173. Corruption, Extortion and the Fight Against Entrenched Interests– How a VC Saves Startups from Death by Politics (Bradley Tusk)

Bradley Tusk Full Ratchet Corruption, Extortion and the Fight Against Entrenched Interests

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Bradley Tusk of Tusk Ventures joins Nick to discuss Corruption, Extortion and the Fight Against Entrenched Interests– How a VC Saves Startups from Death by Politics. In this episode, we cover:

  • Why and how did you get into VC?
  • You have a nice model where you generate revenue through Tusk Strategies, which allows you to hire great talent and invest forward in startups. How has the model changed over time and how is the organization structured today?
  • How were you able to get allocations and generate dealflow when you were new to VC?
  • You spent some time in Illinois w/ an infamous Governor of our’s… and you’re very candid in the book about the issues and illegal acts that Rod Blagoyevich instructed you to do. Give us some of the highlights and lowlights from the experience.
  • You highlight the importance of narrative many times throughout the book. Can you touch on the key points w/ regard to picking and framing your narrative for tech startups?
  • You’ve said that when large industry incumbents are disrupted, “they punch back, and they punch hard”… have you seen situations where startups have died b/c of response of a large incumbent? Talk about some of your experiences.
  • Have you worked w/ any tech companies who’s mission doesn’t align w/ your political beliefs?
  • How can you possibly win a prolonged battle going jurisdiction by jurisdiction?
  • I enjoyed the section of the book you call “Pick your enemies = Win Your Battles (Strangle the baby in the crib).” What’s the best message founders can take away from this chapter?
  • We’ve all heard a lot about the political issues w/ independent contracts vs. employees. Uber has been the headliner in the media but you also cite Handy, in the book, the platform that connects independent handymen w/ home owners… what’s been your involvement w/ this issue and where do we stand?
  • Talk a bit about your interactions w/ Elon and the work you did w/ Tesla against the dealership incumbents.
  • You close the book w/ an emphasis on voting and the importance of mobile voting. You’ve even said that mobile voting is “the biggest disruption fight of them all” and that “restoring our true democracy– and actually confronting our nation’s deepest problem.”

Guest Links:

Key Takeaways:

  1. The purpose of Bradley’s book, The Fixer, is to raise awareness that startup companies don’t have to fall victim to pay-to-play politics, corruption and ultimately lose the right to operate.
  2. Bradley is currently investing with multiple companies including Bird, Circle, Coinbase, Lemonade and Fanduel.
  3. Bird is currently working to pass legislation that will legalize scooters in NYC. Bradley is confident that they will be successful after City Council’s endorsement of the bill.
  4. Since beginning his work with Fanduel in 2015, sports betting has become legal in multiple states and approved by the Supreme Court. They are currently working on getting explicit approval from each state jurisdiction.
  5. Bradley became Deputy Governor of Illinois when he was just 29 years old and goes into detail about the highlights and legal issues he faced in that role.
  6. Illinois was the first state to import prescription drugs from Europe and Canada, utilize open road tolling and provide universal healthcare for kids.
  7. It is critical for tech companies to construct a narrative that caters to the public sector.
  8. Airbnb has taken a hit in NYC, because of numerous laws that have been passed, making it significantly hard for them to operate.
  9. Through the Uber and Airbnb examples, Bradley looks for products that can survive regulatory review. He poses the question “Is it a viable business?” if it cannot pass these reviews.
  10. Bradley shares his opinion on the war on drugs, specifically that he believes drugs should be legal and regulated in the same way that alcohol is.
  11. Through his work with Handy, Bradley is working on creating a portable benefits plan that will provide 1099 employees with the same benefits as W2 workers.
  12. Currently, in the U.S., there is a 10-15% turn out in congressional elections. Typically, these votes come from extreme ends of the spectrum, resulting in politicians only focusing their efforts on small demographics/interest groups.
  13. Bradley envisions a restoration of true democracy and the ability to address some of the country’s deepest issues by implementing mobile voting via Blockchain and radically increasing participation in elections.
  14. In West Virginia’s May primary, mobile Blockchain voting was successfully piloted with Military members deployed overseas.

Transcribed with AI:

0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran, and this is the full ratchet

0:23
Welcome back to TFR for a good one. Today we feature Bradley Tusk from Tusk ventures. Bradley recently published his book The Fixer, where he candidly shares the often shocking stories of his career in politics, and how he now leverages that experience to help startups. In this episode, we cover tough strategy and structure, how he sourced deal flow and got allocations in the early days. The political bribes and corruption that Bradley dealt with during his days as deputy governor for Illinois, the importance of a public narrative for tech companies, pressures from large incumbents on early innovation, how one fights a regulatory battle jurisdiction by jurisdiction,

1:04
how choosing enemies sets one up for success, the independent contractor versus employee battle of the Freelancer economy, Bradley’s experience working with Elon Musk and Tesla, and we wrap up with his thoughts on mobile voting and the massive impact it may have on the future of our country. Here’s the interview with Bradley tusk of Tusk ventures

Bradley Tusk joins us today from New York City. He is the CEO and founder of Tusk ventures the first fund dedicated to investing in startups in regulated industries, protecting them from political risk. Tusk Ventures has now worked with and invested in dozens of startups like bird FanDuel lemonade ease, circle and ripple. Bradley previously served as Mayor Bloomberg campaign manager in New York City Deputy Governor of Illinois, and Senator Chuck Schumer’s communications director, his family foundation is leading the work to bring mobile voting to the United States Bradley’s book, The Fixer scheduled for release on September 18. Is a candid look at his career in politics, and his work with some of today’s leading tech companies. Bradley, welcome to the show.

