Erik Torenberg: Hustle and Flow

Erik Torenberg is hard to put in a box.

When you think of him, what comes to mind first? His investments with Village Global? His time as an operator at Product Hunt? The Venture Stories podcast he hosts? Or the digital university he founded, On Deck?

Often in this newsletter, I write about venture capitalists, creators, and founders: Erik is all of those things, rolled into one. He's one of the hardest-working people in tech, and yet when I spoke with him, I was struck by how low-key he is, how relaxed.

It's perhaps why when I think of Erik — a tech mainstay that moonlights as a freestyle rapper — two words come to mind: hustle and flow. He is someone unafraid to work hard, to take swings, to hustle, but does so in a way that makes you think he barely sweats.

Last month, the two of us sat down to talk about his love of rap, learning from Ryan Hoover, the network thinking that defines On Deck and Village Global, and a few investments he missed.

Brief

  1. Lessons learned from the coach of the Brooklyn Nets

  2. Finding flow in the freestyle rap

  3. Employee 1 at Product Hunt

  4. Building networks at Village Global and On Deck

  5. Missing a COVID-19 breakout, and a controversial security business

  6. Inspiration from Keith Rabois and Tyler Cowen

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Origins

The child of immigrants

My father is from Israel, and my mother is from Colombia. They met at Brooklyn Polytech, became friends, and then started a software company. It was called Microedge and was designed to help charities manage donations.

It was only five years later that they fell in love and got married. They ran Microedge for 15 years together and then decided that their true passion was biking and bought a bike shop. Seeing them do that was formative: it instilled a sense of agency in me, the belief that we're in charge of our destiny, and that we can learn new skills and pursue our dream projects.

Earn your way

I had a lot of admiration for Lawrence Frank growing up, the coach of the New Jersey Nets. What I liked about him was that he grinded, you know? He started his career in the video room and worked his way into a position that, on paper, he had no business being in.

The grinder, Lawrence Franks. WSJ

As a kid, he came and spoke to my basketball camp. I remember one of the mantras he told us: Earn your way, every day.

I went home and wrote those words on a piece of loose-leaf paper, stuck it up on my wall. It's followed me to every house I've lived in since. In the mornings, I'll wake up, look at it, and ask myself, how can I earn my way today?

Freestyling

It was in college in Ann Arbor that I started to get into rap. I was a pretty shy kid at the time. I remember meeting some friends in Detroit that were amazing freestylers. I watched them and thought, man, how cool would it be if I could do that?

I had this feeling that if I could freestyle, I could do anything: speak in front of a crowd, get on a sales call, pitch. I thought it was almost a secret way to grow my confidence.

In the Arena

Rapt

Building the battle

I started Rapt to solve my own problem. I wanted to get better at freestyling but didn't have people to rap with. I thought there should be a streaming service that matched rappers and let an audience watch. This was the same time Chatroulette was popping off — I envisioned a similar product with a different focus.

I enrolled in a Startup Weekend hackathon, pulled an MVP together, and raised money on the spot. Suddenly, I was a founder.

Technical difficulties

Today, live streaming is ubiquitous. Back then, the tech wasn't well-built out. That was the biggest challenge we faced: creating a usable, low-latency product that was fun for consumers to use.

Bringing the bars with Rapt. Crain's

Spitting bars with Quicken Loans

It wasn't what we initially expected, but one of the ways Rapt made money was in employee onboarding. We worked with Quicken Loans, teaching new hires how to freestyle.

The trick to freestyling is to get comfortable with uncertainty. You have to learn to start talking without stopping, and without knowing where you're going to go next. It's like one of those old Road Runner cartoons: you run off the cliff but keep moving your feet. Teaching those skills turned out to be an effective way of getting employees out of their comfort zone and building morale.

Entering the Ecko chamber

After three years, Rapt reached a crossroads. We had a path to building a solid lifestyle business, but I didn't believe it could reach venture scale. But I wasn't ready to let go.

One day, I had the chance to pitch Marc Ecko. Marc founded Ecko clothing and Complex — he's a legend in hip hop culture. We talked for three hours.

I remember him asking me, early in our discussion, are you sure you want to do this?

Of course, I said. I was certain.

He spent the next hour poking holes in the business, then asked me again, are you sure this is your life's work?

Again, I was certain. Absolutely.

Then he spent another hour going even deeper into Rapt's flaws. And he asked a final time, are you 100% sure this is what you want to do?

