VC Bradley Tusk on how startups can get their way with regulators

Political strategist and VC Bradley Tusk joins the pod to discuss the importance of assessing regulatory risks for startups, how passion-inspiring tech succeeds, the state of the SPAC market and more. Also, PitchBook senior analyst Kyle Stanford joins to discuss key takeaways from the 2021 Q3 PitchBook-NVCA Venture Monitor report, which we will discuss further during a webinar on Nov. 3. 

Listen to all of Season 4 and subscribe to get future episodes of “In Visible Capital” on Apple Podcasts, Spotify, Google Podcasts or wherever you listen. For inquiries, please contact us at podcast@pitchbook.com.

 

Transcript
Alexander Davis: All right. Well, Bradley Tusk, welcome to “In Visible Capital.” Thanks for joining us.

Bradley Tusk: Thanks for having me.

Alexander: Let’s start off with a topic that’s near and dear to your heart, which is, I want to know, why do you think startups clash with regulators? What do you like to do in that space?

Bradley: Sure. Look, I think almost by definition, everything that a good startup does is not really covered by the existing law because if the bureaucrats who write the laws could think of new technologies and businesses and ideas and bring them to life, they would be entrepreneurs and not bureaucrats. Whether you are in a business where you’re just tweaking an existing model, whether it’s ridesharing, or home-sharing or sports or whatever, casinos or whatever it is, or you’re in a white space like crypto or drones or AI or cannabis. Whatever it is, where there is no regulatory framework at all, by definition, you are doing something that the government doesn’t quite know what to do about or how to deal with.

Then especially when you are taking on an entrenched interest, usually those interests get political contributions, they have lobbyists. And so when they start to worry about the market share you’re taking with them, they urge their friends in politics to crack down on you and that’s what produces the kind of fights that you see.

Alexander: Can you tell us just a little bit about the first fight that you got into in this example?

Bradley: It was for a little startup, I don’t know if anyone’s ever heard of, called Uber. I joined really, really early. They had just launched in San Francisco, were coming to New York, and Travis reached out to me. I didn’t even know what Uber was but it sounded interesting; I agreed I would take it on. He called me back and said, “Hey, I can’t afford your fee. Would you take equity?” I didn’t know what equity meant at the time but thank God I said yes, and that was back in early 2011. We ran campaigns ultimately all over the US to legalize ridesharing.

The first big battle was actually in DC where we’d entered the market, the local taxi industry. Which, for anyone listening who’s ever taken a cab in DC knows, is particularly off in taxi industry.

Alexander: The zones.

Bradley: Yes, right. The zones, the sharing—everything about it is bad. Of course, Uber was such a better product than what they had. They were losing market share pretty quickly. Medallion owners started complaining about if they’re friends with the city council and a bill got introduced that would basically ban Uber in a variety of different ways. We tested out our thesis, which is, it was very unproven at the time, but could you mobilize your customers to become political advocates for you through the app? No one had really tried that before.

We didn’t know if it was going to work or not either but we felt like we had some things going on with management. One, the juxtaposition between Uber and taxi, especially in places like DC, was so significant that the messaging was pretty easy. You don’t want to go back to this thing you really hate, then you need to help weigh in on this thing. Look, now, when you call for an Uber, you’re just annoyed because it takes seven minutes instead of four but if you think back to those first few times, it’s like a magical experience. That’s what people were feeling like at the time compared to this awful status quo.

Two, most super customers are local. Sure there’s some tourists, some business travelers, but the scale tends to be in the jurisdiction that people are riding in. When you mobilize them, it’s not just people, it’s voters, it’s constituents in a city council district, the state senate district, state house district, whatever it is, carries real heft with it. We sounded the alarm and 50,000 people in the span of a couple of days wrote unique emails to members of the DC city council and not only did the bad bill get dropped but our bill that we introduced passed unanimously. Even the sponsor of the bad bill voted for it.

That was the first of a lot of fights around the country. Ultimately, same outcome absolutely everywhere, which is, we were able to put enough people into play, the tweeting, texting, emailing in some way telling the elected officials, I want this thing. Then we won. There’s a really important political lesson here I think for startups or anyone listening to this, which is every policy output is a result of a political input.

