This Week in Startups - E1106: Desktop Metal CEO Ric Fulop shares insights from taking two companies public, traditional IPO vs. SPAC, future of Computer-aided design & more

Episode Date: September 8, 2020

Check out Desktop Metal: https://desktopmetal.com FOLLOW Ric: https://twitter.com/ricfulop FOLLOW Jason: https://linktr.ee/calacanis

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That's K-L-A-V-I-O-O-com slash twist. Fiverr. Find the perfect freelance services for your business. Go to Fiverr.com and use code twist to receive 10% off your first order. And Dell for entrepreneurs. Level up your hardware today and save up to 43% by going to launch.com slash Dell. Hey everybody. It's a really special day here on this week in startups because today I want to share with you one of the great life lessons. I've, learned, which is play the long game. In life, you work hard and you meet a lot of people. And you treat everybody you meet with respect. And you try to support everybody you can to the greatest

extent possible. This is why I have some of the greatest friendships in my life that I've ever had at the age of 49. Because every time I meet somebody and I make a friendship, I just say, I'm going to go all in on this. That's my. feeling with my team members here at launch and inside. If you're on my team, I'm going all in. I'm going to support you forever if you're in good standing. If you are a friend, I'm going to be loyal. I'm going to do whatever it takes to help you succeed in your life and be there for you and listen. I call this radical friendship. I call it radical partnership. I just put the word radical in front of these relationships, because why not?

If you've chosen to have this person in your life, why not radically support them? And a number of years ago, I think it's getting on a decade, a group from New Hampshire from a company called Dyn, DYN.com, Dyn. And I knew them because they helped me route my DNS for my home video cameras back in the day. They wrote me a very pleasant note and said, hey, would you join our board? We're thinking about raising around. We need an independent board member. And I said, and they shared with me, they were making like, I don't know, $20 million, $15, $20 million.

And then their EBIT was like $14 million. And I wrote back, I said, I'm sorry, I don't understand. You're saying this is how much you've raised? Or you're saying this is how much you make. And they said, no, that's what we make. We've raised $0. And I said, okay, when can you meet? They're like, well, we're in San Francisco next week.

I said, well, when do you land? And they said, Tuesday. I said, meet me at Fang over by the Moscone Center next to the W Hotel. It's great, great, great, Asian food, Asian fusion. You want to get the duck pancakes over there, incredible. Just fantastic. And we said, I joined the board. I get to the board meeting, and I meet a gentleman named Rick Fullop.

And he is one of the smartest, kindest, most thoughtful people I ever meet. Again, a random series of events. And then that gentleman, Rick and I develop a friendship. We spend a little time together on Nantucket. Do they call that the rock, Rick? Is that what they call the rock? Or they call it the rock, right? Yeah.

We spend a little time. We get along. We vibe. We talk for hours. And just one day, Rick says, I'm starting something new. I'd like you involved. I say, great. Where do I send the check?

Because I know Rick's going to win because he's a winner. That's all you need to know in life. And Rick says, okay, here. and I say, can I get twice that amount? Rick says, hey, J-Cal, I'm over-subscribed. I'm like, can I take three times that amount? Anyway, he gets me a tiny little slice of something I know nothing about 3D printing. What does J-Cal know about 3D printing? I know nothing. All I know is that Rick Full-Up is one of the great human beings I've met in my life as a human being, as a technologist, and as a leader of companies. and I am so delighted to have my good friend Rick full up on the program to talk about desktop metal

because Rick just spacked desktop metal. And now we have to have a little disclaimer here. We cannot talk about certain things. Rick, I don't know all the rules of the road. But first, I want to congratulate you on the tremendous success you've had with desktop metal to date. And I've had three companies that have invested in go public. now, Uber, waiter. We had a couple of shares we got in that.

It was kind of de minimis. So I don't, it doesn't really count, but I guess it counts technically because they bought one of our companies. And now desktop metal. So thank you for including me in the journey. You, you didn't have to. You were oversubscribed and you just saved a little slice for your boy J-Cal. And that's all I ask any of my friends, just save a slice for J-Cal.

I don't need, I don't need three slices. I may ask for three, but I'll take one. One slice. Everybody knows the rules. Rick, congratulations. on doing the SPAC. Let's start with number one, what is desktop metal? And number two, why did you choose this moment to do a SPAC and explain the process?

And we'll get into that here in the first segment. Yeah, so desktop metal is one of the leading providers of metal 3D printers. We make machines that make it really easy to print metal parts at scale, which is something that you couldn't really do easily before we came along. You had this legacy technology that used lasers and special facilities and it was quite complicated. And we've made that technology a lot more accessible and friendly to the mass market. And today, it's used by hundreds of companies globally, many Fortune 500 companies to make metal parts. And we're entering the composite space as well.

We've got one of the leading performance continuous fiber composite systems in the market. So we make it easier to make stuff. And are those machines behind you for those of us watching on the YouTube channel or on the video version of the podcast, which, by the way, our video version should be on Spotify any day now. Thanks to my friends, Daniel Eck and everybody over Spotify. Shoutouts out Spotify for including us and everything. Are those the machines behind you? What are the cost of these machines? These are not 3D printers for people at home to build Star Wars, characters, or ornaments and toys. These are metal printers to print components for what type of companies, for what type of application and the cost of them.

Yeah. I mean, I think our most accessible systems start at $3,500 a year, which are in the composite space. But on the metal side, they start around $160,000, and they go all the way. up to 2 million when it's fully loaded for the mass production system. So we have a full range of technologies. The SME products are kind of in the range of a high-end CNC machine. So they're very affordable. If you're a shop, it makes metal parts.

Can you explain what that means two words, composite and CNC? Yeah, so CNC is a milling system. So just type in CNC on YouTube and you'll see you won't be able to like that. This is how people used to make metal parts. That's right. Yeah, exactly. Yeah. Yeah.

And it means cutting the metal as opposed to printing the metal. Am I correct? That's right. That's totally right. Yeah. Okay. So people would previously use these giant machines cut metal. Or they would cast.

They would make a mold and cast apart. Oh, yes. Yeah. And that is incredibly costly and time consuming. Totally. Yeah. It's slow. Yeah.

Many weeks to get apart from a, just to get the mold to then like you've got amortize a mold over many parts. So the cost is prohibitive for. a short run and doing it digitally, it's revolutionary, and you can do a lot more geometry that you could have done otherwise. These are systems that are used by everybody from like Honda, Nissan, Toyota, Ford. These are your customers. Yeah, yeah. What would an automaker use these for?

Would they, if you were building a new BMW, they wouldn't be using these for the BMW that I would drive, but maybe if they were making a BMW prototype, instead of doing a mold, wait eight weeks or six weeks and going through that expense, they could try a couple of different variations on a break or a, what would they print as an example of putting aside BMW or any specific person and automaker? Actually, Jason, so automotive is maybe 20% of our business. So it's not a massive side of the business, but it's significant. We don't have a count concentration.

It's a pretty horizontal business. It's not lumpy, which is actually a great future of the business. but we actually make systems for mass production. So, uh, really? Our large machines can print hundreds of metric tons of parts per year. It's, it's incredible. They, they're, it's like a printing press for metal.

