EPISODE 192

Silicon Valley CEO Kevin Hartz Has “one” Great Idea For The Future of SPACs

43 minutes · August 31, 2020

Kevin Hartz, Co-Founder and CEO of one (NYSE: AONE.U) is a familiar face in Silicon Valley. The co-founder and Chairman of Eventbrite (NYSE:LMT) is back with a new SPAC, and he isn’t shy about why his new vehicle might offer a great fit to help a privately-held disruptor bridge to being a publicly traded company. Kevin stepped inside the ICE House to lay out how SPACs like his “one” are evolving to meet the needs of companies that are ready to tap the public markets in an innovative way.

Speaker 1:

From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York city, you're inside the ICE house, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years.

Speaker 1:

Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.

Josh King:

Let's all consider for a moment the word disruptor. It's been employed so much in financial journalism and convened events in the past few years that I dare say it may have jumped the shark. We apply it to so many companies, products, ideas, or people working in tech that the intended gravity of the word is maybe somewhat diminished. But maybe just a little redefinition is an order. A disruptor need not work completely outside the box. Sometimes the innovation comes just in how the box can be used. Let me explain what I'm talking about.

Josh King:

So back in February 1996, Muriel Siebert, a true disruptor, who is not only the first female member of the New York Stock Exchange, but led the way in embracing discount and online trading that directly created today's no-fee retail market, made a major merger announcement. She was going to join her private brokerage firm, Siebert Financial, with the publicly traded company, Jay Michaels.

Josh King:

Now what's so disruptive about two firms merging? Well, Jay Michaels, wasn't a financial company. It was a defunct furniture store in the process of liquidating its holdings. Siebert decided to combine her profitable brokerage with the shell of Jay Michael's via what's known as a reverse merger as her way of going public. Reverse mergers weren't unheard of in the 1990s, but some viewed them as something companies did try to hide something. Muriel caused quite a stir on Wall Street, as the decision came under scrutiny from the SEC, was attacked by her competitors, and faced harsh coverage from the press.

Josh King:

To quote the New York Times coverage at the time of the transaction, I'm going to quote it here, "By cultivating the same brash attitude that characterizes Wall Street's most successful men, and by never taking no for an answer, the 63 year old entrepreneur guaranteed that the women who followed her into high finance would never have to sneak in through the back door, which makes it all the more puzzling why Muriel Siebert and Company has decided to go public in a backdoor way, usually reserved for shadowy penny stocks."

Josh King:

The successful merger was disruptive at the time, but in hindsight, establishes Siebert's disruptor credentials by changing how the transaction was viewed. Siebert Financial legitimized the process of tapping the public markets through a reverse merger, laying the groundwork for what we now know as special purpose acquisition companies, or SPACs, that have taken the market by storm. In just the first eight months of 2020, the New York stock exchange has listed 40 SPACs that have raised a combined $20 billion.

Josh King:

It's not just the raw numbers, though. The companies are backed by the biggest names in finance and tech, including our guest today, serial entrepreneur, Kevin Hartz. Kevin joins us in a minute to talk about one of the exchange's newest SPACs that he listed along with his business partners to provide a vehicle for a tech company to bridge the gap from private potential disruptor, to being a publicly traded company. Our conversation with Kevin Hartz on SPACs, the tech sector, and one, comes right after this.

Speaker 3:

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Josh King:

Our guest today, Kevin Hartz, the co-founder and CEO of one. That's NYSE:AONE.U. He's also the co-founder and chairman of Eventbrite. You can find that at NYSE:EB. It's a service that I use all the time. He was Eventbrite's CEO from October 2005 to September 2016, before serving as a partner and entrepreneur and residence at Founders Fund, a venture capital investment fund. And prior to founding Eventbrite, Kevin was the co-founder and CEO of Xoom, a leader and pioneer in the consumer to consumer international money transfer industry, which serves over 160 countries worldwide. Xoom was a publicly traded company until PayPal acquired it five years ago for a cool $1.1 billion. Over the course of his career, Kevin's also invested in the afore mentioned PayPal, as well as Trulia, Airbnb, Pinterest, Uber, and Opendoor, among others. Kevin, welcome inside the ICE House.

Kevin Hartz:

Thank you so much, Josh. A pleasure to be here.

Josh King:

one, listed here on the NYSE, but unlike your past listings, you had to oversee the process remotely. I'm curious, looking at your backdrop, where you're joining us from and how did the day of listing go?

