Brock Pierce: When to Exit Your Startup and How to Avoid Common Entrepreneur Pitfalls | E138
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Tell us about the three T's that your mom taught you. Yes, time, treasure, and talent. Time is the most precious currency. I don't like wasting a second. You know, treasure, you know, life is filled with it. I view life as a bit of a video game and it's constantly a treasure hunt, collecting coins and other things. The most valuable asset we have isn't, you know, our money or even our successes. It's ultimately in our skills, you know, in our talents. Those things, you know, we take with us and

into whatever that next thing is. It's your, you know, you're ultimately building a toolkit. Welcome to In Search of Excellence, where we meet entrepreneurs, CEOs, entertainers, athletes, motivational speakers, and trailblazers of excellence with incredible stories from all walks of life. My name is Randall Kaplan. I'm a serial entrepreneur, venture capitalist, and the host of In Search of Excellence, which I started to motivate and inspire us to achieve excellence in all areas of our lives.

My guest today is Brock Pierce. Brock is a crypto billionaire who started his career as a childhood actor, who starred in 15 films, including the huge Disney hits, The Mighty Ducks 1 and 2. Today, he's a serial entrepreneur and venture capitalist who has been involved in over 100 tech firm startups and other companies. And he is also a blockchain evangelist who has pledged to give away billions of dollars during his lifetime.

Among many other roles, he is currently the chairman of the Bitcoin Foundation, the largest Bitcoin advocacy organization in the world, and is the founder of Blockchain Capital, one of the first blockchain venture capital funds that recently raised $580 million for their sixth fund. And in 2020, Brock ran for President of the United States as an independent candidate.

Brock, I'm super excited for you to be here. Thanks for coming. Welcome to In Search of Excellence. Well, I'm glad to be here. And I don't make it through town all that often. I'm glad you reached out when you did. The odds of me being present are probably like bumping into you in the grocery store. Like we did. For those of you who don't know, I- Great odds. Was it Erewhon six weeks ago? I guess a little more than a grocery store. And for those that know, it's the place where

You go to the grocery store to hang out kind of thing. It's that good. It's the best grocery store in the world. It is indeed. So, in fact, I should get him now to sponsor my show. There we go. But let's start at the beginning. You were born in Minnesota. Your dad was a home builder, Jeffrey, and your mom, Lynette, was a disco teacher until she had you at age 20 and then became an evangelist. Can you tell us about your parents and specifically about the three Ts your mom taught you? Well, yeah. So I'm from Minneapolis, Minnesota.

Lots of cold weather and filled with lots of Scandinavians. You know, whenever we migrated to this region of the world, when we picked up and moved, we could have gone anywhere. Florida, you know, or Southern California is quite nice. But we decided to find the place that most reminded us of home.

But yeah, my dad's built, I don't even know, thousands, many thousands of homes. And my mother and father had me when they were young. And I come from a long line of ministers on my mother's side. And so, yeah, my mother, you know, I grew up in the church. You know, though, as a teenager, she was very into the late 70s, disco fever sort of stuff. But yeah, my mother, you know, instilled incredible values in me. She was one of the sweetest people.

kindest, you know, people. And my dad, you know, just solid as a rock. And so I think that the combination of my parents, you know, I'm so grateful we're able to produce my dynamic, yet sort of solid foundation, as I like to say, a Brock, you know, a B-Rock is just a rock, but bolder. So tell us about the three T's that your mom taught you. Three T's.

I'm not even sure what those are. Time, treasure, and talent. Time, treasure, and talent. Yes. Uh, time, treasure, and talent. Um, well, I mean, time is the most precious currency. Um, it's, uh, I don't like wasting a second. Um, but, uh, you know, treasure, you know, life is, is filled with it. The endless, you know, pursuit. I live life and this didn't come so much from my mother, but through my own sort of evolution of these concepts, uh,

I view life as a bit of a video game and it's constantly a treasure hunt, collecting coins and other things. And talent is the process of continuing to refine. I started acting at the age of three and that wasn't my choosing. I'm sure that was my mother wanting to live vicariously through the unfulfilled dreams as a result of my being. And some of the, call it the arts,

And so I became the channel to continue to pursue those things. And I feel very blessed. And my mother's no longer with me. And there's not a day that goes by that I don't think about her incredibly kind and giving nature. So three and a half, you started acting. And the first commercial was Don't Let Your Babies Be Cowboys. Yes, it was a KCRW commercial.

That's a local station in Minneapolis? Yeah, well, I mean, yeah, radio. But back then- It was a radio commercial. Radio was advertising on television, kind of like television would advertise on the internet back in the 90s. It's one of those things that seems-

counterintuitive, but when new emerging technologies occur, you do get these sort of overlap like television killed the radio star. And so it was a radio advertisement for television. The song was, don't let your babies grow up to be cowboys. And so my first memory in life took place on that set. That's the first thing I recall, being under the bright lights of

And, you know, the immense pressure at three and a half, not fully appreciating it, but feeling it, you know, a strong need to perform and hit one's marks, which I'm sure has had a lasting impact on my life.

You were born a serial entrepreneur. You did a lot of things when you're younger. You had newspaper out, lemonade stands, which you sort of franchised out. You mowed lawns, shoveled driveways. Then you were selling video cliff notes to your classmates as well. So tell us about your entrepreneurial instinct when you first noticed it. And are people who are born with the entrepreneurial gene better entrepreneurs than people who learn it later in life?

