Now one of America’s burgeoning tech investors, Lucas Asher shares his extraordinary rags-to-riches tale from being homeless to becoming a self-made millionaire.
Lucas Asher made his first million in web development services after teaching himself to code as a homeless teenager. Today, he’s a seven-time entrepreneur and esteemed venture capitalist whose firm, Tower Equity, boasts holdings in over 38 disruptive tech companies, including SpaceX, Spotify, BuzzFeed, Pinterest, Slack, and Eventbrite. As if that wasn’t impressive enough, Lucas is also a singer-songwriter (by the name of El Sueño), a professional skydiver, as well as a Dean’s Circle philanthropist for the Stanford University Earth, Energy, Environmental Sciences, and Engineering Schools. His mission is to employ a million people over his lifetime, accelerate the advent of space commercialisation, and donate 100% of his capital to education, child poverty, and science-related causes.
We sat down with Lucas to discuss the trials and tribulations of being a millennial VC, the biggest mistake investors should stop making right now, and his top takeaways for businesses in the coronavirus era.
Tell us a bit about your background. How did you first get started in technology investing?
I’ve been passionate about computers my entire life. While homeless, I taught myself computer languages by looking at the source code of every website I visited, and became a self-made millionaire in my teens through white-hat hacking and developing front-end applications for companies. Once I made my first fortune, I started meeting computer science students at universities and accidentally became a venture capitalist at the age of 16 by funding my friends’ cool projects. This ultimately led me to start my own venture capital firm called Tower Equity, which now has a fast-growing portfolio of eight IPOs.
In what way has this shaped your approach to investing?
Most venture capitalists and investors, in general, have more of a business background, but as someone who builds their own algorithms, does machine learning, and reads AI papers all the time, I’m able to talk to technical founders and really look under the hood to determine what core technologies would differentiate them from other contenders in the marketplace.
What are the most common mistakes you see investors making during this time, and how can they avoid it?
I think the biggest mistake investors make is assuming that things will go back to ‘normal’ prematurely. Like the famous economist John Maynard Keynes said, “The market can remain irrational longer than you can remain solvent.” And what that means is, just because something is irrational, doesn’t mean it cannot continue to behave irrationally for longer than your logic predicts. Don’t think that what we’re seeing right now, whether it be the COVID-19 pandemic or civil unrest in Hong Kong, are short-term events that will just be over in three months. In fact, you’d be better off expecting it to last three years, not three months. In a recent interview, Marc Geiger, Lollapalooza’s co-founder and former head of music at William Morris Entertainment, predicted that live music and concerts wouldn’t return until 2022. Everyone hates to hear it, but that’s how investors should think. If you’re a smart investor, you need to be thinking worst-case scenario, not best-case scenario.
What about you personally? Have you made any mistakes investment-wise that you regret, and what did you learn from it?
I made the mistake of being too optimistic and betting on a future I wanted to believe in when the world wasn’t ready. The public perception is that technology doubles every year, and this is based on something called ‘Moore’s Law’ (after Gordon Moore, founder of Intel), which states that the number of transistors on a semiconductor, and the computing power that comes with it, doubles every year. That’s why devices today are smaller but more powerful than ever before. As an optimist, I wanted everything to double year after year in terms of quality and value, from rocketry to healthcare to banking – but that’s simply not the case. A lot of things are actually retroactive and get inversely worse every year, not better. So, the biggest mistake I made was investing in autonomy and expecting all cars to be self-driving within one year. Or investing in space and expecting humans to be on Mars by 2020. I’ve learned that you’re better off assuming things will take longer and being prepared for that.
By the same token, I would encourage investors to spot these trends early because getting into a market that’s still in its infancy is half the battle. If you’re in a space that’s mature, the benchmark is already high so you’ve got to enter the market ‘perfect’. If you’re in a space early, on the other hand, you have more time to make mistakes and learn from them – and you’ll need to make a lot of mistakes to be successful.
Read Lucas’s top investment trends to watch in the post-COVID economy here.
If you could give entrepreneurs three lessons to take away from this COVID-19 crisis, what would they be?
Lesson one is if you aren’t flexible (i.e. if you have to go to an office), you will die as a company. Disasters are going to become normal in the 21st century, so you need to have protocols in place where every team is able to work remotely and be adaptive. I’m a big believer in preparation over avoidance. If there are fire drills for how to evacuate a building in an emergency, why aren’t pandemic drills part of our corporate culture? Does your IT department know how to scale remote in the event of a lockdown? If not, it’s unlikely you’ll be able to stay in business in the COVID-19 era.
Lesson two is to never lose focus on what keeps you in business. Google has a ton of so-called “Moonshot” projects, and they have the elasticity to do so because their core product, a web search engine, generates an enormous amount of money. What a lot of startups tend to do is they lose sight of that core thing people will always exchange their money for. If Lemonade is in the business of selling insurance, they should never lose sight of that. And if you do, always come back to it like a ship to its anchor, because that’s what will help you weather the storm and become more disciplined in the long run.
Lesson three is we need to refresh our software as much as we (hopefully!) refresh our outfits. A lot of companies today, specifically in the financial sector, still use native software built in the 1970s and ‘80s before we were even born, and it doesn’t scale. Those companies become reactionary in that they don’t realise their IT solutions and security systems are outdated until after a pandemic hits. So, you should constantly be looking at your software stack and updating your ‘wardrobe’, so to speak, as often as possible. Nobody is too high up to be interested in technology. The CEO has to be interested, the CFO has to be interested, your teams have to be interested – it’s no longer just the CTO’s job. The onus is on everybody to make sure you have the most responsive software at all times.
Looking back, what were some of the biggest challenges you’ve had to face as a millennial VC?
Initially, I couldn’t raise venture capital. No one was giving term sheets to a 16-year-old, so I had to use the revenue I generated from customers as capital for my funding, and learn how to have a profitable business early on. Being seen as ‘too young’ is a challenge because people don’t always take you seriously. They assume that if you fail, you can always go back to college. So, you’ve got to get people to take you seriously by looking at the core metrics – revenue, customer acquisition, and user growth – and becoming an expert in your field.
Another big challenge is recruiting. As a millennial investor, the majority of people you hire are going to be older than you. Hiring experienced executives can be especially difficult because they’re being interviewed by someone half their age in many cases. So again, you have to immediately show them that you have domain expertise, that you know what you’re doing. You want them to look at you in terms of your knowledge and expertise in the subject matter at hand, not in terms of your age or youthful appearance. This is crucial because you cannot grow a successful company without great teams and great executives.
Besides capital formation and recruiting, I’d say everything else is pretty much democratised. Nobody can tell your age if you’re growing your business via emails or phone calls; they just care about the quality of what you’re building.
Deploying artificial intelligence into FinTech. At the moment, I’m leading the coding of a new FinTech ecosystem that leverages APIs to disrupt the Bloomberg data monopoly, while helping consumers make better financial decisions.
Another project I’m leading as CEO, and am very excited about, is a music sharing app called Revo.fm. TikTok has validated my thesis that the next big social media platform will be music-centric. But, whereas TikTok is more about sharing quick 15-30 second videos, Revo (short for ‘revolution’) lets people share their favourite songs and playlists across any platform for free. Music is language-agnostic, so we wanted to build a platform that cultivates intimate music moments between friends in a shared conversation feed. That will be launching worldwide soon, but we’re already experiencing parabolic growth right now.
Banner Photo Credit: Kiana Govind