Wow. So that is mind blowing on a number of levels because you've taken what would have been the iteration product process. If I, if I, understanding correctly. And I am a neophyte. And you've combined the iteration process with the. production process and now it is one thing. That and also the fact that now you can have physics to find the shape of the part.

Today, we do a lot of things based on the manufacturing process, but if you free yourself from the constraints of manufacturing processes, you could have what's called generative design where the physics that an object will be exposed to end up determining the shape of the part. And as a result, you end up with these things that look like they're bionic. or, you know, from outer space, but they're a lot more efficient, lighter weight, much greener. And so it's definitely the way with the future.

And so this iterative process, I always see as an example, there are some people get crazy with their cars and they're trying to reduce weight but increase the stability of the car. So they will replace stock parts, whether it's like the pedals, with pedals that have, you know, I don't know, half the amount of weight, but twice the strength or something to that effect. This has this type of iteration has never existed before. Therefore, you know, the iteration process of reducing the weight of the pedals or some other part to increase the fuel efficiency of an EV or a gas car, you know, an ice engine.

These things were just not bothered with, right? It was kind of like why even bother? Yeah, I mean, when you went to precision machine design class in mechanical engineering or, or anything like that, you would, you know, it usually suggests that you start with a simple shape or two and a half these shapes. And that's sort of the old way of thinking. And if you don't have constraints and you can make any shape, then, you know, you could have also almost like artificial intelligence determine what's the optimal.

Oh, my Lord. That's mind-blowing. Yeah, which is actually incredible. We're going to cover some of the AI plus the printing and some more of the use cases of desktop metal, which you can follow on Twitter at Desktop Metal. And then in segment three, we're going to talk about the SPAC when we get back on the swing of startups. All right, if you're growing an e-commerce business and that's your focus, you need a platform that is focused on growth. And that platform is Klavio, K-L-A-V-Y-O.

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for our listeners. Clavio.com slash twist. All right. It's a very special edition of this week in startups. You've all been hearing about SPACs, special purpose acquisition corporations, companies. Yeah. Is it companies or corporations? I don't even know. It's the same word.

It's a vehicle. It's a vehicle to go public. And you guys have chosen to do that. And I believe that was announced on Wednesday, August 26th. Am I correct? Yeah. So that was announced. We'll talk about that in the next.

segment. Right now, I want people to understand more about the use cases of desktop metal. Full disclosure. Yum, yum for J-Cal. I was able to invest in this. And it's a third company to go public for me, which is a really big deal because most investors and venture capitalists and angels, they don't see one IPO in their career. And I'm putting up numbers already. And really, I can't thank you enough for including me on the journey. It's a pleasure. Yeah. Thanks, pal. I appreciate it. And many more to go, hopefully. as we both continue on our friendship and career. If you don't remember that story,

I was coming down to see the folks that ended up investing in the Series A and all hotels were sold out and you let me crash in your place. Is that right? Oh, that's right. And I made you a brisket. Did I make a brisket? What did I make? It was good. I don't remember what it was. Oh, I think I may have done a Tomahawk chop. Yeah. So anyway, just for those VCs who are listening, you lazy bastards, man, this is why I run circles around a lot of you, because when a founder's in town, all I tell them

is SFO, my house, here's the directions, here's the master, the second master suite, you know, listen, I'm blowing it out now. And then I just, I immediately get me a brisket. I call my assistant, get a brisket, boom, we get that brisket going, we slice it up, and then we stay up, we eat the brisket, and we talk, and we talk, and we talk, and you know, our mutual friend, Rob May, when he comes out, I told Rob May, if you ever come to, town and I see you on social media and you're staying at a hotel. I am going to come to the hotel I'm going to pick you up and bring you to the house. Do not, and this is to all my CEOs and friends, do not come to this town and not stay at the Calic compound. But you were going to meet

the VCs. We talked about it. We chopped it up and that was great. Let's get back to desktop metal. there is this concept of AI, artificial intelligence, machine learning, and then combining that with metal and printing of parts. Is there an example you can give us without saying the name of the customer or a fantastical example, even better, of something that in 10 years you'd be able to do with AI that could have a dramatic impact on humanity? And you can take a second to think that through, Because what I'm looking for is an example from now and an example that's so fantastical that our minds and our brains will melt. Yeah. So today products are basically an engineer.

And I'm a long-time investor in Kat. So I think one of my early mentors in the sort of venture and investing business, so I did 15 years as an entrepreneur and five years as an investor. And the investing side, that was one of the early backers of On Shape. We did the Series A of that, which we sold for $500 million to PTC. and we did proto labs, which is a public company, $3.8 billion market cap today. And we did also the series A of space claim,

which went to Ancys and Revit, which went to Autodesk. SolidWorks became the SOA, 60% market share of the CAD, software markets. So CAD is like the software used to sketch parts. Computer-aided design. This is how three, this is how things are built in 3D on a computer

and then manifest them in the real world and 3D printers, took this from, you know, from an abstraction, you know, where one thing happened in one building, one thing in another, and they both happened in the same space, in the same office. Exactly. So, so the sort of history of CAD is, there's a company called PTC in the 90s that made it parametric, and parametric means that you change one thing, and the whole thing reorganizes based on that change. And, you know, if you were creating, you know, everything is in context.

And there's references that re-update automatically when you change something. There's a history tree for the design of the part. So in that type of mentality of designing product, you have a sketcher, and you as an engineer are essentially drawing the shape of the part. And you may do analysis to figure it out. But it's a relatively simplistic approach where there's no multi-physics context to what you're trying to design. And that means by multi-fysics is all the things that are going to happen to that object,

from magnetics to heat to friction to vibration to loads that you expose that part to. And so when you're making complex engineered products today, the engineers are thinking about all that stuff in the context of his head. But a product is an assembly of thousands of parts or hundreds of parts or dozens of parts. And so if you had, let's say, a rocket and the entire rocket is designed to run analysis on the entire thing on a multi-physics basis would be quite complex because there's 100,000 parts in that device. And many engineers work, and there are little parts of the design. I would say a decade from now we're going to have, and I'm not talking about desktop

metal, I'm just talking about engineering software today. But in the future, you're going to have all of the physics that the object is going to see define and then the computer will do the design. And I know that there's a if I ask the CEO of a few of the crowd companies that wouldn't agree with me, but I think this is how it's going to play. And the human is going to be essentially defining the requirements for the product and the design of the product is going to be done to some extent by the computer or the or the cloud system that you're exposing it to. And, you know, whether you take a there's something called assembly consolidation, which is a, design technique where you take many parts today and then you print it as a single component, things of that nature, you'll be able to fully automate. And then once you have that in context

of the other parts in a large system or a large product, and you can expose them to like multi-physics analysis, you'll be able to sort of adapt the shapes in the context of the multi-physics problem. And that becomes, that's a huge opportunity in the engineering software field. Okay, again, I'm going to just ask my neophy questions, which is kind of my speciality on this podcast, because half the audience is much more than me and then the other half of the audience, just like me trying to catch up with this. Jacob, there's no software to do what I just described today. This is where it's going to be in five years. But you can do this in a small group of parts. Like you can get three parts in the context of themselves, right?

