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Steve Case · The Bob Lefsetz Podcast

• 0:08
  Speaker 1: Welcome, Welcome, Welcome back to the Bob Left Sets podcast.
• 0:12
  Speaker 1: My guest today is Steve Case who's chairman and CEO
• 0:17
  Speaker 1: of the investment firm Revolution. You know him as co
• 0:21
  Speaker 1: founder of a O L and he has a brand
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  Speaker 1: new book, The Rise of the Rest. Steve, thanks for
• 0:27
  Speaker 1: being on the podcast. Great to be with you, Bob.
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  Speaker 1: What do you hope to achieve with this book? Well,
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  Speaker 1: I've been working on this effort for about a decade,
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  Speaker 1: trying to shine a spotlight on entrepreneurs all around the
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  Speaker 1: country that are building amazing companies in the process renewing
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  Speaker 1: their communities, creating job growth, economic growth. But their stories
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  Speaker 1: aren't really told, uh and most people don't really know
• 0:51
  Speaker 1: what's happening in most of these cities. And so that
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  Speaker 1: was the reason to write the book. It was a
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  Speaker 1: long journey for me when we started a little over
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  Speaker 1: a decade ago working on this, initially on a policy
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  Speaker 1: kind of framework working for the President Obama and his
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  Speaker 1: Jobs Counsel, also cheering at a White House initiative called
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  Speaker 1: start Up America. And the more I looked at, the
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  Speaker 1: more I realized there was a problem we need as solved,
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  Speaker 1: but also an opportunity we should seize and so that's
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  Speaker 1: led me to this effort over the last decade of
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  Speaker 1: trying to help entrepreneurs in in these what we call
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  Speaker 1: the rise of the rest cities outside of the normal
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  Speaker 1: tech helps. For those who don't follow this, uh, if
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  Speaker 1: you look at the data, the venture capital data, about
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  Speaker 1: seventy of venture capital has gone to just three states, California,
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  Speaker 1: New York, and Massachusetts. The other forty seven states, they're
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  Speaker 1: kind of fighting over the remaining and we're trying to
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  Speaker 1: change that dynamic, get more of the capital backing more
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  Speaker 1: of those entrepreneurs and more of the cities around the country.
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  Speaker 1: So how bad or good are things in the other
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  Speaker 1: forty seven states. Well, it's a mixed bad and that's
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  Speaker 1: part of part of what I tried to explain the book.
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  Speaker 1: The bad is that for the last several decades, a
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  Speaker 1: lot of people in the middle of the country who
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  Speaker 1: wanted to be part of what we think of as
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  Speaker 1: the innovation economy, the tech sector, the startup sector, concluded
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  Speaker 1: they had to leave where they were to go to
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  Speaker 1: the coast because the action terms of other people, the
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  Speaker 1: action in terms of where the money was was in
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  Speaker 1: places like Silicon Valley, so that actually led to a
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  Speaker 1: brain drain in many parts of the other country. Um,
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  Speaker 1: and you know what, what we were hoping to see
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  Speaker 1: as a slowing of the brain drain and a kind
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  Speaker 1: of a boomerang of people returning to some of these cities.
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  Speaker 1: And some of that's been accelerated by the by the pandemic.
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  Speaker 1: So the talent has always been there, but the opportunity
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  Speaker 1: hasn't been there, and that's led to some of these
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  Speaker 1: you know, these dynamics. What's encouraging to me is just
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  Speaker 1: what's happened in the last few years. There's far more
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  Speaker 1: focus on these cities, and there was a decade ago.
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  Speaker 1: There's a lot of new venture firms that have started
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  Speaker 1: up in these rising cities. Fourteen hundred new venture firms
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  Speaker 1: have started in cities outside of San Francisco, outside of
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  Speaker 1: New York, outside of Boston. In these in these rising cities,
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  Speaker 1: there's a sixfold increase in the venture capital in those cities.
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  Speaker 1: But perhaps most importantly, there's now a recognition that some
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  Speaker 1: of the big potential opportunities for entrepreneurs and for investors
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  Speaker 1: in this next decade are going to be as sort
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  Speaker 1: of the Internet meets the real world. And big sectors
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  Speaker 1: like healthcare or food and agriculture are reimagined and disrupted,
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  Speaker 1: and in those sectors, expertise matters. Domain expertise matters, partnerships matter,
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  Speaker 1: and that's actually an advantage I think some of the
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  Speaker 1: entrepreneurs in these rising cities, even though they've been largely
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  Speaker 1: disadvantaged for the past, you know, a couple of decades. Wait,
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  Speaker 1: let's start with the framework. Let's start with the bus tours.
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  Speaker 1: So you pick a city where a multiple cities, you
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  Speaker 1: get people in a bus, you go and in each
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  Speaker 1: city you give a hundred thousand dollar investment to what
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  Speaker 1: you feel is the best startup. How did you come
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  Speaker 1: up with the idea and what are the logistics of
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  Speaker 1: the bus excursions? Well, the idea we started this a
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  Speaker 1: little over eight years ago, and the original idea was
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  Speaker 1: building on some of that work I mentioned with the
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  Speaker 1: White House to start up America effort. Why don't we
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  Speaker 1: just hit the ground and see what's happening in different
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  Speaker 1: cities around the country and in the process try to
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  Speaker 1: showcase some of the things that are positive developments in
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  Speaker 1: in in those cities and also see what we could
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  Speaker 1: do to help this next generation of entrepreneurs and so
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  Speaker 1: Frank we didn't quite know what we're going to get
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  Speaker 1: into what we did the first one, but we did
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  Speaker 1: a tour that included cities like Detroit and Pittsburgh, Cincinnati, Nashville.
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  Speaker 1: Those were the first ones we did, and we found
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  Speaker 1: it remarkable to see what's happening on the ground, to
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  Speaker 1: use the bus a little bit as a media prop
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  Speaker 1: to get attention and and you know, local media to
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  Speaker 1: pay more attention to the entrepreneurs, even getting national media.
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  Speaker 1: A few years ago, sixty Minutes Falls Around did a story,
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  Speaker 1: for example, So that was part of the reason to
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  Speaker 1: have a bus. Yeah, there was just practically to get
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  Speaker 1: between city and city and around the cities, visiting different
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  Speaker 1: companies and universities and so forth. The bus was helpful,
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  Speaker 1: but the thing was most helpful. And this was one
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  Speaker 1: of the things I didn't really fully appreciate going into it,
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  Speaker 1: was using the bus as sort of a platform to
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  Speaker 1: bring people together, a platform for convening. And in the
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  Speaker 1: cities we visited now it's it's dozens and dozens of cities,
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  Speaker 1: we found it really is important to make sure people
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  Speaker 1: in those cities are aware of what each other is doing.
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  Speaker 1: There's not as much of the connectivity that that you
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  Speaker 1: really need to have a thriving startup community. So the
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  Speaker 1: bus has been a helpful way to bring people together
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  Speaker 1: and within the community, as well as invite people from
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  Speaker 1: other places, either journalists from the coast or investors from
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  Speaker 1: the coast, to see firsthand what's happening in some of
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  Speaker 1: these cities. Okay, we literally talking like a music tour
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  Speaker 1: bus with sleeping bugs, etcetera. Now, not the bunks, not
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  Speaker 1: the bunks. We we we get we do, uh you know,
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  Speaker 1: least a tour of us that is generally used by
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  Speaker 1: musicians or politicians doing campaigns and so forth. And and
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  Speaker 1: we kind of wrap it with our logo of the
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  Speaker 1: Rise of the the Rest logo and and images and and
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  Speaker 1: so we do not sleep on the bus because we
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  Speaker 1: we do bring We packed the bus pretty full. Uh
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  Speaker 1: so it's not quite like a rock and roll tour bus,
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  Speaker 1: but it's certainly within the city. We do use it,
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  Speaker 1: as I said, to move around and also to bring
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  Speaker 1: people together. So on one of these typical ventures, how
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  Speaker 1: many people are inside the bus, Well, it's pretty full.
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  Speaker 1: I'm not sure what the I'm not sure I want
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  Speaker 1: to report the number because it probably breaks some fire codes,
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  Speaker 1: but we pack them in pretty pretty pretty tight. Uh.
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  Speaker 1: And as we're moving around, we have different people coming
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  Speaker 1: and going, sometimes a governor, of the mayor and the
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  Speaker 1: university president. CEO is a big company, you know, there
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  Speaker 1: are some of the people that we try to invite
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  Speaker 1: on So it's definitely does it's a dozen to people
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  Speaker 1: that are that are on the bus, and over the
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  Speaker 1: course of the time we're in a particular city, it's
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  Speaker 1: it's probably upwards to a hundred people that join us
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  Speaker 1: for some you know, some part of it. And then
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  Speaker 1: the events we do in different cities, including you mentioned.
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  Speaker 1: So we do a pitch competition. We invite companies in
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  Speaker 1: the city to apply it to pitch generally get you know,
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  Speaker 1: close to a hundred companies kind of putting their hands up,
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  Speaker 1: and then we have a team that picks the best
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  Speaker 1: date or ten to be on stage, and then we
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  Speaker 1: have a panel of judges that joins me in deciding
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  Speaker 1: which is the one that is most promising, and then
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  Speaker 1: we do invest in in that company and have found
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  Speaker 1: that others will because they're on stage and are telling
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  Speaker 1: their story to a bigger audience. Generally, you know, somebody
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  Speaker 1: three or four, five hundred people are at these events.
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  Speaker 1: Uh that many of the other companies also get you know,
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  Speaker 1: some some attention and sometimes some funding as well, but
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  Speaker 1: not just the winner. It's sort of it's it's trying
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  Speaker 1: to spotlight what's what's unique about some of these some
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  Speaker 1: of these cities, and how many other professional investors would
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  Speaker 1: be on one of these bus tours. Again, it depends
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  Speaker 1: on the city, depends on how many people join us
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  Speaker 1: in any particular time, but generally there for these tours,
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  Speaker 1: there's you know, a couple of dozen coastal investors that
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  Speaker 1: join us for some some part of it just trying
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  Speaker 1: to see firsthand what's what's happening and in some of
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  Speaker 1: these cities. Okay, you read the book and it appears
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  Speaker 1: like I'll use the term underground because many people are
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  Speaker 1: unaware of them. There's a startup scene everywhere you go.
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  Speaker 1: Is there a startup scene in every city in America?
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  Speaker 1: I wouldn't say there's a start up scene in every
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  Speaker 1: city in America, but it was definitely a startup scene
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  Speaker 1: in dozens of cities in America, and we obviously profiled
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  Speaker 1: quite a number of them. Uh in the book. We
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  Speaker 1: now have investments with our Rise of Rest Fund in
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  Speaker 1: a hundred different cities. Uh, and so it is much
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  Speaker 1: more widespread than people think. When I first started talking
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  Speaker 1: started talking about Rise of Rest, people say, oh, I
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  Speaker 1: got it. There's ttunities to back companies outside of Silicon
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  Speaker 1: Valley or New York City or Boston, which are where
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  Speaker 1: most of the action historically has been. But they assume
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  Speaker 1: it's like one or Tuesday. Well, maybe Austin is doing,
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  Speaker 1: you know, pretty well, or Chicago doing pretty well, or
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  Speaker 1: you know that there's no sense that it's actually dozens
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  Speaker 1: of cities that are showing real, real momentum in terms
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  Speaker 1: of what's happening in in in terms of startups and
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  Speaker 1: you know, the resulting benefits they can provide to the company.
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  Speaker 1: So that's been the real AHA moment for me as
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  Speaker 1: I've traveled around over the last decade, and that's certainly
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  Speaker 1: been the most common kind of feedback I get based
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  Speaker 1: on people who have read the book, as they are
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  Speaker 1: surprised that so many cities, each doing it in their
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  Speaker 1: own particular way, that really are emerging. So you're right,
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  Speaker 1: it's kind of like a little bit of a underground
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  Speaker 1: that is now becoming much more more visible now. You
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  Speaker 1: talk about universities in the book being a generation of
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  Speaker 1: talent and that talent staying in the city as opposed
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  Speaker 1: to going to the coast. But generally speaking, you invested
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  Speaker 1: in a hundred cities. What is creating the startup culture
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  Speaker 1: or you just can't keep startup entrepreneurs down. Well, entrepreneurs
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  Speaker 1: at the core see a problem and decide it's an
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  Speaker 1: opportunity and decided to do something about it, and for
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  Speaker 1: them that's starting a company. Um. And that insight in
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  Speaker 1: terms of seeing a problem and and believing it's a
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  Speaker 1: it's an opportunity, is something that's you know, pretty widespread,
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  Speaker 1: pretty universal. Uh, it's just that in certain places it's encouraged,
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  Speaker 1: in other places it's not. Some cases, actually it's discouraged.
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  Speaker 1: You know, entrepreneurship. Startups are viewed as kind of too
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  Speaker 1: risky in in some places. Uh. And that's what leads
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  Speaker 1: to this this dynamic we talked about before where people
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  Speaker 1: feel like they kind of have to get out of
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  Speaker 1: dots and where where they're living is not really conducive
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  Speaker 1: to starting a company. Uh, it is going to be
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  Speaker 1: able to attract the the money they need. They are
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  Speaker 1: gonna be able to track the talent they need to
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  Speaker 1: build a team, They're not going to be able to
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  Speaker 1: get the attention they need to really scale up, and
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  Speaker 1: so they feel like they have to leave, and I
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  Speaker 1: think that's sad. And so we're trying to create a
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  Speaker 1: dynamic where people really can decide where they want to live,
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  Speaker 1: decide where they want to you know, kind of build,
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  Speaker 1: as opposed of feeling like they have to be in
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  Speaker 1: a certain place where they really don't have kind of
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  Speaker 1: a shot. And there's some parallels. Obviously, you've done a
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  Speaker 1: great job over several decades obviously chronicling the music industry.
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  Speaker 1: There's some parallels there that there there was a time
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  Speaker 1: where if you wanted to be in the music industry
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  Speaker 1: you kind of had to be in in New York
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  Speaker 1: City or Los Angeles. So you're in the movie industry,
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  Speaker 1: you know, similarly, you kind of Hollywood was the place
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  Speaker 1: to be. If you're in the financial services industry, Wall
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  Speaker 1: Street was the place to be. And now over the
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  Speaker 1: last half century, while those cities still have a lead
• 11:50
  Speaker 1: and there's still reasons to be their benefits to be there.
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  Speaker 1: You know, many ways you're creating music, many ways you're
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  Speaker 1: creating movies and you're less tethered to a tickler plate.
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  Speaker 1: That the tech industry is still largely tethered to Silicon Valley,
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  Speaker 1: and that's starting to change, and I think that change
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  Speaker 1: will accelerate in the next ten or twenty years. And
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  Speaker 1: that's a positive because one of the things that really
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  Speaker 1: surprised me when I first started working on this, as
• 12:16
  Speaker 1: I said over a decade ago, uh, it was a
• 12:19
  Speaker 1: two data points. One I mentioned that sevent venture Copita
• 12:22
  Speaker 1: goes to three states. The other is that most of
• 12:24
  Speaker 1: the jobs in this country are not created by small
• 12:28
  Speaker 1: businesses or by big businesses, but by new businesses, companies
• 12:34
  Speaker 1: under five years old, basically startups. That small business as
• 12:37
  Speaker 1: a sector accounts for a ton of jobs. It's very important,
• 12:41
  Speaker 1: but as a sector, it doesn't grow a lot of jobs.
• 12:44
  Speaker 1: And it kind of makes sense because if a restaurant
• 12:46
  Speaker 1: goes out of business, chances are some other restaurant will
• 12:49
  Speaker 1: take over that space and will probably hire about the
• 12:51
  Speaker 1: same number of people. Similarly, with the big companies of
• 12:54
  Speaker 1: fortune companies, some are growing, but some are declining, and
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  Speaker 1: as a sector ends up being kind of, you know,
• 13:01
  Speaker 1: kind of balances itself out so if you're going to
• 13:03
  Speaker 1: create jobs, you've got to back new companies. And if
• 13:07
  Speaker 1: if in order to start a company, it's not always
• 13:10
  Speaker 1: required that you raise capital to start a company. Some
• 13:12
  Speaker 1: are able to boostrap those companies, but most of the
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  Speaker 1: biggest companies that have had the most success, create the
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  Speaker 1: most jobs, create the most economic you know, kind of
• 13:20
  Speaker 1: growth and vitality, do raise venture capital, well, then it's
• 13:23
  Speaker 1: kind of a disconnect if if that capital is not
• 13:26
  Speaker 1: available to most people in in in most places, and
• 13:29
  Speaker 1: so leveling the playing field so that everybody who has
• 13:34
  Speaker 1: an idea feels like they have a shot if they
• 13:36
  Speaker 1: want to starting a company and they feel like they
• 13:38
  Speaker 1: can do that wherever they are, as opposed to feeling
• 13:41
  Speaker 1: like they're kind of left out and left behind and
• 13:44
  Speaker 1: don't really have a shot at building and frankly a
• 13:46
  Speaker 1: shot out the American dream is something I think it's
• 13:50
  Speaker 1: important to address boast to maximize the number of innovations
• 13:54
  Speaker 1: that come out of this country, the new ideas that
• 13:56
  Speaker 1: that you know, kind of lead to the new companies
• 13:58
  Speaker 1: and even lead sometimes the new industries. Uh. And it's
• 14:02
  Speaker 1: also frankly the best way to maximize the likely of
• 14:04
  Speaker 1: the United States continues to be the most innovative entrepreneur
• 14:07
  Speaker 1: nation in the world. That's not you know, kind of guaranteed.
• 14:10
  Speaker 1: There's some risk to you know, the United States, based
• 14:13
  Speaker 1: on what's essentially been the globalization of entrepreneurship over the
• 14:17
  Speaker 1: last a couple of decades or venture capital years ago
• 14:21
  Speaker 1: was invested in the in the United States of global
• 14:23
  Speaker 1: venture capital, and now it's in so other countries have
• 14:27
  Speaker 1: figured out that innovation entrepreneurship is kind of the secret
• 14:31
  Speaker 1: sauce that's kind of made America America, and they're trying
• 14:34
  Speaker 1: to kind of kinta win the next industries. And so
• 14:37
  Speaker 1: we need to double down on innovation entrepreneurship, and we
• 14:41
  Speaker 1: need to do it in a more inclusive way, so
• 14:43
  Speaker 1: not just certain people in certain places doing it really
• 14:46
  Speaker 1: well and and other people in other places feeling kind
• 14:49
  Speaker 1: of left out and left behind. Okay, in Silicon Valley,
• 14:53
  Speaker 1: you had the transistory, had fair Child, so you grew up.
• 14:58
  Speaker 1: These businesses grew up around tech, the logical innovation to
• 15:02
  Speaker 1: begin with. To what degree is it a matter of
• 15:06
  Speaker 1: like COVID where people work remote being one issue, so
• 15:10
  Speaker 1: you can work anywhere, or do these locations actually come
• 15:15
  Speaker 1: with advantages that you don't get on the coast. Uh.
• 15:19
  Speaker 1: Both the first little backstory, even even if you look
• 15:22
  Speaker 1: at the the early days of the Internet, when companies
• 15:26
  Speaker 1: like mine AO all got started, we were in northern
• 15:28
  Speaker 1: Virginia outside of Washington, d C. But that first wave
• 15:32
  Speaker 1: of Internet, the first you know, kind of a couple
• 15:35
  Speaker 1: of dozen companies that ended up playing a key role
• 15:38
  Speaker 1: in building the Internet, building on ramps to the Internet
• 15:41
  Speaker 1: were fairly regionally distributed. You know, as I mentioned, we
• 15:44
  Speaker 1: were in the DC area. Hayes, the big modem company
• 15:47
  Speaker 1: was in Atlanta. CompuServe one of the early online services
• 15:51
  Speaker 1: with Columbus Ohio. IBMS PC operations were in boc Overton, Florida.
• 15:56
  Speaker 1: Sprend the communications company was in Kansas City. Uh, you know,
• 16:00
  Speaker 1: the Dell was in Austin. Microsoft actually started in Albuquerque
• 16:05
  Speaker 1: until you know, they moved to Seattle. So the a
• 16:09
  Speaker 1: lot of companies were all across the country. It was
• 16:11
  Speaker 1: only in the last twenty years where it shifted from
• 16:15
  Speaker 1: building the Internet to building software on top of the Internet.
• 16:19
  Speaker 1: That's really when Silicon Valley grew to you know, kind
• 16:22
  Speaker 1: of its prominence. Indeed, it's it's dominance I think in
• 16:25
  Speaker 1: this next era, This next wave what I've called the
• 16:28
  Speaker 1: Internet third wave. UH. It is sort of when the
• 16:31
  Speaker 1: Internet meets the real world, and that's when some of
• 16:34
  Speaker 1: these sectors that we've been talking about, like healthcare and
• 16:37
  Speaker 1: food and others start getting disrupted. And some of the
• 16:40
  Speaker 1: expertise you need and some of the credibility you need
• 16:42
  Speaker 1: to establish partnerships in those sectors are you know, in
• 16:46
  Speaker 1: the middle of country healthcare, for example, it depends on
• 16:50
  Speaker 1: to see when you're trying to build there. But if
• 16:51
  Speaker 1: you're trying to build a disruptive healthcare company, you're gonna
• 16:55
  Speaker 1: need partnerships with hospitals so they actually integrate what you're building.