Before I became a VC, I spent the first 15 years of my career working directly on government politics at pretty much every level. I was Mike Campbell’s campaign manager who ran for mayor. I worked for him at City Hall. I was the deputy governor of Illinois for four years and restructuring communications director in the senate. I’ve seen it from a bunch of different angles. The thing that I took away from it is 99% of politicians are desperately self-loathing insecure people that can’t live out the validation of holding office. It literally fills a hole in their psyche that absolutely nothing else can fill for them.

The only thing they’re thinking about is re-election because the risk that they can’t take is leaving that hole unfilled. Constantly, we ask politicians to do the right thing at the expense of their own political interest and, shockingly, they never do. You have a mass shooting somewhere and everyone calls for his hopes and prayers and vigils. Everyone’s really out to ban assault weapons, but you’re a Republican congressman from Florida. I’m independent at this point, so I hate both parties equally. I’ll use them in this case for this example. Turn out in your primary, say 12%. Your district is gerrymander, which means the only election that matters is the primary, not the general election.

Because turnout in your primary is so low, a huge number of those voters are NRA members. You know this, which means even though you know rationally that’s crazy that someone can walk into a store and walk out with an AK-47, it doesn’t matter because if you were to vote for an assault weapon ban, you’d be swapped out in the next primary. The only way to change that is either to be able to deliver more voters to a politician so they realize that what you have can either impact them positively or negatively depending on how they handle it.

With Uber, we had the ultimate couple of million people weighing in on our behalf. Or the other solution—and I’m working on this in my foundation right now—is to really increase turnout by primary itself. We are funding and running this campaign nationally to make it possible to vote on their phone elections, which I think would eliminate a lot of friction.

Alexander: Regarding mobilizing your customer base to use a political term, does that still make sense? Do you still rely on that kind of strategy with some of your existing portfolio companies?

Bradley: It’s so funny. I teach this class at Columbia Business School called the politics and economics of disruption and this was literally what the fuss was about last night. The answer is yes when you can win. The whole point of the class was what are the characteristics that allow you to be successful and you can spot that and act on it, and what are the ones that aren’t? It works when, number one, people are really passionate about the product. It could be Uber, but we’ve done it with Bird, we’ve done it with FanDuel. It could have been something people are really into. That’s number one.

Number two, they’ve got to be local. Part of Airbnb is probably the reason they were never able to really generate a good grassroots movement is all the scale on Airbnb is by definition on the guest side. People don’t stay in Airbnb in the same cities that they already live in. I’m sitting here in New York, if someone from Stockholm rents an Airbnb in a place in Brooklyn—

Alexander: What do you care?

Bradley: Right. Even though, to get them to weigh in with the state senator, but what do they care, right? They’re in Stockholm. You need something people are passionate about. The people who are passionate about it need to be local, they need to be voters. If you can do that, then I think you still can mobilize people and it becomes an effective and powerful tool. You just have to really understand, do you have the kind of product or service that can spur people to action if you make it easy enough? There are some really great startups out there that are very successful, profitable businesses but just don’t inspire the kind of passion that can generate real grassroots for many.

Alexander: Yes, like cryptocurrency, right?

Bradley: That’s interesting.

Alexander: There’s no particular geography there for anything, but there is a lot of passion I think.

Bradley: There’s a lot of passion and there’s a lot of money. I don’t think a grassroots campaign necessarily would work at the moment. Although you could geo-target people and start to figure it out a little bit. I do think what could work is, you’ve got all these companies that are making incredible amounts of money and the reason why they are at a political disadvantage when it comes to regulation is they’re just not organized politically at all. It’s still a very nascent industry.

Right now, the banks and everyone else in finance, private equity, and venture capital and everyone else has their associations and their lobbyists and their campaign events and all the stuff that they do. That buys them a certain amount of political goodwill that allows them to get the regulations that they want. Crypto hasn’t really done that yet. It’s a pivotal moment because with China banning crypto a few weeks ago, I really think the US has the opportunity to corner the market. Yes, it’s a sovereignless currency by definition, but the jobs of mining it, trading it, whatever else you have to do with it, has to be somewhere, and there’s no real reason it couldn’t be in the US.

