← In Search Of Excellence
In Search Of Excellence
Brock Pierce: When to Exit Your Startup and How to Avoid Common Entrepreneur Pitfalls | E138
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- [00:00]
Randall Kaplan
Tell us about the three T's that your mom taught you.
- [00:02]
Brock Pierce
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 into whatever that next thing is. It's your, you know, you're ultimately building a toolkit.
- [00:36]
Randall Kaplan
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.
- [01:50]
Brock Pierce
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 in the grocery.
- [01:59]
Randall Kaplan
Store like we did. For those of you who don't know, I.
- [02:03]
Brock Pierce
Great odds.
- [02:03]
Randall Kaplan
Was it erewhon6 weeks ago?
- [02:06]
Brock Pierce
I guess a little more than a grocery store. For those that know, it's. Yeah, it's. It's the place where you go to the grocery store to hang out kind of thing. It's that good.
- [02:16]
Randall Kaplan
It's the best grocery store in the world.
- [02:18]
Brock Pierce
It is indeed.
- [02:19]
Randall Kaplan
So in fact, I should get him now to sponsor my show.
- [02:21]
Brock Pierce
Here we go.
- [02:22]
Randall Kaplan
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 T's Your mom taught you well?
- [02:37]
Brock Pierce
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 as home 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 my mother, you know, I grew up in the church. You know, though, as a. As a. As a teenager, she was very into the 19, you know, 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, 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. 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 Boulder.
- [03:51]
Randall Kaplan
So tell us about the three T's that your mom taught you.
- [03:54]
Brock Pierce
Three T's. I'm not even sure what those are.
- [03:59]
Randall Kaplan
Time, treasure and talent. Time, treasure and talent.
- [04:02]
Brock Pierce
Yes, time, treasure and talent. Well, I mean, time is the most precious currency. It's. I don't like wasting a second, but treasure, Life is filled with it. The endless pursuit. I live life, and this didn't come so much from my mother, but through my own evolution of these concepts. 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, you know, through the unfulfilled dreams as a result of my being, you know, 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 you Know, I don't think about her. Incredibly kind, you know, and giving nature.
- [05:14]
Randall Kaplan
So three and a half, you started acting and the first commercial was don't let your babies be cowboys.
- [05:19]
Brock Pierce
Yes, it was a KCRW commercial.
- [05:22]
Randall Kaplan
That's a local station in Minneapolis.
- [05:24]
Brock Pierce
Yeah, well, I mean, yeah, radio, but.
- [05:26]
Randall Kaplan
Back then it was radio.
- [05:27]
Brock Pierce
Commercial radio was advertising on television. Kind of like television would advertise on the Internet back in the 90s. You know, 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. Yeah, 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 and 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.
- [06:21]
Randall Kaplan
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 and people who learn it later in life.
- [06:48]
Brock Pierce
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 know, that talent, 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 the project was going to be, we probably wouldn't do it. I think a lot of the entrepreneurial gift comes from a certain amount of belief in oneself to a point where if we knew how hard it was actually going to be, we probably wouldn't do it. It's like we look at it, we see an idea, we think we can figure it out, and it's normal multiples, 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 look. Be easier, and then I learn along the way. Oh, I didn't know that. Oh, should have seen that. 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. Is tenacity, right? It's, you know, do you. You know, you only fail when you quit. 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. You know, it's. It's. I think that the. The universal trait that I found in pretty much every successful entrepreneur is a great work ethic, right? A passion, you know, 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, you know, it may not be the success that you once envisioned, but, you know, you you, 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, is, 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, on that journey. And if nothing else, even if we fail, right, the, 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 so I think the innate talent is obviously a wonderful thing, but you have to practice. And if you're really driven by a strong desire to be an entrepreneur and in this day and age, that doesn't necessarily meaning 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, a 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 taking back the freedom of choosing your own hours, which may end up being more work ultimately, but the personal responsibility. And there's an argument that's arguably where we're going, right. With artificial intelligence, robotics and things, the traditional job of 9 to 5 is at risk. How long is it going to take as we move into a new world where the economy of work changes is one that I can't tell you exactly. But at the rate that AI is disrupting things, it may come pretty quick.
