Bradley Tusk of Tusk Ventures joins Nick to discuss From Campaigns to Code: The Intersection of Tech, Politics, and Regulation. In this episode we cover:
- Regulatory Challenges in the Tech Industry
- Gig Economy and Worker Classification Issues
- AI Regulation and Professional Licensure
- Autonomous Vehicles and Federal Regulation
- State-Level Regulation and AI Legislation
- Clean Energy and Climate Tech Investments
- Healthcare and Digital Health Investments
- Privacy and Social Media Regulation
- Venture Capital and Regulatory Environment
- Vote with Your Phone and Political Engagement
Guest Links:
- Bradley’s LinkedIn
- Tusk Venture’s LinkedIn
- Tusk Holdings’ Website
- Tusk Venture’s Twitter/X
- LINK TO BOOK
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0:18
Bradley Tusk joins us today from New York City. He is Managing Partner at Tusk Ventures, a venture firm that invests in startups facing complex regulatory challenges. He has invested in companies including FanDuel, Lemonade, Ro, Alma, and Kodex. He is also a political strategist, former campaign manager, and author of The Fixer as well as the upcoming “Vote With Your Phone,” coming out on September 17th. Bradley, welcome to the show!
0:48
Thanks for having me back. I appreciate it.
0:50
It’s been like six years, so you got to get me the update, you know, yeah,
0:53
some things have happened. I mean, talk some some good things, some bad things. As you know, my mats have still not won the World Series. My next have still not won the title. So I guess in some, some ways, nothing changes. But six years ago, we were probably investing out of our first fund and really seeing if the thesis worked, right. So as you remember, you know, my career didn’t start out like most VCs, right? I was in politics. I had been my Bloomberg campaign manager. We ran for mayor of New York. I was the deputy governor of Illinois. I was Chuck Schumer’s comps director in the Senate, and then pivoted the tech by running all the campaigns to legalize Uber and ride sharing, realizing that there was sort of a need in the venture world for someone actually understood regulatory risk and could do something about it. Launched my first fund in 2016 and the basic question was, you know, Was there really a need in the marketplace for early stage fund that could come in and solve your regulatory problems. And that was, I think, six years ago, what we were trying to figure out. The answer seems to be yes. We are now investing out of our third fund raising our fourth. Like you said, have had companies like FanDuel, lemonade, Roman Coinbase, circle, Burr, kodaks, whole bunch. And the reason why is a lot of companies are regulated one way or another, and they fall into one of two buckets which frequently come up. The first is, you come up with a better way to do something, whether it’s Uber and taxi or Airbnb in hotels or FanDuel and gambling, and the people who you are disrupting. Are pissed off about that, right? They don’t want to have their market share taken away, and they use politics to try to push back and try to use regulation to stop you from operating and so there’s a big fight that’s really about market share, but under the guise of regulation or you’re an entirely new industry. You’re in crypto, you’re in AI, you’re on autonomous vehicles, drones, whatever it is. And the good news is there’s no entrenched interest you have to fight off. The bad news is there are no rules at all. And while it might sound great to live in a world absent all regulation, the reality is, you can’t build multi billion dollar companies. And you know, 11 figure, 12 figure industries in the absence of all rules, all structure, all regulation. And so then the work becomes okay. What should the regulatory framework be for this industry? Where should the regulation happen? How should it happen, and how do we construct it in a way that works to our portfolio companies advantage? Perfect. So
3:17
I want to jump in here, but give us the broad strokes on the fund, you know size checks in point
3:22
fund three is $140 million fund. Entry Point is seed in series a check size is usually one to two. For seed, five to seven. For a we do more A, C, typically, we do not invest pre product or pre revenues. We typically want to see a company at least at the seed stage, have mid six figures in revenue at Series A, you know, low to mid seven figures in revenue. And then you know what we’re looking for. In addition to all the normal stuff that everyone listening this podcast thinks about the TAM, the founder, the underlying concept is we ask two more questions. One, is there a gating regulatory issue or opportunity that, if it were solved, can really drive growth and valuation, and if so too, can we solve it? And when the answer is yes to both of those, that’s what it makes sense for us to come in.
4:09
Got it in a combination of leading and CO investing. Yeah, both will lead.