There’s a great opportunity for the federal government to come up with the right regulatory framework for crypto and really capture a lot of those jobs and keep them here in the US. However, that requires an SEC and treasury department that think positively and expansively about crypto, rather than just thinking that it’s some bad thing that they have to crack down on. That’s where we stand right now. My hope is that we’ll be surprised by the government. Usually, we’re not. Maybe this case, we will be and they will take a more thoughtful approach to crypto regulation and that will allow the community to flourish.

Alexander: Well, let’s stay with that for a second. Just to pick up on that, because I meant to ask you. Gary Gensler is the Biden administration’s commissioner for the SEC. Chairman, excuse me. Every few weeks or so, he’s been on a little bit of a media tour, it seems like, and also on Capitol Hill, talking up some initial points of view on the crypto regulations that they are considering. Just based on what you’ve seen so far, what’s your take on Gary Gensler’s approach and what you’re hearing?

Bradley: I think it’s pretty negative. I think that he sees crypto as a threat. If you look at it from a very provincial way and you say, “The United States government and treasury is here to protect the US dollar.” That in theory, any currency that could become a rival to it, you don’t necessarily want. That’s why China obviously went ahead and banned crypto completely. We’re not China. We’re not a totalitarian society. I think Gensler is basically responding to the political inputs that he has, which are critics of crypto reporters who would far rather write political reporters a negative story than a positive story.

All the political pressure that he and his team get from the banks and all the other institutional parts of finance, who may have concerns about crypto, and based on all that, it’s leading him into a negative place. Yes, that may make some people at the White House happy, it may get him some better press. At the end of the day, it’s a short-term game with a long-term loss. If you came up with a thoughtful regulatory framework for how to tax crypto, how to treat crypto, how to regulate it, I think you could really use it to expand and build the industry in the right way while still offering consumer protection in the US. If it’s purely just a crackdown, then I think he’s going to drive away a lot of opportunity.

Alexander: Okay. This is maybe not a mobilization or grassroots campaign area. It is the policy-making process where you could bring in people in the industry to actually have a seat at the table and have a voice in creating a framework, creating regimes that will satisfy government interest and also satisfy industry. I know that you advocate for that kind of approach in certain industries. In the case of cryptocurrency and blockchain companies, do you think that that’s an avenue to pursue? I remember—

Bradley: Well, it is, but you’ve got to be politically relevant, right? Yes, you could probably hire the right lobbyists, and they could get you into some meetings. At the very least, the SEC, whoever has to say, we met with the community and heard their ideas and concerns and everything else. But they’re only going to do what you want to do if they think that you have real political power behind you, right? If collectively the crypto community said, “Okay, we are putting—” I’m making this number up—”a billion dollars of bitcoin or ethereum, or whatever you want, into the crypto Political Action Fund. We will use this to support pro-crypto candidates to take out anti-crypto candidates and influence regulation in a positive way.”

That could be incredibly powerful, right? If it’s just, “Hey, I’m an expert here. You should take my advice.” Maybe you get a meeting and make people smile and nod at you. I don’t think you can expect to get your ideas across.

Alexander: Well, it used to be like the banking industry and Wall Street always had a reliable senator who was like a ranking or a chairman of a key committee. I think about people like Richard Shelby or Jim Leach, who were very reliable.

Bradley: The senator from Goldman Sachs.

Alexander: Right. Is there somebody like that, for the crypto industry?

Bradley: No. First of all, even finance for a certain extent, Chuck Schumer, I think, because he’s both the majority leader and the New York senator, and is living in a world where he is petrified of a primary from AOC, even though he should be leading the charge to protect Wall Street because it is New York’s biggest industry. Chuck does what’s good for Chuck politically, and nothing else. And at this moment, the tea leaves point towards being as progressive as possible. Not only does crypto not have an elected official. There are some House members who I think are crypto savvy, at the very least, but they don’t have that champion, and they need it.

