#13 Howard Lindzon: fintech founder, fintech VC, early investor in Robinhood ($40B val), bullish on the crypto revolution
Founder & GP of Social Leverage, early stage VC investor in cos like Robinhood ($40B valuation), eToro ($10B valuation) & AngelList. Co-founder of Stocktwits (financial social network, 5M+ members)
We are Pol Fañanás and Gerard García, two friends passionate and curious about tech, startups and VC sharing weekly high-value views from people creating the future. Thanks for reading !
Howard Lindzon, husband and father originally from Toronto, is Founder and General Partner of Social Leverage, early-stage venture capital firm with a special focus in financial services, enterprise SaaS and consumer spaces. Social Leverage is an early investor in top companies like Robinhood (global leading investment app with 13M+ users, $40B valuation and $5.6B funding by top investors like Sequoia Capital, Andreessen Horowitz and Index Ventures, among many others), eToro (social trading platform with 10M+ users, $10B valuation and $270M funding by Spark Capital and China Minsheng Financial Holdings, among other investors) and AngelList (world’s largest startup community by well known co-founders Naval Ravikant and Babak Nivi, 100k+ top startups using it for recruiting via AngelList Talent, $1B+ deployed by users along leading VCs via AngelList Venture).
Howard is also Co-founder and Chairman of Stocktwits, a company he started it in 2008 with the vision of creating the largest community of traders and investors. Today, the team has achieved 5M+ members and 2M+ monthly active users with only $13.2M funding by True Ventures, Foundry Group, ffVC and Social Leverage.
In the summer of 2006, previously to his current endeavours, he founded Wallstrip, a media company based on daily business news that less than one year after its birth (May 2007), was acquired by CBS.
Summary
👤 Brief intro: husband, father, media & fintech founder, VC, loves helping
🥇 Win: freedom to do what he loves, selling co, top deals, family
🚫 Fail and lesson: missed opps and wrong people, focus on time and people
🚀 Ideal founder: timing, commitment, domain experience
💸 Ideal investor: solve problems, help in fundraising and recruiting
📈 Markets: e-commerce, trading, investment, financial markets
🦄 3 startups: Stocktwits, Alpaca, Rady Rd
👍 3 investors: Fred Wilson, a16z, FinTwit
📖 3 books: “Reminiscences of a Stock Operator” by Edwin Lefevre, “Open: An Autobiography” by Andre Agassi, “Shoe Dog: A Memoir by the Creator of NIKE” by Phil Knight
Could you give us a brief intro about you and your origins?
I’m 55, born in Toronto but I live in Phoenix.
I’m a venture capitalist focused on financial services companies with Social Leverage, where we are currently raising our 4th fund. We do seed checks into financial companies and enterprise software up to $1M. I’ve been doing it for the last 15 years, and we have got a couple of famous investments in Robinhood and eToro.
I am also a co-founder at Stocktwits, a social network for traders created in 2008.
I love helping other people.
What would you say has been the biggest win in your life?
If you are still doing what you love after 20 years, you really win. I think my biggest win is getting to do what I love, what I want, having freedom. Now people pay me to invest and do what I love most. Anybody that gets to do that instead of office hours and reporting for duty is a winner.
With COVID, there is a general malaise and people are rethinking their lives. Govs failing although tech doing his thing. Distrust is at all-time highs, so being able to be trusted and be paid is kind of a miracle. Pretty shaky times when people don’t know who to trust.
In terms of jobs, founding Wallstrip and selling it to CBS while going through the process of building something that people want to acquire is an exciting win. Also, I’m currently the co-founder of Stocktwits, a trader-focused network that is growing faster than ever organically. After 12 years this is another exciting moment in my business life.
Additionally, being an early investor in eToro and Robinhood and seeing them hit tens of billions of dollars in market cap. It is thrilling that I got to be there when they were starting, that was pretty cool.
Last but not least, obviously my family. My kids still like me. They are in their 20s and in their own thing but they still talk to me, that’s great. And I’ve great friends around the world whether it’s the States, Israel, Madrid, Barcelona or London. I’m pretty lucky.
Related to the above, and your biggest failure?
Biggest failure generally is missed opportunities, right? What could I have done with my time that I didn’t. I understand how for people that don’t have money, financial success is a big issue because their whole life is about that lack of freedom but for me is a good question, let me think…
…I would say picking the wrong people to do business with. You make decisions and you have to deal with them. As a VC or entrepreneur, those decisions are big and you have to make them a lot and without all the information. So is not really about money but about spending time with unproductive people. It’s hard to extract yourself from that.
