E680 | Oskar Hartmann, Accumulator: From Beast Mode to a New Angel Investing Model

0:00Welcome back, everyone, to another episode of the UBC Podcast. I hope you know by now that this is a place where we try and reshape how starters and companies are being built and funded. Today, we're joined by Oscar Hartman, a legendary operator turned super angel. From building and exiting companies in Germany, Russia, and Japan, to pioneering one of the most novel angel investment models I have seen, Oscar is flipping the script on early stage capital. In this episode, we unpack his battle with adverse selection, the power of network-based investing, and how his latest venture, Accumulator, is creating a new category in global angel investing.

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2:17Tear down this wall. It's more than just an alliance. This is a union of values. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome to the podcast, Oscar. Yeah, thank you so much for having me, Andres. So, Oscar, let's start right with your focus on or your commitment to relentless focus. I want to ask you because you've said the founder mode is beast mode and you've built more than 10 companies from zero to exit in 25 years. It's not just a mindset. It's a way of life. What does beast mode really mean to you?

3:03I'm still waiting to meet some people that can teach me how to be balanced and have high achievement at the same time. I have not met them so far. I have met Martin Warshawski. I think Martin Warshawski is the best example. he built five unicorn companies and he has seven kids and is a like a family man but what he does is alternation so he goes to beast mode to the u.s for two weeks and then he goes back to the family and he just like alternates between the two which i think is a good model for later stages he's he's more older than 60s i think but when most people i see that build unicorns they are definitely i'm not i'm not sure if it's beast mode or something but if you count the hours it's definitely a lot so yeah that's the only way of life i have scenes of these scheduled meetings saturday evening they schedule meetings on their birthdays they do zoom calls on in their wedding you know like who does that tell me oscar though you've you've you've been on that journey yourself let me hear a bit about and last time we spoke you know you said well right now i'm in a place in life where I have small kids.

4:18So I'm trying to live life differently. And for that reason, I also am focusing right now on investing rather than building. Talk a bit about that. Yeah, basically I was burning out every two years or so, meaning that, you know, you have to go to the hospital, you get like, you have like health care because your nervous system shuts down or something like that. And then you come out and you go beast mode again and then you burn out again and then you it's never maybe that's normal maybe that's the cycle of life but uh yeah it was definitely the worst year for me was 2013 i think where you know i thought it's going to be the best year ever because i sold two companies in 2012 i finally had my big exits i sold the company for 75 million and i thought it's going to be the best year ever and it was the worst year ever.

5:13So my expectations to reality mismatch basically killed my brain because it was very difficult to adapt to that mode. I always say founding a company is like having sex with a gorilla. You know, you are not done before the gorilla is not done. So as soon as you are found a CEO, that's it. You know, the thing happens to you. It's just the thing happens to you and there is so much uncertainty and so much unplanned things. So at the moment, I'm focusing on angel investments because I cannot be a founder CEO at the moment for the first time in my life. I have four kids. So I said, okay, I'm going to be an angel for at least seven, eight years while the kids grow up so they know who their dad is.

6:08they know how I look like and so on and then I'm going to go back to beast mode hopefully so that's my model and I think it's a good model I think rarely people do it because if you think about life life is going to be long right yesterday my wife and I we signed a 120 year pact so we want to be together for 120 years which means we have to do biohacking we have to survive the next 30 years and then there's going to be a lot of innovation. And if you think about this type of frame, then taking seven, eight years off as a founder is not that much. It's not that much. You build a family and then you still have 50 years out.

6:54You can still do it like five more times, hopefully. So I want to be like Warren Buffett. I want to sit 95 years old. I want to still, you know, sit there and like give up the CEO role while not actually giving it up, you know. Tell me though, tell me, just give me some value judgment here, because there's a lot of conversation, of course, around where the 996 and beast mode is sustainable. Is that something that we should be actually saying to our founders that they should go for? And this is the model. this is what you got to do? Or is there something to more work-life balance when you are a founder in a venture-backed startup?

7:40Yeah, I think what is much more important is that people don't stop. Because what happens with 996, a lot of times, people burn out and they never come out. So basically, the midlife stage, like at the age of between 35 and 50, A lot of people have their peak achievements already behind them. So nothing much happens after. And that's a huge loss for humanity. Because these people, just like Martin Warshavski, he's 67. He's disrupting the fertility market. 300 ,000 people were born in his clinics that would have otherwise not been born. And this guy's on a mission, right? And we would not have him if he had burned out at 50 and said, basically, that's it.

8:34Now I want to enjoy life. So the most important thing is we need more entrepreneurs who, after achieving success, keep going. They just keep going and keep going and keep going. You know, there's so many examples. I just spent five weeks in the Silicon Valley. I met like four or five 60-year-old founders who are still building stuff, making things, and they don't need to. If you take the top 100 people in history in science, top 100 in entrepreneurship, top 100 in influence, they have almost nothing in common. They're very different people. But they have one thing in common. None of them stopped.

