January 26, 2025 • 57 mins
Roger Ehrenberg's career spans three remarkable acts, each of which would be impressive on its own. He founded IA Ventures, a seed-stage venture capital firm, in 2010. IA Ventures invested in numerous successful startups, including Datadog, Digital Ocean, The Trade Desk, and Wise. His work with IA Ventures has earned him recognition as a three-time winner of the “Midas Award” – the coveted ranking of venture capitalists by Forbes.
Before founding IA Ventures, Roger spent 17 years on Wall Street at Citibank and Deutsche Bank, specializing in derivatives and quantitative trading, managing over $10 billion in investor assets at its peak.
In 2021, Roger stepped back from day-to-day operations at IA Ventures to focus on Eberg Capital, which he founded with his two sons to invest in sports franchises, sports betting, media, and entertainment. Through Eberg Capital, he has made strategic investments in sports teams like the Miami Marlins, Real Salt Lake, and the Utah Royals, as well as in the Alpine Formula 1 Racing Team.
In this episode he discusses building IA Ventures as well as why he thinks sports is the next great investing opportunity.
Mark as Played
Transcript
Episode Transcript
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Kent Lindstrom (00:01):
A full disclosure. Today's guest, Roger
Ehrenberg is an investor ineight bit capital. That's the
fund of which I'm a part. We doseed and pre seed investing into
software companies. Disclosurenumber two, that wasn't a
disclosure, that was a humblebrag, because Roger Ehrenberg is
amazing. He is the founder ofIA, ventures, which, if you
(00:23):
haven't heard of it, is one ofthe most respected among other
venture capitalists, inparticular venture firms of all
time, both for the way theyexecuted and for the results
that they returned, which arejust phenomenal.
The incredible thing, or thething that makes this story more
incredible, is that he builtthat firm, built that
reputation, one of the bestventure firms ever after having
(00:47):
a career on Wall Street where hemanaged billions of dollars of
risk capital, a career that byany measure, would be an entire
five careers for anybody elseafter that, he created one of
The greatest venture firms ofall time, and then, well,
there's a third chapter, andyou're going to hear about that
chapter here too, which is asincredible, if not more
(01:08):
incredible than the first twochapters, and it's probably
going to get you pretty excitedabout investing in the world of
sports. Yeah, that's right.
In any case, you're going toenjoy this episode. My guest
today, Roger Ehrenberg, welcomeback. All
(01:28):
right. Welcome back. It'sassembly measure Podcast. I'm
Kent Lindstrom. I am your host.My guest today is Roger
Ehrenberg, how are you doing?I'm doing great, Kent. It's
great to be here. Thanks so muchfor doing this. So I put Roger's
career into, sort of into, I'llcall it three acts, if I can.
A first act, and this, this partfascinates me, working as a
(01:49):
trader on Wall Street, a tradingrunning a trading operation,
followed by founding andbuilding IA ventures. And we'll
start, we'll start there. Andthen a third act, which is
helping with the renaissance ofDetroit and investing in the
very wide world of sports.
But I A ventures seed venturefirm really became sort of one
(02:13):
of the most famous, respectedventure firms. And, you know, we
don't need over overdo this bit,but, you know, Roger was on the
Midas list, a number of hits,extremely well, well respected,
I'll say, like kind of a venturecapitalists, you know, venture
capitalists, like, if somebody'strying to model out how to do
maybe seed stage, early seedstage investing, they would look
(02:34):
to Roger and IA. And also one ofthe most famous, I think, seed
investments, which was tradedesk, which was an investment
where, as a seed firm, you endedup with something like 20% of
the company at IPO, which in inthis world, is just this sort of
crazy, unheard of unheard ofthing. That's the thing that I
associate with when I think ofIA, and
(02:58):
by the way, I also think of thatstory the trade desk. It's
interesting how much peoplerewrite the venture, you know,
history. Oh, I Well, Facebookwould have been nothing if I
hadn't, you know, met Mark on awalk with his dog and told him
to buy and you know, that wholething, the path the trade desk
took was not straight, right?Didn't you extend it and almost
(03:23):
go out of business? And when youget behind the scenes at the
sausage factory, this seems tobe a pretty common story.
Oh yeah. I mean,
Roger Ehrenberg (03:33):
it certainly wasn't the accidental $60
billion market cap success.
Look, I mean all all credit toto Jeff Green on on the vision
and the grit to get it to whereit is today. Because it's not
that normal for somebody who wastoiling away in the engine room,
(03:56):
scrapping for dollars, sellingahead of product fulfillment, to
actually be the scaling CEO thattook the company public at less
than a billion dollar valuation,and now to have it as you know,
a company that he's running at a4050, $60 billion valuation,
that's a very rare individual.But yes, I mean, the the trade
(04:17):
desk got very close to runningout of money any number of times
in those first two years. Youknow, Jeff had opportunities to
sell the business for 10million, 20 million, $30 million
and there were days when
Unknown (04:33):
it seemed like, wow, you know, yeah, like, we want
you to go the distance, but areyou comfortable going the
distance, giving everything thatyou've been through. And he was
the founder who had incredibleclarity of vision, deep, deep
conviction that he was right andthat it was really just a matter
(04:53):
of time, and he just needed toturn the corner, in particular,
on the on the tech build, where.Or he could then have a product
and market that could competewith the real time bidding
engines that were existent inthe, you know, early 2000 10s.
And you know, his foundingpartner, Dave pickles, helped
(05:14):
help to get that going by 2012and then it was pretty much a
rocket ship from there, right?But those first two years and
bridging three times and raisinga very small series A Yep,
really highlight the messinessof going from a PowerPoint to
product market fit, the rest ismuch easier, but that zero to
(05:36):
one is insanely difficult.
Kent Lindstrom (05:38):
Yeah, the Hobart guys have a fairly similar story
for chime was like that where itwas kind of not obvious for a
long time, and they bridged itand did kind of a sideways
series A and then all of asudden, chime is the number one
thing featured on their website.Kind of that, that path. It's an
interesting thing, too. I you,if you don't work in venture,
(05:59):
you might not kind of see thisthing, but it is that weird
concept that to create a billiondollar company, it's hard to get
anything going, and you shouldnot start a company. It's a bad
idea, but you do have to turndown like, a $50 million offer
that would change your life. Andthat's a really less obvious
thing than like, you have towork really hard and grind
(06:21):
through the glass and all that.You also have is you also did
have somebody who, when he shegets the offer to, you know,
sell their company for $100million says a billion dollars,
if you're Mark Zuckerberg, says,No, I'm gonna it's bigger than
that. And that's a second bit ofcraziness. You need to start to
build a billion dollar company.
Unknown (06:42):
Oh, and by the way, portray does got that offer just
before the IPO? Yeah, so theydid get that offer, that kind of
billion dollar offer. And Jeffwas like, not interested, right?
Just not interested. And I thinksomething Kent that's emerged
certainly in the time that I'vebeen a venture capitalist. And,
(07:04):
you know, let's say for better,for worse, I've been doing this
for 20 ish years. Yeah, that,you know, the notion of founder
liquidity, done right, is anacceptable way of aligning risk
and reward with founders andinvestors, because is it real?
(07:29):
And I know there are some firmsthat are dogmatic on this issue
and say zero founder liquidityis appropriate at any time.
Yeah, you know, I think we weremuch more pragmatic, and not
just pragmatic, but I would say,I would argue humanistic, in
(07:51):
that there was some amount ofmoney that enables a founder to
work better, right, where stressassociated with day to day
living, if you whether you'reliving by yourself, you have a
partner, you have children,you've got a house, you've got
(08:15):
school activities, all of thosethings that cost, especially in,
you know, in the coastal, largecities expensive to live, where
1 million, $2 million ofsecondary can make a huge
difference in somebody's life.So it's not like, oh, there have
(08:37):
been a bunch of bad secondarydeals, right? Where go go.
Companies have allowed foundersto go and take 10s of millions
of dollars off the table right,arguably before product market
fit, and then the companies go,poof, right and whatever. We
don't need to go into any numberof high profile failures in that
regard. But I we always felt atIA, like there was that number
(09:01):
where you're really a partnerwith the founder and wanting to
go the distance, but where thefounder didn't feel like I'm the
one taking all the risk, andwhen I've created This very
significant amount of value withthis huge option upside, yeah,
(09:24):
so isn't it fair that I'd beable to mitigate some of my
risk? And we felt very stronglythat there were the right
circumstances to do that,
Kent Lindstrom (09:32):
yeah? Well, that's definitely a vibe shift
from when I started in SiliconValley. Because when I started,
you know, my little earlystartups, the whole thing was,
like, the you should it was, itwas really bad to do that, like
it was really looked down upon,like, to take any money out of
the company, if you were theentrepreneur, and, like, there
was some, somehow the VCs had anarrative. And I'm mad now,
(09:53):
because I know how much the VCswere making themselves, that you
should be struggling, and then,you know, to succeed, you. Like,
but you're you are alreadystruggling on the business side,
like it's hard enough to wake upand have your employee tell you
they're about to quit, andyou're missing payroll, and you
can't raise money. You don'tneed extra struggle. You know,
by getting paid $74,000 and, youknow, a year in in San Francisco
(10:18):
with a family, and that changedsomewhere along the line. Then,
of course, you're right. Itbecame this extreme thing where
people would take $200 millionout of a pandemic era bubble,
and then the whole thing wouldgo away. And the founder was,
you know, wealthier thansuccessful founders. That's kind
of a crazy, you know, artificeas well. Totally. So I want to
(10:40):
understand that just this firstpart, I really want to get to
the sports thing. But this firstyou start as a trader on, you
know, Wall Street. I worked inChicago, not in option trading,
but you'd get off, you know,these guys would get off work at
two o'clock in the afternoon,coming from the option pits.
And, you know, start drinking attwo o'clock in the afternoon, I
(11:02):
guess. And, and, by the way,they were mostly Big 10 athletes
back in the days, who's, who'son the floor? And these guys
would, yeah, he'd be drinking.Oh, man, today I lost $400,000
what you what? Like, my job is$32,000 a year and I'm proud of
it. You lost $400,000 today, andyou're having a beer on the
(11:25):
street that like trading seemslike a crazy the it seems like
precisely the opposite. Here'swhat I'm trying to get to,
precisely the opposite of seedstage investing, where you put
money into something, you makeup any story you want for 10
years, right? Like if you'retrading options, if you short
(11:46):
the end against the dollar andyou're wrong, you're wrong
tomorrow. You know, you can tellyour buddies all you want, but
you know the end doesn't care.How do you character? I just, I
think it says what the feelingis going from that crazy, high
feedback, instant world to Ican't imagine a more different
part of the investing world.