Got it. If you're trying to define a problem, say, here's a door of a car. and it's going to be opening and closing, and you want to do the crash protection as part of it, and you want to do where you place the hinges as part of it, and as part of wear and tear, durability, and all of these things is a single problem and have the system redefine itself.

That doesn't exist, but it will exist. And that doesn't exist for just the door. I mean, it could exist for the entire vehicle because you also have heat and cold. So if the door... And the aerodynamics and everything. thing. It's going to be the computer and the computer will have an objective. The objective will be gas mileage, lower cost car, and then you could move the dial and tell the AI, listen,

this car is for military purposes. What we want is it for it to be rugged. We don't care about gas mileage. We care about how rugged it is and the and the life cycle of it. And if it's going to be able to withstand, you know, an IED attack. And that. And then. And for a Tesla, you might say, I want this thing to have the greatest efficiency for an electric vehicle. So it being light and it being, you know, aerodynamic becomes more important, correct? Yeah, making it, you know, the space for how much space you have inside the vehicle and how roomy it is and storage. That's your sort of package protection. And then from there, you start to define the rest of the system.

That type of software capability doesn't exist to it. but we're going to be there in a decade for sure. There's no question in my mind. And the example that comes to mind for me is when we grew up, you and I are both Gen Xers, I don't know if you had this experience where they brought us to the assembly hall and we watched the space shuttle take off and land every time. But the tragedy, and I'm not going to remember which the names of each of them. I know one was, I believe, the Challenger.

One of them blew up tragically on takeoff. because of, I believe, an O-ring, and the other one came apart in re-entry because of tiles, which couldn't withstand the heat. And in those two, is that correct? Yeah, the insulation on take of hurt, one of the leading edges,

and then that cascaded. That cascaded in the re-entry, yeah. And so if this technology had existed back then, this software that thinks holistically about the outcome that you're looking for, which is to protect the souls on board the space shuttle on the vehicle at all cost, it's potential, there is a very high potential, and both of those could have been avoided, because a lot of these errors that happen in aerospace are cascading errors

that cannot be predicted or extremely hard to predict when one person's working on the nut and the bolt and the other person's doing the O-ring and yet another person is doing the wiring for, you know, the television sets on the back of the airplane seats, correct? I mean, I think it's going to be a while to we can do systems the size of a space shuttle because that's quite a complicated system. But I think that, yeah, I mean, we're definitely going to be within our lifetimes in a setup where software will be able to design in context, very large systems and do simulate,

multi-physic simulation and put a safety factor across the full system. So that will exist. How many customers, ballpark, does desktop metal have at this time? Hundreds. Hundreds. Great. When we get back from this commercial break,

and the company is in year five? It's almost five. Almost five, right? Yeah, yeah. I have a very weird gift of like, understanding the time, but only for startups. I don't know how many years I've been married, but I always remember when the startups were.

This is a problem. I have to get a tattoo of my, of our wedding day because my wife and I are like, are we 13 years or 14 years or 15 years? I don't know. It's been 18 wonderful years together. When we get back from this break, I want to understand why you took this opportunity

to do the SPAC because SPACs have become a relatively new phenomenon that were previously, not available and really not that interesting, but Bill Gurley himself, our mutual friend and Chimoth, our mutual friend, they both have now become enamored and leaders in thinking about new ways to get companies going public and reverse the horrible trend of less companies being public and retail investors having less access to startups in the early stages of them. I want to talk about why you chose this back and what you think of the overall market of companies going public earlier than.

than they had, but just like they used to in the 80s and 90s when we get back on this week in startups. All right. We all know the way we are working together has changed overnight. We've all gone from going to offices and commuting to working from home. And if there's one thing we've learned, it's that you need the right resources and you're going to need to adapt. And Fiverr is a great way for you to solve your acute business needs right now.

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But please, go ahead and thank Fiverr on Twitter for supporting the show and go ahead when you use the service. Please, the first time, use that code, twist. Let's get back to this amazing episode. All right, Rick Fullop is with us, the CEO and founder or co-founder. I don't know if you're a solo founder or co-founder on this one. Co-founder. I got four MIT professors as co-founders who are dear friends, and then Jonah Meyerberg, Rick Chin and other folks are co-founders of our company as well.

Yeah, and it really has been, you've moved at a very fast pace with this company. From iteration to getting it to market, product market, fit. I just remember early you sending me tech saying, we just got this client, we just got this client, this thing might work. You had very early success with customers, huh? Yeah, it was, we knew what we wanted to build. So we had been, to some extent, investing in this space and knew the market had been using the technology for a long time before this. And, you know, So it was definitely an area where we have experience. Yeah.

I mean, I think that's super helpful. So let's talk about... We knew customers. So, you know, knowing customers is a big deal. I mean, having relationships, early adopters, and that is definitely a... You work with people to develop a product for them, and that is definitely helpful. It's a huge advantage when you know the customer, you understand their. needs and they trust you. And trust is a big part of this because they have to trust you

in order to write a two, three, four, five, ten million dollar check for a hardware product that is in your head right now and is in a mockup essentially, right? I mean, people were putting deposits down for things that did not yet exist. If I remember correctly. Yeah. And you're not the only person who's ever done that, by the way. You on took famously, you know, he was able to help fund the company through the deposits. I, He did that. He did a great job. Yeah.

And did a great job at it, our mutual friend. And you, did you deploy that same tactic? Was taking customer deposits in order to fund the company, one of the strategies here? We did take deposits like that as aggressively, but we knew what we wanted to build. And we went that at full speed. And, you know, we had a couple twists and turns early on. Do we do it this way? Do we do that?

And then eventually pretty quickly settled that we wanted to sort of. redefine powder metallurgy but for 3D printing and, you know, sort of separate the thermal processing from the shaping of the parts. And that would allow you to print parts in an office environment or a hundred times faster than the legacy technology. And, you know, you make something a hundred times faster and you make parts at 120th at the cost of a previous process and the market is huge. You know, we make $12 trillion worth of parts over year. And 12 trillion dollars worth of parts are made with desktop metal equipment. No, no, no, no, $12 trillion.

I was like, that's not possible. In the world. In the world. That's your TAM. So we're not there yet. I was like, wait, this doesn't make any sense. Are you actually printing money? Are you printing coins with it?