4:13
We’ll co lead, we’ll co invest in fund one, we all co investment. Fund two, with five out of 19 were leads in fund three, it’ll be closer to 5050,
4:21
so you mentioned gig economy. Maybe that’s a good place to start. You know, it seems like the business risk associated with the gig economy, namely, you know, potentially requiring 1090 nines to be flipped to W twos. It seems like that risk has abated for the moment in California, yeah, is this still a high exposure area, or is yes, economy stabilized? Well,
4:41
yes, who knows. So I think it’s a little less high exposure, but I think it’s about to evolve in a really interesting way. So the good news for the sharing economy companies is they took a huge beating on a bill called AB five in California about five years ago that said every one of. Sharing Economy, every Uber driver, every door, dash delivery person, every everyone. Now you’re all employees. And why? Because labor unions realized, Oh, they’re all employees. We can organize them. We can make them members. We can collect dues. It’s much better for us. And that’s how that happened. The gig economy companies then ran a massive voter initiative that was called prop 20, where they spent over $200 million and they were able to defeat the initiative, and do so by a more margin, about 6040, the combination of their win and then the expectation was in the following legislative session, you’d see a lot of blue states try to replicate California covid hit. And then once covid hit, just worker classification stop being an issue that was like in the top 20 for anybody, and it just kind of went away. It still does come up for individual companies who get calls from a state department of labor or the US Department of Labor who will say, hey, we think that you are violating the various rules and that your independent contractors are really employees, but it’s not that terrible from a macro standpoint. Here’s where I think it’s going to get really complicated and interesting, which is, how do you do professional standards and licensure for AI, right? So it’s one thing to ask the question, is this human being acting more as an independent contractor or more as an employee? There are different legal tests. You can make different policy arguments, but it’s still relatively straightforward. But then you get to a world where functions performed by humans are being performed completely by AI. The human beings doing that kind of work have to be licensed. What do you do about the AI? So, like, there’s the more obvious stuff. Like, for example, we’re an investor at a company called the KY company called the contract network, which does AI for legal tax or things like NDAs, rather than having to get a lawyer to put it together for you, you know, you can use the AI to do it. And the issue that we deal with, from a regulatory standpoint is, is that, or is that not the unauthorized practice of law? That’s relatively straightforward. But like, for example, and I don’t have an investment in this particular space, but like, I read an article that even read an article that Equinox is growing out these AI massage machines. So at least in New York, where I live, I know this is also true in Illinois, because I was your deputy governor, where you are the massage therapists are licensed, right? You can’t just start doing it. You actually have to pass the test to get certification and all that. So what do you do with the machine? Do they take the test? Do they be are they certified in a different way? Is a state employee trying to look at the underlying LLM to figure out whether or not the coding is right, you know, and so that people don’t get hurt? I don’t know the answer these questions. Actually, I don’t even know anyone other than me that’s, you know, kind of dorky enough to even think about these questions. But I really do think they’re going to come up pretty soon. And what’s interesting is you’re going to see weird alliances. So in the traditional 1099, versus w2 fight, it was Labor versus business, right? And it would just kind of it’s it played out the way that historically, these fights have for the last 150 years. However, it’s been around for this? Who knows, right? You may have times where businesses that are worried about being displaced by AI are teaming up with labor to try to impose really difficult standards for AI and professional licensure to halt the competition. Right? So this could play out all kinds of weird ways that disrupt the normal paradigm that we’re used.
8:21
I mean, should the test be about efficacy? Should it be like, you know, Turing test ish proxy, you know, to make sure that there’s a certain level of competency for the AI? Yeah,
8:32
I think so. I mean, it’s still, at the end of the day, the argument for why government needs to license professionals in the first place is for safety, right? And it could be the safety of a physical machine. If someone is giving you a massage, are they not gonna hurt you? If someone is providing legal services, are they competent enough to not totally screw it up or cheat you? So there’s a bar exam to show that there’s some measure of competence and understanding, or whatever it is. So I think that sort of efficacy, whether it’s physical safety or sort of consumer safety, is what has to get replicated on the AI testing side. But the question is, I don’t know if a single government agency, maybe the US Department of Defense, maybe not even that, would be capable of issuing these tests or evaluating them, or anything else. So, you know, perhaps, you know, there’s a founder listening to this podcast that will say, You know what? There might be a business there where I can sell software to government to teach them how to assess, you know, professional licensure standards for AI. Just like I’m really excited about the idea of using AI within government for procurement, right? Procurement is a sort of black hole of government where it’s this incredibly slow, bureaucratic, political, often corrupt process. And I think you could use AI to take the human element out of it and do it massively faster, man, more ethically and just better. So I actually do think that AI presents both a bunch of interesting challenges. Is for government, but also a bunch of interesting tools that could make the provision of governmental services a lot better.
10:05
So Elon’s been on record talking about how, you know, any owner of a Tesla is going to be able to, basically, you know, use their Teslas as an auto taxi. You know, it’s like a Waymo in the future, you can just send it out, right? And it will be able to perform that function and move people from place to place. I mean, is this realistic? And what is the time frame that gets done? Considering, you know, there’s, there’s
10:30
two different questions there, right? So there’s the question around, is it realistic from a worker classification, professional licensure standard of the rules that govern taxes. So yes, not in a place like New York that has an incredibly complex and burdensome regulatory structure. But there are lots of markets where it is not that hard to become an Uber driver, a Lyft driver. And in those markets, in theory, yes, but then the much bigger question is, when are we really going to see fully autonomous level five vehicles operating on the streets, as is, you know, there are some Robo taxis in, you know, I’ve been in a Waymo in Phoenix. They’re in LA, there’s San Francisco, but it’s still very, very much more of an experiment than anything else. So you would need to get to a point where those taxis have been fully authorized, legalized, and one of the problems we have, and maybe you could sort of VP VPN, it in a way that it never crosses state lines. But look, you know, you live in Illinois, Illinois border six different states, and oftentimes, depending where in the state that you are, you might cross over into Indiana or Wisconsin or Kentucky, or whatever it is, just because it’s the route to get from point A, you might even be starting and ending in Illinois, right? Just to get from point A to point B, there are no federal rules around interstate commerce and autonomous driving. So Congress, about six, seven years ago, took up a bill, had bipartisan support, and then the teamsters came out against it because they’re worried about, you know, autonomous trucks kill the bill, and the US Department of Transportation was supposed to then deal with it. But the problem is, Trump saw himself as a teamsters guy. Biden sees himself as a teamsters guy. And so, at their behest, we’re now going on seven, eight years with no resolution at all. So one of the things that would have to happen for Elon’s prediction to come true is federal action on Interstate autonomous activity, of which so far we’ve been totally stuck. Well,
12:32
either of the candidates is that, will that be a priority, something that gets done?
12:35
I mean, look, Trump will still sort of see himself as a guy that it represents the trucker, so it won’t be his instinct, but you know, you have Elon and Peter Thiel and Sachs and Chamath and all these people. So if enough Trump supporters who have given enough money have enough economic interest involved, Andreessen and Horowitz as well, now perhaps that could move the needle with Harris. It’s hard to really know in general where she’s going to be, because Democrats traditionally have not been great on a lot of tech regulatory issues. But she is from Northern California. Her brother in law’s General Counsel at Uber. She has a lot of ties to the valley, so her familiarity with it, her comfort with it, her understanding of it, may be very different than what we’re used to, and so perhaps there is a little more hope to be had than we have right now with Biden, who is an 81 year wife from Delaware, just completely disconnected from time.
