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Interview With Marc Andreessen: Masters in Business (Audio) · Masters in Business

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Speaker 1: Pierce Veneran Smith Incorporated or Register Broker Dealer. Remember s
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Speaker 1: I p c V is Masters in Business with Barry
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Speaker 1: Ridholts on Bloomberg Radio this week on the podcast this
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Speaker 1: was so much fun. I cannot begin to tell you
0:28
Speaker 1: what a delightful time I had. Mark Andresen of Andres
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Speaker 1: and Horowitz, an absolute tour to force conversation about everything
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Speaker 1: from valuation to psychological impact of market crashes too, are
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Speaker 1: we or are we not in a bubble? The significance
0:47
Speaker 1: of of UH founders, and and how are you better
0:52
Speaker 1: off with somebody who has people skills um but isn't
0:56
Speaker 1: a technologist or a technologist who doesn't necessary fairly have
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Speaker 1: the social skills? On and on. We covered so much
1:03
Speaker 1: ground so quickly, absolutely fascinating. It was an incredible, incredible conversation.
1:11
Speaker 1: It's one of those things where you just say, how
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Speaker 1: privileged am I to sit in a conference room, indeed
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Speaker 1: the conference room where Andreason Horowitz gets pitched from various
1:22
Speaker 1: startups and have a ninety minute chat with someone with
1:27
Speaker 1: his just amazing understanding of where tech came from, where
1:33
Speaker 1: it is today, and where it's going. I could babble
1:36
Speaker 1: about this endlessly, but rather than gush, why don't we
1:40
Speaker 1: just listen to the conversation with no further ado. My
1:44
Speaker 1: podcast conversation with Mark Andreson of andres In Horowitz. This
1:51
Speaker 1: is Masters in Business with Barry Ridholtz on Bloomberg Radio.
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Speaker 1: My special guest today is Mark Andreason. He is the
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Speaker 1: co founder and general partner of venture capital firm Andreson Harowitz.
2:05
Speaker 1: He comes with a storied background. He co created the
2:09
Speaker 1: Mosaic Internet browser, co founded Netscape, sold to a O
2:14
Speaker 1: L for a few billion dollars. Co founded loud Cloud,
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Speaker 1: also sold to HP for a few billion dollars. Crunch
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Speaker 1: Base notes that Andreson Harowitz has over five hundred investments
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Speaker 1: in three D one companies, a number of exits via
2:31
Speaker 1: I p O s and acquisitions. I could go on
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Speaker 1: and on about his curricular vita, but really he speaks
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Speaker 1: for himself, so let's jump right into this, Mark Andreason,
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Speaker 1: welcome to Bloomberg Radio, and thank you for hosting us here.
2:47
Speaker 1: In Andrews and Harrowitz. I'm thrilled to be on him
2:49
Speaker 1: and it's great to have you here. The I love
2:51
Speaker 1: your facilities. We we love all the artwork and everything here.
2:54
Speaker 1: It seems to be like a very civilized place to
2:57
Speaker 1: to work. It's like, I don't know said, being a
2:59
Speaker 1: venture capitalist is like being an airline pilot, long stretches
3:02
Speaker 1: of boardom followed by moments of sheer terror. We try
3:05
Speaker 1: to have a calm atmosphere that makes a lot of sense.
3:08
Speaker 1: Let's let's go back to the beginning. Your Your big
3:11
Speaker 1: idea in was that people would want internet access in
3:16
Speaker 1: their homes. Now that's a given today we want internet
3:20
Speaker 1: access wherever we are seven But twenty five plus years
3:24
Speaker 1: ago that wasn't very obvious. What led you to say
3:30
Speaker 1: in I have an idea an Internet browser. Yes, I
3:34
Speaker 1: would say it was even beyond not obvious. It was
3:36
Speaker 1: considered ridiculous. So the idea that basically it was well
3:40
Speaker 1: known in that the Internet was for academics and nerds,
3:43
Speaker 1: and that there was there was no use case for
3:45
Speaker 1: Mary people like it was just incomprehensible, like why would anybody,
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Speaker 1: how would anybody even have the technical capability to even
3:50
Speaker 1: consider getting online, much less of anything that they could
3:53
Speaker 1: do productively was their online. Um, I've since actually in
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Speaker 1: your sense that actually learned a principle that I have
4:00
Speaker 1: generalized out that it explains what happened, which is what
4:02
Speaker 1: William Gibson, the science famous science fiction author wrote Neuromancer.
4:05
Speaker 1: It was a very influential book in our industry. He
4:07
Speaker 1: he says, his his line is the future is already here,
4:10
Speaker 1: it's just not evenly distributed yet. And there are many
4:13
Speaker 1: applications to that line. It's so it's such a fabulous insight.
4:18
Speaker 1: And so the new ideas, this is something I've really
4:19
Speaker 1: come to believe, is the new ideas already exist. Uh,
4:22
Speaker 1: there are a few ideas that actually materialized out of
4:24
Speaker 1: thing air. They generally already exist somewhere, and they exist
4:26
Speaker 1: somewhere in a lab, right if they exist somewhere in
4:28
Speaker 1: a fringe group or in an underground movement or something
4:31
Speaker 1: like that. And so what happened here was and this
4:33
Speaker 1: this is the part that's just I think probably pure luck.
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Speaker 1: Um is I went to college at University of Illinois,
4:38
Speaker 1: which at that time was one of four universities in
4:40
Speaker 1: the country that had been funded by the government to
4:42
Speaker 1: be the hubs for what at the time was called
4:44
Speaker 1: the NSF net, which was what became the Internet. And
4:47
Speaker 1: so then there's there's a whole program developed in the
4:49
Speaker 1: eighties around supercomputers. And this is what you know when Elgar,
4:52
Speaker 1: when Elgar claimed credit for creating the Internet, this is
4:54
Speaker 1: what he was talking about, was the funding, UH for
4:57
Speaker 1: for this program to wire these universities. And so we
4:59
Speaker 1: had on campus in the level of broadband that people
5:03
Speaker 1: have in their homes today. Um, and we had the
5:05
Speaker 1: use We saw the use cases. You saw everybody using
5:07
Speaker 1: all this stuff. Now it wasn't at the level of
5:09
Speaker 1: sophistication is today, but you could you could see that,
5:11
Speaker 1: you could see all the use cases. You can see
5:13
Speaker 1: many people liked it. But the expectation was you had
5:15
Speaker 1: in college and then you would graduate and you would
5:17
Speaker 1: go off into life and you would just give it up.
5:19
Speaker 1: And that was the part where I was like, uh
5:21
Speaker 1: and s f NET was after darker NEET, but before
5:25
Speaker 1: full on internet for the public. Is that a fair explanation. Yeah,
5:28
Speaker 1: that's right, So our DARPA. ARPA was known as ARPA,
5:33
Speaker 1: now known as DART, but funded a military network which
5:35
Speaker 1: was originally conceived as a way to do nuclear command
5:38
Speaker 1: and control in the event of bad things happening in
5:40
Speaker 1: the world. Therefore the importance of packet switching UM had
5:43
Speaker 1: to be able to respond even after you've been attacked
5:46
Speaker 1: by nuclear You've got a network with you know, it's
5:48
Speaker 1: a hundred nodes and then twenty of them get wiped
5:50
Speaker 1: out by attack, and you still have to have the
5:51
Speaker 1: network has to still keep running. In traditional networks don't
5:53
Speaker 1: keep running, and at least in theory packets which networks
5:55
Speaker 1: can keep running. So so that was the that Then
5:58
Speaker 1: this is like fifty years ago they all figured this
6:00
Speaker 1: up out and then in the eighties that the idea
6:02
Speaker 1: got generalized out to the idea that civilian researchers should
6:04
Speaker 1: be able to use this technology. UM. In particular, actually
6:07
Speaker 1: the government was funding these national supercomputer centers that were
6:10
Speaker 1: buying a super expensive supercomputers to put on four or
6:13
Speaker 1: five college campuses, and then they wanted to provide access
6:16
Speaker 1: to scientists from all over the country to be able
6:17
Speaker 1: to access those and so they trans basically took the
6:20
Speaker 1: template of our pendet, turned it into nsf net and
6:22
Speaker 1: allowed anybody to love with permission to log into those
6:25
Speaker 1: computers have temporary time. You would have a few minutes
6:28
Speaker 1: or hours whatever it was. And and that's eventually where
6:32
Speaker 1: led to uh the full on internet. But let's let's
6:35
Speaker 1: talk about the other name and Andres and Harowitz Ben Harrowitz.
6:39
Speaker 1: You guys have been working together for a long time.
6:42
Speaker 1: Have you made that partnership work? And how did it
6:44
Speaker 1: really begin? Because if if what I've read is to
6:48
Speaker 1: be believed, some of it started out a little little rocky.
6:52
Speaker 1: Ben Ben took great delight in his book uh In
6:54
Speaker 1: in describing the origins of the relationships. So um uh
6:58
Speaker 1: so at this point where an old married couple. Um,
7:00
Speaker 1: and so you know, I guess the good news is
7:03
Speaker 1: we can finish each other sentences. Bad news is we
7:05
Speaker 1: usually try to finish each each other's sences. So um, so,
7:09
Speaker 1: you know, we we've had a long running partnership and
7:11
Speaker 1: friendship for you know, for a very long time, now
7:13
Speaker 1: twenty two years. I guess, um the origin of it actually,
7:16
Speaker 1: so he was he wasn't early he was one of
7:18
Speaker 1: the early guys actually to jump int an escape early
7:20
Speaker 1: on when it was when Escape was telerotical idea actually
7:22
Speaker 1: came over from Lotus, which at the time was this
7:24
Speaker 1: big important, you know, dominant software company eventually booked by IBM.
7:28
Speaker 1: Actually fun story by M. After he left, IBM bought
7:32
Speaker 1: Lotus for I think three and a half billion dollars
7:33
Speaker 1: at the time, which was a blockbuster deal in retrospect,
7:36
Speaker 1: I'd spent three and a half billion dollars. They could
7:37
Speaker 1: have bought the entire Internet instead of Lotus. They could
7:40
Speaker 1: have bought every Internet company and every I s P
7:43
Speaker 1: and they could have owned the whole thing. So anyway,
7:45
Speaker 1: he saw the future. Not the first time ib AM
7:47
Speaker 1: missed a boat what is it and probably won't be
7:49
Speaker 1: the last big companies. Yeah that we all we all
7:51
Speaker 1: at some point tend to tend to do that. But
7:53
Speaker 1: um uh, he saw, you know, he I think, to
7:56
Speaker 1: his great he saw the future. He saw he saw
7:57
Speaker 1: what was going to happen, I mean, even more clearly
7:59
Speaker 1: than a lot of other people who were involved back down,
8:01
Speaker 1: and so he jumped over um and then you know,
8:04
Speaker 1: an Escape was a was a very short right, but
8:06
Speaker 1: it was very intense. It was a pressure cooker, and
8:08
Speaker 1: so it was very easy to see internally who was
8:10
Speaker 1: high potential who wasn't UM, And so we had him
8:13
Speaker 1: on a very fast promotion path basically from the day
8:15
Speaker 1: he joined. And I think had we potential? Is that
8:17
Speaker 1: that's the phrasey Yeah, high potential like UM, you know young?
8:20
Speaker 1: You know basically you're always trying these organizations to find
8:22
Speaker 1: the young managers who you think are going to be
8:24
Speaker 1: able to scale and grow and eventually become the leaders
8:25
Speaker 1: of the company. Right, And so I think that I
8:28
Speaker 1: think had had an escape stayed and we sold a
8:29
Speaker 1: company in had had we stayed independent, I think he
8:32
Speaker 1: would have ended up as the CEO at some point.
8:34
Speaker 1: He was just still very young at that point. But
8:36
Speaker 1: it's just very clear how much but how smart he was,
8:38
Speaker 1: and how good of a leader he was, and how
8:39
Speaker 1: good his judgment was. UM. And so when we then
8:43
Speaker 1: after we saw the company, we then had the opportunity
8:45
Speaker 1: to start a new company, and we just we became
8:47
Speaker 1: clear that we wanted to work together. So let's talk
8:50
Speaker 1: about UM, Jim Clark, UM I became I always kind
8:54
Speaker 1: of knew who Jim Clark was. But then Michael Lewis
8:57
Speaker 1: is the new new thing is what really ted Jim
9:00
Speaker 1: Clark for me? Um, what was that like, meaning, Jim Clark,
9:05
Speaker 1: how did you guys start to work together? Yeah, so Jim,
9:08
Speaker 1: that was again probably struck a luck in my career.
9:10
Speaker 1: Jim called me one day out of blue. Also a
9:13
Speaker 1: friend of his, an associate of his who he had
9:15
Speaker 1: worked with. So he had been the founder of this
9:17
Speaker 1: company called Silicon Graphics, which at the time had a
9:19
Speaker 1: reputation similar to Google's reputation today. It was considered the
9:22
Speaker 1: sort of the gold standard Silicon Valley company that all
9:24
Speaker 1: the green engineers wanted to work for. It was very
9:26
Speaker 1: much this is when after the movie Terminator two came
9:28
Speaker 1: out and they were redefining this whole idea of three
9:30
Speaker 1: D special effects and they were reading it was just
9:32
Speaker 1: this kind of amazing moment for this company. But he
9:35
Speaker 1: he left for a variety of reasons, um, and decided
9:37
Speaker 1: he wanted to start a second company. Um. And so
9:39
Speaker 1: this is a little bit little bit like Larry Page
9:41
Speaker 1: leaving Google or Mark Zuckerberg leaving Facebook and saying I
9:43
Speaker 1: need to start a new company. Um and then um,
9:46
Speaker 1: but he had hired everybody he knew who was smart,
9:49
Speaker 1: who he had ever worked with into Silicon Graphics, and
9:51
Speaker 1: so they weren't available to start a new company with him,
9:54
Speaker 1: and so he literally needed fresh people. So he got
9:57
Speaker 1: together with a group of friends and basically made a
9:59
Speaker 1: list of p bowl who were in the industry who
10:01
Speaker 1: he had not yet worked with UM and he actually
10:04
Speaker 1: I was culminated at a list of about a dozen
10:06
Speaker 1: people who he approached at various stages and said, you
10:09
Speaker 1: know what, do you want to consider doing something together UM,
10:11
Speaker 1: which culminated in a big dinner in Palo Alto with
10:13
Speaker 1: like the full dozen of us. And then at the end,
10:15
Speaker 1: at the end of the whole process, I was the
10:16
Speaker 1: only one left standing. Really, that's fascinating, by the way,
10:19
Speaker 1: it wasn't because necessarily I think he knocked some of
10:21
Speaker 1: the others out of the process, but also a lot
10:22
Speaker 1: of people they were just like they had jobs, they
10:24
Speaker 1: were committed, they weren't willing to take yet another leap.
10:27
Speaker 1: And this was a pretty also people forget like ninety
10:30
Speaker 1: four we started escaping ninety four. It was very similar
10:33
Speaker 1: mood in the valley then to what happened ten years
10:35
Speaker 1: later after the dot com crash. It was a very
10:37
Speaker 1: dark time in the valley um. That valley had had
10:39
Speaker 1: a severe economic crash in one and was still kind
10:43
Speaker 1: of in the Dould rooms at niny four. So the
10:45
Speaker 1: idea of a startup was considered kind of a radical
10:47
Speaker 1: thing and and potentially a dangerous thing from a career standpoint,
10:50
Speaker 1: And so it wasn't the most obvious thing in the
10:52
Speaker 1: world for people to leap into the into the new
10:53
Speaker 1: thing and so and then in contrast, I had just
10:55
Speaker 1: arrived out of college. I had nothing. I didn't think
10:57
Speaker 1: the lewis, you have no baggage, you were ready to go.
11:00
Speaker 1: So I always have this vision of the reason Netscape
11:03
Speaker 1: led to this explosion of new technologies. At the time,
11:08
Speaker 1: Microsoft pretty much was the only game in town, and
11:12
Speaker 1: very often I just envisioned young guys with great ideas
11:17
Speaker 1: going to venture capitalists and and every pitch meeting someone
11:21
Speaker 1: ends up saying, what prevents Microsoft from building this into
11:25
Speaker 1: into their operating system? And if you didn't have an
11:27
Speaker 1: answer to that, thanks for coming by, see you later.
11:30
Speaker 1: And Netscape allowed everybody to say, hey, we could bypass
11:36
Speaker 1: the operating system and do this online. Am I remotely
11:40
Speaker 1: close to the that early nineties understanding of of what
11:45
Speaker 1: who was then the dominant software player. Yeah, so strategically
11:48
Speaker 1: I think that's right and that that was a big effect.
