MassChallenge founder and VC John Harthorne thinks now is the best time ever to invest in seed-stage companies. Listen to learn why.
Click here to read full episode transcript.
Highlights include:
Sal Daher Interviews John Harthorne, VC on “Why Invest Now?”
Sal Daher Gives a Shout Out to Çağrı Savran for Introducing John Harthorne, VC
Sal Daher Introduces John Harthorne Who Founded MassChallenge and Is Now Raising a Venture Fund
“…we haven't seen an opportunity like this potentially ever. And I think this will probably be the best venture vintage in history…”
“…it's typically during periods of recession when you have the best performing venture funds. And if you look at the last downturn during the global financial recession, you see Airbnb and Uber…”
“…new talent will flood into the market and create the new technologies and companies that may displace Bezos and others…”
“We're going to have new ways of working, new ways of travel, new ways of doing everything. I buy your thesis entirely.”
John Harthorne’s Two Lanterns Fund Isn’t Loaded Down with Portfolio Companies Failing from COVID, It Gets to Choose Startups That Will Prosper in the New Climate
John Harthorne’s Portfolio: DriveU.auto, an Israeli Startup with Super Reliable Tech for Controlling Truck Remotely
On DriveU.auto: “...if it's an 18-wheeler, you can't be dropping packets and lose touch for a second with the vehicle, you need to have constant communication.”
On DriveU.auto: “…experienced top-tier Israeli angel investors were excited about that opportunity and they're making good traction. It was our first investment.”
John Harthorne’s Connection to MassChallenge Allowed His Fund to Participate in a Closed Round for StrongArm Tech, the Startup Getting Massive Traction with Its Wearable Worker Safety Device
Limited Partners in John Harthorne’s Fund Get to Put More Money to Work in Portfolio Companies without Fees
John Harthorne’s Portfolio: Lex-Markets.com Is Creating a Deep Market for Fractional Ownership of Real Estate – It’s Backed by Heavyweights in Real Estate Who See the Massive Opportunity
“…you have with a discerning eye for interesting companies…you have the sort of deal-making, the deal origination connections that…allow you to get involved with interesting deals.”
John Harthorne, Founder of MassChallenge & VC: “Yeah. I'm such a firm believer that the more that we can promote innovation the better.”
How John Harthorne Came to Found MassChallenge, the Hugely Successful Accelerator in Boston
John Harthorne Is Named After the Founder of Harvard Medical School
Parting Thought from John Harthorne: “So, for the angel investors out there, look, I think, again, there's never been a better time in my opinion to invest right now in early stage disruption. The returns should be excellent.”
Transcript of “Why Invest Now”
GUEST: JOHN HARTHORNE, MASSCHALLENGE FOUNDER AND VC
Sal Daher Interviews John Harthorne, VC on “Why Invest Now?”
Sal Daher: Welcome to Angel Invest Boston conversations with Boston's most interesting angels and founders. I'm Sal Daher. Your host, who is tremendously curious to talk to the people who build all these fantastic technology companies around Boston. Today, we are really privileged to have with us, John Harthorne. John. Welcome.
John Harthorne: Thank you. It's great to be here. I
Sal Daher Gives a Shout Out to Çağrı Savran for Introducing John Harthorne, VC
Sal Daher: I want to give a shout out to Çağrı Savran for connecting me with John Harthorne. Çağrı is friend of mine. I'm on the board of his company, Savran Technologies. He's a tremendous guy and he knows John personally because his parents...
John Harthorne: Our parents knew each other. Yeah.
Sal Daher Introduces John Harthorne Who Founded MassChallenge and Is Now Raising a Venture Fund
Sal Daher: Your parents know each other. And so thanks Çağrı for getting me together with John for this outstanding interview. Now, John is the guy who founded MassChallenge and then ran it for nine years. Those a thing or two about startups. And John also has a venture capital fund and he thinks this is a particularly interesting time to be investing in early stage startups. So take it away, John, please tell us about Two Lanterns Venture Partners.
“…we haven't seen an opportunity like this potentially ever. And I think this will probably be the best venture vintage in history…”
John Harthorne: Sure. Two Lanterns is a, is a pretty classic seed fund generalist fund, just launched it. We're about halfway through fundraising, have some of the best investors in Boston in the fund, and I think as you said in the intro, I just couldn't be happier about this timing. Now. Obviously there's a lot of people suffering through COVID and it's not a great situation for the country or for society in a lot of ways, but for disruptors and for innovation, it really couldn't be a better time. You have large incumbents that are struggling in their markets, huge markets that are not quite up for grabs, but where it's much easier to gain share from, from these incumbents than it has been historically. And you have amazing technologies that are reaching levels of maturity, all simultaneously that are opening up whole new avenues for new types of businesses in markets that are now approachable and a new markets that are becoming available. So I think we haven't seen an opportunity like this potentially ever. And I think this will probably be the best venture vintage in history, if not certainly one of them
Sal Daher: And listeners should know that the vintage of a venture fund is extremely important because if you happen to have invested in the vintage that contained, let's say Facebook or Dropbox or those companies you do extremely well.
“…it's typically during periods of recession when you have the best performing venture funds. And if you look at the last downturn during the global financial recession, you see Airbnb and Uber…”
John Harthorne: That's exactly right. In fact, like a lot of people cite. There's a lot of the research on venture demonstrates that returns are very variable across funds, but I think we're often gets overlooked is that they're even more variable across time periods. And it's typically during periods of recession when you have the best performing venture funds. And if you look at the last downturn during the global financial recession, you see Airbnb and Uber and a lot of great success stories that came out of that. And I think in this one, you have a different kind of disruption, right? So we had a global financial recession about 10 years ago, roughly that led to a lot of great startups coming out. That was one industry, obviously major industry. It impacted the country, but right now we're seeing a pandemic that impacts the entire planet in massive industries of travel, commercial real estate, transportation, mobility, food, and restaurants. And so you have, and then that has ripple effects into finance and into all sorts of different corporate entities, leading to new and newer opportunities in digitalization of banking and office and communication. It really just, it has a much bigger impact than previous recessions. And that means bigger opportunity for disruption and upside for the startups that are being launched now.
