“Great founders never stop recruiting.” — Dave Eisenberg

Dave Eisenberg (@Eisenberg) is Founding Partner at Zigg Capital, a venture capital firm investing in real estate and construction technology. Before founding Zigg, Dave spent twelve years as an operator at Bonobos, TellApart, Floored, and CBRE. He started his career at Bain & Company, then moved on to found Red Swan Ventures.

To listen to Dave’s bonus interview and learn more about his habits, routines, and inspirations, click here.

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Chapters in Part 1 of this interview:

Dave’s background and founding Zigg Capital
Lessons about the Chief of Staff role
A long-term view of early investments
Investing in talent
Considerations when creating the cap table
Innovations in technology for real estate, retail, and healthcare
The future of physical retail
Investing in automation

Links from Part 1

Books Recommended by Dave Eisenberg

The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz

Learn More About This Topic

10,000 Hours with Reid Hoffman

Dave discusses his experience as a Chief of Staff and the importance of the role. This essay is a fantastic deep dive into the role and all it entails.

Ryan Boykin of REACTIV – Lessons in Risk, Reward, and Entrepreneurship – Outlier Academy

Our recent interview with Ryan Boykin highlights risk and reward in the real estate industry and offers more advice for new entrepreneurs.

13 Emerging Commercial Real Estate Tech Tools Industry Professionals Should Explore

Forbes recently did a great roundup of innovative tech in the real estate industry, from green financing databases to virtual tour companies.

The 5 Most Important Lessons From Stanford Biz School's Most Popular Class, Nicknamed 'Touchy Feely'

Jessica Stillman offers a distilled version of Stanford’s ‘Touchy Feely’ course.

Retailers look to innovate and tempt customers back to physical stores

CNBC explores the changes physical retail stores will need to make to keep up with the modern consumer.

Transcript

Daniel Scrivner:

Dave, welcome to Outlier Academy, I am so excited to have you on.

Dave Eisenberg:

Thank you so much for having me.

Daniel Scrivner:

Today we're going to explore a bunch. I mean, we're going to explore your journey as an entrepreneur, your shift to becoming an investor, we're going to explore venture capital in a big way and talk about the specific areas you focus on. But I thought a neat place to start is to take us back in your career, and I remember you telling me a fascinating story about this Office Space moment that you had while working at Bain. You can pick up from there and carry forward.

Dave Eisenberg:

Yeah. So my professional career began at Bain company, which is a management consulting firm that recruits heavily at certain set of colleges. The very first assignment that I had, I was sent to Southern New Jersey, which was not far enough from New York City to be an overnight trip, but rather something I had to get up at 6:00 AM every day and go down there. But I was put in a conference room that actually did not have windows. It was an interior conference room, and the assignment I was given in a nutshell was to make a financial model of different positions tied to employee ID numbers, and figure out who could be let go, and who could be offshore to Hungary.

Dave Eisenberg:

And the only real like understanding I'd had of office culture had been from watching the movie Office Space. I remember thinking that my assignment was eerily similar to what those guys were put on writing TPS reports. The truth is Bain is an absolute, wonderful place to work. The people are just incredibly creative and bright and outgoing. I just was not a fit for being an entry level associate consultant, because that work is largely Excel-driven, it's largely focused on people who are very detail-oriented at making awesome slides and making what they called Zero Defect models.

Dave Eisenberg:

I'm just not that good at paying attention to detail, to be honest, I much more enjoyed the things that the partners at the firm work on which is delivering strategy to Fortune 500 CEOs. Of course, I was not qualified to do that as a 22 year old, but I remember the first feedback session I had with them, they said, "It would be helpful if you tried to be less of a partner and more of an associate consultant." Basically, I decided to leave Bain early because it wasn't sparking joy in me as a young 20 something.

Dave Eisenberg:

I ended up going to work for a guy who had started his career at Bain and who was recruiting for his first employee, which had the title chief of staff before that became a more common topic in the startup world. The job started, the company was Bonobos, the men's clothing company. At the time, they only sold pants and they only sold them online. So my parents thought this was an absolutely horrible career move for me to jump from a well-branded consulting firm to a eCommerce clothing pants online. I was also not a very fashionable person nor was I very interested in fashion. So it was a strange fit.

Dave Eisenberg:

But I found the CEO who became one of my best friends, this guy, Andy Dunn, he became a great mentor to me, and he was a fantastic guy to work for, because he did give me a lot of the training that I think I wouldn't have gotten had I stayed longer at Bain, but he gave me a lot more responsibility as a young person. The job started in his apartment, which he was sharing with some people post-business school. I remember showing up the first day of work and he opened the door in a bathrobe. And I was like, "What have I done with my life for my career?"

Dave Eisenberg:

I stayed with Bonobos from employee one where I was the chief of staff of precisely zero staff on the first day to about 50 people several years later. I left to go to Silicon Valley where I had gotten to know a guy who's now a partner at the venture from Greylock. At the time he was in entrepreneur residence there named Josh McFarland. Josh had just finished several years at Google where he had studied a lot about what Amazon was doing and how poorly other top online retailers were mirroring Amazon's personalization technology and their one-to-one marketing tech.

Dave Eisenberg:

So, his idea was basically to take a lot of the capabilities that Google had been investing in to do very large scale data analysis. This is the 2010 era. So it was really the beginnings of big data, and basically apply it in a software solution that other online retailers could employ. That business went on to be a great success. It was acquired by Twitter for over half a billion dollars in a very capital efficient way. I was not the first employee, but I was among the first five or six people at the company, and it was a great experience to see the difference between how Silicon Valley I think thinks about building companies and scaling versus New York City and a tech light business in eCommerce. I was glad to have had both of those experiences.

Dave Eisenberg:

Interestingly, it was inside of TellApart that I also reconnected with Andy, the Bonobos CEO to set up a very small early stage investment firm. The beginnings of which really were meeting the Warby Parker guys when they were still at Wharton and they came to visit Bonobos and they said, "Hey, what eCommerce platform are you using, and how do we hire a CTO?" And all these questions that we had bungled our way through in 2008 and 2009, but it gave us the understanding that as operators and early stage founders, we might actually have some unusual and proprietary deal flow, and so we started effectively syndicating angel investments.

Dave Eisenberg:

I recall Andy had a negative net worth at the time, because he had so much student debt from Stanford Business School, and I had just no savings at all because I hadn't really worked for very long. So, we were raising five and 10K checks from people to deploy into startups, but it was super fun. We ended up actually making some really great early stage investments luckily. One of those investments turned out to be a very key career inflection point for me. Living in Silicon Valley in 2011, I had started attending a series of meetups, and one meetup that I was really interested in was the topic of 3D printing and 3D data capture, and ended up meeting these two exceptionally talented engineers who had been hacking the Microsoft Kinect camera to actually do 3D scans of object furniture.

Dave Eisenberg:

And this company went on to be called Matterport, which is now a public company, which is crazy to think about a decade later. But when I saw that they were scanning objects, it immediately got my brain thinking about, "Hey, if we can scan these objects and then situate them in a 3D scan of a place that people might care about, say your apartment or your home, you could have a whole new paradigm for doing eCommerce." What's interesting to see is like, it's taken like a decade for that to actually become viable technically.

Dave Eisenberg:

But Matterport was this business that I just fell in love with, ended up writing the biggest check that I had ever put into a business at Matterport. We also did a deal out of this fund, Red Swan. Then I actually joined the venture firm, Accel, with a vision of building an eCommerce platform that would sit on top of the data that Matterport was capturing, that turned out to be a little too early for the state of the camera. So I ended up pivoting the business that I was working on, which was called Floored into 3D visualization for an industry where you have to sell a space in a different condition than how it currently looks, which is commercial real estate.