9:19But they were at their thing until the last days of their life. There was no pension in this group of people. So I think that is the most important thing. And this 996, this goes hand in hand, Andreas, with meaning. There's two types of 996. One 996 where you actually have answers to the why you do this and what is your long-term vision. And it's aligned with you as a human. you have founder what i call everybody's looking for product market fit i'm always looking for product soul fit is this company your soul's purpose you know then 996 is not the problem it's easy easy but people lose meaning and when people lose meaning and they just grind it out they don't they don't know why they're doing it i think it's okay for your first company or so you You know, when you're still young, when you're still figuring out how you, what you are and you're trying things.

10:21But 996 is really easy, really easy. When you are a man on a mission, when you have the project that you are building with your own hands, that you believe is, you know, helping people, bringing joy to people, bringing solutions to people. It's very easy. But when you don't have that, for example, I didn't have it when I was building factory market in Germany. We were building a cross-border marketplace where Chinese factories could sell directly into the European market. And we grew up to 2 million orders per month. But I was in my biggest midlife crisis ever because we were basically selling trash.

11:07The average order, we were basically competing with, you know, like the likes of what is called Temu now and, you know, Shein and AliExpress. And our average order value was like€3.50. And there was a package flying from China to Europe. And when my team created the pop-up store for me with all our best sellers, they wanted to make me happy. And when I entered this pop-up store, my brain said, why are you spending your life on this? Why are you spending your life doing this? That the bunch of useless shit, 5 million products per month fly through the air. Yes. So that is where you really burn out, Andres.

11:59It's like when I do entrepreneurship development, I'm doing entrepreneurship development since 13 years when I created my first scholarship program. I never burn out doing entrepreneurship development. I think that is very important. It's much more important. The technical 996 is not important. What is more important that we have people who become serial entrepreneurs, who keep scaling? Because as you know, Europe doesn't have a problem with unicorns. Europe has a problem with deca-corns, hecta-corns and giga-corns. Because a lot of people just stop, Andreas. They just stop. They say that's enough.

12:38You know, a billion is enough. And then they stop. And then after that, nothing happens. And that's where we lose, that's where we lose so much talent that is so scarce that it makes me, it is very painful for me to observe. I think we lose like half of the founders at the midlife point. Oscar, you've said a bunch here. I think that it all deserves the context of your life, so to say. So let's just talk a bit about your journey. Take us through, you got out of college. What do you do? My first part of my story, I'm a never-ending immigrant. So I was born in Kazakhstan. We moved to Germany when I was seven.

13:21I moved to the US when I was 17. And I just kept moving kind of because I just like this immigrant lifestyle, I guess. I just keep moving. I spent the last seven years in Dubai thinking to relocate to the Silicon Valley. I'm German by blood, if you can say that. And then, you know, I wanted to be a scientist. Physics was my favorite subject. And then I figured out that the people who actually make decisions are entrepreneurs and people who did economics. So I studied at the WHU in Germany, which is a fantastic school where 25 % of all German unicorns came out of this small school, which is quite incredible.

14:04Yeah, basically the only company I ever worked for was Boston Consulting Group. And other than that, I created my first online shop when I was 18. When I came back from the US to Germany, I created the online shop for fitness products, which was the same as bodybuilding.com. I thought that this business model is not very scalable and switched to construction products. So I actually closed the successful online store. Later, Protein.com proved that this business model is scalable to like 50 million in net profit per year. I was three years before Protein.com, but I messed it up because I had this immigrant mindset of, you know, like not being able to hire people.

14:48and then I went into online fashion after university because I said oh wow you know I know online you know e-commerce and I did the VHU so I thought I can build a bigger company now what I had in mind was like a five million dollar company because before that my company reached one million in revenue that was where I maxed out and then I said okay I'm gonna build a five million and just I put seven in the business plan because, you know, and it became a$250 million company in four years. So obviously the business model was much better than, you know, than I anticipated. And it just like that. I grew up with this company and then, you know, sold my first online shop for shoes for 75 million.

15:35And that gave me the startup capital to do more things and to start investing. So since then I have participated in 150 ventures that I either co-founded or I was the first investor, the first angel investor. So this 150 business stories, you know, 43 died. They don't exist anymore. And unfortunately, I spent 90 % of my working hours on these 43 companies. like i really that's what i don't want to do in the future like i it's really stupid to spend all your time on on the sick part of your of your life 14 companies became unicorns one billion dollars and and more you know i was very lucky to pick some of the right business models that i could have several unicorns in different countries with the same business model and I still have a portfolio that is quite large.

