David Waxman sold his first company to Microsoft, took his second public for $1B in just 12 months, and then launched an $68M fund to invests in start-ups that apply data and technology to disrupt existing industries.
In this episode, you will learn:
- Learning from failures
- The startups TenOneTen Ventures has invested in so far
- Hiring and company culture
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About David Waxman:
David Waxman co-founded the web community Firefly Network (acquired by Microsoft in 1998), the hardware and ISP service People PC (acquired by Earthlink in 2002), and the internet-based advertising agency Spot Runner.
He also now works as a consultant, helping early-stage startups get established and advising established companies on how to think like entrepreneurs. He lives in Los Angeles.
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Read the Full Transcription of the Interview:
Alejandro Cremades: Alrighty hello everyone and welcome to the dealmakerr show. So today. We have an exciting founder turned the investor I think that we’re gonna be learning quite a bit about building scaling financing taking companies public exiting everything that you can think of as part of the full cycle. Of a business so without further ado. Let’s welcome our guest today David Waxman welcome to the show. So originally you were born in I believe he was in Cambridge but also close to a science museum so tell us about.
David Waxman: Um, thank you. It’s great to be here.
Alejandro Cremades: How was life growing up.
David Waxman: Yeah, well let me clear that up I was born actually in Santa Monica right here in near where I live now and at the age of 5
Alejandro Cremades: All right? so hold and hold hold hold hold on. Let’s let’s let’s let’s repeat that let’s repeat that so give us a little for walk through memory lane. How was life growing up in Santa Monica
David Waxman: I didn’t grow up in Santa Monica sorry did you take notes I grew up in Berkeley I grew I was born in Santa Monica and I moved to Berkeley at age 5 So I don’t really recommend. That’s why I was born but I moved to Berkeley at the age of 5 So I don’t really remember.
Alejandro Cremades: Ah, for some I have I have Santa Monica here born in Santa Monica correct yeah and you were raised in in Berkeley. Okay, okay, okay so here we go so we hear the feet we start again. Ah I like.
David Waxman: We’ll get there.
Alejandro Cremades: So all right? So David so give us a little of a walk through memory lane. How was live growing up because you were born in Santa Monica and then you moved to Berkeley.
David Waxman: Yeah I mean I really mostly remember Berkeley I moved there at the age of 5 and um, you know Berkeley is a really interesting town. It’s it’s a college town but it’s also got just a lot of interesting people from all over the world who live there either who. Were attracted to the idea of Berkeley or came to the college and stayed or are involved with the university um, and I was really fortunate I grew up in the Berkeley Hills which is um ah a neighborhood that doesn’t really have any commerce in it. No shops. No walking or rather no walking to storage or anything like that and. As a child I didn’t like that so much I felt like you know I had to sort of drive with my parents to go to town as it were but the 1 place I could walk to was a place called the Lawrence Hall of science which was which is a science museum still is affiliated with Uce Berkeley and from a really young age I started. Hanging out there and I think that had a huge influence on me.
Alejandro Cremades: So they hold you know computers and and and and technology I mean how how do you develop that love for it.
David Waxman: Well, as I said I was spending time and this is before everybody had personal computers by quite a bit. Um I spent a lot of time in the science museum and actually joined something called the Friday club which was kids learning how to program and we were learning how to program on an old deck computer. Um, and I’ve also learned on some early personal computers and that gave me a lot of exposure to technology far before you know most of my peers were ever to see that kind of stuff. Um, and that Friday club alumni network ended up you know they they work at Google they work in other you know. Pretty pretty deep in the tech industry. Um, and it was it was the place where I wrote my first code and ah you know part of it was just wanting to belong to this group but part of it was being super excited by the technology.
Alejandro Cremades: And obviously it took no time you know for you to to use that you know love to eventually start your own company now you know before doing that you went to France you went there to um to school where you did computer music as well and then mit but. Coming out of mit the media lab. You know you you, you? Obviously you know like started to experience with stuff and things led to the next and then eventually you start your first company firefly network which ended up being quite um, a good outcome. So um, so how did you? you know all of a sudden land you know on Firefly and. And how did the the idea or what was that journey like of hey all of a sudden I’m starting a company I’m starting my first company.