Sal Daher: Absolutely, cards are being reshuffled. A lot of news items about, you know, billionaires becoming much richer than they were before is to be expected because the billionaires are the ones that are benefiting. If you're Jeff Bezos, this has played very well for you. I'm not casting aspersions on, on what Bezos does. I mean, Amazon is a very impressive company whose services I rely on to a great extent, but it has been a lifeline. I can tell you that I'm 65 years old, a gentleman who was certain portliness. So I want to get COVID and I've been you know, relying, my family has been relying on Amazon Fresh for deliveries and they have been an amazing lifeline. They've done great job. So
“…new talent will flood into the market and create the new technologies and companies that may displace Bezos and others…”
John Harthorne: COVID has definitely accelerated the adoption of, of tech platforms, Amazon being one of them, for sure. Also look at Zoom, which is up probably 400% since March and many other similar technologies. So a lot of the established players will benefit, especially in the near term, but right now a lot of people have lost their jobs. A lot of people will lose their jobs in the months to come because we're going to be in a period of recession, likely for a while. And that new talent will flood into the market and create the new technologies and companies that may displace Bezos and others. But it will take five to ten years for them to really arrive and grow. And those are the companies that I'm investing in in addition to buying Amazon stock and Zoom stock and the other stuff. But I think from a venture perspective, the opportunity is in the new founders. And I would say, look, this isn't necessarily a great time for all venture investors. Those with established portfolios have to struggle through difficult times.
“We're going to have new ways of working, new ways of travel, new ways of doing everything. I buy your thesis entirely.”
Sal Daher: They are going to be tied up. This is one of the dirty secrets of venture capitalists. And I, I, I recently interviewed Matt Fates. He's at Ascent Venture Partners. Yeah. And he said yeah, I mean, what happens is in the bad times, the VC spent all their time with the companies that are struggling and they don't have bandwidth for the good companies. This is another reason why vintage is so important. So if you're a VC with a clear book, like Two Lanterns, you are going to be unencumbered by all this legacy companies that are in your portfolio that are really struggling with the current environment, you're going to be able to pick and choose the companies that are going to perform really well. Knowing that for the next several years, our economy is going to be disrupted. We're going to have new ways of working new ways of travel, new ways of doing everything. I buy your thesis entirely.
John Harthorne: And, and we're investing in an opportunity where I think there's greater upside because of the disruption in the major markets at the same time, valuations are either flat or down at the very early stage because the established venture investors are distracted by pouring money into their portfolios.
Sal Daher: Right.
John Harthorne’s Two Lanterns Fund Isn’t Loaded Down with Portfolio Companies Failing from COVID, It Gets to Choose Startups That Will Prosper In the New Climate
John Harthorne: And the corporate investors are trying to bring money back onto the balance sheet of the corporation to weather the storm. So there's less competition for these early deals, better valuations, and there's more labor available and more office space and other lower costs inputs for the startups. Whereas, you know, in Boston seven months ago, it was almost impossible to hire a developer. They just weren't available. Although it's obviously a bad thing for society that there have been layoffs. There's now a new talent available that startups can hire and acquire and bring in. So you have lower prices, lower costs, bigger upside. That's the value of the venture vintage. And because I don't have a portfolio to your point, I have a clear book. It's all forward-looking for me. So I feel my timing couldn't be any better. I'm very excited.
Sal Daher: You are. If we talk about Joseph Schumpeter and creative destruction, you are on the positive side of the creative destruction because there are companies being destroyed. Resources are being freed up for deployment in new ventures. And you, instead of having to deal with the legacies, you are yourself now able to help these new resources be deployed, which is really an enviable position.
John Harthorne: Yeah. And that's the part that I love most about startups, is the creation part of it. I'm less enamored of the destruction portion of the equation, but I can come in now. I didn't cause the destruction or create it, but now I can come in and I can help assemble those resources and create something beautiful.
Sal Daher: Oh, the destruction is just a natural occurrence in the economy. When you have an event such as COVID, which has, as I said, you know, reshuffled the decks entirely. So John, do you want to get into a little bit more specifics in terms of the kind of companies that you're, you're looking for? I understand you have a little bit of a geographical focus and a little bit of industry focus and so forth.
John Harthorne: Two Lanterns is a generalist seed fund. We'll do Pre-seed, Seed and Series A investments, pretty broad industry focus where we're a small-ish fund. The target is 20 million plus we're more than halfway there and our fundraising and we'll easily get to that target. But even at 20 million, it's not enough to do deep tech or biotech or other areas like that. So mostly just limited to focus more on capital efficient startups, but in virtually any industry, as long as they're reasonably efficient and then geographically focused on Israel and the U S primarily we could do investments elsewhere, but we're only really shopping and targeting Israel and the U S. And of our first seven investments. Four have Israeli founders, not all, most of those are still in the founding headquartered in the U S, but with Israeli founders, but those two areas we definitely focus on. And then otherwise, you know, we're looking for as everybody. Low cost investments that have the possibility for huge exits, disruptive technologies, really high quality founders in particular, I would say we're biased towards business-savvy, revenue-oriented, results-driven founders, less, you know, less so academic projects or science projects, much more interested in people driving towards revenue and, and real-world business results.
Sal Daher: Okay. Would you, would you like to talk in any specifics about the companies that you have invested in or already?
John Harthorne: Sure. I can talk about a few of them. Some of them, we are still completing paperwork and are not yet public,
Sal Daher: Whatever suits you and I, I don't want you to feel badly about favoring any particular company, but it's kind of like when your daughter is getting married, all the talks about the daughter is getting married.
John Harthorne’s Portfolio: DriveU.auto, an Israeli Startup with Super Reliable Tech for Controlling Truck Remotely
John Harthorne: Yeah, exactly. Yeah. I'd love to talk about the recent investments we've done. Co-Investment with Founder Collective and New Era Capital and Argon Ventures and Boost VC, which is Adam, Adam Draper. So a bunch of good ones in there, but I can't talk about most of those. The first three are also outstanding startups that I can talk about those. The first one was a deal that came to us through Israel. It's called DriveU.auto. And this is a technology that spun out of a company called LiveU, and LiveU developed a technology and was acquired by Francisco Partners, a private equity firm out in California for over 220 million. And they wanted to spin out this technology for application in a new area. And it is a communication and tele operations platform for autonomous vehicles. So originally LiveU used this technology for broadcast television. It enables seamless, no-latency, high reliability, no-packet-loss communication over cellular networks. And now there's an opportunity to use this in autonomous vehicles to enable remote control of those vehicles in scenarios where the AI is not yet capable. So where you have AI can handle a highway driving quite well. If you want to remove the person from the car, the AI is not yet good enough to handle the edge conditions, rural roads and pedestrian areas, et cetera. But you can't have no person in the car and then have a person.
Sal Daher: So, you'll kind of like have a drone pilot or something. Who's going to be sitting somewhere. And who's going to drive the car through the neighborhood with the trash cans on the streets that the AI can't really handle.
On DriveU.auto: “...if it's an 18-wheeler, you can't be dropping packets and lose touch for a second with the vehicle, you need to have constant communication.”
John Harthorne: And in order to do that, especially if it's an 18-wheeler, you can't be dropping packets and lose touch for a second with the vehicle, you need to have constant communication. So they've optimized that communication network and the ability to remote control it. You have lots of sensors, lots of cameras, HD video feeds, et cetera. So it's requires a pretty robust technology solution that all works. And the team is established. And experienced top-tier Israeli angel investors were excited about that opportunity and they're making good traction. It was our first investment.
