Loading summary
Transcript85 lines
- [00:03]
A
Welcome to the Investor, a podcast where I, Joel Palo Thinkle, your host, dives deep into the minds of the world's most influential institutional investors. In each episode, we sit down with an investor to hear about their journeys and how global markets are driving capital allocation. So join us on this journey as we explore these insights.
- [00:26]
B
On my end, it's not going to happen.
- [00:30]
A
Big kids can cry too still.
- [00:33]
B
Little children, little worries. Big children, big worries.
- [00:35]
A
That's what he said. Well, mine's right here. He's got the iPad on, so hopefully I can hold him over for like.
- [00:44]
B
30 minutes.
- [00:45]
A
Yeah, exactly.
- [00:47]
C
So, yeah, for those who have just actually tuned in elsewhere, just wanted to say hi, and also to say that we're really fortunate, actually, to have Jack Levy, the founder of More vc, join the conversation today and to give us a wider insight into the Israeli startup tech scene. Whilst we've not actually met in person, Jack and I, turns out he's actually based very, very near to me. About 15 minutes, actually.
- [01:11]
A
Wow.
- [01:12]
C
And yeah. So once again, thank you very much, Jack, for joining us today.
- [01:17]
B
My pleasure.
- [01:19]
A
Yeah.
- [01:19]
C
Jack.
- [01:20]
A
Yeah, go ahead. Thank you. Yeah, thanks for the intro.
- [01:26]
C
Leading the conversation, you know, seeing as you run Sutton Capital. And we've also been joined by Bonnie, who's tuned in from Startup One Stop. So, yeah, on that note, I think I'll hand over to you, Joel, and we'll get the conversation underway.
- [01:41]
A
Yeah, thanks. Ed. I'm sorry for cutting you off for a second. I was. Guess I was just a little too excited. So, Jack, thanks so much for taking time to be with us today. I often chat with Adam because I have very fond memories of Israel. I went there with my family for the first time last year and it was just a really good time. I definitely want to go back because we didn't see enough. So just excited to see how we're able to extend our ecosystem globally and now learn about kind of the ecosystem in Israel. So I think one thing to maybe kick things off with is maybe just learn a little bit about you, your background, where did you grow up and maybe your early life and then kind of how you navigated into now this career in bc. I think that'd be a good thing to start with and then we'll just kind of guide the conversation casually from there.
- [02:35]
B
Terrific. All right, so it's a pleasure. So it's great to talk to all of you. Thanks for having me. I grew up in New Jersey. That's where I was born. Not too far away, I guess, from where Rachel is right now. And Maybe Bonnie. I started in. I keep Highland Park, New Jersey, in my bio because I was there for nine years. And I really. I have some friends even to this day. But I. Then my family moved to Englewood, New Jersey. My parents are still there to this day. My dad is actually a Cuban immigrant. He came by himself. I think my dad, I like to say, sort of lived the American dream. Like, he came to LSU in 1956 when they shut down Havana University. Basically, he was studying actually at Havana University, but then Batista was, you know, kind of shutting down the university, and he came literally with nothing and just grew up actually in a small sugar town in Macareno. It's not even called that anymore in Cuba, which I've been to with him. So when I think about my personal story, I mean, to some extent, and on my mother's side, it was her parents who came to America as immigrants. And, you know, so I really think that I'm the product of, to some extent, and, you know, the American dream, as it were, on both ends. My mom was born and raised in the Bronx and became a public school teacher. And, you know, they met, and I'm very happy about that. I got one older sister who's an assistant district attorney, and she's still in the New York area as well. So I have deep roots sort of in New York, New Jersey, to Jewish day schools for my education, including high school Ramaz in the city. And then I went, and then I came to Israel for a year, which is kind of not an uncommon thing for a lot of people that go to Jewish day schools. Probably about. Back in my day, it was maybe 10 to 20%. I bet it's like, now 40 to 50% of the kids sort of go. You know, it's. Gap years are increasingly common, especially, by the way, now I know a lot of people that I'm in touch with children. A friend of mine who are like, whoa, wait a minute. If school's gonna remote, maybe I'll take a gap year. So I took a gap year and came to Israel, and I lived in the old city of Jerusalem studying Jewish texts. And that's kind of when I fell in love with Israel. And there was this thing which sort of, like, my friends used to say, there's Jack and then there's Israel Jack. Like, when I was here, I had this like, additional kind of kick in my step and was. I love. I was very happy in the States and everything was great. But. And so I sort of, from that moment was almost sort of looking to get back here. So when I went to college, I was at Harvard and I studied ultimately, international relations. I wrote my thesis about Israeli stuff, and I came here during the summer and I perfected my Hebrew. And then I came back to Israel for a year between college and college and law school. I almost moved to Israel at that point in time, but I didn't. And then I went to law school at Columbia. And that's where, you know, it was like there was an old joke back about Israel in the 90s, which was, how do you make a small fortune in Israel? Come with a big one, right? Because Israel was. Israel was coming out of. In the mid-80s. We had a major hyperinflation crisis, and we were fundamentally a socialist state, which, frankly, there are some things about that are not so bad, necessarily. And some of the positive social benefits legacy is like national health care and all that. I'm very supportive of that. That's great. But we did not have a strong private economy that really only started. It really only started in the 80s. And this ties a little bit into the history of the venture capital community in Israel. The venture capital community in Israel really started in the mid-90s. So we're talking only like eight to nine years after the country had emerged from a massive hyperinflation crisis, which almost destroyed it economically. Right. Not to mention different other security crises and all that. But that's kind of par for the course here. And really wanted to stimulate the private activity. And so the government actually put together an amazing program which really worked brilliantly, where they seeded 10 venture capital funds. It was called the YOZMA program initiative. YOZMA means initiative. And they seeded 10 venture capital funds, basically, dollar for dollar, like, you go raise $10 million, we'll give you $10 million. And by the way, we don't care what our return is. We'll just take an interest rate. And so, effectively, it was like leverage without the debt risk for the other LPs in the fund. And it was also perfect timing and luck because you basically had all these funds that started