Mahbod Moghadam on leaving Genius: ‘I had started getting on people's nerves after we raised our Series A.’View transcript
A lot of stuff that I've done in life I'm ashamed of," says Mahbod Moghadam. "Every day Facebook gives you your old posts. It gives you your memories and I always scroll through them. Some of them I'm just like, 'oh my God, why did I say this? Delete, delete, delete.'"
In the era of social media, of course, things never truly go away. That includes successes, like Moghadam's role as co-founder of Genius, which has grown into one of the largest hip-hop sites with 100 million monthly users. It also includes shortcomings, like his removal from Genius after writing a series of inappropriate annotations on the site that went viral in 2014.
In this interview with Thinknum's Greg Ugwi, Moghadam candidly recounts his highs, like working with investors Paul Graham and Ben Horowitz, and his lows, like starting a fake beef with Facebook CEO Mark Zuckerberg. He talks about getting Genius off the ground — and why he was asked to leave it. And he says he "really thinks" that Genius's next CEO will be Kanye West. Moghadam even gave a taste of his freestyling skills, rapping about why West is right for the position. (Check out the clip above for that; the full recording of his interview will be posted soon, but we've released the entire transcript below.)
When Moghadam started Genius — then known as Rap Exegesis, then Rap Genius — with fellow co-founders Tom Lehman and Ilan Zechory in 2009, he didn’t have a tech company in mind. It was CEO Lehman’s idea to make an entire media company out of a site that posts annotated rap lyrics. The strategy worked: to date, Genius has raised $77 million.
Since Genius, Moghadam co-founded online encyclopedia Everipedia, a blockchain-based competitor to Wikipedia, which he left in 2019. He’s now an angel investor, and serves as the chief evangelist at Ozone, a startup that rewards users for letting it collect their internet data.
From Rap Exegesis to Genius00:00:00
Greg Ugwi: Welcome to the second episode of the Business of Business interview series. I think the easiest thing is if Mahbod, you introduce yourself.
Mahbod Moghadam: Yeah, thanks for having me on. I started two companies, Genius, formally known as Rap Genius, which tells you the meaning of lyrics, and then I started Everipedia, which is like Wikipedia, but easier to use, more inclusive. Then also you get cryptocurrency for writing the articles.
Greg Ugwi: Both companies have raised north of $100 million, so they've definitely been very successful. Rap Genius in particular, you say it's now Genius. I think it's probably the biggest hip-hop site, and that's where I'd like to start with the questions. For instance, they have 1.5 million Twitter followers, 3.9 million Instagram followers, so it's a huge site.
You started Rap Genius as an art project. How did it go from an art project to being the monster it is today?
Mahbod Moghadam: Yeah, at first it was just for fun. I guess maybe the CEO, Tom, had a bigger vision, but I wanted it to turn into a coffee table book. That was my big dream. I didn't even know how you started tech companies. Tom had actually built some other apps too, and he was trying to get into Y Combinator. Y Combinator actually started at pretty much the same time that we started Rap Genius. So we applied to Y Combinator and we got rejected. Then for some reason, them rejecting us made us start to make it more seriously. Tom was working at a hedge fund and he started working only one day a week so he could spend the rest of his time working on Rap Genius.
Then Justin Can wrote a blog post about us and I met with him in San Francisco. He told us to reapply. We reapplied and we got in. Getting into Y Combinator was the big, big change, at least in terms of lifestyle. Mentally we had already started taking it seriously before that. Believe it or not, one thing that made us start taking it very seriously was the movie “The Social Network.” That came out about a year after we started Rap Genius and it was crazy watching these people trying to put together a website. It kind of felt like we were watching ourselves. So that movie mentally made both Tom and I start to take the site a lot more seriously.
Greg Ugwi: As you said, Tom was working at DE Shaw. Ilan was working at Google, and I think you had gone through law school. I think, as you said, you failed the California bar. So how did your friends react? You’re Yale alums and you're starting a rap site. Were people laughing at you? Were they like, "oh yeah, this makes sense," or were they like, "this is ridiculous?"
Mahbod Moghadam: Well, early on, a lot of people thought it was ridiculous. No one thought it could become big. Honestly, we didn't even think it could become big. The way that we realized it could become big is we started getting Google search traffic. Then Tom did some research and he found out that one of the biggest words that people search for on Google is lyrics. So before, when we started it, I never thought we'd get traffic from Google. I thought we'd be more something that just people get from browsing, but then our traffic started to explode because of lyrics.
That's when we started taking it seriously. Before that, a lot of people thought that we were just kidding around, especially other Yale people. Then, once we started to get media attention, there was also the issue of I'm not white, but Tom and Alana are white. Tom is the CEO. He's as white as you can get, so people are like, “why is this white guy building a rap website?” Back then, I used to defend us. I'd be like, “all right yeah, Tom is white, but we're not only trying to build a rap website.” We started with rap, but eventually we want to start doing poetry, the Bible, Shakespeare.
Now, I'm parroting those early critics. The thing that's changed is the site is no longer trying to do the Bible and Shakespeare. We've basically doubled back down on only music and really the de facto, it's mostly hip-hop music. It's like 90% hip-hop and 10% pop, but even the pop artists who come on, like Billie Eilish, are pop artists who are more connected with the hip-hop sound.