Dave Eisenberg:

We ended up actually building a decent sized business. We got 50, 60 employees and we hit this moment. We were four or five years in and we were about 5 million in recurring revenue, and I thought to myself, "I actually don't know if I could take this business to 25 or to 50 million [inaudible 00:06:59] I'm just not sure that the market is there. One of the luckier and I guess smarter things I did in hindsight was not raise a series B because I had this concern that we were not going after a big enough pie. I would've had to bet the company basically on VR and that really glowing up, and I don't think VR actually has yet hit the types of penetration that would've been required for that to happen.

Dave Eisenberg:

And so, rather than raise more money, we actually decided to sell the business. We almost sold the business to WeWork. I spent a lot of time with Adam Neumann and a lot of his colleagues at the time. One of whom we've subsequently backed in out of our new fund, which is a really circuitous way that life works. But we ended up selling the business to CBRE, the Fortune 500 commercial real estate services firm. I moved into an innovation role that they hadn't really had before, which is kind of a scan the market for interesting technology to adopt or invest in or acquire.

Dave Eisenberg:

So I got a chance to travel the world and work with some really talented executives who have built just a juggernaut there over many, many years. They treated our team really well. We grew to about 100 people internally, but I had this big realization, which is that I didn't want to be the CEO of that business 20, 30 years down the line. I think what I learned about myself was that, this thing that I had always thought to be true which was, my goal in life was to be a CEO of a very large important publicly traded business, just required that I be a lot better at management than I actually feel like I am.

Dave Eisenberg:

So, that was like a light bulb for me, which was that, "Hey, maybe this investing thing, which is functionally a small group effort, making decisions and not actually ever building a very large entity in terms of people, maybe that would be a better career path for me." So, the mixture of early stage deals we had done at this entity, Red Swan, which I had with the Bonobos CEO, coupled with what became my domain expertise over about an eight, nine year period of working in real estate and the associated things around real estate like construction and physical retail, became the thing that I thought I was most qualified to do. So I started talking with a few people in the institutional LP world.

Dave Eisenberg:

I had a very good friend at Ribbit Capital, which had built a leading venture firm with a FinTech focus. So they had done the sector focused fund in my estimation, better than anybody else. When I talked to them, they said, "We really think you should go and you should do this, and we'll actually invest in you to go and build your own sector focused fund." They introduced me to a bunch of their LPs, which immediately gave me an audience of institutional capital that I don't think I would've been able to get on my own to be honest. That was really the genesis for Zigg.

Dave Eisenberg:

I left CBRE in the first quarter of 2019. We did our final close on our first fund a few months later, and then we invested fund one in 2019. COVID hit, which we could talk about later, just became this radical paradigm shift for the real estate industry. We ended up raising fund two in 2020. Now we're in the middle of that, we've got our little team here and I'm in my office right now and it feels a little surreal after so much time working from home. But that's how I ended up investing out of my fund, which is called Zigg, it's named for ... my wife is a bit of a classics nerd or geek. I asked her like, "What is an old like Roman or Greek real estate illusion?"

Dave Eisenberg:

And she said, "Why pick like Roman or Greek, why not go like to the Dawn of Civilization, pick something earlier?" We ended up triangulating to the thing that preceded the pyramids, which was this kind of proto pyramid called the ziggurat. I liked the word because it was distinctive, and we also liked the double entendre of sort of zigzag. There's that famous paradigm. I think it was one of the Benchmark founders who said, "You really want to be non consensus in your investments and you want to be right. That's how you find the exceptional returns." So Zigg became this two-pronged thing of ...

Dave Eisenberg:

The ziggurat was origin only built to try to reach the heaven, that was like particularly the Tower of Babylon, the intent of the real estate. So we thought it was a good metaphor for venture capital where you're reaching for these stars. Then we liked the idea of maybe thinking a little bit differently. Many of the other groups in our sector had decided to raise their capital from the real estate industry, which we decided not to do. That's how we ended up doing what we do today. Zigg today is a sector focused venture fund that invests in technology businesses, that touch real estate construction, retail, and the FinTech layer around them, and we generally do early stage investments with the occasional growth stage deal.

Daniel Scrivner:

That's probably the best and most detailed background anyone's given. That was incredible. I love the backstory of Zigg. I'd love to try to pick it a couple of the threads there. I mean, one just going all the way back to Bonobos, in thinking you made the point that obviously you were a chief of staff before that became this hot iconic, I don't know, or very common thing within Silicon Valley, what did you learn about that role, and how did it help you think about the purpose of that role in a company, and just any lessons learned?

Dave Eisenberg:

Yeah. I learned a ton, because I didn't know that much prior, so everything was learning, but I guess the way that I had conceptualized and the reason why I was interested was because Andy had written this incredibly hilarious job description. I wish I could find it, so much of it is probably not PC today, but the job description was kind of like, "You're going to be a mini CEO, you're going to figure out what technology platform we're going to work on. You're going to recruit all of the first early employees. You're going to build our first financial model. You're going to get to do all these things." And I thought that sounds fascinating. Just the ability to touch all of the different parts of the business.

Dave Eisenberg:

At one point, my nickname at the company was super leverager 3000 because of a quick program that we had whipped up to spit out all of the days' most important metrics for eCommerce. Then we named that report super leverager, and so, I became the robot version of that. But I think the best parts of that role are, your main job is to provide leverage to a leader at the firm, the person who you are, the chief of staff for, it's all taking stuff off of their plate so that they can do more and better strategic things.

Dave Eisenberg:

I would say the worst part of the job is that you fall in this very weird spot on an org chart where you ultimately end up recruiting in more senior people to functionally lead departments like marketing or finance or technology. And oftentimes you have a closer relationship to the CEO, but you have none of the authority of running a division of the business. So, you become a little bit like a gatekeeper. I think to be 22 and to be a gatekeeper 23 as I was at the time, where some of the people who were leading divisions a year or two later were in their 30s, 40s, or even 50s, that felt like I was a little bit miss calibrated to where I should have been.

Dave Eisenberg:

I think whenever I talk to people who are contemplating chief of staff roles today, I typically want to vet whether these org dynamics have been properly thought through because in the worst case scenario, you can end up like an assistant, which is really not the purpose of the role. The purpose of the role is to do a lot of important work that the CEO maybe shouldn't be fully hands in the weeds on, and to be a little bit of a screener of how best should the person who I'm working for be spending their time.

Dave Eisenberg:

And it's important that you have a CEO who knows what they want in a chief of staff, and it's also important that you have the rest of the infrastructure thought through in terms of level of seniority and whether maybe there are actual people who are doing more EA work there, but you just don't want to have it be ambiguous because that can create issues.

Daniel Scrivner:

Yeah, I imagine as well, it probably really helps if the CEO has a good amount of self-awareness in terms of just where their strengths are, where they're not as strong. Any commentary insights there?

Dave Eisenberg:

Yeah. This was something where Andy actually has an extraordinary level of self-awareness to the point where I found it like very shocking as a young person to be hearing someone so openly talk about their own flaws, and then my flaws as well. It was a culture of radically and transparent feedback. They had recently taken a business school class. Both of the founders had gone to Stanford Business School called Touchy Feely, where everybody was very in touch with their emotions. I was not in touch with my emotions at that age, and so it became this thing where I had to really mature quite quickly.

Dave Eisenberg:

I had to learn that you don't get strength from hiding your weaknesses. You actually get strength from identifying those weaknesses and being open about them so that you can help other people help you get better. And that was a massive learning for me. But I agree that a high degree of self-awareness on the leadership team will often be a way to include better managers on that team. And ultimately I think what Andy was great at was investing in other people's career growth. One of the things that he did at Bonobos that I'll never ever forget was he kind of set me free two and a half years in.

Dave Eisenberg:

He said in a very kind way, he's like, "I think you've done a lot here at this firm, I think maybe you should go to another firm and have a bigger impact at a higher thing." He's like, "I'm not going to fire you. This is ultimately your call, but I think your career is going to grow faster elsewhere than here." That for me was this like blessing, because it allowed me to opt into doing a proper job search without the fear of not having time left. That was when I found Josh at TellApart, and Josh was just a very different type of leader. He had much more domain expertise on the technology front. He was a product manager at Google and a very good one at that.

