Before we were kicked out of our NYC studios thanks to COVID-19, Jeremy had the chance to talk with Bradley Tusk, the noted venture capitalist, political strategist and the Founder and CEO of Tusk Holdings, which includes Tusk Ventures, the world’s first venture capital fund to work with and invest solely in high growth startups facing political and regulatory challenges. Bradley also recently wrote a memoir called The Fixer: My Adventures Saving Startups From Death By Politics, and hosts a terrific podcast called Firewall.
On this episode, we discuss:
As always, we welcome your feedback. Please make sure to subscribe, rate, and review on Apple Podcasts, Spotify, Stitcher, and Google Play.
Before we were kicked out of our NYC studios thanks to COVID-19, Jeremy had the chance to talk with Bradley Tusk, the noted venture capitalist, political strategist and the Founder and CEO of Tusk Holdings, which includes Tusk Ventures, the world’s first venture capital fund to work with and invest solely in high growth startups facing political and regulatory challenges. Bradley also recently wrote a memoir called The Fixer: My Adventures Saving Startups From Death By Politics, and hosts a terrific podcast called Firewall.
On this episode, we discuss:
As always, we welcome your feedback. Please make sure to subscribe, rate, and review on Apple Podcasts, Spotify, Stitcher, and Google Play.
spk_1: 0:00
quick note before we begin. This episode was recorded earlier in 2020 in the studio. Before you know what happened, all right, let's
spk_0: 0:10
begin. We choose which started to invest capital and fundamentally, if if a CEO and a founder doesn't appreciate the potential need to deal with regulation. My views, I thought, the kind of person I want to invest in the first place. Hi,
spk_1: 0:24
I'm Jeremy Goldman, and this is future proof. So today we're very lucky because we were ableto finical Bradley Tusk to come back into the studio. If you haven't heard our previous episode with him, definitely go take a look in our archive just to kind of recap. He is a venture capitalist political strategist. He's the founder and CEO of Test Holdings, which includes a number of different companies. But I really wanted to talk to him today about some of the amazing work that he's done working with startups and helping save them basically from politics and regulation, helping them figure out how to work within the rules and regulations and even push the envelope sometimes. Uh, Previously, Bradlee served as campaign manager for Mike Bloomberg, deputy governor of Illinois. Ah, and as communications director for Chuck Schumer on, then perfect transition as uber's first political strategist. So, uh, Bradley, welcome back to future proof.
spk_0: 1:32
Yeah. Thanks for having me on again.
spk_1: 1:33
Yeah. No, this is great. I You know, I thought it was really interesting. I know that you wrote in your book that uber wasn't always an inevitable. And it seems like regulation is this critical problem to solve for before you could make any disruptive technology inevitable?
spk_0: 1:50
Yeah, founded a venture capital firm around that
spk_1: 1:52
Be a problem. Otherwise,
spk_0: 1:54
probably did. My Opie's would be, like with, um but, um, yeah, look, here's the thing. If you create a disruptive startup which sounds super cool, your mirror listen to something called future proof. That means that you're disrupting somebody than entrenched interests there, and they don't want to lose their livelihood. They don't want to lose their market share. So, like, Oh, you're right. This is a better way to book a hotel room, get a car or whatever it is, go right ahead. They try to defend themselves and just take often can't defend themselves on having a better product or better service or anything like that. they resort to politics and regulation, and they use campaign contributions and lobbyists and things like that to try to shut down new ideas and new types of innovations. And if you're doing something that's truly disruptive, you have to anticipate where that's going to come from. You have to ready for it. And if you're not, you know, I have a chapter, my book quote. Strangle the baby in the crib If I weren't entrenched interests, that's what you got to try to, Dio. Because if you let us start up, get a head of steam, then all of a sudden they get on momentum and one
spk_1: 2:59
well and yeah, I mean, I think in some ways what's interesting to me is that you've got all these regulators now, and not just now, but all the time. You know that they see these new ideas that and they look at these ideas and say, like you need toe conform to our rules, even if that means it's going to nullify all the benefits of that new idea in the first place, you know, enter, that's that's
spk_0: 3:22
backwards thinking. But I think a lot of times and I've worked in government enough to sadly know this firsthand. People in government forget that they're there to serve the public, and they see if the opposite, which is the public, is there to serve them. Um, and the mentality is, you know, I'll decide what's right or wrong that won't conform to it. But by definition, if you have a product is getting lots of traction in the market place. That means that your constituents want to use it, right? So, like we take scooters for investors in a school of tropical bird.