Greg Ugwi: You have a law school background. So when you're coming up with the product, do you think there is some element in the back of your mind where you're used to analyzing each word in the court of law, and then you bring that same mindset to hip-hop? So there's some creativity angle where you look at hip-hop from a different lens and that's how you had a breakthrough at Rap Genius, or do you think it was more like you were literally just explaining the camera online about Jamaican shirts? Do you think there was a deeper element to it, or do you think it was more just chance?
Mahbod Moghadam: I don't think law was the inspiration as much as religion. What I thought of is it's like breaking down the Bible. That's why the original name of the site wasn't Rap Genius. The original name was actually Rap Exegesis. For about six months it was called Rap Exegesis. I remember a lot of people got upset when we changed it to Rap Genius. The lead singer of Vampire Weekend, in an interview, he was like, "I don't know why they changed it. Rap Exegesis was the perfect name." That's basically what we were trying to do. We were trying to do exegesis of rap lyrics as if it were the Bible, as if it's a holy text.
Greg Ugwi: When you were first starting out, one way you grew was searching for everybody, like DMs on Rap Genius on Twitter and replying to them. So that seems like something, if the CEO of a startup is doing that, that is not something that scales. My feeling is you don't believe in scalability. You believe in getting in there and doing the work.
Mahbod Moghadam: Scalability is a myth. Maybe this is the reason why I'm not good for later stage companies. I'm good for early stage. My philosophy is I think largely scalability is a myth, especially when you want to get contributors. One fact about community sites, there's very, very few contributors. Wikipedia has a couple thousand contributors. That's it.
You don't need scalability. If Wikipedia was for profit and I was the CEO of Wikipedia, any one person I can meet and get them to write, that's a big chunk of the entire population of the contributors. That's what I was looking for. I wasn't doing the stuff like replying to the Twitter mentions in order to get people to look at the site. I was more trying to get the hardcore users.
One part of my philosophy is one hard core user is worth 100 casual users.
Leaving Genius and beef with Mark Zuckerberg00:11:50
Greg Ugwi: There's a law of the internet where, with any user generated site, one percent of people create content, 10% of people create content and comment, and then 90% of people don't even log in. They just read. So yeah, okay, that's a very interesting idea. You hinted at this. As your baby grew, you left. Kara Swisher said you were fired and you said you resigned. How did it end at Rap Genius?
Mahbod Moghadam: Well, there was the approximate cause — I got into trouble. I did some annotations that people thought were questionable. I still don't think they were that bad. It was kind of a fake news thing. They started putting words in my mouth that I hadn't said. What are you going to do? But then that was kind of the lead up. I had started getting on people's nerves I think after we raised our Series A.
The first thing I did, again as a joke, a lot of these are just me trying to make jokes and then suddenly everyone gets all serious and tries to take it out of context. As a joke, I was trying to say that we have beef with Mark Zuckerberg.
I made it sound like Tupac versus Biggie, because we went to Yale and he went to Harvard. But that was the first thing that I started to get into trouble. Ben Horowitz gave me a stern talking to and stuff. These kinds of antics were how the site grew. We were doing this weird stuff, saying weird stuff on the internet. I think that's how we were able to even get to Series A. So it seems like things change. The thing I was just talking about, me not believing in scalability. When you're early stage, you don't want to think about scalability or mind your words. You can be kind of crazy, because what really matters is being passionate.
I was very, very passionate. I was extremely passionate for when we started Genius. But then once you get over $10 million, you need to start hiring people full-time, it starts to become more important to be professional. I'm not good at being professional. I don't want to be professional. One thing that's interesting, I left both of my companies right when we moved into a real office.
Now there's Coronavirus, so maybe my third company I won't have to leave because we're never going to move into a real office. But for me, both times, as soon as they're like, "Okay, we want you to show up to this place in the morning," I was like, “okay, this is getting to be too much for me.”
Greg Ugwi: It almost feels like you were canceled before being canceled was cool.
Mahbod Moghadam: Yeah, I started it.
Greg Ugwi: Because now, Kanye West, Elon Musk, Travis, there's room where people can have big companies and not have a filter, and smoke weed on podcasts. It feels like, in your case, you got hammered.
Mahbod Moghadam: Yeah, well there was something that doesn't exist anymore. It was called Gawker. Gawker, they had a Silicon Valley website called Valleywag.
There was this one writer of Valleywag who just decided that I'm public enemy number one. I think that he did have a lot to work with, because a lot of tech founders, even if they're weird inside, they won't say weird things on the internet. They'll usually keep it quiet. So I was seeing a lot of stuff. I was giving him material to run with. Then Gawker, I wasn't their only enemy. They had a lot of powerful enemies, and then the one who finally put them out of business was Peter Thiel.
So shout out to Peter Thiel. He was going to be Genius's Series B investor. I always wish, I'm always thinking what if. What if he had been our Series B investor instead of Dan Gilbert? I think I would have preferred that just because, even though I've never met him in person, I have a lot of respect for him.
'I just loathe the upper class'00:16:07
Greg Ugwi: I grew up in Lagos and I grew up pretty poor. You go to school and you meet all kinds of rich people. To some extent it's kind of cool. They have these big houses and things like that. I didn't really start understanding rich people until I started understanding just how scared they are. It's paralyzing fear.