Please don't use it for forgery. I know desktop metal has some very elegant technology. Do not 3D print a quarter. That's not allowed. Let's talk a little bit about the SPAC process. Sure. I'm sure you were under a lot of pressure with this early. success with the banker circling and saying, hey, here's the traditional process. And those banks

are very aggressive and they like to wine and dine founders. So you have them over here, I'm sure, you know, trying to get in early. And as having been a venture capitalist and having had other success, they're like circling. And then you have the direct listing thing over here. And you're watching Spotify do that. And you're watching Bill Gurley's blog post and tweets. And then you see our friend Chamath basically restart the SPAC. movement. And I think we have to give him a lot of credit for doing that. He deserves all the credit. 100%. This is like SPAC equals Shamath brought it back. I remember sitting at the poker table with him when he explained it to me. And I was like, you got to explain it to me two more times. I don't know too stupid to

understand this. And he did to his credit. So you're watching the three options. Explain to me as a founder your assessment of each one and why you chose as our friend Bill Gurley wrote in above the crowd, his amazing blog, if you don't read every post, you're an idiot. This is like literally the freest knowledge from one of the most brilliant investors in history above the crowd. Just Google it. He just wrote, door number three. You pick door number three. Tell me about door number one and door number two and door number three and what the process is in your mind of which door to pick. Okay. So I've done the door number one. I took a company public with, you know, the top investment bankers of Morgan Stanley and Goldman back in 2009.

and we did the whole thing. And it was a great experience. And it took a long time. And, you know, it was like a year of preparation, 07 through 08. And then the 08 crisis happened. And then the bankers delay you a year. And it's like you don't have any control of the process, which is not great. But then eventually you go out and then you're done.

And then that approach, you do your SEC work first, like the paperwork that you submit and all that stuff. And you get yours one. You're effective once you're done. through your IPO and then get your comments and all that. It takes a long time and it's definitely an involved process. There also is a criticism of that process from Bill Gurley that the banks get a little bit, the alignment is not perfect. Maybe you could speak to that, maybe not in your deal, but just in general in deals.

I can. Oh, you can. Or in terms of your deal. What happened? Well, back in 2009, when we did our. or when I did a regular IPO, we left $380 million in the table, basically from underpricing. Explain how that happened and then what the next six months are like for you, grinding your teeth thinking about that. How do you leave $3.80 on the table?

Honestly, I didn't think about it afterwards. Oh, because you were right. It was like a big win. Right. Bill Gurley's looking across a hundred IPOs. This is your first. So you're just like happy to be bubbly. We're like, thank God. We got through the thing. It was so much work. Oh, my goodness. But the stock went out at what dollar and then what did it peak at? I can't even remember. I can't even remember. It was like from like 14 bucks to 18 or something like that.

Anyway. So that spread, you should have, you should have captured that spread as opposed to the bank or their best friends who got allocations. It's really the way that it works. It was the best friends that would traditionally capture the spread in a regular IPO. And I remember meeting the best friends in the road show. and then the regular people. And then when the allocation comes, the book is open and there's some transparency,

but it is, they do, I mean, there is some underpricing in order to guarantee demand and make sure that it's a successful offering. And then how much pop is, you know, I guess it depends on PR and all their, other sort of interest from the investor community, et cetera. So anyway, I think that every, every entrepreneur was okay with that spread, but they are leaving money on the table. And it is, it is what it is. Then Bill and all the folks started looking at this direct listing thing.

They made a lot of hay with it. And the problem with direct listing, that's when the company literally just does the work themselves and lists themselves, is that it's there is no, you're not able to raise primary capital as part of the direct listing. And so that was a limitation of it. And I remember meeting in January at World Economic Forum with the vice chair of the New York Stock Exchange. change in John Toddle and asking him, how can we do a direct listing? And we've got cash in the balance sheet and we, you know, we'd be a great candidate for it and we could start to do other things that we want to do. And the problem with it was in direct listing, you have to wait a certain amount of time

before you can raise capital after a direct listing. And so there's some limitations to it. And John was working on with the SEC to try to come up with a mechanism that would allow you to raise primary capital as part of a direct list. Usually when a company goes public, they're trying to raise primary capital. You're trying to sell shares to long-term holders, hopefully, but of course, these friends of the banks, they're just flipping it. They're buying it for 14, selling it for 18, or maybe they sell half their position. And you really want long-term holders. Yeah, you want them long-only mutual funds. You want high-quality investors. Some of the friends of the bank

are high-quality investors, but there's no mechanism for them to build a position when they get such a small amount of an IPO. So it's a there's some complications to that to that approach. Then the direct listing had that problem. Actually last week, actually on Wednesday the same way that we went public, the SEC finally approved primary capital to get with direct listing. So it will be a thing. And it's a new thing. And I think Bill tweeted to John on Twitter just thanking for all his work to make that real. And that's the most fair to all shareholders because my understanding is when you do a direct listing, a feature or a bug or just that nuance of it is, there is no more lockup period.

You just, the shares are tradable or do you have to write that in? It really depends. Every deal is different. You really want a lockup period so that you have a... Why? Why is a lockup period important? Because new investors coming in, you know, want to feel like the public that's coming in, want to feel like, like somebody's, you know, there are no surprises. You want to have a little bit

of time for the public to see the company perform and see that what they said they were going to do is what they do and all of that. So, I mean, I think it's a, I mean, that's just my personal opinion. I think there's- It speaks to trust, right? I mean, you're, you're not saying you buy shares now, I sell shares now. You're saying, you buy shares now, and we're in it together. And I'm not going anywhere for some period of time. Honestly, you know, I've, I've, I've, uh, I'm not a seller in our company, so I'm going to be a long-term holder in our company. Me too. I'm doing this a decade from now.

And so I think we're, but in the, you know, there are, I think that in a direct listing, you may need to create a float. So some of the ones like Spotify or Slack may have done it without a lockup. Anyway. Okay. And then so now before we go to, when we get back from this quick break, Now that we've done door number one, traditional process, you'll leave money on the table. It takes a heck of a long time.

And there's a little shenanigans perhaps going on. And it's great that you have it as an option. But there are some shenanigans and inefficiencies that Bill Gurley and other professors. Our friend Mike, he's been also very outspoken about it. Yeah. So, I mean, the two most arguably the number one and number two most successful investors. I mean, we could argue it, but there might rush more of venture capital. are looking for change. Now we have this direct listing with the ability to raise capital. So now

there's competition, puts a little pressure on the banks to maybe make that first process a little bit better. When we get back from this break, we talk about door number three, which desktop metal chose when we get back on this weekend starters. Hey, everybody, you know Dell has been sponsoring this week in startups, and they've been a tremendous supporter of me for many years. And I have been a tremendous supporter of Dell's because I am obsessed with those. big, curved, beautiful Dell monitors. I send them to every employee. Long story short, Dell for entrepreneurs has really been trying to help every single one of our startups. And we're very lucky today to have Mobile Aji. So Kambi on the program, and he runs Dell for

entrepreneurs. Tell us a little bit about what you do at Dell and why entrepreneurship is so important to the team at Dell. Yeah, Jason, yeah, thanks, thanks for having me. As you said, My name is Mobile I G Sukumi. I oversee strategic partnerships and the Center for Entrepreneurship for Dell Small Business in the U.S. And ultimately, we want to make sure that when it comes to technology solutions, small business owners and entrepreneurs can consider Dell as a preferred choice. Currently, in terms of like COVID and what's going on the current market, we're making sure that we're having those conversations as more entrepreneurs and small business owners

are looking more to, you know, thrive and survive in the midst of this pandemic. we want to make sure that they can consider Dell as a preferred technology partner. I'm excited to be here. And, you know, to your question, entrepreneurship is important for us. Dell, our DNA is built on entrepreneurship, right? We've been around for at least 35 years. And, you know, Michael Dell is one of the most iconic entrepreneurs out there. Amazing.

