The below is a full (unedited), machine-generated transcript of a Youtube session / podcasting episode I recorded with Jordan Nof of Tusk Ventures in January 2022. You can view the video/listen to the podcast on Youtube, Apple Podcast, Stitcher or wherever you get your podcasts.
Erasmus Elsner 0:06
All right. Welcome, everybody to another episode, I’m here with my guest today, Jordan Nof, who’s the co-founder and managing partner at Tusk Venture Partners, which is a venture fund sitting at the nexus between technology regulation, and politics. And we’re going to unpack what exactly that means. Jordan has been responsible for a number of major investments at the firm, including the likes of Bert lemonade. Coinbase Alma, Sunday, and most recently Wheel. Welcome to the show, Jordan, thank you for being here with me. Where does it find you this podcast today?
Jordan Nof 0:41
So I’m in New York, right in the heart of it been here since beginning of COVID. And glad I never left the city is definitely doing again.
Erasmus Elsner 0:48
And as we’re kicking off the year, it’s always a great time for predictions. And last year, you made some great predictions about FinTech, which turned out to be spot on. FinTech was booming. Last year, you had growth round after growth round. You with your firm at Tusk Venture Partners, you led a number of FinTech investments as well, including the series A and Mainstreet, which is a platform that helps startups and SMEs to claim tax credits and government incentives. Then you did two following rounds, I think and lithic, which is a virtual cards and card issuing platform. And then as any good investor would do in 2021, you did a web three investment in a NFT marketplace, digital collectible marketplace. So you went all in with your thesis, you were spot on your thesis for 2022. What are you excited about? Yeah,
Jordan Nof 1:43
I think that that Fintech is a little bit of a broader thesis, I would say not necessarily confined to this particular calendar year or last particular calendar year, just seeing continuous momentum. A lot of people in the tech community agree so much needed changes within financial services in tech in general. I think last year, we saw a lot of innovation happening around opinion side and some of the more infrastructure layer. Obviously, there’s a lot of tailwinds there because of COVID, as well, given the rise of E commerce and payments in general. But I think that we’re kind of stepping into an era right now where we’ve got the building blocks, and now it’s underserved building upon kind of that application.
Erasmus Elsner 2:22
And Lithic, one of the companies where you think participant in to fall on rounds, I mean, it went through the roof, right? I looked back at the funding history, and they just closed the series A in 2020. And then it did two major following rounds, Series B Series C in 2021. Raising north of 100 million.
Jordan Nof 2:41
Yeah. And then that’s it does it look like is it companies that were really huge believers in we’re big fans of what the team has built there. And this is a company that at the time, whenever we first started to get to know the management Dinair, this was formerly known as privacy calm. This was originally a business primarily focused on consumers, and creating virtual cards to help manage online spend, and and really kind of protecting your own privacy with regards to cancellation of cards that may be stored for a plethora of services that many people use day in and day out. And that was a strong use case. But when we started to see and what got us really excited about this business was the b2b application. And whenever you start to see developers proactively reaching out on to a management team, just asking, really curious to dig about, how are you feeling about building out your developer toolkit, and we’d like to build on top of these payment rails, whenever you had developers expressing interest like that that’s typically a good sign. And they really kind of double down refocused on that use case. And ironically, it’s the incumbent in the space, which is not too far removed from starve of bland that by too many years, but is marquetta on the issue processor side. So is it business that we do quite well. And it’s ironic that they kind of started out with the similar path, and then kind of moved into the issue process around I think a really a lot of this has to do with the timing. So we invested at a time that not that many investors, but let’s put it this way, the level of activity was very different. This was March 21. This was COVID. Everybody just got sent to the rooms. I’m not that sure that there was that many investors that were out there writing checks in March 2020. That is that entry point. What you saw was a lot of things happening that went right at the right time, you had a tremendous rise of ecommerce, especially the early days of the pandemic, everybody shifting to buy things online, people that had never made that transition to e commerce, the baby boomer generation that typically were resistant against even shopping for groceries online, really their whole world shift. And so we just saw a lot of positive movement not just across the FinTech element, but in payments in particular, and also a tremendous amount of room for innovation around the issue, process or space in particular.