Even with many founders, as you start — even their thoughts. They are not allowed to think freely. Almost everything they do, the reason they have a big house and all this is because they are scared out of their mind. It's just an interesting thing to me. I do think there is an element where I mentioned, like Kanye West, Elon Musk, or many people have no filter. You can be rich and not be scared. Anyway, that's something I think about.
Mahbod Moghadam: It's true. I'm basically a Marxist. A big reason I'm a Marxist is I just loath the upper class. A lot of them, they tend to be like you're saying, very cowardly, especially a lot of executives of companies. They're cowardly. They just don't want to rock the boat. But then interestingly, a lot of tech founders come from rich families.
Even though 90% of rich people just become cowards, 10% of them, it gives them actually the security to be able to take risks, kind of like what Elon Musk is doing. The founders of both of my companies, they have very rich parents, kind of like Mark Zuckerberg. Mark Zuckerberg's dad is one of the most well known, wealthiest dentists in New York.
So I don't know. I'm always changing my mind how I feel about the rich, but overall I hate them.
Greg Ugwi: I wouldn't say I hate them, but I try to understand the people. Where you get money, it's kind of like Biggie said, "More money, more problems."
Mahbod and Adbus rap00:18:08
Greg Ugwi: You have a passion for rap. So I was wondering, I think now would be a great time, would you mind just rapping for us?
Mahbod Moghadam: Of course, yeah. We should do a freestyle.
I was actually watching this interview I did back when I was still at Rap Genius where she asked me to do a rap about DNA.
Greg Ugwi: Right. So maybe you can rap about bitcoin or something, I don't know.
Mahbod Moghadam: Well, I can rap about why Kanye should be the CEO of Genius.
Greg Ugwi: Sure, let's do it man.
Mahbod Moghadam: Should I put on a beat?
Greg Ugwi: Yeah, that would be awesome.
Mahbod Moghadam: All right, hold on. I'll put “The Next Episode (Instrumental).” This one is a good one. All right, here we go.
[raps] Yo, Kanye, you redesigned the app. We want you as a CEO. You're the man. You ran for pres. You should have won, but they didn't understand. The old heads, they wanted to vote for the Octogenarian. That wasn't cool, but you are a vegetarian. You're so healthy with your words and your thoughts. When you designed the app, you showed us the clout. You invited us to your engagement party. Yeah, it was hot. We're chillin' with the Kardashians. We want Kim to be the pres of Genius.
Yo, we could finally get verified. Annotate the lyrics, people be terrified by the genius that you speak in your rhymes. Yeah.
Greg Ugwi: I love it, man. That's awesome. Hopefully Kanye West sees it.
Mahbod Moghadam: I hope so, yeah. Well, one thing I love about Kanye is you see these videos of just random teenagers coming up to him and they're like, "Kanye, I can rap." He always stops and listens to them.
Greg Ugwi: Actually, in our company, there's a guy Abdus. He's one of our best BDRs. So he's not a professional rapper, but he raps. He loves Rap Genius and he would like to rap for you and get your feedback. So I'm going to step to the side and he's going to do his thing.
Mahbod Moghadam: Yeah, let's do it. Let's do it. Spit the bars.
Abdus: Let's get it. Let's get it.
Mahbod Moghadam: What's good homie?
Abdus: Not much, man. How's it going?
Mahbod Moghadam: Chillin, chillin. Hopefully we can annotate these freestyles later.
Abdus: Yeah, I'm actually going to spit a few bars from one of my latest singles that I actually already threw up on the Rap Genius. So after I spit a few, maybe some people can check it out and annotate it.
Mahbod Moghadam: Amazing. What's your username on Genius?
Abdus: I think AbdusDaMan. D-A-man. Yeah, I'll send the link out, so no sweats. So let's get it. Let's get it. All right, to get the show started. Alpha baby.
Mahbod Moghadam: Amazing.
Abdus: All right, got to get comfortable in the studio over here. Play my boombox. Okay, okay. I'm going to start from the beginning. Yeah, yeah. Shout out to Brooklyn and Queens.
Mahbod Moghadam: Ye.
Abdus: [raps] Dr. Philly, let's get it. Yeah, yeah. We got the alpha, no beta. Real time, big data. DoorDash, no waiters, the world, some haters. We got the alpha, no beta. Real time, big data. DoorDash, no waiters, the world, some haters. Took the L in Philly and the 7 of Queens. Flipped the D to State Street, living the American dream. Got three extra terms on the company's investment. Prices freeze up like moratoriums on rent. Yeah. Bury emails under the hill like Clinton. Google shut me down, I can't stay smitten. Relying on your gut, who you kidding? I run my options tight like Jason Witten. Mm-hmm. Goldberg. We got the intel, don't play. Forecast til' May. Architects wrote the code. Don't get in the way. The quest for alpha on it everyday. I don't shit where I sleep, but I lay where I lay. Mm-hmm. Short long the block, strutting down Grand Central. Life can be sequential, so I make it rain torrential. Trades keep going while they on the clock, and your dusk settle, look who's on top. Your boy spot. We got the alpha, no beta. Real time, big data. DoorDash, no waiters. The world, some haters. We got the alpha, no beta. Real time, big data. DoorDash, no waiters. The world, some haters.
That's just the first verse. We're real wide with it. You can catch us on YouTube. We're out here, 5th Avenue, representing the Business of Business. Let's get it.
