Whether or not we are at some sort of a turning point now, venture investors, old and new, have done very well in recent years, along with their limited partners. biggest gain in decades.
Bradley Tusk, political strategist, lobbyist, and founder of Tusk Ventures, whose firm is just six years old but whose exit already involved insurtech company Lemonade, part of its time frame, is included. went public last July; smart lock company latch, which went public this year through a blank-check company; Fanduel, Joe was acquired and can now be cut into a public company Next year; and Coinbase, which staged a highly successful Direct listing Tusk Ventures in April has more companies set to go publicly traded, too, through alliances with blank-check companies, including mobility company Bird and, if it pass muster With the SEC, Circle Financial.
“What’s funny, because I’m still pretty new to this, is we have a whole bunch of exhausts,” Tusk says. “To me, it’s like, oh yeah, absolutely, it’s like [venture investing works] Works. And people who have been VCs for a long time say, ‘No, that’s not how it works. We are in the middle of a crazy market right now.”
We spoke with Tusk earlier this week about some of his most recent bets, including which Andrew Yang will become mayor of New York (a Tusk deputy was Yang’s co-campaign manager). He also let it be known that he’s helping develop a new social network with a focus on religion and has rolled up his sleeve after he formed the $300 million SPAC last year. Excerpts from our conversation follow, edited for length.
TC: Because it was just in the news, I see you were accused”multiple sourcesThose in Yang’s camp say that your team was responsible for their disappointing end in the race. How do you feel about it, and what went wrong?
BT: Whenever you win a campaign, you get credits. So if you lose a campaign, you deserve the blame, and I’ll take it, I recruited Andrew to run because I thought New York City needed a better option than people running for mayor. [and that] He will be able to get hired on the basis of talent; He will be able to attract really talented people. But two things happened halfway through the campaign. One, the vaccine became available, and violence and crime actually increased in New York City. So the enthusiasts shifted from COVID recovery to crime and violence, and Eric Adams, who won the race, was a police officer for 22 years and was far from a candidate able to deal with that one issue, and I hope so. He would be a good mayor.
TC: Wearing your political strategist hat, if you were marshalling Facebook lobbyists, how would you respond to whistleblower Frances Haugen’s testimony this week?
BT: Obviously, they don’t listen to me. But I will take a step back and just stop the chariot. One reason people don’t trust Facebook is because they’re endlessly pretending you can have your cake and eat it too. And everyone knows that’s not true. You are making a transaction with them where by using this free service, you are allowing them to monetize your data and sell it to advertisers so that you can get the goods. I really think consumers can handle that trade-off. Instead, Facebook is constantly lying and saying, ‘No, no, no, we’ve got you covered, we’re not doing anything,’ no one believes in anything.
Facebook just needs to catch up with people and say, ‘Look, this is our business model. This is how we make money. If you want it to be free, we have to do it. If you want to pay for the subscription, we can do that instead.’ I guess until they do, all the spin and all the lobbying in the world is not going to change [people’s perception of the company].
TC: Are you seeing widespread cultural change in the startup world?
BT: Yes and no. When I think about what we talk to our founders about – and we’re talking about politics and regulation and the media – it’s probably a lot more cautious than it was 10 years ago. On the other hand, if you’re an Uber or Lyft – whatever – and your ability to operate depends on whether you get permission from the government or you go ahead and launch it anyway, if it exists, so you are still he is going to take the risk. Because if you don’t take risks, you don’t exist in the first place
But the culmination of Facebook’s reputation – and the same thing for Google and others – has created an opportunity to build startups that are actually more privacy-focused, I’m working on a social media platform for religion right now, Where it is created by religious leaders for religious community people, and the idea is to be anti Facebook and we protect your data. We do not monetize it. We don’t even have control over that; Community managers and leaders do, and so do opportunities to go out of business [this backlash].
TC: Does “working” on this social network mean you’re helping build it or that you’re investing in it?
BT: We came up with the idea, we worked it out, we funded the seed round and now we’re in beta testing.
TC: Is there anything new for incubating startup Tusk Ventures?
BT: This is the first incubation we’ve done with Tusk. We are now working on a new one in the esports gambling space. When we see a hole in the market, especially because people are misunderstanding the regulatory environment, sometimes the answer is just go ahead and build it yourself. And I think now we have the infrastructure here, the talent, and the money to do that. And so we’ve got our first pair going, and our hope is to probably incubate about two companies a year.
TC: You have a series of investments like this. You have a men’s wellness company, Ro, a lawn care company, Sunday. I used to think of an organization that finds startups that can use your political expertise, but it doesn’t seem to be the same anymore.
BT: This is still the case. As an early stage investor, we are all looking for the same things as every other early stage investor. We’re looking at the founder and TAM and the underlying technology, but then we’re also asking ourselves two other questions. One, is there any gating regulatory issue or opportunity that, if resolved, could actually drive growth and valuation? And two, if so, can we solve it?
Using RO as an example, [cofounder] Zach Reitano really wanted to be able to offer people a prescription available via text message, not to see your doctor. . . And our idea was, yes, if you can write through text, it will really increase the business. The second time – take Sunday as an example – the basic idea was that we would campaign in left-wing cities like Portland or Austin, where we would mandate the use of organic fertilizer and use it to actually create a market for the product. will do. . But it turns out that Sunday progressed so fast, so quickly, that they never needed to do it. Sometimes you just get lucky and the political problem you think is never going to materialize in reality.
TC: You mentioned having enough money to invest. You closed your previous fund in 2019 with $70 million. Is there a new fund announcement coming up?
BT: I can’t really talk about it. We are investing from our third fund and the fund you are talking about is fund two. So, by deduction, yes.
TC: By deduction, usually based on fund growth, is it the same to assume that it will be at least twice the size of that other fund?
BT: [It’s] We expect that to be large enough to allow us to lead at least half of the deals that we do. But at the same time, we still really like to be an early stage fund. Every deal we think should be able to go back to find it, and you can just take those swings at seed- and A-stages. So while on the one hand, being well capitalized is good, valuations are rising so much that you now need more and more capital to be able to win deals. If you have a $400 million Series A fund, you need to have like Five Birds in your portfolio to hit just 3x. I instead want to raise as many funds as possible and short them and be able to give really good returns to my investors with a few clear winners in each fund.
TC: You raised too $300 million SPAC last year. You’ve already told me you can’t talk about it. Out of curiosity, another SPAC is coming?
BT: There’s one more we’ve lined up. The combination of not announcing the first deal yet, plus the SPAC market is clearly taking a beating right now, has caused us not to go ahead and raise funds just yet. But there are a lot of places where the right regulatory expertise, combined with the right company — and that’s true whether we’re incubating something or investing out of funds or doing SPAC — can be really valuable. It’s really mainly limited by how hard I work, and what I’m willing to put in a lot of effort.