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Steve Murray Discusses Startup Valuation · Masters in Business

0:02
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
0:11
Speaker 1: This week on the podcast, I have an extra special guest.
0:14
Speaker 1: His name is Steve Murray and he has a storied
0:17
Speaker 1: background in the world of venture investing. He is currently
0:21
Speaker 1: a partner at Revolution Growth. He spent twenty years at
0:24
Speaker 1: soft Bank working with a legendary list of companies, and
0:30
Speaker 1: we very much get in the weeds about startup and
0:34
Speaker 1: venture investing. If this is an area that is of
0:37
Speaker 1: an interest to you as either a career or just
0:41
Speaker 1: a passing fancy, if you're intrigued by technology, finance, startups, fintech,
0:48
Speaker 1: UH sports technology, wearable technology, well then you're going to
0:52
Speaker 1: find this conversation quite intriguing. So, with no further ado,
0:57
Speaker 1: my conversation with Steve Murray, I'm Barry Ridholts. You're listening
1:05
Speaker 1: to Masters in Business on Bloomberg Radio. My special guest
1:09
Speaker 1: today is Steve Murray. He is a managing partner at
1:12
Speaker 1: Revolution Growth of venture capital funds that specializes in technology, software, wearables,
1:20
Speaker 1: and a number of other fascinating UH tech subjects. He
1:24
Speaker 1: was a partner and managing director at SoftBank for twenty years,
1:28
Speaker 1: working with such companies as Yahoo, e Trade, Geo Cities,
1:34
Speaker 1: Ziff Davis, BuzzFeed, and many others. He is a current
1:39
Speaker 1: board of director member at Fitbit, where he has served
1:42
Speaker 1: since Steve Murray, Welcome to Bloomberg. Welcome. Thank you for
1:47
Speaker 1: having me, Barry. I appreciate it. So let's start with
1:49
Speaker 1: soft Bank, because you were there for twenty years, um,
1:53
Speaker 1: both as a director and a partner for for a
1:56
Speaker 1: large part of that. What did you do with SoftBank
1:59
Speaker 1: A TOF bank or many years is a long time.
2:00
Speaker 1: I can't imagine that I was there for that long,
2:03
Speaker 1: but it was. It was a lot of fun, I
2:04
Speaker 1: guess in summary, I got to sort of be on
2:07
Speaker 1: the front row of the sidelines of the commercial development
2:10
Speaker 1: of the Internet. So what I did, what I did
2:13
Speaker 1: functionally as I started there, I started is really ramping up. Really,
2:21
Speaker 1: the Internet was just starting, and soft Bank had just
2:24
Speaker 1: acquired companies like Ziff Davis, Kingston Technologies, Comdex trade Shows,
2:30
Speaker 1: and plus I trade Shows, and so there were seven
2:34
Speaker 1: different operating units that had had been put together here
2:36
Speaker 1: in the US and outside of Japan. There was a
2:38
Speaker 1: grand total of four people that worked for soft Bank.
2:41
Speaker 1: So I joined initially from an infrastructure perspective to really
2:45
Speaker 1: put together all the information systems, the accounting, legal, tax
2:50
Speaker 1: and other activities for the and and managing that reporting
2:54
Speaker 1: into Japan and working with them on their strategies there.
2:56
Speaker 1: That quickly, as the commercial development of the Internet sort
3:00
Speaker 1: of moved along rapidly, the tasks that I were doing
3:05
Speaker 1: really moved much more into the investing side of life,
3:07
Speaker 1: which really starting in current out of early two thousands,
3:10
Speaker 1: I spent most of my time on the investing side.
3:13
Speaker 1: What what was the relationship between Yahoo and soft Bank
3:16
Speaker 1: way back? Yeah, so that's a that's a one of
3:19
Speaker 1: the great stories of lore, which is um uh soft
3:23
Speaker 1: Bank made an investment in Yahoo and owned about a
3:26
Speaker 1: third of Yahoo at the same time that they made
3:29
Speaker 1: the investment in in Yahoo US. At the time, that
3:32
Speaker 1: was a huge investment. I think it was about a
3:34
Speaker 1: hundred million dollars and they bought a third of it. Right,
3:36
Speaker 1: put things in context, right, it was a a pre
3:39
Speaker 1: I p O investment where Masioshi Son and Jerry Yang
3:43
Speaker 1: got together and decided that Massa wanted to be a
3:46
Speaker 1: big partner here in the US of of Yahoo's but
3:48
Speaker 1: also at the same time they created Yahoo Japan which
3:52
Speaker 1: was a real partnership. Actually, I think it was a
3:55
Speaker 1: sixty forty partnership or something like that between soft Bank
3:59
Speaker 1: as the controlling and managing partner of that entity and
4:02
Speaker 1: Yahoo US. They also created Yahoo Korea, Yahoo UK and
4:06
Speaker 1: some other things, So there was really a global partnership
4:09
Speaker 1: that was set up, and that really was on some
4:11
Speaker 1: level the basis for a lot of soft Banks US
4:15
Speaker 1: and other Internet activities. Really, you know, that's the flagship
4:19
Speaker 1: investment early on in the soft Bank story on the Internet.
4:23
Speaker 1: So it's funny to think of you as a venture
4:26
Speaker 1: investor because your background is that of an accountant. And
4:29
Speaker 1: and maybe it's my bias, but I think of accountants
4:33
Speaker 1: as steady risk averse dotting eyes and crossing teas and
4:38
Speaker 1: making sure double entry accounting adds up. How did you
4:42
Speaker 1: transition from a staid profession of an accountant to something
4:47
Speaker 1: that's got a touch of cowboy in it? Yeah, I'd
4:50
Speaker 1: say a touch of cowboy might be an understatement someday,
4:53
Speaker 1: but I guess it takes all types. Um and uh.
4:59
Speaker 1: I actually really enjoyed my time at Deloitte and was
5:01
Speaker 1: my background is. I was a c p A for
5:03
Speaker 1: a while. I was in the accounting and auditing function
5:07
Speaker 1: within UH within Deloitte for six years, So my first
5:13
Speaker 1: six years of my career were there spent. I spent
5:16
Speaker 1: an inordinately large amount of time on companies, and I
5:18
Speaker 1: think why it translated to my soft bank activities, it's spent.
5:21
Speaker 1: I spent a large amount of my time on companies
5:24
Speaker 1: that were heavily transaction orientated, So companies like Prime Mark
5:28
Speaker 1: that was buying a lot of data service companies at
5:31
Speaker 1: the time, a company like Hardcore General at the time
5:34
Speaker 1: that was buying Hardcore Brace, Jovanovitch and Neeman Marcus and
5:37
Speaker 1: other things. So I was I was involved in the
5:39
Speaker 1: assignments that I ended up being on were very transactional orientated,
5:44
Speaker 1: a lot of acquisitions, and they were doing a lot
5:45
Speaker 1: of activity. Accounting skills would come in very handy with that.
5:48
Speaker 1: Accounting skills come in very handy. I do find that
5:51
Speaker 1: my background of accounting skills is actually quite helpful with
5:55
Speaker 1: the companies, particularly as they scale. As they say there's
5:58
Speaker 1: there's uh, there's nothing like that ruins a good story
6:01
Speaker 1: like facts, and accountants on some level have facts, which
6:04
Speaker 1: is how are the companies doing versus their plan? How
6:08
Speaker 1: much cash is left in the bank, Can we last
6:11
Speaker 1: another year or five years? How would we be viewed
6:14
Speaker 1: relative to comparable companies in the marketplace? So um, Although,
6:19
Speaker 1: for sure, you know the venture capital market is a
6:22
Speaker 1: lot of art project, not necessarily a pure science project.
6:27
Speaker 1: I think having the background and accounting actually has been helpful.
6:31
Speaker 1: So tell us a little bit about Revolution Growth. What
6:35
Speaker 1: sort of companies do you invest in? And gives some
6:38
Speaker 1: examples of of some of the companies you're working with currently. Sure. So,
6:42
Speaker 1: Revolution Growth is a growth fund based out of Washington,
6:46
Speaker 1: d c uh. It was started maybe ten years ago
6:50
Speaker 1: by three folks that previously we're partners together at A
6:54
Speaker 1: o L. So it was Steve Case, Ted leonss and
6:57
Speaker 1: Don Davis started Revolution. That's the murderous row. There we go, right,
7:01
Speaker 1: I have three more podcasts. I'm sure they'd be happy
7:04
Speaker 1: to come. So the three of them started Revolution a
7:08
Speaker 1: number of years ago really to do what at the time,
7:11
Speaker 1: they were trying to figure out what was big and
7:13
Speaker 1: what was next for them in their careers after they
7:15
Speaker 1: left the A O L situation after that merger, and
7:20
Speaker 1: they ultimately created a series of investment funds, one of
7:23
Speaker 1: them being Revolution Growth. Revolution. Growth invests in companies that are,
7:29
Speaker 1: as the name would suggest, at the growth stage, so
7:31
Speaker 1: bigger companies, not smaller, but not generally not billion dollar companies.
7:36
Speaker 1: Generally companies that have twenty thirty fifty hundred million dollars
7:40
Speaker 1: of revenue. We generally invest twenty to fifty million dollars
7:44
Speaker 1: in each opportunity. We usually have a pretty significant minority ownership,
7:49
Speaker 1: so we don't We're not a private equity shop where
7:51
Speaker 1: we take control of businesses. We are more like a
7:54
Speaker 1: venture capital UH even on on some level structured like
7:58
Speaker 1: an early stage venture capital from where we own five
8:00
Speaker 1: percent of a business ten percent of a business, but
8:02
Speaker 1: we get involved as the business is really starting to scale.
8:06
Speaker 1: And so the types of businesses that we get involved
8:08
Speaker 1: in generally our technology related businesses, but they can be
8:12
Speaker 1: across a number of different verticals. Right, So we have
8:15
Speaker 1: UH companies actually as diverse and versus some of the
8:20
Speaker 1: folks that we work with as co investors um in
8:24
Speaker 1: fast casual restaurants, So we're investors in Sweet Green, We're
8:27
Speaker 1: investors in Cava that are both using technology to change
8:30
Speaker 1: the supply chain and change the ordering patterns and change
8:32
Speaker 1: the So that's a fast casual thing that we think
8:35
Speaker 1: is really big. We're involved in UM fintech, so we've
8:39
Speaker 1: recently made an investment in a company called Talo, which
8:41
Speaker 1: is doing UH micro loans in in developing nations through
8:47
Speaker 1: the use of information on people's cell phone. We're involved
8:51
Speaker 1: in sports related technologies like draft Kings where I'm on
8:55
Speaker 1: the board, sport Radar, which we're involved in. I'm sure
8:59
Speaker 1: we'll get to that topic later. UH. We're involved in
9:03
Speaker 1: UH data companies places like Uptake in Chicago, Tempest in Chicago,
9:09
Speaker 1: Interactions in Boston. So those are the types of companies.