2:19
Hey, thanks for having me on.

2:20
Why, and How did you get into Vc by accident?

2:24
So after the Bloomberg campaign in oh nine, I started a business that runs big campaigns for big companies. And I was sitting in a Walmart meeting in 2011, and trying to help Walmart kind of break through different unions and get into urban centers like Boston or New York. And a friend of mine called and said, Hey, there’s a guy with a small transportation startup. He’s having some regulatory problems. Would you mind talking to him? I became Ubers first political adviser that day, I get really lucky when Travis calls me back and says I can’t afford your fee. Would you take equity? And thank God, I said, Yes. That was during the series A then spent the better part of the next five years just kicking the shit out of the taxi industry all over the US. So that ride sharing could happen. As I was doing that, it wasn’t hard to tell the A it’s fun. And be although Ubers a little bit of an outlier. It’s pretty lucrative, right? So I said, I should do this more startups. So when I met with different founders, and I would say, hey, you know, here’s the industry you’re in, here’s what you’re disrupting. Here are the political forces that aren’t gonna like it. Here’s, I’m gonna do too, you know, I can help and I’m happy to do it in return for equity. And at the time, the awareness of the need to take government and politics and regulation seriously wasn’t what it is today. So typical response I will get would be along the lines of No, no, you don’t understand. I went to Stanford. I was in Y Combinator. John Doerr is on my board. And when those stupid regulators see how smart I am, they’re gonna do whatever I want. Exactly. So obviously, policy doesn’t work like that. And then in the summer of 2015, there was a particularly vicious fight. Here in New York Between Uber and Mayor Bill de Blasio, there’s a saying you can’t fight city hall. We did. We won. It got a lot of attention. But what it really did was, I think, start to finally help sink in around the Valley and around tax, you got to take this government stuff seriously. So I use that as a jumping off point to create touch ventures, which is kind of a two part business. The first is working with startups in regulated industries, typically in return for equity, solving a wide variety of political problems. And then when we get warrants for our work, we also get investment rights off of those rights. We raised a small first time fund of 37 million been deploying it pretty rapidly. We’re not far from the first close of fun to and so now I guess I’m a real venture capitalist. Got

4:42
it? Yeah. We had Jordan on Jordan off sometimes you go from to us. So yeah, he gave us kind of an idea of the model. But can you touch on it at a high level? I know you’ve got test strategies, and that’s helped you hire great talent and invest forward a bit but yeah, it’s

4:58
totally so there’s, I guess, a couple of different pieces. sure that are relevant for this discussion, test Venture Partners is the traditional 2020 fund. What we’re finding typically is series A bet a million dollar check out a fun one, that will probably be higher for fun to just because we’re raising more money but still kind of same stage. You know what we really like our startups that are in heavily regulated industries that we know that if they succeed are going to drive a lot of people crazy, and there’s gonna be a lot of opposition. And how do we not only beat that back but in a perfect world? How do we get in early enough to preempt it in the first place, so birds started working with them and invested in bird invested in bird and start working with them about a year ago, and have been kind of leading faith all over the US to make a scooters legal working in most cities struggling and some lemonade invested in starting there be sort of working with them during their a goal was to get them insurance license in every state, that’s pretty much happened. FanDuel we came in when the shit hit the fan after in 2015 kind of helped legalize daily fantasy sports in a lot of different states. And now this year, we’ll be pursuing sports betting licenses and states all over the country, the investment arm of Venture Partners, the advisory arm is Tusk ventures LLC. So that’s the company that we have that works with lots of different startups. And a touch strategy is the original consulting firm to strategies tends to work with big public companies. But what we found is we’ve been able to create some partnerships between some of the really big public companies we work with and some of our startups simply because they each have things everyone likes. And then for purposes of this conversation tonight, Montgomery philanthropies is our Family Foundation, thanks to Uber, we’re trying to create blockchain based voting so that people can vote in elections on their phone. So we’re not investing in startups in the voting space, because I want it to be totally philanthropic. But we are working with startups in that space to get

6:50
it. So several years ago, not having a fund was the sourcing strategy. Were you going directly after these startups in regulated industries? Or were you working VC channels to kind of explain to your value and have them, you know, bring you in as a co investor? Yeah, that

