50 founders and VCs dish on what it's like to work with Jason Calacanis, Silicon Valley's polarizing, Howard Stern-inspired angel investor

 

Ashley Welch and her cofounder were finally in the room for the big break they’d been working towards: a chance to pitch their tech startup to a prominent venture-capital investor. Though she was confident in her vision for the company, Welch was frustrated by her business partner’s habit of talking over her.

Suddenly, the investor they were pitching, Jason Calacanis, stopped the conversation. “Who’s the CEO?” he wanted to know. 

“I am,” Welch’s partner responded without skipping a beat. 

“No, you’re not,”  Calacanis shot back. “She’s the CEO.”

Just like that, Welch was the CEO, and her startup, a dating app called Flutter, had a $25,000 investment and the promise of at least another $25,000 to come. The quick-fire decision was classic Calacanis, in keeping with a blunt, gut-driven style that sets him apart from his peers.

Crackling with energy and attitude, Calacanis, 50, is an unmistakable presence in Silicon Valley. The squat, Brooklyn-raised investor is often the loudest voice in the room, whether he’s preaching his philosophy for success (“do the work”) on one of his podcasts, expounding on opportunities to build the next Uber (he was one of its first outside investors in 2009), or, as has become common lately, decrying California’s “dysfunctional” government.

For many young entrepreneurs with dreams of launching a startup and making it big in Silicon Valley, the first stop on the journey is Calacanis. A former tech-industry publisher, Calacanis has emerged as one the most sought-after suppliers of “seed funding,” the small sums of money that early stage startups raise to see whether their ideas have legs.

The money isn’t the main draw, though. Mixing showmanship, bravado and an assortment of media megaphones, Calacanis has built a one-man brand that touts the glory of tech startups with infomercial-like zeal — and casts him as the astute coach, talent agent, promoter, and gatekeeper to achieving success in the game.

“Many investors think I’m the world’s best person at picking startups, which is not true,” Calacanis told Insider in an email, citing the names of a few other investors he rates among the masters. But, he said, “I’m certainly in the top five.”

It’s not just hot air. His smash hits include early bets on once-unknown names like Calm, the meditation app now valued at $2 billion, and the stock-investing app Robinhood, now worth nearly $12 billion and poised to go public. 

Over the past decade, more than 150 startups have forked over a chunk of their equity in exchange for Calacanis’ investment and services. Many said they feel the deal terms are aggressive, but there’s no shortage of takers: Calacanis said he is “on pace” to invest $100 million per year through a combination of direct investments, funding of startups in his Launch “accelerator” program and fundings through a network of partner investors he has assembled. 

Insider spoke with more than 50 people close to Calacanis, including portfolio-company founders, accelerator alumni, current and former colleagues and rival investors, to learn what it’s like for a generation of young aspiring entrepreneurs heeding his call to change the world. 

For many, Calacanis is someone who “cuts through the bulls—” and is shaking up Silicon Valley’s stuffy venture-capital scene. But others said the swagger can quickly turn hostile, with some founders describing experiences with Calacanis that left them questioning whether he was more committed to their success or to his own image. 

Welch, the Flutter cofounder, recalled “begging” Calacanis to deliver the promised second installment of $25,000; a follow-up seed round bringing in other investors never materialized, and the startup flamed out. The investor who had initially struck Welch as “authentic” now seemed cold and uninterested. “It became this control thing,” she said, “just knowing that he was needed.”

Calacanis said he does not comment on individual companies or founders, but confirmed that Flutter received its second installment of $25,000. He said the split payment was standard at the time, with startups receiving half at the beginning and half at the end of the program; and he said, “it was clear that it was at our option and companies needed to pass diligence.”

The program now pays founders a $100,000 lump sum up front, to be on part with competing accelerator programs, he said.

“There is nobody out there that has not gone to war with Jason at some point,” said Brian Alvey, a former business partner and childhood friend. “But the funny thing is, then, a year later, they are back on his podcast or back asking him for a job.”

‘Too soft to win big’ in tech

The line between hyperactive and hyperbole is not always clear when you’re talking to Calacanis, who hosts five podcasts a week, sits on the boards of more than a dozen portfolio companies, and, by his estimate, talks with two dozen new startups a week about potential funding. 

“Sometimes I will respond to 100 founders on Slack from 11 pm to 2 am when my family is sleeping,” Calacanis said in an email interview.

The conspicuously frenetic pace is part of the Calacanis persona. The tech-startup industry is “hyper-competitive,” he said, “and it’s often zero-sum. If one firm leads the seed round in the next unicorn, 1,000 other seed funds don’t.”