So it makes sense. Yeah, it makes sense for us to work with entrepreneurs. Our DNA is embedded in entrepreneurship. And so that's why we have this program. And that's why, you know, we're pretty excited about our partnership with twist. Save up to 43% when you take an extra 5% off at launch.co slash Dell. And while you're there, you can also register for a free IT consultation and be entered in to win a $200 Amazon gift card. All right.

It is a yum, yum day for J.Cal, your boy. It's working hard. I'm doing 100 investments a year. And I'm just very lucky to have developed a friendship with Rick Fullop. and you know, you get that phone call from somebody on his level and you just say, where do I send the check? And I was lucky enough to be able to put a small bed on desktop metal and I am longed the company. When I get my shares, I'm holding. I'm telling people right now.

I don't know how this works when I get them distributed. We'll talk about that now here in the third segment, but I'm long Rick Fullop and I'm long desktop metal. I am an interested party. Disclaimer, disclaimer, disclaimer, disclaimer. when did people start approaching you about the SPAC? When did you, and then how did you make the decision to pick a SPAC and explain to people just generally what is a SPAC?

Just like you explained the first two processes. So a SPAC is a special purpose acquisition company and it's a model where somebody, they call it a promoter or a, you know, manager? A manager of a SPAC will go out and raise capital and build a strategy around that and go and find a company that they can go and acquire after the SPAC is a public public holistic company. So you raise capital, you put it in a trust, you pay some small interest return to those investors. and then that manager will go out and search for a period of a year or two years or whatever

period is he'll go search for a company. And so there's approximately $30 billion worth of SPAC capital in the market right now. Incredible. Yeah. An increase from last year, an increase from the year before. And it's been a while since this has existed. In the past, the people that did us back or raised us back, or also known as a a blank check company, there were quite rare and you didn't see, you didn't see high quality

folks attached to them. What's really changed is since Jamath got involved, he has raised the quality of the people that are doing it. And you have people now that are very high quality managers executing these strategies. You've got people like Mark Stata, Dragoneer, who's extremely high quality person. and you have... Bill Ackerman? Is that his name?

Bill Ackman is a very successful. Yeah. You've got... So there's a range of very successful folks that are put together these, you know, Roger Frayden, who is the vice chairman of Honeywell, has got a SPAC. And there's a whole range. Actually, I'll pull up a chart right now. I'll show you.

We actually have a chart of this. The number of SPACs created now is we had a big dip, obviously, after the finance. crisis, but now we're at a peak. Nick, is that 81 there? 81 spacks this year have been created, and we're only halfway through the year, so I'm going to assume that's going to double. I don't know. Is that 20? What year is that there, Nick? Is that 2018? That's 2020 with 81. So this thing's going to get more momentum. It probably ends the year over 120. I'm going to guess. Right now there's 110 specs looking for for deals. And the, the reaction. is that, you know, they're specific to a segment and you've got to find somebody that is,

there's like a matchmaking process. So you get a board member with it. In our case, we're really lucky to have partnered with Leo Hendry. He was the fellow that. Leo Henry, he did land systems back in the day. Actually, he did TCI and AT&T broadband and Liberty Media. Oh, that Leo Hendry. Yes, yes, yes. Sorry, I was thinking about another one, Leo Spiegel, was that, Anyway, there's a lot of Leo's going around this industry. So that's fantastic. So you find a high-quality manager. He says, I want to be involved, and he brings how much cash in his spec?

Whatever is in the trust. And so now, it's not like an IPO. The cash has to stick in the trust. The people that are investors in the SPAC have to like the deal. You know, they can have a proxy boat right before the mergers close. And then in order to backstop the deal in case there's redemptions, you raise what's called a pipe. Private investment in public entities.

Equity. Equity. Yeah. So that is where you get the mutual funds and the long-only investors who participate in the deal. So you have the capital that was raised in the SPAC at once, plus the capital that comes from the pipe. And together, they form the full deal that gets announced. And the pipe allows you to have a much higher quality group of investors that add to the value of the total offering. So. get to select them. So that is like the original IPO process, it's sort of like skimming the cream of door number one. You get to say, hey, I want fidelity. I want Goldman. I want this bank for whatever reason. Our board was the allocation committee. We literally had, we're super

oversubscribed and we sat down and said, this guy and this guy and this gal and this fund and that fund. Wow. And those are the folks that, and you can actually give them a meaningful position so that They can build a longer, longer term position in the company. And that's a unique feature of this approach. That's yet another benefit. Now, tell me about the timeframe because I have been researching this, because I have been approached, and I'm going to need your advice, to SPAC what I do as an angel investor with the syndicate.com.

And I think it's a brilliant idea, but I'm going to put that aside my personal consultation with you until we get to the end. But what is the time frame from when Leo contacts you? And you're like, well, okay, here we go. Leo, this is a big name. I'm sure everybody else on the top of that list contacted you. From when he contacts you to Wednesday, you know, August 26th when this thing has announced, what's that time frame like?

So before you do any of this, you spend two years making sure that your company is public ready. Right. Define what that means. Public ready means what? I mean, you have to have PCAOB compliant financials. You have to have your audits done, just like a regular company going public. All that work needs to happen. You can't just like flip a switch and then you're like, I mean, you have a significant amount of, we're really lucky.

Our finance team had done multiple IPOs before. They have been through the ringer. They have a public accounting background. So they know what they're doing. And so that is one of the first requirements. is that you're ready to go. Otherwise, you know, so that's one part. And then you spend sometimes selecting a bank.

It's not like Leo calls you. It doesn't work like venture. It's you sort of select an underwriter. And then once you have an underwriter and you want somebody has experience in this sector, just like going through an IPO, then you will actually do a process where you both talk to a bunch of specs that may be a good fit to your process. and this is where it gets interesting. The SPACs want to continue to see deals nonstop.

And they haven't done a, you know, they have to do due diligence. But at the same time, they're doing due diligence for multiple companies. They're a search vehicle, right? So their job is to not be exclusive with anybody until the last minute. So one of the risks of doing a SPAC deal is that you can get stuck in a false positive or a false negative situation where you waste a lot of time with one thing and then like they leave you in the altar and that's not a so so that is you know that's pretty risky for a company right you're doing and you got to lock up look yourself up and you have to have the

capability like not not end up in a in a bad process and so you know you work with a bank that's good that will you go meet with a number of you've been you've been present to a number of, first you get your, your, your, your store is straight, and then you go present to a number of, uh, uh, spaks. And then you find somebody that you have a, you have a meaning of the minds with. And then once you do that part of the process, uh, you, you have to, uh, agree to go to the pipe market, which is the, the, the rest of the financing, uh, part of the process. And that is something that, uh, at that point, you, you, you want to have agreed on, on what the deal is with, with the spec. and once you have a deal signed, an LOI signed with us back,

then you go to the pipe market and you present your story for several weeks. So, you know, maybe three or four months of process. So we're talking about maybe 50, 60, 70 percent less time than door number one. That's a misnomer. It's not less time because you still have to do. Well, you just know road show, right? No, you do have a, you do the rocho is with the pipe. So if you didn't have the pipe and you just did a SPAC, then it would be saving time.