7:05
and everything else you can imagine in the early days, it was really hard at first, to get people to want to meet with us talk to us, take us seriously, I probably cold email 200 VCs, just saying, Would you please take a meeting with me, I’ll come to you whenever a lot of them blew me off. But some didn’t. I think a few things kind of happened over the last three years. One is, you know, we won some pretty big fights. And that’s gotten attention. And two, as generally, the role of government and politics has become more and more apparent for not just startups thinking really big tech companies, as we’re seeing now with Amazon and Google and Facebook and Twitter, the awareness has changed. And because we’re the only ones who do what we do, we tend to get a disproportionate amount of attention, especially from tech press, because anytime there’s a political issue, they know they can call us up, we’ll have a perspective on it, you can give them a pretty quick quote. So our profile kept increasing both based on first, the fights were winning second, the attention, we were getting a third, we’ve ended up now at a fun one investing in bird circle, coin base lemonade care of Next, our FanDuel bunch of really good companies. And so now people will just hop on CrunchBase. And they see that as well. And so that’s all kind of had that, in sort of the tech parlance created a virtuous cycle with the attention, the political winds, and the investments all keep driving each other now,

8:23
well, this, so probably not the best place to start. But I’m a Chicago guy. And you spent some time in Illinois with our infamous governors. And you’re very candid in the book about the issues and even illegal acts that Rod Blagojevich instructed you to do. fantastic stories, by the way in the book, so I’d encourage the listeners to pick it up. But can you give us some of the highlights and lowlights from that experience?

8:45
Yeah, totally. So the whole thing was crazy from the first day the last day. So in 2003, Mike Bloomberg had just become mayor of New York City. And I was sitting out you’d been there for about 610 months at a point. I was sitting in City Hall. Mike just had a big bullpen where everyone sat at a desk and he sat at a desk in the middle. And I was working on political stuff for him and policy stuff. And my phone rang and a guy I knew said to me, Hey, do you want to be Deputy Governor of Illinois? And I said, What’s a deputy governor and why you’re calling me? And the answer is, it’s the guy that runs the state. A little crazy, because I was I’m not from Chicago. I happen to have gone to law school in Chicago. But that was just a random coincidence. I was 29 years old, right? So really had had no business running the fifth biggest state in the country. But I flew out to Chicago and met with Google, he had just been elected. And I think in retrospect, they hired me for two reasons. One benign, one less benign, the benign one is or was that even without the illegal stuff? He was crazy, right? Had he pled insanity at the trial, they would have had to have given it to them, but of course, people still don’t think they’re crazy, right? So like, they were self aware enough to know that working for Rod would be incredibly difficult. And the advantage of me being really young it was It’s a career making job for me that I would be willing to put up with a lot more than a real grown up with more than I, you know, if I walked that job today, I’d be gone three weeks because there’s no way I would put up with it. When you’re 29, you will want to make more exceptions and deal with more stuff. And I had kind of a broad based background where I knew a little bit about a lot of things. So I had been Schumer’s communications director, so I kind of understood comms, I had done politics and policy for Bloomberg. So I understood that I had worked for Ed Rendell, when I was in college and City Halls had a perspective on that I had gone to law school at Chicago’s at a law degree, a little bit of stuff in a bunch of different places. And so I think there from their perspective, they thought, Okay, this kid seems pretty smart. We know how work is asked off, we know we can’t get a traditional person to do this job because it’s too crazy. Let’s give them a chance. So that’s the benign reason the less benign, one sort of fits in the same mold, which is, ultimately they wanted someone who was so young and naive, and they could rob the place blind. And I would notice, which I pretty much didn’t, until Rob specifically asked me do something illegal, which I knew was illegal and said no to. So things like grants and contracts and patronage. Were the only things not in my portfolio. And in retrospect, I now understand why it all came to head for me in summer of 2006, Rahm Emanuel, at the time was a Congressman from Chicago. And Rod had promised him a grant for athletic facility in his district. Grant never was dispersed. Ron called me one day and it’s typical round screaming, yelling, fuck you. There’s a typical rom cough if you’ve seen entourage imagine already from out there. So that night, I’m on the phone to Goya vich. And I just said, it’s brought up to the head. I don’t even really know what this thing is. But Ron mentioned it and he seems really upset. And he kind of went off and said, No, no, no, he’s not getting that money. His brother surrounds brothers already, Emanuel, who’s the CEO of web endeavor, and kind of one of the biggest names in Hollywood, his brother supposed to have a fundraiser for me, it hasn’t happened yet. And he doesn’t get that grant until I get the fundraiser. And obviously, you can’t link a government grant for a school to a political fundraiser. And so I kind of said we can’t do that got off the phone called our General Counsel, who was also our chief ethics officer and said, You need to get your client under control. And he put a stop to it. Grant was given fundraiser never happened. But when will go over to was arrested of the 24 accounts. He was charged with one included attempted extortion of Congressman Emanuel so I had to testify in both trials about that. So kind of a crazy four years, but at the same time, Rod viewed the world in a way that was both incredibly logical or illogical, which is he saw the role of running for office and the role of holding off to two totally separate jobs. And in his mind, his job was to run for office, he would literally say, Okay, I did my job, I’ll be back again. And for years, which meant he had no real interest in government whatsoever, he would go three or four months at a clip without even coming into the office. And at first, it was kind of a terrifying thought. But at certain point, like you or anyone listening to this, what do you say, All right, well, someone’s got to be in charge. I guess I’ll just do it. And then we started running the state. And in a way because there was no one to say no, every wacky idea that we had, we actually tried to do so like we were the first day to import prescription drugs from Europe and Canada. We were the first day to tear down every tollbooth in the system, and cryopen Rotolo and first aid to universal health care for kids. So whatever ideas we had, we could just pursue, which made it really fun. So it was an interesting four years, I learned a lot was certainly helpful and what I do now, but I think that there’s no way to handle that at this stage of my life.