Calacanis expects a similar dedication and warrior-like mindset from the founders he backs and does not apologize for a polarizing demeanor that strikes some people as off-putting. 

“Anyone who describes me that way is a) correct and b) too soft to win big,” Calacanis said, when asked by Insider to respond to the description. “I’m looking for Samurai, not rice pickers.”

Calacanis, who, along with friends and colleagues, refers to himself as “JCal,” likens his own role to that of a point guard on a basketball team: His job is to bring the ball, or startup, up the court and get it to just the right place, where he can pass it off to one of the big guys for a spectacular dunk.

His latest assist is the stock-trading sensation Robinhood, which is nearing its debut on the public market in a deal that some estimate could be worth as much as $40 billion. Calacanis was an angel investor in Robinhood, putting in an undisclosed amount before the product launched.

For the startups that go through Calacanis’ accelerator program, the experience can feel like a sports team in training. Weekly pitch sessions with other investors are recorded on video. Founders later review their performances, studying the reactions from investors in the room at different moments. 

Launch limits each “cohort” in its three-month program to seven startups, much smaller than the hundreds that are accepted into rival accelerator programs such as Y Combinator. It’s an intense and often personal experience. 

Calacanis requires that his startup founders file monthly updates about everything from hiring and product changes to revenue trends and liability issues. 

The feedback can be “brutally honest,” said Sheri Atwood, the founder of SupportPay, which streamlines child-support and alimony payments. During one accelerator pitch session, Atwood recalled Calacanis telling her, “Your slides are a disaster.” That kind of candor from investors is rare, Atwood said. “I’ve dealt with so many investors where you don’t know where you stand or what they think.”

Straight outta Brooklyn 

The swagger and bravado often elicit eye rolls from some of the more established players in Silicon Valley’s courtly venture-capital scene. “Bombastic,” was the one-word response a rival investor offered when asked to describe Calacanis, while another referred to the Launch accelerator as “The Jason Show.”

“I’m more familiar with him pontificating as a podcast host” than his investment portfolio, said Keith Rabois, a rival investor in early-stage startups.

For many founders, though, Calacanis’ bluster is part of the appeal. Calacanis “wants the gritty founder because that’s the founder who wins,” said Taylor Monks, the CEO of BasicBlock, who described the fundraising process that Launch prepares founders for as “f—ing grueling.”

“A lot of people in Silicon Valley are soft,” Monks said, echoing Calacanis’ preferred put-down for entrepreneurs who lack the mettle to make it. 

Calacanis grew up in the Bay Ridge neighborhood of Brooklyn as the middle child in a family of three boys. His dad was a bartender and his mother a nurse.

“Brooklyn was not hipsters back then,” Calacanis said during a podcast episode about growing up in the ’70s and ’80s. “It was a little bit more rough and tumble.” 

His competitive streak was evident early on: He ran the New York City Marathon 11 years in a row and obtained a black belt in taekwondo at 17 (Calacanis said his current level is “sixth dan”). Like many teenage boys coming of age in New York at that time, Calacanis was an avid listener of the radio shock jock Howard Stern.

Calacanis listened to Stern obsessively and was inspired by him, recalled Alvey, the childhood friend. “He really thought he could be the king of all media — print, audio and video.”

The fascination with media led to early success when Calacanis and Alvey partnered to launch a blogging network called Weblogs in 2003. Two years later, the pair sold their company to AOL for $30 million.

Even before Weblogs, Calacanis saw media as his entrée into tech. After attending Fordham University and receiving a degree in psychology, Calacanis began writing — often in fawning fashion — about the budding internet industry of the ’90s. He first launched the magazine Silicon Alley Reporter, which grew from just over a dozen pages in 1996 to some 250, chronicling the local tech scene with “unabashed boosterism.”

Joanne Wilson, an investor who was one of Calacanis’ first hires at Silicon Alley Reporter, said she tried to persuade him to sell the magazine at its peak. They had an offer for $20 million, but he refused. “He thought he was going to be the next Rupert Murdoch,” she said.

When the dot-com bubble burst, Calacanis became one of the poster boys of the internet industry’s rapid rise and subsequent fall, and his magazine suffered the same fate as the rest of the web darlings of that era. In a 2017 interview with Business Insider, Calacanis attributed his work ethic to the experience of nearly becoming a millionaire before age 30 — just before he fell flat on his face.

Undeterred, Calacanis went on to start three more companies, including the web directory startup Mahalo, which was later rebranded as the mobile-news app and newsletter Inside. He got his start investing as a scout for Sequoia Capital around 2008, helping the established VC firm spot startups. 