Well, I think it's whether you were kind of born with the instinct, you know, or it's one that you nurtured and developed, you know, through, you know, tremendous effort. I think innate talent or innate drives come more naturally, right? They're there. But just because it came naturally, if you don't practice, you know, or perfect, you

you're not going to become great at it just because you, you know, kind of have some natural musical skills and you can play by ear. If you don't do it very often, you're never going to become great at it. But innate talent, you know, is obviously a wonderful thing if you have it. But, you know, training and practice makes perfect. So some skills I think are hard to learn.

Some things, if you don't have an innate ability, it's just going to be very difficult. But I think the entrepreneurial sort of skill is one I think anyone can develop if they're foolish enough. You know, one of the things I say about entrepreneurs is it's one of the things that we do often out of naivety. Because as an entrepreneur, if we knew how difficult, you know, the project was going to be, we probably wouldn't do it.

right? I think a lot of the entrepreneurial gift comes from a certain amount of like belief in oneself to a point where if, you know, we knew how hard it was actually going to be, we probably wouldn't do it. It's kind of like, we look at it, we kind of see an idea, we think we can figure it out. And it's normally multiples, you know, you know, it's much harder than we often think it would be. And I would say that for most of the things I've done,

That had I fully known how difficult it would be, I probably wouldn't have done it, which is where I go back to naivety. It's like, oh, yeah, I always think it's going to be easier. And then I learn along the way, oh, I didn't know that. Oh, should have seen that. You know, had I fully understood the task at hand, I probably would have been reluctant. And so I think that there's a certain amount of almost willingness just to jump in.

Without having, you know, because if we plan too much, we would probably plan to the point that we wouldn't do it. There's a certain amount of, I think, kind of make it up as you go, where you kind of bob and you weave that I think the entrepreneurial sort of, you know, skill comes from. And then I think probably the most important trait is tenacity, right? It's, you know, do you, you know, you only fail when you quit, right?

And so a part of that is no matter, you know, often as difficult as it might seem, you know, kind of still just getting up the next day and, you know, continuing to chip away at it until you find whatever that next insight is that helps you level up and finally make it to that next milestone that you thought was lower, but the bar turned out to be much higher. And so I think it's something that you can learn. I don't think there's a particular personality. You know, I've seen entrepreneurs come in all varieties.

I think that the universal trait that I've found in pretty much every successful entrepreneur is a great work ethic.

right? A passion, a tremendous amount of belief in what it is that you're going to do, where you believe enough in yourself and the idea that you work tenaciously at it until you eventually find success, whatever that is. And it may not be the success that you once envisioned, but you built some version of whatever it is that you set out. And that may not even be what you thought you were going to build in the beginning, right? Often as an entrepreneur,

What we set out to do and what we end up ultimately building is often quite different, you know, which is the pivot, right? It's, you know, you went going this direction and along the way you eventually realize that's not really what it is. The opportunity is something different, but where, you know, we kind of zig and zag until we eventually find some form of success on that journey. And if nothing else, even if we fail, right, the process of learning,

right? You know, it's the most valuable asset we have isn't, you know, our money or even our successes. It's ultimately in our skills, you know, in our talents, you know, those things, you know, we take with us into whatever that next thing is. It's your, you know, you're ultimately building a toolkit, you know? And, and so I think the innate talent is, is, is obviously a wonderful thing, but you have to practice. And if you're really driven by a strong desire to, to be an entrepreneur and in this day and age,

That doesn't necessarily mean running a business, right, with a bunch of staff, right, and a bunch of responsibility. You know, it may ultimately be in being a one person, a one man band, you know, one person band, which is just saying yes to your individual freedom of being your own boss, whether that means working in the gig economy.

You know, whether that's building, you know, your, you know, store using AI and e-commerce and Shopify and, you know, tick tocking it right now. You know, it's, you know, taking back the freedom of choosing your own hours, which may end up being more work.

you know, ultimately, but, you know, the personal responsibility. And that's, you know, there's an argument that, you know, that's arguably where we're going, right, with artificial intelligence, robotics and things. You know, the traditional job of nine to five is at risk. You know, how long is it going to take as, you know, we move into a, you know, a new world where the, you know,

the economy of work changes is, you know, one that I can't tell you exactly, but at the rate that AI is disrupting things, it may come pretty quick. Let's go back. You said a lot of things there that I think are great and that I want to come back to. One of the first things you said is if you're that entrepreneurs are foolish enough to start a business, but yet I look at it a different way. I look at it, there's a big opportunity, it's difficult. So that's exciting to tackle a new challenge. You don't really mean that

It's foolish to start a new business. I mean, you've started so many businesses in your life. When you see a big problem, don't you say, ah, that's a great opportunity for me to solve something that nobody else has done before? Yeah. Well, you know, I mean, it's like the tarot deck. The zero card is the fool, right? And the fool is usually no fool. But, yeah.

