It's okay. I usually I usually could do in one take.
So that's good. I do so many of these. I'm just like you every week.
Like, Oh yeah, isn't that so many?
Especially with virtual now. Oh, my God. I did one this morning.
I mean, it's just crazy, right?
You you got a good because there is software in with high speed.
Totally.
It sounds much better. You can I will not listen to a podcast in which the guy's on the phone.
Oh, my gosh. It's so unpleasant.
Right?
Yeah, that is. You know, I got a lot of I got more things to do.
So let's start with what you had for breakfast so I can make sure that I'm getting a good audio level of you.
Well, I asked. I skip breakfast, so I'm doing intermittent fasting.
Exactly. So I zero for breakfast.

/content/Preprocessed_Data/SHR Behind the Doors of a Silicon Valley Layoff.txt

All right, that looks good. Okay, I'll wear the headphones to begin with.
Yeah, just to make sure that we've got this going.
Sounds good.
So I want to start with the cuts.
Yeah.
When did you first know that you needed to cut?
So it's a great question, Scott. I think that for a lot of CEOs, including me, you're monitoring your business in real time.
And so for us in our sales quarters and kind of one month off from the kind of calendar, so for example, our first quarter ended on April 30th. And so, you know, we didn't you know, you probably know the economy slowed down a lot. It's harder to sell things.
And so our sales were below what we were expecting and hoping.

And so around that time, we said, okay, we probably need to do something, but we weren't sure. And then we went into a process where in May we started working with our board and said, Let's run the numbers. Let's do the analysis.
And so the short answer your question is basically early June, and then we made the cuts about two weeks later.
See, that seems fast to me. So we've had one quarter in which sales weren't where we thought they were going to be. And did was the first thing that went through your head.
We better cut some employee.
Know we had three quarters. Okay. Yeah.
So that was the issue. And by the way, I think every tech companies had the same thing because tech sales we sell primarily tech companies.
Right. It's almost a a smaller circle.

So we're the most exposed during 2021.
We're the most benefited because, you know, there's this boom and now we're the most exposed will do great long term, but we're in this kind of temporary recession.
So for several quarters in a row, every quarter.
Scott, we were like, well, maybe the next one will turn around.
We don't have to do anything. Honestly. We we probably did layoffs a little later than most companies. And so we end up doing with them, obviously with a heavy heart, but also knowing that this to make the business sustainable, you know, this is the right move.
And so you have these two competing thoughts where you're like, these human beings are affected, you have empathy for them and you need to run the business in a way that's sustainable.

I realize there's not this this sudden moment where you realize, okay, this is what we're going to do. It grows and evolve, right?
But at some point, you say, All right, let's do this.
Yes. Tell me about that day.
Yeah. So it's interesting. I was mentioning this got before you before we came in here, I had this very unique period, you know, definitely challenging at the time where in, you know, kind of late May, we were at the point where we're like, well, we probably need to start doing the analysis if we have to do it. Here's what we do.
And then early June, we're like, okay, we're you to do this.

And so actually the same week we had several life events all at the same time. So we started planning, you know, a reduction in force, which we then about two weeks later executed. And so we this offsite to start planning it.
And unfortunately, my dad passed away that week and actually my oldest graduated from high school. So there's a lot of emotions that week.
But that was sort of early June when we had this offsite.
And then of course, you can imagine you don't know how much you need to cut that.
So you're doing the analysis, really making it thoughtful at an individual level.
It's very hard because everyone to cut.

We're great human beings, great performers. This wasn't a, hey, let's cut all the lower performers. This was there's certain parts of our business that aren't working right now.
And specifically, those were the stuff about getting new clients right, that sales and marketing are existing customers.
You want to keep supporting them. So we have a customer success team which is about supporting them. We've got a research and development team which builds the new products.
We hardly touch any of that at all. Like we're like Tiny Me 1% or actually less than 1%.
Unfortunately, our new business slowed down a lot because as we talked about, buyers had slowed down and so we had to cut the sales and marketing more significantly.
Sales and marketing teams would say, No, that's the last thing you say.

Yes, right. You know, because it was sales.
That's what brings in money and marketing.
That's how people hear about us. But realistically, you saw that the clients you had were starting to slow down, correct?
Even for several, several quarters.
Some closed down, some slowed down. You know, we had some companies that customers that were venture backed. And as you know, Scott, the funding environment had dried up there to cut costs a lot. They themselves were doing layoffs, honestly, usually much bigger, ten, 15, 20%. Ours is 5%, by the way.
I don't say that minimally, because it's still.
Oh, I mean, those are all the things affected.
Yeah, but that's right.
Now you're owned by private equity. You're not on crack.
Vista equity partners.

Yeah. So does is there pressure from above in that sense?
It's interesting. No, I mean, for us, I mean, every every firm is different.
Every company is different. In this case, you know, I try to be very proactive.
So I was like, look, here's the situation with four quarters in a row.
We missed here's the the the bottom line, you know, we're not going to be able to get to the sustainability we want. I think we probably need to look at this.
And then they were like, well, that's, you know, kind of ahead of the curve.
Now you might say, why be ahead of the curve?
And I'm like, well, if you're ahead of the curve, it to cut less later, right?
The further the longer you wait, the more you have to cut for the same amount of savings.

And so I said, if we're going to do this, let's do this right and do this fast and then I'll talk more. But we did some unique things to try to be empathetic about it.
But nonetheless, it's hard in hard on the most.
Like it's not it's like you should focus on your own emotions.
It's hard on the people affected. That's the real bottom line, but also the right thing for our business.
And and I think you're right about doing it hard and quickly in that this always would have a devastating effect on the morale of those who actually kept their jobs. Right. You know?
Well, when does the next round come? Yeah, some and no CEO can guarantee, you know, I absolutely promise that they will never cut again.
But if you cut enough, you reduce the likelihood.
Correct.

And soon enough, both of us enough and soon enough.
That's right.
How do you pick the people?
It is so hard because these are human beings, Right?
So you, of course, are in a conference room with the leadership.
You have spreadsheets. It's very clinical.
And then you try to remember these are human beings.
Now, specifically, as as I mentioned, there are certain functions where we thought, okay, these functions, unfortunately, of too many people for the amount of business around sales, marketing, etc.. And then, you know, the other thing we made of maybe a little bit of a different decision is a lot of companies, when they cut, they're like, we're going to cut the most junior people, the front line people.
We said, Look, the reality is we have too much leadership.

So with a very heavy heart, you know, three people that reported directly to be moved on who are amazing people, you know, at the next level, you know, probably ten people moved on. So these VP, senior VP, C-level people, and I think that's a little different.
Some companies, you know, those people are sort of immune to the cuts.
And there's this something that some people call it proximity bias, which is that the CEO, whoever they work with closely, they feel like that's too hard to let them go, their human being. And then if they're further down, they're just a role.
That makes total sense. Yeah, I mean, it's awful.
That's all it makes. It makes intellectual sense to me.

Yep. And so we try to do a little differently where we said, okay, where where does it make sense? We paid too much leadership.
The other thing is if you have too many leaders for your business opportunity.
Everything kind of slows down for everyone's kind of meeting with each other, collaborating. And by the way, all the people are great.
Literally everyone I would work with, again, I've made help people in their job search.
It's just that we had too many leaders and too many unfortunate individual contributors.
Did you step in and when the when it looked like this is where we're going to cut, did you step in and say, no, not him?
Not. Yeah.

Yeah. I mean, I stepped in and I, of course, respect my team because they know a lot more about these people than I do. Yeah, but one of the things I did was, hey, is this really the right decision? Right? Could they do a different job?
Actually, a number of people we rather than cutting, we moved into other jobs that actually had more need. And so beyond about 60 people, beyond those, there were, you know, probably dozen people that we moved around in other more important jobs that they were kind enough to be open to that.
So we try to be a little more precise and more, you know, top down than you might be in running a day to day business.

And that meant in some areas, hey, do we have we kind of unfortunately cut enough and other is, hey, is this the real right decision or are we making the easy decision?
That's not the right one.
How did you deliver the news?
Great. Yes, really good question. This might be where it's a little unusual.
So the thing I did right away when we knew we were going to do it, literally, as I mentioned first, my dad passed away that week on a Saturday.
On Monday, I took my mom to Hawaii to kind of get away because she'd been the caregiver for my dad for a long time. He had dementia, Parkinson's, cancer.
So I took her to Hawaii, very privileged to be able do that.
But, you know, still working in this tough situation.

So that Monday in Hawaii, I recorded a video and said, I'm you know, I want to be transparent with you.
We're working through potentially making cuts.
I know it's really hard for you to hear that. I.
I still have my dad and I am so lucky for that at our age.
And I get what you were doing with your mom.
But did you announce layoffs from Hawaii?
Yeah. It's not. It's not. You know, it's a tough situation, but everyone knew everything that had happened.
They knew why you were there.
Oh, my gosh. I'm very transparent with. They knew that.
Oh, you're very rich. Yeah. Mental health issues, though my kids are going through.
They knew everything. And so people really appreciate it.
And it has the.
Potential of of not being a great optic.
Totally. And I'm the thing I do is very transparent.

So I'm like, yeah, this is exactly what's happening. I'm not I'm not pretending.
And I'm by the way, I'm at 4 a.m. in the morning.
I'm out there and making a video to explain to people.
So I think they appreciated the reality of the situation.
People who know you and I, maybe I was jumping in in your defense for those who don't know. Yeah. And I bet your employees know you and they knew you were taking care of your mother. Exactly, Father.
That's exactly right. You know, and by the way, I'm a person who's most concerned about being transparent and honest.
And then I think generally that actually what is what people care about.
And so what we did, Scott, is I told people in this video, you know, in a few weeks, two weeks specifically, we're going to have to make some cuts.

And this is a huge decision. Do you tell people beforehand or do you just notify them on the day? And by the way, there's pros and cons.
You know, you tell people beforehand, it's pretty stressful.
So if a couple weeks stressful. But on the flip side, one of our big values is transparency. So the moment we knew, I wanted to tell people because I didn't want them to sort of not know, and then all of a sudden find out.
And again, I don't think there's a right answer for this.
But generally speaking, we've always been transparent in good times and bad.
And I didn't want to go to the situation where the one time is a big deal were not transparent. And so we basically told them and then about ten days later we had about 13 days whereby we announced the cuts which very heavy heart.

But really like I was, you know, CEOs often say it's so hard for me.
I'm like, no, it's hard for the people affected.
And so, you know, of course, he said, you send an email, you do a Slack post, you explain it, explain why you know where the cuts are.
You know, prior to that, there's a couple things we did differently.
Number one, you know, we our managers called every person.
There was no deactivating of the email.
There's no you can't log in. I was talking to some people.
People haven't gone through that. Then number two, we gave them, you know, several weeks to be a gain site, be able to keep working actually like about six weeks to be on payroll and then severance after that.
And then one of the things there is you can just say goodbye.

You know, you can actually it's so hard still, they can say goodbye.
And then probably the most different thing and some people might say, Why did you do that? I actually did as a CEO cause it every single person affected at least all the people that were open to us by about 55 out of 60.
Yeah. And I, you know, talk to each one.
I said, first of all, I'm sorry you're going through this.
I'm I can talk about my feelings of sorry about you.
Most importantly, how can I help you on the job search?
And I've now done dozens and dozens and dozens of introductions and references to try to help them. I'm not trying to say I'm great.
I'm think this was the responsibility of the employer to do that.

And yeah, then sort of, you know, again, you know, there's no easy way to do this, but just felt fit our ethos of transparency, vulnerability, helping each other in good times and bad.
The five people that wouldn't take your call, I assume you understand totally.
Like I told everyone, like if you're in a place where you want to take some time.
By the way, I think those folks all said, I want to take some time and then talk.
Yeah.
It's you should take care of yourself. Don't feel bad if you're going to go to take on a vacation for a month. If you're going to go Yelp's ups, you know, just take care of yourself. If you're jumping right back into the job search, One person said, I want to jump in today. And by the way, I've respect all those people.
Have you ever been laid off yourself?

Yes, one time. So actually, I guess two times technically, I started a company during the dot com and we had first had to shut down.
So I was one of the co-founders. I was a VP there.
And I we all got laid off on the same day because you shut down the company and unfortunate and, you know, sat at the time and then I went to another startup and that one kind of shut down and I was a director of product management, so I was kind of a mid-level person I didn't know was going to happen right away.
We kind of knew was going to happen eventually because you remember that dot com timeframe. Unfortunately, everyone was kind of, Oh yeah, yeah.
And I think the parallel here is most companies aren't going under, but almost everyone made these cuts, right? And they chose to.

It's not like they had to, but we all chose to because we think it's the right thing for our business. But I learned it doesn't make it any easier for the people affected.
One of the things I think CEO say is, hey, it's better for the people, it's better for them. I'm like, that's not how they feel.
No, that's not how they feel.
You know, there's that classic scene in Up in the Air.
Oh, my gosh. Great movie.
Great. You know the one I'm talking 100%.
No, you're talking about that movie, I think show everyone that does a layoffs should watch this George Clooney movie, Anna Kendrick.
And it's just shows you the inhumanity of how people often do it. In this case, they hire a third party firm to do it.

Yeah, some people just shut off the email, but I understand some big companies have to do that from a security perspective. Yeah. And who am I to question a big company because I'm running a 1300 person company, But I.
You think that there's a level of like remembering there, not just a row in a spreadsheet?
Yeah.
I did an interview with Patty McCord, who is the H.R.
director. And that's.
Right. She's legendary.
Legendary. She's the queen of good good byes.
Right. And that moniker, she gave it to herself.
Yeah. She is famous essentially for laying people off.
And and, you know, when I first talked to her, I just had this horror about and the way I have not ever been laid off.

The thing that I think I would be angry about is, you know, we were talking in the NBC studios right now when we were, you know, about a mile away at a smaller building back, what, 20 years ago.
I helped carry boxes into this building.
And if my position is no longer needed, I get that.
On the other hand, I helped build this.
Yes.
You know, I mean, literally carried cardboard boxes back and forth.
There's some justifiable.
Wait a minute. From an employee, I am gainsay.
Yeah, exactly.
I mean, I think that's. I have empathy. It's interesting because there are situations, many situations in life you can have empathy for, or at least understanding of both sides. As you just said, somebody is running a business.
They have to deliver value to customers, shareholders be sustainable.

And there's an employee who felt like I built this place right.
And I would say that we had some people that were against that a year because we hired a lot. And those people, we had very generous severance and things like that.
Those people, you know, they're not excited, but all of them were really grateful to have the time and the good severance. And the hardest thing is the long time people.
And I've so much empathy for you.
To be like I, I made the logo.
They did they they made this place what it is, you know, so much empathy for them and also know that things do change.
As Patty, I'm sure feels the same way. Things change in a business.
There's different business needs, but you can't ignore the two.
There's two sides that are equally valid.

And I think those people that have for a long time are you just have more responsibility to help them to be there for them.
You know, you know, anything you can do.
Because I would say those people, one of the things that I feel privileged about is whether somebody is, you know, fired or, you know, some people left voluntarily over many, many years, 11 years running. And so many of them, many years later text me and say, hey, now, can I get some job advice? Could you be a reference?
And I feel lucky about that. I don't feel like I'm like, Oh, I'm such a great person.
I'm like, Whoa, that's amazing.

If you can maintain those relationships, even if somebody is, you know, fired or they laughed or whatever. And the last thing I'd say, Scott, is one of the things I think I advocate for is sometimes companies are very happy to lay off employees and almost clinical about it. But then if an employee chooses to leave, it's almost like they're like, you're dead to me. Like, I'm not going to talk.
Yeah, isn't that funny? It's horrible. Yeah, yeah, yeah.
One of the reasons I invited you is I knew you would be honest.
Yeah. And. And very transparent about what happened.
You know, when I asked you the question, did you, you know, get in there and pluck a name from the, you know, the goodbye pile back into the.
He's staying or she's staying pile. And you said, Yeah I did.

Where does the honesty and empathy that is definitely part of your personality. Where's it come from?
It's funny, people ask me that a lot, you know, Where does the desire to be transparent and honest come from? And I'm not sure, except I don't know how to do it any other way.
And I do. One of our kind of our whole purpose statement to gain sight is to be living proof you can win in business while being human first and ideas, whether you're a CEO or an employee or a family member customer, you can treat all those people like Rose on a spreadsheet. And it's sort of what happens in business.
Or you can remember they are human beings.

It doesn't mean you can't do a hard thing and give them feedback or let them go or tell the customer they're wrong. But you can't forget that's a human being at.
That customer was trying to get promoted. That's a human being in a company that's nervous about their job and be able to hold these two things at the same time of building a winning business and be human first. So that's it's very deep in our company.
But I think for me, Scott, I just I don't know, over the years I've leaned into it more and I'm like, people really like it.
And I'm like, Why does everyone not do it?
I don't know.
Just a few months before you had to dismiss people from your company.
Glassdoor, rated you as far as whether you were a good place to work, right.
Can you remind me where you came in?

The world's list of good places to work?
You know, we were number one, and I.
Think the world.
In the world above any other company. And of course, that felt great from an ego perspective. But also, I think the thing we felt then and by the way, I feel heavily now, is, you know, you're you're number one for now.
And how do you keep earning that from me?
I kind of feel like just like with a customer, you got to earn your employees business every day. Now, interestingly enough, like our Glassdoor actually surprisingly hasn't changed with this really tough decision.
I think it could easily and I think I'm very humbled that like it could be you know, you never know what happens. But I think it's you got to keep on top of it.

And just like you, you know, you have to you have a business, you have a, you know, shows that you want to maintain your ratings. And it's the same thing here.
You got to keep on top of it. And employees have every right to rate employers and to give them feedback and sometimes tell them they're not doing a good job.
I interviewed you shortly after the you won one gained site, one number, one place to work in the world. And we talked about all the nice things it gained site and then both of us a little bit anticipated.
Well we are in tough economic times yeah.

And I asked you you know what It's a fun place to work if you don't have to lay off employees. And then you told me, quote, We've tried to manage things, you know, as carefully as we can, for example, slowing down hiring early and slowing down our expenses so we can take care of the teammates we have.
Obviously, none of us control the future, but that's a big part for us is always trying to take care of the people inside.
I'm sure it goes somewhere, but it's probably inside the company.
Yeah. Did you have any inkling at the time that that might be a thing you needed to do?
You know, I think every CEO knows it's always a thing you might need to do If you're not, you know, you're not probably a very aware CEO, but didn't know that we had had both.

I don't like the word half. Didn't know that we would choose to do it as the right thing for the business. At that time, we had slowed down hiring a lot and we'd sort of gotten ahead of the curve on that in our business was still not honestly hitting all of our targets, but the impact wasn't fully felt.
And one of the things that over time I learned is, oh my gosh, all of these other companies are struggling and they're our customers.
So we knew later on that the wave was coming for us, which eventually did.
And, you know, we're still doing okay, but not the same as we were.
And so initially it was like, hey, maybe we ought to do it, maybe not.
Let's hold off. And then another quarter, maybe we'll do it.
Maybe or not. Let's hold off. Kind of hold off, hold off, hold off.

Now, one of the things, Scott, that gave us some fortune to do, a 5%, which still is human beings, but not a 10% or a 20% like some companies is, we had slowed down.
So, you know, this is one lesson which I think I still didn't do enough of, but it's like if you get too aggressive, you're setting yourself in terms of hiring and growth.
You set yourself up for potentially a big come down on the other side where you have to cut a lot. And I think some companies, you know, it's almost like why not make the bad and grow a lot? Because all you have to do is cut people later. It's not that big of a deal. And that's not the way I feel like it's a pretty big deal, at least the way I feel about it. So yeah, I try to be a little cautious.
We probably weren't cautious enough.

Now no CEO is going to tell me they're not optimistic about the future.
Yeah, so I'm going to presume you're going to tell me you're optimistic about the future?
I'm optimistic about the future and uncertain about how quickly it happens.
So that's the thing. Are we all optimistic about technology and growth and AI and things? Well, maybe as both optimism, pessimism.
But we optimistic about technology continue to grow while seems unabated over long periods of time. But as you and I both know, there can be periods of downturns that can last six months a year.
I mean, the dot.com in some ways last like three or four years prior.
Remember that? I keep telling people we don't know.
We don't know. Everyone will love it to rebound next quarter.
It's right around the corner. I don't know.

You know, with interest rates, inflation, technology, I there's so many variables, geopolitical conflicts, wars. And so I don't think any of us really know inside.
So I tell our employees is I don't know I would love to know somebody gave you that information if we're like in Back to the Future we kind of traveled.
If I could know, that would be amazing.
But I don't I don't think anyone knows.
So it's good to be prudent right now, which is what we're trying to do.
Are you gun shy about hiring the next employee?
Yes. Yes, absolutely. Like, it's funny, Like, again, you know, the typical CEO answer would be we're super optimistic about the future.

We're hiring. But I'm like, no, we're not trying to, you know, get ahead of our skis again. You know, we don't want to do that. And I think there is a bit of a reset where people over hired too much and then you make all these promises to employees and you set these expectations. By the way, you also can't take care of your current employees, right, because you don't have any money.
And so, yeah, we're way more prudent and conservative.
And that's hard. It's interesting because we did chop nicely on that Glassdoor rating and of course got a ton of people applying to us and it was felt so bad that they're applying to us at a time where we're not really hiring. You know, of course there's a couple roles here and there, but in general, they're not really hiring.

And it's it's hard. I wish we were.
I think we will again, you know, when things rebound.
But we try to be prudent while we're in the downturn.
And finally, for the CEO who's listening to this in a car and, you know, has been in meetings in which I think we need to do this, I do.
We need to pull the trigger. What advice would you give her?
HIM Yeah, I think that that a couple of things.
I mean, I always hesitate to give advice because a big thing is it's about do you feel good about it? But is it you? Right?

And so I think some companies maybe those are a the spreadsheet, that's how you do it and that's how you do it. So I'm not to judge you, but I think that if you aspire to a company with culture and values and, you know, basically transparency, Scott, you've got to do that in good times and bad.
You got to tell people that a layoff is coming or call them all after you did the layoff and help them with their job search. You can't hide when times are bad.
If you claim to have a great culture, You know, again, if you don't claim fight, do whatever you want. But if you claim and then you hide and lose your transparency when things are bad, you've sort of given up on your culture and nobody will believe you.
Those are my questions for you. Unless there's something else you'd like to add.

The last thing I'd just say is, you know, maybe motivation for that last one.
Yeah, it's hard when you go through hard things.
And it's most importantly, it's hard on the people, right?
Is hard both on the employees that are there and of course, the ones that are leaving.
But I would say that if you do the right things during the hard times, that's how you build a great culture, because people remember.
The question that won't be in the podcast, but I kind of collect them over the year.
And then in the summer I do a little compilation.
It's nice. What book was influential in on you?
And that could be something from childhood. It could be something you hand every new employee. It could be Winnie the Pooh.
It could be from Harvard Business. Yeah.
What book has been influential in your life?

Well, I'll give you three quick ones, cause I think they fit three different parts of the business lifecycle. The Alliance by Reid Hoffman.
It's amazing book. Reid Hoffman is the founder of LinkedIn.
Right. And business legend.
And he has this concept called the Alliance, which is basically employers and employees should think about their work as an alliance.
And then if the alliance isn't working for one side or the other, they shouldn't have this dramatic thing. You know, for example, if the employee feels like it's not the right job, that's okay. It's okay for them to move on.
And frankly, at LinkedIn to this day, you know, a lot of people will talk to their boss about another job in another company. I love that.

So my employees do the same. So the alliance second one was Patty McCourt's book.
I forget the name of it, but it's about Netflix.
And again, it was this idea of radical transparency.
And even in tough times, and even when you're letting people go, doing in a way that you can be intellectually honest. The second one and then the third one is a book called The Five Dysfunctions of Teams.
It's an amazing book.
It's very among CEOs. It's like a classic.
It's this funny, this book. It's called About Five Dysfunctions of Teams.
It's about, you know, how teams can fall into dysfunction by not being honest and transparent. And we were doing an offsite and I said, we should read this book.

Somebody else said, we should read this. I said, Oh, this could be great, but we don't have any dysfunctions like this. If you and then you read it.
It's a parable actually, with a good example of a company.
And it was like, Oh my God, we have all five of these now.
We've got better. But it's sort of being humble about, You're not perfect, your company is not perfect. You can always get better.
Excellent. Stop there.

Use this. I just need to remember.
All right. Sorry we couldn't meet in person today.
We have we have back to back meetings that I will be shuffling in and out of. It's one of those crazy Thursdays.
No worries.
Okay, I think we're recording and I think we're good and it looks like, Josh, you're muted, so that's good.
Um, okay, so, you know, we've got the video running, obviously, but we're not going to use the video.
It's a podcast. So we're, we're just using the, the audio up.
The other thing to know is that this is extremely casual.
If you get halfway down the answer to something and you think to yourself, you know, I don't even remember what the question is, just wave your hands in the air and say, hold on, hold on, let me start that over again and we'll let it out.

/content/Preprocessed_Data/SHR Managing Energy Amit Chaturvedy.txt

It's absolutely no big deal.
Tilt your tilt your webcam down a little bit so I can see above your chin or below your chin here.
Not that it matters for, you know, the recording, but just so I can see there, I can see your face.
So that's much.
Better. Yes. And we're recording and I think we're okay.
Excellent. Are you reasonably close to your mic?
I am. Can you hear me okay?
Mm hmm.
I can. You can hear me okay, right?
Yes, I can.
Excellent. Perfect.
All right, well, let's start with.
Introduce yourself. Who are you?
A first off, thanks for bringing me over to speak with you on this podcast.
Really appreciate it. We had a good conversation, I think, a few months ago and I was really looking forward to reconnecting again.

So about me, I'm a career venture capitalist, have lagged in this industry for a long period of time with Summit Partners, which is a growth equity fund with Cisco Investments, which is the venture investing arm of Cisco, Cisco Systems.
And then more recently came on board to lead the ventures as the managing partner.
And we can get into that in a second.

But in terms of my quick background, I'm a mechanical engineer involved in the automotive industry in Detroit for many, many years, saw the early beginnings of electrification of vehicles and why that was going to be important, not just for the planet, but also for the economy and some of the underlying technologies that we're developing. And so really that understood the power of capital when deployed in the right places to help solve some of the world's biggest challenges. And that's what drove me to look at the body of experiences I've had.
And some of the work that I've done at different places, I've walked and said, Where can I best use my energy and expertise?
If I think about the next 50 years, what's the biggest problem to solve?

If everybody has finite energy, diamond resources, you want to deploy it in a manner at the micro and macro level where you can actually effect outcomes and maybe change the future direction of where we are headed and make this planet better for future generations. So I came on board to Sea Ventures.
We are €1,000,000,000 fund backed by Schneider Electric, which is one of the most sustainable companies in the world.
So their mission married really well with my mission, and so that resonated with me and that's why I came on board last year.
So side question what cars did you work on when you were in Detroit?
All kind. So Dodge Ram is is one.
So at the time, Daimler and Chrysler were one company.

So I logged on a couple of their products on the on the heavy duty truck side as well as a few other passenger car side models at the time.
Were you a car guy before you became a mechanical engineer?
I always like figuring out how things worked at the fundamental level and breaking some complex problems down to work ahead on how the pieces come together.
So I all already had that bent and mindset and then pursuing mechanical engineering as a as a a field of study just came became naturally the right step to follow from there on.
And then things just fell into place from there.
I was plugging my car in at work and the office parking lot has those big commercial chargers, and I noticed it has a Schneider Electric written on it.

One of your portfolio companies, Auto Grid Helps Utilities forecast demand for EVs. Uses air to do it.
And I want to talk a lot about AI in just a second, but I want to get your reaction to speaking of cars, the Biden administration earlier this month announcing new targets for electric cars. What did you make of that?
As with what you know about our grid, can we handle that in time?
Look, I think those are great questions and you have to break the problem statement down into a few different parts here.
I think there is no escaping that We need to get carbon emissions down just at the planet level, at the country level.

And so therefore, the Biden administration is definitely headed in the right direction with making E-vehicles more pervasive and really giving customers that choice by supporting the industry there.
But at the same time, this requires a fundamental shift in how the grid operates, how we think about power generation, consumption, storage.
And it's a massive undertaking, right?

Energy transition is a massive undertaking and will require tectonic shifts in the industry, both from an automotive industry perspective as well as the charging infrastructure that comes around it and how energy companies help enable and support the utilization of those vehicles, both from electricity generation perspective, but also if you think about the fundamental bomb, the bill of materials of any vehicle being different from ICI engine vehicles, there are other industries that would also start to shape up around this, this notion that there is residual value in vehicles. So there's a lot going on.
We wouldn't be able to pass through everything on the call today.

But this is why us as SC ventures and we obviously heavily look at as I guess data points from a market perspective with our partner Schneider Electric, that are there in the market, very focused on delivering energy management solutions, that this is not just a problem of hardware, this is a problem of delivering software at the right point to solve some real practical problems.
And that automation and that delivery of value can't happen without enabling technologies every step of the way, every part of the ecosystem, right?
Because we think of, you know, if the whole world had electric cars, we think of the infrastructure, the cabling and the and the chargers in the space in the parking lots. But distributing that electricity and doing it intelligently is a software problem.

Right? Right. It is a traffic management problem in some ways.
And this is where some of my dots connect from the time I spent at Cisco Investments. And if you think about Cisco, they are a leader in networking technologies.
So if you're transporting bits and bytes, you're also transporting electrons.
And that is a traffic management problem in some ways, which is and I love it because it is a mechanical engineering, industrial engineering operations research problem, which is where I spend a lot of my early career on.

And but still this notion that, you know, energy cannot be created or destroyed, so it's finite. You have to be able to manage it in one shape or form to create this sustainable future. And this is where I primarily your right and calling it out comes at the grade level, because if you think about the combination of that is the biggest needle mover and what's the low hanging fruit, making our grids more digitized, having them run more efficiently is perhaps an existing problem that is only getting more and more challenging to manage because the demands on the grid are only increasing.
Silicon Valley engineers may be able to help in that sense, because you're absolutely right, when it comes down to electrons, Cisco and huge electric electric distribution grid are sort of the same thing.

It's just the amount of electrons going through those wires.
So we have experienced in Silicon Valley dealing with networks and with, you know, parsing out who gets what at what time in data.
And that's just what electricity is on a huge grid.
Absolutely. So it is going to be I mean, I models are based off of manipulating data in some very basic sense to come up with intelligent conclusions and recommendations around it.
Right. And so in that sense, if you think about Silicon Valley, what is super exciting to me here today, sitting on Science Hill Road and running Sea Ventures, is we're surrounded by talent that has spent significant time understanding how networks operate, how A.I.
models are built, and how do you create a great user experience, right?

Because there are many, many consumer applications that have these are companies that have been founded in Silicon Valley. So Silicon Valley talent really understands how to address people's problems and where we can come in and help support the talent there is with our network and resources of business leaders and customers and channel partners access that we have through our partner, Schneider Electric.
We can really help connect the technology talent with the business needs of what customers are really looking for and be that bridge between a very global company like Schneider Electric and Silicon Valley talent, which is so condensed in a very small square kilometer or square mile area here.
And that's what's most exciting for us here sitting in Silicon Valley.

Well, sitting in Silicon Valley and kind of sitting in the catbird seat because you are at the juncture of of technology and venture capital and electric distribution.
Absolutely. And if you also think about California, I think the ethos of Californians has always been unique and distinct.
And the valley view from people in California just always amazes me how educated and knowledgeable people are.
And I think in some ways, the scale of this, this movement of being of creating a sustainable future has also started in California for the longest time.
California had different emission standards from automotive vehicles versus the rest of the country.
So this goes a long ways back into the DNA and ethos of Californians.

And the good thing about California is such a melting pot of people that come in from other places, whether it's other states in America or internationally, and be given this opportunity to blend in into solving some of the biggest problems that the world is grappling with in a manner where you have the support of the rest of the ecosystem through the venture investor community here, the talent pool that's coming out of great universities in California, as well as bigger corporates that are nurturing and training future business leaders who are also going out and starting their own companies.
I think this this holistic ecosystem that comes together in California is very, very hard to replicate and truly unique.

You brought up education. I know a lot of listeners have tried Chet or Dolly or some of the the artistic eye. I think if the eye that we've experienced, particularly GPT, were a college student, it would be, you know, some sort of English major because the large language model has to do a lot to do with creating other things in language.
What I'm less familiar with is the AI of industry, how A.I.
is making factories work, or how it's working with electricity and the distribution of that. What what sort of things are you most excited about using A.I. in in heavy industry?
Yeah. No, I think you touched upon this very, very interesting trend that we're surrounded by, which is generally away from a broader kind of space perspective.
And it is very natural for.

Generally, I do find resonance with individuals and we call them retail customers in some ways, or consumers that can very quickly test different kinds of technology and things break and they can be quickly fixed because of the inherent feedback loop mechanism that look beautiful fully well in with the technology.
The the problem is similar in the industrial world.
However, there are some new lenses and it's important to understand what those nuances. But before we get there, why they are moving so quickly, I mean, it's truly been an evolution. The first set of algorithms came back in the fifties and sixties. There have been very smart scientist that have been working on, I guess, mimicking the human brain by using algorithms and A.I.

technologies. And what has truly happened, I would say, over the last decade, and it has exponentially changed in the last 3 to 5 years, as we have much better improved data models.
We have computing power that has improved in chips and in the computers that we use today.
And most importantly, we have better access to large sets of data to train these models, which didn't exist in the past.
And so now if you make the transition to the industrial side of things at the highest level, what is super interesting and where we think I can truly, truly deliver value in the world of industrials and energy management is in looking at large sets of data, of utilization at the grid level, demands on the grid and help manage that transfer and consumption of electricity.

So that's one that you touched upon with our IT.
But also at the same time, you have an aging workforce in the industrial environment in the United States. So worker training support, using AI to be able to solve problems much faster than what perhaps could have been done in the past with a high degree of agility and low error rate is probably one of the biggest areas that would evolve.
Can you give me your word?
Can you give me a concrete example of I in in heavy industry that the people would not be familiar with?
Yeah. So, you know, one simplistic example I would just point out is back to my automotive days.
Let's say you have a factory running and you are assembling very complex parts to make this entire vehicle come together.

And oftentimes there is wastage and reduction and warranty issues when either the manufacturing process wasn't followed the right way or you suddenly had quality issues from tier two, Tier three, Tier four suppliers that could not be caught by the naked eye. So if you can sensitize that environment in the manufacturing facilities with.
You know, sensors that capture data, but also computer vision type of technologies and be able to tell the worker that, hey, we we need to take corrective action because such and such part isn't the right part for this vehicle or you didn't follow the process correctly.
That would be one example, real time in line in manufacturing, right?
The other example of this would be.

The semiconductor industry has to have has very stringent standards around the ambient air within which they operate.
Right. So these environments are are as close to it can be to, I guess vacuum in some ways are very heavily sterilized environments. Right.
And so their systems have to operate at a certain level of efficiency and being able to predict if certain rotating parts and the system would fail and what that preventative maintenance motion could look like could avoid the shutting down of the fabrication facility and actually save real dollars.

And one of the the companies that we've invested in is a company called Augury, which essentially has now emerged as one of the market leaders at a global basis that does enable machine health. And they're able to prove in a very short period of time that customers can save a whole lot of money on preventive maintenance. And the auto delivery timeline has actually shrunk from installing technology to testing it out on a limited basis and then rolling it out to actually deploying a technology at scale because you feel more comfortable that the technology works out out of the box. Right? And therein lies the auto.
I most often auto eye gets killed because the timeline to show value is much, much longer than what business leaders can afford. It's not even a question of patience.

It's really what they can afford because they have very they have demand. They have PNL demands that they have to meet on behalf of the company.
You have been at SC Ventures for one year.
In fact, you just celebrated a work anniversary a few days ago, if I'm not mistaken.
You came from Cisco, where you led investments there.
What have you learned over the past year that you didn't know when you walked in the door a year ago?
That's an interesting question, I think, for me.
Every place that I go, I truly like to imbibe the growth mindset.
And why select Cisco Investment?
I got quite deeply immersed in the IT infrastructure world, the enterprise applications world, the cybersecurity world.

I think what this role has really allowed me to do is be more close, closer to my passion of understanding the world of energy management and industrial automation given my mechanical engineering background.
So I was always seeking for an opportunity like this where I could combine my expertise off being a career venture investor in truly backing companies that were bringing disruptive technology to these environments. So for me, I think the the thing that gets me out of bed every day is to be able to go out to work and meet with these amazing, amazing entrepreneurs that are super smart, bringing disruptive technology to these areas, but are increasingly being driven by a mission to leave this world in a better place, which is something that I thought in my own mental closet.

I was the only one thinking this way.
But I feel like there is a community of venture investors out there, of all startup founders out there, where this has become a very real question Where is the money coming from?
On my cap table, is it coming from pools of capital that are trying to engender create a sustainable world? Or is it a set of financial investors that are just looking for venture returns?
And I think we serve as a bridge between who we are backed by, what our mission is and what we can bring forth for these smart, savvy founders.
You've got three people, including you on the team there.
Right. And so I assume with support staff, the size of SC Ventures is, what, a dozen people.

Yeah, thereabouts. We have got four senior investors now, including me on the team, and we all really complement each other's skillset really well.
We all, we all come from having worked in the venture industry for the longest period of time, but covering very different parts of the energy management and industrial automation world. And we also recently hired a general partner to get more local coverage in Europe because venture also tends to be a very local business in.
The media coming from Cisco, which I think had more than a dozen people at it.
If I'm if I can remember correctly.
That's got to be a bit of a culture change.

And it is. But the team over there handled both venture investments and acquisitions on behalf of all of Cisco. So the role there was in some ways very different. But we do. The team that we have in the Ventures is really the right set up.
If you have to drive venture investing out there in the market, but then also turning around and create value for these or these startups in helping them engage with different business leaders and channel partners of Schneider Electric.
And so we've got two parts of the team.
We've got the investing team, which is the model that you've touched upon.
We've also got dedicated operating partners that map to specific businesses inside Schneider Electric and have deep relationships up and down the chain.
And when we make an investment in a company.

The process of testing out and diligent thing.
How much value can be resonate out of this investment starts even before we make the investment. In many cases these days.
And so we're learning and we are evolving and we're improving our model.
But for every dollar that we invest in, in these early stage startups, our goal is to show commercial acceleration to these startups to a $5 two. And so it should be a5x multiplier for these. For these startups, I think that is radical transformation for these startups.
You went to school in Bombay and then you became a boilermaker at at Purdue.
Tell me about that move.
Yeah.
A large part of my. Well, I grew up in jeopardy.

If people don't know about Jeopardy, it is one of the most unheard of, but very tourist friendly place. So I highly recommend folks go out there, get some culture.
But Bombay is just such a hotbed.
It's called Mumbai now. But the reference to Bombay is an interesting one because I'm perhaps dating myself by calling it in Bombay.
There is a switch over to people that call it Mumbai now and.
Yes.
And the school has you know, it was a school.
Which is regarded as one of the best engineering schools in the country.
It's called Bombay, and it has produced strong technologists, engineers and board leaders over the decades that it has been in existence.

And most of all, of my grounding in mechanical engineering and fundamental science and math and problem solving and logical thinking came from my time spent in the classroom as well as with my with my classmates, who are who are all amazingly, amazingly sharp. And so every day was really a step in humility in being in that classroom. And so one of the things that I was just starting to get more passionate about was pursuing fundamental research in the world of thermodynamics.
And so as I started to think about where could my educational need needs be solved, the best, Purdue just stood out because Purdue has a great tradition and history of having a very, very strong program around mechanical engineering and thermodynamics and aeronautical and aerospace engineering and so forth.

For me to be able to come there and work on a project which was at the time supported by the Air Force, was just a dream come true for a while. I'd call it college graduate at the time who didn't know what they were walking into.
And I think my discipline around thinking about difficult research and technology topics and how do you break it down into smaller chunks of solvable problems in a very methodical way and being able to communicate what you're trying to do from a project perspective and the impact that you're looking to deliver actually came from my time at Purdue. So I'm just super thankful for both my experiences because they've all been very formative in what I have been able to become over a period of time.
So just clarifying the program had something to do with the U.S.

Air Force, did they? It was just a scholarship.
It was a research grant, which is very typical of government agencies to give to universities to work on fundamental theoretical science related projects. And so the project that I was working on there was quite fundamental and technical in nature where if we were able to develop predictive models and again, this is early stages of A.I., we were trying to drive and develop predictive models of exhaust gases that come out of jet engines as they travel at different speeds and different altitude and be able to model that so that the Air Force could get a better sense of how efficiently their aircrafts are running and also what the carbon footprint impact.

The last question I have for you and it's probably not going to be part of this podcast, but I collect them together from everyone I talk to and that is what book has been very influential in your life.
Either it's one you read over and over or you give as a gift or and it doesn't have to be something from Harvard Business Review, right?
It could be. It could be Winnie the Pooh.
But what what book is a big deal to you?
Hmm.
Oh, that's a tough one.
And it also may make it also reminds me that my reading habits have even taken a hit in the last few years.
I was a voracious reader growing up.
You know, I would say that.
And if I if I watch this, I think then I will have to correct myself.
But true.

Not written by one of the illustrious CEOs of Medtronic, which was the health care devices company, was a book that really stood out because there was a period in time when I was contemplating going to business school and I was trying to read books on what are different leadership models that exist that people have practiced more effectively then, I guess, to writing and pedantic models and.
True North. The way the book's written really gives you a framework of how you think about being your true self, being that authentic leader that everybody can become in their own way.
Because effective leadership is as much about applying the principles to the external world around you as it is to applying it on your own self.

And you can't do it unless you are very authentic with who you are and read what impact you want to see happen.
And you can only do it in your own authentic style without actually copying somebody else's model because you don't know their life journey.
You only know maybe a fraction of what anybody has gone through in life.
And I think that book really appealed to me because it gave me the framework of thinking through leadership. The second thing I would just point out, and it's hard to name one and this is why I hesitate, but I do go back to my MBA as a business cases, which I believe is some of the best and effective form of literature that's out there.
And it's also accessible through the We are publishing house in many cases.

But being able to read those those case cases again and again over time and be able to reflect back on them as my own life's journey has evolved, has truly been very interesting and eye opening because the learnings that I received there, these were like booster shot learnings that have been very, very, I guess, transformative in my in my own career journey.
Those are my questions for. Is there anything else I'd like to add?
No. I think you you covered it all.
Perhaps if I could leave your listeners with one message, I would just say that I would just really like to bring a call to action to all founders and technologists in Silicon Valley.
We're sitting here on Sandhill Road. We're looking to partner with Silicon Valley talent, Silicon Valley, such a marketplace of talent.

And I would like to see more talent come to create AI enabled businesses in the worlds that we operate in of industrial and energy management, because this is the new rise in energy transition.
And if industrial air is not on your radar, it should be as a listener.
And there's a huge opportunity to build highly valuable businesses that are also achieving a more sustainable future for everyone on the planet.
So I would love to have your listeners reflect on that messaging and come talk to anybody who offers that as the venture.
And the last thing is give me the pronunciation of your last name so that I Sure, I'm sure I get it right when I say it.
Chapter ready.
With a v chaturvedi.
Yes.

I think I'm good.
All right, hold on. Turn off the fan.
All right. So the video is just so that we can see each other, you know, interact, etc..
And.
Do me a favor and go to ten for me.
One, two, three, four, five.
Good.
Yeah. I think we're okay on that. Good. Excellent.
All right, so this is very casual.
If we get halfway down to a conversation and you think to yourself, you know, wait a minute. What? What was even the question?
Just wave your hands in the air and and it will just start over.
So, yeah, very, very easy.
So we've talked to other companies that have, you know, started venture firms, notably Airbus. And then they invest in companies that that encourage and expand air travel.
In your case, what are you investing in?
What are you looking for?

/content/Preprocessed_Data/SHR Investing in the Whole Burrito.txt

Well, certainly Chipotle was founded on this idea that better food and better ingredients not only taste better, but are better for people.
And that's become a movement.
And people are now looking for more nutrient dense, additive free, preservative free food options.
And we found that innovators and entrepreneurs are now really interested in forming companies and creating technologies and options that encourage sustainable farming and encourage real food.
We think we're really well positioned to be an accelerator in this space.
One of the things that's unique about Chipotle is that we're 100% company owned and operated. We're not a franchised organization, so there isn't a third party that we need to get involved when right.
When they want to make a change. You can make a change.

We can make a change.
By hitting a computer key. Yeah.
Well.
I mean you can sense sometimes.
Is that.
Every every location.
Right. And you're not going to get you're not going to get any pushback because you own those locations.
Exactly. And for the entrepreneurs, we're a great sandbox.
You know, we can we can try something new in one or a number of locations or in the case of our digital business, virtually, and then refine it and scale very quickly.
We've also got a very strong balance sheet. So we've got the ability to to look forward and invest in things that will help sustain our future and the future of the entrepreneur. So as we were thinking about all those ingredients, it seemed like a really good time to launch this type of fund.

So not only are we investing in in companies and and technologies that are aligned to our mission, but we're also looking for things that can help accelerate our business so we can we can become a customer as well as an investor in these companies.
Have you invested in anything yet?
We have not. We had a really, really strong response to the launch of the fund and are in conversations with a lot of companies right now in our funnel.
And I expect here in the coming weeks we'll be able to make announcements about our first investments.
How much money are you dealing with?
So we've committed $50 million to the fund to start.
We've got the option to increase that if we choose to do so.
It's a we're the single sponsor of the fund that we're not involving other companies or entities right now.

So again, we've got the ability to make the decision unilaterally on where we invest, how much we invest, and whether or not we want to increase the size of that fund over time.
Have you set a metric for success? I mean, you know, in a traditional venture firm fund, it's well, we want X percent, right?
I mean, we want to grow our limited partners money.
In your case, it necessarily isn't necessarily that you would make money on it as much as it could be that you could grow your operation in such a way. That man, had we not invested in this corporation or this company or this idea, we would never have been able to double the number of restaurants.
Right? Right. For us, it really isn't.
And we talked to a bunch of others.
In the end, I think.
It's me, but I don't.

You kind of got your sound went away there.
Count to ten for me.
One, two, three.
Okay. Yeah. I think that was. I think it was my cheap speakers anyway.
Okay, start over, if you would.
Sure. First, it's an end.
You know, we talked to a bunch of others in the industry when we were forming this fund and thought these ideas should stand on their own as an investment.
And we've got the ability to improve our operations, to support our mission, to support sustainable farming, do all of those things at the same time. If there's an opportunity where we feel like, Wow, this would be a great company to partner with, but the investment may not make sense.

That's a situation where maybe they become a vendor for us and not something that we're investing in. So we expect to have returns on the capital that we're investing, as any investor would, and we believe that the companies we invest in are also going to help to play with our with our strategy and our future growth.
Tell me about the genesis of the idea.
You know, was somebody in the boardroom, was it?
Where did the idea of, you know what, I think we ought to have a venture fund.
It was part of our executive leadership team meetings.

We have had some success in investing in companies like Neuro and found a lot of traction there in terms of synergies of culture and idea and innovation and thought, is there an opportunity to expand our influence and to become an accelerator of these ideas? We we were getting pitched a lot of things and didn't have a formal mechanism for how we might invest or go through the funnel to figure out whether this is an opportunity to partner more as a as a supplier and customer.
And within those meetings.
Well, I was just going to break in and say for the for the listener who's not familiar neuro are those little robot trucks.
They almost look like giant igloo ice containers.
Right.
Right. Automated robotic food delivery.
Yes. Neuro is all about.

So as I struggled, as I tried to imagine what sort of investments you're going to make, is that a good example of one?
Or is there, you know, give me even if the company or the idea doesn't exist, what sort of things do you imagine you're going to invest in?
Well, recently we made an announcement that we're piloting a robot named Chippy that fries chips in our restaurants.
And many people may not know to pull a French fries all of our chips in our restaurants every day.
There's a lot of wasted time in that process where a crew member needs to just stand by the fryer and attend the basket.
And Chippy gives us the ability to automate several steps of that task.
So a crew member doesn't need to make a decision of standing in front of a fryer or serving a guest in line.

That's a revolutionized way of thinking about repetitive tasks in a restaurant, and that's the type of thing that we would want to sponsor and be able to help accelerate.
As we look forward to kind of this combination of people and technology to solve problems. There's some really forward thinking companies that are breaking some glass.
It is remarkable the number of innovations there have been in in fast food and fast casual food.
Certainly, the Starbucks app comes to mind.
You know, this idea that I just type it in as I'm sitting at a red light somewhere if I'm 5 minutes away and then I just pick it up and you you actually help develop that.
Yeah. I was part of Starbucks during that creation of their app.
Yes.

So you and you you were with Starbucks before you were Chipotle for something like 17 years. Right. So you went from everything, maybe the cash register, you know, had the cash register, had some some digital digital maps to it. All right.
Through the invention of the iPhone.
And what can we do with this?
I can't think of a time in which, you know, any store or store chain or restaurant has ever gone through that much transformation or that much transformation has happened around them.
Yeah. You know, I believe in an apple.
And you talk about the iPhone was a great catalyst for this new type of change. Apple reimagined the way people and technology interact with one another, and I firmly believe the best technologies are the ones that elevate or enhance human experiences.

This idea that, you know, back in the nineties, if you bought software, it came with a huge user manual.
And now when you buy a device like an iPhone, it doesn't come with any user manual.
It's intuitive and easy to use.
That's been our design philosophy, frankly, for all of our digital experiences.
They should be intuitive and frictionless and fun and engaging and represent the voice of your brand and what you stand for in a way that they engage people and help them through their day.
And then along comes the pandemic.
And many of the changes, I think, in restaurants would have been made anyway. You know, the kiosk, for instance, is both more convenient.

It's lower cost for the restaurant, and it's healthier in the sense that you don't have the person to person interaction that you used to have.
The pandemic then changes a lot of things as well, and I think a lot of that stuff's going to stay around, even even post-pandemic.
Yeah, I think so too.
At Chipotle, we started our digital journey in 2016 and frankly were inspired by Uber.
I think the reason Uber was initially very successful was not because they just had an easy to use intuitive app.
They made it really easy to be a driver and pulled the threat of digital all the way through their business model and experience.
And in 2016, as we built an app for Chipotle, our digital business was maybe $100 million at the time.
It was primarily sex driven.

Our decision was to build a dedicated digital kitchen within each restaurant so that a crew member never had to make the choice of serving the guests that was standing in front of them versus serving the guests that was coming in digitally. And all of that foundation was put into place in rapidly, again, company operated business by 2018.
All of our restaurants had a dedicated digital kitchen.
We had pulled that thread completely through with technology into those digital kitchens that show a crew member visually what to create in the entree. So we're not using a bunch of text to make it fast and accurate. We built logistics software to do.
Inventory of the orders that were coming in so we wouldn't overwhelm a restaurant and could give a guest a promised time for pickup.

We pioneered to Portland.
You know, it's appalling. The average time in a Windows 12 seconds, the average time now to order digitally and be able to pick up is under 10 minutes.
All of that was put into place before the pandemic and the year before the pandemic started. We did $1,000,000,000 in digital business.
We did three and a half billion dollars last year.
So you can see how dramatically what was a strong business for us continued to accelerate. And to your point, Scott, I think a lot of people that had not tried digital ordering, had not tried what we're doing here with video collaboration, started trying it for the first time, and now it's become part of their routine.
And for us, we're seeing our dining room business recover.

Eating is still a very social thing and something that people want to share.
But there are occasions when ordering dinner for your family and picking it up at the restaurant is more convenient for people, and now they've been exposed to that experience and know what to expect.
So it becomes an additional channel of access for us, an additional occasion, not a not the order situation it was during the pandemic and more that and situation that we're seeing now.
And that's the same with hybrid work. You know, it's I don't think it's going to go back completely to the way it was pre-pandemic.
And I don't think we're going to swing all the way to where we were during the pandemic.
People are finding the place in between that works for them.
As a customer who sometimes stands in line.

I appreciate you having the digital kitchen where I'm not I'm not seeing the employees that aren't helping me.
In what other ways are you changing the restaurants physically or might change the restaurants physically?
Because I it's fascinating to watch it, for instance, with Capital One banks, you know, there are no tellers. I mean, there are people.
But we you know, they don't stand behind a desk and there's, you know, a coffee bar and that kind of thing because they've rethought what a bank's going to be.
And it's interesting to see other businesses rethink what it is they're trying to accomplish and then physically change around that.

And we spend a lot of time in our restaurants seeing what it means to be a customer and how people are are eating and seen what it means to be a crew member that's serving those guests.
I don't we're not we're never going to go away from a human experience in our restaurant.
Chipotle is like a farmer's market in the morning.
All of our vegetables come in whole and are chopped.
We have people that have been trained in culinary arts that are cooking fresh, and it's nice to be able to come up to the counter and have a conversation with somebody.
And that's part of what our front line amenity is.

If you want a little bit more rice or I was in a restaurant the other day and the customer wanted just the green peppers and not the red peppers, you know, that that type of customer service and just say yes is what we're known for.
What we're seeing with the digital customer is it's not just to order ahead and pick up.
Often it's order ahead and eat in the restaurant.
And that's really making us think about how we create those spaces so that it's intuitive for people about, you know, where they go to pick up their food and they're welcome to stay and eat if that's something that they choose to do as well.
Certainly the Chipotle experience was us rethinking the way people use our restaurants.
Our brand does not lend itself to a drive thru.

If you've been to a Chipotle before, you can imagine coming up to a microphone and going through the order process.
And not being able to see all of the different things.
And yeah.
And you try to do it in the order of why want to bowl with chicken, white, rice and black and then being the person that's trying to ring that in in order to get it right all the way through making sure that we do it correctly for the customer.
Our digital ecosystem makes all of that seamless, and when we first launched that, we thought people would be confused.
They would be pulling into the line and looking for the speaker.
And that hasn't happened at all. Right.
This is a line where you just if you've ordered head on the app, you just pull in and get your burrito.

Exactly. And people adapted to that very, very quickly.
And those restaurants are among our best restaurants in terms of volume, in terms of digital business and guest satisfaction.
So all of that's about looking at your physical and digital assets and figuring out ways to recombine them to meet.
Our customers are going.
Now, as you lead this fund, this Chipotle, a venture fund.
You don't you have lots of experience in the restaurant industry.
You don't have experience in the venture industry.
What makes you think you're going to be good at it?
Well, I think it's all about being a good partner in an accelerator.
And we're not looking at these investments in such a way where we expect to be on the board or advising companies.

We're looking at it more through the lens of we know that we can be a really good customer. We've cracked the code, if you will, with our stage gate process and how we rapidly iterate prototype tests and then scale solutions.
Now it's about finding those opportunities in those companies that can also use funding to help get there.
You know, generally speaking, as a customer, we see companies that are later stage that have been through some of that funnel.
And we think there's an opportunity to, you know, help accelerate and influence the direction as an investor as well.
And, you know, and we'll see. We're we're early days into it.
We were speaking earlier about how you were at Starbucks for for nearly two decades and before that Wendy's. Yes.
What have you. What do you know that.

I don't know. Having worked at Wendy's and Starbucks and Chipotle for so many years. You know that.
What do you know about the the fast food and the and the casual food industry that the average person on the street doesn't know?
Well, I wouldn't want to presume, but I will say that the experiences that I've had have really solidified for me that there is magic that's created between human emotional experiences and technology.
And that magic can be whether you're an employee of a restaurant or a customer, there are very few things that are as personal as food. You know, it's a product that you consume and put inside you.
It also has a lot of social power.

It's woven into how we celebrate, how we meet one another. More than nutrition, it's a way that people connect, and there's a responsibility that comes to that.
You know, we often say that we've got the opportunity to make or break somebody's day.
And it can seem like a really small thing.
But, you know, when you've gone to a restaurant, had a really great experience and the food is great, it can change the trajectory of your day.
And when you get it wrong, it can do the same thing.
So we feel a great deal of responsibility in in all of the service businesses that I've been part of to get that right.
And finally, what's your favorite thing to order?
My favorite thing to order. You know, it's funny.

I think breakfast is something that people are more habitual about than lunch or dinner, and I change my order all the time.
If I had to say there one go to that I go to more often than anything else. It's our barbacoa quesadilla that barbecued shredded beef and the cheese melted on a case.
A dinner with some pico and some sour cream to dip it into is making me feel like getting lunch here at 821 in the morning on the West Coast.
Those are my questions for you. The things I should have asked that that I was too naive not to ask.
Things you should have asked that you were too naive.
Not to ask. You know, I think.
I first of all, I enjoyed meeting you and I enjoyed the conversation.
It was.
Fun. Yes.

I think your questions are right on. There's you know, I don't believe that the restaurant business is ever going to be pushed away by Amazon.
You know, it's still something that you make a choice in the moment to do and that you want to do with others.
It's really exciting to see how the digital and physical worlds are starting to intertwine as it relates to those experiences.
And the companies that win are going to be the ones that correctly balance the human aspect of what it means to be in a service industry or in the restaurant business and serving guests, and the acceleration in the experience that can occur, the amplification of the experience that can occur with technology.
And I love being at the intersection of those.
What company out there.

You know, if you think of Burger King keeping its eye on McDonald's or that sort of thing, what company is doing well that you guys keep your eye on? It's not well because, you know, that's it.
Both kind of serve Mexican food, but not really.
I mean, I wouldn't even compare the two of you as being similar.
Now, interestingly, we compare ourselves to other leading lifestyle brands and not other restaurant companies.
And we're really fortunate to have an energized, passionate, young, diverse customer base.
And we know that the experiences they're having are with other leading lifestyle brands.
So, you know, a company that I really admire that I think has incorporated technology into physical product is Tesla.

So they're using a lot of technology in their product and in their manufacturing process and with how people interface and use their vehicles.
It's also a durable good and a physical good.
I really like what companies like Nike and Adidas are doing with personalization and how they're creating a sense of community.
I like how Peloton is using their badging in their Peloton community to connect people to feel like they're in a broader gym environment with a leaderboard and others.
Why they're at home. I thought that that's been brilliant work they've done to create a virtual community that feels like a physical community for something like working out.

I mean, those are the types of companies that we look to because we feel like somebody that's coming into Chipotle is experiencing those brands as well.
That's perfect. I really appreciate your time.
Likewise. Great meeting you.
Thank everybody for me for setting that up. That was that was fun.

And it does not mean if I am doing that, it does not mean I'm not interested in what you're saying. It just means that, you know, I've got it.
I've been more than one job at once. Right.
And if you're comfortable there, that's.
Oh, good, good, good, good.
This is very casual. And if we get halfway down, you know, a thought and you stop and think to yourself, Well, what was the question?
Just wave your arms in the air and say, what was the question?
And we'll we'll edit it out. Or you need to know.
No problem. Have a good coffee or anything else.
Let's start with what you had for breakfast so I can set your audio levels.
What I have for breakfast. I didn't have anything for Broadway.
Is that because.
You're on a what do they call it?
I generally don't have much kids.

Do these days. The fasting?
No, definitely not. I have coffee in the morning, do emails, do board calls and.
Don't generally eat much in the way of breakfast.
If you're on a lot of boards.
I am on 18.
That's a lot.
It's a lot. You know, it is what I do for a living.
I always tell people that, you know, and half of them are like an hour a month.
So it's not as much work as it seems.
You know, the good companies run themselves.
Don't take a lot of interaction from board members.
The bad companies, on the other hand.
I mean, at any given time, there's 3 or 4 companies that need a lot of work and.
I have a couple of those right now.
All right, well, grab my notes here.
Okay.
So you invest in all kinds of things.
Cloud and biotech in AI, of course.

But the one thing I wanted to start with was semiconductors.
Hardware's hard. It is.
Well, it it's it's gotten well.
Hardware has fallen to under a bunch of categories.
But if you talk about semiconductors per say, what's gotten really hard about it is how first of all, how much it costs.
I'm making cost 50 to $100 million to do a tape out of the three nanometer part.
So one is has become much more expensive.
The second is there's almost no suppliers, as you know, Everybody knows that.
You know, TSMC is a bottleneck for for lots of companies and.
So you have you have access to the technology.
Even if you have the money, that can be a problem.
And then you have the the length of time.
So semiconductors, semiconductors fall into different categories also.

So you have, you know, CPUs and GPUs, the Nvidia stuff that's the most difficult, most complex stuff. And there's a huge amount of action in that space now because of artificial intelligence. So there's a bunch of companies trying to create these really complex chips to be able to handle certain workloads that didn't used to exist. And the, you know, the Nvidia chip, which is fabulous, you know, is a is a general purpose chips and not as all these, you know, companies getting started to do the specialty things.
There are also semiconductors to be clear that are way less complicated than the.
Go in a toaster.
Yeah yeah exactly. I mean you know there's there's sensors and connectors and, you know, all kinds of stuff. Those aren't nearly as complicated.

And what's exciting about hardware today and we we at Sloss are primarily a hardware investor, you know, as much as we can be is that I'm sure you'd get around to this question, which is how is A.I.
changing the world? But one of the things that's happening is the the need to access so much more data than we ever needed and to control it and to query it. And all that is is going to require is requiring a complete remake of the hardware systems.
So that's you know, that's semiconductors.
You know, it's servers, it's memory, it's optical connections for higher speed.
It's it's bigger data centers and energy management.
So there's enormous amount of activity now in the in the hardware areas because of A.I.. It's really exciting.
And a lot has changed in the world of semiconductors.

I mean, we're restricting some sales to to China.
Some of the chips you were speaking of, right.
And the government has stepped in with this chips bill funding. Some of that bring me up to speed as to as to where you are in where you fit in all that.
Well. What a complicated and nuanced question.
Yeah. I mean, if I could if I could step back a little bit and I'll come back to the Chips Act and stuff like that.
You know, I have a background from my years at Flextronics and, you know, global logistics management, and I'm considered somewhat of an expert in that area. And the geopolitics of China, Vietnam, India, which is basically people trying to move out of China and get into Vietnam and India, It's basically impossible, Scott.

I mean, it's people I mean, around the edges, it is impossible to separate supply chains in any meaningful way.
And I can give you an example of this just to highlight how complicated it is.
So there was a you know, there was an earthquake in northern Japan, you know, some years back, whatever it was, 8 or 10 years back, and took out some buildings in in Japan in a smaller city.
And 90 days later, there were no red cars on any lots in the world because one of the factories was taken out, was a company making an additive that went into red car, you know, paints.
And they were the only supplier in the world and they probably didn't even know it.
You know, it's several steps down the supply chain.

And I use that as an example of how complicated it is. It's one thing to talk about the chips will come back to chips to what TSMC does, but it's another thing. We go down to all the chemicals and materials that go into each of these things and it is it is necessary but not sufficient to have these kinds of factories, not in China or Taiwan. But that doesn't solve the problem of the suppliers to the suppliers, to the suppliers. So it's much more complicated.
So if I'm if I'm a large corporation and I want to diversify out of China, it one one pull of a thread would create another pull of a thread in until it was impossible.

Exactly. And that way you saw it with, you know, with, with batteries, you know, the whole heavy industry and you know, other rare earth metals are coming out of China.
And now there's some changes. You know, people are investing in mines in other places.
But it's an example of how complicated is circling back to the Chips Act.
It's a step in the right direction, but it is not a way of separating the supply chains because you have all these other materials that go into chips and circuit boards and systems.
And so, you know, what I think about the Chips Act is if we're really going to try to decouple from China in any way, then, you know, these these I used to be on the board of Santos, as I'm sure you know.
You know, you're talking about eight, ten, 12, $15 billion now to make a fab.

So that's the kind of thing that takes government support.
And so I applaud the efforts.
I'm just a bit skeptical that it's really going to work for the reasons we just discussed. And on top of that, you know, it's an enormous amount of skill set that doesn't in and of itself exist here.
And TSMC saying so like they're going to be late, you know, late delivering their their their chip factory because they can't hire enough of the right engineers.
These are very complicated.
And I've heard that before. And it's not that Americans are dumb by any any stretch of the imagination. It's just that we have not been training people over the decades the way that they have in Taiwan.

That's exactly right. And so you you're going to try to and these aren't things you solve by go and get some engineers out of engineering school and training them up.
So, you know, you have to import people coming in from, you know, coming in from Asia.
Fortunately, there's lot in Taiwan.
So that's not China per se, but it is sort of caught in the mix.
Well, even then, you know, that that we're dependent on Taiwan, which we would defend as a democracy in a sphere of influence.
That's important to us. But it becomes important of defending Taiwan simply because of the chips.
That's right. Well, you know, I tell people all the time, everybody has everybody.
And I think TSMC is the most important company in the world today.
You mentioned being the CEO of Flextronics.

They call themselves Flex Now and that you were somewhat of an expert, I think is how you phrased it. But in fact, this is the third largest manufacturer in the world.
So you are quite the expert on manufacturing and the supply chain. But for those who don't know, what does flex flex what you guys call Flextronics?
Yeah. What does it do?
Well, so the company manufactures electronics for four other companies, which.
Turns out to be just everything.
Well, it's everything. And, you know the history of that business, just to show how complicated it is.
Originally was it was board stuffing.
It was people who sat at tables and put chips on boards.
And that's how the industry started back in the in the late 60s.