Roger Ehrenberg (12:10):
You're an excellent storyteller. You
really did capture the vibe ofthe pit trader in Chicago during
that era. I so I was born inDetroit, but I grew up outside
Chicago and rode the ChicagoNorthwestern and yeah, I saw, I
saw those people. So look, so Iwas, principally, I was in. I
(12:32):
was an upstairs guy, not adownstairs guy. So I was never
on the floor like that. I workedon trading floors at City and
Deutsche but my where I reallyfelt what you're talking about,
being on the opposite end of theliquidity spectrum of very early
stage venture was when I ranthis trading business called VB
(12:53):
advisors, where I had 16 tradingteams that I allocated capital
to, most of which were in theliquid markets. There were a few
special sets, but it waslargely, you know, convertible
arbitrage event, things that,you know, we did a closed end
fund arbitrage strategy. Theywere things that subjected
(13:16):
themselves to being marked tomarket on a daily basis, right?
So, we were running about fourand a half billion dollars of
unlevered capital, $16 billionof levered capital, wow. Okay,
and in 2003 we were off to aroaring, hot start the first
(13:40):
five months of the year. Then wehad three successive days in
May, where each day, we lostmore than $50 million Wow, $150
million in a week. Wow. So thatthat $400,000 that you're, you
(14:01):
know, pit trading buddy that youoverheard, yeah, uh, ha, ha, ha,
right. It's like, I mean, whenyou're tired, so that you know,
that's akin to running amassive, liquid market hedge
fund, and it's stressful,stressful as hell, yeah, um,
then you're like, are youinsane? Going from that to then
(14:24):
the exact opposite and theliquidity spectrum, where you
have, you know, my teams were,you know, I had 130 PhDs, data
science teams, and this is inthe early 2000s This is at the
very frontier of machinelearning and big data that and
(14:45):
part of my the raison d'etre forstarting IA and being like the
first fund focused on big dataas an investable theme was my
experiences on Wall Street,right? And and so the funny
thing is that, literally, I.Decided to do the opposite. And
what I found it really it wasn'ttotally the opposite. There was
(15:06):
the Venn diagram where theoverlap is in building high
performance teams andunderstanding the elements of
high performance teams. So thatwas the same whether it was in
the liquid markets trading teamsor it was in the founding teams
of tech startups. Thedifference, as you, as you
rightly say, is in the in thefeedback loop. In one hand, I
(15:31):
had a daily P and L in theother. Call it more like a six
to seven year P and L andeverything in between being, you
know, TV, pi is not dpi, anduntil you actually have
realizations and liquidity, it'sall kind of conceptual, and you
(15:52):
have some of those discontinuousmark to market bumps down when
you go through macroeconomicshocks, and we've seen the
venture industry dealing with abunch of this, you know, over
the last three years inparticular. So in that way,
there are some similarities, butthere is something about for me,
(16:16):
the satisfaction of working withand empowering great
visionaries. That is so muchmore exciting in the seed stage
realm than it is in the tradingrealm,
Kent Lindstrom (16:29):
right? And so you come into the in the seed
stage world, and kind of one ofthe crazy things that happens at
the seed stage is you have acompany, and we do many people.
Do we like we must pre productmarket fit, and you've got the
story, and you've got theperson, you're like, I know
we're right about this. And thenit actually works, like the
(16:50):
product and the market cometogether, and it's, it's
working, and it's a rocket ship,and it's, it's the second best
feeling in the world. The bestfeeling is being the guy doing
it. You're not the guy investingbut then it was there a point
you had such big success with acouple things, and I've been
curious about this with, like,you know, guys who invested in
(17:10):
Uber and that kind of thing. Isthere a point where one company
or two companies become such abig success that kind of nothing
else matters, that your your TV,pi, and all that is just based
on so much on trade desk thatyou might as well just spend all
your time on trade desk. Orlike, how does that evolve for
you over time?
Roger Ehrenberg (17:33):
So of course, there's almost an inverse
relationship between a company'ssuccess and your ability to
help, right? So, in a companylike trade desk, how much did
Jeff Green really need me, oncethe thing really started taking
off, you know, I would arguethat probably one that, again,
is very successful. It's a DECAbillion dollar company, which is
(17:55):
wise, right, which I we investedin, you know, slightly later,
but not much, relative to whenwe invested in TTD, you know.
But that was one because, ingeneral, it was a much heavier
lift, you know. TTD, there was aheavy tech lift to get to the
(18:18):
point where the incredible,visionary product could be
launched in market, and then youwould so much leverage in the
business model that it wouldjust go, you know, but in the
case of wise, you're talkingabout being regulated in 60
different regimes, you have thisglobal customer service
requirement. You're dealing withindividuals, right? I mean, now,
(18:39):
now, obviously the companypowers Morgan Stanley. But
that's not the way it startedout. It started out as a money
transfer company challenging thehigh street banks. So that is
something where, like my andJesse and Brad's ability to help
(19:00):
was it for a much, much longerperiod of time, even after it
was clear that this was going tobe very, very successful, it was
a heavier, a heavier burden toget to success than once. Jeff
hit it with trade desk. I mean,trade desk raised $8 million of
primary capital to be thecompany it is today. That's
(19:21):
like, that's just, that's sorare, like, there are very few
companies that have raised solittle capital and generated so
much value. And look, I mean,wise, it didn't raise that much
money either. They wereprofitable from very early days.
But to grow and to choose how tobest grow in what markets, and
(19:43):
to do so in a highly compliantway so as to not blow up the
whole business because of someregulatory or compliance grew up
somewhere. Yeah, that's, that'sa lot. That's a really, really
hard business, right? So anyway,my. My point is that it is, it
is different by company, as tohow much you can really help
(20:05):
after they've become supersuccessful. And then the other
point is, I think you eitherlove company building or you
don't and like so I started IAbuilt a really, really, really
good business with with Brad andJesse left, was economically
(20:27):
pretty successful, and wentright back into very early stage
investing after, at that point,you know, 17 years of this,
mishegoss, why am I doing this?Why am I doing it? I certainly
don't need to do it. I do itbecause I love it, which is all
to say. I like working with theteams. I like helping people
(20:50):
win, and I like winning myself.Yeah, and it's pathological.
Kent Lindstrom (20:54):
How do you it's not ever i People ask me like,
advice on starting a company,and my advice is, do not start a
company. It's a really bad idea.And if they're like, Well, I
don't care what you think, I'mgoing to start a company anyway.
I'm like, okay, might be worthinvesting, but yeah, you should
not. You should not start acompany. So how did venture
change over this over the arc oftime that you were there? You
(21:19):
know, seed stage investing isover every five years, right?
It's all over. The big firms aregoing to do it. It's all over.
Everything's been inventedthat's going to be invented.
Nobody can come up withanything. You know, the
internet's going to be as big asthe fax machine market, etc. But
how did it change over the arcthat you were involved?
Roger Ehrenberg (21:39):
Yeah, I a lot, obviously, I mean, so I think
the notion that speed stageventure done well occupies an
unusual place on the risk rewardcontinuum. That in fact, it is
(22:02):
arguably the the best place tosit if you're disciplined,
because if you're entering firmsat the A or B, what the this
data that I've seen illustratesthat series A and B investors
(22:23):
are not getting appropriatelycompensated for that risk
they're taking in light of themuch higher prices they're
paying over seed, so that thethe actual de risking that's
happened between seed and a anda and b many times, is
overvalued relative to Theground truth. So that if you're
going to take that massive risk,better to get paid for it at
(22:46):
seed, right than to do it at theA or the B, right now, I would
argue, and I actually havewritten a lot about I wrote a
lot about this, about the hedgefund industry before I even
started IA, and I've writtenabout it subsequently, although
it's been a lot of years, thisnotion that I think the natural
shape of a mature industry isbarbell, where you have a lot of
(23:12):
firms, and you'll always havethis like bubbling sea of firms
that are very small. It is verybespoke. It's very personal,
it's very high touch. It is highrisk, high reward. And there
will be those who do itextremely well, and that will be
an extremely profitable place tobe. Then you've got the larger
(23:35):
firms, and I'll call it themulti strats, the one that that
are almost like corporationsthat have much, much, much
larger AUM that are enteringcompanies at much later stages,
on balance, than the very earlyfirms, and they are investing in
growth, and they can achieveattractive risk adjusted returns
(23:57):
because they're not entering ata time when success has
sometimes been declared, butit's been declared on false
signals, right? They'reinvesting after success is
demonstrated, and they're reallyproviding scaling capital,
right? I think that is a reallygood place to sit on the risk
reward continuum. I think thestuff in between is unnatural,
(24:21):
yeah. And I think the shape oflike, look at the hedge fund
industry, which is arguably moredeveloped and has been through
more cycles than the ventureindustry, that's really what it
looks like. It really looks verymuch like a barbell. And the
firms that are in the middle aretrying to transition to be on
(24:42):
the far end of the barbell, thelarger firms, right? But they're
not living there. They'rethey're on a journey, yeah, but
that you have these smaller, youknow, the the firms that stay
small, that can generatespectacular returns, they're
super nimble. That's a great wayto be, yeah? Or look, if you can
get great fee income byeffectively being an
(25:04):
institutional great assetmanager of 10 billions of
dollars and generate lower butacceptable returns, that's great
too. Yep. And I see venture isnow starting to look very much
like where the hedge fundindustry looks. Which is this
barbell? Yeah,
Kent Lindstrom (25:21):
yeah. Well, we're gonna stay on this side of
the barbell because, you know,and every day, if you put aside
all that stuff, we just see allthese companies, and every six
weeks or two months, somebodycomes in and you're, like, I
don't know if you're gonnachange the world, but you could,
like, you could, like, this isincredible. And then, you know,
the journey from, it's a tenmillion thing that's got nothing
(25:43):
to Hey, customers care aboutthis thing and it's growing. Is
like, again, second best thing,compared to being the
entrepreneur, when, when thingsare working, what do you make
out? And I want to get to thesports thing. But what do you
make of the the current, the theVC vibe shift, where VCs go into
(26:03):
Washington, apparently, likeDavid Sacks is off to
Washington. Scott Cooper fromhis well known venture
capitalist and AndreessenHorowitz, all these guys are
suddenly in the mix and off toWashington. What do you never
see anything like it?
Unknown (26:20):
Never seen anything like it, because it's now VCs,
but we've had this forgenerations with Wall Street,
and it is just an evolution ofdifferential power. And right
now, tech is reigning supreme,not that Wall Street doesn't
(26:42):
have influence, will always haveinordinate influence, right?