13:22
Unbelievable. So were you like a pure proxy for him when he was sort of a well?

13:27
Yeah, I mean, literally, a given example. I remember kind of early on every legislative sessions in Illinois is fairly typical. In this regard, the state will pass call it four or 500 bills. 90% of those are nonsense, like the official amphibian of Illinois, the frog, or whatever, right? 10%, only things that meaningfully impact public policy, the budget is their real piece of legislation that really matter. And so you go through a whole process where you do a policy review, a budgetary review, a legal review, it’s a pretty serious process. And it’s fairly consistent across states, I imagine. And then the last part is going to sit down with the governor and say, Do you want to sign or veto the bill, or the recommendation based on all of these factors, I had a really hard time getting him to focus on it. And so I remember one day, we were maybe had that 20 bills deadline was coming up on that I thought he needed to look at and he said, we’ll have to go to the tailor today, until maybe on the way to the tailor from the tailor, or before or after to now I’m picking out fabrics for three different suits, I’m going to be really busy. And to me that was code for I’m not interested you do it. And so I just decided, right? So at the end of the data entering four years worth of legislation, when I testified to this in the trial, they had to go back and see whether all four years of legislation was validly enacted because the governor had nothing to do with any use the auto pen. So it was so in a way it was amazing because we got to run the fifth biggest state in America, right? That was an incredibly interesting and cool experience. And in a way it was terrifying.

14:51
I bet a bet. So we got a lot of founders and tech companies in the audience. And in the book, you highlight the importance of narrative actually anytime throughout the book, you highlight the importance of narrative. And clearly you’re a storyteller. So can you touch on some of the key points with regard to picking and framing a narrative, particularly for tech companies? Absolutely.

15:10
Where I think maybe some tech companies have fallen a little short is they think long and hard about their narrative for investors, they think long and hard about their narrative for customers, but they don’t really think about it for the public sector, which means not just the regulators and government, but reporters, advocates, all the people kind of in and around public life, who have the ability to either make your company a lot more successful or a lot less successful. And I think that the narrative can be we’re totally blowing up and disrupting this industry, the narrative could be, we’re incrementally improving this thing to make people’s lives a little easier. They can totally vary from company to company and product or product. But you have to think about, Okay, in this jurisdiction, here’s who’s in charge. Here’s what the law currently says, here’s what’s on the books, here’s who We’re disrupting, here’s their political influence and power, here’s what they’re likely to try to do to us to stop us from succeeding and getting market share. And we’ve got to construct a narrative that doesn’t allow them to deal with that, right. So it just requires a reasonably sophisticated political analysis of that market, just like you would have any other customer market or segment. You know, that’s true in every sector at every stage, whether you’re precede or Series E or whatever else it is. But you have to take this stuff just as seriously as you take everything else.

16:31
Bradley, you’ve said that when large industry incumbents are disruptive, they punch back and they punch back hard. Have you seen situations where startups have died? Because of response of large incumbents? And if so, can you talk about some of those experiences? Yeah,

16:45
absolutely. I mean, there’s different levels of it, right. So like, just in recent weeks, Uber got hit in New York City with cabs, we did not work on the fight. But the taxi industry was able to push back successfully and limit Ubers growth. Airbnb also here in New York basically can’t even really legally operate at this point, because they’ve had so many bad laws passed both at the state and local level. There’s a chapter in the book where we talk about a startup at my table. The idea was to do peer to peer kind of kitchen sharing, not unlike, say ride sharing, or home sharing. Because it was such a radical departure from how health inspections work, and how commercial kitchens work and everything else. before we could even really get going. You know, we were getting prank calls made in from restaurants to the local different departments of health in this case was Austin and Los Angeles, shut down by both of them. And because it was such a young company with just not that many resources to put into a political fight, even though intellectually I had a game plan for here’s how we could redo the regulatory framework here, where we can have obviously, you can’t have health inspectors inspect every kitchen, but you could have commercial sourced foods so that you’re buying ingredients replaces inspected, you could live stream, the preparation, there’s a lot of things I thought you could do to really transform that idea and make it work from a political perspective. But they ran out of money before we regard it even close to that. Yeah. So that was one example. It happens a lot. And I think also look, a lot of the stuff that we pass on, is because it’s a cool idea. But the founders, so didn’t think about the politics of it. It’s like, look, this just is not going to happen, right? Like we’re willing to take on lots of different fights, and even ones that sometimes have really long odds. But in the same way that you’re analyzing, are people going to buy this product? Can my engineers build this product that people want to fund the creation of this product? You’ve also got to think about, can this product survive regulatory review? And if you can’t, then the question is, you know, is it a viable business? Right, right.

