- Jason Calacanis founded Silicon Alley Reporter, Weblogs Inc, Mahalo, and Inside.com.
- He turned down a $20 million offer for Silicon Alley Reporter. Then the dotcom bubble burst, and he wound up with a net worth of negative $10,000.
- Calacanis bounced back and founded Weblogs, which he sold to AOL after 18 months for $30 million.
- But most of Jason’s money has made has by angel investing. He placed an early bet on Uber that paid off, and he’s now a professional investor with his own syndicate. Calacanis’ new book is called, “Angel: How to invest in technology startups —Timeless advice from an Angel Investor who turned $100,000 into $100,000,000.”
When Jason Calacanis was just a scrappy kid from Brooklyn in the late 1990s, he built a thriving magazine called Silicon Alley Reporter. At the magazine’s peak, he was offered a $20 million buyout offer. He turned it down, and shortly after, the dotcom bubble burst. Calacanis wound up selling the magazine for next to nothing, and then got fired.
“A year earlier I’m on Charlie Rose, I’m in the New Yorker and I’m getting offered $20 million,” Calacanis said during an interview for Business Insider’s podcast, Success! How I Did It. “All my power and money got taken away from me again. I was really like, “Am I a fraud? Did I just get lucky? Is the Internet a fraud?”
Calacanis went on to start Weblogs and sold it 18 months later to AOL for about $30 million. But he’s made the most money as an angel investor. He was one of the first investors in Uber, which was last valued at about $69 billion.
Here’s how Calacanis, a broke kid from Brooklyn, became rich, blew it, became rich again, and then made a $100 million fortune. You can listen to the full interview with him on “Success! How I Did It,” here:
- Former Microsoft CEO Steve Ballmer
- Box founder and CEO Aaron Levie
- Robinhood founder and CEO Vlad Tenev
- ClassPass founder Payal Kadakia
Below is a transcript of the conversation, which has been lightly edited for clarity and length.
Shontell: We’re really excited to have you, Jason. Thanks for joining us.
Calacanis: Thanks for having me. It’s great to be here.
Shontell: First I want to zip back in time.
Calacanis: All the way.
Shontell: Take me back to your childhood. I know that you’re from Brooklyn, and not from, like, the cool part of Brooklyn.
Calacanis: Bay Ridge.
Shontell: Yeah, way out in Brooklyn.
Calacanis: Yeah, where now actually a lot of media people are living, which is hilarious to me because Bay Ridge is the last stop on the R train and the N train — which we called the “Rarely” and the “Never” when I lived there.
I came from humble beginnings but not that humble. I have a paragraph in the book, like, as much as I feel like an outsider, you know, we know that a white kid from Brooklyn, white male with a computer in 1982, is actually a pretty privileged kid. We were part of the lower part of the middle class, always in debt. My dad was a bartender, my mom a nurse. But they bought me a thousand-dollar computer and a 400 broad modem, and that got me started in the ’80s.
I came to New York, couldn’t afford college because my dad’s business got taken away from him by the Feds because he didn’t pay his taxes, so the family essentially went bankrupt. It was a pretty dicey situation in 1987 after the stock market collapsed.
In 1988, I was going to school at Fordham and suddenly I wasn’t going to be able to have any support going to college so I had to work during the day, went to school at night, four nights a week, three-hour classes, you know, full credit load. And I had two skills: being a waiter and computers. And slowly but surely I went from $3.50 an hour in the computer lab to fixing laser printers to working at Amnesty International as a PC specialist making 10 bucks an hour, and I was just grinding it out in New York when the internet hit. I knew this online thing was going to be big, but we also knew CD-ROMs were going to be big, so in Silicon Alley we had a company called Voyager that was making interactive CDs, and then a bunch of other companies came along and Prodigy and AOL and we started realizing, wow, there’s something here, so I started Silicon Alley Reporter in ’95.
Shontell: I used to be a waitress and I was the worst. Clumsy people do not make good waiters.
Calacanis: They don’t. It’s charming, but if you spill something on somebody, that’s not good. But yeah, I was an incredible waiter.
Learning business with ‘Empire Strikes Back’
Shontell: Well, there you go, but tech seemed a little more lucrative, as did your computer. I guess you figured that out, which is good. Did you have any other kind of traditional jobs before you jumped into the entrepreneurship train?
Calacanis: I was always very entrepreneurial, and my dad used to have poker games in his bar after they closed at 4 a.m., so he’d play until 7, 8 in the morning, and a guy was into him for a couple of dimes — a couple thousand dollars, that’s “dimes” in gambling-speak — and the guy couldn’t pay, so my dad was like, “Hey listen, you’ve got to pay,” and the guy’s like, “Listen, here’s a copy of ‘The Empire Strikes Back’ on a VHS tape.” And “The Empire Strikes Back” had just been in theaters. It was ’83, and my dad’s, like, “Yeah, my kids love that.” Brings me home “Empire Strikes Back.” I start making copies of it.
