Apr 21, 2020

The Real Market With Chris Rising – Ep. 41 Spencer Rascoff

Welcome to The Real Market Podcast! In this episode, we have the privilege of hosting Spencer Rascoff, an accomplished entrepreneur and company leader. With an impressive track record, Spencer co-founded renowned platforms such as Zillow, Hotwire, and dot.LA, and served as the CEO of Zillow for an incredible decade. As an active angel investor in over 50 companies and the executive chairman of dot.LA, Spencer has a deep understanding of the Los Angeles tech scene. His expertise extends to academia as well, having been a Visiting Executive Professor at Harvard Business School, where he co-taught the influential "Managing Tech Ventures" course. Join us as Spencer shares his invaluable insights on leadership, diversity and inclusion, and the dynamic world of startups.
Episode Transcript

Chris Rising (00:01): Welcome to The Real Market with Chris Rising, the only podcast that brings the real estate conference panel to your headphones. You’ll hear from superstars from every realm of commercial real estate, the biggest brokers, the most well known architects, the largest investors and the most visionary developers, learn what they do, how they do it, and what drives their success. We’ll discuss the latest trends across regional markets, capital flows, both national and global, and we’ll explore technology’s role in shaping all of them. We’ll take a clear eyed look at where we’ve been, where we are now, and what’s to come. Real conversations, real experts, real insights, this is The Real Market.

Chris Rising (00:49): Welcome to The Real Market with Chris Rising. I am very honored to have Spencer Rascoff with me today. I know my audience is quite familiar with Spencer, founder of Hotwire, founder of Zillow, and his latest venture is a media venture called dot.LA. I think we’ll have an engaging conversation, so Spencer, welcome to The Real Market with Chris Rising.

Spencer Rascoff (01:12): Thank you. Thanks for having me, I’m excited to be here.

Chris Rising (01:15): Well, I know we were trying to do this a couple of weeks ago and I think it was on the Friday of when the city and county said we were shut down, but-

Spencer Rascoff (01:26): Here we are.

Chris Rising (01:27): That was like March 10th, and here we are on April 13th, and we’re still shut down. So what’s been your … You’ve started business in a lot of different environments from 9/11 to the great recession, but boy, what’s your initial take here on April 13th, 2020, of what we’re going through?

Spencer Rascoff (01:47): Boy, where to begin? I guess I’ll start with the negative and then I can end with the positive. I’m personally super bearish about the economy and about the stock market from here. I think that the stock market is totally under appreciating the severity and seriousness of the upcoming recession that’s, we’re going to see 15 to 25% unemployment in. And so that has me very concerned, sorry for the downer. The positive is that creates a lot of opportunities, and a lot of extraordinary companies have been created through downturns for a lot of good reasons, not the least of which is that recessions or just moments of substantial change because the incumbents to be challenged and they changed behaviors. New services are tried, new habits are formed, new businesses are hatched and created, and generally it’s a less competitive time as well because others have a hard time raising capital for ideas such as yours. So there are a lot of good things that come out of these types of downturns, but I think that’s going to be pretty severe.

Chris Rising (03:11): Yeah. For our company, we’ve been spending the last several years focused on carbon reduction, health and wellness, and creating a social community in all of our projects. And I just talked with our team and I said, we always knew health and wellness was important, I don’t think people will go back into offices or retail unless you can solve health and wellness first. So that’s something I wanted to be right about, but it’s something that we saw coming. But you’ve been pretty prophetic in the businesses you’ve started during tough times, your venture dot.LA has gotten a lot of press and recognition, but why don’t you describe that for our audience?

Spencer Rascoff (03:48): Yeah. So dot.LA is a media site focused on the LA tech community and there’s a lot happening in LA tech. There are a lot of great founders and private unicorns, public tech companies, VCs, incubators, startup studios. There is a very robust tech ecosystem, and yet when I looked at the landscape in LA tech, I was surprised that there was very little journalism and therefore people didn’t really have a sense of just how big LA tech was. So the hole I’m trying to fill in dot.LA is I’m trying to bring together the LA tech community and shine the light on all the great entrepreneurs and founders and companies, startups and otherwise, that are building an exciting and robust tech ecosystem in Los Angeles and Southern California.