I realized I wasn't. As founders, we think conviction is the be-all-end-all. Conviction is great, but sometimes, especially after a few years without much progress, you need a gut-check.

I realized that I could apply that same passion I had for Rapt into other areas.

Running off the cliff. VP Photography

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Product Hunt

Employee 1

I met Ryan Hoover through one of Rapt's early users, a guy called Kelly McGrath who used to come on rapt.fm in a panda suit. Over the years, Ryan and I became friends. When I was thinking about what to do after Rapt, I asked if I could help Ryan with his side-project, Product Hunt. It felt like an interesting asymmetric opportunity: worst case, I'd get experience building and develop a network; best case, it could turn into something bigger.

Within months Product Hunt had raised from Y Combinator and Andreessen Horowitz.

Yo

The moment I realized Product Hunt was about to take off was when we featured the Yo app. We found it a few days after it was released; shortly after, it was featured on one of the late-night talk shows. A similar thing happened with Meerkat, we listed it, and then it blew up.

We became the white-hot center of startup activity.

Learning from superpowers

Both Ryan and Andreas Klinger are remarkable. I learned a lot from working alongside them.

First of all, Ryan is the best community and product person I’ve ever met. No one could have built Product Hunt as he did. He's a master of community, partially because he's so genuinely likable. And he's likable at scale.

Andreas is a fantastic hybrid: he's an excellent product engineer, community builder, and in his very own special way, communicator. He’s also hilarious, which is a superpower. And of course, Andreas saw the future of remote work before the rest of the world caught up.

The Product Hunt team including Andreas (center) and Ryan (far right). Medium

With them I learned how to build a community and a company, and learned the benefits of building in public.

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On Deck and Village Global

Thinking in networks

What defines both On Deck and Village Global is a commitment to a networked approach.

On Deck started as a casual dinner series. Then we added a Slack group. And then, a few years later, we launched our fellowships. Today, our big vision is to build "Stanford for the digital age." If Stanford helps students become better citizens of the world, On Deck wants to help people become better citizens of the internet — help them start businesses, build investment portfolios, and build online communities and audiences.

We founded Village Global with similar principles. Ben Casnocha and I had started angel investing together and realized how valuable products like Product Hunt and On Deck were for sourcing companies. The truth is that the startup ecosystem is too large for a handful of people in Palo Alto to cover. Ben and I were consistently amazed by the brilliant people we met we'd never heard of before. That's why the two of us and Anne Dwane founded Village as a network. We don't need to rely on a small group of partners — we leverage the minds and networks of dozens of what we call “network leaders” who we incentivize to source, select, and support companies on our behalf.

First wins

When you're starting as an investor, especially at the early stage, you tend to be more people-driven than data-driven. I was fortunate to meet unusual founders early in our investing. My first angel deals included Scale AI, Rappi, Lattice, and Nurx. In each case, the real outlier was the person.

I think it’s harder to have a differentiated algorithm to evaluate founders — the trick is getting more data. One way to do that is just by having more time to evaluate them, for example by systematically seeing them before they start their company.

In the case of Scale AI, I had initially gotten to know Lucy Guo through a bunch of On Deck events, and was able to see Lucy and Alexandr Wang ship products over an extended period. Even before they settled on Scale — they were working on a personal assistant product — it was clear how brilliant and dynamic they were, and how fast they iterated.

Misses

Forgetting the follow up with Masterclass

David Rogier agreed I had a $5K allocation in the round, but I didn't hear from him after we spoke. I never followed up. I should have been more assertive to make sure it happened.

Courting controversy with Anduril

We had a chance to invest in Anduril, but we worried about potential blowback. This was when the border wall controversy was at its peak. We worried about looking dumb.

The truth is that when you dug a layer deeper, there wasn't anything controversial about Anduril's involvement. That was a missed arbitrage opportunity on our part: if everyone's afraid of looking stupid, those willing to take the reputational risk, and do the research, stand to benefit.

In other words

Erik embodies the most powerful combination: he dreams big and he knows how to harness the most valuable asset in the world — human talent. His position is like Amazon at the 1997 IPO (market cap $0.5B): he's on the radar, but people don't yet appreciate the 1000x upside that's still ahead.

— Jonathan Swanson, founder of Thumbtack (and investor in On Deck)

Erik and I have been talking about how to build a monopoly on talent for a long time. With Erik’s ability to build communities and build relationships…he just might do it.