• 16:59
  Speaker 1: And you know, you need to get doctors and nurses
• 17:01
  Speaker 1: to actually use it, you need to get health plans
• 17:03
  Speaker 1: to actually pay for it. Uh. And having some connection
• 17:07
  Speaker 1: to that industry, some insights into that industry, some relationships
• 17:10
  Speaker 1: with people in that industry likely will advantage you. If
• 17:13
  Speaker 1: you're trying to get a deal with Cleveland Clinic in Ohio,
• 17:17
  Speaker 1: or Mayo Clinic in Minnesota, or MD Anderson in Texas,
• 17:21
  Speaker 1: there Johns Hopkins in Maryland, some of the key companies
• 17:24
  Speaker 1: that could really help put your your company on on
• 17:27
  Speaker 1: the map. So there is some value to these rising
• 17:29
  Speaker 1: cities in this next era we're entering. But to the
• 17:32
  Speaker 1: other part of your question, there absolutely is something that's
• 17:34
  Speaker 1: happened during the pandemic where it has been a unlock.
• 17:38
  Speaker 1: The sense that you had to be in certain places
• 17:41
  Speaker 1: is less clear. There's clearly more flexibility in terms of
• 17:44
  Speaker 1: how you live and where you live and how you work,
• 17:46
  Speaker 1: and the whole idea of more hybrid work and remote
• 17:49
  Speaker 1: work is opening an opportunity for people to decide where
• 17:53
  Speaker 1: they want to live and not feel like they have
• 17:55
  Speaker 1: to be in a certain place, and for companies, and
• 17:57
  Speaker 1: as a result, you're seeing an acceleration of companies start
• 18:00
  Speaker 1: in these these rise of rest cities. So I think
• 18:02
  Speaker 1: it's it's both factors. This next era. There are certain
• 18:05
  Speaker 1: cities that give you an advantage, but also there is
• 18:09
  Speaker 1: this pandemic induced almost shake the snow globe moment where
• 18:12
  Speaker 1: we're as a society trying to figure out this next chapter,
• 18:16
  Speaker 1: and clearly flexibility is part of it. Okay, Historically the
• 18:28
  Speaker 1: image of an inventor was a lone guy tinkering in
• 18:31
  Speaker 1: the basement, But in the book you make a strong
• 18:36
  Speaker 1: statement about network effects community. To what degree today is
• 18:41
  Speaker 1: important to call on a team or does the loan
• 18:43
  Speaker 1: inventor still have a role. Well, it is that the
• 18:48
  Speaker 1: loan inventor is a little bit of a you know,
• 18:50
  Speaker 1: kind of figment of imagination. Most important thing. You know,
• 18:54
  Speaker 1: Thomas Edison a century ago was invented a lot of things,
• 18:57
  Speaker 1: but he wasn't really doing it on his own. He
• 18:59
  Speaker 1: always had teams that helped take those ideas and scale them.
• 19:03
  Speaker 1: And certainly we've seen that in the work I've done,
• 19:06
  Speaker 1: including with the with with a O. L. It required
• 19:09
  Speaker 1: a mix of skill sets and I provided a certain
• 19:12
  Speaker 1: kind of perspective, but I, you know, absolutely couldn't have
• 19:15
  Speaker 1: done it on my own. It required a team, and
• 19:17
  Speaker 1: I've learned that entrepreneurship is a team sport. As we
• 19:21
  Speaker 1: enter this new era where the problems you're solving as
• 19:26
  Speaker 1: entrepreneurs tend to be more complicated, more multifaceted, where partnerships
• 19:31
  Speaker 1: do become more important, Even understanding policy often becomes more important.
• 19:35
  Speaker 1: You've got to have a broader, broader skill set, and
• 19:38
  Speaker 1: so that that is I think can increasingly be the
• 19:41
  Speaker 1: story of entrepreneurship. Sometimes I think we celebrate the the
• 19:45
  Speaker 1: entrepreneur too much and not the team that really takes
• 19:48
  Speaker 1: that idea and turns it into something significant that that
• 19:52
  Speaker 1: team should get more more attention. And there's also something
• 19:56
  Speaker 1: which is part of your question to clustering of people.
• 20:00
  Speaker 1: And you know there's something too. When a company is
• 20:04
  Speaker 1: successful in a city, what we call a tent pole company,
• 20:07
  Speaker 1: that leads to other success in that city. And we've
• 20:10
  Speaker 1: seen that in the last couple of decades in Austin,
• 20:13
  Speaker 1: the success of Dell there has really been helpful. The
• 20:17
  Speaker 1: success to the south By Festival got a lot of
• 20:19
  Speaker 1: people visiting Austin that otherwise within the visit of Austin,
• 20:22
  Speaker 1: and as a result, it became a magnet for for
• 20:25
  Speaker 1: for people. And now there's hundreds of companies that startups
• 20:29
  Speaker 1: that have great success there and that was not the case,
• 20:32
  Speaker 1: you know, to three decades ago. And so this tent
• 20:35
  Speaker 1: pole company dynamic is critical. I mentioned Microsoft moving to Seattle.
• 20:40
  Speaker 1: The only reason Microsoft moved to Seattle is the two founders,
• 20:44
  Speaker 1: Bill Gates and Paul Allen, We're from Seattle and they
• 20:46
  Speaker 1: want to go home. That's fun. They moved to Seattle
• 20:49
  Speaker 1: at the time Seattle was struggling. It was overreliant on
• 20:53
  Speaker 1: some industries that were in decline, uh and didn't really
• 20:56
  Speaker 1: have a new act and you know, because Microsoft ended
• 21:00
  Speaker 1: up scaling there and became a tech hub because Microsoft
• 21:04
  Speaker 1: was there. Jeff Bezos actually got in a car left
• 21:07
  Speaker 1: New York City to drive to Seattle when he was
• 21:09
  Speaker 1: starting Amazon for one reason and one reason only. He
• 21:13
  Speaker 1: was he wanted to hire some Microsoft engineers. So I figured,
• 21:15
  Speaker 1: you can pick off some of those Microsoft people to
• 21:18
  Speaker 1: build to build Amazon. Now, Amazon, of course has become
• 21:21
  Speaker 1: a very successful company, also strengthened the Seattle startup ecosystem.
• 21:27
  Speaker 1: So what was a struggling city just a few decades
• 21:29
  Speaker 1: ago now is a thriving city. And the success of
• 21:32
  Speaker 1: some companies leads others, you know, companies to start up,
• 21:36
  Speaker 1: and some of the early employees at those companies, you know,
• 21:39
  Speaker 1: want to be part of some new companies, or they
• 21:42
  Speaker 1: had made some money on stock options want to invest
• 21:44
  Speaker 1: in new companies. And it creates that positive kind of
• 21:47
  Speaker 1: increasing returns network effect, kind of tipping point dynamic for cities.
• 21:51
  Speaker 1: And that's one of the things we're seeing more of
• 21:54
  Speaker 1: in recent years. And again that's part of the reason
• 21:56
  Speaker 1: I even wrote the book because I think people don't
• 21:58
  Speaker 1: realize what's happened in these cities, and I think they
• 22:02
  Speaker 1: will be surprised and frankly also encouraged that there that
• 22:05
  Speaker 1: this innovation economy in this next next chapter can be
• 22:10
  Speaker 1: more inclusive. And that really ties also in, you know,
• 22:13
  Speaker 1: at least a degree with some of the political dysfunction
• 22:16
  Speaker 1: we have in this country where where you know, there
• 22:19
  Speaker 1: were in these tribes and there are a lot of factors.
• 22:21
  Speaker 1: Obviously I don't want to make it overly simplistic, but
• 22:24
  Speaker 1: one of the factors is an opportunity gap where there
• 22:27
  Speaker 1: are definitely people that are doing really well in some
• 22:30
  Speaker 1: places and a lot of people, most people in most
• 22:32
  Speaker 1: places are feeling left out. They are feeling left behind.
• 22:36
  Speaker 1: They're not celebrating the disruption and Silicon Valley. They're kind
• 22:39
  Speaker 1: of angry about it. And you know, we need to
• 22:42
  Speaker 1: you know, kind of create more companies in their own
• 22:45
  Speaker 1: cities that can create more jobs in those cities and
• 22:48
  Speaker 1: create more opportunity and even more hope in those cities.
• 22:52
  Speaker 1: And if we do that, that will be good for
• 22:54
  Speaker 1: those cities, and also I think it can be good
• 22:55
  Speaker 1: for the country more broadly. Shark take Nipause dive or
• 23:00
  Speaker 1: negative for entrepreneurship in the kind I think and that
• 23:03
  Speaker 1: positive it it's it's really opened people's eyes to the
• 23:06
  Speaker 1: idea of starting a business and and you know, probably
• 23:08
  Speaker 1: inspired a lot of people who might not otherwise even
• 23:12
  Speaker 1: thought about it. And as people when I was growing up,
• 23:14
  Speaker 1: I didn't know what an entrepreneur was until I was
• 23:16
  Speaker 1: a little bit older. Uh, And so you know that
• 23:19
  Speaker 1: I think is is a is a is a net
• 23:22
  Speaker 1: positive just in terms of getting people thinking about things.
• 23:24
  Speaker 1: And as I said before, maybe next time they see
• 23:28
  Speaker 1: a problem they turned it into an opportunity. One of
• 23:31
  Speaker 1: the stories I love it, and it's in the book
• 23:32
  Speaker 1: as there's a mom living in a suburb outside of
• 23:35
  Speaker 1: Indianapolis who five or so years ago was kind of
• 23:38
  Speaker 1: worried about the water quality because in Flint, Michigan, there
• 23:42
  Speaker 1: was a well publicized crisis about water quality and safety.
• 23:46
  Speaker 1: And she said, I've got young kids. I want to
• 23:49
  Speaker 1: test my water to I want to make sure that
• 23:51
  Speaker 1: they're drinking safe water. So she called the water companies,
• 23:54
  Speaker 1: I want to test my water and they said, what,
• 23:55
  Speaker 1: we actually don't do that. I said, okay, and she
• 23:59
  Speaker 1: called some other company that specialized in and in sort
• 24:04
  Speaker 1: of industrial technologies. Uh and and said, I'd like to
• 24:07
  Speaker 1: get my water tests and it will do that, but
• 24:09
  Speaker 1: we're really set up to do that for big companies
• 24:11
  Speaker 1: and it will cost you a thousands of dollars to
• 24:13
  Speaker 1: test your water in your home, and so what makes
• 24:15
  Speaker 1: no sense? So she said, well, this is crazy. I'm
• 24:17
  Speaker 1: sure that other people like me or concerned about their
• 24:19
  Speaker 1: water quality. And she started a company called one Water
• 24:23
  Speaker 1: that created a very affordable way for people to inconvenient
• 24:26
  Speaker 1: way for people to get their their water tested, and
• 24:28
  Speaker 1: that outscaled. It's even providing some of these testing services
• 24:32
  Speaker 1: to cities, including cities like like San Francisco. That was
• 24:35
  Speaker 1: just somebody who saw a problem and and turn it
• 24:37
  Speaker 1: in an opportunity. And so hopefully things like Shark Tank
• 24:41
  Speaker 1: will open people's eyes that they see a problem rather
• 24:44
  Speaker 1: than just talking about it or complaining about it, they
• 24:47
  Speaker 1: maybe can do something about it by by starting a company.
• 24:51
  Speaker 1: And increasingly because of what's been happening, they have more
• 24:54
  Speaker 1: flexibility to do that anywhere they are as opposed to
• 24:57
  Speaker 1: feeling like why I have this idea, I want to
• 24:58
  Speaker 1: do something about it, but I really don't have any
• 25:01
  Speaker 1: ability to do it. Because I'm you know, living in
• 25:04
  Speaker 1: some part of the country that just is not well
• 25:06
  Speaker 1: known for for startups and innovation and entrepreneurship, and that
• 25:11
  Speaker 1: needs to change. Okay, let's talk about the basics on
• 25:15
  Speaker 1: your side of the fence. Obviously, there are legendary venture
• 25:18
  Speaker 1: capital firms in the Silicon Valley. They're well known ones
• 25:22
  Speaker 1: in New York. Then you read about somebody who's got
• 25:25
  Speaker 1: their own little fund. Tell me about the creation of
• 25:29
  Speaker 1: the venture capital firm, whether there's competition amongst you, how
• 25:35
  Speaker 1: the investment works, a revolution where you get your money
• 25:39
  Speaker 1: to fund your funds. A couple of parts of that. First,
• 25:44
  Speaker 1: venture capital as an industry as a sector is a
• 25:49
  Speaker 1: relatively modern phenomenon. It's really the last fifty years that
• 25:52
  Speaker 1: it emerged, and initially emerged in New York and then
• 25:55
  Speaker 1: in San Francisco, then in Boston. That's part of the
• 25:58
  Speaker 1: reasons why those cities have so strong in terms of
• 26:01
  Speaker 1: where venture capitalists have clustered and therefore where entrepreneurs have
• 26:05
  Speaker 1: have clustered. There's three ways people raise money for venture firms.
• 26:10
  Speaker 1: The first is they've made some money from some other
• 26:13
  Speaker 1: thing and start reinvesting. It goes back to this dynamic
• 26:16
  Speaker 1: of of of having a successful company leads to people
• 26:20
  Speaker 1: making money from that company, and some of them decided
• 26:23
  Speaker 1: to invest in the next generation of entreprenurs. That's actually
• 26:26
  Speaker 1: how I got started. After you know, starting a O L,
• 26:29
  Speaker 1: I started making some investments and then I wrapped it
• 26:32
  Speaker 1: up from there. So that's that's one way. They just
• 26:34
  Speaker 1: have some access to you know, to the capital. A
• 26:38
  Speaker 1: second way is in a more common way, is they
• 26:41
  Speaker 1: tap into institutional investors, so big pension funds, university endowments.
• 26:47
  Speaker 1: They're trying to maximize the return they get for those
• 26:50
  Speaker 1: endowments so they can do more programs for their particular
• 26:54
  Speaker 1: university or for the particular hospital. And so they are
• 26:57
  Speaker 1: sort of professional investors that have a whole series investments.
• 27:01
  Speaker 1: Obviously they have fairly diversified portfolio. But one part of it,
• 27:05
  Speaker 1: and recently it's become a more important part of it,
• 27:07
  Speaker 1: is investing in these private companies, uh, you know, the
• 27:12
  Speaker 1: by terms of venture capital in in in particular. And
• 27:15
  Speaker 1: there are also groups that are what are called fund
• 27:18
  Speaker 1: of funds that also might make raise capital from some
• 27:21
  Speaker 1: large investors and then kind of divate out to a
• 27:24
  Speaker 1: group of of of smaller funds, so there's different ways
• 27:28
  Speaker 1: you can raise that money. We did something a little
• 27:30
  Speaker 1: bit different, uh, for this most recent Rise the Rest Fund. Historically,
• 27:35
  Speaker 1: revolutions started initially where it was just money I was investing,
• 27:38
  Speaker 1: so essentially my capital. Than about ten years ago, we
• 27:41
  Speaker 1: opened it up to institutional investors and we have a
• 27:44
  Speaker 1: Revolution Growth Fund and Revolution Inventors Fund investing companies like
• 27:48
  Speaker 1: DraftKings and Sweet Green and Clear and and dozens of others.
• 27:52
  Speaker 1: And that's with the support of institutional investors who are
• 27:56
  Speaker 1: essentially investing alongside of us. For this more recent rights
• 28:01
  Speaker 1: Rest furred, we just reached out to individuals and so
• 28:03
  Speaker 1: we have very prominent successful entrepreneurs and investors executives who
• 28:09
  Speaker 1: have joined us as investors in our Rise of Rest
• 28:11
  Speaker 1: seed fund, which is investing in these cities all around
• 28:14
  Speaker 1: the country. People like Jeff Bezos and Howard Schultz, and
• 28:17
  Speaker 1: you know hedge fund people like Gray Dally, and private
• 28:20
  Speaker 1: equity people like uh Henry Kravis, David Rubinstein, you know,
• 28:25
  Speaker 1: venture investors like Jim Bryer and John Dorther, entrepreneurs like
• 28:29
  Speaker 1: Sarah Blakeley and Tory Birch, and you know, you know
• 28:33
  Speaker 1: Eric Schmidt Mike Milk and a great group of individuals
• 28:36
  Speaker 1: who basically believe in this idea of the rise the
• 28:39
  Speaker 1: rest believe that their entrepreneurs all across the country believe
• 28:42
  Speaker 1: there's a disconnect between no ability for most people in
• 28:46
  Speaker 1: most parts of the country to access venture capital. So
• 28:48
  Speaker 1: are co investors with us in that particular fund? Do
• 28:53
  Speaker 1: you personally know all those people or do someone on
• 28:57
  Speaker 1: your team reach out? Are you more of a cerebral guy,
• 29:01
  Speaker 1: you very social such that you have relationships with these
• 29:04
  Speaker 1: investors and could just bring them up just because of
• 29:10
  Speaker 1: what I've done over a number of decades, I've have
• 29:13
  Speaker 1: built a pretty good network, so you know, I wouldn't
• 29:16
  Speaker 1: say all there are a few people that invested. It
• 29:18
  Speaker 1: was part of Rise Arrest too. I didn't know personally before,
• 29:21
  Speaker 1: but the vast majority I didn't know personally, and many
• 29:24
  Speaker 1: actually were aware of what we're doing, and we're kind
• 29:26
  Speaker 1: of intrigued with what we're doing and express an interest
• 29:29
  Speaker 1: and and and being investors alongside of it. So we
• 29:32
  Speaker 1: structured something so uh, there's an ability for those people
• 29:36
  Speaker 1: doing it's and it's super helpful if we're going around
• 29:38
  Speaker 1: the country that you know some of these prominent successful
• 29:42
  Speaker 1: entrepreneurs and investors you know, are are essentially backing them.
• 29:46
  Speaker 1: When we make an investment in a company with our
• 29:48
  Speaker 1: Rise Arrest Fund, it's it's it's really the these these
• 29:52
  Speaker 1: dozens of other people are essentially investors in your company
• 29:55
  Speaker 1: as well, and I think that's helpful. I guess people
• 29:57
  Speaker 1: are some a little bit more more momentum when they're
• 30:00
  Speaker 1: hiring people that they're they're more likely to join the company,
• 30:03
  Speaker 1: and a little more momentum when they're they're trying to
• 30:06
  Speaker 1: attract customers or partners, a little more momentum when they're
• 30:11
  Speaker 1: trying to attract follow on investors. So having that that
• 30:14
  Speaker 1: network I think has been been been quite helpful. But
• 30:17
  Speaker 1: just me doing this personally, I don't think we've had
• 30:20
  Speaker 1: nearly the same level of interest or attraction than having
• 30:24
  Speaker 1: several other dozen people you're kind of joining us on
• 30:26
  Speaker 1: this effort. Let's talk about venture capital in general, and
• 30:30
  Speaker 1: revolution general is opposed to just the rise of the
• 30:32
  Speaker 1: rest fun they're different stages of when people invest in
• 30:36
  Speaker 1: recent horrowits another venture capital firm. It's famous for coming
• 30:40
  Speaker 1: in late, So there's early tell us about the different
• 30:44
  Speaker 1: stages you might invest in a company. Well, that the
• 30:49
  Speaker 1: very earliest stage. You know, some think of it as
• 30:53
  Speaker 1: sort of seed investment or angel investment, where you're raising
• 30:56
  Speaker 1: a relatively small amount of money just to kind of
• 30:59
  Speaker 1: get going, just to kind of get that idea on
• 31:02
  Speaker 1: the playing field, build a initial product or service, and
• 31:06
  Speaker 1: you know, hire a few people just to kind of
• 31:08
  Speaker 1: get going. So that's called the seed stage. Uh, I
• 31:13
  Speaker 1: think if it varies depending on what the company is,
• 31:15
  Speaker 1: but yet seed state, you know, the investments generally are
• 31:18
  Speaker 1: in the know, few hundred thousand dollar range. Sometimes it
• 31:22
  Speaker 1: can be more, sometimes it can be less, but generally
• 31:24
  Speaker 1: that's sort of the range that people are talking about.
• 31:27
  Speaker 1: And then there's sort of the venture stage, which is
• 31:31
  Speaker 1: the company is more developed and and the team is
• 31:35
  Speaker 1: more assembled and uh there's a little bit more clarity
• 31:38
  Speaker 1: regarding product market fit things like that. So there's still
• 31:43
  Speaker 1: risk associated with it still is still a fledgling company,
• 31:47
  Speaker 1: but at that point the company and the entrepreneur back
• 31:51
  Speaker 1: in the company really feel like they need to raise
• 31:53
  Speaker 1: more capital. Usually it's a few million dollars and that's
• 31:56
  Speaker 1: a whole other group of venture firms to specialize at
• 32:00
  Speaker 1: that stage. And then, as you said, there's a later
• 32:02
  Speaker 1: stage where people think of as the growth stage, where
• 32:05
  Speaker 1: the company really has you know, kind of got some traction.
