Internet History Podcast | David Tisch

Yeah. I think if you look at internet history, a lot of the great ideas worked the second, third, fourth time, not the first time. And timing matters and all the variables that are very hard to quantify and qualify later on are one of the challenges, right? And I think Vine, they built this amazing prototype, but from a product innovation standpoint and from the original influencers on one hand, you could point to YouTube, but really Vine is what created that category to me.

Thanks so much for having me. Excited to be here.

I appreciate being on a history podcast. It does mean you are old. So, totally get the opener. You know, I grew up in an incredibly fortunate situation. My grandfather was an amazing entrepreneur. That said, I didn't know the word entrepreneur probably until I was 25. It just wasn't a word growing up that was in the mainstream. It wasn't spoken. It wasn't taught. The concept of starting a business was not ingrained in education. And growing up, the internet wasn't around. And so I think if you look as a historian at this sub-generation of like 1977 to 1983 births, we're this sub-generation that straddles Gen X and millennials.

The internet got deployed. And so my first computer was in elementary school at the school and we had the actual floppy discs playing Oregon Trail and versions of MS-DOS games and that's what brought me into the computer. I got an Apple because they were new and interesting probably in fourth or fifth grade. I then switched at some point to a PC and my first moment on the internet was via CompuServe and Prodigy. And then on to AOL. And AOL changed my life. I found a home on the internet. It felt like a place that I could escape in many ways and just find people who were obsessed with this concept of technology. I used HyperCard in middle school to do AppleScript programming. So that was my real onset. And then my father who was in finance had an early Bloomberg laptop and I was obsessed with sports and I used to borrow his laptop to go on BSP which was a keyword for Bloomberg Sports and I ended up with this huge information advantage using Bloomberg Sports to win at things like fantasy. And so, now blanking on the mainstream newspaper for America, USA Today, had a fantasy football league where you had to call in every week to make changes and set your lineup. And I was like 13, and I wasn't allowed to enter it because that was illegal. So, I entered with my father's name. And my friend and I ended up being in the top 10 of this nationwide fantasy thing and our names were in the paper every week and my father was furious because he didn't understand any of this stuff and that was this onset to me of how the internet really was connecting the world. I then took that and I launched a business on eBay buying and selling baseball cards. And that business started on the AOL chat boards where at the top of the message boards there was a sort of reputation score. So people would report bad behavior by screen names on AOL. And I got scammed once buying a Mike Piazza rookie card in Florida. I sent a money order and it never came. And soon after these links for eBay appeared on the forums and I took the whole business that I was doing and sports cards were really one of the first businesses to shift over to eBay. And the day they went public, it was like a third of the items were TY Beanie Babies, a third were baseball cards and a third were other. And I became one of the early power sellers on eBay. And really again appreciated commerce and the internet.

My grandfather started a company that ended up being public called Lowe's. Not the home improvement company but a holdco. He originated by borrowing money and buying a hotel in New Jersey and turned it into a Fortune 100 company. And I don't, again pre-internet you didn't have an ability to put things in context. You weren't able to learn or research or understand anything outside of like a library and finding books or reading physical newspapers. And so growing up, you appreciated somewhat of what was around you and the privilege that you had, but you didn't have an ability to put it in context and sort of study it. And so, I think my grandfather passed away when I was 20, 2 years old. And so I learned enough to remember him and cherish what he had done and who he was, but I was like right before my mature grown-up years to actually appreciate the true business side of him. But he built this business from the ground up with his brother and it turned into buying a handful of companies and when I was in probably middle school, he ran CBS, the television station and I think that was the most famous he became and then he went back to sort of financial investing.

Totally. I mean it's even more acute from a timeline perspective. Growing up it was like so foreign that the idea of any concept of starting a business being attractive let alone talked about or worshipped as you said but even when I went to college 99 to 03 as the internet was rising it still wasn't the word entrepreneurship maybe in California maybe at Stanford potentially at MIT where engineers were in many ways worshipped but at Penn where I went the word like entrepreneurship, founding startups were not a thing. It was Wall Street, right? That was the direct path at Penn or consulting or doctor. It was a totally different education system. And I then ended up fast forwarding obviously joining Cornell Tech in the early days to run a program there and teach startups. And when they approached me for that, I said, 'I don't think you can teach this.' And they said, 'Great. That's why we want you.' And I think it roots back to childhood where these things were not ingrained growing up but today it is. And I think when I started doing investing it was an industry filled with rebels. People were choosing to start a company in rebellion for the other opportunities that were more safe, default, easy, obvious. And today it's a default to start a company as like anyone can start a company. I should try this. Why not? It's sort of risk-free. And I think that is to me the biggest shift that's happened is that the concept of starting and failing or starting and trying and trying and trying again has become a career path in the country in the world that growing up it was not even an identifiable opportunity.