They’ve got to engage in the same political coalition-building, grassroots movement-building, and everything else if they don’t want to find themselves on the negative side of regulation that really limits their ability.

Alexander: That seems like the kind of activity that is not only foreign to startups in Silicon Valley, but also something they’re really not interested in doing. Is almost antithetical to their innovation gain.

Bradley: It may be. Look, this is the discussion that I have with our portfolio companies. We invest in companies that are well thought. To me, if you’re a pure B2B SaaS product with no regulatory implications whatsoever, you don’t need to talk to us, you don’t need to seek us out as an investor; you’re fine. The vast majority of businesses are regulated by government one way or another, either directly or indirectly, and you’re going to have the best UX/UI, the best idea, the best marketing plan, everything else.

If the government says you can’t do this, unless you’re willing to go to jail for it, you can’t do it, right? Not treating the regulatory risk and answering all the different issues around it as seriously as you would treat everything else, nobody would try to raise around the hiring council to put the dots together, right? This is the same thing. Often, for us, one of the most important things to see when we’re meeting with founders, is who knows what they don’t know. I don’t expect the founder to know anything about politics, understand anything about it. Quite frankly, if they do, they probably don’t have the skill set that I need. They’re going to want to invest in.

I need them to at least know this is a world that is very different. The currencies are different. In business, you care about P&L, or eventually, you care about valuation and growth, narrative, and things like that. In politics, they care about money, and they care about votes, and they care about press, right? If you don’t understand how they think, and how they speak, and what works for them, and what doesn’t work for them, it could be really easy for whoever you’re disrupting to run a campaign to put you out of business. It may be antithetical to how they think, but if you want to take on these giant sectors that are heavily regulated, you got to do it.

Alexander: You seem to be talking about almost like de-risking companies, and that you’re interested in helping startups, to some extent, and also perhaps other current and potential investors to do a little bit of due diligence and look under the rocks and see what kinds of regulatory risk might be awaiting a startup that you’re thinking about investing in?

Bradley: Yes, absolutely. Look, we’re a weird venture fund. We’re the only fund I’m aware of that does what we do. To me, at least, this is a really serious issue that affects the majority of startups. Our little niche in the marketplace is we’re the one fund that both really understands politics and regulation and then could do something about it, right? Our thesis isn’t just, do we invest in companies based on our assessment, the regulatory risk.

It’s based on, can we then solve whatever problem that is facing the portfolio company. It’s investing in FanDuel, then running the campaigns to legalize fantasy sports betting. Investing in legalizing scooters, investing in legalizing prescription via tax. Investing in getting other licenses to sell insurance in every state. That’s fundamentally how we look at all of this. To me, it’s pretty integral.

In fact, we are starting a new product, that of our consulting business, where if you are a brand new startup and you want to set up, what are all the regulatory risks that you face? What do you do about it so that you can understand it going in? As part of your strategy, just like everything else, we’re starting to put that product together too.

Alexander: What’s your take on Facebook? Facebook’s been in the news the last couple weeks, getting some really challenging headlines, a number of investigations in the media. They’ve been up on Capitol Hill under the harsh lights up there. What are the lessons there? What is Facebook doing wrong? Which I know we can talk about a long time.

Bradley: Yes, for a couple hours. We’ll do it more concisely. Look, there are a lot of lessons here. The first thing is I would argue that the risk to Facebook is pretty significant, and it comes in multiple forms. The first is some national privacy framework that limits their core business of monetizing their users’ data in the first place. California has CCPA. Europe has the GDPR. If the United States as a whole were to pass something like that, that’s certainly a problem for Facebook.

Problem number two is what’s called Section 230, the Telecommunications Decency Act, which provides legal liability to platforms for what their users post online on the platform.

If I write something libelous about you on Facebook, you can sue me, but you can’t sue Facebook. There’s been a lot of discussion from both parties about removing that protection because, in some ways, it’s what allowed the internet to become so toxic in so many ways. If that were to be repealed or significantly limited, all of a sudden Facebook’s ability to say, “We’re just a platform. Anything goes,” starts to really decline, and they’ve got to be a lot tougher about how they police content. That’s a risk.

