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Paul Martino 5:04

Same thing. I’m gonna find my co founders, my first company here. I want to, I’m gonna make it.

Dr. Jeremy Weisz 5:10

I’m sitting in Philly right now. I split my time between the coasts.

Dr. Jeremy Weisz 5:20

So did you when you split your time there is because that’s kind of the hub for technology. At what point did you say I’m just going to be where the action is.

Paul Martino 5:30

So I lived in Silicon Valley in Mountain View, right and right at the Netscape headquarters, basically, because I did a deal with them. That’s how I ended up dropping out of grad school did a deal with Netscape and fun, fun time, I was there for almost 13 14 years, and then decided to move back to Philly, which is where I’m from. And the only way to move back to Philly is if I went back to California week a month did not get stale. And I kind of figured out how to hack the system. And at that time, people are calling you’re leaving town you’ll never get now they’re like, Martino, where did you go that maybe that was a good idea.

Dr. Jeremy Weisz 6:05

Talk about so Alvy Ray Smith, what’s the connection there.

Paul Martino 6:10

So in between my job, second, first and second year at Princeton, I apply for an internship at Microsoft. And again, it was just one of those things, you’d never do that as a grad student. But since I didn’t really want to be a grad student, I wanted to do company stuff I applied. And I remember the people at Microsoft on your resume is a little weird for this, but you’re a good coder, come on out. And I interviewed with a gentleman who was in the graphics group, and I had no idea what my job was going to be. And I get to the office a couple weeks later, and I meet Alvy Ray Smith, because they just bought Alto mirror. And the graphics group is going to merge with Ulta mirror which is this new imaging processing software. And I’m now the junior developer working for Alvy Ray Smith on the next generation of photo editing as like sounds pretty cool.

Dr. Jeremy Weisz 6:58

So did did people know the legend of Alvy Ray Smith them his background, or,

Paul Martino 7:03

of course people knew it. But Alvy is a really low key guy. And you had him on the show and, and I just he wasn’t the kind of person who was pounding his chest walking up and down. It was funny. I didn’t remember he was a founder of Pixar until I saw your episode with him. It just goes to show you so even though I worked with and he was so all in on ultra mera and beating Adobe, the product became Microsoft image composer. And ultimately, Microsoft never really got behind the product, which was disappointing. But it was one of those things. I’m reading the interview. I’m like, Oh, shit, I forgot he was on as a Pixar. Because even though I worked with him for, you know, a half a year or whatever it was, it just wasn’t something that he wore on a sleeve at

Dr. Jeremy Weisz 7:46

all. You know, where did when did Bill Campbell, enter the picture and talk a little bit about Bill Campbell, who don’t know Bill Campbell,

Paul Martino 7:55

Bill Campbell, the CEO coach, to Steve Jobs, the CEO coach to Larry Page, and you name it best CEO coach in the history of Silicon Valley. I was the CEO of I think it was my third startup company Aggregate Knowledge in the summer of oh six. Randy Komisar from Kleiner Perkins led an investment company. And Bill Campbell was by all means, retired from the CEO coaching thing, you know, he was a curmudgeonly guy grew up in homestead, Pennsylvania, he grew up dirt poor was a car majan he gives you a big hug, and then he didn’t salt yet. Perfect, perfect kind of kind of demeanor. And he’s like, Oh, I’m done with this. I’m sick of people trying to get my their kids into college for them, or interviews, or I’m not going to meet nobody. Komisar is like, Bill, there’s this kid I’m working with. He’s from Philly. He’s kind of like an asshole just like you. I know you don’t do this, but we just would you take a meeting with them. And so I go into this meeting with Bill Campbell, and I’m kind of thinking old guy over the hill, gonna give me a bunch of platitudes, like, Oh, God, am I doing this favorite Randy Commissar? And I get into that meeting, 10 minutes. Bill’s like, Oh, my God, he’s like, you and I were meant to work together. Let’s go do this. And it was just one of those strange things where he didn’t want to be there. I kind of didn’t think it was gonna work and magic. He’s like, yeah, I’m in. I’ll be at your office three times a week for the rest of your life. Let’s go. And it was really just one of those life altering moments because Bill didn’t do this anymore. He didn’t take people on anymore. He had Larry and he and he had Steve Jobs and he was done.

Dr. Jeremy Weisz 9:39

What was it about that meeting, Paul, that you guys hit it off?

Paul Martino 9:43

It was that I was blue collar and you really hit on something very dear to my heart. Yes, I went to Princeton, but I was blue collar. How does that work? Bill and I both understood what that meant. Blue Collar was an orientation around how your brain worked. It was I have to eat what I kill, I have to earn everything I got everybody’s against me. It’s a mindset of I grew up this way. And yes, you could have gone to Stanford and we’re from a wealthy family, but your brain was wired blue collar, or you could have grown up dirt poor and homestead, and your brain was wired that way. So Bill, and I always love blue collar CEOs, but you couldn’t tell it from the resume, you could only tell it when you met. And that’s why that meeting was such magic. In 10 minutes, we knew that we were cut from this very specific cloth that was the same that neither of our resumes would tell you. And that’s why it’s like yeah, Martina, let’s go do this.