11:50
Speaker 1: But I would say there was an equal kind of
11:51
Speaker 1: effect at the same time that was at least as important,
11:53
Speaker 1: which was unlocking the potential of the people in the valley.
11:56
Speaker 1: So the most astonishing thing to me, um was I
12:00
Speaker 1: mean because because the Internet, like I said, the Internet
12:01
Speaker 1: stuff was not we started to escape like this was
12:03
Speaker 1: not considered like, oh yeah, this is a great idea.
12:05
Speaker 1: Most people like, Okay, this is nutty, Like everybody knows.
12:07
Speaker 1: It was common that everybody knows you can't make money
12:09
Speaker 1: on the Internet. There's probably to do it. Commercial activity
12:11
Speaker 1: on the Internet was actually illegal until en right, it
12:13
Speaker 1: actually was not permitted, but because it was federally research
12:17
Speaker 1: that this is before the days of dot com. It
12:20
Speaker 1: was just dot edge you and yeah, but you could
12:23
Speaker 1: have do comment, you couldn't do any commerce, you couldn't
12:24
Speaker 1: be transactions. It was there was these called acceptable use
12:27
Speaker 1: limits because it was federally funded and they didn't they
12:29
Speaker 1: hadn't legalized it yet. So um, we started to asking
12:31
Speaker 1: kind of right right as they switched it. So, but
12:33
Speaker 1: it was widely views Number one it's illegal. Um. And
12:35
Speaker 1: then number two, even if it were legal, people wouldn't
12:37
Speaker 1: want to do it because you can't trust the Internet.
12:39
Speaker 1: There's hackers and thieves and all this stuff and it's
12:40
Speaker 1: just not something. And then ordinary people just won't do this,
12:43
Speaker 1: and so so it was very contintuitive. Um. Within a year, though,
12:47
Speaker 1: like with by when the sort of conventional wisdom, people
12:50
Speaker 1: started to get exposed to it and they started to
12:51
Speaker 1: have it in their lives and I started to say,
12:53
Speaker 1: oh wow, I actually like this and this this starts
12:54
Speaker 1: to making more sense. There was then this amazing flood
12:57
Speaker 1: of talent. We're all these incredibly sharp people in Silicon
13:00
Speaker 1: Valley who had worked on previous generation sub technology for
13:04
Speaker 1: the previous twenty years. They turned out they were still here,
13:06
Speaker 1: right and so, and they were either at the older
13:08
Speaker 1: companies or they were just parked, you know, kind of
13:10
Speaker 1: on the beach, and all of a sudden there was
13:11
Speaker 1: a new thing and they just all showed up out
13:13
Speaker 1: of nowhere um. And so it was like this materialization
13:16
Speaker 1: of human capital and talent basically out of thin air.
13:18
Speaker 1: And I was just astonished and say, these incredibly talented
13:20
Speaker 1: people coming in, engineers, marketers, salespeople, and then all that
13:24
Speaker 1: you know, all the other people you need to make
13:25
Speaker 1: a company go hr people and lawyers and all these
13:26
Speaker 1: people find its people. They just show up, and all
13:29
Speaker 1: of a sudden, you've got this company that's like fully
13:31
Speaker 1: up and running with all these people with all these
13:32
Speaker 1: skills and experiences that you didn't even I didn't even
13:35
Speaker 1: think was possible. Well did they. And this is the
13:36
Speaker 1: magic of the valley. But I mean this is the
13:38
Speaker 1: people's side of the magic of the valley. As the
13:40
Speaker 1: human capital. Well that the people will flow into the
13:42
Speaker 1: next opportunity much more aggressively than then you'll find, I think,
13:45
Speaker 1: anywhere else in the world. So when I when you
13:46
Speaker 1: say they just show up, in my mind's eye, you
13:49
Speaker 1: have Stanford, you have Berkeley, you have all these great
13:52
Speaker 1: universities nearby, cal Tech Um, you have a history of
13:56
Speaker 1: of companies going back to Fairchild, Semi can Doctor and
14:00
Speaker 1: what have you, plus a lot of defense and NASA
14:04
Speaker 1: related stuff, So you would you would envision it's almost
14:08
Speaker 1: like all the parts are are they're just waiting for
14:11
Speaker 1: something to crystallize it and send everybody off. So I've
14:16
Speaker 1: always looked at this as this is kind of a
14:19
Speaker 1: magic one of the magic parts of the country, and
14:23
Speaker 1: Boston is similar, and d C is similar, and and
14:25
Speaker 1: now Seattle has it, and to a lesser degree, Portland's
14:29
Speaker 1: has that same sort of Once you get a critical
14:31
Speaker 1: mass of human capital, well all bets are off. Who
14:34
Speaker 1: knows where this goes? Although you seemingly have known where
14:39
Speaker 1: this was going to go before many other people in
14:41
Speaker 1: some cases but not others. What was your So to
14:45
Speaker 1: get back to the original question about Michael Lewis's New
14:47
Speaker 1: New Thing, I assume you read the book. Did you
14:50
Speaker 1: enjoy it? Did it ring true? Uh? Do you recognize
14:54
Speaker 1: a lot of the characters and it even people you
14:56
Speaker 1: may may not necessarily know. I would say, you're captured
14:59
Speaker 1: a moment in time which is sort of the top
15:01
Speaker 1: of the dot com bubble um. And then it captured
15:03
Speaker 1: a part of Jim's personality, which is the ability to
15:05
Speaker 1: kind of materialize new ideas out of thin air into existence.
15:08
Speaker 1: I don't think it captured, in fairness to Jim, I
15:10
Speaker 1: don't think it captured his depth as much as so
15:14
Speaker 1: that's hard to do if you're hard to do so
15:16
Speaker 1: just specifically Jim Jim, and the book tells a lot
15:18
Speaker 1: of his life stories. He had very very interesting background
15:21
Speaker 1: but basically culminated ultimately in the Navy and so forth,
15:23
Speaker 1: but ultimately culminated in THEO had a PhD in computer
15:25
Speaker 1: science from the University of Utah, which was actually the
15:28
Speaker 1: creation origin point for a lot of than things in
15:30
Speaker 1: our industry today. Actually, there was something special that happened
15:32
Speaker 1: University of Utah in the sixties and seventies, um and uh,
15:35
Speaker 1: basically all of computer graphics and video games and all
15:37
Speaker 1: this stuff and all the stuff that led to s
15:39
Speaker 1: g I. Ultimately it was all kind of conceived. The
15:41
Speaker 1: ideas were conceived actually Utah at that time. Pixar it
15:44
Speaker 1: all if you'd like trace Pixar back. It all flows
15:46
Speaker 1: back to this moment in time at the University of Utah.
15:48
Speaker 1: And so so anyways, say to PhD and CS and
15:50
Speaker 1: then he went to Stanford. He's a professor at Stanford, right,
15:52
Speaker 1: and then he just decided he was the life of
15:54
Speaker 1: an academic was not. Academics don't have the largest yacht
15:58
Speaker 1: in the world, and he was building one of the
16:00
Speaker 1: largest sailing vessels. I think he wanted to play a
16:03
Speaker 1: little more than he wanted to teach or at least
16:05
Speaker 1: that's my take. Oh so this is part of the
16:07
Speaker 1: thing also that yeah he's so that that that and
16:09
Speaker 1: becoming a big part of the book. Um, But I
16:11
Speaker 1: would then again, I would just say what was missed
16:13
Speaker 1: was when I worked with Jim and other people over
16:15
Speaker 1: to Jim will tell you like he goes just as
16:17
Speaker 1: deep as he goes broad like he is he is
16:19
Speaker 1: very deeply in the details of technology. He's not. He's not.
16:22
Speaker 1: The book makes it, I think, come across like he
16:24
Speaker 1: kind of glosses over the details and leads those to
16:26
Speaker 1: the other to other people. Uh we I did not
16:28
Speaker 1: find a big case like he's incredibly deep in technology.
16:30
Speaker 1: He's an incredibly comprehensive thinker on all aspects of business.
16:33
Speaker 1: Like he he goes really really deep. It's just that's
16:36
Speaker 1: not quite as I don't know, not quite as sexy
16:38
Speaker 1: for the book, I guess. Um. And so yeah, it
16:40
Speaker 1: captured part of his personality, but it didn't capture the
16:42
Speaker 1: depth and the seriousness and the application and his role
16:45
Speaker 1: really as a primary inventor and inventor not just if ideas,
16:48
Speaker 1: but inventor of actual technologies and then also by the way,
16:51
Speaker 1: as a recruiter. Um. He's one of the great all
16:53
Speaker 1: time people who can gather other people around them, and
16:56
Speaker 1: he's he's really good at painting a picture. Um, and
16:58
Speaker 1: he's because he's so deep the technology he carries tremendous.
17:01
Speaker 1: There's a lot of people who are promotional, right, a
17:03
Speaker 1: lot of people will show up and they'll say we're
17:04
Speaker 1: gonna do X, y Z. And the engineers will be like, well,
17:06
Speaker 1: you don't like what you know? Where did you go
17:08
Speaker 1: to school? Like what's your professional credential to be able
17:11
Speaker 1: to have this concept? And why do you think we're
17:13
Speaker 1: just gonna do all this for you? Whereas a gym
17:14
Speaker 1: he's like, he's like an actual technology legend, right, who
17:17
Speaker 1: probably knows more about the topic than you do. Um.
17:20
Speaker 1: And so he paints the picture and then he gets
17:22
Speaker 1: buy in from people, you know, incredible amazing people. So
17:25
Speaker 1: and so there's just he he has a level of
17:27
Speaker 1: seriousness and capability that I think is just way beyond
17:29
Speaker 1: what what what what? Michael is able to paint that book.
17:32
Speaker 1: So the Netscape I p O is something. So we
17:36
Speaker 1: went public. So we're in public eighteen months after founding.
17:39
Speaker 1: I remember that because I was a junior trader. I
17:42
Speaker 1: was the logo on the desk, and it was just
17:44
Speaker 1: a day of mayhem, and that really be started a
17:48
Speaker 1: run of technology and internet companies for the next few years.
17:53
Speaker 1: What was that ride like? That had to be insane? Yeah,
17:56
Speaker 1: I know, it was crazy, like being shot out of
17:57
Speaker 1: a rocket, like and not just me, like the whole
17:59
Speaker 1: the whole value had that had that had that experience,
18:01
Speaker 1: and so it really was it was what you meant.
18:03
Speaker 1: It was the establishment of a new platform. It was
18:05
Speaker 1: the establishment of this kind of new front here. Um.
18:08
Speaker 1: It was the you know, the idea that all of
18:09
Speaker 1: a sudden, you there were these thousands of new businesses
18:11
Speaker 1: could get created on top. It was this idea, all
18:13
Speaker 1: of a sudden, that people are connected. It's actually really striking.
18:16
Speaker 1: Um if you look. So the dot com crash right
18:19
Speaker 1: hit in two thousand, um, and then all these ideas
18:21
Speaker 1: that were viewed then as all the dot com ideas
18:23
Speaker 1: that were viewed as genius and NTE nedty eight were
18:25
Speaker 1: viewed as just complete lunacy and idiocy. And in two
18:27
Speaker 1: thousand com doesn't make any sense being the classic example, right. Um,
18:31
Speaker 1: So it's actually really striking all those ideas are working today. UM,
18:35
Speaker 1: I can't think of a single idea from that era
18:37
Speaker 1: that's not working today. And the kicker to the pest
18:38
Speaker 1: dot com story is there's a company, Chewy that just
18:40
Speaker 1: comes out for three billion dollars right out of Florida,
18:43
Speaker 1: which is online pet food sales, like two weeks ago, right,
18:46
Speaker 1: and so even online pet food sales turns out to
18:48
Speaker 1: be a gigantic and very successful business. And so basically
18:51
Speaker 1: the community, the community, the tech community, the Silicon Valley community,
18:55
Speaker 1: the global community that got connected to the internet very
18:57
Speaker 1: quickly between and call it actually came up with all
19:00
Speaker 1: the ideas, like they all people are very creative, and
19:03
Speaker 1: all of a sudden there was just like if you
19:05
Speaker 1: read you remember you remember there was a magazine back
19:07
Speaker 1: then called The Industry Standard, which became kind of the
19:09
Speaker 1: defining kind of bible of the time. And if there
19:11
Speaker 1: was a period where if you read the Industry Standard
19:13
Speaker 1: after the crash, you're just like all these people were
19:15
Speaker 1: just all high, like this is just this is just nuts.
19:17
Speaker 1: If you read it today, it's like a direct forecast
19:19
Speaker 1: of what's actually happening, right, Like, all this stuff actually
19:21
Speaker 1: is happening, it's all working. So and so it was
19:24
Speaker 1: an amazing unleashing of talent and creativity and ideas interrupted
19:28
Speaker 1: by a very bad crash. Um, but it has sense.
19:31
Speaker 1: All those ideas have sense, really come true. One of
19:33
Speaker 1: the things I'm always hearing about is how well this is.
19:36
Speaker 1: This is just like the dot com era. The valley
19:38
Speaker 1: is booming. This all ends badly. But when we this week,
19:43
Speaker 1: we've been in everywhere from Berkeley to Palo Alto to
19:47
Speaker 1: pleasant In to Mountain View, this looks to me much
19:51
Speaker 1: more like a robust economy. Then hey, this is completely
19:55
Speaker 1: unhinged and it's a train wreck waiting to happen. You
19:58
Speaker 1: live through the last version of the dot com bubble.
20:03
Speaker 1: How is this time so different in nature? The obvious
20:08
Speaker 1: thing is a lot of these companies are actually making money.
20:11
Speaker 1: Some of them are making a lot of money. So um.
20:13
Speaker 1: In fact, now the accusation is they're making too much money,
20:16
Speaker 1: which is the criticism on the other side. So that
20:19
Speaker 1: just means they're efficient and productive. It doesn't mean anything
20:21
Speaker 1: is wrong exactly. So yes, from your from your lips
20:25
Speaker 1: so um. So I guess I'd say, I guess I'd
20:28
Speaker 1: say the economist, actually, there's a theory actually in economics
20:30
Speaker 1: on this which they called the economists called the depression
20:33
Speaker 1: baby effect, which is basically it's based on it's been
20:36
Speaker 1: studies papers written about this. If your google, depression babies
20:38
Speaker 1: will pop up. UM investors who were in the stock
20:41
Speaker 1: market nine ever went back into the stock market. Um.
20:44
Speaker 1: They stayed out of the stock market for the rest
20:45
Speaker 1: of their lives because proved definitively right that stocks are
20:48
Speaker 1: fundamentally unsafe. And if you look at the chart of it,
20:51
Speaker 1: literally from ninety nine, you don't get back to break
20:54
Speaker 1: even untill nineteen fifty four. It's twenty five years later.
20:57
Speaker 1: It's a full generation has to be one, grow up,
21:01
Speaker 1: get jobs and start investing in order for the market
21:03
Speaker 1: to get above exactly with no memory and the investors
21:07
Speaker 1: that's exactly that. And then by the twenty five years
21:09
Speaker 1: exactly right. And then the other kicker is it takes
21:11
Speaker 1: another fifteen years after that to get another actual bubble.
21:13
Speaker 1: The next stock market bubble did not materialized until the
21:16
Speaker 1: late sixties. The full forty years, the hits a thousand,
21:20
Speaker 1: it's not over it for another sixteen years, quite quite amazing,
21:24
Speaker 1: exactly so. So, anyway, the point is, if you if
21:26
Speaker 1: you live through one of these scarring crashes, you get
21:29
Speaker 1: psychologically marked, you get you get traumatized. And by the
21:32
Speaker 1: way that you there is everybody, right, It's not just
21:34
Speaker 1: the investors, it's also the people who follow the market.
21:36
Speaker 1: It's also people who write about the market. It's also
21:37
Speaker 1: people who work at the company's Everybody gets traumatized. And
21:40
Speaker 1: so we had it. We we haven't entire We had
21:42
Speaker 1: and have an entire generation of depression babies, including me
21:45
Speaker 1: right um in Silicon Valley who went through two thousand UM.