Spencer Rascoff (04:34): So I raised a couple million dollars seed round from the LA tech community. We hired a great editor and chief and CEO and we’ve got about 10 reporters now from the LA Times, NPR, AP, Bloomberg, Wall Street Journal, et cetera, and we’re putting out a great product. So it’s dot.LA and the news website, it’s free, newsletter, podcasts, video, et cetera, and webinars, and we’ve been up for a couple months and I’m really excited about it.

Chris Rising (05:08): So I think it’s really an interesting idea. I was around at the beginning of when Bisnow, which was a real estate focused media company that started with events but really got digital. I hate to admit it, but I go back to being a young broker during the real boom of tech in ’98 to 2002. And then the fall, I did a bunch of trying to get tech clients in Santa Monica and that whole area. It’s been really interesting to watch this 20 year period of the ups and downs, but it is an amazing ecosystem that’s been built in Silicon Beach and it kinda goes all the way, different parts of the city been very influenced with this new techtainment. But having said all of that, what’s going on with print journalism and journalism as a whole in terms of a business? What gave you kind of the idea

[crosstalk 00:06:02]-

Spencer Rascoff (06:02): It’s, yeah.

Chris Rising (06:03): Make money this way?

Spencer Rascoff (06:05): I mean, obviously it’s a bit of a contrarian bet. I had to launch a news service in the midst of a period of systemic decline for the news business and even more contrarian to make it a single geography. So it’s a local news business and then even more contrarian to make it just tech, so it’s a single industry niche. My belief is that there is a lot of money in the LA tech community and very little journalism, and that there’s a lot of interests. There are hundreds of thousands of people that work in and around tech in LA and yet it’s so bereft of journalism that, that disconnect creates opportunity.

Spencer Rascoff (06:56): Now, the business model originally for it was going to be live events. It was going to be conferences and events and sponsored dinners and workshops and other things that physically bring people in the LA tech community together. And obviously we’ve pivoted already and started an online series of web-based events, which have been very well attended and are producing great content, but don’t have the same revenue potential as in person events. So we’ll see. The reason I raised a couple of million dollars seed round was to give us a couple year runway to find our way to a business model. So far the traffic has been extraordinary. The editorial product has been excellent.

Spencer Rascoff (07:40): The reception from the community has been overwhelmingly positive. And we have enough time to find our way to a business model that will I think present itself and it’ll be some combination of physical events, online events, sponsored podcasts, some advertising on the side and some other community building revenue opportunities. The first step was, as a startup, the first step was to build out an editorial product that we can be excited about and proud of, and I really like how we’re doing in that regard.

Chris Rising (08:14): That’s terrific, and the, who knows about when the world comes back, but I know when it does, people are going to want to gather and so I think there’s a lot to it. I think one of the things, and I haven’t done business throughout the country, but really specifically a lot of business between San Francisco, Silicon Valley and LA, one of the things that I have always found interesting was how disconnected the tech community has been in Los Angeles. Something I thought might be changing that, and I’d love to get your thoughts on that is we have this new category, at least in real estate that we now call it techtainment, which is, you think of the Disney’s has got a big lot and you think of Warner Brothers has got a big lot, but then that’s not where … What’s happening necessarily is what we’re seeing is the Amazons who don’t own any property in Los Angeles per se is got Netflix and now, several others.

Chris Rising (09:01): And this is a convergence of the entertainment and technology that has really taken off and these people are taking physical space and we’ll see how it goes, but I venture to say they’ll come back. And so there’s become a really identifiable sector within tech in Los Angeles recently, but that hasn’t always been the case and tech has been pretty broad. So when you talk about tech, what kind of areas within technology do you think really have a home base here in Southern California and brought about this idea for you?

Spencer Rascoff (09:34): Well, you’re right that tech here in LA is really the intersection of media and entertainment and pop culture and streaming. And in a lot of ways Netflix is the biggest LA tech company, and even though it’s technically based in Los Gatos, but it’s sort of center of gravity and its beating heart creatively is in LA. And you can also likewise argue that Disney is a huge tech company now. I mean, Disney plus has 50 million streaming subs and that’s obviously then LA tech company. So the categories that define LA tech generally are B2C, so business-to-consumer, a lot of media and entertainment. We have a lot of direct to consumer. We have some biotech, but that’s mostly in San Diego or even in a little bit orange County. We’ve got a lot of eCommerce and ad tech.

