn't fast and easy, right? There was numerous times in that business that were difficult. Capital raising wasn't always simple.

You know, a lot of complications, you know, obviously international manufacturing, huge amounts of issues with, you know, driving massive growth through huge social platforms, the team scaling, you know, had all the normal challenges, but he did get to a, you know, pretty special spot. It's interesting. I got the same pitch in a parking lot from him, but he didn't have the video. and I said to him, I said, listen, kid, we'll give you a piece of advice. This is not a venture business. You need to build software. Why don't you build like a store and compete with Amazon or maybe find a collection of these things? But it's just a commodity. Like you can't win the day on just a product that's a commodity.

And I was right and wrong in the same instance because I didn't know he would do all this. content marketing that would be transcendent. Nor did I know, God, what a great user experience it was to get a subscription like that in an envelope, right? And it's like a real important lesson as a founder, I'm sorry, as a investor. My God, you can't underestimate anybody and, you know, what if they do figure it out? What have you learned about assessing these things now as you've gotten, you know, however many, how many investments do you track, how many investments you've made?

is it over 100? Yeah. Yeah, it's over 100. I mean, one thing we've learned is that, you know, if you're going to be doing direct to consumer, you know, you need a very loud disruptive brand, right? Like to your point, you know, a discount of raisers don't stand out. You know, dollar shape club with the content, with the video, with the vision. And if you need a loud disruptive brand, it comes from a certain personality. Right. You know what I mean? Like there's people with that personality where they live the brand and they are the brand and they could be represented online through that and they have that creativity. It's not like it's not a business use case. It's not a business school use case. You can't just, you know, identify a sector,

see it's underwhelmed, you know, fake out a business through a high-end talent, you know, design agency. Like you need that founder that has that vision. So one thing I've recognized is for that type of business, it does take a very particular type of founder that cares about the brand in a way that isn't, isn't manufactured, right? So there's an authenticity to it. Yeah. There's an enthusiasm that's contagious and relentless is what I'm hearing from you. I'm just summarizing what you're saying. That's exactly right. And they have a strong opinion and strong definition around their brand. It's as much, you know, the question is what would the brand do? Yes. But the other question is they have a clear vision of what the brand would never do. Like who is the customer and who would

never be their customer? Who would they be offended if it was their customer? Like they have an opinion on this that's very set in stone. Right. And the second piece is like, you know, retention is everything. Retention is everything in almost all businesses. The media business, the product business, it's retention, right? And certainly it becomes a lot easier if you have a consumable product that every time that blade wears down and you get a new blade, you have a positive experience. So, you know, we definitely look heavily at businesses that have very natural retention. And in a perfect world, the product would actually get worse if you didn't replace it. Right. That's a really nice signal because it means that with every turn of that subscription

or every time that user or customer buys another product, they have a positive sub-subsequent experience, and it kind of lifts them up, right? But retention is the key driver, and I think for almost all things in business is something that we look at for everything. What do you think of this proliferation of a dozen mattress companies? I mean, you had Harry's, I guess, copy what Dollar Shave Club was doing.

I think it was a copy. Yeah, I mean, they did a little bit of different strategy, but, yeah, they went into the market. What was the different strategy they went for? I had them on the pod back in the day. I mean, they had a, they also, had a white label business. So they started with acquiring a manufacturer with a white label business where they're providing their brand was a little bit different marketed, you know,

a little bit higher scale. But, you know, a little bit different. But their revenue mix was different than ours. Got it. So what do you think of the overall category today? 10 years later, here we are. Every, I mean, when we do a call for the launch accelerator to have companies, we get flooded with D to C. Yep. And I had to tell my team like, hey, we got to pump the brakes on this D to C stuff. because I'm having a hard time assessing, can this get to $100 million in revenue? Yep. You know, because I kind of have the same position you do.

It's like, if you can't get to $100 million in revenue, what is the point here? And what are the margins like? What's your take on this? How should I be picking the companies? I love the part that you've just educated me on, about that sort of strong founder and looking back on it. I see that in the three that we have that worked well.

All three have that founder DNA, founder authority, where I would say founder enthusiasm, that might be it. That founder enthusiasm around the product. What else should I be looking for? And what do you think of the overall proliferation of D2C brands? So if we started in this theory of content mixing with commerce, where I am at right now is something where I would say it's authenticity over authority. So this is a big theme for me, authenticity over authority.

So when I was growing up, if my mom went to the store, she might have just trusted Unilever or just trusted Procter & Gamble. These were the brands she trust, right? And those were authoritative brands, right? She trusted the government selection of the brand. She trusted the medical association selected the brand, the store selection of these brand. She trusted the entire lineup that put that product in front of her, and that's why she bought that brand. I think today's youthful consumer does not trust that authoritative brand. I think they look and they say, cancer's rampant, health issues, obesity, you know, that authoritative structure of these are the products you consume and these are the places you consume them.