On DriveU.auto: “…experienced top-tier Israeli angel investors were excited about that opportunity and they're making good traction. It was our first investment.”
Sal Daher: So, we'll just say the name again, please.
John Harthorne: That's DriveU.auto
Sal Daher: Drive, the letter U, dot auto.
John Harthorne’s Connection to MassChallenge Allowed His Fund to Participate in a Closed Round for StrongArm Tech, the Startup Getting Massive Traction with Its Wearable Worker Safety Device
John Harthorne: Exactly. There there's an Indian company called drive U, which is unrelated. This is Israeli tech. A second investment we made was a MassChallenge winner. That's part of our thesis is that we'll invest in, not exclusively, but a good number of MassChallenge teams. It's a team I knew well when they were at MassChallenge, always admired them. They pivoted pretty successfully from what was originally sort of a simple physical product, almost like a weight belt to reduce back injuries from lifting packages. And now it is a, it's an industrial worker safety platform that is centered around a wearable device that can monitor ergonomics. It monitors, decibel levels in the environment and other ambient metrics like temperature toxicity, levels of chemicals, et cetera. So within the factory can warn you if you're in a dangerous scenario and tell you to, to get out of it. It can warn you if you're bending over incorrectly or twisting your back incorrectly, et cetera. And they made excellent progress with that core product with customers like Walmart and Pepsi and Toyota and others, and getting really good, strong ARR and demonstrating, they could reduce injury by over 40%.
Sal Daher: Wow. It's being used in industry at the moment
John Harthorne: Is already being used in industry. And they've got,... When we joined... This is a sort of an, a Series A plus round. So a little later than we thought we would get into early on. But again, so this was, was a closed insider around, but because I knew the founder and we got invited into it, and I have the ability to add significant value through introductions to founders and leaders at other industrial companies. Most of them, I can't name right now, but we are they're on the verge of ...
Sal Daher: Nobody knows people in this domain as much as you do with all the time. Is it almost 10 years at MassChallenge?
John Harthorne: Which is mostly funded through corporate sponsorships. So I know a lot of CXOs and founders at corporations that are relevant in the space, and so was able to introduce them and they've run a couple of pilots. And many of those are on the verge of maybe this week of converting to a long-term ARR contracts. And then one of the beauties here is that, I mean, again, COVID is horrible. And I know that it causes a lot of distress for a lot of people, but as an opportunity for the startup, they have proximity sensors in their devices. So they can do proximity monitoring. Onsite and contact tracing.
Sal Daher: What is their device? Is it a lapel thingy or is it a belt
John Harthorne: You wear it on a sash. It's like a physical device, roughly the size of a cell phone. A little bit chunkier, but similar kind of form factor, you wear it on a sash, almost like a Miss America sash around...
Sal Daher: Or a minister sash...
John Harthorne: Or maybe a minister sash,
Sal Daher: A European, old time minister, you know, the sash or the medal on the side. Yeah.
John Harthorne: And that enables you to monitor their, their upper body movements when they're lifting packages. And again, proven very effective. They're based in Brooklyn, but they operate all over and they had already had, I don't know, over well, over a million in ARR when we, we got involved and they are over 3 million in ARR now on track to triple their last year's recurring revenue again for the second year row. And lineup, the nice triple, triple double, double, double. So, they're, they're just, they're in a great position to keep growing. I think keep landing new clients to keep expanding within their existing clients. It's just one of those products that works and the team, very reliable, very responsive. I've always liked them and I'm super happy to see them doing well. And so we, we went into that deal as a seed fund. It was a little bigger than we were expecting. So what we did is open it up for co-investment with our LPs. And we ended up putting in 250 K and our LPs put in another 500 K .
Sal Daher: Oh, this is also another interesting aspect of it. So your LPs get to participate in some of these deals directly, which is very generous of you, I should say.
Limited Partners in John Harthorne’s Fund Get to Put More Money to Work in Portfolio Companies without Fees
John Harthorne: Be attractive and we do it and obviously much better financials for the investors. And so, this is part of the part of the deal that at the way that we set up the fund is that look, of course, I have great experience through MassChallenge. I've seen 3000 startups pass through. I've worked in this area for well over a decade and very knowledgeable, but I haven't run a fund before. So certainly, LPs investing in first-time managers are a little bit skittish and hesitant, and that keeps them from deploying significant amounts of capital. Here. We give them the opportunity to say, look, put in 200, 500 K maybe a million dollars, but not necessarily 5 million or 10 million. And then, and then I'll give you at bats on co-investment opportunities to prove out the value of the investments. And those are much lower costs. So if you end up with a million in the fund and maybe five to 10 million in co-investments over time at significantly lower fees, your effective fee overall in the fund is very, very low. And that reduces the sort of the, you know, the cost of novelty of a new fund manager or the risk factor associated with it. So people really admire that. And that's, that's where
Sal Daher: My late sainted business partner, Bob Smith will be saying, you're a genius kiddo. You're a genius. He's the, I was looking at your resume. And you did your undergrad at Bowdoin College. And Smith Union is named after my business partners. His dad really loved Bowdoin.
John Harthorne: Beautiful. It's a beautiful building. That was not, that was built at just after, or shortly after I left. But I've not been back to visit and see it. It's great.
Sal Daher: Yeah, yeah. Yeah. So, Bob Smith would say: "You're a genius kiddo". That's, that's a great approach having to, you know, allowing people to invest more money, you know, the LPs invest more money directly and therefore lower their costs is a great way to help them get over the hurdle of you being a first time fund manager, but not the first time, far from the first time, looking at startups and understanding them and helping them.
John Harthorne: Exactly. And it gives us advantages also in the deal with the startup, because we can flex a little bit bigger. So some of these deals that might be too big for a small seed fund to get into, or we're not able to risk that significant of a proportion of our fund to be able to be relevant in a deal. Now we can be relevant by leveraging outside capital as well. So it's kind of a win-win-win. And then it's also part of our pitch to the startups is look, you know, let us get in this round with 500 K, but when it's time for you to raise 10, 20 million, 30 million, my LPs have deep, deep pockets. So if you hit your metrics will, will tell a good story and we'll be able to help you to raise a lot of that money.
Sal Daher: Excellent. This is really tremendous. Is there another startup that you'd like to talk about?