Dr. Jeremy Weisz 10:38

What are some favorite Bill Campbell moments I want you to talk about one time where I think you were talking to him right before he was supposed to talk to Steve Jobs.

Paul Martino 10:49

Oh, yeah. So Bill Campbell used the Socratic method. And when you were one of Bill Campbell students, he would use case studies from other students at that time. Now I’m running a 6080 person company, kind of under the radar. It’s got a cool up and coming company, Kleiner Perkins put some money in right. Kind of cool. But I remember one day, he had to see Steve Jobs in the afternoon in the in the morning. So he comes into the office. He goes Martino, I’m seeing Steve this afternoon. You know, let’s leave the office. Let’s go take a walk around. I love to take love to take a walk. So we walk out the office. We’re in San Mateo, we’re walking around the street around the thing, Paul, you know, you got to keep this confidential. But Steve has had an exclusive distribution deal with AT&T of I don’t know if you remember this. But when the iPhone came out was so dang expensive, that he had to cut an exclusive deal with I believe it was AT&T, because it was the only way he could get the phone in the hands of people at a reasonable price. Is it so he comes in and he’s like Paul, we’re walking around, you know. So this is the first time Steve can break exclusivity and then go multi modal. What do you think he should do? Because I want your thoughts on this before I go see him. I run an 80 person. Company, Steve runs like the most important company in the world. And he wants my opinion, because he wants to talk it through with Steve. But what I realized at that point isn’t so much that I was uniquely qualified to answer the question because I wasn’t. But as another student in the Socratic method of Bill Campbell, this was the way he’d see how I think how I’d work. He then tell a story about some small company thing that I was doing back to Steve so that Steve would stay grounded and understanding what it meant to be an entrepreneur. It’s how Bill work, it was part of the magic to the system. He didn’t give a shit if I really knew the answer. They exclusivity. It was how he worked, though.

Dr. Jeremy Weisz 12:38

What’s another favorite Bill Campbell story or lesson

Paul Martino 12:43

when I hired Dave Jakubowski to replace myself, so as the company grew up, we went from a hardcore SAS company in data and analytics, which I was a very good CEO for, to being a much more advertising focused company and I was oil and water with the ad execs it really was just wasn’t my stick hanging out with the agency people not my thing. And I don’t know I said, Bill, I’m not the right guy to be the CEO anymore. I will find my replacement I did I found this great guy Dave Jacobowsky. Dave went on to be a bigwig at Facebook running all of their ad group at one time is now the CEO of a company called Eureka. And Dave had an interview with Bill and Dave is not a Dave is not afraid of flower But I have to tell you, he was crapping his pants when he had to go interview with Bill was maybe there one time in his life. He was nervous. I said, Dave, I don’t get to hire you. Unless Bill is impressed by by what you do. And Dave’s nervous. He’s white knuckling the interview. At the end of the interview, I got a phone call from Bill Campbell the phone call was five seconds. And I’m going to edit the words here so that so that people don’t you know, go after Bill’s legacy. So I’m I’m gonna I’m gonna soften up a little bit. Martino you found a Polish kid from Buffalo. Hire am, click. Now you can put in the rest of the words you probably said, but it was one sentence. That was the whole summary of interview. Why was it one sentence because he knew I had found another blue collar person like me and Bill, there was nothing else to do go hire him.

Dr. Jeremy Weisz 14:23

That’s awesome. Paul, just take people through the trajectory like in fast forward for a second. So after or, you know, Princeton Ahpah software, like take me through some of the companies and your the timeline.

Paul Martino 14:39

Yeah, so I so I’m in grad school, I don’t want to be there. I’m there to meet people to start a company. We end up having this this gig at Netscape that gets me to form the company in the security space. A lot of my colleagues form the Princeton safe internet programming group which is still running to this day, one of the best security groups anywhere. My office may Dan Wallach is one of the top security experts now at Rice. So I’m doing the security stuff hanging out at Netscape and we realized we have some pretty interesting products. My two co founders, both Princeton guys start the company. And ultimately Intertrust, which was a rights management company realized how important this technology was. What’s going on at that time, Napster just happened, literally, stuffs getting caught and stuff is getting copyright infringed, left and right. And they realize some of the core technology we developed would be very good for rights management, to basically get paid for the music. And they had a very visionary CEO who hired me and bought the technology from my company, and then came into my office with with really one of the strangest offers ever to Paul on buying your company. But there’s only one part of the deal. If I buy your company, you can never write another line of code again. Like what I do, I wrote most of the code base like why would you hire me? He’s like Martino, you’re a geek, but you speak in complete sentences. So you’re going to join me in the front of the office, okay, that’s the deal. You write code, you’re out. And that was a very lucky, important break for me, because I then got to work with Duncan Davidson, who I started Bullpen Capital with, we got to take the company public, we got to run the m&a group, I learned all the stuff you need to know that you’d learn in GSB. I learned on the job during the tech bubble. I was on a panel with iced tea and Jimmy Jam talking about the future music distribution. And iced tea told me what did I you know, because when when I was when he was my age, he was actually in a different profession. And I encourage the listeners to look up what ISDS profession was when he was about 21 or 22. You can imagine that that was a fun conversation.

Dr. Jeremy Weisz 16:47

Duncan Davidson. So some lessons from him.

