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On this episode of Okay, Computer, Dan and FirstMark Capital’s Rick Heitzmann discuss how the results of the midterm elections may impact the markets and regulation (1:00), intensifying layoffs in the tech industry (3:45), Binance’s shock move to buy FTX sparking new fears and volatility in crypto (11:00), why Rick is bullish on “pick-and-shovel” startups (17:15), Elon Musk’s chaotic handling of Twitter so far (20:45), Tesla shareholders feeling the pinch from Musk’s Twitter mess (23:15), and if it’s the beginning of the end-game for the market slump (32:45).  

Later, Dan talks with Jake Wood, Groundswell’s founder and CEO & Team Rubicon’s co-founder and Executive Chairman, along with Joe Marchese, Build Partner at Human Ventures, about what drove Jake to enlist in the Marine Corps (41:00), how 2010’s devastating earthquake in Haiti led to the creation of Team Rubicon (45:30), the importance of giving veterans purpose after military service (48:30), starting Groundswell and the growth of Philanthropy-as-a-Service (57:30), the “founder’s journey” during the COVID-era (1:09:00), navigating privacy protections in philanthropy (1:11:30), and how inflation and recession fears are impacting philanthropy and charitable giving (1:16:00).

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And as always we want to hear your feedback. Please hit us with any comments at contact@riskreversal.com, and follow us at @OkayComputerPod.



Show Transcript: 

Dan Nathan: [00:00:37] All right. Welcome to Okay, Computer. I am Dan Nathan. I am joined by Rick Heitzmann, the founder and CEO of FirstMark Capital. Hi, Rick. [00:00:45][7.9]

Rick Heitzmann: [00:00:45] Hey, Dan, how are you? [00:00:46][0.6]

Dan Nathan: [00:00:46] I’m good. We’re here in studio here and we are on election eve. It is Tuesday afternoon. We get we have a ton of stuff to talk about today. Okay. There’s tons of stuff going on. Public markets, crypto, private markets, a whole host of things here. I have a great conversation with Jake Wood, the CEO, founder of Groundswell, also the founder of Team Rubicon, which is an amazing organization. We’re going to talk all about that with Joe Marchese, the build partner at Human Ventures. Okay. So stick around. That’s coming up after Rick and I go through just we’re going to go through a lot here, people. We’re going to talk about Elon, Twitter, Tesla, the interrelations of that. We’re going to talk about SBF, FTX, Binance, BTC, the whole shebang. Okay. But Rick, here we are. By the time our listener is taking all this beautiful content in, there’s going to be a pretty clear indication of how the midterm elections went. Okay. And obviously, a lot of people feel like the Dems are going to lose the House in the Senate. It’s not that weird of a occurrence in a midterm election first term president. I’m just curious. Let’s assume that that does happen. You know, there’s a lot of data that suggests in public markets that that’s good for the stock market. People like, you know, divided government. How is that played out in your 20 plus years as a VC? What does it do for for private markets? [00:02:02][76.7]

Rick Heitzmann: [00:02:03] I think it’s the same for the both the public markets and private markets that divided house divided executive branch and legislative branch means not much gets done. And as we know and as we saw the opposite in the world of Trump, that having rules of the road and having some consistency and knowing what’s going to happen matters a lot. So knowing that not much is going to happen and you’re pretty certain of that provides at least one less fear in your investment equation. [00:02:31][27.5]

Dan Nathan: [00:02:31] Yeah. So I guess the point would be is if your fear was that a Democratic Congress with, you know, a Democrat in the White House, is that maybe interest rates could go higher, maybe further fiscal stimulus, maybe further regulatory scrutiny like all this. [00:02:43][12.0]

Rick Heitzmann: [00:02:43] The big thing in the private markets, regulatory. So there’s not much tax. There’s not much you know, there’s some, you know, macro things, but the whole thing is regulatory, two pieces right? You’re going to have the piece about M&A and you know, everything that’s going on, M&A, there’s been a second trend, a slowdown in M&A due to the regulatory environment. And then there’s some specific to individual industries, health care, financial technologies, etc.. [00:03:05][21.6]

Dan Nathan: [00:03:05] Okay. As a VC, we know what the outcomes are as far as exits, right? So you can see a company in 5 to 10 years go public. You could see strategic M&A, you could see them go out of business, that sort of thing. The IPO windows closed. Okay. So under a divided government, with maybe less resolve for like sharp regulatory, do you think we could see an uptick in M&A? We haven’t seen a ton of it. We saw the start of this year, that big Microsoft or Activision Deal. You saw that [00:03:33][27.6]

Rick Heitzmann: [00:03:34] Which is still up. [00:03:34][0.0]

Dan Nathan: [00:03:34] When you saw that the EU is investing in that right now. And they’ve been a thorn, I think, in Microsoft’s acquisitive side in the past year. I’m just curious, like a lot of the companies that you have that maybe, you know, you can’t even speculate when an IPO, maybe it’s 2024, right? That sort of thing. Might there be an opportunity for tuck in acquisitions, strategic acquisitions? [00:03:55][21.3]

Rick Heitzmann: [00:03:56] So there can be. I mean, you’re still going to have the same appointed members that are overseeing these types of things. So it’s not going to change everything. But at the same time, you know, there is more of a balance, there is more of a of a thoughtfulness across the board. So you’d like there to be a more active M&A market, you’d like there to be more competition from a private market to public M&A. And hopefully you’ll see a little bit of a relaxation of regulatory environments. [00:04:23][27.5]

Dan Nathan: [00:04:24] You know, that I always think about markets in general through the lens of the public markets. And one of the reasons I love having people like you and Jeff and Joe, you know, and a whole host of others join me is that I think you guys have this really good barbell approach with like you’re always have an eye on public markets and comps, that sort of thing, but you’re also actively advising many, many companies in the private tech markets. And you’re seeing, I guess, the flow through of a lot of what’s going on there into, you know, the private markets. But usually there’s a big lag and we’ve talked about that. [00:04:57][32.8]

Rick Heitzmann: [00:04:57] Yeah, we’re always we see a big lag in valuations. You also see a lag in in reaction sometimes. Sometimes you actually see it going both ways. And, you know, sadly, we’ve talked about layoffs here for the last year. And then there’s some people, including Meta, who are just getting to them. There’s some people who’ve gone through Robinhood, the third round of layoffs after, you know, all the Okay, Computer listeners know to say you do it once you’re decisive, you cut as deep as you need to go and this shouldn’t be a repeat offender. And so you’re starting to see and coming out of call it the last the last spot of board meetings and probably about a dozen board meetings over the last month or so. You’re starting to see kind of that labor market shift a little bit. You know, people are less concerned about bringing folks on. They’re less concerned about holding on to recruiters. Obviously, they care a lot about their talent and their people. And they really want the people that are there to be motivated, have a sense of doing a great mission that has a great goal at the end. But it’s less about, Oh my God, how am I going to get the next person in the door? And then the probably the last shoe to drop on that was the Meta layoffs as the the the put was always being able to say, hey, if I could always go to Facebook or Google and get a job. [00:06:11][74.2]

Dan Nathan: [00:06:12] Yeah. And I guess, you know, to your point, I mean, you’ve been telling our listeners for a while that your advice to founders is like, listen, this is going to be a difficult period. We can all see it. This is in the start of 2022. And like you said, be decisive, make those sorts of cuts. You don’t have to, you know, keep coming back and have a death by a thousand cuts. It weighs on morale. It weighs on a whole host of things. So I guess earlier this week, you know, the headline was that Facebook was going to Meta, was going to be doing mass layoffs here. They had 87,000 workers. And I think your point, and you’ve mentioned this on many occasions, is that Alphabet, Meta, you know, I mean, like all these large platform companies, you know, if you got laid off from a startup, let’s say, in Q1 or Q2 of this year, you would say there was always a place for you at a larger there. [00:06:55][43.7]

Rick Heitzmann: [00:06:56] There’s there’s always been a place and there was probably a deficit. And we were just talking about it internally today with our talent team that there was, you know, a deficit of, you know, you might not go for even in Q2, you might not go from a great startup to Meta or Alphabet, but you could always go to a Macy’s. There’s always there is always a place to land. And I think you’re starting to see a concern that there is are always going to be a place to land in the future. And this might be, you know, one of the first signs of consumers, especially young consumers, Henrys high income, not rich yet millennials of, you know them coming facing a comeuppance. [00:07:31][35.6]

Dan Nathan: [00:07:32] Yeah so this was the middle one was really interesting because about a week and a half ago, the stock was down 25%. And one day it was after they reported their Q3 and gave disappointing guidance. And you mentioned Jeff before. So Jeff Richards was on with me last week and we were talking about Meta and I told them I kind of bought a little bit. You know, the stock is down 75% from its highs a year ago. And, you know, whatever Mark Zuckerberg and the executive team saw about their core business a year ago or, you know, at some point in 2021, you know, causing them to spend tens of billions of dollars on rebranding and refocusing this company that has a third of the world’s population that they could call a monthly active user, over 3 billion people at the time, they knew that this was not going to be met with like a level of exuberance. The Nasdaq was just topping out. No one knew that. But interest rates were starting to go higher here. And so the fact that he doubled down on his commitment to the strategy, this was a couple of weeks ago, but they didn’t talk about cutting spending. But then two weeks later, after the stock’s down 30%, what do they do? They announce mass layoffs. It allows him to stick to whatever his view is of this company going forward, but also appease investors who are looking for cost reductions. [00:08:43][71.5]

Rick Heitzmann: [00:08:44] Yeah, I mean, I think Mark Zuckerberg has a lot of things. Stupid is not one. So, you know, if you think about what he had to do, he has a vision. It’s not a bet the company vision because the company is obviously wildly successful and very large. But he’s put in $250 billion into the metaverse, which is, you know, basically, yeah would be that it alone would just be a top 20 of all time market cap company. So he’s betting the company on that. At the same time, he has the perfect business model of generally user generated content, which is socially shared and produces tons of cash. And so the goal should be, hey, how do I run a good business, maybe even a great business on one side, invest some of those profits in what I think is next in the metaverse, while at the same time making sure I’m running a good business. I’m thoughtful about costs. [00:09:32][48.1]

