What Investor Ashton Kutcher Looks For In Tech Companies

Oh, the hat.

The hat, the hat.

It's all about the hat.

Thank you.

How you doing?

Good to see you again.

Good to see you.

Alright, there's not.

Immediately taking the hat off.

There you go. Let's start without introduction and clearly with this group we would want to talk more about technology. There was a time in which you got interested in technology. And you went out to Silicon Valley.

Yeah.

To what?

To learn. Actually, I've been interested in technology since I was pretty young. I went to school as a biochemical engineer.

Right.

And so I learned a little bit about programming in college.

This was at Iowa?

Yeah. Which is a renowned engineering school.

Yeah, and writing.

And writing.

And then I dropped out, so I didn't really get a degree and I didn't really learn that much. But then, you know, I was in the media space and I was producing a lot of content for have a company, Catylyst Media, and we produce all kind of content.

We saw an opportunity, as streaming video started to become faster and faster, that we felt like we could capitalize on building entertainment properties for the web.

And so, I would say about seven years ago we did a deal with AOL to produce short-form content for AOL, because what we've been doing for a long time with MTV and producing this show Punked that we did, was creating short attention span theater.

Where Punked was three to five minute segments that were strung together to create a show.

And we felt like that short attention span theater was exactly the kind of content units that people were consuming on the web.

So we did a the deal there, and started producing content.

It was a little early to the game, and at that point in time brands were sorta just starting to come into entertainment properties on the web, and starting to see the value in that.

And then we thought that we were really bright and we came to tech crunch 50 years ago, with an idea called blah girls that was sort of a South Park for teenage girls.

And how did that do?

We failed, but Ron Conga was really nice to us at TC50, and what actually came of it is a lot of relationships that I was able to learn from especially that one with Ron and several other people that really sort of said okay kid that you want to do this..

So did they take you seriously in the beginning or did they learn to take you seriously?

I don't know, I really can't say. I took much myself seriously. In fact more seriously than I should have but I actually think. I actually think that the failures that you have are, you know, sometimes expensive education and and if we.. and it became a really valuable experience.

Catalyst media. Is it sort of, mother ship for all of this, or?

Catalyst media, we produce films, we produce television and we produce social entertainment experiences, on behalf of brands. And one of the things we're looking to do, is actually create, basically a social experience factory, in the same way that Paul Grahame has like YCombinator.

Right.

I've actually learned a lot from, from watching how tech companies grow. And there's so many programmers out there with so many different ideas, and trying to solve so many different problems. And they all, they come together, and if they have a great, you know, problem that they're looking to solve, and their great education, and solving these kinds of problems, they get funded.

nd people support them, and I have have a theory that there are just as many people that are interested in creating short-form media properties for the web as there are technologist that are looking to create new web companies. So one of the things I'm looking to try to do with my company is actually create a YCombinator-esque model for media creators.

For media
creators, so, whether, you know, there's, you know, web producers, directors, young actors, performers, and bring them together and actually create environment for them to produce short-form media at scale.

It seems to me you're doing a number of things including the investment.

Just a couple moments about Skype. You were one of the investors in Skype through either Silver Lake or otherwise. So that's one, Micheal, one That was one of my first tech investments. When skype sold from eBay. Another benefit of ailing at TC50 was meeting Mark Andreeson and forming a relationship with him. What I have managed to do from that was surround myself with a lot of people who that are a lot smarter than I am bout some things. About most things I would say. And he's one of them so when that transaction took place eBay.

He called me and said, "Hey we could really use... you know I do a lot of branding and a lot of marketing on behalf of very large brands and my own brands.

Nikon for example.

Nikon for example but I will say more expressively companies like Intel, Levis or Gatorade or PepsiCo. And then obviously my own movies and marketing and its global marketing campaigns. And so he came to me and said, "You know, Skype could use some help in being more popular in the United States. So I'd love to bring you on as a strategic investor to help create that..

And it was.....