But over time, it morphed into then buying all the materials and the companies got bigger than the customers. And so everybody, the customers wanted them to buy all the materials.
Then, you know, then it went to two doing testing that.
It went to designing the products and it went to, you know, product introduction centers everywhere. And to give you a sense of how complicated it is, I, I retired in 2006 from Flex.
At the time, we had 300,000 employees.
We had factories in 26 countries.
But here's the incredible one is we had 15,000 suppliers and we were responsible for every one. Now you're talking about a really complicated business and low margin.
That itself is its own country.
Yes, it is its own culture.
Yeah.
So Foxconn, of course, is number one is big.
Right. Million employees.

But so people, you know, relate to their everyday lives.
Flex would make the Xbox End and Mac computers and at one point made Legos.
Well, that's correct. That was after my time.
Right.
But Legos.
Yeah. Well, you know what?
What Flex tried to do and what San mean is trying to do with some of these companies they're trying to do appropriately is find other areas that are less sure, less competitive and hope to get a little bit of extra margin.
That hasn't worked out great.
You worked in factories as a young man as well.
Right.
Was that you.
Worked in factories as a young man as well, right?
Not really, no. Okay. I mean, I was really flexible.
Was really my first foray into Romania.
What what skill set did you bring to Flextronics that that made you a CEO and made you successful?

Well, I had worked at the company a few years before.
I put together a group of investors, which was Sequoia and Kleiner Perkins and those and, you know, I was running a factory for them.
And it just, you know, the company wasn't really very good.
I had a customer you may find this interesting, actually was a junior at the time, you know, because I was a Harvard Business School guy. So I didn't you know, I'm not a not a technical person, engineering person.
And I was running this factory and he took me out to lunch and he said, Son, you know nothing about manufacturing.

And he gave me a book called World Class Manufacturing, which I went home and stayed up all night reading when I actually know nothing about manufacturing. And then over time, you know, I got interested in it and I know quite a lot about it. But manufacturing is complicated.
There aren't that many people who are really good, frankly.
It's it's why why Flex and Foxconn and these other companies exist because inside of most companies, if you're Microsoft and you have the Xbox or you're at Apple or Google and these companies.
You don't really rise to the top through manufacturing and operations.
You know, you rise to the top through R&D or sales and marketing, occasionally finance.

And as a consequence, these companies aren't naturally inclined to dedicate resources to operations and manufacturing.
Then along come these companies who are really good at it and they go, Well, you do it for us.
So, oh yeah, yeah, we're going to be good at one thing.
Well, we'll leave the details to you. Right.
What what is an important skill set to run a factory and whether that's, you know, some monstrosity like Flex or even just the factory down the street, the manager, what is he or she doing?
Well, that is different than any other job.

Well, if I can take the question in in a slightly broader context than just manufacturing itself, the most complicated and the most important part is managing the suppliers. And the only reason I made that a bigger question is because sometimes that's the factory manager. Sometimes it's a different part of the organization. But being able to get materials in, you know, on time, proper quality and then have a manufacturing mindset that that reduces the amount of time it takes to manufacturing to manufacture those important, important skills, because that's where all the capital is. You know, if you have lots of inventory, takes a long time to rework things on the floor, you know, that takes up a lot of capital.

The mindset is you ask the question what kind of mindset it takes to be successful.
Is this constant improvement? You know, which Toyota started back, you know, 50 years ago or six years ago. But it's always looking at reducing the amount of time it takes to do things, reducing the the the quality defects.
And if you have that that sensitivity to how important those things are and you continue to drive them day in and day out, you can make a successful factory, whether it's, you know, making chairs with ten people on a line or, you know, hundreds of people on a line or, you know, building Boeing aircraft, thousands of people on a lot.
So before I ask more questions, I want to circle back to the semiconductors.
What you said you're heavily investing in in hardware.

Yeah, hardware is difficult.
Hardware, you know, software scales, right.
Hardware is much more. Why invest in hardware?
What's the appeal to you?
Well, probably, you know, if you're a hammer, everything looks like a nail.
So, you know, two of the three partners of the general partners it cites came from Flextronics.
And so.
We just know a lot.
Of the factory guys. Yeah.
Also, if I can if I can answer the question this way, and it's an important one, especially when you look at how people are investing and venture these days.
Is there so many people who only want to do software for the reasons that you said?

You know, it's scales, there's no inventory, you don't have suppliers, you don't have all this kind of it's magic. Yeah, that makes the hardware area interesting from the standpoint that there's not lots of firms that do it.
And so, you know, we get kind of our pick of this of the stuff.
People want to have us involved and old people don't want to be in it.
So it makes for a better investment thesis for us, given our backgrounds.
One of the good examples of how difficult hardware can be is GoPro.
When you were on the board for quite some quite a while, right?
Is, you know, you start with this magical product, right, that everybody wants, but a few years down the road, it's got to be a lot less expensive.

And then there are people who I mean, I can go on Amazon and get a GoPro equivalent for for very little money these days.
It's sometimes a race to the bottom.
Well, it isn't actually in GoPro when you say sometimes it's race to the bottom. Of course that's true.
You know, for a commodity product, GoPro is not a commodity product.
The problem there, GoPro has like 96% of the market.
Yeah. You may be able to find something on Amazon, but it won't be the equivalent.
The problem there is that the market shrinks.
So everybody who's active and wants a camera is using a GoPro.
But as you know, you know, other cell phones have have gotten better and better. The cameras have gotten better.
The you know, there's all kinds of ways to hold them and all kind of stuff.

So the big problem that GoPro has had and it's a it's a wonderful company, a wonderful product, is that the market is shrinking.
And so if you own 100% of the shrinking market, that's not going to be a good story.
And you know, for that company to continue to grow and and achieve new things, they're going have to move into other markets. And that's not easy.
Speaking of factories, you were CEO of Tesla for a little bit.
You took over for from Martin.
I suppose first I want to ask what you think of the Cybertruck.
Well, I'm not a truck driver, so I pay too much attention.
I think, you know, I've obviously been asked about this a lot.
Sure. Because, you know, because of Walter's book and the whole thing, I mean, when I took over. So.

So to be clear, Elon is the one who hired me to run Tesla.
Not not the others, even Elon.
But it went. Martin Then you.
And it was. Yeah.
Correct. So but but Elon was on the board.
Yes. And he was the investor. And he's the one who asked me to step in and take over from Martin You know who you know good guys who started that company, but but, you know, weren't skilled to do the kinds of things that it takes.
There was not really a factory when I was there, to be clear.
I mean, we were just designing the first car and, you know, it was being done in a garage and, you know, up in San Mateo.
It was an interesting project from for for me from the standpoint that I'll tell you this funny story.
It's, you know, was written up in Forbes.

You can find it on the you know, when you Google me or whatever.
But when I when I took over.
The car wasn't really finished and there was orders for materials going back to the supply chain to to, you know, build cars in January, I think was in April or May. So there's this whole supply chain and the car wasn't finished. So I sat down in a conference room with the manager, said, I want a list of everything that we know that is going to keep us from shipping a car. And that turned out to be 54 items, one of which was a transmission.
We didn't know about this mission.
So what I did and Ilan will admit to that because it saved the company.

I made him cancel every order for the materials and came in because we were going to get $25 million of materials coming in and not be able to build a car, and that would've been the end of the company. And those days, you know, you didn't have a lot of money like the board members didn't have a lot of money.
And it shipped the car shipped in January, but it had a different year attached to it that January. And, you know, look, it was it was a pleasure to do that.
I made a bunch of good friends there. And in fact, interestingly, I just yesterday had lunch with with one of the board members at that time I haven't seen in years.
And, you know, Ellen's gone on obviously to do just magical stuff with it.
Is a bestselling car in California.
It's it's a remarkable thing.

You know he's a controversial character, as everybody knows.
And but goodness gracious, what a great thing for the world he's created. And the fact that he's a bit of a whack job, even he knows that it's just part of the drill.
When you were there, you know, you you you speak of how desperate it was. I mean, my notes have written down scrappy.
The Tesla would have been scrappy at the time.
But when you're CEO and you know that every dime counts, the idea of building a car company is almost insane.
A car company?
Yeah. Well, in in those days, what we were what we were doing was designing the car.
You know what Elon did that was so great was turned that design into a manufactured product, which is really.

Which is funny because you think you'd be the guy who turned it into the manufacturing process.
Yeah, well, look, I had another job at the time. I mean, this is I was a site.
I always thought the.
CEO of Tesla was a side hustle.
Well, what I agreed to do is hold down the fort until he could bring reinforcements.
But. But what what you said in the beginning of this of this interview is right, is that manufacturing is really hard and car manufacturing is especially hard. For one thing, you have real competitors, you know, who know how to manufacture.
Who've been there for nearly a hundred years.

That's right. Yeah. And so to me, the fact that they became Tesla has become such a good manufacturer because of my background is even more magical than the fact that that that they design really good cars hard work.
The venture world has not been scrappy in the last ten years or so.
I always struggle to describe the market conditions were in because the data keeps coming in with good news.
You know, inflation is down, the unemployment rate near.
So it's you know, I don't know what market condition we're in, but Venture has been forced to become scrappy, scrappier, and I think that's a good I think that's a good thing.
Always is a good thing. Look down downturns in markets.
I mean, we've had several downturns in the in the technology space.

You know, we had a downturn in the technology space.
It flows through all all elements.
Downturns are good because they make they they weed out the weak players.
They they make the investors more disciplined.
They make the companies more disciplined, spend less money.
You know, we've all watched these you know, we watched the SoftBank entire global of the world. You know, it's quite interesting.
Lots of them. I mean and I'm fans of these companies.
But but, you know, we've we've watched them pour money into companies and then, you know, you have this downturn, a bunch of them go broke.
I mean, we works the world go broke and then everybody gets more discipline.
And to me, there's nothing bad about that.
And we're we're in a downturn the cycle.

But but now, as we were talking earlier with artificial intelligence driving all of these changes in more software companies, more hardware companies, all this kind of stuff, it's a wonderful time to be an investor.
But but prices are down. People are more just when there's just no bad news there.
Are you seeing that in your in your startups that they are realizing the scrappiness that they need to have?
For sure, in fact.

And that's what's really necessary, because when you when you look at venture and to a certain extent the growth markets and p e markets, I mean, you know, people aren't very disciplined in how they use money unless they're forced into it, either forced by the investors or forced by their fear of not being able to get more capital everywhere and every one of our companies and and everybody's companies, everybody is really tightening down the hatches.
And and as I said, that's a good thing. People are getting much more careful about how they spend their dollars. And that's just a really good thing.
So and for sure, we're an environment that's rough in this area.

I mean, companies are really tightening down the screws on capital because they're afraid they won't get capital and there's a risk they won't.
You're going to see many more bankruptcies people just want.
Going away, going, you know, there's just not enough.
There, there. That's good.
What are you excited about in the future?
Well, let me answer that broader first and then personally.
Second, if I could do it that way and broader.
It's that technology as has invaded everything.
If you'll if you'll let me go back to the beginnings of of a venture.
You know, in the beginning, venture was, you know, a couple of guys out of Fairchild in startup these little companies in Silicon Valley called Silicon Valley for a reason you know, basically doing semiconductors.

You know, it's 50 years later and technology the companies we at Celestia can invest in and other guys can invest and it's everywhere.
So it became, you know, first went into, you know, PCs and then cell phones and then, you know, e-commerce and, you know, then, you know, all the web enabled stuff and so like that. But now it's everywhere you look.
So it's in financial services, it's in health care management, it's in, you know, biotechnology. And, you know, you look around and you see I mean, sometimes in a week at our place, you just you see companies that are so very we just made an investment in a company, did 3D printing, rocket launchers.
I mean, you know, just to give you just to give you a flavor for it.

Right. And so what I'm excited about is how pervasive technology's becoming and how important it is.
One of the best examples is, you know, you look at, you know, Fairchild National Semiconductor back in the day. Now you've got like three of the top the, you know, the biggest market cap companies in the world or technology companies, you know.
Well, for all of if you go to, you know, Microsoft, Apple, Google but you got and Vidi and Broadcom and, you know, Intel.
And so the industry has become so much more important and so much bigger.
And so that's a general level.
There's excitement everywhere. On a personal level, I'm doing a lot in the biomedical space. And what that is, is not biotech making the difference.

Biotech is therapeutics, drugs. And and we we have only one investment in a in a drug which is an interesting technology to a company called excision to use Crispr technology which was invented up here in Berkeley to try to cure HIV. It is in clinical trials and that's pretty cool.
But we're not really a biotech investor.
What we do is invest in either the use of artificial intelligence or some form of hardware. And like we have a company, White Rabbit, that is using artificial intelligence to read mammograms.
I mean, to me, that's like so I'm chairman of that company.
I love the technology.

It's real artificial intelligence and it's doing something really good for the world. Better than getting faster delivery of food, which isn't an unimportant company. But for me personally, you know, I'm older, I've been successful.
And so I that we have companies doing using tools for improving magnetic resonance, you know, MRI eyes.
We have a company at an hour up in Japan that that is doing a noninvasive, you know, blood work and these kinds of things.
And so I'm spending a bunch of my time with these companies just because at this stage my life is more interesting to learn about new things, that to do more manufacturing stuff. But anyway, the fact that that technology is ubiquitous is really, really cool.

And at this stage of your life, what advice would you give someone just entering venture, somebody who had not been there during the dotcom boom, who had not been there during the financial crisis?
Well, what I recommend to people, easy for me to say is get an operating job first.
Yes.
You know, get some skill, understand how companies operate, what makes companies good companies, what makes them bad companies?
Because too many venture investors, well, for that matter, investors in general are, you know, are financial analysts.
And that's important. It's sort of necessary, but not sufficient.
It's important. But how companies run, how to replace executives if you need to, there's not enough of that skill set in the venture industry.

In our firm, it's last year we have three, three general partners.
We've all run companies, so we have that mindset.
You mentioned White Rabbit, and at a certain age that you want to make sure that the world is going to be a better place.
But on your list of board members, Oh yeah.
An indoor skydiving company.
Why are you a board member on an indoor skydiving company?
You're a troublemaker.
Well, there's a lot of technology in that one, but that would not be the answer.
It's interesting company that you're talking about as I fly, and it's a wonderful company. That was a company that I invested in when I was in the growth capital business at Riverwood, and it was very successful company.
We had a very successful exit.

One of the guy who runs the company today, Matt Ryan, who also we put in to run it back in the day, was like.
2014 or something, you know, ran all the operations of electronics, really strong operating guy and a very good friend.
And what happened is in the during the pandemic, the owners basically shut it down and we bought it for nothing.
And we had the guy who'd already run it.
I mean, literally we bought it for $12 million.
And today it's doing 150 million of revenue making $35 Million. And you know, Matt Ryan, the guy who ran it back in the day, still runs it.
We're all friends. So that's one of the boards.
It takes an hour.
A month. Okay. Yeah. Right, right, right.
And he's a terrific operator.
And it has its ups and downs, right? Yeah.
Yeah.

Well, it's down a bit now as the economy is weakening for sure.
Yes. It's very.
Profitable. And Crocs, what do you know about shoes?
You know, it's interesting.
Thanks for asking that. I, I got involved with crocs quite a long time ago, since about two, 2007.
And and the guy, Ron Snyder, who who was a good friend of mine, he was a senior executive at Flextronics and he went off to this is one of the things he was putting together an investment here in Brunswick playing golf.
One day I put together some money, went and did that.
You know, that has more more relationship to flex than you might think, in the sense that that's company.

I mean there's obviously passion but but is you know is a manufacturer and a really good manufacturer and those products originally and still but but were very heavy duty in plastic injection molding which is a technology we knew very well.
And so a lot of the same kinds of approaches and techniques were used there.
I mean, I was just a board member investor.
It was never active in the in the company.
But I do have an interesting story to relate to you about this, which was I went to China three months ago and it's the first time I've been in China.
Mm hmm. You know, 15 years.
Mm hmm.
And I went to see a shoe manufacturer, a company called Shootdown, which is the flexor, the Foxconn of that world.
I have another company that.
And they're making parts for carbon fiber inserts for shoes.

And I went because I know from my flex days that that if you're little, you better get a personal relationship or they just won't be able to take care of you.
This is a big company. And I went there and it was it was like saying flex but in the shoe, you know, they're making Nike and Adidas and all this other stuff and and Crocs.
And so, you know, I saw a bunch of products I didn't even know that Crocs had.
But it was an interesting story since you raised the issue because we were talking about geopolitics and stuff.
It's just such a bummer for this guy, the guy who runs the firm and owns it.
This is a big company.

I don't know, you know, in the billions of dollars. So and they're under so much pressure because of the geopolitics. And so they're opening a factory in Vietnam and opening a factory in India. They don't want to they have this wonderful operation.
And, you know, Gwangju China And I just felt sad for the guy because it's just hard having this overlay of geopolitics when they're just grinding away, trying to build stuff. Great.
Just trying to make shoes. Yeah. Yeah, exactly.
Is this something we can fix?
That's above my pay grade. It really is in answer to the question.
I don't know. I mean, what's going to happen is we're going to have some successes and some failures. And it's just a really complicated, nuanced thing.

I mean, the shoe company can go make shoes in Vietnam or in India and they'll be okay. But, you know, back to the electronics.
The supply chains are so complicated. I'm just hopeful that these governments find a way to work together where we don't have to try to separate.
The last unusual thing that I was looking as I was doing my research that I thought, oh, that. But there's an interesting story behind that and did further research and understood why is you're on the board of trustees at Juilliard.
Do you mind if I ask you about that?
I'm not currently on the board, but I was just at Juilliard just last week, so I'd be delighted to have your questions about. Sure.
Institution.

You. Well, and you gave a lot of money to Juilliard, the landmark center for the whole work here. I did some homework.
Who is Alan D.
Marks my brother. My brother was a Juilliard graduate and a world famous pianist. And he died of HIV. Young.
A young man. So I did this in his honor.
And actually, it's part of the reason we made the investment in the companies trying to cure HIV.
Tell me more about your brother.
Well, thanks for asking. So the reason I wound up doing this, making this an investment and I was just there talking to him.
We create the Allen de Mark's Entrepreneurial Studies Center.
Is that when my brother was at Juilliard, which is in 1960s.
You know, Juilliard was just people sitting in in practice rooms eight hours a day. You know, learning to play the piano.

And so my brother took classes at Columbia at night because he wanted to understand something about how the world works as opposed to just playing the piano.
And that was the inspiration for our families.
We have a we have a family philanthropic foundation.
And it was the impetus for the it was a ten year gift, which is coming near the end now to create entrepreneurial studies.
And it's become so successful that it started out just being electives and now it's required.
There's classes that are required of every student in Juilliard to learn, you know a little bit about how financial savings work, to learn how to write resumes, to get exposed to people who have gone off and are not concert pianist or concert violinist and and have created, you know, you know, other kinds of businesses.

One of my favorite is Project Music Heals Us, which is a company that sends professional musicians into hospitals and prisons and, you know, plays for people and changes their lives and all this stuff. So it's become very key.
And my brother would have been thrilled to see what what's happened.
It's really cool.
My last question is, you have three brothers in addition.
I do. You're, you know, a very successful venture capitalist and CEO. He was an incredible concert pianist.
What about the other guys?
Well, you know, they didn't have as big of careers, if you think about it in that way. But but very successful careers, successful life, good families, good jobs. You know, two of my brothers, my twin brothers who next in age, you know, are both retired now and which I'm obviously not.

And my youngest brother has a business that he runs very successfully, so.
Well, it's a good family.
Last question for you. Unless there are other things you'd like to touch on.
Now, it's great.
Last question for you is something I'm not going to include in this episode, but I collect them together and run them all together is what book and you did touch on one. It probably is that one. What book was very influential in your life?
Well, I would say that the world class manufacturing had a huge impact on my on my life and my career.
You know, I'm still reading books that are interesting.
There's one now I try to get the title.
I mean, I read the Jennifer Doudna book, which I really I was really impressed by that.

You know, I like I like Walter Isaacson's book, but one of the ones that has been influential is one about cybersecurity and how scary it is.
Which I which I read, you know, just six months ago and putting a lot of effort in our companies into it. And you see it all the time.
I mean how compromised the security systems are and all of that that once had some some influence on me.

So, yeah, you know, I guess if you think of that question more generically, I have enjoyed reading books about people who have been successful, like Jennifer Doudna or Steve Jobs or, you know, Elon Musk or this, because there's always good lessons you can get from reading about how successful people did it. I remember reading years and years ago a book that Michael Dell wrote where he talked about, you know, dividing by two.
If you if you divide your job into in half, you get promoted.
Now, that was an interesting thing.
You know, just I mean, I read that 25 years ago maybe, and I still think about it. That's that's kind of a cool thought. So there's a lot to be learned from books.
Excellent. And stop there.

The nature of venture is that you want to back people who are taking big swings.
And so if some of them don't fail, I think that's a sign that you're not taking enough risk.
I'm Scott McGrew. Welcome to Sandhill Road.
Got my date. One hour.
We got to go.
I like to think I'm up on the latest things, the trendy stuff, the viral stuff, the tick tock stuff.
But I had never heard of marriage pact.
What if we had people take a 40 or 50 question quiz about their values and what they care about, and then we match them with their best backup match? So it's not supposed to be your soul mate.
It's supposed to be the best Backup.
Will always be my maybe thing.
Exactly.
That's Christina Mollusk, curiously, of Bane Ventures.

So Marriage Pact is a very interesting phenomenon that started on the Stanford campus.
And the founder of Marriage Pact, Liam.
Was in an econ class and that was studying market design, which actually happened to be my favorite econ class at Stanford, too. So we bonded over that.
And he said. What are what are efficient and inefficient markets?
Well, dating is a pretty inefficient market.
And how do we find you? You're perfect match.
She's invested her firm's money in, among other things, marriage pact, which has matched 131,000 people on 78 college campuses.
So everybody on campus takes a quiz.
And then after the end of the quiz.
They get paired with someone on campus.
And it just went viral and it took off.

And year after year on the Stanford campus, I think like 90% of the whole student body would participate in this.
And then other campuses heard about it and said, we want to do this.
Astonishing.
It's amazing. And so, you know, this founder had an insight about young people and what they cared about.
And he decided to just go build something.
And it struck fire.
Have you ever run your husband through it?
Yes. So Marriage PAC launched an app called Checkmate, which we can all download. And you can take a quiz.
And what was the score?
We're like 90%. Oh, good.
92%. Yeah.
Be terrifying if you suddenly say it's like, Oh.
Goodness.
Thank goodness.
I have like a 96% compatibility with the founder.
I think I might run all future founders through this.
Right. How compatible.

And you have a more competitive you're more compatible with the founder than you are your own husband with.
This this quiz. Yes.
Well, you always have a backup plan.
Yeah, exactly. Exactly.
But how do you make money off of it? I mean, how does it make money?
Well, it doesn't right now. And the question is, we don't know.
And so in consumer social, in any time, you know, you're trying to build a company that consumers come on especially want in social media, monetization is kind of the second order question.
If you have people's time and attention, most of the time you can find a way to make money, whether that's consumer subscriptions, which is the Holy Grail for consumer companies or advertisements, which is good but not as good as subscriptions, or you can sell people things.

There's a lot of ways in this company.
I think the ideal would be subscriptions that you could provide so much value to people in their life that they will pay you.
And Tinder's done it and Bumble's done it.
Actually, dating apps make a lot of money.
Well, the irony, though, here is that you have found the right person, right?
Yeah, I mean it. Hopefully it's a one time shot.
Hopefully. But as you know, with, you know, many dating apps, they don't want to just give you one option.
But making money is not their goal this minute.
I hope eventually it is, but we'll see.
My last curiosity is a new partner at Bain, but a longtime investor and venture capital scout and a former product manager at Go Fund Me. You funded three companies in the relatively short time that you've been at Bain.

Is there pressure to get more money out into the system to get that deployed?
There is not pressure.
But you were just nodding.
I think that venture is a weird job because.
You spend a lot of time doing things and the way that you feel productive is by making investments.
But that's not always the right decision. The right decision is to make sure you make good investments. And so if there are periods of times where you're more active and less active, that ends up being okay.
So, you know, we always keep the bar high.
We want to back founders that we think are going to disrupt industries and be category defining investments.
And so ideally, that results in a consistent pace.
But if if there are some clusters of high activity and low activity as part of the game.

Low activity before you were at Bain, you were an angel investor.
Have you had something that you just fell flat on your face on?
Because I think that would be the most instructive, right, is we'd all be afraid of writing that check to that company that just botches it.
And, you know, everybody pays attention to our success, but the one that just botched it.
There are a lot of companies I've backed that have just botched it.
You know, and I, I don't want to specifically point fingers.
Asking you.
To. But I think that the nature of venture is that you want to back people who are taking big swings.
And so if some of them don't fail, I think that's a sign that you're not taking enough risk. You know, the journey I had as an angel investor, I made it almost 30 investments and.

Yeah I think the the the my main learning through all of that was just the founder matters a lot more than the idea.
Ultimately at the end of the day it was like I almost didn't even care what they were building. If they if someone came to me and I got to know them and I understood that they were going to run through walls, I was like, here's a check.
You've said you're a product manager at heart.
Yes.
How does that lend itself to being as you advise these companies?
So being a product manager at heart for me has a few pieces.
The first one is of like obsession with with the customer and the problem that you're solving.
And really thinking from first principles around.
What problem are you solving?
And is it possible to solve that problem?
And if so, what's standing in your way?

And then how do we go try and solve it?
And that's actually something I learned at a firm from working with Max Levchin was an obsession with solving really hard problems and trying to dig in and understand.
If it's possible to solve that problem.
Then then go make it happen.
You know, if you tell me that it's impossible for a physics perspective.
Okay, But if it's hard or you don't have enough resources or you can't, you know, figure out how to find the right vendor to do something.
Those are all problems that you need to go figure out.
You were a venture scout for a while. Explain to me what a venture scout is.
So a scout is somebody that works loosely with the venture firm to make angel investments and.
I think scouts have proliferated in the industry over the last ten, 20 years.

I was part of Sequoia's program, which is fantastic.
We have a program at Bcf to where we.
Partner really deeply with operators who have unique networks or unique point of view on whatever they're building.
And I think scouts, the best scouts are ones that have a lot of intellectual and social capital, but not a lot of.
Real capital yet. So there's like a mismatch where you can help them by saying, hey, we'll we'll give you some money.
We've got the money. You've got.
You've got the air.
Out there. See all of this?
Yeah, exactly. And so as as a scout, I invested a lot in in fintech companies, areas that were adjacent to a firm where I thought this this is a really good idea.
This should exist, but I can't clone myself 100 times.

I can't work for all these companies instead, like, why don't I go give them a little money and be part of their journey?
And so I think scouting is a good way for.
It was a good way for me to stay connected to what was happening on the ground and then also just exercise my product muscle even more of like, how do you help people go from 0 to 1 and how do you help people navigate through the winding path of finding product market fit, which many people don't get to?
But when you do, it's like beautiful and magical and.
When you're at when when you're scouting or when you're angel investing versus when you're at a company building product.
Like the thing that you can do as an early company is you can move so fast.

The larger the companies get, shipping product just takes more time, there's more alignment, there's more internal.
You know, we need to figure out what we're building and we have a code base.
When you're a new company, like.
You have an idea? You have nothing standing in the way.
Just go build that fast.
That is is powerful.
And so as a scout.
I wanted to find those people and help them build the things in particular that I thought should exist.
But for a lot of different reasons, couldn't exist in either the company I was at or in other large companies.
You've now recruited scouts of your own.
A bit unusual. Walk me through that.
Pretend like I do not know anything about the people that you have recruited.
So walk you through. Who? Who I recruited? Yes.

A lot of the people I've recruited are.
Amazing operators or founders that have.
Really interesting networks and perspectives.
And I've also recruited meme accounts right online.
Who have.
Great followings in distribution and want to get into investing.
So those are my two categories.
So maybe Sauvages I'm interested in the study, right?
And to those who don't understand what a meme account is.
So a meme account is they often start as jokes.
Some are anonymous, some are not.
Where people make fun of something on.
Social.
Media, on social media.
And I think memes are this very powerful emergent form of communication where, you know, a picture is worth a thousand words.
I think a meme is worth like 10,000 words, and it can capture the zeitgeist in a really interesting way.

And so the meme accounts really started taking off over COVID because we were all stuck at home and we didn't have anything to do other than look at Twitter and Instagram.
And and so some of these really genius commentators on society started going viral, and one of those was liquidity.
Who was commenting on.
The macro and kind of making fun of what was happening with either the Fed printing a lot of money in the stock market going crazy or, you know, making fun of finance culture at banks or in investment firms.
And it just really captured the attention of everybody on the Internet.
And since then, there are like thousands of meme accounts of of different scale.
And I find they always have like an interesting.
Connection and.
They're in touch with the culture. Like, what's relevant?

Where are we headed?
They can even help drive that culture in many cases.
And so as scouts, it's untraditional.
But I found it's been really a valuable partnership.
As they get into the world, making fun of whatnot or attracting attention, they get to know many of the people in the industry.
Yeah, and that is how they are able to scout for you.
That's right. That's right. And people often come to them because founders will come to them and say, Hey, I think my product will resonate with your community. What do you think?

And so instead of just paying them in the normal way, like a pay for post, which is what a lot of influencers on Instagram do, they will be able to invest in that company and have like a much more aligned partnership of, Yeah, I'm going to help bring this company to my community because I'm a I believe it should exist. And I think that kind of alignment is different than the kind of classic creator partnerships that have mostly happened on Instagram where it's like, okay, I'm I'm trying to sell this like gummy bear, you know, vitamins, and I'm going to go find Kylie Jenner and, you know, pay her $100,000 to post this.

I think this is a much a much more, you know, Silicon Valley native like aligned way of saying how do you get people who are influencers and who have audiences on your cap table to help you understand what your customers want and then also get in front of them and see see what resonates. And so, you know, there have been a number of examples where I've seen that work well.
Now, have you had anything actually pass through and work or is it too early days?
Yeah, I think it's I think it's early days. There are a few, you know, investments that.

That liquidity in particular is made because of his seat as a creator that he's seen early in that have worked well, like he invested in a substack competitor that, you know, is early days but is is growing well. And he actually builds his newsletter on this technology.
And so he was working with them and he said, this is this is exactly what I need as a creator building a newsletter. This is a great tool.
I'm going to invest. And so that's like another example of.
The benefits of that seat in that kind of partnership.
What do you know now that you didn't know when you started at Bain?
A lot.
It's a really good question because because there's a few, you know, different dimensions of.
Of things I things I now know one about.

Like the the role of like being at a venture firm is is one big bucket. Mm hmm.
And then, you know, another big bucket is just the the role of timing in in these venture cycles as well.
I've had a very interesting year and a half in venture because when I joined, we were in.
A large bull run for the last 15 years. And.
There was a lot of.
The last ten, 15 years in Silicon Valley was a lot of software built by startups for startups.
And the macro was really just, you know, low interest rates, great macro environment. And then after I joined.
We had a big crypto bubble. And even in like a year and a half, we've seen a bubble gum and kind of deflate and a new rise of like a platform shift, which is I.
And so. Some, you know, they say some decades.

A year goes by in some years, a decade goes by.
And I feel like my last year in venture a decade has gone by both in terms of market cycle and in terms of like a new platform shift that is going to create trillions of dollars of enterprise value.
And so.
I feel very fortunate to have gone through what I believe is like a compressed cycle.
Very much so.
In like a year and a half.
And so I think some of the learnings from from that for me have been like one.
First principles thinking.
Pay attention to what's happening, but dig deep and really try to go understand the technology and to like have a long term orientation because.
You do need to. Big, great outcomes are unlocked by platform shifts or new technology or why now?
And that seems to be happening now with A.I..

And so I feel lucky for my timing.
And then, you know, the third thing is I've learned a ton from my partners at Bain Capital Ventures who have been doing this for 25 years, who have given me the perspective and patience of like.
This is a long game. Like, separate the noise from the from the reality. Because I think as an angel investor, you're just like, Oh, yeah, hype.
Like, this person's in this investment.
Like, this is doing that. We we need to go back to basics and we also need to, to look outwards outside the bubble and say like, how do we build technology for industries outside of technology?

And we and we have the benefit at Bain Capital of owning a number of large private equity companies and across a lot of industries, healthcare, industrials, retail. And so spending more time like actually understanding what's happening outside of this bubble has been really beneficial.
So those are a few of my learnings, but I feel really fortunate for both the seat in my partnership and also just having seen sort of a few fast technology cycles really quickly to keep me focused on fundamentals and on the long term.
It is the paradox of venture capital that it may take ten years to know whether or not you succeeded or ten years to know whether or not you felt that's right.

And that was a journey that I was excited to sign up for because you only get one life and there's no nothing I'd rather be doing than supporting, you know, founders going from 0 to 1, trying to navigate the messy beginnings of starting a company.
And so yeah, I said, okay, I'll, I'll take the risk of ten years later, you know, not waiting that long to know if I'm any good at this.
Kristina, my last curiosity partner at Bain Capital Ventures, next week on Sandhill Road.
I got to tell you, I was like the coolest mom on Earth for, like, a fair bit of time.
And I said, You cannot tell your friends like, this is like, you know, code of silence in India. And and yeah, the fact that, you know, I had a company with GPT four and made me perhaps the coolest mother.

Rebecca Lynn of Kansas Ventures becomes one of the first venture investors to invest in and then very profitably exit from an A.I. startup.
Sandhill Road is produced by Sean Meyers under the leadership of Sarah Bueno and Stephanie Rooney for more interviews with Silicon Valley's most influential entrepreneurs, check me out on TV at Press here.

I came from another meeting.
So normally I have a an audio technician because of and we're trying to keep everything, you know, as small as we can.
Yeah. Makes sense to look at this.
Okay. But I'm still listening.
It's fine. Totally.
And the other thing is that it is.
Right now, we're trying to stop this. Oh, the little sensor from knowing one minute.
So it should. It'll it'll stop.
It's still do. Yeah. We'll see what happens.
Oh, no worries.
All right. I think hopefully that's tough enough to nail down and we'll figure it out.
You guys know how to get out of here.
I think we can figure it out. I got stuck before.
Oh, really? Hey, it makes for a hell of a story, Carol. Let me make sure it will close.
It's not good enough.
Yeah. As long as it doesn't make a buzzing noise, I don't care.

It's a little further.
There we go.
Melissa.
Yeah, I did koven test myself yesterday.
But I can't say that yesterday. But it didn't the last couple of days.
And.
Uh, double backs boosted.
Oh, me too.
I just want the next one. Like, when can I get that?
Do me a favor. Catch ten.
One, two, three, four, five, six, seven, eight, nine, ten.
Pronouncer.
Erica Brescia.
Russia.
Very good. Yeah. Easier than it looks, right.
I tend to speak really loud when I get going, so if I need to calm down, you can give me the, like.
Reason for me to.
My husband's like. Erika, you're shouting in our kitchen.
I. Yeah, I. I'm not great at that.
It's. I'm Italian. I think it's in my DNA.
So let's start with the other thing I was going to say.

This is extremely casual. We get halfway down the conversation, you're like, wait, what was the question? You know, just wave your hands in the air.
Do you want to take a sip of water in the middle of it?
Fine. We'll edit it out.
Okay. If I say something really dumb, you'll edit it out.
Fair enough.
So let's start with remote work.
There are so many collaboration tools.
You were at GitHub for a good long time, which is all about collaboration to. You helped that company grow into what it is today?
It is kind of the perfect storm, not just to work from home, to leave the office, but a perfect storm for people all over the world who were not involved in.
Or didn't have the access to suddenly be involved.
And it's not crazy to think that the next sales force.
Will be built in Kinshasa.

What do you think of that?
Yeah. So I actually have a long history, even pre GitHub for remote and distributed work.
My company had offices in San Francisco and Spain and then employees all over the world.
And so I've been working in a remote or hybrid capacity for over 15 years.
So all this is new to a lot of folks, not so new to me.
I see a couple of things. I think the first is you're right and it's really exciting that we have the tools today to give access to talent all over the world.

And I think the open source community actually plays a really critical role in this as well. Right back at GitHub, I used to tell a lot of stories of folks, you know, from Kenya who discovered open source, taught themselves how to code, like created a career for themselves, started lifting up their local community and economy and serving as a role model for others.
And we see these I mean, to me, really magical things happening in developing countries. When people get access to technology and have the ability to kind of self teach. There's a really cool company called Micro Verse whose goal is to teach the next million people how to code in places like Africa and Latin America and then help place them in jobs. And they're seeing people 3 to 5 x their incomes coming out of this program.

It's actually not a redpoint company, but it's just a very cool mission, I think, and we're seeing a lot of this.
That said, I think it's also important to note that running a completely distributed company is very challenging.
And I think a lot of startups today aren't actually thinking about how these time zone issues are going to compound.
Right. We have technology. We can't fix time zones right now.
And when people want to sleep or be with their families versus spend their time working. And I see a lot of companies that just hire willy nilly all over the world.
And when you're 20 people, you can manage that pretty well in a lot of companies.

I mean, GitLab is a great example as well, have figured out how to do asynchronous work really well, but it's still important to have some overlap with folks on your team, right? Like live discussions are not going away.
And when you go from that 20 person company to a thousand person company, it starts creating a lot of challenges. So I think it's important for companies and founders to be very deliberate in how they think about building out their teams across all these time zones to help people still manage their work in the way that they live.
But to your to your real question, I think there is talent everywhere.
And we are seeing incredible companies pop up everywhere as a result.

I mean, the African startup ecosystem is amazing and I think that's really buoyed by a lot of the new technology that you mentioned that allows people to build companies and do this kind of work in developing nations where they might not have had the infrastructure to do that previously.
It just that might be just a slight build so I can see you better.
There you go.
Again.
Maybe don't be so loud.
Yeah, because I am a la creative myself.
My, my son is a paramedic and he has a case on the he usually goes through a case by the time you.
Holy cow.
So yeah, I mean, it's kind of cool at a time in which we are thinking about, you know, diversity. Mm hmm.
That. It used to be, you know, kind of think of the social network move.

Hmm. Moves from Massachusetts to Silicon Valley because Massachusetts is not, you know, the MIT.
Harvard. Yeah. Not techie enough in a while.
Right. And now the tech has spread everywhere to the point where there is an African startup scene.
Oh, absolutely. It's amazing.
There's so much capital and so much opportunity there.
I think what is still a little challenging is concentrations of talent in specific areas, like specific roles in different parts of the world.
So something that we are still seeing a lot of is, you know, companies that are starting in Europe, for example, or or in Africa or wherever.
But I see this a lot with with European, a lot with Israeli companies.
Like they'll have these tech teams.

And again, I think open source played this role in helping bring the world's coders together and help help developers learn from each other.
We don't really have quite the same thing for marketers, for example, for sales leaders.
You still do have a concentration of that talent in certain areas, and Silicon Valley is one of them.
You know, New York is another one, especially if you're doing fintech, right.
We're seeing a lot of crypto happening in Miami.
And so I think companies are still starting to you know, when they go to build out their go to market, teams are hiring in specific locations. Now, what's interesting is now that more companies are getting more flexible with work and allowing remote work.
We are seeing this talent migration out of some places like the Bay Area.

Right. I mean, I know countless people who have moved out of the San Francisco area and into places like, you know, I mean, Montana now is growing a ton also, of course, Austin.
You know, I'm seeing more folks pop up in Arizona, tons to Miami, New York as well. And I think with the greater flexibility in work, we're seeing some of the, you know, talent concentration kind of disperse a little bit. And I think that's a really good thing because we need to these folks need to share their knowledge and experience and kind of hire folks reporting into them and teach them how to do it in different areas so that we can get the same distribution of marketing and go to sales talent and executive leadership talent that we have in technical and developer talent around the world.

You have investments in dagger and is it exact Zeta?
Yes. Yep.
Very good. Dagger in Zeta.
Just looking at the websites, they don't seem to have a location there.
Where did you where are they looking?
Yes, they both are. And I have another unannounced deal that I did as well. And they are also distributed. I will tell you, in Zeta's case, it's a Romanian woman who's living in Berlin.
Their team is distributed all over.
Exactly.
But her head of operations and finance is in New York.
Right. And in daggers case, the founders, they're all French, all move to the U.S. They're based here, but their team is distributed.

Their design team, a lot of their engineers are in France and a lot of their team is distributed. And this other company to founder in San Francisco right now hiring a distributed team.
But I do think they are thoughtful in how they construct those teams across these time zones to make sure that they're going to be able to scale and make the team work as they again.
To my earlier point, they reached 100, 200 people.
So that might mean concentrated development teams maybe in Europe go to marketing in the U.S..
Right. So people are time zone aligned with their peers.
How does that change your job in venture capital?
I mean, we talk about doing meetings over zoom and pitch meetings over Zoom, and that's one solution.
But there's more to it than that.

I mean, before everyone lived everywhere, you ran into people, you had a friend of a friend.
Somebody made that classic warm introduction.
Yeah.
You stumbled across things. You walked past an office building and saw a new logo and said, Who's that?
Yeah.
Now, you know how in the world you even find a Romanian woman or something in the African startup world, etc.?
It makes your job much more difficult, doesn't it?
It makes it more interesting, perhaps, you know, a couple of things.
I think, like a lot of discovery is done digitally now.

Right. And if you think about it, like StackOverflow, you know, product hunt Hacker News is of course one of our go to places and everybody building developer tools infrastructure open source like you always have your hacker news launch moment and that really does help surface great opportunities so I think you find folks there.
I think again, for the type of investing I do, a lot of it comes through the open source community and that is pretty much always been globally distributed. And so you get to know folks through, you know, I'm going to be in Valencia on Monday in Spain because there is a a webassembly day where all the webassembly developers are going.
And I'm like, great, I can go to one place and I'm going to meet all these people.

So I think there's there is still no real substitute for getting together in person, but there are a lot of different ways to do that through events, etc..
What I will say is, you know, you have a lot of these just amazing talent distributed throughout the world. And what's interesting is what are the needs of these talented founders and how might those differ across different geographies?
Right. Like you take Monica from Zeta, she is a brilliant technologist.
She had already built a company. It was acquired by Elastic.
She ran a core engineering team at Elastic through their IPO before leaving to start this. Like she really knows how to build and lead engineering teams.

You know her her previous company didn't reach an enormous scale in terms of team. And so what she might need for me as a former CEO might be different from somebody else who say has never built out a team before. Right.
And they're brilliant technologists. And if you're coming from a place where you might not have a strong go to market network because it's just not something that's as common where you're from. I mean, maybe it's Nigeria or something like that, you know, that founders coming from different parts of the world may have different needs in terms of how VCs can best support them in those early days of building out the team and growing that company.

But for me, that's the fun of it, right? Each company, each founder, their needs are unique and that differs by culture and geo and experience and sector and all kinds of things.
And that keeps it interesting.
That hypothetical startup person in Nigeria or wherever.
As Silicon Valley venture capital comes in.
I can see some trust issues, right?
I almost think of, you know, the the you're the the Hollywood record producer sound, you know.
Far more glamorous.
But a little shady fair.
I think of.
The classic shady.
Okay.

Record producer, right. Is. Hi, I'm from California and I have a great idea. Yeah. You have some legit street cred all of your time in open source. And I'm not disparaging any any particular person in venture capital, but as we begin to interact with the rest of the world, there will be some trust issues.
Yeah, I think so. And part of this goes back to my comments before about things happening online. Like I find a lot of people through Twitter say what you will of the platform. That's a topic for a different podcast.
But I think one thing and I need to get better at this, I've been thinking about it, but one thing that you can do is just put your authentic self out there a lot. Right.

And what I try to do and why I go on podcasts and things like that is because I think it's important that you try to help founders get to know you and who you are as a person. And you know how I think about my family and how that's important to me and what causes are important to me and things like that.
I mean, these relationships for founders are very long term relationships, right? People talk about them like marriages.
And it's true. Like you're partnered with these people, especially at the early stage.
Like I expect to be working with these founders for ten years and I want them to feel as good and excited about working with me as I do about working with them. And so I think part of it is really trying to put yourself out there and help people get to know you.

And another thing is spending time on them and just like building that relationship over time, showing value, you know, with these these founders that I backed so far, you know, I'm texting with them or in their WhatsApp or Discord constantly.
You know, you kind of like build this working relationship and trust that way.
And it's funny, actually, in Monica's case was that I didn't meet her in person until three weeks ago, and I did a seed investment before I joined Redpoint a year ago. So I did her seed and led the series.
A having never met her in person.
At.
$30 million. I mean, for us, well, ours was a we did leads, so we were the vast majority of that, but we did co-lead with index.
So they put money in too. But it's a lot of money to put in somebody you haven't met.
Oh yeah.

Maybe the first person I've ever met who gave someone $30 and then just recently met them.
Well, again, I think the important context is I have been working remotely and building relationships for over 15 years.
So this mode of working for me is not entirely new.
And, you know, I think different different venture capitalists have different like superpowers, or at least we hope their superpower is.
And I think one of mine is connecting with people, building relationships in and judging talent, quite frankly, quickly.

And sometimes when we can't meet in person and I think when you talk about investing in remote companies around the world, you know, you have to be good at that and you have to be build a good at building trust and building those relationships. And that's something I hope to continue to improve.
As you mentioned, you've been in the tech industry for quite some time, but you are relatively new to venture capital.
Four months, four months?

Yeah. I spoke to one venture capitalist who I think he was downplaying his own skill, but he said that, you know, no, it was all it was mostly luck because I got in at the right part of the cycle. You know, everything had been depressed and nobody was investing. And I, you know, the stairs started to go back up into the right again. Do you ever worry that you joined at just the right wrong moment?
Oh, I talked about this a lot, actually, with my husband when I was taking the job. I think I knew I was coming in at the height and I told him, Honey, I'm going to need your help because I know this is going to get very, very ugly. For a while, I knew it was going to get very ugly, and I knew that would be hard for me.
It's been less hard than I expected so far.
I'll get to that. But.

But you know, the market is cyclical, cyclical.
And that's always been the case and it always will be the case.
And then, sure, I think if you're in it for the right reasons, at least, is is a really long term strategy.
Right. I talked about I'm going to be working with these companies for ten years.
I hope this is the last job I ever take.
I hope to work, you know, with the Redpoint team until, you know, I am no longer ready to work anymore, which who knows when that will happen, because I really, really love what I do.
But I think, you know, you just have to have the staying power to understand that these are cycles.
I'm making early investments in companies that, you know, we'll hopefully IPO in 8 to 10 years from now. The market's going to look very different.

And fundamentally what I'm looking for is amazing founders building like truly impactful companies that can become large, independent, standalone and it is that hopefully have a positive influence on the world as well.
And so, you know, I don't think the fundamentals of see change. I think the time horizons like how quickly are you going to see liquidity in a deal? How hard are your subsequent raises going to be?
How much capital do you have to raise in your age to make sure that you can withstand, you know, market cycles?
Those are all important things to to consider.
But I'm not particularly concerned about the timing.

I think some of the best companies that we know and love today were built in downturns. And so I try to focus on the things that I can control, which is hopefully partnering with the right founders and doing everything I can to help get them as much leverage as possible in these early days and get them pointed on the right path.
And, you know, the market will will do what it will.
And we just have to be smart about our fundraising strategy.
You're on the board of the Linux Foundation.
How did you get started in Linux? Because it seems to me, you know, you mentioned your previous jobs. You mentioned your husband who I assume you met somehow.
Through open source. Yeah.
Right. So you get interested in Linux then.
Yeah. You to open source that leads you to build companies.

That leads you to become the founder of bitten army and vet rock and leads you to GitHub, which leads you to venture capital. And we got a husband in there on top of that.
Yeah. What was the core thing that got you interested in Linux of all things?
It was the Scientific American article from 2004.
So thank you to whomever wrote that I should go look up the author.
I was really fascinated by Linus Torvalds and this early Linux movement and community like the idea that people across the world and I mean, people are special for lots of different reasons, but these are some of the world's most brilliant technologists and minds coming together to try to build something with no clear commercial outcomes that would just first scratch their own itches and then help a lot of other people.

And then, of course, there is some of the dynamics around like Microsoft versus the rest of the world back then that fueled a lot of the investments and in Linux specifically.
But I really came out of the fascination for what's happening here.
And then, you know, in 2005, a lot of companies like my sequel, for example, were just getting founded.
Red Hat was still in its earlier days.
I think it was. It was an interesting business problem to me to understand, like, how are people going to take something that's freely available and build a successful business around it?
It was almost like watching an HBS case study.
You play out like, how is this going to happen?
And so it was like the intellectual, like the curiosity around this problem that brought me in.

I think what caused me to stay was the community.
And, you know, it's it's such a I mean, incredibly diverse, like melting pot of perspectives and cultures and motivations and ethics and all kinds of things. But there are just some genuinely wonderful, helpful people in open source.
And, you know, I came in and started MIT Rock in 2005.
I had studied investment finance at USC, which is not one a valley school by any stretch of the imagination.
Right. I was a total outsider.
My dad had a construction company. Like there was nothing that connected me into, like, Silicon Valley. Right. And I meet my co-founder, Daniel, who is really like kind of prototypical nerd.
Right. Early member of the Apache software.

Our nation had been working an open source, brilliant product visionary, had never built or run a team or company. And I had a lot of that experience and kind of DNA from my father being an entrepreneur.
And, you know, he and I joined forces and we started the company in Spain because he was Spanish and it was cheaper. And, you know, I would show up at these events not having any street cred whatsoever.
And there were so many people that were incredibly helpful to me, even like the business community. In fact, I just had dinner with Martin Michos, who's the CEO of my sequel, and it has long been an open source.

And, you know, he and people like Larry Augusten, who started via Linux were just so incredibly helpful and supportive to this woman. I was usually the only woman there at the time.
Right. Things have thankfully changed a lot, but I got so much support and mentorship and I fell in love with, I think, the people and the aims and the potential impact of open source.
We talked about this earlier, like open source has brought opportunities to people all over the world and, you know, seeing it change people's lives and livelihoods in, you know, small villages in Latin America and Africa, I think is is just amazing.

And getting to play any small part in supporting that continued growth and success of open source is is a huge honor and something I think I'll spend the rest of my life somehow involved in the open source community just because I think it's such an important global force for good.
We're going to stop this.
Okay. Web three because you were way more interesting than I was to know you.
Thank you. Oh, no, this is it.
I mean, I could talk forever about anything.
No, I don't think so. I think it's fun.
It's fun talking about this stuff. And I haven't gotten to talk about why.
Open source in a very long time.
Did you code?
No.
Reading the Scientific American article.
And you're struck by the, I guess, the social side of it, right?
Like how all these people are working together.

Yeah. You did not code.
No, I've never I've never been a developer, which makes me very unusual as a founder of an infrastructure software company.
Yeah. Yeah. But all of these things, I think.
Um. No, I never coded.
I wish I would have studied CSS, but I did.
I did not. Yeah. Right.
But I was always interested in technology.
Even I used to work at T mobile and started working there in college.
And part of what drew me to wireless was actually the way that all the different networks communicated. I got very into like this was CDMA and TDMA and GSM and how it all worked.
And so I've always just had that kind of curiosity and I'm grateful that I've been welcomed into the community, even though I I'm not a developer, which I'm always very, very transparent about.

Thankfully, you learn a lot about at least the the technology underpinnings and how everything works together just through osmosis.
Doing this for as long as I have, and I'm grateful for all of those with the patience to teach me along the way.

All right. So one of the things is that we will edit this.
So if we're chatting, it's very casual.
If we get halfway down a conversation, you think to yourself, hold up, pose.
What was the question? Just wave your hands in the air and say, What was the question?
And we'll cut it out. You know, we'll make you look smart.
I think it took a lot of pressure there.
Well, good. You know, it's not supposed to be about pressure.
Just about supposed to be about talking about interesting things.
Let's let's start with a little sound check by you telling me what you had for breakfast this morning.
I had oatmeal and tea.
Very good.
Is that what you usually have?
Yeah. I had oatmeal and oatmeal.
I just turned vegan, so.
You did? When did you decide to do that?
Oh, just. I was at a retreat.

/content/Preprocessed_Data/SHR Anshu Agarwal Brings Women-Led Converge to Silicon Valley.txt

And this person, he had reversed all his lifestyle disorders, like diabetes, high blood pressure, cholesterol.
I have none. But do you know?
But it made sense.
It made sense. And I don't want to be in the process of reversal.
I just don't want to.
Be there in the first.
Place. Yeah. Yeah.
So and I did that.
So I'm. I do cheat, though. I am not I'm a vegetarian by birth kind of. I've never had meat, but.
So turning vegan is not difficult for a vegetarian, I would say.
But I do teach the dairy sometimes.
Fair enough. The second question is pronounced both your first and last name for me.
Anshu Agarwal.
Excellent. Which, you know, when I Googled, you turned out to be more of a common name than I was expecting.
Oh, Agarwal is like Smith.
Okay.
Okay. And Anshu is not as common.
No, no.
Verna.

But it is. You'll find men also with the same name.
Oh, interesting. Yeah. Okay. Yeah.
I wanted to start, if you don't mind, with machine speech, because you are, I understand, a leading expert in it.
In the speech. Yes. Yes. Yeah.
So long time ago.
Long time ago. But you did your graduate thesis on it.
What is your assessment of where we are today with all of the various ways that we talk to machines?
And it's just light years ahead of what?
Where I was that that time.
The reason is the compute and data was so insufficient and inadequate at that time. So we got stuck.
We really were stuck. We had the right theory we had.
I was using neural networks in the nineties and I developed a speech recognizer and image recognizer with neural networks.

The problem was that when I was training my models, it took a month to train the models.
And imagine making a mistake in your models.
At that time. You spend a month training models.
You found a mistake. Now you have to spend another month training your models.
Okay. So that's what I'm saying that we had.
Let's light years ahead because the compute so much computers available with the GPUs and everything, I mean, you can train your model in minutes if you are doing an incremental model training.
That was not the case before.
Why do such a thing at such an early stage?
I mean, if you were if your ideas were ahead of the technology available to you at the time.
So speech recognition and it's been going on from, I would say, sixties.

So these these are revolutionary technologies and it takes a very, very long time to develop. We are using all the groundwork that was established at that time. I mean, we were using it in Markov models at that time.
And still a lot of these places use parts of it and say it in Markov models, signal processing techniques. All of these are being used.
The thing that has just revolutionized it is because of the availability of compute as well as the data.
Data is also I mean, we were collecting our own data, so small things we were still doing, you know, IVR. Okay.

I know it is it is constrained vocabulary and you can actually do pretty well in IVR. So those were all the outcome of the speech work that was done at that time. And my favorite project was I was at I was on a grant, DARPA grant, and the project was detecting plastic explosive in packages.
So the software that I had written was installed in Newark for testing Newark Airport and we were testing the baggage is in real time. So again, it's a constrained kind of a a data data set and the outcome is pretty like.
Is there something or is there something that there is then nothing there?
So it's just easier because it's classification problem.
Did you use the baggage detection in voice recognition or what's the connection there? Image recognition or image image recognition?

Yes. You're X-raying the bag.
Yes. And at that time, you're trying to figure out where are whether there is an explosive.
And does that lend itself to do voice recognition?
I because my my thesis was in image and speech.
Oh, I see.
So it's the same underlying technology.
Like, you know, you can use the large language model for anything.
Okay. Same thing. You could use that technology for classification.
And it was a classification problem and we did that.
And so the companies that are doing some of these things today, like Google, you couldn't have imagined at the time a data set like Google has.
Absolutely not. We were collecting our own data.

We were collecting. I used to go to airports to collect speech data because we wanted noisy environments. So we would record people in the airports, in the lounges and waiting rooms and like gates and everywhere.
Because we I, I actually worked for Motorola research after that and Motorola research being in the cell phone business, we needed the there's a data set that represents a cell phone environment.
Okay. So it was collecting your own data.
And how much data can you collect?
It's not much. It's not the. Yeah.
So you're always working in constrained datasets and then that's why your outcomes are more classification based.
So, Jenny, AI is very new phenomenon.

So it didn't work on Jenny. But if I which is more of a classification and basically recognizing what something has been said was what's the problem?
Tell me the mechanics of recording it here or what airport were you at and how did you physically do it? Did you have a microphone or.
Yeah, we had microphone and we had I used to go with the sound person at that time.
Those are the times where you add some people to help you out and we just go in the airport, record the speech that they were, and then it's labeled speech.
So we have to label the speech, you know, what was said and then use it, use it as a training dataset, then have a test data set and then tested again.
So you would sit at the bar, you would sit in the waiting room or whatnot and just run your.

Ask the people, give them gift cards and say, you know, can.
We borrow your speech.
And so you would just will you just record what it is they happen to be speaking to a friend? No, no, no. You had a script.
That you we we would we'd want something to be said which could fall in our dataset particularly.
Give me an example.
So, like the weather. Can you talk about the weather today?
Can you talk about what flights are you?
Where are you going? So it's kind of that kind.
But it's not it it's not just a talk among two friends which could have a slang words and everything.
We we were particularly focused on getting speech accurately.
And do you use things that recognize speech today, Siri and Echo and whatnot?
I do. Yeah. Yeah. And I am driving.
I actually use.

Tell me, what do you think of it?
It's. It's gonna. It's come a long way.
Okay. And it doesn't get my text messages, right?
Always. So I'm always correcting my driving.
And sometimes I just say, you know what? I. And I stop, Alright?
I send the text. So, you know, there is improvements to be made still, but it is a lot more natural to hear.
So the synthesis has actually taken just very it's very evolved.
If there are Siri or Amazon engineers and I'm sure they're working on this, but if they're listening to this, the thing that I.
The next step for me is context.
Right. That if I ask it to play a certain song or whatnot, that it understands the context of that.
What I was asking for was a song, you know, play Van Halen.

Usually it understands what I want, but I'm surprised at how often it doesn't understand.
Turn the temperature down. If you don't see it exactly right, your Nest thermostat will not respond in the right way.
I'm sure they're working on that, right?
Absolutely. I think I have seen an improvement in the last four or five years.
Okay. And I every it's a continuous improvement because it it's not as close.
It's quite close to like we understand.
But there is there is improvement to be made and a context being definitely one of them carrying the context from the repeated questions that you've asked it, it surely helps.
And I mean, that's the beauty of it.
It's evolving and we are.
We are. We are. We have come a long way.

And when you do it, you must have a little bit of pride like, Hey, I had a lot to do with that.
Actually. I have a lot of pride because I am I my son, who is a who studies computer science.
He came across my thesis.
And I'm like, and, you know, as you said, my name is a little bit more generic. It was a Aggarwal on the piece of paper, and Aggarwal being so common, he sends it to me.
He's texted me and says, Mom, is that you?
And I'm like, Yeah, it is me, because it had my adviser's name and everything.
And it kind of I got the like the professional respect from him is, Oh, you talk about pride. I think that was my proudest moment, that my people are still being relevant.
That's, that's.
I love it. You are a brand new venture partner at Converge.
I mean, new. New.
Very new.

Very new. Tell me about your first day.
My first day?
Uneventful. Good.
You know, I can't say anything particular about first day because kind of. I was gearing towards it.
Sure. And I have been evaluating companies for a long time.
I have been an angel investor.
So nothing. Nothing in particular.
The only thing that I would say different was here.
I'm setting up my own day.
Okay. Whereas in an operational role, somebody is actually setting up your day because you have meetings thrown on your calendar, you have your team and you have you have customer meetings already scheduled by the sales team.
You have an analyst meeting that has been that's on your calendar.
You have somebody telling you that, you know, these are the main points that you you will need to cover.

That aspect is gone. It's like, yeah, it becomes I think it's a little bit more lonely a job that than the other one that I had.
But it's good to be queen.
It's absolutely good to me.
So Converge was not in Silicon Valley before.
If I understand that, right?
That is correct.
What in the world kind of venture capital firm isn't in Silicon Valley?
Very good question. So it started in Boston.
And because the two partners, they are Boston based.
And there is there are a lot of companies and, you know, Boston used to be a center for startups prior to Silicon Valley.
So and there's MIT innovation, There's Harvard.
So the two of the two founding partners, they were they had a lot of deals coming out of there in the domains that we invest.

They invested in Middle IIM, Silicon Valley, so they invested in my previous company, Nimbler, and they were opportunistic about the companies that came from here. So they had a syndicate over here and they invested, but they didn't have boots on the ground.
At some point in time they would have built the team on the ground.
But it was it's it's an early stage fund, an early stage investing venture firm.
So it was kind of fine.
But when the opportunity came around, I had left my company and they were always thinking of, you know, setting up in Silicon Valley.
This was there's always the right time to start.
So this was the like.
And I think these days were a little less place bound, right?

I mean, it used to be that, you know, the Office of the Startup was in Palo Alto, and the venture capital firm was literally on Sand Hill Road.
And now the venture, the startup may be three or four different people in three or four different locations.
It doesn't matter the way it used to.
Absolutely. I think that's the one big change I found when I was raising money. I could do maximum two meetings in a day because you go to San Francisco for one meeting and in good house and Hill or you 2 to 2 meetings or three meetings in San.
COVID changed everything.
You could raise 20, 30, 40, 50 million on Zoom.
And you don't have to be in-person.
Not all founders have to fly in. The founder can be in Timbuktu and still take the meeting. All that changed.
So as a VC, you could be anywhere too.

You're good. You don't have to meet the founder.
But if you want to meet the founders, it's always possible to meet the founders, too.
But it is. It was deliberate.
They did not have an office here because they they did not want to grow it. It's an ultimate apprenticeship sport, you and you.
And it is a team sport. So you want to find the right partners who have the who who are who you can actually bond and team with. And so when I when the opportunity came, I mean, I wasn't I wasn't thinking of being a venture. Joining a venture firm.
It just happened to be that when they reached out to me and said, you know, we want you to be a general partner in our firm, I have to think whether I want to I want to do this or not, okay?

Because I wasn't thinking about it, but it was the right opportunity.
It was they they they put a lot of value in me joining the team.
We I compliment them. I bring I, I mean, Silicon Valley boots on the ground.
I say I meet the founders over here in person and I have the opportunity to do that.
That is a different kind of deal flow. Also, you'll get more Silicon Valley deals.
So there's a lot of a lot of things that came together.
And so, you know, it was the right thing for me to do.
It was the right thing for for them to grow like that.
And and the flipside of that is you've been part of what, five or six very successful companies and that have been taken over and with excellent exits.
Are you going to miss that?

Yes, I have been part of five startup journeys and I've enjoyed every I've learned a lot.
I've been through ups and downs, cyclical nature of businesses.
So I learned a lot in in the downs and executed in UPS. So and I've been fortunate that they all had great exits.
Am I going to miss that? It's a great question.
In the last six weeks or so, I haven't.
The things that I didn't like about operational role.
Just is kind of not there in the venture, which is, you know, and being part of the large startup a large companies, it's always is more pressure in terms of there is bureaucracy, there is a lot of things that happen and I've never enjoyed it.
Right. HP, HP and Juniper are some of the ones that have taken over companies that you have created or or helped create.

You had little startups that became much bigger part.
A Much bigger.
That is Yes, Yes.
Is frustrating.
Yeah. So 300. When I joined HP, it was 300,000 people.
You know, you're really nobody in the company when you joined in venture.
That's not the case. The thing that I really like about Venture is you get to meet so many smart people because you know, when you are doing your own company, you meet smart people, but you meet smart people in your domain.
Here you had the breadth. You may not have the depth.
You absolutely will not have the depth, but the breadth.
It's so exciting. It keeps you so young.
It keeps you and you meet so many smart people.

Obviously, you're not going to find everybody, but you meet so many and you get inspired, motivated for actually helping them out and seeing them grow.
It's like you are you're vicariously living your operational experience through others.
Although, you know, as a I would be the first one to say as an investor, you should know we're all really well.
You know, when to step back and to help us because I've been on the other side.
So I would never do that. Even though I've been operational for so long, I would never, never, ever say, But you get to live it through them.
And that's exciting.
I heard somebody I'm not a grandparent yet, but I've heard somebody describe it as being a grandparent. Right. You have all the joy of raising a child.

But when you're when you're finished for the day, you just hand it back.
You know, actually, that's a great analogy. I'm going to borrow that because it is it is very much like that. And as I said, operational role is exciting, is definitely exciting.
But there are aspects of it that I always dreaded, I had never enjoyed, and those are absolutely missing and completely missing, and that's a good thing.
You know, sometimes I am I am reluctant to bring up women in venture because when I sit down with male venture capitalists, we don't talk, generally speaking, about being men.
But that said, as I was doing my research on you, you bring it up often. You once said the time when we stop talking about this topic is the time when I would say enough has been done.

The fact that we're still talking about it states that it's not enough.
You also said it's become apparent to me that the rules weren't the same for men and women. The questions I was asked as we were all figuring out, we started that again. The question I was asked, we're all figuring out is if I were dedicated as dedicated as other Silicon Valley CEOs who were mad that happened.
Yes, absolutely. Absolutely.
So just some history about me.
I was the only woman engineer in my class, in my engineering class. I, I didn't feel there were challenges. I mean, being a lock, being alone, it's okay to be there, challenges.
But I don't I didn't see the biases.
Okay. I think I started observing the biases when I rose to the leadership roles as as a regular engineering team researcher.

It really didn't matter. Okay.
But when when I rose to the leadership positions, I did see a lot of unconscious biases.
And some of the biggest supporters have been men.
Okay. But because I have not had the fortune of working for a woman leader myself, but I've had all my leaders and I. But what I felt was that the women were held to a different standard.
And I mean, I say this to that.
And so some people say women are not assertive in the leadership roles and all that. But when a woman is being assertive, it's considered arrogance.
And when a man is being assertive, it's called confidence.
Okay. So that's the different standard that that women are measured against at times.
And then what I also found was I've been leading product teams.