Erasmus Elsner 4:58
Got it. Now let’s talk a little bit about Tusk Venture Partners. The story goes that your partner, Bradley Tusk, he was a political adviser. He got his start in Silicon Valley in 2011, when he advised a little transportation company, and the founder at that time, wasn’t able to pay him his full 25k fee. And it turned out to be Travis Kalanick. And the company turned out to be Uber. And they agreed on a deal where Travis would pay half in cash and pay the rest in equity. And this little piece of equity that Bradley got, is now worth north of 100 million in Uber stocks. And that’s sort of how Bradley got his start in venture capital. And that morphed into now an emerging manager, you’ve raised two funds, a maiden fund in 2017, a $35 million debut fund and a $70m second fund in 2019. And at that time, when all of this got started, you were still working for a large cap, private equity firm, no other firm and Blackstone, one of the largest LBO houses next to the likes of KKR. So totally different world, but you were doing there some corporate venture activities, which I understand were sort of meant to support the portfolio companies of the private equity firm. So how did you you two guys meet? And how did this all come together?
Jordan Nof 6:27
Yeah, absolutely. It just kind of put some sequencing on there. Bradley’s activities on the political side are obviously very different than my background, my background, I’ve been a professional investor, my career started out in investment banking, and kind of went through that progression. Bradley had a very different experience. But he caught the bug of tech via this use case where a startup really needed something that he could provide. And this was, this was a while ago, this was before it was table stakes to have a platform of services that you would provide to founders just to compete with other venture funds out there. And I think that’s really where the story began for him. And I, I was at Blackstone, as you as you mentioned, I spent the majority of my time there actually working for the CTO, making early stage investments and supporting a portfolio of strategic investments that were, as you could expect, enterprise software, FinTech in nature, nobody could use across our operations or underlying portfolio companies. It wasn’t even a dedicated corporate venture arm, I joined the firm. And shortly thereafter, they brought on Bill Murphy, who was the CTO at that point in time, and is also one of the cofounders of CAP IQ. He he joined the firm and brought over an army of people from gap IQ financial services firms. Typically, if you’re an engineer, that’s not exactly that’s not in Google or Facebook, but he wanted to, he was able to attract some amazing talent there and really think about things outside the box. And so I pitched him to basically said, let me go out there and find some early stage companies. And I should preface this with this is the time when the SaaS market or at least the B2B SaaS market had not taken off, particularly on financial services, everything was developed in house on premise, the perception that the level of security was much higher being in house versus a SaaS business was something that was a hurdle that people were trying to get over. And basically, the thought was, we can go out and take what would be a just commercial agreement for us to be a customer and become equity holders in these companies help them think through their product development roadmap, and really had it not necessarily tailored to fit Blackstone’s needs, but cater to really solve for use cases where we had a very heavy foot. But as where I really did get that dose of regulatory risk, and I just could not stop and notice the that every single memo I ever came across every conversation in investment committee that we were talking about, there’s a regulatory risk element, and it’s there. And there was just nothing ever under the mitigates. And I actually was introduced to Bradley via a co founder, actually the last deal that I did before leaving on Washington, which was the series de VTS, which is a commercial real estate, SaaS platform at that. So leasing an asset neutral platform, it’s actually a multibillion dollar company now in New York, but as one of the one of the first customers of that business really got to understand kind of a lot of the nuance that goes into pre launch and pre product and kind of the thought process around building enterprise software is really not thinking about the regulatory implications that could impact this business down the line. It’s much more resolving what’s right in front of you. And the idea that I had the the first interesting discussion Bradley and I had was, how much better of an investor would I be if I just could just understand just how much risk is there? Look, I’m not a political regulatory person. So I don’t know. You definitely didn’t know at that time, but I knew that that was a blind spot and optimising a partnership around to people that think the same way and have similar backgrounds didn’t make much sense to me. But I did have a very strong appreciation for his ability to think outside the box and come up with these extremely creative outcomes using really creative strategies that were completely foreign to me, it really opened my eyes to the world of local and state level of politics and regulation. And that was what really what