18:45
Bradley, have you worked with any tech companies whose mission doesn’t align with your political beliefs?

18:50
Yeah, I mean, look, ultimately, my belief when it comes to tech is startups should have the right and ability to compete with entrenched interests. I see our role as that Bulwark between startup who’s innovating and Trump’s interest who doesn’t want competition and uses pay to play politics to try to stop them from entering the marketplace. And our job is to give those startups the opportunity to compete. Right. And so on that standpoint, the ideology is kind of the same everywhere, because it’s just like, hey, I want you to have a shot. I believe you deserve a shot. Whether or not ultimately you made that successful. I don’t know, you know, since I’m usually there taking equity or also deploying capital, I hope the answer is yes. And have some sense as to why I think it will be yes. But ultimately, there’s totally different approaches. Right? So if you take Uber obviously well known for really fighting out every single battle and every single jurisdiction, very, very aggressive, where it’s like FanDuel right now, you know, the Supreme Court has legalized sports betting but we’re not taking bets until we know that we have explicit approval from regulators in each specific state, just a different approach to it. And it’s all very context dependent. There’s notion of the beg for forgiveness or ask for permission. And it’s kind of a silly question in the sense that the answer is yes and no to both. And it just depends on what city or state are you in? What are the laws on the books? What happens to you if you don’t if you beg for forgiveness, and you kind of don’t get away with it, right? It’s one thing to have cars impounded or scooters impounded. Another thing is cryptocurrency issue where all of a sudden the SEC is filing criminal charges, you’re looking seven to 10 years in jail. So you really have to think through all those different permutations industry, by industry, market by market to kind of figure out what’s the right approach on each front. Now there are occasionally startup where they do a while with my personal views, like there’s a chapter in the book at ease, which is kind of known as Uber for weed cannabis delivery company based in California. I personally just don’t think the War on Drugs works. And I think that drugs should be legal in the way that alcohol is legal and regulated. So I enjoyed particularly working on ease, because I felt like in furthering what they wanted to do, it helped also advance my own policy beliefs. But broadly speaking, my belief here is the right to compete and the right to innovate.

21:04
Got it. So this point about asking for forgiveness or not, this is part of what you guys provide to startups, right. You get in and you’re like, based on what you’re doing in the industry you’re in and the entrenched interests, here’s what we would suggest in this situation, and here’s how we’re going to help you. Yeah, totally

21:23
how we’re gonna help you, we’re gonna run this whole process. And by the way, we could for the same startup, suggest asking permission in some jurisdictions and techniques for forgiveness and others, right? It’s totally dependent. If you look at Byrd, right now, New York City, we’re working through the process to legalize scooters, they’re not legal currently. And there are people who say you should just drop the scooters and get going. And in some markets, that has actually made sense. But for New York City, our belief is the best path forward is actually get affirmative approval from the city council. We’re making a lot of progress on that it’s bigger than City Council’s already endorsed the bill. York Times Editorial Board has came out in favor of it. So we’ll get there, I strongly believe but yeah, I mean, it’s really idiosyncratic. And I think one of the biggest risks for founders is to not know what you don’t know, right? Just because you really high IQ, just because LPS like me throw money at you or whatever else, doesn’t mean you understand government politics at all. And just even if you like to read politico, or you read the paper every day, or you knock down a few doors for Obama and Oh, eight, it doesn’t mean you understand anything, in the same way that you’ve got to be able to say, how can this thing affect me? And how do I get the expertise to figure out all the different permutations and the path forward? No different than what you do for your marketing or advertising or your legal work? The same thing is true in politics.

22:41
How the heck can you win a battle going jurisdiction by jurisdiction? I mean, it just sounds like a long sort of work attrition.

22:48
It’s really hard. And that’s, you know, sometimes why startups don’t make it as they need approvals jurisdiction by jurisdiction, and they don’t have the kind of funding to survive that process. Right? Most tax and most b2c companies generally are regulated on the state and local level, not on the federal level. If you’re FanDuel, and you want a sports betting license, or if you’re lemonade, and you want the license to sell insurance, you’ve got to get it from each individual state. Now you can obviously we often prioritize what jurisdictions to go into first, based on the politics based on the cost of running the campaign, based on if we succeed, what multiplier effect can we get from that? How does that help us in other jurisdictions or vice versa if we fail? So you know, we usually try not to be and say, more than eight or a dozen places at a time. But there are companies like Byrd where it’s much more aggressive than that, you know, Uber eventually, I think we ended up in 384 different markets in the US and we had to fight it out every single one.