Spencer Rascoff (10:30): Some social media, obviously Snapchat is notable in that regard. And there’s a lot of cannabis as well, which is a category of tech, if you will, that people tend to forget about. And there’s a lot of food and health and wellness food tech companies here as well. So it’s pretty diverse and there’s some B2B things as well like Cornerstone On Demand, for example, is a very large B2B SAS, HR tech company. And then of course aerospace with SpaceX and relativity and kind of our aerospace roots here with McDonald Douglas and others. So we really have it all in L.A. But again, you wouldn’t know it because nobody’s been a town crier the cheerleader telling everybody and sort of boasting on behalf of the community until now. And dot.LA is of course going to fill that hole.

Chris Rising (11:31): So I’d be interested to get your take about the role that journalism plays. I mean, it’s been funny in some instances they’ve made television shows, Silicon Valley and the way journalism, especially in the first season or two portrayed and some of these hackers not hackers, but journalists who acted like hackers to get information. And I’ve read some interesting Syfy books about where AI’s going and the role that pop culture is going to play in that. So what do you think the role of dot.LA is going to be? Is it going to be a gossipy kind of role? Or because that’s just human nature or what do you think the role for dot.LA will in the larger tech universe?

Spencer Rascoff (12:18): I mean, I think there will probably be some gossipy voyeuristic type product, but we’re not Valleywag we’re not that’s definitely not what we’re leading with. The best comp is actually a company in Seattle called GeekWire which does I think, a terrific job of covering the Seattle tech scene. And GeekWire actually invested in the seed round of dot.LA. So they’re an investor of ours and we’ve partnered with them on a lot of initiatives already. And so if you want a sense of like what dot.LA is editorial direction is you can look to GeekWire, which is to say they do a great job of covering the big companies in Seattle with the same type of editorial, caliber and quality that you’d expect from the New York times or the wall street journal.

Spencer Rascoff (13:08): So they cover Amazon and Microsoft really well, just like dot.LA is covering Snap and Disney very well, just like you’d expect the LA Times or the New York Times to cover them. But they also provide a lot of first inc, first coverage on startups that you might not be familiar with. And so we’re doing pieces on companies that you’ve never heard of. And we’re covering the venture community as well. We had a great piece last week on the layoffs at Bird for example, the scooter company, which it was really an expose piece that talked about how poorly handled Bird layoffs were. And we have a good profile today of a firm called M13 which is a very big venture capital firm, probably the biggest venture capital firm that you’ve never heard of here in LA. And they’ve got a couple of hundred million of assets under management. They’ve got a lot of great companies in their portfolio. And yet, because again, there’s so little media coverage here, you probably wouldn’t have ever heard of M13.

Spencer Rascoff (14:09): Now if they were in the Bay area, you would have heard about them all the time. But because of Tech Crunch and other local of other national and local news services covering Bay area tech. But I believe it’s LA Times. I think in 2030 we’re going to look back and say the 20s were to LA as the 2000s were to San Francisco or even the 2010s were to Seattle. Which was just this huge boom time of tech in that local geography.

Chris Rising (14:41): Well, I think it’s got drivers around the techtainment that is interesting but I also think you’ve mentioned a lot of different industries that I think will be extraordinarily important, including I think AI because AI will be very tied I think to pop culture. Let me just tell my audience there’s a great article in fact I read it before we started, it’s called, it felt like a black mirror episode or it is about the Bird, how Bird laid off people. And I think it goes to probably some real inexperience at the top but also because company culture is really tough and you’ve spent a lot of your career writing about company culture.

Chris Rising (15:20): You’ve now got another startup where I have to imagine company culture is important for us. It’s what has made our company is our company culture. What would you say that great piece on Bird but what would you say about the company culture here in the middle of this pandemic? And if you didn’t have it, is it too late? What can people do? Can you just talk about that in the sense of this horrific period of time we’re in?