Dan Nathan: [00:09:33] Yeah and I guess where Jeff and I were kind of going back and forth a little bit is like for me with a stock that was much loved, you know, a year ago where the sentiment couldn’t be worse. Okay. The stock performance you just mentioned, $250 billion. I mean, that’s the market cap of this company right now. They have $40 billion in cash it was supposed to be or is on its way to be $1,000,000,000,000 market cap. You know, this time a year ago and I look at something like this and I say the pendulum has shifted so far one way, whether you like Zuckerberg, whether you like his vision of the future, whether you like the business model and what the product does to people, it’s too profitable for what it is. And little things on the margin, like announcing job cuts or the sort of thing that have the stock bouncing. So my play is not a long term one. It really is a short term kind of reversion trade to that downtrend. But I think the unemployment thing is really important. The fact that you are now starting to talk your team and I know that you guys have been revising your portfolio companies for a long time to make decisive cuts and do it early. But here’s. The thing that’s interesting, the last piece of this puzzle for the U.S. Federal Reserve is having that unemployment rate go up. They’re actually, they haven’t seen that really happen in the jobs report that we just saw for October last week. They saw it tick up a little bit from three and a half percent to 3.7%. That’s really near a 40 year low. And so you think about this, where was all of the overexuberance in the market, really, or economy over the last few years? A lot of it had to do with gig economy, start up economy, small, medium business, and then these large platforms hiring hundreds of thousands of people during the pandemic. [00:11:09][95.8]

Rick Heitzmann: [00:11:09] Yeah. I mean, if you’re if you’re Amazon, you’re hiring every single person, Facebook, Google. Some of the gaming companies and you know there were some people working multiple jobs to do in that time. So it was it was incredible. And it was it in retrospect, it was an incredible time. [00:11:25][15.6]

Dan Nathan: [00:11:25] Well, let’s talk about this, Rick, is I know this is a space that, you know, you’ve kept an eye on. And from a first mark standpoint, you made some investments in and around crypto. You know, one of the things I think is really interesting is that, you know, we’ve had this gentleman named Sam Bankman-Fried, who’s the CEO, founder of FTX, which is a large retail crypto exchange. They had their own stablecoin. This guy, based on his own trading in his own hedge fund, had been this kind of, you know, buyer of last resort for all of these crypto funds and some of these other platforms that have gone under. And for a whole host of reasons, a largely, I think, having to do with leverage and then really some of the stablecoins that that these platforms have, maybe the collateral wasn’t exactly what they suggested [00:12:07][41.8]

Rick Heitzmann: [00:12:08] Maybe they shouldn’t be called Stablecoins. [00:12:09][0.3]

Dan Nathan: [00:12:09] Correct, they were very unstable. But he would come in and one of his entities and they’d back the things and they’d take him under. Well, all of a sudden today the headline is that FTX.com Is being bought by its biggest competitor, Binance, which is fascinating because Sam Bankman-Fried had been the buyer of last resort. Now he needed one and Binance is doing it now. Binance and the CEO what he tweeted out was like, This deal is based on due diligence that we have not done yet. So it could fall apart any moment. And what’s interesting to me is that, you know, when Bitcoin had sold off because there was fears about FTX their solvency and then when the Binance news came out, it rallied up above 20,000. Well, as we speak, it just did a U-turn over the last few hours. This is Tuesday afternoon and it’s back near 18 and a half thousand dollars. And what’s more interesting to me is that the Nasdaq followed it lower here. So talk to me a little bit about this news correlations to [00:13:09][59.4]

Rick Heitzmann: [00:13:09] There’s three things in there. Hey, what does this news mean? And as an active investor in that ecosystem? How do we think about that? What does it mean for Bitcoin and what do we see going forward? And then what is and then what is correlation mean and maybe in reverse order there, I think the correlation and we’ve seen it across the board that everybody was saying crypto as a hedge against the Nasdaq or this is a hedge against that. More than ever, we’re seeing complete correlation of baseball cards to crypto, to startup economy, to, you know, large cap, you know, a large cap ark ETF. So things in general, maybe aside from energy, are all moving in the right direction and they’re all moving as a equates to liquidity. So as liquidity comes out of the system, as interest rates rise, the prices are falling and sometimes are falling faster than someone could catch them. And especially in which a believer community at this point in crypto. [00:14:08][58.5]

Dan Nathan: [00:14:10] Are they still believers that’s the thing that’s really funny. [00:14:10][0.7]

Rick Heitzmann: [00:14:10] People aren’t selling. I don’t see there being a lot of selling nor buying. Actually, if you look at me, the interesting thing you don’t only look at price, we look at volume. So if you look at volume, the volumes kind of aren’t there. And therefore, when there’s a distressed seller or so, let’s say, you know, Binance when they said they had due diligence, my guess a lot of that’s balance sheet diligence and a lot of the leverage. And my guess is they’re going to have to unwind a lot of these this leverage through the sale of coins. So obviously, they’re going to have to sell, you know, semi stablecoins. They’re going to have to sell Bitcoin, they’re going to have to sell all of this crypto. And who’s going to be the buyer there? The market’s not efficient enough to absorb that. And I think that’s why you’re seeing the volatility there. And I think that’s where you’re seeing some fear in that part of the market. [00:14:57][46.6]

Dan Nathan: [00:14:57] Before we get to the other two components, I just think that, you know, the the support of Bitcoin is something that’s really interesting. My co-host who you know, Danny Moses of On The Tape podcast with Guy in me he’s been talking about this for over a year is that he thinks that there’s something really evil lurking in these stablecoins tether in particular that was fought around. Tether is like as old as like the crypto hills here, but we’ve seen it one by one over the course of this year. That and you know, this was in the summer of 2021, Usdc, which is backed by Coinbase that’s their Stablecoin. You know, there was issues about what is the collateral for that. And so we saw, you know, so to me, this has been going on for a very long time. I guess it almost feels like a bit of a shell game here because SPF FTX was backstopping, all of these other ones were failing. Now we have Binance’s literally this is their main competitor. If he wants to put them out of business, he could put them out of business right now. [00:15:53][55.7]

Rick Heitzmann: [00:15:53] He could also put himself out of business. [00:15:54][1.1]

Dan Nathan: [00:15:54] It’s like the financial crisis like that all the banks were going over. Who is next? [00:15:59][4.9]

Rick Heitzmann: [00:16:00] It was next and if they have to sell all their coins, obviously the Binance collateral goes away also. And supposedly that was part of what Sam was doing, is he was supporting the ecosystem, maybe because he wanted to, maybe because he had to, and he had to support the ecosystem for his own balance sheet. And he might have been it might have been with today’s news saying is his balance sheet might have been more precarious then, you know, when you saw him on, you know, on a panel at Super Bowl. [00:16:27][27.0]

Dan Nathan: [00:16:27] Yeah. So let’s talk about the correlations, though, because interestingly enough, the Nasdaq turned when, you know, when Bitcoin dropped 2000 points. We have not seen that in a very long time. And so to me, when you think about who are the buyers, there’s no retail enthusiasm for crypto at all right now. Right. So they’re not there. And then maybe we’ve seen some money, you know, moving back into the stock market, but it certainly came out of Mega-Cap Tech and that stuff is probably a bit more correlated to crypto, especially let’s call it the, you know, high valuation names that have been kind of crucified over the last year and a half, too. I just think it’s interesting at this stage of the game that the Nasdaq would stage that sort of reversal based on a crypto. [00:17:06][38.8]

Rick Heitzmann: [00:17:06] Especially, you know, when you were seeing some small capitulations, things that didn’t make sense to the market earlier this year. You know, you knew there were some margin calls occurring. You knew that there was some leverage unwinding. You knew people were covering shorts when there was a much more active market and a much more volatile market being played today. That doesn’t seem like it’s the case, especially in crypto and especially as it relates to the Nasdaq. So I just it just shows that these systems might be weaker and might be not as resilient as we’d hoped they were. [00:17:37][31.1]

Dan Nathan: [00:17:38] Yeah. I mean, listen, at the end of the day, all the people that have been pushing it on Twitter, you know, they all there’s no more laser eyes. You know, they’re not tweeting these long threads about the religion of. [00:17:46][8.9]

Rick Heitzmann: [00:17:47] Matt Damon’s making movies again. [00:17:48][0.6]

Dan Nathan: [00:17:49] Yeah I mean, I guess Fortune doesn’t favor the brave people. All right. Well, let’s talk to me about, like, how you’re thinking about the space. Because, again, at FirstMark, you guys have made some investments over the last few years. And some of them you guys, you’ve kind of articulated this before it more of the picks and shovels sort of thing [00:18:04][15.4]

Rick Heitzmann: [00:18:06] Picks and shovels and, you know, we believe in software that does jobs, right? It could be video game software makes you happy. It could be workflow software in financial services that enables compliance and it could be crypto projects that do jobs like helium providing Wi-Fi. And we’ve talked about that on the pod before [00:18:20][14.6]

Dan Nathan: [00:18:21] Yeah we have I have a helium router [00:18:22][0.7]

Rick Heitzmann: [00:18:22] Yeah it’s great. Yeah. Printing money. [00:18:23][1.0]

Dan Nathan: [00:18:24] Yeah. It was I don’t think it’s printing anything now, Rick, we have to have a talk about talk. [00:18:29][5.1]

Rick Heitzmann: [00:18:31] Off pod. But so we’re investors in the ecosystem. We think there are a lot of projects which make sense. We think there’s probably more projects that don’t make sense, but we were prepared for with the crypto winter is and I think the key thing that we’re thinking about in terms of crypto winter, especially here in the middle of November, is we’re not expecting the winter to be over if Pakistani Phil sees the shadow or doesn’t see a shadow, I forget which one it is that, you know, in March, April next year, you know, Bitcoin is back at 40,000. You know, we’re saying, hey, these are long arcs and you know, especially on days like today where it’s not even a financial arc, it’s also rebuilding trust. It’s also some of these projects going from speculation to actually doing jobs to actually having operating metrics around those jobs. So there is a long way to go to get to the other side and we’re just starting that journey. So this might be a long winter that’s coming. [00:19:26][55.5]

Dan Nathan: [00:19:27] Yeah and I guess just someone who looks at like speculative markets for the last 25 years of my career was born in one in 1997 at a long short equity hedge fund, you know, like periods of excess like this and just rampant speculation, not just from retail, but also institutions, especially where there is leverage involved. They’re not going to it’s not going to end like this. Like what happened today is it’s probably the start of a capitulation phase. And so, you know, a lot of people and you and I were talking about it before, people like there’s this mirage, that 20,000 or so in and around that, you know, either side of it is some sort of support. It’s not people. I mean, this thing, you know, had kind of bottomed out in 19, you know, in the low single digits, thousands. Okay. And then it consolidated after it took off, after the start of the pandemic in around 10,000. And then it went all the way to 70. And here we are, the fact that we’re down so much from 70,000, you know, like within a year. And we’ve been really going nowhere over the last couple of months in and around this 20,000. These headlines could just be the start. I mean, you need to have some sort of a wash out here and all those retail holders been hanging on for dear life. All those influences that they followed and all the laser eyes. They’re just hoping and hoping they’re right. And sooner or later, they’re going to give up hope. And that’s how [00:20:41][74.2]