23:43
Wow, crazy. I enjoyed this section of the book you call pick your enemies, equals win your battles, strangle the baby in the crib. What’s the message that founders can take away from this chapter? That

23:55
chapter, a lot of it for recall, was really about the 2009 mayoral campaign and we were trying to convince Anthony Wiener, same guy who’s now you know, he made himself famous on Twitter to not run against my for mayor. But you know, we understood early on that based on the political factors at that time in New York City winner very well may have beaten us, whereas we didn’t think anyone else really could. And so we ran kind of a separate campaign, just to knock him out of the race completely and make sure that he didn’t run and he didn’t kind of thank God he didn’t because it’s a backbench congressman, the scandals he got into didn’t really have much of an impact on the world one way or another. If he had done the mayor of New York City at the time, it would have been a very, very different story. But I think for founders is a few things. One is it’s picking your battles wisely, which gets back to the notion of there’s no blanket rule on begging for forgiveness or asking for permission, right? There are times where even if it’s going to cost you a little more money, even if it doesn’t fit your kind of libertarian worldview, it makes sense to get a permit, it makes sense to work through the process and make sense to sort of take a little longer way to do it right. And other times where this was certainly the case for us with Uber, if you don’t bust through as hard as you can, it’s just never going to happen. Right? It’s your only choice if you want to survive. And it’s really being able to sort of differentiate between those different things, and make the right call the right time and not be governed by this sort of broad, sweeping ideology. In a business. That’s totally there’s some kradic Got

25:22
it. We’ve all heard about these political issues with independent contractors versus employees. And Uber has been a headliner in the media on this in the book you cite handy. This platform that connects independent handyman with homeowners. What’s been your involvement with this issue? And where do we stand currently,

25:40
to Hades great credit, oh, Sheen, Hanrahan, who’s the founder had this kind of novel idea, which is, what if we provided benefits to the professionals on our platform, we don’t want to make them w two is our business model doesn’t in any way allow for that. But we could take a portion of their earnings and match that and provide health care, or pension benefits or disability or workers comp or what however, they might want to use it, and agree, totally portable, and they can use it from platform to platform and job to job. And she came to me not long after we launched house ventures and said, Do you think this is possible? And the answer should be Yeah, I want a business wants to go voluntarily spend its own money to give more benefits to workers? Who says no to that? And incidentally, in this question, in this case, the answer is the unions, because a lot of the unions feel like if workers have all the flexibility of being independent contractors, and can still get things like benefits, they have no reason to join a union, they have no reason to pay union dues. So we started the fight in New York, and thought, hey, there’s so many housekeepers and enhance these main businesses, really, housekeeping and housekeepers have been part of the gray economy since literally the beginning of time, there’s no real way to organize them. And so they’re not even really members of unions. But a unit called 32. BJ with represented the commercial cleaners in New York City, the janitors and custodians and things like that felt like anything in the cleaning world was their turf. And they worry that if panties, plugged professionals could get benefits, then that would further reduce their chance of ever organizing residential housekeepers. They, in a very weird way, went to the governor’s office and said, We don’t want these people to get benefits, you have to prevent this from happening. And they were able to block our legislation and also block us from passing on an administrative level. So what we didn’t set is the kind of analysis we talked about earlier, which is, what are the states where we think we can get something done. And we ran legislation in six different states this past year, and one in all, so Iowa, Tennessee, Kentucky, Utah, Indiana, and I’m sure getting one. And we’re also now working on Texas and Illinois, where we’re able to basically say, an independent contractor is clearly not a full time employee. And if you were to provide them with things like benefits, that wouldn’t all of a sudden trigger a change in employment status. We had a couple of years earlier, pass that same legislation in Arizona and are now working on creating a portable benefits plan. In Arizona, at least a critic proof of concept to show the world this could work. And there’s no reason that people can’t be 1099 and still get some of the benefits that WT workers have.

28:18
Got it. And where are we at with the ride sharing side of it?

28:21
It’s an interesting question. Because New York, the the regulatory structure varies from jurisdiction to jurisdiction. So like in New York City, if you’ve taken an Uber, those are pretty close to full time workers, right? They’re working 5060 hours a week, whereas in most places in the US, it’s someone working more like 10 or 15 hours a week, and it’s just part of their life. So depending I think it’s going to come down to really how many hours people are actually working. And it will be addressed probably in a combination of federal and state law. We had tried, and this is talked about in the book, when the tax bill was passed a couple years ago on Congress to include a provision that made it very clear that under federal tax law, sharing economy workers, anyone work in the sharing economy were independent contractors, and that we could proceed in the way that we want them to proceed without having to worry about a state saying no, no, now your W two and you have to change your whole business model didn’t make the very final version of the bill. We got into like a second to last version. But of course, it’s not good enough. But I do think that ultimately, some of those issues will end up getting resolved on the federal level, both administratively through the Department of Labor and through Congress.