Dave Eisenberg:

So I just learned very quickly about the importance of upping my technical game. It was a very technical product that we had to learn how to sell or I had to learn how to sell. So, it was a really nice complimentary experience. This is one of the things that I end up advocating for people who ask for career advice is, in the early years where you're optimizing for learning rather than earning, really try and accumulate disparate skills, and this ultimately came back to how I thought about building Zigg, the firm, my partner and I have very complimentary skills rather than overlapping skills. But it became a real business school education for me just without going to business school, and a quick aside on that.

Dave Eisenberg:

The reason why I didn't go to business school is because, at Bonobos I was oftentimes recruiting for various roles, and the applicants we would get for a lot of these roles were coming from business school. So I said like, "If these people are ultimately applying for roles that are going to be reporting to me in some capacity, I'd be crazy to go back in time and go to business school." I think I missed out on a lot of fun, but I actually think that working in the companies was the fastest way for me to grow.

Daniel Scrivner:

Yeah, absolutely. We're going to talk about a handful of companies that you've invested in early on. But one thing I want to talk about is just your experience early on in companies like Bonobos and in companies like Matterport. I think part of why I want to ask that question is, I've often had the realization as someone in venture that having worked in an early stage venture company, you just have a much more realistic assessment of what that looks like early, because it doesn't look tidy. It doesn't look neat. It's messy and creative.

Daniel Scrivner:

And then the other piece would just be thinking about that experience with Matterport. What did you learn from backing these two really smart engineers that you thought were working on something interesting, and then being a part of that journey for 10 years, which is an incredibly long period of time?

Dave Eisenberg:

Yeah, totally. And it's not just them. Right? A lot of the companies that we invested in, in the 2009, '10, '11 vintage are today going public, companies like Warby and Touro, others like Procore, which have gone public recently. It does take a while to go from true seed to public companies. I'm of the point of view that there is no one way to build a venture career. My best friend from college, my roommate of seven years is a partner at Bessemer and he was never really an operator, he was a pure play investor and he's a fantastic investor. He was groomed in the role of like a Jeremy Levine, Fred Wilson or Peter Fenton. There are many, many investors who don't work in an operating capacity, who just are tremendous at what they do.

Dave Eisenberg:

Look, I think, Marc Andreessen and Ben Horowitz have really tried to be the most vocal about the importance of having operating experience in terms of building comradery for founders. But you can have a tremendously successful firm without that. So I'm not prescriptive in it. I would say for me it was very important to have both eCommerce experience at Bonobos, B2B software experience at TellApart, and then domain expertise working in real estate, like at Matterport and at Floored.

Dave Eisenberg:

As a way to get credibility with founders that we can skip a lot of the 101, maybe even 201 stuff and go to the media issues. I think a lot of what we do today at Zigg is try to convince early stage founders who are comparing, working with us versus a generalist firm who may not spend all of their time thinking about these problems that the learning curve will go faster with us or that we can help them avoid non-obvious pitfalls. I really think that that's a key piece to us winning very competitive deals.

Dave Eisenberg:

But I think to answer the question specifically, what those experiences all did for me was give me credibility with other founders in the category. So, I don't have credibility with the Warby founders unless I have the Bonobos experience. I don't have credibility with companies like Juniper Square or VTS, where we were very early investors that have now gone on to do great things in commercial real estate if I didn't have the Floored experience, and then also the CBRE experience, which I think has increasingly been helpful to those companies that are scaling into public businesses.

Dave Eisenberg:

I think to your point about patients, one of the things I try to be very clear about with people who are new to investing in venture, is that they're very rarely [inaudible 00:19:51] I think about Matterport, not even being really focused on real estate in the early years, ultimately coming to the point of view of real estate and then being very focused on hardware rather than on software for a long time. That was like not the cleanest path, I'd say Floored was very focused on scanning 3D places, and then we pivoted to be focusing on rendering places that don't exist. That was a non-obvious pivot.

Dave Eisenberg:

There are countless examples. Snapdocs is a business that have been a very early and consistent investor, and that's now one of the leaders in mortgage software. Snapdocs had a period of time where the business was not growing that quickly. The mortgage market itself had frozen, and this is sort of 2015, 2016 period. Then they later got onto this exponential growth curve path.

Dave Eisenberg:

I think there was a moment where if you had had conviction at a point of weakness or maybe a better example would be Coinbase. Coinbase had this moment of crypto winter that was right in the middle of the company's history, and there weren't that many people who were that excited about investing when Bitcoin's price wasn't moving very much at all. Like Ethereum was still valued super inexpensively.

Daniel Scrivner:

In hundreds.

Dave Eisenberg:

Yeah, way less than that, single dollar. I think that it is an unfortunate reality that it's not a very interesting story to cover a startup that is doing fine or even doing worse than fine, like doing eh, no one really likes to talk about that. So as a result, it's not broadly known, that a lot of companies that you today think of are great. I mean, think about Procore, like Procore got started in 2002, it took about 12 years for Procore to really start turning on this exponential growth curve. Now it's a juggernaut in the public markets, but-

Daniel Scrivner:

Almost 20 years later, which is incredible.

Dave Eisenberg:

Yeah. It's a valuable lesson for people who are looking for overnight riches and overnight success, is that a lot of great businesses do not follow that pathway. They ultimately are the result of a lot of grit, a lot of tenacity and fighting through some tough times and moments. I think one of the things that fellow entrepreneurs love is both sharing these stories and also ideally helping to avoid pain for future businesses.

Dave Eisenberg:

So I think one of the reasons why startup CEOs do love having venture investors who have either been in the trenches in these really tough operating moments, I love Ben Horowitz's book about The Hard Thing About Hard Things, or on the non-operating side, have seen companies through very tricky periods. I think about like Bill Gurley and Uber and others. I think just feeling like you get to borrow from those learnings and experience is really a great reason to work with a venture investor.

Daniel Scrivner:

I'd love to ask one more question and then move on and begin to explore the real estate space, which I think is fascinating. And that question is, and this may be overly broad. So feel free to take this kind of any direction, but with someone who has had substantial operating experience and is now on the investing side, just when you look back at that time period, and I'm sure you're constantly learning today from the entrepreneurs you work with on those conversations you have, when you look back at your own experience, were there any big insights or big lessons that shape the way that you work with entrepreneurs or just any valuable insights from being an operator at several different phases?

Dave Eisenberg:

The most important lessons have all come around the recruitment and the retention of talent. I think what I've seen and then also observe firsthand experience is that, great founders never stop recruiting. They are always recruiting. Sometimes they're looking to level up people that they recruited a year or two ago. Sometimes they're looking to correct for mistakes. Sometimes they're looking to correct for their own flaws and try to externalize challenges that they're having, hopefully with other people who might be better to solve specific problems.

Dave Eisenberg:

But I love the paradigm of like A's hire A's, B's hire C's and you always want to know what you are and then what the people around you are. But I personally have been attracted to operating in environments where the people around me are better than me or just are going to be in playing such high levels of whatever that is that they're doing that it really like causes my motivation level to jump or so forth. And conversely, like the companies where I've made mistakes in investing, I think have not had this dynamic or they've lost it somewhere along the way, where in the pursuit of growth, they've reduced their thresholds, their bars for talent.

Dave Eisenberg:

I think like one of the truest senses of a company's quality, is like the incremental person who's being brought onto the team in any function, in any department, is that person up-leveling the overall average or are they diluting it? I think as an investor, if you can get a feel for that, for the quality of the talent that's being attracted to the business, I often think this quality of magnetism that a founder needs to have to recruit employee is one through 10, especially because it's just a fact of life that the equity drop off from the founders to the early employees is quite massive.