Kevin Hartz:

Well, I'm joining you from the war room here in San Francisco, California. This is the room where, starting in early March, on the onset of COVID, Eventbrite took a real challenged hit with the shelter in place orders. And I know this room intimately because Julia, the CEO of Eventbrite, and I, who's my wife as well, spent nearly 90 days held up in here, battling away. It reminds me of these good old days of the past.

Josh King:

Food wrappers and leftovers will certainly add to an aroma for a certain room that serves as a war room. I know this from my many years in politics. Kevin, what was your go-to for those initial months to try and keep yourself nourished, when most restaurants were closed?

Kevin Hartz:

Well, you're right about the strange smells. What happened is as soon as Julia had shored up the business and raised over $350 million in converts, she moved out of here because it just smelled too much because of me. But in terms of food, my go-to was to eat healthy. So I had a kale shake in the morning and an espresso, and then I would have a soup in the midday and then a nice home cooked meal at night. And we did that. It became a ritual here. So no junk food. This is the new age of startups where the healthy choice is the answer.

Josh King:

Well, even five months in, our listeners can't see you on the video feed that you and I are sharing, but you do look great, Kevin. And you've just come through an IPO. So you must be doing something right. How did the listing day go?

Kevin Hartz:

The listing day was so exciting. We had an exhausting day of road shows, but we're energized by it. The roadshow started at 5:00 AM with a discussion and a presentation to the Goldman Sachs sales team, and then 30 minute increments after that. And I should point out, this is one of the reasons that this new old vehicle, the SPAC, is revolutionary and is coming into prominence very quickly. And that is that you can do a road show in a day in these quick meetings that... With Zoom conferencing, that just couldn't be done even a year prior, or even a few months prior was not standard at all. I think Eric from Zoom Systems was the first to do an all video road show right before COVID. And now that is the norm. And so it's a reason why you're seeing so many SPACs coming to market so quickly.

Kevin Hartz:

DocuSign, I'd argue, is one of these other disruptors that you can get through the contracts and agreements and so on in a very fast manner. So it's an exciting world that helped us move from our org meeting for one on June 18th to being a public entity on New York Stock Exchange on August 18th.

Josh King:

Let's travel back a little bit, Kevin, to the time before there was Xoom, before there was DocuSign, where there used to be mountains of paper this high to file and to sign in terms of your contract before there was any way to do a video conference back and forth like you and I are doing now, certainly not a road show. While Wall Street was grappling with the nascent impact of the internet on trading and Muriel Siebert was repurposing this furniture company as a SPAC, that I talked about in the intro, you were already cutting your teeth with your first entrepreneurial ventures in the Bay Area. What impact did growing up in and around Silicon Valley play in your career?

Kevin Hartz:

Well, I take a turning point. I grew up in the Berkeley Hills and went to undergrad at Sanford University. And it was really just the caliber and curiosity of other students. And in a lot of ways, I was unaware I was a dual degree holder in Applied Earth Sciences and History, a kind of odd combination. And so I was somewhat unaware of the Valley, but then graduating and getting involved in tech was really that step over into what I really loved, and that is to learn. And you're around so many bright people, so many people that really are looking towards the future and trying to make things better in the world. And that's just attracted me.

Kevin Hartz:

So I would just say I'm so lucky in a lot of ways to be at the right place at the right time to go through this Renaissance, almost Medici period of great innovation and great thinking here in the Valley. And now, by the Valley, I mean from Seattle to Stockholm. There's great companies that are blossoming around the world, and we think those should be out on the New York Stock Exchange. And we think the SPAC is that vehicle to get them there.

Josh King:

Can't agree more, Kevin, with that. People who just want to learn, get that passion and desire from somewhere. So I'm curious what brought the Hartz family to the West Coast in the first place?

Kevin Hartz:

Well, my father actually went out to Stanford University as well, and he did that in the late '50s. So was out here and practiced law, was involved in democratic politics in the Bay Area, an attorney. So I, fortunately again, just ended up at the right place at the right time.

Josh King:

So according to Forbes, I think, Kevin, Orinda, which is where you grew up, is the second friendliest town in America. I mentioned that as a backdrop to a story that I read that you, I think, forged a letter saying that your high school would be closed because of asbestos. How did such hijinks play out with your attorney father?