But if you do the pipe, you basically added back the rochow. Well, you have, it's actually more work. So you have to first, you do your bake-up for the underwriter, then you do the bake-up for the SPAC. Got it. Then you partner with that SPAC. Then you do the roacho. But then after you announce, you have to do the SEC work, like your S-4. In an IPO, you do something.

called an S1 and that it takes a long time to prepare it and here you have to write an S4 and file it and do the comments process. All that, that's just as much work as an S1, but you're doing it after the announcement as opposed to before you go out for the road show. So overall, this is not for like, I mean, this is work. It's, you have to be ready. It may wind up being the same amount of work as door number one, which would then lead you to the question if all things are equal, although Bill Gurley says.

seem to feel that door number three, the SPAC was faster, but I'm going to put that aside right now, because this may be, you know, your mileage may vary kind of situation. Why pick door number three SPAC over door number one traditional? If it's the same time. Yeah, you're definitely, the underpricing is a real thing. And then the, the, you're doing the S4 process after the announcement. So there is some, I mean, you're trading one thing for another. It is going to take you a good six months, no matter what. I mean, people say that it's faster. It's maybe, maybe it's faster, but, but it's work.

Which is more painful. Is one more painful than the other? I mean, I understand one feels more fair. And for a founder, this is very important. I mean, in my mind, founders who build great companies have a north star of when, in business of things need to be fair for all parties. and I think the resentment that's built up around door number one is the unfairness of it. So clearly door number three and door number two feel much more fair than door number one.

I mean, I think there's nothing unfair about door number one. Door number one is a great process if you can do it. But, you know, the market, what people don't understand says, market window is not open all the time. Ah. And you can do things, something sometimes and all the things all the times. And just like there's there's an open market window not for SPACs that wasn't available

last year. And obviously Chamath opened that window with Virgin Galactic wide open for the whole market. So the entire market should thank him. He's a huge innovator in finance and kind of walks on water. So I would say he definitely created a market.

And a lot of folks in the SPAC space have kind of benefited from from his work. I would say, you know, Bill Gurley wasn't talking about SPACs six months ago, right? No, no, we all sat at the poker table together, and he was a big fan of the direct listing, but I think even he concedes now, listen,

anything is better than leaving money on the table. And he's very, there's no doubt in my mind, and I have no insight information here, even though we're talking about two of my friends. There's nothing wrong with, there's nothing wrong with leaving money on the table. table. Sometimes the IPO is a great process too. They all have works and pimples. There is a lot of ups and downs with the SPAC process. I mean, you know, the, it's a high stakes

negotiation process with the SPAC sponsor and then on the during the pipe, you know, it, like in the draft incident sample, I don't have direct information. My understanding is that they had a difficult time with the pipe negotiation and the pipe folks colluded on them, lowered the price of the deal and then even after that happened the deal ran up to you know significant uh boom after the after the deal had been done so it you know it these are are out let's say but now there's more options so the fact that there's three more options equals better and you have more control of your life in a spec process for sure how so how so well I feel like in the IPO process uh because the window for IPO is is is

somewhat, you know, in the past it was Montgomery Securities and Hamburg and Quest and Robbie Stevens and all these specialized small company underwriters that were credible ways for a company to get public. And as there was consolidation on the bank side, the rules kept going out. Now you have to have a billion dollar market cap. Now you have to have like ex-revenue brok. Now you have to have this. Now you have to have that. And it's made it such a small universe of folks that actually can get through that rubycon that it's a

You know, it's what you were describing, that, you know, there's less public companies today than there were a decade ago. And it's a shame that, you know, retail investors can't get into Microsoft the way that they did in 1986 where they bought Microsoft or Apple or Google or, you know, Google. I mean, people don't, Google and Amazon, these companies, I mean, the fact that Uber took so long, you know, with $10 billion in revenue, whatever. I mean, Airbnb is taking for Airbnb's taking so goddamn long that they've got options expiring. I mean, nobody ever thought that would become a situation. Yeah, it's a mess. It's a mess. It's a mess.

It is, you know, I think that, you know, you have other other situations that there's sort of a vilification of being a public company making it sound like it's an incredibly, I mean, some founders don't want to do it just. from the perception of that they don't really know what they don't know. But, I mean, it's like everything else. You got to deliver your numbers and make your quarters and execute properly. And if you build a good business, you can raise money in the private market. And if you build a good business, you should be able to go public. And so the fear of scrutiny, I mean, this next generation and their fear of scrutiny, it's basically our generation, the Gen Xers have this fear of like scrutiny.

I think this comes from the fact that all of these, you know, non-traditional players said, I'll take $100 million. I'll take $250 million. Yuri Milner being one of the first, you know, Masayoshi-San coming in. A lot of folks started dipping down into this venture space and saying, you know what? And I kind of made the joke on CNBC, like just do a MasaPO, you know, like Maso will IPO. you, but we see that sometimes that doesn't exactly put enough sunlight on the company, i.e. we work. So what you're telling me is that scrutiny, that discipline,

makes for better companies, correct? I think so. Yeah. No. Okay. I mean, it is a, it is a, uh, I think that the reason we had this late stage boom was, you know, first it made, you know, you had less banks, less, less ways to get out. when there was consolidation of the banking side and Sorbanes-Oxley and all the things that made it more difficult to be public. And then that led to, you know, the exits being more kind of packaged and at higher price. And then when that started happening, you had kind of a void that got filled by people like Masa and other folks that were this sort of late stage. I'm going to keep you a unicorn forever situation. and that is there's a benefit to that but but I think we've sort of robbed the retail investor

and the public the ability to get into growth high growth stocks I agree 100% and I also think you know if you have more choices if the Robin Hood trader and full disclosure were early investors in Robin Hood as well maybe that would be the fourth or fifth unicorn I don't have any insight I remember going to a meeting with Vlad in like in 2000 17. Wow. And he was, he showed up at this meeting where everybody's like suited up. He showed up in like short shorts. Nice. Yeah. Tesla short shorts with the Tesla logo out of. It was the greatest troll ever. Yeah. But I mean, it would be great for the Robin Hood investor to be able to say, hey, here's a company, you know, called Airbnb and it's worth $4 billion. And I stayed in one where here's this company,

LinkedIn and it's you know I hired somebody off of it or my cousin is driving for Lyft and my other my brother is doing postmates I think I would like to buy 10 shares of that and buy those shares when the company's at two three four billion not 20 30 40 billion and be able to bag a 10x the retail investors should be able to bag a 10x you know and it's unfair that like you know they don't have that opportunity and we were coming up in the industry what was the benchmark back in the day 50, 100 million in revenue you go public? Something in that range? Roughly.