Rick Heitzmann: [00:20:42] They think they could be forced to give up hope, right? I mean, they could be leveraged against the Nasdaq. They could lose their job at Meta. There’s things that happen where you just can’t hold on any more besides hope. [00:20:52][10.0]

Dan Nathan: [00:20:53] Listen, when you think of the enthusiasm that went on in 2020 or the back half of it in 2021, obviously come unwound in 2022. It has to do with the fact zero interest rates, you know, we’ve flooded the zone with fiscal stimulus. People had cash. They had not a whole heck of a lot of things to do. They could believe in false prophets on the Internet and that sort of thing as a. [00:21:12][19.3]

Rick Heitzmann: [00:21:13] And tremendous mark of a map. And, you know, the bigger the party, the bigger the hangover. [00:21:16][2.8]

Dan Nathan: [00:21:16] All right. Well, speaking of false prophets, and I don’t mean profits I mean prophets with a P-H in there. Let’s talk about Elon Musk here. It’s been a crazy couple of weeks. You know, he closed on the deal for Twitter on October 28th. He’s fired it sounds like, you know, haphazardly, half of the employees, I think a lot [00:21:37][20.5]

Rick Heitzmann: [00:21:37] And then hired some back. They probably fired some more [00:21:39][1.2]

Dan Nathan: [00:21:39] And the guys chirping in his ear. You know, we’re saying that this company, you know, as you know, dollars per revenue per employee was like a ridiculous levels of service. But he is the C-suite. They got rid of content moderation. They’ve fired thousands of employees. They’ve lost tons of advertisers. So if you’re taking away revenue streams, okay, look, there’s a chance that he defaults on this debt. And therefore, what’s going to happen if you are a Tesla shareholder and I mean harping on this for a long time, you better be all in on what he wants to do with Twitter and the price that he paid for it. Because if you’re looking at the public market comps, he’s overpaid by at least $25 billion. And if you are literally in on this thing, okay, you’re in on the Tesla, you’re Tesla’s shareholder. There’s a good chance that the banks that hold that debt might need to do an equity offering to put collateral against that debt. Okay. And so why is the stock below 200 down 50% in the last year? I think it’s because of that. [00:22:35][56.2]

Rick Heitzmann: [00:22:36] I completely agree. [00:22:37][0.8]

Dan Nathan: [00:22:37] That was a long a little bit [00:22:38][0.7]

Rick Heitzmann: [00:22:39] That was a bit I mean, basically, you know, you’re your collateral, your cross collateralized, no different than what we just talked about between Twitter and Tesla. And therefore, you know, it might not be have anything to do whether you love the Tesla. I have my Tesla, I love the Tesla. But you know, you’re at risk because there’s personal leverage there. [00:22:57][18.0]

Dan Nathan: [00:22:57] Well, it’s funny. You know, another thing that we you and I have talked about and we were together with some folks the other day and we were talking over some Komos. I will say this, it’s like, okay, so he is the most followed person on Twitter. He’s got 115 million followers. There’s 330 million monthly active users or whatever they call daily, monetizable, active users, this or whatever. So he’s got like more than a third of the people there and he is tweeting some crazy shit. He is tweeting a lot of stuff about who people should vote for. He’s urging people to vote for Republicans in Congress, whether you’re Republican or not. I go back to Tesla. Okay. Who are the people that believe in electric vehicles? There are people who believe in climate change. Okay. These are not these alt right libertarian like techno pros like Elon here. Okay. So he’s alienating on Twitter. He’s tweeting all day long, a lot of crazy shit and he’s alienating Tesla owners and Tesla the next owner to me. So explain that to me as a Tesla owner. [00:24:05][67.6]

Rick Heitzmann: [00:24:05] As a Tesla owner, I don’t I don’t I like my car. I don’t I didn’t buy it because of Elon Musk. I bought it because it was a sustainable car that was great. Separately, am I worried? I’m not really worried about the operations of Tesla that he’s the Tesla CEO, he’s the chairman of Space X, he’s the CEO of Twitter. Doesn’t bother me that. [00:24:23][18.1]

Dan Nathan: [00:24:23] Well would it bother you if you were a Tesla shareholder? [00:24:25][1.7]

Rick Heitzmann: [00:24:26] It would bother me if I was a Tesla shares. Let’s separate those because theoretically yeah. So as as a shareholder of SpaceX X, Twitter or Tesla, I’d be bothered by the antics, right. The you know, so I’m you know, I’m buying a platform, having a megaphone, using that megaphone to make political commentary. At the same time, I’m trying to run three businesses that are all very complex. Two are very capital intensive. One is under earnings pressure because of a debt load. And, you know, it doesn’t feel like, you know, in a time where you could see a recession or you might be in a recession already or you might see, you know, a lot of consumer pressure that would affect advertising, luxury, discretionary spending, all the things that he’s reliant on, as well as cheap capital from people who are fanboys. That’s going to be the issue. So the if he loses Fanboys and therefore drives up his cost of capital, that affects all three businesses and that that creates the beginning of what you’re kind of outlining of his death spiral. [00:25:29][62.9]

Dan Nathan: [00:25:29] Well, listen, I mean, I think we’ve seen peak Musk. I just do. And I’ve said this on this podcast, probably a million. Times. I mean, never in my 25 year career have you seen a cult leader of a company. Okay. And maybe the stock becomes a cult stock. I’ve never not seen them unwound. I’ve never seen that not it just hasn’t happened here. And so I don’t know why he would be different. I get it. Why people think he’s brilliant. I’m willing to concede that. But this might be just a bridge too far because from a personal finance standpoint, you know, he had to sell a lot of Tesla stock over the last year. He’s probably had to pledge a lot [00:26:04][34.5]

Rick Heitzmann: [00:26:04] Does he have to disclose the leverage against this Tesla stock. [00:26:07][2.3]

Dan Nathan: [00:26:07] He has not disclosed what he’s sold recently. So people are thinking that he actually didn’t sell stock he had disclosed in the spring when he sold stock. And so I don’t know what leverage is. I do know that because.[00:26:18][11.6]

Rick Heitzmann: [00:26:19] I think named officers have to disclose leverage. Right. [00:26:21][1.6]

Dan Nathan: [00:26:21] You would think so because, you know, he’s basically pledged his stock. There’s got to be margin loans all over the place to put that equity up here. The way the stock is being sold over the last couple of days, you know, leads me to believe that someone else is telling selling stock. He’s a 15% a holder of the shares of Tesla. But, you know, again, like this is not about Tesla. I mean, again, I don’t the cars, you know, I’ve been in a lot of those lower end ones. They they feel like Honda Civic. I mean, they really do. They’re absolutely nothing special. And they rattle a lot and they feel cheaply made. And I hope you really love your model Y or whatever you have or what is the one that you have? The wing doors. Yes. Okay. And remember the other night we were talking about this, like how juvenile. So his cars are the model S the model three, which is a reverse E, model X in the model Y. Sexy. Okay. He’s got this fascination with 69. Okay, yhis reeks of a guy who had never smoked a bone and had never been boned before in his life. So I’ll just leave it at that. All right. And then just just in general here. But in general here, we’re going to leave that. You know, I just look at what’s going on with him. And I look at Twitter and I say to myself, you could say, okay, you want to vote with your wallet, you can sell your Tesla shares. Well, I don’t know Tesla shares. You could say to me, okay, I just like the sustainable car. I don’t care. [00:27:44][83.2]

Rick Heitzmann: [00:27:45] But but I also think I assume that there’s going to be some disclosure of leverage. I know that whether you’re you know, whether you’re Aubrey McClendon back in the Chesapeake days or Elon Musk today, you know, there’s been some rules where you have to disclose leverage. And if I owned a company, if I was an equity shareholder of a company where the CEO has significant leverage against his shares and he owns 20% of the company, and a lot of that’s based on the performance of a company in social media. If I’m trying to own a car company, that would seem like a crazy risk. There be a little bit too far. [00:28:18][33.4]

Dan Nathan: [00:28:18] It seems like. Listen, I’ve said this if you want to give me the over under of two years whether Elon’s give me the CEO of Tesla, I’ve taken the under. I just don’t know. Sooner or later there’s going to be shareholder suits against him. Lots of them. There’s going to be. There’s first of all, there’s current investigations into the company as it relates to their full self-driving. We know that that’s been disclosed. Okay. So there’s numerous ones there. He might have major capital issues if the capital markets go lower, interest rates stay higher. If Twitter were to default on some of their debt covenants. Okay, if Tesla’s, you know, access to rare earth materials so they can make, you know, these batteries, they’re making them in China, who knows what’s going to happen with China. You know, if China were to attack Taiwan or in some way, shape or form a blockade and or do something like that, will Tesla be able to manufacture in China and really tap into a very important market as it relates to demand for the. [00:29:15][56.4]

Rick Heitzmann: [00:29:15] Consumer demand as well as production. I agree. So it’s China is important, very important on two dimensions for him. [00:29:22][7.3]

Dan Nathan: [00:29:22] And this is where I kind of get caught up. And we’re spending a lot more time, I think, than our producers wanted us on this topic. But where I get caught up is like the days before he was going to close on the Twitter deal. Remember that that email or that Twitter thread that he put out there that he’s doing this for humanity. He thinks free speech is so important. He loves us in this now, whatever. Well, if he loves us and he loves free speech, why is he cozying up to the most authoritarian government on the planet, which is China, so that he has, again, access to those rare materials, access to the production and access to those consumer markets. It just doesn’t fly with me. And then when you think about how did he finance this deal for Twitter? Well, he took all this money from the Saudis. I don’t know if you know that, but but, you know, we’re not we’re they’re kind of persona non grata with us right now. You know what I mean? He the fact that all of these banks who are so desperate to do business with him, whether it be for spaceX, they gave him these 13 billion that they committed to in the debt. You know, by the time they went to do the deal, why I thought maybe they had an out on this was that he spent the last six months denigrating the product, the service, the company, which lowered the value of the company that they had committed debt to in the spring. So to me, I thought they’d have an out supposedly like opening bid for that debt is like at best $0.50 on the dollar. So the banks are going to little where, you know, billions of dollars of losses and they deserve it. And all these equity people who rolled their stock if this bid did not exist from Elon Musk, okay. This stock would have a two. It would it be in the twenties? It would have been in the twenties. The fact that Jack Dorsey, the co-founder of this company, who’s a two time CEO, had a two and a half percent stake in Twitter and he rolled it into the deal at 5420, at $44 billion. It makes you think, how fucking smart are some of these guys? I mean, like not only smart. Yeah. [00:31:11][108.2]