John Harthorne’s Portfolio: Lex-Markets.com Is Creating a Deep Market for Fractional Ownership of Real Estate – It’s Backed by Heavyweights in Real Estate Who See the Massive Opportunity
John Harthorne: So, let's do the third startup that we invested in actually came to me through an LP. And this is a startup called Lex Markets [Lex-Markets.com] or just Lex for short. And they have created a securities marketplace for a fractionalized commercial real estate. So, you know, the accredited investors have been investing in commercial real estate for many years. It's a great asset class, it has returned good money to the investors and it has great tax advantages for direct owners, lots of advantages to it, and mostly has not been available to non-accredited investors. And even for accredited investors typically requires a significant investment upfront, several million dollars at minimum, sometimes $10 million minimums, and then you have to hold... It's pretty illiquid. Often have to hold that investment until the overall asset itself is sold. You're not the most convenient. What they're doing is enabling the fractionalization of these investments. So take a 20, 30, 50, even a hundred million dollar chunk of investment, break it down into smaller units and then enable people to invest at a hundred dollars or a thousand dollars. And they've created a secondary marketplace, an alternative trading system, an ATS, similar to sort of a standard stock market where you can buy and sell those shares at will.
Sal Daher: What is their name?
John Harthorne: Lex markets it's L-E-X hyphen markets.com [Lex-Markets.com]. And they would just call it Lex for short and L-E-X.
Sal Daher: Okay. And while we're at it, could I also get the work safety? Yes.
John Harthorne: They're called Strong Arm Technologies, Strong Arm Technologies. Okay. So, Lex Markets also just has, I mean, they, they really impressed us with their ability to get stuff done in a complex regulated market. They made incredible headway and they've raised money from some of the most elite investors in New York City, especially across real estate, but also the Greyroft founder is one of their lead investors and took a board seat on their board and Craig Hatkoff and a bunch of others that are just really phenomenal experienced in real estate are also on the board. So we've been super impressed with those that surround the investment and the team has done a phenomenal job as well.
Sal Daher: So, what they're doing is instead of a REIT, which is a fund that contains a bunch of properties, Lex Markets is fractionalizing individual properties and making those liquid. Okay. Yeah. I can see the rationale of that because one of the knocks on that. I'm a real estate investor in multi-family. One of the knocks on, REITs in my book is that when you buy a REIT, you're buying the assets inside at three or four X, five X, what the repaid for it. So if they bought that property at a seven or 8%, let's say they bought it at a seven or 8% cap rate capitalization rate, which is the return that you get on a property. If it's not financed. And now you're buying at a four times that you're just going to get 2% return. You're not going to get the 8% that was there originally.
John Harthorne: That's right. You also don't get the tax advantages because you're, you're an indirect owner. You're not a direct one.
Sal Daher: It's their structure because their reach their trust, their you know, the structure so that these things flow through. But in this case, I can see the potential. I'm not... It's one of the ironies of securitization is that when you put the asset into a pool, it doesn't behave like the asset was originally. This is an interesting, intriguing thing. The idea that you actually own a portion of a particular building, because real estate is extremely idiosyncratic. It's a highly local hyper-local business.
John Harthorne: Yeah. And I think it has the opportunity to drive virality on the platform because people will want to invest in local property. So once you get properties listed in Cleveland and Boston and Miami and Dallas and Houston, that also drives into the platform, local investors who know that property...
Sal Daher: The best investing in real estate is always local because nobody understands the local scene like the people who live there. Real estate it's, it's extremely local business.
John Harthorne: And here's an example of commercial real estate in a period of some crisis right now. And so what you're also seeing is that some debt holders are finding the covenants are getting struck as leases dropped below required levels, et cetera. And now these debt holders find themselves owners and they don't really want to be owners. And so this is an opportunity for them to unload their ownership on the platform, recapture their cash and retain their sort of financial upside. I think it's a real opportunity right now as well. The team has just been very clever. And like I said, great, great advisors, Alan Patricof is on the board.
Sal Daher: Excellent. Can you tell me a little bit about the traction that they're getting? Because these marketplaces can be difficult to get started?
John Harthorne: Yeah. They had received all of the approvals they need from FINRA. They're in a partnership with NASDAQ. Who's helping to build the underlying technology to match the sort of market matching technology. And they've got partnerships with a lot of the other firms necessary for it. So they won't do all of the work themselves. A lot of it can be outsourced through partnership. They've got at last, I was aware they had, I think, six investments that are ready to be listed on the platform and they should start listing this quarter. Let's say end of October, maybe in November. And they'll sort of space those out, test the technology to make sure that it scales correctly, everything is functioning and then less than another one and another one, and then to keep lining up properties so that they can have five to 10, maybe 12 in the first year, and then scale up from there further and further. The financials are great. These are a lot of these... Asset owners are eager to unload this asset to be able to front load their capital. And that you know, either there's significant opportunities to charge the owners fees, the retail investors are being enabled to invest for free. Because they drive a lot of the liquidity and are desirable on the platform, but some of the institutional investors also can pay some fees in there. So really the financials are super attractive. And I think this could be a home run.
“…you have with a discerning eye for interesting companies…you have the sort of deal-making, the deal origination connections that…allow you to get involved with interesting deals.”
Sal Daher: John, I think you're illustrating here two things, not only that you have with a discerning eye for interesting companies, but you, you sort of, you have the sort of deal-making, the deal origination connections that help these deals. And allow you to get involved with interesting deals. So these are two things that I I think are evident and promising.
John Harthorne: Yeah. I think as a great example here, and this is where I would, what I would say is the strength of the fund first off, I just love startups. I'm obsessed.
Sal Daher: Yeah. We're, we're on the same wavelength yeah.
John Harthorne: I'm in there. I think they're the salvation of humanity. I love founders. I want all of them to succeed is maybe one of my biggest challenges is that I can't, I know that I can't invest in all of them. And it's hard to say no because I want them all to win. But when I do have to be discerning, and I think probably the strength of the fund overall comes down to the network, right. I just built a phenomenal network through MassChallenge. I think there were 60,000 people in the database when I left. And, you know, I didn't put all of them in there, but I, but I met most of those folks, or many of them in any case, and built a lot of goodwill in Boston and, and other communities around the world. And these are some of the smartest and best people in the industry.
John Harthorne: So, when you know, that helps us with deal sourcing because these people refer in deals. It helps us with deal selection because for instance, on Lex and I wanted to validate it among my LPs account, people that ran equities for some of the largest financial institutions for over a decade and people that have run highly successful real estate funds in commercial real estate focus for sure decades. So can get people on the phone who can talk me through, this is the weakness. This is the challenge. This is the part that's not going to work. Ask them about this, make sure they have this regulation covered. And so that gives me the strength to go back and ask those questions, connect people and tell them comfortable that it's a good deal. And then post deal to strike today. I like similar with StrongArm. I can call it, the CXO is have multiple large e-commerce sites that have large warehouses and factories and people that could benefit from this technology and say, aren't you worried about COVID don't you think you should have some devices on people to make sure they're maintaining their six feet of separation and that you're tracing.
