One of the first big interviews Startup Grind ever hosted was with Jason Calacanis. Jason was kind enough to take time out of his busy schedule during his meetings in Palo Alto to come and speak to small intimate group at the Startup grind offices. Watch and learn more about Jason's early entrepreneurial ventures during Web 1.0, what catches his eye in an entrepreneur and how to perfect your pitch.
[00:02] DEREK: On that note, let me introduce Jason; he needs no introduction, he's worldwide.
[00:08] JASON: I'd like one.
[00:09] DEREK: Well then let me give it.
[00:11] JASON: No no, it’s too embarrassing.
[00:12] DEREK: You don't? No I'm definitely going to give it. Jason is a seasoned entrepreneur -- I wrote this myself its really beautiful -- with a multi-exit track record that includes Silicon Alley Reporter which he founded in 1996 and sold in 2001, you can clap if you like any of these products.
[00:28] JASON: I don't think anyone was around for 1.0. Does anyone remember Silicon Reporter or a part of Web 1.0? It’s so funny I had a whole career before this where I had a magazine that was going out to 100,000 people that made $12 million a year about the internet. Does anyone remember Red Herring or Upside? OK a couple people. It’s sort of like that for New York.
[00:47] DEREK: Ventureporter.net does anyone remember that? Sold to Dow Jones. [00:55] QUESTION: What year was that?
[00:56] JASON: 2002-ish. Database of Venture capital transactions.
[01:00] DEREK: OK and of course Weblogs founded in 2003 and bought by AOL in 2006. Everyone familiar with weblogs or NGadget [sp?], Autoblog or Joystick? Jason is now the CEO of Mahalo.com based in Santa Monica; he is an avid angel investor with companies like Uber, Gawala, Reportive, Uber Media, Chart Beat, and many more. One of the things as we get started that I'd love to talk about is your background and all the really cool things you're doing like the Launch Conference and Mahalo and the recent shifts and things surrounding that. I love the summary you wrote about yourself online which is, "1995 I was nobody, 2000 I was a media titan, 2003 I was nobody, 2005 I was a media titan, 2007 nobody, 2011?"
[01:52] JASON: Yeah that's pretty accurate; never take yourself too seriously. As a matter of fact, I'm becoming a pariah in the industry yet again.
[01:59] QUESTION: Why is that?
[02:01] JASON: I think the breakup with Mike at Tech Crunch is now leading to some factions so the writers at Tech Crunch have been banned from writing about the startups at Launch which I'm really brokenhearted about to be honest.
[02:15] QUESTION: It seems to me that would play negatively on them; what is the advantage for Tech Crunch to do something like that?
[02:22] JASON: You'd have to ask them. I have literally begged the reporters; I know it’s personal between Mike and I, but is there a way we can forget about it for two days so that people who are having their launch can get coverage. I'm inviting you, come. I know Mike and I are in a lawsuit, but do the 40 companies have to suffer? I know it’s my fault and these companies are suffering because of me; it’s very complicated, but that being said I'm busting my ass for them and I'm out here for two weeks helping them rehearse and I'm going to help them all raise funding. I'm going to invest in as many as I can and it’s redoubled my commitment for helping them become successful. I've always been an outsider and underdog, so that's what I have love for. I kind of like being an outsider and underdog to be honest. It's like you get something to rise above as opposed to -- a lot of people know me as an insider in the industry or really well networked, but I don't really like that feeling. I liked it better when I had to fight my way up; I still feel like a fighter and I like it because it gives me a new challenge. If Tech Crunch is going to screw these companies, I have to fight to make it right.
I need to launch a Tech Crunch competitor, I do launch the newsletter, but my intention wasn't to make it blog. If they're not going to cover them then maybe I need to make it a blog and go head to head.
[03:48] QUESTION: Is there no way to go through backroom channels to resolve it? It feels like you've been trying to resolve it, but it feels like if you put it out on Twitter it’s pretty much saying it’s not going to be resolved, but people should know the truth.
[03:58] JASON: This has been an issue for a month and we're a week out from the conference. On Twitter you don't see people asking, "@Jason, why are the Tech Crunch writers not coming?" but I've got 40 companies on stage and you may know I have a launch pad called Demo Pit where I've given people a bunch of free tables who need them or given Steve discounts. I'm running the conference at a loss and I may break even; if it does make money I'm investing it into the companies. My idea is to disrupt the entire conference industry.
[04:44] DEREK: It’s a Clay Christiansen word.
[04:45] JASON: I like to fuck with things, people, and bullies. I felt the Demo Conference was a bully and Mike and I had dinner at the Sunhouse Steakhouse down on El Camino Real and that's where the concept of Tech Crunch 40 and 50 came from was that night when we had dinner; Steve Gilmore was there.
[05:09] QUESTION: When was that?
[05:10] JASON: 2004 maybe. No it was 2006, I was on Sandhill Rd. pitching the idea of Mahalo and meeting with Sequoia and I told Mike about it and I said, "Mike, this Tech Crunch thing you're running out of your house with three writers," and he was writing half the blog posts "you need to do an event, people love Tech Crunch." This was when Mike was a really good writer, not writing about all the silly stuff. Mike's a good guy and a really good writer when he's not writing about his baggage being lost, but that's Mike. He said, "how do you do that?" and I said, "you start a conference and come up with a format," and he said, "what format?" and I said, "well you know this demo conference where they charge people?" He said, "Oh they charge people?" I'm like, "yeah, you should do a conference that doesn't charge people and they get picked for the stage based on merit, not their ability to pay $20,000 for 6 minutes. He goes, "oh that's a brilliant idea" and Steve said, "Do it with him" and I said I was too busy with Mahalo. Human power is going to change everything; I tried.
Mike said, "Do it with me!" and I finally said OK. We started the company and did it together for three years; I'm really proud of the work we did, but that's two big elephants in one small China shop which is basically two elephants too many and it didn't work out for whatever reason. He basically didn't want to do it with me anymore. It started with distinct purpose of killing the Demo Conference. We both didn't like the concept of preying upon startups.
When you're an underdog like I was when I was growing up and how I was in the industry, you don't every lose it. It’s in my DNA to fight and to fight for the underdog because that's me. Just like I destroyed the Demo Conference and everyone here knows it’s a waste of money and you'd never do it, it’s for people who can't get on stage based on merit. That's not a dig at those companies; the companies we turn down are instantly accepted by Demo because they can pay. The bad companies use that as leverage, I'm like, "yes you got accepted to Demo, and so would this check."
[7:33] QUESTION: Jason, even before Chris [inaudible] didn't lead it anymore?
[7:35] JASON: No, back in those days when Stewart Alsob did it they charged -- it was interesting, I'm friends with Stewart and we play poker together, he's a really good guy -- he said when they started charging it was just to like pay for the tables and it was like $2,000 which is just a share cost kind of thing. I asked him when it went wrong and he said they sold it to IGJ and IGJ is a multibillion dollar publishing company and they got 70 companies to pay $20,000 each; that adds up pretty quick, it’s a good business model. Wait a second that's a lot of money; I have to change the business model.