David Waxman: Well I didn’t know that that’s what I was going to do I was a master student and I was going to stay for the ph d and um and honestly growing up in Berkeley you don’t meet a lot of or nowadays you do. But when I grew up in Berkeley you didn’t meet a lot of venture capitalists. It was not a place where um.
David Waxman: Where I knew of such things and I don’t didn’t really you know in my early career in computer music I didn’t really understand venture capital at all either. Ah, but when I was in Cambridge I met ah actually met a guy on an airplane who is a Harvard business school student and. We started talking. We were actually about 5 hours into a four and a half hours into a 5 hour flight from San Francisco to to Boston and we didn’t talk most of the flight but at the very end we started talking and realized we’d been at the same actually at the same new year’s eve party and we had some common friends and ah. And 1 thing led to another he and I started hanging out. He knew a lot about venture capital and he had been thinking about starting a company and so it was almost a little bit of a cliche story a Harvard business school kid meets mit grad and um, actually through that relationship. We grouped together with some other kids from mit. And and that’s what led us to start Firefly but I don’t think without the catalyst of having met him. You know I might have come around to doing startups but it might have been a while so we were the first company to do online music recommendations or online recommendations of anything. There’s this.
Alejandro Cremades: So what were you guys doing at farfly.
David Waxman: Technology called collaborative filtering which is very common now you see it. You know people who like x also like y so people who like you know, but people like Taylor Swift and the smashing pumpkins also like Beethoven. It’s very you know it’s not necessarily obvious things but you cluster with people who have similar tastes and. Then using those clusters you can say who else what else you might like because you’re you’re near on tastes and taste space to these other people. Um, we started that with music we ended up doing it with books and movies and websites we were actually integrated with Yahoo on their my Yahoo page and um.
David Waxman: We had another product when we had these sort of preferences we. We thought that that um it was kind of personal information whereas kind of early into privacy and we thought well we’re collecting your book preferences. It sounds a little bit quaint now where we’re collecting your book and movie and. Website preferences. Maybe this is kind of personal information. So we we had this idea for a common data wallet which we called the passport where you could go from site to site and sort of permission your data your preferences data so they could serve you um serve you recommended stuff. But then you could sort of have a receipt you could rescind your permission and um and that got the interest of Microsoft who had been thinking that they needed something like that and and Microsoft bought the company in 9098.
Alejandro Cremades: And what well we’ll edit this piece because I can hear the the dog going crazy. Ah, go for go for it. Go for go.
David Waxman: Um, you can hear the dogs um can I just grab up some water I’m super thirsty. Thanks Seriously this is never going to work. Um.
David Waxman: Um, yeah, are 2 Yeah.
Alejandro Cremades: My god that that is had dogra or or a dinosur on bo below big dog and oh that’s incredible. All right? so so here so why don’t you repeat that last piece about that got the interest of Microsoft because the dog was parking. Go ahead.
David Waxman: Sure, um, and so that got the interest of Microsoft and we and Microsoft bought the company in 9098 and the firefly passport turned into the Microsoft passport which wasn’t exactly what we had planned. We had planned for more of an open data wallet where you could. Sort of a little bit like Facebook connect was or like sign in with Google is now. Um but Microsoft had a different vision when when we finally came there to to make something that was just for their closed network. So it became the microsoft password passport and it was single sign on for the. Whole Microsoft universe online and offline.
Alejandro Cremades: So what? what? how was that process like of selling your company to Microsoft I mean that’s really amazing first company first exit what what kind of disability would you say that that gave you into the full cycle of you know the whole thing of of being an entrepreneur entrepreneur.
David Waxman: I mean it was an it was an incredible journey. The whole thing lasted only 3 years and but it felt like an eternity. Um you know things were being an entrepreneur or certainly a tech entrepreneur was not as well known a thing at the time so I didn’t really have it wasn’t like you could look online and you know. See videos of everybody else’s experiences or or follow people on Twitter or anything like that. So I learned a lot like basically everything was on the job training except for the technology part.