I've been leading marketing teams. I've been an executive for the startups.
And that role was still okay.
Okay. Women leaders. Okay, fine.
Great. Yeah. There is a little different standard.
We got to prove ourselves more. We got to we have to see.
We have to make sure that you know, that, you know, we're not when we're not feeling we are not being seen as different. Okay.
We got we have to make sure. But when as a CEO and and the founder, it was a different it was a different standard.

And that and a lot of them said, you know what, women leaders are great for marketing h.r. And big business to consumer companies, whether it's fashion or clothing and all that, i mean, that that that's very still a typical a stereotype being a woman leader, but cloud cloud company a woman leader is a cloud company.
And then, I mean, when I was raising money in the valley.
Okay, I have been in the valley for God knows how many years.
I'm raising money in the valley. I'm being asked questions, you know, how old are your children? And our men ask that question like, how old are your children? And, you know, sometimes you feel okay.
You know, that's being a very friendly question.
Okay. That's sure.
I mean, sometimes I ask about people's kids because I don't just like talking about our kids.

It's a very friendly question. So, you know, you answer a you answer.
Yeah. Micah, my son is in college. My daughter's completed.
Oh, that's great. Now you can spend time running.
Oh, don't say that.
So then you realize, you know, the question wasn't benign.
No, the question had a motive.
And that is the that's the different standard.
I see. Women was men leader.
I have experienced it myself.
And it's it's probably an unconscious bias.
Okay. And, you know, there there are a lot of like exercises during the International Women's Day time.
There are like mindspace. I did an exercise where the question of so many people, you know, who it's an excellent exercise.
You know what? I will I will get their permission and I'll let the viewer listen to it.

So presume the viewer has has or listener has heard it. I watched.
It. Okay.
I was shocked.
I mean, I came up with the right answer immediately.
I was shocked. The grown adults of both genders were just flummoxed by the question.
Exactly. And, you know, I, I, I have a lot.
Of hope because both my kids just passed with flying colors.
Okay? And I'm like, you know.
Well, their mom was the CEO.
But I don't think it's just my my kids.
I have I showed it to so many of that generation, everybody.
I can't even think of anybody who didn't.
Yes.
That So I have so much hope that this is all going to go.
You know.
I give you an example from my own life.
I've been in the television business for, I don't know, 35 years.

And one of the you know, every once in a while as a reporter in a small town, you're assigned to go out and, hey, there's an astronaut coming to the school or whatever. And so you do that or they're speaking at a luncheon or whatever, Go, go cover that. And Sally Ride, who was a phenomenal person and an incredible leader, would as the years went by, I watched her tell young girls that they, too, could be astronauts.
And after a while I got the sense that the girls thought themselves well, duh.
Yeah. You know, my mom is an airline pilot and, you know, my mom is a is a famous surgeon or my mom is the, you know, mayor.
And it was good feeling, right?
Yeah. Is that you know, that when when young women started to say, well, of course I could be an astronaut.

Yeah. Yeah. But why were you pointing it out?
So that's why I say when you stop talking about it, that's when it's not it not an issue.
Yeah. The point that we still talk about it, it's because it is.
And you know, that experiment quite literally proved it.
It really did. Goodness gracious.
Tell me, particularly in this environment.
Well, let me ask you about the.
About being an Indian woman, because, you know, I'm not a woman and and I'm, you know, Irish Norwegian in in background.
Is is there more or less bias in that community? Is there is that relevant to our conversation.
So.
I grew up in an environment where.
There was no. My parents are both educated.
They raised us. Same as they would have raised my brother.
Okay. We.
We were told that you all have to have your own career.

Okay. There is no. I went there.
My friends were told. No, you're going to get married.
Okay? My we were told you have to have your career.
You're not going to get married. So I owe a lot to my parents to raise me the way I am.
So I did not experience any any such thing when I was in India. But I came to this country pretty early on, so I came for my masters and then I haven't gone back.
I go, I mean, I visit, but that's about it.
I, I see. I think there is the it's more challenging. The reason is because I think the the kids of same descent who grow up here were born and raised here.
They probably don't say, though. They won't say that because they feel the same.
But coming coming from a different country, growing up somewhere else and coming here, you feel that it's a little bit more.

It's more I think the there is more there are more hurdles to cross than it is for just being born and raised here.
But from a perspective of whether I feel disadvantaged, I don't at all. I think, um, I think it's a it's not a, not a disadvantage to be is South Asian descent.
I, I also think sometimes it's good because you kind of get credibility that Yeah you, you me you're an engineer.
Yeah so there are many. Okay so there must be something that's going on right over there that, that kind of advantage there.
The place that I think there is a disadvantage is when you go into leadership.
Okay. Because a lot of South Asian women are not in that. It's growing. The number of South Asian women leaders is absolutely growing.
But there aren't that there weren't that many.

And thinking that South Asian women, women can hold that role and lead men of all or all the diverse backgrounds was kind of, uh, I wouldn't say put in question in that those many words, but, you know, it's kind of to say, you know, would you be able to handle it?
Would you be able to handle a person who is a little bit more squeaky than the others? I mean, you wouldn't ask everybody else that question.
So this person may be difficult to handle.
This person comes from a more male dominated society kind of a thing, and I've had my fair share of that.
But I think I wouldn't say that I was ever disadvantage.
I think the people the way people thought my skills would can overcome all that. I had to prove it.

I everything, everything required proof The bar is a little higher, I'd say, but nothing nothing more than that.
And I'm as I said, I'm very hopeful it's going to go away.
Me too. Me too.
You've been part of a number of successful startups, and now you will be advising startups. What is your advice, particularly in this rather peculiar time to startups?
So my biggest advice to start ups is have a great team, the founding team.
Okay. Because I have had the opportunity to have really great fun founders with me and there are going to be ups and downs in the company and only the team can actually bring keep it together. So that's one.
The second thing is, you know, cash is king.
Be very careful about cash.
I was here when the dotcom boom was happening.

You know, the vending machine was full of so many drinks, I don't even know what kind of drinks were there. I mean, there was just all sorts of drink.
And then 2001 happened and, you know, all those drinks were gone.
And it was there was Coke and Pepsi. That's it.
So I have seen many times, not just one time, cash is. King. You don't don't think that this is the cash you have and you got to survive in this cash.
How would you do it? Okay. So that's that's the thing.
Third is have your sustainable differentiation, have an eye towards a sustainable differentiation.
Because if you are if you as a company are just doing some kind of wrapper on an API API and creating it, yeah, it gives short term value. But is it long term sustainability?

I don't think so. So have have an eye towards sustainable differentiation because there it feels like a dot.com.
Have you have you done your first deal yet?
I have.
Tell me about.
I sorry, I can't talk about that.
But because they are still in stealth, we do pre-seed seed and.
But you're excited by it?
I'm very excited about it. Yes.
Because it is in it.
It is in, I would say more of a digital meets physical.
And I so it's a combination of the two focus areas that we have and it's exciting because it's disruptive.
So I believe the you know, the companies that do well, the the kind of company is a dual one is disruptive.
They are disrupting something that's been happening long time ago, and the other one is creating new category. New categories are tremendously hard to create.

So we see them a couple of times, but they're not often.
But disruption is one. And you know, how much disruption they're doing is what actually constitutes the success of the company.
So I'm very excited about it because this it is in where it's kind of disrupting a vertical and by the new new technologies.
And I did my first deal almost right after joining.
Hmm. Those are my questions for you.
Unless there's something else you'd like to talk about.
I want any?
No, I just wanted to make sure that there was anything that you or I wish we had touched on. Maybe took notes.
Absolutely could look at. And it's really not notes, but it's just questions I've done before.
I think. I think I covered.

Perfect. I do have one final question for you that we don't include in the podcast, but I collected and then I put them all together each summer.
And that is what book in your past or currently do you recommend or read often or give as a gift or had some influence over you?
And I always tell people it doesn't have to be some big, you know, business tome from Harvard Publishing. It can be Winnie the Pooh.
But what what book had an influence on your life?
So I I've changed the book recently.
It used to be outliers for me.
I used to love that Malcolm Gladwell's book.
But Sleep. YV Sleep.
It's a Berkeley professor who wrote that book, and that has had tremendous influence on me.
The reason is.
I mean, what do we compromise when we are in a bind?
We'll always compromise on. Mm hmm.

And this book really taught me the science.
Behind sleep and why it is so important.
We all know it's important, but we still keep on doing it.
But, you know, I realized that this is this is so much important, so much more important than even food that I that's what I gift.
Because this particular professor, he's actually I wanted to attend his class, too, in Berkeley, but it's just it's always sold out. There's no room in his class.
I would highly recommend YV Sleep book because it tells you the science of sleep in a way that you can absorb it because there are a lot of scientists who have studied sleep.
But you know, the way he he tells you, it's just so it it's so understandable, it's so relatable.
It feels like, you know, why why didn't I read it before?

So that's why I gifted. Plus, all my friends are my age, so that's kind of neat.

So I think we're seeing more intentionality, which we hope will translate to more change in the demographics.
But I think that's where there is some hope and we are seeing some steady progress.
I'm Scott mcgrew. Welcome to sandhill road.
This Merriam Foxx, who is the executive director of Venture Forward as Hawk. You're now recognized for a five minute presentation of your oral testimony.
Thank you.
There are two reasons you might find yourself testifying before Congress.
The first is you're in a boatload of legal trouble.
The second is you're an expert in something.
Miriam Hawke is an expert.
Thank you for the opportunity to testify today on the important topic of diversity, equity and inclusion in the US venture capital ecosystem.

/content/Preprocessed_Data/SHR Maryam Haque Welcomes Your Questions.txt

My name is Mary Hemlock and I am the founding executive director of Venture Forward.
But what is that like? I mean, do you get invited to testify before Congress?
How does it.
Work? You always say thank you for the question and you're always address that.
The members, you know, either as chair or chair, a chairman or chairwoman or congressman. And just remembering those types of things like you don't just dove right into the answer, which I think I might have done at one point.
It's just that type of formality that you're not used to.
And the other, I think hard thing was trying to.
But I'll say the not so hard thing was creating the written testimony because that can be as long as you want it to be.

But at the actual hearing, you only have 5 minutes to say what you want to say and to try to distill a very nuanced and niche part of the economy, which is venture capital, in a very nuanced discussion around diversity in venture capital, and like gives that justice in.
Explain it. Well, in 5 minutes, I think it's really hard.
So that was I think actually the hardest part was to to try to to to get that. You obviously want to I wanted to represent the industry well, but I also wanted to give the topic at hand, you know, justice and really to make sure that it was you know, we're not trying to sugarcoat things here.
I think we want to be very honest about where the industry is and where it needs to go.

Hawk testified before the House Financial Services Task Force on Financial Technology, examining funding of fintech startups.
Chairman Stephen Lynch, Democrat from Massachusetts.
When we look at the founders of companies that received this investment funding, there's an obvious trend toward white males.
While lack of diversity is a trend in almost every industry that venture capitalists invest in. It is particularly troubling in the fintech space where a significant number of fintechs specifically target underserved communities, which we know are disproportionately women and people of color.
You were invited to the capital because you're the executive director of Venture Forward.
Explain to me what that is in an elevator pitch.

So Venture Forward is the 501c3 supporting organization to the National Venture Capital Association.
So NBC has been around for 50 years.
Public policy and advocacy focused.
Two years ago, we publicly launched venture forward to really advance diversity, equity and inclusion and to educate the next generation of investors.
So that's been our philosophy. We want to see an industry that looks and represents more of the country in the population around us.
There are a number of.
Women oriented organizations that are doing basically have the same goal. You coordinate with those other groups.
Yeah, I think we definitely are very complementary in terms of how we are providing different initiatives and programs to the ecosystem.

I think this is a big enough challenge and issue that it really is incumbent on, you know, many organizations to to really play a role here.
And I think where we sort of differentiate is our focus on on the investor base and then also this intersectional approach and kind of thinking about multiple elements of diversity.
I would say also, you know, couple of our programs that have just really grown over the past two years since we publicly launched one is Vista University and we hosted this with UC Berkeley and it is an online cert course that is self-paced.
Anyone can take it. And we have now seen more than 2000 people come through that program. We have also a program called LPI Office Hours where we're trying to connect emerging and underrepresented fund managers with LPs.

We've had 275 people come through that program, and then we're also working with VC firms themselves because we do really think a lot of this change needs to come from within the industry. And one element that we do for this is it actually is how we hold ourselves accountable, which is doing a survey every two years to collect data on not only the firm demographics, but also to better understand how firms approach talent management, talent recruitment practices.
Because that informs us on how we should be guiding firms, you know, what are additional resources or things that we should be producing to to help them.

We posted conversations to have some of these just just unpack some of these challenges and issues because we know that not everyone wants to necessarily have them in an open forum.
But that's really been our focus and I think kind of differentiates us from maybe some of the other organizations, but very much, I think, complementary to what we all have as a an aligned goal for for just increased diversity.
What concerns have you heard that maybe somebody wouldn't want to have in an open forum?
I think every firm is on a different in a different place in their diversity journey.

And I think it's very different than, say, corporate America, where, you know, you have these large, large companies, you have an h.R department, you have a talent department, you kind of have people that are focused on a lot of these important issues.
But VC firms, by definition and by just purely how fund economics work, tend to be small. They mostly don't have someone tasked on their team with leading DNI.
You know, some of the all of the large firms now do, even if it's a small firm, they don't have someone that's necessarily thinking about these these types of issues.
And so I think for especially for those types of firms to kind of hear from their peers how they're just able to like how they're adopting different practices.

And what they're going to do is very different than what maybe some of the larger firms are going to be doing. The other challenges, the industry doesn't have a lot of turnover.
There's not a lot of, you know, open positions, if you will.
It's really hard to to join an existing firm.
It's really hard to raise your own fund.
And and so that, I think, also poses just a different different challenges depending on how you want it, how you want to increase diversity.
And it's not necessarily just if you're a, say, a general partner at a firm, maybe you're not planning to expand your team, but you can definitely take the time to mentor someone or take the time to bring on or to create maybe a a scout program or a fellowship program just to help.

I think the broader just help the broader industry, even if like, for example, like I'm not going to necessarily hire anyone new my team, but I can also think about maybe how to increase the diversity among the pipeline of founders team that I'm going to be investing in.
One of the people who testified alongside you said her goal was to make sure her daughter would not be in front of the Congress 25 years from now.
Testifying, there were not enough women in venture.
What's a metric or a goal when you think to yourself, okay, well, let's turn off the lights, adventure forward. We've accomplished it, we did it.
I think the metric for success is when the survey that we do every two years of representation among investment partners, more accurately reflects the the broader U.S. population.

But I think we're always going to be.
Wanting to help the industry in terms of educating the next generation of books, there's always going to be that element to it.
And the industry evolves. It's growing, it's getting bigger.
I think there's going to be new and different issues that it might be facing and challenges that need to be addressed. And I think, you know, venture forward hopefully will always be seen as a resource for DNA.
And it's just become ingrained in every firm, both large, small, new and young. But I think there will or could be, you know, other elements just around education that I think will continue to drive a lot of what we do and just making sure we're evolving with the industry.
How close do you think you are to that goal you mentioned of it reflecting society?

So our latest survey, which was from June of 2020, we're actually going to be back out in the field later this month with our 2020 or fielding the 2022 survey. But in 2020, 16% of investment partners were women. So we know that that is, you know, ways to go to get to parity for for 50% and 3% of investment partners were black and 3% of investment partners were Hispanic.
And so that.

I think. Is, you know, like I said, we've seen some some steady progress on gender diversity. You've seen little to no progress around racial or ethnic diversity. There are two, I'd say, kind of bright spots that we've seen in the survey. One is that among junior investment professionals, there is more diversity. And so that is a little bit more of like thinking about the pipeline of who are going to be the senior senior partners of tomorrow.
And then the second, I think, positive that we've seen is we collect data on how firms approach talent management and talent recruitment.
And we're just we're seeing more firms have a human capital strategy.

They have a diversity strategy. They've tasked someone on their team with like actually leading this. They've thought about sharing, you know, job postings in other places beyond just sharing it with their friends.
And so I think we're seeing more intentionality, which we hope will translate to more change in the demographics.
But I think that's where there is some hope and we are seeing some steady progress. I will say also just around the, you know, the junior investment professional side, I think there tends to be a lot of importance placed on the DH and not so much importance placed on the in the eye.
And what I mean by that is it's great to get underrepresented talent into the industry or at under and add underrepresented talent into a portfolio.

But there has to be the the intention and the the prioritization of how to foster that talent, how to help it grow, succeed, reach the next level, kind of help that journey along the way.
And if there's not that support for talent, you know, regardless if it's underrepresented, it's it's really not, I think taking the true sort of DNI and also this broader, you know, better returns, better innovation concept to heart if it's really just being seen as a check the box h.r. Thing, if, like, let's get some underrepresented talent in the door.
Miriam Hawke, Executive Director of venture forward.
Next week on sandhill road.
We ran out of money not once, but but repeatedly.
And we were all hoping we'd be able to pay folks back.

And at the end of a year or more of doing this, we were $1,000,000 in debt to our employees, which is a terrible thing to do.
First of all, it's illegal, right?
Pandora co-founder Will Glaser.
And don't worry, things worked out just fine for those employees.
Every one of them is now a millionaire.
That's next week.
Sandhill Road is produced by Sean Myers under the leadership of Sarah Bueno and Stephanie Rooney.
For more interviews with Silicon Valley's most influential entrepreneurs, check me out on TV at Press here.

One recording started were good there.
So we are connected by video, but that's only, you know, for expression, right? I mean, sure, it's an audio podcast, but you can tell that I'm being sarcastic or rolling my eyes or something, you know, where it might not come across. It was straight audio and it's very casual.
So if you get halfway down to an answer and think to yourself, what, what, what was even where.
Am I.
Just waiting for hands in the air and call it a day.
I will say it's lucky that this is a remote broadcast because yesterday I came home, didn't feel very well tested myself, and after three and a half years of avoiding it, I have COVID.
Oh, boy, like you, you know?
And so if my voice sounds extra sexy, you're listening.
You sound good. I'm impressed. Actually, I'm impressed.

/content/Preprocessed_Data/SHR What to Do When Your Balance Sheet Doesn't.txt

You sound good. How do you feel?
I feel. Wow. I don't feel fine, but I feel okay.
Yeah. Scientists have said, you know, everyone's had it.
And so I thought to myself, Oh, maybe I had it.
And I just didn't know. But I know it definitely did not.
You definitely know it. I, I made it.
Not quite as long as you I got it in October of 2022.
But before that I live my life reasonably normally in New York as normal as you could at that point in time without being, you know, overly risky or crazy. But yeah, made it good two and a half years.
And then when it got me, I got it pretty good.
Yeah. I think we need gold stars for those.
Yes.
Exactly. So let's talk about venture capital in this environment.

One of the recommendations to a startup, you know, and I don't mean your portfolio necessarily, we're speaking generally one of the recommendations that would make a lot of sense to a startup that is running out of running out of money is to sell themselves to find a buyer and move on.
It's probably fairly important they do that quickly.
I was talking to one entrepreneur who had a great startup called Jack Esther and then discovered that, you know, the other competitors had already sold themselves before he got around to it.
Right? Yeah, It's a real dynamic.
I mean, you know, the reality is most exits in the venture world are not the unicorns that we read about and hear about all the time.

So, you know, in a market like this where VC funding is not falling out of the trees like it was in 2021, you really have to look for the best options for your shareholders. And it's like you said, it takes some time to get through an M&A process, minimum six months, you know, usually to budget for a year.
But if you're at that point and growth wasn't in the top, you know, 10 to 20% of VC backed companies, you've got to seriously consider it as an option going forward. So I recommend it be, especially in this market, it's a good time to.
And on the flip side.
I mean, hundreds of companies have sold themselves to Cisco.
No question. It's where most exits occur.

And, you know, we're also on the flip side of it, you have a lot of big companies and even medium sized companies out there who have been threatened and challenged by a drastically changing and ever evolving technology climate Over the last you know, I'll generously say three years that we've been in and around a pandemic, but for the last ten or 15 years, realistically, that need to catch up in a hurry and there's an appetite to to go discount shopping or even pay up, you know, serious multiples for the right technology that can help them either, you know, improve their revenue projections and forecast and go into new areas or just shore up their internal operations and be a bit more effective through better use of technology in-house.
And it's good use of cash in inflationary times.

If companies are sitting on funds by some companies.
It's a great time. But like anybody else, you know, the corporates are looking at the funding landscape, seeing not a whole lot of VC money is flowing through the system at the moment and they're being opportunistic to wait you out.
Why isn't there a lot of money flowing through the VC system?
Because, you know, we go on TV all the time talking about old times are tough and families are buckling down and all that stuff.
And then we get the jobs numbers. And the jobs numbers are phenomenal.
You know, there's a lot of data out there that says we're not going through tough times at all.
There is. I think the reality is that the recession we've been in so far is very much a tech recession.

It's a correction of an overinflated over hired or overfunded market that really took off during, you know, before and then during during the pandemic.
Yeah. You know, the funny thing about our market here is that it takes a long time to reprice itself, right. In public markets, you know, stock stocks reprice themselves every second of every day.
You know exactly where you are, you know, if you made money or lost.
Money every second of every day.
Private markets. It takes months or years to know when we've hit, quote unquote, the bottom. And we're still working through that standoff right now between founders and investors figure out where really at the bottom.
And it affects the late stage VC funds a lot.

You know, as the seed stage fund, we can be ten, 20, maybe even 30% off on the valuation at a seed round and be okay if we have $1,000,000,000 outcome. If you're 20 or 30% off in a series B or C or C, you're probably looking for a new job.
There are some other options, too startups that have run out of runway.
One of them is to take new funding on somewhat unfavorable terms. It's not ideal, but hey, you know, it keeps the lights on and it keeps the people employed.

It does. I mean, your number one job as the CEO of any business is to fund your company. And, you know, I don't recommend necessarily jumping on the first owner as terms that are that are thrown at you. But if you're take an honest look at your business in the market and your fundraising prospects and your options are a down round, it's not a time to get overly cute and optimize for valuation.
I think your reality is about 10 to 20% of startups right now are the top companies are still getting funded, they're still getting great valuations and they're the ones who are growing three X or more per per year.

Then there's probably another percentage that's like maybe 40 or 50% of the market of deals that happened in the last year that are sort favorable insider type deals. Existing VC funds on the cap table that want to keep their companies going at a at a, you know, relatively favorable valuation or flat to the last round. They're getting funded.
You get that bottom 30 or 40% that's they're struggling and they're looking for options right now. And you just can't get you can't over optimize your valuation in this type of climate.
One of the places I was reading there's sometimes money available is government grants.
That would never have occurred to me. I mean, obviously it depends on the industry, but but that is a that is a place to find funds.

I'm I'm dialing in to this call from Toronto right now where we have about seven or eight portfolio companies.
Canada in particular has a number of very good government programs that offer non-dilutive financing to their scrappy economy.
There's they have what's called shred credits for reimbursing engineering talent. They have a program called Sofi that that lends to startups based on, you know, certain terms and milestones in the business that is debt, but very favorable government debt that sits senior to your shareholders.

But it's good in other you know, in the lack of other options, it's a very good thing to put on your cap table and it's a bunch of programs like that in in the U.S. we're not as good at the government subsidies, but there are a few areas in particular. One, what I'm excited about is the CHIPS Act.
You know, the US government's not great at historically picking winners and losers in particular markets. And definitely thinking back to the solar days of the late 2000.
Solyndra.
Yes. Yeah. But there's a lot of money that should be flowing into the space.
And, you know, it's one where I think there's some good opportunities to look in government funding or at least government contracts, which is revenue is always the best form of financing your business, right?

Yes, it is. What did you think of the the requirements that the Commerce Department put on companies?
You know, you have to have you can't buy back stock, You have to have a certain amount of child care, etc.. It strikes me as reasonably fair.
After all, we are giving you the funding.
Yeah. I think any time you take funding from you take a government entity, you take conditions. Right. You know, same thing if you take funding from.
Yes. Again, in Canada, for example, there are some VC funds that are backed by banks or have a bank entity to them.
They tend to require an audit in the company a little bit earlier than, you know, a typical VC fund would require.

These are just things that you sort of have to accept depending on where you where you take the capital from. But these are, I would say, you know, mild inconveniences in some ways.
But, you know, overall, probably not terrible things to have built into your company as a as a principle anyway.
One of the other things that Canada, at least they did during the global financial crisis, I don't know if they're doing it this time around, but you know, the companies with H-1B visa workers who may have been in their community for decades, and this is a problem.
I think a lot of people outside Silicon Valley aren't aware of.

You know, is the the family from, let's say, India in which dad is the Little League coach and he's been with Cisco or some startup for for for ten years. Pillar of his community his wife is loved by all his kids or, you know lifeguards and the dad loses his job. They've got to go, which is insane.
But Canada has said, listen, come up here.
You have to and you have to fund yourself. I mean, you have to live in Canada on your own dime. But come up here and you can just be in Canada until a job pops up in Canada.
It's worked really well for them. Look, the.
For a number of reasons. The US became slightly less appealing for immigration for for the last, you know, six, seven, eight years.

Canada really jumped on the opportunity and a lot of folks who I think ordinarily would would land in the U.S., start companies, become executives in tech companies and elsewhere in the economy.
You know, unfortunately have have landed in Canada.
And look, you know, border control and immigration is a never ending battle.
There is no exact right or wrong answer.
But I do think that, you know, the U.S.
would benefit from continuing to have a favorable immigration policy, that that better attracts those folks to come into the U.S. and to stay in the U.S..
I have in the past compared it to when you were picking, you know, kickball team on the playground. And, you know, normally you have to go.
I pick one team member, you picked one team member.

U.S. has also always gotten to go, okay, I picked these first ten.
Yeah.
That's exactly right. And it's been a great competitive advantage saying, look, it's it's played out and also all parts of our economy.
And, you know, I think we'll get back there.
I really do.
But it's just going to take a little bit of a little bit of time. These things go through ebbs and flows, of course.
What is your strategy or has your strategy changed at all as VC money is drying up?
You know, it really hasn't changed that much for us at at the seed stage.
We have the advantage of being, I would say, pretty consistent and a little bit picky. Obviously, we're always competing for the best deals, but we've got to stay consistent to what our core strengths are.
Right.

We we tend to believe that we're still in the very early days of what's possible with AI and machine learning.
We've been in the space since 2017.
My business partner and I both came from the quote unquote A.I.
world over, you know, 15, 20 years of our careers previously.
And, you know, it's funny, I think in the six years we've been running this fund, in the first two years, everybody said, Oh, my God, this is brilliant.
You know, you guys have a unique experience as data scientists and practitioners in the A.I. market. And then there's about a two year period where anybody's investing in crypto and metaverse and everything else, and everybody looked at us and said, What are you guys doing, A.I.? Everything's been done.

And then in the last three months or so since chatter exploded, I think my IQ seems to have gone up ten or 15 points and feel like the same guy was six years ago. But it's interesting. We say we've stayed very consistent.
You know, we do look for good sound AI, machine learning, both applied applications and kind of infrastructure and the really boring tools around it that make the A.I.
quote unquote AI possible.
But we also do look for some of the macro trends and say, you know, ahead of some of these bigger evolutions and also concerns, you know, we've invested in we don't do hardware, but we do software for hardware. And the chips industry, for example, we've done software for the quantum computing industry.

We're spending a lot of time in cybersecurity because we're in sort of a perpetual cyber Cold war, I think, globally.
So those are spaces that we continue to focus on from a thematic perspective.
You mentioned blockchain, and then I'll tell you as a reporter, you get these, you know, pitches about different companies. And a while back it was big data.
You know, this is a big data company doing big data.
And then for a long time it was blockchain.
You know, we're using the blockchain to, you know, deliver food to houses and you're like, I don't think you really understand what the budget is.
And I will tell you now it is a I how do I, as someone who is not a data scientist, determine if a company that puts AI in their name is in any way involved in any great question.

I would say this. So as a I have product manager level experience in terms of technology. So the truth is I can still get fooled by it by a flashy salesperson with my iMessage.
My partner David is a computer science.
He spent 22 years building Renaissance technologies.
And you know, they've done pretty well at using not necessarily AI, but data science to perform extremely well in the markets.
So I tend to think of, yeah, how do you invest in as a non technical person, Right. I think, you know, first of all, it's important to know that AI's not magic and computers don't learn, right?
It's it's math, it's coding and it's and it's math.
The second thing I always think of is.
There is a very much a human element to this of separating the serious founders from the opportunists.

It's not something you can fake if you have a team of low-code, no code, AI, engineers or product, and they don't really have data science in their background. It's not a bet I would want to make, right?
That seems like an opportunistic fundraising pitch.
Right. Thursday look for is is a value of the company derived from the genius of the founders and their A.I.
and the technology. Or is it using good sound technology and data science principles to build a product that adds value as actual business value, Right?
And then it's, you know, it's all about the data.
Data data is really the king we're still seeing in chatbots.
You know, it's concerning.
It's a fascinating tool and also concerning it how confidently it can spit out wrong answers based on where it's getting its data from.

And then lastly, you know, I went down the NBA route for better or worse. And but what you're looking at, I as a non-technical investor, it's still really important remember of your B-school, your business school basics right?
Porter's five forces and business model candidates in an innovation market map are all a great starting point. And then you can go talk to your tech experts.
I call David and say, Is this thing real or not?
Why would anybody use this in a data science world? And I'm fortunate I got to go at the technology side of things alone.
He can kind of check me on that and not get caught up in a flashy sales pitch.
But it's hard. It's hard.

I was talking to an investor who works for SC Ventures, which is a spin off of Schmidt Electronics, but at any rate, I asked him a similar question.
He said, you know, start with are they solving a problem?
You know, that they're using A.I.
is great. We'll get to that in a second.
But first, are they solving a problem that has a market which, you know, when you think about again, what made me think of that was, you know, go back to your MBA days.
Are we doing something that that people will pay for and solves a problem in a way that hasn't been solved before? Oh, by the way, we're using A.I.
to do it.
Absolutely. No question.
Did you see the the warning from the FTC about don't get your skis? And I.
Did.

It was it was wasn't an official I guess it everything's an official statement from the FTC. It was written on their blog page.
So it was maybe a little bit more casual than a ruling or whatnot, but it was plain language, like, hey, Silicon Valley, you've done this before. Do not get overly enthusiastic about A.I.
and start fooling people into something that you're not really doing.
I did see this. It was it was a funny press release or blog is a little bit cheeky.
Yes, but it was definitely I'm a washed up baseball player, so forgive the baseball analogy, but this was definitely a little bit of chin music.
It was a fastball, you know, high, high and in to the venture community.

I think it's smart. Yeah. I think the crypto community got away from, you know, government regulatory bodies a little bit further than they would have liked to.
It's a good time to get out in front of it a bit.
And, you know, I've I'm active with the NBA National Venture Capital Association and you know was looking at some of their subgroups recently to to join and they were to focus on on blockchain actually and none around A.I.

so naturally in the in the field to fill out you know what other groups should be thinking about. I said, you really need to have a high group of people who have done this and and been there before and know what the limitations are in and around A.I., And that will definitely help inform how the NBA chats with our with our government regulators to make sure we're not overregulated.
But also there is enough consumer protection in place for people not to get not to get full.
And then lastly, what are you most excited about? What's what's ahead that that you think, Oh, I just can't wait.
You know, I'm excited for to be honest.
Machine learning and data science.
At its core, I'm going to leave the term AI out of this very intentionally to have its day.

I think there's been so much noise and fluff around AI in the past that it's coming to a reckoning where this is happening and all of the really boring infrastructure stuff that's needed is is finally being recognized for what it is, just like we did with Dev Tools ten, 15 years ago.
We went from on premise software to SAS and cloud.
There's a whole set of stuff that needs to happen and that's the challenges are further complicated by adding data science, machine learning into the overall process that I think we're at the point where anybody has to figure out their strategy and put the right infrastructure in place.

Similar problem happened in crypto and with bitcoin, the use case got ahead of what's viable with the technology and blockchain technology is is useful, has a lot of valuable application.
People got caught up in a very speculative asset and forgot about all the other stuff needs to happen to make things work without massive fraud.
For example, in a couple of recent cases that have made a little bit of news.

So I'm actually I'm excited for the most boring part of this next generation of startup investing. I always say when we started Differential six years ago is largely data and I focus, but it was really an enterprise focused fund that was just going to invest in all of the next generation enterprise technology that would replace all the dinosaur stuff that we built and sold ten, 15 years ago, because data has to be at the core of everything now instead of just, you know, core software service or on prem applications.
Those are my questions for you. Unless there's something you would hope that was going to get you that I didn't.
That was everything for me.
Excellent. I appreciate you making time for us.

The technical difficulties there.
And it was weird. I don't know why, but who knows?
It doesn't matter. So this is the platform we usually use for television, but we won't record the video, so we'll just be recording the audio because it's an audio podcast.
So very casual.
Stay close to your mike. Obviously very casual.
If we get halfway down a conversation and you think to yourself, I don't even remember what the question was, then just throw your hands in the air and say, What was the question? I don't remember because we'll just edited that.
Yeah, we'll just edit it out.
So let's talk about.
Whatever this category is, I don't even know what to call the category.
It's not fintech in the way that Sofi or Affirm are.
It's not crypto at all. So it's not like Coinbase.

/content/Preprocessed_Data/SHR Please Don't Drink the Alternative Asset.txt

Fractional ownership is not the best term for this.
I mean, that's part of it. It's really.
The alternate it would be I would put it under the fintech umbrella and also the alternative assets umbrella.
Right. So there's some embedded fintech in it.
There's kind of a wealth tech sort of trading tech tech, you know, sort of element.
But there's also.
It is. It's it's a hard asset, right?
It's an investment. So it kind of it wears both the the sort of alternative assets and the embedded fintech.
What's the appeal of of alternative assets?

And these can be things like I've seen masterworks as a, you know, fractional ownership of paintings. I've seen this with sports memorabilia, even weirdly enough, with wine, where people are buying a portion of a bottle of wine with the intention of holding onto it as an asset.
Why is that appealing?
Not necessarily all the sudden, but more appealing now?
Yeah, I think historically, just because there's been a run on on asset values globally, so people are looking for safe haven, safe havens, and there's your traditional marketable securities and kind of, you know, the non alternative assets. And there's really been just a staggering run of demand for anything from timber to shipping containers.
Ah, wine, fractional racehorses, I mean, you name it.

I think people are looking for a generally accepted global store of value that's finite in supply, you know, so that not only can preserve your wealth, but hopefully get some, some capital appreciation or even some yield off of it, I think.
And of course in the past that's been gold.
Right? Yeah. That that the hard assets, the gold.
So what's wrong with gold. Why, why resources and not gold?
I think gold is already in people's basket.
Right. So they're just looking for more variety.
That would be how I would look at it, right?
You. It's like having one stock instead of the whole tech portfolio right here if you're just trading on Meta.
You know, you're probably missing some other stuff as well. So I don't think it's going to come to the chagrin of gold. I think it's additive to gold.

What got you interested in this? Did Lexus pitch you or did you come hunting for them?
So we they pitched us, but we did kind of hunt for them.
We we are longstanding alternative assets investors.
So, you know, one of my hats as a technology venture capitalist.
Right. So I'm out there looking for technology that's, you know, disrupting or creating, you know, disrupting and creating new markets or amplifying old legacy markets that just were not technology forward.
But I'm a collector of of gems, fossils, minerals.
I collect numismatics, which is old money.
Do you know with my son? Several of my LPs and kind of family office friends are also avid collectors of luxury assets.
And it it absolutely is a store of value.

I mean, one another way to look at it too, is just look at some of the comps and sports teams. Right? One could argue that that owning a sports franchise is an alternative asset and those have been.
Astronomic growth in how those sports franchises are trading.
Right. It's kind of what the billionaires are doing. Right.
I like. I'm interested in your your collection of old money.
Tell me about what's something in your collection that you particularly like?
Oh, I've got a lot of the Texas currencies from when we were a country.

Just cause we were headquartered here in Austin have a lot of stuff from different times in the war. So if you think about it, you'll and especially you being on the the sort of press side it you know we're all students of history and money was the original mass media, you know, just like painting the walls in chapels and churches were a way to communicate with the masses.
Whatever was on the currency in the pocket of your citizens was what you as a country, as a leader.
You know, of that country we're trying to communicate.
So in there is just a journey down memory lane of history and what you were trying to communicate, what was happening in that country or that nation at that time. What challenges and opportunities?
What was the zeitgeist at hand?
Because it was the original billboard.

Right. It was a billboard in your pocket.
Disseminated through all the citizens of your society and reflection to counterparties that you would trade with who are not citizens of yours. As. As for what your country and society stood for.
So I really like it from a history perspective.
And it's held up very well from an investment as well.
You know, it made a decent amount of money kind of trading up into these things.
And it's a great conversation with my my sons.
And a fun hobby to have together.
When we talk about alternative investments, these are different than buying stocks or bonds, and they're protected differently.
Right? I mean, the investor needs to understand that this is different than buying a share of Apple on on the stock market.

That's right. I think that is where the opportunity is, too, is bridging that gap.
So what? What can serve you?
What serves the investor about the status quo?
You know, broader big market distribution analysts covering it, the underlying security, better flow of information.
And if you look at the alternative assets, a lot of times they're there's less liquidity.
They're more opaque about the timely access to information.
And so in that you should be paid for that risk.

Right? There's always this this equilibrium where things change hands and you're you're trying to either increase the amount of liquidity or increase the amount of information in the timeliness of that information to get to a parity to where you can grow the market and more easily transact. So I think that that's what's happening is you have these these assets that are more niche, they're alternative assets, they're less liquid.
But through embedded fintech and financial structuring, those are becoming in vogue and they're being more commoditized or an early stages of commoditization to kind of grow that market and make them more sellable to a larger base.
You have a surprisingly broad portfolio.
Pro Pro Topia uses machine learning to glean insights out of data.

Home point is in the mortgage business.
Canteen sells vodka, slingshot aerospace makes satellites.
So you've got mortgages, cocktails, rockets.
Are you comfortable in all of those spaces?
Well, it's interesting. They don't.
On the surface, they might seem very disparate.
What's usually behind them is some intersecting theme.
So because we know what's going on, on the retail shelf and do a lot of inventory management, consumer packaged goods stuff as angel investors and across my fund. I mean, I've been a long standing consumer packaged goods and e-commerce investor.
That gives you a lens to look at inventory management.
So one of our our big investments is a company called Pensar Systems.
You might see that see them on the website as well.

They are what's happening real time on a retail shelf, in a convenience store, in a warehouse and a grocery store.
But when those founders were pitching that deep technology to us, we knew the problem of empty shelves and what it meant and the challenges there, because we had invested in physical products on retail shelves and had to deal with this. And one of our investors owns a large chain of grocery stores. And so we were able to to triangulate on this problem very acutely and then make that investment.
And then on the some of the other stuff, we're generally following founders that we've already worked with before. So on, you know, Slingshot Aerospace, that's, you know, my third time to work with that same founder.

In fact, we had a company that we took public together back when I was a founder.
So we're generally, you know, we're we're not looking for something that we don't understand in a team. We don't know.
Ideally, you have both. It's something, you know, have a thesis on, have an information experience advantage, and you're not taking people risk.
You're already working with the team or investing in a team you've worked with historically. So that's why it might seem a little bit, you know, heterogeneous out there, as it were, in companies that are changing the way things are be done with founders we've already worked with that are going to bring it back to one of our our kind of core themes, I guess you could say.
You've worked in consumer goods for a long time.

What was your favorite investment or what was your favorite consumer?
Good. They may not be the same thing.
Oh, my gosh. Well, there was a you may have had this before when the paleo movement was just kind of starting.
So that that dietary movement, you know, to eat less carbs, you know, more like a caveman, if you will. There was a category that was.
Not determined yet. There was kind of jerky, you know, meat products.
And then there were all the granola bars and all the health bars and the snack bars and things like that. And there was a company called Epic Epic that I invested in as a kind of to try and ride the thesis of, Hey, this, this Paleo thing is real, CrossFit is real.

People are trying to bring down carb intake, but there's no place I can go in the snack aisle and get something besides just jerky.
And they ended up selling that business.
It was a nice exit and it defined this whole category of protein based snackable bars in a world that was generally very carb heavy.
So that was that was a fun one because it was a fun brand.
It was very timely. And I would, you know, snowboard high, go around and go places and you start to see, you know, epic bars or people see an epic sticker on your helmet while you're mountain biking and conversation starts.

So I think that's the fun thing about consumer facing things is that you get to talk about it and it creates a conversation versus if you're investing in, you know, enterprise, deep tech that isn't necessarily dinner table conversation.
Right.
Right. And your mom and dad also understand what it is you just invested in.
You can pull it out of your pocket.
Which one of your which one of your investments do you think is best positioned in these economically uncertain times?
We have a couple that are in supply chain visibility.
So I would tell you right now that no one cared about supply chain.
That's a buzz word.
You mean you remember you've been talking to smart people and in a thought leader for a long time here, No one cared about that.

And I think, you know, us being in the Mid-Continent, you know, here in Texas.
Right. You're not we're not in San Francisco. We're not in New York.
You have to make things and move them.
Right. It's a big asset intensive, large piece of land with, you know, huge ports and energy and just hard assets everywhere.
And so for us, the making and moving of things is what we do.
So investing in technology that better helps you make and move things was just pure logic. And so we've been investing in that for over a decade.
And then Kogan happened and then geopolitical anti-China stuff happened and that we are riding this wave of near shoring reshoring supply chain visibility very hard.

And I think that is not slowing down. For all the buzz that's been had over the past three years, I would tell you that we're less than 10% penetrated towards a self-actualized and efficient supply chain. So there's still a lot of room to run there.
You're a small firm. You recently hired Jeff Thompson.
He's a former Army officer.
You're a firm a former Army sergeant.
Was his experience part of your a factor in your hiring decision?
Absolutely. We we hire folks that have been operators.
So if you look across our whole company, one thing that is interesting as a firm is generally venture capital is this is a small asset class and it's a drop in the bucket of the global things that one can invest in.

Right? We're a subset of private equity, which is a subset of all or illiquid, right. Which is a subset of what's available.
And they're the we're overweight.
The whole industry is overweight. Smart people who can financially engineer and are very fluent transactional.
Right. Like that's table stakes, you know, being in Mensa and being able to craft, transaction and model things out, be a financial investor, that's table stakes.
What what's the irony is that early stage so in the you know standing up companies getting to that first couple of million of revenue that's not a spectator hands on sport. You know you can't just hand a bunch of hedge fund managers, some startup companies and cross your fingers. Right.
You need to know how to operate.

And so our thesis was, is that if you're going to help launch companies with founders, being a founder gives you an an edge.
Just like if you're going to play a sport and coach a sport, it's better to have played a sport, right? So I'm kind of maybe I have to edit some of this out, but if you think about it, what coach out there has ever been successful in any athletics that didn't play the underlying sport.
Yet most venture capitalists have never actually built a company.
They're financial investors. So there's irony in that.
So when we look to build our firm, we look for people that had all the financial acumen and chops. You know, we're in, you know, hyper intelligent team Mensa individuals, but they had actually built teams and launched products.

They were technical. They could code and manage the numbers.
And so finding people that are operators who are also financial investors has been something we've been on a quest to do.
And I believe that the military and the ability to be a team player and. Done as a team, especially in a world where we're trying to invest in technology, often at the demise of people that were there previously.
Right. Like automation is literally that your.
Yes. And so the irony is, at the end of the day, it all lands back on humans for as much debate as we're doing. And we're and we're definitely in that space pretty heavily with some great investments.
You know, people still need to get things done.

They need to work together. And for all the polarization and this versus that out there, you know, it's nice to have people that know how to work with folks that think differently than they are, look differently than they do, might fly a different flag. You know, our heterogeneous in the military is a great proving ground to find individuals who who innately know how to get things done with other people.
Speaking of, you know, differences, we'll call it we'll call it rivalries.
I'm in California. You're at ATX, which is short for Austin.
Why base in Austin? What makes Austin appealing to you?
I think Austin was the closest thing we could get to kind of the things that are great about California while still staying.
So it's not the first time I've heard that.

We're that we're the blueberry in the in the whole soup is what people say.
Right. So and I think that just resonates with what's happening here.
I mean, if you look at it, it's the state capital, right?
So there's the ability to kind of help craft with some idea legislation.
It's also a big university town.
And so with that, with that university college dynamic comes asking why being a little bit curious and possibly even recalcitrant.
Right. And so those are beautiful things.
And that's that's a lot of what made the Bay Area great back in the day is it was this haven for people that were willing to break eggs to make an omelet and think differently and be progressive. Right.

So it has those elements, but it's all wrapped in this very pro-business, you know, light government tax friendly sort of umbrella that makes it a very interesting place to be right now to launch.
Technology companies can be an investor.
So I think we're not the only ones here doing this, but we were ahead of sort of the influx and it's nice to be part of the incumbent regime that's seen the past, knows the present, understands the future a little bit better as a local.
So yeah.
And then circling back to Lexus, this company, what do you hope for this company?
Were we to meet back here in a year, two years?
Where would you expect it to be?
So across multiple assets so you can't boil the ocean.
So the Lexus is starting with gems and jewelry, you know, truly collectible museum quality stuff.

Very, very rare. Absolutely finite in supply and high in demand. So you think about something that was worn by Marie Antoinette or was this was this Ruby once upon a time in King Solomon's, you know, actual vault? Like, these are the stories and the conversation and frankly, the community, they come with the asset class that you don't get in a laddered bond fund or discussing your timber portfolio, right, is because it's this intersection of luxury ownership, collectibles, fashion and an underlying asset class.
It has things above and beyond just being an investment.
There's a community and a conversation around it that make it dynamic and more attractive than not having those attributes.

And so if we came back here in a year, I think Lexus and hence the name Lexus is to be the thought leader and the market maker for these very rare, highly curated groups of investor collectors across the whole luxury category, which is actually on fire for as much demise is happening in the macro world right now.
If you look at art sales, racehorses, yachts, there is the rich are absolutely getting richer and the amount of money at the 1% of the 1%. The velocity and the increase in in pricing around these luxury assets is off the charts.
Chris, are my questions for you, unless there's something else you'd like to touch on.
Oh, wow. That's that was pretty.
Easy, huh? Yeah.

Well, I mean, I don't know if I told, you know, when you when we did you did ask about the portfolio. You mentioned some companies are topia.
Zach is a great company. And there's another one called Slingshot Aerospace that I think your audience would resonate with.
And also you asked what what else was safe?
If we could maybe go back and edit that in.
Absolutely. The government is really flowing and I know you've seen a lot of stuff with the government and done some correspondent work as well.
Maybe I can touch on Slingshot Aristotle. I mean, let.
Me let me set you up with that. And that is to say, you know, another important something else in your portfolio that might have some some room to run in a tough economy is anything that has government involvement.

Rocketry often does. Where are you with Slingshot?
Yeah. So Slingshot Aerospace was a thematic investment for us that has proven to be phenomenally resilient this market because both commercial and government budgets are up and resilient for the space category. So in fact, right now, if you look at time adjusted, this is the highest peacetime budget that the government has ever had for aerospace in space at large.

The other thing about space that's really interesting and unique is that if one was an institutional investor trying to invest in space, the whole market, save a couple few, you know, a few SPACs is all in the privates. If you think, just think about that the closest you could get to space if you there is no ETF, you can't go and build a a publicly listed portfolio of stocks and get your space exposure.
Space is private.
All the other big companies in space are private.

The pick and shovel plays are private. It's all trapped in venture capital, private equity backed land. So that whole category is still has a ton of money looking to come into it for people that believe that space is a legitimate market and they have to come into the private markets to get it. So what we like about space is that all the things in orbit, whether they're commercially owned or owned by a government or something like that, they're moving around at 14 to 18000 miles an hour at Leo and there's Leo Meo and Geo.
So there's three rings and they're crowded.
They're full of space junk. Organic matter, inorganic matter, active satellites, inactive satellites, all kinds of rocketry.
That stuff is a giant trainwreck.
And every time that more stuff goes into space, it only exacerbates.

So we want to do invest in something that can make sense out of everything in space, ultimately become the central nervous system or trusted repository of all things in motion and the customers a slingshot serves are both people in space, so they have 90% of things in orbit are our customers are slingshot, and then the launchers.
All these companies launching into space don't want to crash.
They're millions of dollars worth of equipment.
So they also need to air traffic control and or liaise with, you know, space intelligence thought leaders.
So that is really an interesting place to be.
And then there's a sustainability just like our oceans.
All this stuff ending up in space at some point has to be cleaned up, has to be made safe, and it has to be policed in a way that serves humanity.

Like if you if you think about it, borders disappear.
When you're talking about space sustainability, it's it isn't really Korea versus the U.S. versus Russia versus China.
No one wants an ineffective, dangerous, inoperable space. We all need space to work.
So it really is a huge market opportunity with a ton of challenges and also problems to be solved, which is what we venture capitalists love.
Right. Is that asymmetric big fat tail that, you know, when the answer to the question is how big could this be is I don't know, but really big.
I mean, that's so there's only a couple of industries and sort of paradigms that you get to participate in as an investor that are like that.
So only so many industries that are that young that have so much potential.

That's exactly right. So you look for these I mean, that's what that's the job of us VCs, is to go find something where we're underwriting to an upside of infinity, right?
And then time it right. So you're not too early, not too late.
Right. So it's delicate.
My last question for you and this, we will not include it in this podcast.
We I just collect them together and run a kind of a mishmash of them once a year.
Is what book was influential in your life that either you read it from time to time or it moved you, or it's a gift you give friends.
And it doesn't have to be anything from Harvard Business Review.
It could be Winnie the Pooh.
But you know what? What book is important to you?
You know, I think there's kind of two one, one.

All answer is kind of a man that likes to read and, you know, kind of entrepreneur, investor, ex-military guy.
I've always liked cryo krill PDA, so it's sort of the story of Cyrus the Great and his leadership ones, I think for a couple of reasons. One is, is in the West.
So I grew up, you know, America, you know, in the United States did was you know, family was an expat. But we're we don't really learn about the eastern leaders as much. And it's a global world.
I think it's actually a disservice to to to under index on what's happening elsewhere.
And and so it's a it's an amazing he was an amazing leader Cyrus the great how he was able to, you know conquer and assimilate but make it. Do it under the auspices of I'm here to help and solve problems and elevate humanity.

It was a very unique approach.
And a lot of Americans and folks of the West that are students of history just don't really understand that. So I think that that's just a great book to read.
And we all end up working with other people and having to get stuff done as teams.
So I think there's a lot of wisdom in there. And then the other one that I read all to my my two boys all the time is The Lorax.
Right. And, you know, you can't help but look at, you know, the environmental narrative there, commercialization, entrepreneurship, scaled commercialization. Right. And it's it's this trade off of concepts around here is the environment and animals. And there was this way things were.

There's this entrepreneur and we all this entrepreneurs, you know, we all like entrepreneurs, right? But what happens like when was enough enough and what tradeoffs were made and what consequences for the actions of those trade offs manifested themselves? And what does that mean?
And I think that whether you're a five year old or 15 year old or 70 year old person, you know, balancing that act between long term consequences to external participants who weren't involved, as well as trying to pay the bills, feed your family, make a difference and get things done. I mean, that's.
That's a story that everybody can get something from, right?
I'm going to stop recording.
There is. Where's my mouse?

Even at 20, 30, 40, 50 times, even sometimes 100 times year, are the outcomes that we've seen in the market or big enough that sometimes it's very much justified.
I'm Scott McGrew. Welcome to Sand Hill Road.
Thanks so much for having me here.
Mary D'Onofrio is partner at a very old firm with a very big fund at a very young age.
I don't know if you know too much about Bessemer, but we're a 100 year old fund, the oldest in the United States, actually started out of the Carnegie Steel money advice the Bessemer. I know exactly so they license the Bessemer process and made and made their fortune that way. Andrew Carnegie and Henry Phipps and Henry Phipps then started Bessemer Securities, Bessemer Trust and Bessemer Venture Partners spun out of it in the 80s.

/content/Preprocessed_Data/SHR Bessemer's Mary D'Onofrio Counts Clouds.txt

We're on our BPP 11, 2.9 $2.5 billion fund. And four years ago decided to really become a multi-stage fund rather than doing just seed series A in kind of early Series B.
And so I lead net new investment series B and beyond and also help some of our enduring portfolio companies like Auth0, Twilio and the like that that we support throughout their life cycles. And since then, we've raised two dedicated growth vehicles totaling one point three billion dollars.
So a lot of money to to help entrepreneurs with.
I focus more so than anything in developer tooling companies like Launch Darkly Hoshi Corp., which recently filed Zapier data infrastructure companies like Big Idea or Imply Data.

But technically, I'm a generalist within software and cloud software specifically, and in a prior life, I was actually an investment banker at Morgan Stanley, a prior life. But you're not very old because I happen to know you you.
You've won the 30 under 30 award, right?
So therefore you must be under 30.
I am 29. I guess I just squeak by.
Yes, I did. I guess what I mean by that is it feels like a long time ago, I was about seven years ago. So nonetheless, it has been a while, but the jobs were somewhat connected.
I actually did private capital markets while at Morgan Stanley, so that was raising money for private technology companies. Some of the transactions I worked on were companies like Uber and Airbnb and for Scout.

And that was their private capital raised before, like pre-IPO effectively.
So in some respects, the sell side of the job I have today.
So I don't want to be in any want to sound in any way patronizing.
But you've done all this under the age of 30.
I mean, I realize you have an MBA from Yale.
I mean, you are well-qualified to be doing this, but that's a hell of an accomplishment.
Oh, thank you. It's very kind of you.
Yeah. You know, I think the first it was a combination of of the right skill set, you know, bringing some more financial and quantitative skills to bear than early stage investing requires with also being at the right place at the right time. You know, there aren't too many opportunities to build a new practice in a very long standing fund.

And my my partner today at the time, not my partner, my supervisor, Byron Deeter, hired me to start the growth practice four years ago.
And since then, we've we've built it, including my partner, Elliott Robinson, who co-leads the practice with me today.
It's a fantastic group of people and but but certainly I agree with you somewhat for Forward-leaning to entrust it to someone who was relatively new in there.
How much?
How much money do you directly touch?
The you have some. Yeah.
A lot.
Well, you know, Total Bessemer in the current set of funds probably has a total, I think, of of three point five billion dollars, OK?
And the growth funds themselves are 1.3 billion.
But then we still do invest some out of the main funds.
So, so it's a good amount.

The great thing is we have something called the Century Committee in the Century Fund, where we evaluate a lot of the growth stage opportunities as as a collective.
And so I'm part of that group, but almost any growth stage opportunity, especially into our existing portfolio, I will I will touch in some way.
One of your first professional jobs was at the U.S.
Treasury, so in some ways you're dealing with less money, actually, ironically. I worked for the Treasury of the United States, Rosie Rios, who is now a board member and one of my portfolio companies get injured, which is very cool. But she actually ran the Bureau of Engraving and Printing in United States Mint. So she literally minted money and signed every one of them.
Yes, I bigger signature is I'd like over a trillion dollars.

Did you ever did you know that like for I don't know how many decades?
It's always been a woman. It's the first U.S.
Treasury secretary is Janet Yellen, but it's always been a woman who's been in charge. And it's the second signature on on the dollar.
It's the Treasury secretary and the Treasury of the United States.
Yeah, I think it's cool. It's fun trivia.
Very cool. And she was she was there for eight years.
The other thing you need to know about Mary is she indexes, quantifies, organize and calibrates all kinds of things, and she's damn good at it, like the Cloud 100 list, which she works on in partnership with Forbes. So the Cloud 100 2021 list is worth an aggregate of 500 and $18 billion.
It was 267 billion in 2020 last year.

How much of that is the cloud gaining in value and how much of that just feels a little bit bubbly?
So I definitely say it's a combination of the two.
I think the run up in the public cloud markets, combined with a lot of the fantastic exits that we've seen in the likes of Snowflake and Cloudflare and Auth0, even in the M&A side, has led to just vast interest in cloud investor appreciation for what those companies could become.
And what's remarkable is in the public cloud market, the average revenue growth rate is actually 40 percent, and that's at scale at maturity.
And then you have some companies that are even defying that, like Shopify is growing over 100 percent at three billion of revenue.

So I think as it trickles down into the private markets, investors realize that their willingness to pay historically were actually lower than they should have been considering what these companies can become.
That being said, in the Rose recent Cloud 100 list, the average revenue multiple or R multiple, pardon me, was 34 times, and in 2016 it was nine times.
So there's been a huge run up in multiples, and growth rates have not have not been at that same level.
So investors are actually willing to pay more now for the same levels of growth than they have been historically. I think that for some companies, it's going to be totally justified. Beneficiaries, especially during COVID, were infrastructure.
Company is collaboration and productivity software companies.

But certainly, we're going to see some companies not not live up to those fantastic expectations. When, you know, I'm sure you hear lots of narratives around this, but investors are paying 200 300 times RR for for lots of companies. Not every cloud company is going to be a deca court where the average value of the the companies in the list of 100 companies is $5.2 billion.
I mean, there was a time when we thought a billion dollar company was remarkable, certainly.
And you know, I I think especially if we look at the top 10 or 20 companies there, you know, you really see the power of the cloud.
This year it was stripe data.
Check out Plaid, Figma and the like.

And so, you know, seeing those companies justify those, those massive valuations is certainly true. I think as you look further down the list and then even some that didn't make the list, you know, are they all going to be $10 billion companies?
I'm not exactly sure, but I think that especially COVID and the tailwinds behind cloud expansion have opened up a lot of opportunity for cloud companies to capture. You know, when we were doing the state of the cloud the year before COVID, so I think it was actually 2020.
We estimated that cloud penetration of software alone was 25 percent, and that assumes no software TAM expansion.
So if you add if you if you assume that the software market has increased and covered in COVID tailwinds.

Have propelled the cloud. Yes, there is a ample amount of market opportunity for them to capture. But I agree with you, I'm not sure every single one of them is going to be exiting for 10 or 20 billion.
You clearly like metrics.
Yeah. You like measuring things.
You are. Yes, you are you.
You've got the Cloud 100, the Bessemer Cash Conversion Score.
That's you. The scaling to 100 report.
That's you. You helped create a Nasdaq index and an ETF, right? Do you just measure things all the time?
I mean, I'm talking about, like your personal life.
Have you got indexes and whiteboards?
And I think I'm probably I probably over rotate on on metrics in measure, but in my professional life, which which leads my, my personal life to be unmeasured, I'll leave that to my husband if we set COVID aside.

Your experience in banking and venture capital has been entirely during boom times.
Does that worry you at all?
I mean, you've only got. You are, like I said, incredibly intelligent, incredibly well-educated, incredibly well respected in the industry.
But your entire professional experience has been.
Up into the right, as far as the economy goes well, so I hear what you were saying.
However, I think it comes down to investment philosophy and kind of how you especially as a growth investor, how I evaluate companies.
I think in the current environment of high prices and momentum investing, people will discount.
From what they think.
The best case scenario is for a company to get to their willingness to pay.
I am more of a fundamentals investor.

I do look at metrics very closely on a historic basis, and I'll also model companies into what I think fundamentals should look like in the future and use historical multiples historic outcomes in order to base those decisions, which you know, applies a lot of discipline to my investing philosophy and my willingness to pay that to some extent, and I will acknowledge this to some extent makes it difficult to play in the current environment.
You know, if your willingness to pay is, you know, 30 times they are, but the market demands 100 times, then okay, you have to sit that one out.
So I think for me, it has resulted in fewer but higher conviction bets.

But I certainly agree with you that I have not seen a downturn like the the early 2000s that others have that give them potentially even more pause.
But I think that so long as I stay true to that investing framework, I feel good about the bets I've made. But you're right, timing the market is is part of that calculus. I don't think we're going to see software investments that are, you know, high flying 100 percent growers that are offered at 10 times anymore.
You know, Bessemer launched or pardon me, Bessemer published some of its memos, and I think we we led the Shopify's earliest round it like five times they are.
You're not going to get those deals anymore. They just don't exist.
But even at.

20, 30, 40, 50 times, even sometimes 100 times RR, if markets are big enough, you have the execution chops and you have some competitive advantage, whether it's on distribution, product team execution.
The outcomes that we've seen in the market are big enough that sometimes it's very much justified. So I wouldn't say we're sitting it out entirely.
It's fewer, higher conviction bets.
Speaking of timing, you've got this situation with a lot of money going into infrastructure soon.
There are a lot of opportunities for companies in your portfolio, certainly, and I think that they're capitalizing on that, seeing the seeing the investment there and wanting to certainly capitalize on it.

Looking back at your time over both banking and venture capital, what's what's the mistake you wish you could take back?
This is not really a mistake, but maybe I'll answer a different way of like an assumption I made that was wrong is.
I made the assumption, especially when I was thinking about doing bad trade, that everyone.
Would want my money that like.
As an investor, you know, companies are coming down Sandhill Road, knocking on your door and just, you know, saying, Oh, please pick me, please pick me.
And you know, you have the power of choice.
I think the way that the market has evolved in venture and certainly on the growth side is that.

Capital has increasingly become a commodity, and you need to figure out your personal approach to companies, markets and even your role on the board, such that you can build a reputation and build a brand and obviously work at a firm that has has the same.
In order to to win deals and to have access to them.
So a little bit of a different question than you asked or answered or a different question that you asked. But I think that was the assumption that I made that was incorrect.
It seems like a reasonable assumption, right? I've got I've got access to a large bank account. I can put a signature on a check.
People will flock to me. Yes.

Well, some of my partners who have actually been at Bessemer longer than I've been alive tell me that, you know, it used to be a situation where that would be the case. You know, people would come down Sandhill Road and go door to door and be like, Hey, there are not too many firms that too many people who are doing this, taking bets on risky early stage companies and college dropout to have a big idea.
And you know, we were talking about it in terms of the Cloud 100, but there have been so many successful outcomes of that model that, yes, you know, the capital into venture as of late is astounding.
In our most recent state of the cloud, we we noted that $288 billion of of venture dollars went into the industry in only the first half of 2021 alone.

And the second quarter, I don't have the third quarter stats off the top of my head, but the second quarter it was like a hundred and fifty six billion dollars just sounding.
It is another example of you are making your career at an interesting time in which there's this sudden flood of capital.
Yeah, no, totally. And you know, your firms are firms are competing to help with help companies built, which is great. Yeah. This is also a time in which the average person in America may see technology and big tech in a negative light.
I would guess that the average person in America who has an opinion on that probably does not know a ton about venture capital.

But it would be unfair, I think, to loop in venture capital with the evils of Big Tech. I mean, there's some there are some evil out there, right?
But but venture capital continues to either not be understood by Washington and the average American or, I think justifiably can be explained as as something good that still helps the world move forward with projects that will change the world.
I think you're right. And, you know, even as I think of my own personal portfolio, you know, I don't I think these companies are helping to make the world a better place in their ways. You know, I'm invested in a company called Fordjour, its fraud prevention software companies. They have customers like Nordstrom like Let's, let's hope Nordstrom not not be overcome by fraudsters.

You know, I'm invested in a company called Big ID.
It literally is a data privacy company.
Data infrastructure in order to preserve, you know, consumers rights and privileges under different data privacy laws like GDPR, CFPA and venture dollars are the ones that fund those companies fund those new ideas.
I certainly I certainly think there's more goodness than anything there.
You are a young woman who is in charge at a very important Silicon Valley venture firm.
Are you were saying that we have solved that problem in venture or are you an outlier?
I think that I'm a sign that there is a lot of progress.
I don't think that it has been solved.

I think that, you know, there are many, many boards, many venture firms that still do not have as much female representation as they should. You know, theoretically, female representation in venture firms and end boards should should rival population statistics.
It should be about 50 50. It's not quite there.
That being said, there are more and more of us and on the portfolio side, I certainly do.
Advocate.
For my portfolio companies to start hiring chief people officer is chief human resource officer is such that diversity and inclusion at the portfolio company level at the board level can will improve over time.

And you know, obviously that there aren't just moral imperatives for DNI, but they produce better business outcomes, having more perspectives and more people with different perspectives attacking the same problem.
So I think I'm certainly a sign that there is progress more to be made, but I'm very proud that the Bessemer growth team is exceptionally diverse and I am very actively involved in communities like all, always and even kind of women's mentorship initiatives at Bessemer, because I'm hoping to to help the next generation of female investing partners to to rise to that level as well.
We were talking earlier about how you have all of these different measurements that you've invented and and and numbering systems and ranking systems.
What appeals to you with that?

What on a visceral level, what is that the thing that that fires neurons in your brain that that that light up happy spots in your head?
Well, I think the entire discipline Avenger is trying to identify what those.
Foundational and transformational companies could be that will change the next generation of the way that we think and live and work.
And while.
Not all of that can be boiled down to numbers, especially at the growth stages, are really good signals. And I like to use metrics and numbers more as guides for places to look.
So for example, with cat payback, customer acquisition costs payback, the rate at which your sales and marketing expenses repaid by an individual customer if it's really high.
That can tell me that, you know, it's not that important just.