Paul Martino 16:51

Duncan, he’s like, Look Martino, you work for me. I had business development. I’m gonna take the company public, we’re gonna go buy stuff. Let’s go over a lot of fun. And I got to do all of the stuff you dream about when you’re like you’re a GSB student, you know what a Harvard like, I got to do that in 99. In 2000, during the bubble in one of the coolest categories out there music. We were parties at the House of Blues in in, you know, on Sunset Strip, and people like Cypress Hill would show up to our parties because we were cool. And I’m like, this is this is awesome.

Dr. Jeremy Weisz 17:26

Did you know Fabrice Grinda. In those days? It seems like you have a lot of similar parallel paths in the music industry. And in VC world. No, no,

Paul Martino 17:36

I don’t. There were so many weird doors into music at that time from Tech. Like this panel. I always remember I was on I was Jimmy Jam then yet which was a which was a content management system. And iced tea. You’re sitting there going, you got a rights management person, a content management system, and music writer and a celebrity on a panel like who thought that was a good idea. That was the kind of weird mixing that was going on back then. And it’s not a surprise that I missed a lot of people because there was so many at this intersection, sports, gaming media technology. And I’ve stayed at this intersection for you know, the next 25 years of my life, actually,

Dr. Jeremy Weisz 18:17

we’ll circle back to Bullpen Cap and some of your other co founders and managing partners that you have really an amazing team there, including who you mentioned Duncan Davidson. But, um, so next, was Tribe next, or Skypilot. Network. Part of that.

Paul Martino 18:37

Yeah, so Skypilot I try and forget because that was a last year. I mean, it was a last year and a lot of ways. That was Skypilot was basically Oh, 1202. We’re at the bottom of the tech bust. Right. The bottom of the NASDAQ was was April of oh two. That was that last year coming off the bubble. People don’t remember how bad the employment situation was. Santa Clara was 20% of the jobs in 18 months. Like that’s like, I mean, that’s depression level job loss. And, and it was no fun to be in Silicon Valley. Duncan had managed because of his strong resume to start the company. But it was just everything was going up pulling a boulder uphill, nothing was working. But then what happened, and we’ll get to tribe in a second. But what was exciting about tribe was, pride was at the bottom, starting a company at the bottoms awesome. starting a company on the way down sucks. That’s the big difference. Like it’s not a bad idea to start a company in a bear market. It’s cheaper to get office space, it’s easier to hire people. But when the knife is still falling, which was that, oh, 102 year at Skypilot. It was just people were white knuckling. They don’t know what to do. We had a big partnership with with AOL we could never get right because everyone was scared about losing their job. What a tough time and Yes, I do. In my one year there, Duncan, I got to work together there. And I told him Duncan, if we ever work together again, I’m telling you, it’ll be years from now and your work for me. So, we’ll get there. We’ll get to that later. But when we started hope I said Duncan, you remember that conversation a decade ago. So so it is important, though, to work with people that you know and trust multiple times. And when Skypilot basically failed, and you know, it got Aqua hired into another company, I forget the exact details. I know Mark Pincus drew mount octo for a long time. And it was April of oh two, and he’s like, let’s, you know, let’s go do something in this space. He was an early investor in Friendster, he knew that this would be a big category. I was like, this looks flaky. But what the hell, let’s go give it a try. But Mark was always way ahead of the curve. He didn’t know what to do the company in San Francisco, all the tech stuff’s gonna move to San Francisco. And like, nobody was in San Francisco at that time. Everything was in Palo Alto and Mountain View. And Mark really, while a challenging guy to work for a lot of ways, always way ahead of the curve in terms of seeing where the balls going, perhaps the most gifted person I’ve ever worked with in that regard.

Dr. Jeremy Weisz 21:15

But talk about Tribe for a second.

Paul Martino 21:18

So we were in the right place. right time, we knew what was going on. Reid Hoffman was an advisor, he was starting LinkedIn. We knew we knew that. We knew Friendster well, but we kept trying to put a square peg in a round hole together. We kept trying to go after Craigslist by having socially linked classifieds. Pincus was obsessed with two things at the time, Friendster and Craigslist. Craigslist was making tons of money, but it was unsafe. Friendster was growing at a tremendous clip, but there was nothing to do after you caught up with your buddies. He insisted the idea would be classified listings with people who you knew. So the guy who came to your house to buy your car, you could bet via your network. So his instincts were right. But this tension between the classified listings and working with the newspapers like night render and all those people on the left, and building a general purpose social network on the right, we never got it right. That unison was wrong, even though the two macro trends were correct. And at the time, you know, one of my favorite stories about Facebook is when Zuckerberg was still a student at Harvard, came to the tribe office Peter to call him up, he said, You should go meet my friend, Mark Pincus. And in typical Pincus, fashion thinkers goes, but feels got this guy coming by I’m flying my plane this week, can you go meet this kid? And so I got to babysit Mark Zuckerberg at the prime office for a week as a favor to mark as a favor to Peter teal. This is while he was still a student at Harvard. And I was very confused. I’m like, Mark, this guy’s gonna go build something to compete with us. And like, What am I supposed to do here, dude?

Dr. Jeremy Weisz 22:59

So what was that week? Like? What did you do?

