YouSaid · the spoken record

Dave Thornton

lines on the record: 67
first: 2025-11-06
most recent: 2025-11-06
sittings or episodes: 1
sources: podcast

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“Described a very crowded market was that they were all focused on senior people that were leaving really late stage private companies. And so if you need $12 million and you just left Stripe, everybody falls over you. In order to get you your money and you have price competition and you get to choose from different structures with different risk-reward profiles, what we realized after having done our market research was that the users that had come inbound to us from our own user base did not represent positive or negative selection. They were just the people that needed 50 grand instead of $12 million, so the very long tail of rank-and-file startup employees that nobody else would pick up the phone for because of the ticket size.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first reaction that we had was these are the people that nobody else is going to pick up the phone for. So with my financial services background, I thought this was probably negative selection type deal flow. Let's not try to address this problem. But I was intrigued enough that I wanted to start understanding why these people were coming to us in the first place. We canvassed the market that we assumed existed at the time. And it did in fact exist and it was even reasonably robust with respect to a certain set of startup employees. It was comprised of banks that were getting into the private markets and had wealth management businesses. So JP Morgan, Morgan, Stanley, Goldman, City Group, Wells, UBS. It was comprised of Silicon Valley Bank and First Republic Bank and another three or four shops that did stock option exercise specifically as independent investment houses. What we saw was the commonality between all of them.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Single dominant use case, which was none of those. It was I just left my job for whatever reason. I now have 90 days within which I have to exercise whatever stock options had vested as of that time, or else I lose them. The capital use case that was the dominant capital use case that came inbound from our user base was, do you have 50 grand? I need to not lose my equity.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Users that were there for the education had started to come back inbound to us looking for capital, but they asked questions in these very squishy ways, and so we needed to talk to them to understand what it was they really needed. It was a super interesting experience. We start talking to these startup employees who are really just thinking of us as their Sherpa in the world of startup equity. Some of them ask us if we had money. Some of them ask us, do you know people who have money? Some of them just ask, we need money, what do we do? Originally, we hypothesized that we would see five or six different capital use cases. Anybody who's worked at a startup before knows that you tend to be under cash comp. So you get to a certain age, you want to buy a home, and you need to make a down payment. You get unlucky, you have unexpected medical bills. Maybe you want to buy a car. Maybe you want to have walkaround money for the first time in your 20s. All these things are what we expected to see. We ended up seeing a”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The original version of Vested was just a startup equity education platform where there was a website and it had free content and tools and the free content was basic stuff, an article about the difference between stock and stock options, as an example, a tool that would help you calculate the alternative minimum tax associated with your incentive stock option exercise. That's a complicated tool, but everybody needs to know what the tax associated with their exercise is, just like my old guy did. That was the original version of the business, and it wasn't a complicated thing. The idea was going to be that we were going to educate startup employees more than they were, which was not hard. Eventually we'll have 3 million startup employees running around our website. And once they were all here and loved us, we were going to figure out what we could sell them, mortgages, wealth management referrals, et cetera. That was the original thought. About a year and a half into the business. A lot of the”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Got caught front running a big contest, and Elliot Schneiderman, the Attorney General of New York, decided he was going to make a thing of it, and he kicked all the Daily Fantasy Sports companies out of New York at the same time. Those two things both had legs and they were taken away from us.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The real time a liquid asset pricing model that I alluded to had very real legs and we were going to work with two of the evaluated pricing companies that priced municipal bonds, which was the asset class. One was IDC and one was JJ Kenney. We got a call within a couple weeks from senior people at each shop saying, hey, we got to yank the deal. We can't really explain why. Hopefully we can work on this again sometime. At the time, I thought it was just the worst execute brush off ever except for how coincident it was that they were within a couple weeks of each other. We found out later that ice was in the middle of initiating the purchase of both of those businesses. Usually you don't spend any new money when you're being acquired because every dollar that goes out, the door has some revenue multiple attached to it. Then the daily fantasy sports betting operation actually got off to a great start as well. But one of the employees at one of the big daily fantasy sports companies”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The NBA teams that we got to work for, so we worked for the Rockets, the Bucks, and the Knicks. We got paid. We built out a proof of concept. The concept was called expected point value. There's a Harvard professor named Kirk Goldsbury who pioneered it, and we've instantiated it for these teams. The idea was that you could put the number of points you expect the offense to score at any given moment in a game. The numbers are between zero and four. And you could apply it to two different moments and take the difference between those expected point values to put values on things that didn't used to have values that don't belong in the box score. Like what is a pick worth? It's the difference between expected point value before you get around the pick and after you get around the pick. What is a drive worth? It's the difference between what's expected point value at the top of the key and around the time that you get to the cup. The problem with that business was not that there wasn't a lot of interesting substance and teams that were willing to pay.