9:11
Speaker 1: So they tend to be companies that, when we we
9:15
Speaker 1: get involved in them, tend to have substantive revenue, but
9:18
Speaker 1: not a billion dollars of revenue. We tend to put
9:21
Speaker 1: twenty to fifty million dollars to work. In almost every instance.
9:24
Speaker 1: We're on the board of these companies, and we serve
9:27
Speaker 1: to try to, you know, help them out, get them
9:29
Speaker 1: through their journey, and use the experiences and references and
9:32
Speaker 1: networks that we have to try to make them and
9:34
Speaker 1: make them successful. You referenced soft Bank earlier, and I
9:38
Speaker 1: have to ask you they now have a venture funds
9:42
Speaker 1: it's a hundred billion dollars. That's an insane amount of
9:46
Speaker 1: money for something like that. Uh, what does this say
9:49
Speaker 1: about what's going on in that space? And is this
9:54
Speaker 1: part of what's driving valuations that at firms like uber
9:59
Speaker 1: and we works through the roof? Well, clearly there's been
10:03
Speaker 1: a lot of talk about SoftBank's vision fund UM. I
10:07
Speaker 1: think it's actually it's really an amazing thing. And what
10:14
Speaker 1: does it say about the market and what does it
10:16
Speaker 1: say about where we are in the market and things?
10:18
Speaker 1: I think if we take a half a step back,
10:21
Speaker 1: what it says is certainly something like this was not
10:23
Speaker 1: possible ten years ago as an example, So what's changed
10:26
Speaker 1: that true? A decade ago you could not have had
10:28
Speaker 1: a fund this side, don't I mean outside of the
10:29
Speaker 1: financial I don't believe so just it wasn't the appetite
10:32
Speaker 1: for it, or it wasn't the capital for it. I
10:34
Speaker 1: think maybe a combination of both. But I think what
10:37
Speaker 1: UM has come to more clarity for people, which makes
10:41
Speaker 1: something like this possible, although it is an invent of
10:43
Speaker 1: one so you can't make too many broad conclusions about it.
10:46
Speaker 1: And it is sponsored by Massa, who is one of
10:49
Speaker 1: the world's great dealmakers. So I'm not suggesting that there
10:53
Speaker 1: will be multiple more hundred billion dollar funds, but I
10:55
Speaker 1: think what it does suggest is that the world has
10:58
Speaker 1: recognized the importance of tech aology and major industries and
11:02
Speaker 1: therefore the ability to deploy big amounts of capital in those.
11:05
Speaker 1: So things like industries like real estate, industries like healthcare,
11:09
Speaker 1: financial systems and others are really now being fundamentally changed
11:15
Speaker 1: by technology in a way that it's really just starting
11:17
Speaker 1: to happen, although there's been a lot of talk about it,
11:20
Speaker 1: you know, the industrial complex and the like, those things
11:23
Speaker 1: are really now starting to change materially, and those give
11:28
Speaker 1: real opportunities to deploy real amounts of capital. We say,
11:31
Speaker 1: we see this with a bunch of different opportunities that
11:33
Speaker 1: that's up Bank is deploying. So I think that they
11:36
Speaker 1: are a hugely influencial investor in the marketplace. I don't
11:39
Speaker 1: think a fund like this was possible ten years ago.
11:41
Speaker 1: I'm not sure there's ten more of them that are
11:43
Speaker 1: coming down the path, but I do think it speaks
11:45
Speaker 1: to the importance of technology in major industries that maybe
11:50
Speaker 1: previously had been a bit more immune to it. So
11:53
Speaker 1: not too long ago, I had a conversation with Benic
11:56
Speaker 1: Devans of Andrews and Horowitz, and his comment was, there
12:00
Speaker 1: aren't um technology companies anymore. Everybody's a technology company. If
12:06
Speaker 1: you're not using tech in in the most optimal or
12:10
Speaker 1: most productive way, you're just going to be left behind.
12:14
Speaker 1: I think that's a fair and accurate summary. I do
12:16
Speaker 1: think there are obviously some and many companies that are
12:20
Speaker 1: using it more effectively. There are industries that allow for
12:24
Speaker 1: it to be used more effectively. The pace at which
12:27
Speaker 1: some of these industries are going to be able to
12:29
Speaker 1: adopt the technology is not at the same pace that
12:32
Speaker 1: we've seen in some other industries. So as an example,
12:35
Speaker 1: when you talk about health care and you talk about
12:37
Speaker 1: you know, money supply, and you talk about things like
12:40
Speaker 1: that that are heavy heavily regulated, the pace at which
12:43
Speaker 1: some of these changes are going to be happening is
12:46
Speaker 1: not gonna be like how long it took Facebook to
12:49
Speaker 1: be published. For changes in there, it's going to take.
12:52
Speaker 1: So let's talk a little bit about health I see
12:55
Speaker 1: you're wearing the bigger what is that called the versa?
12:59
Speaker 1: This is all the ionic Oh, the ionic, so that's
13:01
Speaker 1: the big fit. But I'm wearing the charge to my wife.
13:06
Speaker 1: I had the original one, which I had, truth be told,
13:08
Speaker 1: I didn't love, but my wife. I got this from
13:10
Speaker 1: my wife and she liked it so much that I
13:13
Speaker 1: went out and got my own. You've been heavily involved
13:16
Speaker 1: in wearables. Where is that sector going, especially since you
13:21
Speaker 1: mentioned health? What might these things mean for a sedentary
13:26
Speaker 1: overweight nation. It's I think the existing status of wearables
13:32
Speaker 1: means a lot for a sedentary overweight nation, which is
13:35
Speaker 1: that it provides basic information around things like how active
13:40
Speaker 1: you are, what is your what's your pulse, how much
13:45
Speaker 1: sleep have you gotten? Things that are very basic in theory.
13:49
Speaker 1: But those pieces of information, when provided to people and
13:53
Speaker 1: easy to use formats with easy to use devices, change
13:56
Speaker 1: behavior for many many users. I could tell you from
13:59
Speaker 1: pro and experience. When I had the original fitbit and
14:03
Speaker 1: I was doing ten fifteen thousand steps a day, I
14:06
Speaker 1: became a little obsessive with it, and then I I
14:10
Speaker 1: had a couple of glitches with it, and I kind
14:11
Speaker 1: of got bored with it, and I put it down,
14:13
Speaker 1: and the phone is still tracking most of my travel.
14:18
Speaker 1: And I noticed that those ten thousand a day without
14:21
Speaker 1: something on your wrist just disappeared and it. Once I
14:26
Speaker 1: got this back again, suddenly it's all right. My office
14:29
Speaker 1: is down on four the street. We're on fifty eight street.
14:32
Speaker 1: I don't need to take a subway. I could walk,
14:34
Speaker 1: And besides, that's gonna add me two thousand steps. It
14:37
Speaker 1: really makes a significant thing, it really does. The mindfulness
14:40
Speaker 1: piece of it, which you're referring to, is really the
14:43
Speaker 1: key piece of the first generation of these things, which
14:46
Speaker 1: is really we're on maybe the first and a half
14:49
Speaker 1: generation of these things. So we started out with really
14:51
Speaker 1: basic trackers that did a pretty good job of tracking steps,
14:55
Speaker 1: but they were really electronic pedometers, if you will, right,
14:59
Speaker 1: And then they married that with really easy to use
15:02
Speaker 1: mobile software which makes you able to look at a
15:05
Speaker 1: little bit more. They've added sensors to things, and I
15:08
Speaker 1: don't know if you use the other ones that do
15:11
Speaker 1: things like your heart rate, you know, which is actually
15:13
Speaker 1: for lots of people quite interesting, what's my what's very
15:19
Speaker 1: pretty chill? What's your and and people sometimes say when
15:21
Speaker 1: I'm working out, I should get to thirty or forty
15:25
Speaker 1: beats a minute. Okay, how is that? You can drill
15:27
Speaker 1: into that in your mobile app after your workout and
15:30
Speaker 1: look at how that goes. The other feature that I
15:33
Speaker 1: use a lot, and I don't know if you do,
15:34
Speaker 1: but many users do, and it actually has really influenced
15:37
Speaker 1: me is the sleep function my wife uses that I
15:40
Speaker 1: like to take off anything from my winning band is
15:43
Speaker 1: the only jewelry I have on it in your bed.
15:46
Speaker 1: But that's just a function of getting used to it.
15:49
Speaker 1: And I would so the sleep thing for me, as
15:51
Speaker 1: somebody that travels every week and has a lot of
15:56
Speaker 1: functions that I attend to and are in different cities
15:59
Speaker 1: a lot I find, particularly as I'm not getting younger,
16:04
Speaker 1: My my vibrancy, my health, everything seems to directly correlate
16:10
Speaker 1: with the number of hours of sleep I get, it seems.
16:13
Speaker 1: And so as an example, I was looking yesterday, was
16:15
Speaker 1: talking to somebody about this. Yesterday evening. I looked at
16:18
Speaker 1: my fitbit data on my phone yesterday as I was
16:22
Speaker 1: traveling someplace, and I noticed that it has been over
16:26
Speaker 1: a month since I've had more than seven hours of sleep.
16:28
Speaker 1: I said, you know, something is not good there. I
16:30
Speaker 1: gotta fix that, right. So there's a mindfulness piece of
16:32
Speaker 1: it there. You've got to report at the end of
16:34
Speaker 1: a week, says your average sleep has gone up or
16:36
Speaker 1: down since last week, and so those basic things that
16:40
Speaker 1: are being provided now materially change people's behavior. Where is
16:45
Speaker 1: it going? I think is is the next step, and
16:47
Speaker 1: I think of it is around health. So they'll be
16:50
Speaker 1: just as they added functions around things like pulse and
16:55
Speaker 1: things like sleep, they there will be things that will
16:58
Speaker 1: add things around blood sure, perhaps blood sugar contact. You
17:02
Speaker 1: could imagine a whole series of sensors that get added
17:07
Speaker 1: into whether it's a risk device or something else that
17:11
Speaker 1: feeds a central depositor depository like a mobile application. And
17:16
Speaker 1: the real key will be when that can be integrated
17:19
Speaker 1: into your health system. If you will your doctor, If
17:22
Speaker 1: you imagine your doctor at some point getting your report
17:25
Speaker 1: about what's going on with you, and and a check
17:28
Speaker 1: engine light if you will goes off and says, hey, Barry,
17:31
Speaker 1: you know, looks to me like your blood sugar levels
17:34
Speaker 1: pretty low. You might want to get home and get something.