Mahbod Moghadam: Ye. That's brilliant, man. I love how you talk about tech and finance and stuff.
Greg Ugwi: Exactly. We sell a lot of data to hedge funds, so he made the song about our markets.
Mahbod Moghadam: Juicy J will love that. Juicy J had a music video ... So I was in his music video because the song was based on startups and stuff, so he wanted some startup people in the music video. So we've got to show this to Juicy.
Greg Ugwi: That would be awesome.
Kanye — the next CEO of Genius?00:24:14
Greg Ugwi: Let's say you don't get Kanye West. Who else do you think can take Genius back to its former glory?
Mahbod Moghadam: Yesterday I put out an article where I put my top five, actually top six choices. So number one is Kanye. He designed the app. We're very close to him. He's a legend. He wants to create a Y Combinator for rappers. I think Genius could be the platform. Maybe he could make Genius into the mother of all record labels. It's for record labels, but Y Combinator is for VCs. It makes all the other ones act straight. So he's my number one choice.
Number two is Rob Markman. Rob Markman is the guy who replaced me at Genius, who made Genius what it is. He's friends with all the rappers. He's a rapper. He shouldn't just be the creative director. He should be the CEO, because de facto he's already the CEO, and he should get more equity.
Third, I put Steve Stoute. Steve Stoute is a legend. He was Nas and Jay-Z's manager. Very close friends with Ben Horowitz, very powerful in tech. Then he's on the board of Genius, so he's the only executive of Genius who already is connected with hip-hop. So I think he could be a good CEO.
Fourth, I put Worldwide Wes, legendary sports manager, also very connected with major rappers. He's the one who got us our series B investment. He's friends with Dan Gilbert. He talked us up about it. Also, I got him into bitcoin. This was back in 2014. So maybe he could make Genius adapt over to crypto like how Everipedia is.
Then for my fifth choice, I put Londell McMillan. Londell McMillan was an attorney at the firm I was working at. I was representing Michael Jackson and Prince and a lot of major music industry figures. Now he runs The Source.
So when I found out he's running The Source, I'm like “dude, if you're into hip-hop, come run Genius. Genius is 10 times bigger, 100 times bigger.” Then honorable mention, I put Diddy. Diddy, we have no connections, but I love Diddy. If Diddy was the CEO of Genius, again, such a legend.
Greg Ugwi: Yeah, hopefully Kanye West sees it. As I mentioned, I do this show with my roommate from college who is also a VP of marketing. Boris has a story about Kanye West, so I think Boris is good to hop on and tell his story.
Boris: What's up Greg? What's up Mahbod? Thanks for having me. So I used to be the general manager of a couple of hotels in Colombia. That your dad owns, specifically in Cali. So maybe you guys have heard of the Cali Cartel if you've seen Narcos. So these were big five-star corporate hotels, so we had a lot of high profile politicians and presidents and ex-presidents and this kind of thing, but none of that compared to just the mayhem of having Kanye West as a guest. So he arrived, I guess that must have been around a year and a half ago, and immediately there were 700 people camping out outside the hotel trying to see him, say hello, get a picture, whatever.
As the word seeped out, my phone just wouldn't stop ringing with journalists trying to find out if it was true that he was in our hotel and how they could get a hold of him and whatnot. Eventually I got a call from the mayor of Cali telling me that his grandkids were big fans and he'd like to have a meeting with Kanye. He'd like his grandkids to meet Kanye. So I had to sort of set this up. Meanwhile, at this point, Kanye didn't have an Instagram account. For whatever reason, he started the account and his very first post you can check it out right now. They're still there. The very first post on his feed was in Cali. They were little doodles he made on the hotel notepad and pictures he took of the city and whatnot.
So anyway, eventually the mayor shows up with a couple of Columbian kids, and they put up a music and dance show for Kanye. You can see it on his Instagram account. Then the end of the story is he told us he wanted to go see the night life. He told us he wanted to go see the city at night and go out and hear some live music and party and whatnot. So I was just scared about what it would be like for this guy to leave the hotel with all these people camped out outside that were just going to swarm his car. So I called the head of the city police and he sends this whole motor bikes and police cars. There must have been seven police cars ready to take Kanye out to party, and then he canceled. So I didn't get to party with Kanye.
Greg Ugwi: Maybe he will if he becomes the CEO of Genius.
Mahbod Moghadam: When was this?
Boris: This was towards the end of 2018, a little less than a year and a half ago.
Mahbod Moghadam: Yeah, Kanye is capricious. When we were hanging out with Kanye, I was actually very frustrated because the two things I wanted him to do, one was I wanted him to invest in Genius, just like we had Nas and Pharrell and Eminem invest. Two, I wanted him to use Genius and get a verified account, and he never did either one. He didn't invest because Ben told us he'd invested in Turntable FM, which is a really cool music app, but it ended up shutting down. So that made him not trust tech investments. I think the reason he didn't want to get verified was because he was like, “Genius is cool but it's kind of weird.”
He sent us the redesign to the app. Basically the message he was trying to send in the redesign was that we should only do music. He was kind of frustrated by us wanting to expand into literature and stuff like that. He's like, "No, just focus on rap music." But since 2018, I think he's changed a lot. I think campaigning for president, he didn't win, but I think it was good for him psychologically. Seeing him on the Joe Rogan show, I absolutely loved it.