Kevin Hartz:

Well, my father was involved in overseeing some asbestos litigation. And so I had kind of learned a bit from him and wrote a letter signed by the principal that they had found asbestos. And we coordinated this with Senior Cut Day. And as you can imagine, that didn't go down well. I was the student body vice president and had gotten ahold of the stationary and gotten ahold of the nonprofit postal stamps. And that's actually, it turns out to be a federal law violation, which I love to talk about the day after being listed on the New York Stock Exchange.

Kevin Hartz:

So we were called into the postmaster's office once they found out it was us. When I was asked if it was me, I can never not tell the truth. So I had to tell that I was involved in it and we were suspended five days and thankfully not prosecuted for a federal crime. But it did create chaos and mayhem in our high school, at Miramonte High School, where the seniors knew not to show up. And it was a puzzling day for the administration, but then a very exciting day for us seniors that were already into our colleges and off to the next great thing.

Josh King:

This is senior day, you mentioned that you eventually were on your way to Stanford. And you mentioned some of the people that you learned from at the time. I'm just going to drop a couple of names. People may have heard them. Peter Thiel, Keith Rabois, David Sacks, all these guys would go on to found PayPal. What was campus life like at the time?

Kevin Hartz:

It was a different period in the sense that there was a lot of open just debate and discussion in a friendly and positive way. So it was a period where there were strong views on either side, as we see today, but there was a lot of open discourse that we unfortunately don't see today. I was the chair of the Stanford Democrats. So I always like to point that out because here in the Bay Area-

Josh King:

That's not what Peter was for sure.

Kevin Hartz:

Yeah. Peter was definitely on the other side of the aisle, but he was a really unconventional thinker. It's those unconventional thinkers that really have an impact on the world. And he certainly has with bringing together the so-called PayPal mafia, this diaspora of great folks that include David Sacks, who has had a product at PayPal and now Craft Ventures. And David had also started a company called Yammer, which was bought by Microsoft for over a billion dollars.

Kevin Hartz:

Keith Rabois, early executive at LinkedIn, as well as PayPal, early COO of Square, and now over at Founders Fund, which is partnered with Peter Thiel. We've got Roelof Botha, who's out of Stanford Business School, who's on our... He was on our Xoom, the remittance business board of directors, as well as being Eventbrite lead director today. And then you have this other phenomenal people that Peter and Max Levchin from the University of Illinois brought on, like Elon Musk, Jeremy Stoppelman at Yelp, Reid Hoffman, of course, the founder of LinkedIn. An extraordinary group of people that have done extraordinary things for the positive in the innovation economy.

Josh King:

This kid from Orinda, I'm curious, did you have a sense at the time about the magnitude of some of the ideas that these guys and these people that you were students with were having, including PayPal, the companies you've mentioned also Google, you mentioned Reid Hoffman, Netflix, and others? Did you sense of where this could be headed back in the '90s?

Kevin Hartz:

And Orinda, by the way, it might be the second friendliest, but it's definitely the first most boring place to live. I kid a bit, but not much. That in Orinda, I think, the world you saw was banking and lawyers and doctors and so on. And those are just terrific career paths, but it was really this exposure at Stanford. And then coming back to the Bay Area after graduate school that I realized I was seeing the beginning of a revolution and it's really what our jobs are here in the Valley, again, in the innovation economy, is to see these future trends and to lean into them. And it was also so intellectually stimulating, the people were so bright. I enjoyed working with these people, alongside.

Kevin Hartz:

So it's been really a thrill. I've been very lucky to have gone through this. And it's what I see with SPACs today is that this strange vehicle that had been associated a lot with this four letter word has now come into the mainstream and with our A-Star parent company and our first SPAC, one, we're looking to partner with a great company and really help that company get out into the public markets and really shine in the light. And we see this, again, as a much broader phenomenon. That SPACs will be a great new vehicle to get to the public markets at a time where we're swinging back from staying private at all costs to now companies and founders and CEOs wanting to be in the light of the public markets. It was during the period of when Microsoft went public in the '80s and Amazon in the '90s, Amazon was just around for a couple years before going out. I think they were founded in '93 or '94, went public in '96 at a $500 million market cap. Today, approaching over... What? It's over a trillion and a half approaching, 2 trillion.

Kevin Hartz:

So companies need to be out in the public light. I think it was frowned upon 10 years ago and companies are now staying private as long as... Or were staying private as long as 12 years, and now we're radically shifting back. And the SPAC will be that facilitator. So we're just at the tip of the iceberg. We're at the top of the first inning. We're really excited to see how that we're just at the start of this revolution. And it's our job in technology to spot these trends, even in the financial asset side, as you pointed out, about the brokerage house, the discount brokerage house.