spk_1: 3:51
Yet Bird is huge.
spk_0: 3:52
Yeah, so we've been in since a series A. And we've worked a lot on how to legalize electric scooters. And one of the biggest proof points we had with regulators is look, clearly, people want to use this thing because that were growing your study like crazy. So you could say no, you just can't use it. Then we could have a big, ugly fight. We can embarrass you and when, or you could accept the fact that this is here and let's figure out the right sensible way to regulate this product. And that's true, whether it's scooters or detective insurance or currency or e sports or whatever.
spk_1: 4:23
I mean, I think it's definitely ah, fascinating. When you look at all these different regulators that, you know they might even necessarily they might work within a progressive state. But I think bureaucracy is maybe inherently conservative in the sense that let's not let anything get broken. Uh, but let's not to some extent, you might almost make the argument that the legal profession is like that. It's, you know, it's it's trying to protect rather than
spk_0: 4:50
heart trouble for saying no to something that for saying yes, I have.
spk_1: 4:55
So this is something that I think you know a lot about, and obviously financially, there's an incentive for you to explain why this is something that's important for people to understand. But why is it important? You know, for a start up to understand each state's regulatory environment when they're trying to shape the future
spk_0: 5:13
because we don't We live in a federalist society, which means that most of the rules set out in this country happen from cities and states, not from the U. S. Government. If you ever product is Onley governed by the federal government regulated by them, then that's what you have to worry about. But that's true of almost nobody. By and large, you've got to deal with 50 different states in hundreds of different cities. And yes, you can say, OK, I only care about California, New York, Texas, whatever the big ones are. But the politics and all those states are different, right? Some are very liberal. Some are very conservative. At the end of dated both really big business. You have to be in operation pretty much everywhere, which means that you have to deal with 50 different regulatory schemes, work in 50 different sets of statutes and 50 different sets of political interest rate in some of the places where you are operating. People you're disrupting will be very politically powerful, and you've got a big fight ahead and other places they won't be. Piccoli power forward and you can steamroll them. But you've got to understand the context of what you're dealing with on the front end or you're not going to succeed.
spk_1: 6:07
And to me, what's so interesting and fascinating is I like to think about, like all of the different things that impact the future and help shape it, that nobody ever thinks about because they're not sexy. So, for instance, regulations and rules, it's you don't find regulations. Well, it's, you know, perfect example is I've been very close to the autonomous vehicle space for years, and the technology has been ahead of the regulations for ever. And this is the thing that I think people don't think about. The average person is like the technology isn't there. It's not ready yet. I'm like that actually, is risk level for Yeah, yeah, you know, like there are a lot of people who have invested their time and effort to solve for a technological problem, but they don't often think about okay. And who are the entrenched interests that they have toe? Find a way? Teoh Challenge and overcome?
spk_0: 6:56
Yeah, look, Regulation almost always lags innovation and one of the reasons why, if it takes a little while to get a visa on the road, it's going to be because the right regulatory framework wasn't created in cities or states that this is one of those issues where Washington really ought to step, been in preemptive cities and states. It's a little crazy to say that we have 50 different sets of rules for times vehicles when you cross state lines, often hands after Guan Wheeler off the wheel or whatever it is. So Washington should act on this, but should active well, actor, obviously. Two different things. They haven't really done that yet. War investors and autonomous trucking startup Pickle Kodiak, based in Menlo Park. And, you know, we've actually had to work with states like California and Texas to create opportunities to test the technology and then go into operation itself because the federal government just really can't get back together. Do
spk_1: 7:44
you know, side note, by the way, Total aside. You know, mobile. I Yeah, for sure.
spk_0: 7:48
When I was I a Z, we discussed off there, have a podcast swell called firewall. Feel like a check it out. Um, I did a series last May in Tel Aviv on I interviewed eight different start ups and one of them was the VP.