Hey, cat, payback. Hi, it's hey, cat, hi.
Does that mean that this is a really tough market like that customers don't actually really want your product or competition is really fierce?
Is that it or is it payback totally justified because your customer lifetime values the kind of total amount of money that your individual customer will give you over time? Are those just so high that it justifies that it more points me in the places to look for the next level of diligence?
I'm never going to invest in a company simply because they have good or bad or not invest in a company because they have bad metrics.
But I love to use the numbers as signals for for where to buy.
Mary D'Onofrio, partner at Bessemer Venture Partners, where she created the firm's growth investment practice.

This is the second time we visited Bessemer.
The first was back in 2019, talking with Tess Hatch, an aerospace engineer who focuses her investments on space and aeronautics.
There's this famous quote to an astronaut said that the first day we were all pointing to our countries, the second or third we were pointing to our continents and by the fourth it was just one world.
And I think that's important just not for me, but for everyone to experience.
Look for that interview in our library of interviews with venture capitalists wherever you find your podcasts.
Sandhill Road is produced by Shawn Meyers under the leadership of Sarah Bueno and Stephanie Adran.
For more interviews with Silicon Valley's most influential entrepreneurs, check me out on TV at press here.

That's Sunday mornings on NBC Bay Area and everywhere in the world on iTunes and at press here.

Hello, there.
Hey.
All right, well, we'll go with what we got here.
Now I cannot, but but that's OK for you either. Oh goodness.
All right.
But I can hear you. And I'm presuming that we are hearing you on the recording as well.
The reason we use this and and prefer this to Zoom is that it's recording you locally as well.
And so when I finish, I get three files.
I get the two of us talking, I get me recorded locally and you recorded locally. And the quality tends to be much better because it's not, you know, a mixed conversation sort of thing.
All right. Well, so let's just let's just give this a go and see see where we are.
Did you get a chance to see the the video I said I sent you, I saw the questions that you sent over.

I read through those you didn't see the little video I sent, you know?
Oh, nuts, OK? All right. Well, let's talk about pitches.
What was the video? Sorry.
It was. It was a student over at Cal Berkeley who had done a pitch for Skydeck, which is their venture firm.
You know, venture sort of thing.
And I thought it might be kind of fun to incorporate his video into the conversation. As you know, I was listening to a pitch the other day by a young man from Nigeria and got to be thinking about pitches, and I thought I would call Nicole and ask her about, you know, about how pitches work and that sort of thing.
But you know, it's not critical that you've seen the video.
It's still the the concept I'm building still works.
OK, perfect.
Thank you. It was such a great voice.

I can see why you do this job.
So thank you kindly. Thank you very much.
So tell me about pitches.
I think this is the one thing that people are familiar with when it comes to venture capital, even if they can't tell you anything more about V.C.
They know that there's a thing called a pitch.
Tell me about pitches.
When do I start this market is just such a crazy one where I probably am on about 10 pitches a day. So what is a pitch and why am I on 10 a day?
A is for us where we will have the great opportunity of being able to sit down with a really inspiring CEO founder and to hear their vision of the future.
And so they're pitching their own background and experience and their teams and their advisors.
They're pitching their idea.

And it's really an idea of how they view the world differently. So maybe they see a problem in the world and they believe that there isn't a good solution to that problem today.
And so they're really pitching their vision and their solution to that problem.
And they're pitching, you know, how large a market size this is and how they're the people to do this. I always love thinking about the idea of three things why this team?
Why this problem and why this time when thinking about whether we as venture capitalist should invest or not?
Having talked to any number of venture capitalists, I am not surprised, but other people might be surprised.
You put the problem solution.
Second, you mentioned the team first.
That is really true.

That, to me, is super important. It depends what stage you're investing in.
But I primarily invest in seed series A, so at light speed we do try to be the first institutional investor.
And at that point, the CEO, the founders, the early team, that's everything to me. I would say that that is probably 90 percent of the reason why we invest at that early stage.
And it really is because this is an exceptional founder and not just an exceptional founder in an absolute sense, but really relative to what they're doing. And so I love to think about.
Is the founder product fit here?
Is that our found a problem fit? What I mean by that is like, is this the best founder in the world to be solving this problem?

And so maybe you had this problem yourself and you found the solution, or maybe you've worked had lots of very relevant companies before and have put a lot of tools in your toolbox to be able to solve this problem. And so that's really what we're looking for in the founders.
As far as the pandemic, you know, people have been pitching over Zoom, did that change the way that you listen to a pitch or how you what you thought of a pitch? Or is that kind of the new standard?
It's changed everything, Scott.
So I am an extrovert and I love meeting people in person and there, and that's what we would do.
You know, I would probably meet 10 different founders in person a day, either at our office or their office or running around to different coffee shops.

And that all changed. And so now are you doing it on Zoom?
And listen, Zoom is much better than a phone, call it being able to better understand who that person is and whether they're exceptional.
But there's nothing that beats meeting somebody in person.
And so I still try to meet them in person.
Even if it's not the first meeting, I'll try and meet them and for an outside walk, for a second meeting.
And then also, it increases the need to do references because you want to speak to other people who have worked with them before, who can tell you, Hey, this is an exceptional person because you maybe can't get such a strong sense of that over Zoom.
You do investments, as you said, Siri's series a very early.
And also, you tend to invest in consumer facing companies, right?

That sounds more fun, to be honest with you, then investing in SAS or B to be that kind of thing.
It just it just sounds like a more fun workday.
I am biased, but I would definitely agree with you.
My background has always been consumer.
I actually helped my father setting up online pharmacies in the 1990s and then spent nearly a decade at Morgan Stanley, covering, first of all, the e-commerce companies and then the technology names London and New York.
And so we did the Facebook, Pandora and Groupon IPOs.
So for me, I think trying to better understand what is a brand, you know what really creates a household brand name in in technology and consumer more broadly?
And that's exactly where we invest.

We're big believers in the changing of consumer behavior and creating brands. And so I definitely believe it is fun and exciting.
And hey, that's also the product that is being created.
You know, it's fun and exciting. We at Lightspeed like to say we invest in pop culture and companies that are really driving popular change.
Tell me about changing consumer behavior.
What are what are you noticing?
Well, the pandemic has definitely shifted a lot with regards to our changing behavior. I actually wrote a very long tweet storm at the beginning of the pandemic, saying, Hey, let's look at China and let's look at some of the changes of behavior over there and whether those changes will be seen over here. Because sometimes things do come from Asia over to the US.

Oh yeah, I mean, look at cell phones in the Japanese about 10 years ago.
Exactly. Very well said.
But you know, it's very new. Translate live shopping, right?
We never really had live shopping on mobile until the pandemic.
Yes, we used to watch HSN and QVC on TV.
But people are starting to, you know, cut the cable.
People are starting to say, Hey, I don't want to pay for cable anymore, but instead I'm going to spend $10 a month on car.
I'm going to spend $10 a month on Spotify, Netflix and so and real, which is a really interesting mental health one.

So people are really starting to cut the cable and move to these new trends and live shopping is definitely one of them. You know where people are thinking, Hey, I want to be able to watch somebody who's really entertaining me and is maybe an influencer who I admire on my phone, I'd be able to transact right then and there on this app.
So I honestly I Nicole, live shopping.
I've never heard of it. But then again, I'm not the target demo.
So it's like, like watching somebody play a video game on Twitch, except they're shopping.
That is a good way of thinking about it, and that is definitely an approach that a lot of livestream companies have taken where you can actually what somebody else shopping and then you can just copy their purchases.

But what I really like is just watching people almost like, just tell you why they love a product.
So they're showing you their beauty collection and they're saying, Hey, this is why I use this particular mascara or lip gloss.
And this is why, to me, this brand is better than any, and you're watching them, apply it and showing you how to do a pretty cool technique around the eye.
And then right then and there you can just buy that product.
So it's the opposite of Amazon, right? Amazon.
You know what I need. I'm going on. I'm I'm transacting with an example of a live shopping app or a live shopping site or whatnot.
So later I can look at it.
It's very funny you say that because the example I was going to tell you is whatnot.
So I like the fact that that's what you said.

There are two really interesting ones pop, shop, live and whatnot and loop, and a lot of these companies really focus on collectibles.
So the great thing about collectibles is that you can never have enough of them.

And so what? Not sell everything from sports cards to Funko Pops to, I mean, vintage clothing, a sneakers pop shop live are doing something really fascinating where they're starting to work with boutiques and these can be child bookstore boutiques. They can be your favorite toy stores in L.A.. And so think about, you know, when you go to Nashville and you love going to these really cool stores where you can now walk around those stores from the comfort of your own home by just going on to the pop shop live app and doing it through there. And then Luke has another one which is focused on collectibles, so there's lots of these that are doing really well.
Are these part of your portfolio or just ones you like?

These are actually just ones I like. Yeah, so I always want to be shining a light on fascinating companies, whether they're in our portfolio or not.
You know, I think it's interesting because we've said in the past that younger people tend to be more interested in experience than physical goods.
But in this case, there's a physical good involved.
But there's also an experience.
Exactly. And that is the complete opposite of Amazon right here.
You actually get the experience, you get the farm, you get the entertainment of actually watching this show. And then how do you can also buy something afterwards, maybe something you didn't even know you needed and particularly relevant at Christmas time?

Yeah, we've learned this a goop, which is one of our Lightspeed portfolio companies that people love the Christmas gift guide.
People want suggestions of what to buy for the person who you know you just have no idea what to get them this Christmas if you're anything like me. And so we love we've invested a lot of e-commerce companies Lady Gaga's House and Goop and The Honest Company.
And so that's something that we really lean into when the companies actually suggest what to get around the holidays or any other times recently, you're looking to hire somebody for your team.
Where are you in that process?
Oh, we have made a higher.
We're really excited to have hired an incredible woman, Sidney Sykes.

Who used to work at Dole's Kill and then another VC before and then she went to business school. So we have hired her and she is absolutely incredible.
She's still at business school and still like sending us deals on a weekly basis while she's there. She just has such amazing insights.
So what? What made you choose her?
What were you looking for in a new venture capitalist?
I mean, you know, some kind of experience as an operator in working in consumer would seem to be kind of a minimum.
But going back to kind of what we were talking about in the beginning, the pitch, you know, what were you looking for in which you said, Are Sydney's Sydney's our girl, our lady?
We actually interviewed Sydney three or four years ago to bring her on as an associate at that time.

And to me, she really stood out and we didn't hire her at that time. But now we met her again.
We stayed in close contact with her over those three or four years.
Over that time, she went and she got really interesting start up experience and we started to work with her. She became a Lightspeed scout and we saw her go off to really interesting deals and build relationships and get into those competitive companies.
And so we thought, Hey, we always liked her just in terms of like her raw skills that are terrific for venture capital.
But now we think she's exceptional because she's gone out and she's added more tools to her toolbox that will just make her a terrific investor.
Now you, she pitched to you, but you had to pitch to her too.

Why lightspeed? I mean, she probably had some other options.
She had many other options.
You are absolutely right. And so for us as people first, you know, we talked about that with regards to like why we invested in founders.
And if you look at the mission statement of Lightspeed, it includes the fact that we invest not in companies, but in great entrepreneurs who are changing the world and creating tomorrow today.
And so that's how we sold Lightspeed to Sydney.
We think she's exceptional, but we wanted her to spend a lot of time with our team.
And so, you know, we did Lightspeed Women's Lunch and got all our incredible female investors together to have lunch with her.

We did a team dinner and really just wanted her to understand what it would be like in the atmosphere at light speed to be working with these people day in, day out.
And we just felt like she would fit into the culture and she had great chemistry with us. And fortunately, she felt the same way you came to light speed through your own startup.
What did you see in Lightspeed that convinced you?
That's the place you wanted to be.

You are absolutely right. I was at business school and I had a wearable technology startup, and I pitched it to a couple of the folks at Lightspeed and I was blown away. I met a lot of different funds up and down Silicon Valley for my startup, but Lightspeed really stood out as very different to the others, and I tell you why it was because they were truthful partners and we say we support.
We push. And that's exactly what it was like.
I felt like they were asking deep questions that were really like enhancing the way that I thought about the company and focused on the things that mattered in the business and helping me to move the needle where it matters most. One of my partners, Jeremy Lu, who I just adore, he I always say working with Jeremy is like going to the gym.

It breaks your muscles down and it builds them up stronger.
And that's exactly what happens when I approach them.
As a founder, I was like, Wow, you know that breaking down the ideas that helping me build them up to be stronger and helping the company be even better as a result of having lightspeed on board?
You and I are both big fans of Jeremy. I've had him on his team, my TV show, several times. He is a smart, smart guy.
So you're working in a consumer facing investment.
It is amazing to me how resilient the consumer has been over this short period of time. You know, people are griping about the economy in some circles.
Inflation is up, but consumer spending is up.

Retail sales are up four million people comfortable enough to to with their financial position to quit their jobs last month.
The consumer space is on fire.
Scott traduzione, Yeah, did you lose me one, two, three now, papa? No, no, no, I got you. I just don't get sorry.
No worries. Did you? Did you need that question again?
I think you were just saying the consumer space is on fire, but I didn't hear what.
Oh, so don't I have that habit of just making comments instead of questions to how that, you know, the bit that you work in a consumer, you know, a consumer facing an investment in consumer facing things.
You know, if, if if consumer spending were down, retail sales were down, you know, this might be a terrible time to work in that particular vertical.

But but no, I mean you, you're at a time in which people have money and they're spending it.
That is exactly what we see.
I mean, to expound on that a bit for me to give you an inside scoop the cameo.
Hopefully folks know Cameo. If not, check out Cameo Gqom as an incredible way to get any present for those you love or give for yourself or you get a celebrity to record your message. The beginning of the pandemic, we were so worried we were like, People are not going to be spending. People are just going to be staying at home.
What are we going to do? We put together an Armageddon plan, and then the next month we realized people are spending.
People are staying at home and they are spending and people are looking for new ways to entertain each other and themselves.

And that's why they turned to Netflix. That's why they turn to cameo, really. You know, what I will say is that the future of joy, it's a true entertainment company and people have really started spending.
They got the stimulus checks quite often.
You know, a lot of people either kept their jobs or maybe moved into a different area.
Maybe people were working in a restaurant, but then they moved to a technology company like Instacart, and a lot of these companies did.
Even while because they were even better as a result of the pandemic because they were able to meet customers where they are and where they need what they need.
And so Cameo and others did incredibly well, because that's it.
They met the customer there and the customer spending has just really been increasing.

But I have to tell you, Scott, I think a lot of the customer spending that we see in the technology is going on NFTs and crypto right now.
Is that something in your portfolio in the future?
It's in my portfolio already.
Is it which one NFT is a crypto or both?
Well, actually, I think a lot of our companies will have an NFT element to them.
And why can't anyone be an investing a lot of different crypto companies like X and many others? And then for me, I invested in a really cool company called Flick Play. Flip plays an app where you can go around a world similar to like a Pokémon Go type scenario and you go around this world and you collect coins and you can collect shareable are so you can trade this art and an NFT sense with other people.

And so, you know, everybody's love for NFT is right now and the belief that you can make a quick buck in a very short amount of time, and that's exactly what you can do through flip play now.
In order to believe in things like NFTs, I think you need to have sort of an open mind and an open heart that goes away as you get older because, you know, at least from my point of view, I think now wait, what? What are they doing?
But you seem to be willing to have that open mind that this might be something that you. Well, you did invest in it, but but you're more credible about it, I think.
Where does that come from?
Have you ever watch those Black Mirror episodes?
Oh, I love Black Mirror exactly already Ready Player One, you know, or some of these very futuristic shows.

Part of what I love about our job is I think that you learn nuggets of the future because the founders that you meet, they do think like the creators of Ready Player One are Black Mirror, and they just think in such a different way.
And I part of me when I'm listening to things, even if there is a slight chance that their future becomes the reality.
Well, that is so different from our reality right now.
And at light speed, we always like to invest, whether as an existing human behavior and a technology overlay. And that, to me, is really what the Metaverse, Web3 and lefty's allows for because, hey, we want to meet one another.
But we don't always want to do it in person, and we don't always want to have our Harvard face on.
I mean, right now, you and I are talking on audio.

But hey, we can do that through our avatars.
We can have our avatars meet one another and chat from the comfort of our own home.
And so I I'm a big believer that this world is metaverse world could become, you know, our our world full stop in the future.
There are some people who would roll their eyes at metaverse, et cetera.
But then again, you look back and you think, you know, I'm going to invent a thing in which you can only use 140 characters to just declare something to the world.
And people would say, Well, that sounds kind of dumb.
And yet it was not a dumb idea at all with Twitter that it takes a while. But the first adopters seem to understand something that a lot of us don't.
Completely agree, there's so many wonderful examples of that.

I mean, if you and I found out that someone told us ten years ago, there is going to be an electric car company worth a trillion dollars, that's, you know, it's funny that my mind would do the exact same thing as you were saying it.
Yeah, exactly. You know, we probably wouldn't have believed them, but like things are just changing so quickly.
And if you have, I mean, Elon Musk or I definitely goes back to like an exceptional founder, is this a founder who has a crazy view of what the world could look like?
Yes. And is there a slight chance of that is what the world's going to look like?
And now it looks like it's definitely going to be a drop.
The I mean, I think in Europe, you're already saying that, but I say by 20, 20, 30, it's going to be all electric cars as new cars.

So this is the reality.
It's no longer crazy.
And so there's many examples of that where people think it's crazy.
But I mean, think about how much time you spend on your phone now, probably about six hours, right? If you 20 years ago, hey, there was going to be this little device that you're going to spend just like eight hours, 10, 12 hours a day on, you wouldn't believe them.
But hey, Apple, Steve Jobs, another person who just thinks it may be a crazy way, but that crazy came true.
And you know, Nicole, that goes back to something you had said earlier that really struck me. So I marked it down was, you know, the people that are cutting cable and then spending money on things like calm.

I had never thought of cameo and calm and Spotify and to some degree, Netflix and even DoorDash as almost being channels because they are ways of entertaining ourselves and we spend money on them.
That's exactly right. I'm sorry, Scott.
Let's just pause for one second. Where are you?
What are you after with this one?
Oh, no, I just it was just an observation that, you know, you were saying that, that, you know, people, you think of yourself flicking through channels at home looking for entertainment. Now you might go to your phone and go from Twitter to cameo to calm Spotify and Netflix. You know that those are almost channels in the sense that we think of them on television.
Nobody has ever described it like that, but you are spot on.
I think that's a fascinating way to think about it.

It's like, I don't watch TV in the same way I used to.
Gosh, you know what? I grew up in England.
I'd probably spend four or five hours a day watching TV as a kid.
And now, yes, you know, you're spending half an hour meditating and falling asleep and calm. Then you're going over to real and you're getting your mental health content for that day.
Then you're going to Spotify and watching that channel, that program for half an hour, then you're going to your live shopping channel and having some entertainment and buying something for a friends that Christmas.
And so that's exactly the same as you would be when you're flicking through TV channels, but we now just have that right in our hands.
I just have a couple more questions for you.

One of which is, you know, you named a number of organizations that are headed by celebrities, Lady Gaga, et cetera. How do you not ask you, what's Lady Gaga really like? What, how, how do you work with people who that's not their area of expertize, but they are doing such a good job leading those companies?
I guess we believe something different.
We believe that this is one of their areas of expertize.
And so when we first met Lady Gaga, that was a question for us.
We're like, Hey, is beauty an area of expertize for you?
And she sat us down and she said, I have three passions in this world music, acting and beauty.
Beauty was probably my first passion because I would sit down with my mom and I would put on that makeup and I would mix things.

I would take her different makeup, a mix them together, and she's like a now. I sit in the dressing room before I'm going on to a show and I'm mixing my things together and working with my makeup artist.
And I really, she is just the most creative person I've come across, and so she is really creating new, incredible beauty concoctions.
And then when we started house with her house labs, everything she has had her paws on absolutely everything in that company.
And so Lady Gaga came up with the names of every product she came up with, every color she's tested, everything into the manufacturing labs.
She worked so closely with the team.

She's in the office with them. And so we have an incredible CEO, Ben Jones, who actually was chief digital officer at the Honest Company and before that at Zynga.
And he's wonderful. But Lady Gaga's a true partner to him.
And another example, Hey, Gwyneth Paltrow, one of her areas of expertize is acting.
But another one is definitely goop living.
And then if you take Jessica Alba, yes, one of her passions and areas of expertize is acting, but the other one is being a mom and wanting to have like organic products for her children.
And so, you know, we're actually working with two others yet to be disclosed for two other incredible celebrities, which I will be telling you about soon, Scott.

I look forward to that. My last question for you is somebody told me, you are the fastest English woman alive to Jeremy to tell you that maybe, you know, before I hit 18 in England, twenty one in America, I discovered alcohol.
You know that I was very good at the one 100 meter sprint, and I used to do it at the Nationals in England.
And it was a real passion of mine and I used to do interval training to train for it. And actually, sometimes I say that investing is like interval training.
Sometimes you're walking, you usually jogging and then you sometimes you really got to sprint.
Right now, this market is definitely a sprint.
That's perfect. Thank you so much, Nicole.

I have one last question that won't be included in the interview, but I've asked it of everyone because I think I want to collect it together someday.
And that is what what book has been most influential in your life?
And it can be, but doesn't have to be, you know, a Harvard business.
Book it It can be Winnie the Pooh or something.
But but what's the book in which that it really had an impact on your life?
Yeah, my the most impactful book for me is probably one that no one said to you on the show before, but it's enlightened the folks of the faraway tree.
And so, yes, it's a children's book, but you can definitely read it as an adult.

And I read it many times over my life, so the children go to the top of the tree, and every single time they go there, there's a different line to the top of the tree, and they just use their imagination to conjure up these incredible different lands.
And that, to me, goes to the view of what Web three and 50's the metaverse is really going to look like.
And we've been dreaming of these different worlds, the top of the trees for decades, and now it's time for it to become a reality.
That's lovely. That's that's what I needed.
I very much appreciate your time.

Okay, Very good.
Hi, Michelle. How are you?
Oh, excellent. Okay. No, no.
You know what? I know I can hear myself.
Yeah, in you. But you're going to be muted anyway, right?
So nice to meet you.
You're certainly more than welcome to hang around.
Brian counted to ten for me.
Yeah, I think that sounds real good. All right, let me just double check my settings here.
Yeah. No, I think we're good. So just a couple of things with one.
Number one, this is we're we're using the video so we can kind of read each other's emotions. But this is an audio only podcast.
The other thing is that it's extremely casual.
If you want to take a sip of coffee in the middle of it, you know, knock yourself out.

/content/Preprocessed_Data/SHR A 30,000 Foot View of Venture With Brian Schettler.txt

We'll edit around it. If the doorbell rings or you get halfway down an answer, think to yourself, Wait, what are we talking about?
That's fine. We'll just. We'll work around.
Okay, so let's start with the easy stuff and just introduce yourself.
Who are you?
Well, hey, Scott, I'm Brian Shetler.
I lead a horizon. It's venture capital platform formed in combination in partnership with the Boeing Company and eight industrial partners.
Excellent. I want to start with air taxis.
You know, air taxis were something that we were promised for years.
And, you know, The Jetsons showed us how cool they would be.
And I think a lot of people think air taxis just turned out to be vaporware.
But actually air taxis are flying all the time.
This is going to be a real thing.

Absolutely. I mean, I believe in the market and that it will come eventually.
I think what the gross miscalculation was, was the realities of the time frame for scaling to occur and for things to actually get integrated in the national airspace safely and in a certified manner. And that's that's the time that, you know, 105 years of of history and a big OEM like Boeing can teach you just how long certification can really take. But I believe in a number of these companies actually surviving and being key players in the market, both in commercial and defense applications.
The air taxi you invested in Wisk flew this summer at Oshkosh, which anyone who knows airplanes knows is kind of the Burning Man of airplanes or the Lollapalooza of airplanes.

One of the best there is. The more more planes you can see in one one day than about anywhere else.
And why showed off there?
Well, it's it was important to just start showcasing how this type of aircraft can interface with your kind of daily life and how it will be an urban or a short range short of a Category two to start with, but that they are real.
Like you said, there have been a lot of lot of myths out there that these were all just scams, that they took a lot of venture capital dollars and weren't really producing something. And for a company like Wisk, you wanted to be able to see, wow, they're actually really is something. Oh, my gosh, it can fly.
Oh, my God. They can transition from vertical to forward flight, you know, effortlessly. And that that so the technology is there.

And now just being patient as we go through the next steps that aviation does really well, which is ensure something safe has the right redundancy and can interface in the national airspace with other small drones, big commercial airliners and everything in between.
I think the national airspace is going to be one of the problems, right?
I mean, the technology of figuring out how to get something into the air.
We've been doing that for a long time since the Wright brothers, this idea that everyone would have an air taxi in their backyard like The Jetsons, that's more complicated. The first ones we might see would be more akin to busses, right?
I mean, a lot of people have a driver's license, but not many people have a license to drive a bus.

But yeah, it's it's a much bigger leap to just think of a free for all of a lot of flying vehicles just crisscrossing each other.
Right now, they are space acts in a very sort of regulated and regimented manner with highway corridors and the like that try to funnel traffic in consistent areas. And so the thought of it just being, you know, pandemonium out there.
And out here in California, we're trying to get people to understand roundabouts.
Yeah, that's step one on the ground.
Yeah. And then let's let's get get get the airspace figured out as well. I mean, you know, a day in the life of air traffic controllers is hard enough as it is today with the tools that they have.
I mean, they they have to be on the fly, be able to to work in unpredictable sort of conditions.

A weather storm might come through and like throw their entire corridor out the window.

And then how do you how do you adapt that that, you know, gets exponentially more complicated when you add hobbyist drones of Vitalis and in other forms of, you know, flying flying aircraft into their space, which is why, you know, we're excited on the technology side of how technology can augment air traffic management and bring, you know, that relentless focus on safety in aviation, you know, as as the sort of, you know, number of vehicles expands and it's all about, you know, assisting with more data, doing more of the kind of automated tasks, sort of, you know, behind the scenes taking workload, non-critical workload off of air traffic controllers. But but also just having more awareness of what's going on, more rapid identification of vehicles that might be off course or might not be

doing what they're told because you need to be able to account for that.

Now that we're back to traveling, you know, there's a huge shortage of pilots, there's a huge shortage of flights.
The air traffic control system says they're overtaxed.
Speaking generally, what are you most optimistic about? What is there out there in technology that's going to make air travel easier in the future?

Well, I think it's a lot of different things that come together to sort of make the passenger experience better from getting from A to B and that, you know, can start with, you know, from the moment you get on the airplane and have reliable and high bandwidth in-flight connection system, you have, you know, an ability to interface with the outside world. And we've invested in some companies that are that are doing that because, you know, right now it's it's a little touch and go whether you get a good connection or not, you want to have I think there's going to be this growing focus on, you know, are you flying on a sustainable aircraft and, you know, is there more focus on new types of technology that's bringing a reduced carbon footprint into the overall equation of your trip today?

And there's a lot of technology from sustainable aviation fuels to batteries to even some of the the the further down the line, you know, hydrogen and other solutions that that.
I am I, I am genuinely surprised at the turn towards batteries for instance the air taxis and e-vehicles that use electric power it's quiet but batteries are heavy and traditional carbon based fuel a lot of.
Bang for the buck. I can go a lot further on.
On jet fuel.
100%. I mean, the great thing about jet fuel, right, is it gets lighter for every mile you burn in the air.
And so you land a lot lighter than you took off.
And that's a good point. The battery weighs the same when.
Exactly a dead battery weighs as much as a full battery.

And so, you know, you got to account for all of that in the relative inefficiency that that technology brings. Now, that said, there are there are the use cases which I think give a smart for, you know, shorter range where you can build enough kind of redundancy of of a battery density into the platform that it doesn't start to break the laws of physics where you you know you're heavier than than the the the thrust you have to take off.
But that said, it's really, really hard to scale to anything medium range and longer without gross sort of step function changes in battery chemistries and energy densities.
So what I what I really like about the strategy today with batteries is what they're really more proving out is, you know, the whole system of electric propulsion.

Right. You know, it's not just the battery, it's how it interfaces with the motor.
It's how you account for the failure modes.
If one electric motor dies and how the other one's going to pick up the slack, what if a battery cell, you know, has a thermal runaway event?
And how does that cell shut down and keep energy going?

So there's a lot of technology innovation happening in the small short range case that's going to get the whole electric propulsion stack certified and sort of proven out. And then I do believe with time, I know it's sort of that running joke. You know, we're always just like one or two years away from the next great thing in battery chemistry. But I do believe down the road we are going to see new forms of of chemistry bringing, you know, double, triple, quadruple sort of amounts of energy density.
And that starts opening up longer range.
I don't know in my lifetime we're ever going to see a battery like take me from the U.S.
to Australia on a nonstop flight.

But I do think there's a lot of use cases that the majority of flights today, you know, most are, I think the latest stats, like 75% of seven, 37 flights are shorter than 500 miles.
I mean, so when you start thinking about, you know, how the the short jumps that these aircraft are doing, you know, you can actually start augmenting a big piece of the daily flights.
You spun your firm out of Boeing. And Boeing is your largest LP still, right?
Correct. Yeah.
Okay. A bit. The value that that I see not only is Boeing obviously getting some early looks at some new technology, but those young startups are are getting access to Boeing which you know there is no name bigger than Boeing in aviation.
Yeah.

And what we tried to do was evolve the traditional corporate venture capital model into something that we thought could could bring even more value and start to dwindle. Some of the complexities that that that manifest itself when you when you have a traditional corporate venture capital unit, you know, a traditional corporate venture can, you know, raise concerns that, hey, the the corporate may not always be acting in, you know, the startups best interest or they might be doing something anti-competitive.
What we tried to do in this new model is really bring the best of both worlds, an independent investment platform that's focused on financial returns like like a traditional VC would.

But stick around us. This unique capability that really nobody else in venture has access to and be that hub and spoke sort of model that has a key player like Boeing that delivers all of that unique value add that we had when we were inside of Boeing and also can act as a key market channel for adoption and accelerating the technology into real world use cases.

But it doesn't have to stop with Boeing Industrial as a as a legacy and focused private equity firm has its own unique capability and real operational experience in these end markets to to to actually kind of apply that capability to really help these companies grow as as sort of independent entities and bring them the right operational experience, bring them the right sort of diversified market exposure as opposed to just, you know, one channel and market channel.
And so it's really working well for us as it as it comes to identifying sourcing and investing in startups. But also once we write that check, bringing an immense set of unique value to them.
Boeing is famous for aircraft.
It has been a long time involved in space travel as well.

Although I will point out it has struggled lately against the likes of things like Space X. Where do you see the traditional rocket makers and spacecraft makers competing?
And is SpaceX just running away with this?
You know, there was I used space X as one of my my best case studies for why startups are sort of awesome and never count a startup out in a big OEM dominated world I had been at. You know, big companies that had dealt in the rocket sort of supply chain, just being so dismissive of Elon and Space X when they were just just starting and then, you know, look at them now. I think that's that's a motivator and catalyst for other entrepreneurs to start solving other tough problems in space.
And you see a whole lot of opportunity, right?

It's amazing how far we've come in the last couple of decades from really only two countries in the world having the capability to access space to now, you know, basically any university can get a satellite on a rideshare and or, you know, any country can get involved.
India just did something amazing a few weeks ago of actually landing on the South Pole. The moon, a tremendous accomplishment that that hadn't happened in a long, long time. And so I see another wave of sort of space activity coming that's going to really be energized by the entrepreneurial market.
I think a lot about where we've come in terms of, you know, sensing in space than it was a wave of connectivity and space.
Everyone wanted to build some sort of low-Earth orbit constellation.

Then there's now sort of the lunar exploration and deep space exploration exploration. And now I think there's going to be like a new economy of how you deal with all of these assets that are in space.
Do you refuel them? Do you maneuver them, do you de-orbit them?
And a whole lot of startups that can address that?
To get to your question of how how this all works out, I think the best examples for startups going forward, I don't think every one of them can be a space X that gets billions and billions of dollars of capital from investors and gets to compete, you know, as a prime in the big leagues.

And so I think how they choose to partner, how they work with the likes of investors like us and others that have, you know, the ability to work with the established supply base a little bit to get them access to launch, to get them, you know, a key capability so they don't have to reinvent every element of the wheel themselves. I think that's going to jump start them the furthest. And and that's what big companies like Boeing, like Lockheed, like others, that's how they need to be thinking about the world, that they can't do it all alone.
They don't have big enough R&D budgets to solve all the world's problems as it relates to space. And they need to tap into the entrepreneurial ecosystem instead of resist it.

I think the other thing about aviation is oftentimes the government's involved, right?
I mean, in the case of Space X, it is getting government contracts, as is Boeing, for that matter. The Air Force has something called Agility Prime as well. The military is willing to buy into some of these entrepreneurs and put in military money.
Absolutely. And the progress the Department of Defense has made in the last few years of being able to help use its needs to stimulate and help resource some of the startups to get them over the Valley of death or get them some near-term traction.
While the sort of commercial economics continue to play out, that's that's going to be transformational for more and more startups to be successful.

And so I applaud, you know, what they're doing with like Agility Prime, you know, have the Office of Strategic Capital. And in the Pentagon you have the individual armed forces force structures having their own sort of, you know, X entity, naval assets or the like to try to stimulate startups.
The IU is another one in Silicon Valley that's been doing a lot.
And it's it's a model that wasn't fully embraced by startups a long time ago. You sort of were either going to be a defense company or not, and there was a strong lean to maybe we don't want to dabble in defense.

And now, you know, there's a way for them to be dual use in a sense that defense might give them some of their original use cases and dollars, and then they can prove out the commercial viability of this over time without having to get a lot of dilutive funding from investors.
And so it's great for investors, it's great for the startups.
The more the DOD, I think, contributes to this.
You used a term there. I'm not familiar with what's IU other than Indiana.
Oh, giu sorry.
Title Defense.
Innovation University.
Yeah. Defense Innovation Unit.
Have you always been interested in airplanes? Were you interested in airplanes as a little kid?

As a kid? Yeah. I think I told my parents my first job when I grew up was going to be a pilot. I started flying hot air balloons, which is a random hobby when I was a kid as well. My, my, my dad and some of his friends were in that just for fun. And then my first job in college was working for Northrop Grumman and in kind of the defense sector.
And I've been at A&E now for over 25 years.
So it's it's just been a key piece of me.
Why? Why what? What does aviation how does that stir your blood?
It just it's one of those things it's always amazing to look at, you know?
I love the engineering and kind of technical side of it.
And so I started, you know, in my my career, you know, being hands on in an engineering discipline. But.

But the more I continue in this role and just flying on so many airplanes in my job, it's what I love about it is just sort of, you know, looking at the other people on the airplane, thinking about what we're doing, thinking about connecting the world, connecting people that maybe had never seen each other face to face, giving people experiences.
I was on this flight this morning to D.C., actually, where there were 66 former U.S. veterans from World War two, Korea, Vietnam, Afghanistan and Iraq all packed on this plane, all going to D.C.
to see all of the monuments. And it's like, God, one of those moments.
I just just take it all in and like this is exactly what we do and why aviation is so cool.
Well, I will leave it there, unless there are other things you would like to add.

Oh, no, no, That was great.
Great for me. Scott, Did I get a lot of any.
Any any other key elements that.
Oh, well, there's only one last question I have, and it won't be included in this episode, but it's just something I collect. And then once a year, I run, you know, the collection of them. We call it the VC Summer Reading list.
What is a book that was influential in your life in the sense that you read it a lot or you give it as a gift or, you know, the classic.
If you're on a desert island and only had one book and it doesn't have to be something, you know it deep and it can be Winnie the Pooh.
But what's, you know, what's a book that really you think about?
Oh, man, that's a good question.
I'm going to.

Can I get back to you on that one? Because I like my rotates constantly. And that's probably the the never sitting still of me that I tend to get with the latest and greatest as opposed to going back to oldies and goodies.
Right.
I use mostly like organizational leadership kind of books, you know, more so than than.
More so than sort of the latest sort of innovation ones, because those always sort of seem to to expire or, you know, they they get, you know, jumped on by by somebody else that's in the latest and greatest.

I will tell you, I was at a an event. There's this book called Make Your Bed by by Admiral McRaven. And he was a guest speaker at an event that I went to last week. And it's just it's an amazing book book that I had read earlier. And then listening him speak and talk about it is one that's pretty cool in the sense of, you know, the discipline that comes with going through the Navy SEAL program, then being like the leader of all the special forces of of of the United States military, leading to the activities of Osama bin Laden and his and that ultimate mission and just everything that came with this journey, he boils it down.
It doesn't feel like this overly, you know, military kind of book.
It's like these little steps, simple in life that can apply to anybody that I tend to like.

And that very first step is to make your bed.
And that's that's how you start. I mean, if you can just focus on that one little task in the morning and, you know, it sets you up for a good day.
It's a it was a good one for me.

No, we'll we'll just go with this, and I can't, you know, it should be fine.
So nor you nor may I remind people that we are only recording audio. I mean, I guess technically record the video, but we don't publish it.
It's it's all purely. And then if if we're talking about something and you get halfway down an answer and you can't, you know, you think to yourself, what was the question again, just, you know, just start over, just say, hold on, hold on, hold on because we can edit it. It's fine.
It's very, very casual.
And then we're holding this until I believe it's the 20th.
I have it on my calendar. Good. Good, good.
So, you know, talk, frankly, and I assure you that we will not publish this until you say it's OK. So so let's begin with your secret.

/content/Preprocessed_Data/SHR A Secret Just Out of Stealth Satellite Bio.txt

Nobody has heard this right. I'm going to be the first reporter you tell, right?
Exactly. And we're delighted to share more about what we're just what we're announcing today.
What is your secret?
So we're announcing is that this stealth thing of a company called Satellite Bio, it's a company we've been involved with actually since the earliest days of of the of the technology.
Sorry. All right.
And so we're here today to share with you the the Distell thing of a company called Satellite Bio, and it's in a space that has been transformed we believe has been transformed and pioneers in a new way to think about regenerative medicine.
And just to give some background.
This is a technology that's actually been 20 years in the making.

There are two scientific founders ones one investigator, Sangeeta Bhatia, based in Amity and unChristian over it at Boston University.
And the two of them have come together and put together a technology which applies a way to help improve how we provide regenerative medicine at scale to the masses and to find regenerative medicine for me.
And so, and maybe I can. The simplest way to describe region of medicine.
A lot of times we'll think about it as the transplant ecosystem.
Something's happened with, you know, you need a liver transplant, you need a lung transplant, you need a transplant. And typically, what's happened in this space is we either we have to get on a donor list.

You know, unfortunately, something happens to somebody and you're able to to to provide a replacement liver in this case or other things.
What we've done is been able to provide a way to create what we're calling satellite delivers our satellite technology in order to provide a.
Sorry. No, he's not doing a great job describing them. So maybe I'll start from well here, let me do this. We'll talk more about what satellite bio does in a minute, but tell me about that first meeting.
Who came to who and what did you think?
Yeah. So the first meeting, actually, the story goes back about 20 years.
So both Sangeeta Batya and I had trained in a similar lab in Boston about 20 years ago.
And so she and I actually knew of each other in our retrospectives work.

So I'm trained as a chemical engineer and a biologist and get as a world renowned investigator in the lab in the space of the liver.
And and what was interesting and what why this moment was quite powerful was the idea of taking the technology like the eye, a liver transplant and finding a way to make it deliverable to a large scale of a number of people.
And back to the analogy around transplant, typically it's a one to one. You have one person's liver replaces someone's existing liver, and the idea of a satellite satellite bio is this what we're calling an adaptive tissue?
So the idea of one liver satellite could actually be provided to multiple people and to serve a greater need.

And that meeting, I mean, the first when funding, when did they come to you for the funding or did you go to them?
So interestingly, in this case, we'd actually been talking about the space for quite a long time. And the power of what we call it, being able to scale a technology.
The big question had been the ability to to deliver and create these satellites had had already existed. However, how you could build it at scale was the big difference.
And so both, including Chris, have been talking about, could they combine their technologies to make this possible?
And then within the last couple of years, they just started to see that the technology's possible it could be done at scale.
And frankly, the need has always been there.

And so in many ways, that meeting was a, you know, the technology works. Now it's time, it's time to commercialize this and get this.
Get this out to as many people that need it as possible.
How was the decision made to to put a company in stealth or keep it in stealth?
And and who makes that decision you as the investor or the company?
Or how does that work?
Yeah, it's a great question. And a lot of times when a company is in stealth that the reason we do that in the earliest days is we're trying to make sure we have all the right components to build the company. It is complicated, right?
You have to have great science. We have great investors.

You have to you want to put together a very important and powerful data package to show to the world the power of a new technology, especially when we're trying to create a new frontier in a space that has desperately looking for solutions.
And so in many ways, the ability to then build that team takes time, and we want to have the company put all those components together.
So when we're in the moment like this where we get to to show the world, we get to show the world the data, the technology, the people around it, and that the financial support is there.
And so I think of it as it's a team effort in and deciding if and when to to share the company with the world.

And now that you're announcing this company, I don't have the biological background to understand the overall technology and what it's going to do, but give me give me a thought as somebody who does understand the biology, how how you expect people are going to react with this news.
So I think two parts will be really exciting and interesting.
I mean, this idea of satellite bio, it's forging a new path for pioneering regenerative medicine. And so it's actually creating a way to develop a modality which we're calling tissue therapeutics.
And then in what we do is actually we're able to take program program cells. You assemble them into what we're calling a satellite.
Think of it like the size of a small little hockey puck, the size of your pole and inside of this satellite.

It has, for example, in this case, liver cells and the cells necessary in order to help the body either restore, repair or replace the dysfunctional tissue or organ.
And being able to do that at a scale that's not just from one person to another is incredibly powerful, because then it means that this technology in this tissue therapeutic could be given to as many people as they need who need this sort of intervention.
We've all had that secret that, you know, we're excited to share to the world and and see people's reactions.
What is the what is the average physician going to think of this?
So interestingly, in part of our process, we actually went to physicians who are in the space of regenerative medicine.

And in the early days, a lot of times the conversation was What can it be done? What would it look like?
And of course, you knew it could be because you've seen it.
We've seen it. Well, how would it work?
What is the procedure like? And so the interesting part is we do.
We do provide and we do do transplants on a daily basis now.
Unfortunately, what happens is we don't have enough organs for everyone who's on a transplant list.
And so what's interesting with our investigators and and scientists in the ecosystem is the opportunity that potentially we could have people not have to get on to a list because we can provide an intervention or a solution to them and their families.
That isn't just just wait and see, we're going to get you on this list and we hope something happens.

So the power of being able to do something, I think, you know, the Hippocratic Oath for a lot of physicians, it's it's this idea of saying, what can I do?
What what solution can I provide you?
In the meantime, that's the power.
I think that's that's captured people's imagination and the potential to deliver care to those who need it.
I guess the way I'm trying to phrase the question is, and you're answering in a very factual and scientific way, which of course, is your background, right?
Is you've got a Christmas present behind your back, you know, you've got a puppy behind your back and people are going to be very excited to hear about this because you are going to publish these papers that show this, this actually works.

Exactly. And actually, there's the publications of Scott, maybe to share a little bit there. The publications in the space of actually been out for a while.
So actually that ability to do this technology has been around.
But being able to assemble it in a way, we could then do it at commercial scale and be able to deliver this for lots of people.
That's been what's really exciting about satellites.
So both it's demonstrating that the science works.
But then how do we make sure we integrate the whole system so that we can deliver it to those who need it the most? And I think that's actually the most exciting part because, you know, if anything in the last couple of years, what we realize is health affects every single one of us.

It's both a population level thing, but it's also an individual thing. Every person knows that feeling of not feeling so well, and we all want better health for ourselves and for our family members and for our loved ones. And so the power of being able to do this and provide potentially a solution for this for a group of need, and that's actually what makes this really inspiring and exciting.
How soon do you think until this is something that is fairly routine?

That's a great question. I do think, and I think it's important to to share that and the concept of a transplant has already been done and we do them on a daily basis being able to do this at scale and we're going to go through the rigorous process of getting approval, showing the data, showing it to a large group and getting the reviews done. So from that perspective, it'll take a little while.
And the important part to share with everybody is that the preliminary data and ability to do this conceptually is there, and now we're working through the ability to do it for a large group of people.
There's so much exciting progress underway in medicine.
Scientific development, you know, tends to generally build fairly slowly.

It builds on itself. Microsoft Scope becomes a better microscope, but then every once in a while, there's this giant leap forward the mapping of the human genome, that kind of thing where all of the sudden out of nowhere, although it took a lot of work to get there, but out of seemingly nowhere and unimaginable things become possible.
And and as far as an investor and a venture capitalist, it seems like health is the obvious place to be.
I could not agree with you more, Scott from that perspective.

I actually think there's a there's a phrase that I have been using as a trained, as a scientist, but really thinking about this concept of an engineered biology. So it's this intersection that's happening between us being able to use engineering, which is built in a structured way to scale alongside all the biological systems in our body and and broadly that are necessary and that can be built. And what I think you're seeing this intersection point of the technologies and ideas are coming out in this engineered biology space are basically being built in a structural way where these discoveries can happen and they can be built to scale immediately.
I think that's really a powerful place to sit.
It's why I'm very excited about investing at this period of time.

I consider this period of time almost like a renaissance in science.
If I were to look at publications that are happening in the space, you're seeing more relevant technologies coming out to date, which are closer and ready to be able to be developed and or taken to a clinical setting. And the ability to do that means we potentially might be able to get these treatments, these therapies out to market sooner, which I think is very important for for us.
And in meeting the demands globally there, there is more of us on the planet and we all need and want great health care.
What are the aspects of health care are you excited about?
So I think there's a couple different areas you're obviously hitting on.

One of my favorites here with satellite bio of developing a technique as a platform technology, we're first applying it to the liver to deliver this satellite and a liver approach.
I do think there's also a lot of stuff in how we deliver health care, how we access health care, how we talk about how health is being integrated into our ecosystem.
And and it's it's become clear that health is a key component of our daily lives.
We want more data about us and we want to share more of that data to help us make better informed decisions. And so areas around cell therapies that help us improve how we continue to our treated and data that can help us tell us what better therapies need to be developed. That viral loop that's happening, I think is incredibly powerful.

Neuroscientist by training, you actually invented a vaccine if I got that right?
I did. I. It was. It helped create the inhaled tuberculosis vaccine.
So and you were in a lab by the time you were in high school?
I was I was very lucky to have met my scientific mentor, a gentleman by Dr. Robert Langer, very early in my career.
And in many ways has shaped how I think about science, how to apply science and how to help scale technologies that can have impact.
Now the as the inventor of a vaccine, these last couple of years must have been incredibly frustrating for you.
You know, it actually wasn't incredibly frustrating.
If anything, it was that I was really the opposite in many ways.

A lot of times we take vaccines for granted and, you know, unfortunately, it takes a global pandemic for people to start to want to talk about a vaccine.
And I mean, I don't know about you, but two years ago, did people ask you, did you get a Pfizer or Moderna vaccine? Probably not, people.
We didn't talk about who made our vaccine.
What a vaccine. Well, that's true. Fervor, yeah, shingles or whatnot, it's not something people are discussing exactly, but what's fascinating now is it's actually part of our lingo.
People are asking, Hey, did you get vaccinated?

Oh hey, I just got vaccinated. And so on some level and then awareness of the needs and the power of a vaccine, I think has been a yes. It's been a very, very difficult time, but also now in a much deeper awareness in the ecosystem and being willing to talk about this, you know, similarly with talking about a diagnostic that that's not something you we talked about.
You didn't talk about going home and doing a diagnostic test, but didn't share that to the world, that people do that now on a regular basis.
And I think awareness in that space and awareness for how we think about this, I think is just as important for for us to continue to.

Like I said earlier, this drumbeat of building health care and building health as part of our daily life, you you are actually a two venture firms, right?
Lightspeed in Sealand Ventures. How does how does that work?
How do you decide which firm is going to make an investment?
So, um, so maybe that to provide some background there?
I actually had put together and founded a venture firm nearly a decade ago and and the way I think about investments and especially what I'm investing in health care. There are some great opportunities in the very early, early stages of investing.
And then there are also opportunities as they grow into a much larger scale.
And so I've been in partnership with Lightspeed for for many, many years.

And and this is a great opportunity for in order to invest both in the earliest stages as we're incubating creating companies all the way through the later stages of of growth in the ecosystem as well.
So to me, it's a partnership partnership to continue to deliver and partner with the best founders in health and biotech.
I'm not sure you answered my question, though. C is still a viable firm, right?
Yes. So I invest.
So my question is, you know, you come across an opportunity, do you give that opportunity to see lane or light speed and how do you make that decision?
Is this a topic that we have to bring up on the podcast or.
Well, it's just it's in your background, just you know that it's you know that it's.

I didn't mean to jump on this sensitive subject, but instead of it all I know. I mean, if you play for both the Cubs and the White Sox, you know, how do you decide which game to go pitch for?
You know?
Yeah. I guess the way to.
I think of it as it's a in the earliest in companies that I've invested in a lot of a lot of times when we're first figuring out if there is a company to be even built in that space. And am I have the opportunity to figure out, can can we build something and that a lot of times I'll do that through one of my other vehicles? And then as it has an opportunity to grow and it looks like it actually could be a venture scale business.
The partnership with Lightspeed makes a lot of sense.
How does a scientist get involved in venture capital?

You know, that's a great question.
It's what I believe is happening in the venture ecosystem is that there is an evolution of.
A specialized expertize that ah, that is happening, and you need individuals who have come from the various respective backgrounds to help and start to foster and understand in that space what's emerging that could actually develop and become a large, I call it, transformative company.
And so I do think as the venture ecosystem, as we're, you know, frankly, it starts know a lot of times it's called it a smaller boutique.
Ecosystem, you know, venture capital now has grown enormously and dramatically in many different sectors, areas and spaces.

Having that specialization to be able to identify, partner and serve as a great mentor with founders we work with, especially in the biotech and scientific companies, you need to have that perspective and background.
And I, frankly, I think it differentiates the ability to partner with founders as they're building these large companies.
I've been struck by that as well. I mean, it's one thing to walk into a garage in Los Altos and talk to a bunch of guys who are going to put a computer in every home and quite another to understand quantum computing.
There has been this need for expertize from industry as far as venture capital goes.

I couldn't agree more, and I actually do believe even that intersection point of where software is integrating into the world of biotech and health care, that intersection is also happening.
So you also if you think about the founding teams of these companies too, they are evolving. You've got a scientist.
A lot of times you have a technologist or someone on the software side and you have a business model, a business person involved in the founding team.
So on some level, what it takes to build these companies are also evolving and changing.
And I think for for the better.
Speaking about you in particular, what got you out of the lab and into the boardroom?
So and in many ways, in my early training at the Langer lab at the lab is a really interesting, diverse place.

And it's a place where the the common think the minds being and thinking is always, we develop a technology, but for what purpose and for who or how were you serving?
So I think in many ways, that perspective of creating technology for the greater purpose was a very dramatic driving factor in in my transition. So obviously having the scientific training as the fundamental backbone, but really saying, well, what does it take to then get this technology out to the ecosystem, out to the world?
What is the business model that we need? What was the team?
We need to build around that. How do we then build the right approval and regulatory processes to make that happen?

So I think that transition to the boardroom was a very natural one to say, if we do want to get this out there, we need capital, we need great people, we need great technology. We got to put it all together.
What did being a scientist least prepare you for as far as venture capital goes?
That's the least prepared, yes, what, what, what, what cost you most off guard making the transition from laboratory to venture capital firm?

I think a lot of times this scientist of the the biggest thing we think about is obviously show me the data. The data is the most important thing is the data tells you this. This is what happens. I think what's interesting about venture capital and also what's interesting about the sector companies aren't just data companies are people. Companies are the market, the people and the technology.
So it's the combination of all three that you need to look for and find at all times. And when you do find all three and they're coming together, it's perfection.
But I think that lesson of as much focusing on founders and what the team is like is just as important as the technology and at times even more important than the technology.

Going back to we originally started with, you know, what satellite bio does.
So walk me through a hockey puck.
What is it? Is it? Is there a battery inside?
What is it doing? Do you so it into the patient?
I mean, give me the give me the gritty details here.
So the way to think about this, a very basic, fundamental way to think about this is think about a hockey, about a hockey puck sized disc.
And inside this disc are what we call these micro channels and these small channels.
And inside the channels, you can see all types of different cells in this case, and in the first application for satellite video, we're focused in the liver.
And the idea being that basically we can in graph and we can see what we're calling the liver cells hepatocytes into this hockey like puck.

And the nice part is you could then deliver this by by delivering this and having it sit right on top of your existing liver.
And this process, would, you know, typical.
Transplant tick is are quite complicated in this particular case.
The process that we've developed. You actually could do this as a now day procedure and the ability to provide supplanted component to your liver, do it as an outtake procedure and deliver the function you need is incredibly powerful.
That is a clarification when you said you were in Boston.
Where were you in Boston?
I did my undergrad at the city and then I did my Ph.D.
at Harvard.
Excellent. And then I had one other follow up question What was it?

Or When did you make the trip or tell me about making the transition from from from science, from laboratory to to venture capital?
You said you started your own firm. Was that when you made the transition and when was that?
Yes, I'd made the transition.
It's about it's about a decade ago, and the way I think about it is I had always invested in creating interesting technologies like like I told you about my Ph.D. research. But what was the most interesting part of my research was then this this discussion of what once we create the vaccine, how do we get it out to the world? What is the right business model?
How do we partner? How does it how does it get out to the broader ecosystem?

And so I think in many ways and through that the experience in Boston, we were involved a lot in that with the venture capital ecosystem, even in that period of time. So I think in many ways that interest in inventors had always been there. And it seems like a natural transition to to to come out of the investing side and to say if I were to partner and help founders and putting this journey together, what would it look like?
And capital is one of the ways we partner with others to do that.
Although not every event, not every scientist rather is going to think that way.
The stereotypical scientist, the scientist in my head, you know, as his or her eyes glued to the microscope and has no interest in what's happening around them, not even a fire alarm.

Well, but I think that is the case and some some scientists and maybe how people look at the world that I do think coming from the Langer lab I had mentioned earlier, there is this natural way to think about can this can this be applied or how how is the work that I'm doing in this lab get applied to the broader ecosystem?
And I I grew up we're both here in the US and and have family abroad in Asia.
And so living and having the experience of living between different areas in many ways culturally might be different. But the need for health care, the need for these critical things are still still really important.
And when when did you make that transition into venture cap?
What like, you know, give me just a rough year estimate as pragmatic.
So 2013.
OK, OK. Good, good.

You know those are my questions for you. Is there something that I was too naive not to touch on?
You know, I was thinking whether or not to share a little bit more about satellite and true and what the power of the technology is.
And and actually, it kind of goes to my question, right about the puppy behind your back right is you've got a thing that's very exciting.
And, you know, I'm interested in how you think the world is going to react.
Yeah, actually. So maybe let's get into that.
And so I think the world will.
Trying to think the right way to say, sorry, I'm trying to find the right way to phrases like you called me out. The scientist in me is giving you the data, right?
I think the world will be excited to see this in many ways because.
As we think about how.

You know, I put myself in the shoes of, you know, friends of mine and family members of mine who have gone through and said, I have an uncle, you've had to put them on the transplant list and we're hoping you will and we're hoping he'll get off the list here.
We put them on multiple places, hoping something happens that they'll have access to this. And I think I put myself in the shoes of that moment of having to just put yourself on a list and you're hoping something happens right in order to get you off that list.
I do think the power of being able to develop and what we're trying to do with satellite bio is.
Provide that opportunity for people to have something you can do, you know, have a technology like a satellite that can say.

Instead of just waiting. This is something we can do to help at least improve your quality of life, and you may still need to get the full transplant at some point in your life. But it gets you somewhere there instead of the the the family member just waiting and hoping something happens.
And I think that that empowerment to say, is there a technology?
Is there something that can make a difference?
That's the that's the you the driving factor to.
So I think why developing these transformative technologies are critically necessary.
Oh, and then the other factual question was just, I assume, is in the press release, I apologize if I skipped over it. What was your investment and what value?
That's a good point.
Yeah. Did we?
Is it in the press? Let me just double check.
Recall it. Yeah.

Yeah. So, um, so we're delighted to announce we're we're exiting.
We're done. You look to make sure.
We're delighted to announce that satellite bio has raised one hundred and ten million dollars in both the seed and Series a round of the company.
And we did this in partnership with Amgen Growth, Lightspeed and Polaris Partners.
Interesting. What's a Moon? I don't think I've run into them.
A moon is a venture capital fund. I believe they're based initially based in Israel, but have deep ties also in the biotech ecosystem.
Sure. Sure.
OK, well, I'm good then.
Thank you ever so much for for making the time.
I'm sorry. I don't get to to to see your lovely smile, but I'm sure it's lovely and and we'll talk next time with video.
Sounds great. Thanks. Excellent.
Nice to talk to you. Take care.

What you've just done.
And we'll talk more. Yeah, that's. That's fascinating.
That's interesting. People who can help you with that, especially on the public board aspect of it.
Yeah.
And yeah, there I know a couple people get.
That's super cool.
Would that be fun?
It would be really fun. I love this stuff.
I do it for free. Don't tell them.
That no matter how.
Good.
You feel.
This green color is everywhere.
I know I'm on trend.
It's super cute.
Let me turn to extreme right. Hi.
Scott. It's nice to meet you, Nina.
Good to meet you.
Okay, so we used to, you know, back before COVID, I had an audio engineer who monitored all this stuff. Right now, I just do it myself.
Yeah. So I will be kind of listening in here, but I'm also listening to you.

Okay. Will you pretend for a second you're doing a demo and check it closely? That's that. I want to see, you know how you're going to.
Would you have breakfast?
I haven't had breakfast yet, but I'm about to.
Apparently you are.
Some egg bite kind of thing.
Exactly. All right. And then tell me your name and how you spell it.
Sure. Jake Heller, j k e h e l l e r.
Okay, cool.
It's all coming through.
Okay. It's all coming through just fine.
Awesome.
Okay, so all of the grammar notes.
That's next level.
Okay, So we talked about what demo to do.
And the the one that we came up with is Taichi.
Protected by the First Amendment.
I actually Googled this ahead of time and there are no answers on this.
So that's why it's a really interesting question.
It's a really interesting.

Question because you have to argue and think about it by analogy in the way that, you know, really good lawyers do.
And so it's a real challenge for the A.I..
So show me that we're just we ask.
So this is co-counsel? Mm hmm. And the way to think about co-counsel is it's an illegal assistant, which means as a lawyer, I can delegate tasks to it that not unlike the type of tasks that I give to an assistant, a paralegal, or even a young associate. So in this case, we're going to ask it to do legal research for us.
And we're in asked this question, you know, is Tai Chi protected by the First Amendment?
And like a good associate or paralegal, the first thing it's going to do is interpret my question in my query and make sure we're on the same page. Right.

And it's on that pretty well. So I'm going to go.
And what happens next behind the scenes is it will be creating a few dozen of its own search queries.
So it will try to ask that question in a few different ways against a daily updating database of cases, rules, regulations and statutes.
It will then read a few hundred or even a few thousand cases behind the scenes and then start to synthesize the information it's gotten from.
And as and as you pointed out, all of it updated because one of the things about GPT is you can't even ask it who the United States is.
That's right. That's right. The big difference here, or one of the big differences is that it is has access to a daily updating database of information.

So it's able to pull that information and use that to have a reliable and on point answer as you see what's happening here.
It's already finished reading all of those cases, rules, regulations and statutes around the 15 most relevant, it is summarized each as to why he believes it may be relevant to your question about Tai Chi being protected by the first time it's pulled out. Relevant quotes and now it's putting together its answer.
And in about 90 seconds, it's completely done doing analysis that, you know, may have taken me the better course of of a day when I was a practicing attorney answering it. It may protect Tai Chi, depending on the specific circumstances.
It talks about expressive conduct.
It's drawing analogies with other other kinds of cases.

For example, you know, messages from a public sidewalk or different performative arts. Right.
And using that to reach its conclusion around whether Tai Chi is protected by And.
If this were a case that you were trying to argue, you would now have the outline of a case with, you know, specific previous cases in mind.
That's exactly right. And what you can do here is click into any of these cases and read the full text of them.
Right. So the whole point is you're not supposed to just blindly trust the eye like a good associate or paralegal.
It is coming up with citations for you to check for yourself.

Well, and to that point, this is nothing a human being couldn't do, except it's a matter of the gigantic stack of books and papers that they would have to go through to arrive at the same answer.
And you got it in 30 seconds.
That's exactly right. What it does is give you leverage.
It has just read through literally thousands of cases, page by page, to come to its conclusion. And you can't do that alone. But working with a I can read, you know, can can kind of spawn itself thousands of different copies of itself reading in parallel all these different, you know, books, papers, cases, regulation, statutes to come to its conclusion.
I think people at home who aren't lawyers kind of assumed you could do that already, that that lawyers had computers they could look things up with.

So there's no question that you can already have done kind of a search over those materials. Where you could have done is have in person or in I work at this speed to literally read all the materials that came back in.
And synthesize.
And synthesize it. Right. This would be the equivalent of doing a Google search and then opening up in a new tab. All the first few hundred results, reading all of them, taking notes and synthesizing that information into one single answer.
Cool. Close that laptop and let's just chat, the two of us. Yeah.
I'm going to move your microphone so that you're facing me more than your face.
Is that comfortable?
I ask. Works as long as that this distance is fine.
Yeah, that's. Yeah. Yeah, right.
Really, really good. Oh, awesome.
It's great.
Yeah, it's great That.

That's good to hear. Thank you.
No Auto-Tune for him.
Lawyer out of the desert out there.
Yeah, Good way.
So. So you were a clerk in the. In the first Circuit.
And a lot of what clerks do is drudgery and kind of what you were showing me.
There would have been drudgery.
When I was talking to the managing partner of a very significant firm.
He described the work that a lot of junior attorneys do as ditch digging.
Exactly right. You do a lot of ditch digging as a junior attorney.
Have you heard of Edmond Cartwright?
Name rings a bell, but I'm not sure I.
Have invented the power loom.
Okay. Yes, that's right.
Yes. Yeah. Yes. And then you remember the response, of course, to the power loom.
The Weavers were not happy.
No, they were not.
Yeah, they burned down the power. Yep. Yep, Yes.

What does this do to the legal profession?
My perspective is that like every other technological advancement in law, this is going to make things more effective, more efficient.
And at the end of the day, you'll likely have more lawyers doing more interesting work.
You know, we as a profession, the law has already gone through going from offline to online, doing research in libraries, in stacks of books to going to, you know, being able to search the files very easily.
We used to do discovery, the process of reading through document by document with banker's boxes in a basement somewhere.
I have seen movies.
Exactly right. And and so we've gone through all these enormous technological levels.
I mean, we moved from the typewriter to word processors, right?

These enormous technological revolutions.
And there are more layers now than ever, and we're making more money than ever.
Right. And and the reason for that, I believe, is that as legal services are becoming faster and faster, less and less expensive and more high quality, there's a greater demand for the services in America. Somewhere between 80 and 90% of people with a legal need do not get access to legal services because it takes too long and because it's too expensive.
I was thinking a lot of room.
I was thinking the same thing, that if if I'm a very small law firm and I'm going up against, let's say, a power company, we won't name one, but let's say there's a power company. And in California, they've got a lot of lawyers.

Yes, they they've got the paralegals looking through everything.
I don't. Yes, but this would find the thing I need the same way it would if I had a staff of ten paralegals, which I don't.
It's just me.
One of the things that we're absolutely seeing is that this kind of technology levels the playing field. It puts a small law firm representing an individual in a position that they can go toe to toe with a large company with dozens of lawyers.
And at the same time, we're seeing some of the largest law firms and companies in the world use this technology not because they need the playing field to be level per se, but because there are so many things that they choose not to do because it's too expensive and too time consuming.

And now for the first time, they really can using this technology.
You've estimated it's the equivalent of 16,500 attorneys doing nothing but reading for every minute for an eight hour day.
And what is coming into that system has been vetted in some way, right?
Because it would be very embarrassing in court if I got to there and there was something in there that just didn't exist.
Oh, yeah, absolutely. And one problem you're seeing with the consumer public tools that are like chat based systems is you're as you're chatting with them, there is no guarantee that anything in there will be reliable, accurate or even exists.
There's this public, very public case.

Steve Yeah, exactly. The lawyer who who walked into court with a number of cases in his brief that truly did not exist, and it turns out he got them from Jackie Beattie.
We take a really different approach and those public consumer tools.
What we do instead is we have the I read materials first and only use those materials to base its opinion off of.
So the example we went through earlier, it was reading through real cases and other examples of what the product can do for you.
You might read through all of your real documents and then reach a conclusion about what happened in the case, the facts of the case, based on the documents you've uploaded.
For us, the analogy is it's like cheap and similar tools. It's like a student taking a closed book exam.

So they may be very smart, very well read.
They get credit for answering to going to try to answer everything.
And but they're operating off of their memory, and memory is faulty.
If instead you can take the same technology but make it an open book exam and give that same very smart student access to the entire, you know, entirety of legal information. In our case, they can do a dramatically better job, can cite their sources so that the person grading the exam can can check and make sure that the work is right and it improves the accuracy, reliability and suitability of those results dramatically.
Tell me about the beginning of the relationship with Canvas.

