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Political strategist turned tech investor Bradley Tusk on SPACs as a tool for VCs

Bradley Tusk has become known in recent years for being involved in what’s about to get hot, from his early days advising Uber, to writing one of the first checks to the insurance startup Lemonade, to pushing forward the idea that we should be using the smart devices in our pockets to vote.

Indeed, because he’s often at the vanguard, it wasn’t hugely surprising when Tusk, like a growing number of other investors, formed a $300 million SPAC or special acquisition company, one that he and a partner plan to use to target a business in the leisure, gaming, or hospitality industry, according to a regulatory filing.

Because Tusk — a former political operative who ran the successful third mayoral campaign for Mike Bloomberg —  seems adept at seeing around corners, we called him up late last week to ask whether SPACs are here to stay, how a Biden administration might impact the startup investing landscape, and how worried (or not) big tech should be about this election. You can hear the full conversation here. Owing to length, we are featuring solely the part of our conversation that centered on SPACs.

TC: Lemonade went public this summer and its shares, priced at $29, now trade at $70. 

BT: They are down today last I checked. When you only check once in a blue moon, you’re like, ‘Hey, look at how great this is,’ whereas if, like me, you check me every day, you’re like, ‘It lost 4%, where’s my money?’

We got really lucky; Lemonade was our second deal that we did out of our first fund, and the fact that it IPO’d within four years of the company’s founding is pretty amazing.

TC: Is it amazing? I wonder what it says about the common complaint that the traditional IPO process is bad — is it just an excuse?

BT: [CEO] Daniel Schrieber was very clear that he and [cofounder] Shai Wininger had a strategy from day one to go public as quickly as they possibly could, because in his view, an IPO is supposed to represent kind of the the beginning. It’s the ‘Okay, we’ve proven that there’s product market fit, we’ve proven that there’s customer demand; now let’s see what we can really do with this thing.’ And it’s supposed to be about hope and promise and future and excitement. And if you’ve been a private company for 10 years, and you’re worth tens of billions of dollars and your growth is already starting to flatten out a little bit, it’s just much less exciting for public investors.

The question now for everyone in our business is what happens with Airbnb in a few weeks or whenever they are [staging an IPO]. Will that pixie dust be there, or will they have been around so long that the market is kind of indifferent?

TC: Is that why we’re seeing so many SPACs? Some of that pixie dust is gone. No one knows when the IPO window might shut. Let’s get some of these companies out into the public market while we still can?

BT: No, I don’t I don’t think so. I think SPACs have become a way to raise a lot of money very quickly. It took me two years to raise $37 million for my first venture fund, and three months was the entire process for me to raise $300 million for my SPAC. So it’s a mechanism that is highly efficient and right now is so popular with public market investors that there is just a lot of opportunity, and people are grabbing it. In fact, now you’re hearing about people who are planning SPACs having to pull [them] back because there’s a ton of competition right now.

At the end of the day, the fundamentals still rule. If you take a really bad company public through a SPAC, maybe the excitement of the SPAC gets you an early pop. But if the company has neither good unit economics nor high growth, there’s no real reason to believe it will be successful. And especially for the people in the SPAC, where they have to hold on to it for a little while, by the time the lockup ends, the world has probably figured out that this is not the greatest IPO of all time. You can’t put lipstick on a pig.

TC: You say you raised the SPAC very quickly. How is the investor profile different than that of a typical venture fund investor?

BT:  The investors for this SPAC — at least when I did the roadshow, and I think I did 28 meetings over a couple of days — is mainly hedge funds and people who don’t really invest in venture at all, so there was no overlap between my [venture fund] LP base and the people who invested in our SPAC that I’m aware of. These are public market investors who are used to moving very quickly. There’s a lot more liquidity in a SPAC. We have two years to acquire something, but ultimately, it’s a public property, so investors can come in and out as they see fit.

TC: So it’s mostly hedge funds that are getting paid management fees to deploy their capital in this comparatively safe way and that are getting interest on the money invested, too, while it’s sitting around in a trust while [the SPAC managers] look for a target company.

BT: Why it kind of does make sense for [them to back] VCs is they are basically making the bet to say: does this person running the SPAC have enough deal flow, enough of a public profile, enough going on that they are going to come across the right target? And venture investors in many ways fit that profile because we just look at so many companies before deploying capital.

TC: Do you have to demonstrate some kind of public markets expertise in order to convince some of these investors that you know what it takes to take a company public and grow it in the public markets?

BT: I guess. We raised the money, so I guess I passed the test. But I did spend a little under two years on Wall Street; I created the lottery privatization group of Lehman Brothers. And my partner [in the SPAC], Christian Goode, has a lot of experience with big gaming companies. But overall, I think that if you are a venture investor with a ton of deal flow and a good track record but very little or no public market experience, I don’t know that that would disqualify you from being able to rate a SPAC.