Rick Heitzmann: [00:31:11] So you saw that. You saw the back and forth via text, you saw the back and forth via DM. And, you know, they’re just like everybody else. [00:31:19][8.0]

Dan Nathan: [00:31:19] Dumb like us. All right. There’s the title right there. Like us. [00:31:22][2.8]

Rick Heitzmann: [00:31:23] Correlation. Dan Elon. [00:31:24][0.8]

Dan Nathan: [00:31:25] This thing is not done Rick [00:31:27][2.2]

Rick Heitzmann: [00:31:28] I knoe. This is going to be exciting. The reason why this is all over the financial media is this is an exciting soap opera playing out there could end terribly. And I’m sure the media would like to see, you know, there’s a stabilization and a balance of subscriber fee growth isn’t the story that was playing for now they’re playing for. How does this all correlate with the most exciting car company the last hundred years, the most exciting space company in the history of time, and and the craziest social media platform that probably got in and got rid of a president in the last time. And now all of a sudden, they’re all run by one guy who’s the richest man in the world and looks likes to make dick jokes. And they say you couldn’t you couldn’t have scripted better. [00:32:11][42.3]

Dan Nathan: [00:32:11] He likes poop jokes and dick jokes. I mean, again, juvenile. Well, that’s just. All right. So we move on from you want to move on from Elon. Let’s talk about a couple of headlines this morning. I tweeted this out and it was just kind of interesting because I’m like, you know, I’m doing my my morning reading here and I’m going over a lot of different sites. CNBC, Bloomberg, FactSet, I spend a lot of time on there. The information which I like too, and I just saw a bunch of headlines. Here was one. Okay, Tesla stock has dropped one 35% since Elon first. So you buy Twitter carvana stock has dropped 97% as outlook darkens for use vehicle market. Crypto Billionaires Brawl Triggers Contagion Fears in markets. And then this one here and this is going to be one that I really want to focus on nine public tech companies from the information worth less than what they VCs originally invested. And I see all those headlines as a monolith. And I say to myself, it’s kind of the beginning of the end game when you think about how many stocks in the market are down 70, 80, 90%, how many cryptos have lost most of their value. I mean, the list goes on and on. You know, I mean, as far as the air that’s come out of SPAC market, that’s come out of, you know, the IPO market is dead. I mean, you need to start seeing headlines like this. And I guess with my tweet, I was like, we’re kind of starting the end game of the bear market. And it probably takes maybe one to, you know, maybe tops three quarters, but you’ll see it as a rounding bottom a little bit. And again, you need to see capitulation. So when you see in your market, in the private markets, a headline like that from the information, what does that signal to you? [00:33:40][89.6]

Rick Heitzmann: [00:33:41] Well, I don’t think I don’t think we’re rounding the bottom. We may be rounding the bottom. It might be a wide term. [00:33:46][5.0]

Dan Nathan: [00:33:46] Yeah. What we see around bottom takes a while. [00:33:48][2.4]

Rick Heitzmann: [00:33:49] Really hard to be worse than, you know, a lot of these companies, which were everyday names of Rackspace and Compass and Oscar being, you know, less than 50% of what they raised in venture money in this story. And, you know, we’re seeing a lot of companies being valued at less than what they raised. You know, you’re seeing the down rounds, the recaps occurring. And all the venture capitalists, whether they tell you or not, are all working through some companies they have, which hit a rough patch for one reason or another. But, you know, it’s time to work through those. I think the key thing that will determine if it’s one quarter or five quarters is what happens to the consumer. Right. Does there’s two things I think people are most worried about. What’s the contagion of unemployment and what does that mean for consumer confidence? So where is consumer confidence today? It seems to be eroding things, whether it’s crypto eroding it, whether it’s your next door neighbor got laid off from Meta, whatever those things are that are eroding consumer confidence. And we see it a little bit. I like to look at the vacation rentals where, you know, Airbnb particularly, but even anything in the hospitality space is consumer discretionary, ultimate discretionary almost. And what does that mean? And they’re still holding up, but everybody’s quite scared there. And then the second piece is, is the Fed going to overcorrect? So they they’ve given every every signal that they’re going to overcorrect. They’re up, you know, 550 basis points in the last six months. It takes six months to have that flow through. So they haven’t even seen the results of the corrections they made in March and April. And therefore but at the same time, they’re full steam ahead. So are those two things a weaker consumer? We all know consumers about two thirds of the economy. So therefore it could control the economy and enterprise which is slowing down spending. Know key way they’ve slowed down spending especially in the tech markets firing people and then a fed which might continue to raise interest rates which for the first time in half a generation is going to put pressure on the earnings line through the interest expense line. You know, you could see, you know, the next step down of Renormalization in the first half of next year. So it’s it doesn’t seem like there’s clear sailing once we hit the bottom to bounce off of you can make and this is before your favorite mega threats of Taiwan or a nuclear Russia or whatever those things may be that you know, you have to see what’s really going to happen. And I think whether you’re in the public market investor or private market investor, you’re kind of thinking eyes wide open. I’m not going to, you know, tie my feet to anything. I want to be able to be flexible. I want to be able to, you know, maintain my growth and have enough capital to get to 2024 when it does feel like, you know, we’ll be through the worst. [00:36:40][170.7]

Dan Nathan: [00:36:40] Yeah. So that seems like it’s going to be a big theme. A lot of your companies had made cuts early. The economy provided very little visibility. You know, there’s a whole host of geopolitical things that have come up. And so, again, you’re going to keep reevaluating kind of where you are and what your runway is. [00:36:56][15.8]

Rick Heitzmann: [00:36:56] And we don’t know what the earnings line is. I mean, we still have had a relatively healthy economy all of these companies were selling into. And, you know, sometimes start ups have more volatility on the revenue line than larger companies. And therefore, you know, we’re still maybe budgeting to a pretty healthy economy and a step down, especially in consumer especially in consumer discretionary can have a meaningful impact. [00:37:19][23.0]

Dan Nathan: [00:37:20] Yeah, I guess that was probably a big theme of Q3 earnings that we just pretty much are getting done with here is that, you know, there was a lot of fear about the health of the consumer even after they’ve been propped up through, you know, the pandemic savings rates were kind of high. We also saw consumer credit going much higher here. Now that we’re seeing unemployment sort of tick up just a little bit. I think to your point, the last part of my take away from the earnings season was also that enterprise was starting to see a bit of a slowdown. And so to me, you know, that has been something that’s been weighing on public valuations, and I think they’re likely to come out of it before private valuations. [00:37:51][31.2]

Rick Heitzmann: [00:37:52] And we also saw, you know, going back to when we started talking about this a year ago, that the enterprises were more concerned about the economy than the consumer was. Yeah, very rare to see this. And this has been enterprises have been more concerned. That’s why the layoffs started before consumer spending starts stopped. So, you know, it’s although the enterprise is leading the leading the tightening, it eventually gets to the consumer. And that’s the bigger piece of the pie. [00:38:18][26.7]

Dan Nathan: [00:38:19] Yeah, well, that’s going to play out over the next few months. We covered a lot of ground today. Really appreciate you being here in studio. So everybody stick around. I have Jake Wood, CEO, founder of Groundswell and Joe Marchese. He is the bill partner of Human Ventures. [00:38:34][15.6]

Dan Nathan: [00:39:18] Current Ad. Masterworks Ad. Taboola Ad. I have a special guest here. His name is Jake Wood. He is the founder and CEO of Groundswell, a philanthropy as a service company. But it’s actually a lot more than that. We’re going to get into all that, Jake. Welcome to. Okay Computer. [00:41:10][111.8]

Jake Wood: [00:41:11] Yeah hey thanks for having me Dan. [00:41:11][0.6]

Dan Nathan: [00:41:12] All right. Now, like many of our fine guests on this podcast, they have been introduced to me from my good friend Joe Marchese, who is also here, partner at Human Ventures. You know, you love them back by popular demand. And, you know, just really we’ve been wanting to do this podcast for a while. Like I said, I met Jake, I think a couple of years ago before you founded Groundswell. You were the founder and I think CEO at the time of Team Rubicon. I want to talk a lot about that. You’re in town from L.A. this week in New York because you have Team Rubicon huge gala I went last year. It’s a phenomenal event. You guys raise a ton of money for a great cause. We’re going to get into all of that. Joe, you’ve been involved. You know Jake from Team Rubicon, correct? [00:41:54][41.8]

Joe Marchese: [00:41:55] Yes, we met we met in the early days of Team Rubicon. [00:41:57][2.3]

Jake Wood: [00:41:57] In Lima, Peru, of all places in. [00:42:00][2.5]

Joe Marchese: [00:42:00] Lima, Peru [00:42:00][0.2]

Jake Wood: [00:42:01] As one does. [00:42:01][0.0]

Dan Nathan: [00:42:02] Yeah, well, I mean, Joe Joe obviously serves in many ways trying to help others here. Let let’s let’s take a step back here, Jake, because, you know, I remember reading this profile of you in The New York Times last year, and it’s pretty fascinating. You sound like a like Forrest Gump thing to a little bit. Have you ever used that expression before? You ever really literally don’t even know what that’s going to be like? [00:42:21][19.7]

Joe Marchese: [00:42:22] Can’t run. I’m not a good runner. [00:42:23][1.5]

Dan Nathan: [00:42:24] Well. Well. Weren’t you a tight end for the Wisconsin? [00:42:26][2.2]

Jake Wood: [00:42:27] I was an offensive lineman. [00:42:28][0.5]

Dan Nathan: [00:42:28] Cross Talk [00:42:28][0.1]

Jake Wood: [00:42:33] Lost 50 pounds [00:42:33][0.2]

Dan Nathan: [00:42:34] All right. So talk to us a little bit because again, the Forrest Gump thing is this is like you played football in the Big Ten it Wisconsin. You joined the Marines, you served, you came out of that. You learned a whole host of things about service in general. You started Team Rubicon and and again now now you are a fintech entrepreneur. [00:42:54][19.8]