Risk number three, the antitrust. A lot of people feel like the combination of Facebook, WhatsApp, and Instagram as one company really is a violation of antitrust law. You’ve already seen antitrust prosecutions filed against Facebook both by the federal government, by almost every single state. One was recently thrown out. Generally, for procedural reasons, I do think there’s a significant risk to Facebook there.

The fourth is Libra, which is Facebook’s payment system. They can’t launch it without approval from Washington. There’s no real reason they shouldn’t be able to do it in the sense of, there are all kinds of online payment systems these days, and people clearly want to use them. Facebook’s a natural place to do that, but simply because they hate Facebook, Washington’s not letting it happen. Facebook has real risk, and I know they don’t love this point of view, but I don’t believe that they can solve this without really fundamentally changing their approach to strategy, how they handle politics.

Facebook historically has basically always said, “We got it. We will moderate all content effectively on our own. We don’t need anyone’s help or oversight. Guess what? Not only can we let you share photos of your cat or find your best friend from the eighth grade or whatever it is for free, all of your data is protected. We completely respect your privacy.” That’s just fundamentally not true. I think the reality is, most consumers are mature enough to understand the business model.

I think if you said to people, “Look, we are a business. If you go to do all these things that we let you do for free, we have to have some way to make money, and the way we make money is we advertise. We take the data that we learn and we use that to target the ads, or if you don’t want that to happen to you, you can pay us a monthly subscription fee and you won’t see ads.”

I think if you said to people this is just the reality of it, people will generally accept that because they understand that there’s no such thing as a free lunch. What Facebook is constantly insisting is you can have something for nothing, and it’s not true. Nobody believes it at this point. They’ve infuriated everyone. They’ve lost the left. They’ve lost the right. They’ve lost the center. They’ve lost the media. That’s why when someone like Frances Haugen comes out with very damning testimony and research, it gets so much attention because everyone assumes that she must be right.

Alexander: You’ve said that they need to change their ways in all the above. They also need to really apologize and turn the page and go somewhere else with things. Why do they need to do that? Why do they need to apologize?

Bradley: I think because they have no credibility at all. Even when they do apologize for something, it feels so insincere that you could literally imagine Zuckerberg sitting there with his fingers crossed behind his back while he’s saying it. As a result, it has completely eroded their credibility. I don’t think anyone believes anything they say. If you want to start to change that, the first thing you have to do is show people, “Look, yes, we’ve screwed up in a lot of ways.” I think they could say this: “We created this new technology that no one had ever done before. Clearly, it has all kinds of great things to it because billions of people use it and it’s brought people around the world together.

At the same time, everything new has a lot of unknowns and there are things that we understand and can control for, and there are things that we can’t. For those that we can’t, we now realize that we should be working cooperatively with government, with regulators, with academics, with whoever, to try to solve these problems rather than pretending that they just don’t exist.” I think if that were a genuine, heartfelt statement that Facebook made, that would at least make people say, “Okay, they finally seem to get it. They finally seem to mean it. Now, what are we going to do?”

Then they have got to go about both being honest about their business model and then engaging with regulators, not in this scorched earth, “We’re going to hire every lobbyist on the hill like pharma does, and we’re just going tohold you down.” We’re going to work with you because we understand and recognize that we don’t have all the solutions here. You don’t either. Look, would a content moderation panel of some kind that included representatives from the government and academia and think tanks and all that, inherently be better? I don’t know. At the very least, now you’re at least letting other people be part of the process. If you’re Facebook, you’re spreading out the blame.

You can say, “Look, this didn’t work out. By the way, this wasn’t just us that got this wrong, so did the federal government, so did Harvard, so did the Brookings Institute, whatever it is.” I think you actually would want that, because then you could spread it out a little bit. There’s a lot that Facebook could do here, but it does require a mindset shift by Zuckerberg, by the leadership. Look, when someone is as rich and powerful as Mark Zuckerberg, I guess they can do whatever they want and get away with it. That’s what he is doing, but I think it’s a long-term detriment to both the company and the shareholders.

