E086: with Barry Silbert, CEO of SecondMarket Inc.

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about this episode

This week, Jason greets his guest, Barry Silbert, CEO and Founder of SecondMarket Inc., an auction marketplace for illiquid assets. Plus a new “Ask Jason” segment, news with Lon Harris, insights with Tyler and MORE!

Welcome to This Week in Startups Should a new startup stoop to buying traffic, we’re joined in studio by Barry Slber of SecondMarket.com, and this just in, Google is massively profitable. All that and more coming up right now, on this week in startups.

Did everybody see the NEW INTRO? Goosebumps!! That’s so awesome. No Insights from Tyler though.

Jason talks about his huge week. Traveling to support Mahalo, OAF etc. Jason laments about the poor service he received from American Airlines, and that he had it worse than the Chilean miners without wifi.

Boston OAF was amazing. NY had their OAF the same time.

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Ask Jason
05:45

Nick has an Educational Website. Nick has a question about websites that charge for a guaranteed portion of traffic. Is that a good idea?

Jason relates these services to a log with gas thrown on it. It will burn hot, then eventually die out. Better to start with kindling to build it from the bottom up. Lead generation is the exception to this rule, if the math works.

Better to have great content and encourage it to go viral. You have to change every member of the staff to start a blog and get the links and viral content to other people.

Barry describes how he (SecondMarket) creates data that is like catnip to the media outlets. That’s the way to go.

Nick rates the advice as an 8. He’s glad he didn’t spend money to throw gas on the log.

Other traffic ideas – Facebook, YouTube to get some early adopters.

Interview
16:10

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Please thank @DNAMail on twitter. Free because of people like @dnamail

Barry and Jason discuss the nuances of SecondMarket. They address selling the stock that can’t be publicly traded. Barry describes himself as a ‘recovering investment banker’ Barry describes his duties as an investment banker.

Barry discusses the difficulties of selling off assets as part of a restructuring, which lead him to create SecondMarket. When they launched, there was no technology, just guys in a room, with a phone and a spreadsheet.

Barry describes the challenges with outsourcing the technology as they tried to build out their business.

Barry discusses the VC experience and the valuation that SecondMarket received after their angel round.

Jason and Barry discuss some of the products and how SecondMarket included those products.

Jason asks about ‘private company stocks’ and how SecondMarket can do this without problems with the SEC. Barry gives the backstory on how they got into the business of selling private stocks, discussing a particular interaction with some Facebook stock. Because of the lengthy time to have company go public, sometimes you get no benefit from your stocks for years. We’re giving a company the option to stay private and go public at the right time.

Companies are embracing the notion of selling off some of your stock without having to go public.

Jason and Barry discuss that Mahalo is one of the companies that SecondMarket users want to buy. Jason asks about insider trading rules and if they’re violated by SecondMarket. Barry describes how to circumvent this problem by scheduling the sales once per year and providing everybody information.

Jason asks the downside of this model. Barry describes some of the rules and models for using the service.

Jason and Barry discuss the problems with being a public company, including shareholders, SOX compliance, SEC regulations etc.

Public markets have become a way to flip stocks. The length of holding stocks has diminished from over 5 years several years ago to less than 1 year today.

Jason discusses the ‘dream’ of ringing the bell at the stock exchange. Party! Balloons! Cake! Barry reminds Jason that the cast of Jersey Shore rang the bell too. That killed the buzz.

Companies need to be 100M more in value to be trading on SecondMarket. SecondMarket focused on 500M initially. Barry gives his vision of getting to a much smaller company which trade their private stock.

Gowalla, SeatGeek, Blippy are all mentioned.

Eventually Barry would like to get to the level of companies raising their ‘primary’ money. Jason discusses Open Angel Market [How his value of having 3000+ startups trying to raise money has value]

SecondMarket makes fees by charging 3% (1.5% from both buyer and seller). They have 150 employees at this time.

Jason and Barry discuss the VC vision of SecondMarket. Initially they said it wouldn’t work, but now they’re buying behind the scenes.

Jason strategizes about how to increase his investing credibility by buying Twitter, Zynga and Facebook pre-IPO, so he can put it on his resume.

Jason and Barry discuss the long term strategy for SecondMarket and that Barry will never have any better idea than what he’s doing.

If you had a Magic Wand and could correct anything (3 things)?
Misunderstand of how we operate (get rid of wild west perspective)
Looking for incredible talent – (More great people)
More hours in the day

Barry and Jason discuss some of the ways that companies are interacting with SecondMarket and some of the fees being imposed be the company.

Average transaction on SecondMarket is 2M dollars.

News
57:20

Thanks @godaddy, @dnamail, @mailchimp

Jason is giving out 10 copies of the David Cohen and Brad Feld books to anyone who tweets using #TWiST, chosen at random.

———–
Verizon and Apple iPad
Why is this happening now? Past difficulty?

Jason says this is triage. ATT in unusable, but this works with my Verizon MeFi to use the Apple devices. Jason vents a little bit on the ATT service and discusses ATTHalfPrice.com and wants to have someone build a class action suit.

Jason discusses the root of the problem may be the volume of the upload/download of videos.

ATT = fail (Jason–Bleep/Bleep – 20 dollars)

Tyler discusses the tower problem. Better service means more towers, but nobody wants more towers.

Jason creates a message to the CEO of ATT.

———–
Google Earnings 7.5% 7.29 B dollars in revenue 23% growth.

Google growth? Wind power, robot cars?

Jason congratulates Google for Crushing It. He discusses the difference between Facebook and Google and that one of the two is out of whack. Robot cars? Yes. If they can do it, that’s another 100B dollar company.

Google ventures investing in everything. As little as 100K in a company.

Tyler discuss the sexy nature of the self driving care. It rebooted the image. Helps with the recruiting.

All discuss the potential of class action suits when one of these cars are in an accident.

———-
Yahoo – takeover rumors. Site went down.

Acquisition AOL/News Corp? What would they do with it?

Jason discusses the fact that NewsCorp tried to buy Yahoo earlier. Also that their Asian properties, AliBaba etc. have 20% of the value. Jason gives it a 2% chance that either company will buy Yahoo.

Barry would love to see them

TC: Earthquake in a trailer park–JC: People lease prepared for the worst thing. TC: Trailer parks usually get hurricanes and tornadoes, now earthquakes on top of it.

———-
UberCab 1.25M angel financing round.

Jason is an angel investor. What was your thought process in getting involved. He discusses the backstory of how he got involved in UberCab and some of the functionality of the system.

Not needing cash to take a cab and having them on-demand is HUGE.

Angel investing is like crack. Barry discusses his angel investments.

Thanks for tuning in. Thanks to Jason Nazar for pitching in on Tuesday. Thanks to DNAMail, MailChimp and GoDaddy. Thanks to Storm On Demand for hosting the show.

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