Josh King:

I want to see if I can hone in on where one will look to partner in a couple of minutes. But before we get there, before we get to 2020, I still want to hang out around the turn of the century. It's 2001, you've already started and sold your first startup connect group, .com 1.0 has come and gone. I have my relic here from pets.com, my old sock puppet that I keep on my memento shelf. But in 2001, you started Xoom with Alan Braverman to start this, to try and solve the century's old problem of easily transferring money between countries. Where did that idea come from and how did the company grow?

Kevin Hartz:

Well, I had the good fortune of being involved in PayPal as an investor. I would say I was a wannabe PayPal mafia. And when we saw this amazing team of people building this amazing business that grew so fast, it was clear that it was more than just a payments company, that it was a payments platform. And there's a big distinction there. A platform really has the means that it can grow into so many different areas that developers could build on top of it and really expand the reach.

Kevin Hartz:

And we've seen that whether it's Microsoft with Windows OS, whether that's apple with iOS and all the apps from Uber to Airbnb, that that made it so powerful, expanding a company through third party developers was really key. And so I had been speaking to David Sacks over at PayPal, and they were working on an API for PayPal and Alan Braverman, my business partner, and I were the first to develop apps on top of that.

Kevin Hartz:

And our urging from Peter Thiel and Roelof was actually to go after Western Union. And we discussed and debated it at length. Western Union is a company that's been around for 100 years, has high fees, it was primarily offline. And we decided to bring the remittance business into the future. We wanted to really help immigrants that were sending money back to their families and doing so faster, cheaper, and better, which disruptors like to do.

Kevin Hartz:

And it was very contrarian. We got a lot of pushback from narrow-minded investors that said, "Well, immigrants can't send money, or they won't be able to get it online." And lo and behold, the business took off and it took off with the aid of writing on the top of PayPal's great growth and success. And that was when I first formally partnered with Roelof. He had moved over after the acquisition of PayPal by eBay. He moved over to Sequoia Capital, and I think we were his first investment, his second investment being YouTube.

Josh King:

So following the sale of Xoom to PayPal, you do something slightly unconventional, you referenced it at the beginning of our show. You and your wife, Julia, took on the issues involved in ticketing, which was characterized by another sort of Western Union, legacy industry where there were high fees, customer service was sort of lacking, and there wasn't a whole lot of innovation. How was Eventbrite NYSE:EB born, and what was it like to start a company with your spouse?

Kevin Hartz:

Well, that's a great question. It was the same thesis as you pointed out that... So I'm not too original. It was a payments business. It was a transactional business of sorts. And what we would do is just look at these lumbering incumbents. The traditional ticketing market exactly was that. High fees, little innovation, and terrible service to customers. And we wanted to change that. And we also saw the opportunity to not go after the biggest venues, but to go after this very unserved nascent market of everything else. Of those that are holding everything from food festivals to triathlons and elsewise. And we built this platform with that audience in mind. And again, we built this off of PayPal. And so again, that platform thesis was really important, understanding transactional businesses, and looking to innovate in a place where there was very little innovation was just the formula.

Kevin Hartz:

One of the many aspects that were great and fun about starting this business is we decided to do so with Julia, my wife, and she had come out of the entertainment industry. She had worked at MTV. When we met, she was working on the show Jackass, which besides her beauty and poise was a deal closer for me. What had happened is that we got engaged and she was moving up here and was going to work for a media business that was moving on the internet up here. And we just started talking about what was to become Eventbrite. And we joined up with our third founder, Renaud Visage, and the rest is history. We built and crafted that out of a small telecom closet that we were given at no cost by a really wonderful family friend and landlord of ours, Gary Gomez, and built that business to where it is today and through the exciting IPO on the New York Stock Exchange.

Josh King:

So, Kevin, I do want to ask, because we started talking about your war room there for Eventbrite, and what has happened in COVID. And as it relates to the events industry, a lot of people are now listening to more podcasts, listening to more spoken audio, certainly watching stream of Hamilton on Disney Plus rather than paying for the ticket on Broadway, or going to events at large, whether it's a music festival or anything else that would be ticketed and bring some revenue along with it. Just curious about how you managed the crisis and the war room and where you see the events space going from here.

