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Steven Hoffman 3:01

Well, it wasn’t a straight path. Like so many things in life, it I went everywhere. I like to say, I’ve had more careers than cats have had lives. So I, I’ve done all sorts of different things from being a manga rewriter, to a voice actor, electrical computer engineer, game designer, you name it. I’ve done it, Hollywood film executive. And I finally wound up where I am today, which is an entrepreneur, and venture capitalist.

Jeremy Weisz 3:33

So take me through the winding road a little bit. What I found interesting from your story is initially it sounded like your dad told you the future was computers. And you were like, that’s not my thing, necessarily. I want to do this entertainment thing and movies. And you actually did cold outreach to people in Hollywood. So you were flexing your copywriting skills, what what worked, and the same thing goes probably three a whole entrepreneur, you guys got to get a hold of hard to reach people. So what works, what works for you then when you’re trying to get a Hollywood producers a hold a hold of them, and then what works just to get a hold of hard to reach people.

Steven Hoffman 4:12

I will tell you, I’m a big believer in if you want to do something, and you don’t know the right people, don’t let that hold you back. You can go out there and actually make those connections. And I’ve done it throughout my life. So my first big attempt was when I graduated film school, and everybody knows what a film degree is worth. It doesn’t get you anywhere. Like it’s great when you’re in film, school and making student films, but you go into the real world, and nobody seems to care. So what I did when I graduated, was I literally wrote 150 letters to the top production companies and producers in Hollywood, sent them out everywhere and waited and prayed that somebody would respond to me Well, I got lucky. I got three responses out of 150. The first response that I received was from the producer of Star Wars, Empire Strikes Back. He called me up. So I pick up the phone. I’m a recent college grad, I was like, hello. And he was like, I’m the producer of Star Wars Empire Strikes Back. But I don’t have a job for you. He had no job. He just wanted to say hi, and give me encouragement. So

Jeremy Weisz 5:30

Steve, why do you think he responded? What was it about your letter in it?

Steven Hoffman 5:35

I wrote a funny letter. So my letter was humorous. And I will tell you, humor will get you a long way. Like you, if you take yourself too seriously all the time. Think about it. These guys get hundreds of letters a year, you know, everybody wants to break into Hollywood. So actors are writing them actresses, you know, want to be writers want to be directors, you name it. They’re all writing agents or contacting them. I wrote a humorous letter. And I think that is what got these three precious responses. Well, the first response didn’t amount to anything. But it’s It was fun. I tell you, I’m a Star Wars fan. So it was a thrill. The second call I got back was from Disney. And I was like, Oh, I got it made. So the head of Disney production invites me in. And I start talking, the interviews going great. I’m sure I’m going to get this job working at Disney. And then she asked me a trick question. You know what that is? she asked me what films I like. And I had just come out with a Master of Fine Arts degree from a top film school. And I was into all these art films and experimental films, and you name it, I was into it, because I’d spent three years studying and watching me so I started to rattle off all these directors I like, and her face just dropped. Because I didn’t mention any Disney films. And you know what? After that question, I was out the door, she couldn’t wait to get me out of her office fast enough. So I did not get the Disney job. That’s a lesson to you, when you are meeting somebody from a company, be sure to mention their films.

Jeremy Weisz 7:32

Yeah, I’m sure the same thing happens with you when companies pitching you as a VC and they are maybe not familiar with what you’ve done, or in the genre that you like to invest in. And we’ll get into some of the common questions that you get a lot of on in venture capital world, but tell me about love of mind. Okay,

Steven Hoffman 7:55

well, I will tell you about love of mine. So I did the film thing went through, got worked my way up the ladder. The third time I got that job. I nailed it, and worked my way up to TV development executive. Then I met the founder of a game company called Sega. And they just surpassed Nintendo. So that sent me on a new path. Because I also have an electrical computer engineering degree. So I want I saw the future of games. So I went to Japan, design games for a while, then came back to my home, which is Silicon Valley. And I wanted to start my own company, I had that itch. I was like, I could make my own games. I don’t have to work for anybody, I could do this. So I basically started coding the games myself. So coding everything, it was just me and my wife doing it all together, you know, she would do the artwork, I would do the coding, I do the game design, we produce the game. We our goal was we didn’t know anybody. Again, in this industry. I just keep switching industries. I didn’t know anybody in the game industry. I knew some people in Japan, but nobody in Silicon Valley. And I didn’t know anybody in the venture capital industry. So I couldn’t raise money. We just self funded it. And we uploaded that game, to the internet. And this is the early days of the internet. It was bulletin boards. They weren’t even websites. And the first person who downloaded and purchased our game was named Lord Dec. Now you can imagine the type of person in the early days of the internet, who was downloading shareware games. Well, that was him. We actually invited him to our house for dinner, because he was the first person who bought our game. And we talked to him and he you know, what was