We started working with Canvas and working with Rebecca long before they invested for about a year. I remember she came by her office then a pretty dear, dingy small Palo Alto office in near California Avenue and spent even think a few hours with us just talking through strategy or ideas at the time.
And, you know, at the time this is I think 2016 or 2015, a technology was not this far along. We were pursuing a slightly different vision, same same general idea, same audience and same consumer.
But she immediately saw all the opportunities, but also some of the weaknesses.
And she helped us get our first client before she's investor, She she That's remarkable.
You had no clients. Yes. When when they invest.
That's right. That's right. We're still just the technology.

And, you know, by the time they invested in I think it's 2017, we had already developed a pretty substantial relationship.
And compared to all the other venture capitalists that I was talking to and working with, it was clear that Rebecca had deep domain expertise, had expertise in things that we have not done yet, like market and grow, go to market marketing and grow, go to market and had a lot to add.
And that's why it was an obvious choice to work with her.
Small office, big personality.
Yeah, maybe.
Yeah.
So how does it end up? What happens in the end?
Well, so fast forward six years from their investment.
You know, it was not a straight easy path.
There were a lot of trouble along the way.

And this is true I think of any startup is challenge after challenge after challenge. You think you have a great idea, You go to market, some customers buy and then it's not enough, or you think you're hitting on something and you hire dozens of salespeople and not all of them are as effective as you need them to be or what have you. We went through and really, unfortunately, two rounds of layoffs. We stumbled along the way.
Sometimes raising capital is hard, but we survived and we grew and we got better and better at serving our customer.
And about a year ago, when we had, you know, already by that point been working on this technology, this large language model technology for about five years since its inception. We are really well positioned.

When opening, I approached us and said, Hey, do you want to get an early look at GPT four, which is still today the, you know, by far the best model out there. And we saw immediately the opportunity to expand what we're doing substantially. We spent 6 to 9 months or so doing nothing as a as a company, but focusing on this new wave of AI well before activity was public, well before that was in the public conversation and. By March of this year, just as people were kind of waking up to this a I you know, craze, I think justifiable craze.
We had already launched a product and were already getting customers and people took note. We were in a great position where we had a number of venture capital office offers and we were thinking about growing the business organically.

We also got kind of out of nowhere a great offer to have the business be acquired and really excited, you know, to take that offer and continue to grow the business apart. Thomson Reuters.
Why, Rebecca?
Well, like I said before, a number of things will be said about Rebecca.
First, she had already gone to law school and already work at Quinn Emanuel, which end up being one of our first or second customers because of her connection.
So do the industry really well?
Knew the problems really well, having already gotten legal education?

Second, her area of expertise is, I believe in, especially because she's very diverse, has a lot of areas of expertise, especially in go to market and marketing. And that's an area where I personally, as a founder and we as a company had basically no knowledge or experience in.
I was a I formerly I was a lawyer.

I knew the product really well. I knew the technology really well, but I was not in a position to get the word out. And she had dozens of ideas before she even invested. And third, it was, I think, the exact kind of personality you want your board, someone who will challenge you, somebody who is intelligent, somebody who listens, and somebody who is willing to go the extra mile and connect you with people, whether they be customers, future investors or people to bounce ideas off of.
And it's a pretty rare combination to get all those in one, right.
Someone who knows your space really well, someone who can extend the capabilities of your company and somebody who can go above and beyond when it comes to helping you succeed as a founder.
Excellent stuff there.

Hello, there. Hi, how are you?
Good. Sorry about that. I just was on the wrong browser.
Oh, I didn't realize it had a requirement.
OK, I'll include that in the instructions later.
Hey, thanks for doing it. I really appreciate it.
Of course.
Always happy to. Thank you for asking me.
And then it sounds like you're going to go on vacation.
Yes, exactly. Next week, I'm going to go to Chicago, which is where I'm more or less from. My parents live there.
And it's a combination checkup on the elderly parents.
And then a bunch of friends are going to come out later in the week for St. Patrick's Day because Chicago will celebrate this coming weekend.
You know, die the river green and yeah, the bar crawls and all in the parade and all that stuff. So it's great fun.
That's going to be great. Yeah.

/content/Preprocessed_Data/What Does it Take to Become a Venture Capitalist.txt

Yeah, yeah, yeah. OK, well, three questions.
Let me start with the question I always love to ask the most because it's just so interesting. And that is what have you learned?
What have you learned between when we first spoke and now I've learned that the pandemic was going to go on for a lot longer than any of us expected? I think when we last spoke Scott, it was it truly looked like it was coming to a close and then we got hit with this new variant and I recovered.
My whole family got COVID. It was it was a whole thing over the holidays, but we're all recovered now and I think finally, we're feeling optimistic.
And in that time, as a brand new venture capitalist, have you funded a company?
I have founded a company.
And I'm actually wearing the t shirt today.

Its slogan is health happens in community.
It's a company called Oath Care, and they are an incredible appetite, not new parents.
Excellent. You know, it's OK, it'll it'll record just on your end, so my dog barking will not affect you.
No, no way, we'll do it again. But actually, the kind of the cool thing about this software is that it's only recording your mike and then it's only recording, Hey, that's OK, isn't it? Isn't it cool? But, but but just in case?
Yeah, we do. What does it do?
Yes.
So I'm we're funded any company since we last talked.
So I'm actually wearing the shirt today.
Health happens in community as their slogan company called Oath.
And it just really spoke to me the mission, because it's an it's an app for new parents and parents to be.

You get access to other people at the same stage of pregnancy, postpartum and also in the pediatric journey as you as well as a whole clinical team.
You know, your lactation consultant, your Dula, all those folks that are so essential and in the first months of your kid's life so that that is oath and we are so proud to be backers and their seed.
What was that like doing the first your first funding?
I know you don't sign a check, but.
Was there a bit of of?
Unease about a boy, I'm spending somebody else's money, I hope I get this right.
Yeah, absolutely. I mean, in my mind, I was literally going to be sitting down and raising a check. So that's apparently not how it works, but you still absolutely get hit with that same fear.

This is real money and and we're essentially kind of giving millions away to this team. But you know, that's what conviction is.
You just really believe in and that's the right founders.
This is the right mission, the right product, the right time.
And it's a journey could take years.
That's how start ups are. But we absolutely believe in them and we want to be there for all of it. The ups, the downs, for everything.
I know you're also very interested in the mental health space you've been writing about it on Substack.
This is a situation where lots of people need mental health care and thanks to technology, we can reach so many more of them.
Absolutely. Yeah, I mean, I think anyone who's been watching digital health care will have seen the rise of companies like Talkspace and BetterHelp.

It's an absolutely meteoric in the past five years.
Nowadays, venture capitalists is starting to see more opportunities to treat people with more severe mental health issues, and those are the populations that have really been left out. These are these are people who need a very specialized type of therapy.
They may even need to actually see someone in person or just stay at a facility.
And right now, what we tend to have is more just app based therapy visits.
So I think that's what you're going to see Scott in the next few years is just more solutions for people with eating disorders with bipolar and plenty of other conditions where there's just so much need and not nearly enough support.
Well, I wish you the best of luck on your next on your next venture.
Thank you so much.

Like I was like.
Oh, we have to. Oh, my goodness.
Why do we? Because. Yeah.
I mean, stuff he has to do like to have that swagger.
But then you got to look at the facts on the ground. He's not working.
Right. He's in San Diego. Right.
All those things he's negotiating. And this is his job that you would pay him to do is negotiate. Right. Like he wants to hang and surf, dude.
20 to 40 hours a month, maybe a little more to start off with.
He's like, Oh, well. Like for 5 hours a month, I could do maybe 20 to $30000 as I go, as I probably.
Fast. But also think about think about it less like the number of hours and what you're getting for that. Like somebody at that level.
It's like not about.
The time, but. But the.
Quality.
Of the brain.

/content/Preprocessed_Data/SHR AI Exit Casetext Sells For $650 Million.txt

Yeah, but what you do is you convert him to eat what you kill and you're like.
You know what I've heard? You're so amazing. And then you give him a percentage of whatever he brings in and then you might end up paying him a lot more money.
But you're very happy if you paid it, right?
Yeah. You're like, You know what? I would just like this to be uncapped.
Seth So why don't you.
Come in and maybe for a couple of months.
Right? Yeah. Well, good advice.
Maybe for, like, maybe for.
Like, two months while you're getting your feet under, what year will pay you this crazy fee? But then you got to prove your value.
And I don't want a cap.
Your upside is like it's such a uncertainty of August 10th.
The idea of of like good go at it like.
Yeah, but you want to be positioned in case it's right.

That's exactly right And I think I think the you know these deals are getting more and more scrutiny they're taking.
Yeah.
You know, so.
So I'm also thinking about, like it does happen.
And what's next for you? Yeah. So we need to have that conversation also.
Yeah. Because I think you there's like, a timing thing that you don't want to miss out on.
So I want you guys to pick up my coffee.
Like, I don't know what you're talking about. I'm going to Hawaii.
With.
My wife. I'm not taking any vacations. It's 2019.
So five years? Yeah.
But part of it is having kids. It's like, Have you talked to us before?
I don't really know how to make a vacation with young kids.
That's true. That's true. Yeah. Yeah, That's not a vacation.
That's a trip. Yes. More work.

I actually. My weekends are much more stressful.
Oh, I know. It's. It's crazy. You're always on.
Yeah, but vacations get to be so incredibly fun.
Like, my youngest is ten now, and we've done multiple college road trips, and we have a frigging ball. Like we go skiing, karaoke.
We do, like, all.
Kinds of crazy stuff, right? We have so much fun.
In and I think my oldest is about four. I think he would really get a lot of.
But the two younger ones are.
Just I would recognize.
Themselves.
It's 24 hour suicide watch.
That's what it is, a 24/7 suicide watch.
Their hotel. There are have nannies in Fiji.
No, no. Better. Okay. Go to Fiji.
Fiji.
And one.
Way each kid.
Gets their own nanny, and it's.
I'm not kidding.
Ah, the Philippines.

Yeah, that's probably better off. More affordability in the Philippines feed.
No, Fiji is not bad. Fiji. Fiji is not.
Bad. But the plane flights hellish.
Yeah.
Yeah.
But let's talk about like, let's get.
You're doing this now. But I think what we need to do is spend some serious time on like how to leverage what you've created here to like your next three things.
And so let's talk about that. I have some good ideas and I wish I would.
Yeah, I'm just learning. I wish I would have help other founders of this more.
And but I have some good ideas. And so basically, like, you could do far better, just say don't take board seats because that's a pain.
If I can ask, just go and get like business.

Yeah, I've been on a public company board, but maybe public just to get your notch on the public company board, that would be good for you. And then getting like a quarter point and a bunch of different companies like that would be huge.
Could not.
Harvey So maybe Harvey I don't know.
Who knows? Why not?
Would not let me do that.
Oh.
Hello, my dear. I have.
He did amazing.
He cried.
I almost.
Cried tears.
There's a lot of forgiveness.
Man.
Thank you.
Your new car is awesome.
Oh, yeah.
I love it. I love that car.
They reliability issues. I'll say we bought this thing two months ago.
It's the first time we've actually driven it.
A distance.
And that's cool. How? What?
How much can it tow?
I have not found that out yet.
Yeah, because I have this horse trailer.

Honestly, wasn't working for the first two months.
Oh, yeah, exactly.
We bought it. Used. Drove it off a lot and didn't make it home.
Oh, my gosh.
Yeah.
Oh, dear. Yeah, It's horrible.
Manufacturing is not.
Not. Absolutely not. Not like the European.
Yeah.
Although my excursion has 200,000 miles on it, and I will never sell it.
And I've actually got.
It as well. It's nothing.
Yeah, but is it a gas? Is it gas or diesel?
My mind is the last solid black diesel engine they made.
It's like a 7.3 liter and solid block.
And so and so I won't let it go.
I've had I've had so many dudes come up to me in parking lots and offer.
Me money to take it off my hands. And I'm like, No fucking way, this thing will pull anything.
Off a car guy. Yeah, all these these are, like, expensive fancy cars.

Yeah. The 1996 Lexus, whatever.
But that model he knows and everybody else he knows is like the Dutch model.
You want reliability.
Oh, how funny.
Exactly. And so he's also constantly out there, like people walking up to us. Can you get your 1990?
That's hilarious. Yeah, that's what I look really cool.
I go like to Petaluma and I come out and it's like, it doesn't look the best because all the like it's 23 years old.
But I like the.
Guys and I go to the Twin.
Oaks Dive bar and like the I love the twin.
You know, the Twin Oaks. Oh, my God.
I showed. But like, the it's like it's an excursion.
And the dudes are all like, Wow, that's hilarious.
Close the door. And we ever.
Yeah, that's great. Thank you, Jake, so much.
We are.
Thanks you.
Yeah.

As I was telling Jake, you remember, we used to have an audio producer, but with.
I thought you didn't need one anymore because of GPT four, right?
Exactly. I mean, a lot of this is getting automated, so.
But yeah, occasionally I'm going to, you know, either look down at them.
Put the headset on. Doesn't mean I'm not listening.
It just means that I've got to do two things at once.
Well, thank you for that. Okay. And then can we.
It's not like we cut and edit and do all that kind of stuff too.
So can.
I know.
What this was about to say? Is that, you know, if you get halfway down the answer to something and you're like, Wait, what was the question?
Just throw your hands in the air and say, What was the question?
Okay, great.
It's it's not. It's not.
She got hit. She had made you.

Live once, and it was very stressful, but.
It went fine. Even fine.
Okay, good. So let's start off with did I hear that you are taking your ten year old on college tours?
Oh, no. Well, I'm.
I'm taking my 17 year old.
17 year old on college tours, but my ten year old comes along.
But she it was it was really funny.
We we took them on college tours and Little Anna was ten and we were sitting in the audience at Reed in this big auditorium.
And the head of the school asked if there was any questions and and it pops up her hand because they were rewarding people for questions with tchotchkes in the front of the room. And then asked the question.
She said.
If you had a choice between a student, it was a cultural fit or a student that had really high grades, which would you pick?

And without the guy said high grades, no doubt.
Oh, wow.
Yeah. And I said, Wow.
Yeah. It's surprising. It surprised me a little bit with Reed that there wasn't a more nuanced answer.
But it was it was honest. So, yeah, so.
My my ten year old is like, Mom, I need to get straight is.
You found the secret as to how to do.
That? Yeah. Yeah.
JPT. Right.
So one of the questions I asked I.
Got because I just. I went to this hilarious, hilarious session at Chak 15 last night.
Yes.
And it was.
Spoof pitches where you had to come up with the most ridiculous spoof pitch and.
Like, every sentence had to have the.
Word air in it. And I was dying.
It was so funny.

But you actually invested. One of the questions I asked, Jake, was that, you know, I think people assumed lawyers could do this already to some degree, that that they could look things up.
But of course, it's much more complex than just looking things up.
Correct.
Correct. Tell me more about that.
Yeah, I mean, lawyers.
Of course, can look so. Well, let's just start.
First of all, there are different grades of lawyers, right.
And not every lawyer is as good.
And so this, you know, having a tool that they can all use to kind of level the playing field is great.
You can look things up. We have LexisNexis, we have Westlaw.
Everyone's trained on how to use those and those tools.
But I think the query string, first of all, that you have to use for those tools would blow most people's minds.

I mean, you literally have to say, I want a I within three sentences of California, within one paragraph of whatever in this jurisdiction. Right.
And that always really amazed me when I was in law school that it was it was that arcane in terms of the search.
And then they were really not a lot of there wasn't any learning that took place. I mean, you had to run the same search over and over again.
It required the individual lawyer to go through and really that, you know, what they were getting and pick and choose what was there.
And it just seemed like that should be done for you.
Right. Even very early on when I did the investment A, it should be free.
Case law is public domain. And you know, there's a $6 billion legal research entity or industry that didn't seem correct to me.

And then in addition to that, the search functionality was just beyond arcane. Right. And so that was the initial kind of thing that they were going after. And then in addition to that, oftentimes what happens is, you know, a lawyer or an associate will research an area of case law, you know, like, let's say, patent law defenses. Right?
I was an intellectual property lawyer. And, you know, a client comes out and they ask for something client and then client B comes out and they ask for and they are doing the same work over and over and over again with, you know, and it didn't, it's not learning, right? So that made no sense to me either.

So that was initially what Jake and case techs were kind of setting out to do, was solve for that problem and make it much less, much less expensive, better legal search, more intelligent legal search.
And, you know, they've been really in AI and really at the forefront of AI for at least ten years. They had developed this incredible parallel search technology that rivaled anything that was out there.
And that was they had that live, you know, many years ago.
And so they've really kept up, you know, with AI from the very beginning, which has been fun to see.
How did you convince Jake to go with canvas?
To go with.
Candace. Yeah.
You know, for me.
When I invest, I always have a relationship ahead of time.
So investing and that check and that deal is sort of like an afterthought, almost.

Almost a natural.
Flow. It's a natural flow. And so I, I look for companies, I look to invest in companies that I would I would either start myself if I wasn't doing this job that I love so much or that I would be happy to come in as their chief marketing officer.
And that's kind of the hat that I put on.
And so I had been looking at things in the legal space for a long time.
I'd been looking for something, solving a big problem that I thought could be a, you know, multibillion dollar company. And and so I had just, you know, talked to Jake and I and I and I do what I did before I, you know, came into venture, which is I help them think through strategically their go to market challenges, how to sequence them, who to hire.
So I was already doing that. And then they didn't have any.

When I first met Jake, they didn't have any paying customers at all.
And I like to come in sort of late Series A, early series B when there's some evidence that people will pay.
And the challenge is, is that, you know, oftentimes we can think things are a great idea, but unless the customer thinks it's a good idea, and unless a customer is going to pay for it, it doesn't really matter. Right. And I think that's where a lot of investors kind of fail, is they they put themselves in the shoes of a customer.
I learned that very early at Procter and Gamble, that that is a huge mistake.
It's just what the customer says matters.
Right. And so and what I did was I worked with Jake.

I helped introduce him to a few law firms like Quinn Emanuel that I had worked for in the past. And I happened to meet your own plank on vacation with my family and had found out that he had worked or he had led the efforts of the Practical Law Group, which sold for a pretty good chunk of change, Thomson Reuters. And he had led the the sales and go to market effort.
And so I connected those two and then your own helped Jake for a fair bit and then contacted me.
I think Jake had actually added him to the board before he added me.
And then you were on, contacted me and said, Hey, we now have like three paying customers. This is how this is going.

And they're making a lot of good progress. And then I jumped in formally with the term sheet, but really we'd been working together for probably a year or so before that, which is how I like to do it.
It seems to me that legal is one of the best potentials for AI.
It's a natural fit. There's a lot of language, there's a lot of words, a lot of text.
Expound on that for me.
Yeah, I think legal is a is like a line drive use case for A.I.
and that the reason it is is that you have such a corpus of information that has to be consumed very quickly just on the caselaw alone. Right. So just to go through and digest the caselaw and oftentimes, I mean, that's how you when you you line up your fact pattern with a fact pattern of the existing cases in the relevant jurisdictions.

Right. And that's how you when in addition to and then you have the writing piece of it. So the writing component and I'm always amazed at how few people can actually write these days, but the writing component of it and the crafting and the argument and the learning from what worked in the past, you know, to come up to speed so quickly, I mean, that that's what I can do in spades.
Right. And then in addition to that, when you look at the discovery process, so, you know, hundreds of thousands of pages of documents where you're looking for a needle in a haystack.
In that movie where the bad guys, you know, bring all the banker's boxes.
Oh, yeah, I know. I've lived that. I've lived that.

I was an associate for a brief period of time and, you know, was walked into the conference room, the war room, as they call it.
With like boxes.
And boxes and boxes. And I remember saying this, this has to be digital.
And sure enough it was. And then but then structure.
And so somebody with a little bit of tech knowledge can can expedite this.
But to be able to just simply not only just search keywords.
Right. Which is kind of the the limit of what current discovery is, but to search context, right, where you find pattern necessity, where maybe you didn't have that hypothesis going into it.
Right. That's where I can just completely change the playing field and the discovery process.

And something that I don't think we non-lawyers don't see in movies is a point you were just making, which is.
Unless it's a, you know, a murder trial.
We've got a murder weapon, that kind of thing.
When you're when you're arguing in court, you're arguing previous case law.
Correct. And to be able to find and craft and synthesize and and present in the most simple way possible, the laws on my side is how you win that case, correct?
Correct. And you have. And the thing, too, is that, you know, there may be one case in May and then another case overrules it right in that same jurisdiction.
But it might not overrule the entire case.
It might only be one element or one aspect of the case.
And and you have to get that right.

And that's this process. It's called shepherd ization, where you shepherd ize the cases and meaning that each critical point you had the most relevant, most recent case law. Right. So if you go into court and you argue a case that has now been overturned, you can potentially be cited or actually know. And like in the medical profession, you can be disbarred.
And so sorry, I shouldn't say that.
So if you if you decide that you mean sorry, you can kill a lot of people.
I mean a doctor. But don't say that.
But but in the legal.
Profession, you can. There are definite ramifications if you miss a case. And if you quote case law, that's no longer an existence.

As we try to figure out what AIG is good at and what it can and cannot do, and we've established that the legal system is a is a great fit.
In fact, you said case after case text is the poster child for for there are things where it might not fit and fintech might be one of those.
And I ask this question because I know not only are did you go to law school, but you are also an expert in fintech, so you straddle those two worlds.
Do you see AI and fintech the way it's going to be in law?
I think there are applications in fintech, but I don't it's not as much of a line drive to me as it was for law in fintech.
When you have, especially when you do credit and underwriting and decisioning of credit ficar comes into play, right?

And so you have to have incredibly transparent scorecards to provide that because you also don't want to just make credit decisioning on things that could maybe they're not on the face biased, but they could be correlated to bias.
Right? And so you want to be very, very careful and you have to have those decisions can't be black boxed. However, when I think there are applications in fintech, when it's you're looking through like, let's say Medicare fraud, right, and the massive amounts of billing and associated with that and that and massive amounts of data and correlations and there's patterning City Excuse me.
So when you look at Medicare fraud, there is pattern necessity in that fraud.

Right? And the fraud numbers that have been estimated are unbelievably high in that in that context, when you look at even, you know, New York has AML, KYC, things like that, I think there are there definitely applications of of API that can be leveraged. And I think we'll see a lot of that coming up.
I think there are a lot of people committing fraud or just even the simple person cheating on their taxes who don't realize how close we are to a system in which you will get caught because this machine can look through everything very quickly.
Yeah, the auditors. Absolutely.
I mean, this machine can look through everything in the blink of an eye, right.

And so the any kind of pattern, a city, any kind of frauds, any kind of sort of deviations like that, it will be able to pick up very quickly.
What about other industries? What where is it transformational?
Where is it additive?
You know, in terms of industries, I don't think it's industry transformational or additive. I think it's use case. Right.
And so I think there's applications of have I in in every industry.
I think in some cases, you know, like with case techs, it's transformational because it can actually then do that job.
What case techs develop with co-counsel is it can actually sit in the shoes of a legal associate. Right.

And and transform that entire industry to where lawyers are now doing the much more interesting work of, you know, settling, negotiating, forming the strategy, advising their clients and how to stay on the right side of the law.
I think in medicine and and we have in the in watershed.
Can I. Sorry.
Yeah. So in biotech, in drug discovery, I think where you're just crunching massive amounts of data and it is absolutely transformational.
And the auditor, maybe with our iris, maybe it will transform that entire iris.
Right.
Mm hmm. Well, what I think.
Rebecca.
Is what really worked.
Oh, yeah. You know what I'm saying? So by the time the technology was they had this customer. Mhm.
Yeah. So I think so.

So I, I don't know what the question would be but the thing that what the companies that are going to most benefit I think from this new technology and that jump up from three, 5 to 4 which was like revolutionary right.
Are companies that are not sort of starting out the gate today with no customer data and no prior sort of experience, Right.
Because they're all using the same hammer.
And so what was unique about haystacks and a lot of the companies were currently looking to invest in is they do have current customers, right?

Case techs had 10,000 customers already before they even launched this new product that they could launch into. But and having those customers, they had developed a very rich, unique data set and they understood the use case of that customer incredibly well. And so, you know, what you really want is you want to have when you leveraging AI, you want this unique access to data and you want to really understand the use case that you're attacking.
And so a lot of times companies that are already sort of, you know, going entities are going to have a much better ability to leverage that AI we have now than de novo startups.
Oh, yeah. Yeah. So? So.

And I say that because what happened at case techs was they, um, they were, they launched a chat or they launched their GPG for version of co-counsel in March and they literally put on about 5 million additional dollars dollars of new RR in 45 days.
I'm so sorry. Can we. Can we kill that?
Yeah. Oh, no. And then we can't.
So I can. So. So. So they launched co-counsel, and within 45 days, they added a thousand customers.
So within 45 days, they added a thousand customers.
Being that they had an existing database and existing customers.
They.
Were.
And not even. So, yes. So I'm so sorry.
And they had an existing database. They had existing customers that probably and maybe even more importantly, Jake had spent ten years building credibility with the with the law firms.

And that was incredibly important.
So when they he came to them and said, this is what we have.
They were excited and they believed him because they'd used his prior products.
And that was one thing on the board we did really proactively, probably six or seven years ago.
I remember being in a board meeting and we had we'd all read the deck and Jake came in and I just said, Hey, you know what?
We've read the deck. Let's just make the entire meeting a strategy session instead.
And we outlined what we really needed to do and what what it appeared is but we needed to spend a lot more time.

Was having Jake, the CEO, be externally facing because he's such a phenomenal product person. But we decided that in especially in the sector, it was incredibly important to form those relationships with everyone on the outside as soon as he could. And so Jake set about doing that in a very structured way and making himself, you know, go out and have, you know, X number of external meetings every single week.
And he put him on the calendar and he made himself do it because oftentimes you can be very internally facing, especially in these startups.
And I think that really paid off because that reputation he built over the years is what made everyone so excited about about co-counsel when it when he launched it.
If you wanted to repeat this success, what would you be?

What can you imagine another success would look like?
We've established it should be a company that already exists, that is already dealing with something, you know, a database of some sort.
Just make up the company in your head.
Yeah. Or a company that has access through an arrangement or a partnership to a set of unique data, which we've all also been seeing.
Right. So that that also can work and that can also come from a client potentially.
But I could actually see something in the fraud or billing or records area.
Very is, you know, coming out of here very easily that really things that historically.
People.

Couldn't make work because of the marginal cost of labor and the marginal cost of sort of going through that much information now suddenly can work this lot. Yeah, and we have seen that.
We have seen it. You know, I for years I looked at something, I was looking for a company in that the billion space just because, you know, with consumers, you know, when we get a medical bill so often it's wrong.
And you know, the average person can't go fight that on their own.
And we looked at several companies trying to fight that, and they never could make it work on margin. So somebody that looking at that space or more broadly in just in financial fraud altogether.

What I'm hearing you say is there are a lot of opportunities in which there's a problem to be solved. Yeah, human hours that have to go into solving it are fundamentally not profitable.
Yeah, they're of not profitable. You cannot make it work.
And so that those those types of companies I think are really interesting. And there's also there also I think those are the most interesting. We've also looked at companies more like companies that are trying to make a platform for all types of sensor data to come into and then analyze in that data.
So and a lot of that data is, you know, video, it's voice, it's text, It's, you know, actually a lot of video data. And where that compute was so high that it made it slow and really hard to do.

But now with with AI, you can pull in, you have thousands and thousands of, you know, video feeds and video data into one place and analyze it very quickly.
So how does it all end up the the investment in the case tags?
How does it end up. What do you mean? Sorry?
The end of the story.
And the end of the story.
Oh, gosh. Well, it's always so I will say it's it's always sad when you when a company exits. Right. Because it's like you've been working at that company for a long time. And and I was really torn.
I mean, case text.
I think it has the completely the ability to to continue on and in a independent way.
But I but the acquisition by Thompson is absolutely the right thing for many reasons so.

So that Thompson acquisition actually makes case text the largest exit and I I think there was another exit that also happened with Mosaic at 1.3 billion but that was not cash.
It was all stock.
So it was not liquid. And and I, I think most bankers would agree the stock was probably two ex overvalued.
Right. So in terms of a liquid acquisition or a liquid exit case, Texas is by far the largest that's happened so far. Well, with GPT four.
You are you know there are some some very we're still looking into it and divesting you're that you're as far as I know the first one to exit.
The first one to exit the four. Yeah.
The first one to.
Exit.
And Yes. And the first and yes and yes.
And I am I guess I admire what when am I called an underrepresented.
But yeah you don't have to but, but but.

Though.
You're as Yeah.
First investors period to exit out of the thing that Yeah I'd really just heard about this.
Yeah no no I so thank you for that so yes I am I am the first investor to exit out of this GPT four.
I will say.
You know we have been heavily looking and investing in AI since I came into venture when I was at Morgan Dollar.
We were the, you know, the first institutional investors in Siri, which was really fun. So we saw sort of the evolution of that.
I then led an investment and Figure eight, which was really the picks and shovels behind machine learning, because what it would do is it actually used AI and machine learning to tag up data to develop the machine learning models.

And I also led the first investment in Luminar, which is a hardware company, but it had to do had to actually develop and the all the software to go with the hardware stack and because it luminar reinvented the entire lighter stack for autonomous driving.
And I don't know if you saw it, but Austin, the CEO of Luminar, was the youngest self-made tech billionaire.
That happened in 2021.
And then he's gone on now to to buy Forbes.
And his house, which is rather spectacular, is the is the set for succession.
Which is always always fun to see.
So that.
Was luminar. And then, you know, case tax has been a really fun ride.
I mean, we have had, you know, Jake and his his team in multiple times just to show us, you know, what they're doing with the AI because it's been so exciting the entire time.

So it's been really it's been really fun to sort of be in this game.
So now that the thing you invested in has been sold, what is your role as a venture capital investor or is there a role at all?
In case. Text. Yeah.
Media. My role. My role is to help Jake.
Figure out what's next.
So I wish you.
Were doing even as we're setting up all the equipment.
I mean.
You know, I mean, I see myself as an.

Advisor and a coach. And so, I mean, we've become good friends over the course of an investment. And I and, you know, in venture capital, your entire job is pattern matching. And so I've had a number of CEOs exit either two IPO's or two M&A. And so you know you learn over time you know what what the options are for the for your CEOs when they when they when they wrap up and so yeah I would love to to help Jake on the way you know going for it and I can see him being a very influential person sort of it may be an advisor advising public companies on how to really integrate AI and machine learning in their stack. And so it's fun for me to help him with that.
And you have a close personal relationship with him also.

You know, a lot of investors say I invest in the person, not the idea, right? He's going to have an idea again.
Absolutely. He'll have and he'll do. I mean, he'll go on to do a lot a lot more interesting things. I think all of my CEOs have done that.
So it's really fun to to meet them when they come to you initially with just this kind of kernel of an idea.
And then you help them through the process and you gain a lot of trust.
I mean, you're in the trenches with these people and it like he said, it's not always up and to the right. I mean, there are some really, you know, bad things that happen from time to time. I mean, CEOs I've had more than one founder call me late at night after being served with a lawsuit. Right.
And and say, what do I do?

And well, to that that my answer is always send me the document.
Pour yourself a glass of wine. Congratulations.
You've made it because nobody sues unsuccessful people.
Is so and so.
You know, you live three of these things, right, with these.
CEOs and you.
Live through.
Personal issues, too, with them. I mean, they have, you know, children and they have, you know, things in their personal life that come up that are real and you're friends with them and you want to help them work through that.
And and I'm always encouraging them to take vacation.
And so that's why I think he hasn't taken a vacation in a while, because that's a hot.
Topic for us.
Like.

That. I want you want to see them make it to the other side in a really productive and healthy way. And then, you know, you know that that's not the end of the journey.
And so, you know, it would be amazing to work with him again on another company and or maybe even to be pull him in as an advisor or a board member or we had this really phenomenal go to Market Council, right where we have, you know, experts around the industry. We actually have a couple of former CEOs on the council that we worked with before and they just they remain in our network.
Right. And we hope to help them as well.
So if you can talk about what our Jake's responsibility is to Thomson Reuters is you have to stick with them for a certain amount of time.
I don't know if I can talk about that.

Yeah, I don't know. I mean, yeah.
I was looking, asking a question more.
Yeah, sure.
Factual understanding. Yeah.
You know, have you run into CEOs that founders that create go from a germ of an idea to a brilliant, profitable exit and then sort of say, well, now what?
Is that all there is?
No, I don't think.
Founders are geared that way.
It's really funny. I mean, when you get I mean, Jeff, Tagg, the Doc Smitty.
Right. So, Jeff, Jeff is just an incredible human being.
Jeff had initially done a Socrates, right, that, you know, was public company.
And then I knew other packages.
And I met Jeff probably in my first year in venture.
He was working on this thing called toxicity.

And, you know, I'd just gotten to know him much like Jake, you know, when he was incubated. And we looked at it then and we looked at the A and in the A, I looked at it and discovered it was a doctor dating app.
Right. It was kind of hilarious. There were like text messages flying all over the place.
And it was, you know, basically two doctors, same same location, different last names. Right. And different genders.
And I looked at the data being, you know, product and marketing person.
And I was an engineer in my whole life and that's what I did.
And I did This is a dating app, right?
And then but but it was getting traction.
It wasn't it wasn't a bad idea.

And then it got it got more and more traction. He, he did more and he just kept working on it. And then in the series B, it had just, you know, blossomed essentially into this, you know, full fledged sort of LinkedIn for doctors.
And and he was working on that and well, it wasn't full fledged.
He was just that was that was where he was going with it.
So we led the series B and then, you know, it was profitable for years before it went public for years. And because we wanted to make sure and he wanted to make sure I mean, it was more Jeff, than anything that it was it would be a really strong, you know, public company. And he's still the CEO and the company's doing really well.
So, I mean, I could see him, you know, doing yet another company.

Right. So and then Ryno, I mean, Lending Club is now doing upgrade right.
And super successful there And so and then Lucas I mean he's at way symbiosis he was at figure eight and then look at Austin right of Luminar he just.
Bought Forbes And so I mean these guys.
Generally don't get board right and so or gals as well right and he did and so they don't get board they don't they don't stop. And that's what just makes it so fun.
I think Silicon Valley, you have to have a fair dose of added to to survive here.
So.
So circling back to the decision to sell a tell me about that. Walk me through it. How.
Who who contacted who.
How was the decision made? Did you debate it?
Can I do this or not?
So the sale has.
Right.
Well, that's fair. Yeah. Um, well, what I'm.

What I'm looking for is more the mind.
You know, that decision is now the time.
You know?
Yeah. So maybe not the ins and out.
Yeah, I don't need the gory details.
Yeah. And the price in that. Yeah.
So talk about how you.
Like what you wrote. Yeah.
Debate now and you've already, which you've already mentioned.
Yeah, it's background debates.
We would be allowed to talk about going from 500 to 650.

Not that. Okay. Yeah. So let me go to the so so the decision to sell case sex wasn't easy. I will say we had suddenly hit this massive inflection point with revenue. The company was preempted with multiple term sheets and we were in the process of just perfecting and deciding which partners we wanted to go with and and choosing sort of, you know, the investor for the next round. And by the way, the company had been on a path path to be profitable, never have to raise again. So we suddenly went from growing company, never having to raise again on the path to profitability, to then, you know, having, you know, sort of an embarrassment of riches, of, you know, choosing which investor to work with. And we had some really delightful options of people we were super excited about working with.

And then out of nowhere, this acquisition came a offer came in. Right? And in a way, it was it was kind of sad because I had just gotten geared up and I was so excited about the prospect and we were actually working really hard on our end to go find a really amazing sort of go to market person, right?

That could it could help us, you know, even, you know, you know, grow into the future and and then all of a sudden to like consider this acquisition offer. It was a little jarring.
It was exciting. But it's one of those things where you always have to look and say, okay, well, what is right for the company right now?
What are the risk we're taking kind of going forward?
Right. How is this evolving?
And in you know, I've been doing this for a fair bit and what I've learned over multiple cycles is typically the biggest acquisitions are right at the beginning.
Right? Right. And they're right at the beginning.
And then they're kind of maybe much later.
And so, you know, you have to just risk adjust it.
And then you also have to ask the team what they want to do.

Right. And and that's incredibly important.
You all have to sort of sit and recalibrate and say, hey, are you guys in this for another 5 to 10 years? Because that's what it could be.
Right. And, you know, I think for the team, it was time.
I mean, Jake has done a phenomenal job that there is this balance of life to. Right. He's got three little kids.
And so I think he could totally do it.
He wanted to do it. And but I but I think but I think there is this whole opportunity to have what he's looking at with with Thomson Reuters. That's really exciting, right?
Really exciting to go in and work with them and be able to take this product that they've built out to the market in a really and a really Broadway.
I would also talk about.
Oh, yeah. And.

Yeah. Yeah. So so the other thing about the deal that we were looking at that offered to buy the deal was it was 100% clean.
It was all cash. All cash.
There were no earn outs. It was completely clean.
And so I think that's, that's a big piece of it.
I think had it been, you know, a stock offer or had it been, you know, had aggressive earn outs or something along those lines, we probably wouldn't have done it that because it was such an ideal partner and because it was completely a clean offer where the employees were treated well, the investors were going to, you know, get the return they needed and and the founders were happy with it. And that was really important, that the founders were really happy with it, that it was a good place for the company to land.

And we decided to act to take the offer.
Those are my questions for you. Unless there's something else you'd like that.
That good?
Good.
So good. Is there anything else you want?
Yes.
And what else to say?

Right. Hold on just a second.
Let me get everything. Let's try to get my pager to work.
And of course, it doesn't want him.
Yeah, I know that feeling.
It's like a hair dryer. You just have an extra one to sit around just in case it doesn't work at.
The blows out.
Exactly right. So as I'm sure somebody told you, this is extremely casual. We are not recording the video, just the audio.
And if you know we're talking about something and we get halfway down the conversation, you're like, What? What was the question?
You know, just throw your hands in the air.
Or if the UPS guy comes or the dog barks or whatever else, it's fine.
Maybe we'll we might have workarounds.
Through trying to find the car keys.
Exactly. Yes. No, not.
We're in a.
Rental a rental place right now for a little vacation.

So I will find the background.
It's not part of it. So.
Yeah, fun. Fun.
And then because my printer doesn't work, you could still see me, right?
If I do that? Yeah.
Yeah.
Oh, good. This is just me tab in between pages on the computer because I have my notes that I cannot print out.
So. And it looks like yeah, it looks like we're recording.
So I guess my first question to to you is.
To say you have just one year's experience in venture capital is misleading, but it is factually true.
It's been exactly a year.
It's been exactly a year since I left Goldman Sachs Asset Management.
I retired after 18 years as the chairman of Asset Management and a member of the Firmwide Management Committee now.

To be fair, Goldman has been in a number of areas in private investing for many, many years and runs one of one of the biggest buried within the the the huge behemoth that is Goldman Sachs runs one of the biggest private investing platforms in the world.
So pretty familiar with this with this one.
You know, when you're at a dedicated venture capital firm and I'm loving it.
Good, good. Well, and let me also add.
Investment Woman of the Year by Investment Week, Financial News, Top 100 women in Finance and Fortune magazine's most powerful women in Asia.
So. So, yes, your bona fides are rock solid.
Yeah. I've gotten around, that's for sure.
You said you're having fun.
With parts of the world.
So you said you're having fun. What's the most fun part?

Look, I think what's really incredible about moving from a $2 trillion asset manager that's in every aspect of investing for many different types of investors is to get back to the kind of the home base of what investing is about, knowing companies, knowing the macro environment, understanding how certain sectors work and where businesses are going.
You know, I think I'm a big hockey fan and I always thought Wayne Gretzky know where the puck is going is really valuable to me.
One of the great things about big capital with spending that time and focusing on where things are going. So it's exciting to be that back to that part of the investing sphere.
Let's talk about where things are going.

What what should we expect ahead? I mean, a lot of different firms, Andreessen Horowitz, Sequoia, Lightspeed, have all been warning their portfolio companies.
What are you telling your portfolio companies?
I think the warnings make sense in the macro environment at this point almost speaks for itself. When we talk to our portfolio companies, though, I think the biggest thing that we do is try to be constructive.
Of course, we're going to spend time in their cash runway.
Of course we're going to spend time on questions around how they're thinking about growing their business and dealing with a more difficult environment, what their customers are asking for, how their pricing is looking, etc..
But we're spending a lot of time thinking about how we can help them.

I think the unique footprint that we capital has with our special strategic partnership with BCG allows us to not just ask the questions and give the warnings because nobody needs a warning when they've ended up on a double black diamond and they expect it to be on a blue slope. Right.
We get the warning, but what do we do and what are the years of experience that we can offer with having many of our investors been founders themselves with the BCG connection? What can we offer to say?
What's different? What can you do well?
What new customer could you acquire that's trying to save money and or trying to innovate in a way that helps their business through a difficult time?
And that's what makes the sectors we spend time in so interesting.

If you think about enterprise, healthcare, even fintech, there's so much that needs to be made more efficient in the world.
And sometimes those efficiencies come out the best in difficult times.
So these these warnings that we are hearing and by the way, I'm just going to say BCG, for those who are not in the financial world, Boston Consulting Group.
Right. These warnings that we are hearing from various. What confuses me about it is it wasn't that long ago we were talking about ventures swimming in money.
That money has not ceased to exist.
If there is a better time to invest, I can't think of it being better than now in the sense that other investments are not going to pay off, say Wall Street, that sort of thing.

That and we've seen a history of so many great startups, the Ubers or even the Googles, starting up in very lean times, that in some ways, I'm a bit surprised that that venture led startups are being warned about their cash burn and the runway.
Yeah, well, I think, you know, first of all, it's a natural human reaction.
So. Well, while we may think that different areas have their own unique ability to look through critical times or look through difficult forward headwinds, it's made up of humans just like everybody else.
And the first reaction to a market shock or a series of market shocks and difficult and hard to predict economic and geopolitical environment is to say, well, let's take a second here.
This is scary. What do I do next?

And that's entirely human, entirely reasonable and important thing to anticipate in and of itself when you think about a business, but particularly growing businesses like we deal with in the venture space.
What I think is interesting about right now and why you see such a dramatic reaction maybe in some circles is that you had such a boom time moment of the amount of capital that had gone into venture.
Of the different ways that that venture really was being deployed.
And that venture investing the strategies behind it, because there's not just one type. And that's maybe an evolution that venture is going through that.
We've seen other areas of investing, particularly equity investing, go through.
As I looked at the past few years from now, two different seats.

One thing I found really interesting is that venture was evolving in some ways.
The way we saw public equity markets evolving in the eighties and nineties.
It was getting more quant. It was getting more.
All your construction and analytics oriented.
It was getting quicker. It was.
Accepting models that might be more momentum driven or stepping away from that that maybe at the time might reconceive old school concept of venture being about picking the founders, having a personal connection, taking board seats, you know, being there to back them.
And that had a moment.
And that's a way to deploy a lot more capital, a lot more quickly.

But I think what you see now is like every other area of investing venture. Growing up, another leg, you know, going from teenager to adult or whatever stage you want to say we're at, I can't even say, right.
I'm only in one year. So what do I know?
But when you when you think about, you know, that kind of evolution happening so quickly because of the amount of money that had been pulled into venture the entire way we deploy capital has been evolving very rapidly over the last two or three years. And then those different methods, those different strategies, we would have called momentum. We would have said, you know, quant strategy.

You think about all the things that went on in the equities world more broadly or the public equities world, they suddenly stopped working and everybody freaks out because they worked so well. So it's natural.
It's what's to be expected. But at the end, it kind of makes everybody is we should go back to our knitting and say, well, what is this all about?
Finding great companies, finding resilient business models and great ideas that are good through good and bad times.
And I think you're right. Those bad times drive great ideas.
Well, and and, you know, if you're building an enterprise company the next salesforce or something, it doesn't matter where the Dow is.
It doesn't matter, really, if there's a recession.

You may not have some of the small companies that are going to be your clients right away, but you still have to build this great next enterprise software company.
Absolutely. And when you think about enterprise to keep going with that space, you know, when you enter tougher times, those are the moments that big corporates are trying to solve problems, make things more efficient, make their businesses work better, cut costs.
And a great enterprise business very often streamlined something that was done very inefficiently and trades, very traditional businesses.
Right. And so take for example, one of our portfolio companies, I service I services a company that does what probably, you know, to some people seems like the most boring thing imaginable.
They help you organize your contracts.

Right. And so, I don't know.
That doesn't sound like the most exciting thing on the one hand.
On the other hand, you know what?
If you're actually working in a large scale business and I'm familiar with this myself, that is really exciting because usually there are many, many contracts across many, many departments and divisions, sometimes with the same people, the same vendors, the same entities. No information is shared.
An issue happens. There's no way to check what is in the terms of each of those contracts. When an act of God happens when something like COVID hits, what does my vendor owe me? What do I owe somebody else?
What's going on? Who? Who's going to have a continuation of service?
What am I owed if they don't?

And so a company like a service helps you not have to have a thousand people pouring through tens of thousands of documents to figure that out, but instead take all your contracts in a very consistent, linear way and say, I need to look for this instance in this type of language.
They need to be organized. I need to be able to compare when I'm dealing with the same vendor across different divisions and make sure two different divisions didn't pay completely different prices for the same thing.
And so there's so many different ways that that type of innovation can help that. I think you see great enterprise ideas benefit from tougher times when people say, Well, what can I do here? That's a bit better that any worry about before because times were good.

You had mentioned working in a large company, Goldman Sachs.
You were there 18 years London, Singapore and New York.
I'm curious as to which one you liked best?
Not not the office, necessarily, but having lived in those three places, which one you liked best?
Gosh, that's hard because I grew up in New York.
So it's it's hard not to say, you know, it's it's New York.
But I think from a cosmopolitan perspective, both London and Singapore have such a huge amount to offer.
I learned so much in Singapore and just, you know, as a point of interest.
Right. I grew up in New York. I'm a child of immigrants.
My mother was a first generation Irish Scottish woman from Brooklyn.
My father was an immigrant from India.
And, you know, he's full on American story.

Never taught me Hindi, no interest in going back.
And I remember when I took the bigger role in Singapore when I first moved, he said, I can't believe I worked this hard to get to America for you to just go all the way back to Asia. And, you know, it was a laugh.
And then he realized, I should have taught you Hindi, or at least the curse words.
So if somebody was making fun of you, you know what they were saying.
But I think the energy and the drive you see in Asia and having lived there twice over the last 15 years, even the two different times I lived with London, in between the growth and the energy and the and the enthusiasm for new ideas is unmatched.

Then you get to London and the sophistication and the culture and the just the amazing nature of that city is, is unmatched in its own way.
So I don't know, I haven't chosen for you, but I've learned something from each and I try to bring a bit of each to the next.
When you were when you were in Asia, you were promoted to vice chairman.
You were in charge of in there's so much opportunity, as you mentioned, in Asia, particularly in China, particularly in enterprise.
How has your experience with China been in the sense that, let's say I'm a bit technical, LPI, I'm a state retirement fund.
What are you telling me as you work with China about what you will and will not do in in China?
Well, I think we, like many others, are cautious about China right now.

We're very focused on the next party, Congress, which I think will tell us a lot about the government's attitude towards areas of growth.
I think, again, when we look at the sectors of interest to us, things like enterprise but also health care, fintech, we very much spend our time and have a great team on the ground, like led by Daisy Kai, our partner.
They're focused on what are the areas that actually align with the bigger goals in China.
Right. Enterprise certainly fits in that bucket.
It's not about gathering very.
Personal data or exporting it in any way.
It's about making businesses function better.

Similarly, when you think about health care, you know China has a great need for innovation in that space. When you think about the size of the population, the age of the population and the rural nature versus the cities.
And so trying to bring some cohesive ability to to care for a population like that and so on.
And so I think we focus on the areas that we think will be supported, encouraged for growth valued.
And we also think a bit earlier, because I think it's important to realize where the value stages are within China and that it's extremely competitive.

I mean, we see Sequoia just raised its biggest fund ever there, so I don't see investors stepping away, but I see them wanting more thoughtful, more long term oriented strategies towards the sectors that will actually matter in the long term economy of China and globally.
Do you think that China, you know, over the next ten years is moving more towards being compatible with the United States or less or about the same in ten years?
You know, I think it's such an interesting question.
And, you know, you can ask a million political strategists as well as economists, and you get a different answer, like from my old colleague, Jim O'Neill, who's still 100% or globalization to many others who are much more of a kind of a dual spheres of influence approach.

And I'm a bit you know, when you get to that continuum, I'm maybe a little towards the dual spheres approach. I think that the base of operations of where you're starting, what you think is a reasonable framework for how your economy should work, how global economy should interact, and really what what each country if you just focus on the two biggest China in the U.S.
from an economic standpoint, is interested in for trade, for development. And so I think you end up with a bit more spheres.
I think that's okay. I think you see that even in the way many areas of technology develop in and of themselves.

For example, you couldn't get away from completely holistic apps in Asia, right? You go in the same app and you pay a bill, you say hi to your grandmother and you vote on the next best song for what should be on your app radio station. And then you order a taxi.
Well, you're doing it right. And and that that wasn't the way that the same kind of technology evolved in the West.
You had a separate app for everything and maybe you liked it that way.
And then you get to the data consideration of it all.

And did you all want it in one place or do you like that it's separate and is it really separate or being shared and so on. So you see both sides kind of moving, learning from each other. I think you'll see the same in health care with very different views on how data should be used and how pharmaceutical should be generated or all this, how solutions should be derived.
And I think those different philosophical approaches sometimes lend themselves to different businesses. So spheres of influence in some ways aren't that surprising.
The Financial Times described you this way.
Patel made a name for herself by taking long term bets on emerging markets that others deemed too risky.
Is that accurate? Did you do things that that others would have said are too risky?

And what is your sense of risk?
Oh, it's an it's an interesting quote. I don't know.
I can't even remember when they wrote that.
It was probably when probably when I moved to Singapore.
And they probably thought Singapore was risky at that moment.
So no. But look, I think one of the things that is has always been important to me and one of the reasons I've moved around the world, but one of the reasons also that the capital was great fit for me as I thought about what I wanted to do next and get back to the heart of investing, was being able to look for a great idea anywhere.
Right. And so I guess I look at risk in a different lens.

We can say the best ideas only come from one zip code and focus in on that. And maybe when it was harder to export great ideas or to leverage them in a more global context, that was true. But when you look at the way capital was built, it was global by design with offices in Asia, offices in the US, partners and groups coming together and comparing the best companies from every geography, and then actually through our own platform team and connections and, and b capital capitals, deep roots.
And then also BCG is huge global footprint helping the best ideas globally. And I think that's where the world is headed.
So to my mind, the risk was always staying parochial.

Wherever you were thinking that London or the Hudson River or a few zip codes in California were where all the best things would happen. They might have been where the capital was.
And that's even true of Singapore itself.
That might have been where the capital was, but that doesn't mean that's where the ideas are and we need to look for those.
The risk. Did you take that turned out okay?
Yeah. No, I shouldn't have done that.
Let's see, what shouldn't I have done? Well, there there actually may be a number of people who the first time they moved to Singapore said, wow, that was that was pretty dumb because I moved right before the GFC and so I got to Singapore and.
Again I'm going to jump in for those non-financial the global financial crisis.

You know, you're in finance when you describe the global financial crisis as GFC.
Yeah, yeah. You're getting articles myself right.
But it's a global financial crisis. It's and I've been in Singapore six months so heading our efforts in Asia, you know, I was asked to move there by Lloyd, the CEO and Gary Cohn, the president at the time, to help expand our business there. And I pretty quickly went from hiring mode to crisis management mode to stay up all night watching what happens in the U.S. as it drives the world and then work all day to try to mitigate risk in Asia.
And that probably seemed like a bad idea.

Right. But actually, it led me to a great thing which was moving into asset management because at that point I was still in the trading, you know, the securities business side, the sales and trading side.
And I think you always have to be able to look at a situation, whether it's your personal career from an investing or a business perspective, and say, okay, is it time to ask the tough question?
Do I still need to be doing this? Is this still a viable business?
Do I need to cut my losses? And and if so, let's all be grownups and figure out where we are. And so I raised my hand pretty quickly and said, you know, you set up Asia big time.
I get why we did it, but does it make sense now?
And if it doesn't, what's out there to do that does make sense.

And I was extremely fortunate. That's how I ended up moving over to asset management.
That's how I ended up moving to London the first time to to expand in that region, because the Board of Goldman had made that commitment at that moment to to really look from a global perspective at growing that business. And it was one of the best things that happened to me.
So so it was maybe a pretty crappy decision, but it ended up working out okay because I figured out a way to turn it to the better.
And that's what you always have to do.
You mentioned moving from trading you.
You at one point actually worked on the trading floor.
And that's something that you and I share.
I was at the Chicago Board of Trade.
Now, I wasn't working for Goldman Sachs and I wasn't a bigwig.

I was the kid who took the order from the phone bank down into the pits, you know, a cell, November, oats at market or whatever, a job, by the way, the trading floor is gone.
That job must have been gone quite quickly as it was replaced by computers.
But the energy of a trading floor, which will never be replicated because now it's all just data is something that that just almost can't be described.
Yeah, it's incredible. I mean, before Goldman, I worked at Morgan Stanley, I was recruited to Goldman from Morgan Stanley, and I was working on the derivatives desk, you know, during the dot com bubble, actually, and before that, during the LTCM, during a lot of during a lot of bad crises and so on.
And there's nothing like that visceral feeling of watching the market change.

And I think today people maybe get it from their computers.
People watch it on a screen, but as you would have absolutely seen, you felt it. It was just this little tinge of mood that changed.
Whether it was the way the phones changed, that it sounded like the phones rang differently. It sounded like the world was changing.
And, you know, I have to say, I've seen it all that, you know, not necessarily at Goldman, but even, you know, in the years well before I joined Goldman, I you know, I've seen phones fly. I've seen, you know, traders stomp off.
I saw somebody try to pick up their computer. And fortunately, he wasn't quite strong enough. I guess he spent more time trading than at the gym.

But, you know, it was it was a really formative experience in terms of management through crisis, because you still had to get trades done. You still had to help people. You see a market go limit down.
You still had to figure out what what you were going to do about it.
And we constantly talk today about the speed of information flow, how markets move faster, where everything is quicker.
But I don't know that we actually feel it that same way because it felt pretty damn fast in those years. I would say, too, when when it's going when it's going south or going up, actually, it's it's tough to catch the tiger by the tail.
You teach derivatives in advanced derivatives class at Columbia.
It's Columbia, isn't it?
I did have it for a few years.
But I did. I did help for a few years.
I.

Give me the basics of what I need to know.
I mean, this is an advanced class. Give me the basics of what?
What it is that you teach.
Well, you know, at the time I was selling the derivatives desks.
Right. And of course, some people are taking their class.
They're already well-schooled in the basic theory of options trading and or at least options structure.

I think, you know, the things to be aware of that very much fit investing today, particularly some of the strategies we were talking about earlier, when you start applying momentum type strategies or quantitative type strategies to more private portfolios, is that timing matters, construction matters, and that the speed or rate of acceleration of change when you have any kind of leverage and derivatives are all about leverage is orders of magnitude. And I think what you've seen actually, what the learnings that are still ongoing in venture are some of those same learnings, right?

If you have a portfolio of 20 carefully selected companies that you know intimately and you have board seats and so on, the rate of change can be very fast, but your knowledge is keeping up with that rate of change.
If you have hundreds.
What is your system for keeping up with the rate of change?
What is your system for understanding how that portfolio interacts with itself? What are the risks inherent in it because of the way it's been constructed and how quick your rate of information will match that rate of change?
Right. And so so you know, is really fun class to teach in part because it's it's always nice to be teaching and then do it in certain cases. And it was a lot of fun to be with students that loved the math of it. I'm still a math geek, so I love the math of it, too.

I mean, I pulled a patent with a with a fellow former partner of Goldman on a weird derivatives construct that probably nobody's ever use. But we were pretty excited about it anyway, trading near one Delta securities.
But, you know, when you when you do the math of it and you really think about it, it's it's not that surprising, right?
It's it's think about how quickly things can move and then think about how much quicker they move when you're involved.
Things move a lot quicker when it matters to you.
Looking ahead, what what interests you most?
As far as investing it?
Sure. Looking ahead, I obviously am interested in the sectors we're focused on. I think there's still so much to be done in in fintech, in enterprise and absolutely in health care.

I'm really actually excited for the ways technology will impact the challenges we see today in areas like climate tech as well.
I think that we're starting to move beyond and it's very involved in the ESG work and sustainability efforts at Goldman.
And I continue to be a big capital, and I think we've moved beyond some of the trite definitions or ways that people have thought about these areas and as box checking exercises and we're really moving on into how can we solve problems and how can we solve problems actually profitably, right?
How can we generate win wins?

And I think there are a lot of win wins out there in areas like climate tech that for the moment have been focused a lot more on either doing good and therefore not made their case in the best way to the broader economic and geopolitical world.
And unfortunately, that's the reality.

Right. But also then from the win win perspective to say, well, you know, is a great idea being executed the best way because you just had a great piece out on the challenges of sustainability. So not just climate, but but all kinds of sustainability for very traditional industries. And it was fascinating to see they did a great chart of it that they tweeted out. I think it was fascinating to see how really traditional industries, whether it's transport and supply chain, which are so focused on these days or the traditional energy industry or so on how they're logjams are not always in the places you think from a sustainability perspective, right?
And you see that all over.

Another one that I think will be really interesting to watch is what is the next iteration or evolution of the world of crypto and blockchain and digital finance? Right.
I look at it and obviously there's been plenty written about it and that's another one that you could probably say I'm a babe in the woods compared to the experts that have been in it forever. Howard Morgan, my colleague and chair of Big Capital, is is probably the earliest adopter, just like he was number 50 on the ARPANET.
Whatever it is, Howard's always first, you can be sure.
But, you know, a good friend of mine, Michael Greenwald, wrote a great piece at the Belfer Institute at Harvard about the next iteration.

And because of his history in government, a lot of it is focused on what does this mean for central banks, what what is their usage for it?
And I think one of the reasons you really have to step back and say, okay, aside from what it means about anything that's been hyped with individual investors or the issues that we've seen crop up of which there are many, you've also seen governments embrace it as a way to skip steps in getting benefits.
Look at how India was able to get digital ID for their entire population of 4 billion people got digital IDs and now if you get a government benefit in a rural area, it doesn't pass through 20 hands through the benefit of digital finance and in some cases blockchain.

You get that benefit directly without a little cut from every middleman, you know, getting from Mumbai to Maharashtra to Delhi to wherever it's it's saving some, some, some dimes or rupees along the way.
And that's the kind of thing that I think means this is all about maturation, like all ideas that need to need to be brought to a more reasonable usage case.
And that's what I think we'll see there as well. So I'm excited to see that next evolution to.
Those are my questions for you. Are there things that you wished I had touched on or anything else?
Trying to think if there's anything else. We really went around the world pretty quick.
Yes, we did.
Yeah, yeah, yeah.
We miss anything.
I don't think so. I mean, if if if it was helpful to kind of.

Give a give an example of like BG through the value chain with us.
I could do that or but no, no, no I'm not.
In the recessionary stuff in the.
Yeah. No, that works.
Now where is your RB or whatever it is your your rental place.
Where we're in an Airbnb in Park City.
What I love. I spent many years in Salt Lake City and love.
Oh, did you? Great deal. Yes.
Great.
Yeah, it's great. We actually we have a house here, but it's being renovated and it's of course, it was supposed to be finished.
And it's not an Airbnb that way we can still kind of manage whatever the hell is going on it yet.
I got in late last night and I've just been doing calls since so that'll be that'll be the project for later is go see what it looks like.
I think it's I think it'll be pretty good but let's see.

Yes, yes, yeah. I'm here.
Yeah, yeah.
Yeah, exactly. It's. That's fair enough.
And supply chain delayed, right? Right.
Exactly where you were delayed because none of the faucets have come, which is sort of potential.
Very good. Thank you, Ben.
I know you're in the background there and and.
Said.
Yes and thanks again. It was it was lovely to meet you.
And and I really enjoyed that.
Yeah. A pleasure to meet you as well. Thanks so much for the time.

Tell me if I want to make sure I'm using the right mic.
Are you hearing a whacking noise?
Yes. And I have a knife as well.
Is that okay?
Yeah. No, that's great.
Good luck. And are we going to use video or is it just audio?
Just audio.
Just audio. Okay.
Let me just close my door.
Sorry.
How's your day going?
It's been great. It's going to be hot today, though.
I like being outside when it's, you know, finally fall.
Yeah.
All right. Fantastic. So you are using your mike now.
Can you count to ten for me, please?
I'm sure. One, two, three, four, five, six, seven, eight, nine, ten.
Fantastic. And it's Jenny, right?
It's Jenny. Like Renee.
Okay.
So that's good. So, Todd. And the last name is Tears and Crying Tears.
So that's.
Easy. All right, easy enough.
So you. This is very casual.

/content/Preprocessed_Data/SHR Raising Series B The Q3 Crunchbase Report.txt

If you get halfway down an answer and think to yourself, Wait a minute, I've forgotten what it is we were talking about.
Just throw your hands up in the air and start over.
If you want to grab a sip of coffee or whatever, no big deal.
That's totally fine. And again, we're not using the video.
We're just using the audio.
So my my first observation is you are Crunchbase senior data editor, but in fact, you actually built Crunchbase, right?
Correct. Yeah. So I am so I joined Crunchbase when it was part of TechCrunch all the way back in 2008.
And I started at the time it was a couple of engineers and myself and it came out of the fact that Michael Arrington, the founder of TechCrunch, said, I can't keep track of all the startups. This was the Web 2.02.0 era.

And he said, I'm writing about companies, but I can't keep track of their stories and where they were last and where they're going next.
And so if we build a data set of private companies that companies the founders could contribute to, that would be hugely useful to us as reporters but also useful to the ecosystem. So Crunchbase was born out of TechCrunch and I joined to run the data side. And then fast forward to 2015.
When you work with data, you're continually cleaning and adding and making sure the data is in good shape. And I wanted to do something more with the data.
And so I started reporting. We added gender to the dataset in 2015 to report on funding to female founders.

I thought, we have this global dataset, we have a lot of founders we can add to the conversation. So we were the first dataset to do that.
And so my first reporting was around women in tech.
We'll funding two female founders.
What do you like about data? Obviously you like data.
Yes. I love data.
So the interesting thing about data is, you know, I spend a lot of time talking to industry experts, talking to VCs, talking to founders to get a sense of what's happening in the markets. But what I find incredibly useful is to marry their perceptions with what the data actually says.

And so I spend a lot of my time looking at the data, trying to understand which sectors are up, which sectors of data are down, which, you know, the seed as a class, the early stage or late stage venture, how are they playing out?
And what we found through our reporting is we do quarterly reporting on, which is what we've disclosed our most recent quarterly report.
But we found that was too long a lag because things were changing more quickly within the venture industry. And so we started reporting from a country based data set monthly as well. Do we do monthly updates?
So I spend a lot of time in the data and I find I see things in the data that I wouldn't be aware of if just talking to people out there in the industry.

So I find it incredibly helpful to use the data married with what people are saying to understand what's going on.
It is interesting sometimes that what people feel is happening in their gut and what's actually happening are often two different things.
Yes, I think that's true. I think the interesting you know, every time I go in and pull the data and the third quarter report is no different is I have a perception of what's happening. And then I look at the data and it might be slightly different.
And I think what was interesting about the most recent quarter is, you know, funding is down broadly more than 50% from the peak.

But what was interesting is that and we've seen late stage funding come down the most and everyone at the time said if late stage funding comes, you know, late stage funding went up, invested late stage, those values are too high.
Companies are not going to go public at the same rate.
So we're going to invest earlier, early and seed.

But in fact, what happened and we saw in the data is after Q2 when late stage came down, Q3 late stage and early stage came down, and then in Q4 2020 to all three stages came down. And so even though investors were saying we're going to invest earlier, in fact, what we saw in the data is that investors were much more cautious and then jumping through to Q3. I think what was interesting in this last quarter is actually late stage was up. That's relative to it being down.
But there were some very big rounds in some very important sectors across the globe which sort of made that late stage funding push up a little bit quarter over quarter and year over year.
And most of that funding was most of that funding was in I. Right?

Correct. So there was some very anthropic raised a very, very large round from Amazon.
They they raised 1.3 billion from Amazon and you can see the air wars are sort of heating up with Amazon backing anthropic and they've committed up to 4 billion some more money to come into anthropic from Amazon.
We also saw databricks a cloud company raise 500 million.
And what was interesting about that round is it was at an up valuation of 2021.
They were valued at 38 billion. It's now 43 billion.

Most companies are not raising it increased valuations from 2021 so and it was t right price. So that tells you databricks might be planning to grow out of it possibly next year sometime and that the company is doing incredibly, incredibly well on its business fundamentals because you're not going to get an upper hand in this market unless you are doing so.
And go out. You mean an IPO? We had two real big IPOs this past quarter. Almond Instacart.
Neither one really took off very far.
Yeah, it was interesting as I watched those two and also Klaviyo I think is also an important company to look at that went public in September.
And I think what was interesting is that there seem to be a lot of investor interest.
These companies were not selling high proportions in the IPO.