impacts private companies, particularly the technology sector today. And so it started out as what would it look like, if we launched a fund that the focus instead of not investing in highly regulated markets, we go right at, that’s where that’s where all the alpha should be. And at that point on FinTech and digital health, and some of these traditionally highly regulated markets, people weren’t aggressively under them. And then there was the the really interesting kind of edge case, which is those really interesting companies that are building a completely new type of business model, where there are actually no regulatory frameworks that exist today. And those are the whitespaces that every VC on the planet is out there trying to chase. That’s but that’s whenever I think we both had that aha moment that maybe there was a little bit less luck, a little bit more value proposition to that relationship that he had had. And the opportunity to launch a fund that we wanted to go out and build a business becomes synonymous with being the regulatory arbitrage fund. And I think that is what we still do to this day. As you mentioned we set out in 2016, when we raised that first fund. I think every venture firm has a product that they’re selling. A VC fund is a financial product that you’re selling to your limited partners. And that’s your investment strategy and your fund performance, and so on. And then there’s the platform and the value proposition you breed to founders. And this was a product that I’d never heard of somebody offering. There’s people that were making waves in the platform space, Andreessen, they were definitely off to the races with a huge platform offering business development associates helping LP make introductions to big corporations. First Round Capital was added helping people find the best candidates on the engineering side. But nobody was out there really kind of providing that strategic guidance on the communications, political and regulatory front.
Erasmus Elsner 12:18
Bradley, he’s known as the Mr. Fix It. He’s really been in the political trenches and really complimenting us. He’s helped famously Mayor Bloomberg when in 2009, then he was a deputy governor of Illinois, he was a communications director for US Senator Chuck Schumer. So he’s been around. And it seems really differentiated from the outside and in the spirit of regulation is always lagging innovation. Your thesis is around that if a company or startup is building some completely new category, especially on the consumer side, that you’re there to guide them and and help them see the the problems ahead of time before they are dealing with 20 different state regulators. Right? Talk a little bit about this thesis
Jordan Nof 13:02
that’s spot on. So look, there are certain areas that we that we generally shy away from investing in. And that’s federal regulation and getting something across the finish line at the federal level, people aren’t going to be really confident that you’re going to get much much to happen to the time period as required for a startup that’s really moving through sprint after sprint and meeting outcomes much faster than the federal agency can move. That’s not to say we don’t touch any element of the federal government. It’s just not a core part practice. Most of the regulations that impact startups today happen at a state and local level. So if you think about whether you’re trying to launch a new type of insurance company that is not going to employee agents like lemonade, there’s a lot of regulations that state by state, you need to go to departments of financial services, you need to convince them that why it’s impossible for me to have be cashflow positive for three years, I’m gonna start off these were clearly written 35 years ago, unless you come from that world, it’s not common sense. Typically, how much of an impact local and state level politics and government do have it’s an element that if you think about it in the context of a market expansion strategy, certainly a lot of sense, right? Where you if you can, you can proactively get across the finish line with the New York Department of Financial Services for a specific type of exemption or a new type of business model around insurance, you could probably get other fast followers to adopt that as well being other state governments to their departments of financial services to follow suit, and really kind of helping founders think through that sequencing and that playbook. And is this possible? Is this worth the lift? And more importantly, as an investor? How do we close the door behind us? I want to create a regulatory moat around businesses because we’re trying to help shape market winners not just move the whole sector four. So I think that’s the key part that Bradley’s insights were tremendously helpful on.
Erasmus Elsner 14:53
And I think in some of these investments, the regulation is not just a nice to have, it’s often Make It or Break It sort of thing you had with Uber, the taxi regulation was so so harsh that at one point, it wasn’t even clear whether Uber would survive. Another example is FanDuel, where you participate in a Series E. And it’s fantasy sports company, there were a lot of efforts to shut it down. I think it concerns 16 Different states state legislations, and, but a lot of people would say that the Tusk was really central in actually letting this company survive.