I feel like we succeeded with that and I feel like it was like the Kretsu [sp?] Forum. Has anyone ever been to Kretsu [sp?] Forum, was it good? Did anyone ever pay to present there? That was the same thing, a company praying upon startups and naive first timers. Oh, the way you get angel investors is you pay them to listen to your pitch? I mean if that's the case I'd be a billionaire right now; I'd be Mark Zuckerberg if I got paid for every angel pitch. I'm going to hear 6 when I go to the bathroom; when I'm at the urinal I hear 2.
[08:48] DEREK: We have ropes that tie you down so you have to listen to them.
[08:50] JASON: I don't mind it; I am all for people pitching and hustling because I hustle everyday.
[08:56] DEREK: I worked at EA at the time, but I would literally cancel meetings for three days to go to Tech Crunch; it was the one time I was pumped to have the high cubes because no one would bother me. I'm just building a PowerPoint and glued to the screen. I talked to Ethan Anderson, the founder of Red Beacon and he said -- before we knew you were going to speak -- I was talking to him about Tech Crunch 50 and he was like, "Jason was this huge force for us in getting ready for it in the presentations by prepping us and asking our questions and getting us lined up" to where they actually won.
[09:37] JASON: Little known fact.
[09:40] DEREK: Yes I think your role was felt by the guys that won and mattered.
[09:46] JASON: Yeah we did rehearsals with them and scored their rehearsals. I won't let anyone go on stage without an 8, but I won't let them drop out either. My dad told me that when he was in the military and they would go out for these 10 mile runs that he was the guy in the back of the run and that they gave him a stick. His job was to hit the people with a stick that slowed down and make sure they finished. If they didn't finish, everyone had to do more pushups. So sometimes I feel like I have the stick and I have to coach them first. It’s mandatory to do rehearsals even if you're great. It’s so awesome to watch companies go from having a great product, but a terrible presentation to having both a great presentation and a great product. That's the most rewarding part for me and why I do it; it’s an extraordinary amount of effort, money, and time. I made a lot of money over the three years of Tech Crunch so I'm not complaining and I did need the money, but after a while I thought, "Wow I could fuck with this whole conference space even more, what if I made the conference accessible for everyone?"
I went to South by Southwest [sp?] in 1999 with Doug Rushkoff when I was a journalist and I think there were 3 tracks and 500 people there and everyone there was a journalist. Everyone there had a speaking gig; there were panels of 6-8 people per panel because that's the only way they could get people to come to Austin. You can see it online with all the alumni speakers. When I went back in 2009 there were 5,000 people and I wondered who they did it. They made it affordable; its $450-$800. When you're the CEO of a company you can buy a ticket to anything at any time, but if you're a developer -- I know because my developers come to me asking to go to conferences and I'm blown away by how cheap they are and CEO's are such jerks about that, they don't want to let you go to any event and god forbid it costs anything. I give it as a reward now because I have found that if you give that to your best people they really appreciate it.
[12:16] QUESTION: That's one of the ways Disrupt and Launch is different right?
[12:18] JASON: Cheap.
[12:20] DEREK: It's really cheap!
[12:21] JASON: There are basically three pricing levels. Its $1000 if you're not a bootstrap startup which is under a couple million dollars in fundraising. Its $400 if you're a regular startup, or 10-25% less if you follow me on Twitter and read the newsletters I send out; so basically $300 some odd dollars, pretty cheap. If you get the 25% off its only $300. There's a third way which is if you email me with a sob story saying you love my newsletter or writing or you like my Bulldogs or you love Tyler's insights on This Weeks Startups. The conference looks like it’s going to be in the black, I thought I was going to lose about $150,000 on it which luckily is not a big deal for me. Now it’s going to be break even or profitable, that means I'll take any profits and invest them in the companies. All these other conference producers hate me because I do crazy shit that makes people in positions of power a little upset; it pisses them off that I'm lowering the price of the event and showing you can have an event with the top speakers and I can do it at a loss or break even. Demo charging $20,000, Tech Crunch 50 charging nothing, Launch Conference I pay you; that's my strategy. It's pretty insane.
Some people are in Hacker News which I love because it’s all these femme boys and people who really hate me like SEOs so I really love participating in the threads. Today I was talking to the companies doing the rehearsals and I asked the number one thing they needed and they said, "venture capital and angels" so I said I had it covered and invited every open angel forum member for free and got a bunch of Venture capitalists to come; some pay and some people I'm shaming now. I have someone on my personal email account emailing groups of venture capitalists at firms that don't have anyone coming so they're getting like all 6 or 7 members of their team emailing them from my account this form letter I wrote like, "is no one from Clana Perkins [sp?] coming?? My goodness you have to see these 40 amazing companies that are going to change the world! Will no one come as my guest? Please just hit reply and I'll give you a ticket" and they all reply and I'm just sitting there eating my Dim Sum. They all think they are some special venture capital firm getting this email and I'm doing it to everyone. I'm going to get every Venture capital firm there and I say, "And of course you're coming to the VIP party." Now they're all responding asking if there's room in the VIP party and I say, "of course there is, for you!"
[15:30] QUESTION: In terms of these startups, one of my questions with launch events in general is why don't we see Quora at launch events, or do we? Would Kevin Rose have launched at Launch? Or Jason Calacanis?
[15:49] JASON: I would have loved to have launched at one of my Launch events, but I always never did that temptation because I felt the event were for those companies launching and that's where Mike and I also disagreed. He wanted to have Carol Barts, Tim Armstrong, Angel Gate, and all these things there. I said, "We’re both journalists here; there's only a certain number of words a writer can write." Are there any writers here? No. When you're a writer you have a certain number of words you can write every day before it all starts to blur. I told him, if we have these great bloggers and writers in the audience covering the companies, they'll only write three blog posts and once you have Carol Barts tell you, "Fuck you" or you have the Angel Gate thing or that thing, all these things become the headline and I didn't want the headline to be us. I wanted the headline to be them because this was their moment.
He would ask, "What is Mahalo going to do at Launch," and I said, "Nothing, we're not going to have a presence." I think that's where Disrupt sort of went down the wrong path which is that you have the startups battling each other which isn't how the industry works; everyone can win it’s not a zero sum game. Also, why does Mike have to get in a fight with Carol Barts at that event? Fight at another event and leave this for the startups. At Launch there will be the 40 startups and they'll be the center of attention. Those in the Demo Pit will also have the Launch Pad with the cocktail tables. You might have seen on Hacker News I was like, "are there any 10 companies here that would like a free table?" the space is huge and we had like 100 tables and it winds up with the internet and space being a couple hundred dollars or a thousand dollars to fill the space. It winds up being $1,000 - $1,500 a table so I thought I'd give away 10 on Hacker News and Quora and blow these people’s minds. These people were like, "wait, what's the catch?" and I said, "The catch is you have to kick ass!" and they said "we can do that!" so I said come to the event.
There are people luckier than me, but I feel very lucky. If I can pay it forward and pass it on I feel like that's my giri, the Japanese word for "honor." It's like duty, it’s a deep-seated duty. A lot of people helped me.