There was a lot of kind of key investors who said they're going to come in and best of the IPO price. And there was a little uptick for most of these stocks that first IPO day. And since then, they've slowed down a little bit.
And I think as I watched it, what was interesting is even though there seem to be a lot of investor interest going in, the companies didn't go above the range.
They kind of did it at the higher range, but they didn't price above that range because I think there is huge price sensitivity in this market.
And even despite that, there, you know, I think all three stocks are down from their listing price. But we'll see if maybe.

Yeah, a CEO would say, hey, listen, if the if the price doesn't move the first day of public trading, it means I nailed the price and we maximize the amount of money that we're going to get out of this.
You know, But I think, you know, I talk to an analyst and as these the sort of IPO market as these three were coming out and he worked on the Facebook IPO in 2012.
And the interesting thing that he said is Facebook priced above its range.
And then after that, for almost nine months, the stock came down quite a bit from that IPO price. And because it was such a big IPO, because everyone was looking at that IPO, it kind of depressed the IPO markets for nine months after that.

And so I think coming into these IPOs in September, I think the companies and the investors were far more cautious because they're not only looking at these three companies, there's a whole slew of companies that are in the pipeline that are preparing to go out, and they don't want a sort of downtrend from these three of these three don't do well. So it'll be interesting to see what does happen, because I would say they've done okay. They are down from their IPO price, but it's not massively down in comparison to what we've seen with some of the 2021 listings.
Do you suppose if companies are having trouble getting further funding in a softening VC market, that might be a choice.
That's a way to raise money.
Yes. I think that we're an incredibly difficult funding environment.

I think companies that are able to raise a company's have growing significantly and we expect to see companies that each asset class closed down in this market. So coming into 20 the end of 2023 and into 2024, I think companies raised in 2021 in the.
Early part of 2022 sit in early was still incredibly strong.
And I think those companies are going to be coming back into the market.
You know, they've cut costs, they've extended runways, but they're going to be coming back into the market and facing the fact that there are companies, the investors are much more cautious about what they're investing in.

They're not flinging money around. And so I think a lot of those companies are either going to face closure or possibly we're going to see an uptick in M&A just because prices are down. They're all companies are doing incredibly well.
Well, who have raised large amounts of money and still have that on their balance books.
And so I think the M&A market is going to increase in 2024 just because of this bit, both on the buy side and the sell side.
The money in venture seems to still exist.
They're just not investing it. They they painfully in my mind call that dry powder.
They could just simply call it money.
But the money's still there.

The money is there. But interestingly enough, the LPs, the people who invest in venture firms, are looking for liquidity and they haven't had that for more than 18 months. Obviously, 2021 was a very strong year.
But if you look at our data, double the amount of money went into this private companies, this asset class in 2021, and at the end of 2021 it shut down.
So all that money came in. But in the last 18 months we've seen very little money come out. And so those all these are looking for liquidity.
And I think investors are aware, venture investors are aware, is that calling that money from their LPs or taking that money from their LPs, there's not a lot of receptiveness to do that at this point because everyone's a little tight.

And so that's also pushing them to be much more cautious if they are going to invest.
They've got to see a lot of upside in the companies they're investing in.
So, you know, the LP equation has also impacted the investors, not just the what the companies are looking like.
And as you look over the Q3 numbers in your report, what what big picture does it tell you about what's happening now and what may happen in the future?

Yeah, I think big picture, what it's showing to us is seed funding came down and this past quarter, early stage funding came down the most actually years ago this past quarter. And what it tells me is that the market is still we're still going through the downturn, downturn despite the fact that there were this beginning to ease up on the public markets and this potential for some liquidity coming into the, you know, the investors in this last quarter and into 2024.
Nonetheless, investors are still incredibly cautious.
And when you see seed an early pickup, that gives you a sense that there is a bit more optimism in the market. The fact that that was down in Q3 tells you that the market is still digesting what has happened over the last 18 months.

Those are my questions for you. If there's other things you'd like to add.
No, I think that's good.

Well, you know. Well, what happens is, particularly when we do them in person, but even online like this, is they realize how, you know, very casually, you know, about most of this stuff.
Right. I just want to know to the people.
And so especially, I mean, the difference between television with our robotic cameras in the studio and the bright lights and going to somebody's office and letting them sit at their own desk drinking a cup of coffee out of their own mug.
Right. The level of ease that they're at is way different than television. So it's a fun spot.
And it started back in 1982.
Let's not forget.
As that dropped me on my head.
Sounds good to me. Perfect. Yeah.

I have a two year old and he tends to, like, grab my airpods and hide them different places in the house. So it wasn't immediately available, but I try.
Okay, good.
All right. Well, I have 27 more of these to look forward to.
That sounds.
About right. Still lives with me.
And I mean, by the end, it'll be, like, embedded in my ears or something, so I won't be able to steal them.
Yeah, I know. Exactly right. My dad always.
Yeah. My dad says the first 56 years of parenting are hardest.
And then, of course, next year, it'll be 57 years of parenting.
Yes. Okay, so I think we're all set.
We are not recording the video.
This is just so that we can see ourselves.
So. And then I. Can you drop out or.
I mean, I want you to be backstage, but I don't want you to frown at us when I.

Yeah. Mary is a big Mary is a big downer.
I know. I hope no offense was taken.
I just want to make sure. Yeah.
That we're good. Okay.
Definitely will be better for all of us.
Better for all of us.
She's not going to like. While your answer.
Stop. So.
So this is very casual. If we get halfway down, you know, a question or whatnot, and you think to yourself and you start to answer, you think to yourself, Well, what the hell is the question?
Just stop and wave your hands in the air and say, What the hell is the question?
You know, it will edit it. It'll be fine.
If you have to, you know, take a sip of coffee or the dogs barking or whatever.
We'll edit it. It'll be fine.
So, So very casual now everywhere.
We're going to start with Panera. A fair amount of this and then we'll bring in a bit.

But every Pronounce your last name for me.
Oh, just like as well. And I'm it.
It's Ahmed Kumar.
Yep.
Excellent. Fantastic. Um.
Oh, wow. Well, I remember.
I remember clearly. I was three years old back in 1980, and my dad brought home a Tandy Color computer, and I had no idea what was going on, but I was barely becoming literate. And I was immediately entranced.
And I saw them programing and basic on this computer, and I couldn't really read what was going on. And it was two years later I could finally read stuff.
And my uncle taught me the three line basic program that I still remember.
And it was basically like, you know, four I equals 1 to 10, print my name next X or next.
And but the funny thing was the line numbers were 30, 40 and 50.

I don't know why. Back in the day, your programs had line numbers and normally you would start a ten.
Yeah, exactly. But why? Why start up there?
And like, I remember being really mad.
At somebody who started the.
Same program and started it in pain. And I'm like, No, you got the program wrong.
It needs to start at line 30 like.
It took me a few more years after that to understand what the line numbers actually did, but I memorized it pretty well.
Oh yeah. Well, I mean, I only program in COBOL just so that I can keep using line numbers.
And have you been using line 30 ever since?
That's the geekiest thing I think I've ever discussed in my life.

My first computer was an Apple two plus, and I think I was about 12 or so. And I can remember programing a number of things, but also going to the back of those computer magazines because they would have written out in hundreds and hundreds of lines.
Of, Oh yeah, my dad typed a bunch of stuff and we had the cassette player and he wasn't he wasn't willing to pay.
For the tape, the actual.
Official cassette player. So he wired up a regular cassette player using like a soldering iron and some connectors.
He's he was a, I guess, what you might call a technician.
Yeah. He repaired stuff. Yeah. Thank you.
So your.
Dad was.
Sort of famous among his family for, like, whenever any toy got broken, they would give it to him. And he only, like in his early years, mostly just made it worse.

But as he got older, he got better and actually fixing things.
But he always tinkered with stuff.
Was I a teeny? I guess I was a teenager. Yeah, I was 19 when I started.
So you basically in my dorm room with my with my co-founder and best friend back in 1997.

Not immediately. It was actually the funny thing about that company was it was actually an experiment. So we went to the University of Waterloo where generally you do like six different jobs and we decided like one of the co-op terms we'd take, we'd start our own company not because we knew what we were doing or because we really necessarily wanted to start a company, but because like, hey, this is some good work experience. So we'll start a company, we'll sell something for four months and then we'll wind it down and go back to school, and then we'll know when we graduate whether we want to start like a real company for real.
And the problem was we built this this product that basically it was hardware plus software. It was a Linux based server appliance thingy.

And. We sold it, we could assemble one for $1,000 and then sell it for $2,000. And we made like a little profit during our four months and that was all good. But then, you know, people kept calling us for tech support even after that for months. And then next thing you knew, they were like telling their friends about it.
And their friends are like, Hey, I want one of those. And like as a student, $1,000 profit on every one of these things we built was pretty tempting.
So we ended up continuing to manufacture them until our apartment was basically a little mini factory, and eventually we had to bring in some additional people and it kind of got out of control from there. So this company was basically we failed to kill it for about eight years until eventually IBM acquired it in 20.

So why sell it? I mean, you.
Well, I think most important thing with that company, you know, why Why did we exit in the first place is just like it took us too long to figure out what nowadays we would call product market fit. We had early adopter fit very early, like early adopters were very excited about this product.
But in order to make it possible to sell things in volume, we have to have product market fit. You have to have like mainstream adoption of your product.
And it was only in the last couple of years or so before we sold that we got this product market standard mainstream adoption in a particular market segment.
But by then we were so overextended, our investors were sort of getting tired of us.

It was it was time to make an exit cleanly and our investors made their money back.
We didn't get super rich, but it was like I was not long after the.com crash, so they were pretty happy with that outcome, but it was necessary to exit at that point.
The outcome of selling was sort of disappointing.
Like you don't really think about it that much, especially when I was that age.
But what usually happens when a software company gets acquired is, is despite everyone having the best intentions, the acquirer almost always fails to digest their acquisition.
And IBM was definitely in that category. They had a very specific market reason.
They wanted our product and that made sense for them.
But the company that absorbed it didn't know what to do with that thing they'd absorbed.

And eventually it sort of just kind of got shredded.
Hmm. You were eight years at Google.
And you?
I think the sequence of events was slightly different.
I really liked my time at Google. One thing that happened, though, was the product that I spent about six years building, which was wired fi routers for an Internet service, just sort of got unceremoniously shutdown, which is something that Google does pretty often. And it kind of reminds me of like the days of my first startup when we sold out to IBM and then it sort of got unceremoniously shut down.
So I'm like, all right, this is getting kind of tedious.
I'm getting a little older now.
I have enough money. I don't have that much money, but I have enough money to satisfy me.

I don't need more of that. What I need is for me to build something that actually lasts.
And the only way to do that is to start a startup.
So walk me through the process of making that decision, because if you're at a big company making a decent wage.
Yeah. Well, I.
Mean, I.
Mean job security.
To be fair, looking at Google, I mean, much more than a decent wage.
They pay very well for top engineers there.
And so it was pretty it's pretty compelling just to go there and and relax. And before I joined Google, I kind of joked to my friends like, you know, maybe when I'm ready to retire, I should go work at Google and just collect collect the paycheck.

Right. But even I even, you know, just to buddy and that you could do that you could park at Google. Right. But but Google, you know, it's working on some pretty amazing things, so.
Oh, yeah. And I did I worked there for seven years.
And it was it was some of the best engineering I've done in my life, working with some of the best people I've ever worked with.
The neat thing about Google is, and this goes back to your question about what's the opposite of Google, but like at Google, they build a huge amount of infrastructure to deal with the problem of like when you think about what they do, they're like core product of search. They search the entire Internet millions of times per second and they return results in like 0.1 seconds.

Right. To pull that off, you have to you have to progress the state of the art of computer science dramatically. Right. They were doing was before a WAC existed by like probably a decade.
And that stuff is absolutely amazing. What frustrated me about Google, though, is when you're trying to build anything that is not this service that scales to a billion users, you still have to use the same infrastructure. And that infrastructure is what one of my co-founders calls scaling Varian like you're going to it's going to be just as hard to build it for a billion users as it is to build it for ten users, which is very impressive if you need to build something for a billion users.
But it's actually really annoying when you need to build something for ten users.

And so after I left Google, which was just, you know, as a result of sort of my product getting tense are canceled and me being generally frustrated, I'm like, you know what?
I entered the outside world and like this same thing is kind of infected everybody Now, every little thing anybody does has got to scale to a billion users.
And I'm like, that's just that's just not how reality works, right?
99% of the projects done by 99% of the engineers don't ever need to scale through a billion users.
Even if you're working on a product that's going to scale to a billion users, most of the work you do is some kind of internal dashboard or a tool or database query or something like that that will never scale to a billion users.

And that stuff the whole industry has been neglecting for probably 15 years now because we're so enthralled with this idea of making everything scalable.
And so tail scale was the first thing we knew when we started.
When we started the company, the name was the first thing we came up with because it's like, look, I think regardless of what we build, the problem we have to solve is people overcomplicating things. Let's make it so engineers can do the easy things the easy way, and we'll leave doing the hard things to somebody else.
I'll get to what tails Gill does in a second, but I want to talk about the money.
Now, Avery, you told you told somebody money is boring compared to talking about technology, but you've raised a lot of it.
Amit Kumar, the partner at a cell, is part of that.

I mean, why why write that big check?
Well, I mean, a couple of things. Number one, we are very delighted that there are other really smart people have written much larger checks subsequent to the check that we wrote, which is still a large quantum of money.
But, you know, that's that's the job. That's what we do.
So I'm a venture capitalist at a firm called Excel, and we write seed in series checks into what we hope to be defining companies.
We've been very fortunate to work with companies like Facebook and Dropbox and Slack and Spotify and Groupon.

And, you know, part part of the job is is writing these checks, you know, called the quantum or 5 to $10 million into businesses, early stage businesses, you know, before other people have figured out how special they're going to be. I mean, to scale was a unique situation where I think many people had sort of figured out the secret that Tails scale was a special collection of people.
But, you know, it was it was one of the most special opportunities that I've run across in the eight years that I've been a venture capitalist. And it's fundamentally what we do. We evaluate opportunities. We take pitches from, you know, world changing entrepreneurs, just like every all day, every day.

And the hopes that we run into in every and we build a conviction and then we invest in that business and then we join the board of directors and help them, help them run the company.
That board of directors.
You've said in the past that you think that board was weighing in success and failure.
I will also point out you sit on that board.
Right?
Avery. You, me.
You. I'm sorry. Sorry. No, I'm it.
Yeah, I mean, listen, I. I think that, you know, I mean, there's a couple of ways to look at it. So the reality is these these founders, these entrepreneurs, they're the ones who drive these companies. And we are to be clear, we are minority investors.

You know, I know there's lots of movies made about what happened with Steve Jobs at Apple. And I'm sure there will be other movies made about different companies.
But almost always, we're one board seat on a larger board of investors and we view it or I view my job as sort of co-founder as a service.

You know, I've been I've been an entrepreneur, not nearly as successful as Avery before I enter the venture capital game. I think it's one of the reasons I'm able to develop the empathy for what it's like to be in the seat and take the hard decisions and try to bring something new into this world. Like it's incredibly difficult to build something from scratch. And, you know, I view my job as sort of acting as a pseudo co-founder to Avery and be a truth teller for him. Be a mirror and tell him, you know what, I think he's doing a great job or where I think he can improve and whatever he thinks, he's on top of the world. It's my job to bring him a little bit down to earth.

And when he's down in the dumps because he's got a hard day, a hard week, you know, my job is to bring in perspective and tell him, you know, how well we're doing and what a special company and trajectory we're on. So, you know, I think I think the board is it's super important and good governance is important in these companies.
But fundamentally, you know, the venture job is about finding great entrepreneurs, investing in them, making that investment decision, winning the investment.
And then, you know, after that, we're we're sort of on team tails and we're doing our best to help Avery not in just coaching him, being a partner to him, but also hiring in the executive team, referring people from our network.

And, you know, that's one of the reasons why Avery chooses to work with a firm like Excel. Why firm like Excel, invest in a company like Taylor Scale is because we've invested in businesses that look very similar to this business in the past.
And obviously to scale is a really special, unique snowflake of a company.
But we we have deep expertise in this category.
And so we have a really wonderful network of talented people that have worked in similar types of companies that we are then able to introduce to Avery.
And he he likes some of them and hire some of them.
And you know, so it's it's it's going pretty well.

You mentioned that you know on the board you are one of many and also that when it comes to funding you're one of several your firm works alongside CRV, Insight Partners and others.
How does that dynamic work in venture capital when you after, you know, maybe the second round of funding are not the only money in the game?
Totally. Well, I mean, look, I think every great company, if you look at it, whether it's Slack or Uber or Dropbox, whatever company you want to think about, there are multiple venture capital firms who've invested in that business.
They're multiple venture capital firm partners that are on the boards of those companies.
You know, it's it's a very collaborative industry.

We've sort of now entered this era where there's probably more VC firms than startups even. And so, you know, it is a little bit more competitive.
But if you really just rewind the clock, not too long ago, it was extraordinarily collaborative and that the job of the venture capitalist who's on the board of the company is to help organize the fundraise. And typically that venture capitalists would have the networking connectivity to other venture capital firms and collectively invest in these businesses. So it's very collaborative.
One of the investors who's on, you know, on the board of the company is Rebecca Lou Doyle from Insight Partners, and we work on a number of companies together.
She's one of my closest friends in venture capital.
I admire her and think she's really wonderful.

And when Avery was evaluating different partners, I definitely gave a strong recommendation. Now, ultimately they were in the founders were making the decision about who to bring on to the company. And it's, you know, it's one of those decisions that can't be undone. You know, once you bring an investor into the business, a kind of there forever, you know, it's it's really hard to unwind those kinds of decisions.
But you know, I think we're really fortunate.
I scale and I'm very fortunate with some of the other companies I work with to have really strong representation from other venture capital firms.

And, you know, of course, it'd be wonderful if Excel was the only and largest shareholder in Tail. Still forever. But the more important thing, the higher orbit that we're solving for is delivering a fantastic outcome for everyone.
And we want to scale to be big and large, successful more than we want anything else, right? And so that's the most important thing to solve for.
And so oftentimes the right thing to do is to bring in more partners because, you know, where Rebecca or Reid are really talented or the heavy, because the investors before me, where they're really talented, that's great, can be very complementary in terms of the value that different firms provide or different partners provide.
Isn't there? I mean, you could have been all the rounds of funding, right?

I mean, if you or is that just a.
Way too much of a risk on any one company?
No, I mean, I would tell you, we love to scale.
Like if Avery today was like, hey, you get to put in this much more money, I think we would immediately do it. I think the business is super exciting.
You know, it's oftentimes about designing what is the right outcome for the company, not just what's the right outcome for Excel. So, you know, yes, of course, we would love to keep investing in our best and brightest companies.

But oftentimes it is valuable to bring in complementary experience or to bring the resources of another firm. And, you know, of course, we did invest and put a lot of money into that last round that was raised. But, you know, oftentimes the right thing is to bring other really smart people around the table to give Avery the kind of advice and support that he, he and the team need.
And then, I mean, you have some similarities.
You worked for quite some time at Microsoft and decided to leave.
You've also founded a company, if I'm not mistaken.
Tell me about some of the lessons you've learned. First of all, how do you decide, much like my question about leaving Google? How do you decide to leave Microsoft?
Yeah, I was you know, actually I would have jumped in on the Avery question.

Why did you leave Google, interestingly enough, and maybe shouldn't be that surprising?
You almost increase your employability when you take that risk and you go early and you start something. I mean, the reality is, you know, Microsoft and Google are wonderful companies. I mean, obviously, the leading companies are in our industry.
And lots of my friends have worked at those companies for a really long time.
And arguably they're happier and more successful than me.
But, you know, it's it's one of the special things about Silicon Valley or risk taking and, you know, almost failure. Not that anyone seeking failure, you know, where those things aren't looked down upon. I think those things are actually sought out.

And when companies are trying to refresh their ranks, they're trying to bring in people who have startup experience and have, you know, done the 0 to 1 thing because oftentimes, you know, there's the value protection part of that where Google's trying to preserve and grow their search business. But oftentimes these companies are trying to initiate new initiatives. Right. And so, you know, the Avery's of the world have gone off and started their own business are actually even more attractive at that point.
So, you know, for me, I was young and it felt like that was a risk I could take.
I felt like I was still very employable and I set off to start a company.
Now I started a company maybe for the wrong reasons.

You know, I started a company because I think I've been told my whole life I should go start a company. I didn't have the right mentorship.
I didn't raise capital. But, you know, I quickly learned from a series of companies.
I started three companies. No one starts three companies.
If the first two are radically successful, you know.
But we kept getting better, kept getting smarter, kept working with better and better people. And ultimately I found my way to excel where I started a business called Cards Brain Excel. It was the venture capital firm that backed it.
We ended up exiting the business of Twitter in 2014.
I ran engineering for Twitter Commerce for a couple of years.
I'm so grateful to Twitter for acquiring that company.

I'm so grateful for the experience, the network that I received from that.
And, you know, without that moment, I don't think I would have been a venture capitalist.
I think that that acquisition and being part of that special network of Twitter is what catapulted me into venture capital and gave me the opportunity and hopefully some of the credibility to work with the Avery's of the world.
You know, when we met Taylor Scale, it was it was one of the.
It was sort of one of the obvious ones. It was one of the companies that lots of venture capital firms had figured out was a special, special place.
And then we're working on something that could turn out into one of these businesses we all look back on very fondly. And so, you know, it's very competitive out there.

It's very competitive to win these investments.
And, you know, it was a it was a weird and special time.
It was sort of the first major round that happened during Covid.
And we were all on Zoom as we are now in the sort of Brady Bunch boxes and trying to get to know a founder. Avery was actually based in Canada.
And so, you know, legally, I think it was actually impossible for me to go to Canada.
We I think there was all these rules and restrictions around getting into Canada.
This is pre the vaccine. So, you know, obviously no one was vaccinated at the time.
So it you know, it was a it was a weird time.
And I look back on my entrepreneurship, you know, fondly.
Yeah.
I lived in.
Munster giving me the product.

My co-founders are respectively. One of them is gone through, another one is in the Bay Area and we have employees all over Canada in the US.
Okay.
Is there any particular advantage?
I'm from Canada. I lived in New York while I was working at Google.
And when I left, I mean, I was thinking, okay, it's time to start another startup.
I think I need the independence.
And so, like, what do I do to maximize my personal runway?
Because I'm always thinking of like, what's the worst case scenario?
And the worst case scenario is we can't figure out how to make any money for years at a time. It's like, Well, I looked at my savings account.
I looked at how much it cost to live in New York. And I'm like, Well, that's not bad.
I can last for a few years. I live frugally while I work in Google.

I saved up a lot. But if I moved to Montreal, I think I have infinite personal runway that gives me a lot of chances to screw up.
So how about I go back to Montreal? It's one of the lowest cost urban center in Canada, for whatever reason.
It's a beautiful place to live, but it means I can live there forever and make a lot of mistakes. And then, you know, in typical, I guess, tale scale or what became typical tail scale fashion, we got our first round of funding like six months later and our first customer, we had already landed, which was like a bank.
And so I never really needed to dip really much into my savings.
And so I guess I could have lived anywhere. But I love it here.
So yeah, I love you.

A combination of French and English culture, just sort of like every every different thing. The food is great everywhere you go, the coffee is great.
Everywhere you go. People are happy here.
Well, tell scale. What's the best way?
I think it's a programable network.
It is. It is a thing that lets your devices talk to each other.
And it doesn't matter about firewalls and stuff like that.
So the easy example is if I've got a laptop, I've got a phone.
If you've ever used airdrop from Apple, you can transfer files between them if they're sitting side by side and if the laptop is Apple branded and the phone is Apple branded to scale, you can transfer files between any of your devices, whether whatever brand they are and they don't have to be side by side.

So I can leave my laptop at home and I could send a photo from my Android phone to my MacBook, for example, or from my iOS device to my Windows machine. And that's just like a very simple consumer example.
But tail scale is often used by large enterprises to do kind of similar things.
I need to connect into my cloud provider and it's behind five levels of firewall I can connect in and it's attached to my identity and it's controlled by the IT department.
And they can they can supervise everything, but it's direct connections, which is something the Internet hasn't been able to do for quite a long time.
Exactly. It sort of.
Which which normally.
The data itself is encrypted and goes point to point in the fastest possible path, but the control point is still centralized.

So the IT team and a security team have complete control over what happens on your corporate network. It's just that your corporate network no longer depends on the layout of the physical world, because the new world, post-COVID especially, no longer has like everybody's in the office and all the servers I need to access are going to be in the office that night. World is gone forever.
Hmm.
I have one last question, but are there anything else you guys would like to touch on?
There are so many things, I think.
Well, you know, you asked about basing the company in Canada, and I would say that Thales Gill is one of the very first companies that we worked with that was fully remote.
You know, there is no office. Everybody works from where they are.

And, you know, there's certainly trade offs to that.
And working in person is, is obviously a really special experience that we all endeavor to do. But working remotely has allowed Thales Guild to hire exceptional people throughout the company wherever they're based.
And so if you look at the executives, if you look at the engineers, it really is spread across North America and Canada in America.
And it's one of the reasons that I think Thales Gill is so special.
I mean, one of, you know, there is no great company in the world that isn't a great collection of talent and that's, you know, nowhere more true than it is with Thales Scale. It's one of the reasons why there was such a reputation around the businesses or the early employees that they were able to bring on.

And early co-founders were all exceptionally well known and talented in their fields and in bringing them together. It's just increasingly hard to do that in a in the physical sense. I think people are finding a better way of work life balance with their families, being able to spend time with the kids after school and still produce world class work. And so I think that there are companies that are leaning fully into the in-person world, and we love those companies and they're companies like Scale, which are like, Hey, we're going to go this totally different direction, but we're going to build a set of processes and rhythms and, you know, offsides and group events to make sure that we're effective this way.

And my last question, Avery, we can start with you, and this will not be included in this podcast, but I collect them together and run them is a giant collection once a year. And that is tell me about a book that's important to you.
You know, the classic if you only had one book on a desert island, or maybe it's a book that you give as a gift or one that you go back to or think about often.
And I always say crossing the Chasm to this one.
So I'm going to switch up the answer this time.

I'm going to I'm going to say High Output Management by Andy Grove, the former Intel CEO. And the reason I love this book is that actually while I was at Google, I had a chance to be involved with some of the like executives there and just understanding the incredible scale of a company that big like an executive at this company is overseeing tens of thousands of people and billions and billions of dollars in spending.
And I just like it was mind boggling. I'm like, if I was in this job, I don't understand how I would do this job. Right.

And and I actually wrote a little essay about it that I distributed on like the Internal Social Network. And a bunch of people are like, Yeah, you know, I believe I understand what you mean. This actually gave me some insight into how executives think, but there was like one executive who was like, Avery, the solution is here.
It was written in 1980 by this guy.
Read this book. This is the answer to how executives can survive at a company like this.
And it's high output management. I read that book and I'm like, Oh, you're right.
This actually does explain everything.
And it's amazing that this wisdom from 1980 continues to be useful 40 plus years later.
People are people and organizations are organizations.
People are people. Yeah.
And I'm it.
Oh, that's a great question. I'm a.

I feel like there's a lot of business and management books out there.
I mean, I'm more of a fiction guy myself.
Yeah. It could be fiction. That's fine.
Well, what do we got? I got. Well, I have this book right here.
Tomorrow on tomorrow. Tomorrow. So I'm a big I'm a big sci fi guy.
I like anything that sort of takes us out of our world and shows us a different planet or a different kind of environment that, you know, still reflects back very human lessons and missions. And so there's there's always a new one that's great.
But this is this is the one I've been buying for my friends because it's a it's a really quick read.
Sci fi is good at holding up a mirror to society.

Totally. Scott I would if we're done, I would add one more point to scale, which I think is really important to get across, which is, you know, all the, you know, we're emerging in this new world where it previously was that all the big companies, all the incumbents were maybe not as savvy or sophisticated about the disruption that startups are going to to do.
And so, you know, you have the Facebooks of the Google sort of emerge and become these titans of industry. But we live in a very different world now.
You look at Microsoft, you look at Google, you look at Facebook, you look at Apple, they're incredibly sophisticated.

And you know, what we do in Metric Capital is we're trying to back these companies that have become one of those companies. And it's just very, very, very rare to meet a business that has that level of aspiration and ambition.
And so, you know, whenever he talks about these human scale networks and going a different path, I think that was the thing that really attracted me.
And I'm sure the other venture capitalists who showed up with Rose, you know, at the Rose ceremony where we were all fighting over the deal and the investment is really to the large. And so that mission, it's like a very simple view of the world.
But, you know, I think Avery's inside.
The reason we're so excited about the business is that actually is what most people need.

And not everybody needs to build things at the Google Scale.
They don't need, you know, the network or the product.
Of course, we all believe that our products and the scale, the billions of users.
The reality is most networks that you're interacting on, the corporate network, it's actually like 500 people or 500 machines.
And so that's where we think the table scale mission, product company ambition is actually sneakily large. And as one of the very few companies that could one day challenge these large incumbents, which are, you know, incredible, incredibly sophisticated, incredibly well capitalized, I have to agree with my experience.
Just incredible people. Oh, I.
Was just kind of being.
Taking a different view of it. So I think I.

Think what I'm it's sort of getting out there or sort of going into the the big vision of tail scale is you can you could say the Internet has gone a little bit off track. I remember growing up in the 1990s and like seeing the beginnings of the Internet and we really truly believed that, like more communication would lead to everything getting better and world peace.
And everyone will know the truth about things because you'll be able to just look it up.
And there's an element of that that happened.
But what also happened is this sort of uncontrolled interconnection of everything where now, like a very small number of bad actors, can ruin it for everybody.
And this happens over and over and over again on the Internet and so tale scale.

Is the idea of creating this set of small networks that you trust, that you control, and then connecting those small networks to other people's small networks in a controlled way is a lot more like what healthy human society looks like. And it turns out that there's huge parallels between what healthy human society looks like and what a healthy society of computers looks like.
If you connect them in a giant network with no defenses, humans get injured and computers get viruses right.
If you connect them very carefully with the right side of social norms, you can have humans with healthy relationships, and computers have weirdly more healthy relationships.

And so we're really building this sort of even though we talk about things being small, the truth is the world is a better place if there's a whole bunch of small things that interconnect with intention.

I was the prototypical super shy nerd.
So, you know, I was very bookworm.
I had a hard time even talking in class.
And at some point I realized that this was going to be career limiting.
I couldn't, you know, go up and talk to people.
We're launching ten more weeks of interviews with venture capital and entrepreneurs, and we kick off with Travis Salo of Defi Ventures.
Trey and I are both from the Midwest, and we both got her start with the Apple Computer. Tell me the memories you have of the Apple two plus.
Oh, my goodness. And I think this is not unique to my story, too.
But I think there's a whole host of folks who are my generation where, you know, was the first time they were starting to put computers into schools.

And so it was a really big change.
And I remember being in I think it was like fourth grade.
And, you know, I was part of this program called Gate, where they would pull you out of your normal classes and allow you to sort of explore other topics and things. And the thing that we got access to were these amazing, shiny new apple tos.
And I have vivid, vivid memories of basically learning all the commands to create graphics on a screen.
And, you know, and it just created this massive spark of, wow, this is a super powerful tool.

I also remember getting killed by dysentery, you know, on the Oregon Trail game over and over again as well. You know, the programing was it was pretty minimal at the time. But yeah, it did it did really create a spark for me that made me realize that, you know, this programing thing and being able to use logic to, you know, to solve problems, it was pretty exciting.
So by the time I was ready to graduate and go off to college, I knew I wanted to be a problem solver. And to me that translated to an engineer.
It is amazing, those little things. And mine was an apple too, that my parents bought me. I was fortunate enough at about the same age or the same time I would have been a little older, but which got me where I am today.

I just it was programing, you know, line ten for I equals 1 to 5.
He's building it. So it's amazing.
It's fabulous. So and this is in World, Minnesota.
This is in Fairmont, Minnesota.
Right?
Right. A town that I'm sure no one listening to this has heard of.
So I looked it up on the map. It's practically Iowa.
It is. I grew up three miles from Iowa.
Yeah.
Now, you know, there's a huge rivalry between Iowa and Minnesota.
I sure do. Yes, of course.
You can't grow up in that area and not know right now.
Do you know why the wind blows north out of Iowa into Minnesota?
So the Iowans don't have to smell.
The Minnesotan know because Minnesota sucks.
Trey is a founder of Defy Venture.
She came to it after a long stint at Kleiner Perkins, investing in Nest and other consumer tech hits.

She says her first question to every entrepreneur who wants to build a company is Why now?
I realize it's been a few years since you launched Defi, but you ask entrepreneurs this, so I'm going to ask you why now?
Why now? Yeah, great question.
So for me, I left Kleiner Perkins in 2014.
I had spent 11 years there, you know, building up my skillset and how to be an investor. It was an amazing learning experience and I got to work with some incredible entrepreneurs through Nest and Dropcam and Oak Power.
And so I when I left Kleiner, I knew that I in some way wanted to continue investing because I really enjoyed it and love, love the ability to work with some of the best entrepreneurs on the planet. And the question was, what's the right contract?
What's the organization, what's the focus?

How is it going to be, you know, most impactful and most inspiring for what I want to do next?
And in the thing that I found most frustrating during kind of my final years at Kleiner was just the size of the organization. So, you know, some people are really skilled at being in large organizations. I think what I learned about myself is that I'm I function way better in smaller teams and smaller organizations.
And so, you know, there's something about being in a small, fast moving team, being an entrepreneur that I love.
And so, you know, it wasn't obvious when I was leaving Kleiner that, Oh, I'm going to start a new fund that actually wasn't the top thing on my mind.

But as I started diving in and understanding, you know, how how am I most valuable, valuable to entrepreneurs without the Kleiner brand, without the Kleiner pocketbook, I realized it's this early stage, the coaching and the empathy and the product help.
And it's it's everything that an early stage investor does and works with an entrepreneur to help them grow from a seed back company into something that's going to scale and get bigger. And and so I really found my passion for.
For doing the targeted early stage, investing in doing that in the context of a small venture team.

And, you know, I'd say that the other I think insight is that, you know, venture investing, the teamwork dynamic of an investing team, it's hard to scale a tool, you know, a team of ten investors and and make really tough venture decisions because part of the problem is everyone around the table has a point of view and really good reasons why the company that you're debating isn't going to work. And so at some point, actually, the more people you have around the table, it can actually be harder to get really controversial, hard investment decisions through. And and it's funny because both both my partner, Neil and I have, you know, thought back through our histories and experiences of doing investing.

And oftentimes it is the most controversial investments that have become the most wildly successful companies.
There's a reason it's controversial. It's not obvious.
It's it's a big, daring, audacious bet.
And, you know, and then conversely, some of the most, you know, well loved opportunities ended up not working out so well. You know, that's what makes this job so hard is that it's not always obvious. And things take wild twists and turns.
We kept coming back to this theme of how we liked being sort of counter thesis or orthogonal to where everyone else is going.
And and that also embodies the kind of the root of what it means to be an entrepreneur. You have to swim against the tide.
You are doing something that everyone else thinks is impossible.

And so in that very nature, you are defying, you know, kind of the status quo. And so we really fell in love with the term defy.
And and yet I think everyone seems to really like it.
Certainly memorable.
You've said tough decisions and controversial decisions.
Can you tell me about someone?
Well, so many great examples like the Nest conversation.
Right? So that was one I certainly had a front row seat to.
You know, Tony Fidel and Matt Rogers and incredible team, you know, that basically created the iPhone, iPod, iPhone at Apple. You know, walked in our door with an audacious plan to build a smart thermostat.
Of of.
All things. Right. You know, really super exciting thermostat.

And you're like, wait a second. But the interesting thing was I had actually had been focusing on how to drive consumer efficiency.
And so I had been spending a lot of time thinking about, wow, Well, there's something really special about the thermostat.
And the problem is you can't you know, utilities can't push a thermostat on people. No one no one wants their monopolistic utility to do that.
So if if you're ever going to do something impactful with the thermostat, it has to be in a hugely consumerist branded way.
And and that's where I was in my thinking.
And I was stuck because how do you find that team?
Right? And then, you know, magically the timing couldn't have been more interesting.

You know, they walk in the door. And so for me and for for Randy, who had been thinking about this with me, you know, it was so obvious.
But for for bringing around the rest of the people around the partnership, it wasn't as obvious because.
Yeah, just so I understand what you're saying.
You were thinking about thermostats before Tony walks in the door.
Yeah, absolutely. You're kidding.
No, no, it's I so I was focused on efficiency and how you can drive efficiency in kind of the energy sectors. And and so I, you know, in that time period also invested in O power, which was more of a software platform for utilities.
And so, you know, when you spend time thinking about, okay, how do you help drive consumer efficiency, there's not too many places to go.

The the I was waiting for somebody to come in and pitch me a thermostat and then somebody did. Story is one of the least likely stories I think I've ever heard in Silicon Valley.
Kind of crazy. And in fact, we had been looking at can we even kick start a company in China and just kind of get something made over there for cheap or buy something and then hack software on top of it and then, goodness, Tony and Matt came through the door.
That would have been a terrible, terrible product and experience relative to what they built.
I think if you told somebody, you know, there was going to be a $200 thermostat and people would buy it, lots of people would buy it, they would have thought you were crazy.
But it's that when you turn the wheel, it is so excellent.

It is. It is the design is so wonderful that it just sort of speaks to you. And it's a thermostat.
Yeah. You were an engineer at Idaho.
I was. What is it about the Nest thermostat or the owl camera or the things that you've invested in that really speak to you?
Well, I'd say once a product person and a product thinker, kind of always a product thinker. And the thing that I learned at Idaho was putting the customer first and always making sure that no matter kind of what you're building and designing, the every single decision is happening in the context of how the user is using the product.
And so it's really focused on creating that delight, the product delight.

And that is something that, you know, is hard to you don't I don't think you can learn that in a textbook. You sort of you learn by doing and there are a few companies that get it really well.
And Apple clearly has mastered the the creating consumer delight. And Tony and Matt had that vision for creating consumer delight. And that means, you know, obsessing about details in absolutely everything. It's not just how something looks, but it's, you know, how the unboxing process goes.
It's, you know, every little detail and the flow of the software and the process to buy the product. It's there's no thing that's left kind of untouched at that point. And and not all entrepreneurs think that way.

And so I'd say, you know, the thing that I took away from my my experience at Idaho is that, you know, building a product is.
You know, requires that obsession on the on the customer, but it also requires a massive amount of iteration.
And I think a lot of people, you know, who aren't in the startup world or who haven't built products before sort of think you kind of have a direction and you go. But the reality is you are you think you're building the right thing and then you are constantly testing and tweaking and iterating, and you want to do as much of that as early as possible to figure all that stuff out before you get too far along.

And you know, and, you know, so I learned how to do that at a product level at Idaho. And then I went to business school and I co-founded good technology, and I got to do that at a company level.
And now I get to do that, you know, at a multi company level by, you know, at least helping and working with entrepreneurs who are going through that process daily.
One of the things that I think is also beautifully designed is the Eero.
This is the Internet with the little devices throughout your house. You were an early investor in Eero and then sold to Amazon.
How did that come about? Does Amazon just call you on the phone and say, or Eero on the phone and say, Hey, we think we'd like to buy it?

Yeah, well, I was a seed investor in Eero, so it was actually the first investment that I did after I left.
Kleiner Oh, so this turned out pretty well.
And it was, it was funny because, you know, I had done Dropcam and Nest at Kleiner and so obviously, you know, it spent a fair amount of time thinking about technology in the home and a very limiting issue for Nest and Dropcam working well was you had to have reliable and indeed a relatively fast home wi fi.

And it turns out the solutions that are out there, you know, not all that great. And so when I met Nick Weaver and he pitched, you know, this idea of a sort of self-healing, super simple wi fi with a software interface, you know, it was actually a software front. And, you know, it was super easy to use and work with. It just made complete sense.
So, you know, so that was part of what got me excited about, you know, investing in Nick and and, you know, and then, you know, I got to be an early beta tester as well, which I always love. You know, I think this goes back to my idea of days, right?
So really getting in there and understanding the product.

But your question about Amazon is ultimately, you know, a lot of these these hardware products, you know, Nest ended up at Google and Eero ended up at Amazon. You know, the reach that these big companies have in how, you know, in their customer base and the technology they're building on top of all of these things is massive. So you know for Eero to go to Amazon, you know and Amazon also acquired ring and and you know and has all of these Alexa's in spots in your home now they are heading clearly in a dominant direction around basically making your home you know a competing platform which is pretty interesting.

The thing I think that's missing in the home and perhaps oh power is part of supplying this is the control panel somewhere in the hallway that just tells me about how what my home is doing, how much how much power is coming in from the solar cells, how much power is going out from everything else. I wouldn't mind if it tied in to the water system as well.
This is how much water has been used today, an overall sort of Star Trek heartbeat of my house.
It can somebody build that?
Well, there are a lot of people trying. I can't tell you how many business plans I get from folks that are trying to be the aggregator of all the services in the home. And my question to them usually is, are you solving a problem with the aggregation?
No. Yeah, there's just curiosity right now that it's.

And so I actually I don't know that that's the holy grail of the smart home.
I totally understand why it's an interesting thing to think about what I want as a as a consumer and I'm a data point of one is I just want stuff to work seamlessly in my home and if it can be somewhat automated so it predicts and knows and does what I want without me even having to do something awesome. And so ultimately kind of my judge, when I'm looking at a product as it has to make life easier, hopefully out a little bit of delight into the process and and not all technology products make life easier. They might actually make things more complicated.
And my issue with dashboards, to your point, is that unless they're tied into something that creates automation.

You know, it's it may be nice to get that data periodically, but unless you're turning that into action somehow or behavioral change somehow, you know, I think they can sound great and people love access to data.
But really turning that into an ongoing consumer, you know, product or benefit I think is a challenge.
You've had great exits with Nest and with Eero.
You're an investor in Al Cam, which is a dash cam in the car.
A very smart dash.
Smart dash cam.
Yes, smart dash cam. It's the best of dash cam.
Yes.
Yes. At what point do you start to think about an exit or do you even consider that? Is this some and what point do you think we're going to build this into the largest dash cam company in the world?
Yeah, or we kind of have our eye on Ford to sell it to Ford.

Yeah, I Boy, I wish the world worked like that.
Yeah, We want to sell it at this company. Yeah. No, it does not work that way.
I think the goal that we always have is, you know, we want to build the most value and sometimes the value comes earlier than you might expect when a strategic or potential acquirer comes by and says, yes, we see the value of combining our distribution or, you know, cars with your product.
And we think that one and one is going to make five.
And and that's fantastic. But I think if you build with the intention of being acquired quickly, you know, that is that is not a good place to be because, you know, as we all know, the likelihood of of the stars lining up for those things to happen is very, very low.

And so in the case of owl cam, you know, this is another story of of backing an amazing group of folks.
So Andy Hodge, the CEO at AOL, I actually worked with at IDEO many, many years ago. So I've known him for a long, long time.
He went off and actually was working with Tony Fadell on iPod and Apple and or sorry, iPhone and iPad.
And so he's one of the select crew of folks who've really, you know, gone through that transformative consumer product process of developing these great products. I recruited him to Dropcam a few years ago, which was a company that, you know, basically allowed you to put cameras in your home and have peace of mind and watch what was going on and record things, if anything, kind of goofy happened.

And so Andy came and helped us with Dropcam and was inspired by, wow, you know, when you put software on a smart camera, you can do some really interesting things. And the insight around Owl was when you look at the what happens from a sort of damage and liability and casualty, and if you just look at the sheer dollar amount of auto versus home, it's it's like ten times higher in auto than home.
Yet knowing, you know, home security systems are all over the place, but no one has them for cars. And partly because there's just hasn't been the technology to be able to do anything proactively as as a consumer.

And now that technology is where it is and you can put a super powerful cell phone like product in your car that is smart enough to record everything it sees, know what's important, and you know, certain things to the cloud, alert you on other things.
There's a lot of intelligence going on and the product and and a lot of data that it is handling that you couldn't have managed even a few years ago. And you frankly need the LTE networks and the 5G networks and all of that to make the product work well.
But their smart dash cam now has over 150 million miles of data and.
Great videos.
And great videos. I mean, these guys get crazy videos every single day now of amazing, you know, wacky road rage incidents, you know, really funny, cute Kerry car, karaoke videos, that kind of thing.

And most importantly, though, it puts power back in consumers hands.
You know, whether it's, you know, your car getting bumped in a parking lot and you weren't in it, but it records it and you know what happened and you lose a peace of mind or you get into an accident and you have at the point the police officers talking to you, absolute recording of exactly what happened. So you can determine fault at the point of the accident.
So so that's kind of where al camera's at.
And now they're really extending into fleets at this point.
So I will. And Eero and Nest are easy to understand stories. It's very quickly apparent to me why I desire.
Yeah, these devices, engineers oftentimes have trouble telling stories.
That's just. The beast, right?

You yourself said you came out of your shell at Stanford.
Yeah. Yeah. This was something I recognized that I.
You know, I graduated with a masters bachelor's and master's in mechanical engineering, but with really a focus on robotics.
And I was I was the prototypical super shy nerd.
Me, I had a hard time even talking in class.
Raising my hand to answer a question was, like, mortifying to me.
And at some point I realized that this was going to be career limiting if I couldn't, you know, go up and talk to people, if I couldn't talk out in a group.
And so I forced myself when I went back for business school, I said, All right, Trei, you're going to really push on.

You're you're kind of ammo this time, and you're not going to just try to, you know, get the best grades.
Grades. You're not here for grades, you're here for personal growth.
And what matters is coming out of your shell and learning how to network and and being comfortable with that. And so I took improv, which was the first step in learning how to intentionally act goofy and then being okay with it. And that was kind of mind blowing for me.
And it's like, Oh, I survived this.
It felt okay. Actually. It was kind of fun.
And then just forcing myself to, you know, take some risks and, you know, and I've talked about how I met John Doar as one of the most amazing sort of examples of me taking a risk like this, kind of put myself out there.

I saw John before class at a, you know, grabbing a newspaper and, you know, and thinking to myself, Oh, he doesn't want to be bothered by a student.
And I'm like, okay, but this is exactly the thing I need to force myself to do.
And so I walked up to him and I introduced myself and and, you know, at the time I had just gotten done engineering the Palm Five, which was a pretty amazing and iconic product of the time dates myself there. It's now in the Computer History museum.
But it but you know I basically just leaned into, hey, I just got done launching this incredible product and, you know, wanted to ask you if there are any companies that you know of or folks who are working on companies in this area where they want to connect to these products, to the Internet.

It was it was kind of an obvious thing that was starting to happen but hadn't really happened yet. And and that turned into him connecting me with my co-founders of good technology and then ultimately being able to become an entrepreneur, all because I, you know, basically was able to rally the courage to put myself out there and go ask someone who, you know, is just larger than life and an incredible person, you know, for advice.
I used to think of venture capital as money that you use to buy desks and rent an office and buy some plans for the front office and, you know, maybe build an assembly line.
Right. Right.
I'm beginning to understand venture capital is for mitigating risks.
Getting rid of the things that are going to bring your company down.

Is that a pretty good understanding of it?
Yeah, I'm in fact working at Kleiner, John used to say, and one of my mentors, John Deere, always used to say, you know, it's about the money you're taking in in this round is all about going towards the, you know, the top three risks that are going to kill this business that you want to figure out how to how to get off your plate.
And so a good CEO not only is inspiring the team and, you know, is touting this incredible vision of what they're building, but they're simultaneously keeping a laser focus on the top set of risks that are going to kill the business or are going to hurt the business.

And absolutely focusing on how to, you know, mitigate those risks or work around and ultimately put those risks to the side. So, yeah, it is all about figuring out how to, you know, push through these things that just aren't working.
Fasulo is also noted for her involvement in a report called Elephant in the Valley, as well as testifying in Ellen Pao's lawsuit against Kleiner Perkins.
We'll start with the Elephant in the Valley.
A study of 200 women with at least ten years experience found 84% of women had been criticized as being too aggressive.
82% experienced clients or colleagues addressing their male peers when they should have been addressing the women.
And 60% received unwanted sexual advances.
If you've had to deal with some of this yourself.
I think anyone. Yes. Yeah.

Clearly the data shows that it's more systemic than I think any of us understood or believed. So.
Yeah. And, you know, I was part of the Kleiner Perkins trial and, you know, my process of sharing my story, of having to deal with some harassment issues basically caused this incredible outpouring of folks who reached out and said, thank you for sharing your story.
The same thing happened to me. And it was this interesting catalyst for me where I was like, Oh, I didn't do something wrong.
Because inevitably when this stuff is happening to you, no matter how you handle it, you're like, What am I doing to cause this?
And so it's some level. There was this relief that, Oh, I'm not I'm not alone. I'm not the only person who's had to deal with this.

But then there was this shock that, Oh, my goodness, this is like an epically large proportion of people. And in friends, it felt like over half who've had to deal with a lot of stuff.
And so that inspired myself and Michelle at Dance Key.
And a handful of women were like, We can get this information.
Let's I'm curious now, let's go figure this out and at least get the information out there in a way that's not that can stimulate conversation and help move the conversation forward as opposed to just try to have people point fingers.
And so, yes, we did the survey.
We got a bunch of amazing responses and it helped catalyze a whole host of interesting conversations. And this was a few years ago now, because this was right after the trial, which I can't remember.

I think that was 2014 or 2015.
And I think the numbers came out in 2016.
Yeah, that's right. Yeah.
Do you think because the MeToo movement has since happened that if you went and ran these numbers again, they would go down because the world is a better place or go up because the world is a better it does a better job of reporting this.
Yeah, I think that, you know, this was a not an academic survey and it was not, you know, hugely it was we surveyed a bunch of folks for their you know, for their emotional responses to these questions. And so I think there was no reason to withhold answers here.
So I don't think that people were holding back.
So I do think that was fairly representative at the time.

And I'd like to think that, given all of the conversation today, that these trends can only get better, It's hard to get much worse.
And, you know, and people are not talking about it.
And so I think that's the big difference, is that if you go back to 2016 and earlier, people just weren't talking about these topics publicly.
I do sometimes when I'm doing interviews, struggle with the conversations about gender equality and things because I find myself asking women about them and not men.
That's right. Yeah. Yeah.
Now, you're the one who authored the study, you know what I mean?
It's totally.
Defensive. Yeah. And so in Scotland, you know, I talked to this person about this investment. I talked to Trey about Eero and Al, and. Oh, by the way, let's talk about gender diversity.
Right?

Does it ever.
Which would you have preferred?
Well, I think the important thing is, you know, that it's not just that.
Right. So I think the important thing for me is, first and foremost, I want to build a successful career.
I want to work with amazing entrepreneurs. I want to help lots of people.
And if part of that platform includes helping bring up, you know, some topics that might be hard and complex, too, to have a conversation about, I'm okay with that as long as that's a subset and not the lead on everything that I do.
Trevor Salo, co-founder of Defi Ventures.
Now before we go, I want to go back to something Trey had said earlier.

So for me and for for Randy, who had been thinking about this with me, you know, it was so obvious. But for for bringing around the rest of the people around the partnership, it wasn't as obvious because, yeah.
Just so I understand what you're saying. You were thinking about thermostats before Tony walks in the door.
No.
Randy is Randy Commissar, and we've talked to Randy on this podcast.
Just check the previous interviews for that.
And Tony, as Trey mentions, is Tony Fidel, the creator of the iPod and, of course, the Nest thermostat.
I look around and I just see so many products that once you are connect them and once you add smarts to them, you're going to see innovation all around.
You can find a talk with Tony on my television project press here.

Archives of that interview are available at press here, TVGuide.com.
Next week on the podcast, you have 40 seconds.
Hold on. Doors are closing and.
Okay, Matt, what is corporate venture capital?
We joined Salesforce Ventures, Matt Garrett in an elevator for a real life elevator pitch.
Sand Hill Road is written and produced by me.

And that just really shocked me because, frankly speaking, nobody had ever said anything like that to me before.
But it was actually very illuminating to me.
I think, you know, first I was angry, obviously.
I thought that was an inappropriate comment.
Let me say right up front, I didn't make the comment that made Elizabeth Yellen angry. And we'll get to what did coming up a little later in the podcast.
The reason I want you to meet Elizabeth, a partner in Hustle Fund, is she's in the middle of raising a new fund.
I've come to realize we talk a lot on this podcast about where venture capital money goes, but not where the millions come from.
Where does the money in venture capital start?
That's a great question.

Yeah, and that was something actually I didn't know before I started hustling.
I don't know it now.
And so really actually, they come from a lot of sources.
But I think the short answer is from rich people and rich organizations.
And it's just a matter of navigating what is it that each individual or organization wants?
Elizabeth breaks it down into three categories.
Institutional investors like Stanford or the Illinois State Teacher Retirement System, angel investors, the super rich like Peter Thiel, looking for a place to put their money and what investors call family offices, wealthy individuals who hire a staff to invest their money.
Now, how do you pitch these people? How do you get them on the phone or knock on the door and say, hey, it's me, Elizabeth, and I'd like $10 million.

So I think in terms of finding people, that's very challenging.
And our approach actually was a very grassroots approach.
So we did two things. One, we started with our closest network and my business partner, Eric Bond, and later we added she and CO and I, we, you know, we've been in Silicon Valley for a long time. So we we've known a lot of entrepreneurs and investors and we started there and we we basically went to everybody and told them what we were up to and how we see our fund is differentiated.
And we asked all of them if they wanted to invest as a start.
But I think more importantly, whether or not they could invest or wanted to invest.
We asked each person we met for 1 to 2 introductions, just like, Can you think of one specific name of somebody who may be interested?

And it didn't even have to matter if that person knew that one person.
We just wanted a lead.
And then from there, we worked on getting an introduction to that one person.
So you can imagine a small group of people all of a sudden, especially if they're giving out two names, can start to expand.
And that and that's how we grew out our network and eventually started going into circles and people we didn't know at all.
And then the second thing that we did was we had events, so we would invite again the same group of people to events, but ask them to invite other people.
And that was a much softer sell because of the event.

It would be, you know, like a networking or mingling event, but we would of course also have a call to action like, hey, if you're interested in talking with us about our fund, we would love to. So that was a lot easier, I think, for people to get behind and sort of, you know, saying to their friend, hey, you know, this VC wants to pitch you.
And I've seen you busted your ass because I saw the spreadsheet you put together keeping track of every meeting you've had.
Yes. And you really worked hard.
Well, we're hustle fund.
Yeah. So for, you know, I counted all the meetings on my Google calendar and for me, I did something well over 300 meetings during the course of about nine months.
And my business partner Eric did about the same.

So in total, you can say about 700 meetings between the two of us, and that included both first and second meetings. You know, I think with individuals, we could close them pretty quickly. It's usually just one meeting and but but with some of these other folks like corporates, you may need to meet a number of people or family offices that are running with the team. It may take several meetings.
This is a really tough business, but it's still got to be a little scary to have a bank account with other people's money that you're responsible for, that you could someday have to call them on the phone and say, Well, that didn't work out.
I mean, it is. It is. I think we don't we don't take this very lightly at all.

In fact, actually, you know, most of our investors in our fund one are people we know from before.
And they trust us, their friends, their family.
This is their, you know, potentially their kid's college money.
And it's also our own money. So, you know, we have skin in the game as well.
Almost every VC fund, I think that the partners have skin in the game like they have contributed a fair bit of the money themselves.
And so actually when you're talking about the bigger funds, like billion dollar fund, you know, it's very common. I think, you know, if I were to throw numbers around for general partners to put in, you know, 1 to 5% of the fund.
So when you're talking about $1,000,000,000 fund, that's actually a lot of money that the general partners are putting in themselves.

And but it's funny, nobody really talks about that when I talk with founders, actually, I don't ever I have never thought to mention that, you know, some of this is my own money, so we don't take it lightly. But I think it was really important for us to be upfront about it because, you know, if things didn't go to plan, we didn't want people to be caught by surprise. And so this has to be a chunk of money that people are willing to potentially lose. Obviously, nobody wants to.
But, you know, I think the flipside, though, is we do feel very confident.
Our models and we've been investing for the last few years and, you know, have some early track record, even if not a whole lot of liquid returns.
What is your your financial model for investing?

I would imagine people with hustle, I'm guessing that's where the title comes from.
Yes, our general thesis is actually pretty simple and very different, I think, for many VC funds. So one of the things that I noticed from doing early stage investing over the last few years is that almost every early stage investor invests based on pitches. You know, like you have a meeting with somebody, they pitch their idea.
Maybe you bring them back a few times.
But one of the interesting observations that I had while running the 500 Startups Accelerator was that I learned a lot more when I saw people work.
And actually a much better indicator of success is velocity of execution. Can you you can you create your own goal and hit it next week? Can you create another goal and hit it next week?

And how quickly can you move the needle? And so even though the initial traction may be small, actually, that's a very good indicator of a strong entrepreneur.
And so that is what we are looking for when we invest, we write a small check upfront and we work very closely with companies for a few weeks.
And then, you know, if if we see that velocity of execution, we pour in more money after that. So most of our money is actually deployed based on execution.
Check my notes here.
You wrote. My mission for the next 20 to 30 years is to change how we fund startups in Silicon Valley. That's a long period of time.
Also, what are you trying to change?

I think, you know, one of the things I've noticed is in seeing so many different entrepreneurs that actually the best entrepreneurs, they don't fit a particular demographic. They don't come from a particular place or necessarily have gone to a particular school. What what is common, again, is this this execution at speed. And so we want to change the way the ecosystem thinks about investing, and that is going to take 20 to 30 years.
That idea that founders come from a particular demographic or a particular school is, of course, a big problem in Silicon Valley. And you can call it prejudice.
You wouldn't be wrong, but it's a problem that can trip up even the most progressive, forward thinking people.
Psychologists call this pattern matching.

The pattern matching is actually not a good indicator of good founders.
And that's why we have a model, because founders who can execute with speed actually look like all kinds of people. So when I was pitching my own startup many years ago to an investor, during a meeting at the end of the meeting, I asked him, So what do you think? Trying to close him. And he said, Well, I don't want to say the wrong thing and call you a meek Asian woman, but I question how you will lead a company of 100 people. And that just really shocked me because, frankly speaking, nobody had ever said anything like that to me before, but it was actually very illuminating to me. I think, you know, first I was angry.
Obviously, I thought that was an inappropriate comment.

But then later, you know, and that week I was thinking about it actually in some sense, he gave me a gift. He gave me a gift into the mind of maybe what many other people were thinking.
And I think pattern matching is a real problem because if you don't fit a certain demographic in this area, it actually is really hard to raise money even if you are a great entrepreneur. And I've even seen the deal memos of some other firms where they'll write reasons for passing and so like does not seem charismatic enough to lead a team of people like that is a reason even if even if the traction is excellent.

And you know, on some level, I think that bothers me because I think you can point to plenty of leaders who have billion dollar businesses who were very introverted and actually not particularly charismatic.
But I think that, you know, again, this pattern matching is a problem because it's actually not correct.
You've written you offer both free fundraising advice, give me some both free fundraising advice.
And I think I'd like to address the elephant in the room.
So I think that, you know, this is going through the startup fundraising process as a startup was just very confusing to me when I was a founder and there were some so many things I didn't know.
So for example, when ABC asks you as a founder, do you have a lead? That's actually a pretty loaded question.

And I think the common response for a new founder is, oh, no, we don't have a lead.
And then the investor will say, well, you know, come back when you have a lead, and then you're kind of stuck in this trap with everybody telling you that.
And you're you're trying to find a lead.
And everyone seemingly is supportive, but they're not.
Actually, what they're actually saying is they're not interested right now.
Now, they could become interested, but you have to essentially force their hand.
And I think that's something that people don't understand.
They're all these weird jargon and and ways.
That coded messages.
And messages and ways that people play the game. And you you really do have to FOMO VCs in order to raise money even if they are interested.

When you think about it, actually, it is much better for an investor to wait for more information than to commit today.
Right? You should always wait. If that opportunity is available five months from now at the same price you should always wait. Really, it comes down to creating FOMO around things that you you actually do have. So you may not have money, but you can have something like packed meetings, like you can have a packed schedule.
You know, I, I don't know when I'm closing, but I've got 20 meetings this week and I'm starting to go into second meetings with other VCs on Monday.
And that itself is a fact and VCs can interpret for themselves.

While this is going fast, I should really move, or if they're really not interested, then self-select out. Which again kind of goes back to my point around qualifying investors.
And then the last piece is just following up.
Like there were some investors for our fund, one whom we thought were interested based on our qualification of the first meeting, it went well, but then they just went completely M.I.A. And the reality is that people get busy and so even if they're interested, they're just busy.
So I think, you know, one of our one of our bigger LPs and actually more engaged LPs, we sent him, I think, about 13 emails that received no response.

And so, you know, when you're in the moment sending your seventh email, you're thinking like, this is not going anywhere, even though we had a good meeting, but you just never know. So I think persistence, I think, is the last piece that's really important.
Elizabeth in telling us about raising her first fund as she heads out to raise her second next week on Sand Hill Road.
Andreessen Horowitz is Scott Kapoor, who literally writes the book on venture capital.
For more interviews with Silicon Valley's most influential entrepreneurs, check me out on TV and press here.

America is a wonderful country. I mean, you can do so much in this country if you work hard and work smart.
Welcome to Sandhill Road.
This week, we step away from venture capital to talk to one of the most successful entrepreneurs in Silicon Valley, Jay Chaudhry.
At all. Natural stone. We believe the perfect finishes in your home.
Create the perfect spaces for living.
From countertops to flooring, accent walls and back splashes, make your home unique and add that special touch of personal style.
We have the largest selection of rare and exotic stone, luxury, porcelain and handmade tiles from around the world.
Experience, exceptional service and endless inspiration at one of our four Bay Area showrooms. Find the perfect finish at all natural stone.

/content/Preprocessed_Data/SHR Serial Entrepreneur  Jay Chaudry.txt

The first thing you should know about Jade Chaudry is he's a really nice guy. I think he's my friend.
He's been on my TV show a number of times.
We went to the same party once. Is that weird?
How do you decide if somebody is your friend and do you just announce that on a podcast?
The other thing to know about Jay, which is not immediately apparent because he drives a minivan and most his own lawn is he's a billionaire.
Even Jay's kids didn't know the family was rich.
My kids said no. For a while, I had no idea about any of the wealth.
We had because.
In Atlanta we lived in a simple 200, $200,000 house. Okay. Like any other middle class family.
Wait. There is a point in which your kids figured out that you were rich.
You know, eventually they did, but.
But this is what happened.

I want to hear about that. I want to hear.
Okay, these kids said, oh, wait a second.
So. So we walk you through what happened, please.
So in Atlanta, they went to public schools there.
Then eventually I said, you know, education is so important.
I want to move them to private schools.
And then they did. And then my son will come home.
He was in sixth, seventh grade.
I said, Dad, I don't want to go to Wal-Mart to buy my next showed.
What did they say, Ed?
I want to show it with a logo on it.
I hadn't bought a shed with a logo myself, but I suddenly realized that they are beginning to.
This is the impact of private schools with all of these rich kids come.
But. But I would say my kids are fairly grounded.

They work hard and and I think I've taken them back home to India to understand, to learn some things.
Is there a particular story? I'm a father of two boys myself.
And and I know there are stories that fathers tell repeatedly about growing up in which the kids roll their eyes and say, Oh, yeah, that story, the one that's supposed to teach us hard work or respect.
Is there a particular story that you tell your kids?
You know, I believe less so in telling stories, more so by leading and doing so.
For example, all along in all these things, we have done our vegetable garden where my parents who live with me here and kids, we all build a vegetable bed and really work together in it.
I want a hired someone to do on my lawn.

We'll do it together, lawn mowing. So I think some of those things are useful. And plus, you get your physical exercise.
So.
Chaudhry has founded five companies, the first with his wife around the kitchen table, betting every cent they had.
I talk to my wife. She's an IT professional as well and she said, You keep on talking about it. Either you do it or you shut up.
She was a nicer than that.
So with that, I put our business plan in place and took it out on.
I didn't succeed. So it is good.
I went back to her and said, Well, you want me to do a startup?
Let's put our own lives on the line.
And we went a step beyond it. You said, Why don't you quit your job?
Quit your job as well. So there's burning.
There's no bridges left to burn. The bridge is behind.

And we started to gather and we put everything on the line.
The notion was simple If it doesn't work, we can always find a job.
The most recent startup success is Zscaler, which he took public earlier this year. It now has a market cap of $8 billion.
It's a long, strange path from Chaudhry's childhood in India, where he grew up without running water.
I look back at my life and say, Wow, I can't believe coming from literally a stone age, I'm really dealing with the rocket age.
It's it's really very, very satisfying, satisfying and unbelievable.
But on the other front, for whatever reason, maybe it's my family upbringing.
I never had an attachment for money.
It has really not moved a whole lot.
My life sort of hasn't changed a whole lot.

It's nice to have the feeling that you can do whatever you feel like doing, but I don't think happiness has much to do with money.
Happiness is a state of mind. Happiness is having good family, good health and good friends. And that's what I cherish.
I do challenge you when we do interviews every once in a while.
That. When you say, you know, we're going to ignore the stock price and we're going to keep our eye on the ball and we're going to stick to the mission. Your stock was up 68% in the last six months.
I think it's easy sometimes for you to say that when other CEOs are hearing no, my dad and my stock's down 68%.
You don't curl up underneath the office desk during quarterly reports with Zscaler because your quarterly reports are great.