Alejandro Cremades: Now when when you guys ended up doing the the transaction you know, literally like like like right after I mean the following year you were already on your next venture on people Pc So how did the idea of people Pc come knocking.
David Waxman: A.
David Waxman: Well, you know we had um it was It was some of the same team members and actually all 3 companies I did were were with some subset of those same founders. Um, ah literally my cofounder and I kind of locked ourselves in a room with pizza. And thought about what we wanted to do next because we knew we wanted to do another one and um and we always had I mean I think one of the great things about the internet period has been sort of the democratization of things. So The idea that that ah you know a small retailer can compete with a big retailer. Idea that you know you don’t have a middleman in certain cases. Um and generally that that it is ah you know Enables creators these days to compete with with you know, big neighbor and stars or become big neighboring stars without labels or movie Studios. And um, and so that idea of democratization was very important to us and back then one of the issues that people were talking about was the digital divide was the people who are online and the people who are not yet online and it was very different. You know our experiences of the world were very different. Some of us had the internet. And and a lot of people still did not have a home computer and did not have the internet. So Our mission was to make that easy and at the time it wasn’t it wasn’t as easy to get on the internet you had to go to a physical retailer and buy a computer you had to figure out which online service you were going to use you had to you know people didn’t know how to necessarily.
David Waxman: Plug everything in so we made it really easy. We put together a package that included the computer internet access and support and we like did our own keyboard and made our own packaging and really worked on Usability and that was the idea for peoplepc.
Alejandro Cremades: And obviously you made it so easy that the company ended up going public for a billion. So what? what was that process like of taking a company public.
David Waxman: Um, well let me back up a second because it was a really interesting trajectory of that company if you don’t mind. Um, so we started as a consumer subscription business. So you you know, pay a monthly fee and you get all of this and we suddenly got this. Um this inbound from. Cfo Ford Motor company literally in our inbound email box saying can you talk to us and we talked to them and they wanted to make all of their employees aware of basically they wanted their employees to get connected to the internet so that they could communicate with them. They could do hr stuff. And most of the employees at Ford at the time didn’t have internet at home because and they certainly didn’t have it at work if they were driving a forklift or working on a factory floor. So um, so we actually got a $300000000 po from them when we were still only twenty people. To enable their entire workforce. It was a subsidized program to get computers in the home and so we turned our model from a b to c direct model to a b two b to c um indirect model where we we first did Ford Motor company we did then Delta Airlines so they could do scheduling. New York Times vivendi universal and and all of that was I think what led us to have the the growth that we needed to go public.
Alejandro Cremades: So then going public How was that like.
David Waxman: It was a trip. Um, it was you know in retrospect we were a very young company to go public. We did have a lot of revenue but but you know we were public we we um started the company 99 and we went public in 2000 so it was a pretty quick journey and um and it was a little surreal. Ah, to be honest with you. You know we we? Yeah I remember very vividly the the drafting process for the s one and I was sitting. It was just me in a room with like 12 lawyers. We were still hiring our general counsel and.
David Waxman: You know I’m sitting there and we had these very deliberate kind of talks about about what words we could use and um and then there was the road show which was something I’d never experienced before and um, you know and then there was being public which was both a good and a bad thing I mean it was it was great. It was sort of everybody’s dream back then to go public but our stock price was. Fluctuating and suddenly people were and I think that’s still true today for companies that go public. You know suddenly you’re very distracted by this thing that wasn’t a thing before which is what is your price doing that day. Um, and yeah, after 2000 the market wasn’t that kind to. You know, not very profitable tech startup. So we um so we you know we got beat up in the market a little bit and that was that was a huge distraction and you know in retrospect I probably still do it but it was it was um I think I think it’s better now that people are waiting longer to go public and getting more.
Alejandro Cremades: So then after people pc I mean at what point there that you you know realize it’s time to turn page and you move on to the next day to the next gig.
David Waxman: More prepared.
David Waxman: Um, well we sold the company so we got bought by another public company called Earthlink which back in the day was um was like 1 of the premier providers of internet connectivity and they wanted to incorporate the ppc brand it was sort of a fighter brand for them. So um, in 2002 they bought the company.