spk_1: 8:05
Okay. Cool. Yeah, I did the branding for them back in 2003 and I was shocked when they actually hope you took equity. I did not. I will be honest about that, but, um uh, yeah, I made people who I know a decent amount of I'm sure shall be okay with that. But it's just actually funny that, given how be to be something like autonomous vehicles and technology is that they never really, really re explored the logo on the branding. So it was kind of nice toe all of a sudden see something that I had put together on the side of the stock exchange Take typical
spk_0: 8:40
more. I at least said that they're gonna have autonomous taxis on the streets of Tel Aviv by next year. 2021. I'm not sure if that's feasible or not. Um, Israeli regulators aren't necessarily any more innovative or better than the U. S. Regulators on this stuff, but it would be super cool. Feed it
spk_1: 8:59
well, and it's interesting, actually, because I mean, of course there are. And I think you even talk about this in your book. There certain advantages in certain places where we actually need regulation. So it's not that regulation is inherently evil, because I'm sure you can think about a few international markets where they don't have enough regular or
spk_0: 9:17
just take crypto cards right on one hand. I think that there's a very valid argument that people feel like they don't trust central institutions like federal banks, and they prefer to deal with like minded people in a digital way. That's fine, I believe in Cryptocurrency to. But there's also a tremendous amount of fraud in the crypt of space. And you want the regulators. You want the SEC. You want the Department of Justice going after scams? You want them going after bullshit? I CEOs. So it's not that you don't want regulation, just want regulation that actually makes sense and doesn't hampering the technology and and cripple growth.
spk_1: 9:51
Yeah, and I think also. And I know we talked about this the last time you were on. There's a certain element of people paying a little bit more attention to the negativity of any new disruptive technology. So, for instance, let's just say if there's a new disruptive technology and autonomous vehicles are on the road and there's a fatality that will get covered more than a quote unquote traditional morality and
spk_0: 10:15
someone getting killed in a car action every day, it doesn't even make the paper makes the news. If a test driving on its own runs over someone, that's front page story from pitch story.
spk_1: 10:25
Yeah, but in some ways, this is almost the whole human fallacy of not studying data. You know, like we actually care about the thing. That's amore. Interesting story, as opposed to like I mean, if we have decreased the total number of fatalities, that's what you should care about as opposed to anything.
spk_0: 10:41
Car crashes. I think the number one cause of death not counting like smoking or ever. And if you were half autonomous vehicles operating effectively, you would exponentially reduce the amount of deaths and injuries and accidents that you would have. But in the way to get there that you have to have a lot of testing and testing, something will occasionally go wrong. The problem is, so much attention is paid to those few hiccups that it ends up threatening. The ability, the entire thing to exist in the first place.
spk_1: 11:10
Yeah, I mean, and when you're thinking of people who you've worked with, you know Travis Kalanick comes to mind right from uber who are able to kind of see the future before people other people around them were able to. I mean, what's the what are some of the traits that people like that have. And then also what separates the people who get that regulations are going to be important for versus the people who are like No, no, no, I'm smart. I'm gonna figure it out.
spk_0: 11:36
Yeah, And Travis, I think, actually checks all those boxes of the first time I ever met him. He said to me one day, nobody will own a car, I'll drive themselves and you get it by pressing a button. And I believe that there is no one in the world has done more to make that a reality ever since then. And Travis Kalanick, Andi. He had a few attributes, I think really a lot to be successful. One is he could see what the world was going in terms of coroner ship in terms of times vehicle technology in terms of the sharing economy. But at the same time, he was also very, very focused on the details and that included regulation. So he was willing to really say Okay, here are all the things that get in my way here is ready to deal with Andi took politics and regulation seriously. They had to, because of the time we were this tiny little Siri's, a company taking on a giant cartel in taxi, a rough cartel taxi. And only someone is tough and ruthless as Travis. And as relentless is Travis and Smartest. Travis was gonna win that fault war, and he did.