I just mean that when I say foolish, that the job is usually far harder than we originally saw it as. Always. And I think the message there is don't fool yourself into thinking that it's going to be an easier job than the other things that you might be doing. It's be aware of

what it is that you're really signing up for. And I think that's the underlying message. Curiosity is a personality trait of mine that leads me down an entrepreneurial path. I see a problem and my mind is immediately focused on, well, instead of complaining about the problem or seeing the problem,

the curiosity in me instantly starts contemplating solutions. Because one of the ways I would describe myself is as a solutionist. And it's just, it's how I'm wired. And it's come from doing this over and over and over again. I'm wired to see a problem and instantly start thinking of problem solving ways to solve it. And so I like hard. As I like to say, impossible. Change your perspective, change your reality.

impossible is spelled, I am possible. And I'm really only interested in mission impossible. If it's easy, why am I looking at it? If many people are willing or able to do it, it's not a job for me. I'm only interested in jobs that are very hard, so hard that one might call them impossible. And that's just the nature of looking for difficult jobs. And

As we do this over and over and over again, naturally, we want to keep raising the bar, kind of like in a video game. I just want harder and harder tasks. And so my attitude is I'm really only interested in the jobs that no one else is willing or able to do. And that doesn't mean I'm the only person, but conceptually, I say that because we want to continue to grow. And growth comes from usually pushing yourself, like in a gym, to...

lift more weight. Right. You and I come from some similar worlds. The similarities is we've both been in the venture capital space. We've both been extraordinarily fortunate to have some big wins behind us. And we operate in a world where a lot of our friends, colleagues, mentees say, I want to be Brock Pierce. I want to have some success that Randy Kaplan has. He started this company, a multi-billion dollar company. You've had many of those. And so I think there's a misperception about

what normal people view as success. You mentioned one person going out to start a plumbing business, entrepreneur for me. He's taking a risk or she's taking a risk, leaving something stable, going out on their own, taking a risk. What's your message to everyone out there who says, okay, I need to make a billion dollars or a hundred million dollars, or I'm not gonna go do something. Should the plumber who starts his or her own business

Is that person going to be satisfied with what they're doing? Or does everyone have to go out and try to make a shit ton of money? Well, first of all, I'm not sure that money should be the motivation, right? It often is, depending upon what's motivating you. But I'm not sure money should be the motivation. I think the making of money is the byproduct of doing something successful.

And I've given lots of speeches talking about this Japanese concept of ikigai. And ikigai, if you look it up, is a form of a Venn diagram that has usually four circles that talks about what you're good at, what the world needs, what you're passionate about, and what you can make money from. And the goal is to kind of find the intersection of those things. Because I think that

To do it successfully, you have to be passionate about whatever it is that you're doing, pursuing your passions. The entrepreneurial journey, whether it's switching from the plumber or whatever job it is, you're going to encounter difficulty enough to the point that you're going to want to quit. And if you're not passionate about what it is, you're normally not going to make it over that hump.

Because you don't love what it is, you're likely going to give up. Because if you're passionate about something, even if it's hard, and even if you don't end up becoming hugely successful from a financial perspective, you wake up every day loving what you're doing, right? You feel good about it. And that's something arguably even more important than money, right? How do you feel? Are you enjoying your life? And the good news is if you work on something long enough, and you're good at it, and you're passionate about it,

you will usually achieve some level of success where you will be remunerated, make money off it based upon whatever the market will ultimately deem paying someone that's really good at something, someone that is successful at something. And so I think that that's a part of it. And I think that when you are looking at a problem and finding a solution and you're passionate, that leads to long-term success. And if you've identified a big enough problem that has a big enough solution, that's where the big money ultimately gets made, right? You found something the world needs, a big enough problem,

you're passionate enough to be able to work through it and have a shot at being the, you know, the really successful, you know, group or company in that field. And that's where the big money is ultimately made. And then when you have that success, then you encounter a whole nother of like, you know, set of life problems, which, you know, that you have to work through, which is the, you know, the obstacles that come from, you know, material or meaningful success. But I think that, you know, one of my main lessons, you know, so I

I'd been arguably a successful actor. I was starring in movies and I decided to quit acting when I was 16, which is the same thing that any person may encounter when they think about leaving their comfort zone, leaving the safe space where they're already successful and venturing off to do something that would appear to be risky.

I went through that. And I think that one of the lessons is I would, the messages I would convey to anyone is that we are confined in a cage of our own effectively creation, right? We are creatures of comfort and we hold the key to that cage that we're confined in, which is our comfort zone. And we have the ability to open the door at any time we want and walk out of it, remembering

that whatever it is that we're doing that we're comfortable with, it's because we're usually good enough at it that we can often go back, you know, to whatever that job is, right? It's not such a safe space that, you know, we can't return to it, you know, and, you know, we can go off and attempt to do new things. And if we fail, it's not necessarily the end of the world. I mean, be a little careful. If you want to go create a startup, you know,

Giving up everything you have, depending upon where you are in life and, you know, incurring a great deal of debt. You know, these are, this is a longer conversation than we would get through here. You know, it's going to come at a great price, you know, taking that risk of leaving a comfortable job and, you know, taking some entrepreneurial risk, but be sort of realistic and, you know, kind of what the goals are and don't get so caught up in drinking the Kool-Aid that you will, you know,

Give up everything you have with no external validation or any data that is suggesting that it's working, right? Try to set a plan. And, you know, at some point you need external validation, which might be customers, you know, or revenue, or it might be angel investors where somebody else, whether it be a customer or an investor has believed in what you're doing. If you can't

close anything, you know, that's perhaps one of the data points where you say, okay, you know, maybe this was not the opportunity, you know, for me to

And don't get yourself into a position where you hurt yourself or your family. And this is also one of the reasons why young people are so successful as entrepreneurs. And the older we get, the less likely we are. It's not because young people are better. They're not. They're less experienced. It's that younger people can afford to take risk because they may not have a family. They may not have a mortgage. They may not have those things. And so we can afford to take risk. Cold and handcuffs. Yeah. That's it.