[18:48] QUESTION: There are so few organizations that really are entrepreneur and founder focus, I think AngelList is a good example, they are just doing it because they think it’s a good thing to do and that's going to come back whether you call that karma or the right thing to do. If you can duplicate what you did in Tech Crunch 50 and bring that into launch, it’s clear as a founder for me to say, "Wow that seems like this guy has my best interest at heart."
[19:29] JASON: It will exceed what we did at Tech Crunch 50. The companies at Tech Crunch 50 were legendary and all sold for over $100 million. We picked a lot of good winners in that group and this group is no different. There are a couple startups that will get sold over 9 figures so it’s going to kick ass. It’s also going to be more inclusive. All the people who do the work in these events are sort of CEO focused; it’s cool to get some developers there or product managers and have people who actually build shit for once at an event. I go to all these CEO conferences and they are all full of shit. You don't need to have me to talk about Mahalo on stage, I can tell you in 10 seconds, but these guys are on stage with bullshit press releases and don't really say anything; there's nothing of substance. There's an inverse correlation of how much money you've made and how freely you speak unless you have a gene like me or Mark Cuban where you just don't throttle yourself; it’s like a success Tourettes.
[20:58] QUESTION: I was talking to Spencer earlier and we were talking about who we would compare you to in the industry and the one I came up with was like 50 Cent of the tech industry.
[21:15] JASON: I like that! Didn't he get shot??
[21:19] DEREK: You know, produces good stuff, pisses everyone off, but at the end of the day you do good work.
[21:32] JASON: Yeah, I'm misunderstood sometimes.
[21:36] QUESTION: But you haven't been shot, have you?
[21:38] JASON: Not yet; it feels like I'm getting close though. If I told you the stuff this week you'd be amazed.
[21:44] DEREK: I heard the rumor that you put on a bullet proof vest after you get off the plane.
[21:51] JASON: It’s illegal to wear one, so I lose either way. If I could tell you what I've gone through this week in terms of the back-handed, back-room, back-table stuff going on to take me down, it would make for a Cloaken Dagger [sp?] novel.
[22:13] QUESTION: Will you tell us without naming names?
[22:16] JASON: No.
[22:17] QUESTION: Are you going to write a book?
[22:19] QUESTION: Are you going to go on Oprah?
[22:21] JASON: I know what I'm going to do, I have every email and I'll write a book someday maybe 10 years from now. Every chapter will start with an email from someone saying, "Motherfucker I'm going to end your career."
[22:38] QUESTION: Isn't it amazing what people write in emails? It's unbelievable.
[22:42] JASON: I have legendary emails from people pissed off at me and CCing everyone in my orbit. It’s very hard when you disrupt things, getting back to that word, but when people start trying to blackball you or get you fired or shut you down, that means you're on the right track. That means you're doing something right. If people in power are starting to get concerned, I won't compare myself to revolutionaries, but it is a good parallel
[23:21] QUESTION: Like Wiki Leaks, right?
[23:22] JASON: Oh that's a good question. What do I personally think of Wiki Leaks? I'm a journalist and writer, I wasn't classically trained as a journalist, but I kind of think if you come into possession of leaked documents which are probably stolen, sure if it’s in the public interest to have it out there it should go out there. Whistleblowers are awesome if they're protecting the public interest. I think there's a moral obligation to read this shit. If it’s a nuclear bomb recipe maybe you shouldn't publish it; not everyone needs to know that. If it's a video of journalists and photographers being murdered in the streets maybe we should see that and it might help.
I think everyone has the same position which is, if done right it’s important to have leaks like Enron, but if done wrong and it can get people killed like informants, then you should black that out. The guy who runs it seems like a smug anarchist and that probably doesn't help. If it wasn't for him, I think people would like Wiki Leaks a lot more, I don't know why he's in charge.
[24:50] DEREK: He's polarizing.
[24:51] JASON: He was pretty convincing on 60 minutes though, I think he did a good job toning him down. I feel like he want to be famous and it’s a little too much. What do you guys think of Wiki Leaks?
[25:10] Male Speaker 1: [inaudible]
[25:17] JASON: So everyone agrees Julianne Asange [sp?] you wouldn't want to go to dinner with him? Does everyone think that leaking helpful information to the public is a good idea; everyone thinks that's a good idea.
[25:37] Male Speaker 1: Somebody needs to leak the document that he is keeping secret to protect himself.
[25:40] JASON: Yeah.
[25:45] QUESTION: It launched, didn't it?
[25:49] JASON: I wish they would. One of the former Wiki Leaks wrote a book about how it works and they're suing him to shut him up and I'm like, "wait a second . . Wiki Leaks is suing someone for leaking information on Wiki Leaks?
[26:14] DEREK: Can we go to a happy place?
[26:17] JASON: Let's go to a happy place.
[26:20] QUESTION: Let's talk about your childhood. I'm just kidding. Tell us a bit about your background. You're obviously not from L.A., where are you from? Tell us about your family? Is your entrepreneurial fighter mentality something you were raised with? Tell us about that.
[26:41] JASON: I grew up as a poor girl in Southern Mississippi and an only child, no that's not true. I grew up in Brooklyn, my dad was a bartender who owned his own bar for a while and my mom was a nurse. We were barely middle class and scraping by month to month. I went to public school until high school. Junior high school was a bit of a battle, after I threw someone down a flight of stairs my mom sent me to catholic school; it wasn't my fleet if you can believe that. I was getting bullied and got tired of it so I grabbed some kid and threw him and didn't see there was a stairway there. I remember like it was yesterday, I'm in the principal's office and my mom comes in and the woman explains what I did. This was in like 7th or 8th grade. They explained I threw a kid down a flight of stairs and he got cut and got stitches and my mom goes, "well what did the other kid do that made him throw him down the stairs?" I remember how loyal and supportive my mom always was. That was my childhood.
Brooklyn was a war zone in the late 70's and early 80's; it was very racial and every day after school there was a fight amongst people. Either black kids were fighting Irish kids or Puerto Ricans were fighting blacks, and so on. The Irish and Italians hated each other more than anyone though.
[28:48] QUESTION: So when you got out of high school were you thinking of starting a startup? What was your thought process? Was it going to school?
[29:02] JASON: My parents couldn't afford college so I went to Fordem [sp?] which was about $10,000 a year and went to school at night for 5 years to get a degree. I worked during the day fixing laser printers. Anyone remember the first laser printer, HP Laser Jet 2? It broke every 100 pages. My job was to fix those and fix the jams, toner cartridges, etc. Then I went to IT because I saw they were making more doing the software; this was in 87, 88, and 89. So I started to set up Novel [sp?] networks; anyone set those up or Banion [sp?] Does anyone remember RG50A cables? I was underneath desks crimping cables. It wasn't the internet then, if you wanted to get on these crazy pieces of software you had to plug your computer into these huge cable jacks. That paid not a lot of money.
I then started doing that at Sony and I had picked Sony because they had this multimedia concept where they had multiple media they wanted to "converge" and they had this Magic Cap software where you'd sent agents out on this internet thing and it was going to come back with your travel reservation and know what you're interested in, basically like Google Alerts, but it’s really interesting. This was in New York and I had met some people who started doing Lotus Notes programming when version 1.0 came out. It’s amazing how your career takes these turns after one little thing. We had Lexus Nexus [sp?] which was law and news and then Lotus Notes here. So I wondered if could get that news into Lotus News and figured out how to do that on LexNex. I searched for "Sony," "Mickey Schoehoff," and all these people who worked at Sony. I then parceled it into Lotus Notes format.