• 32:09
  Speaker 1: It's kind of a real business. It still needs more
• 32:11
  Speaker 1: capital to expand it's still not yet profitable, but but
• 32:15
  Speaker 1: it's clear that there really is an idea there, and
• 32:17
  Speaker 1: that's the growth stage. And generally people are raising tens
• 32:20
  Speaker 1: of million dollars in the in the growth stage, and
• 32:23
  Speaker 1: more recently sometimes a lot more people. You know, some
• 32:26
  Speaker 1: of the companies more recently have delayed going public and
• 32:31
  Speaker 1: be able to raise you very large kind of private
• 32:34
  Speaker 1: you know, late stage rounds before they go public. So
• 32:37
  Speaker 1: the way to think about it is it, you know,
• 32:39
  Speaker 1: kind of whether you're at the very early stage where
• 32:42
  Speaker 1: you need some of that initial seed capital to just
• 32:44
  Speaker 1: get going, or at the venture stage where you have
• 32:47
  Speaker 1: a little bit more attraction but but do need some
• 32:50
  Speaker 1: some capital and and also some expertise to help you
• 32:52
  Speaker 1: build a company, or the somewhat later stage where you
• 32:56
  Speaker 1: really do see a big opportunity and you really want
• 32:59
  Speaker 1: to kind of put a foot on the accelerator and
• 33:01
  Speaker 1: need the additional capital to hire more people or to
• 33:04
  Speaker 1: spend more on marketing or whatever whatever. The you know,
• 33:07
  Speaker 1: the focus might be and a revolution participated all those
• 33:11
  Speaker 1: different levels, whether it be with different funds. Yeah, we do.
• 33:14
  Speaker 1: We do, and then other firms do. There's some that
• 33:16
  Speaker 1: just focused on one stage. But we we really want
• 33:19
  Speaker 1: to be able to back entrepreneurs to kind of every
• 33:21
  Speaker 1: stage of the of the journeys and but way so
• 33:23
  Speaker 1: we have dedicated teams focused on that early seed stage,
• 33:27
  Speaker 1: another dedicated team focused on the venture stage, and a
• 33:30
  Speaker 1: third team focused on the on the growth stage. Okay,
• 33:33
  Speaker 1: so you go into one of these cities and you
• 33:36
  Speaker 1: start with X number of companies who would like to
• 33:39
  Speaker 1: gain the hundred thousand dollars uh, and then you win
• 33:43
  Speaker 1: to it down and then you ultimately award one company.
• 33:46
  Speaker 1: What are you seeing there? Are you seeing a lot
• 33:49
  Speaker 1: of you're an expert, are you seeing a lot of
• 33:51
  Speaker 1: viable ideas? Were you're seeing only a couple? What is
• 33:54
  Speaker 1: out there in the marketplace? Now, we're seeing a lot
• 33:57
  Speaker 1: of ideas that of course a lot of them are
• 34:00
  Speaker 1: are not great ideas. You get a mix. But by
• 34:02
  Speaker 1: the time we our team kind of talks to people
• 34:05
  Speaker 1: and filters it from the initial called hundreds in each
• 34:08
  Speaker 1: city to the best ten. You know, the ten are
• 34:11
  Speaker 1: are always pretty, pretty interesting, pretty compelling in some way
• 34:14
  Speaker 1: or fashion. But one of the things that that we've
• 34:17
  Speaker 1: learned as while the idea is important, obviously, it's it's
• 34:20
  Speaker 1: sort of the core of what you're building is you
• 34:22
  Speaker 1: need to understand what exactly you know is the is
• 34:26
  Speaker 1: the goal? What is the vision? What kind of what
• 34:28
  Speaker 1: what mountain are you trying to climb? What what you know?
• 34:31
  Speaker 1: What what battle are you trying to fight? So it
• 34:33
  Speaker 1: starts with that the vision, or it starts with the idea. Uh.
• 34:36
  Speaker 1: You quickly realize that it's sort of and there's a
• 34:39
  Speaker 1: Thomas Edison quote from a century ago. Vision without executionist hallucination.
• 34:45
  Speaker 1: You quickly recognize it's how do you take that idea
• 34:48
  Speaker 1: and really scale it? Which gets back to some of
• 34:50
  Speaker 1: the things we talked about before that what what is
• 34:52
  Speaker 1: the team dynamic and how does that really allow you
• 34:55
  Speaker 1: to scale that. So when we're talking to entrepreneurs, whether
• 34:58
  Speaker 1: it be in these pitch competitions and are just kind
• 35:00
  Speaker 1: of one on one, we understand the idea, we also
• 35:03
  Speaker 1: understand want understand the team that's going to turn that
• 35:05
  Speaker 1: into a real a real business. Uh. And then you
• 35:08
  Speaker 1: also need to have some evidence, particularly as you're looking
• 35:11
  Speaker 1: at these some of the later stage investments that there,
• 35:13
  Speaker 1: it really has competitive advantage with some people think of
• 35:16
  Speaker 1: as competitive moats or something that is unique about what
• 35:19
  Speaker 1: you're you're doing. And I also want to understand what
• 35:22
  Speaker 1: some of the partnerships are that are allowing you to
• 35:24
  Speaker 1: scale the business. So there are a number of different
• 35:26
  Speaker 1: different factors, but it's really it starts with trying to
• 35:29
  Speaker 1: understand what that big idea is and what's the what's
• 35:33
  Speaker 1: the dynamic of the team that's going to execute against
• 35:36
  Speaker 1: that idea and turn into a real business. Now they're
• 35:39
  Speaker 1: these accelerators, and one is tech Stars and tex Stars
• 35:44
  Speaker 1: Music started up a few years ago and they choose
• 35:47
  Speaker 1: like ten companies and they come in and they want advisors,
• 35:52
  Speaker 1: and I went in to advise, and just about all
• 35:55
  Speaker 1: these people were delusional. They did not have an understanding
• 35:59
  Speaker 1: of the landscape. They had a slight understanding of what
• 36:02
  Speaker 1: was going on, but it wasn't a practical understanding. And
• 36:05
  Speaker 1: there were one or two that I thought were could
• 36:07
  Speaker 1: possibly be viable, and then ultimately none has really broken
• 36:13
  Speaker 1: through on any big level. There's a number of questions here. One,
• 36:18
  Speaker 1: you know, to what degree to people know the landscape
• 36:21
  Speaker 1: and our sophisticated maybe, and then there's timing. There's a
• 36:25
  Speaker 1: lot of investment capital in vtric capital UH. In the
• 36:28
  Speaker 1: music business years ago, most people lost all their money.
• 36:33
  Speaker 1: As I sit here right now, I don't see a
• 36:34
  Speaker 1: ton of opportunity. So what is the landscape do? Is
• 36:41
  Speaker 1: it about choosing the right vertical? Is it about having
• 36:45
  Speaker 1: expertise in some area that you're matching with the vertical
• 36:49
  Speaker 1: or understanding that vertical? Look, I know that there are
• 36:52
  Speaker 1: no strict rules, but give us some insight. Well, I
• 36:56
  Speaker 1: think it's involving. I think it's an interesting, interesting, wait
• 36:59
  Speaker 1: your friend question, because in Silicon Valley there's sort of
• 37:02
  Speaker 1: this uh truism that the biggest disruptors often go into
• 37:09
  Speaker 1: a new industry knowing nothing about it, and as a result,
• 37:14
  Speaker 1: they see things that people in the industry don't see,
• 37:18
  Speaker 1: have insights in terms of different products or services, just
• 37:21
  Speaker 1: different way of doing things, and as a result having
• 37:24
  Speaker 1: that fresh perspective, having that almost naive perspective and asking
• 37:29
  Speaker 1: sort of basic kind of questions and looking for kind
• 37:33
  Speaker 1: of emerging opportunities, they're able to build some some very
• 37:36
  Speaker 1: significant companies. And there are many examples of that. That PayPal,
• 37:40
  Speaker 1: which twenty years ago was one of the first really
• 37:42
  Speaker 1: successful you know, you know, digital payment companies. Elon Musk
• 37:47
  Speaker 1: and others were part of that. None of the team
• 37:50
  Speaker 1: really understood the financial service industry or the credit card industry,
• 37:55
  Speaker 1: and they were able to do some things because of
• 37:57
  Speaker 1: that naivete that allowed them to to to be successful.
• 38:01
  Speaker 1: More recently, you know, ten fifteen years ago, a similar
• 38:04
  Speaker 1: dynamic happening with Airbnb. The you know, the founders there
• 38:08
  Speaker 1: didn't really understand the hotel industry, the hospitality industry, so
• 38:12
  Speaker 1: they came up with what most people thought was sort
• 38:14
  Speaker 1: of a crazy idea, but it turned out to be
• 38:16
  Speaker 1: a great idea. So there's definitely that thread, that that
• 38:20
  Speaker 1: stream where those fresh perspectives are are important. Those fresh
• 38:24
  Speaker 1: insights are important and can lead to great entrepreneurial success stories.
• 38:29
  Speaker 1: But there's also another dynamic, and this I think is
• 38:32
  Speaker 1: becoming increasingly important. It goes back to some of the
• 38:35
  Speaker 1: things we're talking about earlier that in industries, whether you're
• 38:39
  Speaker 1: talking about the music industry or the healthcare industry, or
• 38:42
  Speaker 1: the agriculture industry or the sports industry, there are many
• 38:47
  Speaker 1: industries where in order to be successful, you have to
• 38:51
  Speaker 1: go beyond having that insight and actually be able to
• 38:54
  Speaker 1: build partnerships to be be get real scale. Otherwise you
• 38:59
  Speaker 1: don't really have much success. Going back to the example
• 39:02
  Speaker 1: I mentioned in in health care, if you built really
• 39:05
  Speaker 1: cool software, but you couldn't get hospitals to partner with you,
• 39:10
  Speaker 1: what's the point. And so increasingly you need to have
• 39:13
  Speaker 1: the balance the blend of some of that fresh perspective,
• 39:18
  Speaker 1: but also have some real expertise in in the industry.
• 39:21
  Speaker 1: That's probably why in terms of tech stars, because you
• 39:24
  Speaker 1: have expertise in the industry, they said, let's bring some
• 39:27
  Speaker 1: people together that can help these entrepreneurs and complement some
• 39:31
  Speaker 1: of the perspectives they might bring by bringing some of
• 39:34
  Speaker 1: the real world insights that come from that that that industry.
• 39:37
  Speaker 1: I think that balancing act is going to become much
• 39:40
  Speaker 1: more important in the next ten or twenty years. And
• 39:43
  Speaker 1: and occasionally they'll still be companies that launch where the
• 39:46
  Speaker 1: people within the company know nothing about the industry they're
• 39:49
  Speaker 1: trying to disrupt, but more often at least some members
• 39:53
  Speaker 1: on the team will bring that perspective, bring that the
• 39:55
  Speaker 1: credibility that comes with that. That will result in some
• 39:59
  Speaker 1: of those companies being much more successful because they have
• 40:02
  Speaker 1: on their teams, or on their boards, or in their
• 40:04
  Speaker 1: investor groups, or somewhere in their in their network, some
• 40:08
  Speaker 1: of the people that really are able to to take
• 40:11
  Speaker 1: that idea and scale it, in part by building partnerships
• 40:15
  Speaker 1: with people in the industry that will ask some of
• 40:17
  Speaker 1: the basic questions that anybody industry would would not ask.
• 40:22
  Speaker 1: To what degree do you encounter headstrong entrepreneurs? Here's an
• 40:26
  Speaker 1: analogy between the music business. You find someone who says,
• 40:29
  Speaker 1: I want to be successful, and if you try to
• 40:32
  Speaker 1: give them any advice, say no, no, no, I gotta
• 40:34
  Speaker 1: do it my own way, and you end up rolling
• 40:36
  Speaker 1: your eyes. Do you encounter that in your ventures companies? Sure,
• 40:42
  Speaker 1: And it's a balancing act. We want entrepreneurs who are
• 40:45
  Speaker 1: you know, confident and passionate, and you know, have strong
• 40:50
  Speaker 1: convictions and and a strong perspective on how the world's
• 40:54
  Speaker 1: gonna change, how the market's going to change, why that's
• 40:56
  Speaker 1: going to create opportunities and and evangelists for their idea
• 41:01
  Speaker 1: and can recruit other people to their team and so forth.
• 41:04
  Speaker 1: So you definitely want that that that competence, But I
• 41:08
  Speaker 1: do think it's helpful to balance that at least a
• 41:11
  Speaker 1: little bit of humility, a little bit of listening, a
• 41:13
  Speaker 1: little bit of maybe I don't have all the answers,
• 41:15
  Speaker 1: and and but sure we've we've backed a whole mix
• 41:18
  Speaker 1: of entrepreneurs over the over the years and find the
• 41:21
  Speaker 1: ones that are at least the best fit for us,
• 41:24
  Speaker 1: and you know, usually the most successful. The ones that
• 41:26
  Speaker 1: are you know, have pretty strong views, but also recognize
• 41:30
  Speaker 1: that there's value to to listening and engaging with with
• 41:34
  Speaker 1: others and that helps them refine their ideas. Ultimately they
• 41:38
  Speaker 1: can be be more successful because of that, that that
• 41:41
  Speaker 1: team dynamic. Now, if I win and I get a
• 41:51
  Speaker 1: hundred thousand dollars, do you wave and take the bus off?
• 41:55
  Speaker 1: And that's the last they ever hear of you? Or
• 41:57
  Speaker 1: how involved are you in the company you invest? Now? Well,
• 42:01
  Speaker 1: first of all, I should say we started these bus
• 42:03
  Speaker 1: tours we talked about earlier eight years ago. We've done
• 42:06
  Speaker 1: eight bus tours and visited over forty cities and done
• 42:09
  Speaker 1: over forties pitch competitions. Uh, but I said earlier, we
• 42:13
  Speaker 1: also invested about two hundred companies and hundred cities, So
• 42:18
  Speaker 1: most of our investments are in companies we did not
• 42:21
  Speaker 1: meet via bus tours, and most of our investments in
• 42:24
  Speaker 1: cities that we haven't visited on our bus tours. So
• 42:26
  Speaker 1: initially it was about the bus tours and the pitch competitions,
• 42:30
  Speaker 1: but as we saw more and more opportunity, we kept
• 42:32
  Speaker 1: extending this. This network of over three hundred regional venture
• 42:36
  Speaker 1: firms we co invest with that has been a source
• 42:39
  Speaker 1: of more opportunities. But answer your question, I do get
• 42:42
  Speaker 1: involved with the companies. I get more involved with the
• 42:44
  Speaker 1: companies at the later stage, and I do at the
• 42:46
  Speaker 1: earlier stage. But we have a whole team here that's
• 42:49
  Speaker 1: focused specifically on working with the companies at the earlier stage.
• 42:53
  Speaker 1: We host regular summits who we call Rise of the
• 42:55
  Speaker 1: Rest summits, bringing the entrepreneurs together that we're back bringing
• 42:59
  Speaker 1: the investors we've how invested with, back bringing the community
• 43:02
  Speaker 1: startup community leaders in different cities altogether to to learn
• 43:06
  Speaker 1: from each other. So I'm certainly actively involved in this.
• 43:09
  Speaker 1: I'm working as hard as I was when I was
• 43:11
  Speaker 1: running a well twenty plus years ago, and it's it's
• 43:13
  Speaker 1: because it's a lot of fun. So you know, obviously
• 43:18
  Speaker 1: the cities should go to the uh you're there with
• 43:21
  Speaker 1: the bus there's other people who have you know, combed
• 43:24
  Speaker 1: through the companies, but the people ever just knock on
• 43:27
  Speaker 1: your door. And for those who have knocked on your door,
• 43:31
  Speaker 1: have any of them been good and you've invested in them? Yeah.
• 43:34
  Speaker 1: A bunch of I wanted to particularly read about in
• 43:37
  Speaker 1: the book is entreprene Jonathan Webb just showed up at
• 43:39
  Speaker 1: our office here in Washington, c kept kept pestering the
• 43:42
  Speaker 1: people to you know, get a meeting. You know, we
• 43:44
  Speaker 1: finally got a meeting. Uh. And initially, you know, we
• 43:47
  Speaker 1: thought what you had in mine was a little a
• 43:49
  Speaker 1: little crazy, But the more we've listened to them, the
• 43:51
  Speaker 1: more we became convinced it was actually a pretty interesting idea.
• 43:55
  Speaker 1: And that's gone to you know, create a company in
• 43:57
  Speaker 1: eastern Kentucky called app Harvest. UH. That went from an
• 44:01
  Speaker 1: idea on a napkin, and we provided some of the
• 44:04
  Speaker 1: initial you know, an initial hundred thousand dollars of capital
• 44:07
  Speaker 1: to get that idea going and now raised a couple
• 44:10
  Speaker 1: hundred million dollars and and have scaled. That's it's about.
• 44:14
  Speaker 1: It's in the egg tech sector, agriculture technology sector. They've
• 44:17
  Speaker 1: now built the largest indoor greenhouse in America and They
• 44:20
  Speaker 1: built it in eastern Kentucky outside of Lexington. Uh. They
• 44:25
  Speaker 1: picked that site in part because seventy of the US
• 44:29
  Speaker 1: population is with the twenty four hour drive, so that
• 44:32
  Speaker 1: fruits and vegetables can get the market quickly. They designed
• 44:34
  Speaker 1: it so it uses ninety less water, so it's much
• 44:37
  Speaker 1: more sustainable, good for the climate. And did it specifically
• 44:42
  Speaker 1: there because that area is known as Apple h a
• 44:44
  Speaker 1: coal country which for decades has been in decline and
• 44:47
  Speaker 1: it really seen some real challenges as the coal industry
• 44:51
  Speaker 1: largely disappeared. Uh. And so Jonathan had this idea for
• 44:55
  Speaker 1: creating a company that can could scale, but also creating
• 44:59
  Speaker 1: jobs in a community that has felt, you know, kind
• 45:02
  Speaker 1: of left left left behind. And so that was one
• 45:05
  Speaker 1: example of somebody just kind of knocked on our door,
• 45:07
  Speaker 1: heard about what we were doing, and wanted to be
• 45:09
  Speaker 1: part of it. And as I travel around, I spent
• 45:11
  Speaker 1: a good bit of time obviously not doing the pandemic,
• 45:14
  Speaker 1: but in the last year year and a half, been
• 45:16
  Speaker 1: a good bit of time traveling around the country meeting
• 45:19
  Speaker 1: people and you know, always like you know, people come
• 45:21
  Speaker 1: up to me with ideas and uh, you know, sometimes
• 45:24
  Speaker 1: they're they're really interesting and we have follow on meetings.
• 45:27
  Speaker 1: Sometimes you're less interesting and and I try to be
• 45:30
  Speaker 1: polite and figuring out a way to to to pass.
• 45:34
  Speaker 1: But you know, it's one of the great things about
• 45:37
  Speaker 1: entrepreneurship is is people having these ideas, these sparks of imagination,
• 45:43
  Speaker 1: and then wanting to turn them into something. And so
• 45:46
  Speaker 1: after many years, I was early years of a oh well,
• 45:48
  Speaker 1: and we just got started. I was still in my twenties,
• 45:51
  Speaker 1: you know, I would you go up to people at
• 45:53
  Speaker 1: conferences and start pitching my idea, and you know, most
• 45:55
  Speaker 1: people ignored me. A few people listened, and that sometimes
• 45:58
  Speaker 1: led to some partnerships ended up being very helpful to us.
• 46:02
  Speaker 1: And so having lived through that, I recognize I have,
• 46:05
  Speaker 1: you know, an opportunity and degree of responsibility to help
• 46:09
  Speaker 1: this next generation of entrepreneurs. So I'm always open to
• 46:12
  Speaker 1: getting pitched by anybody. Okay, this comes down to the money.
• 46:17
  Speaker 1: With money comes power. What kind of deals do these
• 46:21
  Speaker 1: entrepreneurs get when you invest money in UH and how
• 46:25
  Speaker 1: heavily is it negotiated. There's no such thing as a
• 46:28
  Speaker 1: standard deal, but are there general splits and things like that? Now,
• 46:33
  Speaker 1: they vary pretty dramatically, and it obviously depends on what
• 46:36
  Speaker 1: we're going back to before talking about the stage as
• 46:38
  Speaker 1: a seed stage, the venture stage, that the growth stage.
• 46:41
  Speaker 1: It varies on the earliest stage of seede stage. A
• 46:44
  Speaker 1: strategy there with with the Rise of Rest has been
• 46:47
  Speaker 1: the partner with other venture firms that are located in
• 46:51
  Speaker 1: these cities all across the country, so they really take
• 46:54
  Speaker 1: the lead in setting the terms of the deal, evaluation
• 46:56
  Speaker 1: and things like that, and then we're participating in in
• 47:00
  Speaker 1: in those rounds and then connecting the people were working
• 47:02
  Speaker 1: with together in the ways I talked about before. On
• 47:05
  Speaker 1: the later stage funds like the Revolution Ventures and Revolution Growth.
• 47:10
  Speaker 1: There we we do lead the round, we do get
• 47:12
  Speaker 1: more involved, including taking board seats of the companies were back,
• 47:15
  Speaker 1: so we really can help them terms of scaling those
• 47:17
  Speaker 1: those businesses, uh, and those tend to be more negotiated
• 47:21
  Speaker 1: based on kind of what the stat status the business is,
• 47:25
  Speaker 1: what the comparable companies, what valuations are of comparable companies,
• 47:29
  Speaker 1: particularly the public markets. So it's it's a little more
• 47:33
  Speaker 1: complicated to get to the kind of a win win,
• 47:36
  Speaker 1: you know, veal where where it makes sense for for
• 47:39
  Speaker 1: us as investors and also makes sense for the companies.
• 47:43
  Speaker 1: Our entrepreneurs born or they built a little bit of both.