The responses he gave at the end where he's like, "What are you going to do if a war breaks out?" That's really showing maturity. A lot of people think of Kanye the same way they think of me. They think of us as immature weirdos, but now he's trying to show some maturity. Maybe that means someday I'll start being mature too.
Mahbod for president00:31:33
Greg Ugwi: So you said you plan to run for president someday, because I think you're the first one in your family to be born in the US.
Mahbod Moghadam: I would love to. I definitely want to get into politics, especially since I moved to New York. New York, I've always loved being here. I went to college in Connecticut. I was still connected with the east coast, but there's a reason why California is so much more successful economically than New York. I want to bring the California model back to New York because I think the people on the east coast are better. There's more sophisticated people. That's the reason I moved back here, but there's a lot wrong.
One of the things that's wrong is the politics. Politicians everywhere drive me crazy, but politicians in New York drive me crazy. So yeah, that's my dream. Someday I would love to run for office starting in New York.
Greg Ugwi: You talked about raising money from YC or trying to raise from Kanye West, but now you yourself are doing angel investing. First of all, why did you flip over to the dark side and what kinds of things do you invest in?
Mahbod Moghadam: Well, these days my investments are basically all crypto. I'm just so focused on crypto. I think bitcoin and Ethereum are going to be huge, but I did a lot of angel investments in Y Combinator companies. One of them was Coinbase, which is again crypto connected. They're going to IPO, so I'm very excited about that. But then all of the other companies I invested in were gig economy. I'm a big, big believer in the gig economy. I think the gig economy is kind of a preview of the crypto economy. It's basically using the internet to make work more of a sliding scale, more of a flexible sliding scale thing.
The gig economy I think is huge. Before coronavirus, it got unemployment down to basically zero for the first time. That's just a preview of what I think crypto is going to do. The company I'm working on right now, Ozone. Ozone is supposed to be getting crypto for watching commercials. Basically people get new and instead of taking all the money like Mark Zuckerberg, you can get some of it back.
I think that's the whole purpose of crypto. The purpose of crypto, half of it is what Everipedia is doing and I want Genius to do, where you give crypto to the creators. Then the other side is what Ozone does, which is giving crypto to the consumers. Once this happens, it's going to be the crypto economy. Everyone can work, children can work, where you live, immigration is not an issue. Anything can be done from the computer.
The gig economy was kind of the preview of that. It's not as extreme, but just the fact that it made working more flexible, it allowed a lot more people to work. So I invested in Yoshi, which is kind of like Uber for car maintenance. They come and they maintain your car. I invested in Helper, which is kind of like an app for childcare. I'm still a big believer in the gig economy, but then that can be changed. I think that can be altered with crypto as well. Maybe you can find ways to use crypto to make the gig economy even more efficient.
Why great founders should write code00:35:34
Greg Ugwi: You believe basically to be a great founder you have to write code, but you yourself didn't write code. So there's something there.
Mahbod Moghadam: I'm a big hypocrite, but the CEOs of both of my companies did write it. The CEO of Genius built Genius, Tom, and then the president of Everipedia, his name is Sam, he built the original site there too. Tom, in some ways, he's a good CEO because he did what I'm saying. He built the product himself. But an interesting thing is Genius isn't really that high tech anymore. We're kind of starting to turn into a media company. The main thing that's popular is the YouTube channel. The artists go on and we do interviews.
We're trying to build some high tech things. We just launched Genius Live, which is a way to do interactive concerts for artists. Before, we were trying to do really high tech stuff. When we were trying to do not just rap but everything, we launched something called the web annotator. It allowed you to put explanations on any web page. That was really, really complicated, but then it didn't take off.
So that's why I think, at this point when you're starting a company, yes, the coder should be CEO. But at this point with Genius, tech is not the main thing we do anymore. We're more just a part of the culture. So I think, at this point, we need a CEO who is more of a cultural leader. Tom can't do that. Tom is an amazing coder. He's an amazing engineer, but I always think these rappers come into Genius's office to do the interviews and they meet the CEO. He's this nerd. He's like, "Hi, I'm Tom. How's it going?" They're like, "Who's this guy?"
I don't code, but I think I'm good along with someone who codes for an early stage company because I can be passionate, I can bring the traction, and then the person who codes can build it.
But then once it gets later stage, I start to become a liability because I say a lot of crazy shit. But then the coder guy kind of becomes a liability too because eventually it doesn't matter if you know how to code. It's more important to have authority and to have respect.
Greg Ugwi: Let's say I'm trying to raise funding. I'm trying to raise from Dan Gilbert. As I said, your companies have raised around $40 million. Now you're an angel investor, so do you have advice for founders that are trying to raise funding? How do you go about it?
Mahbod Moghadam: Well, if you want Dan Gilbert's money, the best thing to do is to be connected with Detroit.
I think that's one of the reasons we were able to close with him is because Elon, the former president of Genius, he grew up in Detroit. So Worldwide Wes told Dan Gilbert, "Yo, this kid's from Detroit," and that kind of got his attention. If you want my money, what you need is you need a product with traction. That's the most important thing for me. Genius, before we got into Y Combinator, we already had one million monthly uniques. So for consumer websites, that for me is the golden number. One million a month.