Alexander: I suppose if you want to engage and have some say in creating a new framework, trying new kinds of mechanisms, like a third-party moderation platform, for example, you need to have a little bit of credibility and I guess authenticity. Is the lesson for the tech industry and for startups looking at the Facebook situation that there is a prescription for you if you want to cover your bases for the future, and have some say to actually engage in that way?

Bradley: Yes, for sure. I think it gets back to what we were discussing, which is, some of the really big platforms like Google and Facebook and Twitter, in their early days when they still had a really good reputation, they just decided they didn’t need to deal with government at all. Google would just say, “Don’t be evil,” and they would smile. It’s like, “Oh yes, they’re so lovely and wonderful.” Then finally, they’re not that lovely and wonderful.

If you ignore media and regulation and politics in the way that a lot of these large platforms have, you start to really build opposition and enemies and a narrative that you are either harmful to society, or deceitful, or everything else, and you don’t want that. Ultimately, that hurts you. Look at Uber. In the early days of Uber, everyone pitching their startups said, “I’m Uber for pimps, or Uber for couches,” or whatever it was.

Alexander: Yoga.

Bradley: Yes, Uber for yoga. Look, I hear that all day and no one says, “I’m Uber for whatever,” because Uber took enough of a PR hit over a period of time, that while it is still obviously a very big company, it doesn’t have the allure that it used to have. I think Facebook and Google and Twitter and Amazon are all at somewhat similar risks. If you’re earlier stage startup trying to learn from this, I think you just have to be much more proactive in understanding that if you are a consumer-facing product, and you’re dealing with regular people, that also means you’re dealing with government and regulators and reporters. You’ve got to be ready for them.

Alexander: In the time remaining for us, I thought we might talk a little bit about the IPO market and SPACs. I know you have a point of view on SPACs. I believe you personally have your own SPACs, not your VC firm’s vehicle.

Bradley: Right, separate. Yes.

Alexander: What do you think of the state of the SPAC market now clearly just cooled off? Are you still a believer in it?

Bradley: I am, but with a very, very specific point of view. Which is, if you can look at the sponsor of the SPAC and the company that they’re merging with and say one plus one equals three here. If the sponsor clearly adds real strategic value to the company that they are emerging with and they have the ability there to logically make it a much more successful company, that makes a lot of sense, right? There are a handful of SPACS that fit that category. While I don’t tend to invest in sort of individual stocks, I would look for those that did really make a very clear case on how the acquisition materially improves the company’s prospects.

In most cases, that’s not what’s happening. With most cases it’s just purely, there was this craze, everybody wanted to get in on it. Banks are just cashing in to make as many fees as they could, so anybody could raise a SPAC. Lots of them got raised and all they have to offer to the companies is money, right? If all you have to offer is money, it’s totally fungible and you’re going to end up with an enterprise value that’s probably way too high because you’re competing against 12 other SPACs trying to do the exact same thing. Then, in these days in this market you have a lot of redemptions and a really hard time moving the deal forward.

In my case are both the SPAC that we’re doing—and I can’t talk about it, because it’s a publicly traded company—and other SPACs we’ve been thinking about. It’s specifically where regulatory expertise can unlock markets, whether it’s legalizing new products or getting permits and licenses for existing products. When we think we can truly do that, that’s a real value add, right?

Those are the deals that to me make sense and that’s what we’re pursuing. Obviously I can’t talk about it, but I really think that there’s not a one-size-fits-all SPAC. They’re not inherently good. They’re not inherently bad. They’re one of many vehicles and mechanisms to raise money and then it just becomes is there something about this deal specifically that is really valuable and attractive? The answer most of the time is going to be no, sometimes it’s going to be yes.

Alexander: Do you think that the slowdown or the cooling-off that’s happening in SPAC activity is a sign that public investment in private entities—PIPE money is getting more selective about it and raising the bar is that the [crosstalk] here?