17:36
Speaker 1: You might want to get get something to eat, or
17:38
Speaker 1: eat an apple or something, or geez, your pulse is
17:41
Speaker 1: way high. You have the symptoms of somebody that looks
17:44
Speaker 1: like you might be having some hard issues that you
17:47
Speaker 1: might want to go to your doctor. But so if
17:49
Speaker 1: you think about some of where this is going. I
17:51
Speaker 1: think in the next phase is around this check engine
17:55
Speaker 1: light for yourself. So, without getting to graphic, I've read
17:59
Speaker 1: about sensors that can be put into a toilet where
18:03
Speaker 1: they can check things like blood sugar, and actually check
18:06
Speaker 1: for proteins associated with cancer. This is so small and
18:11
Speaker 1: doesn't have, you know, a giant battery, but I would
18:14
Speaker 1: imagine the next couple of generations of sensors are going
18:17
Speaker 1: to be able to pick up all sorts of stuff that,
18:20
Speaker 1: you know, hard to even imagine. Yeah, the real trick
18:22
Speaker 1: in all this is figuring out what pieces of sensors
18:27
Speaker 1: people would be willing to wear or use regularly so
18:32
Speaker 1: that the data comes through regularly, because with periodic data
18:35
Speaker 1: is and as valuable as regular data. So there's this
18:38
Speaker 1: constant battle between battery life. You know, so this ionic
18:43
Speaker 1: device lasts four or five days, you could put more
18:46
Speaker 1: sensors on it to do more things. It might last
18:49
Speaker 1: four or five hours, in which case, what do you
18:51
Speaker 1: need to watch for that last four or five hours
18:53
Speaker 1: that's of no value to So there's a they're the
18:55
Speaker 1: constant push and pull and struggle and and researches around
18:59
Speaker 1: how do you create sensors that identify things that make
19:03
Speaker 1: the form factor usable enough for people to wear on
19:06
Speaker 1: a regular basis. Related to wearables, I have to ask
19:09
Speaker 1: the question why did Google glass flame out so spectacularly?
19:13
Speaker 1: It seemed like an interesting piece of tech, but it
19:17
Speaker 1: never caught on except for some very specific niches. Yeah,
19:22
Speaker 1: I think it ties back to what we were just
19:24
Speaker 1: talking about with respect to sensors and battery life and usability.
19:28
Speaker 1: It appears as if the form factor never got to
19:32
Speaker 1: a point where people really wanted to wear it. It
19:34
Speaker 1: looked kind of geeky, it looked kind of weird, and
19:38
Speaker 1: you know what we've seen with the fitbit devices and
19:41
Speaker 1: I think it will be applicable for a lot of wearables.
19:43
Speaker 1: Is that the fashionable piece of this is very important.
19:47
Speaker 1: You know, can you is this something that you would
19:49
Speaker 1: wear in public and and and use? Um So, I
19:52
Speaker 1: think I think that might have impacted Google Glass. But
19:55
Speaker 1: the thought of a surgeon who has Google Glass on
19:58
Speaker 1: and wants to pull up a you know, either the
20:01
Speaker 1: X ray or the m R, a you or some
20:04
Speaker 1: other resource makes perfect sense for that absolutely. I think
20:08
Speaker 1: what you what we'll see, particularly for those types of
20:11
Speaker 1: applications on the I've seen something like that that's on
20:15
Speaker 1: the construction floor where actually it was I think of
20:19
Speaker 1: something with Boeing or or Lockheed or something where somebody
20:21
Speaker 1: who was putting together the intricate pieces of a wing
20:25
Speaker 1: of a plane can look at the through his glass
20:28
Speaker 1: blueprints through blueprints right on the throughs. So those are
20:31
Speaker 1: the types of applications that I think are easy to use,
20:34
Speaker 1: much more likely to have early success. I think the
20:38
Speaker 1: form factor for general commercial use hasn't quite got there.
20:41
Speaker 1: And how significant is the Apple Watch as a player
20:45
Speaker 1: in this space because you're your Fitbit watch about the
20:50
Speaker 1: same form factor as the Apple Watch, the same size. Yeah.
20:54
Speaker 1: Everything Apple does is they do a great job. They
20:57
Speaker 1: have a real a loyal fan following. They're passionate, they
21:01
Speaker 1: make great products that they're they're following loves um, you know.
21:06
Speaker 1: So they're they're they're a credible competitor, and I think
21:09
Speaker 1: that they will have and continue to be one of
21:12
Speaker 1: the real leaders in the wearable category for sure. I
21:15
Speaker 1: want to talk a little bit about a fund associated
21:18
Speaker 1: with revolution growth called Rise of the rest O r TR,
21:24
Speaker 1: and the concept is so intriguing. Most of the venture
21:28
Speaker 1: investing seems to take place in San Francisco and New
21:31
Speaker 1: York and Boston. But Revolution Growth does a bus tour,
21:37
Speaker 1: five cities, five days, five thousand dollars, and they do
21:41
Speaker 1: sort of a local pitch competition. Tell us more about
21:45
Speaker 1: the idea behind that, and who's driving that literally driving it,
21:50
Speaker 1: driving above the bus, right, So, so the idea really
21:53
Speaker 1: is Steve Case's idea, um and it's something that he's
21:56
Speaker 1: been and it and it started as an idea and
22:00
Speaker 1: and some activities around a bus tour. They've recently done
22:03
Speaker 1: their seventh bus tour. Really that many wow, And it's
22:06
Speaker 1: half a million per tour or half a million per city,
22:09
Speaker 1: half a million per tour generally, although sometimes he finds
22:13
Speaker 1: a way to involve a couple of the runner ups
22:16
Speaker 1: sometimes get something as well, but apparently that's not to
22:18
Speaker 1: be known. So the activity really is Steve's, and it's
22:21
Speaker 1: one of a personal passion of his, and it's one
22:25
Speaker 1: that the firm Revolution has adopted generally, right, which is
22:29
Speaker 1: in essence, the ideas around good company development and entrepreneurial
22:35
Speaker 1: spirit are not solely located in New York, Boston and
22:40
Speaker 1: San Francisco San Jose region. And if you look at
22:43
Speaker 1: where the distribution of capital is about somewhere between seventy
22:46
Speaker 1: and seventy eight percent of the venture capital money is
22:49
Speaker 1: spent in those three areas. And so there are a
22:52
Speaker 1: number of other great cities in the country that can
22:55
Speaker 1: and should be producing more entrepreneurial based technology companies. It's
23:01
Speaker 1: important for the country, it's important for the people in
23:03
Speaker 1: those communities, and it's a real business opportunity. So we
23:06
Speaker 1: combine all those three and that's really the impetus behind
23:09
Speaker 1: Rise of the Rest. Rise of the Rest has become
23:12
Speaker 1: much more than a bus tour, right, So it started
23:14
Speaker 1: really as a bus tour. It's now become a real
23:17
Speaker 1: platform of folks. There's a real team there as you
23:19
Speaker 1: As you mentioned earlier, there's now a fund associated with it.
23:23
Speaker 1: Hold on a second, I just have to read a
23:26
Speaker 1: few of the names who are affiliated with this fund,
23:30
Speaker 1: because it's just the noodles. Jim Barksdale of nets Gay,
23:34
Speaker 1: Jeff Bezos of Amazon, Tory Birch, Steve Case, Ray Dalio,
23:39
Speaker 1: John Dor, Henry Kravis, Michael Milkin's, Sean Parker, Howard Schiltz,
23:44
Speaker 1: Eric sch Mintmigut Whitman. That's just the like first half
23:47
Speaker 1: and the rest of it is just as impressive. How
23:51
Speaker 1: on earth did a group of rock stars like that
23:54
Speaker 1: come together to fund a concept like this? That's just
23:58
Speaker 1: a mind blowing list of investors. It is an amazing list.
24:01
Speaker 1: I'm not sure that list of investors has ever been
24:03
Speaker 1: put together in a fund. And now I have another
24:05
Speaker 1: twenty two podcasts to do based just on that list.
24:08
Speaker 1: I think it speaks to the power of the idea.
24:11
Speaker 1: Uh as. The first phases of this were the investments
24:16
Speaker 1: were funded mostly from Steve Case's personal UM resources, and
24:21
Speaker 1: as he traveled around the country and as he talked
24:23
Speaker 1: to people that he had known and worked with and
24:25
Speaker 1: interacted with, what he heard was, Geez, this is a
24:29
Speaker 1: great idea. I want to be part of it. And
24:32
Speaker 1: a decision was made about a year ago to to
24:34
Speaker 1: institutionalize that activity, at least in terms of the deploying
24:37
Speaker 1: of capital around a fund and based on the names
24:41
Speaker 1: of people you can imagine. Um. You know, they really
24:45
Speaker 1: thought that this was a powerful idea. They believe that
24:49
Speaker 1: it is important for the country, important for the growth
24:53
Speaker 1: of entrepreneurship across the country. I mean, anybody that runs
24:56
Speaker 1: companies in Boston, New York and San France. Cisco knows
25:00
Speaker 1: that labor shortage type hiring and retaining engineers is tight
25:05
Speaker 1: um cost of living cause we're living through the roof,
25:08
Speaker 1: so there's lots of things that make it challenging. There's
25:11
Speaker 1: those are great places, and there are great companies and
25:13
Speaker 1: they will continue to be. So the rise of the
25:15
Speaker 1: rest is not, you know, sinking of these other places.
25:19
Speaker 1: It's that these other opportunity there are places where new
25:22
Speaker 1: opportunities can to be created, and we should be really
25:25
Speaker 1: sponsoring those. And so that's really what that's all about.
25:28
Speaker 1: There was a New York Times article some weeks ago
25:31
Speaker 1: about a bunch of Silicon Valley venture capitalists who suddenly
25:37
Speaker 1: had become completely enamored with Detroit. The cost of living
25:41
Speaker 1: is incredibly cheap. There's a huge engineering and and um
25:46
Speaker 1: technology talent pool there that they didn't expect to see.