investing into the tech boom of the mid-90s, and they all did very well. And that's. And since then, the industry really hasn't looked back. I mean, and so I. Coming back to my personal story, I moved back to Columbia, moved back to New York, went to Columbia Law, and at that point in time, I wanted to find my way back to Israel. It was, you know, but I was already in debt, right? So sort of like, you know, you got to. First. I didn't want to come in? I had to pay back my law school and so I went to a firm, Wilkie Farm Gallagher. By the way, I did my first summer in law school working for the Lawyers Committee for Human Rights doing asylum refugee work. Right. Which was very much tied to my personal story and I love that. But then I, since then, I mean, I've been involved with good stuff afterwards, but career wise, I kind of went private sector because I wanted to pay back loans. And then one thing led to another. So I had a career first as a corporate lawyer. And as a corporate lawyer I worked a lot with Warburg Pincus and they were doing both venture and private equity in the mid-90s out of the same fund. And that was my entry sort of into the venture world. What happened then was in 1999 and I was a pretty happy corporate lawyer, which I know a lot of people aren't necessarily. But in 99 there was the first Internet boom. And as I like to say, I too knew a founder of an Internet company who recruited me out of that corporate environment. And that was really interesting because I remember basically Rich Foreman, who Bonnie knows was a great entrepreneur who just knew how to, you know, kind of get people to work for him for free. He would like start calling me and I was like, our wives, I mean since divorce, but our wives were friends. And he'd be like, hey Jack, I need your advice on this. And then he's calling me and it's my vacation. And I'm like, Rich, you really need maybe regular counsel? He goes, yeah, great, come in and interview on Sunday. And I had no intention to do that. But this was, this was like August of 99 and September of 99. I went into interview and by October 99 I was working there. And I never worked harder in my life than I did from October 99 to March of 2000. We took the company public. And that from the moment I walked into a high growth venture backed tech company, I never wanted to look back again. So that was, I found I was a general counselor. I was still doing like a legal job in a sense, but like this. The energy and the excitement and the product. And I used to remember walking around the company company and giving tours to people, right? And it's like this, I liken a company a lot to like a biological organism, right? And it's sort of like there's this interdependence from each function. And you know, if this, if tech doesn't build something, well, what's the point of marketing? And if Marketing doesn't market well. Where's sales going to get their sales? And then I would like give the tour and then I'd walk next to the ad sales guys who were selling these little banner ads for like a half a million dollars. And I would kind of bow down to them, thank you for paying my salary. And it was amazing. And it was a rapid growth company. There's a lot more to say about Register which I can expand upon if others want. But Then I basically 2003 register actually, unfortunately, really we didn't maximize our potential. That's a fascinating and interesting story which I could come back to. And that's why you guys all know about GoDaddy and not about Register.com. bonnie knows about Register. But we could have kept them, we could have kept them out of business. But it was tough to do as a small public company. We were worried about making long term decisions. I think looking back on it. And then in 2003, the company was at a crossroads and I was. And it was an opportunity for me to say, wait a minute, wow, I found myself here. But I always wanted to go to Israel. And so that's when I left. And at the time I had two young kids and my wife had just finished up her PhD. She's a clinical psychologist. And then we made our way to Israel. And then that's where the story gets a little strange in that I started up a venture capital fund in the clean tech sector. And that's weird in a sense, right, because you think about what my background had been. I've been a lawyer and I'd been in house counsel and maybe responsible for a whole bunch of other things that register. I was on the management team and all that. So I'd been at a tech company and seen that rapid growth had been a key part of the management team doing it. But I'd never been an investor at all. And so a lot of people ask me, how do you get into venture? How do you get into venture? And I point out to them that some of the best venture capitalists in history have all come from very, very different directions. Some have been journalists, some have been like, right, I think Mike Moritz, I mean some of them have been techie, sort of like John Doar. I think Bill Gurley was a banker or an analyst, right, From Wall Street. I mean you can really come at this from many, many, many different angles. But what somebody said to me at the time was, look, Jack, your background is you've kind of been counseling a great entrepreneur for many, for A long time. Right. You know, I'd been to 50 board meetings and I'd been involved with decisions and I'd had that role. You're diligent because you have that legal background, you know how to do a transaction. You are, you're an extrovert, you're a networker. You kind of have these basic building blocks that together could put. So what you need now is that the discipline of the decision making side on the investing side. And of course I got and learned a lot of that from my partners that I partnered with as well. So that's how, that's the quick vish of how I got to launch. At the time it was Israel Cleantech Ventures. And now if I quickly, I'll just fast forward like over the 13 years. So lots of things have gone well, but lots of things also didn't go well. The hardest part was the clean tech sector. The marriage between clean tech and venture was a very, very difficult one. And so the traction on our first one was the performance. Our first one was not good like most clean tech funds. And so as we began to realize some of the mismatches, by the time we were investing out of our second fund, we broadened our focus. And now with our third fund, we've already, we maintain that broad focus and we rebranded to more vc. And the one thing I would say though is that we still really want to be associated with doing like things that matter and doing good things. So we've kind of kept that as part of our whole brand ethos and brand statement. So we are definitely more than clean tech. Right. And that's kind of more vc. But we remain, I would say we're, you know, we file an ESG report and we remain sort of, we don't consider ourselves an impact fund. We didn't brand that way and we're driven by returns, but we definitely are trying to make investments in things that we think leave the world in a better place as well. So that's the quick, high level summary. Maybe too much in some places, too little in others.