I think it's a really hard question to have a simple answer to. I think the post-starting can be taught. There's a lot of lessons from history from previous companies from the companies of the moment around company building hiring culture leadership go to market these are things that for sure can be taught. I don't know that risk-taking, leadership, work ethic, determination, which I think are at the core of success of startups and almost the ability to like when you're starting a company from the ground up, you were saying, I am better than everybody else in the world at this. I'm going to win. And you're either going to invent something new or you're going to beat the existing things that are competing at what you're doing hopefully through a new innovation but sometimes just by better execution. That insanity that it takes to say that I don't know that you can teach that. And one of the frictions I had as a professor trying to teach this was you were in essence asking everybody to do it. And I don't know that everybody should do it. And that I think it should be natural that somebody wants it and needs it versus try it. Why not? It's sort of like the drive of I'm going to be an artist or I've just got to be a singer or you know like the drive has to be innate even if the skills can come later.

History.

A history major. I was a history major and then after my bachelor's degree I went to law school, passed the bar and almost immediately retired because I didn't want to be a lawyer.

There was like a growing up again like law school was viewed as a school where you could either go to be a lawyer or learn how to think was what the trick I fell for was. And I went to learn how to think and I got there and realized it was a vocational school to be a lawyer. Which is again like a lack of awareness or maturity going into that decision. It's 2003 at the time like I should have tried to join one of the high-flying tech startups post the first bust and you don't get to redo your life. So I did that. And I didn't want to be a lawyer. So I finished law school. I took a job in real estate finance which I quickly realized was not again what I wanted to do. It's 2007 at the time and the modern New York tech scene is starting. It's very early. There is as you probably have dove into a 10-person back of a bar New York tech meetup happening. This is an incredibly small community. And I read a couple articles on TechCrunch, which had just started, and VentureBeat and these very early media sources for startups, and I said, it's time I got to leave and get going on something I wanted to do.

My first meeting in tech was a guy named Dean Atkinson. I got introduced through someone I went to law school with. And Dean ended up being the CEO of Squarespace for a minute and then he started a handful of companies as well. And Dean took time, met with me, and gave me advice. And I probably didn't pay attention or remember it because I was a cocky big-eyed sort of coming from the outside unknowing about how to approach this world. But we have a distinct memory of meeting each other at the very beginning of that journey. I started to dabble into startups and on the side or during law school I was playing online poker and so I had played in a couple World Series of Poker and a friend, family friend growing up said, 'Hey, I have this friend of mine who is starting a company. You should meet him.' He started a previous company, he's this really smart guy and he's building Facebook was ripping and sort of emerging at the time. I was obsessed just intellectually with Facebook. It was the growing up it was the thing that made the most sense to me when I saw it. I was like that is the future. Because it connected people who you had no way of looking up on the internet previously. And he puts me on a call with this guy and he pitches me poker on Facebook. And I said this is pretty stupid. And I wasn't investing at the time. I'd made one investment I believe before that and I on the call basically was like this is really dumb. Thanks so much. Nice to meet you. That was Mark Pincus. Right, went on to that was the company was... so the first deal I ever passed on I think was Zynga. And that was stupid.

Everything. I still don't know what I'm doing. The, you know, so Facebook started at Harvard and then it started after I went to college and so I was at law school and I still had my Penn email address and so I was able to sign up for Facebook while I was in law school at NYU. And so the day that NYU lit up, I was the first user at NYU on Facebook because I had already been on it through my Penn email address. And I just found the whole thing perfect. And you know the early days of Facebook is a static profile and all the changes were literally on your profile and then the feed was invented and then eventually the platform and the platform was brand new at this point and the platform was filled with like random polls and weird like...

Yeah. Yeah. Every change was so...

News in many ways if not like meme before the word meme existed, right? Maybe it was because you were a purist of the idea that you were like...