And so would you bring in more talent then money to the table in a sense because of your command...your.... where you are in the sort of social media firmament.

I think it's a couple things, I think that I've some pretty expansive social media reach. But I think also, what I've become relatively good at is bringing things around not necessarily main stream into a pop culture stream that allowed them to mainstream.

So i.e., Twitter, with the race with CNN, and the strategy behind that, and between different brands that I've worked on, Punk'd and things like that.

It's just actually mainstreaming things that are at one point in time French.

What is it, about six million now?

What's that?

Twitter.

I think, I don't, I haven't looked.

I think it's like six, more than six.

Yeah.

And then, Facebook, there's another nine or something, Yeah.

so it's like, total reach of about of fifteen million viewers, What's interesting about that, I mean that was a race with CNN, as you said, and you won.

And CNN promoted and published the fact that there was a competition.

You understood the value of this right away.

I don't know...
I just...

I'm reading a book called "Everything is Obvious".

So right now I almost question whether or not I completely understood, or whether it was just a confluence of events taking place. What I did see on Twitter was a potential for mass syndication.

Yeah.

And I saw social behavior that was very, very addictive. When you post something and it gets retweeted or you get a reply from it instantly, tThere is actually a [xx] level satisfaction in that and what I started to see is like a multiplication of messaging and almost a. . If you actually put a part piece of message into the system, it multiplied very, very quickly.

And I saw is a sort of mainstream consumer broadcasting device.

Yeah. It's going to transform advertising.

I think it already is.

Already has, or is. Yeah.

I mean, I think it, I think more so, I think it's transform advertising, I think it transform the company . You have to be transparent, and if you're not, you will fail, and we can look at failed states around the world right now, and I believe in a large part its due to the transparency that social media provides.

Right. We're not talking about Tunisia and Egypt and Libya.

I think you have to be a transparent company, and your product has to be good. Because if it's not good, or if it has failings, people are going to point it out, and then you have to be able to be responsive to that. The consumers are becoming your most value asset because they are your brand advocates.

And by the instant feedback they give you.

The instant feedback they give you can be can be very, very helpful to your marketing, or it can be very, very damaging to your marketing.

Yeah. You have, in terms of, what's the structure of your investment company?

When I first starting investing, I starting investing my own money, and then I realized I was going to run out very quickly, because.

Because you had more ideas than money?

I had more ideas than money, and I had more opportunity than cash to actually put to work. So a friend of mine, Guy O'Seary, who's a brand creator himself, he's an advisor to Groupon, and And this Madonna's manager and has helped keep Madonna's brand fresh for X number of years and involved in producer on Twilight.

So many other things. He was interested in the same space and we kept sort of arguing with each other about, I would show him a company I was interested in. He would show me a company he was interested in. Get me under the door, no you get me under the door, like that kind of conversation.

Yeah, so we decided to partner up. And then we partnered up with another friend of ours, Ron Berkel. Right. Who runs Ukaipa and who is put in a little bit. Billions from the supermarket business. He is done relatively well for himself. Yes. And so, the three of us have now partnered up.

So, The three of you? Yeah, it is the three of us and we have fun that we have put together we have called A-grade. A-grade?. That though we with A-grade. So, what are you looking for?. Give a sense of how you see the landscape and what attracts you and your money?So , I look for, the first thing I look for is problem solvers, that, you know.

Are you solving a problem for a large subset of people?

Right.

I think that's the very first thing. And then I look at the founders and who they are, you know.

So, the same thing that Paul said, the very same thing.

I mean it is all. And by the way, I go to YCom all the time.

You go to Demo Day And you know, Paul's one of the people that, you know, sort of, helped teach me how to look at these things, and it's so.

But, let me stop you for a moment. He's, and has what he taught you, in terms of, just to connect these two? One, look at the founders. Problem solvers, founders. A good thing is when investing in companies that are just trying to keep their servers up?

Yeah.