- [13:23]
A
No, no, it's really great. I think there's a couple of questions that I've been keeping track of as you've been talking. One of them is this is a little deeper with Israel. I still can't put my finger on it, but normally when I travel with my family, I just want to go to another country. I'm like, hey, you know, we did Italy, now we're done with Italy. Now let's go to now let's go to the Far east. And for some reason I don't know what it is, but I, I went to Israel and I do want to come back and I can't.
- [13:53]
B
And you.
- [13:54]
A
I'm trying to figure out like what that is and I'm wondering if like you've done some self exploration over the couple of years to figure out what it is. Is it just, you know, good memories or is it something else? I don't know.
- [14:05]
B
You know, look, I have to agree with you. I mean, here I am now, it's been. I moved here in 2003, so I guess it's coming up on 17 years and I'm thrilled. I've raised my kids here. I have two serving in the army as we speak and one who was born here. I mean there's. Israel has so many challenges and so many things that you could look at it and say, oh God, it's scary, it's messed up, it's problematic, it's a stimulus, but so does life, right? I mean, and I think that Israel has so much beauty, so much diversity, so much potential, so much immediacy. Things feel more raw and alive here to some extent. You know, I'm not saying that it's only because of the different challenges and the tensions, but maybe a little bit to some extent that kind of comes a little from that. The country has just insane history. It's the birthplace of three religions. It's, you know, it's. Well, I know the birthplace of three religions, but it's holy to three, you know, and it's, it's the diversity in a very, very small country. The diversity of the geography and of the. Is fascinating, right? You can swim in three different seas and in a six hour period. One that you float in, one which is, you can do coral reefs and one which is a normal Mediterranean Sea. You can ski and swim in the same day if the Hermon has snow. And then you could ski and do a desert hike in the same day. And it's so from a natural beauty perspective. And then it's an immigrant society to a large extent as well, right? So you have this. Which also of course means that the food is amazing because what is the food? It's everything, right? You could have Hungarian or you could have Iraqi or you could have Kurdish or you could have French and you got, plus this mix together with Arab and Palestine. It's just the food is incredible and so, and the people are generally, I think, nice and warm. They're in your face. They're horrible drivers. Nobody likes this when they're driving on the road, everybody's cutting you off and people are kind of. But you know, it's the kind of thing where like, they'll cut you off and they'll scream at you and then they'll sort of notice something and they'll say, oh, wait a minute, and like, give you a hug and a kiss. You know, it's sort of that family. There's something very familiar.
- [16:26]
A
Yeah, I agree. I mean, I think the diversity and then I think just part of the religious connection too. You know, I'm Catholic, so it was kind of just really amazing to like, go to places that you would read in the Bible, you know, when you're a child. So that was pretty magical. But, you know, I did that too, you know, I mean, so I was like, oh, wow. You know, we did all those things, but there's just something magical about it. So I'm glad to see that somebody else, few other people, because Adam says the same thing, they feel that as well. So thanks for sharing that additional insight. I think that's really good context. Then I got Another question with Register.com, you mentioned that this founder was really great at captivating people and getting them to really join his mission, even take an interview on Sunday. What are some of the attributes that you think gave him those skills? And I think just as you've looked at all these founders, what are you doing? What are good and important skills for just the leader to have as a founder?
- [17:24]
B
So, yeah, I think to some extent, Rich was relentless. Right. So I think that was, you know, and for good and for worse, by the way, I'm a big believer that everybody's key strengths are part of their weakness and who weaknesses are part of the story, you know, so, like, you know, I certainly have, you know, if Riches could listen to this, he knows we clashed a lot, right? But. But he was. Well, let me say this. One of the things I learned from that experience is that I felt that when you're in a rapid growth company, the CEO is probably spending 70% of his or her time interviewing. Right. And that's like that you just have to sort of. It's amazing how much the recruiting sort of takes over because you have so much to do. We were at a moment in time where everybody woke up to the Internet and wanted a domain name, right? So we were. The growth was just insane and we just needed to build out our systems and serve our customers and recruit customer service and just scale that sort of everything up so legal. The function that I came to play also helped with the IPO and all that. He was relentless, I think, great leaders in general and great entrepreneurs. So, first of all, they're fabulous at selling because again, they're selling to employees who are coming to work for them. They're selling to investors, of course, as well. They're selling to their customers. I think the best founders are. And a lot of people put that into a triangle also. Shareholders are square, and then there's other community and all that. I do think that the best entrepreneurs have this crazy passion for their customers. They really recognize that successful businesses are, you know, born and live and ultimately die based on how they delight their customers and if they can keep on delighting their customers. And we all know the statistics of, like, you know, you think something bad about a company, you'll tell it to 10 people. You think something good, maybe tell it to two. I mean, so it cuts both ways. And I remember it wasn't just the founder at Register, but we all had to resolve tickets at the company. When I joined there, we were all like. We had these policies of the goals that we had about resolving our customer service. Queries were just ingrained in. And that's what got us, I think that rapid success was that. And of course, we were competing against a company that was initially a monopoly. So nobody cares less about their companies than a monopoly because they don't have to care about their customers. So I think that that's probably the one thing I would say that I always look at when I'm meeting a founder is are they really coming at this? There's some people that say they talk to them, they want to found a company because it's what I always sort of wanted to do. That's a good thing. That's not a bad thing at all. But I think the best ones are the ones where, like, there is this problem that I something, I experienced it and I needed to solve it, and I'm going to solve it, and I can solve it and create something really huge if I solve it. And that kind of gets me excited in the founder discussion.
- [20:38]
A
Yeah, no, that's really helpful. And I guess when you're looking at competition, what were some of the things that you were along with customers? What were some of the things that you guys were looking at as far as KPIs? So the tickets, was it more of a, like a customer satisfaction score?
- [20:57]
B
You would look at it now as NPS and all that. Right. So 100%. We were about, you know, back. If I take myself to back then, I mean we were about simplicity and quality experience. So six steps to get on the web. What everybody hated about our competitor is that it was too complex, it was too technical.
- [21:16]
D
Right.
- [21:17]
B
I mean the web addresses were not. The whole language hadn't really been developed for the masses. In a sense, if you think about the Internet in the 90s, you know, it came out of the Arpanet and it was so. So we were, we were the first ones that kind of developed this very simple. And here I got to give credit to, you know, Sasha Morenell who headed up the sales and marketing was a genius and he's still doing great work in different companies. He has this company now like an Uber for Boats kind of company. And so the simplicity of the messaging, the simplicity of the process. Six steps to get on the web. Right. That was like all these things. And then though, and then the passion for servicing the customer once you were there. And of course what that creates is the opportunity to upsell. So step on the web also. And that's to some extent where we went wrong. Right. Okay. In other words, what we should have then done is realize that people were going to catch up to all of that that gave us. And once they were catching up, what we really needed to do was cut our price on that significantly and then start to excel in all those other sorts of areas. And we had the vision, I think to be everything. We had the vision to be Box and Dropbox and we had the vision to be wix. I mean look at wix. We bought a company back then called In a Box. We bought a template driven which we bundled in. So we knew that this was all going to sort of like develop. And the problem is that once we were a public company we were scared to some extent. When I look back on this, we had a high gross margin to all of a sudden tell Wall street hey guys, we're going to cut that gross margin down to 10% but trust us, it's the right thing to do for our customers. Our customers will love us. We'll meet instead of a million customers, we'll end up with 10 million and we're going to sell them more and more and more. And you know, it was hard to do and I take responsibility. I wasn't the only one. But like we used to have these discussions and debates and that's where we went wrong. And that's why Godaddy who excelled at that is like a multi billion dollar company register succeeded. It's still around. It got sold several times. Everybody that bought it, made good money when they sold it. It's part of Web.com now, anyway. But that's that story.
- [23:16]
A
Let's talk and let's. Let's switch gears and go back to selling as a CEO. So what was. What was the selling point that got you on board? What. What was that hook? Because you probably were thinking about it, because I. Correct me if I'm wrong, you were doing kind of the more corporate gig, working closely with Warburg Pincus, I guess, before I asked that. So why did you like your, you know, why did people not typically like corporate, you know, legal jobs? And why did you like yours? Was it the hours? Because I feel like I like.
- [23:45]
B
I liked mine because I had an incredible mentor.
- [23:48]
A
Okay.
- [23:50]
B
Not only an incredible mentor, a fellow named Peter Jakes, but also the current chairman of Wilkie Farm. There are two of them. Tom Cherubino, Steve Gardner. Amazing guys. I used to work a lot with Steve. I'll tell you a quick story there. When I left Steve, I couldn't. I didn't have the guts to walk into my mentor Peter Jakes's office until I was actually certain with the decision. Okay. Because he was too much. He was really like a bit of a. You know, just really took me under his wing. And so every. Steve was like the most beloved partner at Wilkie. And every. He was younger, right? He's now the firm chairman. Peter's already retired. So everybody walked. Was walking into Steve's office. It was late 1999. The firm was crazy busy because of all the economic activity, and the associates were all leaving because we were getting these offers other places. And I walked in and I closed the door behind me, and Steve looked at me and he's like, oh, shit, you too. Hey. And sorry if, you know, it's all good.
- [24:43]
A
All right.
- [24:44]
B
So. And then he says, all right, what's the offer? And I told him, and he said, listen, Jack, it's a general counsel position. It sounds like the firm. It sounds like the place has a good business model. You'll know if you don't. You'll know if you made a mistake within a couple of months, and if you do, you'll pick up the phone. And I was like, wow, what an incredible guy. And he said that obviously I was doing good work for him and he needed the talent. But, like, sure. So that. Anyway, when I. When I. So a lot of people don't like being corporate lawyers to some extent, because, I don't know, maybe you're further up. Let me answer the question. In a positive way. The people that corporate lawyers are, the people that love the law, that love being experts and that love helping their clients out using an incredible wealth and depth of information that they have when their client is like a bit of a deer in the headlights because this has nothing to do necessarily with their client core business. But they got to get it right. Okay? So whether it's litigation or a transaction or this or that, and I've seen so many great people who do that over the years and I use them now, right? I mean, you know, the lawyer who represents himself has an idiot for a client, right? So I don't try to do the legal work right. I use excellent. So that's what I like. But a lot of people find themselves going into law school, maybe in debt and then they just need to pay their debt. So, okay, fine, that they do that and then they go elsewhere. I was pretty happy because I had good mentors and I was. But I'll tell you the one thing I didn't like is I didn't like being the expert expert. I wasn't. I was more interested, and this is, I think fits well with what I choose to do. I was much more interested in having sort of knowledge that was like much wider and less deep necessarily. And actually I remember that firm said to me, hey, Jack, if you want to make partner, you're going to have to become the expert in something because that's how you make yourself indispensable. And that was really good advice. And I wasn't that interested in doing that. I realized that I was much more interested in learning a little about sort of everything and using sort of generic. So since I left, I feel that I found out to some extent I've developed an expertise in early stage investing, but that's a very amorphous expertise, right? So I think that this career in a sense, has suited my personality strengths a little bit better.