Paul Martino 23:01

You know, I realized one very strange thing. And I think it’s true to this date. Well, I have tremendous respect for Mark Zuckerberg. And whether he’s built at Facebook, I was confused by Mark. He, he was very, really very socially awkward. He was kind of a tough guy to hang out with in the conference room. And yeah, I know, there was some competitive tension. But I remember literally, I remember putting his phone number in my phone thinking, this guy’s gonna build the great social network. You can laugh about in retrospect, because his product vision and his understanding of the target audience and being exclusive for the college, he was so far ahead of all of us. But his user interface to him as a person belied how smart he was about the business he was building.

Dr. Jeremy Weisz 23:54

Was he sharing any of that during that week of what he was thinking or not really?

Paul Martino 23:58

I don’t think he that week. I don’t think he knew it yet. He was he was germinating. Remember, he hasn’t even quit Harvard yet. You know, the infamous meeting with, with with the wincle by and the president of the university like that hasn’t happened yet. That’s like a year away.

Dr. Jeremy Weisz 24:17

You had some kind of hand in this butterfly effect that I went on, right?

Paul Martino 24:24

And look in it was a, it was interesting, the early days of social networking, the companies all knew each other, when my space launched, invited us to the launch party in LA because we had started tribe. So unlike enterprise software, where all the companies are at each other’s throats, all the early social networks, the founders were all kind of friends. And yes, we were competitors. And yes, there was some role nerve between like Mark pink is and and. And, you know, the Friendster founder, and you know, some of that was, you know, felt like we invested in me and then he competed with me. So there was some heart hurt feelings, between Some people, but by and large, we all knew each other, we use our cupboard, right? We knew Tom at my space, because he invited us to the Opening Day party. Because why wouldn’t you invite the tribe? Guys? It’s just the way we all thought in those days. Yeah, I

Dr. Jeremy Weisz 25:15

mean, it also, it’s like, we’re all a part of all of these social media, Neil channels. It’s not like, well, I’m gonna join LinkedIn and not join Facebook, right? I mean, we everyone joins different social networks. What do you think? What was your kind of post mortem on my space.

Paul Martino 25:34

So My Space was always a weird UI built on ColdFusion. And it always looked like a 12 year old built your website. And I insisted to people, my space will never take off. No way. And so when my space had won, for a very short period of time, I was like, I can’t possibly keep winning. And so I didn’t know if I was saying that because I want it to be right or because I trusted my intuition. And so when something came up, that was cleaner, and better handed out a more targeted audience, and I thought through the page design better, I felt like it was always vulnerable. And then just to show you that I can be wrong yet again, I then assumed something would come after Facebook and supplant it because the switching costs were low. So I got it more wrong than right. But on my space, not being able to maintain its lead. I just think that that fundamentally, from a product perspective, there’s no way that that product would have been the long term winner.

Dr. Jeremy Weisz 26:35

So you spent a lot of time working Aggregate Knowledge. Yep. Talk about Aggregate Knowledge,

Paul Martino 26:42

Aggregate Knowledge, very simple insight. So Tribe fails. But Pincus and I learned two very important things. One is, there’s nothing else to do on a social network. Hence, I want to let you play games equals Zynga. Second thing was the social network might not be great for a lot of things. But the data about the users telling you about themselves will be the most valuable ad targeting data set in the history of mankind. That’s Aggregate Knowledge. And so prime is one of those famous, successful failures. It’s like NGO, or general magic, it’s one of those companies, right space, maybe a little ahead of its time, got it wrong, but spawns other great companies, because the right people were they are working on the right problem. And we knew that the data set coming off of social networks would be a data set, unlike any advertiser had ever seen before in their life, to recommend you products to recommend you a general contractor to tell you know how to tell you who you’d marry, right? I mean, we knew that the data set was there. And and that’s what aggregate knowledge was all about.

Dr. Jeremy Weisz 27:49

So do you take that route, as opposed to Zynga just because that’s more of an interest to you.

Paul Martino 27:55

It’s more what I was good at, right? And think about my background. I’m a PhD dropout in the high performance computing. My PhD work is in security, high performance systems, that kind of stuff. I’m not a direct to consumer guy. I don’t have the right things for it. I don’t try. But I built the back end scalability of tribe, which was outstanding for a time, and a guy named Brian Waller built the front end because I’m just not a I’m not a front end guy. So Brian, and I split the company in two halves. Brian and Elliot. Elliot went on to do wonderful things to he, he did Genie with David Sachs. Brian Waller ended up going to Cisco in the acquisition of private tech got acquired by Cisco along the way up to another funny story. But so we split the world that way. And so when it comes time for me to go build the next thing, I’m never going to be the person to figure out the direct to consumer thing that happens next Mark was going to figure that out. And that was Zynga. I was going to figure out the next plumbing thing to happen. And that’s what aggregate knowledge was,

Dr. Jeremy Weisz 28:55

hmm. And so Aggregate gets acquired. Then what?