- [12:48]
Randall Kaplan
Let's go back. You said a lot of the things there that I think are great and that I want to come back to. One of the first things you said is 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?
- [13:21]
Brock Pierce
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 I just mean that when I say foolish that the job is usually far harder, you know, than we originally, you know, saw it as always. And I think the message there is don't fool yourself into thinking that it's going to be, you know, 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. You know, 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. You know, 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. You know, if it's easy, what do you. Why am I looking at it? You know, 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, you know, 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.
- [15:45]
Randall Kaplan
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, multibillion 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 $100 million or I'm not going to go do something? Should the plumber who starts his or her own business be? 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?
- [16:49]
Brock Pierce
Well, first of all, I'm not sure that money should be the motivation. 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 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, you know, 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, you know, 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, you know, 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, you know, 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, the big money is ultimately made. And then when you have that success, then you encounter, you, you encounter a whole nother of life, 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 had been a, arguably a successful actor, I was starring in movies and I decided to quit acting, you know, when I was 16, which is the same thing that any person, you know, may encounter when they, they think about leaving their comfort zone, you know, leaving the safe space, you know, where they're already successful and, and venturing off to do, you know, something that would appear to be risky. I went through that and I think that, you know, one of the lessons is I would, you know, 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, you know, 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 in, you know, kind of what the goals are. And don't get so caught up in drinking the Kool Aid that you will 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. 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, you know, they may not have a mortgage. They may not have those things. And so we can afford to take risk.
- [22:22]
Randall Kaplan
Golden handcuffs.
- [22:22]
Brock Pierce
Yeah, that. Which often makes it, you know, 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 something that is easier to do before you've put yourself in a situation where you've got, call it real dependents that depend on the breadwinning sort of paycheck.
- [22:50]
Randall Kaplan
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.
- [23:10]
Brock Pierce
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.
- [23:23]
Randall Kaplan
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're 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 $500,000amovie at that point?
- [23:56]
Brock Pierce
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, 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 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 or a Jonathan Taylor Thomas type of, you know, kid. These were, you know, my contemporaries, you know, could have ended up making more than that. But I was, you know, 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, you know, as a, as an actor, let's just say there's, you're, there's many participating in your income stream.
- [25:00]
Randall Kaplan
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.
- [25:08]
Brock Pierce
Something like that, yeah.
- [25:09]
Randall Kaplan
Which is crazy.
- [25:10]
Brock Pierce
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 teenagers, you know, numbers.
- [25:19]
Randall Kaplan
Yeah, I mean, you're a teenager.
- [25:20]
Brock Pierce
Yeah.
- [25:21]
Randall Kaplan
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?
- [25:35]
Brock Pierce
Well, I don't want to undermine the, you know, the, the, the educational system. I think that education is, is a great thing in terms of, it's the discipline. Right. Discipline is very Important, you know, in life, right. And that creates structure. You know, 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, you know, sort of learner, right. I didn't need a curriculum to learn. You know, I'm still a student every day of my life. You know, 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, right? Or you 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 at a deeply discounted rate or free in many cases. You know, 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, you know, 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, you know, search and now AI in search. I mean, what can't you learn in a minute now? I mean, you can. Any question you have, you can get an answer to it in ways that we've never been able to do before. So 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 decrees. I almost don't even care. I think I almost don't even want to know.
- [28:57]
Randall Kaplan
You want to know something. 2.1 grade point average.
- [29:01]
Brock Pierce
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.
- [29:40]
Randall Kaplan
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, but 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. 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.
- [30:55]
Brock Pierce
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, you know how. I think that this is a better mechanism, a better method to identify the people that you want in your organization.