• 47:48
  Speaker 1: I think early on, I think the general view was
• 47:50
  Speaker 1: they're probably born, but I've had and I was one
• 47:53
  Speaker 1: that I think in retrospect, I was kind of born
• 47:56
  Speaker 1: in entrepreneur and if I didn't know what it was
• 47:58
  Speaker 1: at the time, but I've also had the experience of
• 48:00
  Speaker 1: meeting lots of people who had great success and and
• 48:03
  Speaker 1: kind of came to it later in life, and so
• 48:05
  Speaker 1: you know, it was not something they really were you know,
• 48:08
  Speaker 1: familiar with, or not a path they were pursuing, but
• 48:11
  Speaker 1: they stumbled into some opportunity that where they were able
• 48:15
  Speaker 1: to turn into a company, including some of the most
• 48:18
  Speaker 1: you know, celebrated, you know, success stories in the last
• 48:21
  Speaker 1: you know, half century, things like McDonald's right Croc basically
• 48:26
  Speaker 1: was you know, took the idea of McDonald's when he
• 48:28
  Speaker 1: was selling milkshake mixers, you know, two different restaurants, and
• 48:33
  Speaker 1: as you know, a couple of McDonald brothers somewhere in
• 48:36
  Speaker 1: southern California were started ordering a lot of his mixers,
• 48:39
  Speaker 1: and they said, huh, why are they ordering so many
• 48:41
  Speaker 1: of my mixers? And so visited them and I saw
• 48:44
  Speaker 1: what was essentially the first or one of the first
• 48:47
  Speaker 1: fast food restaurant concepts, and that's why they were ordering
• 48:50
  Speaker 1: so many of them because they were they were designed
• 48:53
  Speaker 1: the restaurant to to basically do high volumes, and got
• 48:56
  Speaker 1: more intrigued and so eventually bought the you know that
• 48:59
  Speaker 1: you know, the rand and and sort of the some
• 49:01
  Speaker 1: of the core ideas and turned that into McDonald's. And
• 49:06
  Speaker 1: he was in his fifties when he did that. Sam
• 49:08
  Speaker 1: Walton started a little store in Bentonville, Arkansas, you know,
• 49:12
  Speaker 1: and just with the idea of providing you know, broader
• 49:17
  Speaker 1: selection to people, better prices and so forth. And that
• 49:20
  Speaker 1: little idea in Bentville is now Walmart, which is one
• 49:22
  Speaker 1: of the largest companies in the world. So, you know,
• 49:25
  Speaker 1: some I think are born with that sort of entrepreneurial
• 49:29
  Speaker 1: creativity builder you know, new ideas, you know, start businesses streak.
• 49:35
  Speaker 1: But there are also many who end up seeing something
• 49:38
  Speaker 1: that they just find uh, you know, fascinating and decide
• 49:43
  Speaker 1: to pursue it as a as a as a business opportunity,
• 49:46
  Speaker 1: as a as a startup, even if they're quite a
• 49:49
  Speaker 1: bit older, and if they never really saw themselves as entrepreneurs.
• 49:52
  Speaker 1: I realized every investment has a different amount of capital involved.
• 49:56
  Speaker 1: But generally speaking as a VC, what kind of hit
• 49:59
  Speaker 1: to ship ratio you're looking for your success ratio? Well,
• 50:04
  Speaker 1: it again depends on the stage that earlier you're investing,
• 50:07
  Speaker 1: when it's more the in the idea stage, it's going
• 50:09
  Speaker 1: to be you know, more misss than the later stage
• 50:12
  Speaker 1: where the company is a little bit more more developed. Uh.
• 50:16
  Speaker 1: You know, we try to minimize what's in the industry
• 50:19
  Speaker 1: called the loss ratio, where you basically you know, strike out. Uh.
• 50:23
  Speaker 1: And it's easier to do that with the later stage
• 50:26
  Speaker 1: investments because there's more to diligence. They're generally pretty significant companies.
• 50:30
  Speaker 1: We backed the company started in the Washington c area
• 50:34
  Speaker 1: almost fifteen years ago called Sweet Green, which was a
• 50:37
  Speaker 1: fast casual restaurant concept. And this really it was just
• 50:40
  Speaker 1: one place and there was a few places, and then
• 50:42
  Speaker 1: they started expanding, and so we invested in that to
• 50:45
  Speaker 1: help them expand other regions and that's gone to you know,
• 50:49
  Speaker 1: they're building now a pretty significant business and now it's
• 50:52
  Speaker 1: a public company with a couple of billion dollar evaluation uh.
• 50:56
  Speaker 1: And they were able to use that capital to to
• 50:58
  Speaker 1: scale up. We always new when we invested in them
• 51:01
  Speaker 1: that it would be successful. We just didn't know how
• 51:03
  Speaker 1: how success would be, how how big it might be.
• 51:06
  Speaker 1: But certainly in the earlier stage there's more risk. But
• 51:08
  Speaker 1: by co investing with other people were able to you know,
• 51:12
  Speaker 1: kind of hedge some of that risk. But for sure, uh,
• 51:15
  Speaker 1: you're always going to have as you say, and then
• 51:18
  Speaker 1: it's like in the music business or the movie business.
• 51:20
  Speaker 1: Some are going to work and some are not gonna work,
• 51:22
  Speaker 1: and and you just try to maximize the numbers that
• 51:25
  Speaker 1: are the ones that are working and minimize the ones
• 51:28
  Speaker 1: that that don't work. How many people work at Revolution
• 51:32
  Speaker 1: and how do they get their jobs and what do
• 51:34
  Speaker 1: they do? It's a mix of things overall, because about
• 51:37
  Speaker 1: seventy five people now, and some of them are focused
• 51:40
  Speaker 1: on each of these funds I mentioned. Some are focused
• 51:42
  Speaker 1: on sort of broader corporate functions, finance, legal, communications policy,
• 51:46
  Speaker 1: you know, things like that, UM, and they know they
• 51:50
  Speaker 1: get their jobs like anything, you know, sort of they
• 51:52
  Speaker 1: were looking for great people and always on the hunt.
• 51:56
  Speaker 1: And sometimes we know somebody because they work together in
• 52:00
  Speaker 1: some company or at some other venture fund, or had
• 52:03
  Speaker 1: some other role. Uh, And sometimes they just surfaced through
• 52:06
  Speaker 1: a you know, kind of a more traditional kind of
• 52:09
  Speaker 1: search process. Uh, but you know we have, We've been
• 52:11
  Speaker 1: able to build and build a great team. Okay, let's
• 52:15
  Speaker 1: go a little into the personal stuff. You grew up
• 52:17
  Speaker 1: in Hawaii. What do I know, even at this late
• 52:20
  Speaker 1: date living in Los Angeles, we're three hours behind, and
• 52:24
  Speaker 1: you frequently an afterthought and an elections, national elections, they're decided,
• 52:29
  Speaker 1: except for the last major one with a lot of
• 52:32
  Speaker 1: mail in votes out to be counted, were decided before
• 52:35
  Speaker 1: we even you know, the polls even closed in California.
• 52:38
  Speaker 1: So growing up in a y on some level, that's
• 52:41
  Speaker 1: all you knew. But what was it like, Well, it
• 52:45
  Speaker 1: was all I knew, and most of that I did
• 52:47
  Speaker 1: like it's a great place to grow up and for
• 52:50
  Speaker 1: a whole host of reasons. But you're right, I did
• 52:53
  Speaker 1: feel a little bit like I was, you know, out
• 52:55
  Speaker 1: of the swing of things, a little bit off the
• 52:57
  Speaker 1: beaten track. Even when I was up, and the television shows,
• 53:02
  Speaker 1: the sitcoms, everything would would run on in Hawaii week
• 53:06
  Speaker 1: after they ran on the main land. Basically the tapes
• 53:09
  Speaker 1: would get shipped over or flown over. We would watch
• 53:12
  Speaker 1: them a week later. So, you know, thankfully, back then
• 53:15
  Speaker 1: people weren't using the Internet or lots of phone calls
• 53:18
  Speaker 1: because there's been a big spoiler, you know, effact because
• 53:22
  Speaker 1: the reality of most people in the country already knew
• 53:24
  Speaker 1: what was going to happen before we we did, UH,
• 53:27
  Speaker 1: and so that was that was a little bit it
• 53:30
  Speaker 1: was a little bit strange. And also I write about
• 53:33
  Speaker 1: some of this the book Growing Up in Hawaii. It
• 53:35
  Speaker 1: was interesting to see how the economy was evolving because
• 53:40
  Speaker 1: for most of the previous century it basically had been
• 53:43
  Speaker 1: around agriculture, growing pineapples, growing sugar. That was really the
• 53:46
  Speaker 1: core industry of Hawaii. And then you know, competition and
• 53:49
  Speaker 1: global competition from other countries really decimated that industry and
• 53:55
  Speaker 1: they had to pivot. And thankfully we're able to pivot,
• 53:58
  Speaker 1: uh from and move out of agriculture and into tourism.
• 54:02
  Speaker 1: And particularly when the Boeing business jet came along and
• 54:05
  Speaker 1: the I think it was the early nineteen seventies, you know,
• 54:08
  Speaker 1: that really accelerated the amount of people visiting Hawaii, increased
• 54:13
  Speaker 1: the number of hotels being built and other other things
• 54:16
  Speaker 1: to cater to the you know, the tourism industry. And
• 54:19
  Speaker 1: I was able to kind of reposition itself UH and
• 54:22
  Speaker 1: benefit from from from from tourism, so there are lots
• 54:26
  Speaker 1: of benefits in in in growing up there. And I
• 54:29
  Speaker 1: went to a school, uh, I lived near, and it
• 54:33
  Speaker 1: was it was fun to you know, go to that
• 54:34
  Speaker 1: school and actually you know, and it's a small world department.
• 54:38
  Speaker 1: One of the people I met in high school was
• 54:40
  Speaker 1: President Obama. I was a senior when he was a freshman,
• 54:43
  Speaker 1: so he didn't have classes together, but he didn't. I
• 54:46
  Speaker 1: do remember playing basketball with him a couple of times,
• 54:48
  Speaker 1: and I do remind people when I'm speaking to two
• 54:51
  Speaker 1: younger folks that always be nice to everybody because you
• 54:54
  Speaker 1: never know who might be president United States controlling like
• 54:58
  Speaker 1: the CIA and the I R S all these other
• 55:01
  Speaker 1: other other things. It was kind of kind of interesting. Okay.
• 55:05
  Speaker 1: Basketball has mentioned multiple times in your book, as is
• 55:09
  Speaker 1: your competition with your brother? How how dedicated to basketball
• 55:15
  Speaker 1: were you? How good were you? Into what degree did
• 55:17
  Speaker 1: your competition with your brother ultimately inform and enhance your
• 55:21
  Speaker 1: career efforts? Oh, I think it's an ext that was
• 55:25
  Speaker 1: an average basketball player. It wasn't wasn't definitely not a superstar,
• 55:28
  Speaker 1: but but enjoyed it. Uh. In terms of my brother,
• 55:31
  Speaker 1: he was a really good tennis player, So that probably
• 55:33
  Speaker 1: led me to basketball, you know, wanting to do something
• 55:36
  Speaker 1: a little different than what my brother was doing. And
• 55:38
  Speaker 1: then he was definitely the one. It was a year
• 55:41
  Speaker 1: older and definitely was the one who was getting straight a's.
• 55:43
  Speaker 1: I was I was not getting straight a's. And maybe
• 55:46
  Speaker 1: that was another way I was going to differentiate him
• 55:48
  Speaker 1: if it wasn't necessarily, you know, something my parents were
• 55:52
  Speaker 1: or loving um. And then he ended up going to
• 55:56
  Speaker 1: college at Princeton and end up being a Rhodes scholar,
• 55:59
  Speaker 1: so really quite successful, and then went on to be
• 56:03
  Speaker 1: part of an investment banking firm that was one of
• 56:05
  Speaker 1: the storied firms and Silicon Valley firm called hambrogton Quist
• 56:09
  Speaker 1: took companies like Apple Public and gene Tech Public, and
• 56:12
  Speaker 1: he was a close advisor to people like like Steve
• 56:14
  Speaker 1: jobs Uh and the fact he was focused more on
• 56:17
  Speaker 1: the on the financial side of things, investment banking side
• 56:20
  Speaker 1: of things, and I was focused more on the entrepreneurial
• 56:23
  Speaker 1: side of things. That was a nice kind of balance.
• 56:26
  Speaker 1: And he could help me and I could I could
• 56:28
  Speaker 1: help him. Sadly, he passed away over two decades ago
• 56:30
  Speaker 1: from brain cancer. He was, you know, in his early forty's,
• 56:33
  Speaker 1: had a young family, and it just was a wake
• 56:36
  Speaker 1: up call that none of us can really control our
• 56:39
  Speaker 1: our destiny, controller or future. He was on the top
• 56:43
  Speaker 1: of his game and then you know, sell me. He
• 56:45
  Speaker 1: finds out he is brain cancer. Fourteen months later he
• 56:48
  Speaker 1: passes away. So that was a a just a reminder
• 56:53
  Speaker 1: of the fragility of life and and uh, everybody in
• 56:57
  Speaker 1: my family a reminder not to again any of her. Granted, Okay,
• 57:02
  Speaker 1: you end up going to school at Williams in western Massachusetts.
• 57:06
  Speaker 1: Was that culture shock or your father going to Williams?
• 57:10
  Speaker 1: But had you spent enough time on the mainland or
• 57:13
  Speaker 1: do you feel like a fish out of water in Williams? Uh?
• 57:18
  Speaker 1: I had not spent much time in the man was
• 57:19
  Speaker 1: mostly in in in Hawaii. Uh Uh, I didn't necessarily
• 57:24
  Speaker 1: feel like a fish out of water. I certainly had
• 57:26
  Speaker 1: to adjust to a rather sudden shift in terms of
• 57:30
  Speaker 1: seasons because you know, there's of course no snow in
• 57:33
  Speaker 1: Hawaii and or there's a little bit of snow on
• 57:34
  Speaker 1: one top of one mountain, but essentially no snow. Uh.
• 57:38
  Speaker 1: And there was quite a bit of snow and in Massachusetts,
• 57:41
  Speaker 1: as you know, Uh, so there's some some adjustments like that,
• 57:44
  Speaker 1: but I really enjoyed it. It was it was, you know,
• 57:47
  Speaker 1: an interesting place to be. And in full disclosure, at
• 57:51
  Speaker 1: that point in time, both high school and college, my
• 57:54
  Speaker 1: passion was not around UH technology or things like the Internet.
• 58:00
  Speaker 1: It actually was the music business. In high school, I
• 58:02
  Speaker 1: did a number of things that were related to writing,
• 58:04
  Speaker 1: you know, contra views and taking pictures and and UH
• 58:08
  Speaker 1: and UH. I worked with a bunch of people then
• 58:11
  Speaker 1: did a lot of interviews when I was a kid,
• 58:13
  Speaker 1: you know, Aerosmith and Wolf pan Jack and other bands
• 58:16
  Speaker 1: that were coming through town. And I was in college,
• 58:19
  Speaker 1: part of my little side hustle was promoting some some concerts.
• 58:22
  Speaker 1: So I was initially focused on the music business. A
• 58:26
  Speaker 1: couple of things happened that shifted my focus. The main
• 58:29
  Speaker 1: one was I started in in the late seventies UH,
• 58:33
  Speaker 1: when I was still in college, getting really fascinated with
• 58:37
  Speaker 1: the idea of well we now think of as the Internet.
• 58:40
  Speaker 1: I remember reading a book by a futurist, Alvin Toffler,
• 58:42
  Speaker 1: when I was a senior UH in nineteen seventy nine,
• 58:46
  Speaker 1: and the book was called the Third Wave, and he
• 58:48
  Speaker 1: was talking about, UH, this next wave was going to
• 58:52
  Speaker 1: be around digital technologies, and you know, the first wave
• 58:55
  Speaker 1: was agriculture and the second wave was industrial revolution. Third
• 58:59
  Speaker 1: way was going to be a dual revolution, and I
• 59:01
  Speaker 1: was smitten with that idea. So that was part of
• 59:03
  Speaker 1: what you led me onto a different path. But also
• 59:06
  Speaker 1: I had some stumbles in the in the music business
• 59:09
  Speaker 1: because my strategy, like Venture Capitel, was to back bands
• 59:12
  Speaker 1: when I heard their albums and thought they could be
• 59:15
  Speaker 1: hits and booked them for dates like six or nine
• 59:17
  Speaker 1: months later, with the idea that you know, obviously sometimes
• 59:20
  Speaker 1: to get it wrong and nobody would come to the concert,
• 59:23
  Speaker 1: but if I got it right, I would lock in
• 59:25
  Speaker 1: a band at a pretty good price. And that seemed
• 59:27
  Speaker 1: like a pretty, you know, pretty clever idea to me.
• 59:29
  Speaker 1: But what I didn't realize is is often you were
• 59:32
  Speaker 1: wrong and nobody would show up. But when you were
• 59:34
  Speaker 1: right and you were just a promoting college college concerts
• 59:38
  Speaker 1: in New England and had no cloud, the bands that
• 59:42
  Speaker 1: were successful would cancel on you. And I had two
• 59:45
  Speaker 1: examples of this, and I booked both Meat Loaf I think,
• 59:49
  Speaker 1: for one of their first dates and Cheap Trick Uh
• 59:52
  Speaker 1: for one of their early dates for five dollars each.
• 59:55
  Speaker 1: For our concert that were like six months down the road.
• 59:58
  Speaker 1: Both of them canceled on me a cheap trick. We've
• 1:00:00
  Speaker 1: got a deal with our offer to be on Don
• 1:00:02
  Speaker 1: Kirsha's rock concert or something like that. So I said, Okay,
• 1:00:05
  Speaker 1: this is not working for me. If I guess wrong,
• 1:00:08
  Speaker 1: nobody comes. If I guess right, they cancel on me.
• 1:00:11
  Speaker 1: I got to move on and thankfully was able to
• 1:00:14
  Speaker 1: pivot to the pivot to the internet. There are stories
• 1:00:17
  Speaker 1: of you being an entrepreneur in college selling different things.
• 1:00:21
  Speaker 1: Are those true? Yeah? Yeah, I was definitely. Uh. We
• 1:00:25
  Speaker 1: had all kinds of different side hustle, some of those
• 1:00:28
  Speaker 1: concert promotions. Some it was one business we had was
• 1:00:33
  Speaker 1: called Williams Fruit Baskets and the pitch was went to
• 1:00:37
  Speaker 1: parents because we realized the parents had the money, the
• 1:00:39
  Speaker 1: kid didn't really have the money. That when it was
• 1:00:41
  Speaker 1: coming time for like to study for exam at the
• 1:00:44
  Speaker 1: end of the semester and send these letters to parents saying,
• 1:00:48
  Speaker 1: you know, don't you want your child to eat healthy
• 1:00:52
  Speaker 1: when when they're studying for exams, And why don't you
• 1:00:55
  Speaker 1: order a fruit basket and we will we will hand
• 1:00:57
  Speaker 1: pick the fruit and deliver it to your your student
• 1:01:00
  Speaker 1: just when they're in this uh, this challenging period. And
• 1:01:03
  Speaker 1: that business did did pretty well. And we also had
• 1:01:05
  Speaker 1: some other bus businesses things like that. So yeah, again
• 1:01:08
  Speaker 1: none of them were big successes, but I enjoyed starting
• 1:01:12
  Speaker 1: them and I got learned a little bit from each
• 1:01:13
  Speaker 1: of them. Well, so if I was on campus, not
• 1:01:16
  Speaker 1: that many people go to Williams would say, oh, yeah,
• 1:01:19
  Speaker 1: that's the guy who starts the businesses. That's the guy
• 1:01:22
  Speaker 1: who does that. That was me. That was me. Really
• 1:01:27
  Speaker 1: sad part is, at one point professor pulled me aside,
• 1:01:30
  Speaker 1: I think it was a junior at the time and said,
• 1:01:34
  Speaker 1: essentially they realized that I was spending less time in
• 1:01:38
  Speaker 1: class doing the work I should have been doing, and
• 1:01:41
  Speaker 1: more time on these businesses on the sides and said
• 1:01:45
  Speaker 1: sat me down, said you know, Steve, you know, we
• 1:01:48
  Speaker 1: know you're like super passionate about some of these ideas,
• 1:01:50
  Speaker 1: but you know, college is kind of a once in
• 1:01:53
  Speaker 1: a lifetime opportunity. You're only here for four years and
• 1:01:55
  Speaker 1: you have an opportunity to learn things and meet people
• 1:01:58
  Speaker 1: and really kind of ban your mind and so forth.
• 1:02:02
  Speaker 1: So it's it really encourage you to spend a little
• 1:02:04
  Speaker 1: less time of the business things, but you can always
• 1:02:06
  Speaker 1: do later and more time on on the you know,
• 1:02:08
  Speaker 1: the college things. And of course I recognized he was right,
• 1:02:12
  Speaker 1: but at that point I was, you know, too far
• 1:02:15
  Speaker 1: into my other things. So I did okay in college,
• 1:02:18
  Speaker 1: but nobody you know, thought I was gonna, you know,
• 1:02:21
  Speaker 1: kinda was gonna win any awards. Your father was a
• 1:02:25
  Speaker 1: lawyer that you grew up in a somewhat comfortable upbringing.
• 1:02:29
  Speaker 1: Were you forming these businesses to make money or to
• 1:02:35
  Speaker 1: have the experience of building a business? Yeah, I think both.
• 1:02:41
  Speaker 1: I dad was a lawyer and I'm a teacher, as
• 1:02:44
  Speaker 1: you said, and he was always lived a comfortable, kind
• 1:02:47
  Speaker 1: of upper middle class, you know kind of life, um,
• 1:02:51
  Speaker 1: and so I never had to worry about kind of
• 1:02:54
  Speaker 1: some of the basic things a lot of people have
• 1:02:56
  Speaker 1: to worry about. But my parents also really believed in in,
• 1:03:00
  Speaker 1: you know, people being independent and resilient, and so I
• 1:03:04
  Speaker 1: got a little bit of allowance, but not much and
• 1:03:06
  Speaker 1: had to do a lot of chores for it. And
• 1:03:07
  Speaker 1: if we really wanted to, you know, buy something, you
• 1:03:10
  Speaker 1: need to figure out some way to make some money.