spk_1: 12:34
But, you know, at the same time, I think that having the foresight to say that regulations and figuring out how to work within them and you know, work within them or even say, Forget about that, let's ask for forgiveness later. You know, as I knew, that uber kind of did to some extent and
spk_0: 12:48
not quite as much of the press likes to say,
spk_1: 12:50
Right, right. But but, But it's just interesting to me that there are some people who might invent something as disruptive. And then because regulation is not the sexy, interesting topic, then they say, like we're going toe, we're gonna figure it out, and maybe they don't invest and actually
spk_0: 13:06
Airbnb the example that right? So it's a great product. That's great technology. But in the early days of Airbnb, their attitude was like our Yeah, well, we'll deal with it, or if we just keep our head down, don't really notice, and as a result they had the opportunity to really legalize themselves, for example here in New York, and I didn't take it because they were too passive. And then in being passive, they gave their opposition the hotel unions, the hotels themselves for housing advocates, enough time to catch their breath and come up with a strategy and how Airbnb. It's effectively illegal in New York. And so, by being so passive and not taking regulation seriously, they locked themselves out of one of those lucrative markets in the world. So you see that all the time when we choose which startups to invest capital and fundamentally, if if a CEO and a founder doesn't appreciate the potential need to deal with regulation, my views, that's not the kind of person I want to invest in the first place.
spk_1: 14:02
So, yeah, and when you're thinking also about like being able to shape the future, I think one of the things that you talked about a little bit with uber is going directly to constituents, right and actually people who have power individual used users of an app right, they can raise their hand and they can say I want a certain things to happen and that I feel like been a very transformative, disruptive thing over the last few years. But do you expect it to stay that way for the foreseeable future? Like basically, do you think that the individual is going to be ableto have a groundswell affect and change or
spk_0: 14:39
think, you know, coming always, to be honest, sometimes there are technologies that people just really want to have access to, and they're willing to do what it takes to try to get it. But there are also moments where tech is more popular than other time. So right now I think we're in the midst of Attack Lash, where you have a bad behavior by Facebook question behavior by Amazon by Google, all leading to a tremendous outcry both city, state and federal government and by all over the world, you, especially on people, don't trust Facebook. And as a result, right now, when those companies were riding high and doing really well, it has a halo effect for all of Tak up and down the stack, and when they're in trouble on right now, I think Facebook is being investigated by 46 different state attorney general's.
spk_1: 15:23
That's all we're gonna before introducing one or two extra states just so more than 50
spk_0: 15:30
version islands all of a sudden and then, you know, government and it's a mess over there. So in some ways, you know the ability of tack to take on entranced interests, you know, depends on how some of the giants are doing. And part of the thing is that, you know, we used Tak of the very broad term. But in reality, every companies, a tech company, you and I were sitting at a wooden table. But whoever made this table use technology to design it constructed, market it, ship it all these different pieces. So there's no such thing as a business that doesn't rely on technology one way or another. I want you to come up with a better term for because you know, these super early stage start ups that I invested. Sometimes I have nothing in common with these Booker Amazon apple. These trillion dollar companies.
spk_1: 16:14
Well, that's why we work was an interesting case of a company that, you know, found a really great opportunity toe kind of get that tech valuation. But inherently. You know, you look at its. Of course, there were some technology, but I mean, just a company. It's a real estate company that had a really great pitch, I think.
spk_0: 16:31
Yeah, look, have Newman and I don't know Adam, but from everyone I know who does not known as the nicest guy out there, so I don't feel particularly to defend him. But you know, for everyone on this who listen, this podcast, who's been in a we work, he created something pretty cool, right, And he managed to take, You know, the way that we work and creating alternative vision Ford it's or alternative version of it and get people really excited about it and to use it all over the world. So it's not that he didn't accomplish really meaningful. I think he did. But just because you do something cooler, meaningful doesn't mean it's a $50 billion company, right. There are things that could be good ideas or good innovations were good for society, but have you economic benefit but not unlimited economic benefit? And I think valuations for companies like we work and uber and others got a little out of control and investors who came in really late lost money.