13:30
So we’re going to come back to the candidates, but before we do Bradley, as you consider threats and opportunities, you know that may be created by new legislation or changing regulations or shifts in public policy. You know, what are some of the highest exposure areas that you’re tracking, and how does that impact your investment thesis? Yeah,
13:51
there’s a couple. So one obviously, AI, some listeners might know that last week, the California Legislature passed the first really comprehensive regulation in any state on how to do AI safety testing. We don’t know if Gavin Newsom is going to sign the bill or not, but I do think that you’re seeing a wave of AI related legislation at the state level. So oftentimes, when we collectively think about government and politics, our head goes to Washington, DC. We think about the White House, we think about the Capitol. But capital. But the reality is, if you’re a tech investor or a tech operator, 80% of it, 90% of it is state and local regulation. It’s really not about DC. There are times like I just mentioned with interstate autonomous vehicles or whatever, sure, but by and large, most of the stuff happens at the state level. So last year in Washington, lots of politicians talked about AI. Biden issued an executive order that was totally Toothless about AI, but 800 bills were introduced in state legislatures last year to govern AI, about a quarter of them around deepfake prevention, election security, safe. Testing things like that. So you’re going to see at the state level. Laws get formed around AI, and this could be good news or bad news if you’re a founder, because on one hand, it could be good because you could arguably use it to build a regulatory moat of some kind. It could be bad, though, because the people who are weighing in on this probably have very little expertise about your subject matter, and if you don’t take the politics seriously, and you don’t think about legislation and regulation at every level of government, so yes, Washington, but state and municipal as well, you could easily get caught off guard and really fall behind. So that is, that’s one two, I think, clean energy, you know, between all of the new federal incentives in recent legislation over, you know, trillion dollars for the infrastructure bill and the inflation Reduction Act to do various things, you know, to make different types of upgrades, electrification of heat pumps, or whatever you might want to use as an example. And then local, state, but even more often, municipal building codes and regulatory changes that are pushing buildings towards having to be more energy efficient, use, more modern technology, everything else. You’ve got pressures on one side saying, Hey, you have to modernize. You have pressures on the you have opportunities on the other side saying, hey, here are tax incentives if you choose to do so. So for us, we had never even really seriously looked at climate tech deals, and we still haven’t done one, but we are now taking it a lot more seriously because the combination of the two sided equation, which is municipal pressure, sending people in one direction, and then federal incentives, then making that actually easier and more economical to then execute on all of a sudden, makes that sector interesting in a way that it hadn’t been before. A third for us is edtech. So for example, this year, we led the series A become called Odyssey. Odyssey runs it called Educational Savings account. So the My first thought when I heard that was, oh, those 520 nines I have for my kids, that’s not what it is. This is, typically in red states, the policy of the Money Follows the kid. So yes, you can send your kid to the local public school if you want, but if you don’t want to do that, and you want to send the kid to parochial school or private school or homeschool them, or whatever else it is, there will be tax dollars available to you to do so. And Odyssey, we’ll have their series, a I’m on the board, is a marketplace between parents and kids, states and all kinds of different education providers, and that could be schools. It could be Amazon selling school supplies, and they run the entire program, and then they have typically a 3% take rate. And it’s a really good business, because education is such a big number that if a state is spending billions of dollars a year on this program, 3% gets to pretty big revenue pretty fast. And we are seeing lots of states on typically red states implementing this right now. So Louisiana, Georgia, Alabama, Wyoming, Nebraska, they all passed this year. The Big Kahuna is going to be Texas, which we’re going to see happen kind of early next year. That’s going to be a massive program. And so sometimes there are trends that, you know, might even just be something of a blue state or a red state business model, but if it’s big enough, so if it’s, you know, you’re telling me, Hey, you’re never going to have California, Illinois or New York, but you could have Florida, Texas and Georgia. You know what? That’s a pretty big Tam, right? And that could work pretty well. So sometimes also, you could think about ideas and say, these may not be universally kind of politically salient across the whole country, but they still may be popular enough in certain areas to still create a really good opportunity.
18:45
But that does exist the ability to redirect public tax dollars from Yeah,
18:51
yeah. It started in Arizona about 11, I think it was about 11 years ago, or something like that. And it does exist in a bunch of states. Some are more generous, some are less generous. The rules are different in every single state, but, yeah, it exists, and it is, in fact, so popular that Governor Abbott, Greg Abbott, who’s the governor of Texas, last session, tried to pass this law, and he failed in the Texas House from a bunch of Republicans who voted against the bill because their local public schools were against it because they were worried about diversion of resources. Abbott got so angry he ran primary, primary challengers to those House members in the Republican primaries, and pretty much what took them all, just about all of them out. And so now all these incumbents are not returning to Austin next year. All these new people are coming in. They ran on a platform of school choice, and we’re gonna see that. Wow,
19:42
Bradley, what are some of the biggest changes that we may see to the healthcare system in the coming years?
19:49
Yeah, it’s a good question. So you know, it’s funny, I was just before saying red state, blue state. We are really big investors in digital health, and it happens to be one of those few issues that does tend to try. Transcend partisanship a little bit, and I think it’s because there’s something for everybody, right? So if you are a blue state Democrat, you’re saying, I want more poor people in cities to have affordable healthcare. So I generally like the idea of telemedicine. If you are a red state Republican, you’re saying I want people in rural areas to have better access to health care. So I like the idea of telemedicine. So as a result, there’s been a little less partisan strife around it. But with that said, as every new area of technology emerges regulatory questions and then come out of it. So like, for example, you mentioned we got church in Roman, one of the very first things that we did for Roe was figure out, okay, is prescription via tax, legal. So Zach ritano, who is the founder and CEO of Roe, had a really simple but really brilliant idea. We started this company, which is, if a man has to go to the doctor and say, I want Viagra, a certain number will do it. If he can do it over a video call, more will do it if you could do it asynchronously, asynchronously overtaxed, exponentially more will do right? And that’s what happened. But then the question became, there was a fair question, can you do prescription via text? And nobody really knew, because until Zach Nolan tried it before, right? And so we had to go around the country, and there were some states where we had to pass legislation saying, yes, you can do it. There were some states where we had to block legislation saying, No, you can’t do it. Sometimes it was okay, but they’re like, well, we’re not going to cover it on Medicaid, and then we had to get it added to the Medicaid reimbursement list. So, you know, there’s a lot of issues that come up around cross state licensure is another really good one.