That which often makes it difficult to go pursue those entrepreneurial endeavors, you know, which is another reason where if you're a younger person watching this, you can afford to take the risk. You know, if you're going to do it, definitely it's it's something that is easier to do, you know, before you've, you know.

you know, put yourself in a situation where you've got, call it real dependence that depend on, you know, the bread winning sort of, you know, paycheck. I mean, it's easy for you to say. I mean, so many of my mentees, students, interns, they all ask me, when's the right time? And there's a saying that I say, do it now. Because tomorrow is another day. But today is the start of whatever you should be doing. I mean, I encourage people to pursue their passions and

Just try to be clear. I would certainly, if people go, when's the right time? As a general rule of thumb, the only time there is and the best time there is, is now. You mentioned, we've talked about money. We're going to come back to it as well because it's a theme of business. It's a theme of our output to all the hard work. But you were making a lot of money as a young actor. I mean, Mighty Ducks 1 and 2, those were massive movies. How much were you getting paid at that age? And did you say to yourself, God, I'm going to give up

My career at 16 years old, you said you want to be a normal kid again, moved back to Minnesota. But what did money come into it? Were you making $500,000 a movie at that point? Yeah, I was making depending upon how long the film shoot was. Back then, movies would shoot for three to six months and where my sort of income was. When I quit acting, I was calling a million dollar a year.

sort of actor, you know, I could have conceivably had I stayed acting and let's say I continued to be successful, you know, which is, you know, yet to be seen because I didn't pursue. But yeah, I could have been, you know, a multi, you know, sort of seven figure and, you know, had I achieved a big hit, you know, a Macaulay Culkin type of thing, could have, you know, achieved a Jonathan Taylor Thomas type of, you know, kid, these were, you know, my contemporaries.

could have ended up making more than that. But I was called a million dollar a year type of earner. And that's 13, 14, 15. But that's gross. In the acting business, you've got agents, you've got managers, you've got publicists, you've got lawyers, and you've got taxes. And so as an actor, let's just say there's

many participating in your income stream so we've we had people on the show and I have a lot of friends in the business that Ultimately after you pay everybody you're basically taking home 36% of the gross something like that. Yeah, which is so so That's why I want to give that number. It sounds much better than it is, but those were also 19 You know 96 or a team, you know numbers. Yeah, I mean you're a teenager. Yeah tons of money so

You graduated high school and then you went to USC and dropped out after a semester. Tell us why you went in the first place and how important do you think education is in our success today? Hmm.

Well, I don't want to undermine the educational system. I think that education is a great thing in terms of the discipline, right? Discipline is very important in life, right? And that creates structure to education.

To learn without structure requires a lot of self-discipline, right? Those environments create structure that create discipline. And are you, you know, enough of a self-starter that you can keep yourself, you know, motivated and showing up?

So for me, I was always a curious sort of learner. I didn't need a curriculum to learn. I'm still a student every day of my life. I'm always learning. And so that's really, I think, more an individual thing like that. And I'd say those are the two general buckets are learning.

You're someone that are, are you waking up every day and at the end of every day, have you learned a bunch of new things? If you're always learning, I'd say it's probably less important, right? If that's not you, more structure will probably serve you well, right? I'd say that it was more important in the past than it is today because the world is changing at an accelerating rate and the curriculum is not.

And so a lot of what we would learn today has not a lot of value in the market as it previously did. So I'd say the value of higher education is going up in cost and down in value, except for the fact that you have a lot of education that's available online now.

And you can get it at a deeply discounted rate or free in many cases. So again, I'd probably be looking at those things. And I think the biggest change to it all is look at things like ChatGPT and the internet itself. I mean, what did the internet do? It democratized information and knowledge. Information and knowledge used to be difficult to access other than through traditional education, right? Or being a voracious reader, right?

And a lot of those things are dated. The internet essentially gave us access to all of the world's knowledge and information at the tip of our fingers, irrespective of where we live. And with things like search and now AI in search, I mean, what can't you learn in a minute now? I mean, any question you have, you can get an answer to it in ways that we've never been able to do before.

I would say that the value of education and the importance of traditional education is very different than it once was. And I'd say as an employer, I'm becoming less and less interested in your degrees. I almost don't even care.

I think I almost don't even want to know. You want to know something. 2.1 grade point average? I think that more than anything, the things that I'm seeing, because I'm involved in so many organizations, the best interviews I'm seeing is actually giving people tasks. And instead of doing a traditional interview, build a task or a test

to assess a person's aptitude in the thing that you're trying to bring on and not know that much. Because then you're actually giving a level playing field where you're just looking at someone's ability rather than

Because one of the things is I'm predisposed. The more I know, the more inclined I am to think that you might be good at something versus actually finding out if you are. Right. We do something similar as well. We have a very small team. They're all rock stars. And if we have a job opening, our one or two or three people will screen. We'll have to do a bunch of homework. We tell them, do a bunch of homework. And then we'll give them an assignment that's going to take 20 hours minimum, sometimes 40.

look at these five companies, these five businesses and tell us what you think. 90% of people won't do it. The 10% of people who do do it, there's a huge range. And that's how we determine whether they have the chops, the talent and the skill to be successful at our company. And it's the DNA of people who are willing to invest in themselves and do the work

Those are the kind of people we want. The work itself doesn't have to be perfect. I want to know, I can see how much prep they put into it, how much time they put into it. Everything counts. The quality of the writing counts, right? Stupid mistakes like periods and quotes and misspellings. Those people we don't want. It's shocking. People are going to do the work and still make mistakes like that. But we love that DNA. And that's how we do tests for every employee that comes in. We do the exact same thing.