16:36I think I'm at 91 companies at the moment and I'm enjoying this. Somehow I became one of the top 20 angel investors in the world by the statistics of CB Insights and Deal Room over the last 10 years. And I thought, oh, wow, if I'm feeling so bad all the time and I'm top 20, how bad must everyone else feel? You know, it really sucks to be top 20.

17:06Tell me, Oscar, because you've now taken. So first and foremost, you have a crazy vision of, was it 100 unicorn companies you want to be an owner of? I want to be a grandfather who has 100 stories to tell his grandkids. I don't want to be the grandfather who keeps telling the same three stories all over and over. I want to have a hundred stories that I can tell, you know. So my dream now is to retire at Stanford, you know. I just did lectures at Stanford and it's like the best quality of life ever. So I want to be at Stanford and I need a hundred stories that I can tell my students and my grandkids.

17:49That's my dream. And unicorns are good stories because they are very bright and they are very meaningful. and they touch the lives of thousands of people. And yeah, so I want to build a collection of 100 unicorns. And you make a great point because in the beginning you set out to build a company, then that company reached 1 million. Then you were hoping you maybe built something next time that would reach five, it reached 250 then. And so on, you've continued through your life. And I think one of your learnings, if I should deduct anything from what you've said here is always dream even bigger.

18:28And you can actually do it if you just bring your energy and build in a different way than maybe what most people do. It took me 20 years to realize that I can almost build anything. if it correlates with my meaning that I give life, if it correlates with my soul purpose, there's nothing I cannot build. And it took me 20 years to get there because I was this immigrant child and our grandparents were always telling us, you have to get a good job. That was like, you have to get a job. And it takes a very long time to... And I think a lot of people, I see some people do it faster. They're like 29 years old and they already dream big and they set big goals.

19:23And I always wonder, there was this Indian entrepreneur pitching me in the valley and he was like 29. And he pitched this crazy vision. And I was like, what is it about this guy that makes him believe he can outcompete like Salesforce, Microsoft? What happened with this? It's always a very interesting question. How can you get to that mindset faster that all the people who change the world are not better and not worse than you? they are the same. Yeah, they just work very focused. Tell me, Oscar, because what you've then dedicated this next chapter of your life to, so to say, is reaching those 100 unicorns.

20:16And you've then looked at the angel model, the venture model, and said, this is how I'm going to do it. Take us through that analysis because you've ended up building something that I have never seen before. And I think a lot when they hear this, they'll be like, huh, that's an interesting model. Yeah, by unique experience, maybe it's how can you turn pain into pleasure? I lost more than$100 million in equity value more than three times. So more than three times, I had equity worth more than$100 million that evaporated because unicorns, they are born and sometimes they also die. And every time that happens, it's very painful.

21:03Sometimes there's people who have only this equity. So I saw people that had literally all their value in their life in one company and then just evaporates for all kinds of different reasons where I believe 75 % are outside of their control. So that was the first life experience that I had. The second life experience that I had was how difficult it is to become shareholder at any unicorn company. It's almost impossible. Almost impossible. It's like literally one in a million companies. And if you just invest in Stanford companies, then it's one in a thousand. It's one in a thousand if you just invest in Stanford graduates, you know.

21:49so it's very so most of angels and most of founders they see one unicorn company throughout their life it's literally if you take the top one percent out of them 99 will only see one unicorn outcome whatever that means to you in during their lifetime so that is a very big so it's almost impossible to find one two martin warszavsky with five it's like top five in history of mankind. Yeah, a lot of investors get very frustrated because they become angel investors and then they see only one unicorn company. And the reason why they invest is they want to be part of more than one thing, right? They want to experience it.

22:33So I said, how can we solve this problem? How can I solve it for me? And how can I solve it for others? And the final click came when I saw that there were$5 trillion of unicorn equity and only$50 billion of secondaries a year, like two years ago. So there was less than 1 % of an asset class that is$5 trillion that was actually liquid, which is like, and a lot of people see that, right? They have no liquidity since 2022. and I said wow we need a liquidity platform for the unicorn asset class and that will allow all of us who have equity in unicorns to solve liquidity but also to become shareholders of more success stories so I created a share pooling fund where you can become an LP by pledging equity in one unicorn company against a portfolio, a very diversified portfolio of unicorn companies.

23:39In order to make this work, I created the community of the best unicorn founders and unicorn angels. We created the community first and the community is the gatekeeper of the fund. We decide as a community, we select the companies that we would like to approach with this offer. Then we proactively approach and say, hey, you have$100 million of equity in what company won. Do you want to use some of it and become an LP in a portfolio of equally great companies? It's quite a good value proposition to a lot of people. So we are at 300 million AOM now with zero cash. So basically, we pool, and then whenever we have an exit, we share the proceeds, right?