Before you get one million a month, don't look for raising. For enterprise stuff, it's a little bit different. Enterprise stuff I think basically the question is are you already making revenue. Then you just need to pick — I'm not enough of an expert. Maybe the correct revenue is like $100K a month, something like that, but you need some legit revenue and then you go after investors. If you go after investors before that, even if you're going to be successful and even if you are able to get money from the investors, you're still not going to get a good deal because the investors will have too much leverage and they're going to ask for too much equity.
So if you're going to be successful, why not just stop until you have some leverage and then you can get a better deal. If you're not going to be successful, you're just trying to sucker the investors out of some money, okay don't take my advice, but that's not the kind of life I want to live. Even if you're successful, for me, even if you're able to raise money, I don't think the money is as important as just doing something that is actually valuable in life. It's never happened to me, knock on wood, but if I raise money for a company, an investor gave me millions and I failed, I don't know what I'd do with myself. I'd be miserable.
Both of my companies raised money and they succeeded. Then I meet all of these people who raise millions of dollars and they fail, and they seem to think it's okay. There's this weird cult mentality that they say failure is good. If your company failed, you should be proud of that. It's like, no you shouldn't, because there's people ... You shouldn't raise money until you're already guaranteed success.
That's basically how I feel. One time, I saw some numbers. It's really the MBA people. If your CEO has an MBA, you raise money and you fail.
With Y Combinator companies, if the CEO is non-technical, the failure rate is like 95%. If the CEO is technical, the failure rate is much, much lower. It's like 50%. So it all connects.
Greg Ugwi: I think Elon Musk recently said the problem with business in America is there's just too many MBAs and there are not enough technical people.
Mahbod Moghadam: Exactly.
Greg Ugwi: I think in Silicon Valley, there's this idea of, if you fail — basically you learn more from succeeding. Sometimes you learn more from taking risks and sometimes things won't go well, but in the long run you want to succeed. Anyway, so I tend to agree.
Working with Paul Graham and Ben Horowitz00:42:01
Greg Ugwi: You worked with many great investors. You worked with Paul Graham, you worked with Ben Horowitz. How was it? How was your experience? I think Ashton Kutcher funded you guys, or was it more for show?
Mahbod Moghadam: Well, Paul Graham is a funny guy. The story I always tell about PG is he insisted that we change the name of the site to “Definator.” He's like, "Guys, I got it. You've got to change the name to Definator." We were like, "PG, that sounds like defecator." People are going to think we're calling our site “Defecator.” So PG, on the one hand, he's got a lot of wisdom. He kind of started Silicon Valley. I remember when Mark Zuckerberg came to YC. He was kissing PG's ring. Everyone has so much respect for him. But in terms of modern things, he just doesn't use the internet enough. He should be using the internet more.
One funny thing about PG is he always wanted someone to build a better version of Wikipedia. So Everipedia is kind of PG's idea. Ben Horowitz on the other hand, Ben Horowitz is very, very valuable. Especially with Genius, he was so valuable because it was his dream come true. All he wanted was an excuse to become friends with rappers and we hooked him up. It was through investing in Genius that he became friends with Nas and with Kanye who are now his two best friends.
If I were going to glean a lesson from this, it's that it's not just about the reputation of the investor. It's how much passion the investor has for your project. So that's something to think about, targeting. I remember the first investor we ever hit up for Genius was Fred Wilson. This was before we had traction. Right when we started it, for some reason Tom had a lot of respect for Fred Wilson, so we emailed Fred Wilson. He responded, but I remember his reply was one sentence. He said, "Lyrics are a crowded space. Not interested."
So I just say Fred Wilson, I think he's a brilliant man. He was the first investor in Coinbase. But in this case, I don't think he had the passion. Who really had the passion for us is Ben Horowitz, and we're very, very lucky. I'm the one who connected him. Sorry to be obnoxious, but I've got to give myself a shout out whenever I can. I'm the one who connected us with Ben Horowitz. So he gave a talk at Y Combinator. I got his card and then I emailed him and I said we want to interview you for Rap Genius' blog, which I think was fun. He got really excited.
He's like, "Yeah, I would love it." We did an interview. In the interview, he was like, "I love Fetty Wap, I love ‘Cash Out.’" He started naming all these songs. Then after the interview, then Elon hit him up. He's like, "Now we want to talk to you about money." So that I think is a smart way to approach it. You don't want to be a total fake, but if you can approach an investor sincerely for something that's not about money, that's very, very good. It's a good way to get the ball rolling. You don't want to just send them a cold email, "Yo, give us money."
So we did it like, "Yo, we want to interview you." We did the interview, it went good, and then we were like, "Yo, give us money."
'That second seizure, mentally I think it was a wake up call.'00:45:35
Greg Ugwi: Do you feel like you've changed? So when you first came out the gate, you didn't say these words. Let's say words are put in your mouth, but you tried to set up beef with Zuck and you're like, “basically I'm saying he can suck my dick.” You said Genius is going to be the biggest website in the world, but now the way you talk, it's almost like, “I don't want to be talking obnoxious,” but that's great that you had that brilliant idea to connect with Ben Horowitz.
Do you think there's an element where, when you look back, you were very brash and maybe that helped you succeed, but you also paid the cost for that? If you had to look back, how would you play your cards differently?