Spencer Rascoff (15:49): Yeah. Well, I mean it’s through crises, that leadership shows itself and that culture is formed. And so no, it’s not too late. In fact, there probably are a lot of companies that were sort of just doing great and doing their thing and hadn’t really thought very much at all about curating and pruning and caring and giving care and feeding to their corporate culture and now it’s more important than ever. So to me, company culture should not be confused with perks. It frequently, like if you say to somebody like, “What’s the culture at Google like?” A lot of the times they’re like, “The culture of Google man, there’s free food all over the place, it’s beautiful campus. There’s volleyball and all these activities and like free dry cleaning.” And I’m like, no, no that’s not the company culture, those are perks and benefits.

Spencer Rascoff (16:43): Company culture is how decisions get made, how resources get allocated, how initiatives get spun up or canceled and why. And it’s how people relate to each other and communicate with each other. Like that’s company culture. And in a crisis again that’s more important than ever because this is when employees are nervous. This is when resources are strained, especially as companies cut back. And so it’s when culture it’s just doubly important.

Chris Rising (17:21): In reading the article to me it just it felt like that Travis was a little tone deaf, but it also feels like nobody wanted to confront the issue because these are hard things. I mean, I’ll tell you just today dealing with our lenders and all that, it’s hard to push my people to say, “We got to be honest about this stuff.” What are some things that you think are just kind of ground rules in company culture that if you don’t have them, you’re probably not going to be company that can grow?

Spencer Rascoff (17:51): I mean, the golden rule kind of treat others as you’d want to be treated is a pretty good one. That the old adage like, everything you need to know, you learn in kindergarten that’s pretty solid advice. I think in the case of managing layoffs not specific to Bird, but just more generally, I think in the case of managing layoffs you need to be as honest and forthright and communicative and fair and empathetic. I mean, those are all really important adjectives in business all the time but in particular through challenging times. I think you also need to try to unite and unify the survivors. The people that are still with the company afterwards because getting them to reconnect to the mission and recommit to the company and remember why they decided to work there in the first place and agree to work harder and smarter in a challenging period with a smaller company after those reductions that’s what makes all the difference.

Spencer Rascoff (19:01): That’s the funny thing, it’s not funny, but that’s the interesting thing about layoffs is the most important thing about them is, is the next day, the day after. It’s not even really the layoffs themselves and it’s what do you say to the survivors and how do you get them to be fired up? And I mean, I’ve done that several times in my career unfortunately. I did it in 2008 during the financial crisis when we went from about 200 people to about 150. I did it at Hotwire in 2001 after 911 when we went also from about 200 people to about 150. Both of those experiences were two years post founding.

Spencer Rascoff (19:39): So there’s something, some sort of bad luck trend string that I have of companies that I started that about two years after founding or about 200 employees. And they have to be reduced to about 150. And I think what worked well in both of those situations was being very honest and direct and empathetic and then in particular with regard to the path ahead, the road ahead was explaining to those employees why they’re there, what the big picture is, what the big dream is that we treated the departed as fairly as we could that we think their jobs are safe or as safe as we can be possibly expect to be able to commit to them. Give it all the uncertainty.

Spencer Rascoff (20:31): And now let’s forge up that hill together. And in both cases, that next six month period was an explosion of creativity and efficiency and throughput and productivity which actually significantly contributed to both of those companies success. And I think if you asked every employee a year or a year and a half later, all of them would have said that it was a blessing in disguise, that we had those reductions, that the company just exploded in a good way in terms of creativity and efficiency and meetings were faster, people work smarter. There were fewer people on email chains because there just were fewer people. There were fewer people. There was just a sense of urgency that was really important to success.

Chris Rising (21:24): Well, it’s interesting I often quote about the workers at Google who say, I work at Google more often than they say I work for Google. And I use it as a statement on the importance of office, that they work at Google because they go there and they work and it’s an unbelievably engaging environment and they take care of every need. What do you think, I’m going to just pivot over a little bit to my business. Given that you see Zoom is now more valuable via the stock exchange than American Express, what do you think this trauma that we’ve all gone through is going to do to the importance of office space and culture? What do you think it does in terms of remote working and culture?

