Tinder Founder Shares Priceless Investing Secrets

Yo, what's up? This is my good friend Justin Matine. How's it going? He's the co-founder of Tinder, the app that needs no introduction. Unless you're happily married. Brian was asking when the last time we saw each other was. I don't know. We're on the phone every day. When was it? Maybe at Mororrow. That one time. That one time at Band Camp. Exactly. In his second act, Justin runs a $300 million fund called Jam Fund, which invests in high- growth tech startups. In fact, we invest a lot So, what have you been up to?

I was actually in Cabo and I just got I often ask entrepreneurs that I meet, who's the most helpful investor on your cap table. Almost all of them say Justin when that's 20, 30, 40 companies. I don't know how he has time in the day. I mean, it wasn't really a vacation knowing you probably were on calls the whole time while in combat. Justin is a very different breed. He gets great deal flow. He can do very quick mental math and he's building an amazing track record for himself. He knows no other way but to go hard.

You want some tequila? If you have tequila, I'll have tequila. I'm Jesse Michaels and today's American Alchemist is Justin Batine. Obviously, you have qualities I'm sure you look for in other people. Many of the top founders that I've worked with, they're like, I can see the future. I know what needs to happen. And they have to have an irrational sense of drive where most normal people don't. To a certain extent, good founders have to be

abnormal. I'm not an agist, but I usually like founders between 22 to 35. at at 22 years old, you have a little bit of work experience, but you're also naive. You know, I encourage people to take risk upfront when they're younger. What else do you look for in founders? I look for founders with a chip on their Someone that's gone through a personal experience that has motivated them in in an exceptional way. Can you tell me about a specific founder in [snorts] your portfolio and a chip that they have?

One of my favorite founders actually grew up in Nepal. He was dirt poor, lived in a home with no power, tutored to to make a little bit of money. His father had to sell, you know, one of the most valuable things they had in order to get him a flight to [music] to move to New York. Puts himself through school. Ends up working for George Soros, buys his family a home, and starts a company. He's been through so much just to get to the point of arriving to the to the US [music] that I know he's not going to [ __ ] up. We're talking about Curative.

Brad Turner from Curative has a massive chip. His last company, which I was an investor in, and [music] they pulled a term sheet, a $30 million investment in the final hour. Most of his investors didn't want to invest in him again. I became his first investor in his new company. His focus was actually at that time going to be on sepsis testing. I asked him, this was back February 2020. I asked him if he could focus on COVID [music] testing in case CO really became a thing in the US. I had agreed to invest regardless. Uh but he promised me

that he would consider it. And a few weeks later, he he ended up finding a lab in Sand Deas, a California startup whose COVID [music] 19 test kits became widely used almost And just for context for the audience, curative now powers a large percentage of COVID [music] tests in the US. venture funds that like to invest in

very kind of inside the beltway [music] Silicon Valley, you know, sometimes slightly overhyped uh companies. A lot of your big wins have been a little more unorthodox. Like I'm thinking of one of the the big ones early on was Home Chef. I love betting on the second mover in a massive indefensible space. Well, that's pretty contrarian. That's pretty amazing. So, you like investing? Most people would say they like investing in monopolies. And you're I like investing in monopolies, [laughter] too. But I'm saying if you're going to invest in a space that's not

defensible, why pay a massive premium? I mean, if you think about it, the market size for grocery stores is $800 billion a year. Do you know who the first groceryer was? No idea. Neither do I, cuz it doesn't matter. it's not really defensible space as long as you're good at executing and you can scale quickly. Just because a company has a couple year head start doesn't really mean anything. Loheed Martin selects ABL Rocket for Shetland launches. Okay, let's talk about AL Space Systems. Al Space. I think that it's [music]

really impressive what they've done given the capital that they've spent. Some of their competitors are burning more quarterly than they have since inception. And I think that the founders are really determined to build a big [music] business. It's a pretty idiosyncratic. there a small set of people who could even pull off a company like that. And right now the market is probably uh in an elucory way small [music] uh with the small sat launch market. Two years ago, it was written off as a market that wasn't even interesting to look at.

Uh but I think there's a lot you can do once you have a team of really great aerospace engineers. You know, there aren't that many players on that level that will be launching this year and [music] have a very high probability of having a successful first launch. that a company fails? The first reason companies fail is they run out of money. [music] You know, can't reach profitability or can't get to a point where investors feel

confident. I encourage founders [music] to raise a little bit more capital than they than they need. You know, give yourself backup capital in case you can't hit that next goal. Second reason, and probably just as important, is not being able to attract the right talent. Cuz as a founder, there's only so much that you can do on your own. You got to surround yourself with people that are better than you are at whatever they're focused on. So, I think that those are probably the two ways to [music] mitigate. And something you've told me a

bunch is, you know, somebody would rather own 1% of a $10 billion company than 10% of a, you know, hund00 million company. Absolutely. Obviously, [music] $10 million versus $100 million. But more importantly, when it's a larger business, [music] it's also safer. If you own 90% of a what you think is a $20 million company, the value may not actually really be there if you ever tried to sell it. The fundamentals have been weak for a while and the Corona virus is [music] just as I've been