Yeah, I think that that's, instead of relying on someone's resume and their educational background, I think that this is far more valuable. And with that being said, how valuable is the education today versus how I think that this is a better mechanism, a better method to identify the people that you want in your organization? Right. So I think that kind of answers some of the question. Yeah.

The flip side, I mean, we're both parents. I mean, we both have kids. And I want my kids to go to college. And part of it is to learn and get broad exposure and make friends. But I think the social maturity component of going to college is very important for someone looking at their future. I believe if they have the opportunity, they should go. Well, my 16-year-old is...

In that process right now and, you know, evaluating universities, it's in the beginning of the process. So I'm not opposed to it. But it depends, I think, a little bit on how entrepreneurial you are. If you're kind of like, you know, the Peter Thiel Fellowship, right? Yeah. If you have the innate entrepreneurial sort of like genes. Yeah.

If it's already motivating you, there's arguments to be made just to go right into joining startups and learning in a hands-on sort of role. I think some of it depends on what you want. And I think if you know at a young age you're an entrepreneur and you want to be an entrepreneur, I'm not sure spending those years in university is as necessary as

It depends, I think, a little bit on where you're going. And do you know where you're going? I think for a lot of teenagers that are at a college sort of entry phase, they're not sure what they want yet. Most college kids are not sure what they want. The vast majority. So that's a perfect place to develop the network, right? I mean, I'd say one of the most valuable things that come out of going to a university is this is

This is your sort of network of people that, you know, are out in the world where you've got your contacts, you've got your friends. You know, the social aspects are probably more valuable than, you know, the education itself, right? And keeping back to discipline, you know, keeping you refining yourself and, you know, adding skills and adding information so that as you figure out what you want, which may not happen until you're in your 30s,

I would hope that by the time you're done with your 30s, you've figured that out. Because if you haven't, it gets really hard in your 40s, right? But again, I'd say that finding what you're passionate about is probably the most important thing in figuring that out. Pursue your passions and they can change. So I also have the DNA. I sold t-shirts in college. I did a variety of different things too. I shoveled snow. I picked weeds. I did all those things, knocking door to door, everything.

At some point, I left a secure job at Sun America working for a force for 100 person to start an unfunded, untested technology company in Boston with no CEO and no customers. And we had an investor named Gil Friesen. Our company did well. The company went public on October 29th, 1999, shot up to a $45 billion market cap before the end of the year on $3.2 million of gap revenue. And one of our first...

Angel money was a guy named Gil Friesen. A legend, very famous. And Gil was a record executive, sort of retired. I introduced him to our company, he invested, he made a lot of money. And I remember sitting with him one day and he got a call from a guy named Mark Collins Rector to invest in a company called Den, of which you were 5% co-founder. And we're drawing a $250,000 salary. And I remember thinking,

you know, get me into that deal, Gil. And even though I had no money, I had a lot of paper wealth, which isn't real wealth. There's a difference. And I tell people all the time. I learned that too. Yeah. I mean, man, if there's... I was young and more naive at the time. I think that it was real. Yeah. I mean, right. The only thing that's real is cash and bank. Yeah. Right? I mean, people, paper wealth is nothing. So tell us about your experience at Den. It was...

hot and then it was very much not hot. And then tell us about what you did there and then moved on to the gaming industry and how that path all happened. Yeah. So this was my acting career. I had starred in a movie called First Kid, where I played the son of the president of the United States of America with Sinbad as my secret service agent, Bill Clinton, cameos, Sonny Bono. And after that film in particular, I started questioning whether or not

I didn't decide to be an actor. I just was. I'd never really looked in the mirror and said, is this what I want to be doing? Which is crazy, by the way, because so many people come here and it's all I want to do. Yeah, especially in this town. I just was. And I didn't know anything else. And I enjoyed it. So it's not like I didn't enjoy it. I loved it. It was my life. But I'd never really asked myself, is this what I want to be doing? And I was entrepreneurial.

I was tech savvy. And I was watching, you know, kind of the internet emerging. And I'm looking at it and I'm saying, well, the internet is going to disrupt the entertainment business. And Mark had moved to LA after starting what was kind of the first real ISP. You could say Earthlink maybe back then. It's Guy Dayton. But they started- For those people who don't know, a loud-

Someone at home to dial up on a phone and get online on the internet. Yeah, so Mark had a company called Concentric.

created the first pop and created the framework of what was the internet back then. So an ISP, an internet service provider, how you connected to the internet back before we had broadband, it was dial up. It made these very interesting noises. And what you were doing is you were basically plugging an old telephone for any young people into the back of your computer, effectively through a modem and router. And it would dial a phone number

And then you would connect to other phone numbers. And back in the 90s, your local phone number and your area code or county was all you can eat, unlimited phone calls. But if I called New York from here, I paid long distance rates. And so you didn't have central servers to connect to a website in Minnesota, I paid long distance. To connect to a website in New York, I paid long distance rates.

And so what Mark had done is said, what if

We put servers in all these areas and had data centers and racks. And so I could dial to a local phone number. And then within the ISP, I'd be routed internally. So I didn't have to pay long distance calls, which was the beginning of kind of the internet being networked. At the time, the telcos, which you called the RBOX, wouldn't allow internet companies to go into the telecom data centers because of the movie War Games.