I don't trust this anymore. I want authenticity. I want to hear why the founder made this brand. I want to know why it's better. I might be willing to pay more for that, but I want a level of authenticness. So now I look for those authentic brands and I look for them where they're going after legacy sectors because one thing that's very true, and you and I know this having been in giant companies, it's very expensive, if not near impossible, for giant companies to truly innovate

right now. They have to deliver their earnings. They're, you know, traded off of PE ratios. Yes, Amazon gets away with it and Apple and others. But if you're, you know, a traditional CPG brand or traditional product company, you don't get the ability to launch those youthful brands. And when you launch them, they're so small, you don't really care about them anyway. Right. So, you know, I think right now we're in this moment where you pick an industry where it's a $10 billion industry. And, you know, if you can get to 10% of the industry in a billion in sales, and that giant conglomerate that controls that industry really can't innovate at this point. That means they're going to buy, right? And the question is, is what is that authentic brand that goes after that, that millennial consumer

with that true story online, direct to consumer retail, you know, takes a portion of that audience. And then in the next, you know, five to 10 years, think you see more and more consolidation of those early stage DDC businesses. What do you think of the brandless type Uniclo not having a brand brand? I've been fascinated. about this. I was in love with brandless. Were you? Yeah. I just love the concept. The execution was, I felt,

about 60% of the way there. They only got to do a year or two of work, I think, on iterating it. But there was something there about not having to make decisions and just having somebody be, I wouldn't say an authority, but what were you saying? Curating?

Yeah, curating for me and protecting me, on a shared, you know, kind of philosophy, which is how I feel when I shop at Whole Foods. I know they don't have corn syrup. I know this is not artificial flavor. So there's some baseline that if I, the worst thing I pick out and eat at Whole Foods and buy is going to be better than the average anywhere else. Yep, I agree. I think the, I think there's a pun on Brandless, which is like brandless. Is they brand? The brand is brandless. So I never, I never like that. but I do like the authentic selection that they would provide. And I think one of the current winners of that,

and we have a tiny amount of money into one of their early rounds, is grove.co. I mean, people trust Grove for their organic natural product cleaning selection. I think the thing is that brand list was really broad, and I think these things, in order to become successful, they really need a breakout product. And I think even if you looked at Dollar Shave Club, if he had launched day one with 30 different products of selection,

I'm not sure he would have had the success he did. He needed that tip of the spear that kind of enters himself into consumers' lives and brings all these members into his club. And then he has the permission to sell them more things. Like for me, I couldn't fully get engaged with Brandlis because they never had that one tip of the spear product I wanted. But I know that if they got me over on one, they could expand their relationship with me. Right. So I think it's got to start with a hero. And I think Grove and all these guys have to find those heroes to get to mass scale. And for those of you wonder, we had Grove Collective on Stewart, the CEO. episode 974 back in September of 2019. Seems like a lifetime ago, back when people would come to the studio. Let's, since we're touching on it now, doing a remote interview. Yeah. What is the impact of this pandemic in the, I'm going to call it near term, which is 12 months or less, and then far term, and I'll call it the future. So near term, under 12 months, we're sitting here in summer of 2021. and then in the future past 22 and forward.

What are you thinking? Let's see. So, yeah, I've done so much writing on this, trying to whittle my thoughts down, right? Yeah, me too. You know, I think the near term we're aware of, right? Travels decimated. People, whether they should or should not,

are living in a lot of fear, right? And it's surprising for me, the spectrum of fear that people do or don't live in, people are pent up, you know, there's explosive moments happening that are also, that are because of, you know,

obviously because of police violence, you know, plus people being, you know, pent up for a little long. It's like they just, people just need to get out, you know,

and so. Plus three years of Trump, plus. Yes. Uncertainty on an economic future. Yes. Anytime you have over 20% unemployment of,

um, specifically young men, 18 to 30 years old. We saw it in Greece, Spain, the Middle East. that leads to violence. And so the violent contingent of, and it's not part of the protest, but I think there's a violent contingent of eluding or whatever is certainly socioeconomic related, right?