I didn't understand and I wasn't an investor. I had no idea what investing meant. And so I think I was just unprepared for every aspect of that conversation. But it was a good lesson starting off as an investor because you're like, 'Well, I can't screw up any more than I did the first time.'

Yeah. And I do believe that that moment is the great catalyst of the New York tech scene because I think the concept of the finance industry being safe actually went away overnight and it caused all these incredibly smart, ambitious people to look at startups and tech as a potential avenue for success. And so we'll get back to that, but I do believe it's a really important foundational moment in New York that catalyzed where we are today. So DoubleClick was like a tweener company, but I think the modern New York tech scene is started with like in essence Etsy and Dodgeball and a little bit after that comes Tumblr and Foursquare and Kickstarter. And why those companies it was really Tumblr, Foursquare, Kickstarter and Fab.com to me and Fab's a little later. But those companies in almost every way looked like West Coast companies. These were social, these were engineering-based product companies. They weren't the industries that New York was known for. And they were being built here and they were being built as culturally relevant, culturally important. All of those are, you know, in that 2007 through 10 era of getting started. And I think that to me is the foundation of what we look at today as a pretty mature industry in New York City.

You know the flow of talent into startups and technology in New York was not 2007. I think people were unemployed and struggling and I think or 2008 I think it was decoupled. So it's probably 2010 that people graduating universities don't look at the non-existent banking jobs that are no longer guaranteed to give you these magical career paths as a safety of leaving a top university and getting one of those jobs and sort of putting your head down and going to work. And I think that lack of a safety net is the long-term talent flow into this industry. But not in that moment. I think in that moment, this was a rebellion industry. This was people who were like, you know, you said what you were doing to anybody not in this world and like what do you like, oh, you're unemployed. Like this isn't something that's like a West Coast thing. Didn't the internet blow up? The internet was back sort of fully at this point but not I think at a market cap from a value creation standpoint in the public markets and I don't think you know there were all these like memes around whether it was Facebook and the competitive set MySpace obviously before Facebook of like these things don't make money they're never going to be real companies they're going to go away and yet you know Facebook to me is this transcendent company that won that era and brought online hundreds of millions of people and every milestone they hit there was more skepticism than optimism around what they were doing. And I think around that were these follower companies that almost were being built in the wake of Facebook creating an opening to benefit on this meme of social and eventually mobile that came and I think in the early days in New York it was a confusing industry. There was not establishment. There wasn't a community. And the community that existed wasn't wide. So if there were people that knew each other and you could identify you know at the time I think Fred Wilson as he is today which shows the amazing longevity of his impact. He had started his blog, he had launched Union Square Ventures and it was this stake in the ground for New York. And I think, you know, every ounce of credit that Fred gets or every ounce of hype that Fred gets is probably still underrated for what he did for this community. I think equally Kevin Ryan was just building things and whether it was DoubleClick and coming out of DoubleClick his impact with Business Insider, with Gilt Groupe. Gilt Groupe was to me one of these early needlemoving things. These are people who were through both investing and building trendsetting what was to come in New York. And I think Fred was very public and Kevin was just not as public in his execution. But they are you know 30 years later important people in this industry still doing important things but early days those were the identifiable stories. And then everybody else after that, like to me, you know, what Dennis Crowley did with Dodgeball, and then with Foursquare, it was a meaningful person you could look at. I think the Etsy founders were awesome. They were less known. They didn't find themselves in the tech zeitgeist as much as Dennis did in those days. And I think when Yancey and Perry started Kickstarter, they were like a movement builder and it felt like Kickstarter was going to be the most important company in the world potentially because they were enabling future entrepreneurs through this crowdfunding mechanism. And it was this behavioral innovation and financial innovation, especially coming out of the GFC that it was like, oh, this is a future. And that company felt monumentally important. And so, I look back at those days and there were people that you could identify and pedestal. I didn't know, I think, any of them at the time. And eventually got to know each of them. And I think that I got to know them in that same era because the community was so small and there were just very few people who opted into doing this.