I then made something called Jason's News which was a Lotus Notes application like something you'd use on your phone. It made the IT department crazy because I wouldn't use the Lotus Notes color scheme, but I made friends with the Lotus Notes people so they gave me my own software so I set up my own servers. They tried to get me fired a couple times, it’s pretty funny.
[31:55] Male Speaker 2: And so it begins.
[31:57] JASON: Yes my causing trouble. You could invite people to apps in Lotus Notes so I sent Jason's News to all these senior reps saying who I was and what I was doing. I was working at a law firm doing their IT work and had someone had access to Michael Jackson's files and Bob Dylan's Files; I would never invade anyone's privacy to read those, but holy shit it was crazy! That was the big joke there that all these people that worked in the contract room getting paid a fraction of whatever and supposed to keep everything secure, then we'd go out drinking and be like, "did you see this person is getting is Rolls Royce or this many hours on the jet?" it’s pretty funny. If data exists it will be compromised, typically by the IT department. So I sent this to these people and I had a log, Mickey Schoehoff was in there every day reading every story about Sony and had all the executives reading that. I never told this story to anyone.
Anyway, then there was a guy named Barry Wine who had built the Quilted Giraffe, the most expensive restaurant in New York and he was a director of Sony and had built the restaurant on top of Sony and I was obsessed with trying to get into that private restaurant because there as a sushi bar that Janet Jackson, Michael Jackson, and Bob Dylan used to eat there and I had to be there. It was for executives and above and I was like 8 levels below the director which was in the janitor strata. I was like admin being the IT guy.
I did a search for Barry Wine and found every story written about him and put it in a file and sent it to him, "maybe this will send you down memory lane, my dad went to this restaurant and said it was really great" and then my phone rings and says Barry Wine. I was like, "hello?" he asked me how he did that and I told him about the internet. He asked me what I was doing for lunch and he invited me upstairs. Oh it gets better! I go upstairs and he asks if I want sushi and I say, "Oh, there's a sushi bar up here?" he introduces me to Mori Moto who he had just hired. We started talking about the internet and this was in 1993 and 1994, the internet did not support images. This was when Netscape was out and the browser was Mosaic which didn't support images; it was all ED.
We become friends and I'm going to lunch at the Sony Club 2-3 days a week. I kept seeing my boss there and it was really funny. So I go out to L.A. to work on the computers and I tie my trip in with this new conference called E3 in 1994 or 1995. It was the first version of E3 and they were going to launch something called the Playstation. Barry was going to be there and we were going to hang out there. He asked me to drive him up to the Playstation thing. I just pretended I was Barry's driver so we park and Mickey Shoehoff and Michael Jackson are right there. They both start playing PlayStation and I'm giving Mickey tips on playing Street Fighter or whatever. The next day I'm at the Peninsula Hotel carrying a copy of a book called, Being Digital by Nicholas Negroponte [sp?] and Mickey recognizes me and I'm really nervous at 23 years old. He asks me what I think of the book and I said, "Well, it’s pretty basic and simple, but I think it's going to educate people on the digital revolution that's coming with the internet," and he says, "Oh I'll tell Nicholas that you think his book is very simple."
So then he starts talking to me about the internet and I go home and get a call from Mr. Shoehoff's office saying he wanted me to fly back to New York with him. I said, "OK, I'm on Delta, what is he flying," and there was a long pause, "he's flying the Sony jet." I said, "what do I do with my Delta ticket, it was like $600" and she goes, "rip it up!" so I said, "OK!" and flew back with him to New York. I told him there were 3 companies we should buy, Yahoo, Lycos, and another company and said we could buy them for $30 million. All of a sudden I was at the top of the world and then I joined the AOL Greenhouse in 1995 and built some stuff for that and away I went.
Then I started the Silicon Alley Reporter magazine; I was 25 years old and 10,000 people were getting it in 1996 or 1997 when the internet was just starting. I wound up having 70 people working for me, we did $11.6 million in the biggest year of business and we built it up by credit cards. I was in this boom internet season, but once the internet went bust I went down to 10 employees and $600,000 in revenue. I learned more on the way down than on the way up. There was a book that was going to be called something stupid like Digital Visionaries, the book comes out Digital Hustlers: How Generate X Suckered the blah blah blah. From visionaries to hustlers! I kept asking what happened! Hustlers are guys who sell their bodies for sex! I told him I wasn't a fraud! I sat there and thought, "I thought I was doing good stuff, fuck this I'm going to come back stronger and show those guys" and everyone called me a "one-trick pony who got lucky at the right time." All the tech journalists at New York Times and Wall St. Journal hated me because I wasn't trained and I grew this successful business on credit cards and they were all still journalists telling me, "You can't even spell!" I still can't spell, you see my emails and tweets!
It was funny because they all counted me out and I was at the Patrick Ewing Retirement Ceremony and had this idea that blogs were going to be big so I got Brian Alvee [sp?] who had worked for me at the Silicon Alley Reporter. So at the ceremony I started telling him about my idea saying, "what if you had 10 of these blogs or 20 of these blogs and you did it around business verticals like one-arm Wi-Fi?" he said you'd have to have 100 of them and I said, "let's do it!" At the time the blog platforms weren't doing that so I said, "well you're a developer, you could write it" and he said, "Yeah I could!" So we became partners. I could tell some good stories about late nights; it was fun.
[39:58] QUESTION: Our audience predominately is a lot of founders, many of which you've never heard of their company, but they're working their butts off. Tech Crunch doesn't care about them or maybe they did at one time; put yourself in those shoes and give advice to those founders who are working their butts off, struggling to raise money or on the last money they have, and struggling to get attention, what do you do in that situation?
[41:14] JASON: Perseverance, resilience, and resourcefulness are the most important traits of an entrepreneur. Resilience, probably. Staying positive when you're getting your ass kicked and can't figure things out, being resourceful. In the culture document at Mahalo we have resourceful and resilient as the two of the 10 words that describe our team members and we use that to hire people. People who aren't resourceful and can't get a dollar out of a nickel or can't find a solution to a problem that someone hasn't figured out in 10 years shouldn't be an entrepreneur. If you aren't resilient and can't stay positive and keep fighting even when you're getting your ass kicked shouldn't be entrepreneurs either. If you find yourself at the point where you're going to give up, maybe you're not cut out to be an entrepreneur. I think it takes a certain person and certain perseverance, but if you persevere and do it 2-3 times and learn each time, you will succeed. You miss 100% of shots you don't take and you probably in your life will get a couple swings at that if you take them. I find a lot of people don't take them and that's the big mistake.
[42:32] JASON: No, I think he got that from me; Freeze Crowd is pretty dope. Even the silliest entrepreneur on their worst day, making the stupidest products is more impressive than someone who just punches the clock. I always tell people, if you think it’s a great idea and could work, 20 years from now do you want to say, "I had the same idea for Twitter, I just didn't do it" wouldn't you rather say you tried and failed than never tried. You miss 100% of shots you do not take. Michael Jordan missed more shots than anyone in the NBA. Just do it and try. Get people around you that are good and listen to the market, that's probably one of the harder things for younger entrepreneurs to do - when to listen and when to ignore advice. You'll get pounded with advice, I'm giving you advice now. Consider the source.