Jeremy Weisz 9:38

the game? Well, the game

Steven Hoffman 9:42

was ironically, very similar to what I do today. So I wanted to make a non violent game that would help people better themselves. So a game that taught entrepreneurship, and it was called Gazillionaire. And it’s this really wacky game like in outer space. Where you’re running a simulated business, a simulated company in space. And kind of

Jeremy Weisz 10:05

like Elon Musk, you’re like,

Steven Hoffman 10:08

yeah, virtually lumbus, we made this game. It was a work of passion, it was something that I just really cared about it was a game I thought would help a lot of people. And I thought would be really fun to play. So I put it out there. And we waited, we got more get to buy it. Other people were buying it online, but small amounts of money, you know, very little, not even enough to live off. And then the game got in the hands of the testers. They’re called quality assurance testers at the largest PC game publishing company in the world at that time, it was called spectrum holobiont microprose. And the testers fell in love with it. And they came to us basically, and wanted to license our game, and they put it out there. So went all over the world. So that first product we did actually became a big success. So Gazillionaire took off, we went on and made a whole series of these games, another one called Zappitellism, another one called Profittanea. And they are all business learning games. And they went out to the general public. And then they went out to schools and universities, the California prison system uses them to reform convicts, and they’re still selling like many decades later.

Jeremy Weisz 11:20

Wow. That’s amazing. So was that the company like under the umbrella of lava mine,

Steven Hoffman 11:25

that was a lava mine that would lava mine was a game company. We felt like we were erupting with ideas. We’re making our own games. And then along comes this thing called the internet, the World Wide Web, like it was brand new. And my friend from film school, she was working in New York. And they she was working with this engineer, and they just done one of the very first online games for Microsoft. And they they owned basically all the technology behind it. So she approached me and said, Let’s partner and bring online games, you know, to the world massively multiplayer online games. And I thought, wow, this is going to be a big thing. Like me, you know, I’m a gamer. I know games. That’s where my nickname comes from Captain Hoff my gamer handle. And I thought, well, let’s do this. So we launched my second company, which is called Spider Dance.

Jeremy Weisz 12:19

Talking about Spider Dance. So I want to also point to so at one point, I did have the at one point, he was the past CEO of Sega Tom Kolinsky. And he was talking about console wars, which was a book at the time talking about Sega Nintendo and the battle that the final generations will be with, check out that episode. And it was just interesting to hear you didn’t see the behind the scenes. I mean, I was playing all those Sega Nintendo. So I love it. So talk about Spider Dance.

Steven Hoffman 12:49

So Tom and I cross paths many times you okay? Yeah. And one of them was with Spider Dance. So we basically launched spider dance. And our mission, you know, was we didn’t know what we were going to do. We just knew we had this technology. But we didn’t know what we would build. So like all entrepreneurs, we had some ideas. So our first idea, which which I thought was great, was we would build a platform, so that anybody out there who wanted to develop massively multiplayer online games could use our platform instead of building it themselves. This seemed like a brilliant idea. But in the world, and like in my books I write I explain this, because I’ve lived through it, it doesn’t matter how great an idea seems in your head, because it has to be right for the time. Like we weren’t early. This was the very beginning, we went out with our platform to all these developers. And they were like, now I’ll just build it myself. Or I’ll give you a tiny, tiny, tiny portion of the revenue to use your platform yet, I want a huge amount of changes for you to customize it for me. So we were so early that it was we couldn’t make a business out of it. So we quickly pivoted, like many startups do. And we thought we’re gonna make online games. Now chat was taking off. People are chatting online, it was a big thing at the time.

Jeremy Weisz 14:11

You got people a sense, see what year what year.

Steven Hoffman 14:16

This is the 90s. Like, like 1995 96, 98

Jeremy Weisz 14:23

was on the internet. This? I mean, there was no Google at that point. I mean, what was around? Oh,

Steven Hoffman 14:29

so it was the when things were just taking off. So Netscape was the big browser company. There were, it was the beginning of Boom, the very beginning of Boom, and all these companies were getting funded right and left. And we were like, in the midst of it, and we you know, our engineer, so

Jeremy Weisz 14:47

your dad was right,

Steven Hoffman 14:48

my dad, my dad was right. Yeah. When he told me to study electrical computer engineering and not go to film school. His initial advice was right on target, but I sort of ended up combining them both That’s what got me

Jeremy Weisz 15:01

You made your way back around.