21:48
Speaker 1: That's significant for a couple of reasons. One is just
21:50
Speaker 1: I would argue that right the narrative basically since two
21:53
Speaker 1: thousand four has been its bubble two point oh. I
21:54
Speaker 1: think exactly the opposite has been a it's been a
21:56
Speaker 1: long term bust. I think text talks have been undervalued
21:59
Speaker 1: sort consistently basically since two thousand two three, and even
22:03
Speaker 1: to this day are probably undervalued relative to where they
22:05
Speaker 1: should be. Void. We come back to that. But then
22:07
Speaker 1: the other thing is happening is now finally enough time
22:09
Speaker 1: is passing. It's now we're coming you know, seventeen years
22:11
Speaker 1: since the crash, so now finally we're getting enough kids
22:14
Speaker 1: coming to the valley who don't have a memory of
22:16
Speaker 1: the crash. They don't have post crash traumatic They were
22:20
Speaker 1: like in fourth grade, right, and so they just they
22:22
Speaker 1: were like busy with legos, like they just it's not
22:24
Speaker 1: a relevant concept. And so when and you get these
22:26
Speaker 1: weird conversations we find are selling these conversations where you're
22:29
Speaker 1: telling these cautionary tales right of what happened in nine
22:33
Speaker 1: and they just look at you like Grandpa, like you know,
22:36
Speaker 1: tell us about the model t like it's just an
22:38
Speaker 1: absurd kind of thing. And by the way, it's not
22:40
Speaker 1: that there's a good or a bad. It's just people
22:41
Speaker 1: have different life experiences. But my point is like the
22:43
Speaker 1: balance is shifting well, and so and you just have
22:46
Speaker 1: you have this new generation of people in the valley
22:48
Speaker 1: are just like let's let's just go, let's go build things,
22:50
Speaker 1: like let's not be held back by the superstition of
22:52
Speaker 1: what happened. Let's go build new things. And then to
22:54
Speaker 1: your point, like these things have worked. When we were
22:57
Speaker 1: building Netscape, the man maximum addressable market size for our
23:01
Speaker 1: company was Internet users that were most run dial up
23:05
Speaker 1: and worked to their desktop PCs, which were super slow
23:08
Speaker 1: and crewed compared to today and now was you know,
23:10
Speaker 1: you have three billion people with smartphones and mobile broad
23:12
Speaker 1: down in the world on its way to six billion,
23:13
Speaker 1: and so like this stuff is working like that, it
23:15
Speaker 1: actually came true. The fascinating thing every time when the
23:19
Speaker 1: NASDAC regains its regained its two thousand peak not too
23:23
Speaker 1: long ago, people said, here we are, it's going to
23:25
Speaker 1: crash again, and and you look. I always look at
23:28
Speaker 1: those folks and say, well, wait a second, that was
23:31
Speaker 1: an infinite pe. You now have companies actually not just
23:34
Speaker 1: making money, but making boatloads of money. And it's fifteen
23:38
Speaker 1: years later. So whatever the problems were, then, how do
23:41
Speaker 1: you just assume at this price level it's the same thing.
23:44
Speaker 1: Clearly something very different is going on today. So so
23:49
Speaker 1: sticking with that that point, when when you hear people
23:52
Speaker 1: saying Silicon Valley is in a bubble again, look at
23:54
Speaker 1: all these unicorns. Here comes the train wreck. Do you
23:57
Speaker 1: just kind of shrug to yourself? What's your reaction to that?
24:00
Speaker 1: So those have been the headlines for excuse me every
24:02
Speaker 1: year since two thousand four. So two thousand four, so two.
24:05
Speaker 1: They'll get it right eventually. You just keep saying the
24:07
Speaker 1: same thing over and over in the two thousand four,
24:10
Speaker 1: two thousand four, granted two thousand one to two thousand
24:12
Speaker 1: three were very bad, so fully granted two thousand four,
24:15
Speaker 1: there were two M and A events, Uh, Yahoo bought
24:18
Speaker 1: two companies million dollars each, Flicker and Delicious and those
24:22
Speaker 1: that launched that created the bubble two point on narrative,
24:24
Speaker 1: but in other words, like if anything at tech works
24:27
Speaker 1: and if any company attack ever succeeds, it's therefore obviously evidence, right,
24:32
Speaker 1: and so that that's been the narrative the entire time.
24:34
Speaker 1: We and we've done we've we've done dex on this.
24:35
Speaker 1: We have dex on our website, like we've done detailed
24:37
Speaker 1: analytics on every aspect of the financial numbers and the
24:39
Speaker 1: flows of money and the whole thing. And you go
24:41
Speaker 1: through the whole thing, and when you when you do
24:42
Speaker 1: the analysis, I think correctly, like just objectively correctly, it's
24:46
Speaker 1: just crystal clear how out of control everything got really
24:48
Speaker 1: between two thousand and how relatively plasmdate it's been. It's
24:51
Speaker 1: been ever since. Um. But it just just it's people,
24:55
Speaker 1: don't you know. It's the kind of thing people just
24:56
Speaker 1: have a very strong emotional resp It's a depression maybe effect.
24:58
Speaker 1: People have an emotional response right starting sponses I got
25:00
Speaker 1: tricked once, I'm not gonna get tricked right, and so
25:03
Speaker 1: it's just it's led to that's continuous, in my view,
25:05
Speaker 1: underestimation of what's happening. Right, It's it's led to the
25:07
Speaker 1: opposite problem, which is people are really deeply if they
25:09
Speaker 1: were overestimating, overestimating what was happening in idea, they're underestimating
25:13
Speaker 1: it and they're still underestimating it today, which makes sense.
25:16
Speaker 1: Everything is probably still undervalua, which makes sense if you
25:18
Speaker 1: come out after that experience and you are negatively tinged
25:22
Speaker 1: with that. G I got burned less time because valuations
25:25
Speaker 1: didn't make sense. Fast forward fifteen years. That doesn't leave
25:29
Speaker 1: these folks, So that permanently colors and they're you know,
25:32
Speaker 1: other related studies. People graduate college into a recession. It
25:37
Speaker 1: not only affects their earnings power over the course of
25:39
Speaker 1: their lifetime, it affects their philosophical outlook. They are actually
25:43
Speaker 1: biased and expect recessions to occur more often than they
25:46
Speaker 1: actually do. It's um our wet wear is kind of
25:49
Speaker 1: deeply flawed. So you're a builder, um, you've you've created
25:55
Speaker 1: a couple of a couple of companies, including this one.
25:58
Speaker 1: In your mind's eye, Are you a founder, are you
26:01
Speaker 1: a venture capitalist or a little bit of both. So
26:04
Speaker 1: I think of myself as an engineer first, um, and
26:07
Speaker 1: everything else after that. And so it's kind of the core.
26:10
Speaker 1: And then you never know how much of this is
26:11
Speaker 1: self delusion, of course, but um, I think my assumption
26:14
Speaker 1: is we're all self del and you and occasionally if
26:17
Speaker 1: you glimpse a little reality, fantastic and they either work
26:19
Speaker 1: for you or they don't. So no, I was trained
26:21
Speaker 1: as an engine I was always had sort of an
26:23
Speaker 1: engineering mindset, and I was trained as an engineer, training
26:25
Speaker 1: at a great engineering school, and so I just I
26:27
Speaker 1: always few my I'm just trying to figure out how
26:28
Speaker 1: things work and then try how to make them work better. Um.
26:31
Speaker 1: And I'm far more interested in figuring that out than
26:33
Speaker 1: in trying to draw value judgments on them, were trying
26:35
Speaker 1: to have other you know, kinds of debates around them.
26:37
Speaker 1: And so um uh that's just been you know, the
26:40
Speaker 1: core of the thing. And so that to the extent
26:41
Speaker 1: that my companies have worked, it's because they built products
26:43
Speaker 1: that people wanted. Um. To the extent that this you
26:45
Speaker 1: know that this firm works is because we're going we're
26:47
Speaker 1: finding those products and the people who build those products
26:49
Speaker 1: early um and betting on them. And so it's it's
26:51
Speaker 1: sort of engineering as the core discipline. And then and
26:53
Speaker 1: then we we we are lucky enough, in my view,
26:56
Speaker 1: to live in a system in which you know that
26:58
Speaker 1: that rewards that skill in the sense of people can
27:00
Speaker 1: build things, right, people can build things, are encouraged to
27:03
Speaker 1: build things, that culturally encouraged to build things, and those
27:05
Speaker 1: things might be new products, but those things also might
27:07
Speaker 1: be new companies. Back in two thousand eleven, you wrote
27:09
Speaker 1: a fascinating screed called Software is Eating the World. Not
27:14
Speaker 1: only did it end up becoming a meme that when
27:17
Speaker 1: fairly viral, it turned out you were not just a
27:21
Speaker 1: little bit right, you were very right. Tell us about
27:24
Speaker 1: what motivated you to to put that those words on paper. Yes,
27:29
Speaker 1: it was a two part at Towns. One was to
27:30
Speaker 1: explain what was actually happening, and actually a lot of
27:33
Speaker 1: it was actually against the bubble narrative. The bubble the
27:35
Speaker 1: new bubble narrative was so strong at that point that
27:37
Speaker 1: I wanted to articulate a view of what was happening
27:39
Speaker 1: that was not just this is all a bunch of
27:40
Speaker 1: a bunch of hot air, so partially explanatory but also
27:43
Speaker 1: also an attempt to forecast UM. And specifically in the piece,
27:47
Speaker 1: I sort of lay out a forecast for the future
27:49
Speaker 1: UM in three parts UM, which I think is the
27:52
Speaker 1: part that kind of remains the section that remains provocative today.
27:55
Speaker 1: The three parts maybe recap them quickly so so so
27:58
Speaker 1: part one is UM. Every product or service UM that
28:02
Speaker 1: can become software will become software UM. And there's a
28:05
Speaker 1: long conversation we can have. That's that's the big theme
28:07
Speaker 1: of what's happening in Silicon Valley right now, I think
28:08
Speaker 1: is that we're we're we are now going after entire
28:10
Speaker 1: industries that used to be dominated by by just like retail,
28:14
Speaker 1: retail storefronts or numbers or so is this applification or
28:19
Speaker 1: is this just the move to pure solf were Appification
28:22
Speaker 1: is the consumer experience, right, which is there everything that
28:23
Speaker 1: can be experienced as an app? If you can if
28:25
Speaker 1: you want you know, you need, You want a mortgage,
28:26
Speaker 1: it should be an app. Right, you want life insurance,
28:28
Speaker 1: it should be an app. You want to order pizza,
28:29
Speaker 1: it should be an app. Like every everything should just
28:31
Speaker 1: happen through that, through that front end. But but it's
28:33
Speaker 1: deeper than the app because it's the complete back it's
28:35
Speaker 1: all the back end systems of software that may make
28:36
Speaker 1: the economy ultimately work. So so so Part one, every
28:40
Speaker 1: every every product or service that can become software will
28:42
Speaker 1: um Part two therefore, every company that makes those products
28:46
Speaker 1: or services has to and will become a software company. Right,
28:49
Speaker 1: So companies will become more and more defined by building software,
28:52
Speaker 1: just like solic valley companies already like that, selict companies
28:55
Speaker 1: or software companies first that then get good at things
28:57
Speaker 1: like sales and marketing. Right, Whereas in the rest of
29:00
Speaker 1: the economy you have a lot of companies that are
29:01
Speaker 1: good at sales and marketing that are trying to bolt
29:02
Speaker 1: on software. But sitting here ten years from now, all
29:05
Speaker 1: these companies are gonna be software companies first because they're
29:07
Speaker 1: gonna have to be fascinating form of the product. And
29:11
Speaker 1: then the third sort of most either provocative, arrogant you know,
29:14
Speaker 1: or delusional. Uh principle is therefore, in any industry, in
29:18
Speaker 1: the long run, uh, the winning company will be the
29:20
Speaker 1: best software company. Right, So whoever is the best? Is
29:23
Speaker 1: that really all? That? So the question the follow up
29:26
Speaker 1: question is how much push pushed back did your original
29:30
Speaker 1: writing get and are you still getting pushed back on that?
29:33
Speaker 1: That third part of it, Well, the third one is
29:35
Speaker 1: very third one is very provocative. Let me give an example,
29:37
Speaker 1: but it's pretty it follows logically. It's if you believe
29:40
Speaker 1: in deductive reasoning, it makes sense. Well, let's let's pick
29:43
Speaker 1: up particularly provocative example. Cars. Right, Um, yeah, so car cars.
29:49
Speaker 1: Obviously cars, there's a lot more software cars, and there
29:51
Speaker 1: was ten twenty years ago. Everybody knows that. It's a
29:53
Speaker 1: step further to say that in ten years, the winning
29:55
Speaker 1: car company is going to be the car the car
29:56
Speaker 1: company that makes the best software. Right. There's no existing
29:59
Speaker 1: legacy car company in the world today that would say
30:01
Speaker 1: that that's the case. Right. They would all say that
30:03
Speaker 1: they are best at making cars, and that the software
30:05
Speaker 1: is a component that goes in the cars. But the
30:07
Speaker 1: whole point of being a car company to be great
30:08
Speaker 1: at engineering the actual physical automobile to steal and the
30:11
Speaker 1: rubber and this all the safety systems and then the
30:13
Speaker 1: whole thing. Well, but if you believe self autonomous vehicles
30:16
Speaker 1: are coming, that software exactly right, and so that that
30:19
Speaker 1: would be our thesis is that no, it's actually going
30:21
Speaker 1: to happen is the value will flow to the software layer.
30:23
Speaker 1: The the entire experience of being in a car will
30:26
Speaker 1: be defined by the software. And then at the limit,
30:29
Speaker 1: whichever company that makes cars or makes the intellectual property
30:33
Speaker 1: that goes into cars, whichever of those creates the best
30:36
Speaker 1: software will will then be the winning company, and we'll
30:38
Speaker 1: get the majority of the value, right and including ultimately majority.
30:41
Speaker 1: So so what you really define describing is the iPhone.
30:44
Speaker 1: This is manufactured in China. I believe they make about
30:47
Speaker 1: five dollars pro phone building it together. And then this
30:50
Speaker 1: little comple you may know them, they're up the street
30:53
Speaker 1: and Cupertino Apple is the one that captures not only
30:57
Speaker 1: all the value from the iPhone, but pretty much all
31:00
Speaker 1: of the profits from the entire or the profits from
31:03
Speaker 1: the entire mobile universe. Is that the same basic concept
31:08
Speaker 1: is in an iPhone model for everything else, including automobiles.
31:13
Speaker 1: So in general, yes, like so that that's that's the implication, right,
31:16
Speaker 1: And that's the exact analogy by the way that the
31:18
Speaker 1: car company, the car industry is grappling with right now,
31:20
Speaker 1: which is you as you know and phones you used
31:22
Speaker 1: to have these companies like Nokia and Rim and others
31:24
Speaker 1: that made phones and feud software is just this kind
31:26
Speaker 1: of add on the top of the hardware. But the
31:27
Speaker 1: hardware I'm not that old. I don't really remember those um.
31:31
Speaker 1: And so you know when when you look like car
31:34
Speaker 1: CEOs now they're they're all thinking like they're working on this,
31:36
Speaker 1: the new generation of car CEOs. They're they're working hard,
31:38
Speaker 1: and they're spending a lot of time out here, and
31:40
Speaker 1: they spend a lot of time with us, and they're
31:41
Speaker 1: they're they're working hard on it. But literally the way
31:43
Speaker 1: they frame that question is we we we existing car
31:46
Speaker 1: company do not want to be the noive cars like
31:49
Speaker 1: and so that that Nokia of cars, that analogy is
31:51
Speaker 1: very front and center and in there thinking now at
31:55
Speaker 1: one level of detail later or lower than that. Um.
31:58
Speaker 1: You know, the iPhone is a particular success of vertical integration.
32:01
Speaker 1: UM so Apple. If Apple does that, you know, they
32:03
Speaker 1: don't manufacture every component in it, but they assemble the
32:05
Speaker 1: whole thing hardware, software together. Sometimes the winner is vertically integrated.