Yep. Well, I mean, so if we think about a little bit midterm, I think what you'll see is there's going to be a mass increase in mental health problems. There's a mass increase in drug usage. I think that's going to come out really bad. My bigger fear is I think there's just going to be a bigger split between socioeconomic levels. I think that, you know, for for for wealthy individuals or people that still are maintaining jobs, they're at home, they're doing their work, they feel, you know, very, you know, less impacted. I think what we'll find is that a lot of the retail jobs and the restaurant jobs, you know, just frankly, a bunch of them won't come back because I don't know about you, but, you know, I would probably guess that one in five local retailers and restaurants I

interact with are just not planning on reopening because this basically put. them out of business. One in five would be, I think, a low estimate. I might put it at one in four. I wouldn't go to one in three, but I think one in four is where I would have put it at objectively. And that's terrifying. That's terrifying when you think about it. All those empty storefronts. But that also creates an opportunity. So then in the long term, all those empty storefronts, all this extra capacity of humans sitting at home saying, I need a job and there's not one for me. I need to make one. Yep.

Or some, you know, if one in a hundred people who don't have a job, say I'm going to make a job for myself, that could be to a company. I agree. And so that's interesting, right? And so it provides that opportunity. I think that we've proven that remote work works, which I think is a big deal. It's a big deal, right? Because I don't know about you, but now when we're looking at both investments and when I look

at my investments looking at staff, they're no longer looking at just Los Angeles, right? And they're very open to remote work, which means that. that I think we can find a lifting of employment in areas that haven't been so benefited from, you know, early state technology, which is wonderful. So I think you could see a lift in cities that aren't so over, you know, overfunded. And we could see some of this venture capital and this early stage dollars actually going into other cities that maybe aren't L.A., San Francisco, New York. So that could lift those local economies, which is exciting. The other thing I think could happen is people that felt like they were sacrificing their life by having to live in these

major cities and live in conditions that maybe weren't great, they might choose not to live in those cities. They might choose to move out to the country and move out to more rural areas where their dollar goes a lot further and they can have a better quality of life. So, you know, I kind of always suspected that kind of remote work might work, but I don't know about you, Jason, but, you know, ever since I was, you know, basically 2021, I'd been going to an office basically every day in my life, right? Yeah, it's a pretty hard habit to stop. Agreed. And it's hard to conceive of what we do working, never meeting people in person. And in fact, your thesis was, I'm long L.A. I'm science is my opportunity. You pitched LPs, I'm certain on, L.A. is the next Silicon Valley, correct?

I would never have said that. Silicon Valley is the next Silicon Valley. Okay. L.A. is an up and coming ecosystem. Yes, exactly. And you're number one in it along with Mark Suster, right? You two are tip of the spear there. So that, and then I moved up to the valley. from LA, specifically because I was like, the deal flow is so ridiculous and nobody wants to compete against Y Combinator, and I'm uniquely qualified to do that. I'm going all in.

Yeah. And so it's a very interesting position to be in to now having founders want to come to an accelerator or investors wanting to invest in a company without ever meeting them in person. Yeah. Have you made investments without being people in person? And we've done, you know,

we've onboarded around six companies, into our studio with their perspective of them going into our venture fund during this pandemic. You know, two of them I haven't met in person. I have regular Zoom calls with them. So I feel connected to them. I feel connected to the pace. My team's fully engaging with them. But to your point, it's not important that they're in LA at this point.

Like, you know, you're exactly, it was a hard habit to break. It took this moment to show the world, or at least show me that my work. And granted, this is very information-centric work, right? If I was a warehouse worker, if I was a retail operator right now, I might be offended because I'm like, look, I can't work from home. What are you talking about? My job's physical. I have to go do things in person. But for my category of work and many of the startups who work in, we can work from home, which in essence means we can kind of work anywhere, which opens up a different perspective, I think, on life and different perspective on family. And I think that it'll actually probably lift the country in a better way than previously having everything so geocentric. It's really fascinating that it takes a crisis like this for everybody to adopt it. See, I don't think remote work would work unless 100% of people were forced to do it for some period of time.

Totally great. Because you would have so much resistance in so many places where, you know, if you're Matt Mullenweg and you're like, WordPress is virtual and then this other person is virtual and Chris Locke is like, I'm virtual, I'll come parachute into Silicon Valley for two days, make investments, and then go back to Truckee, wherever he was living. Those were like cute, quaint, like less than 10% of the market. So you couldn't actually make remote work work. But now if Facebook and Twitter are saying we're remote first or we're hybrid, wow, that's a game change, right? I totally agree. It's a game changer. And I think that'll open up changes for education, which are really fascinating. I do think one, you know, highly negative consequences. I just can't see a world where we don't see increased taxes, right? The, you know, the pig going through the python right now of the debt that we're, you know, that we're accumulating as a country, the company's being shut down, the hospital's being shut down, the universities having challenges. I think at the end of the day, that's going to come back, you know, to bite us pretty strong. And Trump and the future president may or may not try to delay that, but at some point we're going to pay the price, you know, of this time frame. It's probably going to result in taxes. And in almost every other time that you look at situations like these, there's been pretty massive.

incremental tax placed on the public. And when those taxes happen, that slows the business velocity down. It slows monetary velocity and it has this stagnation effect or it could just make things grind slower, which then works against you. Yep. Just like if you have to pay your college debt off, you can't take risks in your career. Like we're going to have to pay off this college debt known as the five or $10 trillion we're going to rack up.