Steven Hoffman 15:02

Yeah, I did. And so I’m half technology, kind of half creative. That is me. So we started doing this JavaScript and we put it out there. It was called jabber chat. You chat within, there’ll be games as you chat like word games, as you chat with people really fun, really creative. You could plug it into any website. It spread like crazy. We had hundreds of sites using jabber chat, you know, just overnight. And you know what happened? We needed money, because at this point, we’re really low on money. So we decided we were going to embed advertising this, like there was a company that just came out with advertising, not Google. They weren’t there yet. They were another company. And we took their ads and embedded it in, we said, with all these users, we’re bound to make money. Guess what, we waited to the end of the month to get our check. And when our check arrived, it was like $12.58. It wasn’t enough to buy a pizza. There was like so little money. So we were like we can’t make money this way. jabber chat, meanwhile, was doing great if one South by Southwest is the number one interactive game, it was like doing incredibly well. But it was so early in the internet, that we had to abandon it because we’re basically running out of cash. So we heard that MTV was going to launch an interactive television show The first massive one to like millions of people across their whole network. And Ahmet Zappa was hosting it was a music trivia game show. And we thought we could wet our engine, our massively multiplayer game engine with this TV show and create interactive TV where we synchronize them completely. Well, we started calling MTV, just like I wrote letters to those producers. We were we found out the name of the executive producer at MTV. We were, we were calling them asking them, hey, hey, we were Spider Dance. We have a solution for you. Guess what? They never called back. We didn’t get a single call, like nobody called us. So my partner, she actually got invited to speak at CES because of her previous job. So she went ahead and

Jeremy Weisz 17:19

people don’t know the Consumer Electronics Show. That’s a Consumer Electronics Show. Yeah, yeah. Which is huge. If anyone has noticed in Vegas, I don’t know if at the time was in Vegas, but it is massive. It’s like the all the big players are at CES.

Steven Hoffman 17:34

Yes. So because of our project with Microsoft, she got invited to speak there. So she was on a panel and she starts talking about our company, she like Spider Dance is gonna do this spider dance is gonna make interactive television, all this stuff. We haven’t built it yet. But we kind of had the basis for it. And she was talking about it. After her talk, this guy comes running up from the audience pushes his way through and goes, goes up to her and says, You have exactly what I need. I am the Senior Vice President of MTV Interactive. And she goes, I know we’ve been leaving voicemails for you. So literally, that one talk got us to where we needed to be we got they basically funded our company with $350,000 and kind of bootstrap money. And we built the product, took it to market launched it but it was a crazy rocky ride.

Jeremy Weisz 18:29

What do you consider see in this journey, the first big success that you had, you know, cuz I know in this entrepreneur journey, it’s there’s twists and turns. And usually the first thing someone starts is not really necessary. It totally changes is, as the journey goes on. What do you consider the first big success?

Steven Hoffman 18:49

Well, with Spider Dance, as you can see, we went through two different things. And only on the third thing, did we we hit success, did we actually get enough money to get our company going. And meanwhile, we were having a lot of trouble raising venture capital. There were no startup incubators at the time. There was no like real community like there is today with meetup groups and all this stuff in Silicon Valley. And I didn’t know anybody. So we were darn lucky to get that deal. But if you go back to my history of what I was doing, the first big success was bazillionaire. Like that, gave me the confidence got me where I was going and you know, ended up producing a lot of revenue, especially like today, like over its lifetime. It’s been enormous. So, um, however, with spider dance, we still faced like huge goals, like 350,000 seemed like a lot of money when we got it. But we had to build up this huge platform that had never been built out. We had to synchronize in a frame accurate way, what’s online on your PC to a broadcast television network? And I will tell you, if we were a few frames off people could cheat in the game because they would see it on TV before they saw it on the internet. And they would know the answer. So literally had to work every time. And that was an enormous undertaking, very stressful, we only have three engineers, we had one to start with, we hired two more. And I was like helping design the game, while going out and trying to raise venture capital. And we, and I learned a lot of lessons here, like now I teach entrepreneurs how to raise capital, well, I learned the hard way, how to raise capital, because I went out to these investors. And a lot of them would say, Oh, that’s great, that’s great, we want to fund you. And they would do nothing. And I would spend so much time, you know, following after them, following up with them trying to get them to commit. And finally, I got one investor that said they would commit to the deal. They’re this big Hollywood company, you know, venture firm, they have like Michael Milken on the board, and all these other people, stars on the board. And they, they promised us $5 million. So we we spent a huge amount on lawyers for us, which was like $60,000, if you think about our budget, we had very little money. And we negotiated the entire contract, we get down to the end of the contract. Well, we have everything done. And they told us, we won’t give you the money now, we will give you the money after you launch, we want to see if you can launch the product. So you know, this was beta doubly stressful, because everything was hanging on the launch of that product. And at this time when you launch a product. First of all, we had no way to really load test it. There wasn’t AWS, there were no scalable systems. Like we literally we were building it all ourselves in that like a colocation facility and the hardware. And you know, there was no, it’s so easy today, compared to what it was then. So we know what we had no idea what would happen when MTV would start driving in literally a million users onto our platform, you know, how would it even work? So but we just kept building, we had no choice. We had committed to doing this the MTV, we get up to launch date. And the MTV president, Senior Vice President is really nervous, because he’s like, TV doesn’t go down. We’ll put ads like literally for an entire month, they’ve been blanketing MTV with ads, like driving all their customers to it. He goes, this better work. So we put it up there. We launched the show. It goes live on national television, everything’s going great. And then all of a sudden, it crashes. Like, right in the middle of the first episode, like it crashed, the senior vice president calls me up on the phone, and just starts cursing, like cursing me out, like, you know, every word. And, and I said, Just hold on, just hold on. I call my engineers. I talked to him. They said, you know what happened? Somebody is doing a denial of service attack on our network. A denial of service like, this was the early days, like nobody protected against those like we didn’t even know like they were what to do. But our engineers were really smart. So they were just going crazy. Blocking IP addresses Block Block Block Block, and they got it under control. within five minutes, it was back on air. Literally back on air. Everything running out of minutes