25:50
Speaker 1: How realistic is it to think of parts of the
25:53
Speaker 1: Midwest Pittsburgh, Milwaukee, Detroit and other cities outside of the
25:59
Speaker 1: core current technology venture capital areas really developing a burgeoning
26:06
Speaker 1: texting I think it's very realistic, and I think we're
26:08
Speaker 1: seeing it. Two of the most exciting companies in our
26:10
Speaker 1: portfolio in Chicago. It's just in the West Loop and
26:14
Speaker 1: it's one amazing If you walk into I think it's
26:18
Speaker 1: six hundred West Chicago Avenue where these two companies, Temples
26:21
Speaker 1: and Uptake are located, you would think you're in Silicon Valley.
26:25
Speaker 1: The offices are, you know, vibrant, and there's young folks
26:30
Speaker 1: coming in and out of the building all day long,
26:33
Speaker 1: and there's the activity level is really buzzing. So Chicago's
26:38
Speaker 1: for sure one of those areas that's coming along. Um.
26:41
Speaker 1: I've done some stuff down in Atlanta, Atlantis coming along's
26:44
Speaker 1: coming along. Um. We just did the investment in tallah
26:48
Speaker 1: that we referred to earlier, which is in Santa Monica,
26:50
Speaker 1: right outside of el I mean, there's so that we
26:52
Speaker 1: believe that there are. Pittsburgh is where Google has their
26:57
Speaker 1: autonomous uh and I think Uber has a lot their
27:00
Speaker 1: autonomous work being done there. So a lot of these
27:03
Speaker 1: cities that have great universities, a lot of young folks
27:07
Speaker 1: are support of local community. They can do this and
27:10
Speaker 1: and we're really starting to see this. So this isn't
27:12
Speaker 1: a press release. This is a real commitment to those areas.
27:15
Speaker 1: We stayed in the hotel right across the street, from
27:17
Speaker 1: the new Google building, and our office in Chicago is
27:20
Speaker 1: at a WEE works right around the corner from that.
27:22
Speaker 1: It's amazing, it really is. Let's talk a little bit
27:26
Speaker 1: about the modern era of venture investing, because it seems
27:30
Speaker 1: so different than the two thousands, with the housing boom
27:34
Speaker 1: and bust and the Great Financial Crisis, and of course
27:37
Speaker 1: the insanity of the will we had, the dot com
27:40
Speaker 1: boom and bust and and and that situation. I've noticed
27:44
Speaker 1: that lots and lots of companies are staying private much
27:48
Speaker 1: longer than they used to. The number of I p
27:50
Speaker 1: o S are down. What's the driver behind that? Well,
27:54
Speaker 1: as they say, probably part of it is because they
27:57
Speaker 1: can all that all that capital we talked around gives
28:00
Speaker 1: them an opportunity to not go public. One reasons, really,
28:03
Speaker 1: I think is one is um because of some of
28:07
Speaker 1: the regulations that's happened around Sarbanes Oxley and other things,
28:12
Speaker 1: the cost and complexity of being a public company has
28:16
Speaker 1: gone up, and so there's certainly some piece of it
28:21
Speaker 1: is that it's just difficult. It's expensive. Oftentimes, particularly technology
28:27
Speaker 1: based companies d prioritize building the infrastructure to support that
28:32
Speaker 1: over the next product more sales and marketing, expand into
28:36
Speaker 1: international activities and the like. And so there's a part
28:39
Speaker 1: of it that is, hey, we don't want to do that,
28:42
Speaker 1: and then there's a what what? So it's more let
28:45
Speaker 1: me interrupt you. It's more than just regulations. It's building
28:48
Speaker 1: out human resources, accounting, payroll compliance, all that stuff. They
28:53
Speaker 1: just want to capture market share and sell more and
28:56
Speaker 1: varied products. Yeah, if you think about what drives a
28:58
Speaker 1: founder to start a company and what drives the founder
29:01
Speaker 1: every day to picking a new payroll company, that's what
29:04
Speaker 1: they're enthusiastic, picking a cybersecurity expert and and reviewing compliance
29:09
Speaker 1: with Sarbanes Oxley for a one C or whatever. I mean,
29:14
Speaker 1: for sure there's some piece of it that is not
29:17
Speaker 1: prioritized with a lot of companies. So what But what
29:21
Speaker 1: has enabled it? I believe as as you referred to
29:24
Speaker 1: earlier as really the access of capital to allow for
29:27
Speaker 1: the growth without having to tap the public market. So
29:30
Speaker 1: that you as a venture capitalist, you as a person
29:33
Speaker 1: running of funds, you're looking for an exit eventually, I
29:37
Speaker 1: got to imagine that the big backers of shops like
29:41
Speaker 1: Uber aren't. Yeah, take your time whenever you get around
29:44
Speaker 1: to it will be patient. I think these folks are
29:47
Speaker 1: waiting for an exit. And Uber perhaps is a good example.
29:50
Speaker 1: If they would have gone public a year ago, they
29:52
Speaker 1: might have missed that whole. Gee, here's a haircut on
29:56
Speaker 1: your last high water mark valuation. Certainly could have been
29:59
Speaker 1: And for sure, venture investors have limited partners and of
30:05
Speaker 1: institutions that need money back at some point. That said,
30:08
Speaker 1: if you talk to a lot of them, I'm sure
30:10
Speaker 1: you hear from others that if they find a great
30:12
Speaker 1: company that continues to grow at a fast pace and
30:15
Speaker 1: it's continuing to gain market share and developing opportunity, that's
30:20
Speaker 1: not something they want to get out of quickly. Right. So,
30:23
Speaker 1: on some level, by these companies, the best of them
30:27
Speaker 1: not going public, it allows some of these venture investors
30:31
Speaker 1: to hold longer and capture more of the upside, where
30:34
Speaker 1: perhaps in previous years, when the company goes public, they're
30:37
Speaker 1: under a lot more pressure to sell their shares because
30:41
Speaker 1: there's a public market for that. Now, I recall in
30:44
Speaker 1: the nineties and maybe that's an aberrational period, but every
30:47
Speaker 1: now and then a company would come public with a
30:49
Speaker 1: very small float. Perhaps that was the thinking behind it.
30:53
Speaker 1: All Right, we'll sell ten percent of our holdings, but
30:55
Speaker 1: we think this is worth a lot and we don't
30:57
Speaker 1: really need the money, so we willing to let it
30:59
Speaker 1: ride a little bit. That's right, And and that was
31:02
Speaker 1: also particularly in the nineties, Really the I p O
31:05
Speaker 1: event was much more of a financing event, right, which
31:09
Speaker 1: is they had they got access sitting in boardrooms during
31:13
Speaker 1: that time, the question about when to go public was
31:16
Speaker 1: when do we need to raise our next round? And
31:19
Speaker 1: what would be the benefits of being public? And some
31:21
Speaker 1: of them would be access to more capital, some of
31:23
Speaker 1: them would be we now have a public currency which
31:26
Speaker 1: we can use for acquisitions and the like. And with
31:28
Speaker 1: the the world that has changed now where there there
31:32
Speaker 1: aren't five soft bank vision funds, but there are certainly
31:36
Speaker 1: five multi billion dollar funds that are focused now on
31:41
Speaker 1: later stage technology based companies that are private. And so
31:45
Speaker 1: the availability of capital I can't imagine it's ever been
31:50
Speaker 1: more great than it is right now. Are we creating
31:54
Speaker 1: a giant damn behind which there's all this pent up
31:57
Speaker 1: demand to go public or pent up demand for for
32:00
Speaker 1: more companies, And at some point, not too far off
32:04
Speaker 1: in the future, we're gonna see a wave of I
32:06
Speaker 1: p O s coming out. I don't know. There's been
32:09
Speaker 1: a lot of talk about this wave of I p
32:11
Speaker 1: O s for a number of years, and it doesn't
32:12
Speaker 1: seem to have happened. I do think some of these
32:16
Speaker 1: companies that are private, some of these big companies there,
32:19
Speaker 1: B and B and others, they could go public anytime
32:21
Speaker 1: they want. Uh. They don't have to wait for a
32:23
Speaker 1: good market, a bad market, whatever. There are companies that
32:27
Speaker 1: are our size and scale. Many of them are achieving
32:30
Speaker 1: or past profitability. They're starting to show real leverage in
32:33
Speaker 1: their model. They're starting to show that they're they're able
32:35
Speaker 1: to add new products and new services onto what they're
32:39
Speaker 1: doing in a very effective and efficient manner. They've built
32:41
Speaker 1: out their management team so they are operating almost as
32:44
Speaker 1: if they are a public company. When the within the
32:47
Speaker 1: shell of within the veil of privacy, if you will,
32:50
Speaker 1: and you know so, I think those will happen. Whether
32:53
Speaker 1: they happen this month, next month, next year, it's unclear.
32:56
Speaker 1: So let's talk a little bit about valuation. I've had
33:00
Speaker 1: other vcs like Mark Andreeson tell me valuation is irrelevant.
33:06
Speaker 1: Their business model is looking for the needle in a haystack.
33:09
Speaker 1: And whether Facebook returns ten thousand times your initial investment
33:13
Speaker 1: or twenty thousand times, it's a relevant at pace for
33:16
Speaker 1: a lot of other um investments that don't work out.
33:20
Speaker 1: You have the accounting background, what do you think of
33:23
Speaker 1: of valuation when you're trying to choose amongst early stage companies? Yeah,
33:29
Speaker 1: I guess maybe this is where some of my accounting
33:31
Speaker 1: background would probably put me in a slightly different uh
33:35
Speaker 1: point of view there. I think as it relates to
33:37
Speaker 1: super early stage investments where you're really betting on a
33:40
Speaker 1: team and an idea, whether you invest that two million
33:44
Speaker 1: pre or ten million pre probably doesn't matter too much.
33:47
Speaker 1: I think it starts to matter a lot more as
33:50
Speaker 1: you get further up the valuation train. So does it
33:54
Speaker 1: matter if you invest in the next best travel company
33:57
Speaker 1: that has a lot of traction at a two million
34:01
Speaker 1: valuation versus a billion valuation? I think it matters actually
34:04
Speaker 1: a lot in many instances. In actually most instances, it's
34:08
Speaker 1: easy to point to a Facebook and say, hey, you're
34:10
Speaker 1: going to make twenty thou times your money. Doesn't really
34:12
Speaker 1: matter if you make ten thousand times your money, of
34:14
Speaker 1: course it does not. The that's really an exception. Most
34:20
Speaker 1: of the companies follow into a much more predictable pattern
34:24
Speaker 1: of what they can exit at. Ultimately, as you know,
34:27
Speaker 1: what does that bill curve look like of those that
34:29
Speaker 1: don't make it, those that break even, and those that
34:32
Speaker 1: deliver a profit. It depends when you invest. Uh, if
34:37
Speaker 1: you're pure early stage investors, most of them that are
34:40
Speaker 1: honest with you would tell you that certainly thirty or
34:44
Speaker 1: forty of their companies never make it. That's the earlier stage,
34:48
Speaker 1: the much more challenging it is. You're really casting a
34:51
Speaker 1: wide neck because so many of them are going to fail.
