As the world’s attention on November 8 turned to New York City, where both candidates awaited the results of the US presidential election, one of Manhattan’s most connected people, Thrive Capital founder Joshua Kushner, boarded a flight to San Francisco.
In a few hours, his brother and best friend, Jared Kushner, would experience arguably the greatest political upset in American history at the side of his father-in-law, Donald Trump. Josh Kushner, who didn’t vote for Trump, would make do with seatback television on Virgin America Flight 29, en route to a board meeting for the messaging startup Slack.
Josh Kushner’s expectation: By the time he touched down, the Trump political experiment would be retired as a historical ego trip. Pre-Trump, Kushner had pretty much everything an ambitious 31-year-old could possibly hope for: A $1.5 billion venture capital shop that shot to prominence with an early bet on Instagram, a slew of high-profile startups that he was directly incubating and a life that remained low-profile even as he dated supermodel Karlie Kloss. The Trump Train had derailed much of that. Press and paparazzi gobbled up everything Kushner, family demons included, while Josh found himself linked, at least in perception, to proposals most of the tech community abhors.
As Kushner traversed the country glued to a small TV screen reliant on sketchy airplane WiFi, the professional relief that he expected upon touchdown disappeared, in lockstep with Hillary Clinton’s electoral hopes in Ohio, North Carolina, Florida and then Pennsylvania and Wisconsin. “I was surprised,” Kushner says. “But not as surprised as the other passengers.”
So while Jared and his wife, Ivanka—a woman so close to Josh that he calls her his sister rather than his sister-in-law—revelled in victory, the young VC landed in a situation far worse for him than the one he had left on takeoff. The disruptive, fact-challenged Trump circus was now on its way to the White House, with a Kushner as a senior advisor, purportedly with unparalleled access to the president’s ear.
Josh Kushner scrambled. “It is no secret that liberal values have guided my life,” he says, “and that I have supported political leaders that share similar values.” For the next week, he held one-on-one meetings with nearly 100 employees across Thrive and the two startups he’s currently incubating. People were sad, frustrated, worried, angry. “Just as Jared is my family, I feel similarly responsible to everyone at my companies,” Kushner says.
The responsibility extended to portfolio companies, too. “Josh went around to me and presumably every company and said, ‘I have no personal ties to this administration. I’m not responsible for their actions and won’t be able to get you special favours,’” Slack CEO Stewart Butterfield recalls. “‘Just consider me the same person who invested in your company—there is no connection, either good or bad.’”
Kushner also mollified the institutional investor and tech communities, which supply two necessities for any VC firm: War chest and talent pool. The Trump administration’s immigration and visa dictates have been particularly nettlesome. “These policies impact a technology company’s ability to succeed or fail in the long run,” says Box CEO Aaron Levie, a Kushner friend. “You saw a rapid, consistent response from the industry because of how damaging the policy would be to employees, customers, communities and the brand of the country.”
The group that Kushner most needed to calm, however, was also Thrive’s biggest bet, at least in reputational terms. In 2013, Kushner co-founded Oscar, a health insurance company built around Obamacare. It has raised $720 million and is valued at $2.7 billion—and the president-elect had spent the previous year promising to kill Obamacare.
As we approach 100 days into the Trump administration, Kushner’s situation has arguably worsened. The GOP’s recent failure to repeal and replace Obamacare was, on paper, a victory for Oscar. But President Trump immediately let it be known that he plans to lay slow siege, promising on Twitter that “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!” Since the executive branch controls the levers, Trump can make this a self-fulfilling prophecy, leaving Kushner stuck in strategic limbo.
We now have the makings of a Hollywood-worthy sibling rivalry, which will play out on the national stage: The younger brother, who attended the Women’s March on Washington, helping lead the team running the most prominent startup of the Obamacare era; the older brother, who has either bought into Steve Bannon’s worldview or proved powerless to temper it, helping lead the team that’s determined to end the Obamacare era.
“Jared and I still speak every day,” says Kushner, who won’t elaborate on what they discuss or pretty much any other family dynamic. The Kushner brothers rate among the dullest, least forthcoming people ever to emerge as glamorous power brokers. For his part, Jared would not speak for this story, instead emailing, blandly: “I’ve learned so much from watching Josh grow Thrive and observing how he thinks about investing. I’ve applied many of those key learnings to my businesses, and am working to bring more of that type of innovative private sector thinking to the government as well.”