Spencer Rascoff (22:11): I mean, to be perfectly honest, I think that people are going to use needless office space. I think that we’re learning two things from this experience. Number one is that a lot of those business trips that we went on, turns out they were sort of unnecessary. That day trip from LA to San Francisco for that one meeting and then the quick turnaround or God, I can’t tell you how many, I probably did 10 or 20 trips a year to New York where I just took a red-eye from the West coast in New York, did four hours of meetings and then flew back. Almost all those trips, at the time I thought, this is probably unnecessary, but it would be impolite for me to video in or to phone in. Well, it won’t be perceived as impolite anymore.

Spencer Rascoff (23:05): So I think there is going to be a structural reduction in business travel. And I’m coming to your real estate question a second. Structural reduction in business travel, as we’ve all gotten used to video conference and phone calls. And that has huge implications on the economy. I mean, there are too many hotel rooms at the airport in Pittsburgh or whatever, pick your city, like there are too many hotel rooms. If I’m right and there’s going to be less of that business travel, then we are over hotel room in a lot of places and that has implications. Now with respect to office space, I think it cuts both ways. We’ve all learned that it’s quite possible and delightful in some ways to work from home and all the commuting time I got back. I think I read a research report today that said, they think that people are getting back 240 minutes a week between commuting time and lunchtime, is like 36 minutes a day is what we used to take for lunch at work, and then the average American commute is like 50 something minutes a day.

Spencer Rascoff (24:11): Sorry, it’s sort of 40 minutes, I think it was a week. Anyway, and this was a research report that was arguing that gaming companies are going to be the beneficiary, because now people are going to be able to play so many more video games because they have all this time back. But anyway, we’re seeing that we can get a lot more time back if we work from home, but we’re also seeing that the dogs barking and the kids and the other distractions of working from is a pain in the neck. So just as one little micro example, even with dot.LA for example. So dot.LA has a coworking space across campus in LA in Beverly Hills, but we also use their Santa Monica and their downtown and passing offices. And we of course haven’t been there more than a month, and we’ve been trying to decide, do we cancel that or when this is over, do we go back to using coworking?

Spencer Rascoff (25:03): And on the one hand I’m like, well, we could save four, five, 6,000 bucks a month and we’re only 10 employees and we’ve figured out how to do this virtually without a physical space. On the other hand, my team really wants to get back to the office. My team says, no, we miss the collaboration and we miss the efficiency, and it’s important to get out of the house, et cetera. So I think long story short, I think there’s going to be some cutbacks. I think that there are going to be companies that push more into hoteling where people share desks. That 100 employee company will still have office space, but they’ll have desks for 80, and they’ll no longer frown upon work from home.

Spencer Rascoff (25:49): Zillow had 5,000 employees when I left to CEO and I did not allow work from home, and I’ve very deliberately never allowed work from home. There was this perception that people aren’t efficient and I’m pretty sure that this will change that perception that now companies like Zillow and other big employers will allow work from home and therefore you’ll need less office space, but there still will be office space.

Chris Rising (26:11): Well, first of all, I just kind of low conflict of interest as an investor in cross-campus, I really hope that you go back to it. That would be a good thing. I’m glad you’re there instead of [inaudible 00:26:24]. So I did a podcast last week with Anthony Slumbers who’s a British kind of academic real estate prop tech person. And he was saying, the problem with work from home is most people think you can just operate your business the same way at the office as you can work from home, and it just does not work. And he gave a lot of examples of how the companies that can effectively do a mobile strategy instead of calling it work from home what one has to do. And one of the points he makes is that any job within a business that is repeatable and predictable, they’re just, people are going to cut those out.

Chris Rising (27:00): So there’s going to be a portion of the workforce that has just gone. The other thing that I strongly believe is the baby boomer lasting mentality of like you had to have work from eight to six, and that meant you were working hard, that has blown away. And I really hope you’re correct at the initial meetings. I fly to New York to one or two times a month, I would love to not have to do that for any initial meeting. I just don’t think though that if someone is going to give me a hundred million dollars to invest, they’re going to do it over three Zoom calls. I still think-

Spencer Rascoff (27:33): No, that’s fair.