Paul Martino 29:01

So I had stepped down into Chairman mode at to hire Dave Jakubowski per the story, and I wasn’t sure what I was going to do next. I was actually thinking I’d probably go start my next company. But Mike maples over at flood gauge he kept bugging me kept calling me. But Martino you’re good at this angel investing at the time I was an angel investor in Udemy Zynga Millennial Media I had a real stringer of good hits as an angel investor. Take Martino you’re good at this angel thing. Why don’t you come join me as my first partner at Floodgate? I flat rejected and I said you met your people are a bunch of weenies the real the real stuff is building the company. Like I am quitting Mike, I’m gonna go build another company. And then what happened is through the course of the year where I stepped down as CEO, and was thinking about what my next game was Mike really got me thinking about how the venture industry was getting changed and I was an early limited partner in Josh comp. First round capital. And people don’t really appreciate how important First Round Capital was the history of the venture ecosystem. It was really one of the first innovative venture funds. The thought is it’s cheap to start a company, I need to run my venture fund in a different way than the funds have been run for 20 or 30 years before us. I’m going to write a lot of checks at high volume. I’m going to let my losers fail fast. That was not what you didn’t venture in oh five. But what happens is now Josh is starting to get a lot of respect. Oh, 9 10 11, he did Uber in the summer of 10. People are starting to say, hey, maybe a cute little thing that compliment was doing over there is not such a bad idea. So Mike’s bugging me to take a job. I’m good friends with full black over at true. And then it starts dawning on me. I’m like, I know, I want to start a new company. But my insight is actually in venture if the venture ecosystem is getting reinvented. What is the next thing after first round capital? So I reluctantly started a venture fund, because it was the only way to capitalize on the entrepreneurial instinct around the changing venture ecosystem. And Mike Maples read asked me to this day he’s like, Yeah, dude, you didn’t go become a weenie just to show everyone you were right about what you wanted to do as an entrepreneur. Ah ha ha joke’s on you.

Dr. Jeremy Weisz 31:20

So talk about the inception of Bullpen Cap.

Paul Martino 31:24

Think about at the time 2010. There are only about 40 micro funds, wide gate felices police’s first round. I mean, literally, there’s 30. There are about 100 traditional venture funds, Ray lock, you know, Kleiner, Perkins, Sequoia, all those guys that are sitting there going, if you can go write checks at Josh volume, you can go raise a $25 million funding and be with them. So I remember telling Mike, we went from 20 to 40 over the last couple years, what’s going to happen to you as a business when we go from 20 to 200? Aren’t you going to need a fund in between to basically get a little bit more money to your winners before they’re ready for Sequoia. Now, fast forward a decade later, we went from 20 funds to 2000 funds. So so I was right, but still wrong. I was off by a zero. So my crazy prediction that there’ll be 200 micro funds will surpass their 2000. So the opportunity for Bullpen to play in the middle where the first round and floodgate are the starting pitchers and Sequoia and Kleiner are the closers to play Bullpen, which is how we got the name we were functionally the middle reliever. The opportunity set for our fund was bigger than I ever imagined. Because no one in the right mind thought there’d be 2000 copycats.

Dr. Jeremy Weisz 32:47

Hmm. So you talk about your co founders at SoulPancake.

Paul Martino 32:54

So I’m sitting in Duncan Davidson and I have been angel investing together and he is this friend Rich Melman. Alright Melman. You know, I just started this little company in 1982, called Electronic Arts, right? Just you know, it’s just been around a couple times. He’s got a great, you should get implicit, you should get Melman on this show, because he can tell you stories, Millman was employee 60 at Intel. He was the founder of Electronic Arts and 82. And before that, he brought the spreadsheet to market with Dan Bricklin. And he once told Steve Jobs to eff off in his office because Steve was trying to figure out how to build a spreadsheet on his apple and the only guys in the world who knew how to do it were the two guys that nomen worked with in Boston that’s an awesome story. I can’t give it justice but so I know him has an office in on Sand Hill Road and Duncan and I keep meeting him there and I don’t really know Richard at this point in time I know I’m a little bit from before he was a small investor in aggregate knowledge they looked at me he’s kind of like, you’re here at the office so damn much. Here’s a key know the guy gives me a keen in the office. I’m like, Okay, I guess I’m gonna hang out at your office. So as we’re brainstorming this Richard has more and more sit at the whiteboard with me and Duncan. So about a year in all of the year of 2010 now man looks over at me one day he goes, Hey, kid, I gave you a key. We’re gonna quit our day jobs and do this now. Right? So we did we literally quit our jobs and started a Bullpen we started two days before Christmas, December 23 2010. And, and I can now say I started a company with the founder of Electronic Arts and I started a company with the founder of Zynga that’s I feel pretty good on founding companies with with game people.

Dr. Jeremy Weisz 34:35

What does do this mean? So let’s do this. What’s next? There’s a lot that has to go into it, I imagine.

Paul Martino 34:42

And and I had no idea what I was getting into. raising money for a venture fund is different than raising money for for, for a company. Let’s do it man. We are now full time on this. Our other side activities are in the rearview mirror. We’re going to incorporate the entity We’re gonna go hunt for our first money and we’re gonna start writing checks. And we’re gonna act like it’s a company even if it’s not, that’s actually a very important moment in the history of any startup. This is moment where you’re just glorified bullshitting. And then there’s this moment where you decided you’re a company, it’s a rich rich decided for me that that was the point at which we’re a company. And, and and yes, the next couple months, we’re still kind of really figuring it out. But let’s go get our first couple million dollars. Let’s start writing checks. Let’s go do this. And we did it. And I remember it clear as day in looking at me No, and we’re gonna do this now. Right?