Alejandro Cremades: Was there like um lesson on eman that perhaps you got from the previous sale to Microsoft that they perhaps you know you wanted to implement for the next for this next day a man a you know process or transaction with people. Pc.
David Waxman: Yeah I think one of the things about getting bought by Microsoft which was frustrating was that they didn’t really you know that the sort of champion of the deal who did the deal um had the same vision as us for the company but Microsoft back then wasn’t very good at acquisitions and they sort of ah. You know they didn’t really follow through passport out great distribution. It went to you know hundreds of millions of ah people which would have taken us you know forever to get but it was something different and so you know lesson number 1 is when you sell your company you you don’t own it anymore and that’s kind of a hard thing for founders to swallow sometimes. Ah, earthlink was much more aligned. It was much more like in their core business. They knew what it wanted they wanted it to be people pc was allowed to I didn’t stay but but pc was was really an important product for them for another decade after the you know. After the acquisition I was still seeing advertising on Tv based on the advertising that we had made early on.
Alejandro Cremades: And in fact, they you didn move fa quite far when he came to the segment because what were you guys doing with spot runner.
David Waxman: So spot runner again. It was this theme of democratization so we thought why is it that Domino’s pizza can be on Tv but Joe’s pizza can’t be on tv you know why is it that that um you know. This restaurant chain compete be on Tv but the local restaurant can and we figured out a way using cable television to localize advertising to um to really a very small segment so that Joe’s pizza could actually compete with Domino’s pizza um and so.
David Waxman: It was it was in that same theme and to crack that we had to do a few things we needed to make advertising that was flexible and and inexpensive enough for people to afford to make an advertisement that looked good and we needed to figure out how to make a media plan that worked for people. Um. And and both of those were really interesting problems.
Alejandro Cremades: Now here you guys raised quite a bit over 100,000,000 and it sounds like it perhaps a you raised too much and you got over your ski. So why was that the case.
David Waxman: Well, a lot of things happened in that company and it wasn’t a wasn’t a good exit. Um, one of the things is we just got really hot. Um, you know we were third time founders. The idea was really compelling. It had a really good story and and. You know it. It was a good idea and we got a lot of heat. Ah partly because Google made an an acquisition not long after we started of a company called Demark Communications which was a similar thing that we were doing but for radio advertising and that was a. Big deal at the time it was like a $900000000 acquisition which in those days was ah a big deal. Um, and so people started to turn to us and said well if they’re worth 900000000 these guys and that’s radio these guys are doing television. It must be worth so much more Um, and you know my my partner got invited to sun valley um you know people were the michael eisner from disney was on tv saying that we were the next google and so money came to us very easily. Ah probably before. Well definitely before we had the same kind of product market fit that we should have had to really use that money. Well um, and then um, you know in a way that that. Rings a little bit familiar right now the market really changed so in 2000 we started that company in 2005 and in 2008 the world changed the economy changed the market crashed and marketing television marketing really suffered and so we we took a big hit um in just our our business generally.
David Waxman: And you know between that and some you know and being kind of far out ahead of our skis. We just were unable to recover. So ultimately we ended up selling company that not for not for more than we raised.
Alejandro Cremades: And as you as the saying goes, you know you either succeed or you learn so after having had you know like the 2 experiences you know with with this third one what was there for you to learn.
David Waxman: So many things I mean listen learning through failure is overrated. It hurts a lot. Um and I and I get it and and I did learn a ton. Um, but you know it’s It’s just was a very painful experience. It’s painful to have to let go. Employees that are your friends um and a lot of people are experiencing this right now you know it’s just it’s hard to fail. It’s really really can be brutally painful. Um, so but I did learn a lot I learned about overcapitalization you know I kind of understood.
David Waxman: The difference between after I come up came to understand the difference between sort of vanity metrics and real metrics and um I learned a bit about strategic partnerships we had ah we had a kind of a bad strategic relationship with 1 of our investors who was also in our area. Um, and that was.
David Waxman: Was kind of a big Tangle up in the end. Um, but just yeah I could I could go on for hours about the lessons I learned.