saying an extremely heavy straw on a very weak camel's back. It was interesting when COVID hit it was like ah that the market's going to correct massively. We had conversations early on and it feels like Jerome Powell who's the head of the Fed almost put a de facto floor in equities. I was aggressively buying. Look, it's also if you're a long-term thinker, it's easier to be right. Can't necessarily time the floor or catch a falling knife. But if you believe in something and you're buying the right companies that you think will be successful long term, then I think that you don't need to necessarily time

it perfectly. Are the markets crazy though? I think there's definitely companies that are overvalued and I still think there's companies that are undervalued. Mhm. There's something about pulling the trigger and making doing the deal that is it's generative and then you do the next one. You keep learning and the pattern matching almost gets better. It's all pattern recognition. Yeah. you have to be obsessive and you got to take advantage of an opportunity. Um, it's kind of like, you know, what they teach you in economics where there's no such thing as a $20 bill on the ground

because the second that you see it, someone's already picked it up. Don't just wait [music] there for 6 months to see what the LTV to CAC will end up being. For all the viewers out there, LTV to CAC means lifetime value of a user per cost of customer acquisition. And so you want the LTV to be higher as high as positive. I firmly believe that there is not a direct correlation between risk and reward. You want to invest your time and your resources and your your money in things where you have either more

information or deeper understanding than the average person and you're able to identify something and take advantage of Are there any investors that you admire particularly or like co-investing [music] with? Yes. Who? Uh, Peter Teal. Because you work for him. [laughter] Give me the real answer. [clears throat] That's That's the real answer. [laughter] Um, no. I I think that Peter is a thought leader and he assesses

individuals based on their quality of thought. Are there sort of proxy questions you ever ask to people where you don't necessarily want the actual content of the answer? the content of the answer is telling you something about the person like yeah I often ask what motivates you [music] very few founders want to say that they're incentivized by financial gain I I don't want it to be the first reason or even the second but one of the top three or four reasons should be

success [music] because you're financially aligned with one is I need to trust them to make the right decision [music] for the business right so if they're not thinking about the bottom line and ultimately building a real business that makes sense [music] financially and maybe they should start a charity or you know do something else. Yeah, we we've met founders who say they don't care about money and then it becomes very clear that almost every founder does care about money to a certain extent. So I just want to hear them say it. If they didn't, they wouldn't be starting the company,

right? So, I think money is bad when you see it purely as a status symbol. Yeah. And it's like almost like a new version of like you graduate from school, you had grades and that now you have money and you have to just show off how much money you have. And then I think it's good when you see it as a a means to fre it's freedom. It's freedom and it's the ability to do what you want in life and that's amazing. You can express your highest version of yourself. I think there's rent seeking wealth and there's value creating wealth. And I think investing in high

Yeah, I think that's right. So, you found it in 2012 with Sean Rad. You guys paid for most of it with your own money outside of some engineers that you used from Hatch Labs, which was IA's incubator. You initially had, I think, a pretty healthy equity split between you and I. And then as soon as they started to catch wind of all the momentum that Tinder had, they realized it was their highest growth asset by far, they flipped that equity percentage on you and you were in a relationship at the

time with somebody else who happened to work at Tinder. You went through a bad breakup, but it almost feels like that bad breakup was used as kind of like a nuclear negotiation tactic by IA to oust you from the company and for them to kind of gain leverage. you know, you got to look to the future and and just keep moving forward and and learning from mistakes and improving, but yeah, I think about it all the time. I trusted very few people for a certain period of time and then I realized that that's unhealthy and I adjusted. And I think in

my case, I just thought I was a normal person and I was just going through a stupid breakup. I think that unfortunately the the media, although they they may have good intentions, I think that it's also about arbitrageing eyeballs and monetizing ads. I really respect outlets where, you know, they report the truth. Larry King was always just trying to seek the truth, you know, ask normal questions, be engaging, and to a certain extent, I think, you know, you're that way as well. Don't go away. After talking each other's ears off for hours, we actually missed lunch and the

food got cold, so we ended up playing a game of cornhole. All right, let's do it. Little did I know I was walking into a trap. [music] Two. Two out of four. The loser of the game of cornhole [music] had to take a shot of the hottest hot sauce from the show Hot Jesse [music] doesn't know how to start or end.

You lost. Oh. How many times have you Not that many more times than twice. I see. That's unverifiable. I'm really sorry. Do not take pleasure in watching this, but I think it will be very amusing. [laughter] I took the shot and immediately I felt like I wanted to run OUT OF MY SKIN. And so, while in no way does this mitigate the heat of the hot sauce, I took off all my clothes and I literally jumped into Justin's pool.

Wow, look at that body. Only Jesse could pull that off. Let me get you a towel. Justin's on calls all day long from 6:00 a.m. to midnight. Want to go around cuz you're dripping. So, at the end of our interview, I showed him some holotropic breath work. Belly, chest, out. [snorts] And always in through your nose and out through your mouth. He thanked me afterwards.

through. How do you feel? [laughter] You feel light at the last? Yeah. Good. can and then we're going to hold it for a minute. All right. Wow. You hear like a whole new person. That's so funny. I have to grow up. Where did Tyler go? I think he freaked out like a minute in. He started he sat This [laughter] is great. trust you to

go like this. Yeah. You feel good, I do. Okay. Amazing. I'm happy, bro. Love you. Love you, too.