34:54
Speaker 1: At the stage that we invest in, which is really
34:56
Speaker 1: the growth stage where there's been there's lots of work
35:00
Speaker 1: left to be done, but there's a existing revenue stream
35:03
Speaker 1: and there's a product in the marketplace where you can
35:05
Speaker 1: see things like margin and things like that. The failure
35:08
Speaker 1: rate should be much much lower should be of the companies.
35:13
Speaker 1: But you also lose the fifty or a hundred times
35:17
Speaker 1: x because you're in at a higher valuation and transpoint.
35:19
Speaker 1: But you could still see a ten or twenty x
35:22
Speaker 1: return and that pays for a lot of companies that
35:25
Speaker 1: for sure don't don't break even for sure. We were
35:28
Speaker 1: discussing earlier about some of the companies that have stayed
35:32
Speaker 1: UM private, and I referenced Duber. What about a company
35:36
Speaker 1: like Tesla that went public and just has this massive
35:40
Speaker 1: cash burn? Should they have stayed private and continue to
35:44
Speaker 1: tap the venture markets or does this make sense for them?
35:48
Speaker 1: I I, you know, I don't know enough to know.
35:50
Speaker 1: I don't know all the details of why they decided
35:52
Speaker 1: to do what they've do. It seems to have worked
35:54
Speaker 1: out okay for them. They're obviously going through some challenges now,
35:59
Speaker 1: but people love the product. They've be able to access
36:02
Speaker 1: a lot of public funds. Um recently they just did
36:05
Speaker 1: another three billion dollar bond bond offering that worked out
36:09
Speaker 1: pretty well. And the CEO Ellen is obviously one of
36:12
Speaker 1: the world's great visionaries that people want to back and
36:15
Speaker 1: want to support. Uh So why they decided to go
36:19
Speaker 1: public when they did is not clear, but it seems
36:22
Speaker 1: to have worked out okay for them. So you referenced funding,
36:26
Speaker 1: an idea and a team. Um, which is more important?
36:30
Speaker 1: Is it the idea that grabs your attention? Is it
36:33
Speaker 1: the team and how they execute or is it some
36:36
Speaker 1: ineffable combination. Yeah, it's I'm sure it's It depends a
36:41
Speaker 1: little different on each one, and I think it depends
36:44
Speaker 1: a little bit more on the stage of investments. So
36:48
Speaker 1: the earlier we go, the more it's simply dependent on
36:52
Speaker 1: the team. Right. So it's because what we find is
36:55
Speaker 1: great teams can find the opportunity. You know, if you're
37:00
Speaker 1: if you're in a general market area where you think
37:03
Speaker 1: there's a great opportunity and you have a superior team,
37:06
Speaker 1: they will find where those nuanced opportunities will be. They're
37:10
Speaker 1: almost never exactly where you start. I use this uh
37:14
Speaker 1: analogy with a lot of people because my sons are
37:17
Speaker 1: all they they're competitive sale racers, And I said, when
37:20
Speaker 1: you're running one of these companies, you're you know where
37:24
Speaker 1: you need to go. You're at point A and you
37:26
Speaker 1: need to get to point C. The problem is the
37:29
Speaker 1: people that you don't realize that the captain of the ship,
37:33
Speaker 1: if you will, is actually in a sailboat, not a
37:35
Speaker 1: motor boat. So you have to go. And so if
37:38
Speaker 1: you try to go in a sailboat from point A
37:40
Speaker 1: to point C, if the wind is not exactly where
37:42
Speaker 1: you think it is, you ain't going anywhere, right. And
37:46
Speaker 1: too many people say, geez, I know where I'm going,
37:48
Speaker 1: and I keep going and I'm running into this wall.
37:51
Speaker 1: The really talented managers of these companies and founders, they say, geez,
37:55
Speaker 1: I know where I'm going, but I have to go
37:57
Speaker 1: here first and then there and then there, and I'm
37:59
Speaker 1: going to read the t leaves along the way, and
38:01
Speaker 1: it's it's actually fun to be a part of those
38:03
Speaker 1: We have been speaking with Steve Murray. He is a
38:05
Speaker 1: partner at Revolution Growth Venture Funds. If you enjoy this conversation,
38:11
Speaker 1: be sure and stick around for the podcast extras. Will
38:14
Speaker 1: we keep the tape rolling and continue discussing all things
38:17
Speaker 1: venture related. We love your comments, feedback and suggestions right
38:22
Speaker 1: to us at m IB podcast at Bloomberg dot net.
38:25
Speaker 1: You can check out my daily column at Bloomberg dot com.
38:29
Speaker 1: Follow me on Twitter at rit Holts. I'm Barry rit Holts.
38:33
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome
38:50
Speaker 1: to the podcast, Steve, thanks so much for doing this.
38:53
Speaker 1: I have a list of questions we didn't get to.
38:56
Speaker 1: I have to um bounce off view before we start
39:02
Speaker 1: with our favorite questions. UM, your New York and DC based.
39:09
Speaker 1: I have to ask, what's the difference between venture or
39:11
Speaker 1: even private equity? Firms on the East Coast versus those
39:16
Speaker 1: out in Silicon Valley. And I say this as a
39:19
Speaker 1: person who has been to a number of Silicon Valley
39:23
Speaker 1: venture firms, and every time I walk out of one
39:26
Speaker 1: of them, I kind of scratched my chin and say,
39:29
Speaker 1: I could live in California if I had to, I
39:32
Speaker 1: could survive this. In New York. It seems they're role
39:35
Speaker 1: in big offices and it's lovely and everything, but it's
39:38
Speaker 1: a totally different vibe. Yeah, the weather in UH in
39:42
Speaker 1: northern California is certainly superior to Boston or New York,
39:47
Speaker 1: to say the least. I agree with that, that's agree.
39:51
Speaker 1: So I actually think the differences between the coasts and
39:55
Speaker 1: how they approach things has changed a little bit over time,
39:59
Speaker 1: and they have become are similar. Partly is that some
40:02
Speaker 1: of the firms and the West Coast have opened up
40:04
Speaker 1: New York offices, and some of the firms in New
40:06
Speaker 1: York and Boston have opened up Silicon value firms. Actually,
40:09
Speaker 1: most of the successful firms on either coast now have
40:11
Speaker 1: a presence in the coast that they weren't in. So
40:14
Speaker 1: I think there's some of that that there's a little
40:15
Speaker 1: bit more of similarity. That said, I do think there
40:19
Speaker 1: is something to the you know, the the old adage
40:24
Speaker 1: that they're the more risk tolerant on the West Coast.
40:27
Speaker 1: They're more for sure, and they're the acceptance of failure
40:32
Speaker 1: is a little higher, and on some level, particularly on
40:36
Speaker 1: the early stage, I find that the West Coast investors
40:40
Speaker 1: almost look like, look at somebody's failure as a CEO
40:46
Speaker 1: as a badge of honor, not as a you know,
40:49
Speaker 1: a black mark. Hey, this guy tried, They went for it,
40:52
Speaker 1: they swung for the fences. Now I just um said
40:56
Speaker 1: this guy and it's mostly been guys. Do you see
40:59
Speaker 1: an each changes taking place with more women, more people
41:03
Speaker 1: of color, less um, less just male dominator technology. Yeah,
41:09
Speaker 1: for sure, they're they're less pro topia every everything for
41:12
Speaker 1: the venture from the venture firms themselves, uh, to the
41:17
Speaker 1: firms and the companies running there's there's a clear uh
41:23
Speaker 1: emphasis on diversity, and there's real business reasons for it.
41:27
Speaker 1: The research suggests that you get people in a room
41:31
Speaker 1: with different points of view and you come up with
41:33
Speaker 1: a better outcome. So let's group think. I think there's
41:36
Speaker 1: a there's a lot a lot of ways to go there,
41:38
Speaker 1: and obviously there's been some some you know, very public
41:41
Speaker 1: and bad stories that have come out in the last
41:43
Speaker 1: couple of years. But that's probably catalyzing change faster, is
41:47
Speaker 1: my my guess. So you sit at a unique perch
41:51
Speaker 1: where you're looking at things that are changing. What is
41:54
Speaker 1: the next industry that's going to be disrupted? Is it healthcare?
41:59
Speaker 1: Is it finance? Schools? In fintech, which I know is
42:02
Speaker 1: an area, uh you like, is it even something like
42:05
Speaker 1: food or transportation? What what's the next disruption that's going
42:09
Speaker 1: to take place? I think there's all of those, but
42:13
Speaker 1: so here's but there's one that's maybe more more current
42:16
Speaker 1: than Okay, an interesting topic to talk about, which is
42:19
Speaker 1: the Supreme Court will rule within the next thirty days
42:24
Speaker 1: on a case called Paspo, which is the state of
42:28
Speaker 1: New Jersey sued the federal government essentially around thing about
42:34
Speaker 1: states rights. But depending on which way the Supreme Court rules,
42:38
Speaker 1: it could allow for legalized sports gambling on a state
42:43
Speaker 1: by state basis. Legalized sports gambling. So currently there's gambling
42:48
Speaker 1: allowed in Las Vegas. You can bet on different um
42:53
Speaker 1: teams and stuff. Isn't that is that not allowable on
42:57
Speaker 1: a state by state basis currently? So you are now
43:00
Speaker 1: seemingly making the argument that New Jersey is making, which
43:03
Speaker 1: is why does Nevada get to allow for this and
43:08
Speaker 1: the other states not? It doesn't make much sense there,
43:12
Speaker 1: So that that's the essence of the conflict. There's lots
43:15
Speaker 1: of legal nuanced and you with your legal background, would
43:18
Speaker 1: be able to read the briefings, I'm sure, and be
43:19
Speaker 1: able to summarize them, do you, Lord No, under no circumstances.
43:24
Speaker 1: In essence, that is the conflict that's being resolved, or
43:27
Speaker 1: that's being that that's at at that issue right now.