21:34
So a class of prescription drugs that can be done that way, or so
21:38
it depends. So everything can be done that way, with the exception of specific controlled substances, which are then there’s a without getting too tactical here. There’s a piece of federal legislation called the Ryan hate act that has control over that. And then the FDA does the regulations. We are investors called boulder care, which is an online opioid recovery system. And they do send suboxone via mail to their to their patients, to their customers. And so we deal with it from that specific perspective, but we have seen some abuses from some companies, you know, in recent years, around things like Adderall and other ADHD meds. But Alma, which is a company that does, I don’t you know them, they’re the back end for therapists. So we led their series A back in 2019, I think we did 432, and a half, or something like that. And the idea is, when you’re a therapist, turns out you’re two things, one that you do want to be and one that you don’t. The thing that you want to be as a mental health professional, talking to people about their problems and hopefully helping them get better. The thing that you really don’t want to be is a small business person, but you are right, and it’s the worst part of your life. Yeah. And so Harry Ritter’s yurvalma came up with a platform that does billing, invoicing, claim, reimbursement scheduling. They deal with the insurers, with the payers. They’ve taken so much of the pain out of being a therapist. We’ve got, you know, well, over 20,000 therapists on the platform now. But one issue that we confront is something called cross state licensure, which means, can a doctor in one state through telemedicine, treat a patient in another state? So it used to be the answer was no. Then when covid happened, the federal government said, Okay, we need to keep people physically who don’t have covid Out of the hospitals and doctors offices as much as possible. So we’re suspending all cross state licensure requirements. Everybody can treat everybody. If you are licensed to provide medical care in Kansas, you can treat a patient in New Jersey.
23:37
Or suspension is lifted now or so, 5050,
23:41
some states have gone back to it. Some states have not. And so, you know, that is an ongoing question. It’s not really a political, ideological question. There’s no it’s not like abortion, where there’s like a clear Republican and Democratic point of view. It’s a lot more tactical than that. But nonetheless, it is a regulation that does impact a lot of people. And I think we are the bet that my partner, Jordan and I made when we led Alma, which was actually the first deal that we ever led, was that the social norms and stigmas around mental health and therapy would change. And you know, I’m sitting here in downtown Manhattan, any of my employees say I’m going to therapy, like, Okay, I have a great session. And like, it’s normal in New York City, it’s normal in Chicago, it’s normal in LA but a lot around a lot of the country, it was not normal, and our bet was it would normalize and change. We got it’s hard to hate. So we got lucky because of covid, but because of covid, a awareness around mental health really skyrocketed, and then B, demand skyrocketed, and C, the ability to provide it remotely skyrocketed too. So like, even though my therapist happens to be in the state of New York, I haven’t seen her in person in over four years, right? I talked to her today. I still do it every Wednesday, but there’s just, why would I spend time taking the subway to the Upper West Side and back? Yeah, if I could just call her on the phone or do a zoom or we actually, I can’t do zoom because I can’t be trusted, because I keep doing all their work if I’m on so I have to call her and then hide my phone in order for me to actually do the therapy and pay attention. But nonetheless, so you know, to dance your question on health care tech and health regulation, it tends to be the good news is a lot less partisan and polarized and a lot of other stuff. The bad news is it just gets pretty technical. And so like, the people on our team who work on our health tech policy stuff are all lawyers, because it would be really hard to do that work without having that kind of background.
25:38
Well, you’re pretty articulate. For somebody who’s been multitasking this whole interview. Bradley, I give you a lot of credit. Um, don’t
25:44
tell anybody I’m actually doing therapy as we speak. Yeah, let’s
25:46
talk about privacy a bit. So tech companies are good at, you know, acquiring consumer data, and there’s been some some changes, of course, cookies and such, but they’re still pretty good at it. So are we gonna see a future where, you know, consume consumers are going to have to opt in in order for tech companies to collect their data? So
26:04
it’s a really interesting question. So what we should have is some sort of national privacy framework. So Europe, as you know, has GDPR that applies to the entire EU. We have never passed anything like that in the US. There have been acts in Congress introduced. Some of them have made a little bit of progress, but they’ve never, ultimately gone anywhere. But at the state level, you’re seeing both privacy, but even more broadly, social media regulation and reform happening, right? So, you know, I don’t know if you have kids or not, or how old they are, but I think every parent of teenagers, and I’ve got two teenagers, would say they’re absolutely terrified about what their kid is saying online, because it’s one thing your kid’s for, you know, you can sort of control it, but like when your kid’s 14, like you have no control over whatsoever, right? And the problem is even more than privacy, I would argue, human beings have a negativity bias, and that’s an evolutionary trait so that we didn’t get eaten by lions or Tigers or whatever it is, or that, you know, when we smoke gas, we know like, oh, something’s a problem. I should probably get out of the building, right? We need negativity bias. But what it also means is that we are far more attracted to negative information and positive information. Meta, and all the platforms are well aware of this, and they understand that you or I, just as people are far more likely to click on something that has a negative headline, a negative spin than a positive spin, and when your business model is solely about clicks, right, all revenue is correlated to clicks. You are heavily incentivized to push the most toxic negative content out there you can because it’s going to generate the most clicks in many forms of media. If you right now, were to defeating someone on this podcast, they could sue you for your words, right, if they could meet the legal definition of it. But if you were to post something about someone on Instagram, they may be able to sue you, Nick. But