I start selling copies of “Empire Strikes Back” for 20 bucks, 30 bucks, and I sold dozens of them, so I was running an illegal “Empire Strikes Back.” I printed myself a business card that said “Jason’s Hot Tapes” on it, and I would hand it to people and say, “I’m Jason Calacanis, here’s my hot tapes,” and then I’d say, “Can I have the card back?” because it was just a laminated piece of paper — it wasn’t an actual business card. And they’d be like, “Oh OK, I thought it was a business card,” and I was, like, “No, so how many copies of ‘Empire Strikes Back’ do you want?” You know, in Brooklyn, we had a lot of different enterprises, to be candid, that we ran — scams — and luckily, I got on the right side of this kind of thing, but, you know, there were a lot of opportunities to do things that were not legal.
Shontell: It sounds like all that shaped you and motivated you to be ambitious and scrap your way to the top.
Calacanis: Yeah, it’s a trait that people either love me or hate me for. I’ve calmed down a little bit since, so the edge has been taken off, but yeah, for a long time, I felt very powerless, and I was very scared of being broke because when you have no money — if you’ve ever had that experience where your parents are fighting over having no money and you can’t fix your car or you can’t pay the mortgage, it’s pretty terrorizing for a 10-year-old or an 8-year-old just to witness that and I realize, now at the age of 46 — my God — I was just scared to death of being poor and I was scared to death of being a failure.
A lot of the fire that I had that people saw early on, which looked kind of spastic at times or charming or just offensive depending on the day you caught me, was really just my own fear of just, “My God — being poor sucks.” And so I just worked really hard with Silicon Alley Reporter and some of the other businesses to try to be powerful because I was a kid who had no power.
Shontell: I know a goal that you didn’t quite hit, but it sounds like you came close, was to be a millionaire by 30.
Calacanis: I came close. I had opportunities to sell.
What millennials get right
Shontell: It’s not bad, you know, a millionaire by 30. You missed that one, but $100 million before 50, that’s a good catch-up.
Calacanis: But at a certain point, it all doesn’t matter, which is kind of surreal, and when you come from nothing, you’re basically just trying to get escape velocity, which means you and your family don’t have to worry about being broke and that’s all I ever cared about. Once you have the first $10 million, literally it doesn’t matter. Like I will go have a cheeseburger with Mark Cuban or Elon Musk or Travis [Kalanick] or Chamath [Palihapitiya] — just any friends of mine who are worth $1 billion or $10 billion, and we all eat the same cheeseburger. And if you order that cheeseburger with the foie gras on it and the black truffles, it’s really not that different than the really good In-n-Out burger or a nice Shake Shack burger.
Shontell: I like the cheeseburger analogy. Doesn’t matter if you have the foie gras or not.
Calacanis: Honestly, this is what millennials get right. You know, I was part of Gen X — I think you were kind of right on the border, right, between a millennial and Gen X?
Shontell: Yeah, I think I’m “strong millennial.”
Calacanis: “Strong millennial” — OK, so, well, how many times did you Snapchat today? Because it’s 1 o’clock. If you Snapchat —
Shontell: Oh no, yeah, I’m an old millennial. There’s two different kinds of millennials.
Calacanis: If you didn’t Snapchat before noon, then you’re not a millennial. I don’t think so.
Shontell: I Snapchatted yesterday. Close enough.
Calacanis: OK, great, so close to millennial. But anyway, the point is, experiences and your friendships and doing what you love, it’s all very nice to say all of that, but if you can’t make your rent, it’s kind of a bummer. Each of those generations had sort of the right idea but not the full picture and it’s a good balance to be had between millennials who are very focused on experiences and doing what’s right in the world and then Gen Xers who were capitalists and independent thinkers and just wanted to rebuild the system. Between those two the truth lies.
Discovering magazine royalty
Shontell: Let’s talk about how you scrapped your way out into your first $10 million.
Calacanis: Yeah — Weblogs Inc.
Shontell: And starting with the first thing that really put you on the map in a big way, which was Silicon Alley Reporter, and so talk to me about what that was. These magazines were super cool then. It was like, if you ran a magazine, you were just kind of a god in New York.
Calacanis: Yeah, so running a magazine was the equivalent of having a top 50 podcast today that makes millions of dollars or a top 50 blog 10 years ago. Twenty years ago, having a magazine in New York made you very powerful. I used to come into New York on the subway and buy magazines and look at them and I thought, “Wow, how do these people get on the cover of a magazine? They must be very powerful,” and then I would look and I saw the masthead and I said, “Wait, who’s David Hershkovits? At PAPER. And who’s Graydon Carter?”
Shontell: I did the same thing.
Calacanis: Who’s Jann Wenner? And I said, these are the really powerful people because they pick who’s on it. So I had this revelation that if I started a magazine about the internet in 1995, that this would make me powerful. When I started the magazine, it was a 16-page photocopy and within five issues it was a glossy, and within 20 issues it was 300 pages and had, at the peak, a million dollars in advertising in the best issue we ever did. It was very surreal because at that time, if you knew the internet and you had a magazine, that was an explosive combination, right? Just knowing what the internet was made you really an elite person in the world, and so it was very heady for me and I got offered $20 million for the magazine and I didn’t take it. Then I wound up selling it.