John Harthorne: So, you keep your business afloat and pretty much all of them say, yeah, we're interested. Let's do a pilot and let's see. So we can help them to grow as well. So, you know, deal, sourcing, selection and growth, which is really what the business is about. And then I just love it happy to put the time in and connect to everybody and, and learn,
Sal Daher: Yes. When you're talking about innovation, saving the world John. I'm a hundred percent with you there. These companies that you've mentioned are all companies that are going to have just marvelous effects. But people frequently talk about the fact that, well, you know, a few insider investors get extremely rich when one of these companies becomes highly successful, but I read a book by a consultant. Edward Conard, I dunno, you are Bain guy, right?
John Harthorne: I'm sure you've heard of him right in this book. He, he mentions study by William Nordhaus, the Nobel prize winning economist that tried to figure out what percentage of a technology enterprise's value can be captured by the founders and investors and what percentage cannot. And the number he came up with, in a study that's for a pretty long period of time, probably over many different vintage. That just was it generally no more than 5% of the value of created by the enterprise can be captured by the founders, by the investors and so forth. And the other 95% are captured by other stakeholders, employees, and mostly customers. So these, these are enterprises that create a lot of value and they're not captured by the people creating them. So these people are doing an amazing amount of good, and that is how they're saving the world.
John Harthorne: Absolutely. And you think that, you know, there's this the fallacy of the winners. So, so people get unhappy that, you know, individual founders or investors become very wealthy, but 99% of them do not. And they still work incredibly hard and oftentimes still create enormous value for society, even though they themselves don't necessarily profit off of it by advancing the cause or ruling out certain, certain avenues of research or technology.
Sal Daher: So survivor bias, survivorship bias. You're only measuring the success of the survivors. You're not counting all the train wrecks that were left behind which are the majority know two thirds of early stage companies don't return the original capital you know, like 67%. This is ACA number.
John Harthorne, Founder of MassChallenge & VC: “Yeah. I'm such a firm believer that the more that we can promote innovation the better.”
John Harthorne: Yeah. I'm such a firm believer that the more that we can promote innovation the better.
Sal Daher: One second, I should mention that the ACA number is these are angel deals that are earlier than the stuff that you do. What you call a Seed deal is actually post angel. One of the companies you mentioned was already a Series A, I see these are companies that have revenue and so forth. The failure rate, there is much, much lower.
John Harthorne: Yeah. It's still not stellar. And it depends also if you're looking, you know, what you're looking for to call success, but the massive sort of 50X returns are very rare 50X, a hundredX. So, you know, getting the five to 10 or 10 to 20 X is a little more common and that's great, but then a lot of also still returns zero even at the later venture stage. So it's still a very risky
Sal Daher: Because you're buying it at a high, at a high valuation. Yeah,
John Harthorne: Yeah. Just huge value for citing. And I think, you know, innovation is growing exponentially and this has been always the strength of the American economy and resilience. And, you know, we've gone through waves and I, and I was nervous when I launched MassChallenge that we were at a period of significant decline and we weren't as focused on creating value as we were on capturing value and extracting profit. And if too much of society is focused on making money from money, but not actually creation and innovation and solving problems, then you sort of run out of profit to go around. Yes, the analogy I use is, you know, entrepreneurs are like pie makers. You take in various ingredients and combine it into a new format and that format has more value than the original ingredients in the raw. And then you can sell the pie and you get to keep a slice for yourself as a reward for creation. We need more pie creators in the world to make sure everybody gets a slice. If we get to a society in a structure in which everybody's fighting for a bigger slice of the pie and nobody's making more pie, well, then you run out of pie. And this is a huge, huge challenge and problem. And I think we have seen some of this exacerbated in society in the United States in the last 20, 30 years,
Sal Daher: You're, you're absolutely right. A shrinking pie, or a pie that doesn't grow creates this zero-sum mentality. You know, the economies of the medieval period, there were zero sum games. Basically, you know, you had a certain determined production of grain and other foodstuffs from the lands that were available, and the function of the government and the Church at the time was allocation of this food in such a way that it gets produced and it's fair and nobody starves, or as few people as possible starve, because reality was, periodically, there was mass starvation. This whole formula was broken, you know, with the industrial revolution. And we haven't looked back since, I mean, you know, this is Matt Ridley. I highly recommended, but anybody on this podcast, hasn't read, some of Matt Ridley's works, they should pick up Matt Ridley. And he has a book on innovation, by the way, you know, I would love to have him on I he's a former editor of the Economist.
Sal Daher: A thoughtful person about innovation. Basically. You know, that the history of humanity was it's almost no growth, no innovation until, you know, the beginning of the industrial revolution. And then it just took off. It's like a hockey stick. I mean, the difference between the technology that was employed in the late 16 hundreds and the technology of the Romans... The Romans who would have recognized what people were doing, you know. They didn't have electricity. I mean, well, the electricity was already sort of thought about, but it wasn't usable. It was water power and the Romans knew a lot about water power. So, and then we've had this amazing explosion, and this is a point I want to make here. You are an American, you were born here. I'm an immigrant. I came to America when I was 11 years old. People don't understand that America is the country of the new, the country of innovation.
Sal Daher: America is a country that invented invention. Other people invented things. Okay. But America is a place where you had a guy named Alexander Graham Bell that set up a lab. And all he did was invent, you know, Thomas Edison. This is all, you know, he was inventing stuff all the time inventors before were kind of like they invented something and there was kind of, it wasn't a formal process. So America is the place to kind of like made inventing a commonplace and created an environment for it. That's why people like Tesla and, and people like that, you know, other foreign innovators would come to the United States.
Sal Daher: Because of this spirit of innovation, a spirit of ferment, of trying things new. You know, John, I actually think that one of the things that made Americans, helped Americans be innovative is the fact that they have a garage. Not everybody like in Europe, you don't have a lot of garages. Cars are parked in the street. Having a garage. You could go. And, you know, you're in the garage. If you blow something up, you're not going to kill anybody in your house and you can try and tinker and people like the Wright brothers and so forth are just, you know. So this is a distinctly American thing, is innovation. And I, and I think a lot of Americans forget this. I, I used to be a member of a very exclusive squash club in Boston, at the center of downtown Boston, which just closed at the beginning of the month, I'm sad to say. And among its members were, you know, former governors and prominent attorneys. And I remember having a conversation with a prominent partner and one of the, you know, white shoe law firms in Boston, I was talking to him about how America is a country that's characterized by inno... [innovation] He didn't know this. It didn't, you know, it was kind of like a surprise to him.
John Harthorne: It's our defining strength, but we do oscillate and like, so at the launch of MassChallenge in 2009, 2010, that was the height of this global financial recession. And that was driven by Americans. That was a Wall Street led phenomenon. And it was too much greed in the system.