who they can sue is Mark Zuckerberg and meta and the company that actually has all the money. So there’s a bill. There’s a provision in law called Section 230 is to the Communications Decency Act of 1996 and at the time, it made a lot of sense, and it said internet service providers can’t be held liable for the content posted by its users. You probably don’t get the internet in the way that we got it without that. So it made sense in 1996 but no one that even thought about social media, let alone the toxicity of today’s Internet. And so revoking section 230 has been a giant political issue and fight for the last couple of years. It always gets taken up in Washington, and then big tech has so many lobbyists and so much power that they’re able to kill it every single time, but what you’ve seen are states step in to fill the void. So for example, in New York, where I live, I help work on a bill that changed the algorithms that can be used for minors on social media to say they do have to opt in, or actually, their parents have to opt in to any particular feed. You can’t just send them stuff, right? And there’s been legislation in Florida, Texas, Utah, California. And what’s interesting is, again, not a partisan issue, right? Because I would say the polling that I’ve seen on this supports it. You know, you could be a maga Republican, you could be a Bernie Sanders Democrat. If you’re a parent or teenagers, You’re just afraid, right? And like, there’s really no, like Republican or Democratic sort of feel to that. It’s just like, oh my god, this terrible stuff is being all promoted to my kid do something, right? And so we’re seeing states do things like privacy. So California has the CCPA, which governs privacy regulations for companies operating and doing business in California, Texas has something. So you’re seeing various forms of social media regulation, from privacy to liability to protecting minors all out there. And then what you’re also seeing are the internet, via the platforms, bringing all these laws into court and saying, No, only Washington has the jury. Fiction to do this, not Sacramento, not Albany, not Tallahassee, and then the courts are trying to figure this all out, and a lot of it is sort of still up in the air. And so yes, I think that we will continue to see more. Was a very long answer your question. But we will see more privacy bills passed, but they will happen at the state level, and then whether or not they survive federal judicial review is still up in the air. So if you support a privacy framework, if you support social media regulation, what you should really want is to see this happen in Congress, because then there wouldn’t be substitute legal review. I see
30:36
Bradley, did you see the podcast between Mark Andreessen and Ben Horowitz? No, I’ve
30:41
been following the bet Horowitz, Mike Moritz, fight in the last week or so, but I think I missed that one.
30:46
Okay, all right. Well, I mean, if you’ve been following the fight, yeah, on whether you think Trump’s agenda is more aligned, you know, with venture and little tech, as they call it, or not, not
30:59
really. I mean, look, I think that we have had Trump’s president for four years. Biden’s been president for almost 40% in that eight year period, we’ve had Republican senates, democratic senates, Republican House, Democratic House. The one thing they have all failed to do is regulate big tech in any way, shape or form. The only real thing we’ve seen that happen is some on the executive branch side out of the FTC and DOJ, some antitrust activity Google most recently. And even those haven’t resulted in it’s not like Standard Oil or Ma Bell. These companies get broken up. We’re talking about, hey, here’s a $3 billion fine, which is like, you know, a 10th of quarterly revenue, and they pay it along their way. So nothing really changes. So I would argue it’s interesting, I have had a kind of complicated relationship with and view on the FTC under Biden, because as a early stage investor, I support efforts to try to better regulate big tech because I can’t invest in a company that wants to compete with meta or Microsoft or Apple or someone like that, because when the company has monopolistic power, how is my little startup where, you know, I put in 6 million and a ten million round, ever gonna compete? Right? It’s basically impossible. And even if you don’t care about early stage venture investors, what you should care about is the long term economy, and history shows that even though these companies are at the moment, incredibly innovative, everyone’s tactics right? If that were not the case, Standard Oil and IBM and General Electric would still be the biggest, most important companies today. They’re not. When they were at the top of their game. No one thought that it ever would be less innovative. And yet it happens to pretty much every single company, and so ultimately, the big five or six today, it’s going to happen to them too. And then the question becomes, are there competitors there to fill the void in the economy to create jobs or not? And if they can never get off the ground, because the giant companies are allowed to have so much monopolistic power that they can squash any forms of competition. That’s a real problem. So on one hand, I think that some of the efforts that we’re seeing out of Lina Khan and the FTC and the Biden administration are good for innovation, early stage tech. On the other hand, there has been this general sort of left wing opposition to all mergers and acquisitions and all corporate activity. And as you know, you know, a certain number of our deals have access through IPOs, and those are the big winners, usually on paper, but most stuff is happening through M and A deals. They’re happy through acquisitions. And there is such a massive chilling effect now, because the FTC and the DOJ have been so anti M and A overall that, you know, I see in board meetings. I suspect you do too, companies that might normally think about either making an acquisition or or pursuing being acquired, not even thinking about it seriously, because they’re assuming that, oh, this will never get through, you know, the regulatory structure and regulatory review now, and that has had, and I don’t know they meant, I don’t think they’ve meant for it too, but nonetheless, had had a giant chilling effect on M A overall, yeah, as a result, less overall venture investing, less capital deployed by us, which means less new company formation, less innovation, less early stage tech, right? So this stuff gets really complicated at what? When you say, when you ask, like, Hey, is it Trump or Harris, even, like within Biden, right within him, at the same agency, you have activities that they’re doing that I think are really good for innovation early stage tech and really bad for innovation in early stage tech. So this stuff gets super granular, really fast. And then even more than that, let’s say talking about Trump? What wind are we talking about, right? There is a Trump sort of, you know, Wall Street capitalism that, you know, New York real estate, all that. There’s a JD Vance economic populism that looks a little bit like Elizabeth Warren and Bernie Sanders, right? And so even within a Trump administration, or a Harris administration. And you may see widely divergent views, depending on who their appointees are and what the issue is. Yeah. I