Still, any striving little brother can relate to Josh. While Jared Kushner, at 36, is one of the most influential people in the world, he was given every break that got him there. He was handed the keys to the family business by his father, Charles, who then went to prison for illegal campaign contributions, tax evasion and witness tampering. And he was handed the keys to a presidential campaign by his father-in-law, where he developed the data operation that ultimately delivered Trump the White House.
As heirs to billion-dollar fortunes go, Josh is the self-made man, abdicating a comfy seat at the family real estate firm to create something independent. “Thrive has had one of the shortest trajectories from inception to top-tier status, reputation, deal flow and quality investments,” says billionaire venture capitalist Marc Andreessen. Kushner has backed some of the best startups of the decade: Twitch, Warby Parker, GitHub, Spotify, Stripe and Slack, in addition to Instagram. And he’s personally co-founded or incubated five more. “Josh gets his hands dirty and understands the journey,” says Spotify CEO Daniel Ek. Instagram CEO Kevin Systrom calls him “a disruptive entrepreneur, whose business just happens to be venture capital”.
Yet, through no action of his own, either professionally or politically, he gets saddled with all the Trump baggage. And unlike Trump’s business partners, he gets none of the upside. Actually, it’s worse: Oscar, with its dependence on mandated individual insurance purchases, sits squarely in Trump’s crosshairs, with his brother riding shotgun as the president tries to shoot it down.
If Kushner’s post-election damage-control tour felt natural, it’s because he already manages via walkabout. On a cold March morning, before a blizzard is due to hit New York, Josh Kushner ducks out of the brick, barrel-vaulted offices of Thrive Capital in the historic Puck Building for his daily rounds.
First stop: Oscar, reached in about 20 seconds through a back stairwell. Gangly and dressed in all black (tight jeans, cashmere sweater, suede chukkas), his eyes startlingly bloodshot from a recent Lasik surgery, Kushner checks in with CEO Mario Schlosser, says hello to Joel Klein, the former New York City schools chancellor and current Oscar policy chief, and vanishes through a service door.
He emerges on another floor to talk with Ryan Williams, CEO of Cadre, Kushner’s fast-growing commercial real estate platform, which epitomises his complicated professional life: He co-founded Cadre with Jared, reportedly raising money from Trump bogeyman George Soros. A fire door and a staircase later, he’s back in the Thrive offices.
Kushner walks around like he owns the place, because he does. His family’s real estate company bought the 131-year-old SoHo building in 1987. (One of their early tenants: Spy magazine, which spent the 1980s lampooning Donald Trump as a “short-fingered vulgarian”.) Josh has transformed Puck into an integrated tech campus, with himself at the centre.
Puck is one of the few ties between Kushner’s business and his family. Both Jared and Josh (there are also two sisters, Nicole and Dara) grew up wealthy in Livingston, New Jersey, basketball fans who went from a Jewish day school to Harvard, intending to join Kushner Companies.
But when Jared took over the family real estate empire, Josh was still at Harvard, swept up by Mark Zuckerberg’s Facebook mania. He co-founded a flurry of startups. Roommate Reed Rayman, now a private equity executive, says that no matter how late Kushner was out the night before, he’d always be up working on side projects by 7 am.
Smartest-friends approach (from left): Kareem Zaki, Nabil Mallick, Jared Weinstein, Liz Tran, Chris Paik, Joshua Kushner and Miles Grimshaw Image: Jamel Toppin for Forbes
Kushner deferred a spot at Harvard Business School (HBS) to work a year at Goldman’s distressed-debt desk, and after enrolling at HBS in 2009, he became interested in venture capital, forgoing a traditional summer internship to make angel investments in companies like Kickstarter and GroupMe.
Kushner’s parents didn’t know what to make of all this. “For the first three years, my mom thought I just fixed computers,” Kushner says. But he caught the attention of Joel Cutler, co-founder of General Catalyst Partners who persuaded him to start a fund. (Disclosure: General Catalyst works on the Forbes Under 30 Summit.) “I told everyone that if they didn’t give money to this young guy, they were out of their minds,” Cutler says. “And if it didn’t work out, I’d make good on it.”