24:26We had our first exits now and we share the proceeds. So it's improving liquidity for everyone. And now we have also cash. We can also give advance cash, liquidity. Every time somebody joins, we can give up to 20 % cash. And tell me, do you approach investors in unicorns or founders as well or only founders? We approach private people who are not funds. So it could be an angel investor, the first angel investor or the founder. There's more angel investors than unicorn founders. So I would say it's 60-40, 60 % of the people are early angels and 40 % are unicorn founders. Unicorn founders have a much higher concentration risk usually, right?

25:15They have usually much bigger equity packages, not diversified. And also unicorn founders always believe that their unicorn is the best of all unicorns. I think angel investors are very easy to convince that diversification makes sense. All of a sudden, you own 30 million in Rippling or Canva or whatever great company. And then you say, oh, I'm going to take 20 % of my stake and do secondaries. and I want to take 20 % and put it into a diversified fund of private tech companies. Tell me a bit about the analysis that kind of got you started on this journey because I think you made a pretty interesting one.

26:05Yeah, I mean, there's analysis and what gets you started, Andreas, is always emotions. So the emotion was, I will die and I will not achieve my dream. That was my first emotion. The second emotion was, if I want to achieve my dream, I need to do 1 ,500 investments like Fabrice Grinder. And that means I will have 400 bankruptcies. Way to play rounds, founder fighting. Like when I thought about this, my head exploded. I'm like, there must be a better way. that is statistically what i would have to do with my current track record to achieve my targets and the last emotion i had was the emotion of i have a never-ending fomo like in ai now how can you know it's so painful you're not there and you're not in this and everything is growing all these important companies are coming up and you want to be part of the important companies of the decade, right?

27:12If you were not part of Airbnb and Uber in the last decade or before that. Yeah, so FOMO makes me sleep really badly. So I said, I want to sleep well at night. And the only way I can sleep well, if I have a portfolio of 150 companies that all have a good chance, that means they are already at a billion and they have a very good chance that they will become the most important companies of the decade. to come yeah so that were the emotions and the analysis obviously everybody knows the numbers we have 1500 unicorns in the world out of which half are not really unicorns they are corpses or fake unicorns or dead zombie corns there's something else but there's about 750 companies a lot of which have been funded in 21 that have raised too much money that have raised more than a billion dollars if you raised more than a billion dollars and you are unicorn it's i guess it's not the big achievement in terms of value creation and there's a lot of companies that have almost no revenue and now you know almost so there's a lot of buy and build type stories all of a sudden vcs thought that they can build companies and drive them to ipo they don't need founders anymore.

28:35So there's a lot of this VC type made for IPO companies that have no real founder. So the remaining 750 are really, really valuable companies, I think. And we don't know. The sad part, Andreas, the saddest part of my analysis was me understanding I cannot predict which of these companies will become HECTA and which will become GIGA and you can sometimes predict which ones will be wipe out right I kind of predicted the you know wipe out of VFOX and some other companies but it's easier to predict the wipe out than to predict who's gonna you know who's gonna be irrational enough to be like Brian Chetsky from Airbnb this guy he's at 150 billion and he's saying for us at Airbnb, it's day one.

29:32We are a startup. We're going to grow 10. Like what is inside this person's mind? Like where? 150 billion he's claiming it's day one, you know, so. Then tell me also because you have a very special approach to how you use the community. It's not just Oscar Hartman's fund and you just do your own thing and you employ a bunch of principals, but rather you employ the community. Yeah. So I think I just saw 150 stories. That's not even scientifically enough to make any conclusions. So I get at people who made more than 10 ,000 investments all over the world and collectively have invested in more than 300 unicorns.

30:22And we built a community first before we started to do anything. And luckily, you know, people like Fabrice Grinder joined, and then Stefan Glentzer joined. We had like the, in Germany, we had Philippe Dames, Philippe Meerman. We had the amazing angels from the top, Avishai from Vicks in Israel joined, and then Jose Marine from South America. And all of a sudden, we had this mastermind that had like a collective wisdom to make decisions. And I have only one vote in the entire community like everybody else. The only people who have two votes are the people who are already LP. They have skin in the game.

31:07They have skin in the game. I'm also an LP, obviously, and then that's why I have two votes. And the community idea is very simple. when you look back and reflect on your track record, what you realize is that not people become successful, but communities become successful. So I was in my life part of some bad communities and some good communities. For example, when we were immigrants, we had this weird community where we would fight all the time. And then, like, people would literally call and tell the location, and you had to run there and fight, not even knowing who is wrong, who is right. And the culture of this community, I realized that this is going to end badly, like my grandmother used to say.