When I started the blog company I was explaining it to people and they didn't understand what that was. I've come full circle now, if the majority of people understand the idea and think it’s a good idea I have absolutely no interest in doing it because it means by default that everyone has that idea, its already been tried, or it’s not going to be that big. I want the idea that maybe 5% of people say its brilliant and 10% say it could be interested and the other 85% don't know. I had this idea for Human Power Search and people thought it was crazy, when I realized how hard it was and Google was getting huge and I realized maybe this wasn't a solution every day started writing article after article of blog posts, "We Need Human Power Search!" and I was like, "its not Working!" I think it’s an idea that will happen, but it was too early. You have to know when to listen and when not to.
I think Human Power Search is my Newton and Newton sucked, but a certain amount of people were really jazzed about it. Palm Pilot was terrible, remember that? "Let's beam!"
[45:19] QUESTION: There are still people carrying Palm Pilots.
[45:20] JASON: If it was 1998 you'd all be flipping open this green thing that looks like it’s from Desert Storm and you're going to set off a bomb. It’s all timing and iteration, everyone who looked at YouTube said, "Video on the web, how dumb" how many people tried video on the web before that? Thousands! Funded and not funded. They came along at the right time, bandwidth went down, storage collapsed in cost, they did it in flash, and they had the syndication part to let you share it. There were 3-4 things that unlocked that magic. Facebook wasn't the first social network, they were just the first people to build it with a good clean UI. Facebook looks very much like Friendster that had a great UI, but they didn't keep their servers up or they would have been facebook; there would be no MySpace. MySpace could have kept their servers up running in fast and had a more organized look and feel that was more professional could have been facebook. LinkedIn if they had let people have public profiles and message people through the system instead of making it a cost might have been facebook. If Twitter hosts images, how big would facebook be? Images are a third of facebook's traffic.
The point is little decisions along the way can make a big difference. People will give you all kinds of advice and it’s your job to figure out if that person is worth talking to or listening to or how to interpret that advice. At the end of the day it’s all about product. All of my success in life has come when I've focused on the product and made something that people connected with like Silicon Alley Reporter, Tech Crunch, Autoblog, Joystick, Mahalo 1.0 maybe not, but Mahalo now with the educational videos had 30 million views on the videos last month, 12 million people to the site, and hundreds of comments on the guitar videos and every cooking video, we have 26,000 videos now. I'm going to be the largest producer of professional video on the internet this year. We're hiring 100 more video editors to go with the 105 people we have on staff already; this is going to be big and we're making a lot of money and don't need to raise anymore. I figured it out and it took listening, but you also have to know when to not listen and that's the challenge; it’s very hard to know.
If you always look at the product and ask, "are people getting value from this?" and that's the hardest thing to do as an entrepreneur because you put so much effort in. How do you know if it’s good or not? Do you use it yourself? Do your employees use it? Are people using it in a repeated fashion? Are you in some way part of someone's everyday life or not? For Human Power Search I wasn't using it for myself and I had all these excuses for why, but at the end of the day I realized that even if Google has 3-4 spammy results out of 10 that means they have 6-7 good ones. Hitting the back key to find a good one after a bad is not that much work and that's ]where Human Power Search failed because people don't care, just like people don't care about pollution in New York City. People just adapt to imperfect situations.
[49:40] DEREK: Let's give Jason a round of applause.
[49:47] JASON: I hope that was helpful or interesting.
[49:49] DEREK: It was. Let's take 2-3 more questions.
[49:56] QUESTION: I grew up [inaudible] and ended up here after I finished grad school and this was the natural transition. I know that there's significant [inaudible] number of tech companies in Santa Monica that have never worked there [inaudible.] I'm curious to hear what you think about running a tech company [inaudible.]
[50:29] DEREK: Santa Monica is really taking off with Mahalo, Movie Clips, and a bunch of cool startups.
[50:34] JASON: Yeah a lot of people live there now. I moved to L.A. for the same reason that anyone leaves the greatest city in the world, New York -- for a woman. I met my wife in L.A. and was bicoastal anyway and fell in love so I started a company there. Having been there I can tell you it’s not as vibrant as the Valley or New York in terms of the tech scene and number people. Clearly the Valley is a great place to be and New York is equally good now in terms of funding. I actually think it might be easier to get funded in New York because a lot of East Coast venture capitalists don't want to take a 5-hour flight and not a lot of great entrepreneurs. L.A. is awesome because no one is leaving Mahalo to go to Movie Clips, no offense to Movie Clips. No one is leaving Mahalo to go to any of the startups there; I can be the big fish in a small pond. I come up here and if they offer me a senior VP job at facebook and a bucket of stock I have to look at that, I'm joking, but that's series competition. Google, facebook, and Twitter are going to pay literally 50% more than anyone in L.A. for the same people and that's why Google has an office there.
L.A. is also an awesome place to live, Palo Alto's food sucks, no offense but if you tell me the great restaurants here it’s going to be on one hand; the food is not as good as L.A.
[52:22] DEREK: That's deep right there.
[52:23] JASON: It hurts because it’s true. You are going to San Francisco to eat. Is there any place that's good to eat?
[52:29] DEREK: A lot of times I take a sandwich into the Apple store and that's really awesome and a great experience.
[52:38] JASON: For you, if University was developed in terms of restaurant and foodie culture it was done by a literal program developer. "What if we had like huge sandwiches and 32 oz. Gulp sodas?" Anyway, that doesn't mean it’s bad.
[53:01] Female Speaker 1: [inaudible]
[53:02] JASON: Exactly, but L.A. is awesome. Here you have the other advantage that you throw a rock that bounces off three developers heads before it hits the ground and then hits 2 recruiters chasing him down the block, just like L.A. is all Hollywood all the time; here it’s all tech all the time. That's why I would have a hard time living here; I like a lot more diversity like New York. If you go out to a bar in New York you see you're in publishing, you're in finance, you're in fashion, etc.
[53:45] Male Speaker 2: [inaudible]
[53:46] JASON: All that stuff, we have PHP, Pearl, the Cassandra guy. We have a guy doing Paskel [sp?] its madness.
[53:53] QUESTION: Jason, what do you think about Yelp, Chowhowd, and Trip Advisor and these other UGC sites that are just so ugly and the main point of using them has become favor pitched and how to district that space?
[54:09] JASON: Clearly you are a UX consultant. No, it’s always good when you hear a unique question like that and they are from UX cleanupyourwebsite.com.
[54:21] Male Speaker 1: I bootstrapped my last company to about 60 people, 8 figures in revenue, and I've been spending the last year figuring out what to do next and have moved my family to Silicon Valley and this space interests me.
