Mia Culpa Jason Calacanis

Mia Culpa Jason Calacanis which I think translates from the original Italian to “That’s my Coffee Jason Calacanis.” For those of you who don’t know, Jason Calacanis is a guy who heard the words of Horace Greeley, “Go West Young Man.” Yes, one day this guy from Brooklyn, prior to the hipsterfication of Brooklyn, you know when Brooklyn was still inhabited with urban hillbillies, struck startup unicorn gold and then packed up his bags and moved about 400 miles north of Beverly (that’s a Beverly Hillbillies reference).

Why Mia Culpa? To catch you up from our last episode of Mr. Cranky is an Asshole in which I trashed Jason’s Angel University (see episode one here) and took some cheap yet self amusing shots. You know self amusing, which is to comedy what masturbation is to making love.

The Jason Calacanis Empire

Jason Calacanis is one of many startup gurus who has built a startup conglomerate consisting of multiple branches:

  • Launch Accelerator – a startup accelerator which competes with my Brake Decelerator
  • Launch Angel Investment Syndicators – this is similar to the kind of syndicates that Paul Singh puts together except, Jason Calacanis is not an idiot, he’s not full of shit,  he has real connections to people, and many of them aren’t in Dubuque IA, and he actually understands deal terms and oh yes, people who know shit don’t laugh at him, and just to keep piling on… he has access to great deals, not just deals that nobody wants like when Paul invested in Speek, a company that’s basic thesis was butt tattoos was a business model.
  • AuthorHis book Angel, rated 5 stars with 381 reviews, which is like 381 more legitimate reviews than that ass hat, angel king, Ross Blankenship’s book garnered.
  • PodcastThis Week in Startups, one of my goto podcasts
  • Blogger – Chocked with good stuff
  • Launch Events – Angel University: we’ll dig into this in more detail in the post, Launch Events: Festivals and Summits, Founder University: A sponsored free event for founders who want to learn how to build a company and raise money.

What I Learned About Jason and Myself

Okay, so enough pumping up the Jason Calacanis empire of stuff! After I thoroughly trashed Jason Calacanis Angel University, let me admit… I might have been a tad bit harsh. Yet, Jason, in full confidence of his ability and his force of personality, invited me to attend the event and I did. Jason fully admits he’s been a lucky guy. Many lucky people who hit a double spend their life on second base. Jason took his double and through talent, hubris and hard work has parlayed his luck to put him in the position of rounding third-base and heading home. Sometimes his public persona can be off-putting, said the pot to the black kettle.

Here’s what I realized about myself and about tribalism. It is impossible for an anti-Trump and Trump people to change the other’s mind… they just talk past each other. Most people on either side of that issue are entrenched in their positions. That’s how tribalism works? This week with the release of the Mueller Report, if you consume your news from MSNBC, you know that Trump is totally guilty and if you are a Fox viewer, you are sure it was a Hoax perpetrated by the Democrats. One side says he’s guilty and another he’s totally exonerated.

It’s like two different groups of people skipped reading the report. Instead, they let MSNBC and Fox News give them book reports. One group thinks the book was Carl Marx’s, The Communist Manifesto and the other group thinks it was Atlas Shrugged. Those two books couldn’t be more different. What would have happened if the viewers read the book instead of allowing the network to boil it down for them? What if we read the Mueller Report and made up our own minds instead of allowing the network executives to form our tribalist opinions.

That’s what it’s like when some arrogant cranky schmuck writes about an event without ever going to the event? He writes a bad post like, Bullshit Jason Calacanis Angel University. What happens when that same guy goes to the event? He writes a post like, Mia Culpa Jason Calacanis.

I’m going to skip straight to the thumbs up or thumbs down. As an educational, event, I’d say that 7.23% of the content was new to me and educational useful (7.23 you say? That’s because in a PR seminar I learned that when your winging statistics, make it seem less like an out-of-the-butt prediction by using a number that isn’t a round number). Was it entertaining… yes! Was it worth $500? Not to me. Because everything I learned I could have learned if I gave one iota about being an angel investor. I’m sure others didn’t blink writing a $500 check for the event and found it totally worthwhile.

If I judged it on entertainment value alone, I just paid $179 per seat to see ELO in the Capital One Center. As compared to that, I’d pay $25 dollars to see Jason, and there was brunch, so I’d kick in another $25. And I’d pay $5 to have my picture taken with Jason. So to me, it was worth $55.

Best Quotes From The Event

How about we start with some of my favorite quotes?

“When a founder spends most of his time in a pitch presenting all the articles, awards, trials, non-paying users as acheivements and in the end breazes by the finances that is a problem.”

In other words, a founder that focuses on glitter traction and not real traction, there is probably an issue with the founder or the company.

Jason asked a founder a question, the founder meandered, beat around the bush and after about 45 seconds had not yet addressed the question. He then said to the founder,

“Remember, aswer my question first and then filibuster.”

Another good quote after a founder kept droning on and on, Jason said,

“Founders are like mustangs. Let them run. They’ll tire out eventually.”

Here’s one that Jason later qualified from all VCs to 10% of VCs

“VCs are assholes who beleive they can run over previous investors.”

On Accelerators

“Most accelerators are run by failed entrepeneurs who don’t have the ability to build a company or be a VC.”

Those of us in DC know this all too well, think Jonathon Perrelli and The Fort, Evan Burfield and 1776, and Paul Singh of Crystal Tech Fund.