Jordan Nof 15:31
And I think Fanduel is a great example. Okay, this looks and feels and smells like gambling. But somebody needs to sit there and somebody needs to have that active dialogue to explain, it’s not this is a game skill. Ironically, actually, this week, the state of New York actually is now allowing online sports betting, which was kind of that next iteration, once once there was a federal law that was repealed, allowing states to make up their own mind on honour if they want to allow online sports betting or not been that bad. So FanDuel is active in that market now as well. But at the time, whenever we made that investment, this was about daily fantasy, as you mentioned, and the question around that is game of skill, or game, which one and having that right voice and going to the right states in the right order, and helping really kind of paved the way to get enough momentum behind that to pass new legislation and protected legislation state by state to maintain this business that and allow them to be operational. And then that second wave came through with the repeal of of paps up, there was a quiet day, this New Jersey case that, um, said, Let’s just push the federal government shouldn’t really be deciding what states can do at this at this level being with regards to gaming and let them decide. And then it became this foot race of arcade like, which states are we going to go after? How are we going to strike these partnerships within each jurisdiction and get back operational there. And I think that’s more of an exception. And then the core strategy just given the entry point, as we are early stage investors. And typically, that looks like a Series A or C type of an initial entry point. This was just a very unique case exactly.
Erasmus Elsner 17:15
As I was going to ask the Series E, it looks a bit late, you typically do late series, a early Series B kind of stages. If you think about it, when does a start up, start butting heads with regulators? It’s typically at the scale up stage, right? When they’re at the series D, things are typically already proven out to some degree.How do you think about sort of this interplay between stage and when the regulatory issues arise?
Jordan Nof 17:41
You’re spot on in a sense that regulators are there to protect consumers. And you need to have a certain amount of adoption to really be on the radar of a regulator to begin. Now, that’s not to say that what you’re doing is okay, until a regulator comes in and kind of slap somebody on the wrist. And I think that it also depends on what the actual product is. And digital health, for example, you see involved in much earlier just because the stakes are so much high, right, especially if there’s medication involved, you’re talking about some very strict laws around seeing patients across state lines for scribing across state lines, and kind of the notion of doing things via telemedicine is not a novel idea, or concept telemedicine has been around for decades, it’s just never been utilised to its full potential until post COVID. I think that what you’re getting at is we’re not the firm that it is our focus is not to come in and help kind of crisis management situations.
Erasmus Elsner 18:33
And another aspect slightly related to this is sort of this interplay between consumer and enterprise. And you got your start on the enterprise side. And you could make your life so much easier if you only focused on enterprise SaaS, right. But typically, these regulatory and political issues, they arise more on the consumer side. I mentioned that before, because regulations aren’t typically there to protect businesses, they are there to protect the public. And so it draws you also as a fund and as following your thesis indirectly more on on the consumer tech side with wonderful companies that you back, including birds coin base, eliminate all of them having a consumer angle. How does that sort of jive with your background?
Jordan Nof 19:21
Yeah, it’s a great, it’s a great question envelope. I mean, there’s just a different pattern recognition that goes into consumer versus enterprise. I don’t differentiate. I’ll give you a perfect example about how we’ll kind of make that leap from consumer into enterprise because our portfolio isn’t next a we do at b2b businesses that are in here. We made an investment into Roman and early stage investment and got to know digital held really well had a really strong thesis around it and where the world was going, especially around the ability to leverage telemedicine, particularly around stigmatised concepts like erectile dysfunction or hair loss really get the treatment that’s needed into the hands of people. They’re just not comfortable having these conversations with a doctor face to face, the value proposition that we brought to the table there is we passed legislation to allow prescription to be done via text. Now, that’s not a catch all for all, you know, controlled substances and things of that nature. And it’s something that we believe net net is for the better good of consumers that they have better access to the care that they need, in a way that they shouldn’t be subjected to stigma, they shouldn’t feel embarrassed about it. And they should be able to really kind of have that open dialogue with somebody regardless of the medium of communication. Now, that was the beginning of what became kind of a pretty robust thesis that has played out. And what happened is that we saw a lot of stigmatised areas that we’re going to change and came