32:11
Speaker 1: There are other times in other industries and PCs were
32:14
Speaker 1: like this. The other example, which it's is horizontal in
32:16
Speaker 1: structure and so the the other outcome is you'll have,
32:18
Speaker 1: for example, Microsoft of cars right where you'll have the
32:21
Speaker 1: software layer that that actually ends up and they actually
32:24
Speaker 1: in that model they instead of making the car, that
32:25
Speaker 1: winning company might just sell it software to all the
32:27
Speaker 1: car companies. But then it's like the relationship that Microsoft
32:30
Speaker 1: end up having with all the PC companies right where
32:32
Speaker 1: the PC companies did all the work of actually making
32:34
Speaker 1: the PC and Microsoft got all the money. And so
32:37
Speaker 1: the victory for the best software company could go either
32:39
Speaker 1: vertical or horizontal, and that that varies a lot, but
32:42
Speaker 1: the consist I believe the consistent theme will be the
32:44
Speaker 1: company with the best software will exactly your point. They'll
32:47
Speaker 1: end up getting most of the profits so and have
32:49
Speaker 1: the strategic control, right, they'll they'll be able to dictate
32:52
Speaker 1: the future of the industry, but by virtually the fact
32:53
Speaker 1: that they control the software. So that naturally leads to
32:55
Speaker 1: the question is Tesla an electric car manufacturer or is
33:00
Speaker 1: SLA a software company that happens to make a pretty
33:02
Speaker 1: good looking car as well? That's right, So this is
33:05
Speaker 1: the thing if you squint with and by the way,
33:06
Speaker 1: I mean, Ellen is deservedly a legend, and so nothing
33:08
Speaker 1: I'm about to say should be interpreted as a criticism
33:10
Speaker 1: of Ellen, but just from a historic sweep of history standpoint,
33:13
Speaker 1: if you squint at Tesla one way, it looks like
33:16
Speaker 1: Apple circa two thousand, you know, seven two eight, where
33:19
Speaker 1: they release the iPhone. They just haven't sold very money yet,
33:21
Speaker 1: but they're gonna sell a ton and they're going to
33:23
Speaker 1: be the vertical winner alli Apple. Another way of looking
33:26
Speaker 1: at Tesla is you know their Apple in two with McIntosh,
33:30
Speaker 1: and yes they're integrated hardware. Software is good, but other
33:32
Speaker 1: people are going to come up with software as well.
33:34
Speaker 1: And then there are many other people who make cars,
33:36
Speaker 1: and so you know, the whole thing may just you know,
33:38
Speaker 1: they may set the model mode for what other people
33:40
Speaker 1: end up doing much higher scale. And I think that's
33:43
Speaker 1: the big question on Tesla is like, is which way
33:45
Speaker 1: is that tip? Obviously Elon is highly determined to make
33:47
Speaker 1: sure that he owns the whole stack, and to your point,
33:49
Speaker 1: he's incredibly focused on software like he's he is like
33:52
Speaker 1: Tesla is deeply deeply immersed in the details, not just
33:55
Speaker 1: by the way of the software that obviously runs the car,
33:57
Speaker 1: but for example, power management is a big at that's
34:00
Speaker 1: just sort of a secret sort of advantage that Tesla
34:02
Speaker 1: people and talk about that much is they buy the
34:04
Speaker 1: batteries from somebody else, but they write the software that
34:06
Speaker 1: manages the power, which is a big part of getting
34:08
Speaker 1: the range and the ludicrous mode and the ludicrous mode
34:12
Speaker 1: um and then um. And then they're also he's now
34:14
Speaker 1: deeply involved in right building, making sure that Tesla. He's
34:17
Speaker 1: gonna try to Tesla be the best self driving car,
34:19
Speaker 1: which is entirely a software exercise. Um. And so he's
34:22
Speaker 1: on it, like he's he's pushing very hard. He's and
34:25
Speaker 1: then he's the other car companies are all in, you know,
34:27
Speaker 1: more or less reactive mode to what he catches. He
34:29
Speaker 1: definitely has the lead right now. But that said, the
34:32
Speaker 1: other car companies a trying to figure this out. And
34:34
Speaker 1: we now have an entire wave of new automotive software
34:38
Speaker 1: companies in Silicon Valley. Right, there's I don't know, there's
34:42
Speaker 1: dozens on its way to hundreds of highly capable founders
34:44
Speaker 1: and engineers building new kinds of autonomous software for cars,
34:48
Speaker 1: by the way, vehicles of all different side shape and description,
34:50
Speaker 1: air vehicles, ground vehicles, water vehicles. Right, So there's there's
34:53
Speaker 1: a revolution of foot of which Tesla is an important part,
34:55
Speaker 1: but it's also become much broader now quite fascinating in
34:59
Speaker 1: um in the yearly. I keep coming back to that
35:02
Speaker 1: era when venture capitalists with funding startups, people had to
35:07
Speaker 1: go out and buy their own servers. They have engineers
35:09
Speaker 1: to manage that and build that, and there was a
35:11
Speaker 1: giant infrastructure. It would take tens of millions of dollars
35:15
Speaker 1: just to open a company. Today that stuff is, if
35:19
Speaker 1: not free, will certainly very cheap with Amazon cloud services
35:22
Speaker 1: and a whole huge infrastructure. So if you want to
35:26
Speaker 1: launch a company today, it doesn't take ten million dollars
35:29
Speaker 1: just to open the doors. You could really do things
35:32
Speaker 1: on the cheap. How does that shift in infrastructure change
35:36
Speaker 1: your job as a venture capitalist when you're looking at companies,
35:41
Speaker 1: what do they really need? Do we really need to
35:43
Speaker 1: give people million dollars at a bob when they could
35:47
Speaker 1: start for a few thousand dollars. So that's exactly right,
35:49
Speaker 1: that's exactly what's happened, and we think about that in
35:51
Speaker 1: economic terms. It's a very rapid inflation of of input costs,
35:55
Speaker 1: which is dramatic. It's like the inflation input the input
35:58
Speaker 1: costs for a startup in economic term deflated by a
36:00
Speaker 1: factor of like a thousand. That's amazing, which is amazing, Right,
36:03
Speaker 1: It's it's hard to actually find a historical precedent for
36:06
Speaker 1: that happening. We're used to cost ten million dollars just
36:08
Speaker 1: to launch and now you could do it for a
36:11
Speaker 1: few grand. Yeah, yeah, we yeah, we routinely get you know,
36:13
Speaker 1: we'll get three or four kids in here. The entire
36:15
Speaker 1: their entire CAPEX, the entire company is their laptops, right,
36:18
Speaker 1: It's that's that's all they happen, and they're good to go.
36:21
Speaker 1: That's it, They're good to go. Everything else is like yeah, no,
36:23
Speaker 1: it's a hundred a hundred dollar bill of this month
36:25
Speaker 1: on their m X for their for their Amazon Cloud
36:27
Speaker 1: services to launch the thing and see if it works.
36:29
Speaker 1: And so that's that's a dramatic step change. Like that's
36:32
Speaker 1: that's huge. I mean, it's very hard to find any any,
36:34
Speaker 1: any precedent for that, which is a big reason why
36:35
Speaker 1: a lot of so much energy has come back to
36:37
Speaker 1: the valley. So as a VC, what that results in
36:39
Speaker 1: is that the Darwinian process of running experiments to surface
36:42
Speaker 1: the good ideas and the good companies is now happening
36:44
Speaker 1: at much higher scale and at a much faster pace, right,
36:47
Speaker 1: and so it's a VC it's this is amazing. So
36:49
Speaker 1: it's it's not just the pace of acceleration. The second
36:52
Speaker 1: ary of ittive is increasing. Well, so it's it's accelerating
36:55
Speaker 1: at a faster and faster rate. Yeah. Well, the number one,
36:57
Speaker 1: it's just a sheer number of ideas that can explore.
36:59
Speaker 1: It can be explored has gone way up, right, because
37:01
Speaker 1: there's elasticity. The less it costs to test new idea,
37:03
Speaker 1: the more new ideas will get short and more people
37:05
Speaker 1: will try to test new ideas. And then right, the
37:07
Speaker 1: second is it's just so much faster now, it's just
37:09
Speaker 1: the speed to get to market is just so much.
37:10
Speaker 1: How do you deal with that? How do you sift
37:12
Speaker 1: through a near infinite amount of really fantastic and interesting ideas.
37:17
Speaker 1: So that's that's the business. And so that the day
37:19
Speaker 1: to day businesses we we see we see evaluate two
37:21
Speaker 1: thousand referred qualified startups a year every year, So that
37:26
Speaker 1: that's the day job here is to sort and sift
37:28
Speaker 1: and filter through the two thousand, and of those of
37:29
Speaker 1: two thousand, how many do you end up doing now
37:32
Speaker 1: you also do something unusual. You do sort of angel
37:35
Speaker 1: funding at a very modest level and then broader funding
37:39
Speaker 1: for for more I guess we would say developed or
37:42
Speaker 1: advanced companies. So out of those two thousand that get reviewed,
37:46
Speaker 1: what does it break down to right now, it's about
37:48
Speaker 1: the thirty a year, thirty year, thirty a year out
37:50
Speaker 1: of two thousand. Yeah, and I could go through in detail,
37:52
Speaker 1: but exactly where, but like that's basically the way. It's
37:54
Speaker 1: a little bit more than one percent. By the way,
37:55
Speaker 1: I should also say these are two thousand that are referred, right,
37:58
Speaker 1: so these these are sent to us. There's some connectivity
38:00
Speaker 1: to people we know. So I can give you an
38:02
Speaker 1: elevator pitch. Now. Well, now, now now that you're here,
38:05
Speaker 1: in fact, you're in, you're in the room, give me,
38:08
Speaker 1: give me a few minutes. I'll think up of business models.
38:10
Speaker 1: This is the this is the actual room for that. So,
38:12
Speaker 1: um so two thousand a year, um and and and
38:15
Speaker 1: and then the other side of it is it's not
38:16
Speaker 1: just right that. The whole thing with this is it's
38:18
Speaker 1: not just is it a good idea a good product,
38:19
Speaker 1: it's also who are the people? Right, because these are
38:21
Speaker 1: people at the end of the day, these are people businesses,
38:23
Speaker 1: and so honestly, most of what we're doing is evaluating people.
38:26
Speaker 1: So that was always a question that I find intriguing.
38:31
Speaker 1: Very often these ideas come along, there's no patents on them.
38:35
Speaker 1: There's almost something in the ether where a lot of
38:37
Speaker 1: people get very similar ideas. How often do we see
38:40
Speaker 1: four or five different companies in the same space. Hey,
38:43
Speaker 1: there's Uber and Lift, and there's Pandora, and go down
38:46
Speaker 1: the list, and every time you look at a concept,
38:48
Speaker 1: it looks like a lot of people have said, hey,
38:50
Speaker 1: you know it would be cool right about now. How
38:53
Speaker 1: do you figure out who has not just the best idea,
38:57
Speaker 1: but the best way to execute did When you're dealing
39:01
Speaker 1: with some really young, inexperienced technologists who very often have
39:06
Speaker 1: no business experience either just out of grad school, sometimes
39:10
Speaker 1: dropping out of college, that sounds like a near impossible
39:14
Speaker 1: decision making process. So we call this the volcano movie problem.
39:17
Speaker 1: There there's never just one movie about volcanoes. There's two
39:20
Speaker 1: or three or four or five there or two giants.
39:23
Speaker 1: There's never just one. There's never two killer there's never
39:26
Speaker 1: just one killer media movies, there's got to be too.
39:28
Speaker 1: So yeah, so that's a that's the thing. And these ideas, yeah,
39:31
Speaker 1: they come in waves, um, and so that's exactly what happened.
39:33
Speaker 1: So the thing that we try to go I mean,
39:36
Speaker 1: there's a lot of different lenses you apply to when
39:38
Speaker 1: you're evaluating people, but one of the ones we really
39:39
Speaker 1: dig into hard to try to pull kind of what
39:42
Speaker 1: we call kind of the real founders away from the
39:43
Speaker 1: people who just like think they have an idea and
39:45
Speaker 1: how to try something. So the concept we call the
39:47
Speaker 1: idea mazeh One of our partners, Crystallized, wrote a paper
39:50
Speaker 1: on a biology front of us and called the idea maze.
39:52
Speaker 1: And so the idea maze is it appears on the surface, look,
39:56
Speaker 1: this is a cute idea, like and by the way,
39:57
Speaker 1: lots of people have this idea. The real founder, the
40:00
Speaker 1: really good ones, what you find is they have thought
40:02
Speaker 1: about the problem so deeply and for so long that
40:05
Speaker 1: they have worked their way through the logic maze of
40:08
Speaker 1: how to try the idea and what they're going to
40:10
Speaker 1: try next if it doesn't work, and what the implications
40:12
Speaker 1: would be if they learn something, and who are the
40:14
Speaker 1: people they need to bring into the company, and how
40:16
Speaker 1: do they segment the market, and how do they go
40:18
Speaker 1: acquire the customers and so all these details. It's it's
40:21
Speaker 1: the convert it's all the topics and sort of that
40:23
Speaker 1: you don't cover in the first hour of the meeting,
40:24
Speaker 1: but you cover in the subsequent five hours when you
40:26
Speaker 1: go really deep right with them. And the really good
40:29
Speaker 1: founders tend to all have in common is they've been
40:31
Speaker 1: all the way through the idea mays on their own
40:32
Speaker 1: before they come in and talk to a VC. So
40:34
Speaker 1: there is not ideally, in the best case, there's not
40:37
Speaker 1: a question that we can ask them in the meeting
40:39
Speaker 1: in the first six hours of discussion that they haven't
40:41
Speaker 1: already not only have they already thought of the ques,
40:43
Speaker 1: they've already figured out the answer for themselves. Right. In fact,
40:46
Speaker 1: you actually get to the point with a really good
40:47
Speaker 1: really sharpens to the point where they get frustrated because
40:49
Speaker 1: they're like, why why is this not all obvious to you?
40:52
Speaker 1: People like this, Why are you asking me all these
40:54
Speaker 1: stupid questions? I figured this out two years ago, Like
40:56
Speaker 1: I already know the like and it should be self
40:58
Speaker 1: evidence yourself at everybody, because they figured the whole thing out.
41:02
Speaker 1: As as contrasted by the way to the ones who
41:04
Speaker 1: haven't done that. If if somebody's only put you know,
41:06
Speaker 1: ten or twenty hours and are thinking through something and
41:08
Speaker 1: they just decided to put together a pitch, it becomes
41:10
Speaker 1: crystal clear because you get eight or ten or twelve
41:12
Speaker 1: questions in and they stop being able to answer the questions.
41:14
Speaker 1: Now you just they start making they start making up
41:16
Speaker 1: the you know, start making up the answers. So you
41:18
Speaker 1: just revealed this, so you would all concern that people
41:21
Speaker 1: would come in and say, Okay, now I have all
41:23
Speaker 1: my ducks lined up, and Mark isn't gonna throw me
41:26
Speaker 1: off my pitch. Well, they try to trick us already,
41:28
Speaker 1: So if they haven't been through the idea as they
41:29
Speaker 1: try to convince this, they have been, but they just
41:30
Speaker 1: start making up the answers, and you can you can
41:33
Speaker 1: flash that out like you can figure that you can
41:35
Speaker 1: if there's part about it and parts content like they
41:37
Speaker 1: just can't back up their answers. It's like like this
41:39
Speaker 1: is how it's a little bit like how police do interrogations.
41:42
Speaker 1: So the way people believe if you're get ever getting
41:44
Speaker 1: interrogateted by a company thinks he what he just does
41:45
Speaker 1: is he just the questions get more and more detailed. Oh,
41:48
Speaker 1: you were your alibi as you were out seeing a
41:50
Speaker 1: movie that night. Okay, well what movie? You know? Well,
41:52
Speaker 1: what was the opening scene? Right? Well, what you know,
41:54
Speaker 1: what was the plot twist at the end? You know, well,
41:56
Speaker 1: what kind of what snack? Did you have your popcorn?
41:58
Speaker 1: Or did you have salt in your popcorn or not?
42:00
Speaker 1: Just go deeper and deeper and deeper and deeper until
42:02
Speaker 1: you finally freak out because you can't like make up
42:03
Speaker 1: all these people. So it's it's it's the same kind
42:06
Speaker 1: of thing. And so the reason why I say it
42:07
Speaker 1: so openly is it would be good for us if
42:09
Speaker 1: more founders actually went through the full idea mas like,
42:11
Speaker 1: it would be great for us if more founders came
42:14
Speaker 1: in here having thought much more deeply about what they're doing.