Those are generally good companies to invest in, and then beyond that I look at - what does the market need? Or want? And what will the consumer want? So as an actor, when we receive a the first thing we do is we start breaking down every character by wants. 'Cause every character has an objective and super-objective, right?

And the objective is always in service to the super-objective of the character and so what I frequently do is, I look at technology that same way, and I say, okay, I'm a user on this platform, or I'm looking at you know a beta or power point which somebody showing. I mean saying, "What do I want and how badly do I want it?

And how much friction am I willing to put up with, to get what I want.

Right.

And where can you eliminate friction within your process in order to get me what I want faster? I mean technology is really just science's way of helping people. So helping them get what they want most specifically And so what excites you now?

So within, I mean, I look at a variety of a lot of different companies, I think that, you know, one of the things that I've become a little immune to is people walking in the room and talking to me about market cap, for like advertising on a social media platform. Right. Because they always come in with these, like 30 billion dollar market capital, yes, but there are like 5 million startups right now become very put in that could become very small, and by the way, that is why I have a lot of friends that are a lot smarter about those things than I am, so, talking to someone like Ron Conway, or talking to Paul Graham, or talking to Marc Andreesen, or talking to people that are folks from Sequoia, or whoever it is, let them be extremely smart about that.

And then, what I look for is, what is the trust level of people and will they trust this application to service their need and then the other thing I am really look for is, "Are you solving the signal to no addition?" Few fundamental things that I consistently and constantly looking for. And the more people can become trustful of the platform that they're operating on, or the company that they're dealing with, the more time and personal investment they'll be willing to put into that platform.

And then on the other side in social media I look at signal-to-noise problem solvers .

A plus?

A plus is a really good grade.

No, but what is your company?

My A plus client that we just found.

Yeah.

So I was investor on google media and, and Bill Gross came to me and said, hey, would you be interesting in creating a desktop client? And I sort of looked at, you know, the problems I have surf on the web on my desktop which is where I equally do most of my deep, you know, social media on the desktop Yeah and and I had a real issue with, real time social is really fleeting, so it's, you know, the messages that were there in the morning are gone in the afternoon and I don't have all day to sit on this thing.

Right.

But I want to consume as much content as I possibly can.

[xx] [xx]

So, what we focused on building was a desktop client that allows you to very, very quickly surf your social stream. So, there's a browser attached to it, and it pre-caches, you know, five or six different links as it moves down your social stream so you can just arrow down and roll through and it opens it in the browser right next to you so you can really very quickly move through your social stream.

And what's the potential?

I think the potential is, is trying to solve this signal-to-noise issue and I think that we're only just starting you know one of the things that helps with that is how quickly can you surf through something. So if it's something you don't want how quickly you can move to the next. And I think that the real potential is actuallybuilding the platform that we can start to eliminate some of the noise based on your preferences.

So I-I look at, you know, friend groups. So the average person has about 150 strong and weak tie relationships. And, you know of those, you don't really wanna communicate everything to everyone. So I have friends who are just my fantasy football friends and I have friends that are just, you know, interested in my acting, you know, community, and I have friends that are in the tech community, and I have my family and my mother, and I don't want to share my photos with every Jack, right?

that photo. And-and right now, its sort of differentiating in those sort of small groups that are the way that actually people relate with each other and being able to sort of focus your messaging to people, I think is, I think there is a great potential on this A+ platformactually start to create a linkage between your handle and a hash tag.

So if-if I said, alright, I want-I want-I want to follow Charlie-Charlie Rose's stream, but I only want to actually receive tweets when they are in relation to tech.

Right.

So if you, you know, entered something that said @Charlie Rose and then you hash tagged it tech, I can receive just your tweets around tech and I wouldn't have to receive your tweets around instead this other thing or Whatever theater.

Or what you ate for breakfast, right ?

Right. Right.

Thereby improving that signal device.

How do you, how often do you tweet?

Depends on the day.

Well take yesterday.

I would say, well yesterday I was launching this thing, so it's probably around five hours.

Okay.