No need. Kushner launched Thrive in 2010 with a $5 million friends-and-family round, followed in 2011 by $40 million from Princeton University and other endowments. He quickly made smart bets on Harry’s, Warby Parker and Instagram. By getting into the latter’s competitive 2012 series B round, alongside VC heavies Sequoia and Greylock, Kushner put tiny Thrive on the map. “He had invested time in Instagram a year before he invested any money,” says Instagram’s Kevin Systrom. “His relatability and strategic thinking mattered way more than any firm pedigree.” The deal valued Instagram at $500 million. A few days later, Facebook bought it for $1 billion. “That was a defining moment,” Cutler adds. “There was a food fight to get into the deal, and the founders said, no matter what, Josh will be in the syndicate.”
Fundraising rounds got fatter. Thrive closed a $150 million fund in 2012 and a $420 million fund in 2014. In the summer of 2016, a $715 million fund brought Thrive’s total war chest to $1.5 billion. What’s more, Kushner has done it before returning any money. “We look at how the Thrive team is seeing deals, analysing deals, winning deals and the value they’re adding to entrepreneurs,” says Andy Golden, who runs Princeton’s $22 billion endowment.
Thrive takes an active role in its portfolio companies, parachuting in to help with talent, connections, product design and financial strategy. “These guys aggressively do their homework, offer support when you want it and stay out of the way when you don’t,” says Eric Gundersen, CEO of Mapbox, a maps platform, which recently raised $50 million from Thrive and others. Adds Neil Blumenthal, co-founder of Warby Parker, which scaled in the Puck Building: “We view them more as peers.”
As evidenced by the five companies, Oscar included, that he directly helped launch, Thrive is willing to build, too. “There are three ways to make a return,” Kushner says. “You can create something no one else has created. You can discover something before anyone else. Or access something that very few can.”
Oscar was Kushner’s attempt to shake up the staid health insurance industry, using tech to find more efficient care and replace complicated paperwork with a simple, Instagram-like interface.
The idea hit Kushner in 2012 while attempting to decode an insurance form after he sprained an ankle. He discussed the problem with Mario Schlosser, a co-founder of Vostu, one of the companies Kushner dabbled in at Harvard, who was squatting in Thrive’s office, writing a book about data. Schlosser, a data scientist, was equally perplexed by the byzantine claims process that preceded the birth of his first child.
Obama’s Affordable Care Act seemed the perfect way into the market. They thought a high-tech, consumer-friendly product would flourish on the Obamacare exchanges, where people compare and pick insurance plans. Schlosser and Kevin Nazemi, a Microsoft alum, went to work on the product while Kushner and Thrive focussed largely on marketing and branding.
Capital was key. While the Ubers and Airbnbs could gleefully skirt local rules, health insurance was bound by strict state laws. Oscar had to hire teams of industry wonks, navigate a lengthy certification process and park millions of dollars in government-mandated reserves.
Kushner’s network and rising reputation helped secure $40 million in funding from the likes of General Catalyst, Khosla Ventures and Founders Fund in 2013. Schlosser laughs as he recalls an early pitch in which Kushner described their naïveté as an asset that let Oscar see the insurance business with fresh eyes. “One guy goes, ‘The world of health care is full of the bloody corpses of people who sat where you’re sitting and said what you just said,’” Schlosser says. “Josh stopped using the line after that.”
Still, the rap worked. A year later, they’d raised another $30 million. Then came rounds of $80 million, $145 million and $33 million, followed by the big one—$400 million from Google Capital and Fidelity, among others, in February 2016 at a $2.7 billion valuation. “Josh is great at spotting large market opportunities,” says Breyer Capital’s Jim Breyer, an Oscar investor.
The actual running of the business has been harder than expected. It turns out that creating a slick user experience was the simple part. Building health networks, attracting customers and managing high patient costs were expensive. Oscar lost $120 million in 2015 and $205 million in 2016. But it is not alone in its struggle in the individual insurance exchanges. Giants like United Healthcare and Aetna have aggressively abandoned unprofitable regions. Oscar still has plenty of capital in the bank, but with a decline this year in enrolments, from 140,000 to 105,000, it clearly erred in terms of overall demand.