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The poker luck and skill algo didn't pan out because we were so focused on marketing and how obvious the business case was for basically matching players by scale at a given table, that we forgot that online poker had just gotten kicked out of the United States around the time that we were doing this and that they needed to get their gambling licenses back.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I sat there totally card dead. Waiting for my turn and never having had it come. He was a really nice guy. He wasn't being a pain in the butt of the poker table or anything. He didn't have any problem with losing the money that he came with. And afterwards, when he left, apparently everybody but me knew that he was part of the mafia. And so I got to play with one of those guys once.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, plenty of stories. There was a guy that came and sat at one of the games that I used to play at when I lived in Manhattan. So this is 11 or 12 years ago. Perfectly nice guy, well-dressed. He sits down with a lot more money than everybody else was bought in for at the table. And this is not a small game. So I'm trying to say something. He proceeds to make large blind bets before he even check his cards out over and over and over again. So the folks that are regulars at these poker games know that now is the moment where you just go into the wait for good cards and then see what happens. He blew through all the money that he came with within two hours.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“First business that I built was a business in which we created bespoke machine learning models in areas that I happened to be a subject matter expert. I grew up playing high school basketball. We worked for some NBA teams doing basically moneyball at the beginning of the NBA data revolution. I played a lot of poker back in the day, inclusive of a lot of underground poker in Manhattan. And we built algos to tease apart luck from skill in poker. We even scraped one of two major daily fantasy sports sites and built a small betting operation.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which we took care of, and everything is fine, and the company that was then private went public had hired multiple. So everything worked out other than a cash crunch at the time. But I had the moment where I was just like, if somebody with my background at this point in the game is screwing up startup equity, I'm sure your average startup employee is. Also probably screwing up their startup equity.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“By one of our data vendors, which was also private at the time. I remember that as a key person in the transaction, my portions of stock and cash were fixed for me. I didn't have much thinking to do, but my employees all got the chance to go anywhere from zero to 100% stock in that transaction. One of my employees knew some of the folks at the acquiring shop, and he was super bullish, and he wanted to go 100% stock. shook him as hard as I could and I said, don't do that just because they're 10 times bigger than us doesn't mean they're not still a private company. That could end badly. They ended up fine. But once I could not prevail upon him to take something off the table, I made the mistake of telling him, well, private for private, stock for stock, at least it'll be tax-free. And with that throwaway comment, I basically heaped on him a tax bill next March.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first business that Built was called Skilling Games, and we did a lot of really interesting things, and then one very boring thing, which is we took some of the lessons that we had from the illiquid asset class that was the Citigroup hedge funds asset class that we traded, and we built a real-time illiquid asset pricing model. We built an illiquid asset pricing model that priced munis in between trades, Munis trade every two to six days, but they move with rates, which are moving all the time. A subsequent version of that model has been rebuilt inside of a brand name bank, and it's currently algo trading $400 million book right now. One of the most important pieces of IP that we have is machine learning-based private company pricing model. The last piece of the background that is at least a little bit relevant is the second startup that I did after that first super fun one. It was a healthcare analytics business. We were acquired.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the formative parts of my background was working at an internal hedge fund within Citigroup that was getting off the ground before Dodd-Frank back when banks were allowed to have hedge funds. There was a prop desk that was doing great. Two of the four prop traders and myself moved over to City Alternative Investments to build out basically the same strategy but with other people's money that it had the opportunity to scale up. I was the nexus between technology and trading, so I built out the risk models and the trading models and I automated as much of the back office machinery as I could given that everything was Excel-based, so there were limits. But that was a good financial services operator's background for me. It also led to one of the insights that appeared later in the part of my background that's relevant to Vested, which is after the hedge fund I went to law school, after law school, I started in the entrepreneurial world.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source
“Somebody with my background at this point in the game is screwing up startup equity. I'm sure your average startup employee is. Also probably screwing up their startup equity.”
2025-11-06 · Capital Allocators · Dave Thornton – Unlocking Venture Access Through Stock Options at Vested (EP.469) · IDENTIFIED FROM THE TRANSCRIPT · source