Chris Rising (27:33): That business [crosstalk 00:27:34]-

Spencer Rascoff (27:34): For sure, I agree with that of course. But I mean, God, I had so many like coffee, like get to know you type things, which then six months later become the a hundred million dollar LP, and a lot of those will be replaced. Anyway, even board meetings, like I’m on a board in Boston and I go there like six times a year and this is not necessarily, like [crosstalk 00:28:02]-

Chris Rising (28:01): No, I think between-

Spencer Rascoff (28:02): Totally be video.

Chris Rising (28:03): Yeah. Between software like director point and similar things and a Zoom meeting. I do caution though that we have … I think this pandemic is so awful and has crushed us all, so much people are closing their eyes to the major security risks. I mean, because the easiest way to hack somebody is to get into their home wifi, get access to their computer and then you’ve got access to the company’s servers. So it’s to me, this is a stop gap measure, but you’re going to run most of your important technology through a very encrypted system via an office in my opinion.

Chris Rising (28:40): I think the one good thing about all this is I was starting to … There’s nothing good about it, let me restate that. There is nothing good. But what I saw happening, I was telling my team, I said, I’ve been through three or four of these recessions and when I start hearing that we’re not paying people enough and we have to be really careful about keeping everybody at pay levels, that’s always an indicator to me that maybe things have gotten out of whack, you know what I mean? All of our employees are paid based on market study, it’s not like we just grabbed numbers out of a hat. So I do think the businesses are going to rethink.

Chris Rising (29:15): One thing that’s happened and it was driven really by WeWork is this incredible densification of space. I think you’re going to see that just totally reversed. We’re going to go away from … I was at WeWork’s headquarters about nine months ago and they were one person per 50 feet. It was like a beehive, an anthill. So I think that’s going to change. But let me just take what you’re doing with dot.LA and the VC community here. I mean, I know Prop tech is big thanks to our friends at Fifth Wall they’ve really built a community here, but there’s a bunch of what I see hardware businesses when I talk about hardware I’m talking to like plumbing and things like that, that are now becoming digital with sensors on them in digital. And a lot of that’s coming here from Southern California.

Chris Rising (30:08): So when I look at what you said about 2020 is being the Southern California decade, I really see it. Is there outside of the techtainment and some of the obvious ones is there anything that you’re seeing in terms of the migration from just Silicon Valley East that’s happening in people who are following dot.LA? I mean, are you seeing it in downtown LA? Are you seeing it and Los Gatos? This is kind of-

Spencer Rascoff (30:36): Absolutely. I mean just Service Titan is an example of a B2B it’s a basically like a scheduling service for small businesses, for plumbers and home repair people and it’s just a good example and I think if where are they based? I think they’re in Pasadena. I mean, LA tech is not just bubblegum kind of consumery like celebrity driven. I mean, there’s a lot of that like, one of the interesting things that, one of the interesting tailwinds that LA tech has, is that LA is the capital of influencer culture. From athletes to celebrities to musicians. Like, I mean, to social media influencers. Like all of that is headquartered in LA, even more so than New York. And that’s how a lot of brands are built now is through that social media or just celebrity influencer culture.

Spencer Rascoff (31:37): In fact, not just built many of those brands are hatched from those influencers. But geographically speaking, there’s a lot in downtown. I have friends, I’m an investor in a not yet announced startup that’s upfront funded and they’re in downtown LA. Just as an example there about 10 or 15 employees. They raised 5 million in venture capital and they’ll probably be a hundred plus employees in a year. So they’re downtown. I’m an investor in Relativity that’s down in I think it’s in they weren’t also going to do, I think they were in Los Gatos I think they just moved. Obviously there’s Tons of Venice there Santa Monica. I mean it’s pretty spread out. That’s one of the advantages and disadvantages. The advantage is if you are a tech worker in LA, you can find a tech company within 20 minute drive of your home, almost no matter where you live in LA. That’s the plus side.

Spencer Rascoff (32:41): The negative is, it’s very difficult to just to unify a community that’s as geographically spread out as ours. It’s not unlike the Bay area actually. I mean the Bay area tech scene goes from like Sausalito Tiburon in the North to obviously the city of San Francisco to the East Bay and then down all the way to San Jose. And that’s basically like us, if you think of like Santa Barbara, then down to LA and then down to orange County and then East to downtown LA. It’s a similar size area. It’s about two hours from one to one side to the other. That’s basically what the Bay Area is.