Sal Daher: Well, the greed is always there. Look, the Depression, you know, the crash after the 20s, that was also American-led. And the follies committed, you know, the economic follies that made that market crash last a whole decade were very much caused by Americans. So America was at the center of this. I mean, it was really the beginning of, you know, I don't want to get into that discussion, but the, the reality is that America is the land of innovation. It has been also a source of instability in the world when you mentioned the crash and so forth. But that crash, I wouldn't so much see as greed, greed is a constant thing with humanity. I think the crash of 2007 and so forth. And I was sort of inside that, you know, watching the players and all of this, you know, it was a situation where a lot of tinder was allowed to build up and then you had a massive conflagration.
John Harthorne: I think we're, you know, at, around that time, the GDP was like 40% financial services industry. And I think maybe it was not so much that it was driven by greed. There's a lot of factors that led to that, which is fine. But I think what we need is an economy that is more tilted towards innovation and startups.
Sal Daher: In a small scale, without these massive enterprises, that if they fail, that's sort of like the dead part of the economy.
John Harthorne: That's a logical conclusion. As companies grow to become more focused on extraction of value, because you can lock up channels, you can lock up customers, you can optimize your supply chain to reduce your costs. So you start to focus on more, how do you optimize and maximize your profit run less so on innovation and how do you create something
Sal Daher: They become over-optimized and therefore they cannot deal with change. Yeah, they're, they're dinosaurs.
How John Harthorne Came to Found MassChallenge, the Hugely Successful Accelerator in Boston
John Harthorne: The origin of MassChallenge was an attempt to refocus more of the society on that very, very early stage to say anybody with an idea that could be good, that might create value for society and innovate in a new way, bring it forward. We'll connect you with the best minds in the world. We'll help you to will help to identify those that are valid and have a viable shot at success. And we'll connect you with team members, office space funding, press, and media coverage, mentors, et cetera, and help you to take a reasonable chance at success. And then the best of the best gets showcased as award winners at the MassChallenge award ceremony, and often that leads to funding and success. And that's kind of the world that, you know, that's the change that I wish to be in the world is to refocus everybody more on creation and problem solving. Wealth is great. I have no problem with profit. You just, you got to earn it by creating value.
Sal Daher: Exactly, exactly.
Sal Daher: Well, and if you have this environment of constant innovation, it really is harder for people to just be rent seekers and have an extractive... You know, there's always something new bubbling up, you know, eventually the situation changes. Now, John, you've pointed in a very interesting direction. I want to talk to you about the MassChallenge story, unless there's anything else that you want to talk about Two Lanterns. I want to shift gears a little bit and start talking, but first I just want to make a pitch for one of the reasons that I do this podcast. I do this podcast for two reasons. One is for me to learn more. And the other is for me to connect with investors. I want to connect with investors, for example, who have time to be full-time angels. Okay. And a lot of them have become full-time angels at Walnut Ventures at Launchpad, and some other places. I'm sort of like opening people's eyes to the idea of angel investing.
Sal Daher: So, I'm kind of an evangelist for angel investing, but also to invest alongside me with my syndicate list and the companies that I believe in, in particular. And so I invite listeners who are thinking about becoming angel investors, sign up, on my syndicate list. Let's talk. Go to AngelInvestBoston.com and become qualified as an accredited investor, because I only accept accredited investors into my syndicate list. And then we'll talk about interesting companies, or I might invite you to some angel investing group meetings and go on from there. The other reason I do this is that I learn tons from talking with people like you who have this amazing wealth of experience. I always like to bring in people who know more than I do to the podcast, because that's how I learn. If I know a whole lot more than the people I'm bringing on, I don't mind, you know, sharing some knowledge, but you know, I want to learn
John Harthorne: I hope I can live up to that on some of these categories.
Sal Daher: Well, John, let's get on to the MassChallenge story. Now, MassChallenge for people... You hear this word, okay. MassChallenge is a startup accelerator here in Boston. It does not take equity. It's unique in that. It's a really unique model and John can talk about that later. It is highly prestigious. It is supported by all types of industry players, major industry players. I'm an investor in... One of my proudest investments. I was an early investor in SQZ Biotech, and they were hugely helped by going to MassChallenge. They connected with some people in industry who have been just massively helpful to them in a pivot that they executed shortly after that. I mean, it really, I can tell you, the MassChallenge was critical to the success of SQZ and many other companies. So John, tell us your MassChallenge story. How did you come about starting this amazing thing?
John Harthorne: So I would say probably it goes back to MIT. So I got... When I applied to business schools, MIT was my favorite. I've grown up in the Boston area. I remember getting out of the shower to listen to an NPR interview with Amy Smith, from D lab, talking to me about all the machines that she built with her students to power washing machines. Just dripping naked in the bathroom, listening to her because I was just amazed. And I've just been, you know, I think I've maybe I've met one or two MIT graduates that I didn't like. I can't remember. I think pretty much everybody that I know that's an MIT alum I adore.
Sal Daher: I'm an MIT alum. I can tell you most of the time, the MIT people, I don't like it's because of their personal hygiene.
John Harthorne: All of them,
Sal Daher: It's usually nothing worse than that. Because people in my, at MIT tend to be, you know, they're, they're not cocky. They're not, they're just brilliant. And sort of like in their own world and their own bubble,
John Harthorne: And really good value, the university as a whole, and the people in particular at the school really good values, they're really created on really focused on creating value.
Sal Daher: And helping people. There was a time when I was at MIT, it was drinking from a fire hose. But at the same time, I, there were a lot of other people who were in the same boat and they would help you. If you don't have a cutthroat... You know, you hear about, you know, pre-meds being cutthroats or... I wasn't a pre-med, but in engineering people were very helpful. I mean, they helped you out, you know, with a problem set that you couldn't... It's extremely collaborative environment. So that's, that's the thing that, the reason I liked MIT. So please continue.
John Harthorne: So early on, I was at the business school and I wanted to, I wanted to make sure I met some engineers. So I went to a mixer across campus. I can't remember where it was, but it was actually, frankly, it was the worst party I've ever been to. It was like maybe eight people in the room. Total, there was a small boom box, somewhere playing quiet music, a plastic table with Apple juice set up. And I was like, Oh, the business school has way better parties. So, but I was like, I'll go introduce myself, just a couple of people sitting around kind of shuffling and looking down. And I walked up and shook hands with people, introduce myself. And I was like, so what do you do? And these were mostly undergrads. And the first one was like Oh, I created a system to bring solar, thermal energy to Sub-Saharan Africa.
John Harthorne: And it's made out of old bicycle and car parts. So it can be, it can be repaired locally and it cost under $300 to produce and can be repaired locally. And it can power a small village. So children can read at night and get an education. Wow. That's incredible. Unbelievable. What do you do next? Well, I have a high altitude wind turbine because you generate 60% more power at higher altitudes, and we can put them on the back of flatbed trucks, and then we can power remote installations on our villages, or the U S military is interested in because you don't have to drive gas through Pakistan to get to our troops. And I was like, wow, this one is 21 years old, 20, you know, like really young. I built a system to remove arsenic from drinking water and address the largest mass poisoning in the history of humanity. And then we've created a system for entrepreneurs to buy know, to produce and sell these door to door. And we're going to prevent 40,000 children from going blind this year. And I was like, Holy crap, this is unbelievable.