That's right. madness. I mean, another bigger question would be, you know, if we all believe that this fully worked remote, like, would you ever consider living in some place that wasn't the U.S.? A different tax location, right? Like, if you really felt, right. And so suddenly that's a new discussion that I would have never thought I would have been having. Well, it's really interesting because the last couple of years it became so toxic and hard to work in the valley. We saw people start leaving. And in fact, Peter Pham lived up here for a long time and left for L.A. Yeah. And so some people left for lifestyle, but now I'm seeing people go to Austin, seeing people go to the east side of Lake Tahoe,

the Reno side. I'm seeing people go to Florida, Miami. Those seem to be the experts. They all have lower taxes, more freedoms, and higher functioning government. So it's only a matter of time before somebody says, you know what? You know, Vancouver and Toronto look pretty interesting. or maybe I'll be in the British Virgin Islands. If this is going to work. A lot of entrepreneurs in Puerto Rico. Yeah. The weird ones.

The weird ones. The weird ones went first. Their statement was, I talked to somebody in Puerto Rico this morning, entrepreneur, big investor. And a statement was, look, you know, I have a U.S. passport and I pay a, you know, four to five percent total tax. Yeah.

Yum, yum. Crazy. Super appealing. And you know what? Being Malibu, being in Puerto Rico, It's kind of the same thing, right? It's like it's a beach. Yeah.

No, education would be the hard thing to get, I know some people who moved down there and they were having a hard time navigating education. They may just have to, but if you're paying that little in tax, you just fly in a teacher. I mean, that's the question. So there's just, there's new options, right? And there are options that I didn't think I would see during my lifetime, to be totally honest. But, you know, that adjustment to work from home, I have a much, having involvement now

with my kids' education, which I actually really like, which has been really neat. Like I said, I hasn't slowed down my deal paying. I do feel I could be in different places. I suspect that from a capital perspective, like I still want to visit my LPs, and I think my LPs will still like to see me in person, but I don't think it requires me to be with them all the time, right? I think I can find ways to keep that connectivity through flights

and just be a little bit lighter, you know, on the forced in-office environment, which we kind of previously had. There's something gained and something lost in this remote work. What's gained is you stay home, lower tax bases, lower cost of living, be able to hire everybody from any, where so much to gain from it. What's lost? So I think the, you know, I think the creative

sessions are much harder to have. So when I'm working with early stage founders on specific tactics or the ways that their product might look or feel or interact with users, I find that those sessions are harder to replicate, maybe impossible to replicate to the same efficiency as being in person. I think the serendipity of feeling connected to your team, you know, you just lose. I don't think, you know, four p.n, five p.m. Zoom meetings, they do something, but they don't solve that, that missing of that human element. I think it's harder to have a separation between your work life and your family life. I realized that that drive to the office for me and that drive back from the office me was actually important time to separate my work from my, you know,

like I lost that moment, which is interesting. What was your commute? Like 30 minutes? It was 30 minutes in a good day. It could be 45 on another day. But I mean, it's like, it's when I called my mom and my dad and casual checkup. And it was a wind down. from the intensity of the day. So when I walked into the house, I was really ready to receive my family and be more present to that moment. That's the thing I'm kind of missing

is that 20, 30 minute commute really got me geared up for the day, put me in that mindset. I would do a phone call, listen to a podcast and really get in that mind. And then it would also, yeah, it would be my slow, you know, way to come down off of a busy day.

And I do find now it's like with my daughter's coming into the, office while I'm doing a podcast or while I'm on a Zoom and everybody's fine with it now. It's just like Alexis was on the podcast. His daughter was, you know, jumping on his lap during the podcast. And I was like, fantastic. Like, yeah, it's kind of like, it's making it, yeah, it's kind of getting with a little the pretense. I was looking at my suits and my blazers today. And I was like, what do I do with these? Yeah, I agree. Like, I don't know why. Yeah, it's not comfortable. Like, these are uncomfortable decisions, right?

I'm looking at these Zenya custom suits and I'm like, what's the point of me? What am I doing? These are for Halloween now. Yeah. I mean, I don't know how many, I mean, yeah, it is, I wonder if Facebook or Uber or Twitter, any company that hit massive scale could hit massive scale being work from home. What do you think? I wonder that too.