42:16
Speaker 1: And this is part of the pop where the popular
42:17
Speaker 1: narrative startups is probably a little bit problem at the
42:20
Speaker 1: popular narrative startups is it's like the popular narrative and
42:22
Speaker 1: invention is that these are somehow Eureka moments. It's this
42:25
Speaker 1: sudden flash of brilliance and you know, you're just you're
42:27
Speaker 1: just you know. And by the way, these companies all
42:28
Speaker 1: these origin myths like oh, I was just a kid
42:30
Speaker 1: doing this and this idea came to me and like
42:32
Speaker 1: loan behold boom Facebook, right, And that's not at all
42:35
Speaker 1: how it works, right, It's it's this incredibly deep and
42:37
Speaker 1: elaborate process of thinking, uh and work that actually leads
42:40
Speaker 1: to these things happening. And so I think for people
42:42
Speaker 1: to be if more founders understand the concept of the
42:44
Speaker 1: idea MAS and they set the bar higher for themselves
42:47
Speaker 1: and the level of thought they'll put in their ideas,
42:49
Speaker 1: then I think we benefit from that. What could your
42:51
Speaker 1: future hold more than you think? Because at Merrill Lynch
42:54
Speaker 1: we work with you to create a strategy built around
42:56
Speaker 1: your priorities. Visit mL dot com and learn more about
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Speaker 1: Merrill Lynch than affiliate Bank of America. Merrill Lynch makes
43:01
Speaker 1: available products and services offered by Merrill Lynch. Pierce, Feder
43:03
Speaker 1: and Smith Incorporated, a register broth for dealer. Remember s
43:05
Speaker 1: I PC. We talked about some of the unicorns before
43:10
Speaker 1: we talked about this ends badly. I'm gonna I'm gonna
43:12
Speaker 1: skip those questions. Let let me before I get to Facebook,
43:16
Speaker 1: let me I have to ask a question. I love
43:20
Speaker 1: the show Silicon Valley. I know that, uh, Mike Judge
43:24
Speaker 1: and Alec Burg have described you as an unofficial writing
43:29
Speaker 1: consultant to this, So tell us about your experience with
43:33
Speaker 1: the show. And I have to I'm a fan of Portlandia,
43:38
Speaker 1: and having been to Portland's several times, I came away
43:41
Speaker 1: with the impression that, oh, this isn't a sitcom, it's
43:44
Speaker 1: a documentary. How true is that for? For Silicon Fact's
43:48
Speaker 1: my understanding, Portlandia is literally true? Right? It certainly feels
43:51
Speaker 1: that way to put a camera in for a normal
43:54
Speaker 1: nor Yes, exactly, Silicon Valley is exact same way. So
43:57
Speaker 1: so and all I have to confess I've still only
43:59
Speaker 1: seen the season get Out. I haven't seen yet. It's
44:03
Speaker 1: so hilarious. I know, I'm sure it is. I just
44:05
Speaker 1: the first season was so perfect, just gonna stop. I
44:08
Speaker 1: just I couldn't. I don't know. I've just had a
44:10
Speaker 1: mental block. Um, I haven't seen the one from the
44:13
Speaker 1: most recent one this Sunday, and people are telling me
44:15
Speaker 1: it's just so hilarious and over the time funnies and
44:20
Speaker 1: it just rings. Especially being out here, It's like, oh, okay,
44:24
Speaker 1: I recognize him. It rings really true. Do you have
44:27
Speaker 1: a get feedback from people saying, hey, what are you
44:29
Speaker 1: doing to us? Excuse me? Like Mark, you're kind of
44:35
Speaker 1: making us look silly. What are you doing from who? Exactly?
44:39
Speaker 1: Random people? People you know, other vcs, other founders, other
44:43
Speaker 1: other because there are very few people come out of
44:46
Speaker 1: the show with their reputation. And so that's the thing
44:48
Speaker 1: I can't call. I can't comment past I can't comment
44:51
Speaker 1: past the first season. I will say the first season
44:53
Speaker 1: was perfect, and I will tell you so that the
44:55
Speaker 1: secret of that show, at least the secret of the
44:57
Speaker 1: first season, which I consider a work of art. Ums.
45:00
Speaker 1: I Judge himself started his career as a chip engineering
45:02
Speaker 1: in Silicon Valley, UM and if you if you meet
45:05
Speaker 1: him at actually it's it's not what you'd expect. Like
45:07
Speaker 1: he's one of the lead, you know, the leading creative
45:09
Speaker 1: comedy geniuses of our era, the creator of all these
45:12
Speaker 1: you know, Pavis and Butthead and all these things, and
45:14
Speaker 1: which is fascinating because he started out so wildly overbroad idiocracy,
45:19
Speaker 1: and you work your way down the list, and as
45:21
Speaker 1: he seems to have gotten older and maybe his artistic
45:25
Speaker 1: vision matured, it went from insane to overbroad to slapstick too. Oh,
45:31
Speaker 1: this is mildly a parody and somewhat of cinema verity,
45:35
Speaker 1: although I think he'd Idiocracy was also a documentary. Um,
45:38
Speaker 1: I was a documentary, but five years ahead of his time, right,
45:41
Speaker 1: exactly right, and so um and so he just he
45:45
Speaker 1: has a very precise um uh. He has a very
45:48
Speaker 1: precise understanding actually how things work here, more so than
45:51
Speaker 1: I think people would think. Um, and so it comes
45:53
Speaker 1: across and then and then his you know, his partners
45:55
Speaker 1: are also geniuses, and so it comes across. So that's good.
45:57
Speaker 1: I would also say, for people who haven't seen it,
45:59
Speaker 1: Halt and Catch Fire, uh in a completely different, hundred
46:02
Speaker 1: eighty degree different movies. It's a dramatic. It's a drama.
46:05
Speaker 1: There's no Halt and Catch Fire fire. It's not funny
46:07
Speaker 1: at all. It's it's a it's a very serious show. Halton.
46:10
Speaker 1: Catch Fire is a show on AMC that's I think
46:11
Speaker 1: in its third season now. Um. It is a period piece.
46:15
Speaker 1: Unlike the Silic Value is HBO, Silicon Value is current
46:18
Speaker 1: Time Fires a period peace set in the early eighties
46:21
Speaker 1: at the birth of the PC. UM. But it's the
46:22
Speaker 1: story basically, it's the it's a fictionalized story of the
46:24
Speaker 1: creation of the company Compact and then the birth of
46:27
Speaker 1: the PC industry and the birth of the PC clone
46:28
Speaker 1: industry at a time when IBM was by far the
46:30
Speaker 1: dominant company in the industry right and and so it's
46:33
Speaker 1: a but it's a very um it's a spookily accurate
46:37
Speaker 1: portrayal of what a startup is actually like, and it's
46:40
Speaker 1: actually really funny. The critics of the show in the
46:42
Speaker 1: first season, it was getting criticized for being too melodramatic,
46:45
Speaker 1: like this is all too superheated and too emotional, and
46:48
Speaker 1: I'm thinking, nope, this is It's like they put a
46:49
Speaker 1: camera in a startup like this, this is what they're
46:52
Speaker 1: actually like. Everybody would like to And this is also
46:55
Speaker 1: part of the thing we see all the time is
46:56
Speaker 1: everybody wants to pretend that startups are fun, and it
46:58
Speaker 1: turns out start ups are no fun. No, it's a
46:59
Speaker 1: lot of work, a lot of work, and it is
47:01
Speaker 1: a stomach churning process um of being told no by
47:04
Speaker 1: everybody and being told your idea is stupid and it's
47:06
Speaker 1: just not stop. Just you just feel like as a
47:08
Speaker 1: start every started founding, they just feel like they're under assault.
47:10
Speaker 1: All that, it's all and catch fired as a very
47:12
Speaker 1: good job capturing the other side of that. What what about, um,
47:15
Speaker 1: the incubators like hy Combinator or back Monity, What about
47:20
Speaker 1: those where all right, this is a little more founder
47:24
Speaker 1: friendly environment with a little more support and a little
47:27
Speaker 1: less um of of that negative CASTI gade that you
47:31
Speaker 1: were referring to. Yeah, so they're they're fantastic, Like they're
47:33
Speaker 1: they're fantastic. They've been usually additive to the to the valley. UM.
47:36
Speaker 1: The big thing that why Combinator and other firms like
47:39
Speaker 1: it are doing is they're bringing people in earlier. UM.
47:41
Speaker 1: And so write the path once upon a time, I
47:44
Speaker 1: mean I was maybe an exception of this, but the
47:45
Speaker 1: path once upon a time was you go work, you know,
47:47
Speaker 1: in a real job for five or ten or fifteen
47:49
Speaker 1: years and your real experience before you try one of
47:51
Speaker 1: these things, because you need to build the skill set. UM. Basically,
47:54
Speaker 1: what why see basically viewed is almost like the fifth
47:56
Speaker 1: year of college or something where they have they have
47:58
Speaker 1: ability to pull in you know, kids. A lot cases
48:00
Speaker 1: are people who just haven't been exposed to startups and
48:02
Speaker 1: able to They basically try to spin them up much
48:04
Speaker 1: more quickly in their careers. They talk openly about this, right,
48:06
Speaker 1: it's like it's it's it's sort of the new career path,
48:09
Speaker 1: um so. And then it as part it's also part
48:11
Speaker 1: of this increased our winnie and kind of feeding frenzy
48:13
Speaker 1: that we're talking about. So as long as we throw
48:15
Speaker 1: enough competitors gladigators into the ring, will end up with
48:18
Speaker 1: that many more survivors that potentially can can be something
48:22
Speaker 1: one day. Yeah, and I suspect I think, you know,
48:24
Speaker 1: part of the impact that these things have are the
48:26
Speaker 1: companies that come out of them, you know, out of
48:27
Speaker 1: the programs. I suspect the long run effects positive effects
48:30
Speaker 1: will be even bigger sort of the second, third, fourth generation. Right.
48:33
Speaker 1: So it's it's you know, the the y C Finnders
48:35
Speaker 1: this year, right, the ice Finders got don't a hundred
48:38
Speaker 1: and fifty companies in the batch right now or something
48:39
Speaker 1: like that, Like, you know, some of them is gonna succeed,
48:41
Speaker 1: a lot of them are going to fail. But to me,
48:43
Speaker 1: that's almost beside the point because it's all the people
48:45
Speaker 1: in those companies. It's three people who are working on
48:48
Speaker 1: those companies, and then what those people are gonna do
48:50
Speaker 1: not just this year, but five years from now, ten
48:51
Speaker 1: years from now. And so these people are being set
48:54
Speaker 1: up on a career path um where they should be
48:56
Speaker 1: able to do amazing things years from now. One of
48:58
Speaker 1: the nice things about Silicon all his failure isn't considered
49:02
Speaker 1: a mark of shame. It's so this this startup blew up,
49:05
Speaker 1: and that startup didn't make it, and we killed this,
49:06
Speaker 1: but we pivoted this one. And you know, sometimes the
49:09
Speaker 1: fifth or six time is a draw. Yeah, that's right,
49:11
Speaker 1: and so you get you get the Yeah, the first
49:13
Speaker 1: startup doesn't work, you do you do get more swings
49:14
Speaker 1: at the bat, and you do get and by the way,
49:16
Speaker 1: you get different experiences like your if your first up
49:18
Speaker 1: doesn't work, it's very often it ends in it's called
49:20
Speaker 1: an aquahier where you end up getting sold a big company,
49:22
Speaker 1: or you just or some people just go and get
49:23
Speaker 1: a job just to recover from the trauma of going
49:26
Speaker 1: through a start up work. But then you get skills, right,
49:29
Speaker 1: so then you have you have your startup experience. You
49:31
Speaker 1: have now a experience maybe working at a great you know,
49:33
Speaker 1: growth company where you're learning how that stuff works. When
49:35
Speaker 1: it when it's actually running at scale, right, and then
49:37
Speaker 1: five tenures and you start to learn how to manage
49:39
Speaker 1: people and you sort of pick up these skills and
49:41
Speaker 1: then you go start another company, right, And so there's
49:44
Speaker 1: there is a sort of repeated swings at the bat
49:46
Speaker 1: um kind of effect that happens. And I think that
49:49
Speaker 1: these incubators just give people basically an early swing at
49:52
Speaker 1: the bat that maybe otherwise didn't exist. Coming up, we
49:54
Speaker 1: continue our conversation with Mark andreeson discussing the unique structure
49:59
Speaker 1: of Andrew Uson Horowitz. I'm Barry Ridhults. You're listening to
50:02
Speaker 1: Masters in Business on Bloomberg Radio. I'm Barry Ridholts. You're
50:07
Speaker 1: listening to Masters in Business on Bloomberg Radio. My extra
50:11
Speaker 1: special guest today is Mark Andreason. He is the co
50:14
Speaker 1: founder and general partner of the venture capital firm Andrews
50:18
Speaker 1: and Horowitz. He co created the Mosaic Internet browser, co
50:21
Speaker 1: founded Netscape, and has done more things over the past
50:25
Speaker 1: decade or two than most of us will do in
50:27
Speaker 1: our lifestyle entire lifespans. Let's talk a little bit about
50:31
Speaker 1: the firm we're sitting in, which is quite lovely. It
50:35
Speaker 1: is a very relaxing zen vibe heerre um with the
50:40
Speaker 1: blonde wood and the just generally soothing atmosphere. Not what
50:46
Speaker 1: you imagine when you think up think of the startup
50:49
Speaker 1: community and and Silophone Valley. Tell us how you structured
50:53
Speaker 1: the firm and what was the thinking behind it? Yeah,
50:56
Speaker 1: so the big thing. So we're trying to create, We're
51:00
Speaker 1: trying to work with founders to create something out of nothing. Right,
51:02
Speaker 1: and so at the time we invest in most companies,
51:03
Speaker 1: there's not a lot there. And then the path is
51:06
Speaker 1: going to be a five, ten, fifteen year path to
51:08
Speaker 1: get to you know, to get to something important and significant.
51:11
Speaker 1: So you're really playing a very long game. It's not
51:13
Speaker 1: two years. Hey, we've got to start looking for an exit. Yeah,
51:16
Speaker 1: it's it's my friend and friends at CNBC, right, have
51:18
Speaker 1: the show Fast Money, and I'm always pitching them. It's
51:20
Speaker 1: like you need the car market needs slow money, right,
51:22
Speaker 1: and the slow money should be on every day and
51:24
Speaker 1: every day it should just be right, you know, well,
51:25
Speaker 1: what's happened today that matters? And the answer is yeah, nothing, Um,
51:29
Speaker 1: you know, what's what's going on? You know? Not much? Okay,
51:31
Speaker 1: I'll see tomorrow, right and so and and and you
51:34
Speaker 1: know they start looking the start ups are working incredibly hard.
51:35
Speaker 1: Like the startups, you know, there's all kinds of activity
51:37
Speaker 1: at the startups. But the investors, say the vcs who
51:40
Speaker 1: freak out on a daily, weekly, monthly basis with these
51:42
Speaker 1: companies like burn themselves to a crisp, like because stuff
51:45
Speaker 1: these companies to cast. And so we go into it
51:47
Speaker 1: just knowing it's gonna be with every company is going
51:50
Speaker 1: to be this long running journey, and it just takes time.
51:51
Speaker 1: It takes at least five years to build something that
51:54
Speaker 1: has real value, and it takes at least ten years
51:55
Speaker 1: to build something that's going to endure for long, you know,
51:57
Speaker 1: for for for another ten years after that, and so
51:59
Speaker 1: it's it's just to be this this, this, this long thing.
52:01
Speaker 1: And then I mentioned earlier like so much of this
52:04
Speaker 1: people like we we like to I think, brag on
52:06
Speaker 1: like how good we are I thinking about the ideas
52:07
Speaker 1: and the technical and stuff, and then we do spend
52:09
Speaker 1: a lot of time on that stuff. But I think
52:10
Speaker 1: a lot of it is partnering with really high potential people.
52:13
Speaker 1: In a lot of cases, you know, to your point,
52:15
Speaker 1: like don't have that much experience at the time they
52:17
Speaker 1: start their companies UM or or even people with more
52:19
Speaker 1: career experience who haven't done a startup before, right where
52:21
Speaker 1: there's a whole new set of things they have to learn,
52:23
Speaker 1: and then we try to work and help them, you know,
52:25
Speaker 1: grow and become better. Uh and and and you know,
52:27
Speaker 1: develop the skills that they need to build important companies
52:30
Speaker 1: um and so the whole firm is kind of engineered
52:32
Speaker 1: around those ideas. Right. So, as an example, we will
52:34
Speaker 1: never back a startup if we think it's outcome is
52:36
Speaker 1: it's going to get bought. Like every once in a while.
52:38
Speaker 1: It's really like if there's a slide in the dock
52:40
Speaker 1: that says excess strategy, you don't get bought by Google
52:42
Speaker 1: in three years like for ten X, like we won't.
52:44
Speaker 1: We won't find the company spent a lot of time
52:47
Speaker 1: on that. But like we're we're know, you want to
52:49
Speaker 1: create a company that worst case scenario exists on its
52:52
Speaker 1: own for the foreseeable decades in the future, and if
52:56
Speaker 1: someone happens to acquire them, great, But that's not the target.
52:59
Speaker 1: That's the kicker, as the companies that actually get bought
53:01
Speaker 1: are the ones that don't have to get bought, the
53:03
Speaker 1: ones that actually could have stood on their own because
53:04
Speaker 1: those are the ones that actually value that value, right exactly.