Mahbod Moghadam: Well, a lot of stuff that I've done in life I'm ashamed of. Every day Facebook gives you your old posts. It gives you your memories and I always scroll through them. Some of them I'm just like, “oh my God, why did I say this? Delete, delete, delete.” I think one thing that changed my mentality a lot was my second seizure. I had brain surgery in 2013. Then in 2018 I had a seizure and I had to get a second brain surgery. Then I got off of the seizure meds after my second brain surgery was a success, and that gave me a second seizure.
That second seizure, mentally I think it was a wake up call. It was kind of electric shock therapy for me. Ever since then, I really started avoiding beef. I started avoiding fights. In terms of things I would change, I wouldn't change anything. It's a weird philosophical question, but I'm one of those who I believe that the butterfly flaps its wings in Africa, and then that starts the rhino stampede, and that starts the birds migrating, and then the birds migrating starts an avalanche in the Arctic. So I believe that everything connects. I think we're here for a reason, and I'm very, very happy with my life, so I don't want anything to change.
One thing I'm happy about is that I had that second seizure. It shocked me into not being as much of an asshole. Also, a lot of the magic is gone. When I look at my old posts on Facebook, I think I was a lot funnier back in the day. Back when I was an asshole, the bad part was I was an asshole, but the good part was that I was funny. Now I'm kind of old and boring, but it's chill.
Greg Ugwi: You were the first one in your family born here. Your mom, she could have been a great entrepreneur. How does that story influence you?
Mahbod Moghadam: Yeah, my mom is very charismatic. Right now, I haven't seen her since quarantine started because she's still in LA. I haven't been to LA for a while. I basically made it my mission to teach her English. She's been living here for 40 years, but she never learned English. That's how LA is. LA, everyone just lives in their ethnic ghettos. A lot of Iranians in LA never even learn English, just like my mom. So now I'm focused on teaching her English.
My mom was never allowed to go to school. She didn't even finish elementary school. Then her mom, my grandma, forced her to marry my dad when she was 16 years old. So that sucks, but she's very, very charismatic. The place that she had professional experience was my sister who is a social worker. So my mom was working with some people who had just come from Iran, trying to help them, get them jobs, get them visas. All the time on Facebook, I'll have random people hit me up like, "Your mom saved my life. Your mom changed my life." She's kind of like a community manager.
It's sad for me that she doesn't use the internet more. I tried so hard to get her into Facebook and she browses Facebook a little bit, but right now her hands shake so she's not really able to create content. Also, typing Persian on a computer is really, really hard. Unfortunately, we use the Arabic alphabet. I wish the Arabic alphabet would go away. I wish Arabic, Persian, Chinese — I wish every language would just start writing in Roman characters just because it would make typing easier.
So she's had a lot of hurdles. That's why she wasn't able to become a Sheryl Sandberg. But she has that charisma in her that she's able to basically get people to follow her. She's kind of like a religious leader. She makes a lot of enemies too. Unfortunately I learned that from her as well. Being a charismatic leader, it helps a lot of people. Me too. I've done a lot of bad things, but one thing I'm proud of is that, through Genius and Everipedia, I've helped a lot of people, and these are people who really, really need help. We have people who are dedicated members of these communities who have Asperger's, Autism, Depression, ADHD. These are the people who get the most out of internet communities.
If you're just a healthy, happy person, it's still good to join an internet community, but you don't need it. People who have mental disorders, and I'm kind of talking about myself ... I've never been diagnosed, but I always tell people I have Asperger's light. That's why I'm so into the internet. The real world always made me feel kind of uncomfortable and uneasy. The internet, it was more like I'm a fish in water. I'm more comfortable here. So I'm trying to use the internet to make more people comfortable with life.
Greg Ugwi: I do feel like many times you're almost harshing yourself. I do feel like you're misunderstood. When you say you did bad stuff, there's nothing you did that was a crime or even that had ... They're all victimless situations where maybe you were not politically correct or maybe you weren’t right then. If you say, “Zuck suck my dick,” you're not saying “Zuck, suck my dick.” It's a joke. I don't know. I do think I certainly see that element.
Mahbod Moghadam: Yeah, thank you man. Basically I only kick freestyles. I've never written a rap. I've always just kicked flows. That's how I am in life. I just don't really think about stuff that I say. I'm always telling people, I promise I'm not a bad person. Deep down inside I'm not a bad person.
Greg Ugwi: Ultimately you've got to judge people by their actions. You've got to say did he actually do anything bad because, if you judge everyone by what they think or what they say, there is no person that's interesting that doesn't say something that could be considered weird.
Mahbod Moghadam: Yeah, words being crimes is something that really bothers me. Thought crimes. It's funny, before I went to law school, I didn't even know you could go to jail for making a threat. I remember in criminal law, when I learned you can go to jail for making a threat, I'm like, you can? What the hell. It just seems weird. If someone says words to me, it's impossible for me to get that upset.
But then other people really, really get hurt. I've said words to people that I think it hurt them more than if I would have punched them in the face. I just don't understand how people can be that sensitive. It's just language, and it's getting worse. One thing that really bothers me is all of the judges who use rap lyrics in court. A rapper is in court and then they use his rap lyrics as evidence.
That's created a big chill. I think that's one of the reasons why the rappers are turning into mumble rappers. Rappers don't want people to know what they're saying because it can be used against them in court. That's when it starts to turn into “1984” and it's something that I'm really, really upset about.