Today, the publisher turned entrepreneur is living his third, and seemingly most successful, life as a startup investor. Calacanis surrounds himself with investor friends over games of poker, including Chamath Palihapitiya and David Sacks. 

“I’ve had more than a couple of calls from investors who are like, ‘I want to hear what you are doing. Jason was telling me about you at a poker game,'” said Aaron Holm, co-CEO of Blokable and one of two dozen Launch alum who spoke to Insider for this story.

Calacanis keeps the Murdoch dream alive with Inside and the podcasts, “This Week In Startups” and “All-In,” which meld investment strategy with ramblings on current events from friends, Silicon Valley celebrities, and B-listers alike. He’s also written a book about startup investing, offering “Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000.”

The price of a ‘JCal’ investment

If Calacanis is known publicly for his outsize persona, behind the scenes in Silicon Valley he’s known for his funding terms, which many find aggressive. To put Calacanis’ deals into perspective, Insider reviewed dozens of internal accelerator documents and ran the terms by attorneys who advise early-stage tech companies.

The biggest sticking point is Calacanis’ “right of first offer,” also known as super pro rata, a stipulation that allows him to purchase up to 50% of a company in future funding rounds after the company has graduated from Launch. Coupled with Calacanis’ initial stake of 6% in a startup, the terms could give him control of the company.

Chris Harvey, an attorney who works with early-stage startup investors, said super pro rata terms are typically used only with accelerators, which tend to draw early-stage startups that need cash quickly and don’t “have as much leverage” as a more established company.

Harvey advises clients against agreeing to super pro rata terms. “It’s a no-no for most companies,” he said, noting that the arrangement can leave a startup at the mercy of the investor in future rounds of funding. “It can become a bargaining chip to get some sort of favorable treatment at the equity round.” 

One startup founder who spoke with Insider was recently weighing whether to have Calacanis invest in a funding round. Ultimately the founder decided to not include Calacanis, instead going with another investor who was “like Jason, with the network and with the reputation, but without the pro rata risk.” 

Calacanis said he’s received a handful of complaints in seven years, strictly from other investors, and argued that “when folks see it in practice, they realize it’s a massive feature and not a bug.”

“Founders in our accelerator get to tell investors, ‘We have half our round filled by JCal, would you like to take the other half?'” Calacanis said in an email, adding that “The only folks who have a problem with this are weak VCs and attorneys who don’t know us — which is just fine with me!”

Launch founders have a chance to raise additional capital through Calacanis’ so-called syndicate, a network of more than 7,000 investors that can peruse the selection of startups the way one might read a menu at a restaurant. It’s one of Launch’s key differentiators from rival startup accelerators, and roughly half the startups in the program choose to raise extra cash through the syndicate, Calacanis said.

Blokable’s Holm, along with other Launch alumni whom Insider spoke with, said the syndicate provides access to a more diversified group of investors, including people with deep industry knowledge in specific niches that might apply to a particular startup.

“Our investors aren’t traditional VCs,” said Holm, whose startup focuses on developing affordable housing — a business that he said attracts investors seeking to make a social impact as well as “evergreen” funds that let investors regularly contribute more capital. “The syndicate is good for that.” 

Fellow Launch alum Jeremy Redman met with syndicate members but ultimately opted not to raise money through it, a decision he said was made primarily because his startup was profitable.  “There’s great people — and also a bunch of dentists who aren’t that sophisticated and are calling you, bugging you,” he said.

The syndicate also helps super-size Calacanis’ profile: The money he invests in startups comes from the $44 million Launch3 fund, but by counting the cash that syndicate members invest in his portfolio companies, Calacanis can say he is on track to put $100 million to work.

From the top of the world to toothpaste

For a first-time founder launching a startup, getting the Calacanis stamp of approval and the funding that comes with it can feel like winning the lottery. But in at least two instances, Calacanis lottery winners told Insider they never received the money they thought they were promised.

As part of his annual Launch Festival event, Calacanis has organized numerous “hackathons” since 2013, in which techies race to create the best app, as determined by a panel of judges. The winners receive cash prizes to fund their startup and often an invitation to join Calacanis’ Launch accelerator. 

“We were on top of the world,” recalled one founder, who, along with her business partner, quit their jobs and moved to San Francisco after winning a Launch hackathon.

That year, hackathon winners were once again invited to join Calacanis’ accelerator, “which comes with a $250,000 investment (for ~7% of the company),” screenshots from the announcement and digital archives show.

But after the cofounders unpacked their bags and moved into a shared apartment at the top of Telegraph Hill in San Francisco, they learned the $250,000 that was advertised in bold-face print on the invitation was actually $25,000 upfront, emails between Launch staff and the founders show. That’s all they’d ever get from Calacanis.