Chris Rising (33:20): Yup. I think you’re right on that. I think the pushback question, people ask me a lot and I’d love to get your sense, is do we have enough programming engineer, computer scientist talent here in Southern California to compete with Northern California to really grow?

Spencer Rascoff (33:39): Mostly. So two things. Firstly, believe it or not LA County graduates more computer science grads than any County in the country and undergrads and graduate students. But also a lot of companies now are more geographically dispersed. Well two things. Number one, they’re more geographically dispersed, meaning you can have a 50 engineers in LA, 50 in China and I don’t know whatever, 25 in the Bay Area and that’s doable. And it didn’t when the early tech companies of [inaudible 00:34:26] the Silicon Valley were up and coming, you needed to have everybody in the Bay area. And so that’s advantage to Silicon Valley. But secondly, so many services are distributed now that you actually need smaller tech teams, right? I mean you’re using AWS and you’re using for cloud and you’re using this service for storage and this service for CRM and the service as an email service provider, like you’re not building everything in house the way it used to.

Spencer Rascoff (34:54): And so you can get really far with 10 or 20 engineers. And then you supplement with Upwork or some of these virtual services to get freelancers. And then maybe you open a second engineering office and with only 10 or 20 full time engineers in your headquarters like that. How I started in 1999 in San Francisco, we had 200 plus engineers if we were starting Hot Wire today, we could totally put it in LA and probably get by with 20 engineers full time in LA. And that would be enough. And everything else would be freelance and remote and shared services. Chris Rising (35:34): We’re getting near the end here, but I always ask people on my podcast. How did you, when you set up dot.LA, what kind of infrastructure did you use? Did you use a Google bat system with Google calendar and mail? Did you use Microsoft? Are you using any project management? How are you set up to work?

Spencer Rascoff (35:54): Yeah, so we use Slack. So same question for dot.LA and another startup that I’m doing right now, which I haven’t announced yet, which is unfortunately for me headquartered in San Francisco, but employees are pretty remote and that’s venture backed too. So I’ve got an N of two to answer this question. And the answer is Slack for workplace collaboration, Trello for like another form of workplace collaboration. The Google suite for everything all the office productivity, so mail, calendar, et cetera. Gusto for benefits and HR and payroll. And you know remote lawyers. So one case in Cincinnati and in one case in LA where we’ve never even met in person the lawyers. And for like in a matter of a week you can start a company.

Spencer Rascoff (36:54): Actually in the case of dot.LA, we have no engineers. So we use a service called Rebel Mouse, which is a basically like a publishing platform a company in New York that you know, we paid them to basically build the website and turn over to us a CRM and a publishing platform. And we have no engineers dot.LA. And in the case of the San Francisco one, sort of as I was describing just a moment ago, we have only five or six full time engineers, but then we’re using lots of shared services and open source code things that 20 years ago we would’ve had to write ourselves or 10 years ago we have to write ourselves. So anyway, those are the services, it’s amazing, it’s quite extraordinary how easy it is. inexpensive and remote friendly it is to start a company.

Chris Rising (37:43): Well that gives me great faith that AI is not going to take over the world but if you can be creative, you can do it. So Spencer I really appreciate this. Hey, could you give everybody your Twitter handle and how they can follow you beyond dot.LA. Spencer Rascoff (37:57): My Twitter handle is Spencer Rascoff, so @S-P-E-N-C-E-R-R-E-S-C-O-F-F. My email is [email protected]. Spelling @D-O-T.LA and website is dot.la.

Chris Rising (38:12): That’s fantastic. Well, I really appreciate it and I look forward to meeting you when we can get back into a physical world.

Spencer Rascoff (38:16): Absolutely. Thanks for having me.

Chris Rising (38:19): [crosstalk 00:38:19] and thanks for doing it. All right, have a great day.

Spencer Rascoff (38:22): That was good.

Chris Rising (38:22): Thanks.

Spencer Rascoff (38:23): Bye.

Chris Rising (38:23): Bye.

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