Jake Wood: [00:42:55] So you’re saying Team Rubicon is my bubblegum shrimp? Is that. Cross Talk. [00:42:58][3.2]

Dan Nathan: [00:43:03] We’re going to get into that, but talk to us a little bit about I mean, like your days playing football in the Big Ten, what was that like and when were you there? [00:43:09][6.3]

Jake Wood: [00:43:10] Yes, I played I played football for the Badgers from 2001 to 2005. So just I mean, it was an amazing experience. I had the opportunity to go and play for Coach Alvarez Hall of Fame football coach, really pretty incredible leader mentor, you know, built an incredible organizational culture up there at Wisconsin, which was fun and I think has paid dividends for me. 20 years later, we were good at football. Back then, we didn’t make the Rose Bowl. You got cheated out of it my senior year by Michigan State. But it’s an awesome experience, man. [00:43:41][31.2]

Dan Nathan: [00:43:42] Those hoodlums at Michigan State. Exactly. No, it must be. Is it hard for you? I mean, Wisconsin football is fallen on hard times a little bit here. It’s kind of like the armpit of the big oh, come on, come on. [00:43:52][10.1]

Jake Wood: [00:43:53] The interim head coach was my old teammate. I know him extraordinarily well. [00:43:58][4.8]

Dan Nathan: [00:43:58] Fair enough. Talk to us a little bit about, again, your service. You join the Marines. And so you were playing football. 01 to 05. Were you ROTC at Wisconsin or. [00:44:08][9.7]

Jake Wood: [00:44:08] No. So I yeah. So I was a, you know, full athletic scholarship there. You know, there’s really no time for ROTC if you’re if you’re playing football, it’s 40 hours a week. But obviously, 9/11 happened my freshman year. That was pretty formative. And, you know, right before then, my senior year, Pat Tillman was killed in Afghanistan and, you know, former professional football player. And I think that was a very kind of like a moment of reckoning for me, where I just decided, hey, it was very clear I was not going to make it in the NFL. I wasn’t giving me a chance. I wasn’t ready to go into the corporate world. And I decided, all right, hey, we’re at war in Iraq and Afghanistan. I’m going to go do my part. And so I enlisted in the Marine Corps right after my last game. [00:44:45][36.9]

Dan Nathan: [00:44:46] And yeah, so how long did you serve and how long were you overseas? [00:44:48][2.8]

Jake Wood: [00:44:49] So I was in the Marine Corps from 0509. So four years is kind of a standard enlistment. And the entire time I was in, I was either training for or deployed to combat. So I did a tour in Iraq in 2007 as part of the surge and then a tour in Afghanistan a year later in Afghanistan, southern Helmand Valley. [00:45:06][16.9]

Dan Nathan: [00:45:07] Yeah so when you got out of the Marines, you still felt a need to serve. And again, I mean, a lot of guys can go into these programs where, listen, you know, coming from finance, you know, investment banks, they’d love hiring veterans, the sort of the discipline. And you know what, you know, think about I used to sit on a trading desk and we had a couple former one was a naval aviator. I mean, you know, when you think about like these guys tweaking out about a position that’s going against them or whatever, you know, in the the sort of situations that you guys have been, what you’ve been trained for, it’s truly astounding. I mean, there’s no shortage of opportunities in the corporate world for, you know, people like you coming out of the service. What did you choose to do? [00:45:45][37.8]

Jake Wood: [00:45:45] Well, I mean, listen, that’s what I thought I was going to do, was go, you know, get on a trading desk next to you. Or actually, what I really wanted to do was, you know, be an entrepreneur. It was kind of the height of, you know, Silicon Valley was kind of like rising. You know, in oh nine, you know, Twitter, Facebook, all these companies were really launching into the stratosphere. And, you know, I knew I couldn’t fly up to San Francisco and knock on Jack Dorsey door and be like, hey, I’m a marine sniper. You should totally hire me. You know, there’s just nothing marketable. [00:46:12][26.6]

Joe Marchese: [00:46:12] You know, that might have worked in that exact line. [00:46:14][2.3]

Jake Wood: [00:46:16] Makes me crazy decisions recently. You know, the plan was to go get my MBA and go do the corporate thing. That plane got hijacked, you know, shortly after it was hatched because earthquake hit Haiti, you know, got a wild hair out my ass and decided I wanted to help. And and that was really the the genesis of Team Rubicon was that event. We we went down there, we took some veterans and doctors. We were helping out after that earthquake. And then, you know, it just really snowballed from there. And, you know, fast forward 12 years, that organization that started with eight random people is an organization with 150,000 people across the globe responding to hundreds and, you know, over 1000 disasters since inception. [00:46:56][40.5]

Dan Nathan: [00:46:57] When you started Team Rubicon, did you really think it was going to kind of be a one off sort of situation here? We had this massive earthquake, this thing in the Western Hemisphere. And you thought I could, given my, you know, knowledge and my ability to kind of mobilize some some friends who are, like very capable. Did you did you have the idea of this massive organization that you built? [00:47:15][17.8]

Jake Wood: [00:47:15] When we first said, hey, let’s go to Haiti, it was we’re going to go down there a couple of weeks. We’re going to come back. It’s going to be a story we tell at bars. And, you know, Joe and I, Joe’s on the board, and that’s how we’ve really gotten to know each other well. We just had a board meeting or annual board meeting yesterday here in New York. And to see where the organization is, you know, it’ll raise $52 million this year. It’s got 160,000 volunteers this year. To date, we’ve already run 111 disaster and humanitarian operations. That was never the intent. And even even when we got back and, you know, from Haiti and said, okay, hey, let’s let’s kind of keep going with this, I thought the upper limit of what it could accomplish was like $1,000,000 a year. [00:47:53][38.4]

Joe Marchese: [00:47:54] So it’s funny, I haven’t said, you know, if through as you’ve told that story in person again in a long time, but if if now after watching Groundswell come, which I know we’ll get to, isn’t that the story of an entrepreneur like like they it never ends what you started as you normally start small you see a problem that you think you have a unique ability to solve. And like we ask every founder that comes through human, why now why you? Because we’re that early. I mean, look, the why now why you in the Team Rubicon founding Haiti earthquake special skill set, trained by the U.S. government to do certain things in moments of crisis. So and then it snowballs into a giant organization. That’s like most people who start with a plan. We’re going to be a massive organization. Don’t go there. Right. It’s too complicated. There’s too many things that are going to change. And so, like, when you hear it told that way, if you just remove that you knew it was going to end up being a nonprofit, you would sound like a consummate startup story. [00:48:43][48.7]

Jake Wood: [00:48:43] One of the things I’ve been hearing a lot more recently is, you know, you everybody knows about product market fit, but everybody now is talking a lot more about founder market fit, which is exactly what you’re talking about. Yeah, I think it was a lot of right place, right time, right person for starting a challenger organization in the disaster space. You know, and I think same thing with Groundswell, right? You know, there was a lot of expertize that was developed building a nonprofit through some challenging economic times and, you know, now pivoting into making philanthropy more effective, more efficient, more egalitarian. You know, the timing is right. [00:49:16][33.1]

Dan Nathan: [00:49:16] You know, it’s interesting. We had Jason Kander, who just wrote this book, Invisible Storm, and he was on the pod recently. It’s just pretty fascinating. I think he joined the service at a similar time that you did. He served in Afghanistan. And in reading his book, it’s pretty fascinating about just the challenges. You know, he came out, he was in law school, you know, and then went to, you know, serve in Afghanistan. The story is about just about PTSD and how he’s dealing with it. Not even, you know, some of the worst case scenarios, but just how it’s kind of, you know, infected is like how is just the experience over there just, you know, overall been for you as you think about building nonprofits, as you think about building organizations, I assume you’re in touch with a lot of veterans and this sort of infrastructure really helps them, I think deal with with some of those the aftermath of serving over there. [00:50:03][46.6]

Jake Wood: [00:50:03] Yeah. So I mean, I guess maybe before answering that, zooming out for the listeners that aren’t familiar with Team Rubicon, you know, the organization basically recruits trains and deploys military veterans for disaster response. So we’re taking, you know, men and women who’ve served often or primarily from Iraq and Afghanistan, but all the way back to Vietnam, even some Korean War vets. And those guys are old, but they are they’re they’re wily. And, you know, we is as Joe mentioned, we repurposed the skills that the military gave them to, you know, bring order to the chaos of these post-disaster situations. And I think what you’re referring to, Dan, is this kind of this unintended consequence of that mission that we discovered was these veterans found this renewed sense of purpose that was really powerful. One of the things my wife likes to joke about, you know, she’s like, Jake, you never actually got out of the Marine Corps because, you know, I started to Team Rubicon 60 days after the Marine Corps. So I never really had that hard transition where I found myself lacking purpose because I just started pouring it into Team Rubicon. Now, I can’t say it was without challenges. I lost friends to suicide. My sniper partner committed suicide, you know, two years after I got out. And, you know, those were tragedies. My my unit, you know, the whole battalion that I served with has lost more men to suicide than we did in combat. And we served during the two deadliest years of the war. So we lost a lot of Marines in combat, and yet we’ve lost more coming back. And I think maybe pull that thread just a little bit further. I think one of the things, as you mentioned, post-traumatic stress, PTSD. I think it’s a very misunderstood dilemma. I think it’s overdiagnosed. And I think what we often do is conflate PTSD with moral injury, you know, the spiritual moral injury that people suffer in war. You’re doing horrible things. You’re seeing horrible things. That’s not necessarily the same as having kind of a chemical imbalance of PTSD, and you have to approach them differently. I think purpose is a universal human need. And certainly, you know, for someone coming back from war, I think that’s exacerbated and I think team Rubicon kind of help there. [00:51:59][116.2]

Dan Nathan: [00:51:59] Yeah, no. Well, that’s great. I would love to get to kind of Joe, how you got involved in it. You guys just mentioned that you met in Lima, Peru. So it was during, I guess, disaster relief. [00:52:08][8.8]

Joe Marchese: [00:52:09] No, actually, it was it was a conference. It was a tech. It was a tech. Really good tech for change here. [00:52:15][6.2]

Dan Nathan: [00:52:15] Let’s start that over again. No, no, no. [00:52:19][3.5]