Jeremy Weisz 23:20

seems like an eternity. When that’s happening. I’m sure

Steven Hoffman 23:22

I was on the floor dying of a heart attack like, this is the end of our company. MTV would drop us our venture investors wouldn’t invest. Everything we have done. The past nine months of hell we had gone through to get this product live would be for nothing. So it got back on air. Everything ran smoothly. The everybody got to play along the end, we pumped the names of the winners back into the live broadcast went great. So I was so relieved. And we figured out how to block denial of service attacks in the process. We go to the investors like the next day, I was like calling them up. Okay, why is the money we got to do send us a signed contract. They went back to us because they knew we were totally out of money. They knew we like spent everything we had to get to the point and we were desperate. So they came back to us and said we will give you the money. But we want to cut your valuation in half in half. This left me in a really tough position. I was furious. My partners were furious like you don’t I mean, these guys were taking advantage of us when they had promised something else. Do we want them on our board of directors? Do we want to have to deal with people like this? We said no. We you either meet our valuation or we’re walking. They didn’t we walked in. Now at the moment we said it felt really good. Screw you. We’re going our own way. But it just happened to be right before Christmas. All the venture capitals were going away. We had no other parties ready to invest. We were entitled Only broke. That was the worst Christmas I ever had. Or in case my case I’m Jewish, so tonica like, there was no Hanukkah fairy coming around for me. It was really brutal. We were dying. The last year at CES, it was like a miracle. Right? We got the project this year, CES rolled around. My partner and I went to CES. We were so depressed, we could only afford the cheapest crunchiest Hotel in Las Vegas. And we were literally so depressed, we were lying on the bed and couldn’t bring ourselves to even go in and see CES, just went because we bought the plane ticket. And we came back to Silicon Valley, it’s like a month has passed. We have no investors, totally desperate. But we didn’t give up like this. What I tell entrepreneurs like no matter how bad it gets, you just got to keep going. So we went to a company called Macromedia and they are now Adobe. They became Adobe. They merged and became Adobe. So Macromedia at the time, the President invited me and he said, You know, we’re interested in investing. I was like, great, give us the money, because but I want to know, if you can take your platform and move it over to flash flash was their brand new product on the internet, you know, that was going to power, the experience for all the consumers. I said, Absolutely. No problem, we will get an all flash, let’s do a deal. Because Hold on, we can’t leave the round. You have to get a Silicon Valley, venture capital firm, a top tier firm to lead the round, only then can we come in, that kills me like he was promising something that he couldn’t deliver. But he said, I will introduce you to some firms. And we will see how it goes. Well, I knew it was now or nothing. So I said yes. Like this is all we have, literally, we’re going to out run out of money at the end of the month. And we we had already asked our employees to work for free. But we had to pay hosting and all these other fees, they were just like adding up. So we go to the first investor introduces that’s a big venture firm on Sand Hill Road, which is the heart of Silicon Valley venture community invites us in he goes to the meeting with me. Now, this might seem good, but it’s also bad. Because I know he’s going to be listening to my pitch. And if that venture capitalist says no, we are out of business, because like if that venture capitalists pokes holes in our base