[54:32] JASON: There is no correlation between good design and success on the web; if you go down the top 100 websites on Comcast there is ugly shit in there whether it’s EBay, Craigslist, and Huffington Post which looks like someone threw up on USA Today, but at least there's good content! Community and content trumps the look and feel, certainly SEO is a messy business. Making a really well designed SEO page vs. a really well designed page is totally different. Also advertising works better when you make the page really crappy. This is one of the frustrating parts of the content firm space. I did a talk about this a couple weeks ago saying, "Fuck the content, I'm out. I'm not going to compete with demand media anymore!" because every time we start making more content they're publishing 18,000 things a day and I'm thinking, "is there 18,000 things to say in a day??" how many different ways are there to cook asparagus, apparently on eHow there's 700.
[55:53] DEREK: Or pour milk, right?
[55:55] JASON: It’s ridiculous! I was just like, it’s nonsense. Everyone has to stop going wide and go deeper instead that's why my video with an expert in it was my lever into the content space. It sucks, because if you produce one article, we spend like $500-$3,000 on a series of videos with an expert in HD, cut really nicely, with question and answer, with articles and then it’s like we got beat by eHow or about.com which has "How to Make Sushi Rice: buy a bag of sushi, read the instructions on the side, prepare as per instructions on the side, enjoy delicious sushi rice" you know?
The two big demons that Google has and these content sites are the more you solve people’s problems, the less they click on the ads. The better job you do at creating the content, the less people will click on the ads and the less money you'll make; why? Because the ads are typically targeted to the content so if you make a bad page that doesn't solve the problem, I need another page, there's the other page let me click that! There's actually a disincentive to do a thorough job, its maddening! Then if you want to spend $1,000 making a series of piano videos and how to play a particularly hard song, you're better off spending $10 making 100 pages, no one which solve the problem, flooding the Google page, you're better going wide than deep. Sometimes they have something good, but a lot of times its not and then anyone creating content to compete with it gets one swing at it when the other person gets 100. The 100 gets 3 times as much click through so it’s more like 300 to 1.
[58:16] QUESTION: Aren't you playing a game you can't win then with Mahalo?
[58:22] JASON: I'm changing the game because I'm going to ride the search engines publicly and I'm going to show a page I spent $1,000 and compare it to the 3 above it. I'm going to email Madcuts, Microsoft, put it on my blog, I'm going to tweet it, and I’m going to go on a Jihad to get this problem solved; is that the wrong term?
[58:57] DEREK: I think that's a bad thing to say.
[59:01] Male Speaker 2: A crusade.
[59:03] JASON: Yes a crusade. Jihad too soon, Crusade OK. If you can't win, this is series Sun Su Brooklyn stuff, fight the fight you can win and if you can't win, just change the rules of the game. I'm not going to win playing basketball against someone taller than me so I'm going to foul the shit out of them until they don't want to back me up into the basket. I'm going to make it painful every time I hit them in the nose, but I'm not sorry. I'm just trying to explain that I'm going to rake your hands or face until you stop raking me in.
[59:55] QUESTION: Is that really how you play basketball?
[59:56] JASON: If I have to.
[59:57] DEREK: We should play, you have to be on my team though.
[1:00:00] QUESTION: What do you think about Blekko?
[1:00:07] JASON: Blekko is great.
[1:00:09] Male Speaker 2: [inaudible]
[1:00:18] QUESTION: Do we have anyone from Blekko here? The CEO comes sometimes.
[1:00:21] JASON: Blekko is awesome. I know the guys from back when they were doing Topics. There are a lot of different approaches, they are doing vertical searches where you do a search and do a slash which gives you a subset. Google just released a Chrome extension where you can block certain browsers which are the opposite of that. Vertical search has been tried a lot of times. What happens with searches is you have to make something so much better than Google that people will switch. The problem is, you have to make something 2-3 times better, I'm convinced, in order for people to switch. The mental cost of switch is high, people think it’s low. If Google was getting worse every year and Blekko was getting better every year at some point there would be enough difference for people to switch.
The reason search share is so hard to move is because there is not much more innovation left in search. What Blekko is doing has been done already, that doesn't mean they should stop; they will hit some things very innovative if they keep going, but no one is going to switch from Google for a search engine that's 10-20% better. I know because if you switch the logos on search engines and have people test it, they don't know the difference and will report that Google is better than yahoo if you switch the logos. If you put the logo back they'll automatically say Yahoo is first. That's a lesson for brand. There's nothing wrong with Google, what's happened is Google's process for relevancy was based on the age of the domain, the number of inbound links, and the number of pages; those three things became apparent so people like Demand bought 11 year old, put millions of pages on it, and got a huge number of links. People like JCPenny go buy zillions of links like you read in the New York Times and boost it up so everyone knows. If the emperor doesn't have any clothes it’s easier to game.
I'm convinced in the next year Google will figure out quality based on social signals and time on page and start using your browser data and other things as signals of quality and the whole index is going to get turned upside down. That's why a year ago I pivoted Mahalo and I said this game is over, we are out of the content farm business; I was never really fully in it because I always felt like I was doing content 60% as good as I was doing at Autoblog. I wanted something I was going to be proud of and I got in this crazy race with these other players.
[1:03:00] QUESTION: Do you think Google is going to figure it out? They have the bureaucracy that everyone has reported on.
[1:03:08] JASON: There are great people there and it’s a great company. Larry Page taking over is going to change everything, he is very competitive and he is very smart. If Larry Page walked in this room I'm pretty sure he's the smartest guy in the room by default. I've had a couple conversations with him over the years and he's brilliant and being in charge of Google he has brilliant people around him who explain really tough things to him. Imagine if I said to you, "here's a thousand people at your disposal to explain anything difficult to you and you can give them tasks to solve you thesis on things" that's why he has at his disposal, "you 50 people go try doing something like Blekko and you 50 people go do something like Mahalo, come back, explain to me what worked and didn't" he then sits around and analyses, "we need to do this." He has a lot of smart people there and they will absolutely figure it out.
As I told people many times, the worst thing you can do to a partner is make them look stupid whether that's your domestic partner, business partner, conference partner, or anybody. You make your partner look stupid they have to respond in some way. They will respond by breaking up with you, filing a lawsuit, or maybe knocking you out of the index. That's why those New York Times articles that sting so much and are so important, there has been now 2-3 stories of people gaming Google and when eHow says they have an algorithm that tells them what to put in Google and rank it higher and make more money and what pages to make, they're basically saying, "our algorithm is smarter than Google, we can outsmart Google." That is not a smart thing to say especially when they are your partner; be nice to them. Just say, "We make good content, we work hard every day and try to help the user," or some bullshit like that. You never get high on your own supply; anyone see Scarface?
I know I'm not smarter than Google. Me vs. a Google person playing chess I'd lose. Me vs. anybody at Google in poker, I'm rich; I will win. You have to know what game you're playing. I would not play chess vs. anybody at Google or write an algorithm.
[1:05:50] QUESTION: I used to work for a company called Tube Mogul. The how to content you're doing, are you [inaudible]?