Dave Eisenberg:

So, to be an early employee, you really need to believe almost to the level of intensity that the founders do, that this is the right call for you either because their culture is so amazing or you love the problem space they're working on or because you're a very economic person, you think they're going to go build a tremendous business, like all of the early employees at places like Coinbase and Uber and others like did it unbelievably well. Facebook of course. So I think that as an investor, what you're looking for is, did the founders intuitively get this? Are they constantly trying to bring in the best people they've ever worked with into their network?

Dave Eisenberg:

When a founder does references on someone, are they using those references to try to network to other talent that they could potentially recruit? It's the single most common problem I hear from our portfolio today is just recruiting has become incredibly difficult in a world where there are so many remote companies now of high quality where someone can work anywhere. It's never been easier to start a company either, if you think about so much infrastructure that you can rent to start a company. So really like you're taking a lot of the very natural early employees and some of them are getting peeled off to go start their own companies, which is awesome. And then some of them are just getting paid extraordinarily well, just given the nature for the global marketplace of competition for talent.

Dave Eisenberg:

So, it's almost a requirement from our point of view that any investment that we make, we can see other very high quality people going to work for the founding team that we're backing.

Daniel Scrivner:

It's such an interesting point and it's one I've definitely heard other people make, and it's interesting in my mind because, well, I guess just to ask the question, do you feel as strongly about ... feeling the same way about the other investors on the cap table? Just thinking about the companies that I feel like are the most impressive, they seem to be attractors of the best people, but across every single access in terms of they've managed to get a ton of press because people want to interview them. They're interesting. They happen to recruit very well. People want to invest in them. Does that quality extend far beyond recruiting just in and of itself?

Dave Eisenberg:

Myself assessment would be that I'm not consistent on this topic. I find that this is a highly bespoke question of like, "If the question is who are the right investors for this business?" There are some businesses that are doing so well, have such a mature management team already, have such great investors on the cap table that I actually care about this a lot less. I care about the incremental investor, especially if they're not going to have a ton of rights related to like a board seat or something like that.

Dave Eisenberg:

Maybe you just want the best and cheapest capital. There have been times that I have advocated for that, more often than not, that's not my framework. More often than not, I care a huge amount about who the incremental investor is in a round where we are leading and we're trying to hand allocate the rest or in a round where we've already invested, and now we're effectively on the sales team of the founder to bring in the next investor and we're helping back channel price expectations, and we are helping give people guidance as to where they need to be flexible or negotiable.

Dave Eisenberg:

If that other investor counterpart is someone who I think very highly of, I have often advocated that we take offers at lower prices because I believe that that firm or that person will actually deliver a return on that delta over time. And so, it's a hard question to answer because there are situations where I have begged a founder not to take capital from an individual or from a firm who has been a bad actor in the past that I've seen. And there have been situations where I say, "Hey, this is a toss up, just go with the person you like better socially." Right? It's like, "It really runs the gamut more often than not though."

Dave Eisenberg:

I think the point is opt, which is to say that I believe that one should be thoughtful about every person who you bring onto the cap table and in a world where there's a ton of capital, you might as well get something more than just the capital from them. You might as well find that that person's going to help you with your design strategy or they're going to help you with connections to the credit markets, or they're going to help you with international expansive. You might as well find investors who are going to do a little bit of work for you rather than just someone who's completely vanilla.

Daniel Scrivner:

I heard an entrepreneur say this recently, that they really try to hoard the best investors, the best advisors, the best people, that word is necessarily the best word, but just this idea that you will always want the best people around the table. And for sure there's a lot more value to be had in other ways than just capital.

Dave Eisenberg:

My only comment there is, it can become too extreme though. You can have a situation where a founder is obsessing over very small changes to the cap table in details. And you have to say to them like, "This is probably not the best use of your time. You should be focused on this other thing because this is rarely going to come up."

Daniel Scrivner:

Yeah, you can. I feel like that's a meta lesson as you can over index on almost anything.

Dave Eisenberg:

Yes.

Daniel Scrivner:

It's important to have that sense. I'd love to explore the real estate space, and I feel like Procore is a really interesting example. I've spent some time recently learning about that business as it came onto the public markets. I did not know I had not gone to the level adept to know that it was founded it in 2002, which is fascinating, just to think about that kind of arc.

Daniel Scrivner:

But zooming way out, I feel like my perception, and I know this is changing, but I think it's most people's perceptions, especially people that have been in the real estate industry that historically, and there's actually quite a few industries that are like this. It's been almost neglected by tech or it's been almost anti-tech in terms of just the way that that industry has operated. So I'd be curious just for your perspective on that. What is the arc that you see happening in real estate tech and what are some interesting trends that you've seen over the last 20 years?

Dave Eisenberg:

There are a few things that are non debatable, so real estate and construction industry sort of next to real estate, as a percentage of their overall revenues has spent among the least on technology. If you contrast it to retail, which has had the threat of Amazon like competing with traditional retailers, retail spends 10 times the amount of money on technology as a percentage of revenue than real estate or construction, which has historically spent among the least out of any industry in the entire country.

Dave Eisenberg:

And so you wonder like, "Well, why is that the case?" Well, there's a few artifacts about real estate that have led folks to not particularly lean into innovation. First, I would say is a culture of risk avoidance. Right? Like buildings need to stand and they need to stand for a very long time, and they need to be very secure. The capital that gets invested in real estate is looking for safety primarily more than opportunistic return. Oftentimes real estate has had this bond quality to it that has made it very attractive to institutional LPs who can really scale. And then real estate has also landed itself well to monopolies.

Dave Eisenberg:

So you've had a fixed amount of land. No one can force you to sell a building that's standing on that land. And so a lot of real estate's been passed and a lot of very successful tax law lobbying over hundreds of years has resulted in ... A lot of real estate is tied up in a relatively small number of families and institutions. If you just held that real estate over a very long period of time, you did extraordinarily well. Or if you held the land and you leased the land to others. So as a result, there hasn't been much that has forced the real estate industry's hand about why should I do anything different or better?

Dave Eisenberg:

I'd say the founding thesis of Zigg was actually a deep fascination with the future of autonomous transportation. Specifically, I was very interested in how electric shared ... Autonomous vehicles might radically change where people want to live in the world, which would be a thing that would move the demand for specific real estate and specific places to such a degree that you wouldn't care if a building that you needed to get to was a few miles away or was off main and main, but was rather somewhere else.

Dave Eisenberg:

Historically real estate value was clustered with public transit hubs. You think about the subway line in Manhattan, or think about the BART in San Francisco, the closer you were to these major movers of people, the more value that you had. And I thought that it was possible that next generation transportation, like the roboticization of transportation would actually unbundle the famous real estate maxim of location, location, location from value. That was going to cause the real estate industry to start to act a lot differently as they needed to attract tenants and retain tenants who have much more fluid preferences on where they want to be. If you had told me that two years into our funds history that a global pandemic was going to prove this point well in advance, I would've not believed you at the time.

Dave Eisenberg:

And I also didn't really understand how positive this was going to be. It's a horrible word to use, because it's obviously a tragedy that we continue to live with. But I do think in terms of the acceleration of the modernization of some legacy industries, this pandemic has actually moved the world forward faster, and the real estate industry and the construction industries have been hugely impacted by COVID in terms of both the movement of people, where people want to obviously work from home, is a tremendous depressor of demand for commercial space and in highly urban environments.

Dave Eisenberg:

And I think as eCommerce disrupted need for physical retail, so too is this happening, I think for a lot of different segments of the economy, the digitization is changing the needs for physical bank branches or the need to do notarization in person or the need to sign mortgage documents in person. A lot of stuff is changing quite quickly. Virtual tours. Right? Talking about Matterport. This is a tremendous acceleration of demand in a world we need to do virtual tours, and there's a lot of people moving around.

Dave Eisenberg:

So I guess what we are observing in real time is that the real estate industry is realizing that the industry is not as stable as it used to be, and it is not going to be as stable going forward, that there are more things changing, whether those things are stuff like climate change or whether it is pandemics or whether it's consumer preferences with gen Z and millennials who are unbelievably different types of humans than boomers and others.