Joe Marchese: [00:52:19] It’s it’s okay. Because there’s some relevancy here, which is like so so when I first met Jake, we were at a tech for good conference and we’re talking about how people can, can participate, get engaged. And that Team Rubicon was just getting started. And he was early days of Team Rubicon. And that Jake, obviously dynamic person. We became friends and we were friends for a long time. I didn’t join the board for four years, five or six years, probably five or six years after that. But then one day here in New York, we’re sitting for breakfast. And he told me that part of the story, it wasn’t just the disaster relief, it was the resiliency that it brings in to people here in the U.S. and veterans when they come home. And it’s that dual purpose of the organization that gave me like it just kind of lit a fire for me. And that became something that I was very passionate about, having never served. I’d always been shy about. I don’t want to be on the board of a nonprofit that’s veteran led because I haven’t served. And it was Jake coming around saying, no, we need we need people who are storytellers, marketers. People have been here. But but I think the interesting part, when you talk about purpose, there’s also a broader thread even beyond the veterans that we think of a lot right now, which is Derek Thompson has these great talks from The Atlantic about an abundance mindset. So our society might end up in abundance mindset, but like we need purpose for people, right? And, and people participating in civic duty, people volunteering, people helping their neighbors going across political lines. That kind of purpose economy was a big deal for me. And almost as much as the disaster relief as what what Team Rubicon does on the worst days, what are they doing on all the other days? And so that was when I got hooked. I was five years into Team Rubicon, joined the board, and then and then we’ll start to get into what I saw in Jake, which was I saw board meetings run better than, you know, $100 million funded startups. I mean, the the corporate partnerships, the discipline and raising money, the, the the metrics they were measuring people by managing a 100,000 person volunteer force in the was just astounding. And so then it came to a point where I said, if you ever start anything, I’m not recruiting you out of a nonprofit. I’ll make that very clear on this other than other than I did get art. So then well. [00:54:27][127.6]

Dan Nathan: [00:54:28] We got to get upgraded CEOs, absolute stud, former top gun pilot. Right. And I mean, so he took over the reins. And I think that’s about the time when you and I met, because you were just starting you guys were starting Groundswell. You were what? The executive chairman. You know, Art is a fascinating guy. It sounds like it was time, right? You kind of did phase one. [00:54:49][21.1]

Jake Wood: [00:54:49] Yeah. I mean, I first met Art. We are put in touch by mutual friends. I wasn’t looking for, you know, to add a senior executive to the team, but I walked away from that meeting and I just said to myself, like, I’m going to hire that guy one day. And, you know, about a year later I called him up. He was working for Northrop Grumman or Raytheon or something like that, you know, probably selling missile defense systems. And I said, hey, man, you’re sick of selling missiles to Saudi Arabia. You want to go do something meaningful. And he said he said yes. So he came on board as my COO. And, you know, I was lucky to have him as a as a as a partner for five years. And it was just time, you know, it was time five years later for me to to step away and do something else. [00:55:28][39.3]

Dan Nathan: [00:55:29] So how can people who are listening to this now participate? How can they just donate? What are some of the things they can do for Team Rubicon? [00:55:36][7.3]

Jake Wood: [00:55:37] I mean it’s really very simple. So, you know, go to our website, Team Rubicon, USA, dawg. And one thing that I would I failed to mention earlier, it’s not exclusively military veterans that are involved as volunteers in the organization. We’ve got about 25 30% of our volunteers are, you know, have not worn the uniform. And they’re incredibly valuable to the mission. You know, Joe mentioned, you know, building this resilience. How do you how do you make our society more capable, more outward thinking, less insular, less you know, thinking about, hey, what’s in it for me? And so we’ll take anybody who wants to serve and we’ll give them the skills that they that they need. A mission that’s meaningful will keep them safe and and really show them how to have impact. So, you know, whether it’s donating your your time or your money, you know, we’ll put it to good use. [00:56:21][44.3]

Dan Nathan: [00:56:22] Alright people let’s do that in support of Team Rubicon. Okay, Joe, so again, you just said that you didn’t want to recruit him out of this, like really well functioning dual purpose nonprofit. But you kind of did. Or what did you say to him? You said, whenever you’re ready to do something in the private sector. [00:56:36][13.7]

Joe Marchese: [00:56:37] The literal line was, if you want to start an ice cream stand, I will back the ice cream stand. I really was hoping he didn’t want to do that because that would have been harder to explain to the LP’s, at human. But I was like, whatever it is, I’m in. And and I just remember it was probably six months of thinking through or just bouncing things around as you were getting ready to get ready for the chair. And yeah, and then and then one day you called me and you’re like, okay, I found the thing that I can’t sleep because I’m thinking about it. I find the thing that keeps me awake. And it’s. It was this idea of corporate philanthropy. [00:57:09][32.3]

Jake Wood: [00:57:10] Yeah. I mean, listen, I was so lucky to have guys like Joe on the board. You know, I don’t call many people that are my same age, my same vintage, you know, mentors. But Joe was an incredible mentor. And so just the opportunity to start something with Joe was exciting. You know, Joe’s a seasoned entrepreneur. He’s done this a lot of times. And I was confident that I could flip over to that for profit venture backed side and be successful again. But you always you always kind of wonder like, hey, can I catch lightning in a bottle twice? But, you know, you can kind of create unfair advantages when you partner with guys like Joe, you know, a big believer in creating unfair advantages. So, yeah, I was lucky to do so. [00:57:51][41.0]

Dan Nathan: [00:57:51] It sounds like that your first idea that tequila wasn’t particularly great. And so I just want to be really clear on that. So Komos won out on that one. [00:58:00][8.9]

Joe Marchese: [00:58:01] Yeah. Even Richard Betts, you know, I don’t know that it could be Jacob. A lot of physical contests, but in crafting world class tequila. [00:58:09][8.0]

Dan Nathan: [00:58:10] Not that you’ll be lacking this this week in New York City here but you know every guest of okay computer and on the tape gets a bottle of Komos tequila here. So so you’re going to have a little bit of that. All right. Talk to us. What what is philanthropy as a service? Do you do you do recognize the fact that that’s probably a new concept to a lot of people? [00:58:27][17.0]

Jake Wood: [00:58:27] Yeah. So let me I guess maybe back up and share the problem that I observed. So, you know, in ten or ten years running Team Rubicon, I raised $350 million in philanthropy. Right. So a lot of money. And I realized kind of two things. One, rich people have access to tools for their giving that average people don’t. I always found that was unfair. And I feel like in today’s age that that just didn’t seem logical anymore. Second thing was companies think they’re good at giving away money and they actually suck at it. So you have a lot of companies out there giving away a lot of them billions and billions of dollars of philanthropy a year. They think they’re good at it. They’re not. They think that they’re driving business outcomes with it. They’re not. They think they’re inspiring their employees. They’re not. So having seen that, I just felt like there was a better way. We create a groundswell with a mission of democratizing philanthropy. What that means for us is making building the world’s best, most modern donor advised fund, making it available to anyone in the most cost effective way. And then what we’ve done is we’ve packaged that as a platform that we sell to companies that allows them to roll these personal giving accounts out to employees. They’re tax advantaged, like an HSA or 401K, and those companies then can give or match money into it. So basically decentralizing their corporate philanthropy, empowering their employees to give it away to what matters most to them. And so what they’re really doing is they’re they’re empowering their people. They’re investing in the diversity of their people because each of their employees has a different perspective on what matters most in the world. They’re providing an innovative and unique benefit that’s really you know, Joe kind of really leaned into this this concept of adding, you know, making philanthropy a component of your compensation. Right. Subsidizing the philanthropy. The people are already doing so. It was it’s been powerful. It’s I think that going back to timing, the timing’s right. You know, the world has changed. Stakeholders at companies expect their companies to give back, to align, to have a values alignment. They expect their CEOs to speak or act on every social issue that arises. And like that last thing, that’s pretty unsustainable, that’s a minefield for executive. [01:00:33][126.3]

Dan Nathan: [01:00:33] Well, Joe, as an investor and, you know, a VC and you hear a lot of pitches, what was attractive about this idea? What did you think that that Jake’s idea was kind of disintermediated? [01:00:42][8.5]

Joe Marchese: [01:00:43] Well, one one. What he said I’ll say it in my simplified way of good companies are take something rich people have and then use tech to make it available to everybody. Right. Like rich people have private drivers. Uber is tech. Everyone has a private driver. Rich people have summer homes, Airbnb. Anyone could have a summer home for a week. Why can’t everybody have a donor advised fund? So that’s one component. But like, you know, one thing we look at it human is can we find a consensus space? So there’s lots of people who think donor advice should be for everybody. But can you have a counter consensus approach? And that was the other part of the coin, which is Jake has raised hundreds of millions of dollars for charity and he can go through the stats more. But corporate giving is wildly inefficient and it’s the largest source of it. And at the same time, corporations are looking to engage their employees more. They’re like, So could you use the fintech rails to solve this problem and have this pool of money not coming from consumers because consumers aren’t. While consumers all would like a donor advise fund, like the normal person isn’t looking for new ways to give away money. Corporations are looking for new ways to give away money. So that was that last little unlock and it got really exciting. I mean, take that. And then like we talked about why you why now you could have a charity that is we support kittens and you’ll have 5% of your workforce that hates that charity. I don’t know why, but you will. And so the ability to decentralize, not in a blockchain way, but literally decentralize corporate philanthropy. So instead of Corporation X giving away money to the Boys and Girls Club, Dan Nathan gives away money to the Boys and Girls Club of Albany. Right. And imagine your entire employee base doing that. And so that became this wildly exciting and something that was so clear to see. But it was something that evolved over time. [01:02:23][99.9]

Dan Nathan: [01:02:23] Well, what were some of Jake’s? Some of the companies that just got it right out of the gate and just in what some of the feedback that you’re getting, both from the company who’s providing this as a service and then some of the employees who are it’s probably brand new to them, this concept. [01:02:36][12.7]