[1:06:01] JASON: Yeah, in a way. Howcast outsources their video production, we're trying to do something like Con Academy [sp?] Its one guy named Con and he did like 3,000 on math. Con Academy teaches is Con teaching you math, science, and finance; one really good teacher in the same format. We have math and stuff like that, but teachers in the other things. We also use the best techniques for teaching. Where a Howcast would outsource it, I'm going to spend tens of millions of dollars building these, but I've done the math and the trajectory of how much people are willing to pay for it. How to solve the quadratic equation will be the same today as it was yesterday and will be tomorrow so a lot of this is evergreen.
Also we have Mahalo Answers which is pound for pound as good as Quora in terms of features and we also have articles. We've studied the education space and there's something magical that happens when you have a video you made with an article you wrote and the ability to ask questions which get routed to those experts; it’s a much tighter process. There's another piece we'll build which is lesson plans and exercises which Con is starting to build too. It's about scale, consistency, and brand. If you trust the brand it has a certain panache to it and a certain voice.
[1:07:50] QUESTION: Do you get more views on YouTube vs.?
[1:07:53] JASON: Oh yeah, its 95%; it’s all YouTube right now. We used Tube Mogul to distribute to all the things and it didn't matter; YouTube is where it’s at. My philosophy is that when something is working like social games, sure you could make it for 5 platforms, but facebook is the one that's going to matter. It’s not my job to change how effective YouTube is and how what their percentage of the market share they have so we're putting it on there. The thing that impacts it the most is the credentials of the teacher, its very old school. We cast and we cast for if the person can present and their credentials; if we have to take one over the other we'll take the credentials over the presentation skills.
[1:08:33] QUESTION: How can you apply?
[1:08:35] JASON: We are trying to get to scale at some categories right now. We're focusing on music, food, and video games right now and we'll be adding language, math, and science too. You can email Jason at Mahalo. We have one studio down in L.A. and we'll be building 3 more, so we'll have 4 studios, 7 days a week making videos. We did 800-900 videos every week for the last couple weeks; when we get this other 9,000 square feet we'll start doing about 2,500 videos a week. Every language teaching every other language so if you're Chinese and want to learn Spanish or English, you start thinking about all this knowledge and language. We have a video called, How to Play Hotel California by our guitar instructor that has 500,000 views in 6 months which will get 1,000,000 views a year; that's a decent amount of money if you're making $3 CPM that video makes $3,000 a year, $10,000 over 3 years and it might have cost $100 to make. It scales because if you do 10 more Eagles songs people are going to be whipping around and linking around inside of this so it’s a neat business that way.
What's really interesting is that video can be in 10 languages and I don't have to build a video platform that reaches everyone because it’s already there, but the video isn't there in that language. We look at our stats and get on some videos more traffic non-U.S. than U.S. and eventually every internet company in the U.S. will make 2/3 of their money outside the U.S. and 1/3 in so the global trend is big. Once we get to about 100,000 or 200,000 videos we're going to do subtitles on them and are trying to find the most efficient way to do that. We've also started finding bilingual hosts, we have a nurse practitioner doing videos on how to wash your hands in English and Spanish. We do the same shoot just in another language.
We've identified a half million videos we want to do in 2 years, but we can do that in 5 languages. There are huge numbers and no one has ever built video at this scale before. You can think about it like, would you rather learn to tie a bow tie or use Cassandra or program in PHP -- has anyone used Linda.com? Linda.com is like doing it in software for subscription and you have Con Academy doing math over here and food network over here; what if there was one brand that taught you everything, that's the vision. If Wikipedia with 3 million articles can be a top 10 site and about.com can be top 20 and eHow can be top 25, what if you had one brand that made millions? This would work, right? Please tell me yes or I'm going to go down a 3 year trial that's not going to work. Like a video you have with an expert as opposed to a $10 person working from home in their underwear.
[1:11:39] QUESTION: How do you feel about entrepreneurs going and doing it part time vs. really cutting it off times and doing it full time?
[1:11:46] JASON: I always had some income sources. Some people will save to just dive all in, but they don't have to pay rent and they have Venture capital and a trust fund, but fuck you I have to pay my rent! I always liked to have a consultant that paid me a disproportionate amount of money for a small amount of time and used that to build my businesses. As a matter of fact, my severance package when I sold Venture Reporter and all that kind of stuff let me work for a year getting paid while I built weblogs, Inc. After they bought it they took me for a walk by one of these hotels around here and said, "listen we wanted to talk to you about what you're working on with Venture Reporter, and we don't know if your talents would be properly utilized here at the Dow Jones corporation" and I'm like, "am I being fired?" "Oh no, we don't want you to look it that way." So I am having fired, and they said, "we had a two year deal with you and there's 19 months left so we'll give you all that" and I'm like, "oh OK then, fire me!" but they still wanted to have me a consultant so they could call me if something doesn't work; I was like, "I'm out!" I asked about a lump sum, but they said no. It's fine. You have to do what you have to do if you're going to be an entrepreneur.
This is why I say it’s typically a younger person's game, if you've got 2 kids and you can work 40 hours a week on your startup it’s going to be harder than if you're Mark Zuckerberg and don't sleep, need human interaction, or however Jesse Eisenberg played him.
[1:13:34] Male Speaker 1: He does have a girlfriend, c'mon.
[1:13:38] JASON: He does, that's correct. I know that that is true, I saw his status.
[1:13:47] DEREK: Let's give Jason another round of applause.
[1:13:52] JASON: I give him a lot of hack because of the privacy issues, but I have to say he's become a more mature and wildly successful, he actually is thinking about what they're doing now. It’s sad that it took congressman emailing him and pundits berating him about the privacy stuff, but I give him credit for listening and changing a whole lot. They have a much different approach at facebook now to violating people's privacy; they are behaving much better.
[1:14:26] DEREK: The greatest thing I see is that he's influenced another wave of entrepreneurs who aren't interested in just selling out. You look at the facebook mafia now, the one common thread is that none of them want to sell and that's probably because they are rich.
[1:14:41] JASON: It’s really easy to sell when you're rich! People ask why I sold Weblogs after 18 months and I say "I had $10,000 left in my account and they offered $30 million, what would you do?" take the money! I sort of feel like it’s actually kind of obnoxious when people say it’s not about money, bullshit, this is venture capital! Look at the words! They want you to make a venture, here's capital, and exits is what it’s all about. Anyone who says this industry is not about money is lying, "oh I just do this because I like to innovate, whatever, I'm just in it to live" anyone saying that is lying. This about a gold rush, making great stuff, and making good money. I think the internet is the greatest liberating force in the whole world for peace, democracy, and personal freedom, I love it for all those reasons and think it’s the most amazing business opportunity for everyone in this room to go fulfill their dreams, make a lot of money, take care of their families and their families females, and prosper.
If they offer you $100 million, take the money for God's sake! I think some of these young entrepreneurs get bad advice to not take the money. Do you remember all these people who didn't take the money? No, because they didn't take the money and then got none. There is a slight difference that you can take some money off the table because of these friendly founder rounds which I think is awesome. It is smart of the venture capitalists to go for the bigger opportunity, but last time I checked Word Press and Dig haven't sold yet and if the only money they made was in the C-round both I think made some money, but that might be the only money they ever take out. If that's the case it’s like, oh your company was worth $100 million at one point and you own 30-40% of it and got to take out $2 million, congratulations.
[1:16:54] DEREK: He talked about that and you could see the look on his face of self-reflection that he could have taken it.