up with several pretty strong DCS around the way that payers would be reimbursed by providing services or the way that providers would be reimbursed by payers, the insurance companies for consultations being done via telemedicine because at the end of the day, you’re providing the same level of service for certain types of consultations as if they’re in your office or not. There’s no reason why the reimbursement rates should be pennies on the dollar, why incentivize people that have the bad behaviour run up additional costs in the healthcare system, and put people out of their way just to go through a physical doctor. This is really prevalent with areas like mental health, and with chronic conditions, which are two areas that are also a very stigmatised another investment, I led the series a of a company called called the hall long, which is a behavioural health company based in New York as well, that was an investment that I need at the beginning of 2019. And there are a series C Company today, it was fortuitous, in terms of the timing being pre COVID, however, we believe is that they’re providing access and affordability helping providers, partner with insurance companies, and be able to provide more affordable services to the people that need it the most. And the business is operating almost exclusively D telematics and that was that was a face to face in person business, that now you talk to a lot of behavioural health providers. Most of them don’t plan on returning office and then taking that a step further on the b2b side to investments later into a company called wheels and an Austin Texas based company that led to a seed extension round that is the infrastructure element. Basically, all Doctor consultations, whether you’re going through a large healthcare system, you get the big or small from carbon health Blencowe, good RX all the way to Mount Sinai, if you’re doing a telemedicine consultation, the doctor is more likely than not leveraging wheel. So just like true cold provides the pharmacy fulfilment, you have wheel powering is a white label B2B product, a compliant way to have Doctor consultations, regardless of the platform, and seeing that company be built and having a very heavy hand from a regulatory and from a board capacity perspective, there’s something that we’re really excited about what the fact there’s built, and what the future has to store for the business for that is ridiculous.
Erasmus Elsner 23:10
So in a sense, there’s a great intersection between regulation and B2B in the healthcare space in particular.
Jordan Nof 23:17
So you want to make sure that you’re diving into a new industry, and you’re only willing to invest in the consumer companies, you’re probably just seeing a few green. Yeah, for those that are operating in huge markets that you already know, you’ve already done the homework.
Erasmus Elsner 23:30
Yeah. And this brings me to the question of what would you NOT invest in? What does Tusk not invest in? Because, as I said, you can make your life so much easier, just investing in pure and simple B2B SaaS. But you mentioned in the past that if there’s nothing that you can bring to the table, you’re not the right partner. And then you want to have this regulatory angle where you feel like the Tusk platform can be leveraged in one way or the other, right?
Jordan Nof 23:56
Yeah, look, we were concentrated on every fund we had, this is a portfolio that’s more likely than not going to have less than 30 companies, which is very, very concentrated for early stage venture funds. That’s part of our investment strategy for and the value proposition, that moral contract that we have with our founders, that we believe in what we’re able to provide them. And by taking on more and more and more portfolio companies, we’re diluting that ability to give the founders the attention that they deserve, and that we want to provide that we guide to keep our portfolios into very high conviction needs. I mean, there’s other funds that do this as well, it just to answer your question directly, the world changes really quickly and saying, I’ll never do this or I’ll never do that. It’s really hard to put in concrete examples except for one and that’s it’s got to be a mind with Bradley and myself moral competence if we can look our own kids in the eye and tell him about a company that we’re excited about that we invested in without feeling embarrassed or not wanting them to know about it, it’s not the deal for us,
Erasmus Elsner 25:01
That makes a lot of sense. You start out as a thesis fund, and sooner or later, you’re going to develop into more of a generalist. And you might still have this value add and sort of high conviction sub sectors and sub thesis. We had a couple of examples before, but maybe let’s do two case studies. And one case study where you were involved quite early on, was bird, I think you invested when it was just two founders, eight employees, 68, scooters in Santa Monica. I was just there. It’s filled with bird scooters. These days, you were at Web Summit earlier last year, you tweeted a picture of yourself in Lisbon with a bird scooter. So it seems to be been quite the ride, taking it from such an early stage to now being a public company going through the scooter wars, which had its own regulatory ups and downs, obviously. And even a South Park episode dedicated to the regulation of the scooters, obviously something that grabbed attention and headlines. And it must have been quite fascinating having the first row seat to this story.