Kevin Hartz:

Great question. So COVID has hit everyone. Really hit the live entertainment and events and ticketing industry quite hard. And we not only play in this live experiences economy, which was shut down entirely during COVID, but also small businesses which were especially affected. Think of the independent music venues, think of these craft festivals and otherwise. So it was an incredible experience of seeing the business in January and February, growing ahead of our expectations super fast, and then collapsing. All the music stopping. I just had never seen a dislocation of this magnitude before, where we actually had in March negative revenue, more refunds than sales. And I don't think there are many companies that have ever gone through a crisis like this. And thank God that we had Julia at the helm of the business. She was incredibly... She held that grace under pressure.

Kevin Hartz:

She was not affected or impacted by the fog of war with emotional decision, but she had to make really incredibly difficult decisions. She shorted up the business within 90 days. We had to see a lot of our friends and colleagues that we worked with for sometimes a decade depart, but she did restructure the business, taking out 100 million in operating in expenses. And then we added 350 million to the balance sheet. And to be honest, what I saw from that is that that just wouldn't have happened in the private markets. We had so many capital source options in the public market. We had a lot of those that knew this was a temporary dislocation. And just like the Spanish flu of 1918, where you saw baseball teams wearing masks and playing to empty stadiums as you do now, or you saw people sheltered in place for extended periods of time, you saw the roaring '20s come out of that.

Kevin Hartz:

And that was a time where there was almost this, maybe, hedonistic attribute where people were so excited, maybe more than hedonistic, but excited to be back in one's company. It's what is fundamental to human beings is to gather. So we'll be back. We'll be back when it's safe, gathering in droves. However, we don't know when that is going to end. And that's the benefit of the public company of being able to raise that pipe, the convert, and so on, really allows us to build and craft our business and prepare for that time. But at the same time, Renaud had the foresight, our third co-founder, to begin building over a year and a half ago or so an online event site. What we saw was service and what we saw was that one of our most popular categories was webinar or online when you pull down for a location of your event and typically put in an event venue location or address or so on.

Kevin Hartz:

And this term, online, was one of the most popular. So Renaud built what became our online offering. As soon as COVID hit, we saw that jump 3,000%. We were seeing tens of thousands of events published per day. And we were seeing so many of our creators alone, that were on our platform, holding events in IRL, in real life, then move online and be able to reach a much larger audience. And I think that's going to be something where you see a hybrid style where these event creators, as we call them, now can reach a broader audience and still be offline.

Kevin Hartz:

We have a... I think it's a Brooklyn based cheese shop that held these classes on cheese tasting. And now you can join online and they'll send you the cheeses and you can do that over Zoom from the comfort of your home. So we've seen this great adaptation of the business, but we also are seeing those silver linings of the world coming back. We saw great growth in New Zealand, as shelter in place is curving. So we see that people want to come back and come back in droves, but we won't do so until it's safe and sound to do so.

Josh King:

Well, we don't have any gourmet cheese here inside the ICE House, but we do have Kevin Hartz, IRL, in real life, co-founder and CEO of one. That's NYSE:AONE.U. He and I will discuss how he's taking his career of experience to one, and what comes next for A-Star. That's all right after this.

Speaker 3:

In our time of greatest need, we want to thank the true heroes around the world for stepping up, for taking care of us and keeping us safe. With your expertise, your commitment, your sacrifice, and your selflessness, we'll work together to create a brighter future. And we thank you for reminding us what really matters. From all of us, thank you.

Josh King:

Welcome back. Before the break, Kevin Hartz, the co-founder and CEO of one, NYSE:AONE.U. We're discussing with me that his career and how he developed his entrepreneurial chops over time. Kevin, the SPAC space has evolved greatly from Muriel Siebert repurposing a defunct furniture company. That story that I told at the beginning of the show. What did you find appealing or unique about the structure of a SPAC for your purposes?

Kevin Hartz:

Well, there will always be the traditional IPO and the growth of the direct listings. And this is a very viable and exciting third option. What we're trying to do at A-Star, and by the name... You might wonder where our sponsor name came from of A-Star. Well A-Star is actually a 1968 Stanford search algorithm, developed at Stanford University. And it really calls out our geek cred. We're just focused on the technology sector, we'll call the innovation economy. And we also, in that definition, have this notion that it's the shortest path to the truth or the answer. And that's what we're trying to do with our first vehicle, one, is find that great partner company. We don't call them targets. This is often used. We're not an assassin. We're looking for a great company to partner with. And it's really the company that it's all about. That's the company that will be on the New York Stock Exchange. We're a fun source to bring that company in this reverse merger aspect into the public markets. And that's who we admire and pay attention to.