Dr. Jeremy Weisz 35:35

Was it the raising money for venture funds different from pharma company and then probably simultaneously Are you vetting companies that you are presenting to these people that you are looking at?

Paul Martino 35:48

So we have to we have to, we have to make fake it to make it we have to, we have to, if you’re a poker player, it’s a semi blog, right? We we’ve got to start writing small checks right out of our pocket and act like a fund even though we’re raising the money or else no one will think we’re a fund and no one would give us the money as a first time fund manager. So you got to kind of Reel yourself into existence. And you know, we got the first couple million dollars literally $4 million dollars. It was me and Duncan and rich and people we have made money for we call them up and you’re giving us 250 grand like send it here. No questions like don’t don’t ask economics. And guys, ACO were some of those first checks. And Matt was a huge mentor now runs Data Collective really, really was a great mentor to us on how to run a venture fund. He was at SoftBank before and Vantage Point before that. So we have 4 million bucks right and checks. Luckily, one of those first checks was a $250,000 check. To this little seven person company in Edinburgh, Scotland, started by a husband and wife called Bandol. That proved to be a pretty good check. $8 million valuation at the time we invested company years later exits for 14 billion, so nice to get one of your first checks into a company like that.

Dr. Jeremy Weisz 37:04

That’s amazing. That went through some crazy times. fanduel

Paul Martino 37:10

crazy times is an understatement. The Attorney General of New York tried to throw the board of directors in jail. You know, people referred the CEO for criminal prosecution because of running an illegal gambling operation. We tried to merge with DraftKings and the FTC ky botched the merger. I mean, I’ve learned more about arcane aspects of the law. And oh, by the way, the companies in Edinburgh, Scotland just to make it even more complicated. So yeah, there were things that we signed that we ended up doing, we sure didn’t sign up for when we made the investment in that company. And literally there’s a whole book written about it called dueling with kings, the history of DraftKings and FanDuel. There’s some great interviews and stories in that book about those crazy times. And in 2015, FanDuel and Rockies, were spending more than Geico to advertise. Literally, it’s September, the start of the football season. We’re spending more than Geico, do you know how much Geico spends on advertising?

Dr. Jeremy Weisz 38:15

So why did you What did you see in in FanDuel? Because I’m sure you are vetting a lot of companies at the time. And why did you decide on FanDuel

Paul Martino 38:24

FanDuel had awesome monetization on a small user base. This was a very unusual at that time, most apps had large user bases and no monetization. He is the exact opposite. He’s the classic example of a Peter teal zero to one company, dominating market share of a small market that you think could be big. I am mentally built more like Peter than I am the rest of the venture ecosystem, contrary and at heart, zero to one style companies. So FanDuel spoke to me, I immediately knew I wanted to invest. And Nigel’s in my office, the CEO is me. You know, Paul, I pitch 70 Farms, like I’ve gotten 70 knows. This is why I call Morocco up. Iko Iko Iko. You’re my advisor. This is the biggest no brainer I’m ever going to see how come everybody’s telling him. No, he’s like Martino, that’s what you wait for in the business. When you’re the one person who sees it that clearly right? as big a check as you can that and remember that feeling and hope you get it again in your career.

Dr. Jeremy Weisz 39:26

So have you gotten it again?

Paul Martino 39:28

There are a couple times now where I looked at it and I said, Yep, that Melman says this, that has to happen. And that’s a that’s a good feeling. Let me give you an example. I don’t know anything about K through 12 education software. It’s a notoriously difficult market. guy comes into my office from Montreal, who’s a former school teacher named Philip Kotler. He says, Paul, I have a solution to address educational inequities in K through 12. Like really like why is anybody by that isn’t the same cycles horrible. And I’m like, What? You know what? Paul, I’m the only thing that principals can buy from their title one budget, call up a couple of my principals. Look up, look up all this principals. He’s like, yep, well, we get this evergreen money every year, hold title one. And there’s no qualified vendors to address the solution of inequity in the districts. We buy those products. And Phil, we like a lot, and we’re going to buy more stuff from him. So I go back to my partners, I’m like, Guys, this guy figured out something nobody else did. He has an evergreen budget that he’s got one of the only products that fits in, I know, I don’t know anything about K through 12 software. I know the companies in Montreal of all places, then COVID hits company literally went from like 1 million in revenue to 30 million in revenue in like 12 months. Because education and equity is a top topic, and COVID exacerbates the problem. I mean, literally like one to 30 like that doesn’t happen. You don’t go from one to 30. And like, and again, I don’t have the numbers right. And, and I’m sure your phone would be the guy to tell you that IVP comes in and puts $100 million in the company a year after we invested a $12 million valuation in a backwater K through 12 software company that no one wants to touch in Montreal. But he was right. And I knew he was right. And he convinced me he was right. Because I talked to those principals were as buyers. And that was again one of those moments of my partner’s looked at me. They’re like, there’s one deal. We’re never going to make money in this fund on it that it’s that conflict over that you did. So it’s a hard business, though I’m not ripping my partners. This is a very hard business.

Dr. Jeremy Weisz 41:40

What do you look at when you’re evaluating a company coming in, because I’m sure you get a lot of people coming in pitching.