[1:17:06] JASON: By not selling when you're offered a disproportionate amount of money is in a way saying you'll never going to have another good idea.
[1:17:15] QUESTION: What about Groupon? That's an incredible amount of money.
[1:17:20] JASON: It’s a unique moment in time. I don't think there's a bubble because Groupon is an exceptional business. All these business are going public like LinkedIn, facebook, all these businesses are the promise of Web 1.0 actually fulfilled with revenue, profits, and scalable businesses. People are also willing to take their credit cards out, everyone is on the internet, and everyone is on their internet 2-3 times with their phone or TV. It’s spreading as a global phenomenon really fast. These companies are going to be huge and there's no bubble now except maybe in angel financing where valuations are maybe double or triple what they should be. Angel rounds should be $1-3 million, not $6-8 million; it doesn't make sense for angels to invest at that, I know I've sure slowed down and decided to sit it out. I'm not going to participate in that kind of round unless I get advisorship to make up for it and that's happened.
It’s going to be an awesome 2-3 years when these companies go public. The U.S. economy is going to be awesome for the next 30 months. Housing has just hit the bottom; people have started buying houses with cash in Arizona, Florida, and Vegas. They are literally saying, "Oh you want $120,000, I'll give you $60,000 in Cash" and people are like, "how about $80,000?" "$65,000, Sold!" it’s happening all over the place, that's when you know you're at the bottom when people start buying like that. These are the real deal companies that will triple and double in size. It's going to create a lot of jobs and hopefully some people be trained to code or PHP or whatever. It's going to be an awesome 30-month run. I think Groupon going public is a good call; I don't think there's much downside or risk there.
There's very little downside risk when you have a epic company; it’s those tweeners like Digs, it’s something that has a lot of value inside a bigger enterprise or on its own its got decent value, or weblogs Inc, but does it have the ability to become the billion dollar business? Weblogs did, they don't. Huffington Post didn't, they are a perfect example of someone selling at the peak; that's not going to get much bigger. That's a really good price, take it and that's why they did take it. If you have something like facebook that's growing like this and you can't see the end of it, of course don't sell. If Groupon is growing like this, you can't see the end of it, and people are throwing free money at you like, "here let me give you a billion dollars extra to play with", OK then I'll stay in the game. It’s like when you have a big stack of chips in front of you in a tournament, you can play some margin hands, be a little risky, expand your range of hands a little bit. If you're in a tournament you can take a little more risk, but that can also make you unfocused and sometimes you do need to get up from the table and cash in those chips and hopefully people won't get burned.
I always feel bad for entrepreneurs that had a chance to exit and didn't, that sucks. My first company they offered $20 million for it and I didn't take it; I ended up getting much less like under $1 million. That burned me for a really long time because that's the money I was going to take care of my mom and dad with.
[1:20:26] QUESTION: But you learned from it and didn't make that decision the next time.
[1:20:29] JASON: Correct! "What? You want to offer me how much? I'm out! Fuck! Did it clear? I'm out!" now I'm going long. I'm going to build a top 25 site if it kills me. I'm 170 now, I just have to drop a zero, how hard could that be?
[1:20:50] DEREK: Something I appreciate about you and guys like you and you do it once and its successful you don't go live in Maui 6 months of the year. I feel like you could be an entrepreneur of these random companies you're starting for the next 20-30 years. You're not trying to get off of Sandhill. There's a certain class of guys that I really appreciate and I don't think a lot of people are like that.
[1:21:18] JASON: I love the game. We're probably only in the 3rd or 4th inning of the internet revolution. As much as has been accomplished . . .
[1:21:26] QUESTION: But usually everyone leaves by the 6th or 7th, right?
[1:21:29] JASON: Hey we could have extra innings, but there's still a lot left to be done when you think about it. These are going to be 2-3 of the best years to be an entrepreneur; its already better than it was in 1999 and 2000 for those who were around because now it’s got actual substance underneath it whereas before everything was getting elevated and it was like getting pushed to a hundred foot height and there's nothing under you. The rug will be pulled out and you will fall a hundred feet and die, now it’s just that things are getting elevated based on revenue; that seems to be a good way to elevate things. Mahalo doesn't have 105 people because we're blowing through venture capital, it’s because we're making money. I see an opportunity to make more money and don't need to raise more money, that's a good time to be in business. That's why Groupon and facebook are growing, they are profitable companies. When profitable companies go public and grow like this that’s a good sign for the economy. These companies aren't losing hundreds of millions.
Journalists are people who generally can't work in regular jobs or start companies, they are usually fuck-ups; I was one of them. Not always, I shouldn't say fuck-ups, that's a little harsh. They couldn't cut it running their own business so they criticize others' businesses like sports writers. You see this guy who is a sports writer who's a nerd with glasses and the other is 80 lbs overweight and they're talking about Lebron James saying, "well he didn't put in all his effort tonight" and I'm like, "you haven't put your effort into anything since you were in high school; you're putting your effort into the cheese dip! What do you every put in?"
Journalists say, "Oh this business isn't profitable" or "oh Tessla is at a loss." C'mon they're building electric cars! Electric cars! It’s awesome that anyone is doing it ever and you're going to criticize it? It’s working! People are driving electric cars and they're going to make 20,000 electric cars a year and then we don't need oil and we can have solar panels! Then the journalist is like, "this stock is this and this company has lost money; there's plenty of coal" it’s like, what? Can we have some respect for the entrepreneur that has people driving electric cars? Can we revel in that for a moment? Journalists are always hating on everything.
My newsletter is a celebration of all the great shit going on; it’s not bullshit. You can choose to appreciate the virtues and things that are great about a company and entrepreneur; you don't have to manufacture these awful stories. I feel like everyone in journalism is lost in trying to making this person look like shit; everyone wants to write the anti-Groupon story; why? Because they are successful? What if the story is, Groupon Kicks Ass? "Yeah but there's one guy we found that had too many people come to a store and too many of them didn't get to order the extra chicken soup so we're going to wrote a story about this one guy." Really? They find one person who got upset and they write a Wallstreet Journal story about it. How about the hundreds of thousands of people who have used it and love it or the thousands of restaurants that are on waiting lists to use it. They have a 9 month waiting list in most cities. That's not fair and balanced journalism.
Ignore the press if you're an entrepreneur; anything written in the press is something that is in the rearview mirror, they are writing about something they don't understand and making it into what they need to get the headline to do what they want the headline to do. A lot of times the person who writes the headline doesn't write the story and a lot of times the person who wrote the story is really pissed about the headline which tell you something. I can't tell you how many times I've heard that, "Jason, I'm really sorry about the headline, I hope the story was good" "yeah the story was great, but the headline said I was a douche!" "Oh our editor thought Jason is a Douche was snapper" and it is! The click-throughs were better.
I'm always talking to Henry Blodget [sp?] about Business Insider and I'm like, "you take my email newsletter and republish it with an outrageous Headline!" and he's like, "oh yeah we get a lot of click-throughs for that" and then says he didn't do it. It's one of his interns.
[1:26:40] DEREK: I'm sorry we're way over. Let's give Jason one more big round of applause.