Kevin Hartz:

We see this as this viable third alternative to get into the public markets that's something that's been around for decades, but is now really going to see a permanent light of day as we get the economics of a SPAC in line. There's this thing called the promote. The promote's quite high. This is against my own best interest, but we're looking to Amazonify the promote. And by doing so, we make this a more mainstream vehicle that really attracts the right people with the right intentions of helping great companies get in the public markets and build their balance sheets. So this is really our mission. We're missionaries, we're not mercenaries. We're in this for the long term. Our goal is to be long term shareholders, just as all the great investors on New York Stock Exchange, the Fidelitys, the Baillie Giffords, the Capital Groups and others. We want to see our returns come from holding these businesses for 10 years, not from kind of pulling the rip chord after 12 months.

Josh King:

More than half of the listings on the NYSE in 2020 are SPACs, Kevin. They total about $20 billion so far. Curious about your take on the SPAC surge and what you saw in the marketplace that said, "Look, for us, let's make the promote higher." I mean, I'm curious what makes A-Star and one different from the large family of SPAC IPOs this year.

Kevin Hartz:

Yeah. So our goal is to really lower that cost of capital and lower that promote. And what we see is we see a sea change happening right now, and that is that there's a window open that there's this understanding that this is a great way to get into the public markets. And we're really just at the beginning. So what is it? 20 billion, I think, you referenced in revenue so far this year is really just the tip of the iceberg. That we're in the top of the first inning, that we're going to see an incredible amount of growth here. And there's all these attributes to the SPAC that are just so attractive. One is being able to file an S-4, that M&A, that merger statement versus an S-1, where you can really reveal a lot more details of how a business functions and how your business works and grows.

Kevin Hartz:

You can proforma out the numbers in a way that you can't do in a traditional IPO process. It's less distracting. There's just so much in a traditional IPO. There's so much regulatory constraints that we saw from Sarbanes-Oxley and other rules and overregulation that went into place. And this is a great way to really give investors familiarity with a company and to give them time to diligence a company, and really get to know the team, to know the metrics of the business in a manner that's much deeper and richer than you can through a traditional IPO. With that said, we had a great experience going public on the New York Stock Exchange with Eventbrite. And it's not a replacement, it's just another arrow in the quiver to get into the public markets. And so we think it's a great one.

Kevin Hartz:

We've got to get the cost of capital of a SPAC in line. And that's where we talk about lowering the promoter, making the promote incentivize that when the company builds and grows, that that's where profits are made, not through just merely flipping a SPAC very quickly. And once we do that and get that in order, and as we do that, you'll see this industry really mainstream. Just as in, believe it or not, that venture had been around since the '50s, '60s, '70s into the '80s. And it was this kind of bespoke industry. It was something that had really strong, investor friendly terms like 3X liquidation preferences, and you take 50% of a company, and now it's reformed. And it's very friendly to the companies yet these funds and the returns that have been generated are astronomical. So there is this notion, again, of Amazonifying the economics where Amazon, a trillion and a half dollar company, made a great business out of providing low-cost to consumers and great service and so on. And that's the ethos and the mission that we have.

Josh King:

You've said, Kevin, your company intends to partner with founders, operators, and entrepreneurs to build great companies that advance the technology industry, which you call the innovation economy. How do you see A-Star and one driving growth in the innovation economy?

Kevin Hartz:

Well, we're four founders and byfounders. So we're not coming from the outside, we've grown up in the Valley and been the benefit of such a great Renaissance from Medici times here. And we just kind of know how we've pattern matched. We know these kind of contrarian business approaches. We know which markets are emerging. We have the relationships here with the founders, operators, and CEOs. So that just gives us a phenomenal advantage that not many others can really say they have. We're also independent. We're not part of a specific fund. So we've also been just out in the Valley, talking to all our venture friends at all the major firms and just giving them a kind of SPAC seminar. A SPACinar? I don't know if I'll use too many SPAC puns here today.

Josh King:

So now the search begins to find that partner company. I'm curious, our listeners are curious, how you actually do it?