- [26:55]
A
And I'll say too, I think just from a human being element, if you're a person that is happy for somebody else's success, I feel like that good energy will come back to you. And it seems like your boss was just an amazing person because he knew he needed you, but he also wanted to look out for you. And I think that's a huge, you know, example of character. And I think just having that outlet, it's.
- [27:16]
B
I'll throw a pitch out for Wilkie. I mean, you know, it's a. Very few startups can afford them maybe, but like, if you can't, they're as we say, they're a bunch of mensches. I mean, they always were. And I was very, very happy to be there. And, yeah, they're. You know, I'm looking forward to Steve finally retiring. So he promised to visit me in Israel when he retires.
- [27:34]
A
Nice. That's great. So, okay, so then, you know, you found the opportunity, he promoted it, he supported you. But what was the hook of why you took the role? I guess, was it.
- [27:46]
B
Yeah. So it's funny, I come back to the. I remember the interview.
- [27:50]
A
Was that on Sunday, or did you reschedule it to a week?
- [27:54]
B
No, no, he was. He was bothering me. He actually literally my boss. Like, it was. This was a funny situation, a story we're telling. I. He basically had this kind of situation where within one of his investors, it was like an llc, and they were having a bit of a fight. Okay. The two members of the llc. And it turns out that they were both Orthodox Jewish. And so Rich is like, oh, Jack's my Orthodox Jewish friend. Maybe he'll know somebody. Maybe he'll help me. They were actually arbitrating it before Rabbi. And Rich wanted to stay out of the fight because understandably, he's the CEO of the company. He didn't want to take either one side. He wanted. But the arbitrator sort of wanted to talk to him. And he's like. And he's calling me on my vacation. And I was. Yeah, it was like a Sunday, or I think it was a Friday. I was down by the Jersey Shore with my family, and. And I'm sitting there in the hotel room as opposed to down at the pool. And he's like, you know, Jack, he goes, can you help me with this? I said, yeah. He goes, okay, great. I'm patching in the arbitrator. And he just patches it in. Now it turns out that the arbitrator was a rabbi who coached one of the hockey. Floor hockey, by the way, in the Yeshiva League. And I knew him. I'm like, oh, Rabbi Miller. And all of a sudden, that kind of helped. And I basically said, my client. I'm like, here I am. And I'm talking as if I'm representing him. And I'm just. My client really doesn't want to take sides. He doesn't want to do this. He doesn't want to give a statement, if that's okay. And I helped him. So he. So that was a part of the interview. Like, he saw me that way. But then when I showed up, he didn't even meet me. He basically had me meet the head of finance and the head of marketing and stuff. Head of marketing and sales, this guy Sasha, he walks into the interview room and he gives me a contract and he says mark it up. And he walks out because that's what a startup is. It's not like all the interviews that I had in, in, in law firms to be honest, were like they saw my grades and they made the offer based on whether they liked the. It was. I could tell you which firms I was going to get a job an offer at and which I wasn't literally based on my grades. All of a sudden somebody actually wants to see if I have skills. Somebody wants to see if I could do something. And better than that he wants free work. It was a real contract that he needed help with. And so again it's like the immediacy, the energy, the passion, the need, everything is due yesterday. I like. And then when I show up at the firm there's this great guy. Tony Moody was the head of business development. You know, he like emails me the contract I'm literally on, you know, sort of the three quarter wall over next to him. And then he's like Jack, you look at that contract literally like he like it shows up in my box. So the idea of having all your clients surrounding you is a little scary, but the energy and the passion was amazing. So that's when I knew I'd made the right choice.
- [30:21]
D
You know there was one other element to Web 1.0 that you haven't mentioned is we were all making it up as we went along. There wasn't.
- [30:28]
B
That's true.
- [30:28]
D
Made the whole thing up.
- [30:30]
B
That is true. That is absolutely true. Bonnie and I have to there I got to get like the people in the register. We basically had 10% of the DNS under our control in a sense and everything. The policies, all the stuff. By the way, look, it feels to some extent that the tech giants are also still making it up and maybe getting it wrong. But we also are all these issues of hey, are we going to be liable when somebody registers a domain name and then uses it for bad and what's bad and what's not and where do you draw the lines? The laws weren't made up, it wasn't clear. So it was a fascinating issue. And the guys, it was 23 year olds, it was 23 year old techies who were using their common sense to make these rules up. And that's what I loved as well, 100% and I love that's where I guess also I Developed a love for programmers. Now I have a son who's a programmer and I really kind of saw this and I think I even knew how to nudge him in that direction because, like, I really think that software developers, they have this love for logic and for logical flow and they really were fair. They also have this passion for fairness, right? And so they were literally making up these decisions and it was awesome to be a part of that.
- [31:44]
A
That's amazing. And it's good to kind of hear these stories because it just adds much more color and context. So, switching gears, fast forward, moving to the impact fund. You know, one helpful nugget that I got recently, I spoke with a VC in India. You know, he was focused mainly on deep tech. And in India, you know, there's just a crowd of B2B SaaS companies, there's marketplaces now, right? They have their own Uber, they have their own food delivery companies. But, you know, he has a little bit of an edge because everyone's not going to have the patience to do that deep research and, you know, work with the universities and understand the technology where you just have to go deeper. So that helped him a little bit. So that was just kind of an interesting nugget. And I've seen that trend. And then sometimes you battle between being a generalist versus a specialist. So I guess what was your thought process in focusing? That's an insight from India with Israel and then also with just focusing on clean tech, what was your thought process on that focus area? And we have a specific interest because that's something that we're looking to learn a little more about. We're thinking about also just having a focus on impact and clean tech. So any advice you have and then just kind of any insights on, you know, how you kind of develop that investment thesis, I think it'd be really.
- [33:02]
B
So look, to a large extent, we were addressing a market gap. Okay, so in other words, I. What happened again, the sort of. The historical story is that my partner Mayer and I were theoretical. We're not theoretical. We had an offer to become principals in a new fund of somebody here named Shlomo College, who ultimately then didn't raise that fund. Okay. So mayor and I were like in a PPM to become principals. And we were already talking about what we would be working on. And I raised my hand and said, cleantech. Why? Because nobody else was doing it. And so I think also as an investor, you want to be ahead of the herd. I wasn't going to sit there and say, oh, I'm Jack Levy. I'm new. I could have by the way, stayed in Internet and maybe I should have to some extent, but I sort of felt there was something about this clean tech stuff that attracted me. Part of it for sure was the desire to do good and do well at the same time. But a big part of it was the market gap that no, nobody was looking at it. And we felt that in 2005, 2006 and here we were, right. We felt that all of the trends towards rapid growth in the end user adoption of this stuff were ready and were there. And I'm not talking about necessarily oil at the time people were talking about peak oil and all that. But okay, oil we've learned really will fluctuate and frankly, technology solved the peak oil problem with fracking. I mean it may be caused bigger problems, but I'm more talking just about overall drives towards sustainability. In other words, we felt that we were hitting a moment where sustainability was becoming and this moment has just continued to accelerate and I think it's actually accelerating even more now. Just like in 99, 2000 when I was a register, every board was looking at its CEO and saying, what is your Internet strategy? Right. Okay. In 2005, 2006, I think people were sort of saying, how does sustainability impact our business? What are the opportunities? What are the threats? What's the SWOT analysis? You know, and it wasn't greenwash. I mean for some it was okay, but it was, but it was the beginning of a real understanding which you could say is now accelerating with Larry Fink's, you know. Right. Larry Fink write his letter about from BlackRock about corporate sustainability and all that. And I think it's the. It started around that time. It started with, you know, An Inconvenient Truth. Definitely gave a big push to it from Al Gore's movie. And that by the way was like launched and GE launched Echo Magination. Unfortunately GE didn't succeed that well with this stuff, but they launched Echo Imagination. I remember like two months after we decided that this is what we were doing. So we were there for a moment and none of the Israeli funds were looking at it. So we had this opportunity to become number one in the market. So that was great. The challenge was that and remains that it is that this deep tech stuff is hard, hard, hard, hard. And it doesn't mean that we're not going to continue to do it. But we didn't want to limit ourselves to a sector because then you run the risk of sort of having a bad selection Bias. Right. We want to basically compare every deal to every other deal from a venture returns perspective. And so we do. We're not going to have trouble anymore attracting the best solar companies and the best water treatment companies, because we've been there, we've been involved with those and we have that known for that. But what we wanted to do when we shifted our brand to More BC is make sure that we're also still attracting the best companies in InsureTech, which interests us and which makes a big difference in people's lives if you can do it well, or in education tech or even in some things around retail tech, certainly automotive. We were there already anyway because that was. So we wanted to just make sure that we were casting the net even wider. And if you look at our second fund and the portfolio that we have, we've kind of already done that, but we just wanted to make sure that everybody knew that we were doing it. So look, impact funds are different. And so again, we never took that mantra on and we never took that sort of responsibility to some extent on. Right. To measure ourselves with certain other key metrics of impact. And you know, there's. We do file an ESG report every year and we like doing that and we care about these things and we bring them down into our portfolio companies and. But we do not. We are returns driven. We're not measuring us. I think an impact fund means that you're measuring yourself both on financial returns and on impact. Okay, well, kind of impact, well, depends on what you're, what you're doing. So we never took that on. But we definitely think that the clean tech themes that we invested on continue to this day. Absolutely.
- [37:38]
A
Yeah. I did notice that Chris Sacca is back and now he's got a clean tech fund. I forgot the name of it. It's Lower Carbon. Lower Carbon, I think.
- [37:48]
C
Right.
- [37:49]
B
No, look, I think some of the things that we invested in, not just us, I'm talking about the whole industry.
- [37:56]
A
The whole industry, you know, we.
- [38:00]
B
We. They just either the science was too early.
- [38:04]
A
Yeah.
- [38:05]
B
Right. And, and it's just. And we're talking about areas where you can't release it in beta and the customer suffers a little bit and you fix it while you go around. It just doesn't work that way. Certainly, you know, you can't treat somebody. You can't treat industrial or municipal water and fix it, you know. No, the plant has to be beta tested and that's already a couple hundred thousand dollars. And then it has to be. So the capital intensity and plus the early science that mix was a little too much for a 10 year venture fund especially while so many other opportunities were driving venture quality returns. Really, really strong funds like Breakthrough Energy Ventures which is what was launched by Gates and now they have like 20 year life cycles. There are different ways to address this. I think that we can continue to be involved in these areas maybe more often with a software or a chip angle to a problem as opposed to trying to come up with the next great electrochemistry and think that we're going to be able to back that from start from the university until the exit in our fun life cycle. And so I still. And it's, it's. This is, this is to some extent a problem still because the world needs that. Okay. There is nothing that the world needs more. Well, I don't know, that's a hard statement to say. But one of the things the world needs most is more cost effective energy storage. Right? Okay. Cheaper battery because effectively then we can use solar and wind and intermittent power for our baseload power. Then we can solve our carbon problems. Right? But I have seen too much money lost including some of our investors. But even just around all the co investors I work with, the people getting really excited when they see a membrane of a battery and the flow is faster and the flux is better and sorry the flux is like in the water membranes but like the, the, the anode is cheaper and, and then you like wow, this is going to be the. Maybe, maybe but it might take a half a billion dollars until you know, and that's kind of whatever. And if that's the case then it's a game for LG and for you know, Toshiba. It's a game for the big, the big players in the electronic side or it's a game for Exxon and for Shell and they're playing that game. They are playing. They, they're definitely looking at themselves no longer as oil and gas companies, but as energy.
- [40:32]
A
Are there some. And I'll be sensitive to time too. I know we only got a few minutes left, but I'll just ask one more question too. Are there areas that we should just try to stay away from when it comes to clean tech as far as just being too concentrated or just overly saturated, you know, with.
- [40:49]
B
No, I don't think the concentrated or saturated is necessarily the problem. I actually think that you're going to get great valuation. The cleantech investors, the clean tech entrepreneurs are not finding as many funds because of the boom bust that we all had other than Elon Musk. Right. I mean, I remember in 2012 or 13, I was at an event out in Silicon Valley where all of us were gathered in a room and it was a kind of an opportunity for us all to look around and say, let's talk about what's really happened. Our performance has been bad. And somebody said a funny line where he's like, you know, next time we do this, we're going to play a drinking game. And if somebody says either Solar City, Tesla or Elon Musk, you got to take a shot because that's the only thing that was really working on a massive. Now I take that a lot of things have worked. And In Israel also, SolarEdge is a 5, $6 billion company. I don't know, I'm not following. There have been some major successes, don't get me wrong. And there will be even more in the future. I don't think that the problem is saturation. I just think that if you're going to do this, you need to really be making sure, depending on who you, what your, what's your strategy? Right. What's your fund, what's your fund strategy? Where's the follow on capital coming from?
- [41:53]
A
Yeah.
- [41:53]
B
And how is it going to come in a way that's not going to either wash you out at some point in time or, you know. Yeah, fundamentally that. All right. Because like I look at, you know, one of the companies that did succeed, the fuel cell company in his name is escaping Mary, now based in California. I mean it required, I think they raised over a billion, I mean to raise over a billion dollars is doable now if you're really, if you're going to get there. Okay. It's doable in the private markets. We all know that if you're going to get there.
- [42:24]
C
But.
- [42:27]
B
I can't forget the name of that company. Large scale fuel cell storage. Just be very, very thoughtful about co investment dollars, how much capital intensity there is around it. And frankly, if you're going to see if you're thinking about doing it in a seed stage, I would tell you stay on the software side. There's enough opportunities there.
- [42:48]
A
That's super helpful.
- [42:49]
D
Cool.
- [42:49]
A
Well, I want to be mindful of your time. Do you have a couple seconds for maybe a few final questions? Okay, great. So I'll open it up. If anybody has any quick questions, I guess. Adam, I think you're raising your hand.
- [43:00]
C
Yeah, yeah. Thanks again, Jack. Really insightful and appreciate it. And I just, we're fortunate to have a speaker today, I guess who comes from a background Also in the US and also having worked in a startup from the ground up and then moved over to Israel and just wanted to know if you could share any or have any insights as to the major differences maybe between let's say the Israel startup ecosystem and founders that you back here and in comparison to maybe what other fund managers or Joel and other people have been exposed to over in the States.
- [43:40]
B
Yeah, so it's a great question. I think I'll answer it with generalizations. But of course there's the caveat that all generalizations have their exceptions. Right. Okay. So I think that we, and maybe this because we're a little older and stodgier than some of the younger VCs here. Right. Okay. We are typically looking for some kind of deep technological innovation because we think that the best Israeli successes to have that now it doesn't mean like it's often a VC might look at something and sort of say well is there deep IP patent? It doesn't necessarily for us have to have sort of like a patent. But like if you think about the profile of the Israeli entrepreneur on the tech side, okay, often what's happened with them is that the depth of their technology has been accelerated during their military service because they got to work on a specific kind of a problem in a crazy intensive, results driven way with resources beyond their imagination for their age and mission critical. And so that's kind of a bit of our proprietary advantage over here in the ecosystem. And so why back something which is just sort of like a pure execution SaaS play that's a little bit maybe further away from its home market as well. If you can do something like that now, the answer might be well, but if you can mix and match that and maybe you have some of the one of the founders is relocating or one of the founders is already tied into the Israeli. That's a big advantage that we have as well is the Israeli expat community in Silicon Valley and in New York and in Berlin and London, all that. So that then maybe you can mix that closeness to the market. I feel that lots of American VCs have this advantage that they're working with founders who have lived in the end market, whereas a lot of the Israeli founders haven't. But they have this tremendous technological know how that maybe was applied in area A, military sort of related potentially or whatever, but now could be applied in area B and it's not that far a technological leap. So that's I think a very generalistic over generalizing comment because again, look at Lemonade and look at Fiverr. And I can give you some amazing Israeli companies that are, you could call them their pure execution plays in a sense. But by the way, those founders, you know, they have major offices in New York. Right. So that's.
- [46:15]
C
Thanks.
- [46:17]
A
Yeah, it's really helpful.
- [46:19]
B
By the way, if you have not watched the Lemonade 5 year video, watch is, you know, I'm not going to sit here and comment on the face actually the founder Daniel is an old friend of my wife's because they grew up together in London. But that video just tells, if you're looking about how to tell a story and also at remarkable execution. Watch that video.
- [46:43]
A
That's really helpful. Yeah, definitely take a look at that. Appreciate that. Anybody else have any questions?
- [46:52]
B
Bonnie?
- [46:53]
D
I don't have a question. I was just thinking about how different the early days of Web 1.0 was. And you know, recruiting everything is like platforms and this and that and blah blah, blah, blah. But in the early days, I remember because you're here, that register had this amazing party on the pier. Were you there?
- [47:13]
B
Which one? We had a lot of amazing parties.
- [47:16]
D
There was one in particular that was on the pier I think was by the frying pan and that's how you people.
- [47:21]
B
Yes, yes, yes, I do remember. We also had an amazing party in. I don't remember what it was called but it's like opposite Grand Central Station. There was that one venue.
- [47:30]
D
I'm sure I was there.
- [47:32]
B
Yeah, yeah. You know, when you talk about how things were different web 1 0, the place to. I mean, it's on the tech side is, you know, we used to only release at 2am on Friday, between Friday morning and Saturday because God, for. You know, that's. We needed the less amount of time you think about the agile development now in a continuous. The CICD world, it's just. Oh my God, it's just a completely different world.
- [47:58]
A
Well, this is amazing, Jack. I always ask one final question and I think I've asked. I forgot to ask this for a couple of my past speakers, but I'm glad that I remembered. So one piece of life advice that you would give us as we step away.
- [48:12]
B
You know, it's the same advice I have to give myself every day, especially in this moment, to stay calm, keep perspective. Right. I mean this is unprecedented, right? What we're all going through right now in society, it really is unprecedented. I know that because I'm talking to my dad who's 82 and who lived through revolution and all this and still this is still unprecedented. And I think that, you know, what helps me, you know, stay centered, Mindfulness, all that kind of stuff. I can't say that I adopt it and do it particularly well, but I can say that I have my moments where you sort of, you're, you just the mind quickly sort of runs. And this is important for life and it's important for business. It's important for running a company. I mean, there's, there's very few things that can be as potentially anxiety provoking as running a company. Because if you're just going to always sort of let your mind think about the next challenge and the next worry and the next, then you're not going to be productive. It's like, so just the ability to stay centered and to appreciate, you know, the successes. Celebrate the successes as well. I had a big success today on my not for profit in one of my school that I'm the chairman of the board of. We managed to, we know we're going to open up another class next year and we weren't sure we were going to get that done. And I've had like, I've lived through hell with that situation over the past year. And like the moment that that happened, I'm like, okay, we just have to take a step back and so celebrate your successes. Stay calm, keep perspective. We're all bumbling through this to some extent and making mistakes. And I have, like I told you, I mean, I raised a fund and lost money. I mean, it's not a pleasant place to be, right? But I have amazing LPs who understood the risk that we were taking together and understood, you know, and have been very, you know, it's not even a question of forgiving. It's just like, okay, we did our best. We know that we did your best. And some of them continue to back me to this day. So don't worry about, don't dwell on your failures, you know, and stay mindful in the moment and then face the challenges that you have to face that day as opposed to letting yourself go anxious. I think that's critical for entrepreneurs.
- [50:20]
A
Yeah, that was amazing.
- [50:22]
D
I also noticed that you have a picture of the Brooklyn Bridge in the background. We never really get all that far.
- [50:26]
B
From, I'm a New Yorker, but I gotta, you know, I'm an old New Yorker, but I got a, I even have a picture, which I don't hang here, but I got a picture, a different picture of downtown Manhattan with the Twin towers, right?
- [50:36]
A
Because I can't.
- [50:37]
B
Every time I look at lower Manhattan, I still kind of. I was at Register that day, and I just still shake my head.
- [50:44]
A
Yeah, yeah. So I live in midtown. I'm in. I'm in Manhattan. But it's funny, I used to live in Hackensack, New Jersey, with my wife, and we tried to do that. We've got, like, a lot of family there. And then we just. The commute was just too bad, so we ended up moving back to the city. So good to meet a fellow New Yorker. Thanks for your time.
- [51:01]
B
It's a pleasure, guys. It was great to chat with all of you. It was a lot of fun with everything you're doing. All right.
- [51:06]
A
Thanks, Jack. Appreciate it. This is awesome. Thanks. Bye.
- [51:09]
B
Thanks, Jack. Thank you.