Paul Martino 41:48

We look for good metrics, and a CEO with mastery of them to look I invest in Ipsy, and cosmetics, I invest in FanDuel and fantasies, I invest in spot hero and parking. I invest in paper and K through 12 software. How can I possibly know about all those categories? answers? I can’t possibly. What happens is I have CEOs who come into my office who have such mastery of a business with already good metrics that I know that I’m underwriting to my belief in that CEO and their understanding of the business as opposed to my understanding of their business business. And so Randy Komisar told me this a long time ago and Bill was an advocate of this Bill Campbell as well. There are three kinds of people in venture there are product pic pickers, there are people pickers and there are market pickers. My partner Richard Bellman is a market picker oh that has to happen. That’s his phrase. He says that a lot of people picker I can relax my judgment on the product and the market because I know how to pick people. Rich relaxes judgment on people and products to rely on the market and the best venture people are one of the three and they know which one they are to play to their strengths.

Dr. Jeremy Weisz 43:01

Hmm Can you talk about and you have to name names here Paul but an example of B that seems like a great company the metrics are there but the CEO like you’re mentioning the people per the people parts not there they don’t know their numbers or whatever you’re seeing in the people part not what are those those missing things that you saw in those instances that you’re all the you know, the other things kind of look great, but you thought the people part was not there? Yeah,

Paul Martino 43:30

I would say so. At Bullpen we have an unusual screening process we start with the metrics and then we move to the kind of do we like the team most venture firms invert it they do it start with a team start with the market we start with the numbers show me the existing business. This allows us by the way to screen a lot of companies people would otherwise not see right we get to see a company like paper because his numbers are great, even though it’s not a sexy space because we invert the screening pyramid but we get to the bottom of the pyramid we have to now answer that question. And I would say that the preponderance of our bottom of the pyramid knows our because we couldn’t get on board with the management team. Hmm, that’s the preponderance if you’ve made it to our partner meeting and you get it now it’s very likely because we could not get on board with with basically the quality of the team you had on the field.

Dr. Jeremy Weisz 44:24

So what do you what have you seen with that piece? Like you meet the team what what are the missing pieces that they are showing you

Paul Martino 44:35

don’t know how to or don’t have interest in hiring that’s one we see is a huge red flag over and over it There you go. Okay, show me your hiring plan. All the products built, you know, I need to hire two salespeople. We’re good. Now, like you need a CMO. You’re the CFO. Oh, have you ever done a retained search? Oh no, they cost too much money. I’ll never do one. So Let me tell you why you do retained search. And if that CEO then goes, Well, I’ll never do that. I mean, that’s, that’s like what you’re telling me you’re not ready to grow up. You want to you want to play in the kiddie pool a little longer. Like I’m here to show you how to play with the big kids. You want to leave the kiddie pool, a couple million dollars in seed money and go get 100 million bucks. You’re my VP. You want to get on the Bullpen train, I’m going to show you how to do that. And if you don’t want to do the things you need to do to get on the bullpen train, hire people grow the team do retain searches, improve your finance function, etc. It’s pretty quick in a conversation with the CEO to see, do they want to do those things? Do they have the headroom to learn how to do those things? Are they motivated to do those things? And as Bill Campbell, we said, Martino you can’t coach height. Are they tall enough? You can give all the training you want. But are they tall enough? It’s tough to get the ball in the basket.

Dr. Jeremy Weisz 45:57

There is a there’s a coachability piece there too, like you’re giving feedback on the spot?

Paul Martino 46:03

Is Yeah, I get I would say coachability is among the single most important factors when we look at a company.

Dr. Jeremy Weisz 46:12

Is there a way to like you growing up like when you go in and you’ve had these mentors and these colleagues and you’ve taken their advice? Is there a way to you know, people who have kids or colleagues as a way to coach Coach ability?

Dr. Jeremy Weisz 46:30

Coach Coach ability Yeah. I was you you I guess, you know, took to that, right? I mean, maybe naturally, I don’t know, is there something from your upbringing that maybe allowed you to be more coachable? Or not? Right? It seems like that’s a big factor.

Paul Martino 46:47

No, that’s right. You know, I’ve never thought about that question. I. So I’m not going to give you a glib answer, because it’s a very deep question is coachability, a learned skill or a native skill? I bet it’s both. But But it’s interesting. It’s immediately obvious the ones that are coachable and isn’t learnable. The people who are coachable know that there’s somebody smarter on a topic than them and want to seek out that smarter person so they can get better. There’s this self improvement part to coachability. That requires you to have an open mind and and a desire and ability to learn new things. Is that coachable or not? I don’t know. But it’s easy to tell when the person has that. Because they’re not afraid to get on the phone with the one person in the world smarter than them on the topic, as opposed to they’re intimidated that they finally got somebody smarter than them about something they think they’re smart about. And that’s just a your brains oriented that way or it’s not. I want to really think about that question because it’s profound. I wonder

Dr. Jeremy Weisz 47:53

if it has to do with failures. I don’t know maybe because along the journey, you experienced certain points where you didn’t win that it humbles it humbles you possibly

Paul Martino 48:07

It could be and look, you go Wow, it hurt losing. I don’t want to do that again. So what can I learn from it?