43:30
Speaker 1: The reason I think that's so important is that sports
43:34
Speaker 1: and the media around sports has changed so much in
43:39
Speaker 1: the last few years. How people engage with sports, whether
43:43
Speaker 1: it's through the mobile device, whether it's through uh fantasy sports,
43:48
Speaker 1: both regular league's fantasy sports or daily fantasy sports like
43:54
Speaker 1: at DraftKings. The engagement with sports has changed so much
43:58
Speaker 1: over time. But the import of sports to the television
44:03
Speaker 1: bundle and places cut the chord. You're not seeing live sports,
44:09
Speaker 1: that's right, So that this is a big thing. There's
44:14
Speaker 1: a strong opinion amongst many people that know much more
44:18
Speaker 1: about it than I do, that the Supreme Court will
44:20
Speaker 1: in fact overrule. This makes sense and allow for states
44:25
Speaker 1: to decide on their own what they want to do.
44:28
Speaker 1: That will kick off an enormous game of musical chairs
44:32
Speaker 1: around who's doing what. Everybody wants to have their hand
44:37
Speaker 1: in that pie. The leagues, the states, want, the operators,
44:44
Speaker 1: the media companies. Everyone seems to be positioning there. There's
44:49
Speaker 1: a number of states that have already begun to file
44:52
Speaker 1: legislation in the event this passes. So this is a
44:56
Speaker 1: real game of musical chairs that could start any day.
44:59
Speaker 1: And you think this will be explosive. I think if
45:02
Speaker 1: it happens, it's going to be really interesting to watch.
45:04
Speaker 1: I have a buddy. So I'm not a fantasy sports guy,
45:08
Speaker 1: and I'm too old to be the Nintendo I forgot
45:12
Speaker 1: the name of the the game where people were running
45:15
Speaker 1: around swiping things in in um Pokemon. I'm too old
45:20
Speaker 1: to be a Pokemon ghost sort of guy. But I
45:22
Speaker 1: have a buddy. Shout shout out to Lend Parissi, who
45:25
Speaker 1: created a company that combined fantasy sports with Pokemon Go.
45:30
Speaker 1: He got it patented. They were just funded and essentially,
45:33
Speaker 1: when you put your fantasy NFL or basketball team together,
45:37
Speaker 1: you run around your city and your's, Oh, there's Lebron
45:40
Speaker 1: James and you're swiping him like he's a Pokemon go egg.
45:43
Speaker 1: When he told it to me, I said, dude, I
45:46
Speaker 1: don't do any of that stuff, And I gotta think
45:49
Speaker 1: kids are gonna love that. That just seems like a
45:51
Speaker 1: crazy good idea. Um, is this the sort of insanity
45:56
Speaker 1: that we're gonna be dealing with? As all these different
45:59
Speaker 1: kind steps cross fertilize each other and cross pollinate, you
46:03
Speaker 1: end up with just a million new ideas and a
46:07
Speaker 1: million new businesses. It's very clear that if from sports,
46:11
Speaker 1: which is a big and important business in in the U.
46:14
Speaker 1: S and and internationally, that the way in which the
46:18
Speaker 1: consumers consume that content has changed dramatically and will continue
46:22
Speaker 1: to change. That could be where things like virtual reality
46:26
Speaker 1: and augmented reality player role like with your Friends Company
46:30
Speaker 1: an AI are gonna apply to this. You think about
46:33
Speaker 1: a situation where you're sitting at your house on a
46:35
Speaker 1: Friday night, you don't feel like going into the Yankees game,
46:38
Speaker 1: but maybe for fifteen dollars, you can be essentially at
46:42
Speaker 1: the front row in your with put your headset on,
46:45
Speaker 1: and you you're there. The game's going on. You hear
46:48
Speaker 1: it all, you see the ball flying by, There's those
46:51
Speaker 1: types of things. So there's a lot of ideas that
46:54
Speaker 1: are going on. What the consumers actually fall in love with?
46:57
Speaker 1: Who knows, I don't know. I have three teenage boys
47:00
Speaker 1: and they have never seen addictive behavior like their's right
47:03
Speaker 1: now with a game called Fortnite. Of course that's it's
47:06
Speaker 1: just and so, but if a year ago somebody had
47:10
Speaker 1: shown me that game, I would have said, I don't
47:12
Speaker 1: see why somebody would want to do that. They and
47:15
Speaker 1: all their friends and everybody I knows friends play it
47:18
Speaker 1: all the time. So what consumers actually hang onto I
47:21
Speaker 1: don't know, but there is, there has started to be,
47:24
Speaker 1: and there will continue to be an enormous amount of
47:26
Speaker 1: innovation around the activities around sports because they're so popular,
47:31
Speaker 1: because the usage patterns have changed so much. And I
47:33
Speaker 1: do think this sixty nine. Nobody knows what the number is,
47:37
Speaker 1: but it's a big, big number of billions. That is
47:40
Speaker 1: that is bet illegally in the US through off shore.
47:44
Speaker 1: It's a lot more than that. It's hundreds of billions
47:46
Speaker 1: of dollars. It's an insane, insane amount of money, and
47:50
Speaker 1: that very soon could be very soon measured in years
47:54
Speaker 1: not days, could be now bet legally, huh that? And
47:59
Speaker 1: so every any profits from it, taxes it, except for
48:02
Speaker 1: the you know Mark Twain called gambling attacks on the stupid,
48:06
Speaker 1: but except for the people on the losing end. There's
48:09
Speaker 1: a lot of activity that's going to take place, and
48:11
Speaker 1: the people the proponents of this would certainly say, well,
48:14
Speaker 1: there are people on the losing end of it. Now,
48:17
Speaker 1: sure you're not adding to the number of people. Well,
48:20
Speaker 1: you might be attracting more people once it comes out
48:23
Speaker 1: from the black market. That's certainly a reasonable guess. Certainly
48:27
Speaker 1: could be. I remember having a conversation with somebody that's
48:30
Speaker 1: involved in one of the operators in Europe, a good
48:33
Speaker 1: friend of mine who actually lives in New York here,
48:35
Speaker 1: and he said, you know what's interesting is he said,
48:38
Speaker 1: when we have a tennis match in Europe where the
48:42
Speaker 1: number hundred player beats the number three player, we actually
48:46
Speaker 1: go to the logs and see who bet on what when,
48:49
Speaker 1: and if there's some unusual activity, if that happens here
48:52
Speaker 1: in the U s what do you how do you
48:53
Speaker 1: find any data? But what you actually don't. It's a
48:57
Speaker 1: way to keep the sport clean and you know they're
49:00
Speaker 1: currently enough twelve step programs UM certainly for for angry
49:05
Speaker 1: birds and candy crush that if it gets to be
49:08
Speaker 1: a problem someone I don't mean to make loud of this.
49:10
Speaker 1: I know they're people who have issues with it, but UM,
49:14
Speaker 1: it's fascinating to to see what takes place. So so
49:18
Speaker 1: that's one area sports, Give me one more area and
49:21
Speaker 1: then we'll jump to our favorite UM questions. What else
49:24
Speaker 1: do you see as the next area that perhaps people
49:27
Speaker 1: aren't paying attention to? We could we really like a
49:32
Speaker 1: lot of the areas of UM in fintech and infint tech.
49:39
Speaker 1: Fintech Yeah, oh, in within finte I thought you meant
49:42
Speaker 1: like newborn technology, and like, what what are we doing
49:45
Speaker 1: with no, not infantech, in infant infant technology. So give
49:49
Speaker 1: us a couple of examples. So a couple of examples
49:51
Speaker 1: is our most recent investment in in Tala Tala. As
49:55
Speaker 1: I mentioned what what, So, what we like to see
49:58
Speaker 1: is what are they doing now that has changed the
50:01
Speaker 1: fundamental value proposition of what is being offered? So as
50:04
Speaker 1: an example of this company is taking information that exists
50:08
Speaker 1: on somebody's phone for people that are jet almost almost
50:13
Speaker 1: universally do not have a bank account, and they're making
50:16
Speaker 1: a credit decision based on that activity. Just so you
50:19
Speaker 1: give them access to your phone and they determine based
50:22
Speaker 1: on what you're doing with your aliate, can you give
50:25
Speaker 1: me access to these five things? They say, yes, please,
50:28
Speaker 1: I would like a loan of X. They say okay,
50:30
Speaker 1: based on that I've correlated that activity with other people,
50:34
Speaker 1: and this means that you're good or not a good
50:36
Speaker 1: credit risk. I actually read something about an attempt to
50:39
Speaker 1: create a credit score based on your social media activity?
50:42
Speaker 1: Anything along? Is that similar to this or or is
50:45
Speaker 1: that part of that part of the same concept, which
50:48
Speaker 1: is how can you use And it informs a lot
50:51
Speaker 1: of the investment decisions we make in the companies that
50:54
Speaker 1: we like a lot, which is are you using the
50:57
Speaker 1: availability of data that either didn't exist previous slee or
51:00
Speaker 1: wasn't it didn't exist at the pace at which exists
51:03
Speaker 1: now to do something different. Um. We have a company
51:06
Speaker 1: and Chicago that we talked about a couple of times, Uptake,
51:09
Speaker 1: which is using data from sensors on industrial equipment to
51:13
Speaker 1: do things like tell you that the tractor that's going
51:17
Speaker 1: across the farm in Iowa is just about ready to
51:20
Speaker 1: have a problem, you better go change that oil or
51:22
Speaker 1: you and so things like that. Those are amazing opportunities
51:27
Speaker 1: within industries that previously didn't have a lot of technology.
51:30
Speaker 1: Now there's data, but somebody has to do something with
51:32
Speaker 1: industrial self diagnostic equipment correct that. That's just wild um
51:39
Speaker 1: fascinating and and Venmo type stuff where you're you're swapping
51:44
Speaker 1: money back and forth without a bank in the middle.
51:47
Speaker 1: Is that really gonna Yeah, that's happening, not counting crypto
51:51
Speaker 1: just talking on an app that theoretically is hackable. Are
51:55
Speaker 1: people gonna be able to trust that? Well? That that's
51:58
Speaker 1: the question. I think there's a lot out of those
52:00
Speaker 1: activities that happen and then there's an event, and then
52:03
Speaker 1: there's can you trust them? Can you not? There's obviously
52:06
Speaker 1: there is no question a growing concern appropriately so around
52:12
Speaker 1: where does my data? Said? Who has access to it? Um?
52:16
Speaker 1: How do I protect against that? And part of that
52:19
Speaker 1: is an operational thing, and part of that is a
52:20
Speaker 1: cybersecurity thing. Right. There's not too long ago a Wall
52:23
Speaker 1: Street Journal article about these crypto billionaires who have created
52:27
Speaker 1: these bunkers for the secure storage of their codes and
52:32
Speaker 1: drives and things like that. Because legitimately, these things can
52:35
Speaker 1: get stolen and they just have to hope there's no
52:39
Speaker 1: e M electromagnetic pulse that wipes out the hard drive.