- [31:18]
Randall Kaplan
Right.
- [31:19]
Brock Pierce
So I think that kind of answers some of the question.
- [31:22]
Randall Kaplan
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.
- [31:40]
Brock Pierce
Well, my 16 year old is in that process right now and 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 the Peter Thiel Fellowship, right?
- [31:57]
Randall Kaplan
Yeah.
- [31:58]
Brock Pierce
If you have the innate entrepreneurial sort of like genes, if it's already motivating you, you know, there's, there's arguments to be made just to go right into, you know, joining startups and learning in a hands on sort of role. You know, I think some of it depends on, you know, 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, you know, those years in university is as necessary. It depends, I think a little bit on where you're going and do you know where you're going? You know, I think for a lot of, you know, teenagers that are at a college sort of entry phase, they're not sure what they want yet.
- [32:39]
Randall Kaplan
Most college kids are not sure what.
- [32:40]
Brock Pierce
They want, the vast majority. And so that's a perfect place to develop the network. Right. I mean, that's, I'd say one of the most valuable things that come out of going to a university is this is your sort of network of people that, you know, are out in the world where you've got your contacts, you 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.
- [33:35]
Randall Kaplan
So I always, 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. 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. Company went public on October 29, 1999. Shot up to a $45 billion market cap before the end of the year on $3.2 million of GAAP revenue. And one of the our first angel money was a guy named Gil Friesen.
- [34:19]
Brock Pierce
A legend, very famous.
- [34:20]
Randall Kaplan
And Gil was a record executive, sort of retired. I introduced him to our company, he invested he 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.
- [34:37]
Brock Pierce
Yeah.
- [34:37]
Randall Kaplan
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 I learned that too. Yeah. I mean, man, if there's.
- [34:53]
Brock Pierce
I was young and more naive at the time to think that it was real.
- [34:56]
Randall Kaplan
Yeah. I mean. Right. The only thing that's real is cash in bank. Right. I mean people. Paperwell did nothing. So tell us about your experience at Den. It was hot. And then it was very much non hot. And then tell us about what you did there. And then moved on to the gaming industry and how that path all happened.
- [35:16]
Brock Pierce
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 ended up 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 like looked in the mirror and said, is this what I want to be doing?
- [35:43]
Randall Kaplan
Which is crazy, by the way, because so many people come here and it's all I want to do.
- [35:47]
Brock Pierce
Yeah. Especially in this town. It just was. And I didn't know anything else. So I was kind of, you know, and I enjoyed it. So it's not like I didn't enjoy it. I loved it. It was my life. But I never really asked myself is this 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, 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, Sky, Dayton, but they started for those.
- [36:26]
Randall Kaplan
People who, don't know, allowed someone at home to dial up on a phone and get online on the Internet.
- [36:32]
Brock Pierce
Yeah. So Mark and 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. You know, 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, you know, for any young people, into the back of your computer, effectively through a modem, you know, and router. And it would dial, you know, a phone number and then you would connect to other phone numbers. And back in the 90s, you paid you 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. 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 malls, 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 Payless, 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 all the major telcos got into it. So it's an interesting sort of historical fact. But Mark came out here 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 entertainment folk and at the time none of them were entrepreneurial. 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. You know that as 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 need to meet this kid Brock. 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 to, 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, I'm not going to quit acting and you know, you know, I need to be paid something reasonable, you know. And so I was able to negotiate a quarter million dol a year salary which sounds crazy when you think about a 16 year old but I 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 you know, 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, you know, it was an incredible learning experience. You know, we were doing user generated content. We created the term webisode, you know, 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. You know, we bought a company called gas, Gary Gersh and John Silva's company. So we have Den Music with back 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, you know, we. 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.
- [43:20]
Randall Kaplan
Optimized stock, our stock went from a high of 3.49 to 49 cents 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.
