Howard Lindzon is one of our keynote speakers at The Next Web Conference 2011 taking place next week.
Apart from being the CEO of Stocktwits, Howard is also a seasoned serial entrepreneur who made, and lost, millions of dollars by investing and participating in many online startups.
Check out my interview with him:
Boris: What are you? Entrepreneur or Investor?
Howard Lindzon: I am an entrepreneur, totally. Entrepreneurs are investors. I think there are only entrepreneurs and analysts. I am also the CEO and cofounder of Stocktwits.
Boris: So you are not a classic investor that invests in companies but more like a stockbroker?
Howard Lindzon: I just think that classic investors are actually entrepreneurs so they are the same. A stockbroker is a salesman. I was a stockbroker in 1991 coming out of grad school in Phoenix. That lasted about 6 months until I noticed that the clients I was trying to sell stuff to were working on projects that sounded much more interesting than anything I was doing. So I didn’t hesitate and started investing in their businesses and left the selling behind. One of my first cold calls was to a kid who had a product in the newspaper that looked like a home run. When I called him, I ended up investing my last bucks with him. The product is still in the QVC Hall of Fame – The Gripp.
From there I have invested in over 50 startups and had lots of successes and failures along the way. I have never had a steady paycheck other than from CBS after they purchased Wallstrip in 2007. I created that show in 2006 and we did 200 episodes before we were purchased by CBS in 2007.
Boris: So you are a serial entrepreneur?
Howard Lindzon: Yes… I invested in Rent.com in 1999, which was purchased by eBay for $450 million in 2005. Golfnow.com was a big one for me and my investor friends. It was bought by Comcast in 2007.
Boris: So you are a rich serial entrepreneur? How rich are you exactly?
Howard Lindzon: I am a ‘thousandaire’. I invest every nickel back in the market so I am poor by living standards.
Boris: So you also lost some money along the way? How much of that $450m from the sale of Rent.com to eBay did you pocket at the time?
Howard Lindzon: I was an early investor in Rent.com and because it was the top of the bubble, the pre-money valuation was over $60 million in the first angel round. It is hard to make huge money that way, even on a great exit. So really it was just a 10 bagger.
Too much information?
Boris: Does the abundance of information online make it easier or harder to trade?
Howard Lindzon: I think the info is better, richer and thicker than ever but there is also just a lot more of it. Some of it is misleading and there is more than that out there than ever. Aggregation, curation and filtering matter which is where Stocktwits comes in. You need trusted sources, and we are one of those.
Boris: Could you explain what Stocktwits does?
Howard Lindzon: Stocktwits is an idea network. We built a layer on top of the web that pushes (broadcasts) messages to Twitter, Facebook, LinkedIn and vertical financial networks like Yahoo Finance, CNN Money, Reuters and Bloomberg and also pulls $(ticker messages) from Twitter, and soon from other social networks.
On Trust
Howard Lindzon: In 2002, I owned and ran a brokerage firm to manage the costs of all the investing we were doing and my partner who was our NASDAQ-background CFO was stealing from us. We caught him eventually but not before we were ruined as a business and I lost everything.
Boris: What can you share with other entrepreneurs on that? How do you learn from that and what can you do to you avoid it from ever happening again?
Howard Lindzon: You really have to pick your partners carefully and never take success for granted. The reason I love the stock market is it is just like life; The moment you feel you have a handle on it, you are going to get slammed. You must be investing, living life, learning, but always have an eye on outside forces and manage risk!
Boris: So how do you balance trusting partners (which you must) and keeping an eye on stuff? It’s very hard to build a company if you don’t trust your partners…
Howard Lindzon: You must find partners that believe in your vision and do things that don’t overlap. You must create checks and balances over bookkeeping and cash management. It took me three years to hire anyone after 2002. I worked my way back just trading and investing and then got lucky with the Rent.com exit in 2005. I parlayed that and the sale of our home at the peak in 2005 into all the investments I have made since.
Foreplay, foreplay, foreplay?
Boris: The title of your presentation at The Next Web Conference is “Failure, Foreplay and Acceleration” right? A little pre-occupied with sex are we?
Howard Lindzon: ‘Foreplay, foreplay, foreplay’ is one of my lessons. The social web is all about connections and social leverage but so few people know the social basics and etiquette of how to engage people. Someone you admire or trust may say something that resonates with you and you fire off an email or message as if you are best friends. You might ask for something and that’s not how the social web works. You need to build up deposits. It takes a great amount of time and effort. Just like at a bank; instead of cash deposits you make social deposits.
Also check out the speaker announcement post, our conference site and my other interviews with Dave Winer, Steve Rubel, Alexander Bard and Mark Randall.
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