52:43
Speaker 1: But other than that, UM, that that's fascinating, all right,
52:46
Speaker 1: So let's jump to our favorite questions. I asked these
52:50
Speaker 1: of all our guests, and let's jump right into this.
52:52
Speaker 1: Tell us the most important thing people don't know about
52:56
Speaker 1: you or your background. The most important thing people don't
53:01
Speaker 1: know about me that where they would be surprised to know,
53:04
Speaker 1: perhaps given the nature of what I do. And so
53:07
Speaker 1: I'm a pretty energetic guy, and I travel a lot,
53:10
Speaker 1: and I see a lot of companies, and I sit
53:11
Speaker 1: a lot of boards, and I do a lot of
53:13
Speaker 1: outwardly facing things, and I'm a pretty introverted person that
53:16
Speaker 1: I most people would not expect. I would not have
53:19
Speaker 1: guessed that if I had to, If I had to
53:20
Speaker 1: make a guess, who were some of your early mentors. Well,
53:25
Speaker 1: I've been amazingly fortunate that. Um, I've had so many
53:30
Speaker 1: people in my career that have taken a real care
53:33
Speaker 1: about my career and me as a person. And so
53:35
Speaker 1: there's a long list of them. But at you know,
53:38
Speaker 1: I start at Deloitte and that was really um folks
53:42
Speaker 1: like Steve Richards and Bill Platt and Susan Riyo and
53:48
Speaker 1: Give Hammond and others. But there each one of them.
53:51
Speaker 1: I still to this day bring something to the table
53:54
Speaker 1: from them at soft Bank. And probably my best mentor
53:58
Speaker 1: and will be forever. My best mentor is Ron Fisher,
54:01
Speaker 1: who's still at SoftBank, who I had the pleasure of
54:03
Speaker 1: working with for for twenty years. Um. I got to
54:08
Speaker 1: Brad Feld was a mentor way back. He started at
54:11
Speaker 1: SoftBank way back when, and he and I continue to
54:13
Speaker 1: be friends and and he's currently at a Foundry boundary group.
54:17
Speaker 1: He's the you know, really the managing partner at Foundry.
54:19
Speaker 1: They've been hugely successful and he and I are working
54:22
Speaker 1: on something together now. And you know, one of these
54:25
Speaker 1: guys that's just such an honest and straightforward and involved guy. Um.
54:31
Speaker 1: I've had the pleasure of working with him and learned
54:34
Speaker 1: a ton from him. Although he wasn't a day to
54:36
Speaker 1: day mentor, having exposure to Massa over the years has
54:41
Speaker 1: certainly influenced me in a great way. So I've been
54:44
Speaker 1: very very fortunate. I've had people that you know, and
54:46
Speaker 1: now I have ted Leonsis and Steve case who who
54:49
Speaker 1: I learned from every day. I think one of the
54:52
Speaker 1: things that UM is so great about this business that
54:55
Speaker 1: we're in is that I get exposed to brilliant people
54:58
Speaker 1: every day that are either running these company, is on
55:00
Speaker 1: the board, people that I work with, And so I
55:04
Speaker 1: literally feel like I learned something new every day. And Uh,
55:07
Speaker 1: let's talk about venture investors. Who has influenced your approach
55:12
Speaker 1: to making these investments? Yeah, so I'd say Massa has
55:16
Speaker 1: influenced my approach Originally his and the influence there was
55:20
Speaker 1: his boldness, his willing to take enormous risk against the grain. Uh.
55:26
Speaker 1: He he was by you know, he was buying you know,
55:30
Speaker 1: mobile companies when that wasn't the right the thing to
55:35
Speaker 1: do out of favor if you will. Um, he has
55:38
Speaker 1: very you know, he raised a hundred billion dollar fund
55:42
Speaker 1: when everyone is saying, jeez, we must be at the
55:45
Speaker 1: end of a cycle, right, So this is a person
55:49
Speaker 1: that his boldness UM is really inspirational on some level.
55:54
Speaker 1: As I mentioned earlier, Brad Feld is somebody that's influenced
55:57
Speaker 1: my investing style. He his is very much understand the
56:03
Speaker 1: the company, the product of people, walk the hallways, see
56:06
Speaker 1: where things are going. Another guy that influenced my investment
56:10
Speaker 1: style that's here in New York as a guy named
56:12
Speaker 1: actually two people one uh Eric Hippo who runs lair
56:15
Speaker 1: Ho Pope Adventures, who um is sort of the ultimate
56:20
Speaker 1: uh professional, you know. He everything starts on time and
56:23
Speaker 1: ends on time, and decisions get made and you don't
56:26
Speaker 1: second guess your decisions, and you and you put you know,
56:30
Speaker 1: your very uh matter of fact and non emotional businesses.
56:33
Speaker 1: You have to make decisions, and you have to move on,
56:35
Speaker 1: and you have to go to the next one. I've admired,
56:38
Speaker 1: I've admired him a lot. I've admired, uh you know,
56:41
Speaker 1: I've worked with and he still remains a great friend.
56:43
Speaker 1: A guy who just recently was the CEO at Forbes,
56:45
Speaker 1: Mike Perlis, who's a great friend of mine, who really
56:49
Speaker 1: is a real people person, you know. He is the
56:52
Speaker 1: guy that walks the hallways and says, this guy and
56:54
Speaker 1: this guy don't seem to be getting along, and this
56:56
Speaker 1: gal is having a problem here, and how can I
56:59
Speaker 1: engage myself off and help this company? And he's all
57:02
Speaker 1: about leadership and clear vision and direction. And so from
57:05
Speaker 1: each one of these persons, I've learned something different. Let's
57:07
Speaker 1: talk about books. Tell us about some of your favorite books,
57:10
Speaker 1: be they finance or technology or not fiction nonfiction. What
57:14
Speaker 1: do you read? What do you enjoying? Yeah, sure so, Uh.
57:18
Speaker 1: I actually mostly don't read about finance and technology because
57:22
Speaker 1: I live it every day. But and time is short.
57:26
Speaker 1: But I actually get to read a lot because I
57:27
Speaker 1: travel a lot, so I read. I think I've read
57:31
Speaker 1: every John Grisham book and I love them because they're
57:33
Speaker 1: fun and they're easy, and you can read them in
57:35
Speaker 1: a couple and well along flight or two and it's
57:37
Speaker 1: other great. Um, I've read a couple recently that I
57:40
Speaker 1: really like. One is that I've probably many people have read,
57:42
Speaker 1: which is The Boys on the Boat. I like that
57:45
Speaker 1: because I'm a team guy. I'm a sports guy. I
57:47
Speaker 1: love I love how people can overcome adversity and gang
57:50
Speaker 1: together and accomplish something. And I get, you know, goose
57:54
Speaker 1: bumps on my back every time I hear those stories.
57:57
Speaker 1: And I read about success and things like that. So
58:00
Speaker 1: that that's a book that I've recently reread and enjoy it.
58:04
Speaker 1: I'm also reading. I just finished a book, uh that
58:06
Speaker 1: I that has a real influence on me called being mortal,
58:11
Speaker 1: which is about really it's a it's a book written
58:13
Speaker 1: by a doctor about the way, frankly, that we may
58:19
Speaker 1: have screwed up the aging process. We're treating the aging
58:22
Speaker 1: process as if it's a disease, not a condition, and
58:25
Speaker 1: it's fascinating. So I like reading all kinds of different things.
58:28
Speaker 1: I read something about that book, and if I'm remembering
58:31
Speaker 1: it correctly, part of the book is doctors die differently
58:36
Speaker 1: than lay people do because they understand what we do wrong.
58:40
Speaker 1: And I'm recalling the right one. It may be, But
58:42
Speaker 1: really the point of the thing of the of the
58:45
Speaker 1: article was that or the book was that we've made
58:48
Speaker 1: so many advancements in medicine that has allowed us to
58:51
Speaker 1: treat things, and we have. Therefore, when somebody gets older
58:57
Speaker 1: and they have a condition, we read them as if
59:00
Speaker 1: they're twenty five years old and they might have seventy
59:03
Speaker 1: more years to live. Doesn't make and what we end
59:06
Speaker 1: up doing as a society, as we end up making
59:08
Speaker 1: the last five years of somebody's life probably miserable, where
59:11
Speaker 1: they're going through surgeries and all kinds of other things,
59:14
Speaker 1: the likelihood of materially extending their life is not long
59:18
Speaker 1: and you spend enormous resources doing it, something like eight
59:21
Speaker 1: percent of the healthcare costs or in incurred in the
59:24
Speaker 1: last twenty of people's lives. And so there's all these things,
59:27
Speaker 1: and and so instead of that, what he proposes is
59:30
Speaker 1: something more along the lines of what hospice and others do,
59:33
Speaker 1: which is, say, what's important to you and how do
59:35
Speaker 1: I create an environment for you to enjoy as best
59:37
Speaker 1: you can your last remaining piece of your profound We
59:41
Speaker 1: we talked about what what excites you? Tell us what
59:45
Speaker 1: changes you're looking forward uh to the world of of
59:49
Speaker 1: venture investing in startup? What what are How is the
59:53
Speaker 1: industry itself shifting into the future. Yeah, and we've talked
59:58
Speaker 1: about a number of it. The company these are are
1:00:01
Speaker 1: there are staying private longer. The holding periods therefore are longer.
1:00:06
Speaker 1: So the idea of investing today and returning capital in
1:00:10
Speaker 1: a year or two is is much different. The size
1:00:16
Speaker 1: of the funds seems to be extending. I think partly
1:00:20
Speaker 1: due to that, which is that people are saying, geez,
1:00:23
Speaker 1: I have to be able to build a firm to
1:00:25
Speaker 1: support a company, particularly my best ones from soup to nuts.
1:00:30
Speaker 1: I don't want to miss out I've talked to a
1:00:32
Speaker 1: number of early stage investors who have now started to
1:00:35
Speaker 1: create follow on investment funds because some of their best
1:00:38
Speaker 1: companies that otherwise would have been private or sold are
1:00:41
Speaker 1: now still private companies raising money and they want to
1:00:43
Speaker 1: participate in those, but they don't fit within the constructs
1:00:47
Speaker 1: of their early stage small fund. They they are now
1:00:50
Speaker 1: adding different people call it different things, a select fund
1:00:53
Speaker 1: or a follow on fund or something like that. So
1:00:55
Speaker 1: I think that the things that are changing, or how
1:00:58
Speaker 1: do you serve the needs of the company in a
1:01:00
Speaker 1: better way, given the changing landscape that we exist in.