Dr. Jeremy Weisz 48:16

You know, first of all, Paul, I want to thank you I’ve one last question. Before I ask it, I want to point everyone to go to check out more about your team, their investments, if you are who’s a good fit, like Jeremy, if someone listens to this, this is the this is the type of company that should be contacting us.

Paul Martino 48:37

You’re 12 to 18 people, you’ve raised three to $5 million in prior seed. It’s early, but it works. And you know, you might be able to go talk to the series A funds and get your 20 million bucks, but they’re probably going to tell you to come back in nine to 12 months. That’s when you call Bullpen

Dr. Jeremy Weisz 48:56

there’s certain industries that you like, more than others or doesn’t matter.

Paul Martino 49:00

We’ll do just about anything.

Dr. Jeremy Weisz 49:03

Love it. So last question. Everyone should go anywhere else online we should point people towards or is that the best best spot?

Paul Martino 49:12

Certainly the best place? Yep.

Dr. Jeremy Weisz 49:15

So you created this. I mentioned the beginning this film Inside Game. That seems again, one of these random things when I look at your whole trajectory. So I want to talk about that. And and briefly. You know, have you talked about what you’re working on? The Bankroll Project.

Paul Martino 49:41

Very good to look um, my cousin was involved in one of the largest scandals in the history of betting in sports in United States is my cousin Thomas Martino. Along with Tim Donaghy, he now notorious referee and a third party a big better named James Battista orchestrated one of the most elaborate sports betting schemes in the history of the world. They used inside information from Tim about unreported injuries and bad blood between reps and players to bet on the games that Tim had inside info on, in my opinion, and this is subject to debate, but I’ve known Tim and Tommy and Jimmy since I was born since I was a little kid. I know all three of them since I was a kid. people disagree about this, but this is my opinion, Tim never really made bad calls in the games, the officiating, he didn’t need to. He had so much inside information about that referee was going to call the game that way, because he didn’t like the player. But he didn’t need to influence the games, some of the games that they bet on, they were so in the money than him calling fouls. flagrantly would have only tipped his hand off, he actually probably called fouls against his bet to make it look better, because he knew that that other wrath was going to go hard on the player. So did Tim make bad calls in the games? In my opinion? No. Did he do something? You know, on tour, of course, he was using insider information. He was relaying it to a third party, and they went 33 and five against the spread in the 38 games that they bet on. And Tim insists the two of them he got wrong because my cousin Tommy was too busy too busy smoking his own dope to get the bet, right. But when you have three knuckleheads from South Philly from Delaware County, moving millions of dollars on behalf of some of the largest betters in the world, you’ve got the mafia on one side, you have the FBI on the other and NBA somewhere else. I remember telling Tommy I’m like, could you piss off anybody else with what you did? Like one day, this will make a great movie. And when they got out of jail, that’s what we did. I bought the life rights from Tommy, we got a script written. And I told him I said, I don’t know about making a movie, but it’s an entrepreneurial endeavor. One day if I meet the right person, let’s go do it. And chance meeting with a guy named Michael Pierce, who made one of the great gambling movies of all time called the Cooler with William H. Macy. And he’s like, he literally looks at me goes a venture capitalists from Silicon Valley is gonna hand me a script in a restaurant in Beverly Hills. Oh, geez. How cliche does it get? I tell Peters, I’m a good guy. You have owe you a favor. You’re gonna read the damn thing. He read it. He called me up that night. He says yeah, let’s go make it. And that’s that’s how it happened.

Dr. Jeremy Weisz 52:25

Bring us home with the Bankroll Project.

Paul Martino 52:28

So I’m on the board of FanDuel. For years, we’re advertising against Geico hundreds of millions of dollars a year. I remember sitting there thinking, wouldn’t it be more fun to get the hundreds of millions of dollars then be writing the checks for the hundreds of millions of dollars? So we can think of what Wouldn’t it be better to be the media company getting all the sports betting all the DFS daily fantasy money? So now that there’s all the radio stations doing advertising, similar as what if we did what Alan Busch Nell did when he came up with the idea for Chuck E. Cheese on next generation? entertainment venue? What have we built a restaurant that had cool stuff on the screens, and you could do betting on your phone. But yet celebrities came in and gave interviews and FanDuel and DraftKings wrote us checks the sign up players to their app, you have the best of all worlds, you’d have a look and feel like a Vegas style casino. But no money would change hands. It all be on your phone. The players could come in and give interviews because it’s a restaurant. And why don’t you keep up with one of the best restaurant tours in Philadelphia. I won’t tell you his name because we haven’t announced it. But let’s make it one of his restaurants. And I’ll bet we can make a higher margin than FanDuel does. Because we’ll make 80 to 90% margins on those affiliate fees and sandals and an 8% margin sports betting business. That’s what bankroll is, it will be the first of its kind next generation sports entertainment site is going to be at 19th and just not in Philly, opened in May of next year. It’s going to be awesome.

Dr. Jeremy Weisz 54:05

What’s where should they check out more where online will be the best place? I

Paul Martino 54:08

don’t have anything up just yet. But it’s going to be up there. I think it’ll be on when it’s up. Probably by the time this interview is out, watch some more information available.

Dr. Jeremy Weisz 54:20

All right, well check out if it’s not there, just wait. Paul, I mean the first one to thank you. Thanks, everyone. Thanks, Paul.

Paul Martino 54:29

Great time. Thank you.