29:25
Bradley talked a bit about your interactions with Elon Musk, and the work he did with Tesla against the dealerships. So

29:32
Tesla obviously has had a lot of interesting developments and maybe a little outdated in that chapter. But what Tesla wanted our help with was the ability to sell direct to consumers through their website without having to go through a third party of car dealerships. In today’s economy. There’s no reason that you need to disintermediate this by having the manufacturer, a dealer and the consumer all that that middle ground does that dealers is out cost to everyone else, right? The system is just totally inefficient and no longer at all unnecessary. But car dealers are actually pretty well organized. So use car dealers are not popular. But if you look at like the local Kia dealer or Ford dealer or whatever it is, they’re very embedded in their communities in a dealers community. Yeah, they sponsible literally team, they make regular contributions to every politician in their area. I mean, you remember the TV show Friday Night Lights? Sure. So the buddy who was at the big booster of the team, he was a car dealer, right. So that’s actually kind of the norm. And so Elon brought us down to see if we could pass legislation in a bunch of key states that would beat the car dealers, and allow us to allow Tesla to sell direct to consumers. And that the point of the chapter in the book is really to say, when you’re doing things in around politics, you have to make choices like everything else. So the traditional path, just hiring lobbyists and talking about clean energy and jobs, obviously wasn’t enough in in these days, because if it was the bills would have already passed. And we concluded we need to run really, really tough negative campaigns, on the car dealers and on all the politicians who took their campaign money in order to blow them up in order to pass legislation. And Tesla ultimately felt like the tactics that we needed to do were too rough and too negative. And that the benefit of passing these laws wasn’t as great to them as the risk reputation really, of being seen as attacking politicians as accusing people of corruption, of doing push polling and Robo calling and things like that. And they chose not to, and that’s fine. They lost as a result in all the states. But the point I tried to make in the chapter say, look, there’s an inherent set of choices involved in everything. A lot can be achieved politically. And the question is at what cost both financially reputational, and everything else. You I made the decision in this case that he thought it wasn’t worth but reputational cost to fight these fights. Now, obviously, based on where things have ended up the last few months have probably been the least of his reputational problems. But a couple years ago, I think they saw it differently. So it’s all a question of context. But with that said, I actually found him pretty easy to work with. Yeah, I know, that may not be the predominant view, but I thought he was other than that, ultimately agreeing with what I wanted to do, but I thought he was rational and reasonable and accessible, and straightforward. I actually found him to be a pretty good partner. Other than that, I couldn’t convince him that what you need to do should actually happen.

32:28
Interesting. Bradley, you close the book with an emphasis on voting and the importance of mobile voting. Yes, even said that mobile voting is the biggest disruption fight of them all, and that restoring our true democracy, and actually confronting our nation’s deepest problems resides with changing the way people vote. Why is mobile voting so important?

32:47
What I concluded from the sort of 20 or so years I spent working directly in government and politics is 99.9% of politicians are desperately insecure self loathing people who don’t have the talent to succeed in any other industry, and cannot live without the validation affirmation that comes with running for office. Wow. And so there’s literally like a psychological hole that only gets filled by being in the game and getting attention and having a title and having a driver and everything else. And as a result, it’s their oxygen, right. So when you expect them to do something that is right and good for the country, but not in their political interest, is I telling them, we’re going to cut off your ability to breathe, they can’t do it right now, Mike Bloomberg was an exception. There are exceptions here and there. But they are definitely exceptions, not the rule. But at the same time, what they really had to make their choices is simply, if I do X, is that going to help me get reelected or hurt my chance of getting reelected and is going to help me when the next office I want to move up to or hurt their chances. And also, if you can frame what you want in terms of this is going to help you or if you don’t do this, it’s really going to hurt you, they’re likely to go along. But what happens is turnout in our elections are so low to a typical primary for mayor or member of Congress, whatever it is, you’re talking 10 to 15%. So those are typically the most left wing or the most right wing voters in that district. Because Because of gerrymandering, there really is no general election in the vast majority of the cases. So whoever wins the primary wins the general. And so if you’re a politician, X and you’re saying, Hey, I just want to get reelected, and you know that in your district of 40,000, people, only 25,000 are going to vote in the primary, you kind of have to do with the 25,000 people want, even if they are the political extreme, right, because that’s how you stay in the job. Yep. So as a result, we have a congress and a governor across the board that is wildly polarized, wildly dysfunctional, because everyone is answering solely to a very small, highly, highly ideological part of their constituency. So if you take gun control, for example, if you’re a Republican congressman from Florida, and turnout in your district is 12%. And half of those 12% are NRA members. Even though you probably know that a shot weapon ban is a good idea. You’re not going to do it because you’re looking at it saying well, I don’t wanna piss off 50 percent of the people who actually vote my primary. But what if turnout was 60% instead of 12%? Now it’s on the NRA makes up more like 10% of your electorate instead of 50% of your electorate. And the math totally changes. And then it makes no political sense not to be for an assault weapons ban. And this is true both for issues on the left or the right. So

35:18
and you think mobile voting is the solution to getting folks to show up for primary elections. So