35:07
mean, one winner in all of this seems to be the attorneys. You know, it’s like, oh, always. Prevention of of these M A deals is hurting little tech. Yeah, you know, it’s probably not affecting big tech as much as Lina Khan thinks it is. But then now there’s this, these creative structures, right? With the take unders, and we saw character, you know? And it’s like this pseudo licensing kind of takeover situation, yeah, but not the true M A,
35:35
right? You’ve got to come up with these workarounds. And that’s not good for it’s not good for the employees, not good for the companies. And I think oftentimes where the left just doesn’t you see this a lot when they talk about an unrealized gains tax as well, is they don’t understand that. Without people like us who are willing to deploy capital and take a lot of risk, you just don’t get new companies and innovation. And even though a lot of our bets will fail, some work, and of those that work, some become truly transformational, right? And provide, you know, great value to society and billions of dollars in jobs and tax revenue and everything else, right? It’s funny, the first deal I ever did was Uber and so I thought, Oh, this is pretty easy. You know, here’s here’s how it always goes. I’ve learned my lesson since. But the urge the world do happen sometimes, right? You know, we’re all a lot of us are lucky to be able to point to at least a handful in our portfolios that we’re really proud of. And so you have to have venture capitalists, even if you want to see them as a necessary evil, in order to have true innovation. I mean, if you look at the US and our competitive advantage disadvantage vis a vis Europe and China, there are ways that I think those structures probably work better than ours, but one way that ours works really well is we produce more innovation, more new tech, more new ideas, you know, than anyone else in the world by a lot, and because of that system and the system of capital that goes into it, we have the opportunity, I think our immigration policy is all wrong, but we have the opportunity to take the best of the best technologists and coders and engineers and programmers and innovators and visionaries from all over the world and bring them into the US and give them a visa and give them a green card and say, Hey, Stay here and build your companies here, create your jobs here. Now you can debate immigration broadly. You can debate what’s happening at the border. It seems to me just insane that you wouldn’t take advantage of every high end person intact from all over the world who wants to be here. You wouldn’t let them. Bradley,
37:37
there’s there’s a lot of rhetoric about the impact of taxing unrealized capital gains. What’s the truth of this legislation, and how likely is it to be passed? Not
37:46
that likely. So I think that the left is sometimes a little more aware smarter than we give them credit for. And so I think it’s the thing they throw out in a negotiation that they know they will give away to get the other stuff that they actually think is feasible, right? Like, so, I’m a New Yorker. I was born in Brooklyn. I love this city, you know, I ran my Bloomberg campaign for mayor, and I’ve really spent, you know, I own a bookstore in New York City. Like, this is my my home, right? And yet, if Albany passed an unrealized capital gains tax, I would have to leave. I don’t literally know how one could operate an early stage venture fund in a state that was taxing unrealized gains like the math just doesn’t work, right? It’s literally impossible. I’d have to move to another state. And if Congress were to pass this assigned into law, I think I just have to stop being a VC or move to another country, because it just killed the entire industry. And so I think the actual effects of it would be so devastating that the likelihood of it ever happening is pretty low. But if I were on the far left and I wanted to get just like, an increase in the corporate tax rate, or eliminate the carried interest loophole, or something, you know, smaller, big, but smaller, I would use a Trojan horse, an unrealized gains tax, and then when we say that’s not going to happen, all of a sudden, you find yourself agreeing to other things that you otherwise wouldn’t want to do, because it doesn’t sound as bad,
39:09
but isn’t it just taxing unrealized gains over, like, 100 million of unrealized gains,
39:15
yeah, but, but, but still, that that gets you know, first of all, it really depends on how the regulations are written and how everything is calculated. Number one, calculated. Number one, number two, you know, if, if, if we invest 10 million in between, let’s say the A and our pro rata and the B, or whatever it is, into a company, and they succeed, and they hit unicorn status, we, on paper, may be in nine figure territory pretty quickly. That doesn’t mean at all that there’s gonna be an exit in the next five years, or that when there is an exit, and then we have our lock up period on top of it, what we see is only anything like what you’re seeing on paper, right? I mean the public markets, when they’re back in the days when there were tech IPOs, they were the valuations were falling by 60, 70% pretty quickly. The Public Market, simply because we as an industry were wildly overvaluing things. And we can talk about the reasons and causes for that So fundamentally, you know, yeah, it sounds like, well, if you’re doing that, well, what’s the difference? How am I going to pay taxes on a $200 million paper gain if I’m not going to see any of that money for seven more years? And the number I see may be radically different than what the piece of paper says right
40:23
now. Well, it could be also offset by other investments in the fund, but if the taxes are assessed at the individual portfolio company level, then right on paper, then you’re in trouble, right? I
40:34
have lots of companies. This is every early stage investor that don’t succeed, right? That’s literally the model, yeah, and that’s why we’re being taxed on an overall basis, it makes sense. But if it’s company by company, especially in an unrealized way, it’s dev state.
40:47
So Bradley, you’ve been beating the drum on vote with your phone for a number of years now. I have tell us about the book vote with your phone. You know? Why’d you read it?