You know, I think 50 to 100. Yeah. I mean, we took, I mean, I was an investor through my friend Michael Scott, my partner, Michael Scott, backed a company called Demandware that we ended up selling to Salesforce for like close to $3 billion. But we were the Series A investor in that business. We took a public in like 40 something million in revenue and it was a, you know, great, they kept running up and built a great public business.

But it's a, you know, you got to have more of those successes, I think. Yeah, and people should be able to take risk. I mean, the idea that the only bet you can make in the stock market is on Amazon and Apple and Disney, which are fantastic companies. But we need more innovation. We need to have, I would love to see 10 times as many companies go public and let the public, make some bets, and I'm using the word bet here. Let's face it.

You know, we're taking risk. Hopefully it's an intelligent bet. But let the average Joe, average Jane, get in there and place a $100 bet on Uber in year one. I'm sorry, not year one. You're five, you know, year four instead of your 10. I would like to see people be able to take more risk. Jason, at year five for Uber, they were an indisputed massive company.

It's like, I mean, they, they're, they, they, they, deserve to be public when they were five years old. I don't know why. I mean, this is more about Travis. I think Travis didn't want to do it. You know him better. Yeah. I think a lot of it was, you know, and it's better for Travis to answer his thinking on it. But I think at that time, things were going so unbelievably well that going public would mean showing people the playbook before they had reached all the markets. And that to me made sense. If you think, that you have a clear path to a hundred billion, $250 billion company, turning over your cards. It's like, it's like in poker, you know, you flop a set and you're like, look, I got a set of tens.

And the other person's got two, you know, the other person's on a flush and a straight draw all a sudden, and you maybe gave people a little too much information and they can, they can maybe chase it. Maybe they'll chase the straight, chase the flush, and you created a competitor. And so I think that reason is one. what happens now for shareholders of desktop metal, i.e. myself, when do I find out that I have my shares and what their prices is? And am I locked up? Just technically, what happens to, you know, employees who have shares? How does that all happen in a spec? It's just the same as a public company.

At some point? At some point, you ship it to me, ship me some shares? Well, there's a conversion ratio from shares of one to the other. And in our case, we had an up-round, meaning that the price of which we did, yeah, the price of which we did our deal is higher than the last financing. And so we have, yeah, it was good. And then, you know, employees and investors

have a lock-up, which is a fair thing for the public markets. Yeah, lock me. Please lock me up for 10 years in any Rick Full-Up startup. I mean, I still have a bad thing around, half my shows of Uber. Yeah, I mean, Jason, if you look at our space, It's been compounding for 20 years at 20%.

And then the last three years, it started compounding on 25%. And it projected to compound this decade at 25%. So in our particular market, it was $12 billion last year. It projected to be $146 billion by the end of a decade. Yeah, I'm not going anywhere. I'll hold it for a decade. Sure.

It's a better market to be in than like, I don't know, some public utility thing that's like, or, you know, some. energy, something like, yeah, deprecating. Be careful.

It's a growth, it's a growth area in the industry. Obviously, it's technology and, you know, with technology

comes to disruption and all these other things, but I think that if you're the disruptor in a technology market that's going to grow 11X in a decade, it's a great area to be in.

I think every venture firm is going to basically look at their portfolio and say, we're going to create a SPAC department and we're, just going to every year fire off us back with our LPs and whoever else wants to join the party.

And you'll see Sequoia have like every year, Sequoia will launch every six months, a Sequoia, a benchmark, you know, just like Shamath has. I don't know. You don't think so? I don't know. Is it too much, too different? Too much work? I don't believe that you're allowed to know what you're going to acquire before you create a vehicle.

No, you're not allowed to know. You can have a short list. And it's complicated. The economics, there is enough SPACs in the market that you can actually negotiate the promote economics. That's what I heard. What is the promoter make? Because I know in Chmott's case, he put a lot of his own money in, but putting Chmoth aside, what does a promoter get? I was told by somebody who came to me about, was like wanted to sell me on starting a SPAC myself.

They said it's like $5 to $10 million to set up a SPAC. I don't know if that's true or not, but that's what I heard. I mean, it's all dependent. It's like an adventure fund. You have carry, you have 20%. It's the normal care of an adventure fund. I think that 20% is the promote in a spec. So the sponsor makes a percent.

Actually, it's usually not of one person. It's like a whole team of people. Right. And there's work and to do it right. So if they were to put in a hundred million, they get 20% of whatever that grows into. So if the 100 million were to grow into 1.1 billion, you take out the original $100 million

and they get 20% of the billion dollar in gain, you get $200 million. No, no, no, no. No, no, it's not as good as venture. Not as good as venture. They get 5%. What do they get? No, they get 20% of the $100 million.

Ah, in shares? Or in cash. In equity dilution of the company they're acquiring. Ah, got it. So they would then, if they put the $100 million and get $20 million in shares, if it 10Xs, they get $200 million. or the value of their shares to be 200 million. That's actually more alignment, right?

That's good alignment for them. I mean, yeah, but think about it. It's a $20 million fee. So there's some expense to it. So, like, the benefit here is you got out of dilution, right? So you have to make up for it, and you can make up for it with a higher price or you can make up for it with a, I mean, it's not, it's not a straightforward. In an IPO, you don't have that dilution. Yeah.

And you don't have a new board member. So you have to, those are tradeoffs. and in our particular case, we, you know, we felt like it would be a huge asset to the company to have Leo involved with us. Yeah, amazing. He's a legend.

And I think we were, you know, that promote economics is something that can be negotiated. There are different aspects of it can be negotiated. It's not like Chamath is in need of a quick hit, you know, and make a couple of millie, he wants to go long, you know, he's looking to go long. He's not trying to, that's my best guest. I don't, I haven't asked him. It'll be a little uncouth for me to ask him directly. I mean, he's, he's, uh, uh, you know, I don't know the economics of IPO, B and C, that the other two or A, I mean, I think, but I think he's a major investor in

those companies. So he's, he's actually skin in the game, a major backer. Yeah, totally. That's what I think is important to skin in the game, you know, when people see me, doing my syndicates, they know that I'm a certain percentage of my funds and that my funds are putting money in. So we're not just, you know, like, there were some people who were doing syndicates in the early days of Angel list who are like putting in 2K and raising 500K. And people are like, is that the right ratio of skin in the game? And, you know, just, you know, it's definitely an open discussion.

I mean, obviously people can do that. You may have seen the accreditation laws are evolving now to the point at which the SEC is now going to allow, let's say, non-accredited investors to have a path to becoming sophisticated, i.e. accredited. What do you think that will have, what impact will that have on the startup game? I mean, I think that most people at Angel Invest are, I've never met a non-accredited angel investor yet. And, but I think that, and I know you're a huge believer, and I remember from reading your book, I think it's a, I think it would be awesome for a broader part of market to be able to be exposed to early stage investing.

Yeah, it's just a great way to learn, right? Like, if you're the HR person. Yeah, as long as it's just done in a way that it's, that it's, you know, the problem is early stage investing is quite, quite risky. So. Yeah, 80% chance of a zero. 90% chance of a zero. Like, be prepared.