Jordan Nof 26:04
Absolutely. In any look, this is a company that’s always going to be near and dear to my heart. I’ll never forget that first ride on a bird. I’ll never forget the first meeting I have a Travis and kind of the first time I was pitched this idea and it was one dead. If you’re trying to go through a traditional framework of what is this market look like? Are we displeasing walking, we understand ride shoe very well, we understand where that makes sense. And the modality that makes the most sense to get from point A to point B, we’re also New Yorkers were very comfortable with not taking your car ever. And so I think that we knew there was a very high unmet need within it is what’s called that one to three mile radius. That’s typically where most people spend the majority of their time going back and forth. And travelling around. A lot of that is also watching what would happen with Citi Bike in New York, which was a programme that really ever took off the way that it probably should have. And then being introduced to a business that wanted to solve this, this short distance problem, not in a way of okay, I’m just gonna help people shade three minutes off their day, or deliver a burrito, 10 seconds faster than somebody else on an electric bike. This was something that was a service that now looks very different than it did obviously, at this series A but there are some core elements that do remain the same. There was one week’s worth of data that I remember that this decision was was primarily predicated on look, we were not interested in investing into a company that wasn’t going to be twice a day product minimum, I wanted to see people coming and using this product to get from point A to point B to point C to point D and then back to their home. So 4,5,6, 7 times a day, like you would see with Uber. And we started to see that within the first week. I remember the small numbers of that sample size, but astronomical high retention, people that would take their first scooter ride, if they were local, chances are they were going to take that north of five times a day, it was kind of just magical product. I remember, first time I took it for a ride. People were jumping in front of me to ask me you have what’s the app that I download to rent one of them and I’m like, what is happening? People are honking at me in the street because it no but there was no added caveat around Do I go in the bike lane Do I not go into basically this was really the wild west at that point Bike Share was there there were people commuting to work that were men using bikes, not women, that’s not as conducive for a woman’s outfit or business out it to again on the sheer bicycle as it is to get on a scooter. And so what we started to see is that the adoption was very, very strong, people were using it far more often than they thought they were. And it was quite predictable how far they were going to go. And this was an area that we knew is the least penetrated part of the market that Uber had, the reason why Bike Share was launched, we just felt that that was an execution issue. And that people needed to take a proactive approach to work with cities and actually help improve the infrastructure of these more densely populated areas to provide safe ways to get around the city. And it really wasn’t the concept of an inferior product. It was actually just inferior strategy going to work with the city’s proactively chicory, safe bike lanes across California and New York.
Erasmus Elsner 29:23
And one thing that I often think about, especially if you think about Bird being a pioneer in such a space, and that’s the same for Uber, that if you’re the first mover you’re sort of you’re fighting all these battles against the cities against the state regulators. You’re chopping all this wood. I mean, we’re I think Series C $70 million was basically raised to fight lawsuits all over the world and then you have the second mover swooping in and and reaping the benefits.
Jordan Nof 29:51
So in with with Bird is an example they were the only game in town. That investment line was still doing the by chair they were first to market This go around the strategy of going after the fast follower is is one that look, I’m sure this is not everyone’s view. I mean, I know is not everyone’s view. But it’s hard, isn’t it, this is hard enough of a job to find the right team, the right product, the right strategy, and to get into the deal, let alone to sit there and think, Well, maybe someone else is gonna come around, that’s gonna just replicate this product and like, execute on it in a better way than the visionary that came in to begin with, that’s just not a strategy that I’m going to follow the strategy that I’m going to want to take and say, What kind of moat can we build around this business that actually closes the door behind and pretty, it’s a gold standard, where that second mover, third mover, fourth mover, let’s set the ball to what they need to be compliant in this way to launch in a market, the only way to do that is to proactively work with the government to really set those regulations in place. And that can be very difficult to do. If you are the second, we’ve seen plenty of businesses like this whenever you’re on to something you’re on to stuff where people will pivot business models very quickly. And I tend to think that innovation is quite persistent. He typically founders that have a phenomenal idea, they tend to have more than one and they figure out ways to execute on those business ideas in a way that someone who just might have replicated a model, his chances are, they’re probably going to be trying to replicate the into perpetuity, right, it’s a constant game of catch up economically, you can do okay, I’ve yet to see a VC pitch themselves as their investment strategy getting around the second mover, there are strategies that that we did part on, there’s one thing that’s constant states and cities, They at least need to provide the notion that they have a balanced budget. They’re typically incentivized by additional tax dollars or revenues, or for registration fees. And so with vandal, we’re quite happy, whenever the notion of okay pay to be licenced in this state operate a daily fantasy sports product, it costs a million dollars, and I’m just making up numbers. But if you’re the first mover and you’ve raised enough money, now, that’s an opportunity for you to close the door behind you, because most early stage, new market entrants are going to be able to pay a million dollars to every state to launch. So I think that’s a big element here. And I think that in these land grab scenarios, every case just tends to play out differently. But I think that just as they were the first mover in getting a product to market, they’re probably the first mover find the top talent, it just trickles down to other elements. It is as well.