40:56
So it comes out of my experience, both in politics and in tech, right? And so I’ve seen politics from every conceivable angle. Like I said, I was my Bloomberg campaign manager for mayor of New York City. I was Deputy Governor of Illinois. I worked in Congress, executive branch, legislative branch. And the thing that I took away from all that is every policy output is the result of a political input. Every politician makes every decision solely based on the last next election, and nothing else. And because we live in a world of gerrymandering, the only elections that ever really matter are the primaries. Right? You live on the north shore in Chicago, which means you don’t ever, you know the Democrat is going to win every general election that you could ever vote in. So the only election that really makes a difference is, you know, the primary election and primary turnout in this country is typically 10 to 15% So who are they? They’re the furthest left or the furthest right, or they’re big special interests that can move money in votes and will turn out primaries, and it gets us one of two things, either the total gridlock and polarization dysfunction of Washington or totally one sided government, whether it’s the state of Texas on the right, or the city of San Francisco or Evanston, you know, on the left, right? None of that is good, in my view, right? We need to be able to compromise and work together if we’re going to solve big problems like climate or affordable housing or education or whatever it might be. And because politicians are only making choices based on winning their next election. They’re never, ever gonna risk that just to get something good done, right? That’s just, it’s not their personality. And when I ran over Uber campaigns, the way that we beat taxi, it’s, you know, we were this tiny, little tech startup at the time, and taxi was a big, muscular industry, and the way that we won is that we were ultimately able to get millions of people to advocate through our app to tell their elected officials, their mayors, council members, state senators, whoever was relevant in that situation, Hey, I like this thing. Don’t mess with it. Leave it alone. And guess what? It worked in every single jurisdiction in America, right? And the question I started asking myself, was like the same people who are doing this, they don’t know who their city council member is, they never voted in a state Senate primary. We’ve always just written them off as a lost cause. But maybe they’re not lost. Maybe it’s just that, if you, if you give them a good reason to do something, and you make it really easy, would they do it? And if the answer was yes, that’s a radical thing, because if we can go from, say, 10% turnout to 30% turnout, all the underlying incentives change, right? So let’s say, I’ll pick on both parties here at the one at a time. You’re a Republican turnout. Your primary is 12% NRA members are half that 12% you know intellectually that it’s crazy that someone can walk into a store and walk out with an AK 47 but you also know that if you were to say that, let alone do something about it, you’re out in your next primary, right? You had no shot. So you’re never going to pick keeping kids safe in school ahead of your next election, or Democrats. You know, you may think that letting the teachers unions call the shots for kids schools and put the interest of the adults in the system ahead of the interest in the system is crazy, but you also know that if you were to piss them off in your next low turnout primary, they can move a lot of money in votes, and you might lose. So instead, you do what they want, right? And that’s how Brandon Johnson became the mayor of your city of Chicago, right? So if you want different outputs, you need different inputs. So imagine in those same primaries, turn out were 36% instead of 12% the NRA vote share just went from half to 16. Guess what? They have a lot less influence in power now. It’s the Chicago Teachers Union. Power just went from half to 16. They have a lot less influence now. And so you can literally find examples of this on both sides of the aisle. And I’m an independent I hate both parties at this point.
44:41
So we’ve become less extreme with this far less extreme, far less polarized, despite the effects of social media like that are further seeming to polarize. Yeah,
44:50
because at the end of the day, the vast majority of people on social media don’t vote in primaries, right? And so if we can get more of them to vote, it’s still. Definitionally, the views of 30% are more mainstream than the views of 10% it may or may not be an issue you would I support, but it’s still inherently more mainstream. And
45:08
what is the biggest hurdle that needs to so it has been security.
45:11
So the question was, can you do this securely? So starting in 2018, out of my foundation, I got lucky with Uber, and that I was before I started investing. I was consulting. I took my fee in equity. It became worth a lot of money, and so I’ve been using that money to run the mobile voting project. So we funded elections in seven different states. Were either deployed military or people with disabilities. Voted in those elections on their phones. It worked, turned out, increased significantly. They were audited and came back clean. But a lot of sidebar, percent, oh, it’s still too risky. We can’t do this. And so we took the findings of the US vote Foundation, which was written by a lot of photographers, and said, Okay, we’re going to build technology to these specifications. So over the last four years, we have been building tech again, out of my foundation, I’ve funded this. I’ve put about $20 million of my money into this project. In total so far, is all philanthropic, open source, end to end, encrypted, end to end, verifiable, air gapped, multi factor authentication, biometric screening, mobile voting technology that, once we are done, will be certified by NIST, National Institute of Standards technology. And after that happens, I’m going to make it open source and free, and anybody can use it, anybody can download. Can you do it
46:19
at a small scale for a local election. Sure, in
46:22
fact, that’s how we want to start. So I think that it’s still new enough that I’m not trying to make the next presidential election happen this way. What I would like to do, and my hope is that in 2025 I can pass a few bills in cities where school boards, city councils. Let’s start small and just see what works, see what doesn’t work, and if it works, let’s keep growing it. If it doesn’t work, okay, we try. So I’m, you know, making it free. I want everyone to be able to use it. And I wrote this book because, despite it, hopefully sounding good to you and to your audience, but everybody listen to this audience or techno optimist, the status quo is not going to like it, right? Because if you know how to win elections in low turnout primaries. You don’t want to mess with that, right?
47:03
So it’s easy to create the perception of a security risk, even if it doesn’t exist, absolutely.
47:08
And that’s why I’ve spent so much money and brought so many experts. There’s a great Chicago politics story. You ever hear a guy named Abner Mikva? He’s probably he’s before your time. So he was professor of mine in law school. I went to UFC actually, for law school, and he had been Clinton’s general counsel on the White House. He was an appellate judge on the Seventh Circuit. Really impressive guy. And he said, In the 1950s when he was a young man, Adlai Stevenson was running against Dwight Eisenhower for president, and he wanted a volunteer on the Stevenson campaign. So he goes into the local ward off, you know, Ward 47 or wherever, on the south southwest side. And you know, Bill O’Sullivan is the older man, and he was smoking a cigar, exactly, he was backed. And mikvah says, hey, you know, I’m here because I want to help. And O’Sullivan says, Who sent you? And Mikva said, nobody. And O’Sullivan said, We don’t want nobody. Nobody sent right? And that is still the attitude of politicians today. They don’t want more people to vote. And so I wrote the book to try to hopefully start building a movement where people will say, You know what, I don’t want to keep living in this dumpster fire of a government and of a democracy. I want to fix it. We can do it through technology. We do our banking, we do our health care, we do our love life on technology. There’s no reason we can’t vote securely on our phone. And so that was the point of the book, if you like what I just had to say. It’s called a vote with your phone. And even if you don’t want to buy the book, if you just want to learn how to sign up and learn more about it and support us, if you just go to votewithyourphone.org. It’s all on there.