I don't know, you know, because there's one thing to talk about money and investing. there's nothing to talk about power, right? Creating entities of power that have influence over the American public or influence over individuals. And a lot of thought that power is created and magnified in person through those in-person interactions. I don't know, but I suspect we will see one. I mean, certainly there'll be at least one great giant company to come out of this pandemic. There might be multiple. One of them will be a big voice. One of them will be a big platform. I don't know which one it is. Yes, that's what I'm trying to figure out is if remote, my thesis is I don't think a company can hit the, the mega scale of Amazon, Microsoft, Google, Facebook, Uber, by being remote. I think there's going to be a cap to what can be accomplished. And I'll put that cap at, you know, $5, $10 billion, something modest, you know, by our industry standards, not modest by success by any means. I mean, you and I never built a $5 billion company. Sure, exactly.

Somebody builds a billion dollar. I mean, I think the only billion dollar company that's ever been built remote is WordPress. Probably true. And the cynical take on that would be, well, maybe it'd be a $10 billion company if they were in person. Maybe. Maybe.

I don't know that that's the case. But you also have to build what you, you have to live the lifestyle and build what you want to build. So I think this is also given people, you know, something to think about in that regard. So, yeah, maybe you don't have this transition time we talked about. But maybe it's kind of cool that if, you know, your kid is struggling with a math problem, you can stop the day. I had to stop the day

the other day. Yeah. I just said, canceled the next two meetings. Yeah. I have to take my daughter out. She was struggling with something. And I wanted to work on her with her for school. And I literally just canceled the next two meetings. And my wife looked at me and she was like, hmm, what? And I said, yeah, I'm the CEO. Fuck it. I just text to my sister. Cancel the next two meetings. I'm taking care of this. It's more important. Because I saw it. You know, I wasn't at my, and when I was at my office, I couldn't come home. I'm not coming home. I mean, if somebody gets taken to the emergency room, I'm leaving work. But if somebody's having a problem with math or something and they're struggling and it's frustrating, I'm not coming home from the office. I'll deal with that when I get home at six.

Well, you also wonder, like, what if you took, I don't know the ages of your kids, but you know, when they're ready, 10 and 4, right? And 10 year old's almost there. But imagine your kid's 12 and you said, like, look, two hours a day, you're going to shadow me. Yes. I would bet they would learn more two hours a day shadowing you at age 12 and beyond. than they will through their classes. You are going to prepare them better for their future careers, select their future careers, bring them into the work world in a more effective way.

And I kind of wondered that, like there used to be the old thesis of apprenticeship and mentorship and the family business. And suddenly I wonder, like, is that even a possibility? But I love that. I'm looking for startups in that specific space. We've had two of them now.

Paragon one's in our accelerator right now. We had one previously that was trying to make it work and it didn't work. But I think apprenticeship, and I think paid apprenticeship because you know, internships can't be free anymore because you're abusing people or whatever that nonsense was.

Right. I don't know if you ever saw that story. It was like a New York Times story about this guy's like, I've been an intern for 15 years in Hollywood and I still don't get hired. And I'm like, I think that has to do with you. Yeah, that's not an industry problem. That's probably three people problem.

I think that's a you problem. If you've been working for a decade or more doing internships, I don't think you're being abused. I think you're abused. abusing yourself or you just maybe suck at your job. But you can't have unpaid internships anymore, which means why would you have an intern? An intern is just a drag on productivity. That's right.

Yep. The whole deal was you're doing this for free and therefore we'll deal with the drag you are on productivity. Yep. But I love the idea of, can you, what would somebody pay to have a slot next to a venture capitalist for their 16 to 20 year old per year? What is that worth compared to $50,000 a year in college? I agree.

It's got to be worth more to work at a venture for now. That does create the issue we're talking about of class. Yep. That's problematic. Well, I mean, you don't have to charge for it. I mean, the reality is that, like, you know, yes, it's similar to internships and maybe to avoid taxation. You need some sort of sort of, to avoid the labor laws, need some other structure around

it. But certainly I think that from my kids' perspective, the time I'm spending them now, evaluate in the public markets, making investments, reviewing pitch decks, which is something that we can serendipously do because I'm here and they're here and we can look at things together. I believe that this will help help them select their career in a better way

than probably some of their classes. I'm announcing right now. We're going to have three apprenticeships. One's going to be 30,000, one's going to be 10,000, and then one's going to be free. And so we'll give one based on merit, one will be discounted and one will be full-fied.

So if your kid is, if you got a kid who wants to be an investor, they want to learn this. That's what it cost. Free, 10. I joked about it before previously on Twitter because I do think parents have to think this through. What amount of work do you think kids are actually doing

on academics at school per day in the seven-hour day? Now that you haven't been at home. We've looked at this a lot and we keep looking at the homeschooling sector. We liked it before COVID. We obviously like it a lot after COVID. But schools are super different one thing we found. Is there certain schools that are just like slotting those Zoom meetings, for six straight hours a day.