Daniel Scrivner:

[crosstalk 00:34:10]

Dave Eisenberg:

So I think this is an interesting time to invest in what we invest in, in the same way that coming out of the '08 regulation and all the changes that were happening that reduced the footprint of big banks, like FinTech was just this amazing thematic approach one could have had to venture starting in the '09 sort of 2010 vintage.

Dave Eisenberg:

It's our belief that coming out of COVID, this is going to be a very similar moment for real estate tech. So, we're seeing similar to like the crypto industry where talent flowing. I think we're seeing a ton of very high quality traditional tech talent. Who's looking at the size of the real estate markets, who's looking at the degree of change that's happening, and they're saying, "I think I'm going to go after a really, really big market, be that construction or residential real estate or commercial."

Dave Eisenberg:

I think the other industry where that's happening other than crypto is healthcare. We also look at a lot of things that are in healthcare retail as well. I find that I'm in a bit of a lucky moment where the thing that I'm qualified to do is also having a major growth spurt and is being royaled by a lot of generational change. Even within the real estate industry. The real estate industry is a lot older than other industries within America. The average age of the drywaller's in the late 40s, the average age of a real estate agent's in the early 60s.

Dave Eisenberg:

So, you find that there's going to be some generational change in the industry. That's going to cause either the adoption of new tech and trend at a much higher pace or it's going to be disrupted. I would say there's a few companies in our portfolio that I would accurately categorize as competing with the legacy real estate industry, much more than selling to them. And some of those companies are the ones that I'm the most bullish on.

Daniel Scrivner:

Maybe to flip it, something I'd be curious, we talked about this a little bit, 101, as we were preparing for this interview, but what's been interesting to me and part of why I was really excited to have this conversation is, I feel like I've seen this through the lens of some really interesting real estate focused companies that have come public, and we're starting to see a wave of those, whether it's Doma, whether it's Opendoor, other examples. So just to zoom out from those particular examples, and you can feel free to bring those back up, but what public companies do you think are doing really interesting things, innovating in retail at the moment?

Dave Eisenberg:

Yeah. Look, I'm going to talk my book here a little bit, but I think Warby Parker, which is on the eve of ... had their own direct listing, really has the perfect omnichannel business. They have an incredibly compelling and differentiated physical retail experience. I love going into the Warby store. It feels like going into a beautiful library setting. The people are friendly, there's not a lot of pressure to buy and yet it's fun to do so. The eCommerce experience, they were the first to have the try on at home experience, send you five, send the step back. They've now gotten really good at applied augmented reality. So you can actually get a legitimate eye exam from home and also see what the glasses will look like.

Dave Eisenberg:

I think than anybody that I've seen, they have nailed the ... You're just our customer, it doesn't matter if you're our customer in our store. It doesn't matter if you're our eCommerce customer, we meet you where you are, and hopefully we build a compelling enough experience that we pull you into our stores because they're fun places to come and shop and experience. They were very early to do branded experience. I remember going to the Warby Parker street fair in Soho one year, and I just like brought my young kids and it was so pleasant. It was so fun, it was so wholesome. I love that Warby's thing is reading.

Dave Eisenberg:

Obviously it makes sense with glasses, but it's such the right thing creating a family friendly environment, and there was no pressure to buy anything. It was just like, "This is who we are." Obviously they give one movement where they've given away millions of glasses to people in need. They were early there. So, that's one that I'm incredibly bullish on holding for the ultra long term, but there are more, I think there are many other digitally native brands that have gone public and will continue to go public in the coming years. All of whom I think have forced the question to traditional brands, like what is your digital strategy? You can't just have a lame, boring eCom experience because people will buy the cheaper more commodity version elsewhere, on Amazon or otherwise, on an aggregator.

Dave Eisenberg:

And then, what's fascinating to me to see in the real estate side is the degree to which people are reinventing the physical space. I'll give you another example from our portfolio. We are investors in a company called Tend, T-E-N-D. That is reinventing the dental experience. What they identified was that the dental experience had a very low net promoter score. People don't like going to the dentist, they don't talk about going to the dentist. And they say, "What if we reimagine this to be much more like a hospitality environment where you actually have extremely friendly staff, diverse staff who love to pamper you and who love to let you try new products?" And then we also have a digital experience where you can book an appointment, see what your insurance is going to cover in advance.

Dave Eisenberg:

They're just perfected to go into the dentist experience. When you go and you sit in the chair, there's a Netflix above you, is pre loaded with shows that you like to watch, you wear cool glasses that block the glare actually from Warby Parker. So, it really reinvented the whole thing. I think their growth rate has just been astonishing, partly because there's a lot of creativity that's being exploded onto businesses that have not had a ton of it. That's one of the best things about this moment in time, is I feel like thoughtful entrepreneurs are looking at every experience that has a poor net promoter score, and they're saying, "Is this a big category where I can reinvent something?"

Dave Eisenberg:

And we see that in construction payments, we see that in mortgage. We see that in stuff like title insurance, but look, there's going to be a lot more public companies in our category in the next five years than there have been. I'd say ones that I think have really created a culture of innovation and will continue to do great, one that's not in our portfolio is Opendoor where I just so deeply respect the quality of the talent on that team. Certainly Matterport, which I think has real big visions for they're going to go. Procore has a company that is a partner to it today called Built that we think very high level in the private markets that I assume will be a public company, not too distant future.

Dave Eisenberg:

Outside of the United States, we have a company called Loft that is building a super app for real estate. So there's an iBuying component. There's a mortgage origination component. There's a rental marketplace platform. I think there'll be a public company in the next year or two, also an extraordinary high quality founding team. So, the short of it is, I think it's going to be a great time to be a public investor looking at Prop Tech. I think a lot of the Prop Tech companies that do best will have FinTech focus areas where they're doing things that bleed into the FinTech area. It's a very blurry border between those two, and those are the types of businesses that we love investing in.

Daniel Scrivner:

I'd love to ask a follow up question around, you mentioned that you're seeing some really interesting businesses that are this intersection of healthcare and real estate. Maybe ten is a good example. It's interesting for me because you've been coming across companies like Brave Care, is one I came across recently that's doing something really interesting. If you're a parent, you probably have had not so great experience at a pediatrician. Not that you don't have a great doctor, but just that the experience has a ton of friction and there's nothing about it that feels refined. And it feels actually like a perfect thing to peel off.

Daniel Scrivner:

And if you were to have a fully focused model, you can do something really interesting and differentiated. I'd be curious, and it's going to be a wide open question, but any commentary you can share around what you think is interesting or interesting, other examples of healthcare meets real estate?

Dave Eisenberg:

Look, we're seeing this almost in every segment of healthcare, we're seeing people reinvent, going to the dermatologist. My father's a dermatologist. I don't think he's used a computer in his office for the last 30, 40 years. There are people that are reinventing stuff like in the ambulatory surgical center areas where people are externalizing surgeries from hospitals in order to save costs and also deliver better patient experiences. We're seeing stuff on the cosmetic side, we're seeing stuff in physical therapy and women's health. There's a lot of stuff that's happening in women's health, largely because it's been so neglected over the last 25 years in startup land.

Dave Eisenberg:

I guess what we look for at Zigg is we look for a business that fundamentally has a nice margin profile pre-technology and then upon the addition of technology to how one acquires customers to how one retains customers and markets to them over time, and then through automation of workflows that don't necessarily need to be hand input by a person. Those, I think, are the beginnings of a business that could have a venture type profile. So I think one medical [inaudible 00:42:16] business kind of pioneered this model, at least in the venture context of taking physical locations for primary care and building a membership model that has a recurring revenue characteristic beginning to automate parts of how one books an appointment or flu shots and blah, blah, blah.