Erasmus Elsner 32:28
Yeah, gotcha. I mean, once you’ve gone through the whole process, you have all this money invested in this business, you’re really at the starting line. Once sort of the floodgate opens, and you have bright line regulation, you’re there to execute and you pay the licencing fee in the case of Vandy, or, and then there’s another interesting case, which is that you have a large incumbent, and he’s getting into legal troubles and regulatory troubles. And that was sort of maybe not the entry thesis, but at least it played a part in your investment in Sunday, which is a b2c lawn care company. And you had an incumbent ground up, which was going through a class action lawsuit. And basically, you came in with a more sustainable solution there. And that’s sort of a different strategy where you see an incumbent struggling with regulation, and you see sort of a whitespace coming in with a new novel solution that’s more geared towards regulatory clarity.
Jordan Nof 33:31
Yeah, so I led the series A in July of 2019, into this company, and it was one where there was a big lawsuit that was underway been perpetually underway with bear Monsanto for Roundup, which eventually after many, many, many times in court, it was leaked to cancer. I feel very fortunate just to be as involved as I am with this company is sitting on the board with some absolutely top notch other investors as well and a founder that has a mission that has been top of his mind. This is a Boulder, Colorado based company that everything that you would envision, right like, this is not a Silicon Valley business. This isn’t a New York City Business. Here’s somebody who genuinely cares deeply about the environment. And that was part of that thesis that we had the next generation of homeowners are very different. This is also informed a little bit by our investment lemonade, right like lemonade we see the data we know that people are moving from the cities to the suburbs are first time homebuyers. first time homebuyers are also DIY lawn and garden people. But most people don’t really know much about lobby. I’ll be the first one to admit I’m saying an apartment building right? Why do I know about about taking care of a lawn? I know that I want to remove complexity from it. And I know that we’re not really DTC investors but we are gets the right offer. And this is a direct to consumer product because that’s the best method of delivery because it only shows up whenever it’s time to apply it on It’s not a way to get to market faster, it’s a way because it’s a customised product that’s geared towards providing you with the exact product that you need and the exact recipe and the and the balanced care that your lawn needs. So that you can just apply it know nothing about what you’re doing. And your lawn is going to look and visa especially if you’re walking down the aisles of Home Depot, looking at various giant bags of poisons, it’s a tough pill to swallow. If you want to just take that on as a Saturday after event, you’re probably just going to get that done professionally. What we saw is the intersection of consumer trends where the calculation used to be am I willing to pay extra for an organic product? Or how much am I willing to go out of my way to go greet, my willing to get my product shipped a little bit later. And those tastes and preferences changed from more economic decision to I’m not gonna do have anything to do with a brand that that Tesla, I’m not gonna have anything to do with the brand that isn’t sustainable. I’m not going to work at a company that doesn’t instil the same values I have, I’m not going to put their product on my lawn I wanted in my house, I don’t want my kids coming into contact with it. And I don’t want neighbours that that are using products that are going to get on my lawn. And so this is a product that’s DTC because it shipped to you just in time for you to apply it to get the best results even as a novice and we saw just this intersection of a great time when people were moving to the suburbs that were going to be first time homeowners that are much more inclined to take care of those initial projects themselves, but also that had a new newer set of values that really the environment and climate change is that almost the top it was the right time the right place the right founder the right product.