On Valuation

“If you overpay, you reduce your chances. If you can get two 5% of two good companies instead of  5% of one company with the same amount of money you get to play two cards from the deck.”

On writing a check

“If we can’t envision a 50 – 100X exit we don’t make the investment.”

On YCombinator

“YCombinator holds their best companies back from demo day”

According to Jason, YCombinator doesn’t offer up their best companies to the public. The hold them back and invest in them themselves.

On why a board seat, reporting, and 3rd party auditors are so important.

“The biggest problem with startups is the lack of governance.”

Because without independent board seats auditors you wind up with Trustify, Communiclique.

The Event

There were roughly 40 people at the event. Including Jason and two members from his team, Ashley Whitehurst, Managing Director of the Syndicate and Samantha August, President of LAUNCH. There were several people I knew, ranging from a casual relationship to knowing them well, including, Terry Hsiao – Director of MIT Angels, Paul Murphy – Founder of 3Advance, Aaron Berkley – Principal Cresa, Ben Coleman – CEO of Sworkit, and Josh Greene – The Mather Group.

Other folks there included two members of the Baltimore Angels, I think they were Greg Cangialosi and Scott Garber. Two noisy staff members from the CAV Angels (University of Virginia Angel Group). I had the bad fortune of sitting one row in front of them and they were loudly chatting through most of the presentation (are you reading this?). You know, like those people you want to throw out of the Movie Theatre. Mark Dumas and other folks from the host group, Riverbend Capital, a Great Falls VA-based angel group.

During brunch, I sat with Paul Murphy and Greg Coleman. I also met an interesting recent retiree (he’s young for a retiree) Marine Corp Aviator, Chris Hoover, interesting in beginning a career in Venture Captial and/or startups. Check out his linked in and resume… he might be a great hire and he’s mobile. Not like a mobile phone or a mobile app, but he’s willing to move for the right position.

The meeting took place in a modern, newish country club located in the Tawny, just-outside-the-beltway, DC suburb of Great Falls. Home to many of DC’s VCs, and a few of our Unicorn exited startup founders. Brunch was a good selection of meats, fish, eggs, fruit, pastries, and of course the all-important bacon!!! In terms of Value, I’d say food cost per person about $35.

The program started around noon, after brunch. There were a few blah blah blahs from sponsors (I assume some of them paid sponsorship fees) and the host from Riverbend Capital. Then the main act, Jason, began his program. An education program on how to invest in startups. He was interesting, the slides were informative and yet very little of it was new to me.

The most entertaining parts of the program were anytime Jason strayed from the slides, for instance, during Q&A, when he would recite war stories. At these points, he was the most animated. While going through the slides, it felt like Jason had recited this spiel so many times, his heart wasn’t in it.

In the middle of the standard program, he invited different startups to pitch to the audience. Jason then questioned the presenters. He then broke down the pitches and dissected how the entrepreneurs handled the Q&A. This was easily the most entertaining and valuable part of the session. Jason gave great incites for interviewing techniques and evaluating pitches (most of the quotes above came from this section), while spouting some of his best gem quotes.

How do I judge the value of this thing? If you’re an experienced investor there is little new information you’d glean from this. Yet I learned one big lesson and I’ll get to that in a minute. If you’re an inexperienced investor, this session may create unrealistic expectations. Especially when Jason outlined his mandatory negotiations skills. Like?

  • Ask for super-pro rata rights – Maybe Jason can get that in some rare occasions… you ain’t getting it.
  • Require monthly reports – That’s a reasonable ask and all my best founders did that. What do you do if they don’t comply?
  • Get a board seat – You probably aren’t getting a board seat if you’re writing a $50K check in an $800K seed round.
  • Outside Auditors – require outside auditors, also a reasonable request, I wouldn’t expect a company that raised less than $3 Million in require, auditors.

This is when it hit me. This is when I learned something. Whether intentional or not, this is a soft-sell for Jason Calacanis’s syndicated deals. And I believe that I would have done better as an investor if I did my deals through a quality syndicate.

I’ve invested as a University Dingman Angel. In some deals, our group invested as much as half a million dollars. Even at $500K, we did not have the leverage, the notoriety, nor the value-add to make these kinds of demands that Jason says he makes and gets. Of the dozen or so deals I did in the five years I was actively investing, I sat on one board… because I was asked. Not because I demanded. Not one of those companies agreed to auditors and I would have asked for super-pro-rata rights. In fact, if I had asked and they agreed, I would have passed on the investment.

Here’s what I learned, as an angel a small-time angel investor, laying down fifty thousand dollar bets here and twenty-five thousand there is a sucker’s game. Actually, I already learned this the hard way. What I learned is there is another smarter way to invest in startups. And that is a syndicate from a quality syndicator. Not some two-bit conman clown like a Paul Singh’s syndicate but a legitimate syndicate like Jason’s and a host of other legitimate connected intelligent syndicators.

Jason can ask for and demand monthly reporting, a board seat, and audits. Remember Jason’s quote, “The biggest problem with startups is the lack of governance.” Jason has clout and with clout, you get governance. He’s absolutely right about that, think Trustiy, Communiclique, and Theranos. Governance is important.

A few weeks back, I wrote a post called, How to Invest in Startups. In it I recommend, several alternate methods of investing in startups besides simply writing a check to the company. They included Randy Domolky’s, Private Access Network and John Backus’s, PROOF Fund. I’d add quality syndicates to that post.