Kevin Hartz:

Well, we're always looking what's... we're kind of born and bred around our great teams, businesses with competitive advantages in very large markets. It's the simplistic view of it, but there's a lot of... Most of the businesses that become the leaders tomorrow are non-obvious today. So I would point to, I had the good fortune of being a seed investor in Airbnb when they were getting started. And it was a very odd and bizarre thing that you would allow a guest to stay at your home, that you don't know. And vice versa to be a traveler to stay in a stranger's home. But these are the kind of changes that you start to see and an amazing business was built out of that. I likened it to kind of a data storage business, where you used to have these big storage systems like EMC, that would be on premise, and they would need to be cooled and maintained and take up a lot of the real estate.

Kevin Hartz:

And it wasn't as efficient as... And you see that in hotels today where hotels require large amounts of real estate, expensive real estate. You've got to heat and cool a hotel. You've got to market for that hotel. You got to fill the rooms. If the room's aren't filled, that's lost money. It's a perishable item. And in the same way, so now you have distributed storage just like Amazon S3. And then you also have what is really distributed storage, but distributed hotel. So the perfect hotel where guests have all these unique places to stay, hosts have this found money, and air Airbnb benefits as a business by providing this great distributed service. And that was really the thesis. And so finding those types of gems.

Kevin Hartz:

I was also a seed investor, the first investor in a company called Trulia in the real estate space. And that was before real estate had moved online. It was a tiresome process to find a home or buy a home and sell a home. And Trulia, it was part of the revolution of companies of the real estate business moving online. And it doesn't seem obvious at the time, but the notion of finding your home online was a very strange thing in 2005. And that's the kind of asymmetrical advantage that we have being here and understanding the space that those nuances aren't there for others.

Josh King:

So if one finds one of those gems like Airbnb or Trulia, then what happens next? How do you envision your team at one working with the management and board of whoever is your acquisition partner?

Kevin Hartz:

Well, we put our partner company first. It is really their business. We're a financing source for them. We're a source for them to get to the public markets. But it's really, we're looking for those great founders. We're not here to rip and replace teams. We're looking for those founders, operators, CEOs that really know how to build a business. And we just want to do no harm.

Kevin Hartz:

We're there to advise. We can help find independent board members. We can help in any formal manner, but our goal is to define those founders and CEOs that stand on their own two feet that are going to build a great business. And we're going to be partners along in terms of capital partners for hopefully decades to come.

Josh King:

So the word one obviously begins a sequence. I'm interested in what's next for A-Star after one? What are your plans for the future?

Kevin Hartz:

Well, my snarky remark would be two, of course. But we want to build a franchise here. We think that, again, we're at the beginning of a revolution. That this revolution is just starting and we want to bring more companies. We're riding the wave of companies, entering the public markets sooner and wanting to enter the public markets sooner, but getting clogged up in these IPO pipelines that are at the whims of the ups and downs of the market. And this is the ideal vehicle to get these companies into the markets.

Josh King:

As we wrap up, Kevin, how are you helping those who are just getting started now? And what are some of the lessons that you would apply as sort of Kevin Hartz's lesson one in terms of starting a company that you've learned along the way?

Kevin Hartz:

Well, it's passion, it's drive, it's intellectual curiosity, and then it's persistence. My cardinal sin has been really either selling too early, or maybe not waiting out to see a full market develop. But if a founder and CEO just always stays and builds and does that with great conviction, that's the best path to success. The innovation economy is still in the early in innings itself. Even though today, we saw Apple reach $2 trillion in market capitalization, there's still much disruption growth still ahead. And I'm just so heartened by this new generation of founders that are going to do great things. But the persistence in staying through and seeing their vision grow, there's nothing more rewarding than that as I saw with Xoom, our remittance business, going through the public markets. And now with Eventbrite and next with our SPAC, A-Star, or first vehicle one.

Josh King:

So $2 trillion from the work bench of Jobs and Wozniak all those many years ago. The sky is definitely the limit for so many companies like A-Star and one, as long as you follow these four ideas, passion, drive, intellectual curiosity, and most importantly, persistence. Kevin Hartz. Thanks so much for joining us today inside the ICE House.

Kevin Hartz:

Thanks, Josh. Really a pleasure.

Josh King:

Thanks so much for joining us in the ICE House. Our guest was Kevin Hartz, co-founder and CEO of one, NYSE:AONE.U. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Kearney Ferguson and Pete Ash, with production assistance from Ian Wolf. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. We'll talk to you next week.

Speaker 1:

Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE, nor its affiliates, make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.

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Information contained in this podcast was obtained in part from publicly available sources, and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice.