[00:00:00] Speaker A: Welcome to Stand up to Stand out, the podcast where we help you master clarity, confidence and influence.
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[00:00:23] Speaker A: So let's dive in.
So I'm lucky enough to have John Hawthorne with me. John is the founder and managing director of Two Lanterns Venture Capital. We'll find out all about that. But I know him in a previous role where he was founder and CEO for 10 years at MassChallenge, which is the world's largest startup friendly accelerator, generating billions in revenue, 3,000 companies graduated, and hundreds of thousands of jobs. I mean, it just really changed, I think the tenor of Boston. And I'll say, I think it really just planted a flag in the ground, John, that this is a place where you don't just come to get your best and brightest degrees. This is where you come to launch businesses. Let's start with the roots of MassChallenge. And you've told this story many times, but I never get tired of hearing it. So maybe you could explain how you came up with the concept to do Mass Challenge in the first place and what it was and what it is.
[00:01:19] Speaker B: So I gotta go back a little bit before the founding to set the stage. I graduated business school 2007. I wanted to do a startup, but I also had $150,000 of student loans and I got an offer from Bain and company to go be a consultant. And it's a good sal know signing bonus, starting salary, end of year bonus kind of a thing. So I figured, all right, I'll go through the first end of year bonus, pay down my debt and then I'll launch a startup, right? That was kind of the idea. Graduated 2007. So first real bonus comes December 2008, which you may recall was the worst moment economically in living memory, right? It was shortly after the collapse of Lehman Brothers. It was talk of the next Great Depression. The dow had dropped 40% in a matter of months. It was really devastating. Worse than the pandemic in terms of like just economic distress, turmoil, fear. It was devastating. And so at that time, it was a hard time to leave a high paying job to launch a startup, right? And I'm thinking I don't even really have an idea for a startup. I just know that I want to do that. But I had committed myself to not getting sucked into being a consultant forever, which is the common you know, failure mode that you get into consulting and they just keep luring you in for one more year with a little bit more money, one more year with a little bit more money. And then suddenly you, you look back on your life and you're 50 and you're like, damn it, I'm a permanent consultant. I never did anything I wanted to do. So I, I seriously brainstormed like mad to try to figure out how I could leave Bain even in that terrible, terrible economy. I spent like weeks, you know, staying up really late. I was working 80 hour weeks to begin with at Bain, so it wasn't like I had lots of spare time, but I spent like a whole weekend, I remember, brainstorming. I wrote out a bunch of different executive summaries, ball them all up and threw them in the trash at like Sunday or actually Monday Morning at like 4am knowing crap, I gotta wake up in like an hour and go back to this job that I just totally hate. Like literally was giving me hives to go to work. I was physically ill going, I hated it so much. And I was lying about thinking, this is terrible, like the world has gone to hell and why, like what happened? How did we get here? Like, I, when I was at MIT, I won the 100k business plan competition. I got an award from the president for promoting the impact of startups on campus and around the world. And I thought like, if I as an MIT grad can't launch a startup then like we're screwed, like this is problematic, then like, you know, what are we going to do? And I was thinking, you know, so what happened? So what happened was really just greed. It was just, you know, too many people at that time were trying to extract profit and not enough people trying to create profit. And if you think like in a very simple level, I remember from strategy class at Sloan, there's sort of two basic fundamental principles to a business or obligations of a business responsibility. One is to create value. You got to do or make something new that people need or want. And it could be as simple as like you're just taking ingredients, mixing them together in a new way and turning them into a pie. And now you've added value to the ingredients which on their own weren't worth as much as they are together as a pie, right? So people pay more value for that. Now there's more value in the world. You've created value. So you can think of creating value is making pie. It could also be making telephones or computer equipment or medicine, could be anything that you do that's new and different and better for the world and just creates value for the world. So that's the first and foremost. The second thing as a business that you have as a responsibility is to capture some of that value so you can sustain the business.
And you do that typically as profit, right? So you create a pie, you sell it to people, and you get to keep a slice of the pie basically for yourself, right? So you get to create pie as the value creation, and then taking a slice of pie is. Is capturing some of that value for yourself. And what had happened at that time was too many people trying to make money from money and not enough people actually doing stuff, making things and improving the world. So when you're just trying to make money from money and make money from algorithms, then you are just fighting over slices of the existing pie. And if everybody is fighting over trying to get a bigger slice of the pie and people aren't making more pie, well, then you run out of pie, right? That's kind of a very basic and trivial concept. So this is what was happening essentially at the economic level. And what we needed was more pie makers. And entrepreneurs are the ultimate pie makers, because an entrepreneur is starting from nothing. And they are creating often an entirely new industry that never existed before, creating massive amounts of value, potentially billions, trillions of values in some cases right from zero. At that time in the economy, I recognize we need more pie makers desperately. And here I am. I want to start a business. I want to create value, I want to solve problems. But I can't figure out any way to do it in that environment because everybody was running away from risk as fast as possible. There was no money available. There was nobody willing to take those risks. Even I, that was desperately attached to the idea of launching a startup, was too scared to leave my job to do it. And so I was lying in bed thinking, this sucks. That was like all in my head thinking, God, somebody's got to fix this, right? Like, somebody's got to fix this where it's like the end of the Western economic model, like, this is maybe the next Great Depression, and then the Eastern tigers are going to rise and take over the world and it's over. Like, we had our run and that's it, we're done, and this sucks. Somebody's got to fix it. And I was thinking, like, you know, Congress, but they're dysfunctional and incompetent. The Fed is doing everything they can to try to fix it. The President, I don't know, like, who's who is responsible for trying? Wall street screwed a lot of this up. Maybe it's their responsibility. Like somebody's got to fix it, right? And then I kind of like half fell asleep and I woke up with this like, like Pulp Fiction, like, adrenaline shot to the heart moment where I woke up, like wide awake. I still remember it super vividly with this realization, wait, I'm somebody. Why don't I fix it? I'll do that. I'll try to make it easier to launch startups. And that was the origin of the idea for MassChallenge, was a recognition that we need to create a system that makes it easy for thousands of people, not two, but thousands of people, to create new businesses as quickly and effectively and efficiently as possible and remove as many roadblocks from their pathway as possible.
Because entrepreneurs create growth, optimism, hope, jobs, wealth. They're a common good for the entire rest of the economy. And even if you think of even like the most successful startups, like Amazon didn't turn a profit for, I think probably 10 years, 10 plus years, most of them, it's at least five years. A startup doesn't turn a profit, so they're contributing value. They're mostly making pieces for the beginning part of their life. And it's only as they become big and established that they can finally grab a slice of that pie for themselves and their investors and the others in their equation. I was thinking if we can just tilt the economy a little bit more towards that creative front end of the pipeline where we're focused on creating value, then there will be plenty of jobs, plenty of wealth, plenty of growth and optimism for everybody. So that was kind of the idea. So what does that mean in practice? We launched the largest ever startup competition. The idea is to leverage competition because it's like psychologically, everybody believes they're going to win a competition, everybody thinks they're going to win the lottery, which is why you enter, even though the odds are against you.
So in competitions, you get lots of work from lots and lots of people, even though only a small number will be hugely successful. But that's kind of necessary, part of the pyramid to create that growth. So we leverage a competition, gave away a million dollars of prize money to anybody in the world as a challenge who can come forward with any idea that could create growth, optimism, hope, jobs, wealth, anything that could improve the world and create value. And our promise in return was we'll identify the 110 best in the first year, became 128 later. To honor Route 128 but in the first year was 110. And we'll identify the 110 highest potential, highest impact startups, and then we'll connect you with all of the resources you need. The lawyers, the investors, the media attention, the government resources, other team members and talent, office space. Anything that you need, we'll go and find it and we'll make it available to you for free without taking any equity or anything from you in return. Because you as the founder, are the salvation of the economy. And you're going to grow. You're going to help us to grow our way out of the Depression. And so that was the origin of MassChallenge. And then we launched and I ran it for 10 years. It was amazing. The amount of support that we got from the community, from government, from billionaires, from, you know, from wealthy angel investors, from corporates, from real estate developers, from just your everyday Average Joe is incredible, incredible stuff. And it was a real honor to run it for so long.
[00:09:47] Speaker A: So when did you decide you wanted to become an entrepreneur, John?
[00:09:51] Speaker B: I mean, I think honestly I was like, infected with the bug way young. I mean, a lot earlier than that. I think in high school, probably in freshman sophomore year, I felt like I didn't like the system. I think everybody's had bad years or difficult years in their schooling or their life when they just felt like, God, I just don't really fit in. I don't like these people. I disagree with who they think is cool and who they think is smart and what they think is appropriate. So it started really then. And then I had this rebellious sense that, like, screw the system. I just don't believe, like, they're right. I have my own ideas that I think are better and different, so I'm going to follow those ideas. And at first it was just like, I'm going to be over here and you guys are going to do your thing. That's fine. I'm just going to be like, separate and I'm going to follow my own path. But then over time, it became like, no, you really are stupid. Like, that really is a dumb system. I want to help to improve it. And it became an element of I can leverage my strengths and my knowledge. And I think there's a great strength in being an outsider because you can see the weaknesses that for other people are blind spots or for the system as a whole are blind spots. And then you can really create, like, leveraged models to create value for yourself and move the system into a direction that is more aligned with your values. So even like for me, honestly, I became kind of a delinquent in high school and honestly one of the first businesses I founded was I became the vodka dealer of my high school. You know, certainly not a, you know, above board business and not something to be super proud of. But at the time, honestly it was a big deal and it was a way for me to become popular again because I knew everybody that was having parties, who was having parties with whom, and I became the center as this like wholesaler for the group. And so I always knew where everything was happening and I could pick and choose who I wanted to be friends with. And it became like a point of leadership for me in a really weird and twisted way. So it started there and that's part of starting as a revel. You're kind of beginning from outside the system and you got to break rules to make the system kind of bow to your will a little bit. So that was my first real business. And then I didn't, then I just became an academic and didn't really do a lot and you know, until way later. And then it was really in my 20s again. I was kind of followed the like typical path. Got a master's degree and thought I'll just do. I thought I'd be a diplomat. I figured I don't really like that pathway. And then I found myself alone again, like crap, I don't know where I fit in. There's no logical next step for me. I don't know what the businesses I'm supposed to do. I don't know anything. I don't have very many skills. I kind of feel like I screwed up and I found myself like empty again. And, and then it's always trying to figure out how do I fix this. And then I thought I got to go to business school, I got to start something else. And again it was a little bit of like anger at the system, a sense of being separated from it and then a sense of kind of like pride and resilience and a desire to overcome it. A kind of a screw you attitude. I'm going to fix it, I'm going to do it on my own. And that brought me into business school and then at business school, at mit, I just fell in love with startups and realized like that's how you do that. That is the expression of my personality traits in a productive and useful manner through a business channel. And then it was like a no brainer for me that that's definitely what I wanted to do. And that led into Bain. I had the Debt. I had to make money. I wanted to do startup and I couldn't. And then so when, you know, I had set a timer, once I get that bonus, I'm leaving it to a startup. But then the economy was terrible and it was hard, but it was too powerful. Like the draw was too powerful. I was like, no, I don't, I hate this. I really did not want to be a consultant and it like hurt my soul. So I just had, I had to leave. And then it was just, what am I going to do?
[00:13:21] Speaker A: Talk to me about that model of creating value and then growing and capturing some of that value. Where did that clear thinking come from? Was that a professor? Was that a melding of your deduction of lessons? Where did that clarity come from?
[00:13:38] Speaker B: Yeah, it was. I mean the, it was this one of the simplest models that I've ever had in a class. It was a Professor Sorenson who was visiting from Stanford and taught a strategy class at MIT when I was there. It was a great class overall. This is a really simple model that those are your two fundamental responsibilities as a business. It's really create value capture bucket. I mean you can't make it any dumber than that, right? It's just very five year old level stuff. And it didn't exactly stick with me immediately in the classroom, but it just like it's so too easy not to remember.
And then it was lying in bed that night, angry at the world, angry at Wall street for screwing up my chance. I was like, God, I was all ready. I was just about to get my bonus and go do my startup. And then the world collapsed because freaking Wall street is too greedy. This sucks. I'm so mad at you guys. You're just so obsessed with capturing value.
And here I want to create value. So it just like it crystallized kind of then and there a lot of like these step function changes in my life you can trace back to like moments of anger and isolation. Honestly, it's like that's when I feel like my mind is most focused because I know that like this has to change. Like this is not acceptable.
[00:14:46] Speaker A: So talk to me about some of the early days of masschallenge because one thing that you've seen is thousands upon thousands of of startups and you've seen people on all ends of the spectrum from nonprofits trying to change the world to you know, tech solutions or software driven. And this is just all mass challenge days. What do you notice as a commonality for founders or teams that just stood out to you over that Decade long. Like what are the traits or the behaviors of people who really stood out to you?
[00:15:19] Speaker B: Yeah, so there are a few consistent traits that you would like to see in a founder. There's a debate is it a personality or can you learn it? And I think it's a little bit of both. But there certainly are personality traits that are better suited for entrepreneurship than others. A couple of things. I think sort of first and foremost, as the personality trait that is most relevant and best suited is somebody with a bias to action, an intense resilience, right. That is often born out of this sort of chip on their shoulder from there's a problem that is massively bothering them that they can't live with. They refuse to. To accept something about the world that is wrong and that leads them to be very resilient. Right. And then the biased action is related to that because the sort of, like the, the kind of pain, if you will, or the challenge associated with overcoming the problem is too great to wait. So, so you have to just take action and go and do stuff. And then there is, and it varies a lot. There's a lot of different, you know, ways that this recipe comes together in different proportions, but charisma is often a part of it because you need to gather other people and build a team. You can't do things alone. If they're important and complex, you're going to need many, many people to work alongside you. And so it's, in a way, it's almost like a land war in Asia. You're going to form a lot of different alliances and friends, sometimes short term or for convenience, sometimes mostly for the long term. And that, that involves typically a lot of great communication skills, ability to understand other people and listen to them and figure out what is their pain point and then be able to explain to them, all right, this is how we're going to fix your problem while you fix mine. Right? We're going to work together and both our problems are going to be solved at the same time. And then if you can do that with, you know, five, then 10, then 30, then 50 people, suddenly there's a movement. Suddenly there's like just momentum and it becomes kind of unstoppable. At some point, I remember realizing, like, I could leave and mass challenge would just keep going. Like it doesn't, doesn't need me anymore. Like there's just this force happening. So there's the, you know, sort of biased action, this kind of pain point and urgency, the communication ability to sort of gather other people together and communicate A vision, effectively unwillingness to accept no is part of that resilience as well. There is a self awareness because it is really hard and you're going to screw up constantly and you do have to re examine all the time. So this is one of the biggest challenges that I see. And often you do need an element of confidence, almost stupid confidence and almost you need an unrealistic attachment to your vision. Like unrealistic, like really foolish attachment. It almost has to be. But there's a line at which you cross from that sort of stupid confidence into arrogance when it becomes, you know, negative again. So you have to, there's a sort of a, you have to find this peak point of unrealistic, foolish confidence that isn't quite yet arrogance that doesn't become obnoxious because you still have to care. And I think what keeps you there really is that you care so much about the problem. That's the thing that's the most important is because if you really care about the output, if you really care, like in this case, I thought for MassChallenge, I got this idea, I recognized if we could really, like really genuinely, if we could get thousands more people to launch startups than otherwise would and we can get them funded and connect them to the best mentors and the best investors, we could catalyze a renaissance. Like we could change the nature of history in a way that like the Italian Renaissance did, right? But now in a period where people can communicate instantly with anybody on the planet in high definition for free, where information travels immediately, not it takes three weeks for information to travel by boat from Europe to elsewhere. And even then it only gets in the hands of the elite. And that was the most important change in history for the Western hemisphere was that Italian Renaissance, which started with a small number of people with ideas about rationality and science and art and how people should live and the importance of individualism. And so this was a similar concept of what if we can promote the creativity as a value among humanity and prioritize that above the extraction of just raw capital.
If you believe that that's possible, even if it's really hard, you can't not do it, right? You can't sit and say, ah, screw it, I'm going to go be an accountant. Or it's just like there's nothing else that will live up to the high of that possibility of like, this could be a thousand year change in the direction of humanity. And I can see a path, even if it's dark and narrow and hard. So I think that's the most important thing is that somebody has that crazy unreasonable attachment to some outcome and then the other stuff almost is derivative of it, but you know, become necessary over time.
[00:20:02] Speaker A: So looking back on your decade there, what stuff did you not know that you didn't know going into it now? I'm sure there's a lot. But what would be like some of the top two or three revelations for you that you just couldn't have known on the, you know, Eve of 2008 or watching the Wall street crumble and you sort of saying, I have this fever dream. And then, you know, fast 10 years.
[00:20:27] Speaker B: Later it was, I mean, basically everything to be honest. Like, and this is one of the things people have to recognize about early stage startups and founders is they really don't know anything. You have a vision and a belief and that's more or less all you know. And I mean all that said, look, we came up with a pretty clever business model that wasn't all wrong, but it was really dumb in some very simple ways. And early on, like those early meetings were embarrassing.
Like we had embarrassing meetings, you would go and pitch and people would just like intellectually pants you. You just walk out and be like, that was terrible, dude. Holy crap. We are like way, we're just way off. We don't know what the hell we're doing. So like as an example, we had the early, the first model wasn't a nonprofit. Ultimately MassChild became a non profit and doesn't take anything from startups. Totally free for startups to participate. And it's supported primarily by corporate sponsorships and a little bit of government money and some foundation and philanthropy money. But the initial idea was that it would have, it would be a venture fund driven model and we would get money from the government because this was the time of Obama's stimulus plan. We would get like $50 million from the government to have a fund and we would invest in the winners that would come through the competition, take equity and then we would sell that equity at the next round of funding. So in like I remember one of the early meetings with a junior lawyer at a, at a firm that like really didn't have that much value to offer us anyway, but just was somebody who took a meeting and so we were just happy to talk to anybody and pitch in front of anybody and we pitched to her. And I remember just being like, oh okay, so there's a 50 million dollar fund. So so you guys have run, how many funds have you run before?
And we were like, oh, we haven't run any. Any funds before. Oh, but you're an angel, but you've angel invested that. How many. How many angel investments have you guys made? We're like, no, no, we haven't, like, you know, like, zero. We haven't done any at all. Like, oh, so you've never done any. I mean, like, have you been part of a team that did angel investments before or something? No, we have, like, zero. Zero experience investing at all. And she's like, all right, so you have no experience investing. And then you think like, are you just like, are you really rich? Like, where's the 50 million? Where are you going to get. Why do you think somebody's going to give you 50 million? We're like. I was like, I'm not. We're not rich. We don't have any money at all. He's an immigrant. And I have debt. I have student loans. And I'm like, so, no, we don't have the money. And they're like, no, where are you going to get the money? Right. That. Probably the. We're thinking the government, probably. She's like, government, all right. It's a big entity. You got a department or like a bucket of money or something. And we were like, you know the part with the president, I guess, like the, you know, I guess I don't. You know, and she was like, dude, you guys have no idea what you're doing, right? You're going to go from 0 to 50 million. You think you're just going to walk into the Oval Office and ask Obama for $50 million, and he's going to go, oh, look at these sharp two young guys that have zero experience in the worst moment in economic history, and you're just going to get 50 million. This isn't. How long do you think it's going to take? And we were like.
Like, three months is what we were about. Three months with. And. And you just walk out and you're like, dude, we're just wrong. Like, this is not correct.
And again, you, You. You have to be so committed to the outcome, not to the plan, but to the outcome, right? Then eventually said, all right, that's not the plan. That plan sucks. That doesn't make any sense. And then we started to get smart and say, all right, we're just going to start asking other people. Like, we would ask her, all right, so where do we get him? What do you think the answer is? Maybe it's not 50 million. How much do you think we could raise? Who could we raise that from if the money's no longer in Obama's hands, where is it? Oh, it's all been passed to the states now. Oh, it's at the state level. So the governor is probably more approachable than the president. So we should go after the governors. And then people started to unwrap it and they'd be like, yeah, you could probably get some money from the government. You know, it's actually Secretary for Economic Development is the guy that controls that decision. And you know what, probably some corporates would help as well. So. And then people started unpacking and we're like, all right, we could probably do this, but it's not 50 million. It's just a million of prize money. There's no equity. And then started. It started to sort of morph in and basically the world told us the answer. Like, we didn't really develop it, we just heard it from the market. We, like, derived it from trying so goddamn hard over literally thousands of meetings, almost all of which were terribly embarrassing of just us constantly exposing our own stupidity and naivete. But that's how we got smart.
[00:24:43] Speaker A: I love it. And lots of lessons there. Are you living on savings at this point? Or like, I mean, because all of that takes Runway, which is just a fancy way of saying, like, I need money to spend on food, shelter and clothing. Like, where.
[00:24:57] Speaker B: So basically, consulting companies typically don't lay people off because it hurts recruiting and it makes them look bad and they just. They like, avoid layoffs at all costs. But Bain was smart, is smart, amazingly well run company, and they knew that this economy is terrible and it's going to be a bad year. So what they do instead is they just make your life miserable and then they offer money to anybody who volunteers to leave. And they tell you upfront they were very clear. In January, you come back from the break and they're like, all right, everybody, this year is going to suck. Probably no bonuses. We're going to make everybody work double shifts. You're also going to have to be working on books and research on the side. There's going to be no breaks between gigs. We're going to reduce the amount that's allocated for travel. Everything is going to be way worse and crappier. We're going to bring in fewer young people, so you're going to have to do more of the work yourselves. Everything just across the board, terrible. Anybody who wants to leave right now, come to the office. We'll give you five months salary. You can do two and a half months of work and then you can leave and get two and a half months of just free salary. And I was like, me, me, me, I'm in. I want that because I hate being here. And. And Akil, who was my co founder, we sat next to each other. We basically were on that train. We're in the office before the announcement was, was finished, basically before people finish reading email. So we had five months of salary and very little work in it and we were still allowed to use the office. So we printed all of our decks in color on the Bane printers. I would just print out like a thousand pages of decks so I could bring them to meetings because I didn't want them pay for printer ink. And we were using their research tools and everything else to do all of our, you know, to, to get all, compile all the resource. So, so we had a timer of five months. And we knew like at the end of that we have no money. That's it, we're out. And so we had. That was the urgency. And so we had to push to get funding quickly or else we knew it wouldn't work too interesting.
[00:26:42] Speaker A: I saw you many times on stage in front of hundreds or thousands of people and your communication approach, how important it is to leadership, how you've worked on your own communication style, give us some insights to how you perceive it as a skill and then how you've actually worked on your own.
[00:26:57] Speaker B: I mean it's absolutely vital. You know, people will wonder like what is. How do you prepare to be an entrepreneur, whatever. And I think honestly there's really no pathway that is necessarily that much better than any other for me. Like I studied literature in college. I was a major, I majored in literature. That was helpful for me. Like I didn't. With no anticipation of it being helpful in this way. I just. What I liked and what I was good at. I had no plan for how I was going to use that in the real world. But you learn a lot about how to structure a narrative. There's a beginning, there's an end, there's a middle. You start off with optimism. You end, you know, like there's a. There's a crisis in the middle and then there's a resolution. Typically, right. It's almost like a sentence structure. And it varies. I was actually a German literature major and it varies by different languages and different periods throughout history. So I think that that influenced me a lot as how like the various styles of communication of when you should be using punchy short sentences and getting direct to the point and when you can be Long winded and give a long narrative that's lots of details and things. I just had kind of a background in it and then I had before business school worked in corporate training and so I did a lot of public speaking and it was technical training. So like computer security, walking people through how do attackers break into your system and hack in? And it was, I didn't know that the content well so I had to have other people explain it to me like I was a five year old and then I had to explain it to other people. And so I learned to really reduce it down to its essence and then be able to convey it. So that way I knew for sure I understood it. I couldn't just repeat the jargon because I didn't know what those words meant. So I had to actually reduce it down to like in simpler terms, what does it mean? And I think that helped me a lot as well and it gave me a comfort in front of large crowds and that helped me throughout the maps challenge trajectory. But I would, I think honestly so and I think that the sort of my communication definitely important throughout it but honestly the best and most important communication element throughout all of MassChallenge was other people communicating. To me this is really important for everybody who wants a powerful startup ecosystem to recognize is that again, the founders are basically idiots. I mean they know they, they want something. They're geniuses at one thing. They have one visionary idea that is amazing and beautiful and incredible and they basically have no idea to make it happen, how to make it happen or if, let's say there are a hundred steps required to make it happen. They know 22. Like they know a very minor small slice of what they're going to have to do. So the rest of the community has to help them and tell them, for instance, that's a stupid idea, that part of your plan where you walk into the Oval office and get 50 million.
No way, not going to happen.
Stop wasting your time on it. If it hinges on that, you're screwed, right? So then you know, I got to figure out another way and walking through it. So the best in my mind, in my experience of it was, was, and there's a lot of great people at this. Josh Boger is amazing as well. But Desha Spande was one of the best of all time and he just had a way like it's so brilliant but he, he made it seem so simple and casual. But he would just ask us questions and the questions would expose the flaw.
But he. But you end up walking out thinking I figured it out. I figured out a flaw. You don't realize that he's telling you that he's like marching you to the answer with his questions. But he was. So you feel, like, empowered and you feel like you're in charge. He takes no credit for it. He's just this like, calm, wise guru on the sidelines that is humble and peaceful, but is like really almost directing you to the answer. And he would get. And then he would give you very simple, very simple sounding, but difficult tasks that would force you to exercise exactly the skill set that he needed to know whether or not you were going to make it to the next phase. And if it were, then he would give you the next one. So as an example, we went to him the first meeting. He'd spoken at a conference that I ran when I was at school. So I reached out to him. I was like, this guy's amazing. He's a billionaire. He's at four startups, IPO at over a billion dollars. Genius mentor. There's an innovation student at MIT named after him. One of the nicest guys I've ever met. And so he reached me with us for half an hour on a Sunday in the lobby of the Marriott Hotel in Kendall Square. And when we get there and we're walking around practicing, we see him on the couch, and it turns out he's got like four hours blocked and there's eight people pitching for half an hour segments. And this guy, he doesn't need this. He is already very successful and he's already a huge philanthropist. So, like, he's doing this because it's the right thing to do and because I think it interests him and excites him. But so we pitch him and we tell him, this is what we're going to do. We're going to launch this largest competition in history. We're going to bring. We're going to catalyze a renaissance on the planet and change the trajectory of humanity by re. By. By restoring creativity to the soul of the economy. And he's like, it's a great idea. Yeah. So who's gonna do it? We're like, what do you mean? Like that we're, we're the.
That we're doing. He goes, no, somebody should do it. I agree. Somebody should do it. We're like, no, we. We're the somebody that's. That's, that's what we're sitting here with. Peter goes, oh, really?
You guys are joining us?
Like, yeah, yeah. That's like the whole point of this. It's like, so you say you quit your jobs, you don't have anything else, you're not doing anything else. This is it. You're like 100% committed. This. And we had. We just quit our jobs. So we're like, yeah, we did. He goes, oh, good. You should have started with that. All right, then I can help you. And that was just test one. Are you committed? If you're gonna ask me for my commitment and me to take risks, then you have to show me that you're committed too, right? So he's like, all right, then I can help you. All right, write down the following list of names. And it gave us a list of names that was like, presidents of universities, top managing directors at law firms and venture funds, top professors at entrepreneurship centers, entrepreneurs, et cetera, about 30 of them. And he's like, go talk to them and come back and tell me what they say. So we set up, like, meetings, and we. And when you say destroy. Spande told me, actually, we asked him to email them. We said, we'll send you a draft email for each intro. You forward it and say, I want you to speak with these people, please. And he goes, great, no problem. Happy to do it. We sent it at like 10pm 10:30. He had forwarded all of them along. And by 8am we had a response to every single person. I will clear my schedule to meet with you because Desh said I should. So we get all these meetings stacked up. We go and we get all of them to sign a letter saying, I support this idea. It's a brilliant way to create jobs and growth in Massachusetts. And these kids are on. So we, like, force them to, like, give us a signature. We go back to Desh, we lay out the 30 letters out on the table, and we're like, check it out. Royal flush, baby. You sent us on a task, and we came back 100 response rate. What do you say? We win, right? He goes, ah, so what? Signatures are free. You're good at marketing. Who cares? We're like, what do you mean? That was like, what you asked us to do. And he's like, who's going to write you the first check?
I'm like, well, I don't know. We were thinking there was the government maybe, I'm not really sure, maybe the governor. He goes, good, go back and get some money and come back. And it's like, you know, you've been enjoying it so far because you're pitching an idea and everybody loves ideas. Signatures are free. Who cares? I gave you a Signature. There's not. Who's going to write you the first check? And we're like, well, will you give us a first check? And he's like, nice try.
Go get some money, come back and then talk to me then. Now you're going to go home crying, People are going to kick you out of their office, stop answering your phone calls, stop responding to you. Now it's going to get a little harder. And then we did. We ended up going back. We did get money. We came back, met him, and he. And he was like, I'll match the money. Who else do you know? Let's split the rate. And then he would keep helping us, but he gave us, like discrete tasks, very clear, very simple. One thing, go do this one thing and then come back and don't talk to me till you're done. I'm not interested in any halfway solutions or excuses or anything. That's it, that's the bar when you get there. And then he would help 100% of the time. Amazing. Like, mentorship capabilities.
[00:34:32] Speaker A: Yeah. What I love about that story, there's so much to unpack there, but it's offering help, but you have to help yourself.
[00:34:40] Speaker B: Yes.
[00:34:41] Speaker A: And I also like standards, not goals. Like I, you know, go do. This is a standard.
[00:34:48] Speaker B: Right.
[00:34:49] Speaker A: The goal doesn't really matter. Like, goals are cheap and easy, but a standard is we're going to bring you this deliverable. This is the output that we're going to have.
Yeah. And so obviously, you know, and I wonder where he got that approach from, because it's the right approach. It's mitigating risk, it's testing people, it's giving the litmus test to say, are you, are you worthy of this? In. In the friendliest way?
[00:35:17] Speaker B: And again, it's very empowering because he places the burden back on you. But he is helpful. He's not like, you're alone in the woods and I'm abandoning you. He's like, I'll give you some, I'll give you some, like a little bit of clothing and a little bit of. I'll give you the necessary goods to survive to the next stage. But now you gotta go do it. You gotta, you gotta show me that you can. And if you can't, then you shouldn't be doing this. Right. That, I think, is he consistently had that guidance for us around mass challenges. Don't coddle the startups too much because the fact is it's hard and if you make it too easy, you're not giving them a fair chance thereafter. You have to make it hard because they, otherwise they shouldn't be doing it. Then they should go get a job as an accountant. This isn't the life for them. They have to want that challenge and be able to overcome it.
[00:36:01] Speaker A: Does everyone know that the difficulty is also uncomfortable, vague. You know it's right, because, I mean, you and I can be looking at the peak of a mountain and like, there's gold up there. Okay, great. But if we just start sprinting, you'll run out of oxygen, you'll break a leg, you'll run out of food. You can't just start like, you have to, you have to be thoughtful about that journey.
[00:36:24] Speaker B: It totally. And, and this is another characteristic I think I missed earlier is you, you have to have comfort with ambiguity because you, you have a goal, but you have, frankly, no real idea how you're going to get there. At the very beginning, you might think you have a plan, but it's like I, you know, it's like the Mike Tyson quote, right? Every plan is great until you get punched in the face, right? And like the second that you start implementing the plan, you realize it's taught, it's terrible and broken. Right? It was our, like, we're going to get 50 million from Obama moment where we're like, but, but that is every day over and over again in slightly different and smaller ways. So you have to get comfortable with the fact that, like, we really don't know what we're doing, but we're going direction and we're pretty confident we're going to get there. We just got to keep following the path that's in front of us and keep just doing the best we can and just get there somehow.
[00:37:07] Speaker A: Yeah. The title of this interview for me is, is from Pema Chodron's book, Comfortable with Uncertainty. Because to say that you're a startup and one of the things I'm getting from this conversation to say that you're a startup is, you know, declaring ambiguity, being committed to the cause, having grit and tenacity to stay the course, being humble enough to ask, being dedicated to execute. It's this combination of all these things and probably a lot more, let alone a good idea. Never once did we even talk about the quality of the ideas because resoundingly, you know, it sounds like a lot of the ideas were bad or off, but you went and did them and found out they were bad or wrong.
[00:37:50] Speaker B: And I think that you're right. That's super critical. And it comes back to like, what, like the most important element for me, and what I see also in my founders is they have to be unreasonably attached to the idea, to the outcome that they're targeting. And because that is what makes you resilient, that is what makes you bias yourself towards action and stop just talking and thinking and just go get it done. And that's what makes you sort of take the, make the hard asks when you have to and listen to the difficult feedback when you have to. Because you can't not succeed. You just won't allow that because it's too important.
And I think that is a key element that when people come to me with ideas that you can tell they don't care that much about, they're like, I want to be an entrepreneur. I just want to make some money. I have this idea. And you're like, don't. Just don't. It's not unless you are like, unless it's really important to you, you're going to give up.
So if you're going to give up in six months, screw it. Just save yourself the time. Don't do it now. Wait until you have an idea that you really care about that is that you really are convinced is genius is going to change the world in a very positive and dramatic way that you can't not do. Like you have to, you have find an idea that like, you can no longer go to your day job because you just can't stop thinking about it. It's like just obsessive. Then you can start. But I think until then it's not worth it. It's too difficult.
[00:39:07] Speaker A: So how are your superpowers of intuition? Because you've now sat in that seat, you've been in that seat, you've been on all sides of the table raising money, investing in others, now doing it at Two Lanterns. And I feel like you must have developed a sixth sense around founders or entrepreneurs that just hits you before someone even says too much or goes too deep. What are those internal GPS coordinates for you when you see someone coming into the Two Lanterns world or entrepreneurship.
[00:39:41] Speaker B: I would say I continue to learn every single day. And I think it's important to recognize even the very best VCs in history.
Still 60% of their investments are return zero. So you're still wrong more than half of the time.
Some of that is randomness in the system. But.
But a lot of it is just like, it is difficult. It's like sort of what makes food delicious. Well, there's a lot of, there's a lot of different kinds of food. In different ways. So there, there isn't like one undeniable simple statement about what an entrepreneur looks like or sounds like or does. But I do think what, what I'm increasingly recognizing is this piece of resilience. So the, the unreasonable attachment to the idea which then is also triggers into this resilience. And it's also possible to just be very disciplined and resilient through kind of an intense discipline and a refusal to lose a kind of a like ambition. So there are different flavors of it. I think that's probably the most important. And I see it in my portfolio. We have 34 investments in fund one of two lanterns and four of them, two of them are written off, like are gone, and two of them we've marked to zero because they're basically gone, which is not abnormal for a fund of our size or anything. But everyone that dies hurts because all of them, you thought it was gonna like there was something there. And you know, some of em, it's like, ah, there was randomness in the system, the market shifted, the economy changed. Some big entrant, it just became impossible. But mostly it's just the founder. You know, in some of the cases the founder just gave up. Just like, look, just this got really hard. I don't see a path to making a billion dollars as a company anymore, to getting that valuation and it's too difficult. So I just don't want to do it anymore. And you're like, you can't be a general in the battlefield and just walk away on all your stuff. It's terrible. But like, I think I, it didn't occur to me that people could give up. It also, like, there's also some layer of this, you know, each of these elements that I've said that I think are important, this biased action, this sort of salesman, like quality or charisma, the ability to convince other people to hitch their wagon to yours and join you. I just sort of take for granted. I took for granted a lot of them in our founders. So I'm surprised when some of my founders are like, they've been at it for four years and they don't have a million dollars of revenue. I'm like, dude, how do you. What even do I like, I got to 1.5 million in my first six months and I was, I was not giving any of it back. It was like donations. Like, you got to get out there, go and pound the pavement, man. You have to do it. It's your job. And. But not everybody had it. So. So it is. I Will just acknowledge that it is difficult and that I continue to learn and you know, you sort of life is lived forwards but understood backwards. So recognizing it in other people is still hard for me, but getting better at it. And I think it is that, you know, unreasonable attachment, the salesmanship and communication capabilities of really selling, the vision, the resilience and unwillingness to give up or yield while still having sufficient self awareness to listen, to seek out even, and then also specifically to listen to feedback and incorporate it. Not always, but at least most of the time to make sure you can differentiate between good and bad advice, et cetera. That is really key. I've had, you know, of the failures, one of them gave up. Some of them just absolutely straight up refused to listen to any advice and ran in the wrong direction. You know, some of it was bad luck, but it, you know, it is, yeah, it's still tough, but that's, that's what I would say is again, biased. Action, vision, communication skills, self awareness and resilience, those are, you know, and integrity is part of that. Is like sort of that they're not lying to you outright is obviously that's kind of a foundational element. Integrity is a key element of that as well.
[00:43:19] Speaker A: All right, last question. Two lanterns. What's the significance?
[00:43:23] Speaker B: So two lanterns is a reference to the American Revolution. And it was one if by land and two if by sea. And the British came by sea. And the deal was that the Old North Church was the highest point in Boston at the time, the most visible from the surrounding area with smaller buildings at the time. And so the idea was the British had amassed their soldiers and it was obvious that there was going to be an attack.
But there were two methods by which they could attack. Either across what is now the Charles river, but was at that time a much larger bay and was the sea, or across the little ismouth of land where the science museum is today, that little narrow passageway, which would mean that they had to go almost single file, like very narrow, you know, pile of soldiers and would make. So you would change your counterattack dramatically depending on which way they were going to attack. And so the idea was, if they attack by land, we'll hang one lantern in the old North Church so that the rebel armies could see it and know where to go to fight. And two lanterns if they were coming by sea. They did come by sea. And so it was two lanterns. And the reason that I'm attached to that is there's a couple, but one is that I am distantly related to the Major General whose idea it was to hang the lanterns, which was Joseph Warren. So my full name is John Warren Harthorne, in honor of the Warren family, to whom I'm distant. It was a long time ago, so distantly related. But his younger brother, John Warren founded Mass General Hospital.
And my father is a cardiologist at. Was a cardiologist at the Mass General Hospital. And so I'm named after John Warren. And then. But his brother, Joseph Warren was the first spymaster general and he was the physician to the general for the British and his wife, with whom at least rumor has it that John Warren was having an affair. Joseph Warren was having an affair. And that's how he knew where they were going to attack was through the wife who had overheard it. And then he knew to hang the two lanterns. And that was the spark that ignited the American Revolution. And so the idea is this is also the spark that will ignite a revolution. And then on top of that, the sort of symbolic layer that it is really lonely to be a founder, but we'll come and join you and bring our lantern and join you. So it'll be two lanterns walking instead of one.
[00:45:37] Speaker A: What I also love about it, selfishly, is that it also is the power of clear communication, that everyone understands what that symbol means and they know what to do and take action. And what drew me to pitching in the first place in communication was that you have to take action.
And I've heard a bias towards action as a running theme. And that's a great story about two lanterns. I. I thought it was going to have some significance, John, but clearly it's just a throwaway name that you found on the Internet. No, that is the most profound connection to a title, and I just loved every piece of it. So you learn a lot from everything, but it's just the way you tell the story, just the story about Desh and the way that he gently would guide you and test you, but in a friendly way that really resonated with me. And, you know, I don't know if this is like an after the show notes, but it was just something that I. I need to chew on a little bit because that level of mentorship and guidance is rare, but the most valuable.
[00:46:38] Speaker B: It's funny, like, this is where again, even now, like, I know these lessons and I've shared them with other people before, but it doesn't mean that I emulate them, even though I should emulate many of them. So it's helpful to retell it. But like, I, you know, when I get pitched by startups. It's. The instinct is to tell them what's wrong with it. Right? Here's why that's not going to work. Nobody's going to pay you money for this thing. This part's stupid. Nobody's going to hear it and you just want to kind of burp it out.
And that is depressing. As the founder, because you're like, God, everything sucks. Everybody hates me. It's. But he had a way of not telling you what was wrong, but just asking you questions and saying, why do you think people will adopt it?