So you need to hit like, I think somewhere in the 20, 30, 40 range is what most people tell me in terms of diversification to have a chance at an outlier. And that's a, I mean, that's a chance of an outlier. And what I, what I'm proposing, and I'm, I mean, people have seen publicly, I've been talking to the SEC publicly on Twitter about this. I'm proposing that my Angel University course and my book be a path to, and this was my, my end game three years ago and why I wrote the book is, I want the book plus the course, the three-hour course, which is free. I, you know, just make a $100 donation to charity or proceeds go to charity. Everybody knows the rules. And so my idea is we could create a course and then do a 25 question certification, just like

when you go buy a pistol, you have to take a gun certification, like you answer 25 questions about, you know, like how to store a pistol. This would be amazing if we could do that. And then I think caps are the solution. So just like when we sell guns, we say, hey, you can only have this many, the magazine can have this many bullets in it. I'm proposing a similar idea for early stage investors, which is you can make up to 5% of whatever was on the average of your last two, you know, tax filings. So let's say you made $75,000 a year for the last two years.

you could do 5% of that, you know. So you can put $37,000, whatever, rounded up $4,000. Maybe it's 10%. You know, it's people's money. But when you go to a casino in Vegas or you go to your local bookie and you do, you know, a cash-based bet at your bar, which everybody's doing anyway. We all know that. Nobody's saying, can I see your tax return? And can you float this bat or it's just going to be the next six weeks of your salary?

And, you know, I'm going to send a guy, you know, to pick up the money, you know, like, Nobody's doing that. I say let them invest, but then put it on the syndicate leads to get a confirmation with them where they say, I made this much money the last two years. I sign off that my salary is $80,000. And we say, great, $80,000, you agree that you will not invest more than $8,000 in startups a year. And you agree that you'll do no more than you'll have some diversification or just something. It would be like if you went into a Vegas casino and you went into the the high roller suite and they'll be like, do you belong in the high roller suite? Because it's 5,000 a hand for blackjack here. Are you sure you should be sitting at this table and playing four hands of blackjack with your 20K? Like, probably not. Yeah, it's hard. I mean, I'm a little more libertarian from the view that people should be able to invest in what they want to invest in. I think and not have rules that prevent them from investing in things. I mean, if you want to start a company and you want to, but everybody's different. I think it, you know, it's probably healthy for the market

to have some limits. I haven't thought about, about, you know, what's the right thing to do. I'm a libertarian, too. The problem with our libertarian view is that there are bad actors. Sure. And, you know, in a world filled, in a world filled with bad actors, I am concerned because I've watched people I know who are complete utter dipshits trying to sell angel investing scams.

And these idiots who have never like literally this dipshit idiot I'm not going to mention his name is talking about, I kid you not Rick, what the angel investors in Uber made in selling like a $3,000 angel investing

course. That person didn't invest. He basically took my book. He took my track record and made a a Foucaca crazy money-making scam for $3,000 and you know that you pay like 500 now and then they try to ups and then they're upsell to 3,000. If you're that goddamn rich, number one, don't ride on my coattails or my investments.

Yeah. And then number two, if you've made that much money, why are you trying to scam, you know, young kids out of $3,000 like all these lame people? I, my angel, the book is $9. Everything I learned in the first, you know, whatever, seven, eight years of angel investing, $9. And then the course is $100. all the proceeds go to charity. Like anybody who's rich who's trying to sell you on a book or a scam or a thousand or a $3,000 course on how to get rich is by definition not rich because they need the money from you. I'm sorry.

I didn't mean to go on a tangent, Rick, but you're my friend. It's very frustrating for me when I see people doing this bad stuff. Just wrapping up, thank you for including me on the ride. We've had a great ride. Absolutely. How great would it have been if Dyn, if Spax's. were around if I'm dying. Oh, my lord.

Well, actually, I really think that Dine could have been public. I've always told Kyle and Jeremy and the rest of the team, but, you know, they got a great offer. They got a great offer and they're, you know, part of Oracle and it's a great, that was a fantastic exit for everybody. Yeah. So makes me see. I mean, everybody, everybody, there's nothing wrong with them. I mean, there's a, it's a full, I mean, everyone, look.

everybody's at different points in life like we're talking about people cashing their chips in in different ways at different moments in their life right and that was a long journey but i just i think one of the things that we need to think about in the united states especially when it comes to finance is that we've created so much goddamn regulation and we made this also complex and we've got this patriarchal you know like we're going to treat everybody like babies with you know the the the less money you make the more we treat you like a baby and the less access we give you to wealth creation devices is just bonkers. And then this is what's creating this, a big part of the tension is, well, I can't get in on the deals that an accredited investor can in. You know, in the early part of our careers, you and I could not have invested in the companies we're investing in building now. And that's just unfair. We should make it fair. Let everybody have access to these companies. And I'm really glad that you went public because I do think it's, you know, you're just a tremendous entrepreneur. And I like the fact that, you know, you didn't wait another five years.

Like you're doing it a little. I wouldn't say you're doing it early. You're in year five. We're getting to hit year five. That's what we used to do in this town, right? Five years seem to be the time to do it. So you're just doing it like we used to do it. Congratulations.

Thank you for coming on the pod. And if I see you, I know that you, you know, you have zero budget constraints to where you stay. If I see you in the Bay Area and it's not at my house, I'm coming, picking you up at the four seasons in the St. Regis. You tell me what I'm making a new, I'm making a new smoked. I'm smoking, pork belly, along with the brisket, it's a nice combo. So next time you're in town, Cala compound. By the way, I don't know if you remember, but your dad is the one who taught me how to do barbecue. So I had no idea what I was doing until your dad taught me how to teach you. That's right. That's right. I think when we were in Nantucket, right? Yeah.

Yeah, you know, I'm thinking about getting a place in Nantucket. Come and join us, yeah. Yeah, you know, I just, I like the East Coast, the East Coast. I miss my East Coast vibe. When I'm on Nantucket, I've never been so relaxed in my life. I like getting the Jeep, and I like going off road. People don't know you can do this. Now, do you have the badge to go off road with your Jeep or no?

Yeah, yeah, yeah. You just do the driving. I love it. I love driving out. What's that point you drive out to? A great point, yeah. We drove out there. me, you and Jeremy, I think, that day.

I don't know if you'd come on that? Was you me and Jeremy? I did, I did. We drove the jeeps all the way out to the lighthouse, and the sea lines were tracking us the whole time, and you drive out to that point, and it takes, what did that, it takes like a half an hour to get to the end of the point.

Yeah, it's a big, it's a long trip. And it's fun. It's fun, and you have to lower the air pressure on your tires, so you didn't get stuck in the sand. I'm getting myself when I'm Jeep Wranglers, man. I love that. That was one, that was peeking. experience, I have to say. And, uh, you know, much love to the family and, uh, thank you for,

uh, the friendship over the years and for including me in the ride and, uh, thank you for support. Yeah, yeah, yeah, yeah, yeah, many more deals to come. All right. I love you, Rick. Congratulations. Sincerely. Uh, all right. We'll see you all next time on this week's service. Bye, bye.