It's just we are now at thispoint where global tech, as a
percentage of global GDP hasnever been higher, is on the
rise, and as a result, andbecause it touches every part of
(27:03):
government, either as a policymatter or as a an investment
matter, I and I understand itnow. You can argue that it's too
much, too fast, and that perhapsthere is an imbalance, but I
(27:25):
understand it, and I do think itis directly a function of this
reordering of economic Powerfrom those who make money and
move money to those who createbusinesses and make money as a
(27:47):
derivative, yeah,
Kent Lindstrom (27:48):
certainly fascinating to watch. So you
turn to sports. You went toMichigan, right? I did the so
that means I went toNorthwestern. So that means that
you saw Northwestern play atyour homecoming a number of
times, because in the Big 10,what everybody would do
Northwestern, the Big 10 used tobe not the best sports program
(28:10):
in the Big 10, and thereforepeople would always invite
Northwestern to theirhomecoming, so they would have a
win at their homecoming. SoNorthwestern,
Roger Ehrenberg (28:20):
I don't know what you're I don't know what
you're talking about. Yeah,well, jokes
Kent Lindstrom (28:25):
on you, because Northwestern would get half the
gate. So they would go to OhioState and Michigan, and he had
half the gate, and people wouldsay, why don't you join the Ivy
League? And they'd say, becausewe get 1/10 of the TV revenue.
And so it worked forNorthwestern. And it was great
actually being there was greatbecause we could, you'd see all
these guys come like the best,you know, we could. We'd see
Michigan come play, and OhioState and, you know, Indiana
(28:50):
with Bobby Knight would come andthrow his chair, or, you know,
do whatever the heck it was. Itwas, it was pretty fun. But how
Unknown (28:56):
did you know I grew up right next to Northwestern which
one? Echo? Oh, okay, yeah, Iactually, I took, I took classes
at Northwestern, Northwestern isgreat. I went to the old dyke
stadium, you know, sitting,sitting on aluminum bleachers,
yeah, you know, when it was, youknow, now you look at
Northwestern athletic campus,and it's spectacularly
(29:18):
beautiful. It's
Kent Lindstrom (29:19):
amazing look. I loved it. I went there, you
know. And, like, when I went, Iwas like, oh, you should have
gotten a heart, you know,Harvard was cool, or whatever.
Screw that. It was great. I wasin a fraternity that was, like,
super fun. It's not a bigcampus. We got to see all the
Big 10 sports. It was DavidSchwimmer was in my fraternity,
Stephen Colbert was like,running around is I strongly
(29:41):
recommend the Big 10 andNorthwestern in particular. They
hear Michigan is really good. Sohow do you like? Do you bought
us into a sports team at somepoint, right? A baseball team?
Is that? Get that right? Yeah.
Unknown (29:55):
So the first harrenberg family investment in sports was.
Works as a minority partner inthe Miami Marlins, yep.
Kent Lindstrom (30:03):
And so you, you go into leaving behind IA
ventures, you've accomplished aton. A lot of great
organizations have got a lotmore money to spend on what they
do. And you, you've, you startyour firm that's now with your
family, that's going to investin sports and things related to
sports, is that sports, is thatwhat act three is my little
(30:25):
analogy here.
Unknown (30:27):
I would say it's, it's part of Act Three. Act three,
you know, also wraps theaffordable housing in Detroit
business into it. But, but to behonest, Kent, when I left, IA,
it wasn't like I in the same waythat when I left Wall Street in
late 2004 it's not like I had aI had clarity vision as to what
(30:50):
I was going to do with the nextphase of my life. You know, I
had started angel investingcoming out of Wall Street, that
turned into my focus. And thenIA was born of that when I, you
know, I had invested in theMarlins before leaving IA, I
leave IA, and then I startspending more time in and around
the sports ecosystem, and startdeveloping a thesis that, huh,
(31:14):
there's, there's something here,not just in terms of the
franchise, You know,professional franchises, but
also in terms of sports, ventureand tech and that I saw a market
that felt reminiscent to me ofthe early 2000s and venture, in
terms of the in tech venture interms of the amount of Capital
(31:37):
and focus and kind ofsophistication, if you will,
right in the space that therewas a mismatch between the
importance that sports had insociety and the amount of energy
effort and focus being placed atearly stage companies servicing
sports, Right. And so thateventually crystallized into
(32:01):
this notion, okay, well, I'mgoing to try and be, you know,
one of the people to helpreshape this. And I ended up
using investments inprofessional sports franchises
as a vehicle for both BuildingNetwork credibility and
personal, family assetdiversification in order to get
(32:24):
this flywheel going to occupythis important place right in
the sports ecosystem. You know,you can think of, you know,
people that are doing this on amuch grander scale, like David
Blitzer, you know, in bowl, youknow, there are a handful of
(32:45):
folks, the fertittas, that aredoing things in this vein, that
have kind of venture andfranchise ownership together. I
probably have the most intensivededicated effort at the very
earliest stages of sports andmedia related startups than
anybody else,
Kent Lindstrom (33:03):
right? So there's the teams themselves.
Now, why did you start with a abaseball team? And how does
baseball How is baseball doingas a sport? I mean, it seems of
all the of all the things thatthe kids might want to go see in
terms of sports, I don't know ifis baseball. How does baseball
rank?
Unknown (33:22):
So baseball actually was very stagnant and declining,
and now it's on an uptick. Love
Kent Lindstrom (33:29):
the new. The new didn't mean I love the new
products, by the way. The thingwhere they made all the rules. I
went to a game. I made the game.He was all the time, but I went
to a few, I was like, this iscool. Like all those they made
the game faster in a bunch ofways. And I, my personal
opinion, is it works.
Unknown (33:49):
That's what the data shows. And whether it's, you
know, attendance, merch, sales,you name it, baseball is on the
upswing. And the Pro, you're,100% right. I think, you know, I
definitely have had differencesof opinion with Rob Manford on
certain issues, but the rulechanges that he pushed for and
(34:11):
got in. I mean, generationallyimportant. Also, you know, we
have such an incredible numberof great young players and
stories that in today's world ofsocial media, it is just so
engaging to see these playersunderstand their stories,
(34:35):
understand the dynamics thatEach of them are are managing,
that I think where baseball wasreally, you know, a laggard in
the social media realm, both interms of its use of social
media, and the players thatthere's really been an explosion
and a really positive way whichhas made baseball increasingly
(34:58):
attractive to young. Cohortsthat had kind of abandoned it
for faster moving sports.
Kent Lindstrom (35:04):
Will MLB ever be able to sort of extend into like
south of the border in theUnited States? Is that ever
going to happen Mexico City, or
Unknown (35:14):
wherever, I think, in general, I think for the US
based professional leagues arevery interested in global
expansion. And you know, you'veseen it with the NFL and the NBA
very, very actively. And I thinkyou'll, I think you'll see it
across all professional leagues,because why not? There's the
demand the sport is compelling,whether, whether it's, you know,
(35:38):
south of the border or acrossthe pond. So I am very, very
excited for the kind ofcontinued increase in value of
sports IP. And then that, youknow, that then begs the
question, Well, is there moresports IP than just like the Big
Five sports? And the answer is,sure, you know, there's some
really exciting emerging leaguesthat have now taken hold and
(36:00):
more investors than some ofthem, and it's fascinating to
see how some of these emergingleagues are using different
forms of distribution to get offthe ground than their big five
brethren, because now you know,if you have great, engaging
content, you can distribute overTwitch and YouTube and not need
(36:24):
a big deal with a network or anESPN to get going. You know,
where production costs are highand the balance has shifted
where, you know, an emergingleague is not, not going to get
a payment from a streamer out ofthe box, they're going to pay,
they're going to pay forproduction. There's going to be
(36:45):
this, you know, service levelthat they're going to need to
uphold in order to meet theirobligations under the
distribution agreements, where,if you're doing your if you're
self producing, and you'reputting it out there on YouTube
and Twitch, you know, and it's,I'm not talking about emerging
sports that are variants of themajor sports. I'm saying things
(37:06):
like golf, right? Like talkabout an explosion, you know, we
own a part three golf franchise,and you can only look at things
like, you know, good, good asbeing one of many, many
examples. But now, you know,millions of engaged viewers on
multiple streaming platforms,and, like, they didn't start
with a network deal. So anyway,it's just, it's so interesting.
(37:28):
It's like a convergence of allthese different things
Kent Lindstrom (37:30):
well, and sports seems like the last thing that
people will, you know, careabout. And why? I mean, the
streaming thing has made theconcept of getting together for
friends on Thursday night ateight o'clock just not a thing,
but getting together for the NFLplayoffs, you know, the real
time aspect of it, and there'sonly one of them, you know, it's
not a million makes it kind ofthe last big thing. Do you think
(37:51):
could anything else emerge everyfew years? Someone's like, you
know, three on three basketballis going to be big, or drone
racing, or ultimate Frisbee? Or,do you think there's any chance
for something kind of newer toemerge? I guess UFC emerged.
Unknown (38:07):
Yeah. I mean, look, I think it is going to take time
to see, well, okay, one, it hasalready made it, and then
there's dozens that areemerging. What's made it is UFC,
yeah, right. UFC is made and,you know, and then you've got to
(38:28):
challenge your brand, like, youknow, PFL, and, and there, there
are others, um, obviously, like,different variants on soccer,
or, you know, European football,you know, with kings League and
baller, which, which we're in. Ithink again, golf, I think the
(38:48):
you know, live, I think opened alot of people's eyes to just
different ways of experiencing avery traditional game that,
again, folks like good good hadalready been experimenting with.
And I just use them as the asprobably the biggest example.
(39:09):
There are tons. There are dozensof golf channels that have, you
know, millions of followers,right? And by the you were
talking about, kind ofsynchronous versus asynchronous.
And like the NFL playoffs beingsomething where people will get
together and watch together. Alot of people do watch together
streaming on YouTube, but theydon't need to be sitting in the
(39:30):
same room, but they can bewatching together. And that is
that is a new phenomenon, and Ithink something that also is
connective tissue that bridgesthe live sports personal
engagement gap is sportsbetting, yeah, where sports,
sports betting has becomemassively social, and it's, it's
(39:51):
not, you know, sitting there inan off track betting parlor with
slips and yellowed fingers fromyour cigarettes looking at the
next race. This is. Is, youknow, a bunch of you know,
young, energetic men and womensitting with groups of friends,
you know, with multiple screens,sitting here looking at the
(40:13):
looking at the live bettingopportunities. You know, they
might have their their six legparlay that's going to carry
them through the weekend,because it's fun and engaging to
see how it might play out, butat the same time, they're
watching their favorite game andthey're going in or betting in
real time. Yeah.
Kent Lindstrom (40:29):
So what are the big what are the components?
Obviously, you can invest indifferent sports teams, emerging
leagues. What are the technologycomponents? There's the there's
gambling, I assume there'sgaming. What are the, what are
the tech companies around? Youknow, we know what Netflix is
doing and Amazon, yeah,
Roger Ehrenberg (40:48):
but there's, you know, there's, there's
media. So there's, you know,media and infrastructure
companies that help emergingleagues either become bettable
or create, distribute theircontent broadly. So pull that in
for and then, of course, likethings like, Yeah, real time.