What kind of evidence would prove to you that people are going to sign up? Why don't you go and get that and come back? So he would identify the weaknesses and then go make you solve that weakness and then come back and then you'd be like, you solved all the weaknesses. Guess what? We're working together.
You overcame my doubts and it's a really powerful way to do it. That.
[00:47:31] Speaker A: Yeah. And the only. And I'll leave it here and I'll be done. But I'm currently in a coaching program with somebody who's got a big community. And one of the things I like is that you're not allowed to ask for coaching unless you do what he calls the five daily non negotiables, which is reaching out to at least five people, you know, trying to do something for your health, reading 20 pages of nonfiction, reviewing your goals and talking to your clients.
And, and, and basically, like, unless you're doing that every day, seven days a week, and you can prove it, then you're not allowed to ask for advice because that's going to solve so much of the stuff in your brain that you should just do that, take action, hit the wall. And when you come back with that data, I can now counsel you.
[00:48:19] Speaker B: It's smart because it is. I remember I had a, A key lesson in like, the first job that I, the first real job, like office job that I had, I needed to get, like, I had, I needed some scripts written. So I'm like, just programming some basic, like, pearl scripts to solve some minor problems I was having. And so I went to the programming team within the business and I was like, hey, can you help me figure this out? So this woman was doing it for me for a long time. And then I would say, I come back, I had this problem, this thing isn't working, blah, blah, blah. And I kept. And at some point she just turned and she was like, dude, is there any part of your job that you do?
And I was like, oh, shit. And it like floored me. And I was like, well, but you're just solving all my problems. And she was like, yeah, I have my own job. You got to figure this out on your own. Here's a book on how to program. All right, go figure it out. And implored me that I was like, oh yeah, just like basic personal responsibility I got to do. So much easier just to be like, hey. And I feel like the educational system in a lot of ways trains us to go and seek help from other people. Like, tell me the answer even, just tell me the question, which is not even, is not even in the real world. They don't. Nobody even tells you what the question is that you're supposed to do. So you have that independence.
And so that's, I think that's a key element of it, is you gotta do your own job first.
[00:49:27] Speaker A: Well, and tangential. And I'll, I'll zip it after this. But I always tell people, look, I, I help people with communication. But what I would say is you can't think your way to becoming a better communicator. You have to do it. And everyone hates role playing or practice. Everyone hates it. Everyone hates it. Yet at the same time, you know, if, if I said, hey, you're going to be in front of 40 million people tomorrow and half of them have checkbooks waiting to invest would be like, yep, I'm just going to wing this one. Hey, what's up, peeps? So you got to sort of bring some stakes to that. But, but my essence was don't sit here and think your way through it. Like, get the minimal effective dose in a pitch. Right? That's what drew me to mass challenge in the first place was 60 seconds. It was like, what was it? Minutes of pitching.
[00:50:13] Speaker B: I was like, I think in the early years it was super fun too. It was drunken melee. It was like people were wearing furry outfits and stuff that was like wild. And it was great and it was.
[00:50:23] Speaker A: Fun and it was sort of non precious. And I've actually, it sort of stayed front of mind for me, you know. But anyway, my point is you can't think your way to do it. You just got to do it. So I think that the theme here that I really take away and what's going to inspire me beyond this call John, is just like, just, just do it. I have this sticky note that says execution beats knowledge.
I'm trying to get out of my own way and just be like, go do it. Go build it. Have it suck. And then Just do it again. Do it again.
[00:50:51] Speaker B: Yeah, just keep going. You learn more while doing it than you could ever figure out on the whiteboard. Like, imagine the first seven. Like, the first airplane was not a 747. First you got to figure out lift and all the other crap and, like, materials and the basic design and sort of. And then you iterate and you improve and eventually you get to the 747. But nobody's ever, ever going to build something that complex on the first attempt based on you have to build.
[00:51:12] Speaker A: And the only other thing I'll say about this is getting out of the mindset of, like, because we, we grew up in school where it's like, you don't know anything. You've graduated, you didn't, you grad. All that means nothing. I think if we can change the, you know, everything to a verb. Like, you're not. You're not launched. You're just launching. You're launching every two weeks. You're relaunching now.
[00:51:32] Speaker B: You're re.
[00:51:33] Speaker A: You're pivoting. You're. You're never anywhere, but you are on a journey. And so try to solve the biggest problem that no one's solving and then move to the next one and next one and hopefully you get some people who pay you along the way for what you do. You create value and you move on, you know?
[00:51:48] Speaker B: Yeah. Yeah, totally.
[00:51:50] Speaker A: I think that's a perfect place to pause our conversation. I would love to come back for a part two in the future.
[00:51:55] Speaker B: Anytime.
[00:51:56] Speaker A: I just had delight speaking with John Hawthorne. And if people want to go find out more about what you're doing in the investments, what is the best place on the Internet to go search for what you're up to?
[00:52:07] Speaker B: 2L VC. The number two, the letter L, that VC. Or you can write out two lanterns VC also works. And that's our website. It's got a list of all of our 34 investments on there. A little bit about my background, and then my partner, who is better looking, smarter and more interesting than me, Michal Gilonian, she's described there. And then also our associate, who likewise is better looking, smarter and more interesting than me, Lily Toto. She's there, so that's where everybody can check it out. And I want to say before we break up, Stuart, you were by far the most popular of all of the mentors and people with whom we worked throughout all of the years of masschallenge and did such an incredible job donating so much of your time and energy. And like, literally, you've contributed an enormous amount to thousands of startups that came through Mass challenge. So thank you for that and anything you asked me. You know, you've got a default yes right off the bat, so anytime I can help you, you know, you got it.
[00:53:00] Speaker A: That means a ton to me. Thank you for saying that. And I really, I loved our conversation. So thanks, John.
[00:53:06] Speaker B: Anytime.
[00:53:06] Speaker A:
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