• 1:03:11
  Speaker 1: So it was not you know kind of here's here's
• 1:03:14
  Speaker 1: our credit card. Uh, you know, you know, I guess
• 1:03:17
  Speaker 1: at back then the credit cards were not even a thing.
• 1:03:19
  Speaker 1: But but you know, you want to buy something, you know,
• 1:03:22
  Speaker 1: you know we'll pay for it. That was not the
• 1:03:24
  Speaker 1: the the ethots. It was more of a we'll give
• 1:03:28
  Speaker 1: you a little bit of money if you do a
• 1:03:29
  Speaker 1: bunch of chores. Uh. And but if you really wanted,
• 1:03:33
  Speaker 1: you know, you have any real flexibility to do anything much,
• 1:03:36
  Speaker 1: you know, you have to go get a job and
• 1:03:38
  Speaker 1: whether that. Sometimes it was just getting jobs, basic jobs
• 1:03:41
  Speaker 1: and doing different things um over the years. And sometimes
• 1:03:45
  Speaker 1: it was starting things, you know, to to also have
• 1:03:48
  Speaker 1: a path to you know, make some make a little
• 1:03:50
  Speaker 1: extra money. But as you said, also there was something
• 1:03:52
  Speaker 1: about the idea of starting the businesses that that also
• 1:03:55
  Speaker 1: was kind of intriguing to me. So you know, for
• 1:03:58
  Speaker 1: me it was sort of a two. When I was
• 1:04:07
  Speaker 1: going to college a few years ahead of you, Uh,
• 1:04:10
  Speaker 1: Williams was not co ed, And I said, no way,
• 1:04:14
  Speaker 1: what was the status of men and women when you
• 1:04:18
  Speaker 1: went to Williams? It had shifted a few years before,
• 1:04:21
  Speaker 1: not too many years, but just a few years before
• 1:04:23
  Speaker 1: I was there in seventy six through eighty. Uh by
• 1:04:26
  Speaker 1: then was co ed. It was still uh majority men.
• 1:04:29
  Speaker 1: But it was it was definitely co ed, okay. And
• 1:04:34
  Speaker 1: what kind of kid were you there? You have a
• 1:04:36
  Speaker 1: million friends? Were you ostracized? Were you popular? Unpopular? Sorry?
• 1:04:42
  Speaker 1: In the middle. I was involved in a bunch of
• 1:04:44
  Speaker 1: different things, including co chairing the entertainment committee that was
• 1:04:48
  Speaker 1: booking concerts to come to the college, worked at the
• 1:04:51
  Speaker 1: radio station, and and uh and so I had some
• 1:04:54
  Speaker 1: and at some of the side businesses that I that
• 1:04:56
  Speaker 1: I mentioned. Um, so I was involved in a bunch
• 1:04:59
  Speaker 1: of different different things. But I would say it was
• 1:05:02
  Speaker 1: sort of kind of the the middle of the pack in
• 1:05:04
  Speaker 1: terms of you know, friend groups and things like that.
• 1:05:08
  Speaker 1: So you applied to get an m b A and
• 1:05:12
  Speaker 1: you didn't get in anywhere? Were you just going through
• 1:05:14
  Speaker 1: the motions or did you really want to get an
• 1:05:17
  Speaker 1: m B A? And how did you feel when you
• 1:05:19
  Speaker 1: didn't get it? Yeah, that was kind of a bummer,
• 1:05:22
  Speaker 1: which is you know. Of course it's been made for
• 1:05:25
  Speaker 1: a fun story since because the two schools I applied to,
• 1:05:29
  Speaker 1: Harvard and and Stanford both rejected me and spoken on
• 1:05:33
  Speaker 1: their campuses a bunch of times. I'm always quick to
• 1:05:36
  Speaker 1: remind them of what In fact. One time it came
• 1:05:40
  Speaker 1: out with another book about six years ago called The
• 1:05:42
  Speaker 1: Third Wave. And I was uh in Boston going to
• 1:05:45
  Speaker 1: some television station to film something and drove by the
• 1:05:47
  Speaker 1: Harvard Business School campus and I said stop, stop, stop,
• 1:05:51
  Speaker 1: and we got out and uh, I did a little
• 1:05:54
  Speaker 1: quick I think it was a Facebook live thing or something. Uh,
• 1:05:58
  Speaker 1: some live video basic wandering are on the campus, you know,
• 1:06:02
  Speaker 1: to find the admissions office to ask why they turned
• 1:06:04
  Speaker 1: me down whatever a number of thirty plus years ago,
• 1:06:07
  Speaker 1: so it's kind of a yeah, fun So I answer
• 1:06:10
  Speaker 1: the question I was. I was not sure what I
• 1:06:11
  Speaker 1: was gonna do at that point. I thought that was
• 1:06:14
  Speaker 1: a good path at least pursue. And at the time,
• 1:06:18
  Speaker 1: most of the business schools didn't really accept them many
• 1:06:21
  Speaker 1: kids right out of school. They wanted to get some
• 1:06:23
  Speaker 1: few years of work experience first. So I didn't really
• 1:06:26
  Speaker 1: have a high expectation that I get in, but figured
• 1:06:28
  Speaker 1: if I did, that at least would be an option
• 1:06:31
  Speaker 1: I would consider. Meanwhile, I was interviewing for a bunch
• 1:06:34
  Speaker 1: of other jobs and New York and other member of
• 1:06:37
  Speaker 1: interview and HBO and some ad agencies and so forth,
• 1:06:41
  Speaker 1: just trying to figure out what what I was gonna
• 1:06:43
  Speaker 1: do at the time, I really knew I wanted to
• 1:06:47
  Speaker 1: the old a company like an A O L. I
• 1:06:48
  Speaker 1: knew it even back in when I was graduating that
• 1:06:52
  Speaker 1: I believed the idea of the Internet was a big
• 1:06:54
  Speaker 1: idea and I wanted to figure out some way to
• 1:06:57
  Speaker 1: pursue that path. But when I was graduating, since the
• 1:07:00
  Speaker 1: Internet was still mostly a research technology, it was still
• 1:07:03
  Speaker 1: limited to government agencies and educational institutions. Consumers and businesses
• 1:07:08
  Speaker 1: weren't able to use the Internet when I was graduating
• 1:07:10
  Speaker 1: from college. Uh, there really wasn't an Internet industry. I could,
• 1:07:14
  Speaker 1: you know, inter act in the Internet company I could
• 1:07:17
  Speaker 1: could join. And back then when I was graduate college,
• 1:07:20
  Speaker 1: venture capitalists, you know, weren't backing twenty one year old
• 1:07:23
  Speaker 1: kids coming out of college. They were they were They were,
• 1:07:25
  Speaker 1: you know, looking for more seasoned people with more experience.
• 1:07:29
  Speaker 1: And so that's what led me on the path. We're
• 1:07:31
  Speaker 1: working for some big companies, Procter and gam once Cincinnati.
• 1:07:35
  Speaker 1: Well before you before you get there, so you talk
• 1:07:39
  Speaker 1: about reading the Toffler book and having an inspiration. Did
• 1:07:44
  Speaker 1: you learn anything about that in college or was it
• 1:07:47
  Speaker 1: all self education? And did anything you learned in college
• 1:07:53
  Speaker 1: help you as you went down the line or it
• 1:07:55
  Speaker 1: was just a contained experience. Uh, well, it's it's it's
• 1:08:01
  Speaker 1: a complicated question. Break into a couple of parts. Uh.
• 1:08:04
  Speaker 1: The interest in essence the Internet technology, uh was inspired
• 1:08:10
  Speaker 1: in part by the top of the book. But even
• 1:08:12
  Speaker 1: before I read the top of the book, I was
• 1:08:14
  Speaker 1: spending a lot of time doing my own research in
• 1:08:17
  Speaker 1: the college library, reading all kinds of newspapers magazines, because
• 1:08:20
  Speaker 1: back then, in the late seventies, there was some of
• 1:08:23
  Speaker 1: these new technologies that were being trialed, things like mini
• 1:08:27
  Speaker 1: tel in France and Prestel in the UK, and concept
• 1:08:31
  Speaker 1: like video text and teletext and interactive TV warrant amics
• 1:08:35
  Speaker 1: at a system called cube and being tested in since
• 1:08:39
  Speaker 1: saniel Hio and Columbus, Ohio. So there are a bunch
• 1:08:41
  Speaker 1: of things that were bubbling even the late seventies that
• 1:08:44
  Speaker 1: I found really intriguing that in retrospect were kind of
• 1:08:47
  Speaker 1: a really early days first experiments and what then ultimately
• 1:08:51
  Speaker 1: led to, you know, the Internet. Uh. So I was
• 1:08:54
  Speaker 1: learning a lot, but it was not necessarily classes I
• 1:08:57
  Speaker 1: was taking that we have related to to you know,
• 1:09:01
  Speaker 1: things that I was focused on then. But I would say,
• 1:09:04
  Speaker 1: and this is true, I think for any uh, you know,
• 1:09:06
  Speaker 1: kind of liberal arts education. I think the value, at
• 1:09:09
  Speaker 1: least the value to me was learning a little bit
• 1:09:13
  Speaker 1: about a lot of things, which gives you a broader
• 1:09:15
  Speaker 1: perspective on life and broader perspective on the world. Learning
• 1:09:19
  Speaker 1: how to aggregate and synthesize information and come up with conclusions,
• 1:09:25
  Speaker 1: points of view, learn how to communicate you know, those conclusions.
• 1:09:29
  Speaker 1: So I think there are a bunch of things that
• 1:09:31
  Speaker 1: that did end up serving me well, even if any
• 1:09:34
  Speaker 1: the specific course material, uh you know one specific things
• 1:09:39
  Speaker 1: you could connect to what I ended up you know,
• 1:09:42
  Speaker 1: later doing. So I'm actually bullish on the value of
• 1:09:46
  Speaker 1: a liberal arts education, uh, while at the same time
• 1:09:49
  Speaker 1: recognizing that that entrepreneurs will end up being passionate about
• 1:09:54
  Speaker 1: a particular idea and likely will pursue that idea in
• 1:09:58
  Speaker 1: a lot of different ways, and and many of them
• 1:10:00
  Speaker 1: are uncoupled from what they might learn and while they're
• 1:10:04
  Speaker 1: in in college. Although it might also would say it's
• 1:10:06
  Speaker 1: changed quite a bit. I have visited, uh dozens of
• 1:10:10
  Speaker 1: dozens universities over the years, including related to our work
• 1:10:14
  Speaker 1: with rise Rest, and even saw him in the last
• 1:10:15
  Speaker 1: month since the Rise of Rest book came out and
• 1:10:18
  Speaker 1: it's amazing to see how many universities really are leading
• 1:10:21
  Speaker 1: into entrepreneurship. And in Phoenix a couple of weeks ago
• 1:10:24
  Speaker 1: is at Arizona State University. They have a whole dorm
• 1:10:26
  Speaker 1: focused on entrepreneurship and makers and builders and so forth.
• 1:10:30
  Speaker 1: So there's a lot more happening on campuses now than
• 1:10:32
  Speaker 1: we're when I was there. You were there in the
• 1:10:34
  Speaker 1: in the in the in the seventies. Uh So I'd say,
• 1:10:37
  Speaker 1: you know that I did learn a lot kind of
• 1:10:39
  Speaker 1: self taught around the The ideas of that ultimately for
• 1:10:43
  Speaker 1: me became you know, kind of a o L and
• 1:10:45
  Speaker 1: more broadly, you know, the Internet. And do think looking
• 1:10:48
  Speaker 1: back that I've benefited, you know, considerably from that that
• 1:10:52
  Speaker 1: kind of broad liberal arts education. So you got rejected
• 1:10:56
  Speaker 1: by PNG, but you showed up then they gave you
• 1:10:59
  Speaker 1: a job. Yeah, I'm this line of questioning, Bob. It's
• 1:11:02
  Speaker 1: really kind of it's gonna kind of making a little
• 1:11:05
  Speaker 1: PTSD for mere. Yes. Yes, every every school, in business
• 1:11:09
  Speaker 1: school I applied to reject the man. Yes, the companies
• 1:11:11
  Speaker 1: I really wanted to work for, not just P and G,
• 1:11:13
  Speaker 1: but HBO and many others rejected me. So thank you
• 1:11:16
  Speaker 1: for pointing out that out no, no, no, when I
• 1:11:19
  Speaker 1: kept fighting and I kept fighting, and and I think
• 1:11:22
  Speaker 1: the second part of that PNGNG story, as you know,
• 1:11:25
  Speaker 1: was they did reject me. I just didn't did an
• 1:11:29
  Speaker 1: interview on campus, and you know, they just you know,
• 1:11:31
  Speaker 1: weren't interested in a follow on interview. But I really
• 1:11:34
  Speaker 1: was interested in P ANDNG. There's something about the company
• 1:11:36
  Speaker 1: and their training program for marketing people that I thought
• 1:11:38
  Speaker 1: would be really good fit for me. So it basically
• 1:11:42
  Speaker 1: appealed their decision. That wrote to Lennon said I'm sorry.
• 1:11:45
  Speaker 1: I don't remember exactly what it was, but something like,
• 1:11:47
  Speaker 1: I'm sorry that interview that goes so well. I really,
• 1:11:49
  Speaker 1: you know, I think P ANDG would be a good fit.
• 1:11:51
  Speaker 1: Here's two or three reasons why I think it would
• 1:11:52
  Speaker 1: be a good fit. Please give me another chance. I'd
• 1:11:55
  Speaker 1: like to have, you know, a second bite at the
• 1:11:58
  Speaker 1: Apple if you will. Um And so they said, okay, well,
• 1:12:01
  Speaker 1: if you'll get to New York City, you know, in
• 1:12:04
  Speaker 1: a couple of weeks, um on, thus in such a
• 1:12:07
  Speaker 1: day that we will have somebody who will meet you.
• 1:12:09
  Speaker 1: And I think they're just kind of testing me. When
• 1:12:12
  Speaker 1: I was a little bit of a hassle. I had
• 1:12:13
  Speaker 1: to you know, kind of take the you know, the
• 1:12:15
  Speaker 1: bus to the city and figure out some way to
• 1:12:18
  Speaker 1: kind of get there. And with the middle of winner,
• 1:12:20
  Speaker 1: so it wasn't exactly the easiest time to be getting around.
• 1:12:23
  Speaker 1: And the fact I just showed up, I think I
• 1:12:26
  Speaker 1: think I passed the persistence test and the passion test,
• 1:12:30
  Speaker 1: and that was a better interview. So ultimately I did
• 1:12:33
  Speaker 1: end up, you know, getting that job and moving to
• 1:12:35
  Speaker 1: to Cincinnati. Well, you're talking about the PTSD. I guess
• 1:12:38
  Speaker 1: the reason I'm asking these questions is not to point
• 1:12:41
  Speaker 1: out the bumps in the road, but to ask how
• 1:12:43
  Speaker 1: did you maintain your optimism? Well, I understand that, and
• 1:12:48
  Speaker 1: I appreciate that. The the um I don't know this
• 1:12:52
  Speaker 1: is this is part of uh, the entrepreneural journey. You know,
• 1:12:56
  Speaker 1: you're gonna you're gonna have a lot of setbacks. Even
• 1:12:58
  Speaker 1: the early days of A Oh well, we struggle a
• 1:13:01
  Speaker 1: couple of times. We had to go through layoffs. Many
• 1:13:04
  Speaker 1: people thought we wouldn't survive, you know, the company would
• 1:13:07
  Speaker 1: just kind of hit the wall. Uh, we had many,
• 1:13:10
  Speaker 1: you know, many challenges there. Remember one point we had
• 1:13:12
  Speaker 1: a deal with Apple worked on for months and months
• 1:13:15
  Speaker 1: and months and the licensed their brand name is create
• 1:13:18
  Speaker 1: something called Apple and Personal Edition, and they decided to
• 1:13:21
  Speaker 1: not long after we launched, to cancel it and and
• 1:13:24
  Speaker 1: uh tear up our contract. And a lot of people
• 1:13:26
  Speaker 1: then thought, you know, company would would hit the wall.
• 1:13:29
  Speaker 1: We had all kinds of you know, challenges, and that
• 1:13:32
  Speaker 1: that is the entrepreneur journey. There's very few overnight successes.
• 1:13:36
  Speaker 1: Most of them are kind of a slog and eventually,
• 1:13:39
  Speaker 1: you know, things kind of you know, if you stick
• 1:13:41
  Speaker 1: with it, things you know kind of turned out. So
• 1:13:42
  Speaker 1: I think that gave me that if you believe it's
• 1:13:45
  Speaker 1: a you know, idea worth fighting for, a business worth building,
• 1:13:48
  Speaker 1: that that you know that you keep keep fighting, you
• 1:13:50
  Speaker 1: keep persisting. And I think some of that may have
• 1:13:52
  Speaker 1: been you know, kind of some of those early days,
• 1:13:54
  Speaker 1: maybe even some of those rejections as you noticed and
• 1:13:57
  Speaker 1: noted and you know, continuing to fight to get what
• 1:14:00
  Speaker 1: I thought was was at least for me, the right,
• 1:14:03
  Speaker 1: right next step. I think you just learned the importance
• 1:14:06
  Speaker 1: of persistence and keep fighting. Even frankly, when I started
• 1:14:12
  Speaker 1: the the the A O. L and we you know,
• 1:14:15
  Speaker 1: struggle to raise capital in those early days, and most
• 1:14:17
  Speaker 1: people did not believe the Internet would ever be a
• 1:14:20
  Speaker 1: mainstream phenomenon. It seems crazy now, but most people would
• 1:14:23
  Speaker 1: say things to me like, what you really think people
• 1:14:26
  Speaker 1: are going to buy something called a personal computer and
• 1:14:29
  Speaker 1: and then sit down in front of a keyboard to
• 1:14:32
  Speaker 1: type a message to somebody when they can just pick
• 1:14:35
  Speaker 1: up the phone and call somebody. That feels like a
• 1:14:38
  Speaker 1: crazy idea. Said no, I actually do think that that's
• 1:14:40
  Speaker 1: gonna happen. Uh, and others. You know, a few years later,
• 1:14:43
  Speaker 1: when things around home shopping and electronic commerce started developing,
• 1:14:47
  Speaker 1: people said, well, do you really think that average people,
• 1:14:50
  Speaker 1: like normal people, would be comfortable buying a product from
• 1:14:54
  Speaker 1: somebody they don't even know, and and you actually think
• 1:14:57
  Speaker 1: they'll be comfortable with this internet thing to type their
• 1:15:00
  Speaker 1: credit card in that somebody might some hacker might steal.
• 1:15:03
  Speaker 1: I said, yeah, oh yeah, I think I think people
• 1:15:05
  Speaker 1: will be interested in that. So there was a lot
• 1:15:07
  Speaker 1: of skepticism, and it really was a decade of struggle
• 1:15:10
  Speaker 1: before finally, you know, we we broke through. And when
• 1:15:13
  Speaker 1: we first started Rise the Rest ten years ago, it
• 1:15:16
  Speaker 1: was a little bit dejabu all over again. When I
• 1:15:17
  Speaker 1: started talking about the idea of backing entrepreneurs all around
• 1:15:20
  Speaker 1: the country. What would happen with these rising cities, How
• 1:15:23
  Speaker 1: we could slow the branger into people leaving boomerang people back,
• 1:15:26
  Speaker 1: more capital and more people, more places, you know, things
• 1:15:28
  Speaker 1: we talked about earlier. Most people were skeptical. Most people
• 1:15:31
  Speaker 1: kind of didn't necessary roll their eyes, but they thought
• 1:15:34
  Speaker 1: it was a mission that likely was gonna end up unsuccessful.
• 1:15:40
  Speaker 1: And you know, it's been great to see the progress
• 1:15:42
  Speaker 1: we made in the last decade, and particularly the momentum
• 1:15:46
  Speaker 1: in the last couple of years, which ultimately loved me
• 1:15:48
  Speaker 1: to write the books. To me, it is around persistence,
• 1:15:52
  Speaker 1: But I don't think it's unique to me. Most of
• 1:15:53
  Speaker 1: the entrepreneurs I've known who ended up being successful had
• 1:15:57
  Speaker 1: to deal with, you know, setbacks, but they just keep fighting. Okay,
• 1:16:01
  Speaker 1: let's bring it up to today. Since you've been a
• 1:16:03
  Speaker 1: seer technologically in the past, what is your view on
• 1:16:08
  Speaker 1: the metaverse and Facebook's pivot to the metaverse. Well, I'm
• 1:16:14
  Speaker 1: a believer in the metaverse. We actually launched one of
• 1:16:16
  Speaker 1: the first metaverse products in the late nineteen eighties. We
• 1:16:21
  Speaker 1: did a partnership with Lucasfilm to create essentially a virtual
• 1:16:25
  Speaker 1: world with avatars. This was very rudimentary technology actually was
• 1:16:29
  Speaker 1: a common or sixty four computer with a three bod modem,
• 1:16:33
  Speaker 1: but essentially was in the early version of the metaverse.
• 1:16:36
  Speaker 1: Since I've always believed in that idea with gaming. I
• 1:16:40
  Speaker 1: think some of the more recent applications in terms of
• 1:16:43
  Speaker 1: kind of business use terms of creating much more immersive
• 1:16:47
  Speaker 1: experiences for people, including things like video conferencing really feels
• 1:16:52
  Speaker 1: like you're you know, sitting with somebody and it's really
• 1:16:54
  Speaker 1: like a real room. All those things I think hold
• 1:16:57
  Speaker 1: a lot of potential, but these things tend to take
• 1:17:00
  Speaker 1: a while before they really are ready for prime time.
• 1:17:03
  Speaker 1: And I think what Facebook now you know, meta is
• 1:17:08
  Speaker 1: struggling with is have been making very very significant investments,
• 1:17:11
  Speaker 1: you know, ten billion plus a year, and these metaverse
• 1:17:15
  Speaker 1: technologies they're a little slower to to take off than
• 1:17:18
  Speaker 1: they thought, while they're seeing some challenges in their their
• 1:17:21
  Speaker 1: core business and so they likely will you know, kind
• 1:17:24
  Speaker 1: of you know, pull back at least a little bit
• 1:17:26
  Speaker 1: on some of their their their efforts. So they probably
• 1:17:28
  Speaker 1: are right in the long run, that's an important new platform,
• 1:17:32
  Speaker 1: but they might have gotten a little ahead themselves in
• 1:17:34
  Speaker 1: terms of the pace at which they were pursuing that
• 1:17:37
  Speaker 1: the timing is certainly key. We certainly saw that with
• 1:17:40
  Speaker 1: music being the canary in the coal mine for digital disruption,
• 1:17:44
  Speaker 1: as I say, twenty odd years ago. But if we
• 1:17:47
  Speaker 1: look forward within our lifetimes, will the public at large
• 1:17:54
  Speaker 1: never participate in the metaverse? Or is augmented reality more
• 1:18:02
  Speaker 1: the thing? What's your prediction there? Well, I think I
• 1:18:04
  Speaker 1: think metaverse is one of these concepts like kind of
• 1:18:07
  Speaker 1: like Web three, which is a basket of ideas and
• 1:18:10
  Speaker 1: so you have to kind of parse it a little bit.
• 1:18:12
  Speaker 1: I think I think, uh, augmented reality, virtual reality are
• 1:18:16
  Speaker 1: are parts of the you know, the technology suite that
• 1:18:20
  Speaker 1: make things like a metaverse possible and other things like that,
• 1:18:23
  Speaker 1: and I do think they'll get broader adoption. Additional running
• 1:18:26
  Speaker 1: a revolution the investment company, I'm currently the chair of
• 1:18:29
  Speaker 1: the Smithsonian Institution. We have the twenty museums in Washington,
• 1:18:33
  Speaker 1: d C. And research operations around the around the world,
• 1:18:37
  Speaker 1: and a big focus there is how do you to
• 1:18:39
  Speaker 1: not just assume people are going to come to d
• 1:18:41
  Speaker 1: C to visit our physical museums, how do we take
• 1:18:43
  Speaker 1: the Smithsonian to them? How do we take the Smithsonian
• 1:18:46
  Speaker 1: to every home in every classroom, and obviously digital technologies
• 1:18:49
  Speaker 1: are key part of that, and some of things including
• 1:18:52
  Speaker 1: a virtual reality, augmented reality, or some of the things
• 1:18:54
  Speaker 1: that we're testing out because it is a way to
• 1:18:57
  Speaker 1: expand our kind of educational mandate. And I do think
• 1:19:01
  Speaker 1: these technologies will get you know, get get broader adoption.
• 1:19:04
  Speaker 1: But you say, sometimes there are these things are just
• 1:19:08
  Speaker 1: take a little while. In fact, it reminds me the
• 1:19:10
  Speaker 1: first time I think we met in person was twenty
• 1:19:13
  Speaker 1: years ago and backstage at an Eagles concert not long
• 1:19:15
  Speaker 1: after a Will merge with Time Warner uh And and
• 1:19:19
  Speaker 1: even then when we did the merger, which was in
• 1:19:22
  Speaker 1: two thousands of twenty two years ago, we talked about
• 1:19:25
  Speaker 1: at the time what was going to happen with streaming
• 1:19:27
  Speaker 1: technologies for for movies and and television. We talked about
• 1:19:32
  Speaker 1: what was gonna happen with music being digitized, things like Napster.
• 1:19:36
  Speaker 1: We're just bumbling bubbling at the time, but there's a
• 1:19:39
  Speaker 1: lot of nervousness in the in the music industry about it.
• 1:19:42
  Speaker 1: The things that we we identified twenty years ago is
• 1:19:45
  Speaker 1: being likely to happen, uh and likely happened soon did happen,
• 1:19:50
  Speaker 1: but they took longer to happen and salally that company
• 1:19:54
  Speaker 1: well in time, Warner together weren't able to capitalize on
• 1:19:56
  Speaker 1: some of those opportunities. In retrospect, you know, we really
• 1:19:59
  Speaker 1: should have lad the charge, not not the Apple with
• 1:20:03
  Speaker 1: the iPod or or Spotify or or or Netflix or
• 1:20:07
  Speaker 1: other things that really were the ultimate successors. It was
• 1:20:11
  Speaker 1: clear even twenty years ago what was going to happen.
• 1:20:14
  Speaker 1: We just didn't get organized to be able to pursue
• 1:20:17
  Speaker 1: those opportunities. In a way, I wish we had some
• 1:20:19
  Speaker 1: of them. Sometimes it's timing sometimes to just execution, not
• 1:20:23
  Speaker 1: having the right people focused on the right priorities and
• 1:20:25
  Speaker 1: working together in the right right kind of ways. And
• 1:20:27
  Speaker 1: so that was one of the lessons from that that merger.
• 1:20:31
  Speaker 1: You know, it could have been this dominant company ended
• 1:20:33
  Speaker 1: up kind of shooting itself in the foot. Okay, let's
• 1:20:37
  Speaker 1: go back to a o L. So the stories your
• 1:20:40
  Speaker 1: brother talks about, an opportunity, you get a job that
• 1:20:44
  Speaker 1: ultimately morph into a O L. What is the special
• 1:20:48
  Speaker 1: sauce that you bring? What is your skill that allows
• 1:20:53
  Speaker 1: you to be successful and allows the companies you're working
• 1:20:56
  Speaker 1: with to be successful? No, it it's hard to say.
• 1:21:01
  Speaker 1: I think it's a it's probably like most people, mixed
• 1:21:03
  Speaker 1: of things. I think I do have a certain sense
• 1:21:07
  Speaker 1: of the future, certain sense of what's possible. I think
• 1:21:09
  Speaker 1: I think that that that's helpful. I do bring a
• 1:21:12
  Speaker 1: certain passion and persistence to it. We talked about, you know,
• 1:21:16
  Speaker 1: some of that before. I think that's that's helpful. I
• 1:21:20
  Speaker 1: think I do bring up particular, uh, particularly early day
• 1:21:23
  Speaker 1: to day well in particular skill set around marketing, you know,
• 1:21:26
  Speaker 1: and some of the things that we did to really
• 1:21:28
  Speaker 1: build the able brand and even distribute these free trial
• 1:21:32
  Speaker 1: disc to the world to get people that you know,
• 1:21:34
  Speaker 1: try out some of those marketing things. I think we're
• 1:21:36
  Speaker 1: also kind of in my in my wheelhouse and thinking
• 1:21:39
  Speaker 1: pretty good at building teams and getting people to work
• 1:21:43
  Speaker 1: together on a on a shared mission and make it
• 1:21:47
  Speaker 1: something that is aspirational, kind of a battle worth fighting.
• 1:21:51
  Speaker 1: I think those are some of the dynamics. But I
• 1:21:53
  Speaker 1: also would point out that none of the things I've
• 1:21:55
  Speaker 1: been able to do I could have done on my own.
• 1:21:57
  Speaker 1: It really is about the the team and even those
• 1:22:00
  Speaker 1: early A O L days. I brought some of that
• 1:22:03
  Speaker 1: marketing sense to the other co founders. Mark Sarah brought
• 1:22:05
  Speaker 1: the technology sense. Jim Kimsey brought them more of the
• 1:22:08
  Speaker 1: business financial sense, and you know, none of the three
• 1:22:11
  Speaker 1: of us could have done that without the other the
• 1:22:13
  Speaker 1: other two. So it's just always a reminder to me
• 1:22:17
  Speaker 1: about this notion of off. We talked earlier about entrepreneurship
• 1:22:21
  Speaker 1: really being a team sport. I have certain things I
• 1:22:23
  Speaker 1: can contribute, but there are many other things I'm not
• 1:22:26
  Speaker 1: good at and need to make sure the overall team
• 1:22:29
  Speaker 1: has the right mix of skills and a shared sense
• 1:22:32
  Speaker 1: of purpose and passion. Okay, I remember getting a free
• 1:22:37
  Speaker 1: subscription to a O L via Warner Brothers Records. They
• 1:22:41
  Speaker 1: had I think they had like ten free subscriptions. Had
• 1:22:44
  Speaker 1: to give me one in nine two, and then I
• 1:22:47
  Speaker 1: started to hear from college students based on an article
• 1:22:50
  Speaker 1: I wrote in the Tower Records magazine saying, you know,
• 1:22:55
  Speaker 1: can I connect with you via the Internet? But I
• 1:22:58
  Speaker 1: really did not become Although I had a modem bud
• 1:23:02
  Speaker 1: at the time and I was connecting, it wasn't really
• 1:23:05
  Speaker 1: till the summer of ninety five that I became to
• 1:23:07
  Speaker 1: say it was an active user. Was ultimately a gross understatement.
• 1:23:11
  Speaker 1: When did you know on the inside that you reached
• 1:23:14
  Speaker 1: a turning point the either gaining traction or traction was imminent. Well,
• 1:23:20
  Speaker 1: it was about that time. We started in eighty five,
• 1:23:23
  Speaker 1: but as I said before, it was really ten years
• 1:23:25
  Speaker 1: of of slog to stay alive, tried different things to
• 1:23:31
  Speaker 1: ultimately get successful. Uh. You know, we did go public
• 1:23:34
  Speaker 1: and was the first Internet company to go public, so
• 1:23:38
  Speaker 1: that was a little bit of a rite of passage.
• 1:23:40
  Speaker 1: But even then there was a considerable skepticism in our
• 1:23:44
  Speaker 1: I p O. We raised ten million dollars and the
• 1:23:47
  Speaker 1: value of AO all that day was seventy million dollars,
• 1:23:50
  Speaker 1: and nobody knew or cared about this little company. A well,
• 1:23:53
  Speaker 1: that was you know, going public. It was kind of
• 1:23:55
  Speaker 1: a you know, a non event um and for a
• 1:23:58
  Speaker 1: few more years it was still the struggle. Most people,
• 1:24:01
  Speaker 1: you know, weren't really believers in the idea of the Internet.
• 1:24:04
  Speaker 1: But it was about where interest started accelerating and people
• 1:24:09
  Speaker 1: started hearing about this thing called the Worldwide Web. People
• 1:24:12
  Speaker 1: started hearing about some of the services available on this
• 1:24:16
  Speaker 1: Internet thingy and and started wanting to get online. Thankfully
• 1:24:20
  Speaker 1: at that point in time, because we've been at it
• 1:24:22
  Speaker 1: for so long, you know, I always kind of the
• 1:24:24
  Speaker 1: right place at the right time, and that really drove
• 1:24:27
  Speaker 1: our our growth in the late nineties UH and and
• 1:24:31
  Speaker 1: uh our peak about half of all the Internet traffic
• 1:24:34
  Speaker 1: United States went through a well. So it was to
• 1:24:36
  Speaker 1: me an example of believing early in the idea, sticking
• 1:24:40
  Speaker 1: with it even though it took a decade and there
• 1:24:42
  Speaker 1: were a bunch of near death experiences there. Even my
• 1:24:45
  Speaker 1: parents one point called and said, like, Steve, it's like
• 1:24:50
  Speaker 1: it's not working. It's you know, maybe it's time to like,
• 1:24:53
  Speaker 1: you know, give it up and get a real job.
• 1:24:55
  Speaker 1: And no, I think, I think, I think it will work,
• 1:24:57
  Speaker 1: and give me think think I'm gonna stick with it,
• 1:25:00
  Speaker 1: and eventually eventually we we we broke through. So it's
• 1:25:03
  Speaker 1: a to me, it's sort of revolution sometimes happened in
• 1:25:08
  Speaker 1: evolutionary ways and you have to you know, kind of
• 1:25:10
  Speaker 1: take the long view and and kind of be able
• 1:25:13
  Speaker 1: to you know, kind of live to fight another day.
• 1:25:15
  Speaker 1: But to answer your question, it was sort of inn
• 1:25:18
  Speaker 1: were things really accelerated. I also remember I think it
• 1:25:21
  Speaker 1: was probably seven we moved to you know, from charging
• 1:25:25
  Speaker 1: per hour to unlimited use. Not surprisingly, you should skyrocketed
• 1:25:30
  Speaker 1: and our systems went down. There was so much demand
• 1:25:33
  Speaker 1: that basically systems crashed. I it's for twenty three hours,
• 1:25:37
  Speaker 1: AO was was inaccessible, which obviously was a problem because
• 1:25:42
  Speaker 1: we had tried to get people to rely on us
• 1:25:44
  Speaker 1: and we were not not providing the service they understandably expected.
• 1:25:48
  Speaker 1: So in that sense, it was kind of mortifying, but
• 1:25:51
  Speaker 1: also was it was It was in one way gratifying
• 1:25:54
  Speaker 1: because it had gone from this thing that nobody cared
• 1:25:57
  Speaker 1: about too suddenly it was this national story. It was
• 1:26:00
  Speaker 1: lead story on the TV network, the lead headline most
• 1:26:03
  Speaker 1: of the newspapers A well down and even a few
• 1:26:07
  Speaker 1: years before, nobody even cared about it all. I who
• 1:26:10
  Speaker 1: cares whether ails up or down? That's not that's not
• 1:26:12
  Speaker 1: a story. So that to me was at one point
• 1:26:14
  Speaker 1: where it felt like the Internet had arrived, Ail had arrived,
• 1:26:17
  Speaker 1: had gone from being ignored to being essential. Okay, meanwhile,
• 1:26:29
  Speaker 1: you get married and start a family, and frequently being
• 1:26:34
  Speaker 1: an entrepreneur a musician, which is almost like being an
• 1:26:37
  Speaker 1: entrepreneur requires all your time. Income is low. Uh did
• 1:26:43
  Speaker 1: you hesitate saying, well, it's like telling your parents calling
• 1:26:47
  Speaker 1: you know the job or joys feel that maybe I'll
• 1:26:49
  Speaker 1: land on my feet. What were your thoughts going through
• 1:26:52
  Speaker 1: your head then? No, I think there were there are
• 1:26:55
  Speaker 1: some tough moments. Uh. It was it was still in
• 1:26:58
  Speaker 1: my twenties that we're when we got started at mid twenties,
• 1:27:02
  Speaker 1: and so when we went public, uh, I was early thirties.
• 1:27:07
  Speaker 1: So this was kind of the real difficult years. We're
• 1:27:09
  Speaker 1: kind of late like twenties, and and I think there
• 1:27:12
  Speaker 1: were some moments where I wondered if I should do
• 1:27:14
  Speaker 1: something else, but I really believed in the idea, and
• 1:27:17
  Speaker 1: thankfully he was able to kind of you know, kind
• 1:27:20
  Speaker 1: of get get by and kind of, as I said before,
• 1:27:23
  Speaker 1: kind of lived to live to fight another day. Again.
• 1:27:25
  Speaker 1: That's not you know, just my story. It's pretty common
• 1:27:28
  Speaker 1: entrepreneur stories, you said, pretty common story, and other industries,
• 1:27:31
  Speaker 1: including music, where people are you know, struggling For a
• 1:27:35
  Speaker 1: while Springsteen was playing a whole lot of clubs, did
• 1:27:38
  Speaker 1: nobody cared about until finally he was able to to
• 1:27:41
  Speaker 1: break through. And I think it's a little bit of
• 1:27:44
  Speaker 1: a test. You learned some things about yourself thing that process.
• 1:27:47
  Speaker 1: You also have some experiences that probably do make you
• 1:27:50
  Speaker 1: better and stronger ultimately. But you know, there was some
• 1:27:55
  Speaker 1: difficult periods of time, but thankfully I I stuck with it.
• 1:27:58
  Speaker 1: And eventually, even though sometimes it felt like the light
• 1:28:02
  Speaker 1: at the end of the tunnel was the light was
• 1:28:04
  Speaker 1: far away and flickering, you know, I kind of stay
• 1:28:07
  Speaker 1: with it, and eventually the tunnel got a little shorter
• 1:28:10
  Speaker 1: and the light got a little brighter. Okay, so a
• 1:28:15
  Speaker 1: O L is marching along. In tech, you have to
• 1:28:20
  Speaker 1: be ahead of the game or you die. Whereas like
• 1:28:23
  Speaker 1: other industries talking about Internet, in intellectual property industries, they
• 1:28:27
  Speaker 1: have a catalog, They have a back list which keeps
• 1:28:30
  Speaker 1: them alive. So alll starts to roll. To what degree
• 1:28:35
  Speaker 1: were you focused on where we're going next? I was
• 1:28:40
  Speaker 1: mostly focused on where we go next, and then secondarily
• 1:28:43
  Speaker 1: focused on continuing to build a team to scale. Always
• 1:28:46
  Speaker 1: started with a couple of dozen people. By the time
• 1:28:48
  Speaker 1: we went public, it was less than two hundred people.
• 1:28:51
  Speaker 1: Uh six seven years later at ten thou people. So
• 1:28:53
  Speaker 1: it really it really scaled up pretty pretty dramatically. So
• 1:28:57
  Speaker 1: I had to, like many entrepreneurs, you know, learned to
• 1:29:01
  Speaker 1: to not do certain things I had been doing and
• 1:29:05
  Speaker 1: build a team that I could empower and trust to
• 1:29:07
  Speaker 1: do them because I needed to focus on some things
• 1:29:11
  Speaker 1: that I could perhaps uniquely do, and some of it
• 1:29:13
  Speaker 1: was trying to understand what was next and positioning a
• 1:29:16
  Speaker 1: company for it. So was you know, building the team.
• 1:29:19
  Speaker 1: Some of it also was being kind of a spokesman
• 1:29:22
  Speaker 1: evangelist for the medium. I had to do a lot
• 1:29:24
  Speaker 1: of things in the particularly the late nineties to educate
• 1:29:27
  Speaker 1: people around about the Internet, the press, you know, Congress,
• 1:29:30
  Speaker 1: other other other other folks, to other people in other countries.
• 1:29:35
  Speaker 1: Even that, because all was visible, I became kind of
• 1:29:39
  Speaker 1: a a spokesperson, not just very well but in many
• 1:29:42
  Speaker 1: ways for the for the industry. So I had to
• 1:29:45
  Speaker 1: focus on those things. I had to spend less time
• 1:29:48
  Speaker 1: on some of the things I had done, including some
• 1:29:49
  Speaker 1: of the marketing things, or some of the product things,
• 1:29:52
  Speaker 1: or some of the technology things that I spent more
• 1:29:55
  Speaker 1: time on in the early early years. Okay, so from
• 1:29:58
  Speaker 1: my perspective, once a again I had a free subscription
• 1:30:01
  Speaker 1: when you charged by the hour, never mind a free
• 1:30:03
  Speaker 1: subscription through the nineties I was living on the service
• 1:30:07
  Speaker 1: was a big education. I remember vividly in the summer
• 1:30:11
  Speaker 1: of nine six you could launch a browser on AOL.
• 1:30:16
  Speaker 1: But for me, the real breakthrough moment was in the
• 1:30:20
  Speaker 1: summer of two thousand. I went to visit my sister
• 1:30:22
  Speaker 1: in Minneapolis where she had a high speed connection, which
• 1:30:26
  Speaker 1: of course led you to Napster. Now, in this particular case,
• 1:30:31
  Speaker 1: I maintained, I don't think we had to pay for
• 1:30:33
  Speaker 1: a while my A O L and the high speed connection,
• 1:30:37
  Speaker 1: I got quite a way right away. But for me,
• 1:30:41
  Speaker 1: what killed A O L or put a dent in
• 1:30:44
  Speaker 1: it was more just the fact there was a high
• 1:30:46
  Speaker 1: speed connection sold by the cable company or a third party,
• 1:30:49
  Speaker 1: and that was twenty dollars right there, and people didn't
• 1:30:52
  Speaker 1: want to spend multiple as opposed to it being the
• 1:30:56
  Speaker 1: Web that put a dent in AO. Well, what do
• 1:31:00
  Speaker 1: you think from your inside view, Yeah, I think that
• 1:31:03
  Speaker 1: that's fair. The way AOL when it first launched, it
• 1:31:08
  Speaker 1: as other competitors at the time, was separated from the
• 1:31:11
  Speaker 1: Internet because at the time and when we started, it's
• 1:31:15
  Speaker 1: hard for people to believe us. But it's true it
• 1:31:17
  Speaker 1: was actually illegal for consumers or businesses to be on
• 1:31:21
  Speaker 1: the Internet. A few years later, Congress passed some legislation
• 1:31:24
  Speaker 1: to commercialize the Internet, but the early years it was separate.
• 1:31:27
  Speaker 1: When the Internet got commercialized, that actually accelerated A A
• 1:31:30
  Speaker 1: Well's growth because people wanted to be on the internet.
• 1:31:33
  Speaker 1: We integrated a very fast web browsers, so actually you
• 1:31:37
  Speaker 1: could get the websites through a well faster particularly with slow,
• 1:31:42
  Speaker 1: slow modems, and you could with most of the other
• 1:31:45
  Speaker 1: Internet service providers. And in addition to that, we provided
• 1:31:48
  Speaker 1: a whole suite of services that were exclusive to well
• 1:31:51
  Speaker 1: people connection and a lot of exclusive content and and
• 1:31:55
  Speaker 1: other services, so sort of the Internet and a whole
• 1:31:58
  Speaker 1: lot more for about the same price as the Internet only,
• 1:32:01
  Speaker 1: and that's really what drove our our hyper growth in
• 1:32:04
  Speaker 1: the late nine nineties. You're right, the transition to broadband
• 1:32:08
  Speaker 1: was was more challenging. We actually argued in Congress to
• 1:32:13
  Speaker 1: pass legislation to open up the cable broadband networks so
• 1:32:17
  Speaker 1: it would work like the dial up narrowband networks. The
• 1:32:20
  Speaker 1: phone companies were required to allow other people to operate
• 1:32:24
  Speaker 1: on their their networks. The cable companies were not required
• 1:32:27
  Speaker 1: to do that. Uh, And that effort did not succeed,
• 1:32:30
  Speaker 1: and so essentially the broadband networks remained closed as opposed
• 1:32:33
  Speaker 1: to being opened, which was one of the reasons that
• 1:32:36
  Speaker 1: led to our merger with Time Warner, because the part
• 1:32:38
  Speaker 1: of the reason to do that was Time Warner at
• 1:32:40
  Speaker 1: the time had Time Warner Cable, which was the largest
• 1:32:43
  Speaker 1: cable system with the largest broadband footprints, So we knew
• 1:32:47
  Speaker 1: the market was moving to broadband. We couldn't on our
• 1:32:50
  Speaker 1: own get there, and so by merging with Time Warner
• 1:32:53
  Speaker 1: would have a clearer path the broadband as well as
• 1:32:55
  Speaker 1: obviously all the other businesses that were part of Time Warner,
• 1:32:59
  Speaker 1: including some of the media business, Warner Music, Warner Brothers,
• 1:33:02
  Speaker 1: you know, CNN, HBO, you know, Time Ink, you know,
• 1:33:06
  Speaker 1: many many other things that were part of that. So
• 1:33:08
  Speaker 1: it was sort of the obvious thing to do in
• 1:33:10
  Speaker 1: terms of ensuring our path the broadband, as well as
• 1:33:13
  Speaker 1: having a broad suite of really great brands that would
• 1:33:16
  Speaker 1: be more valuable in a in a digital world. So
• 1:33:20
  Speaker 1: that really was the motivator doing. Unfortunately, once we did merge,
• 1:33:24
  Speaker 1: uh that some of the synergies that struck me as obvious,
• 1:33:27
  Speaker 1: we're not really pursued integrating a Well and Time Warner Cable.
• 1:33:32
  Speaker 1: So it was one bundled offering, which is what you
• 1:33:35
  Speaker 1: mentioned before, never happened, ended up really competing with each
• 1:33:39
  Speaker 1: other as opposed to benefiting from each other, and ultimately
• 1:33:42
  Speaker 1: that led to you know, not capitalizing on some of
• 1:33:45
  Speaker 1: these opportunities, which which led to the a well going
• 1:33:49
  Speaker 1: from the leader of the pact of being kind of
• 1:33:51
  Speaker 1: irrelevant now, which is which is sad to see and
• 1:33:54
  Speaker 1: it's sad to say, but that that that's the reality.
• 1:33:56
  Speaker 1: I think the takeaway from me goes back to some
• 1:33:59
  Speaker 1: of the things we talked about before getting the you know,
• 1:34:03
  Speaker 1: the vision right is helpful and important, but that's really
• 1:34:08
  Speaker 1: just the starting point. If you look at the initial
• 1:34:10
  Speaker 1: press release we wrote when we merged ale on Time
• 1:34:13
  Speaker 1: war two years ago, it was largely accurate and predicting
• 1:34:17
  Speaker 1: what was going to happen over the next ten or
• 1:34:19
  Speaker 1: twenty years. But our inability to organize the company to
• 1:34:23
  Speaker 1: capitalize on those opportunities and some of the friction between
• 1:34:26
  Speaker 1: different divisions basically hobbled our ability to execute against that
• 1:34:31
  Speaker 1: vision and ultimately lead to you know, the company being
• 1:34:34
  Speaker 1: broken up. So at what point, if the merger happened
• 1:34:38
  Speaker 1: in two thousand, at what point did you have the
• 1:34:41
  Speaker 1: idea it was Time Warner always the target or were
• 1:34:46
  Speaker 1: there other companies in the mix. There are other companies
• 1:34:50
  Speaker 1: in the mix. In in nineteen you know, the when
• 1:34:55
  Speaker 1: the internet really was you know, growing dramatically in popular
• 1:35:00
  Speaker 1: already and a Well's growth rate was accelerating dramatically. Also,
• 1:35:04
  Speaker 1: our stock market valuation accelerated dramatically. We went from mentioned
• 1:35:09
  Speaker 1: we went public in seventy million by late ninete it
• 1:35:13
  Speaker 1: was on sixty billion dollars. It was actually the best
• 1:35:16
  Speaker 1: performing stock of the decades, something like eleven thousand percent
• 1:35:19
  Speaker 1: increase from the time we went public. And so we
• 1:35:22
  Speaker 1: did see the value of having more diversified mix of businesses.
• 1:35:26
  Speaker 1: So we did want to use our our stock our currency,
• 1:35:30
  Speaker 1: if you will, to merge with other companies. We considered
• 1:35:33
  Speaker 1: a lot of different options, including some communications companies that
• 1:35:37
  Speaker 1: you know, discussions with A T and T about merging
• 1:35:39
  Speaker 1: for example. We also talked to a number of of
• 1:35:43
  Speaker 1: internet companies, email, electronic arts, you know, others around merging.
• 1:35:48
  Speaker 1: But but we always kept their eye on the prize,
• 1:35:50
  Speaker 1: which we did believe was time warn't for the reasons
• 1:35:53
  Speaker 1: I said before. It was unique in being able to
• 1:35:56
  Speaker 1: you know, provide what at the time at least I
• 1:35:58
  Speaker 1: thought was uh path the broadband that we couldn't get
• 1:36:01
  Speaker 1: on our own and couldn't get with any other other company,
• 1:36:04
  Speaker 1: which is why I pursued that in particular, and indeed
• 1:36:07
  Speaker 1: the first conversation I had with Jerry Levine, who was,
• 1:36:11
  Speaker 1: as you know, the CEO of Time Warner at the time,
• 1:36:13
  Speaker 1: proposing the idea of merging our companies. Within the first
• 1:36:17
  Speaker 1: minute of explaining why I thought we should merge our companies,
• 1:36:19
  Speaker 1: I said, and if we can do this, I will
• 1:36:22
  Speaker 1: step aside as CEO and let you run the combined company.
• 1:36:25
  Speaker 1: Because I knew it would be hard to get a
• 1:36:27
  Speaker 1: deal with with Time Warner had done. Our value was
• 1:36:31
  Speaker 1: quite a bit higher than their value, and they're all
• 1:36:33
  Speaker 1: kinds of other issues that we're going to be complicating issues.
• 1:36:36
  Speaker 1: But since was the only path to get it done
• 1:36:39
  Speaker 1: was to basically propose that the Time Warner side essentially
• 1:36:44
  Speaker 1: run the combined company. So that's why I did. And
• 1:36:46
  Speaker 1: when we when we did close the merger, I did
• 1:36:48
  Speaker 1: step aside as a CEO, even a well didn't no
• 1:36:51
  Speaker 1: longer reported to me. I was chair of the board
• 1:36:54
  Speaker 1: for a couple of years, and then uh, you know,
• 1:36:57
  Speaker 1: on the board for another year or two, and finally
• 1:36:59
  Speaker 1: decided it was time to move on. We just had
• 1:37:01
  Speaker 1: a difference of opinion of what to do, and I
• 1:37:05
  Speaker 1: think they were getting tired of me saying let's go
• 1:37:07
  Speaker 1: left when they wanted to go right, and I was
• 1:37:09
  Speaker 1: tired as well, so it was time to to kind
• 1:37:12
  Speaker 1: of part ways. And and even though it's obviously a
• 1:37:15
  Speaker 1: big disappointment, and that ultimately led me on this path
• 1:37:18
  Speaker 1: that had been on for most of the past two decades,
• 1:37:21
  Speaker 1: instead of starting in their company, starting revolution a company
• 1:37:25
  Speaker 1: to invest in many entrepreneurs with a particular bias, as
• 1:37:29
  Speaker 1: we've discussed around investing in entrepreneurs outside of the usual
• 1:37:32
  Speaker 1: hubs like like Silicon Valley. So the legend is that
• 1:37:36
  Speaker 1: ultimately the time Warner side of the company became resistant
• 1:37:40
  Speaker 1: to the A O L people in the A Well
• 1:37:43
  Speaker 1: ideas set an accurate description, Yeah, I think that's accurate.
• 1:37:47
  Speaker 1: I think in retrospect we could have handled it better.
• 1:37:49
  Speaker 1: We probably were a little toned depth diplomatic as we
• 1:37:52
  Speaker 1: could have been. There. There's definitely a sense that these,
• 1:37:55
  Speaker 1: you know, new kids on the block that haven't been
• 1:37:57
  Speaker 1: around long are coming and telling us you know what
• 1:38:00
  Speaker 1: to do. And I'm sure there was more of that
• 1:38:02
  Speaker 1: than I was even aware of, which was which was
• 1:38:05
  Speaker 1: a mistake, But there also was a reluctance on the
• 1:38:08
  Speaker 1: part of a lot of parts of the was then
• 1:38:11
  Speaker 1: time Warner to really fully embrace the Internet, fully embraced
• 1:38:15
  Speaker 1: the idea of digital convergence, fully embraced the reality. That
• 1:38:19
  Speaker 1: also meant it would challenge some of the existing business models.
• 1:38:22
  Speaker 1: You have to involve some of the interesting business models,
• 1:38:26
  Speaker 1: and I think there was just a reluctance to do that,
• 1:38:29
  Speaker 1: and in a sense that might take longer for some
• 1:38:32
  Speaker 1: of those innovations to to happen. I again sort of
• 1:38:35
  Speaker 1: remember a meeting probably at least twenty years ago with
• 1:38:38
  Speaker 1: some of the folks UM on the Warner Music side
• 1:38:41
  Speaker 1: and talking about was likely I thought it conda happen
• 1:38:44
  Speaker 1: around streaming, and what likely also going to happen around um,
• 1:38:49
  Speaker 1: you know, kind of how music companies might be structured,
• 1:38:52
  Speaker 1: and over time maybe it's a little bit more like
• 1:38:54
  Speaker 1: you know, venture capital, where they're investing in a new
• 1:38:57
  Speaker 1: artist and and share in the upside across multiple, uh,
• 1:39:01
  Speaker 1: you know, parts of the artist's career what then became
• 1:39:04
  Speaker 1: known as three sixty deals. That seemed like it was
• 1:39:07
  Speaker 1: a pretty obvious thing that was going to happen, but
• 1:39:09
  Speaker 1: there was a lot of resistance to that because the time,
• 1:39:11
  Speaker 1: as you know, the way that business was organized, as
• 1:39:14
  Speaker 1: you know, the music companies just put out the music,
• 1:39:17
  Speaker 1: and you know, somebody else did the concerts, and somebody
• 1:39:19
  Speaker 1: else had the publishing, and somebody else did this, and
• 1:39:21
  Speaker 1: somebody else did that, and having a more integrated view
• 1:39:24
  Speaker 1: of it was just not something most people either believed
• 1:39:27
  Speaker 1: in or just believed you practically they could get everybody
• 1:39:30
  Speaker 1: organized and headed in that, you know, that direction. So
• 1:39:33
  Speaker 1: again it goes back to I said earlier, it's sort
• 1:39:35
  Speaker 1: of a lesson around you know, the idea is important,
• 1:39:39
  Speaker 1: but ultimately it's putting that idea into action. Uh. And
• 1:39:43
  Speaker 1: the fact that we had some of the right ideas
• 1:39:45
  Speaker 1: around what was going to happen with broadband, I was
• 1:39:47
  Speaker 1: going to happen with streaming, or what was going to
• 1:39:49
  Speaker 1: happen with many many different things is sort of irrelevant
• 1:39:53
  Speaker 1: because we weren't able to be the company that actually
• 1:39:57
  Speaker 1: made that happen. And so that apply that lesson to
• 1:40:01
  Speaker 1: the work we're doing now at Revolution, including Rise of
• 1:40:05
  Speaker 1: the Rest. And part of the reason they even wrote
• 1:40:07
  Speaker 1: the book on the Rise of the Rest is I
• 1:40:08
  Speaker 1: really wanted to tell the stories of these these entrepreneurs,
• 1:40:11
  Speaker 1: these companies that were doing amazing things that really inspired me.
• 1:40:16
  Speaker 1: And and also surprised me in many ways, and I
• 1:40:21
  Speaker 1: wanted to make sure that people understood what was happening
• 1:40:24
  Speaker 1: with these with these companies, and particularly understood what was
• 1:40:27
  Speaker 1: happening in these cities that we're kind of being renewed
• 1:40:30
  Speaker 1: and revitalized because of the work of those entrepreneurs. So
• 1:40:33
  Speaker 1: it goes back to this issue of of trying to
• 1:40:36
  Speaker 1: make sure, you know, we don't just say we think
• 1:40:39
  Speaker 1: the rest surprize we hit the road, whether it be
• 1:40:42
  Speaker 1: bus tours or launching a fund or writing a book,
• 1:40:44
  Speaker 1: to actually do everything we can to make sure the
• 1:40:47
  Speaker 1: rest rise, to make sure we kind of level the
• 1:40:49
  Speaker 1: playing field for entrepreneurs in America. So in business books
• 1:40:56
  Speaker 1: and in media, the A O L Time and our
• 1:41:00
  Speaker 1: merger is portrayed is the worst in history of business.
• 1:41:06
  Speaker 1: To what degreed is that effect? And usually people writing
• 1:41:08
  Speaker 1: that have no vision, no knowledge of the inside. Is
• 1:41:12
  Speaker 1: that something that has emotionally hurt you? Is that something
• 1:41:16
  Speaker 1: on your back or is that something those people just
• 1:41:18
  Speaker 1: don't understand what's going on. And I've moved on well
• 1:41:21
  Speaker 1: about that because you don't love the fact that it's
• 1:41:24
  Speaker 1: it's you. It is the worst merger in history. I
• 1:41:26
  Speaker 1: understand why it is. It was the largest merger in history,
• 1:41:29
  Speaker 1: and it was the execution of it was flawed in
• 1:41:32
  Speaker 1: the way as I mentioned, So I think it's fair
• 1:41:34
  Speaker 1: to characterize it as that I of course have a
• 1:41:37
  Speaker 1: slightly different view, maybe more than slightly different view of
• 1:41:41
  Speaker 1: exactly what happened and why it happened. UH, and also
• 1:41:44
  Speaker 1: have the view of the CEO a O Well, which
• 1:41:47
  Speaker 1: might be different than the view of the CEO of
• 1:41:49
  Speaker 1: Time Warner, because for for us and our shareholders in retrospect,
• 1:41:53
  Speaker 1: turned out to be a good thing to do. But
• 1:41:56
  Speaker 1: but certainly understand some of the the the dynamic that
• 1:41:59
  Speaker 1: just in terms of the economics that I just did
• 1:42:01
  Speaker 1: quickly you know, cover it. When when we did the
• 1:42:04
  Speaker 1: you know, the merger, as I recall, the numbers were
• 1:42:08
  Speaker 1: something like the combined company UH would do about forty
• 1:42:12
  Speaker 1: billion of revenue and ten billion of profits something in
• 1:42:16
  Speaker 1: those that magnitude. UH and UH A Well contributed about
• 1:42:21
  Speaker 1: a billion of that ten billion of profit. But able
• 1:42:24
  Speaker 1: shareholders ended up with fifty of the combined company. So
• 1:42:28
  Speaker 1: for the able shareholders, it was a way not just
• 1:42:30
  Speaker 1: to have this what we thought would be this great
• 1:42:32
  Speaker 1: path to broadband, but also with more diversified mixt of businesses,
• 1:42:36
  Speaker 1: and we concluded the better for the able shareholders instead
• 1:42:39
  Speaker 1: of owning a well of this much larger, much much
• 1:42:44
  Speaker 1: more profitable, much more diversified company. I get it that
• 1:42:47
  Speaker 1: the people on the Time Warner side, you know, in retrospect,
• 1:42:51
  Speaker 1: did not view it the same way. I understand why
• 1:42:53
  Speaker 1: people were frustrated and when the stock market crashed after
• 1:42:57
  Speaker 1: the merger, not just for our company, but from many
• 1:42:59
  Speaker 1: other company's. Obviously a lot of people got hurt by that.
• 1:43:02
  Speaker 1: I also understand that. But but do bring the lens
• 1:43:05
  Speaker 1: of of you know what I was charged with doing
• 1:43:08
  Speaker 1: a CEO? H Well, okay, Time Warner was ultimately destroyed
• 1:43:13
  Speaker 1: as a company, broken up, pieces sold off. Presently, David
• 1:43:17
  Speaker 1: Zaslav runs has all the content with Discovery with an
• 1:43:22
  Speaker 1: amazing amount of debt, and keeps cutting costs and programs.
• 1:43:27
  Speaker 1: Rupert Murdoch sold the Fox other than the channel and
• 1:43:31
  Speaker 1: the uh TV stations, I believe, sold all the library
• 1:43:35
  Speaker 1: and the production of Fox to Disney. What should these
• 1:43:40
  Speaker 1: people be doing and what do you view the future
• 1:43:44
  Speaker 1: of this big time entertainment going forward? I don't know.
• 1:43:48
  Speaker 1: I think others have a more informed view I've been
• 1:43:51
  Speaker 1: largely out of it for for two decades and focused
• 1:43:54
  Speaker 1: on this, this next generation of entrepreneurs. I think some
• 1:43:59
  Speaker 1: of the things that Disney is done recently are consistent
• 1:44:02
  Speaker 1: with the kind of things I thought all time Warner
• 1:44:04
  Speaker 1: could do in terms of really driving some of the
• 1:44:07
  Speaker 1: streaming doesn't think we have done with Disney Plus in
• 1:44:09
  Speaker 1: particular is really quite impressive and uh and and because
• 1:44:14
  Speaker 1: they really got the whole company behind that initiative. And
• 1:44:17
  Speaker 1: and so I think when companies really get organized and
• 1:44:20
  Speaker 1: have strategic priorities and need strategic imperatives, and Disney basically said,
• 1:44:24
  Speaker 1: we now recognize the future is is streaming. We need
• 1:44:27
  Speaker 1: to control our destiny. We need to have more direct
• 1:44:30
  Speaker 1: control of our customer and not just rely on Netflix
• 1:44:32
  Speaker 1: or others is sort of intermediaries. They put kind of
• 1:44:35
  Speaker 1: everything behind that, and that ultimately led to the success.
• 1:44:38
  Speaker 1: I think that's hard for big companies to do, but
• 1:44:41
  Speaker 1: that's what they need to do. One of the reasons
• 1:44:43
  Speaker 1: I'm so excited about backing entrepreneurs across a variety of
• 1:44:47
  Speaker 1: sectors is having lived that. I kind of know how
• 1:44:50
  Speaker 1: the big companies, the big companies in the industries that
• 1:44:53
  Speaker 1: are up for up for grabs. Now outside of the
• 1:44:57
  Speaker 1: entertainment business, music business, that publishing businesses, that the digital
• 1:45:00
  Speaker 1: businesses that were associated with Ale and Time Warner, but
• 1:45:03
  Speaker 1: some of the things we've talked about before, like a
• 1:45:05
  Speaker 1: healthcare industry or or other other industries, I understand kind
• 1:45:10
  Speaker 1: of the plays that the big companies are going to run.
• 1:45:12
  Speaker 1: And those plays are even clear when the economy is tougher,
• 1:45:16
  Speaker 1: the markets are tougher, inflation is rising, what's gonna likely happen.
• 1:45:21
  Speaker 1: Many of those companies will pull back on their long
• 1:45:24
  Speaker 1: term innovation initiatives because they cost a lot of money
• 1:45:27
  Speaker 1: and they have an uncertain future, which actually creas even
• 1:45:31
  Speaker 1: more of an opening for the entrepreneurs. They're trying to
• 1:45:33
  Speaker 1: challenge those incumbents and and bring on new ideas. And so,
• 1:45:37
  Speaker 1: having lived through that watching little companies that were just
• 1:45:41
  Speaker 1: around the fringes, when when we did the deal with
• 1:45:44
  Speaker 1: the Able and Time Warner, I stepped aside companies like
• 1:45:47
  Speaker 1: Google and Amazon. We actually had a deal with Google
• 1:45:50
  Speaker 1: early on where we were able at five percent of
• 1:45:52
  Speaker 1: the equity and Google because they wanted to help us
• 1:45:54
  Speaker 1: use their search engine for our audience. You know, those
• 1:45:58
  Speaker 1: companies have risen over the last in a year as well,
• 1:46:01
  Speaker 1: uh well has has been in decline, and now are
• 1:46:03
  Speaker 1: these new powerhouses. That's going to happen in industries all
• 1:46:07
  Speaker 1: across the economy, and it's going to happen in cities
• 1:46:10
  Speaker 1: all across you know, the country. And so that's really
• 1:46:13
  Speaker 1: why the sort of some of the work I'm doing
• 1:46:15
  Speaker 1: now around rise the rest and backing these entrepreneurs and
• 1:46:19
  Speaker 1: supporting these cities and partly informed by that that experience
• 1:46:22
  Speaker 1: and a belief that most of the innovation will come
• 1:46:25
  Speaker 1: from uh, these these entrepreneurs with with with new ideas,
• 1:46:29
  Speaker 1: new business models, new perspectives that can move more quickly
• 1:46:32
  Speaker 1: and and uh try things in a more kind of
• 1:46:37
  Speaker 1: agile kind of way than big companies that big companies generally,
• 1:46:42
  Speaker 1: you know, play defense when young entrepreneur companies are are
• 1:46:46
  Speaker 1: playing offense. You know, the big companies generally are are
• 1:46:49
  Speaker 1: are just more short term oriented. You know, younger companies
• 1:46:53
  Speaker 1: are kind of take the long term view. So I
• 1:46:55
  Speaker 1: think it's very exciting time for innovation entrepreneurship in the country,
• 1:47:00
  Speaker 1: and it's going to impact every aspect of our lives.
• 1:47:03
  Speaker 1: You know, how we learn, how we eat, how do
• 1:47:04
  Speaker 1: we stay healthy, how do we move around, how do
• 1:47:07
  Speaker 1: we invest, etcetera. Uh, And you know, a lot of
• 1:47:10
  Speaker 1: that innovation is going to come from this next generation
• 1:47:13
  Speaker 1: of entrepreneurs and a lot of that innovation is going
• 1:47:15
  Speaker 1: to happen and these dozens of rides the rest cities
• 1:47:18
  Speaker 1: I write about in the book, and you know, Silicon
• 1:47:21
  Speaker 1: Valley will still be strong, will still be the most
• 1:47:23
  Speaker 1: innovative startup hub in the country, indeed probably in the world.
• 1:47:27
  Speaker 1: But we hit peaks Anilicon Valley a few years ago,
• 1:47:30
  Speaker 1: and the rise of the rest is accelerating. The pandemic
• 1:47:33
  Speaker 1: has been a tipping point, and so I think people
• 1:47:36
  Speaker 1: are should pay more attention to the people and places
• 1:47:39
  Speaker 1: that have generally been left left out of the innovation discussion.
• 1:47:44
  Speaker 1: I think that's where the action as, that's where the
• 1:47:46
  Speaker 1: puck is going. Okay, so you spoke in both the
• 1:47:50
  Speaker 1: book and earlier about three waves. Could briefly, could you
• 1:47:54
  Speaker 1: delineate the first and second wave and expand upon the
• 1:47:57
  Speaker 1: third wave where we are now? Well, the first wave
• 1:48:01
  Speaker 1: of the Internet was goes back to some of the the
• 1:48:02
  Speaker 1: things we talked about before with companies like A Well,
• 1:48:05
  Speaker 1: but obviously there were many others. It was taking it
• 1:48:07
  Speaker 1: what was just an idea and turning into a reality,
• 1:48:10
  Speaker 1: building the automaps, building the servers, building the content, and
• 1:48:13
  Speaker 1: other reasons that people should get online. Uh, And so
• 1:48:17
  Speaker 1: that really was the eighties and nineties, and and you
• 1:48:20
  Speaker 1: know that was really you know when the Internet when
• 1:48:23
  Speaker 1: exactly what you said before sort of arrived. And you know,
• 1:48:26
  Speaker 1: it took ten, fifteen, twenty years for you before it
• 1:48:29
  Speaker 1: really kind of arrived, but eventually it did. That then
• 1:48:33
  Speaker 1: set the stage for the second wave of the Internet.
• 1:48:35
  Speaker 1: And because at that point the Internet was built and
• 1:48:38
  Speaker 1: everybody was connected, you didn't have to focus so much
• 1:48:41
  Speaker 1: on the building phase or the infrastructure phase. You could
• 1:48:44
  Speaker 1: focus essentially focus on building on top of the Internet.
• 1:48:47
  Speaker 1: And it's particularly building software and apps on top of
• 1:48:50
  Speaker 1: the Internet. And a lot of the big innovations in
• 1:48:53
  Speaker 1: the last couple of decades have basically been that you know, apps,
• 1:48:56
  Speaker 1: whether it be you know, Facebook or Twitter or Google
• 1:48:59
  Speaker 1: or other things. It's basically software writing on top of
• 1:49:02
  Speaker 1: the Internet. And that's been super important obviously created some
• 1:49:05
  Speaker 1: super valuable companies. The third wave of the Internet, which
• 1:49:08
  Speaker 1: is the phase we're now in, is and we talked
• 1:49:11
  Speaker 1: about some of this before is sort of when the
• 1:49:12
  Speaker 1: Internet meets the real world, and that's when it really is,
• 1:49:15
  Speaker 1: you know, disrupting some of the big industries like healthcare
• 1:49:18
  Speaker 1: and the important aspects of our lives. And that's going
• 1:49:21
  Speaker 1: to require, I believe, a different entrepreneurial playbook. It's not
• 1:49:25
  Speaker 1: just about the software, not just about the apps, not
• 1:49:28
  Speaker 1: just about trying to get the idea spread you know,
• 1:49:30
  Speaker 1: you know, kind of you know, viral e and then
• 1:49:32
  Speaker 1: figuring out ways to monetize it. It's going to require
• 1:49:35
  Speaker 1: more systems level change to really change sectors like like healthcare,
• 1:49:40
  Speaker 1: So partnerships will become more important, policy will become more important.
• 1:49:45
  Speaker 1: These tend to be regulated sectors and entrepreneurs don't like
• 1:49:48
  Speaker 1: dealing with regular but the reality they have to if
• 1:49:50
  Speaker 1: they're going to innovate in this in this third wave. Uh.
• 1:49:53
  Speaker 1: And it's also going to play to the rise of
• 1:49:55
  Speaker 1: rest in place. It's gonna advantage the cities that have
• 1:49:58
  Speaker 1: some of the domain expertise, send credibility, and in some
• 1:50:01
  Speaker 1: of these sectors that are up for grabs. So I
• 1:50:03
  Speaker 1: think even though the first wave was certainly exciting and
• 1:50:07
  Speaker 1: taking the Internet from being an idea to being a reality,
• 1:50:10
  Speaker 1: and the second wave also was very exciting because all
• 1:50:13
  Speaker 1: the things that we've had been built on top of
• 1:50:15
  Speaker 1: the Internet that we're particularly doing the pandemic, we're able
• 1:50:17
  Speaker 1: to take advantage of in ways that seemed inconceivable just
• 1:50:21
  Speaker 1: twenty years ago. I think the third wave, when it
• 1:50:24
  Speaker 1: really is, you know, the Internet meeting the real world,
• 1:50:26
  Speaker 1: is where the most interesting and most successful and most
• 1:50:29
  Speaker 1: valuable companies will will be created, and it will have
• 1:50:33
  Speaker 1: a very uh substantial impact in terms of of America's
• 1:50:38
  Speaker 1: leadership in innovation entrepreneurship. And I hope, which is why
• 1:50:42
  Speaker 1: we're working so hard on the Rise of Rest. I
• 1:50:44
  Speaker 1: hope it will be a more inclusive approach to innovation
• 1:50:47
  Speaker 1: entrepreneurship that does include more people, does include more places
• 1:50:52
  Speaker 1: they are. More people can therefore be optimistic about the
• 1:50:55
  Speaker 1: future as opposed to anxious about the future. We can
• 1:50:58
  Speaker 1: maximize the shots on Goald max My is the ideas
• 1:51:01
  Speaker 1: we try by backing more more entrepreneurs and in more
• 1:51:04
  Speaker 1: cities around the country, and hopefully people reading the Rise
• 1:51:07
  Speaker 1: of Rest book will see why I'm so enthusiastic about
• 1:51:11
  Speaker 1: this and so optimistic about it. It's it's something that
• 1:51:13
  Speaker 1: I've had the privilege of having a front row seat
• 1:51:17
  Speaker 1: literally a bus in some cases over the last decade
• 1:51:21
  Speaker 1: as he developed. And I'm excited about the rise of rest.
• 1:51:24
  Speaker 1: I was in that those early days of the Internet
• 1:51:27
  Speaker 1: when it I believe in the idea even when others didn't.
• 1:51:31
  Speaker 1: To me, the rise of rest is sort of deja
• 1:51:34
  Speaker 1: vu all over again. And sectors other than healthcare that
• 1:51:37
  Speaker 1: are right for integration with the Internet or to be disrupted.
• 1:51:42
  Speaker 1: I mention them basically, if you look at the most
• 1:51:44
  Speaker 1: important aspects of your lives, they've changed a little bit,
• 1:51:47
  Speaker 1: uh in in the last ten thirty years. They'll change
• 1:51:50
  Speaker 1: a lot more in the next ten years. And that's
• 1:51:54
  Speaker 1: this acceleration of digital technology, acceleration of the internet. Uh.
• 1:52:00
  Speaker 1: And you know healthcare, for examples one six of the economy,
• 1:52:03
  Speaker 1: it doesn't work all that well, you know, and there
• 1:52:04
  Speaker 1: are ways to provide better care and better outcomes, greater
• 1:52:07
  Speaker 1: convenience and lower costs that new uh. You know, people
• 1:52:11
  Speaker 1: with new ideas. Many of those will come from young
• 1:52:13
  Speaker 1: companies led by entrepreneurs, are gonna kind of you lead
• 1:52:17
  Speaker 1: the charge on where you're reimagining our food systems, which
• 1:52:20
  Speaker 1: generally are too industrial and not particularly healthy and companies
• 1:52:25
  Speaker 1: that that were back there, like like a Sweet Green
• 1:52:27
  Speaker 1: or and many others are really leading the charge. There's
• 1:52:30
  Speaker 1: a lot of things happening around reimagining education, both the
• 1:52:34
  Speaker 1: K twelve education as well as you know kind of
• 1:52:36
  Speaker 1: colleges and universities, you know, lifelong learning. Digital technology will
• 1:52:41
  Speaker 1: play a key role, you know kind of there. So
• 1:52:43
  Speaker 1: it really is, you know, just all across the you know,
• 1:52:47
  Speaker 1: the landscape in terms of really big industries that are
• 1:52:50
  Speaker 1: likely to change a lot, and really important parts of
• 1:52:53
  Speaker 1: our lives that are likely to change a lot. Yeah.
• 1:52:55
  Speaker 1: That what I would encourage people to do, which again
• 1:52:57
  Speaker 1: is probably reason I wrote the book, is don't you
• 1:53:00
  Speaker 1: be a spectator watching this. If you have a particular
• 1:53:03
  Speaker 1: passion or you have a particular insight, jump in, do
• 1:53:07
  Speaker 1: something about it. And the great thing about what's happening
• 1:53:09
  Speaker 1: now with the Rise to rest and goes back to
• 1:53:11
  Speaker 1: what we said before, four hundred new venture firms in
• 1:53:14
  Speaker 1: these rightsrous cities that didn't exist ten years ago. There
• 1:53:17
  Speaker 1: are now existing backing companies in in you know, dozens
• 1:53:21
  Speaker 1: and dozens and dozens and dozens of American cities that
• 1:53:23
  Speaker 1: historically didn't have venture capital. You can now do that anywhere.
• 1:53:27
  Speaker 1: You shouldn't feel like you're in Ohio or Wisconsin or
• 1:53:30
  Speaker 1: Iowa or Tennessee or something. And so therefore you don't
• 1:53:34
  Speaker 1: have the ability to participate in the start up sector,
• 1:53:38
  Speaker 1: participate in the innovation economy. You're left out because you're
• 1:53:40
  Speaker 1: not in Silicon Valley or some other players. No, you
• 1:53:44
  Speaker 1: can be in the game. Uh, and you can do
• 1:53:46
  Speaker 1: it now. Uh. You just have to get started, and
• 1:53:49
  Speaker 1: you just have to say instead of just looking at
• 1:53:52
  Speaker 1: the problem and wondering if somebody else is going to
• 1:53:54
  Speaker 1: solve it, I'm gonna solve it. I'm going to do
• 1:53:56
  Speaker 1: that by starting a company. I'm gonna do it now,
• 1:53:59
  Speaker 1: and I'm gonna do it from wherever I am. Okay,
• 1:54:02
  Speaker 1: just a couple more things then we'll go. Big point
• 1:54:05
  Speaker 1: in the book is about immigration. The HB one visas.
• 1:54:09
  Speaker 1: Certainly has been stories in the news about a lot
• 1:54:12
  Speaker 1: of people foreign countries who would have stayed in the
• 1:54:14
  Speaker 1: United States ended up going back greatly to India and
• 1:54:18
  Speaker 1: starting the businesses there. Are we going to see a
• 1:54:21
  Speaker 1: change in this what's going on? Yeah? We we we
• 1:54:25
  Speaker 1: we must see it changes. I've been working on as
• 1:54:27
  Speaker 1: sadly unsuccessfully for the last decade. Actually testified the Senate
• 1:54:31
  Speaker 1: about nine years ago around immigration reform. And the reason
• 1:54:35
  Speaker 1: is because the data is pretty clear that immigrants have
• 1:54:38
  Speaker 1: played a central role in driving the American economy. About
• 1:54:41
  Speaker 1: of the successful companies have been immigrants or children of immigrants,
• 1:54:46
  Speaker 1: and part of what's made America so so, you know,
• 1:54:48
  Speaker 1: so compelling as this pioneering spirit, this is being a
• 1:54:51
  Speaker 1: magnet from talent all around the world wants to be
• 1:54:53
  Speaker 1: part of the American story, wants to build the next
• 1:54:55
  Speaker 1: chapter of the American story. But we have made it
• 1:54:58
  Speaker 1: more difficult for people to come. We have made it
• 1:55:00
  Speaker 1: more difficult for people who are here, perhaps at a university,
• 1:55:03
  Speaker 1: to stay. And as a result, we were losing some
• 1:55:06
  Speaker 1: of that that that talent ward to other other countries.
• 1:55:09
  Speaker 1: And we need to we need to reverse it. It
• 1:55:11
  Speaker 1: almost happened this past Sumber. Some legislation past Congress, any
• 1:55:16
  Speaker 1: one bill called the Chips and Science Act, had some
• 1:55:18
  Speaker 1: good things in and around you're reshoring some conductors and
• 1:55:23
  Speaker 1: funding the development of war these regional hubs, you know,
• 1:55:25
  Speaker 1: ties in with our rise of rest of work. But
• 1:55:28
  Speaker 1: also there was a startup VISA provision that was at
• 1:55:30
  Speaker 1: one point part of that when the final bill got done,
• 1:55:33
  Speaker 1: it got kicked out, which is unfortunate. If if we
• 1:55:36
  Speaker 1: fast forward, you know, a number of years in America
• 1:55:39
  Speaker 1: ceases to be the leader of the pack, ceases to
• 1:55:42
  Speaker 1: be the leading and common in the world, ceases to
• 1:55:44
  Speaker 1: be the most innovative entreprene nation in the world. Uh,
• 1:55:47
  Speaker 1: it's like very likely will be we got this wrong.
• 1:55:50
  Speaker 1: We lost that that edge we had globally as this
• 1:55:54
  Speaker 1: as this as magnet. So I'll continue to do whatever
• 1:55:57
  Speaker 1: I can to try to, you know, support uh kind
• 1:56:01
  Speaker 1: of reform around immigrations, so we can when this when
• 1:56:04
  Speaker 1: this battle for particularly around some of the talent that
• 1:56:07
  Speaker 1: you know likely could be the entrepreneurs of the future,
• 1:56:10
  Speaker 1: building some of the companies of future and creating lots
• 1:56:13
  Speaker 1: of jobs for for for Americans in the process. And
• 1:56:17
  Speaker 1: we've covered a lot of the viewpoint of the entrepreneur
• 1:56:21
  Speaker 1: that location is not that important now you can do
• 1:56:23
  Speaker 1: it anywhere. But in conclusion, any other advice for entrepreneurs, Well,
• 1:56:29
  Speaker 1: first of all, I recognize, uh that entrepreneurs are choosing
• 1:56:34
  Speaker 1: a path that most people think as a risky path,
• 1:56:38
  Speaker 1: and so it requires a certain boldness, a certain fearlessness
• 1:56:42
  Speaker 1: to take that path. I think we should understand that
• 1:56:45
  Speaker 1: and and respect that. We also should recognize that sometimes
• 1:56:50
  Speaker 1: people who try things stumble the first time. You know,
• 1:56:53
  Speaker 1: it is the first yet that doesn't work, uh, you know,
• 1:56:57
  Speaker 1: but you kind of keep having to take shots. And
• 1:57:00
  Speaker 1: Ruth was the home run king. He had more home
• 1:57:02
  Speaker 1: runs anybody else. Guess what. He also was a strikeout king.
• 1:57:05
  Speaker 1: He had more strikeouts than ab Els. If you're swinging
• 1:57:07
  Speaker 1: for the fences, you're not gonna always get it. Sometimes
• 1:57:09
  Speaker 1: you'll you'll end up with a strikeout. We also need
• 1:57:12
  Speaker 1: to understand that. So if an entrepreneur try something and
• 1:57:15
  Speaker 1: it doesn't work, that doesn't mean they're a failure. That
• 1:57:18
  Speaker 1: just means that particular idea is a failure. So just
• 1:57:22
  Speaker 1: getting more people to realize that the importance of it. Uh.
• 1:57:25
  Speaker 1: And even though if you go back to what we
• 1:57:27
  Speaker 1: were talking about just a bit ago, that America itself
• 1:57:31
  Speaker 1: was a startup two fifty years ago, America was an idea.
• 1:57:36
  Speaker 1: Most people around the world didn't think America would succeed,
• 1:57:40
  Speaker 1: just as most people don't think startups will succeed. There's
• 1:57:44
  Speaker 1: a lot of skepticism in the first couple of decades
• 1:57:47
  Speaker 1: of that American story. Somehow we powered through, somehow we survived,
• 1:57:52
  Speaker 1: and then we thrived and we went from this fledgling,
• 1:57:55
  Speaker 1: you know, almost hit the wall startup nation to the
• 1:57:58
  Speaker 1: leader of the free world. And so how do we
• 1:58:00
  Speaker 1: keep leading? We can't do that unless we're leading around innovation.
• 1:58:05
  Speaker 1: We're leaning in the future, we're trying new things, we're
• 1:58:08
  Speaker 1: taking risk, and we need to celebrate that as a
• 1:58:11
  Speaker 1: core part of the American story and celebrate the entrepreneurs
• 1:58:15
  Speaker 1: out there. Perhaps I'm listening to this right now that
• 1:58:18
  Speaker 1: are you know, taking that shot? Are the ones we're
• 1:58:20
  Speaker 1: thinking about taking the shot? And maybe now is the
• 1:58:23
  Speaker 1: time they'll step in into the game. So that again,
• 1:58:25
  Speaker 1: that's my you know, my real passion here is making
• 1:58:28
  Speaker 1: sure I can do what I can to make sure
• 1:58:32
  Speaker 1: America continues to lead. America continues to be a magnet
• 1:58:35
  Speaker 1: for talent, America continues to be this innovative, pioneering nation.
• 1:58:39
  Speaker 1: But we do it in a more inclusive way that
• 1:58:41
  Speaker 1: we do bring along more people, we do bring along
• 1:58:44
  Speaker 1: more places, and we can inspire the next generation to
• 1:58:47
  Speaker 1: start here, build here, scale here, create jobs here, drive
• 1:58:50
  Speaker 1: economic growth here. So for those entrepreneurs out there, or
• 1:58:54
  Speaker 1: those potential entrepreneurs out there. Thank you for taking the
• 1:58:58
  Speaker 1: risk you're taking. Thank you for taking a shot. Keep
• 1:59:01
  Speaker 1: fighting and hopefully ultimately you'll you'll be successful in that
• 1:59:05
  Speaker 1: one and then strengthen your community, the community you care
• 1:59:08
  Speaker 1: about by creating more jobs and opportunity in those communities,
• 1:59:11
  Speaker 1: and collectively that can also strengthen our nation. Yeah, that's
• 1:59:17
  Speaker 1: what I've been telling people for years now. There is
• 1:59:19
  Speaker 1: no flyover country all in America. Obviously their pockets that
• 1:59:23
  Speaker 1: don't have broadband, but essentially all of America has broadband.
• 1:59:27
  Speaker 1: Everybody has hundreds of channels. Everybody is hip, everybody is informed.
• 1:59:32
  Speaker 1: It's not like you're talking earlier. It takes a week
• 1:59:35
  Speaker 1: to get the TV show in Hawaii. But I must
• 1:59:39
  Speaker 1: admit your book really fleshes it out. It really talks
• 1:59:42
  Speaker 1: about the different locations and what is happening, and it's
• 1:59:46
  Speaker 1: eye opening, especially in an era where living costs may
• 1:59:51
  Speaker 1: be much cheaper in between Boston, New York and Silicon Valley, California.
• 1:59:57
  Speaker 1: In any event, Steve, I want to thank you so
• 2:00:00
  Speaker 1: much for taking the time talking about your history and
• 2:00:02
  Speaker 1: explaining your investment strategy across the country. So thanks again,
• 2:00:07
  Speaker 1: Thanks Bob. Great to reconnect. Love your writings, love your podcast,
• 2:00:10
  Speaker 1: keep it up. Thanks so much. Until next time, this
• 2:00:14
  Speaker 1: is Bob less sex.