And there's other schools where there's no connectivity beyond every other day. And kids are self-managed. And the other thing that I assume that you hear and maybe you've seen in your own life is that parents with kids that are 11-year-old, 10-year-old plus, those kids can often self-manage. Like my 11-year-old and my 15-year-old, they just run their days, right? Like, I'm happy to be here and help. But, you know, when I talk to my partners and my staff and if they have young kids,

they have a very different work at home experience, right? like very difficult right daddy come swim that's right and summer's going to be brutal right so i talked to somebody today who has two young kids and they're like all of our summer camps are canceled all of our activities are canceled i don't want my kid on the computer seven hours a day like what do i do because i do need to work i'm the primary breadwinner right and so i think um everyone's having a very different experience through this um this quarantine yeah some people can't go back to work now because of this issue that's right when you look at the science of, well, this isn't a, you're not a doctor that I know of, I'm not either. But when you

look at the response to COVID and where we're at now, are you confident in going back? Do you feel comfortable? I'm sure. Tell me your feels. Yeah, I speak for many people. Like, I, you know, I oscillate between, you know, we're underreacting to we're overreacting. Like, it's really hard, right? I know that if I were making my own choices, you know, I'm comfortable with my risks of receiving the Zeeves, I'm very uncomfortable with the idea that I would give it to somebody else, right? So I'm happy to take my life into my own hands, but I'm very uncomfortable with the thought of me impacting somebody else, right? But on the flip side, I looked recently at the requirements with our kind of our head of our office on what we would need to kind of reopen our

office, and they are strenuous. I mean, it is a strenuous amount of change physically on how we use the office, the resources we have to provide, the scheduling systems. I mean, reopening our office, if we followed the letter to the law, which I assume we will have to, is very complicated. It's so complicated that looking at the list, I'm kind of like, let's just punt this. Like, let's just punt this. What is the list like? Just the distance between people has got to be huge. Distant between people is actually the easier part. It's more like controlling walkways, controlling flows, controlling bathroom access, reducing scheduling. And then there's just PPE supplies kind of everywhere. But there's, you know, I think it's more like the physical

movements within the office feel higher risk than just the desk. The desks are easy. It's more like how you prevent people from bumping each other into the cafe or do you split up who gets used different bathrooms at different times or what do you do when the guest shows up? What is the process for having a guest enter? And what about the person that receives the guest? What happens after they receive the guest? I mean, it's well thought through. Like, don't get me wrong. It's very protective in nature, but it's so complicated. It kind of pulled me to this moment to be like, maybe we don't need an office open the office right yet. Maybe we should wait until these, you know, restrictions, you know, reduce.

Yeah. And New York is going back so quickly and California is not. And California has had a fraction of the impact. And it just seems surprising too, right? You probably look at these graphs like I do, being like, how are we still have super high cases every day? Like, haven't we been home for almost three months? Yeah. And it seems to me that it does go through the population at a very, at a certain pace independent of a lot of these things. So a certain number of people have to get it, it seems like. And very few people are impacted who are under 50. So it does seem to me like the right way to have done this. And listen, it's just hindsight. Nobody knows. I'm glad we locked down early and I don't know anybody who died from this. Or actually, I know a person

who knows whose ex-wife died from it. So I actually do know secondhand, but I don't know any primary people who died from it. It would have been a much better philosophy to quarantine everybody at risk and then do social distancing and masks. Because it seems, seems like masks and being outdoors is no problem. I agree. I totally agree. I think that the population should probably be selected as high risk, medium risk, low risks, and maybe there's different rules depending on where you sit there. But, you know, listen, this isn't our first pandemic, but this certainly feels like the first pandemic, obviously in our lifetimes, that we really have been impacted by. And I don't think we really had set rules for this. And so I think it's all

about coming up with those rules in case it happens again. So it's not so disruptive to society. We've, we, yeah, we've really not done a great job on this. The lack of like a federal leadership, not to make it political, but it would have just been great if, you know, Obama or Bush were president, you know they would show up to the podium in a mask and say, please, everybody wear your mask because 85% of this or some, at least, is handled by everybody just wearing a mask. Yeah. Yeah.