Scooting while drunk is a dangerous, lame way to get a DUI

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Yes, you can get busted for scooting while drunk. 

With scooters swooping into more and more cities, it’s no surprise that people are behaving badly on the electric devices. E-scooter rental company Bird celebrated its first anniversary earlier this month with 2.1 million riders in 100 cities. That’s 10 million rides.  

But not all those rides have gone smoothly. Just this week Los Angeles had its first DUI case involving an e-scooter. The Bird scooter driver was three times over the legal limit when he crashed into a 64-year-old pedestrian, who fell to the ground, scraping their knees. Twenty-eight-year-old Nicholas Kauffroath rode off without helping the pedestrian. Read more…

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A Lime scooter rider died this morning in Washington, D.C., marking the second fatality this month

Lime, the 18-month-old, San Francisco-based company whose bright green bicycles and scooters now dot cities throughout the U.S., launched a pilot program in Tacoma, Washington, today, but that tiny victory might have felt short-lived. The reason: on the opposite side of the country, a Lime rider was killed today by an SUV while tooling around Washington D.C.’s DuPont neighborhood. The local fire department shared video of the rescue, which shows that the victim, an adult male, had to be pulled from the undercarriage of the vehicle.

It’s the second known fatality for the company following a death earlier this month in Dallas, when a 24-year-old Texas man fell off the scooter he was riding and died from blunt force injuries to his head.

On the one hand, the developments, while unfortunate, can hardly come as a surprise to anyone given how vulnerable riders or e-scooters are. E-scooter use is on the rise, with both Lime and its L.A.-based rival Bird, announcing this week that their customers have now taken north of 10 million rides. At the same time, city after city has deemed their use on sidewalks illegal out of fear that fast-moving riders will collide with and injure pedestrians. That leaves riders sharing city streets with the same types of giant, exhaust-spewing machines that they hope to increasingly displace. In fact, sales of traditional SUVs has continued to surge, thanks in part to low unemployment, high consumer confidence, and Americans’ enduring love with gigantic vehicles.

One solution to the issue, and one for which the e-scooter companies and their investors have been advocating, are protected lanes that would allow e-scooters to be operated more safely. Bird has even publicly offered to help fund new infrastructure that keeps cyclists and scooter riders safer.

Another possible answer would appear to be mandating the use of helmets with e-scooters, though California evidently disagrees. On Wednesday, Governor Jerry Brown signed a bill into a law that states Californians riding electric scooters will no longer be required to wear helmets as of January 1.

The bill was reportedly sponsored by Bird.

E-scooter company CEO wants to ‘Save Our Sidewalks’ from bike litter

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Bird is flying into more cities, and as the electric scooter-share company spreads its wings, it wants to make sure it doesn’t destroy communities with its short-range vehicles.

Bird expanded from Southern California this week to San Francisco and San Jose, California, along with Washington, D.C. With the expansion, CEO Travis VanderZanden introduced the “Save Our Sidewalks” pledge.

VanderZanden has proposed other scooter and bike-share companies, like LimeBike, Ofo, MoBike, and Jump, commit to a daily pick-up program, responsible growth of vehicle fleets, and revenue sharing with city governments. Read more…

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New Zealand’s bird of the year is a highly cheeky parrot known for messing with humans

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New Zealand, you’re alright.

What other country, teeming with magnificent, yet sadly endangered wildlife, would have an annual bird of the year competition?

Perpetual natural paradise New Zealand has announced the winner for the country’s 13th bird of the year, awarded to the world’s only alpine parrot, the kea.

What’s a kea? It’s an unusual olive-green parrot found in the country’s southern alps, known for its intelligence, cheekiness, and curiosity — something that can “get them into trouble,” according to the BOTY website. Read more…

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Bird staring at itself in this window is not having an existential crisis

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No, this bird isn’t having an existential crisis, despite appearances.

A bird in Queensland, Australia was photographed staring at itself in the window by journalist Nick Wiggins, with a sign above it.

“I’m a bush stone curlew. I’m fine. I just like to stare at myself in the window,” the sign reads, penned by “Caitlin from Wildcare Australia.” 

Of course, Twitter was happy to jump in with a collective “same.”

We’ve all been there pic.twitter.com/AKgnF9EoXb

— Nick Wiggins (@nick__w) March 13, 2017

Even with that logical explanation, it’s hard not to ignore the bird’s hilarious introspection, as it stares blankly at its own reflection — perhaps pondering at what’s become of its life. Read more…

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