spk_1: 17:23
Yeah, it seems like a lot of the companies that air succeeding these days. And I'm doing a SYRIZA talks on kind of predicting the future, that successful startup of tomorrow And what are the things that are most correlated with success? And what are the things that don't actually matter As much as one might think on, I think one of the things that's really interesting to me is just to look to see, like, one thing that sends toe attract a lot of funding these days and that, you know, this is narrow casting, unifying a nation, saying Listen, we're not gonna be a $50 billion company but we found a very lugar re lucrative nish, and we are going to dominate that one particular nation. If
spk_0: 18:01
you can capture 50% of ah total addressable market of $5 billion you know, that's just as good as capturing 10% of a tam of $25 billion.
spk_1: 18:10
So I want to ask you just pivoting off of that a little bit. You know, you spent a good part of your early career finding opportunities for politicians to get in front of microphones. So how important is getting in front of the proper microphones critical for shaping the future in general?
spk_0: 18:26
The same thing, right? Which is now. There's so much information flying at us all the time that we're absorbing things very quickly, processing and mainly in our subconscious and then making discriminations one way or another. And, you know, either you're the one shaping. What said about you, what's written about you without their about you or someone's doing it to you, right? And in every case, it's hard to not argue for being proactive. There may be certain situations where you want to try to keep things quiet because you're developing something new or whatever it is. But even then, even if you're not out there talking about it, you should know what the strategy is. You should know what the narrative is. You should be ready to go out there, talk about it, assumes either you are ready to or the story breaks anyway on I think people who I don't think about that or feel like they're above that seems things happen. People don't think about regulation, which is you know, the story is told, neither you're telling or someone else is telling him. So what else is telling? Get eyes are not telling exactly like to.
spk_1: 19:21
And and I like that the way that uber they don't know If this is the thing you had a hand in or at least you're familiar with. I'm sure you are, of course. But the confrontational, uh, aspect that I mean that in a positive way. The fact that Listen, if you have this really great mailing list if you have this really great app that people are always in, why not take advantage of it? To rally them to your side?
spk_0: 19:42
Yeah. And I think sometimes look, you know, regulators, politicians in general, if we assume we thought that this last time that we were together if we assume that politicians are always going to make a rational choice to advance their political interest If you're a politician in the taxi industry, give that nice campaign contributions. I say, Hey, can you do this for me? If there's no political cost to you for doing it, you're gonna do it because you want the money, right? But all of a sudden, 20,000 constituents or emailing you and tweeting and texting you and saying Leave this thing alone. I care about it. You're gonna back off. And in some ways, with uber, we had to create a certain amount of fear for politicians to say Shit, I'm not gonna mess with this sorry taxi industry, not this one. And that requires creating a certain air of a certain perception.
spk_1: 20:27
Yeah, and I think that also what's interesting to me about that is that sometimes people that we kind of talked about this already is, you know, like sometimes innovation means you're taking two steps forward and one step back right, which is the way that I think about it like the devil's advocate argument for me that I don't necessarily believe is the whole taxi drivers hurt by uber or, you know, all of the other disadvantages associated with things like this card. No innovations ever going to be perfect. And I think that people just focus too much on the
spk_0: 20:57
table. And I think ultimately, you know, if if an industry doesn't evolve, doesn't improve in taxes a really good example, because, you know, anyone who's been the back of yellow cab, my This isn't just true New York destroy anywhere in the U. S or the world. If there if the driver's air unfriendly and the cabs or dirty and smelly and the price is high and you never make any attempt to improve because you have a monopoly, Then when someone breaks that monopoly, you're really gonna suffer. And while you don't want to see individual taxi drivers suffer the people that on the medallions at least we're now asking for bailouts from cities. Some of them purchased them his highs of price of 1.21 point $3 million not evaluations under $100,000. A lot of places. Um, they weren't really good actors most of the time. I mean, they chose to try to really exploit a system and exploded Monopoly, and they were lazy and they were greedy, and eventually they paid the price for.
spk_1: 21:49
And I mean, that's the thing that I think people forget, You know, that you could very easily be like a minority of a different color than your eye in an outer borrow and good luck trying to get a cab. You know, this was
spk_0: 22:02
one of the very first things I did for uber. This was back early 2000 lives. I wrote an ad for black radio that said When you asked for Neubert No one knows the color of your finger because fundamentally, most African Americans, Latinos and most cities around the U. S. All have stories of seeing an empty cab go right by their hands up and they just don't pick him up on dfo Whatever Ruber has been accused of a few years. No, I've never anyone talk about racial discrimination. They call it you call it someone, takes the job, they come and take it.