I would say everyday maybe once or twice and then I try to respond to the community or engagement.

So, once or twice a day you?

Yeah. Now probably once. There was a point in time I would [xx] seven or six times a dayand then I try to respond to people three or four times.

So, you do not have people tweeting for you?

No, no, no, I tweet everything myself.

Everything is your...yeah, yeah.. Has acting, is acting still the first love?

Absolutely.

And it served and you've mentioned earlier its a fascinating to have asked. How being an actor served in a sense of your business instincts? Yes?

Well.. you know it is a business that ended up itself.

Right.

And I think that operating in the entertainment business could serve my business instincts Probably more that anything, I, you know, people say we don't make anything in America. And I think, we two things extraordinarily well: technology and entertainment. And we're the greatest entertainers in the world.

And and also probably the greatest exports for the United States too....culture and technology.

And it's, and it's actually not such a dissimilar business. I think there's some efficiency in tech that don't exist in, in entertainment media.

Yeah.

That I would like to bring to entertainment and media or, or you know sort of help implement some of the best practices but it's a very similar business I mean when you go to make a film you go out and you raise some money and then you fund that project and you don't know what your profits are gonna be.

You have no idea if you are going to have, I mean especially independent film making. You go, you raise nine million dollars, you put that together, you make a film. You have no idea what your profits are going to be. You have potential revenue sources. You know, theatrical release you know, television sale, DVD, Netflix.

So, it's in some ways a very similar business.

Here's what is interesting among the things that you have said. One, is the notion that the social media challenges traditional media companies, you know the whole - what 's it going to do to them?

Well, I think media will just become ...media. Right.

So, the devices which...with we receive it, are, you know. We'll still watch the television, it's better viewing than my phone.

Right.

But I'll also watch it on my phone and I think.

It's just the multiple platforms you'll have, and the multiple distribution devices.

Yeah. Well, I think you'll have probably, multiple consumption devices and then you'll probably have one distribution device. So, you know, if you look at air play for example, it's, you know, you can have all your context stored on your phone, or in the cloud, and then you can actually push that content through to whatever viewing device you want to receive it on.

So, I think that what's really going to happen is that all that media is going to come to one place, and I think what a lot of people are trying to capture now is, "What is the consumption interface or the organization interface by which you, by which you access to, contact your media and then display your media?"

You have, you have made a point of some guessing that there is a risk that the movie business will be cannibalized the way the music business was.

I think it is being cannibalized the way the music business has.

What can it do to prevent that?

Well, I mean first of all What are the mistakes that the music business made that the movie business You know the biggest mistake they make, is they don't just all get along and get on with, get on with the solution as opposed to arguing over what the solution is.

Yeah.

It's funny, you [xx] all the different movie studios and there is very little being done collectively to address piracy. And I don't think you can stop it, but I think you can make the threshold for buying media lower and you make the threshold for stealing it higher.


Yeah.

And if there's a collective effort around that I think that there, there can be great strides made. I had this movie 'No Strings Attached'.

Right.

Did very well on the box office Natalie Portman And I was hoping that it was going to do well on other platforms as well and the movie comes out and the week after the movie came outI just went to sort of looking for it on the web, just to see what was there, and I found about twenty different versions of it. And it wasn't like it tore, where I had to download a file.

It was just like there.

Twenty versions of, no strings attached.

In about five minutes.

Yeah.

And then, sort of spent a little bit more time and found far more than. So, I took the twenty links, and I send it to the studio. And I said, are we giving the movie away? Are we going to do anything about this? And I got no response!

They didn't respond. So, they're not aware, yet their zealous about trying to protect their.

It's a little demonstrating and because, you know as an actor that, that my movies aren't always the most well received necessarily, but they tend to do well. I want to make money off my movies. I got vacuum points on this. The better it does on multiple platform release the better I do, like I, it's frustrating.

I am out of time as I look at the yellow sign there. Actually thank you so much.

Thank you. Appreciate it.

Michael, thank you very much! Thank you...