Actually, I think what I'm telling you is almost probably not written anywhere. And this is the really interesting history because I happen to know it from having done all this. So they couldn't put things there. And so Mark was at a conference and he met the CEO of Payless Shoe Stores. And when he met the CEO of Payless, he said, can I sit down and look at a map of where all your locations are?

And he pulled out that Payless had, you know, basically locations in almost all the shopping walls, at least in every city in the country, and said, how much money do you make in your shoe racks in the back of all the Paylesses? And, you know, looked at what it was and offered substantially more money to be able to put computers or servers in the back of Payless shoe stores around the country. And that's where Concentric built the first network.

So that you could dial in and that launched what we think of as, you know, the original ISPs before broadband and, you know, all the major telcos got into it. So it's an interesting sort of historical fact. But Mark came out here, you know, after that company went public and had an interest in entertainment. And he was meeting with the movie studio people and the TV networks and, you know, entertainment folk. And at the time, none of them were entrepreneurial, you know, and it took a very long time. By the way, the entertainment...

industry, most of them, unless they're young, if they could go back and basically prevent the internet from disrupting them, even today would probably press that button. I'd say the entertainment industry, generally speaking, is not a fan of innovation or tech. They're quite happy with the status quo, as you can see through the union deals and otherwise. They're not, I'd say,

They don't love innovation. That is a general statement. That's obviously not everyone. But at the time, nobody really knew any of this stuff or had an opinion about it. And Mark was told by some mutual friends we had that, you know, you need to meet this kid, Brock. You know, he grew up starring in movies. He's entrepreneurial, full of ideas, and has a lot of opinions about how the internet's going to disrupt the entertainment business. And so we met up and I just started talking about all my thoughts. And he's like,

I need to make you co-founder. I need you to do this with me because he hadn't found anyone that could really articulate a vision for the future. And because I made, you know, call it, well, it's not on a single project, but let's call it a million dollars a year.

I said, you know, I'm not going to quit acting and, you know, I need to be paid something reasonable, you know. And so I was able to negotiate a quarter million dollar a year salary, which sounds crazy when you think about a 16-year-old, but that was a big pay cut for me, you know, at the time, you know, to walk away from, you know, that. And so I negotiated that and I thought 5% of the business, you know, which made me the, you know, the third largest shareholder, you know.

was acceptable considering my limited experience as an entrepreneur and my co-founders having started billion-dollar public company startups. So I felt satisfied with my negotiations as the third person in the company. And the idea was simple. We were the first company attempting to disrupt the entertainment industry in a meaningful way with the internet. And it was a precursor, you'd say, to YouTube, Hulu, and Netflix.

We became the hottest probably company in the world when it came to entertainment and digital. One of, if not the hottest startups in Los Angeles because of the town that we were in. And with many of the biggest name investors and everybody. And the company ultimately suffered from the fact that broadband didn't roll out.

And back when we were running on 56K or very low internet speeds, you really couldn't watch video yet. This is where Mark Cuban's idea with broadcast.com, which was streaming audio, was much more timely and ultimately led to far greater success for him because he sold during that period. But yeah.

It was an incredible learning experience. We were doing user-generated content. We created the term webisode, thought through the formats and product placement and original programming. We had 30 different shows running. We were looking at licensing and repurposing. We even had Den Music. We bought a company called Gask, Gary Gersh and John Silva's company. So we have Den Music with Beck, Beastie Boys and the Foo Fighters. I mean, it was

It was a very exciting deal at the time. And as someone that hadn't been through market cycles, which is very important for anyone to learn, our last raise before we were going public was from NBC at a billion. So I had my first unicorn back when a billion dollars was actually, back then actually billion dollar startups were pretty commonplace if you were in internet in 1999 and for a very brief period of time because that bubble was extraordinary.

But it all came crashing down. I mean, when the internet bubble burst in the spring of 2000, for anyone that knows the cryptocurrency business, you've not seen a bear market. You've not seen hard. When the internet bubble burst, the impact was beyond devastating. My stock, our stock went from a high of $0.49 to $0.49 at one point, delisted from NASDAQ.

I don't know. I think that's a 99.89% decrease in value. No one's feeling good at that point. You know, I mean, that was every company with very few exceptions. Every business went down 99% to 100, meaning most failed. 99% of businesses failed after that. And even of the public companies, the ones that had real revenues and were profitable, companies like eBay, the public companies that had basically become the category winners,

that had meaningful revenue and were profitable. Public companies that were profitable were trading below cash. They traded below the cash on their balance sheets, which

I mean, you can't talk about a worse market condition when you can buy businesses below their balance sheet that are actually profitable businesses. Mary Meeker, who was the biggest analyst at the time, had actually published a suggestion for people to invest just by the public internet companies below cash. Had you followed that advice, it would have been one of the best investments anyone could have ever made in their lives. And clearly, because they kept trading below cash, almost no one took her advice. Because that is how toxic...

That is how radioactive the market was towards internet companies, VC firms, and investment firms. It was common where if you took an interview, took a meeting with an internet company back then, you would be fired just for talking to us. Because the belief was the market was so hurt from the losses that were sustained that the general consensus was that the internet was dead.

And it was never coming back, even though, I mean, that's a ridiculous concept. Just because so much money was lost didn't mean that the internet was a bad idea. And the usage of the internet continued to go up and up and up. Every data point there is said the internet's going to continue to change the world. But the market had been so burned, so scorned, that no one could even like, you know, the PTSD. Yeah.