Alejandro Cremades: Well Okay, obviously I’m sure that they you know served you well and I’m sure that you are using those now for for for what you’re doing now to really be able to identify winners. So You know you decided that you wanted to go on the other side of the table. You know I was the next Chapter. So. Why did you go on the other side of the table as an investor I mean what was that thought process there and and what are you up to right now with 10 one 10 ventures.
David Waxman: Sure? Well I was lucky ah in during the time at um, at spotrunner or near the end of that journey 1 of our investors who is from index ventures was also an investor in a company called factual run by my now partner Gil Elbas and he said you two would really like each other and so after a couple of years after I left spotrunner I I started hanging out with giil and um and the the investor was exactly right? We we were not ah, we’re not alike. Really, but we really have fun talking to each other and hanging out and um and I had also started. You know I’d done some angel investments in the past. But I’d also started doing more of that and doing some advising and sort of helping folks in the la ecosystem which was still pretty early days for that too. Um. And so gill and I decided to start 10 one 10 to invest our own money really as as angel investors. Um, he had a lot of connections. He had you know had very successful exit with selling his first company to Google and um, while he was still a Ceo he he had. Interest in in being an investor and I had time and I had enthusiasm and you know the 2 of us decided to pair off and after about a year of doing that on our own with our own money we said well this is working really? well. It’s exciting. We’re meeting really smart people. We’re.
David Waxman: Making good investments. Let’s raise some money from outside folks and we raised an $18000000 fund from mostly other successful entrepreneurs and that became 10 one 10 fund one.
Alejandro Cremades: So obviously now you guys have done a ah few funds. So what are the um, the companies that you guys get excited about.
David Waxman: Well, we really like we’ve always liked Ai and machine learning and sort of big data. Um, you know and some of our fund 1 companies are really great examples of that. So um, one company is called. We’ve we’ve done a lot in the space of computer vision for example, which is a. You know an area of Ai. Um, one of our companies is called mashjin and it is computer vision-based retail checkout. So imagine going to a store and instead of like manipulating all your. Items in front of a barcode. You just put everything down and it sees it and it rings it up instantly It’s super fast. Um, that company is very successful fund one company they um they started in the cafeteria space which got really hurt during covid. And they pivoted a little bit of market to the grab and go sort of convenience store space and they’ve since just been blowing up so they’ve got a 10000 store contract with circle k which is one of the biggest convenience store chains. They’ve got a lot of others in the pipeline they’re they’re in airports and stadiums and. It’s just a great application of the technology. So. That’s that’s one from fund one that we really like and um, another company is called flockfreight that they do basically ah, they’d hate for me to use this analogy but uberpool for shipping.
David Waxman: Um, for less than truckload shipping. So if you think about less than truckload shipping like say a palette of something or a couple pallets of something that don’t fill up a truck the normal way you ship that is you ship your stuff to within a little truck to a hubb and it’s a hubb and spoke model to a.
David Waxman: Hub where they put it on a big truck goes to another hub goes to a little truck etc that costs a lot of money and it takes a lot of time and it can lead to breakage because you’re taking step on and off and on and off the truck. What these guys have done is optimize the routes such that they can pick up loads Abc and fill up an entire truck and then. Drive them to across the country and drop them off cba so that everything just goes in and out once and it’s it’s super efficient and less expensive and my dog is scratching right? there superfici unless it sense a dude and.
Alejandro Cremades: Ah, good Stuff. So So so I guess when it comes to Pattern recognition for being able to identify the ones that are the winners from the ones that maybe it that is not so much worth of. Perhaps you know the the investment like how. How do you go about identifying Winners. What are what are some of those patterns that you’ve seen over the course of time. Yeah, is that the bird I got you? Yeah, you got like a shoe they are going on and incredible.
David Waxman: Um, can you hear that we have chickens I do do I think there’s a squirrel. Um.
Alejandro Cremades: Pray? Yeah, so it go So so I think it stop now. No okay, still going. Okay.
David Waxman: Pattern Recognition Sorry it’s you want start that again or should we wake till least Nots you not really, but it’s cool if you can’t hear just that That’s um, color you can ask me about pets later.