Sal Daher: And that is the kind of stuff that bubbles up at MIT all the time.
John Harthorne: And then they were like, what are you going to do? And what are you doing? I was like, well, I was thinking of being a consultant.
John Harthorne: And now I feel shame. I feel like I'm a bad human being. I didn't know that we were allowed to be amazing. I didn't know that, that you could choose amazing until I got to MIT and I saw 20-year-olds doing things I didn't think countries or corporations could do. And that, that sort of spark of inspiration really ultimately drove me to MassChallenge. I fell in love with startups. That's all I wanted to do to innovate, create, solve problems. I got it right away. I was ended up being a winner of the 50 K business plan competition, 50 K at the time, now 100K with some engineers. And then I graduated. I wanted to do that, but I had 150 grand of student loans. So I went to Bain and Company as a strategy consultant to pay down my loans. The plan was to go through the first big bonus and then pay down my loans and get out.
John Harthorne: But that was December, 2008, which was the very, like the steepest downward part of the financial crisis. We hit bottom in March of 2009. So hard time to leave a high paying job. And I was frustrated and angry. And I was like, I want to create a startup. That's going to create jobs and wealth and solve problems. And yet I can't do that because the world is too greedy. And, and, and Wall Street has collapsed and now I have to be a consultant forever. And I was full of self-pity and anger. And I was thinking, somebody's got to fix this. Like, if if an MIT grad can't launch a startup, then the whole economy is going to struggle, right? So thinking lying in bed, somebody's got to fix that. And then I had that, I think classic founder, epiphany realization, wait, I'm somebody, why don't I do that?
Sal Daher: You're the one you've been waiting for. Huh?
John Harthorne: So, then that became the origin idea for MassChallenge was let's take everything I learned at MIT and bring it to the entire world for free. How do we replicate that model? And there's a lot of parts, you can't replicate that, or that are very difficult. Obviously it attracts incredibly high caliber people, all sorts of, you know. So I took the 50 K as the, as the central kind of idea or concept where if we issue a challenge to the world that says, bring out your best ideas to create growth jobs. They don't even have to be profitable. It doesn't have to be a for-profit could be a nonprofit. Anything that can help humanity, solve problems, create optimism and hope and help people. And then we'll help you to connect with lawyers, investors, advisors, team members, office space, all for free. We'll take nothing out of it just to create growth. And we'll create a factory for startups that will create thousands of new startups, ultimately each year. And that became MassChallenge. And so the first year it was 111 startups, and we did 110 was the idea. And we thought 10 of them would reject us. And so we would end up with a hundred, but 110 said, yes.
John Harthorne: Yeah. That we had actually calculated, judged, incorrectly.
Sal Daher: You underestimated the value of free rent.
John Harthorne: A hundred percent yeses. And it took off. We had support from the mayor and the governor. And actually, it's funny because when we pitched this to the community in Boston, we said, we're going to do it totally for free. And we're going to ask people to advise the startups for free. Invest in them. You know, support them. People we talked to early on said, Oh, this is a great idea. I love it. You can't do it here, though. You're going to have to go to California or New York. Because people are just not collaborative enough here. That's the problem. This is... We're in decline. It's not going to work in Boston. And the thing is though, all of them to a person said, look, I'll help you. Let me make some introductions for you and see what we can do together. But you're not going to find anybody else helps you. Every one of them helped me. And I was like, I think you guys are more friendly than you believe. And I think that it was like Boston was ripe for this because they just needed an excuse to collaborate. Everybody wanted to collaborate. They just thought nobody else did.
Sal Daher: This was the Stone Soup story here. Yeah.
John Harthorne: So, it just took off. It worked great. We got an amazing amount of support. The governor Deval Patrick at the time was really our first source of funding. Desh Deshpande was very early on as a major supporter and friend remains to this day. A huge supporter and friend of mine and MassChallenge. And we just accumulated all these great people. We had great startups that came through. Been 10 years, graduated... Now, now we're running nine programs in seven cities and four countries. And we've graduated over 2,500 startups. My stats will be a little bit out of date now, but over 2,500 startups, minimum of $6 billion raised and $3 billion of revenue, 157,000 jobs, all of those are out of date, meaning too low. They're all higher than that in reality. And so it's just been a blast and I've had the pleasure of working with some unbelievable startups, a lot that don't come from the same backgrounds I would have expected.
John Harthorne: So, you know, obviously a lot of the MIT teams come participate and are dominant. They're great. A lot of Harvard kids, a lot of Northeastern startups, but then a lot of you know, we had 80 or 80 plus year old founders. We had a 16 year old founder. People come from all different backgrounds and all different communities. Now it's over 50% typically in each of the nine programs of the startups have at least a female, one female founder. It was above 40% for a long time while I was there. I think we're about 50 now consistently. And I think it's become a real force in the neighborhood.
Sal Daher: Oh, it certainly has. You're very humble to say that. I mean, MassChallenge is one of the shining jewels in this environment of startup companies in Boston. I think John, you you've made great progress in accomplishing your goal of stirring up innovation. I mean, you've got this engine started and it is just impressive. As my old business partner, mazel tov kiddo. Mazel tov.
John Harthorne: Thank you. No, look, I would say this though. Very importantly, we had a crazy idea and like the founder has to, we took big risks. We worked really, really hard on it. A lot of people thought it was crazy and wouldn't work. We did all of the difficult things. So I'm proud of the work we did, but it definitely would not have worked if the community didn't engage. And the Boston community absolutely stepped up with money, with support. We got free office space from Joe Fallon in a class, a building an entire floor and a skyscraper types of support that came out of the woodwork. It was unbelievable. And I think it's more of a testament to the Boston community. Then to us, we had an idea and we push hard. I'm proud, but the community really was phenomenal. And now in, in Houston, in Austin, in Rhode Island, in Switzerland and Israel and Mexico City and multiple programs running in Boston, it's just been a real pleasure to watch it grow and take off.
Sal Daher: Yeah, I think initially some of the people you talked to, might've sold Boston short a little bit. Boston has a tradition of being a little bit insular. You know, the old Yankee tradition. Remember the old Yankees were also tremendously involved in philanthropy. You know, they were very, very careful. They're very thrifty, very careful with their money, but they were also extremely generous in creating institutions, such as Harvard such as all the hospitals we have around here and so forth. So, so there's a very strong to this, yes, insular, but at the same time, having the sense of taking responsibility individually as happened with you. They say: "Oh, it's hard. You know, these guys are, you know, very you know, hardheaded and so forth and so on." But when they see something like this they unroll the checkbooks.