53:07
Speaker 1: So that's the twist on the whole thing. But so
53:09
Speaker 1: we're we're always backing these companies with and these people
53:12
Speaker 1: with an eye towards long run independence, developing something of
53:15
Speaker 1: of deepen enduring value. UM. So one is just the timeframe, Um,
53:18
Speaker 1: that's important part. A second part is how we coach
53:21
Speaker 1: and mentor and work with the founders and the team
53:24
Speaker 1: that the founders built around them, And that has to
53:25
Speaker 1: do with our how we how we s left general
53:27
Speaker 1: partners for our firm with the people who make the
53:29
Speaker 1: pull the trigger investments and go on the boards. Um.
53:32
Speaker 1: And there is all our our big claim to fame
53:34
Speaker 1: there is all of our general partners are former founders
53:36
Speaker 1: and our CEOs of tech startups. And so when we
53:38
Speaker 1: go on a board, it's always the case with us
53:41
Speaker 1: that you're sitting with somebody who has been through the
53:43
Speaker 1: same situation that you're in right now and has had
53:45
Speaker 1: to make the difficult decision and has had to live
53:48
Speaker 1: with the consequences of that decision, right. And so it's
53:50
Speaker 1: just it's a grounding in the in the advice and
53:53
Speaker 1: the guidance that you get that I think just goes
53:54
Speaker 1: deeper than you know. And there by the way, there
53:56
Speaker 1: are great vcs who have no operating experience or little
53:58
Speaker 1: operating experience, and some of them are actually very very
54:00
Speaker 1: good investors. But there's there's just so much in that
54:03
Speaker 1: intimate relationship with the founder and with the with the
54:05
Speaker 1: team that I think benefits from having the credibility from
54:08
Speaker 1: having actually been you guys. You guys also do something
54:10
Speaker 1: unique in that every partner is on every investment, as
54:14
Speaker 1: opposed to you do software, you do semi conductor. I'll
54:18
Speaker 1: do this. Every partner participates in every investment. Is that
54:21
Speaker 1: an accurate statement? So we do that. There is there's
54:24
Speaker 1: always a single GP on the board, so there's somebody
54:26
Speaker 1: who's focused on you. But then the way the firm
54:28
Speaker 1: ist structured is everybody shares equally in the in the
54:31
Speaker 1: results of that. So we so basically we've just there's
54:33
Speaker 1: a lot of things we've done in the firm to
54:35
Speaker 1: design the firm to be a zero politics environment, to
54:37
Speaker 1: be so what you discover what you do rowe politics
54:40
Speaker 1: and environe your politics environment with respect to how the entrepreneurs,
54:43
Speaker 1: I mean, I can Garantie. We've ruled out all politics
54:45
Speaker 1: in the firm. I'm just saying, as far as the
54:46
Speaker 1: founder's experience, that they should never run into for a second,
54:49
Speaker 1: it shouldn't be this guy in the firm likes this,
54:51
Speaker 1: but this guy is fighting against fighting again. So what
54:54
Speaker 1: you often find in a lot of entry capital firms
54:56
Speaker 1: since they present as united front and then there's a
54:58
Speaker 1: tremendous amount of in fighting this taking place. It's by
55:00
Speaker 1: the way, it's the same thing you see and like
55:01
Speaker 1: you'll see on on Wall Street, a lot like whis
55:03
Speaker 1: just for example, there's just a battle for the there's
55:05
Speaker 1: a battle for the profits, like there's a battle for
55:06
Speaker 1: the carry. And so for me to get more money,
55:08
Speaker 1: somebody else is to get less money. And that least
55:10
Speaker 1: to this weird adverse thing where I actually want the
55:12
Speaker 1: other guys deals to fail because then I'll have more
55:14
Speaker 1: negotiating leverage in my comp you know, discussion or there
55:17
Speaker 1: will be a battle between who wins the deal, right
55:19
Speaker 1: the maybe the entrepreneur starts the conversation with one GP,
55:21
Speaker 1: but maybe the entrepreneur really would rather have another GP
55:24
Speaker 1: with the more relevant skill set right in the same
55:25
Speaker 1: firm on their board, sure, and a lot of firms
55:27
Speaker 1: that that starts World War three. Internally, at our firm,
55:30
Speaker 1: everybody's fine with that. Another thing, a little twist that
55:33
Speaker 1: we have. We don't have a promotion path in the
55:35
Speaker 1: firm to general partner UM. So the way most other
55:37
Speaker 1: firms are structured as they have young people in the
55:39
Speaker 1: firm who get promoted up the rights over time. But
55:41
Speaker 1: it's a competitive process, right, So you'll have twenty junior
55:44
Speaker 1: people who are competing for you know, six sort of
55:47
Speaker 1: UM junior g P slots who are competing for two
55:49
Speaker 1: g two senior GP slots of course ten or fifteen years,
55:52
Speaker 1: and so they're in a constant knife fight with each other,
55:54
Speaker 1: right because they're it's just like had a law firm.
55:56
Speaker 1: I was gonna say, it sounds like the big big
55:58
Speaker 1: Wall Street or park Ev and you law firms where
56:00
Speaker 1: it's just a blood bath and when they make the
56:03
Speaker 1: announcements of partners, there's a handful of happy people and
56:06
Speaker 1: a lot of other people getting their resumes together and
56:08
Speaker 1: it's no fun for anyone. And so when that struck,
56:11
Speaker 1: that's exactly right. So when that structure works well, that
56:13
Speaker 1: leads to a very brutally Darwinian effective eat what you
56:15
Speaker 1: kill environment where you're you're breeding for you're basically breeding
56:18
Speaker 1: sharks for maximum infectiveness. The problem is, as a client
56:21
Speaker 1: of one of those firms, you get caught crosswise in
56:23
Speaker 1: the politics right, and you do not get you basically
56:25
Speaker 1: only get access to the people who have the direction
56:27
Speaker 1: sentive to help you in the firm. You don't get
56:28
Speaker 1: access to the rest of the firm. And that's the
56:30
Speaker 1: typical experience that founders have with vcs, which is they
56:32
Speaker 1: get promised the resources of the firm, they get what
56:34
Speaker 1: they get in practice is one person that seems really counterproductive.
56:37
Speaker 1: It's very kind of productive and and in our come
56:39
Speaker 1: by the way, a lot of our work with companies
56:40
Speaker 1: is working with our companies to help them resolve these
56:42
Speaker 1: kinds of issues with the other vcs. So because you're
56:45
Speaker 1: you guys are also co investors with other other ventures.
56:48
Speaker 1: So we just don't and again, like this may work
56:50
Speaker 1: for other firms, we just decided to take a different
56:52
Speaker 1: mentality where we don't have that kind of you ever
56:54
Speaker 1: get caught in the kind of crossbar because it doesn't exist. Um,
56:56
Speaker 1: so that's a big thing. And then the other big
56:58
Speaker 1: thing that we do is a firm um is, we
57:00
Speaker 1: do believe deeply in the idea that the founders not
57:04
Speaker 1: in every case, but in a lot of cases, really
57:05
Speaker 1: should be able to if they're if they want to,
57:07
Speaker 1: and if they're able to do it, they should they
57:08
Speaker 1: should run their own companies. And we could have a
57:10
Speaker 1: long conversation about that. Um. The other thing that we
57:13
Speaker 1: do is we really try to help arm up the
57:15
Speaker 1: founders who don't have a lot of deep business experience
57:17
Speaker 1: with all of the connectivity the network access that the
57:21
Speaker 1: professional CEOs will tend to have. So so the technical
57:24
Speaker 1: found technical founder starts a company right, and then you know,
57:26
Speaker 1: big part of it is are I think, just gonna
57:27
Speaker 1: be good at managing and leading, which is where the
57:29
Speaker 1: GP relationship is really critical mentoring. Do you find that
57:33
Speaker 1: very often engineers and people with that sort of technical
57:36
Speaker 1: skill set, um, the stereotype is they're socially awkward. They
57:40
Speaker 1: lack the usual skill set that a CEO typically has. Yeah,
57:44
Speaker 1: so that is often the case. But also the reverse
57:47
Speaker 1: is often the case, which is the highly social you know,
57:49
Speaker 1: the CEO is had of central casting have you know,
57:52
Speaker 1: the the great hair and the you know, brilliant smiles,
57:55
Speaker 1: and the great, you know, just the great in front
57:57
Speaker 1: of the crowd. They often not always, but they often
58:00
Speaker 1: lack the technical grounding to determine the direction of a
58:02
Speaker 1: technology company. And so and again like these are these
58:05
Speaker 1: are stereotypes, and they're overly broad, but they are patterns.
58:07
Speaker 1: There is some truth to it. Started in this case.
58:11
Speaker 1: And so so what we're now everything, I would say
58:14
Speaker 1: the the kicker everything adventure is on an exception basis, right,
58:16
Speaker 1: and so by definition we're not looking for the pattern,
58:18
Speaker 1: we're looking for the exception. And so we're looking for
58:20
Speaker 1: the to your point, the very particular technical founder, who,
58:23
Speaker 1: by the way, may start out without a lot of
58:25
Speaker 1: these social skills, and may start out without really knowing
58:27
Speaker 1: how to deal with customers, or may start out not
58:29
Speaker 1: really knowing how to manage people or hire people. And
58:31
Speaker 1: then we're trying and if they're willing and able to learn,
58:34
Speaker 1: we will then put a lot of effort into helping
58:36
Speaker 1: them become great at those things. By the way, it's
58:38
Speaker 1: the same astray on the other side when it comes
58:39
Speaker 1: time some of our companies we do end up with
58:41
Speaker 1: professional CEOs, and then we look for the professional CEO.
58:44
Speaker 1: Is that not only have that skill, but also then
58:45
Speaker 1: go deep on products and technology, and so you're and
58:48
Speaker 1: and and those are both exceptions like those are these
58:50
Speaker 1: are not on both sides, these are rare people. So
58:53
Speaker 1: so it makes me wonder is it easy to take
58:55
Speaker 1: someone who has the technical skills and teach them to
58:58
Speaker 1: be a CEO, because it sounds like gets challenging to
59:01
Speaker 1: take a CEO and say, by the way, on the side,
59:03
Speaker 1: we want you to get your you know, your ms
59:06
Speaker 1: in in computer science over at Stanford at night, that
59:09
Speaker 1: that doesn't seem like your first breakthrough product. At the
59:12
Speaker 1: same time, the same time, I would think it's easier
59:14
Speaker 1: to teach the inexperienced, unskilled but really sophisticated technology technologist
59:22
Speaker 1: the people skills then vice versa. So in the tech industry,
59:25
Speaker 1: we firmly believe exactly what you said from the general
59:28
Speaker 1: pattern as we want to find the great technical founder
59:29
Speaker 1: and helping become a great CEO, and that then, exactly
59:32
Speaker 1: at your point, that's easier than finding a great CEO
59:34
Speaker 1: and trying to turn them into a great product technology visionary.
59:37
Speaker 1: And I think the history of our industry confirms this,
59:39
Speaker 1: like nine out of ten roughly of the big successful
59:42
Speaker 1: tech companies in the last frankly hundred years have been
59:45
Speaker 1: run by their founders for a long periods of time
59:46
Speaker 1: for this reason, starting with you Litt Packard and Intel
59:49
Speaker 1: and you know many many many others you know now
59:50
Speaker 1: today Facebook and Google, right, um, And so that's the
59:53
Speaker 1: thing now because it's easier though doesn't mean it's easy, right,
59:57
Speaker 1: So you know, it is a real like for these
59:59
Speaker 1: people to learning um. You know, for for an engineer
1:00:01
Speaker 1: who has not managed a large organization before to learn
1:00:04
Speaker 1: how to do that, like that's a big thing that
1:00:05
Speaker 1: they really have. They have to really want to do it,
1:00:08
Speaker 1: and some of them just simply don't. And then you
1:00:09
Speaker 1: pair them up with somebody who them come up with
1:00:11
Speaker 1: a pair configuration where they can work with somebody who
1:00:13
Speaker 1: can help them with that UM. And then some of
1:00:15
Speaker 1: them just simply can't write. They just hit the wall
1:00:17
Speaker 1: where it's just not something that they're going to be
1:00:19
Speaker 1: able to do. And so that there there, there in
1:00:21
Speaker 1: lies the difficulty of implementing the theory. But that's that's
1:00:24
Speaker 1: that's our that's what we do. So so two things
1:00:26
Speaker 1: immediately come to mind when you bring that up. The
1:00:29
Speaker 1: first is you have Larry and surgery, who are technologists
1:00:32
Speaker 1: who eventually UM partner up with with their chairman, Eric Schmidt,
1:00:39
Speaker 1: who who basically brings them along and teaches them how
1:00:43
Speaker 1: to be c e O S or co c e
1:00:45
Speaker 1: O S or what if we want to call them.
1:00:47
Speaker 1: But the other example that leaps to minds is Marcus
1:00:51
Speaker 1: Zuckerberg and Facebook. So let's let's talk about that for
1:00:54
Speaker 1: a moment. You're a friend of his, you're a mentor.
1:00:56
Speaker 1: Tell us how that relationship came about and how how
1:01:00
Speaker 1: have you helped Zuckerberg become one of the leading CEOs
1:01:06
Speaker 1: in the world. So, first of all, I should disclaim
1:01:08
Speaker 1: most credit on this, which is Mark has done most
1:01:11
Speaker 1: of this on Zone. He has been advised and helped
1:01:13
Speaker 1: along the way by a lot of people. So I'm
1:01:15
Speaker 1: not I'm not going to take any sort of giant,
1:01:17
Speaker 1: giant credit on this one. Um I did that. I
1:01:19
Speaker 1: did get to I did get to see it, and
1:01:21
Speaker 1: you know I was I did get to be in
1:01:22
Speaker 1: the room for a fair amount of it. So um
1:01:24
Speaker 1: So I met Mark through Peter tele after he first
1:01:27
Speaker 1: invested in the company, and this was when Facebook was
1:01:29
Speaker 1: four or five people sitting in bean bags. UM in
1:01:33
Speaker 1: Palo alto uh in an office with very colorful graffiti
1:01:36
Speaker 1: on the walls in the very early days. Um, and
1:01:39
Speaker 1: it was just crystal clear from the start. I mean
1:01:41
Speaker 1: it was not I don't think clear that Facebook was
1:01:42
Speaker 1: going to become you know, the heam come because just
1:01:45
Speaker 1: how how often does that ever happen? And how how
1:01:47
Speaker 1: can you actually predict that? Do you want you want
1:01:48
Speaker 1: me to go through the list of how often that's
1:01:50
Speaker 1: happened with you? Or should we save that for a
1:01:52
Speaker 1: later segment? Not not very not very freaking often. I
1:01:54
Speaker 1: can tell you that. So um so uh. I will say, like,
1:01:58
Speaker 1: it was very clear from the beginning that Mark was
1:01:59
Speaker 1: a I call him a learning machine. Um, he just
1:02:02
Speaker 1: siphons in information. And then this this goes to what
1:02:04
Speaker 1: I mentioned earlier. It's it's it's it's technical founders. It's both. Um,
1:02:07
Speaker 1: it's both can they do it? But also do they
1:02:09
Speaker 1: want to do it? And a big part of that
1:02:11
Speaker 1: for both of those is can they learn? And by
1:02:13
Speaker 1: the way, there there are people who just simply hit
1:02:15
Speaker 1: the wall where they just do not want to learn anymore,
1:02:17
Speaker 1: Like and we've all dealt with people like that where
1:02:18
Speaker 1: say they're impervious to new information, right, because they've deliberately
1:02:21
Speaker 1: set themselves up where it's like any new information at
1:02:23
Speaker 1: this point would be a threat. And so I'm just
1:02:25
Speaker 1: I'm done. They tap out and finished. They just they
1:02:28
Speaker 1: piked like they just peeked in terms of everything that
1:02:30
Speaker 1: they're ever going to know and absorbed like that's just
1:02:32
Speaker 1: the way that they've decided to live their lives. And
1:02:33
Speaker 1: so to do what Mark has done, you need to
1:02:35
Speaker 1: be these that opposite of that. You need to just
1:02:37
Speaker 1: constantly be pulling in new information until actually curious devouring
1:02:41
Speaker 1: whatever comes cross every possible topic that you can imagine
1:02:43
Speaker 1: it's going to be relevant to what you're doing. And
1:02:45
Speaker 1: so Mark, Mark has just been the way I think Marcus,
1:02:47
Speaker 1: he's the most systematic person I think I've ever worked
1:02:49
Speaker 1: with it, just pulling it and just extracting the information. Um.