Jeremy Weisz 27:23

thinking, Oh, those are good points. Yeah, I didn’t think of that. Yeah,

Steven Hoffman 27:26

exactly. And that’s why he’s doing it all get out of this deal. I won’t introduce him to any more people. So we go into the meeting with a venture capital firm, and I learned show no weakness, like you do not reveal your poker hand to venture capital firms like you show them your hand that they’re gonna screw you like, I just got screwed in the last one. So I’m in there. I’m like, things are going great. We close the deal with MTV, the launch went flawless, blah, blah, blah, blah, blah, you know, we all these things, great things. And at the end of the meeting, he was completely stone face. Like he had no expression whatsoever. And he goes, excuse me, and he gets up and leaves the room. I look at the I go, I thought we were dead. I look at the the the president of Macromedia and he’s just sitting there, he doesn’t know what to make of it. So we’re waiting for him to come back in and tell us to go and he comes back in like 10 minutes later, kept us waiting, sits down, pushes a paper in front of me and said, Here’s your term sheet. I’m ready to sign. I couldn’t believe it. Like I’ve been talking to investors for months and months and months, like an entire year of this. Not the old rag the process out. None of them gave me a term sheet on the first meeting. It was like a miracle. And I was like, why did this happen? Why is he giving me this term sheet? Like, you know, usually they want to skeptical? I was like what is but I remembered something I’ve said during my pitch. And I turned to him. And I was just casually mentioned that the president of Macromedia who’s sitting right there was going to take me to other investors. And they were the first. So I dropped that in there inadvertently. But I realized that he was afraid of losing the deal. Like he believed that if I walked out of the room, that he let me go out, I would take the deal to another VC and he would get cut out. So fear and greed. I tell people that entrepreneurs is all the time, fear and greed. You know, these are what motivates investors, right? They have to be I’ve kind of a rule. investors have to be more afraid of losing the deal than they are of losing their money. If you can make that work, make them more afraid of losing the deal than their money. You can close on the first meeting. It can happen. So he said, not only did he say want to close the deal. In the first meeting, he said he wanted to give me more money than I was asking for. I was asking for 5 million. He said he wants to give me 7 million at the same valuation that the other investor turned me down. So I was like, Great 7 million, you can never have too much money. Like I knew what it was like to starve. I wanted, I wanted a buffer, I wanted insurance. But I told him, I caught myself. And instead of lunging at it, I said, Wait, I said, we only asked you for 5 million, I cannot accept 7 million. He was shocked. Like he looked at me like, What do you say, Michael? I’ll tell you what, if you can close the deal, in the next two weeks, I will take 6 million. So my strategy at that point was basically to set a deadline for closing the deal. The reason I needed it done in two weeks is because we literally couldn’t go beyond two weeks with that money in the bank. So but I made it seem like I was playing hard to get. So when he heard that, he said, Great, we’ll close it in two weeks. And the deal was done. We got the money in the bank Two weeks later. And I’ll tell you for venture round, that’s really, really fast. So you know, the lawyers, everything that’s involved all the terms, we just nailed it. And then we were off to the races.

Jeremy Weisz 31:11

That’s an amazing story. I want to hear what happens next. But before I do, I want to hear you know, you were able to attract an amazing team, you know, a rockstar engineers. And also they kind of had to go on the ups and downs as well with you. How do you go back to the team during these moments or time periods where you know, you have is up? And then this down? What do you go back and say like you said, some of them you go back? And they’re willing to work for free? Right? Which not not everyone, or most people are going to do that. So what do you go back and tell the team to keep them motivated during these times?

Steven Hoffman 31:53

Here’s my rule. And I learned this as I went along, the thing that you cannot motivate other people, they have to motivate themselves. However, you can make it easy for them to motivate themselves. And that is literally by making them feel like this is their project. As much as it’s not your project, right, your job isn’t to motivate them. If it was your project, your job would be to motivate them, but it’s their project too. So they should be motivating you and everybody should be motivating everybody else, right? We are all in this together. So because we have that attitude, that’s what enabled us to do it. And I will tell you, when you are working with teams, it is the number one thing you need to do when things go south, when things aren’t going well, when you know, everything seems like it’s falling apart and you will not survive. The number one thing you need to do is not hide the truth. Like as the CEO, a lot of people, they will try to hide it from their team, right? They don’t want to demoralize them, they don’t want to think all you know, although they don’t want them to start looking for new jobs and jump ship right when they need them. But if you hide the truth, the people find out anyway. But it also creates this, you’re not on the same team anymore. Like as soon as you’re not telling them everything, you’re on separate teams. And they and they no longer trust you. And the only reason they’re going to really stick with you during these hard times is because they feel like it’s their project to and in order for them to feel that they feel like they trust you. You’re in this with them. So I tell entrepreneurs all the time, whatever is happening with your company, it tells your team, like get the team in on it. Like they should know it’s there their company too, don’t they have a right to know? And and you need to go to them and say how can we get through this, which is basically, you know, what we did? Like, we’re like, how can we get through this? How can we stretch our, you know, almost non existent funds to cover this period of time? What do we have to do? And everybody pitched in?