Jake Wood: [01:02:36] Yeah, it’s it’s interesting. So we came out of beta about four or five months ago. You know, we’ve signed up a bunch of companies. There’s one interesting thing is there have there are companies out there, software companies that have solutions for employee giving. Frankly, the solutions are quite archaic. The platforms themselves are clunky. And we and we really well, what those with those platforms have done is automate a process. Right. What we thought about is how do we reimagine what the process should be. So like, you know, Henry Ford said, you know, if I ask people what they wanted, I would have given you the answer I would have gotten was faster horses and said I gave him the model T. We’re not looking to build faster horses. We’re looking to build the Model T, and we’ve done that. And so one of the things about these legacy providers is they’re I mean, they’re not on prem, but they’re like from that era. Right. And huge account minimums. They could only really service Fortune 500 companies. So first and foremost, we’ve built a really lean platform, you know, with the most modern architecture which allows us to go down market and easily service a mid-market or SMB customer, which is exciting because what happens is I’ll use one community that I know you’re familiar with investment management firms, right? Hedge funds. PE You know, the largest investment management firms out there, they use these legacy providers. Goldman Sachs uses these legacy providers, these smaller shops, 100 employees. They’ve never been able to afford it. It never made sense to spend $50,000 on a platform to do employee giving when you’re only giving away $100,000 a year. We can we can get those companies and bring them up to parity in their benefits, offering immediately at a lower price point. So that’s been kind of an exciting thing. The other thing, you know, I mentioned, we’ve reimagined what the process looks like because we’ve built this with a donor advice front at the center of what we do. We’ve actually created this this layer of privacy. Right. Other platforms the employee has to disclose to their employer where they gave in order to get a match. That’s fine. If it’s like the local animal shelter and it’s pretty benign if it’s Planned Parenthood after a really controversial decision around Roe v Wade, you may not do that if the woman in H.R. processing it is a devout Catholic, you know, not to pick on Catholics. Right. But and you can think about that from all sides of the issue. [01:04:50][134.0]

Dan Nathan: [01:04:50] No Catholics were hurt in the recording of this podcast. [01:04:53][2.4]

Jake Wood: [01:04:54] And because, you know, we’ve built this, all the matches go first into that donor advise fund and then you can give it away however you want as authentically as you want. And by disaggregating it, we’ve created this really private experience that allows people to, again, participate more fully as as themselves in protecting that. [01:05:11][17.2]

Joe Marchese: [01:05:11] And add to that the you know, when Jake talks about there are and we thought about this a lot as it was starting this groundswell was getting off the ground was there are large platforms that have this as a component of what they do. But that’s like saying Microsoft had chat as a component of the Microsoft Office Suite. And yet there Slack right there. There was video. I mean, there was Skype. Further. It definitely still exists. But but the idea that there is purpose built for one particular thing allows you to make something that is just so much cleaner. It is again, it’s it is a good enough product that a consumer could sign up on their own. I have it on my phone right now. I use it for all my giving. It makes it super easy. It’s like Venmo for giving, like it takes me 2 seconds to go in and give give money to a charity. And then at the end of the year they just think of it. At the end of the year, I just have one account. Like, do you know everything you gave to over the last two or three years. [01:06:01][49.6]

Dan Nathan: [01:06:01] Is it’s a mess. You literally have to go to your Amex card and like sort it. I mean, it really is a mess as I. [01:06:06][4.9]

Jake Wood: [01:06:07] To in my inbox. [01:06:07][0.4]

Joe Marchese: [01:06:08] And this is the same problem for someone who’s making, you know, 50 K or 100 K or 200 K, you’re like all the way up until you have a family office that can keep track of this stuff, which is, you know, the 1% of the 1% of the 1% like you can’t do that. So making it easy enough that a consumer says, Oh, wow, this is something I take with me, but then, okay, but where’s the funding going to come from? That’s where the problem. [01:06:29][20.9]

Dan Nathan: [01:06:29] You know it’s interesting in my inbox, I have an email from Kristie Marchese and she’s talking about her husband who’s running the New York City Marathon this weekend. And you can support his charity that you’re raising money for haymakers for Hope and she actually has a link to groundswell dot I oh where you I mean again it makes it really I think all of us are kind of like you look at some of those other sites there and they’re clunky and you don’t they don’t look like like legitimate. And this is really a kind of a platform based sort of thing. And and I suppose for you and I think Jake and I both know this is a Joe Christie or two of the most generous people we know know about helping every organization that they find, you know, remotely useful. The word.[01:07:13][44.3]

Joe Marchese: [01:07:18] Yeah, it’s it’s amazing. I mean, the way we set this up and there’s just kind of, you know, this is brand new. There’s not even a workflow to support this, and yet it just works anyway, which is everyone who donates to Haymakers. I’m doing a2x match to their charity that would take me forever to go to every charity’s page, figure out what how they use it. But right now I just have the money in the account and every time someone makes a donation, I just type it in and hit send and it goes to their charity. I don’t have to change anything. [01:07:42][23.5]

Dan Nathan: [01:07:43] Listen I mean this sincerely. I mean, I both of you. I worked when I was in college in Philadelphia, and I think it was like 1993 and 94. I worked for a guy, an ex-Marine. His name was Dick Welsh, and he served two tours in Vietnam, and he was a stockbroker at Prudential Securities. And he used to come out to me and he’d say, Nathan’s, and he was aging at this point. He called me Nathan’s. I don’t know. He didn’t know my first name. And he had a $20 bill and he would go down to that crescent place. It was like, Go Bon Pan or something and get me a sandwich and get one for yourself. And he goes, He used to say, I have the money, but I don’t have the time. Okay. And he says he felt bad about me going down there and getting the sandwich every day. But this is a guy who was uniquely interested in in helping others, in doing that. You know, he was a mentor to me. And so I guess I’m kind of like Dick Welch in a way, when I see people like you guys who are so giving of your time and so immersed in it, and now what you’re doing is you’re building a platform to help others do it and give back in a way. So I’m more of that guy, you know? [01:08:38][55.0]

Joe Marchese: [01:08:38] You want us to go get your sandwich? Yeah. So let’s. [01:08:40][1.9]

Dan Nathan: [01:08:40] Talk to us a little bit about this founder’s journey for you, because I think you kind of just aptly said it. You’d already been on that journey, but you’re doing it for a nonprofit. You set up an organization that, you know, he was as impressed with as he is. And many of the human companies who are VC back, that sort of thing. So now where are you a couple of years on, you know, talk to us a little bit about, you know, there you were raising money when you were going to raise money from corporations. They knew where it was going and how useful it was. And the dual purpose of it. Now, it’s like you are a steward of their capital, right. To to build a business. What’s what’s that been like? [01:09:17][36.9]

Jake Wood: [01:09:17] I mean, it’s been fascinating. One of the one of the things that was pretty remarkable is we first went out and started raising money for for groundswell. You know, I’d have a I’d have a 30 minute phone call with potential investor by the end of which he’d say, All right, hey, and this was just a pre-seed round raising on a safe note. And they’d say, Hey, yeah, I’m in for a half million bucks. I’d love $1,000,000 allocation and I’d hang up the phone and me, Oh, my God, are you kidding me? Like I used to have to beg, borrow and steal somebody. Give me $1,000,000 a Team Rubicon. And this guy doesn’t you know, he’s met me for 25 minutes. He’s going to cut a seven figure check. It was so it was it was honestly, it was frustrating how easy it was to raise money. [01:09:56][38.7]

Joe Marchese: [01:09:56] Yes, I do remember the timing of this was was right. It was right in the heat. And so a pre-seed deal at that and like like like something that you’re going to grow into that people could actually say, okay, I see there’s meat on the bones of this because, like, there was money getting thrown out. The craziest thing. [01:10:08][12.2]

Dan Nathan: [01:10:09] I mean, listen, we’re not going to get in a macro discussion Guy Adami’s not here. Think about the difference of where we are than a few years ago with interest rates, where they were monetary policy in general, where it was the risk taking appetite. But again, you know, Joe, this goes back to like you’ve seen a lot of cockamamie ideas come across your desk years in Heathers. You know, maybe this is probably one that resonated as an investor big. As you see the clear opportunity to see the incumbents right now. You see, you know, like really the change in which this to like. It really is a it’s a marketplace in a way. Would you would you consider that way? [01:10:44][34.8]

Joe Marchese: [01:10:44] I mean, I can I can make this so simple. You can see who gives value to and who are the customers. So, like, if you can see who it gives value to and who pays for it, I mean, I don’t I can’t believe that that’s an amazing concept to throw out there. But there are companies raising money where you’re like, well, who’s going to pay for it? Someday we’ll figure out some way to pay for it. Like we’ve kind of always been stuck on like at Human and this is kind of the other portion of it is we think there’s $1,000,000,000,000 market and things that make living in this world better rather than, you know, escaping to the metaverse or everything’s going to be. [01:11:13][28.6]

Jake Wood: [01:11:13] Don’t get started. [01:11:13][0.3]

Dan Nathan: [01:11:14] Yeah, well, actually, I want to get you started here because you’re kind of an outspoken one, you know? I mean, you know, it is interesting. And, you know, I’ll just say this. You know, my dad is a retired lieutenant colonel in the Army. And I just did this amazing trip with him in the spring. It was one of those honor flights where. Oh, yeah, like 150 guys from Syracuse, New York. And they had people like me, like a loved one, go with him to D.C. for the day. And it’s a truly amazing thing. You know, all of these individuals in there were predominantly men from all different walks of life, you know, on that plane together, on that bus in D.C., I mean, they’re all like a unit again or however you guys would refer to it. And I found that fascinating. But then if you split them all up and you send them back to their living rooms and these guys are turn it on Fox News and these guys are turning on CNN and these guys are turning on MSNBC. It’s kind of like that word patriot. When when I think when you joined the Marines, it was pretty universal what that meant if you were serving your country. And now it seems like two very different things. And I’m just curious, how has that been for you? Because Team Rubicon, I’m sure this is there’s big political rifts, you know what I mean? I don’t mean rifts among the people, but the way the participants think about it, the way the people donating to Team Rubicon. Right. Is that is that a thing or. No. And I’m not trying to kind of get you to trip you up here. And, you know. Yeah, I’m just curious. [01:12:30][76.5]

Jake Wood: [01:12:31] I think listen, I think the last two years have been really challenging internally. I think for the first, you know, nine years of the organization, we were really good at navigating the political environment internally because we have a very diverse volunteer base. And along the political spectrum, I say as an organization, it’s really, you know, what we do is very progressive and we have, I think, very progressive ideals. But know the military leans conservative. It’s I don’t think it’s as monolithic politically as people want to paint it, but it certainly leans conservative. The last two years were hard. COVID really divided the organization, you know, between the people that thought it was real and the people that thought it was fake. Vaccines really divided, you know. [01:13:13][42.4]

Dan Nathan: [01:13:13] Much like the country. But like, think about where we are right now. So, for instance, what percentage of Team Rubicon operations are outside the U.S.? [01:13:21][7.9]