So, so my first investment is an angel investment in a company called Boxee. I wrote a $25,000 personal check into Boxee in 2007. I met them through a lawyer friend from my minute in law who said my he was at a hedge fund my CFO's husband is starting a company you should meet him and I go okay I don't I had no idea other than the legal structure of what any of this meant I met them and it was a founder named Avner Ronen and Gideon Cousin who were the two founders and I was deeply compelled by what they were working on. So I had to figure out how to invest. I like had a legal framework for it. I got capital and I put a small check in. No idea what I was doing. I then quit the concept of my startup and joined this big company where I became head of internet which is not a good sign. And that period is it's on my resume LinkedIn. It's called KGB. Their company was historically named InfoNXX. They were TCV-backed. And they were a call center company that looked like a tech company but was really a scaled call center company ex finance guy who started it and I joined to be a product manager eventually got promoted to head of internet and this is 2007 to 9 while I was there I wasn't allowed to make investments because they were all conflicts and what was amazing is I ended up basically getting to build startups within this big company. So 2007-9 as the global financial crisis happens this company was printing cash and so we were not resource constrained and what that meant was we were able to hire people and so all of the tech companies locally Yahoo as a perfect example they had an amazing research lab in New Jersey they did major layoffs and there was a lot of uncertainty about your stability and we had cash and so I ended up building in essence a skunk works team inside this org. And in doing that over the two years I was there I interviewed 500 people engineers and product managers. And going back to those days we were this basically only company hiring tech people that had some version of safety. There were a handful of startups out there but like we were a corporate thing that offered startup vibes but with like cash and salary and some version of safety. So we had the privilege to meet a ton of people. So through that process I met Alex Rainert who was one of the founders of Dodgeball with Dennis who ended up being at Foursquare. I met John Steinberg who now I'm going to blank on the company he started. He had left Google as an executive and started that media company and sold it. I met Rus Yusupov who ended up being one of the founders of Vine. And they were all met through this interesting process. There was a guy we ended up hiring named Paul Dix who's gone on to start an important database company and the language at the time was Ruby on Rails and we were a Ruby on Rails shop. And we were innovating in the Ruby on Rails world and we worked with Pivotal Labs which will come back in the Techstars days into my life to help supplement the tech team we were building. And it was again this magically small community at the time of people and so we were able to meet in essence the width of people interested in tech who wanted a job and then in 2009 I left that org and I made my second investment in 2009 in a company called I.D.me which I met through a kindergarten friend who was at HBS who had a friend who was starting a tech company and he sent it to me and I along with him made an investment in this company again an angel investment so to your question I didn't raise external capital in this era I was making angel investments and that company today last week announced a $2 billion valuation round so as you know I like to look at it it's that old 15-year overnight success and that story was on Invest Like The Best they have this amazing history to their journey as well. And I had made about eight investments and I was contemplating starting a company and ended up going up to this conference called Angel Boot Camp in Boston to teach you how to be an angel investor which I found worth attending.

Guy named John. I'm going to blank on his last name. He was like a local Boston hustling community builder. It was at MIT. And in that room were a handful of people I had read about on the internet. And I'd become sort of historically and academically and intellectually obsessed with the accelerator space. And so Y Combinator had just moved from Boston where it started to San Francisco. And Techstars was live in Boulder. They had just launched in Boston. And I went up to this conference and the founder of Techstars, David Cohen, who had sort of consumed all the content publicly available was there. And I in the most like awkward introverted way just walked up to him and said, 'Hi, I'm from New York. I just wanted to know why you're not in New York.' And that sparked this immediate conversation and really began my journey into joining Techstars to launch and run the program here in New York. And so at that point I'd made about eight investments when I joined Techstars and you know that was to me the beginning of my full-time investment career because Techstars' role was an investor and I at the exact same time decided to capitalize BoxGroup again not raising external money but using internal capital and so when I joined Techstars I simultaneously took BoxGroup seriously as well and that was 2010 when I joined Techstars.

2011 but we announced so I joined in 2010 we announced the program for applications I think at the end of 2010 and then launched.

The whole thing was surreal. It was needed. It was ready. The city was ready for it. There had been one accelerator in New York City called NYCCED, run by a guy named Owen Davis. When I joined Techstars secretly because we hadn't announced the program yet, I went to their demo day with Roger Arinberg, who started and ran IA Ventures, an amazing firm in New York. We sat in a windowless room at NYU and watched the demo day for NYC Seed. We saw Datadog present and dismissed all the companies as too early, but we were like, that one was pretty good. Silly me, I didn't pursue it. Credit to Roger, he led their series A, probably as good of an investment as you can make. I think Datadog is probably the biggest homegrown startup ever started in New York.