John Harthorne: I think that's a great point. And I totally agree. And in many ways I think this could not have worked anywhere outside of Boston first, because Boston has excellent values underlying the system. So, you know, look, Y Combinator started in Boston as well. And then shut down, went to California saying you can't this, you know, you can't do this kind of stuff in Boston, but I think the nonprofit model worked phenomenally well. Because people wanted to know that if I were driving around in a yellow Porsche with my name on the license plate, why would everybody volunteer as mentors to support the teams. It becomes corrupted by that, that profit mentality. When if it's designed to really help humanity, everybody will come out and including like the owners of sports teams and all of the society will come in incredibly generous, like really supportive. So it, like, I really was impressed with the generosity of the community and it's been, it's just been phenomenal. Great. I'm proud of my part, but I'm also proud of Boston.
Sal Daher: This is so great. As we wrap up our interview, are there any other thoughts that you want to address to our audience of angels, people who are thinking about becoming angels founders, people who are thinking about becoming founders.
John Harthorne: The last point on just the Boston origin story. And then I actually addressed that. So, in fact, the name Two Lanterns is a homage to the two lanterns hung in Old North Church at the time of the American Revolution "...one if by land..."
Sal Daher: "...Two if by sea."
John Harthorne Is Named After the Founder of Harvard Medical School
John Harthorne: So, the two lanterns now I have an interesting family connection to this and that my full name is John Warren. Harthorne. The general whose idea it was to hang the lanterns and who sent Paul Revere on his journey was general Joseph Warren was one of the more prolific early revolutionaries. Didn't end up as a founding father with a signature and a declaration of independence because he insisted on fighting at the Battle of Bunker Hill and was killed in fighting, but was very prominent in the lead up to that. So in his brother's name was John Warren, his younger brother, that's who I'm named after. And John Warren founded Harvard Med School.
Sal Daher: Awesome. Yeah, my name is Saleh Daher, okay. I come from a Lebanese family, my mother's Portuguese, but I have great respect for the old Boston Yankees. Okay. You will not disagree with me when I say that some of them tended to be a little insular, perhaps a little snobbish and so forth. But the thing that really set them apart... Lots of people were snobbish. Lots of, you know, French noblemen were snobbish and so forth, but they couldn't back it up with doing stuff like founding Harvard Medical School or founding the Boston Symphony Orchestra or founding, you know, these amazing hospitals,
John Harthorne: Public schools and introducing so much value for society.
Sal Daher: Yeah. So this is a very Yankee, Boston Yankee thing. Yeah.
John Harthorne: I think that's why it still is today because people still adhere to those values today. And so the name hearkens to that... But also because I know from experience being a founder is extremely lonely. And so we will bring a second lantern to walk alongside them on the journey to make that journey a little more revolutionary and a little bit more fiery.
Sal Daher: That that's, that's really a very excellent way to think about it. So two lanterns and General Warren and the idea of putting "...one if by land, two if by sea." Fantastic. So parting thoughts, John.
Parting Thought from John Harthorne: “So, for the angel investors out there, look, I think, again, there's never been a better time in my opinion to invest right now in early stage disruption. The returns should be excellent.”
John Harthorne: Yeah. So for the angel investors out there, look, I think, again, there's never been a better time in my opinion to invest right now in early stage disruption. The returns should be excellent. It's a difficult game. They won't all work out, but over the longer term, yeah, the winds are all in our favor right now. Boston is extremely strong. There's great startup, early ideas coming out of the universities out of programs like MassChallenge and Techstars and Greentown Labs and so many other great programs. So there's a lot of early support. It's a great time to engage with startups. You'll enjoy it. You'll probably make money over the, over the longer term. So I would encourage all of you to engage. Sal's obviously got a good handle on it. So he seems like a great guy to work with on it. So I'd take him up on his offer and go sign up even syndicate. And then if you see great startups, bring them to bring them to us at Two Lanterns. We'd love to work with them once they're a little bit further advanced we do Pre-Seed as well? So we'll even join alongside some of the angel rounds. And we'd love to see you.
Sal Daher: Yeah. Just to make things clear here. John is investing as a venture capitalist and he is investing other people's money. So his criteria for investment are much more careful much more deliberate. Angel investing is much more a personal thing, particularly because you're investing much earlier. And so you are really just judging the team. It's a bet on the team and perhaps the technology. You think the team has what it takes to develop the company. So really different world. It's a different type of investing, you know, different risk profiles and so forth. And so what John is doing is a very different thing. It's very, you know, it's a professional investor and I think it's a pretty good bet. You know, I'm, I'm listening to this and I'm thinking, geez, you know, do I have the liquidity to put some money into your fund?
Sal Daher: But no, I, I think this is very promising. I have, you know, certain commitments at the moment and I'm involved in real estate at the moment and I'm having a lot of headaches. Because multi-family a lot of people are late paying the rent and so forth. So, you know, some of the buildings are having problems, but I think what you're doing, John is extremely interesting. And I, I have a very high regard for you. And once again, I want to thank Çağrı Savran for putting us in touch.
John Harthorne: Yeah, he's got a great business too. I think you're going to do very well. He's a very impressive individual and founder.
Sal Daher: Çağrı has this energy. See, this is the thing when you're investing early on. I connected with Çağrı Savran of Savran Technologies via my brother-in-law Peter Fasse, who is from this family of patent attorneys, they're German patent attorneys, you know, like his father was a patent attorney. His brother's a patent attorney. Peter is a path attorney. He's at Fish & Richardson. And he's like top guy on microfluidics knows everything well. So Peter was so excited about... He came to me is you got to see this company, you know, Savran's technology. When I met Çağrı, you know, I was impressed with technology, but when I met Çağrı, that's what opened my eyes. The guy is amazing dynamo. That's what sold it for me. Yeah, the technology, as you say, it's still, it's still a science experiment to a certain extent, but you know that guy, if anybody can get it done, he can get it done. And of course, you know, this brilliant guy came up with this technology, which is really tremendous. It really fantastic. So I should do an update with Çağrı. I had him on a years ago when the focus of the company was a little bit different and I should have him back on. But anyway, so John, unless you have anything else that you want to say we can, we can wrap it up.
John Harthorne: No, this is great. I appreciate the time to chat. I enjoyed it. Learned a lot. And hopefully it's interesting for your listeners.
Sal Daher: I have no doubt. It'll be very interesting. It'll be very interesting for me. I can tell you that. It's just fascinating. Oh, you know, if you want to give us an update at some point, let me know John Harthorne of Two Lantern Venture Partners. I thank you for making the time to be on the Angel Invest Boston podcast.
John Harthorne: Thank you, Saleh. I appreciate it. This is great.
Sal Daher: This is angel. Invest Boston I'm Sal Daher. Thank you for listening.
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