As opposed to the literal exact opposite of that. Yeah. I mean, there's, there's not a strong consolidated voice. at the top. It's weird to have state by state handling it very differently. It feels odd to me that certain states have different rules, especially when we're so globally connected, if anything, this is showing how globally connected we are. But yeah, it's so weird. Like, yeah, why would one state have this all locked down and another state having a free for all and they're next to each other? Yeah. Or people are going to draw. Or voters are porous, right? Like, I mean, you can't, yeah,

it's, it's been a really, you know, a funny experience, right? But, you know, I don't know, listen, like as being, you know, 44 and living through this, it's super interesting. I have friends that have gotten sick from it and recovered. And to your point, like, I do know people that have lost people because of it, which is super sad. But it's, it's really interesting to turn society, I mean, the global society on its head and kind of reawaken us. Like, look, we are all very connected. And, you know, one thing, I was, I was speaking to an incredible researcher the other day through this, like, you know, of course, incredible Zoom session that was happening. And they were talking about how, you know, the origin of basic

Southeast Asia, India, and how bats are getting more and more disrupted through communities and how bats become often kind of patient zero for a lot of these diseases. And he was really driving this against environmental change, talking about how, you know, as we further disrupt wildlife, as we further disrupt these native species, you know, the likelihood of these things rising. And he kind of paired it showing the average time to develop vaccines for, for diseases like these. And, you know, it's a difficult discussion to have, but it's absolutely true, right? Like, we're disrupting a lot of nature, and it takes a long time for us to build, to build vaccines. And so we should be prepared for whatever that means. Yeah, we probably do not, yeah, closing the

wet markets, which is not just something that occurs in China, then also have them in Africa and some other places in Asia. Like, this is a no-brainer. Like, for the love of God, please do not. Food safety is super paramount and important. And they, and people took that as. being like a xenophobic kind of approach. And I was like, then I pointed to the WHO article from like 10 years ago, they had like, here's how wet market should be run and you should really shut them down. And I was like, this literally has nothing to do with any specific race or country. It has to do with food safety.

And maybe don't eat raw exotic animals without preparing them properly. And previously, when we weren't so globally connected, maybe they didn't. didn't matter as much because it could be locally regimented. But now it's like food safety in a country that's very far from here has a massive impact on us and a massive impact on an individual's job, which is super fascinating, right? Well, and then think about the economic damage caused by those decisions that are downstream. You mentioned earlier depression or mental health as a general category. Now we're going to have mental health.

You mentioned drug abuse. They're going to have opioid crises. and then obviously we already have a homeless issue, which is based in some large part to those two other factors. That's right. And it's going to be growing, right? And then you have this movement to figure out how to, you know, reform or reduce the way that police interact in society, but you also don't have a good catch for people that are homeless

or do have opioid addiction problems because right now those problems are basically laid on the doorstep of the police, right? there's a homeless person arrest them. There's a person that's using drugs, arrest them. There's a person that's having challenges with their family, arrest them. So we don't really have the structure in society to take care of these bigger problems beyond using the police force as this blunt instrument. And yet these cases are going to be rising. So it's a weird, you know, it's a weird chemistry bubbling up right now. And it's also weird because politicians are so dug into whatever their position of their party is that they can't do what we do as, you know, entrepreneurs or

investors, or even what many people in the public do, which has come up with a creative idea. If you even suggest a creative idea around any of these things, you will get annihilated. And if you, God forbid, you change your position based on new data or an experiment, you'll get even more annihilated. I did a tweet the other day, and I was like, you know, it would be interesting, why don't police officers, why don't they have a position, they have hostage negotiators, right, for a very specific case. Why don't they create a subsection of police?

They have the SWAT team. They have a hostage negotiator. Why don't they create one? And I just use a term like almost like a Jedi knight where they have the ability to take out a weapon, but they don't want to take out their weapon. And they're trained in understanding people. And they're trained in diffusing situations. The Jedi come in.

They want to diffuse the situation. Their goal is to never take the lightsaber out. They don't want to dismember people with a lightsaber. But you know they can. why wouldn't they create this, take people who are social workers or psychologists and then give them the ability to arrest people and have a weapon, but they're psychologists and they get paid like a detective might, a much higher rate of pay. And when there is a domestic disturbance, you don't call the police, you call those Jedi. Right. No, I think that idea of

identifying these problem sets that the police are currently dealing with and creating other agencies to deal with those problem sets with different qualified individuals is a really great direction, whether we get there anytime soon. But if anything, watching the negative police responds to some of the protests is an exact example of that, right? Like, yes, you have a lot of peaceful protests that are still being met with violence. And it's terrifying to watch that. You're watching it and you're like, you know, where is the, there's no leadership in these organizations and they'll train them on how to do to use combat gear, you know, and they'll train them on how to use high-powered assault rifles for a 9-11 type situation, which is great.

I'm all for it. We want to have that kind of ability and that tactical ability. But all that money we spent on tactical ability and never used. Yeah. Because there haven't been many terrorist attacks. Yeah. But every day you're faced with homeless people. Every day you're faced with people with drug addiction.