Dave Eisenberg:

We're seeing that business model across a bunch of different areas. In some cases they're better businesses than one medical. They have a higher margin profile, they have less competition and so forth, but whether it's pediatrics or whether it's geriatrics, I think there are a lot of high quality entrepreneurs who want to do something meaningful. Some of those entrepreneurs are looking at doing stuff in the climate world and ESG, and there's a lot, if that intersects with real estate there, and some folks say they want to do something with healthcare, either because of a personal experience they've had or because they have a family member who has had some personal experience.

Dave Eisenberg:

But I think those are some of the most compelling founding stories when people want to dedicate 10, 20 years of their life or more to a problem, and it's deeply rooted in a personal experience. When you find the right magic of great business model that can be enhanced by technology with weak competition and an easy entry point that tends to be magic for us.

Daniel Scrivner:

Yeah. It seems like the perfect setup. I want to ask one quick follow up question to that idea. Just obviously thinking about whether it's Warby Parker or whether it's these healthcare examples, all of those seem to suggest that this idea ... I don't want to conflate the two, but this idea that retail stores are dead or this idea that malls are dead or this idea that street level commercial real estate are dead or are going away. What is your take there in terms of just from a trajectory perspective, and just on that point? Obviously I would guess you disagree with it, but just any commentary.

Dave Eisenberg:

Well, not necessarily. The United States has dramatically more retail space than other countries on a like for like basis. So I would not be surprised to see the retail industry in terms of physical locations and square footage contract dramatically. I don't know that we've yet seen the right idea to how to repurpose a class B or C suburban mall. It's not clear that all real estate is going to come back. I think that what we are seeing is that you can't just assume that if you put what I'll call a thoughtless box somewhere that you can count on foot traffic coming through there, the internet is just delivering awesome experiences that are good enough, that people don't feel like they need to leave their home.

Dave Eisenberg:

So, on the contrary, everything that is being designed in the physical world has to be better than the purely digital experience to get the mind sharing attention. I'll give you an example from our portfolio, we invested in a company called CAMP. CAMP is basically building ... I think of it like a next generation Disney, where they're building a physical store that has experiences embedded, that are really awesome experiences that you want to do with your kid. Like I took my daughter to a CAMP location on the Upper West Side. We spent like three hours there doing art projects together, that were art projects that I couldn't easily do at home. That was the key.

Dave Eisenberg:

The key is like, they've taken all these things that are not super easy to do at home, and they brought it into the store. Then the toy stuff that they sell, it's just not commodity toys. It's all like really well curated, thoughtful stuff that I'd never be able to find on my own. So the combo of community, plus experiences, plus commerce, I think is very, very powerful. CAMP has had unbelievable foot traffic retention compared to even stuff like grocery. So we've had seen some landlords who say, "The best thing that I can do to reanimate or reactivate my mall or my physical location is to put something like a CAMP into there because it's going to do such a good job of attracting and retaining people to those locations."

Dave Eisenberg:

That's the future of retail, is like things where it's fun gets you out of the house. I think there's a lot of people who are looking to get out of the house. We looked at a business, we're not investors in all that. I think it's a fascinating business. That's building destination virtual reality experiences. So, basically taking the fact that the computational hardware is still expensive and the physical hardware is changing every year or two, and they're saying we're going to build destination experiences that are a mixture of entertainment, maybe even some education and some team events there.

Dave Eisenberg:

I think that's a great idea. I don't know if it's going to be something that can take massive quantities of space, but the short of it is that every owner who I know who's being really thoughtful about the next decade about their property is, they're looking at the pace of innovation in their tenants, and this is something that they never ever used to look at, but they want to know like, "Am I taking a 10 year tenant whose credit is based on the fact that over the last 30 years they were innovative, but is actively being disrupted today? Maybe I'd rather bet on the upstart who may not have those years of credit, but who has an awesome investor base, has really high quality talent. Maybe that's the tenant that's going to grow their footprint with me, and maybe I can get a leg up on attracting them to my space because I'm willing to bet on them in a way that my peer set is not."

Dave Eisenberg:

This is the type of stuff that's changing how one underwrites real estate in real time, because real estate's a very backward looking industry in terms of betting on whether you're going to be a good tenant. But I think real estate in the future is going to be a lot more like venture. It's all going to be forward looking on, "Are you going to be bringing in the types of people that I want to my asset? Are you going to treat my location correct? Are you going to be someone who's going to expand in a footprint that maybe I can help support?" That's the future. I really think that there are more and more landlords who are not yet comfortable doing this, but are starting to build the muscle that over the next decade will enable them to be comfortable making forward looking hypotheses and bets rather than historical ones.

Daniel Scrivner:

It's a fascinating perspective. As a parent, CAMP sounds incredible because I feel like parents are super underserved. It's like you can go out to food. There's obviously movies, there happens to be bounce places and a handful of those places, but otherwise it's just museums, I don't know, going outside.

Dave Eisenberg:

Yeah. I'm very, very bullish on CAMP's ability to create content that changes out more frequently enough that people love as well as these parent-child experiences that are fun for everybody. This is one of the things that I look for in books that I select for my kids is like, I actually want to read the books that we read, because I think that my kids can pick up on my own levels of enthusiasm as well. So I think it's something that CAMP is like unusually good at.

Daniel Scrivner:

Yeah. That's awesome. This has been an incredible conversation. I could do this for another hour, but I know you've obviously got a limit on your time. I want to ask one follow up question, which is, one thing I was going to ask, I thought might be interesting to explore, but we've covered so much ground in the time we've already talked is, just for a map of the real estate space technologically, I know that may be hard to do, my question is, the stuff that I'm seeing is everything from Procore, which is obviously this very vertical play that's serving the construction industry and is offering a ton.

Daniel Scrivner:

It has a really interesting model, has a ton of different entry points for people. Which has got interesting vertical model, there's these underlying layers now of technology like Doma, is an interesting example. There's also stuff like Latch, which you're like, "Okay, there can be a company that just focuses on entry points and software." So, maybe to constrain the question a little bit, where are you most interested? Are there things that you avoid or things you focus on more, or it just seems like the bounds of this industry can be very fuzzy?

Dave Eisenberg:

So one thing that's important as a sector focused fund is not define yourself so narrowly that you turn yourself off to potentially good ideas. I think, look, at the highest level of abstraction, there are companies that are focusing on attracting tenants, on retaining tenants, on maintaining buildings and like physical environments. And then on the whole investment side of the stack, like how capital flows in and out of these assets, there are companies that span all types of real estate. There's commercially focused companies, residential, industrial retail. You can slice it that way.

Dave Eisenberg:

Then you can also take all of the financial transactions in a building around, placing a mortgage, putting a securitization in place. You can find all the places the dollars flow, and there are probably startups being built around there. The insurance market is a huge one in the real estate space. So, we are careful not to rule out doing anything that's related, because you never know when you're going to find extra ordinary team.

Dave Eisenberg:

I would say in general, we are more focused on the businesses that enable cost savings through automation than we are through any other type of business, and the way that that can manifest can be wildly different from business to business. So we have a company called Openspace that enables you to capture 360 degree photographic walkthroughs of construction sites every day, and then track the changes that happen there. They're growing like crazy in the construction industry, because they reduce the need to do that with a specialist visit, and they can do inspections much faster and so forth.

Dave Eisenberg:

There are companies that use that data to figure out when can I release a construction draw for someone who's doing a site. We also have companies that are doing stuff like physical security at buildings using computer vision. There are companies that are automating all of the steps involved in getting a consumer mortgage, so making that process a lot simpler. There's a whole host of companies that have new ideas as to how do I fractionilize ownership in real estate and put it on a blockchain.

Dave Eisenberg:

I could never come up with all of the ideas, and I'm glad that's the case. But I do think that the qualities of businesses that we love tend to be more technical rather than more of a real estate innovation. There's a lot of companies that are innovating on real estate in terms of like space design or in terms of how frequently one can get access to a space. Those tend to be lighter on the tech side and heavier on the real estate finance side, and just our thing is a little bit more like let's try to find true software companies that happen to be working in this space, and then let's try to use our expertise on the real estate and construction side to help them grow faster.