As with Obamacare itself, Kushner and Oscar have scaled back expectations. The company has pulled out of money-losing markets to focus on three metropolitan areas—New York, San Antonio and Los Angeles. While Oscar initially strove for the biggest health network possible, it now partners with hospital systems, sharing risk and aligning pricing incentives with the goal of driving down costs.
While the company says the failed Obamacare repeal is good news, the events of the past several weeks will not cure its ills. Oscar had already been urgently shifting towards a world without the Affordable Care Act and its individual mandate, launching an insurance product for small business—the hope is that its flashy tech will lead to big corporate deals.
But businesses hate uncertainty, and Oscar’s sandbox now ranks among the most uncertain in America.
There’s one thing that Thrive Capital and the Trump administration seem to have in common: A preference for working with people they already know and trust.
A look around the table at Thrive’s Monday investment meeting tells the story. All 11 attendees are under 40 and all are mimicking the Josh Kushner uniform: Sweater, dark jeans, cool sneakers. While diverse in race and gender (at least by VC standards), they all come from elite universities; at least three hail from the Spee, the 165-year-old Harvard finals club that counted John F Kennedy as a member. “We definitely have taken the hire-your-smartest-friends approach,” Kushner says.
The result, professionally, is an odd bunch. Nabil Mallick helped 3G streamline Heinz. Miles Grimshaw was at the hedge fund Bridgewater, while Kareem Zaki came from Blackstone. Josh Miller helped run Obama’s digital operation, while partner and COO Jared Weinstein served in the White House as George W Bush’s personal aide. Liz Tran travelled the globe, financing her trek by working as a remote HR advisor. Chris Paik, a Harvard pal and Kushner’s first hire, had been kicking around New York: “I was a social media consultant, which basically meant unemployed.”
Kushner sits at the head of the marble conference table with his hands clasped beneath his chin, a black Swatch watch on one wrist, a red Kabbalah string bracelet on the other. As usual, he listens more than he talks, as they run through hiring needs, discuss their portfolio companies and ponder potential deals.
But Kushner’s president-in-law always hovers. That week, Kushner is due to travel to China for an annual catch-up with Chinese tech leaders. He decides to cancel—a wise decision, in retrospect, as media reports say that Chinese conglomerate Anbang might invest $400 million in Kushner Companies’s flagship building at 666 Fifth Avenue. Questions begin flying: Is Anbang offering a sweetheart deal to curry favour with the White House? Bad optics for Jared’s little brother.
Conflicts of interest, real or perceived, are now part of Kushner’s normal life. Witness the media frenzy when the Kushners, with Josh out front, mulled a bid to buy the Miami Marlins from Jeffrey Loria, a candidate to be Trump’s ambassador to France.
To guard against conflicts between their two expanding worlds of interest, both Kushner brothers have hired top DC lawyers to guide them through the maze of regulations and public relations. Liberal Josh has hired a Republican, while Trump aide Jared went for a Democrat (Jamie Gorelick, Bill Clinton’s former deputy attorney general). With Jared recently tapped to lead a task force devoted to bringing business efficiency to the federal government—and being summoned to testify to the Senate about meetings with Russian officials—there will be plenty of billable hours.
“There is a lot of discussion in the Valley about political tests on both who you’ll take money from and who you’ll work with,” Andreessen says. “Having said that, I haven’t yet seen an instance of anyone hesitating to take money from Josh because of the affiliation with his brother.”
Given the headaches, Kushner seems more inclined to bunker in than travel. He can see his apartment from his office window. When he does leave the city, it’s upstate to a stone cabin with a big fireplace and plenty of privacy.
But the vast majority of his time is spent in his office. After his five-hour Monday meeting, he plops down on the sleek leather couch in his corner office. There’s a bull’s-eye behind him—literally—in the form of a massive painting by John McCracken. And as he gazes across the room, his older brother’s shadow looms, from the black-and-white photo of his Holocaust-survivor grandparents (Jared reportedly has one in his White House office, too) to a brick from Citi Field, inscribed: “Fans for Life/Jared Kushner/Josh Kushner.”