Other mistakes, I didn’t invest in Twitter when I had the chance to, I should have held more Apple stock longer, I could have done that investment relative to the other one. But for me is about time. Yet you can’t be always in a rush, everybody is in a rush to build stuff and get rich but how do you put your people together? Your team, your cap table? That’s a key lesson from failure.
What is your ideal founder profile?
Someone that understands, and gets the timing and commitment needed. I don’t think it is about getting rich overnight.
It’s always about the founder. Do they really understand the domain they are about to enter, is it music or finance? For instance, music is a crappy business and finance is so big and with so many ways to make money. Do they really understand how does it work? Market, regulations…. Like people getting into crypto without really understanding everything around financial markets, not ideal.
A good founder overcomes a small market problem, they do a good job to figure how to move forward and they have domain experience.
What is your ideal investor profile?
Good question. Is there one? I don’t think there is a specific profile. Investors have to do many things to fill the hole, they solve problems from recruiting to sales.
A CEO shouldn’t run out of money and has to recruit very well. Two jobs really important for the CEO and the truth is that a great investor should help in there. Can the founder/CEO recruit smart people, grow fast, tell the story, get money fast? Can we help as investors? We want to help but still we don’t want to run the day-to-day of the business.
We have to find founders that can get from 0 to 1, build that product and get the first 10 customers without worrying about macro events. We want to make sure we help them raise capital and recruit great people.
What present and future markets are you most interested in?
One is definitely e-commerce. I am not an expert on it but we all buy on the internet, we can get whatever we want. We are all experts. It’s a fun and interesting global phenomenon. Huge market.
Also trading and investing. My main expertise, nothing surprises me anymore. We have Robinhood, Binance, eToro, Crypto…
From Roman to Egyptian times, money drives things, the language of money and language of markets drives things. We are constantly excited about markets when in reality they are just people, prices, and behaviour. I’m interested in people helping educate and mentor so more markets can be opened to more people and you can empower them to work better.
Could you share with us 3 startups you like and why?
Stocktwits. Obviously my own one. It continues to be fascinating. We made so many mistakes at the beginning but we still have the ability to be growing as fast as we are. Now I don’t have to do the dirty work but our CEO is a great guy, listens and respects the history of what we know about the company. It’s fun to see just the markets themselves become more popular. When we started at the end of the financial era, the world was different. No Robinhood, eToro or Coinbase. It is exciting to see all these young people driving innovation now.
Alpaca. They are enabling the backend to build your own brokerage, like brokerage in a box. The vision of empowering a decentralized network of smaller brokerages through a toolset that helps multiple creators build it themselves is compelling. Regardless of you being in Nigeria, Peru or Barcelona, you can build your trading operations. They are like Shopify for traders. Wouldn’t it be interesting to people that love markets to have their own 100 customers?
Rally Rd. They provide IPOs of collectible assets, allowing investors to buy fractional ownership in bags, watches, baseball cards or similar things, anything that has cultural and intrinsic value, something that it’s important for people. Whether they are the ones to win in this space or not, pretty interesting. My daughter is 23 and works there.
Could you share with us 3 investors you like and why?
Fred Wilson. My mentor. He is a pretty famous NY investor at Union Square Ventures. He is an investor in Stocktwits, a family guy, very geeky, always using edge technologies and a very young spirit around investing, always trying new things. He has the ability as an MIT person to make things doable and playable. It has inspired a lot of people in our generation.
a16z. Because they are so new and have grown so fast doing a lot around content with very bold big bets. They aren’t embarrassed to be wrong. The world needs people with thick skin to do that. Also, they are raising tremendous amounts of capital with relevant conviction, especially given that they are only 10 years old.
Fintwit. Really interesting as a whole community where tens of thousands of people that love markets interact with each other. Not even only 1 but this whole huge community force around the world - Reddit, Telegram, this whole moving orchestra of people talking about markets is pretty cool.
What are the 3 books you feel everyone should read and why?
“Reminiscences of a Stock Operator” by Edwin Lefevre. It is one of the earliest books about investing, speculation and the whole experience around the ups and downs. Anybody interested in investing can relate to that. People change but markets don’t change that much. Digestible in 1 or 2 sittings, explains how markets work and their behaviour. Doesn’t get old.
“Open: An Autobiography” by Andre Agassi. The tennis player story. The idea that you are alone and no one knows what is going on in your head. His issues with hair, his father, money, his girlfriend. Then the comeback to be the best in the world twice. Pretty fascinating tale of the human rollercoaster that is a top level person in the top of their game. Similarities with being an investor. I grew up watching this guy and still surprises me.