You know, from the losses that everybody sustained from the internet was such that people just wouldn't hear it. They wouldn't have it. And that went on for a few years. You know, there was no raising money for anything. I mean, PayPal, PayPal at the time became the hottest sort of fastest growing internet company. And there was not a single investor in the world that would invest in it other than its lead investor where I worked for, you know, in a, you know, briefly as a clear start. I wasn't there when they did that investment, but there was no co-investor in the world.

that would co-fund PayPal. No one. Which is why they bought X.com. They bought Elon Musk's business for the cash on the balance sheet. It's crazy when you think back. I mean, people then said, no one's going to buy a refrigerator online or a TV online. And it all happened. Yeah, the ideas. I mean, other than maybe Pets.com.

which even that's probably working now. I mean, we're buying our dog food. Even pet food. Eventually, all of those ideas were not wrong. It's a timing thing. And that's another thing for any entrepreneurial lesson, right? Timing is everything. Back to time. Time is a precious resource. Timing is also one, certainly, for a market's perspective. But probably almost every idea from Internet 1.0, to some degree,

has probably come to realization or fruition. That doesn't mean the successes we once thought, but most of those ideas have probably worked out to some degree.

I was a big investor on the board of a company called xDrive, if you remember xDrive. And it was storage online. And it was dial-up broadband, wasn't here yet. And we were getting something like 20,000, 30,000 new customers a day. It's free, like Dropbox is today. And then if you want more storage, you have to pay. We raised something like $70 million for that company. It is the exact same company as Dropbox today.

Or Box.com, the exact same company. It was too early. Well, too early. And also, we went through such a crazy market condition where if you didn't have a war chest of capital, if you had had a war chest of capital, you might have been able to survive. The problem is most of us...

didn't have enough money on our balance sheets, and probably didn't lay people off fast enough. The companies, the smart thing to do is after the bursting of the bubble in the spring of 2000 was tighten the belt as fast as you possibly can, throw everything overboard that you don't need, and prepare for Game of Thrones level winter is coming. Go into straight hibernation

And figure out how to generate revenue by any means necessary. I mean, that's where Dan, the last point there was, that's a story that's never been told, is we selected Rob Wiesenthal and Credit Suisse First Boston to take us public. We filed our S-1. We were going out. That was the number one banker, the number one firm for internet IPOs at the time.

But to be on that platform with that deal team, you know, was the hottest thing. And so it took like six months. At the time, JP Morgan and a number of the other top firms that we would think of in finance today were desperately trying to take us public because they'd never had a hot internet deal before. They had never done an internet deal. And so... Morgan Stanley was the other one. Those two would compete neck and neck for every hot deal. Yeah, it was CSFB and Morgan Stanley at the time. And...

And they had all the hot deals. JP Morgan had never had a deal yet. Certainly nothing that was credible for their first deal. And so the second tier at the time, banks, were begging us to lead our sort of IPO. And we turned them down because we're like, who are you? You're chopped liver in this market.

Had we, in retrospect, done our IPO with that firm, we would have been first in line, gone public before the bubble had burst, had a war chest of capital. And had we made the right decisions when the bubble had burst, there is a very real chance we would end up having been YouTube and Netflix and these sort of things today. Because the ideas were spot on. It's just, could you...

survive until the market was actually ready. And that business didn't come around until really 2004, 5, and 6. And one of the things about YouTube is YouTube was going out of business because it couldn't afford the bandwidth. You know what? No one gets that today. And I'm so glad that you mentioned that, by the way. Yeah, YouTube couldn't afford to survive. And by the way, that was the same problem that originally the first social networks had.

The first social networks, we had never seen internet companies scale. And so we talk about today, just get scale. It's not about revenue. But back in the 2000s period, let's call that web two, you know, in the beginning of like, you know, post 1.0.

We started to see businesses scaling in ways we've never seen before because they're really hitting consumer hits. But they couldn't afford to survive. And this is even true of the MySpaces, right? The Friendsters. Friendster went out of business, the first successful social network, because it couldn't afford to pay for its data.

It was scaling faster than the VCs were. They'd never seen one before. They didn't know, oh, when you get a rocket ship like this, just pay for whatever it costs because you're going to be building a multi-billion dollar business. But it was the first time anyone had seen that. PayPal similarly, huge taking off, but what's its revenue model? We can't afford to fund them. YouTube,

The VCs did fund it, but they couldn't afford to fund it enough. And so the only companies that could afford to buy YouTube at the time were Microsoft, Google, Amazon. Only a tech giant could afford because they had the data centers and the ability to fund the enormous losses of the bandwidth. Right. So in 17 months, as the company's running out of money, the company sold for $1.65 billion. Yeah.

And everyone's like, holy shit, that's amazing. But the story for the insiders in the tech business, like us, was growing like a weed. Everyone was excited about it. But they kept having to spend a lot of money, $10 million a month, $20 million a month to serve all the traffic. Yeah, and VCs didn't have the money that they have today.