— Keith Rabois, investor at Founders Fund (and investor in On Deck)

Erik was the first person I told when I wanted to start a company, and he was the first person to commit to investing. He’s since been my first text and has been helpful on every element of the business.

— Dani Grant, CEO of Jam

Erik has an excellent eye for seeing great founders before others do. He’s led our first checks in Roam, RDMD, Trove, and many others.

— Anne Dwane, co-founder & GP at Village Global

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I don’t think a company like On Deck could have been founded by someone other than Erik. He single handedly built out the early community, personally recruited 90% of the team including me, figured out our business model, and serves as a great ongoing partner in scaling this business.

— David Booth, CEO at On Deck

Erik has the “Drake Effect” on people. He brings up everyone around him and sees to it that they all succeed in their dreams and goals.

— Soona Amhaz, GP at Volt Capital

Erik’s ability to build communities at scale is impressive. He’s also one of the more intellectually curious people I know.

— Tyler Cowen

Lessons

Work ethic as inspiration

You either want to be so good at something you make people want to quit because they'll never reach your level or inspire people to work harder.

People from different fields have inspired me. Kobe Bryant in basketball, freestylers like King Los and Eyedea in music. All three reached a level of mastery that makes you want to go out and do your best, whatever your job is.

As an aside, Eyedea is a fascinating, tragic figure. I think of him as the David Foster Wallace of freestyling. He was brilliant from a young age, already a legend in his late teens. He died at 28.

Eyedea, a lost genius. NPR

How to build a community

There are a few key lessons I've learned from both Product Hunt and On Deck.

The first is this: build in public. Transparency is motivating to a community — it gives members something to engage with and creates an audience.

The second: elevate your early advocates. Put in the work to make their lives easier, and make them successful. This takes a lot of manual effort, but there's no way around it.

Finally: enable ownership. Give the community ways to make it their own. With Product Hunt, we encouraged members to host Meetups around the world. We did the same thing with On Deck — we had hundreds of people organizing free events. One of those hosts, David Booth, is now On Deck's CEO.

Investing as a product, not a craft

The ecosystem views venture too much as a craft and too little as a product.

Often, VCs compare what they do to poker — it's about using good judgment to play your hand. But this is a game with an unevenly distributed deck. If you're a firm like First Round or Sequoia, you get pocket aces every single time, whereas if you're starting as an angel, you're working with a two and a four.

You can spend decades trying to get better at playing your hand. Or you can build a machine that gives you better cards. You can build a product. That's what we're doing with Village Global.

Digressions

Mentors

Keith Rabois and Tyler Cowen have been influential, both in their advice and example.

You know, I'm a VC and chairman of a company — Keith's the one that showed that could be done. He's also a relentless winner. I think of him as the Kobe Bryant of VC — he's been in this game for a long time but still wants to be the best. He's not afraid to be great.

I met Tyler through a cold email. He was kind enough to answer, and then a few years later, we met at a conference. Since then, I've been lucky to have fantastic conversations with him about economics and life. Having written every day for decades and developed an encyclopedic brain in the process, he is the living embodiment of “earn your way, every day.”

Tyler Cowen, met through a cold email. Techcrunch

A favorite book

Nonviolent Communication by Marshall Rosenberg. I've written about how life-changing this book was for me. In essence, the author outlines a framework for communication that allows both parties to speak as clearly as possible. I think of it as a fork of the English language — stripping out the things you don't mean to say so that you can speak clearly, unburdened by passive aggression, for example. I've found it valuable for both conflict resolution and just better day-to-day conversations.

The last product he loved

Roam. I'm an investor, and I think Conor is a true genius. He has a sense for the product and a craftsmanship that is remarkable. He's also a great community builder — you don't expect a productivity tool to have a literal cult following.

His fantasy dinner guests, dead or alive

Robert Pirsig, the author of Zen and the Art of Motorcycle Maintenance. It's a book I read every year. It taps into this deep wisdom that often escapes us in modern life.

Pirsig, the inimitable. FT

Marshall Rosenberg, the author of Nonviolent Communication. As I mentioned, his work has had a real influence on my life. He passed away recently. I would have liked to have gotten to know him and talked to him about how we could popularize NVC.

Lastly, David Foster Wallace. He was such a fantastic chronicler of reality; he captured what it meant to live in a certain time, in a certain place. I wonder what he’d say about today. We could all use a bit of sense-making.

~

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Until next time, Mario

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