Over the next 12 weeks, the cofounder said their business changed at the direction of Calacanis and his staff at Launch so many times she lost count. “We were floundering,” she said.

While they were spending so much time on a shifting business model, their product suffered. The feedback from Calacanis focused more on the cofounder’s appearance, she said, including her hair, how she talked and how she dressed, and less about her business.

As happens at many early-stage startups, the cofounders had a fallout. The company folded, and she never talked with Calacanis again.

“It put me in a precarious situation where I couldn’t pay for toothpaste and toilet paper,” she said of her Launch experience, describing how she raised an additional seed round in an attempt to pick up the pieces of her company after leaving San Francisco. Calacanis “never checked in on us.”

Another hackathon winner from a different year shared a similar story. Winners from that year were to split an investment prize of $100,000, the archived announcement for the event shows. One winner said they received their portion of the prize money “within a couple weeks” of the event.

But another winner said they never received a dime. After meeting with Calacanis’ staff in person and discussing his startup with Calacanis directly, the founder agreed to forgo an investment and instead take the option of receiving 10% of the money in cash, emails he exchanged with Launch staff show. Launch staff then told him that “too much time has passed” and that the money initially allocated for hackathon winners had “been used to fund other startups.”

“I thought it was kind of a game,” the founder said. Calacanis “gets companies visibility and promises to invest, but in the end there is no real follow-through.”

Calacanis did not dispute the stories but said the hackathon “investment prize” was often complicated by the fact that winning contestants were subsequently vetted by Launch staff before being accepted into the accelerator and receiving the money.

“Some folks who participated had never started a company before and didn’t understand the concepts of valuation and diligence,” Calacanis said. “The ‘investment prize’ was a very creative idea, but it was more complicated than doing what other hackathon do, which is just give $10,000 in cloud credits and free burritos.” 

Calacanis stopped doing hackathons after 2016, saying that putting them together became a burden on his staff and that sponsors no longer wanted to fund them.

Activism or showmanship?

Calacanis has never been shy about sharing an opinion. More often than not, he takes to Twitter or to his podcasts to lob his views with Trumpian zeal. (While he says he’s not affiliated with either political party, Calacanis has vocally opposed Trump, who he describes as “a deranged, largely ineffective maniac.”)

His most controversial view depends on the week, but lately Calacanis has focused on leading an informal coalition of investors challenging San Francisco District Attorney Chesa Boudin and his progressive prison-reform policies. Calacanis has raised more than $59,000 via a GoFundMe that he said will be used to fund “a known journalist in San Francisco” who will “do some data science on crime stats.” 

He’s also not a fan of California Gov. Gavin Newsom, who is facing a recall campaign: “He’s mismanaged the state, from education to the pandemic to the vaccine rollout. We shouldn’t be losing businesses, VCs, and founders to Florida and Texas,” Calacanis said.

Side projects like the GoFundMe have rubbed some in tech the wrong way, including startup founders who privately question how much value Calacanis can bring as a board member when he’s constantly picking fights on Twitter. And in liberal-leaning San Francisco, some of Calacanis’ political positions aren’t popular.

In a business in which investors are constantly jockeying for position and visibility, Calacanis seems to subscribe to the mantra that “all good news is good news.”

“There’s some gamesmanship about what he does publicly,” the Launch alum Osmaan Shah said, adding that while he doesn’t agree with everything Calacanis says, the investor “has created a persona. He’s got his thing going, and in that way I respect it.”

His ultimate goal, Calacanis said, is to grow his syndicate of investors to 25,000 “over the next decade” and buy the New York Knicks basketball team.

“Sounds crazy,” he conceded via email. “But given the way things are going it is certainly possible.” 

To get there he’ll need a lot more hits and a lot more friends — the two themes that have defined the highs and lows of Calacanis’ career to this point. 

Several people in his orbit remarked on how defensive they found Calacanis at times. One investor said they experienced this at a networking event in San Francisco after asking Calacanis a question about gender representation in the industry. Calacanis “got very mad and blew up” at the investor, who told Insider they have since pulled back their interactions with Calacanis but still occasionally works with him.

Years after Ashley Welch’s startup folded, she reached out to Calacanis in an effort to address their falling out. Welch offered a product sample from her new startup, a health-nutrition company called Sunspice. Her hope was that if Calacanis liked the product, he’d consider taking a seat on her advisory board in exchange for a small stake in the company.

Calacanis never responded.

“If it works out with Jason, awesome. If you rub Jason the wrong way, you may never hear from him again,” Welch said. “He’s like your rich friend who you don’t want to piss off.”

Axel Springer, Insider Inc.’s parent company, is an investor in Uber.

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