Alejandro Cremades: Ah, yeah, this is amazing. We’re gonna get this happen. We’re gonna make it happen. You’ll see so okay so it’s gone. So so basically when it comes to Pattern recognition. What have you learned about identifying winners.
David Waxman: Um, well I think it’s really hard. Um, you know being ah being a a founder is way harder than being a Vc emotionally and work hours and stress and like it’s much much easier to be a Vc but to be a good Vc is really hard. Um. And um, and you know after a decade of doing it I feel like I’m still learning every day but 1 thing that comes around every time is it really does at our stage which is the seed stage boil down to the founder right? or founders. Um. We’ve seen a lot of our companies right now sort of I mean basically you you know you need someone who’s really resilient who can think on their feet who listens well not just to us but to to sort of everybody around them in the market. Who is charismatic and can hire people and kind of bring people to their cause raise money all of that stuff. Um, so it’s you know and they have to be passionate. They have to they have to really want to do whatever it is. They’re doing and you know passion can come from all kinds of places but it’s it’s. You know so someone’s it’s it’s really hard to be a founder and so you need someone who’s going to push through and be able to change as things change I cannot fucking believe this sorry come on like seriously people.
Alejandro Cremades: Talking. Ah.
David Waxman: Um, okay, where are we.
Alejandro Cremades: Ah, ah here here we go. So so so so go again with the um, you’re finalizing on Pattern recognition for your winners.
David Waxman: Pattern recognition so I’ll just I’ll just start again. So um, I’ve been one of the things that I keep learning over and over in my career is that you can look at the product you can look at the market you can look at the you know the Tam you can look at all these things. But really it always boils down to the founding team and especially you know at at our stage which is seed There’s not that much product and there’s still a lot to to learn. Usually there’s some kind of traction and and signal from the market that the thing is valuable but but really it takes you know what we look for is resilience. Look for you know because you have to be able to push through really hard things you have to be a good listener. Um, not just to us but to everybody on your team and around you and your customers. Um, we look for somebody who wants to go big. Um. And really wants to go big which is sometimes hard to tell and um and someone who is able to rally support around them. So you know as ah as a Ceo you need to and founder you need to build a great team. You need to get money into your company to support your growth. You need to. To get customers to engage with you so all of those things really come down to the to the person and what we’re seeing right now. It’s really interesting is you know chat gbt has changed a lot of people’s plans and thrown somewhat of a wrench into some you know some people’s companies because it’s like this thing that we were doing this way.
David Waxman: Now you can do it that way and I’m seeing founders respond to that challenge. Um, and and all of them in our portfolio are doing a really good job of saying either know that’s a distraction or yes we have to get ahead of this. Um, it’s It’s great to see and that’s sort of inaction. Ah the kind of. You know the kind of qualities that make a founder successful.
Alejandro Cremades: And I know ah for for what you guys are doing now and also for previous companies for you building around culture was very important. Why was important so important.
David Waxman: Um, because ah, you know so a software company basically is its team I mean most companies are their team and I think it’s really important early on because the people that you hire. The first few employees you hire end up hiring the next few employees and those employees end up hiring the people after those and if you set a tone about the kind of person you want at your company of you know whatever it is. There can be sort of different ways to to build a great company different management styles. Um, you can. You know and if you and if you work on that early you can propagate it through the company people want to join companies. Of course they want to have good jobs. They want to make money all of those things but but you know when employees come into a company. They’re also looking at the other people who are there do I want to be part of this group and if you if you have a company full of. Top performers who are great and fun and you know whatever you once again, whatever you’re looking for you’ll attract more people like that whereas if you want to sort of bring in people who are very different than the team you have. That’s that’s much harder.
Alejandro Cremades: So for the people that are listening that are you know, obviously excited about the opportunity of maybe you know sharing with you What they’re up to what would be the best way for them to reach out and say hi.
David Waxman: Um, sure I am that can email me I’m David at 10 1 ten t e n o n e t e n dot net
Alejandro Cremades: Amazing. Well hey David thank you so much for being on the deal maker show today. It has been an honor to have you with us.
David Waxman: Thank you.
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