35:24
the the system we have right now is 250 years old, you know, we vote on Tuesdays, because that was convenient for farmers in the 1700s. Right, they totally agrarian based system that people don’t participate in. But what I found is we were running his campaigns for Uber or FanDuel, and other startups around the country that if we gave people the opportunity to advocate politically, from their phones from the app itself, they would do it, they would take their own time and advocate for a for profit company, because it was easy to do. And it’s convenient. And so my initial thought was, if people could vote in elections on their phones, turnout would radically increase. And politicians would adapt. And they would just support generally, the views in the mainstream instead of the views of the extreme, because they just want to keep their job. And they’ll do whatever they’ll fall whatever inputs they’re given, the outputs are truly dictated by the inputs. And so that was the idea of mobile voting. And then what we found is blockchain creates a way to do it securely, where you can take a really weak system that we have today vote in a more secure way, and exponentially increase participation. So there are a couple of different startups that are working on this one called votes in Boston is the one that’s furthest along so far, we did a pilot program with state of West Virginia in their May primary where blockchain based mobile voting was available to members of the military who were deployed overseas, worked really well on the audit show that the votes were properly cast and counted, they’re gonna do it again, in the general election. We’re talking to a bunch of different jurisdictions about municipal elections in 2019. I think we’ll have some to announce on that pretty soon. And my goal is initially in the first couple years is prove that blockchain voting is safe and can work and can increase turnout, start off at groups that are really hard to object to like deployed military or the elderly, or the disabled, people who really just may have a really hard time getting into the polls for different reasons, and then ultimately work our way into the center where hopefully, in 10 years, everyone listening to this podcast, has the ability to vote in any election on their phone. And I think that’s the only real way to save democracy

37:14
is watching the right solution for that. And part of the reason I ask is because, you know, there’s a variety of ways that it can be done. And I worry that the general public is going to have almost an adverse response to blockchain because it’s still this, this unknown, right, this unknown technology. Yeah,

37:32
totally. I’m pretty agnostic as to the both the technology solution and who provides the solution. We paid for the state of West Virginia to administer the election. My view is I don’t care what vendor you pack, right, I’ll pay for your class either way, because I just want to see it happen. So if there’s another solution that’s better than blockchain, we’re for it. But what we found so far is of the different ways that you could cast a vote on a phone. So far the most secure approach where it is the hardest to hack. And the easiest way to attack that anything that goes wrong is over blockchain. Part of what I’m betting on is that as we’re doing proving out this concept of the next couple of years, in different kind of niches around the country, the notion of blockchain becomes more inherently understood by your average person. And so it feels a little less scary. To think about a blockchain. It’s really just the plumbing to be able to move a record of something from point A to point B. Most people don’t really think about the plumbing of their phone, right. And people tend to conflate cryptocurrency and blockchain but blockchain is really just kind of the internal plumbing, their first step is to prove that it can work and that it’s safe. And then the next step is to roll it out widely.

38:38
Got it? Coincidentally, I’m catching up with Harper Reed tomorrow over coffee, you know, CTO of Obama, for America pioneered a lot of the current approaches toward elections. Have you picked his brain about? Yeah,

38:50
no. Well, obviously, if there’s any interest would love to talk. But actually, the reason we did West Virginia, and we did military in part was because I come out of democratic politics. And I mostly will work from a loss of command democratic politics. And I really don’t want immediately to be accused of some sort of left wing plot to take over the world. And so I kind of thought, What’s the most Republican seeming thing you can have? Okay. Military members from West Virginia, right. So I’m trying right now, to not have this too caught up by any current major political figure, one of the reasons that it makes sense for me to be the main funder of this so far is nobody knows who I am. Right? But for for my Bloomberg, a lot of my career, still very close with him and the team. I could ask them to get involved in this thing. But then you’re attaching all the good and bad of Mike to this issue, right? Whereas I’m much more of a neutral palette because I’m unknown. And so I think in the early days, my hope is to keep this as far away from being identified with any specific politician as possible. Bradley, if

39:51
we could cover any topic here on the program, What topic do you think should be addressed and who would you like to hear speak about it? Obviously,

39:57
I’m really biased but it’s a little lonely. Getting at that intersection of tech and politics by ourselves. Not that I want more competition. But I want more awareness. Or the reason that I wrote this book is we can only work with, say, a dozen startups at any given time. Given that there are 17,000 right now in the US, it’s such a drop in the bucket that I wanted to try to help shape the way people see politics see regulation and the way that they handle it right. So not everyone gets a chance to work with us. And we don’t have the capacity to work with everyone. But no startup should fall victim to pay to play politics to corruption to to lose the right to compete and operate simply because they didn’t handle the politics, right. And so I would like to see more awareness of that created. And I think that would mean, bringing on regulators more often bringing on politicians who are either leading the fight for or against, like, if you take San Francisco, for example, is going to Aaron Peskin, who’s a supervisor who’s the bane of every startups existence. Every server kind of hates him, because he doesn’t like anything to move forward. But he’d be interested to have on the show, right? Why does he think that way? I don’t think he’s going to persuade any of your listeners that they should adopt his worldview, but the longer stand at least why he does, what he does, and how to deal with it a lot better. So that would be my hope.

41:11
Grid. And then finally, what’s the best way for listeners to connect with you be

41:15
Tosca test holdings.com. You can find me on Twitter too. But I’m still a little old school. So emails best. Awesome.

41:21
Well check out the book. It is the fixture. I’ve read it. It’s a very engaging read lots of great stories. Bradley, thanks so much for the time today and look forward to connect the next time I’m in New York.

41:31
Definitely Nick, thanks so much for having me.

41:38
That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet dotnet and until next time, remember to over prepare, choose carefully and invest competently. Thanks for joining us