1:01:03
Speaker 1: A lot of it is international too. I think that
1:01:05
Speaker 1: will be another thing that will see more of, which
1:01:07
Speaker 1: is more firms. Just as we've talked about earlier, more
1:01:10
Speaker 1: of the East Coast firms they do have a West
1:01:12
Speaker 1: Coast presence, and likewise, I actually think more of the
1:01:15
Speaker 1: U S firms will have an international presence over time, Europe, Asia,
1:01:19
Speaker 1: the least, ETCETERA. Tell us about a time you failed
1:01:22
Speaker 1: and what you learned from the experience. Well, I fail
1:01:26
Speaker 1: every day in something particularly and I'm reminded of that
1:01:30
Speaker 1: by my three teenage sons. I think I actually fail
1:01:33
Speaker 1: more in their eyes every as they get older, although
1:01:37
Speaker 1: I think my older one that's eighteen now is starting
1:01:39
Speaker 1: to come out of that phase. I think he's realizing
1:01:41
Speaker 1: that I'm not quite as dumb as he might have
1:01:42
Speaker 1: thought a year or two ago. But I noticed that
1:01:44
Speaker 1: the older I got, the smart on my parents got.
1:01:47
Speaker 1: So there's some correlations. It is an interesting correlation. The
1:01:51
Speaker 1: topic for another one perhaps, UM. I'd say the two
1:01:56
Speaker 1: or three times that I've failed in terms of an
1:01:58
Speaker 1: investment bad is when and what I've learned about it
1:02:02
Speaker 1: is really the value of people's ethics and people's integrity.
1:02:07
Speaker 1: And so in a couple of different situations where we've
1:02:11
Speaker 1: where we've you know, where I have known that the
1:02:15
Speaker 1: person that we were dealing with was something less than
1:02:18
Speaker 1: the type of quality individual that I want to be
1:02:21
Speaker 1: associated with. I'm sort of over life on things like that,
1:02:24
Speaker 1: and so that's happened to me twice where I sort
1:02:27
Speaker 1: of knew that the person wasn't gonna be the kind
1:02:30
Speaker 1: of person I really wanted to work with, but you know,
1:02:34
Speaker 1: the opportunity was exciting and the progress in the business
1:02:37
Speaker 1: was great, and in both cases it's come to bite
1:02:40
Speaker 1: me right back in the behind. What do you do
1:02:43
Speaker 1: for fun when you're not in the office, What do
1:02:45
Speaker 1: you do to kick back and relax. Well, I mentioned
1:02:48
Speaker 1: my three sons. So I have three sons. Two of
1:02:50
Speaker 1: them are in high school, so I love to and
1:02:53
Speaker 1: then I have another one in seventh grade. I love
1:02:55
Speaker 1: to spend time with them. I love to go to
1:02:56
Speaker 1: their sporting events. I love UH. For many years I
1:02:59
Speaker 1: was the coach of their hockey team, so I enjoy
1:03:02
Speaker 1: contributing and participating with the kids and their friends and
1:03:06
Speaker 1: doing that kind of stuff. I like to work out,
1:03:08
Speaker 1: that's sort of I find, like we talked about earlier
1:03:11
Speaker 1: with sleep. The other thing that correlates to happiness for me,
1:03:14
Speaker 1: UH seems to be if I can get a workout in,
1:03:16
Speaker 1: so I try. I love to work out. I love
1:03:18
Speaker 1: to be outside. I love to be I love to
1:03:21
Speaker 1: fish and that kind of thing. But I really like
1:03:22
Speaker 1: spending time with my family. If a millennial or a
1:03:25
Speaker 1: recent college grad came up to you and said they
1:03:28
Speaker 1: were interested in a career in venture investing, what sort
1:03:32
Speaker 1: of career advice would you give them. It's it's a
1:03:34
Speaker 1: question that I get, as you might imagine a lot
1:03:36
Speaker 1: from millennials and recent college grads. Friends of friends and
1:03:40
Speaker 1: and others. The the good and bad news. I think
1:03:44
Speaker 1: on that particular question is the honest answer is there's
1:03:47
Speaker 1: no clear easy path into the venture community. Uh, some
1:03:52
Speaker 1: folks have. As you pointed out earlier, my background is
1:03:55
Speaker 1: not sort of classic out of that there. So there's
1:03:57
Speaker 1: people that have come from legal backgrounds and accounting backgrounds,
1:04:01
Speaker 1: and they've come from product backgrounds, and they've come from
1:04:03
Speaker 1: banking backgrounds. So there really is a collection of different
1:04:06
Speaker 1: types of people that have come through it. What I
1:04:08
Speaker 1: would advise what I do advise them to do is
1:04:10
Speaker 1: if if you're passionate about startups, then get involved in one.
1:04:15
Speaker 1: And that could be as um small as volunteering if
1:04:20
Speaker 1: you will are helping out at the local tech stars
1:04:22
Speaker 1: or something like that, or it could be maybe on
1:04:25
Speaker 1: nights and weekends you're helping your friend that's doing and
1:04:27
Speaker 1: then they's saying you have not everybody is ready to
1:04:30
Speaker 1: say I'm gonna move to Silicon value, and do you
1:04:32
Speaker 1: think if that's what you want to do, go do it.
1:04:34
Speaker 1: So it's not it's not just go to a big school,
1:04:37
Speaker 1: get a degree in finance and engineering and you're ready.
1:04:40
Speaker 1: There's a lot of different paths, and they all can
1:04:42
Speaker 1: lead to different things. And I think some firms obviously
1:04:45
Speaker 1: have more of a technology product engineering bend some people.
1:04:50
Speaker 1: Some firms have more of a investment banking bend. Some firms.
1:04:54
Speaker 1: I think the best ones have a mix of other
1:04:56
Speaker 1: Some people have more operators. I think the best firms
1:04:59
Speaker 1: really as we talked about earlier, with diversity, diversity of experiences,
1:05:02
Speaker 1: it's important, but it's it's a it's a tricky path
1:05:05
Speaker 1: because there isn't a clean one where you can say,
1:05:07
Speaker 1: go get this degree and get this job, and you'll
1:05:10
Speaker 1: end up at this place. It's not my experiences, it's
1:05:13
Speaker 1: not quite that. It's not like there are thousands and
1:05:15
Speaker 1: thousands of vcs and millions of open slots. It's a
1:05:18
Speaker 1: pretty small that's all community too. And and our final question,
1:05:23
Speaker 1: what do you know about the world of venture investing
1:05:25
Speaker 1: today that you wish you knew twenty thirty years ago
1:05:28
Speaker 1: when you were first getting started. I guess the easy
1:05:32
Speaker 1: answer would be Amazon, Facebook, Google, Right, Well, that's that's hindsight.
1:05:37
Speaker 1: What should you have bought thirty years ago? But but
1:05:40
Speaker 1: what did you learn from None? Was Amazon an option?
1:05:44
Speaker 1: Did you say pass by the way, there was a
1:05:46
Speaker 1: thing that I started noticing not too long ago, maybe
1:05:50
Speaker 1: it was long ago, that a lot of the websites
1:05:53
Speaker 1: of various venture firms list these are all the companies
1:05:57
Speaker 1: we passed on, and it's just an sane list of
1:06:01
Speaker 1: the great we passed on Apple, eBay, Amazon, Why why
1:06:05
Speaker 1: share that? So it's a little self deprecating. But also
1:06:08
Speaker 1: they probably don't list here are the other fifteen times
1:06:14
Speaker 1: that list that we passed on that somebody else thought
1:06:16
Speaker 1: was a great idea that failed. Right, So there's an
1:06:19
Speaker 1: equal number of those. So sometimes the best deals, as
1:06:21
Speaker 1: they say, they are the ones that you don't do.
1:06:23
Speaker 1: So let me let me bring it back to what
1:06:26
Speaker 1: years ago stands out what would have been really helpful
1:06:29
Speaker 1: to know years ago. Not a crystal ball about the future,
1:06:33
Speaker 1: but part of your process. So one of the things
1:06:35
Speaker 1: that I think I have learned over time is that
1:06:40
Speaker 1: people don't change right as much as they would like to.
1:06:44
Speaker 1: People talk about changing, but it's hard. It's changing people
1:06:48
Speaker 1: is very very hard. Not people you can move deck
1:06:51
Speaker 1: chairs around, but the fundamental things that drive people to
1:06:55
Speaker 1: behave a certain way very hard to change. So don't
1:06:59
Speaker 1: waste a lot of time trying to do that. Secondly,
1:07:02
Speaker 1: is that uh failure of these companies that are doing
1:07:05
Speaker 1: this really really hard stuff is okay, they can adjust,
1:07:10
Speaker 1: they can do things that I think I was, like
1:07:13
Speaker 1: most people naive that the business plan is the one
1:07:16
Speaker 1: that they should go execute on. You spend all this time,
1:07:18
Speaker 1: you get trained along the way, there's gonna be a
1:07:20
Speaker 1: business plan and here's how we're gonna do step bay
1:07:23
Speaker 1: and step B and step see. And I've realized over
1:07:25
Speaker 1: time that never works. So don't show me a fifty
1:07:27
Speaker 1: page business plan because I don't want to see it.
1:07:29
Speaker 1: Tell me about how you're thinking about things. How do
1:07:31
Speaker 1: you think about challenges, how do you think about opportunities?
1:07:34
Speaker 1: And those are the those are the things that I
1:07:35
Speaker 1: wish I knew. Huh, quite quite fascinating. We have been
1:07:39
Speaker 1: speaking with Steve Murray, here's a partner at Revolution Growth,
1:07:43
Speaker 1: a early stage ventured capital firm. If you enjoy this conversation, well,
1:07:49
Speaker 1: be sure to look up and entered down an inch
1:07:51
Speaker 1: on Apple iTunes at any of the other two hundred
1:07:55
Speaker 1: such conversations that we've had. You can find any of
1:07:58
Speaker 1: them i Tunes, Bloomberg dot Com, overcast wherever final podcasts
1:08:04
Speaker 1: are sold. We love your comments, feedback and suggestions right
1:08:08
Speaker 1: to us at m IB podcast at Bloomberg dot net.
1:08:13
Speaker 1: I would be remiss if I did not thank our
1:08:15
Speaker 1: crack staff who helps put together this podcast each week.
1:08:18
Speaker 1: Medina Parwana is my audio engineer, slash producer, Taylor Riggs
1:08:24
Speaker 1: is our booker, and Michael Batnick is my head of research.
1:08:28
Speaker 1: I'm Barry Results you've been listening to Masters in Business
1:08:32
Speaker 1: on Bloomberg Radio