“Shoe Dog: A Memoir by the Creator of NIKE” by Phil Knight. The most important business book I have ever read. There was no computers when I started as an entrepreneur and this is a great book about how it was done back then. A hell of a story. 40 years of building Nike and the first 10 years without being profitable with pretty small operations, and then becoming super profitable. No VC would accept that. It’s a reminder of what entrepreneurial spirit is. Before technology, the risk people took was completely different. He had to travel around the globe and build factories during years, during decades, leaving everyone behind. Old entrepreneurial stories that kids won’t be able to relate with. We can build a business via zoom while on an airplane now. You can do anything, anywhere now. You can build a shopify and put some instagram ads. Amazing of what Nike built back then, the patience that entrepreneurs needed before internet is a lot different, it just does not exist today.
WILDCARD QUESTION
What are your views regarding the new decentralization trend exemplified in the Reddit situation as well as in the crypto boom (BTC, NFTs, etc)? As a founder and investor with vast experience on financial innovation, what changes do you expect in the VC industry?
About crypto … most successful people are open-minded and willing to play with these things. I got into Bitcoin at 12 cents in 2010, back then you had to go to the dark web and figure out how that worked. It was technical, mysterious and for me, stupid.
But I always play and keep playing with these things, the only way of learning is by doing. And I am very convinced that this time is different. Something big and interesting is happening. Maybe now my question is more: even though decentralization has momentum, if society goes back to routine as we have been seeing in November/December of 2020 with people starting going out and spending more and a vaccine in the works, will decentralization catch on? Will NBA Top Shot still be there? God bless it will. Bitcoin, ethereum, people developing new stuff on top of them, digital art … blockchain is the future. Now we are seeing it, now is different. And not just blockchain but decentralization as you mentioned. Creator explosion, Shopify, Patreon, Reddit, Stocktwits, OnlyFans. 100k true fans will find you and support you. Decentralization is here.
The world looks bad but we are in an increasingly tech-driven world. You can’t fight your way out of this, because it is a completely new group of people, you can’t buy the way out. NBA Top Shot won’t be bought by Facebook nor Google. It’s like Jurassic Park, you sit down no matter how many times you’ve watched the movie and think “why the heck are these people going to this theme park for? There is a T Rex there who is going to jump and eat them”. Tech wrecks every fence and destroys everything it comes through so decentralization will probably do that. Some big tech players like Facebook and Google (which have an unfair advantage) are trying to build barriers, the Chinese are learning to grow better and build a digital wall, and America will follow. But in this world of T Rexs and decentralization, it will jump over the fence and you can not put it back in the other side.
We will look back on this era of money bubble and government stimulus bubble and see that decentralization was painful for some but also a big opportunity to others, because Tencent, Alibaba, Facebook or Google couldn’t own it. You can’t put this thing on a cage.
But if bubble bursts too soon, I am worried we might not get all the good things about this though. Bubble means more money to spend on innovating in everything. Health longevity, medical progress, freedom, better quality of life. Not just decentralization. Let’s see how the vaccine factor works out. Is of human nature to focus on bad stuff. If we look at the macro, does it tell we are in a bubble? It doesn’t matter, you can get money or you may lose it either way. It is easy to say “oh there is a bubble” but what really matters is to try and do stuff. Great people usually persist on how I am going to make it without whining about it. Macro people are generally boring people. Don’t take me wrong, I’ve great macro friends but I won’t let them manage my money. The more macro people with this style the easier it is for me to invest. However if they have a lot of money they can self-fulfil their prophecy. If you are a government or a billionaire you have your point. But every time I see a founder talking this thing … it won’t help you get your firs 10 customers. Are we gonna get pain or fines? Guess what, if you worry about the wrong thing you won’t have Uber nor Robinhood.
And about changes in VC, money is becoming a commodity, specially with the internet and governments just printing a lot of it. Let’s see what happens. Spotting talent and building relationships is becoming more important and I can only do what I can do. So in this era, on the investing side, the faster the VC gets a point of view and builds a network the better. It is hard to be a generalist and people should have specialization, the faster you become an expert the faster you will probably accumulate wealth. Everyone can start a blog, have opinions and networks, you can build yourself through this and accelerate your own growth. Don’t worry about what other people say, this is a very simple plan smart people should do, push yourself into the network and continue to add value to the group, contribute to the network. It’s like a bank account, the more deposits you make, the easiest it is to take withdrawals in the future. Now the bank is the network, the community. You are not going to be able to do one thing and take two out of it, you have to contribute to the ecosystem, helping in careers and taking extra risk on certain projects, then you’ll see all pay its dividends. But there is not only 1 way to be a great investor and navigate the evolution of VC.
Big thanks Howard for sharing your views with us !
Big thanks to you, reader, for your time and interest !
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