Daniel Scrivner:

That seems really smart. You want to cast a wide net so you can be opportunistic and make sure you're not missing out on stuff. Because markets change, things evolve. For anyone that wants to learn more about Zigg Cap, wants to follow you, where can people find you online and learn more about Zig?

Dave Eisenberg:

I wish I was awesome at social media, I'm not, but I'm constantly getting made fun of corny dad tweets and so forth. So our website is relatively simple, but it Zigg, Z-I-G-G, Cap, C-A-P.com. We do keep an active running tally of our portfolio companies there, so you can click around and see that. Then we publish a few things from time to time, macro thesis and so forth. Our LPs get the really good quarterly letters.

Dave Eisenberg:

On the personal front, I say I'm @Eisenberg on Twitter. Once in a while I'll post stuff about our portfolio on LinkedIn and so forth. This is just one of these things where it's just like I found I'm not a natural social media guy. I try to do what I can to grow my footprint and then also to promote our portfolio companies, but there are people that are so much better at it than me, and I'm jealous of them.

Daniel Scrivner:

Yeah. I fall right there with you. I feel a similar pain. Thank you so much for the time Dave, this has been incredible.

Dave Eisenberg:

It is my pleasure. I had a lot of fun, and thank you for the great questions.

‍

Bonus Dave’s Habits, Influences, and Life Lessons – Dave Eisenberg of Zigg Capital – Outlier Academy

Daniel Scrivner:

Dave, I'm really excited for this second mini interview. Thank you so much again for the time, for coming on.

Dave Eisenberg:

Sure.

Daniel Scrivner:

So, I'll dive right in. We do this interview for a bunch of reasons, but from my perspective, we've just had an incredible conversation going really deep on what you do. It's also interesting for me to explore, just my sense is, entrepreneurs and investors spend ultimately a lot of time thinking about habits, routine systems, how they can set themselves up for success. I think it's interesting window to give people.

Daniel Scrivner:

So just to start, and you can take this question anywhere, sometimes for people, this makes sense, sometimes it doesn't. But I just love your take on ... As you think about habits, routines, even just what your daily life, are there things that you do regularly that are important to you, that either help you show up as your best self, help you operate at the highest level?

Dave Eisenberg:

I'm interestingly not a creature of habit. There is one habit that I was able to identify that is a daily habit for me. It's the most important thing in my day, which is every day I start with ... We now have three kids, but my two daughters, we get up and we'll do a mix of stuff. We'll do Magna-Tiles, we'll read books. If we're not too loud, we'll play music, something like that. Then every day I try to be home like precisely at 6:00 and then we'll do dinner. We have a routine which I think starts at the beginning and end of the day. There are days like I really wish ... During COVID actually I saw a lot of, the middle of the day, stuff which was an interesting art of how to balance a full work day with being a home.

Dave Eisenberg:

But I think that my main habit is that, while my kids are young at least, just making sure that I've got a few hours in the morning and a few hours before it's too late. I think there's been a lot of work stuff that I've missed as a result of doing that, and it's a conscious trade off and there have been moments where I think I've wanted to go to certain events that just fall in there. But it's a habit that I think keeps me grounded, keeps a really good dynamic between me and my wife, and I think it's the most important daily thing that I do.

Dave Eisenberg:

I think on the weekly and monthly side, it's a little bit harder to identify stuff. I love Peloton, and when the weather is good, I love playing tennis. Those are things that I really try to find their way into my schedule, but it's not a daily thing in the way that dedicated family time is.

Daniel Scrivner:

Yeah. When you say that you're not a creature of habit, I guess my interpretation of that thinking about myself, because I would describe myself there as well too is, something big for me is just, I'm happier if there's openness in the day and I can have some serendipity and do different things. Is that where you're at? Is that where that comes from?

Dave Eisenberg:

I think it also comes from this love of variety. I think my musical taste is extremely eclectic and wide ranging, and yet I don't go super deep on any one or two artists. I think the stuff that I read similarly fiction and nonfiction and so forth. I believe that one of the reasons why I prefer investing to operating is simply every day I meet a whole bunch of new businesses that I've never heard of, and most of them I won't talk too much again, but they fill me with energy and creativity.

Dave Eisenberg:

We've got a portfolio of 30 something companies that each do something wildly different from one another. When I was a CEO of one company, like that's the one thing you're obsessed about every day. And ultimately I think I realized I prefer liking different cuisines rather than doing the same thing every day. I totally understand people who are the complete opposite, but for me, the variety is where I derive my energy from.

Daniel Scrivner:

Yeah, I'm right there with you. On the tool side, and this can be physical, this can be digital, but I think the idea is, are there things that you found, things that have significance for you, things that have really been able to help you? And on the physical side, it could also just be this cool thing that I just enjoy having, I enjoy touching and using, but is there anything on the tool side that's interesting for you that's worth sharing?

Dave Eisenberg:

I love Twitter. I always have. I find that it's a way for me to interact with people that I deeply admire and respect, who I may not know very well. On the tool side, I have really come to appreciate and respect this very premium email app that I use called Superhuman, where I have a few different email addresses. I'm overwhelmed with email and this thing helps keep me sane in terms of filtering, and keeping it all steady. On the digital side, those are probably my go-to, use them all day long. On physical side, I guess I fell in love with Peloton a few years ago and probably do it three to four times a week. I think as both a community, as a functional way to stay in shape is something that I love. Yeah, that's probably it.

Daniel Scrivner:

Moving on. Question I always love asking people is, what is their superpower? I think for you, I don't know, I could take a few guesses just depending on our conversation, but what do you think your superpower has been over time? Or where do you feel like you're just really strong, and where do you need to compliment?

Dave Eisenberg:

So I thought about this a little bit. I think in another life I could have been a very effective executive recruiter. I really enjoy hearing the personal career narrative, the things that people are looking to solve next, or if they're just looking to really deploy the skills that they've already accumulated, like what is a place where they can get placed. I think it's helpful that in venture you do a lot of recruiting. You recruit a lot of executive talent, oftentimes replacing senior management talent or board directors has become a thing now where I'm trying to build a network of underrepresented folks to place on boards.

Dave Eisenberg:

I think that's been something that I really enjoy doing and I get a lot of energy from. I love networking and it's always been something that I think I've not been afraid of and have had, just a positive experience with. I know there are plenty of people who have the opposite for, and there's a ton of things that I'm weak at. But probably a superpower would be understanding how to place people with companies, and then also how to make, perhaps some non-obvious introductions about putting people together where I think there will be a mutual exchange of ideas, where it may not be immediately evident to either one of them why I've done it. But then with a little bit of prodding, there's a spark of something there.

Daniel Scrivner:

Yeah. I love that. On the flip side, what do you struggle with, what have you struggled with and how have you worked on that over time? And just really quickly, I think it'd be interesting to touch on how you went about selecting your co-founder, your partner at Zigg Cap and how you thought about that relationship?

Dave Eisenberg:

I mean, in some sense, it goes back to that first Bain job I had, which just prized this thing that called Zero Defect, which is to say you're so meticulous that there are no errors in your financial model or in your slides or something. I remember getting berated for missing the color palette of a company, and I was just like, "This is not what I'm good at. I'm not good at all this stuff." So I think whether it's attention to detail, sometimes I think it's just organization, something that I'm not great at. My college roommate will like attest to this. I was a mess just physically in terms of leaving stuff around.

Dave Eisenberg:

My wife is a very clean person, and so to make that work, I had to become a lot better. Honestly, it just requires a lot of work for me to pick up after myself, make my bed every morning, do all this stuff that I think I've had to work at. The truth is that my digital life is similarly a little bit scattered and it requires a lot of effort to keep my email inbox from exploding and to keep my calendar structured and so forth. I don't have somebody who helps me with there.