1:02:53
Speaker 1: And that was true when he was really young, right
1:02:55
Speaker 1: and was not well known, um and he was very
1:02:58
Speaker 1: determined to go get the information from people who knew.
1:03:00
Speaker 1: And then it's it's only magnified out as he's grown
1:03:02
Speaker 1: and by the way he continue know he's out on
1:03:03
Speaker 1: this tour right now, you know, touring all fifty states,
1:03:05
Speaker 1: like from Mark standpoint that there's all kinds of speculation
1:03:08
Speaker 1: on that. But from Mark standpoint, the whole purpose of
1:03:10
Speaker 1: that is learning, not that he's running for president when
1:03:12
Speaker 1: he turns he's where he swears not, but yes, whole
1:03:17
Speaker 1: when he talks about that, like when you talked about
1:03:19
Speaker 1: that with us, when he said he's gonna go do
1:03:20
Speaker 1: it's all I'm gonna go learn. I'm gonna go learn
1:03:22
Speaker 1: about the Country'm gonna learn about every state. I'm gonna
1:03:23
Speaker 1: learn about people who aren't like me, and and so
1:03:26
Speaker 1: and for me. So for me, it was not surprising
1:03:28
Speaker 1: in the sense of it's completely consistent with how he operates.
1:03:30
Speaker 1: And I think this is an area in which he
1:03:32
Speaker 1: is a much He's a real role model on this,
1:03:34
Speaker 1: Like I I really think, like I think a lot
1:03:36
Speaker 1: of founders like look at Mark and they try to
1:03:38
Speaker 1: drive like how do I get good at I don't know,
1:03:40
Speaker 1: viral marketing or data da whatever product? He just wants
1:03:42
Speaker 1: to take it all. I think if more people just
1:03:44
Speaker 1: look at Mark and said, how do I learn like that,
1:03:46
Speaker 1: they would be much better. You're on the board of
1:03:48
Speaker 1: directors of Facebook. What's the reaction when the CEO and
1:03:52
Speaker 1: founder says, hey, guys, I'm going around the country. I'm
1:03:55
Speaker 1: gonna go to all fifty states because I think people
1:03:58
Speaker 1: have interesting things to say and I want to learn.
1:04:02
Speaker 1: Is there eyebrows raised or it's like, oh, that's just
1:04:04
Speaker 1: Mark being Mark. Go ahead, yeah, I mean Mark, Mark
1:04:06
Speaker 1: does things like that. Mart Market. Is My point is
1:04:08
Speaker 1: Mark has always stretched himself like he stretches. He comes
1:04:11
Speaker 1: up with a quest every year, goes at his question quest,
1:04:13
Speaker 1: the quest. A couple of years ago, I remember he
1:04:15
Speaker 1: was learning some obscure language if memories, sir, I don't
1:04:18
Speaker 1: remember what it was. Mandarin Mandarin right, well, not so obscure,
1:04:22
Speaker 1: but a complex, uh language. So he does a quest
1:04:26
Speaker 1: every year and just basically keeps learning, keeps learning. He's
1:04:28
Speaker 1: been doing this is if you know, I don't know
1:04:29
Speaker 1: for ten years now or something. It's it's and so
1:04:31
Speaker 1: there's been through a variety of things, and he talks
1:04:33
Speaker 1: about this. He's very open about this um and so
1:04:36
Speaker 1: you know, he just he just goes out in siphons.
1:04:37
Speaker 1: And so he's a guy. He's a guy who's literally
1:04:39
Speaker 1: able to learn from some of the most you know,
1:04:41
Speaker 1: experience and accomplish people in the world on certain topics.
1:04:43
Speaker 1: But you know, spend a day on a farm not
1:04:44
Speaker 1: far from where I grew up in Wisconsin and dow
1:04:46
Speaker 1: to milk cows like and he's just as far and
1:04:48
Speaker 1: he's happy to do that. He's absolutely so he's living
1:04:52
Speaker 1: the life he always wants to live. I just want
1:04:54
Speaker 1: to just suck everything I can possibly into my head
1:04:57
Speaker 1: as as rapidly as I possibly can. Well, that's pretty fascinating. Um,
1:05:02
Speaker 1: let's keep going about the deal days you do. I
1:05:06
Speaker 1: want to talk about some some more of the combination
1:05:09
Speaker 1: angel investing late stage. So you do deal days, and
1:05:13
Speaker 1: and how many people will the firm see in a
1:05:16
Speaker 1: given day or week when those are running well, we have,
1:05:19
Speaker 1: like I said, we do about two thousand a year total.
1:05:21
Speaker 1: So there's a whole funnel in the whole system, and
1:05:23
Speaker 1: there's a lot of people in the firm who meet
1:05:24
Speaker 1: companies the whole process of kind of distilling the information.
1:05:26
Speaker 1: So it's you know, it's dozens of week you know,
1:05:28
Speaker 1: kind of across the firm, and then we see pitches
1:05:31
Speaker 1: on usually Monday and Thursday, or Monday Monday Thursday generally, UM,
1:05:34
Speaker 1: and as the GP team and that's you know, I
1:05:37
Speaker 1: don't know, Monday, it was five this week on Thursday,
1:05:40
Speaker 1: I think there's two or three more. Um, and this
1:05:42
Speaker 1: is every week, so there's occasional vacations and stuff, but
1:05:45
Speaker 1: pretty much you're running through three hundred, four hundred pitches.
1:05:49
Speaker 1: The GPS will see everything the way. These are called
1:05:52
Speaker 1: the all GP pitches, and so these are ones where
1:05:53
Speaker 1: everybody's in the room, um, and then many others. There's
1:05:55
Speaker 1: many others that happened during the week where one or
1:05:57
Speaker 1: two or three GPS might see them. Right, So it's
1:05:59
Speaker 1: a giant fun It shrinks down and down until and
1:06:02
Speaker 1: out of those let's call it three hundred a year,
1:06:04
Speaker 1: you're looking at ten percent, very very seriously. Yeah, that's
1:06:08
Speaker 1: about right. And when you decide to do an investment
1:06:11
Speaker 1: in them, are these usually angel fifty thousand dollar rounds
1:06:16
Speaker 1: or these much more substantial rounds or both. Yeah, So
1:06:18
Speaker 1: we don't really do the fifty anymore. We used to
1:06:21
Speaker 1: do more of those when we got started, but we
1:06:23
Speaker 1: don't do those as we tend to get much more.
1:06:25
Speaker 1: We tend to kind of go all in or not.
1:06:27
Speaker 1: So that I could go through that, but like that,
1:06:29
Speaker 1: why not we work, well, why all in? Why not?
1:06:32
Speaker 1: Well we'll get to three other investors and will hedge
1:06:34
Speaker 1: our bets and go in partially. Well, there's still so
1:06:37
Speaker 1: there's there a couple of couple of reasons. UM. One
1:06:39
Speaker 1: is just the level of one is just an economic thing,
1:06:41
Speaker 1: which is for us to be the opportunity. So there's
1:06:43
Speaker 1: costs and then there's opportunity costs. And there's always opportunity
1:06:45
Speaker 1: costs on our time and on our ability. How many
1:06:47
Speaker 1: companies gonna work with? Is it more of the time
1:06:49
Speaker 1: or the money. It's it's more of the time. It's
1:06:51
Speaker 1: more the opportunity costs. It's every deal, every deal and
1:06:53
Speaker 1: we do fills a slot that can't be then filled
1:06:55
Speaker 1: by you know, another hundred deals that you might have
1:06:57
Speaker 1: done instead. And right, so there's a big there's a
1:06:59
Speaker 1: there's always there were any deal you do a big
1:07:01
Speaker 1: risk that you're for closing some other deal that much better,
1:07:03
Speaker 1: and so you have to just think very hard about it.
1:07:05
Speaker 1: And right, it's it's it's it's time um. And then
1:07:08
Speaker 1: UM that that that's a big part of it. UM.
1:07:10
Speaker 1: Then there's also just the economics of it UM, which
1:07:12
Speaker 1: is just as a consequence of that, when when you
1:07:14
Speaker 1: have a hit, like how much of it you actually
1:07:16
Speaker 1: own actually really drives your returns um. And so we
1:07:19
Speaker 1: have a responsibility to our parall piece to try to
1:07:21
Speaker 1: you know, really have the the hits pay off um.
1:07:24
Speaker 1: And then part of it is just a full engagement model,
1:07:26
Speaker 1: like we really don't like giving up. We really don't
1:07:27
Speaker 1: like we don't you know, there there are venture firms
1:07:30
Speaker 1: that if your company is not going well, they just
1:07:31
Speaker 1: they'll mysteriously vanage on the visa website like they just
1:07:34
Speaker 1: never get talked, they get dropped down the memory hole. Um.
1:07:37
Speaker 1: And uh, we don't tend to do that. We're just
1:07:39
Speaker 1: and it comes from the fact we've all been founders
1:07:41
Speaker 1: and CEO is like, we just we don't tend to
1:07:43
Speaker 1: give up. Um, you know what it's like when you're
1:07:45
Speaker 1: on the receiving end of unreturned phone calls. That is right, yeah,
1:07:47
Speaker 1: and so and and my view is like our we
1:07:49
Speaker 1: make our money on the ones that work, and we
1:07:51
Speaker 1: probably I think make our reputations and the ones that don't.
1:07:53
Speaker 1: That's a fascinating line right there, because the math behind
1:07:58
Speaker 1: venture investing is, look, when you go out and buy
1:08:01
Speaker 1: stocks in the market, fifty of them will do nothing,
1:08:04
Speaker 1: thirty of them will work, and uh, ten of them
1:08:06
Speaker 1: will be disasters, and a handful them will work really well.
1:08:09
Speaker 1: The odds are far more daunting with venture investing. It's
1:08:13
Speaker 1: it's almost ten x that you have and I think
1:08:16
Speaker 1: you've you've written this elsewhere. You'll make a hundred investments
1:08:19
Speaker 1: and fifty of them just crash. Okay, But it's the
1:08:25
Speaker 1: one or two at the top of the pyramid that
1:08:26
Speaker 1: pay for the other for the whole thing, right exactly.
1:08:29
Speaker 1: And that's actually roughly the math. So yeah, So fifty
1:08:31
Speaker 1: in top tier venture capital, top descile venture capital across
1:08:34
Speaker 1: forty years of data on this, which we have access
1:08:36
Speaker 1: to a couple different ways. Um, basically half the deal's
1:08:39
Speaker 1: good news is it's not a temper cent success, right,
1:08:41
Speaker 1: it's a fifty percent success right right, So it's not
1:08:43
Speaker 1: as bad as some people think. But it is a
1:08:44
Speaker 1: fifty percent success right, meaning it's a fifty percent failure,
1:08:47
Speaker 1: right um. And then meaning fifty percent failure meaning zero
1:08:51
Speaker 1: return on that half about about about half of the
1:08:56
Speaker 1: go to zero and then and then the other half
1:08:58
Speaker 1: returns between zero and one x. They return, recover some capital,
1:09:02
Speaker 1: but not all they message capital. And then the sort
1:09:04
Speaker 1: of that third quartile of sort of fifty, they return
1:09:08
Speaker 1: you know, one to three x and then it's basically
1:09:10
Speaker 1: the upper quartile that returns sort of you know, god
1:09:13
Speaker 1: Welling returns three x plus. And then if you and
1:09:15
Speaker 1: some of the three x plus is a lot more
1:09:17
Speaker 1: plus than So that's the good the good news. The
1:09:19
Speaker 1: bad news is, yeah, you do get that. You you
1:09:21
Speaker 1: do get the ones where you lose one x pretty frequently.
1:09:23
Speaker 1: The good news is they if they, if they work,
1:09:25
Speaker 1: they can make a thousand x right, and so you
1:09:27
Speaker 1: and then the LP. This is the great thing about
1:09:29
Speaker 1: kind of the venture ecosystem. The LPs don't care. So
1:09:33
Speaker 1: for example, in the data, they don't care how you
1:09:34
Speaker 1: make the money just as on as you do. So
1:09:36
Speaker 1: that in the data, for example, the top performing venture
1:09:38
Speaker 1: from strike out more often called the baby Ruth effect,
1:09:41
Speaker 1: the top performing firms have more zeros. Right, they're swinging,
1:09:44
Speaker 1: they're only swinging for home runs and so and by
1:09:45
Speaker 1: definition in venture, if you're only swinging for home runs,
1:09:47
Speaker 1: you're taking more risk on crazier ideas. Makes sense, and
1:09:50
Speaker 1: it's like it's like you know, the famously they're they're
1:09:54
Speaker 1: Google Fund. It was the fund that Google and it
1:09:56
Speaker 1: had segue right and Segway was a legendary disaster, and
1:09:59
Speaker 1: you know, out all this negative publicity and you know
1:10:01
Speaker 1: they guess what they lost one x their money in
1:10:03
Speaker 1: segue right, guess how much money they made on Google right, right?
1:10:08
Speaker 1: And so so. So the good news on it is
1:10:10
Speaker 1: we we and this is something that we're The US
1:10:12
Speaker 1: in particular has a real edge on this, I think
1:10:15
Speaker 1: is we we have a base of limited partners institutional
1:10:17
Speaker 1: investors in the US that deeply understand that this is
1:10:20
Speaker 1: how it works. And so when we have one that
1:10:22
Speaker 1: goes to zero, they don't call us up and yell
1:10:24
Speaker 1: at us and complain there is They're like, yeah, that's
1:10:26
Speaker 1: the cost of doing business. Um. And in fact, we've
1:10:28
Speaker 1: had helpings ask us why we actually don't have more failures?
1:10:31
Speaker 1: Like are you taking enough risk? Really, what they want
1:10:33
Speaker 1: to know is, okay, of the companies that are working,
1:10:35
Speaker 1: how well are they working? And and we call this
1:10:38
Speaker 1: to how high is up? Question? How high is high
1:10:40
Speaker 1: is up? How big could they get? Right? And then
1:10:43
Speaker 1: if and then literally, Alan venture, if you came back,
1:10:45
Speaker 1: if you were lucky enough in venture to come back
1:10:47
Speaker 1: every year with one big, giant home run, and all
1:10:49
Speaker 1: the rest are failures, they'd be totally happy like so,
1:10:52
Speaker 1: so they would not complain about that at all. And
1:10:54
Speaker 1: of course it's very, very different than how the rest
1:10:55
Speaker 1: of Wall Street operates, no doubt. Do you run into
1:10:59
Speaker 1: every time time there's that thousand X do you run
1:11:01
Speaker 1: into How many times do people say, well, this is
1:11:05
Speaker 1: the next Facebook? No, please stop saying that, do you do?
1:11:08
Speaker 1: You sort of end up in that mode where whatever
1:11:12
Speaker 1: was working, Hey, let me explain to you why our
1:11:14
Speaker 1: company is the next X, y Z. Do these cliches
1:11:17
Speaker 1: begin to make you crazy? Yeah, they do. Well, they're
1:11:20
Speaker 1: they're a tip. They usually the really great founders tend
1:11:22
Speaker 1: not to say that. I hope people are listening to
1:11:26
Speaker 1: all these suggestions. This is gonna be a how to pitch.
1:11:30
Speaker 1: Indrees and Horowitz don't go there without having heard all
1:11:34
Speaker 1: these suggestions from this guy named Mark Andres. And I
1:11:39
Speaker 1: would imagine that at a certain point you halfway through
1:11:42
Speaker 1: a pitch, do you look at each other and like,
1:11:44
Speaker 1: all right, we're done with this. Every once in a while, everyone,
1:11:47
Speaker 1: I will say every once in a while, um, but um,
1:11:49
Speaker 1: but I will say this, um. The privilege of the
1:11:52
Speaker 1: job is that these are two thousand of the smartest
1:11:55
Speaker 1: people in the world in the remains in which they're operating,
1:11:57
Speaker 1: who we get to do with every year, and so
1:11:59
Speaker 1: the other that we we learned so much and even
1:12:01
Speaker 1: the deals we're not gonna we're not gonna do it.
1:12:03
Speaker 1: There's something we've just made a mistake and we've seen
1:12:04
Speaker 1: a pitch that we shouldn't seen because we're never going
1:12:06
Speaker 1: to do the deal for some reason. Um, and there's
1:12:08
Speaker 1: you know, a dozen reasons why that could be the case. Um.
1:12:10
Speaker 1: We generally, you generally learned just a lot of contextual
1:12:13
Speaker 1: information about what's happening in that in that industry because
1:12:16
Speaker 1: these people have to get to that point. They've all
1:12:18
Speaker 1: thought these things through. Really back to the idea amazing
1:12:20
Speaker 1: that we're talking about. So that's that's what you just learned.