Jeremy Weisz 33:52

At what point did you become a VC.

Steven Hoffman 33:57

So when I became a VC much later, like much later, I did, you know, venture startups and then I started mentoring startups and helping them I launched founder space, which is our startup incubator and accelerator. And as I saw really good companies, naturally, I was tempted to invest in them. And so I did that. My being a VC, it’s really nice because it I’m on the other side of the table, but I also have a really deep understanding of what the entrepreneur is going through, you know, and so I can both emphasize with them, give them advice, and really understand a lot of times whether their team is functional, whether this is a team that can take the ball and really run with it, or whether they’re going to have problems in the future.

Jeremy Weisz 34:43

So I want to hear about why and how you started Founders Space.

Steven Hoffman 34:49

founders face that I had done three venture funded startups. And after my third one, I was taking a break like I needed a break and all my friends started to come to me because, you know, they were now doing startups. Everybody seems to be doing startups and they were like, kept it off, kept it off helped me. Like, I want to raise capital, I want to put together this business plan, what do I do? So I would sit down with them over coffee and just help them out. And they started to ask me a very specific questions. And so I started to answer them. And when I got home, I said, Well, probably a lot of other entrepreneurs need these. I should put them up on my blog. So I created a blog, I called it Founders Space, I started posting the answers to all these questions I was getting, and more and more entrepreneurs that I didn’t know started to come to me. And literally, we started to arrange roundtables where we introduced them to investors and marketing people and lawyers. Then we found a space in San Francisco, we set up our own incubator and accelerator space. So we had startups come in there for we develop programs. And this was a long time. This was starting back in 2011. So a long time ago. And we just kept doing this. And then we started to get contacts from all over the world who were coming to us, you know, asking, Can you come to China? Can you come to Europe? Can you come to Japan, all different places to help us out? So we started to expand internationally. And that’s how we grew. We basically our mission was to become the gateway between the rest of the world and Silicon Valley.

Jeremy Weisz 36:27

You know, when I was doing research, Steve, it seems like Founders Space is pretty well known in China. We are and that’s

Steven Hoffman 36:35

a whole nother story. It’s, it’s crazy. You know, I wasn’t planning on doing anything in China at all. I don’t know Chinese, I never studied, you know, Chinese history or anything. I was invited there, because Founders Space is doing well. And somebody invited me to come over and give a talk. And I thought, wow, free trip to China. I’ve never been there. Let’s go. I you know, I’m curious person. So I took them up on their offer, flew to China, gave a talk met a few people came back, I thought that was the end of it.

Jeremy Weisz 37:06

Then I talk about what what do they want you to talk about,

Steven Hoffman 37:09

they wanted to talk me to talk about founder space, like how to do an incubator. So this was right at the time, when China was just starting to launch their own startup incubators and accelerators. I mean, Alibaba was a big hit. You know, they had Tencent WeChat, those who are going, but they didn’t really have a startup ecosystem, like there wasn’t the support there. And they decided, oh, we want to have startups to just like everywhere in the world, but their China, their huge country. So they invited me back to give another talk. And I went back there and gave another talk. And then all these people started to approach me to do deals, like they were like, we’ll take your Founder Space into China, boo, boo, boo, boo, boo. Now, I don’t know, Chinese, I don’t know, China, how business is done in China, I was very wary. And so I was like, I’m not gonna just hand you all the rights to Founders Space. I don’t know you, I don’t know what’s going on. But I was interested in the opportunity to grow founder space. So I ended up taking my time. And I would meet with people, we do events or small things like I was doing in other countries. And then I saw an opportunity to actually launch with our partner, the first Founders Space, they’re in Shanghai. And it just started to take off at the same time, I published my first book, Make Elephants Fly, which is all about how startups innovate, come up with a big idea and get it off the ground, make it fly. So that book had just come out in the US. And it was just an A Chinese publisher picked it up, like right away, because I was getting known there. And then I gave another talk, which I thought was just like all the others. But literally, after I gave that talk, like, several weeks later, somebody came up to me said, you know, you’re really famous in China, like you are really famous. And I was like, Are you serious? I didn’t believe them. And I just kept going about doing our business. And it turned out that that talk was broadcast across all of China. And everybody was like buying my book, because it had hit just at the right time. And everybody was hearing about Founders Space. And we were just about to open and all these new cities, and all those things converged at the same time. And I if I became, you know, super well known there, and our business just grew like crazy. And so that was my entry point into China, which as we know, is a parallel market to the US sort of like a whole nother it’s a whole nother universe like very, very different. And so for me, it was just a fascinating experience, to learn about, you know, the culture, the people the way business is done, which is just radically different than anything I had experienced anywhere else in the world.