We did a segment once called Jake Chaudhry Can't Lose.
So I know I challenge you on this all the time.
Do you have a blind spot because you have been so wildly successful?
So I would answer it this way.
The stock price you have today, the earnings results you have today, are not a result of what you did this past quarter.
It's a result of what you did three or four quarters earlier.
So really, if we are focused on building a strong company, putting the right products, sales and marketing in place today, the results will show up in two, three, four quarters.
So that's really what needs to be done.
Not really how do I fix my current quarter?
I do.

I think that that's what helps. Then the other thing I would share with you at a personal level, like to say do your best and leave the rest to whoever.
Right? Yeah.
That's so that's what keeps me out of stressing and worrying about the results.
How are you going to challenge yourself in the future?
Is it a is it a six startup? Is it moving on to something else?
How are you going to continue to find the next success?
So early on, when I did the first startup, it became wildly successful pretty quickly and the stock went through the roof during those dot com days, and that's when I felt, Wow, it must be some kind of a fluke.
Okay, So I wanted to prove to myself that I can actually do a start up again.
And that's what took me to do three startups.

And that was because this time I said, I can put only so much money in one company, so let's do multiple and do it like having kids.
And you stagger them a year or two apart once they're done with those three, I had no desire to do one more and flip it.
That's really took me to see scale and say, Let's build a lasting company.
So do I have an urge to say I need to do the next startup?
Not really. I think my current desire is how do we take it to $1,000,000,000 in sales, to $2 billion in sales, and it's a big enough market.
But would one day, maybe five, ten years down the road, I do want to get out of that capitalistic world and probably get into a start up to change the way we teach our kids. How do you really make education all online, all free?

So you democratize access to the best education that anyone sitting in India or Congo or Latin America somewhere where the simple tablet and Internet connection can get.
I think that's the biggest thing we can do.
And that's partially because education is what brought me where I am. So I have special attachment for education and helping out people who don't have easy means to get good education.
Draw a picture for me of what that was like when you were young.
What did it look like coming from, as you say, the Stone Age.
Right? I mean, my tiny village, 800 people, my dad and mom were in farming, a small farm, not a whole lot big farming.
You do. And here's what the crazy thing was.
We hardly bought anything.
Everything was grown from vegetables to rise to weed to corn and even your shoes.

When your cow died, the there was this community that really took that cow away. They built 20 pairs of shoes.
They gave you ten. They kept them, that kind of stuff.
We grew corn, for example.
We had weavers in the village.
We my grandmother was kind of we fed.
We gave it to them. They made cloth caps, some gave us some.
It was a fascinating system.
It pretty contented life, actually.
But I had a desire to learn and my dad and my mom encouraged me to learn.
And it was actually not very good public schools.
And but I had some good teachers who saw that I had interest in. Learning who coached me, who guided me, and I was lucky from that point of view. I am thankful to Indian government.
They really kind of gave scholarships all the way.

And then luckily I got a scholarship to come here to University of Cincinnati to get my masters in computer engineering.
And that's certainly opened up tons of opportunities.
So my archives are wonderful country.
I mean, you can do so much in this country if you work hard and work smart.
Jay Chaudhry, longtime Silicon Valley entrepreneur.
Next week. Dave Welsh of KKR tells us about a different sort of venture capital on Sandhill Road.

What you eat for breakfast so we can get a soundcheck out of it.
Yeah, I had eggs and yogurt for breakfast.
Two eggs and some toast and some berries.
A cup of water, some tea.
Good. That is a nice, normal breakfast.
As opposed to some of the ones I've heard in the past.
All right. I think we've got a good idea.
Yeah, Grab it. Thanks.
That's make my life easier.
Very good.
All right. As far as my audio goes, I look like I am on one.
And I will turn that down just a bit.
And that would. Okay. Let's start with how you say your name.
So.
Oh, yeah. So it's too much like an S-H at the end.
And the last name is Tin Goose. So a little tough.
Where's that name from?
It's a it's a reason, Siberia, that my great grandfather was exiled to by Nicholas the second he was a member.
What did he.

/content/Preprocessed_Data/SHR Tomasz Tunguz Can't Find a Bank.txt

Do? He was a cavalry officer.
No, I mean, what did he do that Nicholas didn't want him around?
Oh, the Russians were invading Poland.
And so anyway, so that's the reason that he was exiled there and he came back and he took the name. That's cool. There was a big meteorite that exploded there, too.
Oh, that's right. It's been discovered. Yeah.
Wait, the meteorites named after the region?
Yeah.
So there's a reason called Tunguska. Okay.
And the meteorite? I think the it's the largest meteorite impact in modern history. I think.
And I, you know, whatever.
Anyway, so that's that's where he was in the gulag.
So crazy.
I'm so glad I asked you where you're name.
That's fascinating.
Thank you.
So for the longest time, you're.

LinkedIn said working on something new but was otherwise pretty vague. You're something new as a new venture firm.
A Theory Ventures brand new fund.
Right. Tell me about it.
Yeah, it's a it's a venture firm called Theory.
And it we raised we were really lucky.
We raised about 230, $30 million in order to raise in early, uh, to invest in early stage software companies. And it's a solo GP, but we're starting to build a team.
And the idea is to be thesis driven, concentrated investors.
And what does that mean? It means we spend six, nine, 12 months researching spaces, mapping everything out, meeting all the different players, trying to build networks with people who could be buyers of the software and really understand the customer needs.

Because at the end of the day, what we're looking for is some technology innovation that enables that go to market advantage.
So when I was in grad school, I had this quirky marketing professor, and the first day of school he writes an equation on the board, and the equation said innovation equals invention plus distribution.
Right. So in order to change the world at the innovation park, you have to create something new. And then you have to get people to be excited about it.
Want to buy it, want to use it. And I was lucky.
I worked at Google, and what I took away from Google was most of the weight should be on the invention side.
Because it was such an incredible piece of technology and it changed the world.

And what I've come to realize is actually more the way it should actually be on the distribution side.
That's where, like if you think about like Betamax versus VHS, I mean, we don't have to learn that lesson that many times to realize if you have the distribution, the technology can be it can be sufficient.
Is that where you're investing? Are things you think are good ideas but haven't haven't reached the market or the market isn't paying enough attention to?
Yeah, so what we're trying to do, we spent a lot of time with buyers trying to understand what is the head of data need, what are top three priorities, What does the head of security need, What does the head of infrastructure need?

What is the head of marketing? What is it? And and so what we do is we find those needs and then we're looking for some discontinuity in the market, like a material advance in machine learning or a different way of architecting a system.
And when you have a really strong need and a discontinuity, that's what we believe creates hypergrowth companies.
Now, when you say we, it's you, right?
I mean.
Yeah, it's a royalty.
But what's the plan as far as ramping up?
So I have an associate starting Monday now, which I'm really excited about. And then we hired a CEO who has a really terrific background.
She starts me first.
What that first hires got to be difficult.
I mean, it's 50% of the team.

It is 50% of the team. It's these people I've known for a really long time and we've worked together on deals and we've worked together throughout my career.
So they were they were easy, were very straightforward.
And 230 million. Right.
Exactly. You were able to raise that from investors even when you said, I'm going to go out on my own.
I was very lucky. Yeah. So we were able to put together an institutional base, predominantly US investors, and really proud of that, that LP base.
I feel very, very fortunate considering the macro.
Now, you raised the fund before the world got crazy, right?
I mean, before Silicon Valley Bank and everything.
That so the fund was closed, the documents are signed.

Our first capital call, which is when we ask for money from our investors, we're supposed to be executed the week that SVP that.
And so actually the hardest part of the last three or four I mean 5 to 6 weeks has been getting a bank account.
It's really unusual. A lot of the big banks like Jp morgan and Morgan Stanley and Bank of America and Citi, we were refused.
You know, 230 million.
We are we are not a feeling customer.
For some reason that can't figure out. So we're almost there.
I finally figured out where to get a bank account, but that's been actually really hard.
It's like surprisingly hard.
So the LPs at this point are holding on to the money.
They're holding on to the money committed. Yeah, they're committed.

And it's just about finding the right banking partner because with all the destabilization in banks, we want to make sure that our banking partner is solid.
Now, you know, having never and I realize it's not the fault you throw right away, but having never deposited $230 million in the bank, who would have an issue with that? I would I would have to think if you went up to I mean, you don't go up to a teller. I understand.
But if I went up to a teller, you know, she's it would take the rest of the day off.
I mean.
Yeah, well, it comes in pieces, right?
So it doesn't come to 30 at once. But I don't I've been trying to understand.

I mean, they have a lot of the major banks said we have assets under management minimum threshold and they said it's one and a half to 3 billion for us to take your business. And I don't really I mean, you would think the number of LPs, limited partners investors in our fund, each one of those is a wire, you know, wire.
And then when we invest in companies, there's a wire and we need.
To come back to you. When you have a come back to us.
We have $1,000,000,000.
In a um. Yeah.
Yeah. So, you know, it's at a particular level of scale.
I must look so small. I mean, we look at that number and we say $230 million is a lot of money. But if you. JPMorgan.
Yeah, I don't know how many trillions of dollars you manage.
I mean I'm not even the basis point of a business.

Assume and I'll go back and rerecord this if there turns out to be a a San Jose National Bank.
But because I don't I don't want to slander anybody, but I assume San Jose National Bank for you is too small, my imaginary bank too small to trust. But that much money.
Well, it's so you have.
Surely they take it.
For sure. So there are national banks and then there are regional banks.
And what Silicon Valley bank, the crisis that they catalyzed created a lot of questions around the counterparty risk of those regional banks.
And so I'm sure there are many very healthy regional banks.
The ideal situation is to have a national level bank as your primary banking, but.
You don't want to put your money in a regional bank.
Well.
I mean, I fiscally I guess it is fiscally responsible.

I just I'm not in the business of evaluating a bank balance sheet.
I don't think any of us expected to be in that business.
Right. And so I just don't want to misunderstand what somebody whether some of these assets and liabilities are mismatched for whatever the contract is of their bank.
That was an extra I what is what is strange answer I as you said you've got the solver you're close right?
It's all very close. We should account numbers on Monday five five weeks later.
When you do have an account and when you do start writing checks, presuming they give you checks, you're going to write big ones, right?
Yeah. So it's somewhere between 1 to 25.

And the way to think about it is we really want to so we're we're entering a capital markets environment that's a lot different than the last ten years in the last ten years unabated Mumbai market for 11 years, 12 years, which was the single longest bull market run in U.S.
history. And the next ten years won't look like that.
And who knows what that will look like. But I can assure you they won't look like that.
So we really wanted to be a financial partner that had a lot of stability.
And so the idea is to invest either at the seed or the A and then continue to invest material amounts of money behind those companies.
Now, you know, those are big seed investments.
I mean, seed investments used to be much smaller.
They used to be inflation happens quick.

No, there's a lot more competition in the market. In the U.S., venture capital industry has growing from about 8 to 320 billion in about 12 years.
And so there is more money and that's a big driver of round sizes.
And then the very competitive financings also tend to be larger.
As far as the entrepreneurs, are they realistic as far as term sheets? As far as I mean, it's a strange, strange time.
So most of the market has corrected.
So the public markets are down 70% from their highs.
And the series in a series B market on the whole are probably down 30 to 40%.
And you would expect some disconnect between the public and the private.
There is one segment that is partying as if it's 2021, which is the generative air segment. Oh, yeah. Yeah.

And that segment. So like in the heyday of venture capital, we were investing in companies at 100, 200, 305 hundred and 700 times. There they are, the annual recurring revenue.
And you know, now the public market is kind of trading at like 6 to 7 just to kind of put in past this 100 X difference.
And again, I generally I in the last two or three weeks, there are three companies that I know of that have traded between 5 to 700 times.
They are.
Are you good at knowing because journalists, you know, we got it said big data was a big one for a long time and we have got a big data company and now we've got a crypto company.
Yeah, and now we have an AI company.

Are you good at figuring out separating the wheat from the chaff as far as what's really in AI company and what they're actually doing something?
Yeah, well, I hope so. So I'm a graduate course work with machine learning.
I worked at Google doing large scale machine modeling and so I hope I have some sense of that. Obviously the technologies have changed quite a lot.
What you noticed with these ways that you were talking about is like you go through this wave peak of euphoria where everything gets financed and people.
We all promised the world to each other about what this is going to do.
And then there's this sort of collapse that happens where people realize, okay, here's the limitations. And so it's it's possible to make money on the way up.

It's really it's it's simpler if you wait and then pick up the pieces.
A little bit.
Oh, sure.
I'm sure there's sort of technicians trying to make this better.
But you have a VW.
But no, I don't. That's, um.
That's a cafe in, um, pescadero.
That's their sticker.
Yeah, but I love cars, so my.
My son gave that to me. Oh, yeah.
You were managing director at Redpoint?
I was.
What's your relationship with that firm now?
It's great. I was just on the phone with one of my former colleagues, and it's been we look forward to working together on a bunch of different investments.
Obviously, a lot of kinship there.
I'm sure everyone has mixed feelings about, you know, moving off, even if it is to open your own shop. Were you confident that that was the right decision?

I'm a comfort. I'm very happy I made that decision.
I had a wonderful run. And 15 years, a good, good, long time to work with a wonderful group of people. And now it's time for the next adventure.
Eric of Russia moved into your role?
I've interviewed her in the past.
She's great.
She really is.
She's a wonderful person. You know, her experience as a CEO of GitHub, I think it's a unique, unique set of skills.
And she's warm and friendly.
Sure. Yeah.
I think she's got a gig.
When you were there, you took Looker from a startup to a sale to Google for 2.6 billion.
I mean, it sounds simplistic to say, what lesson did you learn?
Because there's a lot of lessons in there, but what did you take away from that?
Yeah, that was a really wonderful experience. There was a founder there.

Lloyd took a bet on me. There was this blog post that I think Finn Barnes wrote that I was like, Who took a bet on you and your career? And Lloyd took a bet on me.
The big lesson there was going back to this idea of innovation equals invention plus distribution. I learned that lesson again there.
So in 2012, cloud was growing really fast.
The fastest growing cloud product was Redshift, which was a database, and the dominant big event at the time was Tableau. And Tableau had been architected out of Stanford for smaller datasets to make them look beautiful but couldn't really handle the scale.

And so Lloyd and the Looker team had built a technology that was cloud native that allowed them to process cloud levels, cloud size data, and that architecture allowed. So that was the innovation, the core innovations, this technology called look email that allows you to work with large scale data.
And the business the the go to market advantage that created was we could partner with Snowflake, we could partner with Google's BigQuery, we could partner with other cloud database. And the combination of those two, that partnering strategy drove a huge amount of growth, and that's how we became the biggest in the category.
Have you taken a risk on? I mean, obviously, as a venture capitalist.
Yeah.
Good question.
But who would say that about you?

Well, I've been fortunate to work with lots of junior investment professionals at Redpoint. Um, and it's been a privilege to help coach and guide them. And many of them now are in wonderful places, either running their own firms or part senior partners that are the firm.
So I think, you know, I like to think that may be the case.
Now, you mentioned a blog. You run a very popular blog and write for it a lot.
There were ten entries last month alone.
What motivates you to want the world to know what's in your head?
Boy, that is a good question. I guess the way I approach it is.
Okay. So the more founders I meet, the more I realize there are many different ways of building a startup.

And the privilege of my job is that I get to watch that and I get to ask them questions about why did you do it this way and not that way.
And the perspective that I've I hope that I've always brought and I hope that will bring is sharing, learning.
So it's not necessarily my thoughts. It's just this is what I see in market.
This is what makes it interesting. Let's look at some numbers to see, you know, like this one of the recent ones was around generative AI.
And then I had this I had this question that popped into my head, which was, will the personal computer have had a greater impact on GDP to us overall generative AI.
And the answer stunned me. So Goldman actually went to answer this question.

And they predict and look, predictions are always very optimistic, but they predict something like a thousand. Jenny, I will have a thousand x more impacted GDP than the personal computer.
Wow. And that's awesome.
That's incredible. And so now it's like, okay, well, let's go and figure out what does that mean with all the different pieces in order to build a generative AI company?
How do you take those new technologies and create go to market advantages?
And that's what I hope to share on the blog.
Is talking with Chon Tang from Berkeley Skydeck a couple of weeks ago.
And and he said the thing that I think most people don't realize is in some cases not all, but in some cases we're not years away from something.
We're months away from something. He's just it's moving that quickly.

It is moving. I mean, there's room I mean, GPT five will come out and it will be two orders of magnitude larger in terms of the number of neurons and the.
Okay, so this was course there was a paper coming out of Stanford.
I mean, just to kind of make this the ground this a little bit, there's a paper coming out of Stanford that talks about what are called emergent properties of these models. So if you're a human so I'm a human, I will learn by reading a book. I will look at a look at a book and read about the history of Rome.
And I will learn about the history of Rome.
I can also. So that's one way I learned basically by memorization.
The other way I can learn is swimming.

So let's say I wanted to learn how to swim so I could pick up a book and I could learn all the mechanics about freestyle the breaststroke faster.
You throw me into a pool, right? I'm going to drown.
Right. And so I can only learn by doing.
We had thought that most of these generative A.I. models, their learning was going to be constrained to just the first kind of learning memorization about Rome.
So in the last model, the GPT four LSAT score popped right and got to 80% of a human and all the AP exams got two levels of a human.
But what we're starting to realize is the more queries, the more questions we feed, the more it's sort of learning as if it were swimming.
It's learning by doing and improving.

And that's the part that we have no idea how fast that will grow or what the downstream impacts will be. That's, I think, the really exciting part.
And we only know what it's learning when it tells us.
I'm not saying that's suspicious or anything, but it's interesting that, you know, if we if we built a car engine, you and I, we could measure the horsepower, we could measure the efficiency that the output, that kind of thing.
But with AI, we wouldn't necessarily know what it knew.
We don't know. It's impossible to look.
Well, it's not possible. I won't say it's not possible yet to look in the brain.
And so there's some people that are trying to work on it because basically what we do imagine you have a big dictionary and you the computer reads a dictionary.

And then what it does is it between the dictionary entries, It's trying to find similarity. And so it uses a trigonometry function called a cosine function. So like two sides of a triangle.
And the closer those two sides are together, the more related those are.
So that's called a vector. And we store those vectors in a database.
And when we ask a question to the computer, it looks up a bunch of stuff in the vector database and says, okay, here, have like five or six words, which are the two vectors that are most similar. Okay, let me do something useful with that.
And.
I thought I lost my train of thought.
Sorry. That happens all the time.
Yeah, well, we were talking about how We don't know.
Oh, that's.
Right. Okay. Yeah.
It tells us that it learned it.

That's right. Okay, so you have all these different vectors, and those vectors are.
They're sort of stored in neurons in the neuron to the brain.
But you can't look it inside of a neuron and say, like, what do you have inside?
Because it's a bunch of.
Computer machine code. You don't know what I know until you ask.
That's exactly right. And I'm willing to tell you.
Yeah, exactly right.
You asked A.I. to write one of your blog posts.
I did. To work out. It's.
I think it's improving rapidly.
The way I sort of think about it is.
It is, it will produce for you the average of its input.
Yeah. So it will produce for you like a very fine structurally sound five paragraph essay.
That has nothing creative or interesting or is like, there's no statistic, there's no story.

Never does anything unexpected. That's right. Because literally by definition, it's working on the expected.
Exactly right. That on that narrow, narrow vector.
Exactly right. And so maybe that comes there's this there.
So when you train when you ask a question of the model, is this thing called temperature that you can ask or you can specify.
And temperature zero means you're a librarian by the book and temperature, you know, ten or 20, you introduce a lot more variance and variability.
And so to open up that.
You and creativity, right, might be another way of thinking about it.
So you can control it, but it becomes less predictable.
You've been writing since 2012 on that blog.

Have you gone back and read anything of your older entries and thought to yourself, Man, I was so ahead of my time or Oh my God, I should totally delete.
What was it? Was it called Quibi? Well, remember that video service?
That's right, yeah. You don't have a you don't have a blog entry that says Quibi's.
Good news.
I'm I'm sitting here with my juice arrow enjoying a movie.
Soylent for lunch.
Anything you regret or anything you like?
I'm amazing. I can't believe I figured that out in 2012.
No, I don't think I've ever seen anything. That's amazing.
I do great. I do predictions every year and I grade them and average about a 60 or 70%.
So but, you know, they're definitely blockbuster that in the fullness of time are wrong. Sure. And but I want to keep them there.

I want to keep them in the public domain because, again, like, it's about authenticity.
It's about showing like this is learning. And I mean.
I mean, the very first we used to do a consumer television show was in broadcast in several, several cities across the world.
And the first time I think it was Motorola sent me a cell phone that had a one megapixel camera in it.
I said, I just don't understand the point of having a camera in a phone.
Yeah. Because, you know, I could have predicted that the camera would have gotten better.

I could think of situations in which you would want to take a picture and then send it to someone other than, I don't know, you're in a garage sale and you send it to your wife, like, Hey, this dresser looks, what do you think sort of thing? Absolutely. This is before is going to sound insane to anyone who's, you know, under 30, but this is before text messaging.
And I mean, it was before we communicated everything with everyone.
Yeah. And it was before we were taking pictures of our food.
But it is the the number one dumbest thing I've ever said.
As far as prediction go.
It's so hard to anticipate this thing. I mean, now it's a funny thing.
They call it a phone because you buy it based on the camera.
Yeah, right. Like.
Oh, yeah, that's the first. Yeah.
But there's no way that this.

AP comedian talking about that you know the least used app on your phone is.
Your phone.
You were born what in Europe right Lived in South America.
I lived in Europe when I was a little boy and then when I was about 17, lived in South America.
Okay. And now here.
And out here.
Again. What lessons?
I I grew up all over the Midwest with television.
I, you know, moved to Georgia as a very young reporter, then over to industrial Ohio and then out to Salt Lake City and then here.
And the number of lessons I've learned about those regions and how those people think and and and the language and all of those different things are tremendously valuable to me. But by your experience, it's pretty much homogenous, you know, It's all no, no, no.
No chance. No.

You know, I mean, South America is different than Europe is different than California.
What sort of things have you taken away from that?
So there are many different ways of getting to the state. Like if you look at different civilizations or different cultures, they do things very differently.
So I went to Tokyo when I was at Google, and the thing that blew my mind was their breakfast is the same as their lunch and dinner.
They rice and fish for breakfast.
There's no toast. No, there's no toast.
There's no jam. It's a different kind of preparation.
But that's how they have breakfast. You know, I grew up in the Western world.
It was stunning. No orange juice, no bread, nothing like that.
Um, and so.

Again, like going back to this idea, like there are many ways of getting to the same goal. There are many ways of like organizing ourselves or building a business, and it's just having an open mind and asking questions and coming with those questions first.
I think that's something that.
Every time I forget, I learned again very quickly because I embarrass myself somehow by assuming something. Um, but yeah, I think that's the major lesson that I've learned, is just to start with questions.
Those are my questions for you. Unless there's something else I'd like to.
No, no, This is great. Thank you so.
Much. There is a question I ask everyone.
It's not going to go in this podcast, but I usually collect them together in the summer and then play them all at once.

And that is what's a book that's been influential for you.
Either you read it a lot or you remember it as fondly or you give it as a gift. And it doesn't have to be something From Harvard Business Press. Yeah. Winnie the Pooh. Yeah.
You know, is there one in particular that that that made a dent in your head?
Yeah. So on the same theme, my aunt, who lives in Paris, gave me a book when I was 17, written by Hermann Hesse. And Hermann Hesse was a German or Austrian, but he brought Eastern philosophy to the West like Buddhism.
And he wrote this book called Narcissus and Goldman.
And it's a story of two young boys who, one is an orphan and one has a father, and they meet in an abbey.
At a school in in Europe.

And they grow up together and then they lead their lives and they come back to each other on one's deathbed.
And it's it's a story of like two very different divergent lives that ultimately converge. And it's just always it's always left a mark on me.
Because again, like there are many different ways of getting to the same place.
Yes.

Hey, Craig, can you hear us OK?
I think so, yeah.
No, we can hear you, you. Oh, good, OK. Yeah, that's fine.
Excellent. Then, Dan, let's have you count to ten or something.
One two three four five six seven eight nine 10.
All right. And Craig, same for you.
Two three four five six seven.
Excellent.
All right. And I'm recording here, so we should be all right.
And you guys can hear me. No problem, right?
Yeah, you sound great. Excellent. Terrific. Terrific.
So this is I mean, we're doing this video just so we can, you know, see each other's expression sort of thing.
But it's not a video recording, it's an audio recording only.
The other thing that's important is that, you know, if you get halfway down an answer and you think to yourself, What the hell am I talking about?

What was even the question? Just exactly.
Just wave your hands in the air and say, Hold on, hold on.
I'm restarting that. It's fine.
We'll just we'll add it. It's it's really no big deal.
It's a very casual discussion.
But but let's go ahead and get started.
And maybe let's start with Dan and then Craig.
Introduce me and introduce yourself and tell me where you are.
Yeah. Well, Scott, nice to meet you.
Dan. I am here in lovely New Hampshire.
It was snowing last night and it's below freezing this morning.
So you know, I did my Ph.D.
in San Diego and now I'm in New Hampshire, so I've clearly made a mistake somewhere along the line.

But I am one of the partners here with Mix Ventures, along with Craig and our other partner Nick. And we are an early stage seed series, a life science venture investment group, just brief background.
And I trained as a scientist a long time ago.
I did a Ph.D. at UC San Diego.
Loved science, was a terrible scientist.
So, you know, kind of quickly left the bench did did a bunch of interesting jobs along the way and eventually got into venture about five years ago, working for a different fund before omics.
And then through that experience, I met the fine gentleman that I work with today and we decided to hang up our own shingle and go into business for ourselves.
And Greg.
So I'm in Washington, D.C., and who are you?
Oh, I'm Craig Usher in Washington, D.C.

Today. I have a background that's a bit strange.
What happened?
About a dozen years ago is a friend of mine, said Craig. Data and biology are going to merge and. I thought quickly and said, yes, that's that's right. Now what do we do?
And he said, Well, you better start studying biology and and get it going.
I have a background in industrial engineering which led me to in manufacturing and then software development.
So I come from the data side of this equation and I got into bio found it to be fascinating, a great place to advance society.
I hope in a little way and lucrative.

So stand point out he and I and Nick had worked together for for some time in a previous incarnation, basically, which was three separate entities, and we decided to join forces about two years ago and form OMICS Ventures Fund.
And so far, so good.
Now it's my understanding you speak four languages.
Yes, I'm working on number five, but I got a ways to go.
What's number five?
Italiano, OK.
I'm at least not ridiculous.
And English, French, German and Spanish.
I'd say your English is pretty good. You've worked really hard.
Far. Yeah. So I want it.
I want to speak a little Greek to begin with.
And that is the Suffolk omics like genomics has to tell you about why that happened.
Yes. Yes. Tell me why that happened.
There's a good reason.

So, yeah, so our name omics ventures, you know, we when we were getting set up, we we knew what we wanted to do, but we didn't know what we wanted to call ourselves. So, you know, as I normally do when I'm processing questions, I grab my dog, grab my wife. We go for a walk.
And I was explaining to her that we had no name for our new venture group.
And she said, Well, let me help you.
What are what are the ways that people name new VC funds?
And I said there are three three canonical ways that people generally will name VC funds.
It's either after names or initials.
It's after proper nouns usually have places of importance or you you give it a name that's related to the subject matter that you'll be investing into.
And she said she quickly dismissed the first two.

We didn't have the ego for either of those.
So she said, Please tell me some things that you will be investing in.
And I said, Well, we'll do genomics and we'll do transcriptomics and proteomics.
And she said, Stop right there. I'm sick of talking about this already.
You're going to call your name, you're going to call your firm omics ventures, but you're going to make it look good. So you're going to spell out OMX.
Brilliant. That was it.
And then it turned out that there are several more omics that Dan didn't get to cover because she'd had enough.
But actually, the span of omics is is is wide and increasing. It is actually turned out to be a great name.
Some of those omics, I think a lot of people have never heard of.
What's the most obscure?
Let me take that one, if I may.

So we have we're fortunate to invest in a portfolio company that should soon be unveiling secret toll mix, which means basically cells can secrete many things to communicate with other cells on a regular basis.
Cytokines being one example.
That's how cells indicate to each other.
Hey, hey, virus here. Go get, go kill me.
So basically, the whole idea of capturing the secretions of cells on a scalable basis is actually a very interesting and supportable idea.
And and they're going to become a world leader in this space.
And yes, that is quite obscure.
In fact, Dan, when I mentioned to it, he said, Eureka, I another omics. So yes, I think that's the most obscure so far.
So you were talking about how a venture capital firm can be, you know, a place name. You guys haven't got a place.

I mean, you two are hundreds of miles apart and then some of your other workers are thousands of miles apart.
And this happened before the pandemic.
I think everyone's used to it now, right?
I mean, hey, let's have a meeting on Zoom is nothing.
Nothing unusual, but people must have thought before the pandemic.
Wait, you're going to work at home with your kids and your dog, and you're somehow going to have, you know, investment meetings on Zoom.
You're crazy.
Yeah. We we we actually were using Zoom before Zoom got cool, you know? And a lot of this was because of our history.

You know, if so, if you rewind back five years, the group that is now omics was functionally working together as this loose cabal of investors and company builders. You know, we all worked for different venture funds at that point and different groups. But we functionally work together on a lot of projects and got really comfortable communicating remotely.
Working remotely. Kind of just having a very natural flow of communication and touch points. And then we decided to form omics and immediately when we did that, COVID hit.
And so there was really no impetus to co-locate and frankly, there was no need. It worked really well the way, the way we were dispersed geographically. And, you know, we communicate really well.

There's, you know, I'm always talking to Craig, I'm always on Zoom or on mobile and same with some other teammates.
And frankly, you know, as I think about it in retrospect, it is.
It is a little bit of a superpower of our group that we are in different geographies.
I mean, we have natural networks that we've been building up in our local areas over long periods of time. And now we get to collaborate on all of those throughout our entire group. So we have coverage in all up and down the East Coast, D.C., New York, Boston got a guy out in Chicago who's doing great work there and has inroads through the life science ecosystem there, and we have a venture partner on the West Coast, so we have really broad geographic coverage and a lot of network that we get deals and cool companies out of.

And Craig, a lot of biotech sort of things, entrepreneurs, et cetera, are not necessarily in Silicon Valley.
Silicon Valley, you know, known for silicon, but there are certainly biotech companies in Silicon Valley.
But this is a new industry. Yeah, this is a new industry where, you know, Massachusetts and Texas and Virginia are our players, and we're fortunate to not only have U.S.
capabilities, but we have now several investments that look quite promising in U.K.
and in Denmark.
And having this ability to work remotely and thrive remotely and then access every place, at least from Germany to California thus far is is a good thing. So we started this way and we'll keep it going this way.

But Dan didn't mention one point, which is we do meet regularly in person at our portfolio companies, even though we have done fine with Zoom.
Going from a 2D image of someone to a 3-D image in person is is definitely a good thing.
And once this next wave current wave of COVID passes will allow, we'll be back in in our entrepreneurs headquarters and meeting them in person.
So that's a very good thing.
And Craig, your firm has called this the center century about let me start that again.
Craig, your firm calls this the century of biology.
Explain that to me.

All right. So we're borrowing a quote from Sir sectioned off who's the very able amazing CEO of 10X Genomics, where Paul Conley and I, who are two of the parties involved in omics. We're fortunate to get to invest at the very beginning.
And when Serge.
Was at the nest egg in two thousand nineteen.
Basically unveiling his company to the public markets and about to press the big button to start the trading.
He said This is the century of biology.
This is the time in which we will.
Gather an immense amount of information about biology, we'll learn a lot more about biology, and we'll be able to start making biology more work for us than just work for it.

Now, obviously, Surge is pointing out something that is a long term project that even in the end, by the end of the century, we still will not have mastery of biology. That's impossible.
But he's very correct that we will gain a much deeper understanding of biology over this century than we've ever, ever had. And we will be able increasingly not just to use biology for miracles such as many vaccines, but for many, many other constructive purposes that will further our society.
So yes, this is the century biology now.
The quick question is why did research say that there is a key reason what's happened in the last 10 to 20 years is the ability to gather data about how biology is working at the nanoscale.
Where it resides is is unprecedented.

Surge is toolset that he helped build a 10x genomics is elaborated single cell sequencing, which is a very powerful technique, a set of techniques to use to understand biology.
We've invested in I've been fortunate to invest in a whole set of other tools that will generate very important data set and and the therapeutic side where you apply these data.
It is increasingly possible with great computational capabilities and great modeling capabilities and machine learning and statistics to apply these data in ways that generate keen, keen insights into how biology is working again.
No fool would ever say We will master biology.

That's impossible. God only can do that, but we at least can start to understand biology over the course of the century in ways that have been unprecedented prior to today.
Dan, it's funny that Craig brought up surge sex, and because I have a quote from him as well written down here, he said.
The big obstacle is how little underlying science.
We really know biology is really complex and we only see five to 10 percent of it. First of all, it's rather exciting when a very, very smart person says, I don't know a lot of things about what I'm doing, but it's also a very exciting time for an investor because if we only understand five or 10 percent of what we can do with biology, that means there's about 90 percent of things we're going to discover. That could be very, very exciting.

I think that's right. I mean, you know, our group is very interested in fundamentally understanding the design rules of biology, and we actively invest in the tools that help researchers and biologists get there and, you know, really start to query biology deeply and in large datasets.
But we also like to invest in things where, when you know the design rules, how can you apply that forward to rationally design something of value or something that is beneficial? So we really try to invest on both sides of that coin as a way to first learn and then exploit how biology works so that it works for us.
Now, man, we're not the only people who are doing this.
We're blessed that a whole set of like minded venture capital firms now exist or similar minded.

I don't know if they're exactly like, we're a bit weird, so I don't know if anyone should be exactly like us. But but at least similarly minded venture capital firms exist. So we have co-investment partners in all of the deals that we are doing, who also subscribe to this theme that that data and biology have a have a unity coming together, and we're going to get from five percent to six percent to 10 percent and maybe we'll even sneak for more.
But again, let's just say surge is directionally correct.
We got a long ways to go before really understanding biology at its heart.
And Craig, I think there are people, you know, average people on the street who don't understand how exciting and how pivotal.

What's about to happen is the way that they do understand, let's say, the development of personal electronics, because 20 years ago, I was walking around with a flip phone saying, Can you hear me now?
Can you hear me now? Now I've got an iPhone 12 that will do magical things, so I understand personal electronics, but that what's happening in the world of biology and technology is is something most people have no idea how big it's going to be. Well, let me. Also, in some old, I can actually go back to when I was going to school in Silicon Valley and describe at the time we my class had a brilliant, brilliant guy named Steve Gerson and Steve by the dint of his high brainpower.
He's quite famous. Vicino was able to design two chips for HP that were then fabricated.

So, wow. Now at the time, designing a.
Circuit at that scale required artistry, there was very, very little software available for electronic circuit design.
Few years later, while I was still around the Bay Area, you start to see the emergence of actual software to master electronic circuit design, which is now the standard of care.
So in other words, even Steve's genius wouldn't be required by any means to fabricate semiconductors. So he's trying to, of course, to other things like biology.
Good. So my point is the same thing is starting to happen.
This was what Dan was pointing to earlier in biology.
They're starting to be a software or systematic approaches that can be used to inform the design of biology. It's nowhere nearly as deterministic, though, as with the circuits.

Why? Because circuits are linear systems inherently, or at least the nonlinear already can be completely modeled because biology is a whole set of nonlinear systems where you're only going to be able to model the outline.
There's going to be a long ways to go before cadence and other software packages allow you to design your perfect cell.
But but steps are taken now, such as what surge offers, such as several other tools that are in our portfolio and will get us closer and closer to cadence and other software packages over the next hundred years.
I want to get back to that idea of tools, but but Dan, what are your thoughts on that idea that the people who even people who follow tech have little appreciation for the potential of what's happening in biology?

You know, we would in the sense of we understand how cell phones have grown, but we have not been paying attention to what's happening in those labs.
I think that's true. I mean, I think it's a very complex subject matter.
I think it's you're dealing in physical things that are being made that you generally can't see or understand at a physical scale that you interact with.
I mean, drugs. Yeah, you look at a pill.
But what's actually in the pill or the therapy that your doctor is providing?
I mean, it's it's a it's a black box to most people because it's not something that's front and center in their daily life.

I think that's changing. I think, you know, we've covered it, shining a big, bright spotlight on health care. I mean, who, you know, two years ago, who would have predicted that most Americans would know what man is right?
Nobody would predict that. But now there's they're very vicious public debates about what is an MRA and what does it do?
So there is a great big spotlight on a lot of this now, which which is great for the field. It's it's, you know, it's great for the companies that that are in the space.
And I think overall it does.
I think it's going to yield kind of long term gains and acceptance and awareness of the power of biology and the importance of biology within our society.

So I guess the clarification I'm looking at in this getting this answer can come from either one of you as I think if you say, if I said you had to sell it to a friend, oh, I was talking to a couple of guys who work in biotech and genomics and and things they would imagine that you are creating a bug free corn or, you know, working on a new drug or those sorts of things. And those are wonderful things.
But in some cases, you know what, what they're doing out there is creating computers out of cells. I mean, it's it's so much bigger than bug free corn.
That's exactly right. We are we are intensely interested in this.
So the idea that you know, genetics is essentially the operating system it is, it's the stored information of how biology works.

And you know, I always like to think about a genome is like an encyclopedia or a blueprint of how to build a building.
And then each of the genes is a particular page.
So if you need to make more doors, you print that page, you go make more doors.
But the genetic information is stored.
We're now really starting to understand how to read it, how to do that quickly, how to do it accurately, but then how those parts interact with each other and how you can change those parts. How can you edit?
How can you cut and paste within that, that broader encyclopedia?
And how can you link that then to an outcome?

There's a lot of work to be done clearly, but there is very early evidence and, you know, companies and therapeutics and products that are being developed now that that it's fundamentally an editable data storage space.
You know, I think we really need to understand the design rules of how to use it and how to best use it and how to optimize it.
But it's it's applicable to any organism that has DNA as it's as its genome. So that could be corn and there's tons of great applications in agriculture.
You know, it could be microbiology, synthetic biology, right?
Could you make something ferment to produce a bio product that you're interested in?
Absolutely. Tons of opportunities there, massive investment there.

And then the real. I think the real top of the mountain is when you get into human therapeutics, it's a much more complex system, but we're really starting to, in certain instances, really understand how to do it and how to do it well, where you can make genetic changes that are therapeutically beneficial to the patient. And that is intensely interesting.
And hopefully, hopefully it's a huge value add to people who kind of, you know, they they're born with some poor genetic luck and you know, they shouldn't be, you know, they shouldn't have to go through life with that burden when it's ultimately fixable.
And I think we're getting there.
So we're investing in two companies with complementary approaches towards gene therapy, for example.

But let me add one other point. So the rules around the genome are definitely being explored, and that's wonderful and wild.
But the rules around the proteome are now starting to become much more understood example. Yesterday, one of our portfolio companies, an early stage company, showed us in a proper crystal structure generated model that their molecule could engage a critical protein and the cell cycle for cancer cell growth.
In a way that could potentially shut it off.
For much, much longer than any of these similar proteins in the cell cycle have been shut off label.
If that's a word in the past, in other words, match of the time, it is possible to engage these cell growth proteins and diminish their activity for months, sometimes even years, but not kill them, not stop it.

Cancer seems to outwit everything.
However, this approach that they showed us yesterday that they've elaborated through an extensive amount of of of protein modeling informed by a lot of data and significant intuition on their part. Might generate molecular structures that can actually shut down these key growth.
Jurors for four potentially years and and extend the life span of women with metastatic breast cancer for for a long time.
I don't want to get ahead and that's all modeling data driven.
I don't want to get ahead of ourselves, but you know, it's one thing to meet with an entrepreneur, and they're solving a problem that needed solving and quite another to meet with an entrepreneur who says, Look, I think I just shut off cancer at least temporarily. That's exciting.

And well, here's the point, though that is worth noting, because this is why we are venture capitalists and not private equity investors.
When these two guys came to us with this idea.
It was a set of drawings at best thought through drawings, drawings and concepts that were supported by some very significant key opinion leaders who we look up to.
But that's it. Drawings now they have because of the data that they generated actual structures, chemical structures, crystal structures for the protein, et cetera, that show that they may be on the right track.
So what I'm trying to get is we have to take leaps of faith.
And say are.
This has the potential to turn into something, but where we start, it's usually a napkin surge and banned from 10x had a napkin.

From Starbucks that had the the basic pipeline framework on it that they were going to build.
We we took a shot on those two, well, three of them actually, they're coming and they're napkin.
So that's the point at which we have to think, OK, can this evolve into something that will be meaningful?
So we're definitely on the leading edge of of where things are.
Dan, I see you nodding.
I think that's right. I mean, I think the nature of our business is one where, you know, we wake up every morning and I feel like I'm the luckiest person in the world because I get to do such interesting work and interact with such interesting people.
But it is one where you know, we get it's a mix of mad scientists, emphasis on scientists and emphasis on mad sometimes.

And it's our job oftentimes to, you know, figure out which is which.
And so, you know, we spend a lot of time really thinking through the, you know, what happens after the investment kind and what does that roadmap look like?
How do they get there? You know, the majority of our team comes from a bit of an engineering and a process engineering background.
And so we really do think about kind of roadmaps and timelines and budgets and kind of the process of how to get there.
And, you know, we only invest when we do see that there is a path.
You know, fundamentally, we kind of we invest in the path we invest in the team.
But it all starts with that really crazy idea drawn on a napkin.
You know, the hard work comes next and then one key point.

We want to we are deliberately trying to find investments with high technical risk, but low market risk.
So if it can be built.
There will be a very significant opportunity space for that thing, whatever that is.
And the intellectual property that goes with a very novel and non-obvious technology can be owned by that company.
They could get many, many patents and have a proprietary opportunity for some time.

So in other words, if they can build it one, it will serve a large population of patients or it will serve a large community of scientists. Or it will it will be of significant support to to learning about biology and. Whomever created it will be the proprietary owner of that platform, and we'll be able to propagate that forward for for some time. And so that's a key feature of our thinking, although all that coverage is second only to turn down my thermostat because my heat came on and I don't want it to.
Don't want the blower to make noise.

No problem. Coal, even in Northern California, I'll tell you what that is about is what is it? New Hampshire or New Hampshire is a little chilly today, so. So the last thing I wanted to touch on is people who follow Silicon Valley would be familiar with companies like Applied Materials or ASML.
They make the tools that make the chips.
Silicon Valley got its name from the chips, but really much like the gold rush, you know it's the selling of the tools and the creation of the tools.
That is really important. And this is something the omics has recognized is that the tool makers are very important in this entire process.

That's right. This is, you know, this is an area that we've been investing in for a long, long time. I think, you know, arguably longer than most investors in life sciences.
And I think, you know, really only the last half decade or so has the tools.
Space really started to see a lot of value in the market, and a lot of new groups and investment groups have moved into it because of how interesting it's becoming. And you know, we we always start from the tools frame of mind. You know, we always talk about kind of our trajectory and how we think about life sciences and advancements in the life science space in fundamentally, it really does start with can you build a better tool that allows you to understand the design rules of biology?

And if you can, that's powerful, and that's valuable, and that's important.
You know, it really kind of starts to uncover what is unknown within biology.
And so we see that space is really interesting from an investor and really valuable as it from an investor perspective writ large.
But it also is a bit of a force multiplier for how we operate as a fund. You know, we we oftentimes will start with the tools, but really as a group, we think downstream what happens next as this tool is employed and you get really interesting data that allows you to understand X within biology.
Can you then build a company around that new insight?
And so a good example of of kind of how we think about this.

You know, we we invested early on in a company called In Scripter There in Boulder, Colorado, and in Pleasanton, California, and they they built an instrument that allows researchers to do genome engineering using CRISPR enzymes and at scale.
I mean, you can make 100000 different genome types of a microbe and understand how all those genes work and what they do.
And they had built it with the idea of we will build an instrument that researchers everywhere will want to use and need to use because it's, you know, it's a best inbred instrument to do this type of genome engineering.

Downstream of that, people will use this instrument to do genome engineering and produce products and things of value, and so we then made an investment in another company, which was customer number one of an scripter.
And it's a company in the Bay Area called Festina.
And they took this instrument and they said, Great, thank you.
This is an amazing instrument. We will use it to make microbes that produce bio products that we want to produce high value bio products that can be made in an E.
coli or in a yeast cell, and have used this instrument as their kind of R&D backbone. And so we really do look for opportunities like that where our insight in the tool space leads to a what's next in the application of that tool because fundamentally there's value in both spaces, we think.

And and you know, that's just one example.
There's several others in our portfolio, but that's really how we think about kind of linking all of our investments across that value chain.
Craig, that makes total sense that you invest in a tool company and then the people who want that tool probably are very good investments as well.
Exactly. And often it's the case.
We've been very fortunate that.
Our friends who were supporting and the tools companies say, Hey, these guys are really keen insight and using the data that we're helping them generate.
Why don't you talk to them? And so that's often the way the progression actually transpires.

The last question I have for you and this is, you know, one for both of you is what are you most excited about? And and I don't mean, you know, well, it's the specific company and they're doing it. But but broadly, what is the the end target of things is start with you, Craig. What are you most excited about ahead in biology here?
I'm seeing that there's hope those my wife always reminds me. There's no proof until there's proof that there will be drugs forthcoming from all this data and from our investments in some of these drug companies as well.
That will knock down some very, very pernicious and terrible diseases that are prevalent today.
Again, if we can help reduce the the the what will extend lifespan for people with metastatic breast cancer a whole wow.

Thank God, if we can take some of these terrible diseases which are a genetic defect, generate diseases which kill our kids and in early childhood and give them a life a real life?
Wow. Thank God, there are a whole suite of these opportunities where we're invested now, where if things continue to go right, we'll be better again. There is no way we will stop cancer, and there is no way we will be able to arrest every genetic defect, but we should be able to make a dent that's noticeable in the next 20 years. And that's what keeps me very, very excited.
Every day is to keep chipping away at this and get a bit of a dent to happen and extend lifespan and make life better. Yes, that is something that we can see happening with what we're doing.

So I agree with everything, Craig said. I usually do.
He's he's the smart one within our group.
I think, you know, tactically too, you know, when I get excited on a day to day basis, it's what really makes my socks roll up and down is when I see a company who is really leveraging biology, the design rules of biology.
I always say, you know, I talk to folks that are that are entrepreneurs.
I often will say, you know, I get really interested when you show me a drug builder. I am less interested when you show me a drug hunter in terms of how they're approaching, you know, the drug they're trying to find.

I get really excited when I see a company who is takes known science really well, validated science and can apply those design roles to create something to directly fix a problem. And it just it's those those opportunities and those types of companies and products are just so obvious to me in their utility that when I see something like that, my light bulb goes on immediately and I get really excited and I call Craig and I start to yell on the phone.
But I do think that, you know, on a day to day basis when you see folks you can who can take what is known about biology, tweak it and exploit it for a fit for purpose use.
That is that is our, you know, as individuals, as people, that is our best shot at creating things that can directly address a problem in health.

And so, so on a day to day basis, that's what gets me the most excited.
So little by little, by little.
We want to chip away at, at, at, at how biology hurts us and makes it more of us.
Perfect stop there, I have one fact check question, Craig.
And that was you used a word I want to say it was pro no mix or mixed proteomics. You explain what proteomics is to me.
So what proteomics is is basically the systematic study of proteins. OK, just as any of the other omics or the systematic study of it sort of genomics, a systematic study of the genome that makes sense, then proteomics is the systematic and that's in this. That's the word you probably were using when we were talking.
We were talking about proteins.
Yes. OK. And the idea in all of these is they're relatively underexplored.

Yeah, or some not. Our little secret omics was invented only all three weeks ago, you know, as a construct.
So that's again, the the game where we're we're playing is is say, OK, systematically, let's understand proteins. Sure.
Bingo, that's our our motive.
OK. OK. Very good.
Well, thank you, fellows. I really enjoyed that.
One of the things favorite parts about my job is I just I learn I'm going to school every day with experts. So oh yeah, yeah, yeah, right, right. And we're all going to hope to be half as smart as search someday.
Yeah, that's right.
Oh, that'll never happen. But at least one can aspire.
Excellent. I'm going to hit stop with my mouse cursor.

Let's see here, let's get this recording here.
How are my levels for you?
You know, they sound pretty good.
Why don't you just just in case one two three four five six seven eight OK?
You sound good. So there's video on this, but we're and technically, I guess we're recording the video, but we're not going to play the video.
It's just so that you can see each other and understand what, what, what our what we're seeing and that kind of stuff.
And then it's super casual. So, you know, if you get halfway down, this is not television. So if you get halfway down an answer, do you think to yourself, I don't remember what the question was, you know, just wave your hands in the air as they hold on, hold on, hold. Let's start that one over again.
So very, very easy.

/content/Preprocessed_Data/SHR Brian Greenberg I Will Probably Die Having Not Solved This Problem.txt

I want to start with you started in your education career as a teacher, right? I did.
Tell me a teacher story.
Sure. So, you know, this sends me back a.
It's been a long time since I was a teacher, but we'll tell you a story that relates a little bit to my work. I had the luxury of helping start a school within a school and a big Los Angeles Unified High School.
And we, at the time, people were experimenting with gait, which is gifted and talented in small schools.
So we built a small school, which is predominantly for very low income families in and around the neighborhood in Los Angeles and for kids who are really talented.

And we decided to start a school that would serve those kids, and I went from teaching every day with some kids who were motivated to some kids who aren't, which is very standard for a teacher to this remarkably motivated group of kids.
And instantly, I had to up my game in really powerful ways.
And so I just kept saying, you know, raise the bar, raise the bar, raise the bar, see if the kids would respond. And I think what we all learn when we teach is the more you raise the bar generally, the more the kids respond.
And then I had some teacher training. I got sent away for two days, too.

And I said, These kids are really interesting. I'm going to give them this very open-ended challenge. And we were reading a tale of two cities, you know, which is like, not the easiest book to get through is high school.
And what level of kid are we talking here?
And sophomores and juniors give or take?
Yeah. And I said to them, design a game to capture the spirit of the book.
And you each get a quadrant of the wall basically cleared the walls.
So I had five periods. I got five sections of the wall and that was it.
And I sort of trusted them in the sub to figure it out.
I came back and they had worked so hard for like, I think they were coming in on lunch breaks and they were designing these incredible murals with, like some of them had like board games on the wall. Some had strategy.

It exceeded my expectations by 10x.
And it made me realize I'm the obstacle.
I'm the barrier stopping them from finding what's possible.
And that's even the teacher had pretty high expectations and it stuck with me because I don't think the current education system does a great job of finding what kids ceilings are. We do a pretty good job of ensuring the floor, but not enough of the ceiling.
And that's sort of motivating a lot of my work these days.
And that's true for every kid. That's not just for gifted kids.
It's just how often our kids truly engaged and motivated by what they do.
Now you then turned your efforts to you.
Consider yourself a venture capitalist is handing out money to to new ideas. These are new ideas in schools.
Why do you consider yourself a venture capitalist?

I'd I'd put a spin on that.
I'd call it a venture philanthropist, and that's sort of what a lot of people refer to the sector as. In the end, what we're doing is nonprofit foundation grant making for social benefit. There's no physical return.
People will often ask me, Well, what do you get back?
And I say, we get back educated kids and populous who go on to make society better, be taxpayers, be productively employed at all.
Exactly. That's it. Just just a functioning democracy.
That's all we get.
But we think very disciplined about how we give out the money so every dollar the Silicon Schools Fund gives away.

We have raised and it's a small team, so I'm doing most of that myself and we're speaking to, you know, really committed donors across America and saying instead of each of you trying to find the best way to donate and deploy your capital that you want to have a great outcome in the world, trust our team of experts to go do all that diligence and work for you.
And we're rigorous and we can talk a little bit about what our diligence process looks like because it's really interesting and we're inspired by a lot of the work the venture capital does to also find the best investments.
And then when we find them, we say to these entrepreneurs, you are in desperate need of flexible, patient, risk tolerant capital to make your dream come true.

We have that. We're in desperate need to, like, transform the country and find hardworking people who would do it. You have that.
This is a match made in heaven. But let's not just give you a grant and say, good luck.
We're proud of you. Let's set some goals together and we set a series of metrics and then we tranche out the funding you see over a three to four year period.
And there's deliverables. And as long as they're hitting their deliverables, when we walk the schools and evaluate classrooms, they look like these dynamic places of learning.
Kids are performing using well above what the default school around them would be. And they've hit their enrollment targets and they're in good financial position. The checks keep coming and they get our full funding over a four year period.

The other interesting thing about the way we do our funding is we want these schools to break even eventually. We don't want them to be perpetually reliant on philanthropy.
So we spend a lot of time looking at their financial models to help make sure that in years zero, one and two, they're allowed to lose money because they don't have all the kids yet, and they still have all the fixed costs of the administration and the building.
But by year three or four, we want the state revenue to be balancing out against their expenses. And that's like a piano that balances.

And then we can pull out. They can self-sustained into perpetuity and we move on to the next school. And that model's been working for 10 years, but we've now launched 75 schools, and almost all of them are sort of on their path to sort of perpetual, strong quality schools.
And most of these are charter schools, right?
It's a mix. We are governance agnostic.
So we work with some big districts that are very innovative and trying to do new things, or even in some cases, launching new schools because their enrollment is growing.
We work with some independent and Catholic schools and religious schools, and then a majority of our schools are obviously in the charter space, mostly because they have a lot of the flexibility that it requires.
I've worked in districts, I've worked in charters.

There's this sort of unholy war going on right now between teachers unions and charter schools, and I think we're missing the bigger picture, which is great.
Schools should be thriving, bad quality schools should be closed or transformed, and we need to get over a little bit of this battle of what kind of governance structure they have. I'm a firm believer that parents deserve choice, and if a parent is rich, they have choice by where they move to or if they send their kids to a private school.
You hear that story all the time, and nobody begrudges that parents if I got their money.
But if a parent doesn't have resources, they're often stuck in many cases with a pretty bad local option and no alternative.

And we don't think that's right. We think if those parents come together and find some educators that they really believe in and they want to open a school that can meet all the rigorous criteria that it takes to open a school, that they should have that right as long as the school performs at the school doesn't perform, it should be closed down.
And closing schools is brutally hard and nobody likes it.
But we think some of that natural churn, where great schools are thriving and growing and less good schools are closing, replicates more parts of our broader economy. And you have to do it carefully.
You have to really think about those families and the impact.
But we think that's a force for positive growth.

And there's some real data to support this, that in communities where there's a thriving, strong charter sector, both the charters and the traditional public schools are getting better. And Boston is one of those examples where there's a big research base to talk about that.
So you talked about how you hand out money in tranches based on does a school hit criteria?
The way we measure students is testing.
Are there other criteria and how is that not subject?
You know, Scott, you're getting one of the biggest, most challenging problems in the education sector right now, which is what does success look like?
And education's complicated because you have multiple constituents.
Are you trying to please the government who's giving you the funding?

Are you trying to please the parents? Are you trying to please the kid?
Are you trying to please the teacher? And the answer is, you kind of have to do all of the above. All, those constituents matter.
I do believe the test scores are a strong indication and some people are ready to get rid of all state tests. I feel like there's nothing on those tests that I don't want my own kids to know. So there's nothing on that test.
I don't want kids who I teach or kids I've worked with to know.
And if you ask most families, including a lot of times, people will say, Well, you know, these tests aren't fair to people of color, to low income families.

We talked to those families a lot. We work with a lot of parent groups who work with their families. They want their kids to be able to thrive on those tests.
Now the elements of state testing that is maybe has racial tinge to it or that is bias.
We do need to fix full stop.
But I want those test scores to reflect. The kids are learning.
But I also don't think it's enough. So I think, you know, the measures that other people are experimenting with right now are some secondary measures, like can you use attendance rates as a proxy for whether kids are happy and coming to school?
Can you use suspension rates as a proxy for whether schools have a positive culture versus reliance on discipline?

Obviously, the really good measures are things like college attendance rates or college acceptance rates, but that's hard if you're measuring an elementary school that's pretty far downstream, even SAT and Act is a pretty good proxy for the overall academic quality.
But then there's some like student surveys that have now become pretty rigorously tested across the country. I don't want anyone to say, Hey, I made a measure.
Here's my internal measure. I don't really trust things that don't have some external validation. But there is now some good measure is that if you give these out to kids and parents and measure their satisfaction, their sense of belonging, their hopefulness, their optimism. Those are things that are just as important as reading and math skills.

So we really believe in a balanced approach to this, but it's hard until the states start to act. As us, until you build some of this into the accountability, because what gets measured is what people work on.
So right now, you're strongly incentive to free up scores, maybe less so to pay attention to kids' social, emotional and how they're doing, and especially post-pandemic. We know kids have been struggling.
They don't feel a sense of belonging. They don't yet feel reconnected to their schools and their communities. And, you know, two years in the life of a teenager, that's a long period of time, let alone a second grader who's really never had traditional schooling in their whole life. So we think this is a good time to look at some multiple measures of success.

So why not just send the money?
You know, there is if there's an underfunded school and a well funded school, and I know nothing else about them other than those two facts I can already tell you which school is likely to have the better test results.
So why not just send money and say, do what you want with it?
Good luck.
I spent a lot of time thinking about this type of question, and I think there's two approaches to this work one to me feels more like charity and the other to me feels a little more strategic.
Charity is still important. You could say any Low-Income school needs more resources and feel justified in writing a personal check or a government check to that school.

And if you really want to see that dollar turn into better outcomes for kids, I'm of the belief, especially if you have a limited amount of money which you know every foundation does. It's not like the government where you just simply have huge vats of resources. I firmly believe that getting clear on how the money's going to be used and doing some partnership with them increases the likelihood that that money's going to yield the results that you want.
I think about, you know, sitting down with the school leader and you say, Well, you know, what was your funding back in 2011?
And in California, you get about seven, seven thousand five hundred per kid.
And then you say, Well, what's that funding in twenty twenty two?
That number is much higher in a place like California.

Now it's ten eleven twelve fourteen thousand, depending on your district and the demographics of the kids you serve.
So we've almost doubled in some cases the funding, but we haven't seen a doubling of the quality. And so we say, Well, why is that?
And there's lots of theories, but you know, a the cost of labor has gone up.
So some of that money just gets absorbed into the cost of labor.
But also a lot of these schools don't have the flexibilities or the capacity to figure out what you would do with more money.
And I'm sad to say that I think the federal stimulus money in education, it's done a great job of keeping schools open and giving people a little bit of breathing room, which after these last few years, that alone is a success.

But given the scale of how much money it was, I actually think we would have been much better off saying, let's take that money and spread it out over three or four year period and give either unrestricted grants to schools where they just sort of make a plan and that plan gets vetted or some form of.
I don't want to see a competition because the problem is when you start doing grants and people have to apply to them in written formats, the schools with more resources are better positioned to go after those grants.
But I think it really comes down to when I talk to a principal and I say to them, You know, what do you most need to turn around your school?

The clearer their answer is, the more likely I am to be like, This is a principle I want to bet on. And then I say, like, do you have the capacity to do those things?
And they say, Yes, we've set this up and that up.
And then you talk to some other principals or even superintendents, you say, what do you need and go, Oh, we don't even know, we just need more people.
Well, if you had more money, well, I can't really get my teachers to stay for training because we don't have time. But you start to realize you don't have the fundamental building blocks to make more money equal more success.
And that's not their fault. That's the system they've been accustomed to.

And I often joke that, you know, you can take a smart young, you know, motivated crispy little guy call, make a little cucumber, and they say, I'm never going to turn into a pickle. But if you drop that cucumber in the pickling juice, they become a pickle.
That's just what happens. And some of these bureaucratic sort of stuck systems are pickling juice, and they take very good people who are very hardworking and very well-meaning.
And they lowered their belief in what's possible for kids, their lower their belief in what's possible among adults. And you just sort of get a dysfunctional culture.
And I will be fully honest to say I don't know how to fix that problem yet.
So I'm not.
I think it's I think it's particularly particularly tough in education.

You know, they kind of regression to the mean, but we see this in other things.
We see it in health care. Airlines could certainly be run better.
I mean, every person that starts a new airline says, I am going to be so different and then it just ends up being another airline.
It happens in television news. You know, people come in and say, Let's rethink the way that we present television news in about six months in, they go back just the same thing and it doesn't matter what city you're in.
All TV news looks sort of the same.
One of the things I think about sometimes is the Moon launch of the 1960s and how much they accomplished in the space of about 10 years because nobody had ever done it before.

And now you compare it to the very hard working men and women of NASA these days who are trying to go back to the Moon and its delay after delay and budget overrun over budget overrun. And sometimes I wonder how much of that is just the the inertia of the of the organization just pulling them back.
OK. You know, I've thought about the same analogy and I've also thought about how it compares to like, you know, we just put the Mars rover up on Mars and it's collecting data. And I don't remember my math, but I think Mars is about 40 times as far away as the Moon is.
So you think on one hand, what an incredible accomplishment from, you know, the last 50 years to get 40 times the distance and have a rover there?

When we started to look at schools, we very much were inspired by that vision of like, think big, make each school its own rocket ship.
And we assume that one rocket ship launch would be successful and then it would teach the next school and that one would go further and that one would go further.
That we would essentially be nonstop sending kids into the stratosphere.

And I think we underestimated the forces of gravity and in education, those forces of gravity are things like expectations of teachers, expectations of parents, what school is supposed to be like, what kids expect schools to be like in the case of a charter school, you have an authorizer, which is often the district or the state saying you are aren't allowed to do that and you can bring these big, bold, audacious ideas. And someone says, Yeah, but how are you going to get the E3G classes required for college admission? How are you going to make sure you have the number of instructional minutes? How do you make sure you have line of sight?

And pretty soon, by just putting all these constraints on you, force them back into the exact same box we've always had, which is, I think, why five o'clock news looks the same in every market in America, to your example.
So we do think that the key is to get enough freedom and autonomy for educators, especially educators who have a track record of success and have some big, bold ideas to try some new things to thoughtfully innovate. And we sort of think of as labs of innovation, and we've now built seventy five of them. And not every single one of them is wildly innovative.
Some of them are just replicating other people's ambitions.
But 10 or 15 or 20 of these are doing very different things which I can talk to you about if we have time and when those guys start to figure something out.

Then other educators come and visit them.
And we thought there'd be real power and clustering all of them in one place, which is why we are sort of place based in the Bay Area.
You can fly into one of our four airports and people can, you know, in about an hour's drive, get to 40 different models and an education.
Seeing is believing when you walk into a school and you really experience kids doing the equivalent of my story from earlier when kids were designing lessons on the wall by themselves, and I was sort of not even present in the school for those two days when you see that it raises your bar of what is possible in a way that me writing a white paper or giving a TED talk just can't do.

So we think these labs that show what's possible and that become proof points is the next step to help more educators and go back to their communities and say, What does this look like for our community? Because I don't think it's a one size fits all solution. We're not trying to create a McDonald's franchise that just spreads across the world. We're more trying to say, what are the components that we're looking for?
How are some new models possible? And then you go figure out for your community, is it a real arts focus? Is it a STEM focus?
Is it particularly giving more agency to kids?
And we tend to think a lot about those factors, such as our kids making more decisions about what, what and how they're studying.
How motivated are they? Is the teacher changing what they do all day long?

And are we getting closer to the golden ideal of every student getting what they need when they need that? If we can see schools during those sorts of innovations, then we're really bullish on sort of their contribution to the sector.
Can you give me a concrete example of an innovation from one of your schools?
Definitely. I'll tell you a couple of stories briefly.

So there's a set of schools called the Summit Public Schools, which a lot of people may have heard of. They had been running great schools focused on sort of traditional college prep, and they were looking at these graduates, so they were incredibly close to who had worked really hard to get through high school and not seeing them succeed at the rates they wanted to in college. And that was breaking the heart of the staff would work like fingers to the bone to get them there.

And they looked back and said, a lot of it is just like they get to college and they don't have the right math preparation and they're missing some of these sort of core skills. And they may not have learned how to really work hard enough through persistence on their own. And my theory is that, you know, too many of these teachers pulled the kids along to the finish line, which we're all tempted to do as a teacher versus realizing no, the finish line is just the starting line on the line is that our job is to get them there on their own so they can thrive on their gone.
So Summitt went back to the drawing board, and they built this big experiment around what's a better way to teach math in our school.

And the more they played with it, they started coming up with some combination of use the teacher for more small group instruction and let the kids learn some of the core work by themselves through some technology and then just play with the ratio, how much time independently small group and over one to three school years of iteration. They expanded this to not just math, but to a whole platform.
And they built a new way of running their school.
That was much more about teachers doing one on one check ins, students setting individual goals, and it was working and people were really excited.