So, you know, video, like, supercutting edge video technology
(41:11):
that occupies like one part ofit, then you have analytics so
companies that are in the AImachine learning space helping
teams value their players,whether it's for n, i L, the
Transfer market, Player Health.So there's this whole sphere of
(41:31):
data analytics around sports. Sothere's teams, leagues, media,
infrastructure, analytics, Iwould say that pretty much
covers the landscape. But onething I would say, Kent that's
important is I'm I'm listingthese things off in serial
(41:54):
order. But part of the reason Igot so excited about the sports
opportunity as a mega trend,aside from it being under
invested in and under focused onat the earliest stages, is there
was this massive convergence,and sports media and social are
(42:14):
all coming together, yep, and Ithink that's super exciting and
a durable trend, because Ireally do feel like sports IPs
are one of those things that arelargely a cyclical Yep, and are,
and sports as a general matter,bring people together, and I
(42:37):
love that
Kent Lindstrom (42:38):
well. And going back to the Greek games, going
back to sports during wars liketo keep people's morale up. I
mean, it's obviously not a, nota fad, right, in any sense of
the game. And now I think youhave a thing too. I mean,
there's kind of, I've alwaysbeen intrigued. There's the
sports that you play. So I rode,you know, road like a boat in
(43:01):
northwestern which, again, notthe best rowing program. There's
a theme Northwestern createdsports, but there's sports that
people play and watch. Sosoccer, people play and watch
tennis. People play and watchfootball. Most people don't play
football, maybe not really.Nobody rows. I'll tell you that
like, you know, growing up, butit's kind of interesting. I
(43:23):
assume things like soccer andtennis probably have some
popularity due the fact thatpeople a golf, you know, people
also play them and kind ofproject themselves into what
they're what they're seeing.
Unknown (43:36):
Yeah, I think that is that's an interesting filter at
the same time, you know, there'slots of emerging sports that you
can't really approach that way,right, like sale. GP, right? So
how many people are hopping onhigh performance yachts and
(43:59):
flying across the water at 30knots, yeah, stuff like that, or
f1 Yeah, yeah, right name.People drive a car, but sure,
not really the same thing Iforgot, in the same way that
people can throw football in thebackyard, but they're not, yeah,
playing, playing football in thesame way
Kent Lindstrom (44:19):
I forgot that sailing thing is really cool,
and it's made like, hockey got alot better with high def TV like
that really helped hockey. The,yeah, the graphics on the
sailing because you can never,if you're watching sailing,
you're like, I don't know who'sahead or behind, like, what's
going on. And then the graphicsreally changed for that. I find
that kind of incredible. Iagree.
Unknown (44:39):
I think the production quality of some of these
emerging sports is shame, or,like you said, Legacy sports,
but where the intersection ofdata and production quality is
just skyrocketed, yeah. I mean,just like, if you look at, you
know, just even a foot, even afootball broadcast now, when
you. The, all of the additionaldata that's being provided in
(45:03):
game, or something like, youknow, PFL, professional fighters
League, you know, relative toofc. I mean, you look at, you
look at a PFL broadcast, which Ithink it's really interesting.
We're not investors, but I know,I know the team well, and I
think, I think they're great,you know, it is a completely
different experience given thegranularity of the data that
(45:25):
they're streaming to you in realtime in a really high production
quality event. I agree with you.I think the way these things are
depicted is critical, which isinteresting. But then there's
the flip side is also true. Ifyou look at some of these, you
know, golf YouTube streams,yeah, production quality is not
high, right, but they'reincredibly fun. There's like the
(45:49):
the energy is palpable. And, youknow, watching, uh, you know,
Bryson deshambo Try and, youknow, hit a hole in one over his
house onto his little green, andthen having a guy, you know,
paying a guy 100 grand if he canget one in, you know, within the
10 hours fan, I mean, it's like,it's so awesome, you're gonna
get everybody
Kent Lindstrom (46:08):
excited about sports investing. Well, let's,
let's finish with the DetroitRenaissance. And I thought, I
was thinking I was talking toone of these billionaire hedge
fund guys who, it's one ofthese, like, TPG guys who just
has all the information in theworld, like he's the president
united states, like, you know,and and everything's just like a
prop bet, you know, the entireplanet. And he said something
(46:30):
that's interesting, which was,if he could buy call options on
Chicago, he would 100 year calloptions. And his the idea was
that it's an earthquake freeplace with unlimited fresh water
right next to it, as climatechange pushes people north. But
Detroit, different thing thanChicago has seemed like the
(46:51):
poster child for a city that wasonce and then will be again, a
great thing. How'd you come tobe involved in that? And what do
you Where are you on that?
Unknown (47:02):
So the point that this hedge fund guy made about, I'll
call it the Great Lake states.Him focused on Chicago. Me on
Detroit. I've been I've beenspeaking about that for years. I
very much believe in the thesisof climate migration, and very
much believed at the Great Lakesstates, and in some cases, once
(47:25):
great cities will benefitdisproportionately from that. So
as I was born in Detroit, my dadwas a Ford guy, so that's where
I started life, and it's alwaysbeen very near and dear to my
heart. Followed my sister, whohas two degrees from Michigan to
(47:47):
U of M, met my wife at U of M,both our kids went to U of M,
her grandfather went to U of M,nephew cousin go to U of M,
Kent Lindstrom (47:56):
give the person a try.
Unknown (48:02):
You know, very involved with the university, but about a
decade ago, I started, and thisis completely separate investing
in affordable workforce housing,because that was something that
I felt intersected mission andbeing able to make solid
economic returns. East LA,Aurora, Colorado, Salt Lake
(48:26):
City, Brooklyn and then Detroit.I co founded a business in 2000
real estate business in 2017with some other Michigan folks,
bald great water that was bornof the opportunity zone
legislation that was promulgatedin 2017 we have raised about
(48:50):
$300 million of private capitalacross 10 funds. We are the
largest multi family homeownerin Detroit at this point, with
2000 units that we've rehabbedand built, and we have an
additional 700 in Lansing, oneof my partners who again, born
and raised in Detroit, he and Ihad this even bigger vision for
(49:18):
how the place making real estateinvesting that we were doing
through great water could beenhanced and hasten Detroit's
recovery by investing in thingsthat people who lived in Detroit
would want and find exciting. Sowe partnered with a great
(49:41):
restaurant tour, and we ownrestaurants and are developing
restaurants downtown and in theneighborhoods. We with with that
founder, who founded arestaurant called marrow. We
started a wholesale meatbusiness called marrow Detroit
provisions, where we areactually. Me distributing
(50:02):
sustainable, ethically,ethically handled meat from the
Great Lake states that is beingsold through gourmet markets,
but also Zingerman's, which youmust know like, right? Everyone
knows zingerman, so zingermansells marrow meat, and we have
(50:22):
also invested in some CPGcompanies based in Detroit, jobs
in Detroit, but now sellingproducts nationally. So we are
on the cusp of actually raisinga fund that has three parts to
it, CPG studio with a set ofshared services to help the
(50:44):
incredible entrepreneurs inDetroit with capital and know
how to scale a venture fund toinvest in the seed and series A
rounds of these and othercompanies, some that we develop
in our studio, but others in theecosystem when We've already
made a few investments thatwe've been warehousing, and a
(51:04):
beverage brand I called CasaMara being one of them, and then
a real estate fund to help usacquire and develop buildings,
which we're already doingpersonally, but now to do it at
greater scale that we can putcompanies in to again, get this
flywheel going of great people,great entrepreneurs, great jobs
(51:29):
for Detroit, putting money backinto the system, but with kind
of global expertise and know howin manufacturing, distribution
and marketing. This then alsoconnects with the work that
we're doing through Universityof Michigan, and with
(51:51):
partnership with the school ofeducation and this project, this
school on the northwest side,called Mary Grove, so we're
doing all of these things, bothwith kind of foundation
partnerships, University ofMichigan and university
partnerships and our own privatecapital to help make Detroit the
(52:11):
city that it's will benefit fromclimate migration, but even for
the Even absent that rebuildthis once great city and make it
great again.
Kent Lindstrom (52:24):
And why doesn't housing curious about this? Why
doesn't housing alone do Irecently went on a vacation to
the this kind of traveled aroundthe lower Mississippi River,
which, putting aside my vacationchoices, there's these, like,
little towns there, climatethings different there, but
like, I don't know, Natchez orwhatever. And they're these just
beautiful old towns. They'rejust, they're kind of deserted,
(52:48):
you know, the Piggly Wiggly orwhatever, moved to the freeway
and the NAFTA came along. But asa just a town, it's like on the
Mississippi River with unlimitedwater and all these beautiful
old homes for like, $60,000 whydon't just a bunch of young
people just move there, likeleave LA and San Francisco and
just colonize these or whateverthe right word is, you know,
(53:11):
take over these towns. Just onhousing prices alone, you buy a
beautiful house on a hill for$80,000
Unknown (53:19):
so
it's interesting. I mean, a lotof places have tried to address
that issue by providingincentives for people to
relocate, not just in the UnitedStates, but, I mean, you read
about this in Italy and Franceand some of these gorgeous
little towns that have largelybeen been deserted. The reason,
(53:39):
I think, is because if you'retalking about young people,
young people eventually havefamilies. Kids need schools. You
need the infrastructure thatgoes along with that. It's not
just housing. And that's,that's, that's the key Kent to
again, what we're doing inDetroit is it's not enough to
have great housing. It's notenough to have places to go out
(54:03):
to eat. You need walkable, safecommunities. You need excellent
schools. You need public,private partnerships. You need
it's and I know I mean havingnow, having spent so much time
in Detroit with both state andcity leader leadership, who I
(54:27):
think have done a reallyfabulous job, but there's so
much more work to do. It is sohard. It's just it is really,
really hard to change trend nowDetroit for the first time in 60
years, 66 oh, had an increase inpopulation year to year, the
(54:47):
first time in six decades. Soonce you get that momentum
going, you can, you can do it.You can get, you can try and
sustain it and have an increasein speed. So. Yeah, I just you
can't underestimate howimportant all of the wraparound
services are to makes a placeattractive relative to just an
(55:12):
attractive house. Yeah,
Kent Lindstrom (55:14):
wow. Well, it seems like you're the third act,
if you will. In my littleanalogy, it seems incredible,
like the sports Detroit. I mean,it all seems amazing. How would
people follow you? There's apoint, really the IA part, but
like the current things you'redoing, if people want to keep up
with you, they follow you onTwitter. Or what's the what do
you recommend?
Unknown (55:34):
I certainly, I probably, at this point, use,
use LinkedIn more for kind ofbusiness oriented updates. I do
use Twitter for sure, and I dowrite on medium now and again. I
will say my my writing hasslowed when I write, I write
like pretty deep, thoughtfulpieces, but yeah, info arbitrage
(55:57):
on Twitter, me and Ebertcapital, great on, you know,
Kent Lindstrom (56:04):
and working with your family, that's good. That's
going okay. You're all gettingalong.
Unknown (56:09):
It's great, yeah, I mean that. That's a whole,
that's a whole other podcastKent that I can get into.