- [43:35]
Brock Pierce
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 if 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, you know, a suggestion for people to invest, just buy 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 you know, 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, 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 Clearstone, 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 dot com. They bought Elon Musk's business for the cash on the balance sheet.
- [46:17]
Randall Kaplan
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.
- [46:26]
Brock Pierce
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. I mean even 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.
- [47:10]
Randall Kaplan
I was a big investor on the board of a company called X Drive. If you remember X Drive, and it was storage online and it was dial up, broadband wasn't here yet, and we were getting something like 20, 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.
- [47:41]
Brock Pierce
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. You know, 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, you know, Game of Thrones level. Winter is coming. You know, 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 in Credit Suisse First Boston to take us public. We filed our S1. 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 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 had never had a hot Internet deal before. They had never done an Internet deal.
- [49:04]
Randall Kaplan
And so Morgan Stanley was the other one. Those two would compete neck and neck for every hot deal.
- [49:10]
Brock Pierce
It was CSFB and Morgan Stanley at the time. 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 be 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, you know, sort of Netflix and these sort of things today because the ideas were spot on. It's just, you know, 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.
- [50:13]
Randall Kaplan
You know what, no one gets that today. And I'm so glad that you mentioned that by the way.
- [50:18]
Brock Pierce
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, you know, consumer hits. But they couldn't afford to survive. And this is even true. 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.
- [51:41]
Randall Kaplan
Right. So in 17 months, as the company's running out of money, the company sold for $1.65 billion.
- [51:47]
Brock Pierce
Yeah.
- [51:48]
Randall Kaplan
And everyone's like, holy shit, that's amazing. But the story for the insiders in the tech business like us, it 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.
- [52:03]
Brock Pierce
Yeah. And VCs didn't have the money that they have today. You know, you didn't have these mega multibillion dollar venture firms. It was a very different investment market back then. And this was. You didn't even really have what you'd call growth equity, you know, at that point. Right. It was VCs, you know, series A, you know, series B. It was just, it was a very different business. And there wasn't a market for IPOs at the time. Meaning you could. 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.
- [52:48]
Randall Kaplan
It's so interesting to say that. And at the time, I mean, $1.65 billion in 17 months is huge, right? 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.
- [53:13]
Brock Pierce
Yeah, there's no question. It would have looked more like a WhatsApp sale or something, you know, Instagram.
- [53:18]
Randall Kaplan
Yeah, or Instagram for a billion dollars. That'd be worth $80 billion today maybe.
- [53:22]
Brock Pierce
Yeah, those would be great examples. Well, Instagram, they chose to exit early, right. At a different point in the market, right? They, Mark Zuckerberg gave effectively the same offer to them that Yahoo had given to him back when Zuck turned down $1 billion Yahoo deal, which at the time also looked crazy to most of us. How do you turn that deal down? But yeah, YouTube, 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 dollars exit. 10 times.
- [53:59]
Randall Kaplan
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.
- [54:12]
Brock Pierce
I'd say even with greater risk, more so with more.
- [54:15]
Randall Kaplan
So when is the right time to sell? I get that question all the time. You know, 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, a 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 two, $3 billion. When's the right time to sell?
- [55:26]
Brock Pierce
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 by 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, you know, people that could effectively get an exit that could forever change their life. Right? You got your first exit, you know, 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 screen grater or whatever it is, all your eggs. Generally, you're the, the wisest thing is to take the liquidity event, especially if you. Because then you can do, 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? 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, you know, where you're not, you know, 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, you know, sort of like 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, let's push this further. Let's go a little further. Unless. And now we're getting to the new 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 log and hard and probably do the deal. Because if you're good enough to be able to do it again, it's all good.
- [59:13]
Randall Kaplan
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.
- [59:20]
Brock Pierce
So you put away the eighth wonder of the world.
- [59:22]
Randall Kaplan
It's the eighth wonder of the world. And 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've you're. You're done. You have the rest of your life to. 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. Walk.