Jeremy Weisz 39:50

I know there’s different ways people can engage with Founders Space and get involved with Founders Space. Can you break down a few of the ways that people can engage With the company,

Steven Hoffman 40:02

there are a lot of ways to engage with us. So you can come to our site, we have lots of free content up there, like my I’m sort of I see myself, I wrote the books, because I’m passionate, as you probably can tell, I’m really passionate about what I do about educating people. I think it’s my father and me, he was a professor, I like to educate. So we just put up tons we have like online startup program, and we charge for those, but honestly, anybody who can’t afford them, they’re free. Like we make it free. If students are free, nonprofits are free. Or if you’re on a very limited budget, like I was, when I started my company, it’s free. So you can go there, get our online startup program, you can go there, we have a community, we have a way for people to apply. And we have a big network of investors now, both in Silicon Valley in the US and around the world. So you can apply for investment, we have a new product we are launching with one of our partners. It’s called it’s a startup that we’re kind of working very closely with. It’s really cool. It’s called And it is an app. And if you could imagine Tinder, crossed with Angel list, that’s it, you know, entrepreneurs upload their video pitch, and investors can flip through it in their free time. And it’s super addictive. Like I’m an investor in like, it’s so easy to like, go through all these video pitches. And then you find the startup you like, and you contact them.

Jeremy Weisz 41:28

That’s awesome. So Intro.VC. Yeah. And then but you also have arm that we you advise companies, right? And you make investment to with the network.

Steven Hoffman 41:38

Yeah, so we usually co invest with other investors in our network. So we will, a lot of them are angel investors, we tend to come in pretty early. Some are early stage VCs, we also have later stage VCs for the more mature companies. And it’s really exciting. Like we have had some amazing startups in there that you The thing I love about working with entrepreneurs is that I’m teaching them or I’m sharing my experience with them my knowledge, but they’re also teaching me because each one of them is an expert in their field, like what they’re doing. And I learned so much. So I can give you a few examples, if you like.

Jeremy Weisz 42:13

I’d love to hear some. Okay,

Steven Hoffman 42:15

so one of the companies I just love is called Echobot. Now Echobot was they came out when AI was just coming out, like just coming into vogue. And they basically watched the very first ETF exchange traded fund powered by AI. So it was like it’s entirely AI powered. And when they did this, it just took off Bloomberg, everybody like was with was writing about them. And they just took off overnight. And they they they raised, you know, investors in their ETF went very quickly to a billion dollars like that ETF. And then they saw an opportunity that was even bigger than their ETF. And that was to launch an entire AI powered portfolio management platform. So they’re working now with big corporations out there who have these investments that want them managed by AI and providing that whole platform. So they’re really cool. Another one is called Chooch AI. And today AI has gone out there. And they have created a platform for visual analysis like so you get images, and actually analyzing them with AI. So they can do predictive models of things that will happen, like the spread of forest fires, things like that, that are really, really powerful. And again, they’re a platform, so they’re putting it out there for any company that wants to use it.

Jeremy Weisz 43:40

There’s another one that we were talking about last time called letting Grub Market.

Steven Hoffman 43:45

Oh, yeah. grub market. So grub market, very interesting company. They have raised, I don’t know, a lot of money. Like, I don’t want to quote, but I know it’s well over 25 million because that was a while ago. And they do. They basically this was a Chinese entrepreneur coming to the US. So the other two are us entrepreneurs. This is a Chinese entrepreneur coming to the US. He basically figured out how to do from the farm to the table, basically a very efficient supply chain, an online e commerce site. So people want to order, you know, fresh farm goods, get them on their table, they can do that.

Jeremy Weisz 44:24

I’m sure you get this question a lot, Steve, which is when a company approaches you, you’re looking at, you know, Intro.VC or talking to a founder, what are some of the key components you look for? Or maybe some hard nose? When you see like this is not a fit for me as a VC?