Suffice it to say, my wife,Karen, who, you know, whom I've
been with since Michigan days.You know, she's a clinical
psychologist, and let's just saythat for role in helping us be
(56:30):
effective, in bridging the gapbetween being super close as a
family and as parents with ourchildren, as well as colleagues,
she should get paid overtime.Okay, well,
Kent Lindstrom (56:44):
we will do the family business podcast at some
point. Thank you so much fordoing this.
Unknown (56:50):
Kent, it's my pleasure. It's, it's, these are great
questions. It's really greatseeing you and all the best for
grade 25
Kent Lindstrom (56:56):
thanks so much. All right, this is in the
something metric podcast. RogerHerbert, my guest, talk to you
Next time
Unknown (57:22):
you
A full disclosure. Today's guest, Roger
Ehrenberg is an investor ineight bit capital. That's the
fund of which I'm a part. We doseed and pre seed investing into
software companies. Disclosurenumber two, that wasn't a
disclosure, that was a humblebrag, because Roger Ehrenberg is
amazing. He is the founder ofIA, ventures, which, if you
(00:23):
haven't heard of it, is one ofthe most respected among other
venture capitalists, inparticular venture firms of all
time, both for the way theyexecuted and for the results
that they returned, which arejust phenomenal.
The incredible thing, or thething that makes this story more
incredible, is that he builtthat firm, built that
reputation, one of the bestventure firms ever after having
(00:47):
a career on Wall Street where hemanaged billions of dollars of
risk capital, a career that byany measure, would be an entire
five careers for anybody elseafter that, he created one of
The greatest venture firms ofall time, and then, well,
there's a third chapter, andyou're going to hear about that
chapter here too, which is asincredible, if not more
(01:08):
incredible than the first twochapters, and it's probably
going to get you pretty excitedabout investing in the world of
sports. Yeah, that's right.
In any case, you're going toenjoy this episode. My guest
today, Roger Ehrenberg, welcomeback. All
(01:28):
right. Welcome back. It'sassembly measure Podcast. I'm
Kent Lindstrom. I am your host.My guest today is Roger
Ehrenberg, how are you doing?I'm doing great, Kent. It's
great to be here. Thanks so muchfor doing this. So I put Roger's
career into, sort of into, I'llcall it three acts, if I can.
A first act, and this, this partfascinates me, working as a
(01:49):
trader on Wall Street, a tradingrunning a trading operation,
followed by founding andbuilding IA ventures. And we'll
start, we'll start there. Andthen a third act, which is
helping with the renaissance ofDetroit and investing in the
very wide world of sports.
But I A ventures seed venturefirm really became sort of one
(02:13):
of the most famous, respectedventure firms. And, you know, we
don't need over overdo this bit,but, you know, Roger was on the
Midas list, a number of hits,extremely well, well respected,
I'll say, like kind of a venturecapitalists, you know, venture
capitalists, like, if somebody'strying to model out how to do
maybe seed stage, early seedstage investing, they would look
(02:34):
to Roger and IA. And also one ofthe most famous, I think, seed
investments, which was tradedesk, which was an investment
where, as a seed firm, you endedup with something like 20% of
the company at IPO, which in inthis world, is just this sort of
crazy, unheard of unheard ofthing. That's the thing that I
associate with when I think ofIA, and
(02:58):
by the way, I also think of thatstory the trade desk. It's
interesting how much peoplerewrite the venture, you know,
history. Oh, I Well, Facebookwould have been nothing if I
hadn't, you know, met Mark on awalk with his dog and told him
to buy and you know, that wholething, the path the trade desk
took was not straight, right?Didn't you extend it and almost
(03:23):
go out of business? And when youget behind the scenes at the
sausage factory, this seems tobe a pretty common story.
Oh yeah. I mean,
Roger Ehrenberg (03:33):
it certainly wasn't the accidental $60
billion market cap success.
Look, I mean all all credit toto Jeff Green on on the vision
and the grit to get it to whereit is today. Because it's not
that normal for somebody who wastoiling away in the engine room,
(03:56):
scrapping for dollars, sellingahead of product fulfillment, to
actually be the scaling CEO thattook the company public at less
than a billion dollar valuation,and now to have it as you know,
a company that he's running at a4050, $60 billion valuation,
that's a very rare individual.But yes, I mean, the the trade
(04:17):
desk got very close to runningout of money any number of times
in those first two years. Youknow, Jeff had opportunities to
sell the business for 10million, 20 million, $30 million
and there were days when
Unknown (04:33):
it seemed like, wow, you know, yeah, like, we want
you to go the distance, but areyou comfortable going the
distance, giving everything thatyou've been through. And he was
the founder who had incredibleclarity of vision, deep, deep
conviction that he was right andthat it was really just a matter
(04:53):
of time, and he just needed toturn the corner, in particular,
on the on the tech build, where.Or he could then have a product
and market that could competewith the real time bidding
engines that were existent inthe, you know, early 2000 10s.
And you know, his foundingpartner, Dave pickles, helped
(05:14):
help to get that going by 2012and then it was pretty much a
rocket ship from there, right?But those first two years and
bridging three times and raisinga very small series A Yep,
really highlight the messinessof going from a PowerPoint to
product market fit, the rest ismuch easier, but that zero to
(05:36):
one is insanely difficult.
Kent Lindstrom (05:38):
Yeah, the Hobart guys have a fairly similar story
for chime was like that where itwas kind of not obvious for a
long time, and they bridged itand did kind of a sideways
series A and then all of asudden, chime is the number one
thing featured on their website.Kind of that, that path. It's an
interesting thing, too. I you,if you don't work in venture,
(05:59):
you might not kind of see thisthing, but it is that weird
concept that to create a billiondollar company, it's hard to get
anything going, and you shouldnot start a company. It's a bad
idea, but you do have to turndown like, a $50 million offer
that would change your life. Andthat's a really less obvious
thing than like, you have towork really hard and grind
(06:21):
through the glass and all that.You also have is you also did
have somebody who, when he shegets the offer to, you know,
sell their company for $100million says a billion dollars,
if you're Mark Zuckerberg, says,No, I'm gonna it's bigger than
that. And that's a second bit ofcraziness. You need to start to
build a billion dollar company.
Unknown (06:42):
Oh, and by the way, portray does got that offer just
before the IPO? Yeah, so theydid get that offer, that kind of
billion dollar offer. And Jeffwas like, not interested, right?
Just not interested. And I thinksomething Kent that's emerged
certainly in the time that I'vebeen a venture capitalist. And,
(07:04):
you know, let's say for better,for worse, I've been doing this
for 20 ish years. Yeah, that,you know, the notion of founder
liquidity, done right, is anacceptable way of aligning risk
and reward with founders andinvestors, because is it real?
(07:29):
And I know there are some firmsthat are dogmatic on this issue
and say zero founder liquidityis appropriate at any time.
Yeah, you know, I think we weremuch more pragmatic, and not
just pragmatic, but I would say,I would argue humanistic, in
(07:51):
that there was some amount ofmoney that enables a founder to
work better, right, where stressassociated with day to day
living, if you whether you'reliving by yourself, you have a
partner, you have children,you've got a house, you've got
(08:15):
school activities, all of thosethings that cost, especially in,
you know, in the coastal, largecities expensive to live, where
1 million, $2 million ofsecondary can make a huge
difference in somebody's life.So it's not like, oh, there have
(08:37):
been a bunch of bad secondarydeals, right? Where go go.
Companies have allowed foundersto go and take 10s of millions
of dollars off the table right,arguably before product market
fit, and then the companies go,poof, right and whatever. We
don't need to go into any numberof high profile failures in that
regard. But I we always felt atIA, like there was that number
(09:01):
where you're really a partnerwith the founder and wanting to
go the distance, but where thefounder didn't feel like I'm the
one taking all the risk, andwhen I've created This very
significant amount of value withthis huge option upside, yeah,
(09:24):
so isn't it fair that I'd beable to mitigate some of my
risk? And we felt very stronglythat there were the right
circumstances to do that,
Kent Lindstrom (09:32):
yeah? Well, that's definitely a vibe shift
from when I started in SiliconValley. Because when I started,
you know, my little earlystartups, the whole thing was,
like, the you should it was, itwas really bad to do that, like
it was really looked down upon,like, to take any money out of
the company, if you were theentrepreneur, and, like, there
was some, somehow the VCs had anarrative. And I'm mad now,
(09:53):
because I know how much the VCswere making themselves, that you
should be struggling, and then,you know, to succeed, you. Like,
but you're you are alreadystruggling on the business side,
like it's hard enough to wake upand have your employee tell you
they're about to quit, andyou're missing payroll, and you
can't raise money. You don'tneed extra struggle. You know,
by getting paid $74,000 and, youknow, a year in in San Francisco
(10:18):
with a family, and that changedsomewhere along the line. Then,
of course, you're right. Itbecame this extreme thing where
people would take $200 millionout of a pandemic era bubble,
and then the whole thing wouldgo away. And the founder was,
you know, wealthier thansuccessful founders. That's kind
of a crazy, you know, artificeas well. Totally. So I want to
(10:40):
understand that just this firstpart, I really want to get to
the sports thing. But this firstyou start as a trader on, you
know, Wall Street. I worked inChicago, not in option trading,
but you'd get off, you know,these guys would get off work at
two o'clock in the afternoon,coming from the option pits.
And, you know, start drinking attwo o'clock in the afternoon, I
(11:02):
guess. And, and, by the way,they were mostly Big 10 athletes
back in the days, who's, who'son the floor? And these guys
would, yeah, he'd be drinking.Oh, man, today I lost $400,000
what you what? Like, my job is$32,000 a year and I'm proud of
it. You lost $400,000 today, andyou're having a beer on the
(11:25):
street that like trading seemslike a crazy the it seems like
precisely the opposite. Here'swhat I'm trying to get to,
precisely the opposite of seedstage investing, where you put
money into something, you makeup any story you want for 10
years, right? Like if you'retrading options, if you short
(11:46):
the end against the dollar andyou're wrong, you're wrong
tomorrow. You know, you can tellyour buddies all you want, but
you know the end doesn't care.How do you character? I just, I
think it says what the feelingis going from that crazy, high
feedback, instant world to Ican't imagine a more different
part of the investing world.
Roger Ehrenberg (12:10):
You're an excellent storyteller. You
really did capture the vibe ofthe pit trader in Chicago during
that era. I so I was born inDetroit, but I grew up outside
Chicago and rode the ChicagoNorthwestern and yeah, I saw, I
saw those people. So look, so Iwas, principally, I was in. I
(12:32):
was an upstairs guy, not adownstairs guy. So I was never
on the floor like that. I workedon trading floors at City and
Deutsche but my where I reallyfelt what you're talking about,
being on the opposite end of theliquidity spectrum of very early
stage venture was when I ranthis trading business called VB
(12:53):
advisors, where I had 16 tradingteams that I allocated capital
to, most of which were in theliquid markets. There were a few
special sets, but it waslargely, you know, convertible
arbitrage event, things that,you know, we did a closed end
fund arbitrage strategy. Theywere things that subjected
(13:16):
themselves to being marked tomarket on a daily basis, right?
So, we were running about fourand a half billion dollars of
unlevered capital, $16 billionof levered capital, wow. Okay,
and in 2003 we were off to aroaring, hot start the first
(13:40):
five months of the year. Then wehad three successive days in
May, where each day, we lostmore than $50 million Wow, $150
million in a week. Wow. So thatthat $400,000 that you're, you
(14:01):
know, pit trading buddy that youoverheard, yeah, uh, ha, ha, ha,
right. It's like, I mean, whenyou're tired, so that you know,
that's akin to running amassive, liquid market hedge
fund, and it's stressful,stressful as hell, yeah, um,
then you're like, are youinsane? Going from that to then
(14:24):
the exact opposite and theliquidity spectrum, where you
have, you know, my teams were,you know, I had 130 PhDs, data
science teams, and this is inthe early 2000s This is at the
very frontier of machinelearning and big data that and
(14:45):
part of my the raison d'etre forstarting IA and being like the
first fund focused on big dataas an investable theme was my
experiences on Wall Street,right? And and so the funny
thing is that, literally, I.Decided to do the opposite. And
what I found it really it wasn'ttotally the opposite. There was
(15:06):
the Venn diagram where theoverlap is in building high
performance teams andunderstanding the elements of
high performance teams. So thatwas the same whether it was in
the liquid markets trading teamsor it was in the founding teams
of tech startups. Thedifference, as you, as you
rightly say, is in the in thefeedback loop. In one hand, I
(15:31):
had a daily P and L in theother. Call it more like a six
to seven year P and L andeverything in between being, you
know, TV, pi is not dpi, anduntil you actually have
realizations and liquidity, it'sall kind of conceptual, and you
(15:52):
have some of those discontinuousmark to market bumps down when
you go through macroeconomicshocks, and we've seen the
venture industry dealing with abunch of this, you know, over
the last three years inparticular. So in that way,
there are some similarities, butthere is something about for me,
(16:16):
the satisfaction of working withand empowering great
visionaries. That is so muchmore exciting in the seed stage
realm than it is in the tradingrealm,
Kent Lindstrom (16:29):
right? And so you come into the in the seed
stage world, and kind of one ofthe crazy things that happens at
the seed stage is you have acompany, and we do many people.
Do we like we must pre productmarket fit, and you've got the
story, and you've got theperson, you're like, I know
we're right about this. And thenit actually works, like the
(16:50):
product and the market cometogether, and it's, it's
working, and it's a rocket ship,and it's, it's the second best
feeling in the world. The bestfeeling is being the guy doing
it. You're not the guy investingbut then it was there a point
you had such big success with acouple things, and I've been
curious about this with, like,you know, guys who invested in
(17:10):
Uber and that kind of thing. Isthere a point where one company
or two companies become such abig success that kind of nothing
else matters, that your your TV,pi, and all that is just based
on so much on trade desk thatyou might as well just spend all
your time on trade desk. Orlike, how does that evolve for
you over time?
Roger Ehrenberg (17:33):
So of course, there's almost an inverse
relationship between a company'ssuccess and your ability to
help, right? So, in a companylike trade desk, how much did
Jeff Green really need me, oncethe thing really started taking
off, you know, I would arguethat probably one that, again,
is very successful. It's a DECAbillion dollar company, which is
(17:55):
wise, right, which I we investedin, you know, slightly later,
but not much, relative to whenwe invested in TTD, you know.
But that was one because, ingeneral, it was a much heavier
lift, you know. TTD, there was aheavy tech lift to get to the
(18:18):
point where the incredible,visionary product could be
launched in market, and then youwould so much leverage in the
business model that it wouldjust go, you know, but in the
case of wise, you're talkingabout being regulated in 60
different regimes, you have thisglobal customer service
requirement. You're dealing withindividuals, right? I mean, now,
(18:39):
now, obviously the companypowers Morgan Stanley. But
that's not the way it startedout. It started out as a money
transfer company challenging thehigh street banks. So that is
something where, like my andJesse and Brad's ability to help
(19:00):
was it for a much, much longerperiod of time, even after it
was clear that this was going tobe very, very successful, it was
a heavier, a heavier burden toget to success than once. Jeff
hit it with trade desk. I mean,trade desk raised $8 million of
primary capital to be thecompany it is today. That's
(19:21):
like, that's just, that's sorare, like, there are very few
companies that have raised solittle capital and generated so
much value. And look, I mean,wise, it didn't raise that much
money either. They wereprofitable from very early days.
But to grow and to choose how tobest grow in what markets, and
(19:43):
to do so in a highly compliantway so as to not blow up the
whole business because of someregulatory or compliance grew up
somewhere. Yeah, that's, that'sa lot. That's a really, really
hard business, right? So anyway,my. My point is that it is, it
is different by company, as tohow much you can really help
(20:05):
after they've become supersuccessful. And then the other
point is, I think you eitherlove company building or you
don't and like so I started IAbuilt a really, really, really
good business with with Brad andJesse left, was economically
(20:27):
pretty successful, and wentright back into very early stage
investing after, at that point,you know, 17 years of this,
mishegoss, why am I doing this?Why am I doing it? I certainly
don't need to do it. I do itbecause I love it, which is all
to say. I like working with theteams. I like helping people
(20:50):
win, and I like winning myself.Yeah, and it's pathological.
Kent Lindstrom (20:54):
How do you it's not ever i People ask me like,
advice on starting a company,and my advice is, do not start a
company. It's a really bad idea.And if they're like, Well, I
don't care what you think, I'mgoing to start a company anyway.
I'm like, okay, might be worthinvesting, but yeah, you should
not. You should not start acompany. So how did venture
change over this over the arc oftime that you were there? You
(21:19):
know, seed stage investing isover every five years, right?
It's all over. The big firms aregoing to do it. It's all over.
Everything's been inventedthat's going to be invented.
Nobody can come up withanything. You know, the
internet's going to be as big asthe fax machine market, etc. But
how did it change over the arcthat you were involved?
Roger Ehrenberg (21:39):
Yeah, I a lot, obviously, I mean, so I think
the notion that speed stageventure done well occupies an
unusual place on the risk rewardcontinuum. That in fact, it is
(22:02):
arguably the the best place tosit if you're disciplined,
because if you're entering firmsat the A or B, what the this
data that I've seen illustratesthat series A and B investors
(22:23):
are not getting appropriatelycompensated for that risk
they're taking in light of themuch higher prices they're
paying over seed, so that thethe actual de risking that's
happened between seed and a anda and b many times, is
overvalued relative to Theground truth. So that if you're
going to take that massive risk,better to get paid for it at
(22:46):
seed, right than to do it at theA or the B, right now, I would
argue, and I actually havewritten a lot about I wrote a
lot about this, about the hedgefund industry before I even
started IA, and I've writtenabout it subsequently, although
it's been a lot of years, thisnotion that I think the natural
shape of a mature industry isbarbell, where you have a lot of
(23:12):
firms, and you'll always havethis like bubbling sea of firms
that are very small. It is verybespoke. It's very personal,
it's very high touch. It is highrisk, high reward. And there
will be those who do itextremely well, and that will be
an extremely profitable place tobe. Then you've got the larger
(23:35):
firms, and I'll call it themulti strats, the one that that
are almost like corporationsthat have much, much, much
larger AUM that are enteringcompanies at much later stages,
on balance, than the very earlyfirms, and they are investing in
growth, and they can achieveattractive risk adjusted returns
(23:57):
because they're not entering ata time when success has
sometimes been declared, butit's been declared on false
signals, right? They'reinvesting after success is
demonstrated, and they're reallyproviding scaling capital,
right? I think that is a reallygood place to sit on the risk
reward continuum. I think thestuff in between is unnatural,
(24:21):
yeah. And I think the shape oflike, look at the hedge fund
industry, which is arguably moredeveloped and has been through
more cycles than the ventureindustry, that's really what it
looks like. It really looks verymuch like a barbell. And the
firms that are in the middle aretrying to transition to be on
(24:42):
the far end of the barbell, thelarger firms, right? But they're
not living there. They'rethey're on a journey, yeah, but
that you have these smaller, youknow, the the firms that stay
small, that can generatespectacular returns, they're
super nimble. That's a great wayto be, yeah? Or look, if you can
get great fee income byeffectively being an
(25:04):
institutional great assetmanager of 10 billions of
dollars and generate lower butacceptable returns, that's great
too. Yep. And I see venture isnow starting to look very much
like where the hedge fundindustry looks. Which is this
barbell? Yeah,
Kent Lindstrom (25:21):
yeah. Well, we're gonna stay on this side of
the barbell because, you know,and every day, if you put aside
all that stuff, we just see allthese companies, and every six
weeks or two months, somebodycomes in and you're, like, I
don't know if you're gonnachange the world, but you could,
like, you could, like, this isincredible. And then, you know,
the journey from, it's a tenmillion thing that's got nothing
(25:43):
to Hey, customers care aboutthis thing and it's growing. Is
like, again, second best thing,compared to being the
entrepreneur, when, when thingsare working, what do you make
out? And I want to get to thesports thing. But what do you
make of the the current, the theVC vibe shift, where VCs go into
(26:03):
Washington, apparently, likeDavid Sacks is off to
Washington. Scott Cooper fromhis well known venture
capitalist and AndreessenHorowitz, all these guys are
suddenly in the mix and off toWashington. What do you never
see anything like it?
Unknown (26:20):
Never seen anything like it, because it's now VCs,
but we've had this forgenerations with Wall Street,
and it is just an evolution ofdifferential power. And right
now, tech is reigning supreme,not that Wall Street doesn't
(26:42):
have influence, will always haveinordinate influence, right?
It's just we are now at thispoint where global tech, as a
percentage of global GDP hasnever been higher, is on the
rise, and as a result, andbecause it touches every part of
(27:03):
government, either as a policymatter or as a an investment
matter, I and I understand itnow. You can argue that it's too
much, too fast, and that perhapsthere is an imbalance, but I
(27:25):
understand it, and I do think itis directly a function of this
reordering of economic Powerfrom those who make money and
move money to those who createbusinesses and make money as a
(27:47):
derivative, yeah,
Kent Lindstrom (27:48):
certainly fascinating to watch. So you
turn to sports. You went toMichigan, right? I did the so
that means I went toNorthwestern. So that means that
you saw Northwestern play atyour homecoming a number of
times, because in the Big 10,what everybody would do
Northwestern, the Big 10 used tobe not the best sports program
(28:10):
in the Big 10, and thereforepeople would always invite
Northwestern to theirhomecoming, so they would have a
win at their homecoming. SoNorthwestern,
Roger Ehrenberg (28:20):
I don't know what you're I don't know what
you're talking about. Yeah,well, jokes
Kent Lindstrom (28:25):
on you, because Northwestern would get half the
gate. So they would go to OhioState and Michigan, and he had
half the gate, and people wouldsay, why don't you join the Ivy
League? And they'd say, becausewe get 1/10 of the TV revenue.
And so it worked forNorthwestern. And it was great
actually being there was greatbecause we could, you'd see all
these guys come like the best,you know, we could. We'd see
Michigan come play, and OhioState and, you know, Indiana
(28:50):
with Bobby Knight would come andthrow his chair, or, you know,
do whatever the heck it was. Itwas, it was pretty fun. But how
Unknown (28:56):
did you know I grew up right next to Northwestern which
one? Echo? Oh, okay, yeah, Iactually, I took, I took classes
at Northwestern, Northwestern isgreat. I went to the old dyke
stadium, you know, sitting,sitting on aluminum bleachers,
yeah, you know, when it was, youknow, now you look at
Northwestern athletic campus,and it's spectacularly
(29:18):
beautiful. It's
Kent Lindstrom (29:19):
amazing look. I loved it. I went there, you
know. And, like, when I went, Iwas like, oh, you should have
gotten a heart, you know,Harvard was cool, or whatever.
Screw that. It was great. I wasin a fraternity that was, like,
super fun. It's not a bigcampus. We got to see all the
Big 10 sports. It was DavidSchwimmer was in my fraternity,
Stephen Colbert was like,running around is I strongly
(29:41):
recommend the Big 10 andNorthwestern in particular. They
hear Michigan is really good. Sohow do you like? Do you bought
us into a sports team at somepoint, right? A baseball team?
Is that? Get that right? Yeah.
Unknown (29:55):
So the first harrenberg family investment in sports was.
Works as a minority partner inthe Miami Marlins, yep.
Kent Lindstrom (30:03):
And so you, you go into leaving behind IA
ventures, you've accomplished aton. A lot of great
organizations have got a lotmore money to spend on what they
do. And you, you've, you startyour firm that's now with your
family, that's going to investin sports and things related to
sports, is that sports, is thatwhat act three is my little
(30:25):
analogy here.
Unknown (30:27):
I would say it's, it's part of Act Three. Act three,
you know, also wraps theaffordable housing in Detroit
business into it. But, but to behonest, Kent, when I left, IA,
it wasn't like I in the same waythat when I left Wall Street in
late 2004 it's not like I had aI had clarity vision as to what
(30:50):
I was going to do with the nextphase of my life. You know, I
had started angel investingcoming out of Wall Street, that
turned into my focus. And thenIA was born of that when I, you
know, I had invested in theMarlins before leaving IA, I
leave IA, and then I startspending more time in and around
the sports ecosystem, and startdeveloping a thesis that, huh,
(31:14):
there's, there's something here,not just in terms of the
franchise, You know,professional franchises, but
also in terms of sports, ventureand tech and that I saw a market
that felt reminiscent to me ofthe early 2000s and venture, in
terms of the in tech venture interms of the amount of Capital
(31:37):
and focus and kind ofsophistication, if you will,
right in the space that therewas a mismatch between the
importance that sports had insociety and the amount of energy
effort and focus being placed atearly stage companies servicing
sports, Right. And so thateventually crystallized into
(32:01):
this notion, okay, well, I'mgoing to try and be, you know,
one of the people to helpreshape this. And I ended up
using investments inprofessional sports franchises
as a vehicle for both BuildingNetwork credibility and
personal, family assetdiversification in order to get
(32:24):
this flywheel going to occupythis important place right in
the sports ecosystem. You know,you can think of, you know,
people that are doing this on amuch grander scale, like David
Blitzer, you know, in bowl, youknow, there are a handful of
(32:45):
folks, the fertittas, that aredoing things in this vein, that
have kind of venture andfranchise ownership together. I
probably have the most intensivededicated effort at the very
earliest stages of sports andmedia related startups than
anybody else,
Kent Lindstrom (33:03):
right? So there's the teams themselves.
Now, why did you start with a abaseball team? And how does
baseball How is baseball doingas a sport? I mean, it seems of
all the of all the things thatthe kids might want to go see in
terms of sports, I don't know ifis baseball. How does baseball
rank?
Unknown (33:22):
So baseball actually was very stagnant and declining,
and now it's on an uptick. Love
Kent Lindstrom (33:29):
the new. The new didn't mean I love the new
products, by the way. The thingwhere they made all the rules. I
went to a game. I made the game.He was all the time, but I went
to a few, I was like, this iscool. Like all those they made
the game faster in a bunch ofways. And I, my personal
opinion, is it works.
Unknown (33:49):
That's what the data shows. And whether it's, you
know, attendance, merch, sales,you name it, baseball is on the
upswing. And the Pro, you're,100% right. I think, you know, I
definitely have had differencesof opinion with Rob Manford on
certain issues, but the rulechanges that he pushed for and
(34:11):
got in. I mean, generationallyimportant. Also, you know, we
have such an incredible numberof great young players and
stories that in today's world ofsocial media, it is just so
engaging to see these playersunderstand their stories,
(34:35):
understand the dynamics thatEach of them are are managing,
that I think where baseball wasreally, you know, a laggard in
the social media realm, both interms of its use of social
media, and the players thatthere's really been an explosion
and a really positive way whichhas made baseball increasingly
(34:58):
attractive to young. Cohortsthat had kind of abandoned it
for faster moving sports.
Kent Lindstrom (35:04):
Will MLB ever be able to sort of extend into like
south of the border in theUnited States? Is that ever
going to happen Mexico City, or
Unknown (35:14):
wherever, I think, in general, I think for the US
based professional leagues arevery interested in global
expansion. And you know, you'veseen it with the NFL and the NBA
very, very actively. And I thinkyou'll, I think you'll see it
across all professional leagues,because why not? There's the
demand the sport is compelling,whether, whether it's, you know,
(35:38):
south of the border or acrossthe pond. So I am very, very
excited for the kind ofcontinued increase in value of
sports IP. And then that, youknow, that then begs the
question, Well, is there moresports IP than just like the Big
Five sports? And the answer is,sure, you know, there's some
really exciting emerging leaguesthat have now taken hold and
(36:00):
more investors than some ofthem, and it's fascinating to
see how some of these emergingleagues are using different
forms of distribution to get offthe ground than their big five
brethren, because now you know,if you have great, engaging
content, you can distribute overTwitch and YouTube and not need
(36:24):
a big deal with a network or anESPN to get going. You know,
where production costs are highand the balance has shifted
where, you know, an emergingleague is not, not going to get
a payment from a streamer out ofthe box, they're going to pay,
they're going to pay forproduction. There's going to be
(36:45):
this, you know, service levelthat they're going to need to
uphold in order to meet theirobligations under the
distribution agreements, where,if you're doing your if you're
self producing, and you'reputting it out there on YouTube
and Twitch, you know, and it's,I'm not talking about emerging
sports that are variants of themajor sports. I'm saying things
(37:06):
like golf, right? Like talkabout an explosion, you know, we
own a part three golf franchise,and you can only look at things
like, you know, good, good asbeing one of many, many
examples. But now, you know,millions of engaged viewers on
multiple streaming platforms,and, like, they didn't start
with a network deal. So anyway,it's just, it's so interesting.
(37:28):
It's like a convergence of allthese different things
Kent Lindstrom (37:30):
well, and sports seems like the last thing that
people will, you know, careabout. And why? I mean, the
streaming thing has made theconcept of getting together for
friends on Thursday night ateight o'clock just not a thing,
but getting together for the NFLplayoffs, you know, the real
time aspect of it, and there'sonly one of them, you know, it's
not a million makes it kind ofthe last big thing. Do you think
(37:51):
could anything else emerge everyfew years? Someone's like, you
know, three on three basketballis going to be big, or drone
racing, or ultimate Frisbee? Or,do you think there's any chance
for something kind of newer toemerge? I guess UFC emerged.
Unknown (38:07):
Yeah. I mean, look, I think it is going to take time
to see, well, okay, one, it hasalready made it, and then
there's dozens that areemerging. What's made it is UFC,
yeah, right. UFC is made and,you know, and then you've got to
(38:28):
challenge your brand, like, youknow, PFL, and, and there, there
are others, um, obviously, like,different variants on soccer,
or, you know, European football,you know, with kings League and
baller, which, which we're in. Ithink again, golf, I think the
(38:48):
you know, live, I think opened alot of people's eyes to just
different ways of experiencing avery traditional game that,
again, folks like good good hadalready been experimenting with.
And I just use them as the asprobably the biggest example.
(39:09):
There are tons. There are dozensof golf channels that have, you
know, millions of followers,right? And by the you were
talking about, kind ofsynchronous versus asynchronous.
And like the NFL playoffs beingsomething where people will get
together and watch together. Alot of people do watch together
streaming on YouTube, but theydon't need to be sitting in the
(39:30):
same room, but they can bewatching together. And that is
that is a new phenomenon, and Ithink something that also is
connective tissue that bridgesthe live sports personal
engagement gap is sportsbetting, yeah, where sports,
sports betting has becomemassively social, and it's, it's
(39:51):
not, you know, sitting there inan off track betting parlor with
slips and yellowed fingers fromyour cigarettes looking at the
next race. This is. Is, youknow, a bunch of you know,
young, energetic men and womensitting with groups of friends,
you know, with multiple screens,sitting here looking at the
(40:13):
looking at the live bettingopportunities. You know, they
might have their their six legparlay that's going to carry
them through the weekend,because it's fun and engaging to
see how it might play out, butat the same time, they're
watching their favorite game andthey're going in or betting in
real time. Yeah.
Kent Lindstrom (40:29):
So what are the big what are the components?
Obviously, you can invest indifferent sports teams, emerging
leagues. What are the technologycomponents? There's the there's
gambling, I assume there'sgaming. What are the, what are
the tech companies around? Youknow, we know what Netflix is
doing and Amazon, yeah,
Roger Ehrenberg (40:48):
but there's, you know, there's, there's
media. So there's, you know,media and infrastructure
companies that help emergingleagues either become bettable
or create, distribute theircontent broadly. So pull that in
for and then, of course, likethings like, Yeah, real time.
So, you know, video, like, supercutting edge video technology
(41:11):
that occupies like one part ofit, then you have analytics so
companies that are in the AImachine learning space helping
teams value their players,whether it's for n, i L, the
Transfer market, Player Health.So there's this whole sphere of
(41:31):
data analytics around sports. Sothere's teams, leagues, media,
infrastructure, analytics, Iwould say that pretty much
covers the landscape. But onething I would say, Kent that's
important is I'm I'm listingthese things off in serial
(41:54):
order. But part of the reason Igot so excited about the sports
opportunity as a mega trend,aside from it being under
invested in and under focused onat the earliest stages, is there
was this massive convergence,and sports media and social are
(42:14):
all coming together, yep, and Ithink that's super exciting and
a durable trend, because Ireally do feel like sports IPs
are one of those things that arelargely a cyclical Yep, and are,
and sports as a general matter,bring people together, and I
(42:37):
love that
Kent Lindstrom (42:38):
well. And going back to the Greek games, going
back to sports during wars liketo keep people's morale up. I
mean, it's obviously not a, nota fad, right, in any sense of
the game. And now I think youhave a thing too. I mean,
there's kind of, I've alwaysbeen intrigued. There's the
sports that you play. So I rode,you know, road like a boat in
(43:01):
northwestern which, again, notthe best rowing program. There's
a theme Northwestern createdsports, but there's sports that
people play and watch. Sosoccer, people play and watch
tennis. People play and watchfootball. Most people don't play
football, maybe not really.Nobody rows. I'll tell you that
like, you know, growing up, butit's kind of interesting. I
(43:23):
assume things like soccer andtennis probably have some
popularity due the fact thatpeople a golf, you know, people
also play them and kind ofproject themselves into what
they're what they're seeing.
Unknown (43:36):
Yeah, I think that is that's an interesting filter at
the same time, you know, there'slots of emerging sports that you
can't really approach that way,right, like sale. GP, right? So
how many people are hopping onhigh performance yachts and
(43:59):
flying across the water at 30knots, yeah, stuff like that, or
f1 Yeah, yeah, right name.People drive a car, but sure,
not really the same thing Iforgot, in the same way that
people can throw football in thebackyard, but they're not, yeah,
playing, playing football in thesame way
Kent Lindstrom (44:19):
I forgot that sailing thing is really cool,
and it's made like, hockey got alot better with high def TV like
that really helped hockey. The,yeah, the graphics on the
sailing because you can never,if you're watching sailing,
you're like, I don't know who'sahead or behind, like, what's
going on. And then the graphicsreally changed for that. I find
that kind of incredible. Iagree.
Unknown (44:39):
I think the production quality of some of these
emerging sports is shame, or,like you said, Legacy sports,
but where the intersection ofdata and production quality is
just skyrocketed, yeah. I mean,just like, if you look at, you
know, just even a foot, even afootball broadcast now, when
you. The, all of the additionaldata that's being provided in
(45:03):
game, or something like, youknow, PFL, professional fighters
League, you know, relative toofc. I mean, you look at, you
look at a PFL broadcast, which Ithink it's really interesting.
We're not investors, but I know,I know the team well, and I
think, I think they're great,you know, it is a completely
different experience given thegranularity of the data that
(45:25):
they're streaming to you in realtime in a really high production
quality event. I agree with you.I think the way these things are
depicted is critical, which isinteresting. But then there's
the flip side is also true. Ifyou look at some of these, you
know, golf YouTube streams,yeah, production quality is not
high, right, but they'reincredibly fun. There's like the
(45:49):
the energy is palpable. And, youknow, watching, uh, you know,
Bryson deshambo Try and, youknow, hit a hole in one over his
house onto his little green, andthen having a guy, you know,
paying a guy 100 grand if he canget one in, you know, within the
10 hours fan, I mean, it's like,it's so awesome, you're gonna
get everybody
Kent Lindstrom (46:08):
excited about sports investing. Well, let's,
let's finish with the DetroitRenaissance. And I thought, I
was thinking I was talking toone of these billionaire hedge
fund guys who, it's one ofthese, like, TPG guys who just
has all the information in theworld, like he's the president
united states, like, you know,and and everything's just like a
prop bet, you know, the entireplanet. And he said something
(46:30):
that's interesting, which was,if he could buy call options on
Chicago, he would 100 year calloptions. And his the idea was
that it's an earthquake freeplace with unlimited fresh water
right next to it, as climatechange pushes people north. But
Detroit, different thing thanChicago has seemed like the
(46:51):
poster child for a city that wasonce and then will be again, a
great thing. How'd you come tobe involved in that? And what do
you Where are you on that?
Unknown (47:02):
So the point that this hedge fund guy made about, I'll
call it the Great Lake states.Him focused on Chicago. Me on
Detroit. I've been I've beenspeaking about that for years. I
very much believe in the thesisof climate migration, and very
much believed at the Great Lakesstates, and in some cases, once
(47:25):
great cities will benefitdisproportionately from that. So
as I was born in Detroit, my dadwas a Ford guy, so that's where
I started life, and it's alwaysbeen very near and dear to my
heart. Followed my sister, whohas two degrees from Michigan to
(47:47):
U of M, met my wife at U of M,both our kids went to U of M,
her grandfather went to U of M,nephew cousin go to U of M,
Kent Lindstrom (47:56):
give the person a try.
Unknown (48:02):
You know, very involved with the university, but about a
decade ago, I started, and thisis completely separate investing
in affordable workforce housing,because that was something that
I felt intersected mission andbeing able to make solid
economic returns. East LA,Aurora, Colorado, Salt Lake
(48:26):
City, Brooklyn and then Detroit.I co founded a business in 2000
real estate business in 2017with some other Michigan folks,
bald great water that was bornof the opportunity zone
legislation that was promulgatedin 2017 we have raised about
(48:50):
$300 million of private capitalacross 10 funds. We are the
largest multi family homeownerin Detroit at this point, with
2000 units that we've rehabbedand built, and we have an
additional 700 in Lansing, oneof my partners who again, born
and raised in Detroit, he and Ihad this even bigger vision for
(49:18):
how the place making real estateinvesting that we were doing
through great water could beenhanced and hasten Detroit's
recovery by investing in thingsthat people who lived in Detroit
would want and find exciting. Sowe partnered with a great
(49:41):
restaurant tour, and we ownrestaurants and are developing
restaurants downtown and in theneighborhoods. We with with that
founder, who founded arestaurant called marrow. We
started a wholesale meatbusiness called marrow Detroit
provisions, where we areactually. Me distributing
(50:02):
sustainable, ethically,ethically handled meat from the
Great Lake states that is beingsold through gourmet markets,
but also Zingerman's, which youmust know like, right? Everyone
knows zingerman, so zingermansells marrow meat, and we have
(50:22):
also invested in some CPGcompanies based in Detroit, jobs
in Detroit, but now sellingproducts nationally. So we are
on the cusp of actually raisinga fund that has three parts to
it, CPG studio with a set ofshared services to help the
(50:44):
incredible entrepreneurs inDetroit with capital and know
how to scale a venture fund toinvest in the seed and series A
rounds of these and othercompanies, some that we develop
in our studio, but others in theecosystem when We've already
made a few investments thatwe've been warehousing, and a
(51:04):
beverage brand I called CasaMara being one of them, and then
a real estate fund to help usacquire and develop buildings,
which we're already doingpersonally, but now to do it at
greater scale that we can putcompanies in to again, get this
flywheel going of great people,great entrepreneurs, great jobs
(51:29):
for Detroit, putting money backinto the system, but with kind
of global expertise and know howin manufacturing, distribution
and marketing. This then alsoconnects with the work that
we're doing through Universityof Michigan, and with
(51:51):
partnership with the school ofeducation and this project, this
school on the northwest side,called Mary Grove, so we're
doing all of these things, bothwith kind of foundation
partnerships, University ofMichigan and university
partnerships and our own privatecapital to help make Detroit the
(52:11):
city that it's will benefit fromclimate migration, but even for
the Even absent that rebuildthis once great city and make it
great again.
Kent Lindstrom (52:24):
And why doesn't housing curious about this? Why
doesn't housing alone do Irecently went on a vacation to
the this kind of traveled aroundthe lower Mississippi River,
which, putting aside my vacationchoices, there's these, like,
little towns there, climatethings different there, but
like, I don't know, Natchez orwhatever. And they're these just
beautiful old towns. They'rejust, they're kind of deserted,
(52:48):
you know, the Piggly Wiggly orwhatever, moved to the freeway
and the NAFTA came along. But asa just a town, it's like on the
Mississippi River with unlimitedwater and all these beautiful
old homes for like, $60,000 whydon't just a bunch of young
people just move there, likeleave LA and San Francisco and
just colonize these or whateverthe right word is, you know,
(53:11):
take over these towns. Just onhousing prices alone, you buy a
beautiful house on a hill for$80,000
Unknown (53:19):
so
it's interesting. I mean, a lotof places have tried to address
that issue by providingincentives for people to
relocate, not just in the UnitedStates, but, I mean, you read
about this in Italy and Franceand some of these gorgeous
little towns that have largelybeen been deserted. The reason,
(53:39):
I think, is because if you'retalking about young people,
young people eventually havefamilies. Kids need schools. You
need the infrastructure thatgoes along with that. It's not
just housing. And that's,that's, that's the key Kent to
again, what we're doing inDetroit is it's not enough to
have great housing. It's notenough to have places to go out
(54:03):
to eat. You need walkable, safecommunities. You need excellent
schools. You need public,private partnerships. You need
it's and I know I mean havingnow, having spent so much time
in Detroit with both state andcity leader leadership, who I
(54:27):
think have done a reallyfabulous job, but there's so
much more work to do. It is sohard. It's just it is really,
really hard to change trend nowDetroit for the first time in 60
years, 66 oh, had an increase inpopulation year to year, the
(54:47):
first time in six decades. Soonce you get that momentum
going, you can, you can do it.You can get, you can try and
sustain it and have an increasein speed. So. Yeah, I just you
can't underestimate howimportant all of the wraparound
services are to makes a placeattractive relative to just an
(55:12):
attractive house. Yeah,
Kent Lindstrom (55:14):
wow. Well, it seems like you're the third act,
if you will. In my littleanalogy, it seems incredible,
like the sports Detroit. I mean,it all seems amazing. How would
people follow you? There's apoint, really the IA part, but
like the current things you'redoing, if people want to keep up
with you, they follow you onTwitter. Or what's the what do
you recommend?
Unknown (55:34):
I certainly, I probably, at this point, use,
use LinkedIn more for kind ofbusiness oriented updates. I do
use Twitter for sure, and I dowrite on medium now and again. I
will say my my writing hasslowed when I write, I write
like pretty deep, thoughtfulpieces, but yeah, info arbitrage
(55:57):
on Twitter, me and Ebertcapital, great on, you know,
Kent Lindstrom (56:04):
and working with your family, that's good. That's
going okay. You're all gettingalong.
Unknown (56:09):
It's great, yeah, I mean that. That's a whole,
that's a whole other podcastKent that I can get into.
Suffice it to say, my wife,Karen, who, you know, whom I've
been with since Michigan days.You know, she's a clinical
psychologist, and let's just saythat for role in helping us be
(56:30):
effective, in bridging the gapbetween being super close as a
family and as parents with ourchildren, as well as colleagues,
she should get paid overtime.Okay, well,
Kent Lindstrom (56:44):
we will do the family business podcast at some
point. Thank you so much fordoing this.
Unknown (56:50):
Kent, it's my pleasure. It's, it's, these are great
questions. It's really greatseeing you and all the best for
grade 25
Kent Lindstrom (56:56):
thanks so much. All right, this is in the
something metric podcast. RogerHerbert, my guest, talk to you
Next time
Unknown (57:22):
you
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