Greg Ugwi: If I see a threat, like Everipedia or Rap Genius, it's about diving deeper into words. It's about breaking it down. It's about trying to understand what someone is saying versus just judging. I think the way the internet has gone sometimes, it's like with the mob. It's almost the opposite of Rap Genius, where people try to misconstrue what you're saying to make you a bad guy and get outraged.
Mahbod Moghadam: It's rap dummy. That's the fake news. That's why Peter Thiel wanted to invest in us. We were deciding between Dan Gilbert and Peter Thiel for our Series B. Peter Thiel is not interested in rap, but the reason why he wanted to invest in us was News Genius. He basically wanted us to build a product where someone can annotate a Gawker article and they can tell you the reporter's background. They can tell you if there's a line they have a problem with. We tried to build Peter Thiel’s vision, but we got shut down. We got shut down by the fake news and the politicians.
The politicians came and they said News Genius is toxic, all this crap. That was one of the reasons why we switched back to only music.
Why crypto doesn't have enough traction00:55:24
Greg Ugwi: It was obviously great to sort of connect with you and sort of hear your side of the story stuff publicly.
Mahbod Moghadam: Yeah, it's a pleasure. Thank you so much for having me on. It's an exciting time. This article that I published yesterday is going viral right now. I really think Kanye is going to become the CEO. Kanye can turn Genius into the Y Combinator for rappers. That's basically my vision. Then also the stuff that's going on with crypto right now, like bitcoin hitting these all time highs. I'm so happy and that's a big part of my vision as a community leader. I think crypto is a necessary element for internet communities so that you can get crypto for writing, like on Everipedia, or like what I'm trying to do with my new company, Ozone. You can get crypto for consuming.
Greg Ugwi: People like to get paid, so hopefully people ... Not just Zuck, but everybody will get paid.
Mahbod Moghadam: Not even get paid. It's more like ownership. It's not like you're getting paid hourly. You get the tokens to represent ownership for your content or your data.
Greg Ugwi: What do you think is an element with a lot of crypto apps? You talked of traction. At least from my perspective, it's not clear. Rap Genius has millions of users. Also, for most crypto apps in my experience, they don't have a lot of traction.
Mahbod Moghadam: None. That's the problem. That's the problem with crypto in general. Crypto doesn't have enough traction and it's because crypto is technologically really hard. Also, the people who are into crypto are hardcore nerds like me. We need people who are kind of nerdy and also kind of cool. Then they're going to make it a cool UI, a fun UI. One thing that's blowing up, probably the crypto app with the biggest traction is Cash App.
Cash App is making it cool. They're making it easy. They got Megan Thee Stallion giving $1 dollars of bitcoin away. Then another selfish shout out to my own stuff, Everipedia is — other than Cash App, it's the crypto app with the most traction. So I'm happy we've actually got some traction. Yeah, you've got things like these crypto social networks got no traction. There's one called Minds. Our investor is trying to build one called Voice. They've just really got no traction. It's really frustrating for them.
Shout out to Cash App. Cash App, in some ways, is the most exciting thing in crypto. I hate Jack Dorsey, but I love him for making Cash App. Then Ozone that I'm working on right now is going to be the next Cash App. We're going to make it basically so you can earn crypto, but we're going to make it so that rappers are into it, cool kids are into it. We're going to make it fun. Our first client is Kush Queen.
Greg Ugwi: I've never heard of that. What's Kush Queen?
Mahbod Moghadam: Shout out to Kush Queen. I love her. I love her. It's a female founder. She made makeup that gets you high. It's makeup that has CBD in it. The fact that we're going after cannabis first, that's going to help us make it into something that's cool. Also, I'm a big believer in cannabis. It's a drug, it's bad, but I think it's better than any of the other drugs that people are addicted to.
Greg Ugwi: You're against coffee. You're against things that get you hyped up.
Mahbod Moghadam: Yeah, uppers. I'm against uppers.
Greg Ugwi: Sort of like booze. Fine wine is great, but no beer.
Mahbod Moghadam: Well, even beer. I don't drink any alcohol because of the seizure, but the analogy would be to not have hard liquor. If you have something that's just chill, beer and wine are like the alcohol version of weed. Whereas I think of hard liquor as being pills or cocaine and stuff.
Basically, I don't think it's good to be turned up. Even though I do a lot of turned up shit on the internet, people probably think I'm drinking 10 cups of coffee a day, but I'm against that mentality. I'm basically against anything that creates heat in the body. Heat, acid, exhaustion, those are bad. What I like is I like sleep, I like cold, and I like basic. I drink alkaline water. I'm all about not creating an acidic environment in your body.
Greg Ugwi: You have a lot of wisdom. You've been through a lot of battles, man.
Mahbod Moghadam: Yeah, well it's a pleasure talking to you. I'm a huge fan of Thinknum, and what you're building is massive.
Greg Ugwi: Thank you very much for doing this, man. We're very excited. It was a lot of fun. It was especially cool to hear your rap and hear Abdus rap.
Mahbod Moghadam: Yeah, well and your boy. I'm going to look him up on Genius right now. We can hopefully get those lyrics to go viral.
Greg Ugwi: And get Kanye West to be the CEO of Genius.