Every day you're faced with domestic disputes. why not have somebody who can just do that. But see, I'm saying don't put it outside of the police department. Why don't you do a test? You say, okay, here's our 10,000 police officers in New York. Does anybody have a psychology degree? Okay, we found 300 psychology degrees. Great.

You're now going to go into deep training. We're going to get you a master's degree in negotiating these situations. You're going to wear a different type of uniform. And the other police officers know, when there's a domestic situation, you get called in. they might secure the perimeter, then you go in. Yeah. And you go in. Like a non-armed mental health response team or something.

I say still let them be armed. But you know, you look at a detective in a different way because they're playing clothes and they're wearing a suit. So this person would show up in a suit with a tie. Yeah. And they would come in and say, hey, can we talk this through? Or maybe even a sweater, you know, like maybe even take like a Mr. Rogers-like approach or a therapist approach with a sweater and say, hey, I'd love to talk to you guys. we have a, we have a vehicle outside. It's a sprinter van with a couple of comfortable seats.

We can get you a hot cup of tea. Yeah. You want to try and talk this through? Yeah. And the person's like, okay, and there's still a gun on the belt, and there's still a police officer. I still have a badge. It's like, we could talk this through,

or the cops can come and arrest you. Which would you prefer? Well, I certainly think no matter what we need a different solution, because using this blunt hammer, the police force for all these rising issues, it's not going to work out. But I can guarantee you that there will be people who will clip this part of the show.

and say calicannis is crazy. Oh my God, why would you even say this? And then in Vancouver, you know what they do with heroin addicts now? They have a shoot-up storefront. Oh, really? Where do you can go use? You can go shoot up in a storefront. And you would say like, oh my God, this is crazy. Like you're enabling.

Yep. No, people are shooting heroin. They now get to go to a place, get a clean needle, sit in a chair, and there's a counselor sitting across with them. If they OD, they can bring them back. And that person can say, here are some options for you other than shooting up, but we understand that you're going to do this anyway. So here's a clean room to do it. And it's actually worked. Yeah. No, I like these alternative solutions. I think something has to change.

Something has to change. All right. Listen, it's been great to talk with you, continued success. If somebody wants to pitch you on their idea, what's the best way to do that? And who are you looking for? What stage are you looking for? Sure. I mean, listen, I think we're best at early stages. At times, we do get companies where they have something in market, but they can't really get it to the next phase or the next level of growth, which we do meet with those companies. If you're raising a series B, series D deal, like, we're not going to be your right answer. So it's always going to be early for us, right? If somebody just had an idea, what would they need to show you in order for you to want to do that partnership thing? What did the person in Australia show you that made you want to do that

50-50? Because I see a lot of people who want that specific thing. Yeah. So on those, I, I want to understand the person. I want to understand the why. Like, why do they want to attack this idea? Why are they the right person to attack this idea? Do we think that, do they think, do we think collectively they're the right person actually build this company behind this idea? You know, I want to see something, you know, I want to see a big why statement. I want to see a very specific approach to solving that why. If they have anything that shows that there's some validation from, from perspective of customers, that's always helpful. But I'm really looking at the person, you know, at that point. So I want to understand them. What are the skills

sets that they should have that make it easier for you to engage with them? You know, just as you would expect with almost all startup founders, they need to be able to sell, right? Which means they need to be able to communicate really effectively. So how they, I often, when I look through pitch decks, for instance, I'm less concerned that the pitch deck is perfect. I'm just really concerned that it's comprehensible. Like, I want to see that they can articulate an idea.

It might be the wrong idea, but that it can be clearly articulated in a vision. because that's really hard. Like some people just aren't good at that. And if you can't articulate that to me, it's going to be hard to articulate to investors. It'll be hard to articulate to staff, buyers, customers. So, you know, generally I want people with really strong communication skills that have a really deep why statement they're personally connected to that they want to dedicate, you know, a substantial portion of their life to go solving for.

Like those are interested people I like to go on missions with. Awesome. All right. On that, thank you for coming on the pod. Mike Jones. Everybody can, what's the website for science? I'm sorry, I don't know the name. Yeah, it's science dash ink.com, and I'm just M. Jones at Twitter.

There you go. Thanks for coming on the pod. If you haven't watched the other episodes, we had Dream Adventures, StartX from Stanford, Mass Challenge from Boston, SOSV from China, Capital Factory from Austin, David Brown from TechStars, Global Everywhere. And we had the Alchemist Accelerator on as well. What a great series. Great job, Nick.

on producing this one and Matt and the entire team at launch in This Weeking Startups. Thank you for the hard work during the pandemic. I know it hasn't been easy. We'll see you all next time on This Weekend Startups. Bye-bye.