Dave Eisenberg:

So it takes some real time of mind, but I find that it's rewarding when it's clean and when it's organized and when I've done it myself, I know where everything is, and so forth. But I do think it's a weakness that I just continually am trying to be more mindful of how to be a more organized and structured person.

Daniel Scrivner:

I would love to ask about people and figures that you admire, and I guess the specific vein is, I feel like in venture obviously you're in an industry where there is this lore of ... There's just a lot of people that you can look up to, some that are still investing, some that invested previously. Some that led really significant funds and similarly on their entrepreneur side. So I guess just focusing on entrepreneurs and investors, are there any figures there that you've drawn inspiration from, or just really admire?

Dave Eisenberg:

I think reading about the founding of Benchmark and how the original partners there really had, some really unusual points of view, for instance, there was no concept of avito, but there was the concept of antivito where one person could put a deal through. If they had such conviction, they were pounding the table. I thought that's something that I've tried to incorporate into our firm, which I believe to be an incredibly powerful idea that you never want to stop someone, even if they have the odd opinion from doing something they're incredibly passionate about.

Dave Eisenberg:

It's funny, there are so many people that I admire who are just public thinkers. So, whether that's Fred Wilson and his blog over many, many years, or whether it's Andy Ratcliffe and Joel Peterson with their classes at Stanford, or whether it's Marc Andreessen and Ben Horowitz and their writings, Paul Graham, their writing. I'm sure I don't agree with a lot of their political beliefs and otherwise, but I think just the clarity of their public thinking on technology building has just been extraordinary. Outside of entrepreneurs technology, a person I deeply admire is Winston Churchill. I just finished a book called The Splendid and the Vile, which was an extraordinary account of the early years of World War II before America came in, and how he just had this level of moral clarity that I think held the Germans at bay.

Dave Eisenberg:

And as someone whose family was deeply impacted by World War II in a negative way, I think I just have this incredible admiration for that level of heroism and also just belief and courage. Those are just qualities that I'm glad I don't have to practice in a way like that. But I think just remembering that so many other people have done such things that have enabled us to live in the world we live in today is quite helpful for me.

Daniel Scrivner:

Yeah. Absolutely. I've not heard of that book, we'll link it up in the show notes. It sounds great. I guess, similarly on that tangent, do you have favorite books? And this can be in any vein any direction, and those can be things that just have really significance for you, or I know a lot of venture capitalists, a lot of entrepreneurs will pass on books as well too. People they invest [inaudible 01:02:40]

Dave Eisenberg:

This is going to be the ultimate Homer answer, but my wife just spent the last four years writing a book, which came out on Tuesday, which I'm going to plug here, which is called Baby Unplugged. It was an extraordinary effort for our family to figure out how we want to incorporate technology into our young kids' lives. I remember the third day of our oldest daughter's life, I brought home a Smart Sock that I put on her to track her heart rate and oxygen rate. In the middle of her first night at home, the thing lost its wifi connection, started blaring an alarm in the middle of the night. We lost like 10 years of our life when that happened.

Daniel Scrivner:

And hair went all white?

Dave Eisenberg:

Yeah, totally. It started this like process that she really led in a highly self-direct way to figure out what is our household's philosophy on screen time and on educational programming? When they're watching TV, what do we want them to watch? I think she just did such an extraordinary job of researching from first principles, what is the current experts? What do they say about technology? And then where can I just trust my gut because there isn't research there? So I think she put it all into a book. She's also a very funny person. She created a very entertaining book that has a lot of information packed in. Anyone who has young kids or thinking about kids, check it out. It's called Baby Unplugged.

Daniel Scrivner:

Perfect. We will link that as well too, and I'm definitely interested in reading that. Okay. Last two questions. I'm really excited for your answers to these. Do you have a favorite failure?

Dave Eisenberg:

The failure that actually gave me the confidence to leave Bain and go to Bonobos was when I got my very first feedback session. They said, "Look, we're not telling you that you're not on track to be retained or promoted here, but your level of attention to detail is not meeting our bar. And you have these other qualities that we really like, you're nice to people, you're exuberant, you're a good communicator, but you just have to be much more careful in your Excel modeling and in your PowerPoint stuff." It was just this like, "I don't want to, I don't want to be the best at those things. It's not a natural fit for my talents or my lack thereof."

Dave Eisenberg:

So maybe I should do something else, and I don't think if they had given me a growing review, it's totally possible that I just would've stayed there for several years, I would've gone to business. I just would've had a very different life. It was like a kick in the butt for me to say, "Maybe I should go do something else."

Daniel Scrivner:

Similarly on that, and I typically wouldn't ask this question, but I have to ask this one. On that note, you seem very comfortable talking about and being really open with your shortcoming, and you talked about as well working with Andy at Bonobos and how that was a really big influence. Have you always been that way? Has that something you've learned over time? Anything you can share there?

Dave Eisenberg:

I learned all of that from Andy, to be honest, if I look back at my 21, 22 year old self, I was the person who was the opposite. I only wanted to brag and I only wanted to talk about my strengths. I think I was a little bit of a caricature of a person in that way. I remember him sitting me down and he is like, "You're not building any empathy here, you're not growing as a person. By the way, you're not as awesome as these things as you think you are." He just talked to me like that, and it was so shocking, but it was so helpful.

Dave Eisenberg:

It was one of the reasons I remained so loyal to him, I think he recrafted my sense of self, and I think took me as more of a moldable ball of clay. In that way, that learning, I think it has been something that I've tried to deliver to other people. I think it's a mixture of love plus honesty plus compassion to get it right, and I haven't always gotten it right. But I do believe in direct feedback and specifically from a good place where you want the person to improve, it is one of the most helpful things you can do for someone.

Daniel Scrivner:

Yeah. It's such a generous gift when you can do it and you can communicate that in a way that's not charged and comes from this compassionate place. It's very hard skill to develop. Last question, what is your definition of success?

Dave Eisenberg:

I think it is finding ways to live a life that are at the intersection of things that you find really interesting. So you enjoy doing the way that you're spending your hours with things that you're very talented at, or maybe even uniquely so. Then things that allow you to live the type of life that you want to lead. If you want that to be a very expensive life like living in an expensive city, in an expensive place, you have to factor that in as optimization. There's a lot of people who don't want for that. I say more power to them.

Dave Eisenberg:

The less you need, I think the happier you can be, but there's no recipe for success that is universal. I think everybody's on their own journey to find the overlap of that Venn diagram. For me, most of my career was operating in an adjacent place to where I ultimately wanted to be. So, I think having patience to figure it out is right, but also maybe not being afraid to take some risky things.

Dave Eisenberg:

For me, jumping from a traditional career path into a highly untraditional one, that was the right time in my life to take that risk. I had no meaningful liabilities at the time. It was just a time, and I was lucky that it paid off. But I think creating space in your life where you can take some risk in case you want to do something that is not a sure path, is something that might lead to success.

Daniel Scrivner:

Any advice for someone that is at that intersection right now, where they see something that's exciting, they want to take that leap, but they're may be having a hard time mustering the courage? Any advice you'd give them?

Dave Eisenberg:

Yeah. I would say, go seek out people who may have a similar life background to yourself, who did it and then landed in the place where they did ... See if there's anything that you can take away from studying the choices that they made or the way in which they did it, that will give you that extra boost of confidence. I think a lot of what I've done in my life has been from watching other people and then trying to mirror that in my own life. I think everybody can find someone for whom they're inspired by, and ultimately that might be the thing that pushes you into that decision.

Daniel Scrivner:

Thank you so much for the time. This has been one of my favorite conversations. Appreciate it, Dave.

Dave Eisenberg:

Great. Thank you. I really appreciate it.

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On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.

Explore all episodes of Outlier Academy, be the first to hear about new episodes, and subscribe on your favorite podcast platform.

Daniel Scrivner and Mighty Publishing LLC own the copyright in and to all content in and transcripts of the Outlier Academy podcast, with all rights reserved, including Daniel’s right of publicity.

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Tagged:

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Dave Eisenberg

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