Bradley: Absolutely, raising PIPEs are harder. The terms that PIPE investors are getting from sponsors are more and more favorable to the PIPE investors. The number of redemptions that we’re seeing upon a de-SPAC are a lot higher than they used to be. The market has clearly moved away from the SPACs, but I don’t really think it’s that the market says SPACs are bad. What the market is saying is way too many SPACs were raised that didn’t really need to exist, and we are not going to reward those businesses.

I like to think that when I eventually go to market—because I think I’ll be able to show that one plus one does equal three and a really specific value-add—that that will end up doing really well. That’s my hope, but overall, if you’re just like, “Hey, I missed out on the SPAC craze. I should still try to do one.” I’d probably pass on that.

Alexander: Just, Bradley, as a venture capitalist, what’s the attraction to you? Why not of a SPAC vehicle, why not just stick to your firm’s portfolio approach?

Bradley: Because we’re early-stage investors and our funds are pretty small. Our first fund was $35 million, our second fund was $70 million. The third fund will be bigger, but nonetheless I raised $300 million for our SPAC and I did it in three days of roadshow meetings on Zoom. Anything that I’m looking to then go ahead and merge with and purchase is going to be several multiples of that.

The numbers are bigger, the process is different and simply because ours is in the hospitality gaming space, I’ve been in this space for a long time and I had this vision originally that if you look at casinos in the US—and this is basically true around the whole world, from the nicest one on the strip to the worst riverboat—you could imagine they’re all variations on the same thing, right? It’s all red carpets and gold plating and wheels of fortune and slot machines and some are nicer than others, but it’s effective with the same thing.

You have 140 million people in this country alone who are millennial or Gen Z, and probably a specific percentage of them might be gamblers as much as any other age group or demographic, but they have different interests and different tastes. No one has ever built a casino to say, “Let’s focus on this demographic and we’ll offer esports-betting and fantasy sports-betting. We’ll have ax throwing and soul cycle popups.” That was originally what I was trying to do in the space and I had competed in some auctions to buy casinos, but my cost of capital was always really high.

I was never able to win the auctions, and then when COVID hit two things happened. One, the SPAC craze came with it, so all of sudden this new vehicle came along—or it wasn’t really new, it existed for a long time—but reemerged. At the same time, because nobody was in Las Vegas or in casinos for a year-plus, the price of all that went down. That’s what initially drew me to the SPAC market that may not be where we ultimately end up on a deal itself, but it was the ability to raise a lot of money very quickly for a very expensive deal. That’s just at least for us that may not be true for a Sequoia or a Tiger or someone, but for us, it’s still an early-stage fund different model.

Alexander: Yes and a very special opportunity that you just didn’t have before.

Bradley: Correct. Exactly.

Alexander: Great. All right. Well, I think we’re all set here. Thanks so much for joining. Great talking with you.

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Bradley Tusk
Co-founder & CEO, Tusk Ventures

Bradley Tusk is a venture capitalist, political strategist, philanthropist and writer. He is the CEO and co-founder of Tusk Ventures, the world’s first venture capital fund that invests solely in early stage startups in highly regulated industries, the co-founder and chairman of the Ivory Gaming Acquisition Corp., a publicly traded company on the Nasdaq. Bradley’s family foundation is funding and leading the national campaign to bring mobile voting to all US elections. Tusk Philanthropies also runs and funds anti-hunger campaigns that have led to the creation of universal school breakfast programs in eight different states. Bradley is the author of “The Fixer: My Adventures Saving Startups From Death” by Politics, writes a column for Fast Company, hosts a podcast called “Firewall” about the intersection of tech and politics, and is the co-founder of the Gotham Book Prize. He is also an adjunct professor at Columbia Business School.

Previously, Bradley served as campaign manager for Mike Bloomberg’s 2009 mayoral race, as deputy governor of Illinois, overseeing the state’s budget, operations, legislation, policy and communications, as communications director for US Senator Chuck Schumer, and as Uber’s first political adviser. Bradley received his J.D. from the University of Chicago Law School and his B.A. from the University of Pennsylvania.