1:12:23
Speaker 1: You learn and that it's and by the way, once
1:12:24
Speaker 1: your experience that it's just a fire hose of it's
1:12:26
Speaker 1: just the smartest people in the world coming in and
1:12:28
Speaker 1: spending an hour telling you everything they know, like it's
1:12:30
Speaker 1: an amazing how how that was a question? Next question
1:12:33
Speaker 1: is how big of a strategic advantage is getting first
1:12:37
Speaker 1: looks at at two thousand of the smartest people in
1:12:39
Speaker 1: the world. Yeah. Yeah, I think that's a big part
1:12:41
Speaker 1: of it. And I mean, and that's why I'm so
1:12:42
Speaker 1: I've sort of become kind of semi legendary sort of optimist. Um.
1:12:47
Speaker 1: It's really hard, I think, to be pessimistic in this job,
1:12:49
Speaker 1: because you do see all these incredibly fired up people
1:12:51
Speaker 1: with all these incredibly vivid and brilliant ideas, um, and
1:12:54
Speaker 1: you you just you get a sense of the productive
1:12:56
Speaker 1: capacity of capitalism, of the intel rustial pursuits. By the way,
1:13:01
Speaker 1: it's hard to be too negative when you're looking at
1:13:03
Speaker 1: the most optimistic inventions in in the universe. And by
1:13:06
Speaker 1: the way, also the output of the great research universities,
1:13:08
Speaker 1: like so much of what we do is building you
1:13:10
Speaker 1: mentioned earlier, so much of what we do is building
1:13:12
Speaker 1: off and what happens to Stanford and M I. T
1:13:13
Speaker 1: in Berkeley and all these other schools, and it's just
1:13:15
Speaker 1: crystal clear, like how amazing they are. So you know,
1:13:18
Speaker 1: so that it's just this that that that's that's cut
1:13:20
Speaker 1: sort of the psychic payoff from the job is the
1:13:22
Speaker 1: ability to do that. And then it just also i think,
1:13:25
Speaker 1: just becomes clear like there are contra all that, you know,
1:13:28
Speaker 1: the headlines are just all relentless negative these days, there
1:13:30
Speaker 1: are a lot of smart people in the world. There
1:13:32
Speaker 1: are a lot of people have a lot of energy
1:13:33
Speaker 1: in the world who want to legitimately want to build
1:13:35
Speaker 1: new things. Um. It's very exciting and increasingly not just here, right,
1:13:39
Speaker 1: not just in Silicon Valley, not just in the US,
1:13:40
Speaker 1: not just in the West, all over the world, right,
1:13:43
Speaker 1: And and so that that's the other side of it,
1:13:44
Speaker 1: is this, this culture of entrepreneurship is really spreading, um.
1:13:47
Speaker 1: And you know, we're gonna benefit from that in the
1:13:49
Speaker 1: sense of more opportunities, but I think the entire world
1:13:51
Speaker 1: is going to benefit from that. So your focus mostly
1:13:53
Speaker 1: here on the West Coast, primarily Silicon Valley, you're not
1:13:56
Speaker 1: looking at China, You're not looking at India. Is that
1:13:58
Speaker 1: a fair uh servation. So all of our companies want
1:14:02
Speaker 1: to be multinationals, and all of our companies want to
1:14:04
Speaker 1: operate on the ground in all these countries, and all
1:14:06
Speaker 1: of our companies hire a huge number of immigrants, and
1:14:08
Speaker 1: so our our companies by definition, will end up with
1:14:10
Speaker 1: a lot of Chinese immigrant, Indian immigrant. And then by
1:14:13
Speaker 1: the way, a lot of them are actually built offices
1:14:14
Speaker 1: on the ground. A bunch of companies with offices in
1:14:17
Speaker 1: China building up big presences indeed these other countries. UM,
1:14:20
Speaker 1: so we're heavily exposed to the sort of knowledge flow
1:14:23
Speaker 1: and talent that way. UM, we do I guess that
1:14:25
Speaker 1: though we do think venture capital is a craft, there
1:14:27
Speaker 1: is a craft to the business UM and it's it's
1:14:29
Speaker 1: a lot of it's the relationship with the board, the
1:14:31
Speaker 1: board members, and the founders and the team UM. And
1:14:34
Speaker 1: so there's a local dynamic to it. UM. The number
1:14:38
Speaker 1: of venture firms that have successfully figured out how to
1:14:40
Speaker 1: operate in multiple geographies and stay world class, it's a
1:14:42
Speaker 1: very short list, most of the most most generally that
1:14:45
Speaker 1: doesn't work. And so we we've just we've made a
1:14:47
Speaker 1: decision at least for the time being, to try to
1:14:48
Speaker 1: be really good in Silicon Valley. So, by the way,
1:14:51
Speaker 1: we do fund companies outside the valley, but just on
1:14:53
Speaker 1: on an exception basis, like they have to be super special.
1:14:55
Speaker 1: So we do have some of those. So you you
1:14:57
Speaker 1: focus mostly local. Your you're a software absolutist, no clean tech,
1:15:02
Speaker 1: no rocket ships, no electric cars. Is that still true?
1:15:06
Speaker 1: It's it's software and software only, so software at the core.
1:15:10
Speaker 1: So the rule of the rule is software at the core,
1:15:12
Speaker 1: so there has to be We just think there's a
1:15:14
Speaker 1: particular magic around software. There's a particular magic around how
1:15:17
Speaker 1: you can create things with software. Right. It's it's it's
1:15:19
Speaker 1: I call alchemy, like you type on a keyboard and
1:15:21
Speaker 1: then things happen in the real world like that. That's
1:15:23
Speaker 1: an amazing process. There's there's just kind of huge intellectual
1:15:25
Speaker 1: leverage there, and then as a consequence, there is huge
1:15:28
Speaker 1: economic leverage, right, which is there's likes to say capital,
1:15:31
Speaker 1: software is the labor that creates capital. Software is labor
1:15:35
Speaker 1: that Okay, It's the closest thing to magic will ever have.
1:15:37
Speaker 1: It's like typing on the keyboard is like casting a
1:15:39
Speaker 1: spell and then something happens, Right, It's like, you know,
1:15:41
Speaker 1: that's the lift. Lift Guys they type software and then
1:15:43
Speaker 1: all of a sudden, real people are being taken on
1:15:45
Speaker 1: a real rise in real cars, like just by magic,
1:15:47
Speaker 1: Like just the software just caused that to happen. And
1:15:50
Speaker 1: so we are looking for that kind of software leverage,
1:15:53
Speaker 1: the sort of software magic in every company, scalable, magical
1:15:57
Speaker 1: and the ability to convert labor into capital. And then
1:16:02
Speaker 1: as a consequence, but as a consequence of that, our
1:16:04
Speaker 1: companies do end up doing all kinds of different things.
1:16:06
Speaker 1: And so we have some companies that sell software. We
1:16:09
Speaker 1: have some companies that provide softwares a service. We have
1:16:11
Speaker 1: some companies that provide apps. We have some companies that
1:16:13
Speaker 1: are making hardware. We have some companies that are going
1:16:16
Speaker 1: after new new healthcare pursuits and biology, material science like there.
1:16:20
Speaker 1: There's lots of software is becoming so intertwined with the
1:16:23
Speaker 1: world that there are lots of ways to now use it,
1:16:25
Speaker 1: to go to leverage it in a different spaces, and
1:16:27
Speaker 1: so are The range of companies that were funding is
1:16:29
Speaker 1: broader than ever, but they all have software at the core,
1:16:31
Speaker 1: software at the core. Um I started out this segment
1:16:36
Speaker 1: talking about the firm. There's a couple of things I
1:16:39
Speaker 1: have to ask about the firm because I'm fascinated to
1:16:42
Speaker 1: buy it. So you used to blog at p Marca,
1:16:45
Speaker 1: and let me remind you that I warned you to
1:16:47
Speaker 1: pace yourself, young man. You're gonna burn yourself out. I
1:16:50
Speaker 1: don't know if you remember that. And and you tweet
1:16:53
Speaker 1: fairly actively. I know we're on hiatus now and you podcast.
1:16:58
Speaker 1: You guys have a podcast room at this doesn't sound
1:17:02
Speaker 1: like it's the typical forms of communication for the old
1:17:06
Speaker 1: line venture capital front. I mean, everybody has a website
1:17:10
Speaker 1: and there's sort of this interesting, Hey, here are all
1:17:12
Speaker 1: the things we oops, we passed on that we shouldn't have.
1:17:15
Speaker 1: It's sort of this, UM, I guess we could call
1:17:18
Speaker 1: it humility or attempt at humility. Your distult is very different. Here.
1:17:24
Speaker 1: Tell me about the thinking behind that. Yeah, so we're
1:17:27
Speaker 1: just we're trying to teach, like with yourselves, kind of
1:17:30
Speaker 1: has been fundamentally lucky to have seen a lot of
1:17:32
Speaker 1: these things, mentioning these things were trying to teach. We
1:17:34
Speaker 1: think it's by the way to our benefit to teach,
1:17:35
Speaker 1: because if more people know how to do this, then
1:17:37
Speaker 1: there's more companies for us to fund and people for
1:17:39
Speaker 1: us to work with. UM. And then part of it
1:17:41
Speaker 1: is just look, I think technology has gotten very important
1:17:43
Speaker 1: in the world, much more than it used to be,
1:17:45
Speaker 1: and so UM and it's complex and it's hard to understand,
1:17:47
Speaker 1: and so I think and it's hard to understand from
1:17:49
Speaker 1: the outside UM, and so a big part of just
1:17:52
Speaker 1: what we're trying to do is to tell the story
1:17:54
Speaker 1: of what's happening, not just in our firm, but tell
1:17:56
Speaker 1: the story of what's happening in the industry and what's
1:17:58
Speaker 1: happening with all these companies and with the aplications of
1:18:00
Speaker 1: all these technologies. So you mentioned our podcast series. So
1:18:03
Speaker 1: I get no credit for that. Our partners here, UM,
1:18:05
Speaker 1: our partners here have done all the work on that.
1:18:07
Speaker 1: But it's become like I would say, shockingly amazingly important
1:18:11
Speaker 1: and influential among people who care about how technologies affect.
1:18:16
Speaker 1: The level of response we've gotten to that has been
1:18:18
Speaker 1: like an order magnitude beyond what I would have ever
1:18:20
Speaker 1: thought was possible. UM. And the amazing thing is a
1:18:23
Speaker 1: couple of years ago people saying, well, podcast is all
1:18:25
Speaker 1: but over. I just read last week Reid Hoffman of
1:18:29
Speaker 1: LinkedIn is now hosting a podcast. So this is a
1:18:33
Speaker 1: technology that a is not going away as a form
1:18:36
Speaker 1: of communication. What is the benefit to the firm of
1:18:40
Speaker 1: being able to go out and tell a story that
1:18:42
Speaker 1: might not be Hey, here's why you should use injuries
1:18:44
Speaker 1: and Harrowitz. It's never that overt it's always here's some
1:18:47
Speaker 1: interesting things happening in the world of technology you should
1:18:50
Speaker 1: know about. Here's what's happening. A lot of people care
1:18:51
Speaker 1: about I was thinking, a lot of people care about
1:18:53
Speaker 1: this stuff. A lot of people care about the implications.
1:18:54
Speaker 1: A lot of people, by the way, are in a
1:18:56
Speaker 1: position to affect the world, and regulators and journalists and
1:19:00
Speaker 1: people at big companies, um. And so we're trying to
1:19:03
Speaker 1: get to all the people who are decision makers, you know,
1:19:05
Speaker 1: you know, the constituents and the entire ecosystem that have
1:19:07
Speaker 1: to cope with the consequences of technological change. Trying to
1:19:09
Speaker 1: get to those folks. We're trying to pull more people
1:19:11
Speaker 1: into the industry. Right, if more people all over the
1:19:13
Speaker 1: world have a sense of what's happening, then they can
1:19:15
Speaker 1: they can decide they might want to participate. We're trying
1:19:17
Speaker 1: to help people up level of their skills, become more
1:19:20
Speaker 1: knowledgeable about these things. And we I mean, we obviously
1:19:22
Speaker 1: benefit from all that, but just more broadly, like I
1:19:24
Speaker 1: think this is the topic of our time. It's absolutely
1:19:27
Speaker 1: absolutely fascinating. All right, So we're almost at a time
1:19:30
Speaker 1: there's a ton of questions that didn't get to, including
1:19:33
Speaker 1: the speed round. But what I really want to do
1:19:36
Speaker 1: is get to the standard questions. So how many minutes
1:19:38
Speaker 1: can we go over two minutes? That's gonna be tough alright.
1:19:44
Speaker 1: So so, by the way, if I forget to um
1:19:47
Speaker 1: say this, thank you so much for being so generous
1:19:49
Speaker 1: with your time and and and going through such thoughtful,
1:19:53
Speaker 1: detailed answers. These these really been been fascinating. I have
1:19:57
Speaker 1: ten favorite questions. I'm going to just go through a
1:19:59
Speaker 1: two or three of them really quickly. Tell us something
1:20:02
Speaker 1: about your background that most people don't know. Probably big one.
1:20:05
Speaker 1: I grew up in the roal Midwest. I grew up
1:20:08
Speaker 1: in Trump Country. You did, yes, absolutely, And has that
1:20:10
Speaker 1: affected your output on on the world at all? Your outlook? Yeah? Absolutely.
1:20:15
Speaker 1: Early mentors Jim Clark, Jim Barksdale, um with the two
1:20:19
Speaker 1: big ones and say, very complimentary personalities that work together
1:20:23
Speaker 1: very well, but also starkly different in their skill sets
1:20:25
Speaker 1: and orientations. And I learned a lot for both of them.
1:20:27
Speaker 1: The question I get from listeners more than anyone asked
1:20:30
Speaker 1: your guests what their favorite books are? Favorite books? So
1:20:33
Speaker 1: I have three quick nominations, and I'm getting getting the
1:20:36
Speaker 1: hook here, uh Port Charlie's Almanac, The Companion Speeches. I
1:20:41
Speaker 1: think it's tremendous. Um um. Extreme Ownership has been a
1:20:44
Speaker 1: favorite recent book. A guy named Jocko Willink is a
1:20:47
Speaker 1: former Navy seal commander UM, one of the stream ownership
1:20:50
Speaker 1: streame Ownership Um one of the best books on leadership
1:20:53
Speaker 1: I've ever I've ever read in a tremendous by the
1:20:54
Speaker 1: Way word story book as well. UM. And then what
1:20:58
Speaker 1: is the Man? There are so many there's a brand
1:21:01
Speaker 1: new book. O Roberts of Pulsky has a new book
1:21:03
Speaker 1: I've just started on human behavior of his magna Opus
1:21:05
Speaker 1: on human behavior. He's the great evolutionary theorist. And so
1:21:09
Speaker 1: that would probably be the third one that that's the
1:21:10
Speaker 1: new one, but it looks very exciting. And then our
1:21:12
Speaker 1: final question, what is it that you know about technology
1:21:15
Speaker 1: and venture capital investing today that you wish you knew
1:21:20
Speaker 1: five plus years ago when you were first starting out. Oh,
1:21:22
Speaker 1: there are no bad ideas. There are only early ideas.
1:21:26
Speaker 1: No bad ideas, just earlier ideas happen. It'll all happen.
1:21:29
Speaker 1: I've become convinced now it'll all happen. Every smart person
1:21:31
Speaker 1: who comes in here with a crazy idea, it's all
1:21:32
Speaker 1: going to happen. At some point, they all happen. It's
1:21:35
Speaker 1: just a question to win. We have been speaking with
1:21:38
Speaker 1: Mark Andreason of Andrews and Horowitz. UH. If you enjoy
1:21:42
Speaker 1: this conversation, be sure and check out all our other
1:21:44
Speaker 1: such chats. You can find them on SoundCloud, Apple iTunes
1:21:49
Speaker 1: and Bloomberg dot com. I would be remiss if I
1:21:51
Speaker 1: did not thank our hosts, Mark Andreason and the crew
1:21:54
Speaker 1: here at Andreason Horowitz, as well as Mike Batnick, who
1:21:57
Speaker 1: is my head of research and help put these stans together.
1:22:01
Speaker 1: We love your comments, feedback and suggestions right to us
1:22:04
Speaker 1: at m IB podcast at Bloomberg dot net. I'm Barry Ridholts.
1:22:08
Speaker 1: You're listening to Masters and Business on Bloomberg Radio. Our
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