48:31
Yeah, I would argue that a lot of the establishment, you know, a bit older, they’ve got their constituencies, you know, they’re entrenched, and the threat of a lot more voters, especially younger voters, with easy, easy access, so that could be disruptive to the security of their
48:48
corrections, right? It’s not actually about election security. It’s about job security.
48:54
Cool, Bradley, I noticed you wrote this piece titled 10 rules that demystify politics. Yes, give us the crib sheet. You know, for the tech founders,
49:02
the crib sheet, ultimately, is every politician makes every decision solely based on reelection, and they will do what you want. If they believe one of two things, if they think you’d either help them win their next election, or, if not cooperating with you, could help cost them their next election, they will work with you. So let me use FanDuel as an example. You know, we invested in FanDuel, and we ran a lot of the campaigns around the country to legalize the other fantasy sports betting. And we would go into a meeting with, say, a state rep in Tennessee, take over anywhere you want. And we say to that, listen, you have between FanDuel and DraftKings 2814 customers in your district. And let’s be honest, they don’t know who you are. They probably don’t even know what a state rep is, but they love this thing, and if you take it away from them, we’re going to make sure that they know that you’re the one that did it, and we’re going to register to vote, and we’re going to drive them to the polls and they’re going to vote against you. And guess what? Every single politician America said, I don’t need that problem. No problem, and we won, and literally, were able to operate everywhere. And the reason why is we convinced politicians that not doing what we wanted risked their next election, and they weren’t going to take that risk, you know, for something like fantasy sports gambling. Who cares? Right? They just weren’t going to do it. And so if you can convince them that you can move money and votes, then they will listen to you, and if they don’t think that you can, it doesn’t matter how smart you are, it doesn’t matter what great VCs are on your board, how much you raise that you went to Stanford, that you were in YC, nobody gives a shit, right? That is meaningless in politics. The only thing that matters is the next election, and they have to believe that you have the ability to enforce
50:42
tough system. Bradley, if we can feature anyone here on the show, who do you think we should interview and what topic would you like to hear them speak about? Yeah,
50:50
that’s a that’s a great question. I would sticking with the political bent here. You know, I would like to see there to be a couple of really critical appointees, either Harris or Trump, chair of the SEC, the chair of the CFTC, both of those for crypto, are going to determine the future of that industry. In many ways, the chair of the FTO, FTC and the DOJ antitrust division, that’s going to determine the future of MNA and antitrust prosecution. And then whoever they appoint to head up AI regulation. I would love to see you know, those people come on, because I think that they should have to be able to explain what their vision is, how they plan to grow these industries, how they plan to protect consumers, and get them a little bit out of their comfort zone, because they’re going to be used to just talking to people who are, you know, in the base of whatever they believe already, and look what I know from having in your podcast twice is it’s going to be a fair interview. You may agree or not agree with any particular thing. I’m sure you agree with everything that I said here today, but you give your guests a fair opportunity to be heard. And so I would love to see that and offline, you know, once we know who it’s going to be, you know, I’m happy to try out on the show
52:00
Bradley, what book, article or video would you recommend? Full
52:03
listeners just finished Nate Silver’s book, and it’s basically about the concept of people who take tremendous amounts of risk in their business and how they view the world. And the more counterintuitive way, VCs are one of the example. National gamblers are one of the examples. And basically he has this two segments of society. One is the river. So those are the people who are super counterintuitive, kind of the misfits who are willing to take lots of risk, and how do they think? And then the village. Or these are the people who are drawn to institutionalism and status and prestige, and the decisions that they make tend to be more based on maximizing for that. And you know, neither is inherently right or wrong. You or I have sort of natural the river, of course, because that’s us, right. But I thought it was a brilliant distillation of the culture and underlying intellectual framework of each of those two groups. So I thought it was a really good book. I would highlight,
52:57
what is it like? A 5% to 95% breakdown between the two groups. Oh,
53:01
yeah. At best. You know, maybe it’s even more like two to 98 or something
53:05
like, wow. Crazy. Bradley, do you have any habits, tactics or behaviors that are a force multiplier?
53:10
Yeah. And so two things. One is, when I turned 50 last year, I wrote on my sub stack an essay about turning 50, and it was 50 different things I’ve learned, and the last dozen or so were all very specific kind of time management ideas and advice. But I would say this, which is, I do not let the perfect be the enemy of the good. I believe that something done 80% as well and 50% of the time is ultimately more valuable than something done 97% as well, in 100% of the time. And I think that, yes, there are, if it’s a surgeon operating on me or something like that, sure, take your time, get it right, but by and large, volume, I think, goes a really long way. And I look for employees who can think fast, write, fast, move, fast, make quick decisions. It gets shit done. And I really think that if you have that skill set, it really will help you in any job and
54:03
following your Bradley what’s the best way for listeners to connect with you and follow along with tusk?
54:08
Yeah, LinkedIn is a great way to do it. You can message me on that. If you have Bradley tusk.com you can then get links to my podcast. Go firewall. You can you can follow that. You can subscribe to my sub stack books that I’m working on, my venture fund, my column for New York Daily News, all of that. So either of those two ways are a great way to get in touch.
54:28
He is Bradley tusk. The firm is Tusk ventures, and the book is vote with your phone. Coming out on September 17. We will link to it in the show notes. Bradley, thanks so much for the time and the insight. Well, thank
54:40
you for having me. Man, I really appreciate
54:47
it. All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email. Let them know what particularly. Resonated with you. I can’t tell you how much I appreciate that some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over, prepare, choose carefully and invest confidently. Thanks so much for listening.