Jake Wood: [01:13:22] Oh, very small, I’d say 5%. [01:13:22][1.0]

Dan Nathan: [01:13:23] Okay. All right. Just I was going to say, like, here’s a big issue that’s basically on the ballot in the midterms next week is that if the Republicans take the House and the Senate, the risk is that we’re going to see much less aid going to Ukraine. Right. And so, like, think about these are these are. [01:13:37][13.9]

Joe Marchese: [01:13:37] And Ukraine is one of the places Team Rubicon has has operations right now. [01:13:41][3.6]

Jake Wood: [01:13:41] Boots on the ground in Ukraine. And I’d listen if that happens. It’s a tragedy. I think if people are so myopic to not believe or understand that we’re at war with Russia in, you know, it’s it’s in a proxy. And, you know, we I think we have to admit that. And we’d much rather be fighting this war in this manner than in the way it can manifest in over the next decade anyway. [01:14:03][22.4]

Dan Nathan: [01:14:04] Well, here’s one other question for you, because we’re in this kind of political season also, right. With the midterms, I mean, don’t the mechanisms for donating to political causes, it seems absurd. You could be the most progressive or the most conservative person and you could be getting, you know, like a thousand, literally a thousand communications in a month from your hero, you know what I mean on that side. And you just want to delete your account. You don’t. Oh, my God. Is there an opportunity, if you think about it, in groundswell for political donations and how you might help organize that process? [01:14:35][30.4]

Jake Wood: [01:14:35] You know, we’ve talked about, you know, in the future, a product that you cannot donate to political causes through groundswell. Right. You can’t make just, you know, tax deductible. Yeah, exactly. It’s not an authorized distribution from from a public charity. Which groundswell is but is there a companion product in the future potentially? One of the things that we’ll know a lot of about our users is the issues that they are really passionate about. [01:15:00][24.4]

Joe Marchese: [01:15:00] I’m literally watching you say that, and I’m picturing when Tammy, who is the chief product officer at Groundswell, hears him say companion product and here’s product creep throwing her phone at something. So here’s Tammy. Don’t worry, I got you. I’m here with Tammy not adding things to the products. [01:15:16][16.3]

Dan Nathan: [01:15:17] Tammy, give me a ring. I mean, to me, as someone who actually likes to donate, if any of my friends are doing something like you’re doing, if you’re going somewhere to support some cause, you’re going to run some race, I always give. Okay. And so to your point, you know, how do you organize all that? But then on the political. Aside, I do a lot of donations. Some I do bigger, some I do roots. I’d love it all in one place. [01:15:37][20.8]

Joe Marchese: [01:15:38] I mean I mean, it would take it would take it would take a while to get there on this to. [01:15:41][3.6]

Dan Nathan: [01:15:42] Dashboards that tell me that’s all I’m saying to dashboards. That’s all I need. Okay. [01:15:44][2.9]

Joe Marchese: [01:15:45] Let’s I mean, if we would have to have an entire another podcast on the fact that money isn’t the problem in politics, it is the problem. And it is. [01:15:52][7.0]

Dan Nathan: [01:15:52] A huge problem. [01:15:53][0.5]

Joe Marchese: [01:15:53] But I’m saying like it isn’t the problem in that they’re not winning or losing because you didn’t donate that extra thousand dollars so they could buy more media. [01:15:59][6.1]

Dan Nathan: [01:16:00] That’s useless for all that dark money. [01:16:01][1.4]

Jake Wood: [01:16:02] I think, though, one of the real issues in politics, there’s a lot. But after. [01:16:07][4.8]

Joe Marchese: [01:16:07] We cover the politics and we cover what are the right religions and why, as I run to make sure we touch on everything here. [01:16:12][4.5]

Jake Wood: [01:16:12] I think I think I think one of the issues is people they only care about these federal elections. Right. And people just really fail to understand the power of local politics and help, you know, helping people sift through how to get the right local leaders elected. I think there’s a powerful opportunity there. Whether it’s something, you know. [01:16:26][13.8]

Dan Nathan: [01:16:26] I mean, it is an incentive. If you think about our people in the House of Representatives, they literally have to run every two years. It’s a it’s a nonstop fundraising operation. And who are their masters? You know, I get all that. Here’s one I wanted to hit really quickly. When we talk about just, you know, the economic environment has changed pretty dramatically as we just kind of touched upon in just the last two years and obviously the last three years since the pandemic started, you know, it’s kind of been a very volatile situation. How have you guys seen, you know, well, in both organizations, you know, Team Rubicon and Groundswell, you know, how have you seen, you know, the propensity for people to give in philanthropy in general, especially when we know that, you know, lots of parts of this country really came together and tried to help, you know, like their fellow citizens in need. But I’m just curious, from a more institutionalized standpoint, how is headwinds to an economy with rising inflation and the potential for rising unemployment, that sort of thing? How has that affected, you know, giving in general? [01:17:25][59.4]

Jake Wood: [01:17:26] So America is a really unique place. But, you know, relative to philanthropy, America’s most generous nation on the planet, it’s not even second place isn’t even close. And recessions do dampen individual giving slightly. But, you know, what’s really interesting is Americans will still continue to give to charity even in a recessionary period, and they’ll cut other spending elsewhere in their lives. But they’ll continue to give. And that’s just really remarkable. I think it says something about a special element of American life. You know, beyond the individual giving foundations who have money set aside, they have you know, they’re sitting on huge piles of of cash. They actually step up in these moments. They understand that the need will increase, food banks will have a larger drain. Things like domestic violence spike in times of economic uncertainty. So you have just a lot of needs. You know, every every social issues exacerbated in these moments. And often, you know, foundations will step up to fill voids if they if they arise. [01:18:24][58.2]

Joe Marchese: [01:18:25] There’s so much money pools at the top. Look at the amazing work that like Mackenzie Scott is doing. They look look at the Gates Foundation. They’ve got Eric Schmidt just announced. And in fact, there’s so much money that’s pulled at the top. The problem is efficient distribution to the places where you can actually do good. Right. And this is part of what’s so. Well, I won’t go there either. But the but the the the idea of getting the money to where it can do the most good. This is back to what I was saying before about the decentralization of the giving down to like on the ground, someone who can see that, oh, this would be very helpful in my neighborhood if I gave this away. And technology’s promise was always that we could make things more efficient through technology. Philanthropy hasn’t gotten the treatment that normal financial services has gotten from technology yet, but couldn’t it have been billions and billions of dollars flowing through at a more efficient level and actually just do better for us this time around in a downturn? [01:19:13][48.6]

Dan Nathan: [01:19:14] It’s fascinating to see, you know, how groundswell progresses. And I think when we come out of whatever this economic period we’re in, it really seems like especially how, you know, a divided America on a lot of different fronts when you think about the example that you gave about Planned Parenthood is really fascinating. One way tools and platforms like yours might be, you know, a great outlet for people to kind of, you know, kind of funnel, you know, money in a really effective way to causes that they care about at a time where privacy is a huge focus. [01:19:43][28.7]

Joe Marchese: [01:19:43] I mean, that example is real. And it’s and it’s an it’s I think a big deal. And also, if you think about it, there are issues where we’re 80 or 90% of the population and certainly a strong majority. Look what happened post Dobbs Right. In the election and it was a Tennessee I believe. [01:19:58][15.0]

Dan Nathan: [01:19:59] Yeah. And in Kansas. [01:19:59][0.5]

Joe Marchese: [01:19:59] City, Kansas. Right. Yeah. But like it was a validation that like there is there is a majority support, but there isn’t unanimous support. So it’s very hard for corporations to take a stance. But if the corporation can give it to the employees to give away, a majority of people will be giving to the causes that they believe it’s like. So these are places where a very vocal small minority are stopping corporations from doing the right thing. [01:20:21][21.3]

Jake Wood: [01:20:21] They’re holding them hostage. [01:20:21][0.4]

Joe Marchese: [01:20:22] You can actually get the money to people to do it. That’s I think that’s one of the things we need to do, just generally groundswell first and then. But like in general, there’s a bunch of things that a majority of the country. To be around and so we can help with that. [01:20:34][11.8]

Dan Nathan: [01:20:34] Yeah. Listen, I hope that any listeners here who are just like all of this might be new to them. I mean, when I heard when I met you and I heard about this, this was not something that philanthropy as a service in these sorts of donor advised funds. They were just not in my purview. And I just think that you guys are on to something and pretty fascinated by it. So if you are running a corporation or you work somewhere and you’re interested in this sort of stuff, ask about it. I guess it would be Groundswell, Daddy-O. All right. Well, on that note, Jake Wood, he is the founder of Team Rubicon. Go support Team Rubicon. We will be supporting Team Rubicon. Joe’s on the board of Team Rubicon. They have their annual gala. You’ve raised how much since you started? Team Rubicon. [01:21:12][37.5]

Jake Wood: [01:21:12] 350 million. [01:21:13][0.5]

Dan Nathan: [01:21:13] Amazing. That’s truly amazing. So go check that out, people. Groundswell dot I. Oh, Jake is the CEO, founder of that Joe Marcus. Thank you. Executive chairman of Groundswell. [01:21:23][9.7]

Joe Marchese: [01:21:24] Co Executive Chairman of Ground. So we didn’t get to we didn’t get to today. We made a lot of ground to cover. But like right at the very beginning, actually, another member of Jake’s board, Adam Miller, a very, very successful entrepreneur, one of the most prolific investors in Southern California, also came on. So so Jake isn’t kidding when he says he has an unfair advantage. [01:21:42][18.4]

Jake Wood: [01:21:42] Creating unfair advantages and, you know, packing all all my mentors into into groundswell. [01:21:47][4.7]

Dan Nathan: [01:21:48] Check out groundswell. Shout out Adam Miller. And also, Joe, you were also a build partner and you’ve been a great mentor. You said this before about stacking the decks in this that Joe’s been so helpful to Guy and myself and what we’re building here at Risk Reversal Media. So whenever we have you involved in the intros that you’ve made over the years have been truly amazing. So thank you guys for being here on Okay Computer. [01:22:08][19.9]

Jake Wood: [01:22:08] Yeah, thanks for having us on. [01:22:09][1.3]

Dan Nathan: [01:22:15] Thanks again to our presenting sponsor Current and our supporters Masterworks and Taboola for bringing you this episode of okay Computer. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we want to hear from you. Email us at contact@riskreversal.com. Follow and connect with us on Twitter at OC Computer Pod. We’ll see you next time. [01:22:15][0.0]

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