You didn't have these mega multi-billion dollar venture firms. It was a very different investment market back then. You didn't even really have what you'd call growth equity at that point. It was VCs. Series A, Series B, it was a very different business. And there wasn't a market for IPOs at the time. Meaning,

Back then, the concept was you could become a victim of your own success and your success could kill you. Your success could bankrupt you. And that was kind of what we talked about if you were around back then is too much success could ultimately be the failure of your business. It's so interesting to say that. And at the time, I mean, $1.65 billion in 17 months is huge, right? Yeah. Two founders, they both walked away with hundreds of millions of dollars at a very young age. Today,

let's say that was 2006. So we're looking at 20 something years later, YouTube alone. And again, they would have needed a lot of resources, but would be worth somewhere between $100 billion and $200 billion. Yeah, there's no question. It would have looked more like a WhatsApp sale or something. Instagram. Yeah, or Instagram. So for a billion dollars, that'd be worth $80 billion today, maybe. Yeah, those would be great examples. Well, Instagram...

they chose to exit early, right? Uh, uh, it wouldn't at a different point in the market, right? Um, they, Mark Zuckerberg gave effectively the same offer to them that Yahoo had given to him back when, you know, Zuck turned down a billion dollar Yahoo deal, which at the time also looked crazy to most of us. You know, how, how do you turn that deal down? Um, but yeah, YouTube, uh,

If you had that kind of success today, at a minimum, even at that 18-month mark, you'd probably be looking at a $10 to $20 billion exit, 10 times. So let's talk about that. Entrepreneurs raise money. They're fiduciaries to investors, right? You have a lot of responsibility. You raise capital. I believe you got to treat someone else's capital like it's your own. I'd say even with greater risk, more so. With more so, right?

When is the right time to sell? I get that question all the time. When's the right time? I had, and I'm not going to mention the name because you'll know who this person is. They had started a video, short video company and had a pre-IPO Twitter offer for $80 million by the company. Twitter was so hot, they were going to go public. And they had a founder of the, and they were going to raise money, either sell for $80 million or raise money at a $300 million valuation.

And the founder who I had worked with at another company who wasn't well liked by the board or investors was a good salesperson, managed to raise a lot of money from a completely new group of investors, right? Very bad thing if someone doesn't want to back you the first time, the second time, right? Something there is generally wrong if things go well the first time. So the founder says, I'm not doing that.

I'm taking the $300 million valuation, very selfish. And ultimately, that company went bankrupt. And that $80 million would have turned into over a billion dollars, maybe $2, $3 billion. When's the right time to sell? Yeah. So I think the best message here is in Mark Zuckerberg turning down that billion, or this example of turning down that $80 million,

Or we'll give a version of the story that more can understand. Let's talk about Sylvester Stallone and Rocky, right? Sylvester Stallone wrote that screenplay. And there were people that were willing to fund that movie, right? Or buy these companies. And Sylvester Stallone was so focused on being the star of that movie to play the part, he was effectively turning down offers. But eventually, the film got funded and he got to star in it.

For every Sylvester Stallone that does that, there are so many screenwriters that turn down the sale of their script and never, ever, ever, ever get a deal. Those examples are like winning the lottery.

And they're actually dangerous to people that could effectively get an exit that could forever change their life, right? You got your first exit, whether it be a tech company or your screenplay or whatever that thing is. But we see those rare examples of where someone turned down the big deal and it turned out to be far better. But for every one of those successes,

There's a long line of failed businesses and projects that never sold and ultimately bankrupted or failed. And so generally, the right answer is to take the exit. Certainly, if you're a first timer, where all of your wealth, all of your future is tied up in that one deal, then your challenge usually as the entrepreneur is actually with your investors. Because your investors who usually don't have that same need, right? Your investors...

who are not, you know, in need of liquidity per se, because they're usually, you know, they've got lots of things going on, usually well, but you as the entrepreneur, all your eggs might be in that basket or that screenwriter or whatever it is, all your eggs. Generally, the wisest thing is to take the liquidity event. Especially if you're not- Because then you can do it again. And what I would say to the screenwriter or the entrepreneur is, do you think you're actually any good? Do you think you're talented? Yeah.

Are you good enough that you might be able to do this again? Do you believe enough in yourself that you could do this again? The answer should be yeah. So then give yourself the freedom to be able to do it again, but from a better place, with a foundation, you know, the security.

where you're not all in. But then again, some of the most successful entrepreneurs I know were ultimately successful because their back is against the wall. They only had one choice, which is success. Failure is not an option because they've got it all on the line. So there's a number of points here, but generally the exit is there. Then the VCs are usually going to be your issue.

Where the smart VC will usually have an opinion of like, wait, no, we're taking an exit too early. Let's push this further. Let's go a little further. Unless, and now we're getting to the nuances of being a VC.

the fund is late in its life cycle or they're raising a new fund. And then sometimes the VCs are going to be more willing to take that early exit because they get to do a distribution to their LPs. You know, they get to have a success that will help them raise their next fund or they're near the end of a fund's life cycle where they're going to have to give it back anyway. So there's some nuances here we could dissect for a while. But the answer is to an entrepreneur, if all your eggs are in this basket,

You should think long and hard and probably do the deal. Because if you're good enough to be able to do it again, it's all good. Especially if you're young. I mean, what people don't realize, and I've heard this so many times, the secret to creating great wealth is the value of compounding. So you put away- The eighth wonder of the world. It's the eighth wonder of the world. So people don't get that. You're 20 years old, 30 years old, you have a chance to make a few million dollars. And we know people, $10, $50 million at that age.

You're set for life, right? You're done. You have the rest of your life to play with what you do. But on the flip side, every successful company I know in our portfolio at our company has had an opportunity to exit before it does, right? Because great things happen.

to great companies. You're listening to part one of my awesome interview with Brock Pierce, an internet billionaire who once ran for president of the United States in 2020. Be sure to tune in next week to part two of my awesome interview with Brock.