Erasmus Elsner 36:47
Interesting, I noticed it was one of the few if not the only DTC company in your portfolio. And so I dug a little bit deeper but interesting to to learn about the thesis around it. And so Jordan has work over the clock already. I want to finish this episode with finding out where you’re spending most of your time. And 2022. What kind of areas are you excited about? We mentioned digital health before gaming, fintech? Probably web three, tell me what you’re excited about where you’re looking at and what kind of investments we can expect from you.
Jordan Nof 37:23
Yeah, any look, I think that just like a lot of investors out there, or Shubert, we’re still really excited about what’s underway in FinTech in general, web three, I think is going to present a plethora of great investment opportunities, I think that we’re going to continue to see an on bundling of financial services as they were, as they still are somewhat sold to date, under the legacy ma learnings from previous investments that I’ve made is that the biggest demographic that is purchasing financial products today, five years ago, a lot of people thought that millennials and Gen Z’s would just be living in the moment, not really caring too much about their financial health, not valuing ownership as much as kind of living in it turns out, they’re far more savvy managing their financial lives than then probably other generations. And and they love robotics, they just don’t like to be sold, we’re giving them the ability to take more agency over those decisions is imperative. And that’s that’s an area runs pretty astronomical in that we’ve made several investments in this space. Some have been announced some but not that I’m extremely excited about that are really changing the dynamic around the way that financial products are distributed, who has access to them and who doesn’t. And this convergence around access to to the best in class financial products at affordable prices, and not putting on barriers that are not necessary at place to preclude people from taking more agency over their own investment decisions. I think if anything, this pandemic has shown people that are showing us that people are very comfortable, particularly didn’t millennial generation, look, they value people’s opinion of the value professional financial advisors and so on. But but they’re very comfortable in taking the bull by the horns and really executing on a plan that’s very well researched, and that they can put in place themselves and providing them with the tools and the platforms and the technology to do so is there we’re going to continue to see that kind of bifurcation out of these very large banks that aren’t meeting their their consumers where they are, they’re trying to be the solution for everybody. But unfortunately, that leaves far more people without access to the right financial products that they need, whether that’s to run their own business as an entrepreneur or really kind of just to live their day to day life. And I think that we’re gonna see a lot of radical changes on the consumer behaviour side, we’re gonna see bigger financial institutions be a little bit too slow to adopt to it. And hopefully some new market entrants come in and show them how it’s done.
Erasmus Elsner 39:47
Yeah, I like it. I mean, it was Andy Rachleff from Wealthfront who said that was his key insight for wealth front, that millennials, they don’t want to talk to bankers. They want to do all the transactions, but they don’t like talking to bank clerks.
Jordan Nof 40:01
I would take it a step further and say like millenials are more comfortable with the kind of the setting their own asset allocations and picking their stocks. And what’s fascinating about it is it’s not necessarily they’re not necessarily looking for the prudent target date portfolio. My wife is an animal rights activist. She obviously is a big fan of Sunday. She’s also a hedge fund trader, she’s very proficient in where to where to invest her money, but she might have a huge interest in being able to put capital behind a money manager that says I want to dig animals out of the supply chain. It’s not just about investing the most lucrative financial return stream for a lot of people here, there’s a segment of their asset allocation that they want to put behind causes that they care about people that they believe in. And that gap, not necessarily the talking head on CNBC are the person running Vanguard fund. That’s where we’re starting to see this intersection of the Creator economy, with people with those more outspoken voices and unique opinions that aren’t necessarily in the financial services industry. create quite a fall.
Erasmus Elsner 41:08
Yeah, understood, talking about the creator economy, and we’re just finishing up this podcast. Jordan, thanks so much for being with us here. Where can people find out more about you and sort of keep in the loop with what Tusk Ventures is up to?
Jordan Nof 41:21
Well, thanks for having me. And absolutely, people can follow me on Twitter at Jordan nama they can visit our website tosk.vc And feel free to reach out to me directly via email firstname.lastname@example.org at any time.
Erasmus Elsner 41:35
I think that’s the first that someone mentioned his email. That’s great.
Jordan Nof 41:39
It’s not that difficult to just put my name in for don’t mean so let’s just let’s just put it out. Let’s do it. Let’s just do Brave New World. It’s a fresh beginnings. It’s 2022.
Erasmus Elsner 41:42