spk_1: 22:32
Yeah, No, I love that. I mean, just one toe. I know you gotta let you go in a minute or two in your book, you write that if you can control the flow of attention, you can get people to do things or not do things that could have a major impact. Right? So why is that such an important lesson for those start ups and companies trying to navigate rules and regulations?
spk_0: 22:52
Because at the end of the day, most people who run for office do so because they're really, really desperate for attention, right? they have to have that if liked oxygen. For you and me. I think I said this in the last Martin Castillo. And they're either the ones directly setting the rules or they appoint the regulators who set the rules. Either way, they're the ones who really have the power in this equation. And if you there mainly thinking about the next election, right? So if they think, hey, if I work with these guys, I got a better chance of winning. Or if I don't do what they want, I have a greater chance of losing and they're gonna work with you. If they think that either you can impact the next election or nobody cares what you say they're gonna ignore. You do whatever they want to dio. And so if you want to get their support and you want to get and you want to get there, there validation and everything else, you've got to be able to make them feel. But you can really be determinative in their next election. The thing they care about the most is attention on DSO all if you get good press, they had to do what you want to get a bad press the thing to do what you want. And if you have no impact on the press, they tend to ignore you.
spk_1: 23:54
I love that. And since we didn't last time or this time, really do our traditional lightning give you at the very least one quick lightning on
spk_0: 24:04
that, sir, that that's mainly what I've been thinking about the last few days. But yeah.
spk_1: 24:08
Oh, really? Well, that's like a whole That's a whole nother episode. Yeah, Yeah, I know, but I want to ask you most challenging boss toe work for Chuck Schumer, Mike Bloomberg or Rod Blagojevich.
spk_0: 24:18
Rod. So the chuck was Mike's actually not a hard boss. As long as you have your shit together, right? As long as you know what you're doing and work really hard and you're prepared, he gives you an incredible amount of autonomy and freedom. Chuck was a really hard boss because Chuck cared about getting press attention more than anyone I've ever met. And I was in charge of his press and so I would have to talk to him 24 7 to kind of help him scratch the itch for for attention and validation. But Still, Chuck is an honest, hard working, decent guy, Roger. Criminal. Right? And the thing with Rada's had rod plug insanity, I believe we would have to have given it to him. You know, the problem is crazy. People don't think they're crazy. So he didn't ask for insanity, But he was really disturbed in some ways and had the weird combination of in some ways, he wouldn't come toe work at all. He could three or four months that come into the office because he saw the job of running for office in the job of holding office is two totally different jobs and thought his job was only the job of running for office. How nice
spk_1: 25:17
was his house? I just gotta say, I got a pretty
spk_0: 25:20
nice, you know, um, but he was like, uh, go or whatever it is, we don't believe that. And, um, from one hand, you kind of have to run the government on your own because he wasn't there to help you do it. On the other hand, he was a real conspiracy theorist and really paranoid. And so he spent all that calling me up, saying this one's have to get me that was actually at me. And while a lot of his theories were crazy because it was Chicago politics, they were out to get him. Everyone had to get everyone in Chicago politics. So, you know, I just had a him acting like a nut so much of the time and that I'm trying to run. Its deputy governor is responsible for the state's budget operations legislation, policy communications from 29 years old. I'm trying to run the fifth biggest state in the country. It's a pretty demanding job. And then I got this lunatic on my back 24 7 So I would say of the various bosses that had you could throw Travis And that makes also Rod is
spk_1: 26:09
the worst. Well, and I got to just say no to South. If you're in a core Afoa trying to do things that will keep you out of prison, right? Yeah. Yeah, Exactly. And on that note Thank you so much for coming back. T o. And thanks again, Bradley, for joining us for a second time. Once again, if you didn't hear the first part of our conversation x number of episodes ago. Go look back in your feet or really enjoyed that one I think it was hide for is interesting is our second part of our conversation. Once again, make sure to review us on apple podcast stitcher and wherever finer podcasts are sold, it really helps new people find this show week after week. And we thank all of you for your support. Once again, I'm Jeremy Goldman and you've been listening to future.