Steven Hoffman 44:44

Yes. So unfortunately, as a venture capitalist, we have to pass on most things. Like literally, you we can only keep track of so many deals we can only like help people on so many deals like if I invest in a deal. I want to participate like I Want to actually add value that’s more than my money. But that requires my time, which is limited. And that’s true of most. So you know, they can only sit on so many boards. So when you go to VCs, usually their money is much more flexible than their time, like their time is what’s really precious to them. And that’s why they are very careful about what companies they pick. So when we, when I choose a company, it’s a pretty high bar. So I want a company where the first thing I want, I want the, I want to look, and it can be very early stage, even pre revenue, even pre traction, you know, growing, I can still invest. But I want to see one thing, I want to see that that CEO has passed my first test, and this is the most important test that they’re getting off the path in the first test is that you went out there and built a stellar team, like you are not doing this alone. Because I will tell you, it’s hard enough to do a startup but doing it alone. It’s really, really hard. So my test is, you know, I think that the essential quality to be a great CEO is leadership, like you can fail on everything else. But you cannot fail on leadership. And the first criteria to judging a good leaders can they bring on amazing people that could have been working for Microsoft or Google or Facebook, but they turned down six figure jobs to come join the startup because they believe that this is going to go somewhere. So I look at who they attracted, why those people joined, I talked to them. And if those align, then I think, well, we can figure it out, we can figure it out together, they may not have exactly the right idea. But that’s a really good start. So that’s the first criteria. And then, of course, we look at all the things we look at how big the market is, do they have any unique technology advantages? What you know what, if they’re literally I have two rules for startups, two fundamental rules, if you’re going to succeed, there are only two ways to do it. Either one, you look at all the other products out there on the market. And you figure out a way, usually using technology to do something not incrementally better. Because if you do something a little better than all your competitors, you’re going nowhere, you’re dead, like the start dead. But you figure out how to do it exponentially better an order of magnitude, because it literally takes that much to get customers to switch. Nobody wants to switch products, we all happy with what we’re using, we will only switch if there’s a super compelling reason. So exponentially better. And if you can’t do that, the only other way to break through is to do something different. There are new needs being created new demand out in the market all the time, because markets are shifting, trends are changing, technology is emerging. There are always new trends out there. And you as a CEO have to if you can identify an area that is untapped. This huge supply of demand. And you can bring it to us and show us that you can meet this need. Boom we’re in.

Jeremy Weisz 47:55

See if I have one last question. First of all, thank you. Thanks for sharing your stories. Amazing. Everyone should check out to learn more. My last question, are there any other places online we should point people to to learn more? Check out more.

Steven Hoffman 48:10

So yeah, you can go to if you want my book, which goes, it’s written like I talk. So it’s very conversational, but filled with information like this, go to

Jeremy Weisz 48:23

That’s my last question. Steve Surviving a Startup, I would love to hear a favorite story from surviving a startup. And if people want to check out the book, then go to what’s a fan favorite story in the book.

Steven Hoffman 48:39

So one of my favorite stories that I described in the book is Halo Top ice cream. Now here, it’s ice cream for those of you who don’t know it, they’re a startup, they basically launched this ice cream. And it is basically ice cream. It’s not good for you. But it’s much less bad for you like it doesn’t, you know, they don’t have sugar in it. And it’s, you know, you can eat a lot more of this ice cream, and be a lot more satisfied without putting on the pounds. However, to launch this company, those guys went through hell. Now I won’t go into the whole story because it’s a really dramatic story. But they broke every rule. I give entrepreneurs in the book like they broke every rule. And I put the story in there to show you that I’m going to give you a lot of rules in this book. But they aren’t. They are just rules of thumb like they tend to work most of the time, but you can break every one of them if you believe in your company enough. Now, one of the cardinal rules I give people don’t borrow money from friends and family. This company did like it because, you know, most startups fail. That’s why I call it surviving a startup like 90% of them just

Jeremy Weisz 49:46

when you see them at Thanksgiving and right

Steven Hoffman 49:49

after the rest of your life, if they’ll even talk to you after you lose all their money. So I just think don’t borrow it from family and friends if you want to keep them like get somebody who’s an experienced investor doing that. They know what they’re doing. Your family and friends are just being nice, or they’re being delusional like you are. So don’t take the money from them. I also said, don’t take money from loan sharks that super high-interest rates. Again, Halo top did this. But if they hadn’t done this, they literally would have died because they came to so many near-death misses, they ended up at the end of the day, breaking through, and I’ll tell you what enabled them to take these big risks. Number one, they were making a product where they were the customer, the founder of that company, really wanted this ice cream for himself, like and he worked on formula after formula after formula, trying it on himself and all his friends over iteratively over and over and over and over. And he knew he had a great product. So he was willing to go all the way he knew there was a demand for this product, he just had to break through. So if you’re an entrepreneur that really knows it, you’re not just fooling yourself, like a lot of entrepreneurs, we fall in love with our products, but love is blind. We don’t know. But if you can really see clearly that you have a winner then you can take those risks you can break all the rules.

Jeremy Weisz 51:06

Steve you only be the first one to thank you everyone check out check out and in many more episodes, thanks to you. So thanks so much. And thanks, everyone.

Steven Hoffman 51:17

Thanks, Jeremy.