Deciding not to sell and regretting it
Shontell: To sell the magazine?
Calacanis: Yeah, to Alan Meckler, who had Internet.com, and it was a publicly traded company and I didn’t take, that was my big opportunity. I owned 85% of it or 90% of it — I had given some employees a couple points — and so that was a big mistake.
Shontell: When did you realize it was a mistake?
Calacanis: Well, after the internet crashed and the revenue went from $12 million to $500,000 in two years. I wound up selling that company to Dow Jones, but I got a two-year salary, and after they bought it, they basically said to me, “We think there are better things for you to be doing than working here,” and I was like, “Oh yeah, that’s OK, though, I’m kind of enjoying it.” And they were like, “Yeah, but we really don’t need you here,” and I was like, “Are you firing me? I have a two-year contract.” They’re like, “We’re going to give you two years of your salary.”
Shontell: You had an opportunity to sell for $20 million.
Calacanis: Didn’t take it.
Shontell: You turned it down, you kept going, which a lot of founders do.
Calacanis: Huge mistake.
Shontell: It’s hard to predict how things are going to change and then you sold it for —
Calacanis: Nothing. I got like a hundred grand and then two years of salary.
Shontell: So basically $20 million to zero and then you get fired on top of it.
Calacanis: Yeah, and I was really looking forward to working on it, and so then 9/11 happens. I didn’t realize it at the time, but I had PTSD and I found out five years later when I went to therapy for it. I never talked about that really, but anyway I had PTSD very hard. With the PTSD, I think I was a little depressed about the state of the world having watched so many people die at 9/11 when I lived here.
Shontell: Because you were in New York at the time? You experienced it firsthand?
Calacanis: Yeah, I lived on 26th and the West Side Highway. I mean, I experienced it firsthand. My brother was a firefighter — all of his friends died. It was pretty heavy and we didn’t know where he was that first day when all communication went down so it was like a dual blow.
The stock market crashed, all the internet people were hustlers who crashed the stock market and hated it. A year earlier I’m on “Charlie Rose,” I’m in The New Yorker, and I’m getting offered $20 million. So it’s kind of like you just get totally leveled as an entrepreneur, you’re on the ground, trying to get up, you’ve been knocked out, sucker-punched by this stock-market crash, and then 9/11 happens.
So that was like the ultimate “What is life about?” Wow, this is crazy. And so all my power and money got taken away from me again. And this was, like, I wouldn’t say earth-shattering, but I was really like, “Am I a fraud? Did I just get lucky? Is the internet a fraud?” And I had to really think about it, and everybody who was in the internet business gave up and went to Thailand or went on yoga retreats and I said, “You know, I don’t think I’m a fraud, I think I’m actually pretty f—ing talented.”
Getting back to work
Calacanis: I was like, “I’m pretty f—ing talented, I’m going to get back to work.” What’s working? And I looked at what was working in the world and two of my employees had left and started blogs. Xeni Jardin went to Boing Boing and Rafat Ali started Paid Content. I was like, wait a second. He started that when he was working for me and I had told him, “Rafat, like, this will never be anything. You have no editor; you need an editor. Blogging is stupid. I was completely wrong. Editors were holding them back and once you said, just publish when you’re ready, they blossomed and they knew better than their editors what they should publish, and they knew they should publish five times a day instead of once every week and so we started Weblogs Inc with my partner, Brian Alvey.
Shontell: And you were negative $10,000 in the hole, right?
Calacanis: Yeah, I was, I was negative. Well, at that point, I wasn’t exactly negative. I quickly became negative once we started it.
Shontell: And you’re how old at this point?
Calacanis: I guess I’m 32 or something, and I said, “Brian, we need to do this and we can do 10 blogs or 20,” and he said, “Could we do 100?” And I said, “That’s it, it’s 100, let’s get to 100 blogs.” And he builds a CMS; I start rounding people up.
Shontell: Did DoubleClick even exist or Google AdSense or anything? What were you sticking on these blogs?
Calacanis: Well, Google AdSense was just starting, and in fact when Google went public, they had two use cases in their first quarterly report: New York Times and Engadget and Weblogs Inc. And they did a huge blog post, and, like, New York Times is making a bunch of money, and this little blog company Weblogs Inc. just hit $1 million in revenue on AdSense and we were selling ads directly.
Shontell: So you start building this pretty good team and within 18 months it’s successful.
Calacanis: Eighteen months we have $100,000 in revenue and AOL buys it.
Shontell: What was traffic like in those days?
Calacanis: You know, tens of thousands of people a day, hundred of thousands of people a week. It was just getting started, but there was no competition, and so that was pretty great. AOL bought it for $30 million, and it was a huge payday.
Shontell: And you learned from your first time of turning it down.
Calacanis: Exactly — and then I was dangerous.
Shontell: How much did you m