But they realized it was too big of a jump that they had gone through in three years for another school just to replicate it. So they started to build some software and to figure out a new like operating system for the school.
That would make it easier for teachers and other places to load the content they wanted to and use some of these tools. And then they built a little training arm.
And there's an organization now called Gradient Learning, which is a nonprofit that spun out of summit that is replicated. This, I think, like over 300 schools across America.
Now that's an example of just sort of like an outsized success of replication.
And then you can go very different and very small.
We work with the school called Redbridge here in San Francisco.

It's about a three year old school serving. The littles, you know, some elementary school. And their theory was lots of people are working on agency for kids in middle and high school, getting them to be more in charge of their own learning.
But why do we think the kindergarten and first and second graders can't do that?
If anything, if you have kids who've gone through Montessori preschool, you can see them doing it at age three or four or five. It's nothing about six year olds.
A suddenly means they lose their agency.
It's just we've always assumed kindergartners sat on their circles, looked up at their teachers and repeated what the teacher said.

So Redbridge set out to do it very differently, and they have flexible blocks throughout the day where kids are assessing themselves on what they need to do.
They have deliberate practice time where kids sit and focus on a skill they're working on. And in fact, there's a very clear sequence of what kids need to do to be promoted to the next independence level, which is roughly equivalent to grade level.
And these kindergartners come in and self advocate and say, I'm ready because I've met all of these goals, and if so, they go through a process and they don't all make it the first try. Sometimes it takes two or even three tries.
But when they do the sense of pride and agency that they have that I've done all the things required of me.

And if you have that at six, I would argue that's an even more important life skill than just being good at reading and math would be.

And now we have a set of other schools that are so interested in this model that they're going to try to replicate this within their own systems, including an entire district in sort of the central part of California that will be probably providing some grant funding to to help try to replicate it. So there's a lot of these examples out there that just show when you have adults oriented around this goal with the orientation towards give kids freedom with accountability, freedom with feedback that we can actually do better than the old model of, I stand at the chalkboard and lecture to twenty seven kids using, you know, a standard direct instruction approach.
So those are examples of successes.

But if you are going to do these sorts of I mean, in in in software or hardware, we'd say rapid prototyping, right?
You're going to risk failure if you try something new.
Some of it's not going to work.
And these are children. So if you rethink third grade and you completely fail at one particular way of doing it, then you say to third graders, Well, sorry, your third grade didn't go all that well, we're going to try something else.
And he's got, you're exactly right. How do you get innovation when you don't have lab rats, right? What do you do to test new drugs if you can't test it?

Now, some people would argue you shouldn't be testing on rats, but I'd say that's better than testing on humans, right? And we don't have that in education, so we have a choice we can make. We can either say the presumed old way of doing things is the only thing we're going to do because we're afraid of taking any risks.
Or you can say we're going to accept some risk of failure, try to bound that risk and be very quick and studying and evaluating and seeing it.
And I would tell people that the biggest hamper to education improvement right now and the biggest dampening effect innovation is that people presume the old way of doing things is way better than it is.

And if you go and sit in, particularly in more low income communities, urban and rural settings and what any grade level, what the average classroom looks like and how little time of day kids are in there, what they call a zone of proximal development, the right spot for them, their sweet spot for learning and how little even just a kid speaks. In the course of a day, you make the average American kid and just count the number of words they utter during class time.
You would be shocked at how passive, boring and unengaged education system can be.
Not every teacher, but can be for way too many kids.
And sadly, how high that is for particularly kids of color and low income kids who are clustered in schools that often aren't working.
And that doesn't mean that you can try anything with them.

We are not fans of wild innovation.
But to go into those settings and saying we have a thoughtful, measured approach to test something out that we think will create better results and that parents and kids have a choice to opt into.
I'm fully in favor with the amount of risk involved there for the potential upside of these much better models. And let's be clear, we don't need every school to be experimenting. We don't see every classroom to be experimenting.
But some of our best educators, some of our best schools being very thoughtful about trying to solve a problem that they have identified.
We often say they've seen a problem they can't unsee, and they're spending day and night thinking about this problem. We want them to have the freedom to try some new things.

If doesn't work, shut it down. We don't have to go the whole of third grade.
And it's not like we have to devote everything we have to do in math.
But I'll tell you a very specific story. We had a set of schools that were wildly successful by all traditional measures down in Gilroy and Hollister, which is like an hour south of San Jose. Give or take.
Very rural community. The garlic capital of America.
And they had this very engaged, interactive kids on computers, kids chanting and singing that was really working for elementary school students.
And by the time I got into middle school and given the highest performing schools in the state, the guidance got into middle school.

They said, like, we're noticing that the kids aren't as motivated, they're rolling their eyes. They don't want to do the same things that they did in elementary school now.
Their middle schools, and they realized it wasn't a developmentally appropriate approach anymore, so they literally started over and said, well, what's most important?
And there are a lot of trial and error they landed on.
Kids are really ready to learn from their peers, and they rebuilt their model around a peer based learning model. They call it squads, where the teacher is giving very clear instruction on a daily and weekly basis about what each pod needs to do.
And that squad of kids rotates leadership role, and the teacher's role is completely different, and they're sort of going from squad to squad to squad.

But the kids are truly teaching each other and collaborating, and they're getting even more success than they had under the old model.
And the kids are liking it because what middle schooler doesn't want to spend more time with their peers and would rather not sit, listen and lecture to a teacher all day long?
So that's how I think about the balance of risk and reward and innovation and experimentation. But you are totally right.
This does not mean hey, gloves off, anything goes.
If anything, I think that's one of the reasons I wouldn't say just send a check to anybody, just send the money. We want to have real, thoughtful expertize evaluate each of these proposals and saying, Yeah, I think this flies.
This is worth trying.

When Google try something new, you know they'll AB test something.
And of course, they've got scale so they can get huge numbers very quickly.
You can't do this sort of.
You can't measure the progress in education quickly.
You know, at least a school year, if not the entire elementary school career of a child before you really know what worked and what didn't.
Right?
Yeah. I mean, that's the hardest part about educational research is one you get.
It's very hard to have a true like, double blind study.
There are a few examples of this where there's some natural ones that have occurred and people have learned a lot from them.
And to your right, the timeframe of changing education is frustrating.
It's frustrating to donors as frustrated policymakers.

It's frustrating to teachers. And oftentimes people will say, Well, you know, we've been doing this ED reform new models for 10, 20, 30 years.
Why haven't we solved it yet? And I'm just humbled by anything that is a truly human problem. It's not just like an algorithm.
You can write a piece of code that can scale to the whole world in a matter of months if it's popular and good enough. But human change takes a long time.
And the same way, all of our problems in the prison systems aren't going to be solved by some magical algorithm. Those are human beings and tough conditions trying to make the better cultural decisions.
And you know, I'm 48 years old. I've been doing this work for about twenty six years and I'm convinced that I will die not having solve these problems.

And that's a hard thing to say when you've put your life's work into it.
But I don't have to solve the problem. I have to move down the line toward success.
I can be three links in a long chain and then hand off to the next motivated person who wants to take some of this work.
And for those folks who say, never mind, it's too long.
I would just say this you have a choice.
You can either do the hard, decadeslong billion dollar work of making education more equitable and better for everybody.
Or you can have a nonfunctioning democracy.
It's one or the other because we can't allow.

Only the wealthy are only those with privilege or possibility or choices to have access to a great education and then claim, Oh hey, it's a meritocracy level playing field. The whole idea of the American experiment and the American dream, as we all have a fairly equal first chance and then we let the meritocracy kick in.
And I think most of us would agree. We haven't lived up to that in the work, and education is all about that. So do you want to wait 50 years and spend all this money?
Or do you want to have a failed democracy?
That's the choice I see, and that's what I keep doing this work despite how challenging it sometimes feels.
Are there times in which you think to yourself, think of how to phrase this?

As you're trying to think of wealth, whether this would work in other school systems, in other cities, one of the things in your experiments, if we can call them that that may not be the same is the parents, because almost by definition, in some of these schools in which children are being placed into, you know, experimental forward thinking schools, you have forward thinking parents who are going to be involved.
And that isn't true throughout America.
Yeah, I think that's a fair critique and a fair question.

The only real critique I have of, hey, it worked here didn't work there is that thing of like, well, are you serving people who are a little more motivated, a little more the way they want to be? That's one of the reasons we think this is the right place to do the innovations. But maybe the next step is to figure out how many of those innovations and spread and scale to other settings.
But I will say I've never met a parent that doesn't want the absolute best for their kids. I've never met a kid who hasn't responded well when someone showed that they really cared what really invested in them and trying to give them more ownership and agency.
I think these are like fundamental human truths.

And I think it's easy for people to sort of say, well, it won't work on those kids because they presume and think, Oh, if you're from a low income community or if, oh, you've had a bad education outcome that you're essentially lost.
And I've worked with kids up to 18 years old.
In fact, I work with a few kids who are like post high school age are still trying to finish for the majority of them.
I have said, when you give them the right setting the right culture around them of students, the right adults who care the right materials and structures, they can find their version of thriving. They may not all go to Stanford, right?
If you're catching them at 17, it's too late, probably for that for the ninety nine percent of them. But they can go on to higher education.

They can go on to a good middle class job.
And if we don't catch them, if we let them graduate under credentialed, many of them maybe not even literate yet, there's virtually zero chance that they're going to hit that middle class, and there's a much higher chance that they're going to become a drain on society, if not an out and out problem.
Like that old adage of, you know, they build prisons based on second grade reading scores. There's something to this idea of if you don't know how to read by second or third grade, the die is kind of cast against you, and that's horrible to say to a nine year old. And whose fault is that?
We now know how to teach kids to read with the very, very, very few exceptions to kids who have real learning disabilities.

We know how to teach kids to read, but we're not necessarily doing that in our schools.
And that's on us. That's on like, you know, standing up to saying, Hey, we've now got science to really talk about how learning works and we should be pursuing this and we've got to train teachers better and then we have to hold teachers accountable and schools accountable to doing it. And if there's one place, we should draw the line, it's early literacy because this is a knowable phenomenon of how to do so.
And once you get kids to know how to read, then everything is possible.
But as a ninth grade teacher, when I used to hand out that first assignment and have kids reading out loud, I could tell instantly, OK, this kid is still a struggling reader at the age of 14.

How much work do I have to catch up?
And I get them for one hour a day, five days a week for one hundred eighty five days a year, and then they move on to 10th grade. And that's a lot to put on an individual teacher.
Teachers are part of the friction.
I'm not going to say problem, and there are obviously wonderful, hardworking teachers out there. But there's no question that if teachers are the main touch point of education, that they are part of the problem.
I think of it as we can't rely on just the individual training and quality of each teacher to be the solution to whether our schools are good or not, because we're going to have way too much variability and there will be some teachers who aren't up to snuff.

And I will tell you, teaching is one of the hardest jobs in the world to do well.
It's actually a pretty easy job to do badly.
If you want to just come in and trade relationship for rigor and hang out with kids, it can be a pretty fun, easy job. But for the teachers who care, which I think is the vast majority of teachers. I'm just telling you, having done it myself for years, it is brutally hard to get up and physically perform a play for seven hours a day, like the stress on your voice and on your energy level.
And then you go home that night and you have to read all the reviews of your critics and then write the next day's play and get over and do it again and do that five days in a row. It is exhausting.
And teachers get very little time to do anything other than perform all day long.

They maybe get an hour of prep a day, and the good teachers are staying late on their own dime, basically to plan the next day to get their room set up.
It is unfair how much we ask of our teachers.
And yet, because that's the world they've been put into and because they have administrators who come and go and new fads come and go, they have built up actually a very healthy scar tissue to resist all these new ideas.
And they look at the shiny, young new administrator of the shiny new idea.
And they say, I've been through this four times before.
I will outlast this and that becomes this culture.
That is the problem that you're talking about.

It's where the teachers and frankly, sometimes the teachers unions can become so self-protective that they missed the core reason we all do this work, which is to help kids have this thriving future.
So I do think you're right in identifying the problem.
I think it's important to remember the cause of that and to think that a lot of the solution is to actually make teachers lives easier.
And I will say with these models that we're experimenting with in the schools that we're working with, the majority of them have teachers that are more satisfied and feel more efficacious and more successful. And what they do, and if you say to a teacher, would you rather lecture all day and deal with discipline and run your classroom in the traditional command and control way or set up your classroom?

So maybe there's rotations where you have fewer kids at a time and then some of the kids are productively struggling and engaging with really good software at their right level.
And then other kids are doing group work and you get to spend more time working on the stuff that only teachers can do, which is the inspiration, the diagnosis, the problem-solving. Like we know, one on one tutoring works.
It's just really hard if there's twenty five of them and one of me.
But if I can get that number smaller and smaller and even rethink the day, like, there's just no reason that everyone should be taking five pictures of the exact same amount of time for the exact same course.
If I'm really strong in math, I might be able to do that in half the time.

And if I'm a struggling reader, I might need twice as much time.
But our current system of sort of the factory model doesn't give that kind of latitude, nor can you just say, Well, hey, every kid, just go and get whatever you want all day long, because then it's chaos. So we think of it as like a great architect walks into a big space and says, these are the load bearing walls.
Don't take them down. We need those to keep this place functioning.
But all these are cosmetic. Let's take those down and open up the space and give more freedom of movement. And that's kind of what we're trying to do with students schedules with blocks without throughout the day in the school.

Even the physical space of campuses looks very different in a model like this than the traditional conveyor belt. Have the kids go in and out of these little block rooms and get direct instruction all day long?
The other friction point, which I think even I, you know, six or seven years ago would never have occurred to me, but is growing, maybe school boards. There are some real changes coming to school boards all over America.
I think you're exactly right. The school boards are in a period of flux, as is, I would say, the role of parents in education.
The pandemic did some very interesting things.
One, it peeled back the curtain. So all of us who were home with our kids had more insight to what was happening than we ever had before.

And some of it was really gratifying to see how amazing the teachers were.
Some of it was kind of concerning how boring, unchallenging, disengaged a lot of the learning can be. The second thing is, through all the politics that are happening in our country, there's now these new flashpoint issues critical race theory, which is really not a thing in K-12, but has been really taken as a stick to beat schools over the head with which, in my opinion, is more a cover for.
We don't want to confront some of the racial issues of our country, and I think it's sort of a mistake as opposed to leaning into the discomfort and trying to find more harmony among different groups and acknowledging past wrongs.
And then school openings and masking where I think frankly.

Schools and districts, and in some cases, unions were so worried about, you know, the pandemic for obvious reasons, it's a scary thing to do.
But they kept schools closed for too long and they insisted on things that are actually working against the best interests of kids.

And I think got around the edge of science, where they were no longer justifiable in their stances. And if you want to know what angers a parent who's desperately trying to make it through a pandemic and is desperately trying to keep a job, and they're saying, and you won't be there for my kid, even though I know how much they need that that has ignited a force of parents that I don't know if we want to put back the genie back into that bottle. I actually think an empowered parent body is really a good counter to some of those forces of status quo.
And school boards are just one example because that's where the elections can happen.

You can't necessary elect your superintendent or elect your teacher, but you can elect your school board. And my fear is that it will be a bunch of reactionary elections where you'll get these people who are like one issue voters coming in.
The fact is, school board is a really complicated job.
You have a huge budget that you're responsible for hundreds of millions of dollars in most cases and a very complex organization.
And these are often unpaid elected people.
And sadly, a lot of school boards are just people who want higher office.

They don't even really care about school, but they want to make it to City Council or county supervisor. So we actually have become more involve me personally in school board electoral work and trying to find really moderate, smart, thoughtful people who want to run for office, who don't want to be beholden to special interests and instead want to put the needs of kids and families first.
But I do think you're right that for the next couple of years, we're going to see school boards continue to be a source of sort of a political football that gets kicked around a lot. And God, that just breaks my heart for the superintendents who are really trying because, you know, the average tenure of an urban superintendent in this country or something like three to four years, depending on the year.

And so what happens is a new school board comes in.
They say we have a change in that mandate.
They either force out or fire the old superintendent.
Then they put in the person who has their beliefs and that doesn't go so well for a couple of years and then a new group of people gets elected.
And one of the things that I like about the charter sector is instead of having elected school boards filled with mostly amateur people who come and go or have other political aspirations, like a great nonprofit like the American Cancer Society or all these other great nonprofits, it's a group of board members who, when there's a vacancy, pick a new board member who is going to sustain the mission and keep the vision.

And I think Reed Hastings, who runs Netflix, was a big promoter of charter schools and said the reason he believes in this is just for this issue of sustained governance, as opposed to this sort of swinging back and forth of electoral governance.
You know, there's some cities that has a mayor who controls the school board.
I think the jury is still out on whether that has definitively had evidence to show that that gets better results or not. But at least then you can have some sustained leadership as opposed to this whipsaw back and forth approach.
Just a couple independent sort of questions just to finish up here.
One is, can you walk me through what an ideal school of the future looks like?
When I went to high school, you know, we started at 8:15.

There was a bell. We went to homeroom that lasted.
Forty five minutes. There was a bell.
Some of us went to mass. Some of us went to science.
Same, I'm sure for you. What does your ideal school look like at? Is that first bell rings?
Is there a bell?
I think there's some elements that are needed to move four or five one hundred five thousand kids throughout a day with a 20 to one kid to adult ratio. There's just some of that you need for logistics.
Just like if you've ever been on a cruise liner, it's not just everybody going anywhere you want to. There's some logistical challenges, but the idea of giving kids a lot more choice of having kids.
So I think of American education as this canoe filled with 40 million kids, right?

And there's a handful of educators who are breaking their back trying to move that, can you upriver because they're doing all the work.
And these ideas that we're playing with are more what if you gave the kids paddles?
What if they leaned in and put their effort into it?
So then you say, Well, how do you get kids to lean in and put their effort?
It has to feel relevant to them, and they have to see how their work is being honored and where they can have influence and have agency.
So you can try to do this through a very complex scheduling where you move.
Or you can sort of say, especially as the kids get older, we need to trust them a little bit more and trust and verify I still hold them accountable.

So I believe that there should be flex periods during the day or during the hour, where kids who've shown mastery or who know the work that they're working on can opt out and move faster or go back and recover something they need to or go work on maybe a passion project that they're really excited about.
If you want to see what kids are capable of, go watch either a high school football after school. For a really motivated team or like a robotics club, these kids will stay till nine o'clock at night and work their tails off for no money and nothing, but maybe a ribbon. At the end of the year, because they're so motivated by what they're doing, but we don't let them have that experience of math because if they get done with Chapter two, Unit two, they just stop.

And it's like, Well, why don't we put the whole chapter in front of us if you can go through more? And if you do go through more, what if we have some really interesting application programs? So I don't think there's one model of what high school should look like. But I think the elements of it should be.
We don't spend as much time making sure everybody has the exact same floor.
We let kids start to specialize, especially by their sophomore junior senior years, so that maybe we don't say every single kid takes four years of science or four years of English. Maybe we sort of say, if you really want to specialize and you love English, go take some advanced poetry classes, do some rhetoric courses.

And if you don't want to do physics because you're really motivated by English, we can allow for that like we do in a college system.
And then I think a lot of the stuff the teachers are doing that really is rote where it's like, Hey, you know, if no teacher ever grades another vocabulary quiz, I will be very happy. Computers are very good at that.
There are ways where we can have tech supplementing some of this, even just teachers recording lectures and deciding, when do I want my kids with me?
And when am I OK to have them be more independent?
And I don't think that works if you still have a command and control mindset.
But I have seen it work many times where the educators come in and say, I trust kids.
My general answer by default is yes, not no.

And now what I need to do is be ready to respond to when kids let me down because they will their kids. They don't have a fully developed prefrontal cortex.
Yet when they make mistakes, do we respond by taking away that freedom or working with them to understand like how that set them back and how they have to make adjustments if they don't want to lose this firm freedom that they've worked on?
So that's how I think these schools could end up looking.
And the interesting thing is, during the pandemic, we were super comfortable for two years because we had to be saying, Hey, whatever you want to go goes if you want to be online, if you want to work offline, cameras on cameras off.
And it was as if we just sort of pretended for two years, it didn't matter.

And then the minute that the pandemic sort of eased, or we could at least open schools again, we put kids right back into custody and we put them right back into desks in rows.
And so we have to control every minute of your day.
You're no longer allowed to get a snack if you're hungry or go to the bathroom if you need to use the bathroom. Now you're under our control.
And I just think we missed the boat of saying there was lots of things that were bad about the pandemic. But the good thing was kids showed us, for the most part, they were pretty motivated to do their best under very ideal circumstances.
What if we do it under ideal circumstances?
And what if we redesigned the school to accommodate that and let those kids thrive?

And that's what the schools that we're funding are trying to do.
And if each one can figure out a few of the pieces and then we can bundle those together, I'm hopeful that in five, seven, 10 years we might have some examples where we're not just saying, Hey, this is cool and interesting.
It's cool and interesting. Kids are liking it.
They're thriving and it's getting results.
And that's the moment when I think more schools like, OK, now maybe it's time to go after it. But these do take time.
Like, This is not a problem. I'm going to call you back in twenty twenty three and say, we've solved it. It's done. It's going to be iterative.
Last one is take me back to the beginning.
So you are you are a high school principal and and and somehow John Fisher is involved in getting this started.

Tell me the genesis of this.
So I had been a teacher.
I had been a principal. I've been a chief academic officer.
So I've sort of seen up and down what it takes to run high performing schools.
And I was ready for something bigger and bolder and more entrepreneurial, and I knew I wanted to figure out like what was the role of technology, but I wasn't sure what I was going to. Maybe I was going to start an edtech company.
Maybe I was going to try to solve a different problem here.
And I still loved teaching and I loved startups.

Starting a school was the best thing I ever got to do in my career and the freedom you have as an entrepreneur. When someone backs you and gives you the resources to hire a team and build a culture and the school that I founded, which is still a very high performing, thriving California high school, is maybe the thing I'm proudest of in my career. And yes, John Fisher came to me.
You know, Fisher family is the founders of the Gab, very involved in education philanthropy across the country, and said, we want to do something for the Bay Area and we think it should involve innovation. And we think it should be bold in its thinking.

And we collectively built a business plan of what we thought it could look like, how much money would take to launch twenty five schools to see if we could develop some very different models of education and show those to the world as proof points and labs of innovation. And I had to go out and say, Well, how do I do this?
I've never raised twenty five million dollars before.
And John and others were very generous and both supporting us and opening doors.
And we ended up bringing together this group of about 10 or 11 individual investors, some very well-known names of philanthropists to do a lot of work mass in education, who all said, This is going to be our R&D project.
Let's be a little more risk tolerance.

Let's try some new things. Let's let this be an incubation for all the rest of our work in the country. So we set out to do it.
And then the first fund, it was going to be a five year, twenty five million dollar fund to launch twenty five schools. And it turns out it went really, really well.
We finished. A year early with more schools than we had hoped and under budget.
And everyone said, Well, this is great. Do it again. So we raised our second fund.
And now we're at the point we're about to launch our third fund, which will be about a $40 million fund from now till twenty twenty seven.

And it's still a lot about launching innovative schools, but it also includes some new nuances that we've learned a lot about, such as we have to also help the existing schools. So what are the strategies that best help existing schools get better? And one of them, it turns out, is there some really good curriculum out there now? There's a site called edX reports where you can look up and see every curriculum and how it's evaluated.
No doubt. Let me let me take that over.
So we'll take that back from so.
So there's a site called ED Reports where you can look up and see how every curriculum is evaluated, and we said to schools, we want you to pick the green rated curriculums.
The one that is very high quality, well-established nonprofit has rated as quality.

And we think you should be adopting those, not the curriculums that are less proven to have gotten a success. But just adopting a curriculum just means OK.
We've made a decision we'll use as curriculum.
The average teacher and principal needs a lot of support to do so.
And you just go pick any vendor off the street.
So we went and found great vendors, the handful of people in the country who we've really seen help schools get serious about how to observe teachers, give feedback and run training sessions so that people will deliver curriculum well.
And lo and behold, if you pair a great curriculum with a great provider with a motivated school, you can actually move an existing school and get better outcomes.
So that's become a a second wave of our work.

And then the last wave across this new fund is just going to be a return to those.
Moon launches the questioning of what are some big, bold new ideas that might not even be a K-12 school that we think could help accelerate.
So I'll give you one example. During the pandemic, right after the first year when schools were all closed, everyone looked up and said, Summer school is coming.
No school is capable or ready to do it.

Teachers are exhausted. What if we stood up a national organization with some of the best teachers in America that we could hire to do a national summer school where it's individual kids from across the country could log in and have sort of a teacher remotely giving these great masterful lessons and then also have some fun, engaging stuff like drama or art or whatever dance that you could do remotely.
And we made the very first investment in this organization that is now on its way to serving, I think, thirty or forty thousand kids this upcoming summer.
And it turns out summer school is kind of lousy everywhere.
So maybe it's better to have one great national organization providing this sort of free or low cost version of summer school. And schools can opt into this.

And I think when it comes to kids going back to being in-person every day, most schools are built to do that for the handful of families, which is no longer just a handful. It's not a significant percent who want something different, who want more independent study, who want more remote learning.
I don't think every school district should be designing their own.
It's very complicated to build a platform and curriculum in good online teaching.
And I think the market is quickly sort of running to create solutions that districts can buy and have their kids that want that to go that route.
And I'm just like fanatically focused on like, let's get the ones that are of quality.

Let's not make this a race to the bottom or just whoever has the best marketing material wins. Let's put good options in front of superintendents for what this could look like.
So I do think the pandemic got all teachers in America more comfortable with tech.
I think it got parents really comfortable with new models.

Out the door.
But a good friend of mine started a peanut butter company.
And so we've purchased a lot of jars of peanut butter, organic, all natural wonders.
Yes. Oh, absolutely.
Terrific. Yes. Okay, that sounds good.
Feel in again and feel free to take a sip of water.
Again, this is all additive. We can move or we can remove the, you know, the pauses and whatnot.
Okay.
One of the blurbs for your book says it's written for people who don't even know we're Silicon Valley and saying, let me start that again.
One of the blurbs of your book says it's written for people who don't even know where Sandhill Road is. Mm hmm.

And this sounds silly coming from a podcast host where the name of the podcast is Sandhill Road, and anyone listening to a podcast called Sandhill Road. But tell me, where is what is Sandhill Road?
Well, Sandhill Road is similar to Hollywood for movies or Wall Street. For the financial industry, it is often seen as the Mecca and the main strip for venture capital. And there are reasons why that is, and also reasons why it's changing. But it's certainly a symbol of how in the know you are, whether or not you know what Sandhill Road is.
So how do you break into venture capital?
Great question. And I think when you talk to most people, they'll probably tell you, oh, I, I just got lucky.
How did you break into venture capital? Let's start with that.

Well, I started my career on Wall Street, actually.
So I was at Goldman Sachs in the middle of the financial crisis, and that was my first introduction to how technology is changing all of our lives, whether you understand it or not, and changing the way you think about your career. And so for me, I didn't want technology to be disrupting my career. I wanted to be the one disrupting.
So ended up getting into technology, joined a venture backed startup called General Assembly based in New York. And that was really my real introduction to venture capital because I saw how our investors were impacting, how we built our product, how we grew our business.

And I ended up moving to Asia to launch our business in Asia, which was an exciting introduction to being the only person doing what you're doing.
And so helped kind of build and grow the burgeoning startup scene in Asia.
And when I was out there, actually our most popular class at General Assembly was introduction to Angel Investing.
So we spent a lot of time building relationships with angel investors and kind of understanding how they operate.
And there was so much demand for this class that we, you know, couldn't run enough of them. And so the instructor that I had recruited to come teach the class, I started pitching him on, How do we do more here?
There's obviously a lot of appetite for getting into Angel investing in venture capital.
How do we, you know, capitalize on that?

I pitched him a bunch of ideas about, you know, long form courses that we would sell.
And he said to me, I don't really want to do that, but I'm thinking about starting a fund. And would you be interested in starting the fund with me? So I thought it was completely crazy.
It kind of looked over my shoulder like, Who, me?
Are you serious? But he said something to me that I will always remember.
And I said, you know, look, I don't I don't know anything about venture investing up for being an employee of under back startup.
So why would you want to work with me?
And he said, Look what you do building this business.
Yeah.
So that's to remind me that you're coming.
Oh, here I am. Yeah, I know.
The traffic was really bad.
No, you're early.
I know.
So he.

Said to me something that I'll never forget. Which was your job at General Assembly?
Running classes for startups is finding people that are amazing at what they do because we ran class classes on product management, management, engineering, fundraising, angel investing, and I was out recruiting instructors.
And what I had to do was find the people that were the best at what they were doing and convince them to come work with me.
Like, why would I teach a class if, you know, I'm obviously a very successful person otherwise? And he said, That's really what venture capital investing is all about, is finding people that are amazing at what they do and convincing them why they should work with you instead of anybody else.

And so that was really my entrance into venture capital, was starting a fund in Asia, which was a very unique way of breaking into the industry because in some ways I didn't break in at all.
I just kind of started something somewhere else and got to take advantage of being one of the only people doing what I was doing at that time.
So that was the beginning of my career in Venture.
So how do other people how do regular people that started regular people, that category Bolivians?
Yes, exactly.
If you could boil down your the advice in your book, how do people break into venture capital?
There's three pieces and I try to be a I try to mix being kind of formulaic, right? Because there is a model that we know works.

But also you have to improvise and kind of capitalize on what's unique to you.
So I'm guessing the formula that works is go to Stanford or Harvard and sell a company.
Yeah, exactly. So I come from a rich family.
Yeah, Go to an Ivy League school, buy a Patagonia vest, and.
Well, that.
Concludes it then. My guest has been.
And that's the book. Very short, actually.
So yes, of course there is.
There's certainly a formula that has worked historically because venture has been pretty homogenous.

But today, I think if you follow kind of three guiding principles, you can break into venture, whether it means raising venture capital as an entrepreneur or working at a venture backed startup, becoming an advisor, there's all these different flavors of how you can get involved, but it really comes down to three things.
And I call them the three A's because I have a bad memory.
So I like alliteration.
One is access. So you have to have the ability to access great opportunities.
That comes down to who you know, It comes down to how you tell your story and it comes down to, you know, how you look for these opportunities. Second piece is analyze.
So how do you pick the right opportunities, especially in a world driven by technology?

We have so many different choices and how you figure out which ones to pursue or how you figure out which investments to actually make, whether that's a money investment or a time investment or a network investment that's absolutely critical to breaking in successfully. And then the third piece is adding value.
So what can you actually bring to the table when you invest in public markets?
You can't influence the outcome of the investments you make.
You can try to predict them, but you absolutely can impact them.
So in the private markets, that's not the case.

I mean, part of the promise of venture capital is that you bring in investors that are more likely to make you successful. And so you have to figure out how you can actually add value. So if you do those three things, you can absolutely break into that trust.
Let's let's circle back to access.
And that is that has been an issue for women and people of color in the past.
It's gotten better. MM But when we talk about that issue on this podcast, the answer I usually get is, well, we need to, we need to bulk up the pipeline, you know, wait a few years and we'll have this solved.
Right. Do you agree with that?
I think the numbers certainly speak for themselves.
So there's a lot of data around how there's certain groups that are underrepresented in technology.

So absolutely, I think that is a problem.
But I think that really it comes down to how the industry operates and exclusivity and venture capital is a feature.
It's not a bug. And I think it's important if you're trying to break in to understand that, but then also understand how you can navigate it.
And so, you know, I think that's a lot of the advice in the book is how do you figure out how to make yourself more likely to succeed by investing time in the right relationships, representing yourself, and how to I think especially as a woman or a person of color who comes from an underrepresented background, how to stop looking for mentors.
I think we talk a lot about kind of we need mentors.

Well, you know what? I've had plenty of mentors, and what worked for them isn't what's going to work for me because we are different.
And there are very few examples of, Oh, this person followed this path and that applies to me. So instead I talk about in the book actually look for collaborators, not role models. You know, if you're breaking into the industry, you need people that are going to send you deals that are going to invite you to events, that are going to introduce you to LPs, and you need to find those kind of people.
And when you do find them, you know, invest your time, invest your capital and your reputation with them because they're the ones that are going to be successful and they're the ones that are going to be able to actually help you be successful as well.

You've written about the importance of writing your own narrative as well, communicates who you are, inspires people.
Give me an example of a narrative.
How is that different than just kind of your life story or your LinkedIn resume?
Well, it's easy to forget that in venture capital we meet literally thousands of people per year and it is so important to make yourself memorable.
So I share some specific frameworks about how to be concise, unexpected, and just the right amount of personal.
To be to be memorable, you need to also understand the person you're speaking to and you know, what are they looking for?
How can you help them? What's going to be interesting to them?
And that all goes into how you represent yourself.

You've got 30 seconds to get someone's attention and you've got to make that time count.
You're not shy about saying that the world of venture capital can be lucrative for people who get involved in it is. But many, many V.C.
are wealthy. But it's not something people on Sandhill Road talk about very much. It's a bit gauche.
I mean, it is, generally speaking, the fanciest car in a sandhill road parking lot is going to be like a Tesla model S, which is a very expensive car, don't get me wrong.
But we don't talk often about how profitable this business can be to the individual involved.

MM Well, it's funny because I think that's actually somewhat of a recent phenomenon where it used to be a much more flashy industry, but it kind of ended up turning on its head and you have to know the inside scoop to know that, you know, looking rich is not cool in venture capital anymore. In fact, you know, the cheaper outfit that you that you wear.
The cooler you have oftentimes with our with our television show press here, we have a green room that we place the guests in.
And and, you know, somebody from a mid-cap company, a CEO from a mid-cap company will come with a publicist, an assistant and probably somebody else.
Yeah. And then somebody who runs a venture capital firm will just drive up in their own Prius, right?
Yeah. And like, be wearing jeans.

Exactly. All by themselves. Yes. Yes.
That was definitely an adjustment for me coming from Wall Street where I was always trying to look older. You were wearing suits and being very formal.
And then I entered the startup world and I remember the founders of General Assembly said, you know, we didn't almost didn't hire you because you wore a suit to the interview. But then, you know, we decided you were cool and I didn't have any casual clothes anymore.
And so I was wearing my clothes from high school.
And I just remember somebody asking me like, are those Abercrombie Bellbottom jeans?
I was like, Yeah, they are. Actually, I think that's all I've got left.

But yeah, it's funny. One of the I interview a bunch of other general partners at venture funds in the book, and one woman I interviewed, I asked the question, When did you first learn about venture capital?
Because one of the things that has always fascinated me about this industry is, you know, of course we're in our little bubble here.
Everyone knows what B.S.
But when it comes to Main Street America, most people have never heard of venture capital. I didn't even hear of venture capital until one of my ex-boyfriends got a job at a venture capital firm. And I thought, Oh, wow, that's interesting.
And so it's really operating kind of in a different world.
And so I asked everybody that I spoke to, When did you first learn of.

Our venture. And Vanessa Lago, who's an investor at NEA, told a story about how the first time she ever heard of venture capital was when she was driving here with her brother and she saw a Lamborghini on the highway and she was like, Wow, that's so obnoxious, so flashy, You know, why is there a Lamborghini in this area?
And her brother said, Oh, that's one of the V.C.S.
So I think there is a fine line there.
But one of the things that's so confusing about venture is we definitely have our own language. And so, you know, it's cool to look not rich and not important. And that actually communicates how rich and important you are.
So you can see why that might be confusing for somebody that hasn't spent time in this industry. Right.
And there's somebody I wish I could give credit to her.

But when you see a, you know, a room full of people in sweatshirts and one guy in a suit, than the person in the suit is the most important room.
But if it's a room full of people in suits and one person's wearing a sweatshirt, Oh, yeah, that's the most important person in the room.
Yep. Absolutely. Although definitely applies definitely to women and underrepresented minorities, I do believe.
Is that that's got to be a tougher, you know, just even I know women have trouble figuring out what to wear even on casual Friday, much less right.
Yes.
Yeah. Where everyone wears hoodies.
Exactly. I don't get quite the same reaction from people when I wear hoodies.
I tried, but it doesn't doesn't work.
Silicon Valley is not shy.
It's shy about money, but it's not shy about failure.

We celebrate failure here.
You can almost put failure on your resume.
What have you failed at?
I failed at so many things. I don't even know where to start.
And that's what's special about this book, is I share a lot of those failures and a lot of the folks that I interviewed shared their failures as well.
And that's something I think we don't talk about enough.
I mean, of course, there's the law of Silicon Valley celebrating failures. But when it comes to venture capital and this ecosystem, there's a concept that's actually been proven in network science.
It's called success breeds success.
And I'm sure you see this in media.
This is true in publishing as well, but it's the companies that demonstrate early success that are most likely to be more successful in the future.

So researchers have actually done experiments where they've backed Kickstarter campaigns that currently had zero funding, and then they measured which campaigns went on to successfully raise, and the fact that the donations were made to these initial Kickstarter projects actually was a key determinant.
And the fact that they they ultimately raised money.
So even though it was perfectly random, which campaigns they donated to, the ones they donated to were way more likely to be successful.
So there's this idea that you need to appear successful in order to even get the chance to be successful.
And that was something that I struggled with early in my career in Venture, where I tend to forge connections with people by being authentic and vulnerable.

And I still remember having a conversation with another investor.
I had just moved to Silicon Valley.
You know, I started a fund and when I lived in Asia, which is how I got into venture, but we were building the fund and it was awesome.
But I wanted to learn more and I wanted to spend time on Sandhill Road and get more traditional venture experience. And I was really struggling to figure out what do I do next, you know, between kind of continuing to run this small fund or going to work in a big fund. And I opened up to someone, someone that I had met who was a successful female GP at a fund, and I said, you know, I don't know what to do.
And and she looked at me and she just goes, Oh yeah, that sucks.
And I was like, okay.

But what I realized and part of what I talk about in the book is that, you know, if you don't portray that you are successful, that you're going to be where you are for a long time and that you're great at doing what you do.
Nobody is going to want to work with you because they see you as a risk.
And so you really need to figure out how to talk about your failures.
I mean, I think inventor, we call it the humblebrag.
It's like, how do you talk about your failures but still make yourself sound good so that you can have the best of both worlds. And I think, you know, that's something that's really hard to figure out when your, you know, adventure is today a career pathway. It's not just, you know, an artisan industry anymore.
And so you have to figure out how to navigate it.

And how do you do that if you're don't have safe spaces to ask questions and and truly be vulnerable and share your fears of failing.
There were some famous examples of pretending to be successful.
Theranos is is one.
I think most people outside of Silicon Valley don't understand that most VC turned Theranos down.
Mm hmm.
Most of them smelled bullshit. Yeah.
And. And turned it down.
But in the case of FDX.
Mm hmm. A very large firm said I'm.
We're all in on this. Yeah.
Being able to determine the difference between acting successful and actual success is going to be very important as you try to decide as a venture capitalist what to put money on.
Absolutely. And that's a big part of the book as well.
So in the part to around talking about how do you analyze opportunities?

I talk about the frameworks that we use to run our diligence process.
But I also talk about what kind of biases actually change the way we make decisions. And so I share stories about when I've fallen victim to my own biases.
You know, there are certain cognitive biases, like certainly you have emotional bias if there's something that you're really passionate about or that happened to you, you might not necessarily ask all the tough questions.
If you see an opportunity to right that wrong in in an investment.
So I've had that challenge.
One of them that I talk about is confirmation bias, where you've already made up your mind and you're merely asking questions to confirm what you already know.

Another is social proof bias. So one of the early investments I made in my career in venture met an entrepreneur.
I shared the story in more detail in the book.
All names have been changed to protect the innocent.
But you know, he was running an app and was telling me, you know, that it was going to be the next big thing and that actually the co-founders of Twitter were involved.
They were advisors to the company.
And I really fell subject to that social proof bias of, Oh, well, if there are famous people that are involved, then they're more likely to be successful.
And while that might be true, you really it falls on you to do the homework to figure out, well, how involved are they?
And, you know, he offered to make an introduction for part of our diligence process.

But I could never get a hold of these co-founders of Twitter.
They never applied to my emails. And so I wasn't able to actually validate what their role was or if that role actually would have an impact on the ultimate success of the business. And long story short, that company ended up shutting down after only a few years because, well, the founder was full of shit, but also because I didn't follow the proper steps to actually dig deeper into, you know, who are these people that are around the founder?
You know, we are certainly kind of the myth of the founder, but there's also who are there executives who are there early investors?

Who are their advisors and what are their incentives and motivations behind being involved? A lot of times if you have a famous name involved, you know, is it really them or is it someone below them or are they just lending their name or are they involved? And how much ownership do they have and how does that impact how they're going to help the company over time? And so you have to really dig deeper and ask those questions and not fall, fall victim to your own biases.
So that self-awareness is critical.
I think another bias or is the trend or the darling of the month, you know, subscription boxes, driverless cars, big data.

Yeah, crypto. Now we have generative AI doesn't mean any of those things are not possible moneymakers, but it means you see, oh, we're a big data company, right? We're we're a machine learning company.
Where are you? Because yesterday you were not a machine.
I've seen a lot of that.
Yes. So you as a as an investor, you have to be aware, even as other people are pressuring you, We need to be in generative AI right now.
Right. You need to be able to say we don't know anything about generative.
Right? Or this person doesn't know anything about this.
Company that we were thinking about investing in.

Yeah, exactly. And that's one of the things that's most fun about this job, I think, is being an investigative reporter and kind of going beneath the surface and saying, you know, what do they know and what have they?
Produced and doing back channel references and running that process.
I talk a lot about back channeling in the book.
You know, you think that being adventure is just all about the conversation you're having at that moment with that person, but it's actually not.
There are thousands of other conversations that have happened around that and will happen after it in order to actually make it successful or worthwhile.
And so doing that homework is absolutely critical.
But I think it's also important to understand why that is the dynamic in venture capital.

And, you know, when you have a really hot topic, then there's actually a lot more money flowing into a space than there are great opportunities to invest.
And so that starts to drive up valuations, which creates the incentive for founders to say that that's what they're doing because then they can actually raise money at a higher valuation because they have this special technology.
You have a degree in economics from Harvard and you teach at both Columbia and Cal.
And I kind of want to conclude with some some economic thoughts.
As you and I are sitting down, the latest inflation numbers just came out up 0.5% for the month to month, down from summer highs.

There was an article in the Wall Street Journal the other day titled Hard or Soft Landing. Some economists see neither if growth accelerates because we've gotten phenomenal job numbers lately.
Inflation seems to be easing.
But in Silicon Valley, all these layoffs talk of, you know, venture, you know, withdrawing some some not withdrawing current funding, but rethinking funding.
Are we taking some of these threats too seriously because some of the data doesn't support it?
Well, I mean, what does it mean to really take a threat too seriously?
I suppose it's always good to be cautious and to approach any opportunity or landscape with a healthy amount of skepticism and cynicism.
But I also think as venture capitalist, we are eternal optimists.

Our perspective has to be that the next world changing technology could be around the corner. There is a lot of money that is sitting on the sidelines and venture capital waiting to invest, and we've been in an environment.
The disruption of the pandemic was definitely a catalyst for the adoption of new technologies and rethinking the way we do things. We always talk about disruption and here we go.
We had the disruption, but now we have to sort through what happened and what things will look like in the long term.
And there has been a lot of investment in new companies that, you know, that were they were able to get early traction.

And so signals have been mixed. And so I think for now it comes back to really doing great diligence and looking for founders that know how to navigate uncertain times. But this is a more exciting time than ever for venture capital.
There will be some carnage. I think there are a lot of companies out there that have been funded that shouldn't have been, and you have to remember that the venture capital model is that, you know, a lot of your companies will go to zero.
Failure is part of the process.
And so now is the time when we're going to see really big winners emerge and growth is not free.
It will come at a cost.
And founders then know how to navigate. That will do well in the long run, for sure.

Those are my questions for you. Unless he has something you think we should have touched on.
Uh huh.
I mean, I'd love to touch on, I guess, a little bit why I wrote the book.
Sure.
Why did you write the book?
I wrote the book because I wanted it to exist.
And I've read every book out there on venture capital.
And we're going to restart that one. Hey, can I call you back later?
Can I call you back later? Yep.
Got it.
That's my son in the Navy.
Oh, wow. Where is he now?
Jacksonville, Florida.
Okay.
Yeah. Start over.
I wrote.
The book. Yeah, I wrote the book because I wanted it to exist over the course of my career. I've read every book out there on venture capital.
I've used many of them to teach venture capital to students.

But I still felt that there is an overemphasis on the math and the figures and valuation. And while understanding how to read a capitalization table or properly value, a startup is really important information.
Ultimately, you have to know why the industry works the way that it works.
And when I was getting started, I wanted to know, you know, how is it possible that some people make so much money in venture capital, or did they and some people are constantly hustling, And why is it that, you know, why is it that everybody says they're crushing it all the time?
And does that mean that I'm just not meant for this industry, or does that mean I just have to figure out how to tell my story differently?
And it's about how do you play the game?

And that was the book that I really wanted to read because I knew that what worked for Brad or Scott or Jason, who have written some of these books before, you know that my career would look different because I am different than them.
And so I really wanted that to exist.
And that's what led me to this place.
I think nothing is easy, but if we can't make meaning out of our challenges and make it easier for somebody else, then you know, what's the point of going through them in some ways?
One of the questions I ask and it will not be on this podcast, but I kind of collect them and every six months to a year and put them all together.
Is what book was very influential for you or that you would give as a gift?
Or if you could only own one book.

And it doesn't have to be something from Harvard Business Review, right?
It can be. It can be Winnie the Pooh. I mean, you know, what book was most influential on you?
Huh? That's such an interesting question, and I'm sure people answer it kind of strangely.
I mean, if I'm going to be completely honest, I would say The Fountainhead. I know that's probably like somewhat cliche, but and and Rand has very.
She comes up fairly.
She is she is kind of like a weird but I think the concept of being selfish and we perceive that as such a bad thing. But I think glorifying this idea of listening to your own.
Point of view and pursuing what you think is right as opposed to just pursuing.
Awards and accolades.
I think that's been a driving force for me over the years.

Scott, how are you?
I am doing well. I am apologizing, you had to hang out.
We don't know where they are.
I got some quality time with Schnauz, so that's always positive.
Great. All right. Well, good.
Good. Good. So she knows you're more than welcome to listen in if you'd like.
Just make sure you're mute yourself and take your turn your camera off and then smear the idea of the camera's just simply so that we can, you know, kind of an easier way to talk. It's a it's a much easier. You know, I can tell if you're if you're being silly or sarcastic or something. But this is we're only recording the audio.
So not great.
Great. So we'll we'll get started.
Yes. Yes, absolutely.
Good, good. Yup.
You go on mute in there, that's perfect.
Wonderful. Sounds good.

/content/Preprocessed_Data/SHR Impossible Investments Samir Kaul.txt

OK. So one of the important things is this is very casual and I will, you know, edit it as needed.
So, you know, if as we're talking, you're answering your question how you kind of forget what the question was, just throw your hands in the air and say, hold on, hold on, hold on. I, I forgot what the quote.
You know, it's fine. We'll we'll edit it out.
It's extremely casual. But let's let's start with having you tell me what you had for breakfast today so we can get a proper mic check.
I am an intermittent faster.
I know it may not look that way, but I am.
And so I kind of hold out for another three hours or so.
Excellent. All right. Sounds good.
I think that's going to be high enough. It's a little low, but just stay near your microphone here.
Yeah, I think you probably should get better.

I think it is. Yeah, right? Let's let's go with that.
Very good. OK. So first of all, pronounce your first and last name for me, just so I'm sure I've got it right.
Yeah, it's similar call.
Just like Paul with a K.
Excellent. Wonderful. I will start.
Let's start with skiing.
Where did the where did skiing begin for you in life?
Pretty laid, to be honest with you. You know, as kid of immigrant parents, skiing wasn't quite high on their, you know, it was math, science, math, science.
And so, you know, it really started in my thirties when I had my kids because I wanted them to be learn to ski and we lived in California driving distance from Lake Tahoe.
So I've probably even skiing for 15 years and I bought our whole family enjoys the sport. It's a great family sport.

If you're a skier, the time on the chairlift with your kids, especially as they get older, where they have nowhere to go but to talk to you.
It's it's it's pretty fantastic.
Now I started skiing when I was about 12, but that doesn't mean I'm, you know, a board member of the U.S. ski team. How does a guy who's been skiing for 15 years be involved with the U.S. ski team?
You know, I had a lot of friends on the board.
And one thing that and you hear stories about the ski team and and the athletes and there's a sexy, you know, your Bode Miller or something like that, Mikaela Shiffrin.
And there's that. And then there's everybody else who've dedicated their whole life to skiing have basically gone to ski academies for education.
And then what do they do now?

And so I think, you know, one way I can help these are athletes.
They're representing our country, they're putting it all on the line, you know, four years of hard work for a couple of minutes on the slope, that kind of thing.
And so I said, look, one thing that I can help do is because I'm involved in a number of companies is help folks for their post ski careers and what can they actually do?
And so that was what I love skiing.
I love watching all sports, my kids, all ski and love it. I thought, what a great way that I could maybe use a little bit of my platform to help these folks in their post ski careers.

Oh, so that's very interesting because I mean, you know, you can learn a lot about skiing and you can become a very good skier in 15 years, but you're certainly not going to be their level of skier.
But skiing doesn't last forever.
It does especially competitive skiing.
You're basically, I mean, there are some Olympians this year who are in their early 30s, but it's primarily and these are these are people that make the Olympic team.
Right. This is a that's the cream of the crop.
But most of them, I would imagine, are, you know, mid 20s or even younger.
There are a couple of teenagers in the Olympics this year represent the United States.

What, what should they look for? We're going to run this next week, and of course, the Olympics will be underway and what are you excited about as far as skiing goes?
A lot. So, you know, obviously Makala Shiffer, Shiffrin and Breezy Johnson on the women's downhill side or Travis Gannon and Tommy Ford, who are both from the Lake Tahoe region, are really exciting.
I think the Chloe Kim and on snowboarding is going to be really exciting. So I think there'll be a lot of podiums for the United States and rooting all rooting all these skiers on.
What's the appeal of skiing, what, what, what reverberates with you that makes skiing something that you're you're excited about?
It's just so multifaceted.

So if I want to go out in the morning for two hours by myself and have my AirPods and listen to music, and it's very meditative, right?
You can just ski up and down and take the chairlift and you get this really nice rhythm.
And the sound of the snow on your skis is really exciting.
It's a great family sport, so we do a lot of family ski days where you got my young kids and my wife are all different levels and we can all just spend a lot of time together.
And then if you really want to push yourself and challenge yourself physically and mentally, I mean, half of it's between the ears.
If you're on, some of the harder stuff is it's mental and and it's great. It's great to spend time on work trips to take a bunch of CEOs and spend time with them there.
It's just a nice destination.

Be outside, spend quality time together, no screens, no no iPads and and just have a lot of fun.
And it's a sport that people can enjoy.
Like I used to play a lot of tennis growing up.
Tennis is hard unless you're about the same level.
It just isn't that fun. With skiing, you all take the chairlift off.
There's always a super difficult way to get down and there's an easy way to go and you can meet back up on the lift line and get the 10 minutes on the chairlift back up.
There's a lot of things I love about a lot of what you said is true of golf as well.
I'm a covered golfer. I learned to golf during COVID and and you know it.
My my my family always teases me, Oh wow, middle aged man likes golf.
Imagine? I didn't know how much I was going to like it.

I always sort of pooh-poohed it as being sort of a, you know, old guy thing.
And and it's the same thing. It's no screens, it's friends.
It doesn't really matter how good you are. Exactly.
Golf is that golf actually really does a great job of that because I a handicap so you can play with someone who's 15 strokes better or worse than you and have a competitive day if you want, or you can just go out there and have some fun.
I love golf also for me, something I can do with my family and do with friends or do on my own. Carry your bag and.

Again, I played so much tennis as a kid that these new sports are so great and they're refreshing because they're different, like a tennis court or the tennis court, whether you're in Europe or Colorado or wherever a ski mountain, every everyone is really unique. A golf course.
Everyone is unique. A links course and ocean course.
And so again, any excuse to be outside for four hours without a device and most golf courses don't let you bring devices.
So you know no device and spend time either by yourself or with close friends or family. It's just especially in the tumultuous ness of the last couple of years. I think it's really been a mental health saver.
Tell me about growing up. Where did you grow up?
I grew up outside of Washington, D.C.
and Maryland.

And then you said parents were immigrants.
Yeah. So my parents, my whole family is from Kashmir, the northernmost part of India.
And so my parents got married and immigrated here in 1970 into the D.C. area. My father actually went to Berkeley for grad school and then started working in the D.C.
area. Then, just like many Indian immigrant families, when you have someone sets up the anchor, then sort of, you know, slowly by slowly, like, it's my dad's brother still lives there for a while. My mom's brother lived there.
We have other all kinds of cousins. So basically the early immigration of my family from India really settled in that Washington metropolitan area. Now, families everywhere now have tons and Silicon Valley and Cincinnati, all of a kind of Boston area all over the place.

But yeah, what took you out to Silicon Valley working with the. I was at flagship ventures after business school and really enjoyed myself, and I started a number of companies that ventured invested in.
And when he left Kleiner Perkins, it took a year off.
Then he decided he was going to launch his own firm.
He asked me, Hey, do you want to come start a firm with me?
And, you know, before he could finish the sentence, you say yes because you know, the young Indian entrepreneurs, they kind of have you never know the certainly on your wall of fame. So that was a real thrill.

And then the other thing was that I really, you know, we really wanted to focus on these game changing technologies, especially in areas like sustainability or medicine or robotics space. All these cool areas and I was like, you know, like this is great because if I only have node to convince to do things, it's going to be really fun.
As opposed to like a more broad partnership with lots of people not willing to take the kind of risks that we are.
So it's been a great 17 year partnership, and it's been fun for someone who's not familiar with venture capital, explained Vinod Khosla, too.
Why is he a big deal?
You know what I would say about Bono that's incredibly unique is that he is an incredible optimist about the opportunities that he can see.

A science paper or just one or two entrepreneurs come in and present, and he could immediately see most people, even people who are in venture capital, even people who are very good early stage venture capitalists will say we'll find like 10 reasons why it's not interesting.
And the things that I learn from B.A., which I think make them really unique and special are, Hey, saying no is easy.
Like it's easy to say to people in the garage trying to do something and say, there's no way that I'll scale.
There's no way that they know is easy.
That's the easiest thing in venture capital. Say no with Bernardo, you know, he looks at everything as like, what could it be?

And then he said, OK, so this thing can be something massive now, like with Impossible Foods, when Pat Brown came in and Pat had nothing.
He didn't even have a sample and he he had a presentation of how he was going to change the entire foods food system in this country and in the world.
And by doing so, save the planet.
Right? And immediately, Bernard said, Hey, look, absolutely this can be done.
And then when he decides that something can be done, he has incredible conviction to go see it happen. And will you know there's no hill or no obstacle that's too big for him. He'll he'll grind through it.

And as a result, you know, the kind of companies that we've been incubated or very early investors and become companies like Impossible or QuantumScape or Square or a number of these type of companies, right?
Square was just a dongle.
And people are like, Wait a second. In Europe, the waiter comes along with their little clunky device and swipes your credit card. Why do why is this dongle a big deal?
And Jack explained how this dongle was going to lead to basically equalizing the playing ground between small and medium businesses and the large retailers and allowing everybody to have their fair fight.
And it led to square capital and lending and then square cash and then square crypto, you know, and vineyard bought into that when it was just Jack and his partner.

And remember, Jack Dorsey is a superstar, and he's one of the people I have the most respect for. But at this point, his star was falling and he had just been removed as CEO of Twitter. He wasn't, you know, who he is now.
And so, you know, Bernard's ability to take those kind of bets and then see them through.
Are in a in a business where you have to have 25, 30 percent IRR to justify the risk and the illiquidity.
I really think that's the only way you can do it because, you know, the thing that also really strikes me is you can in our business, you can only lose one times your money when you put.
We put eight million dollars in the first round or square.
If we lose it, we lose eight million dollars.

You know, now, you know, it turned into multiple thousand Typekit return. You know, like a hundred x or five hundred whatever.
And every fund. We've been fortunate to have a couple of companies that become these, you know, multi-hundred x returns.
And then and once you have that, you realize, Oh, who cares?
Like, let's let's make the bed and then be super disciplined about not chasing bad investments.
But you know, you had you've had quite a number of recent wins.
You know, is it 10 billion in 14 months?
My my notes say.
That's that's that's a number of recent wins.
The yeah, I think we've been fortunate a number of the last couple of years have really played out the vision and the principles we had put in place about 15 years ago.

That's not up. It's not been it's not been a smooth, linear slope.
There've been a lot of bumps and bruises, but I'm super thrilled and excited about the portfolio and the entrepreneurs that we've had the fortune and pleasure of working with.
I'm particularly interested in your investments in food.
Tell me about that original pitch from Impossible.
and Patrick doesn't come in with something to taste.
You would think he would have a tray of things to taste.
I think if he had to trade things, that taste would have passed at that point, it would be that bad at first.
The first few samples were quite comical.
No, no. Look, the food thing to be honest, was.

Was the result of us licking our chops on some of the beatings we took in clean tech, you know, clean tech with a tough sector. We had a lot of we've now as you go full cycle, we've had some real tremendous wins that have gone public and, you know, in a positive category for us financially, obviously for the world, very positive.
But, you know, it was a it was a tough time and I was thinking, Oh wow, I was pretty disheartened because I was thinking, Wow, people won't.
People talk a big game, but they won't pay more for power and they won't pay more for fuel for their car.
So, so energy really is a commodity.
And then I read a few books about animal farming and how bad that was for the environment. I never thought of that.

I never knew that cattle farming heard about methane and cow farts and jokes like that, but I didn't realize it was all bad for the environment as coal plants were.
And and then you go into a Whole Foods opened in my little neighborhood in San Francisco, and you'd see young people, rich people, middle class people, all shopping and whole foods where the mangos were three times as expensive as the Safeway or the produce market.
And you're like, Wow, people will pay a ton of money more for food if it has, if it's organic or of its locally sourced, or if it's whatever right, they'll do that even if they can't really probably afford it.
So food is not a commodity.
You know, food Whole Foods proves that out.

The organic proof that out well is and isn't as bad for the environment as coal, which we learned the hard way was a commodity.
So why wouldn't we look to invest here and within that six month period of us understanding that Pat came to us with this idea and we're like, Yes, let's do it, and then we done it.
We've done a series of companies since then.
Impossible was the first. Soon after, just, you know, just the former Hampton Creek. And we've done ripple and joy well and a few others as well in plant proteins and figuring out ways to reduce sodium and figuring out ways to reduce sugar. And one thing is food scale, as well as say, you know, investing in a sales force.

It's very different, right? You know, a SAS company scales as a function of how many qualified SAS salespeople, how long's it take to spin them up and what's their quota? And are they able to achieve it right?
And so you can see SAS companies can grow in a linear type way.
What I'd say about food is the market's monstrously bigger is dramatically bigger, right? And it's it's kind of recurring because you're eating every day, right? You're eating three meals a day.
So it's not like, Yeah, I'm going to pay four bucks per seat per month for some H.R. software.
But yeah, you're going to eat how many impossible burgers, how many impossible chicken nuggets are, you're going to eat per week?
It kind of probably more.
It scales as the function of capacity and supply.
So the demand is dramatic.

So you'll see sales go like this and then we'll build a factory and I'll shoot up. I'm using my fingers there, but you'll see these step functions in growth as a function of sort of built putting on supply, and you have to build these plants.
So it takes time. It costs a lot of capex.
But because the market is so big and especially when it comes to plant based foods, you know, the food market's all about cost, convenience and taste, right?
Impossible. Now you can get the mail order, you can get an almost all retail.
You can get tons of quick service restaurants, so it's convenient.
I think the taste is as good, if not better.

If you if you know, certainly if you've tried the chicken nuggets impossible that you could tell the difference. And there's just no way you can absolutely true, right?
And the taste test with the burgers and the pork give you the similar type results.
But I think the chicken nuggets are the most, I think, difficult to distinguish.
And then cost, we're continually bringing down the cost.
We're on the two four five menu, a burger. And I mean, you know, at first, you know, we were putting on these high end restaurants before like, Oh, it's only for the rich.
Then we went to White Castle, now we're a Burger King.
Now we're in the combo menus of Burger King and we're selling.
When people are going to Burger King, people are going to Starbucks and they're buying.

It's a great opportunity to sample it, too.
I mean, you know what? What's my investment?
It's, you know, it's a three or four dollar burger.
Yeah, yeah, three, four dollar burger.
And you enjoy it. And then when you go to your Safeway or Kroger or Albertsons and it's there, you're great.
Your investment in an impossible comes after some frustrations in green tech. All kinds of people want to save the world and use money to do it.
But there were frustrations.
Oh, for sure. I mean, you know, we made a lot of investments in ethanol, which didn't work out. We made investments in solar panels that.
Didn't work out some like renewable plastics and things like that that were far better, better than existing materials.

But what also happened is remember as these clean tech companies, sustainable companies scaled, you also hit the financial crisis.
So what markets, what type of companies are going to get hurt more than illiquid high capex?
Commodity like materials, right?
That's just going to get crushed, right?
And what's not going to get hit is Burger King.

Burger King. Yeah, exactly who you would never have guessed when you were, you know, thinking about, you know, wood and ethanol and whatnot that the answer might have been hamburgers would not have thought that now. But I think that I think you start to then also pivot just and this happened in Web 1.0 versus Web 2.0 or whatever. And now if you look at when I was in business school in 2000, you had the Pets.com Stamps.com that eToys and Webmin and all these companies that then failed. And I remember when we know we were the first money in Instacart, so we put the first million dollars in there and that obviously had become a tremendous return and will be whenever they decide to go public.

But it was amazing how, you know, when I think I had, I still remember I had a drink with the CEO about 9:30 at night and I was late because I was dealing with my putting my kids to bed and I almost didn't make it.
But I went, I didn't want to be rude and a poor mother, just a terrific entrepreneur, which was the best decision if I think it was fantastic.
But I remember talking to a lot of people were passing on Instacart because they still had memories of web them and and but they didn't put together.
Back then, you had to drive home, go on your dial-up AOL connection modem.

You know whether she'll wait for log and then put in an order on a terrible web face UI. Whereas with Instacart, while you're stuck in a traffic light or in the back of an Uber, you can order groceries for the week and they're there by the time you get home. I mean, it's like a totally different different.
And I think the other thing that we pride ourselves at are thinking about, Hey, we invest in all these super cool technologies like we have a company called Mojo, which does air through contact lenses.
So you ask yourself, Hey, we believe this company is going to work right?
Yes, we believe that people will. All that air is the next platform after the iPhone and people, people don't want to wear goofy goggles.
But if it's contact lenses in their eyes, they do it.

Then what? But what would we have wished we had invested in if we knew that because we've got it here now that that the world can move in this direction?
So what? What would we if we could go back five years?
What would we invest in?
How would that even begin to work air in your contact lenses?
Yeah, the the technology that's going to have to be developed.
And of course, you know, we see technology developed in amazing ways.
But but you know, where does the power come from, where is the receiver, et cetera?
So they've sorted out almost all.
And I think soon, soon this year, I'm happy to invite you to the company.
You can put one of these in your eye yourself.
It'll be allowed to do that.
And so I'll let the company tell more about it. But it's all embedded.

So you're printing a silicon circuit on a contact lens that can be a prescriptive contact lens that's aerated, and the battery image sensors are all in the contact lens. Audio is with AirPods and visuals, obviously through the contact lens and and you do data transfer through RF.
You know, the person I would have expected to have invented that would be Elon Musk.
Now you, you, you skipped an investment in Tesla, right?
Yeah, that's a painful one, because we just didn't like how it transitioned, though.
Thank you for that.
Next, you'll talk about the forty nine ers or the Michigan football game or, you know, I don't know what else you'll bring up that's haunting me these days.

But look, we didn't think that electric cars are full. Auto company could be built with venture capital or dollars.
And we were obviously very wrong because, you know, the mistake we made, which I've learned from was 14 years ago or so, is that when you have someone who is as exceptional as Ellen, just.
Make the investment. It doesn't matter what they're doing and just make the investment because there's is a once in a lifetime type entrepreneur, and he's proven that and we should have recognized that because we're also in the talent business.
And so that now we we did quantumscape because we believed that if you could, we believe that, hey, why pick one? We believe in electric vehicles.
But we said, Hey, look, why pick one brand, one electric vehicle, you know?

You know, why not pick the best battery technology out there?
Because then everybody will need that.
Because that'll be that would be we thought that would be the bottleneck.
And it still is frankly, the bottleneck in electric car adoption still is.
What's the range, how fast to take the drug?
You know, I still charge my Tesla takes in a supercharger.
It'd be 20 minutes to charge it up, 30 minutes to charge up.
I should be five. That's what it takes for me to charge a gas station, right?
And and there have to be stations all over the place so I can drive do a five hundred mile road trip. And, you know, can I get cars with a five hundred mile range?
So batteries are still the rate limits up to even further adoption.
Adoption is fantastic about it even further.

So I'm very happy that we made the, you know, we incubated QuantumScape attractive.
But yeah, we obviously missed on Tesla.
We were asking. There's one more thing I would say that's got yeah to the to the up and coming venture capitalist. You want to learn from the companies you passed on and or missed? Right? And so I've learned, you know, when you get an extraction entrepreneur, don't worry so much about valuation or what they're doing.
Just invest in Hershey because they're going to make success happen.
But you have to focus on the investments that you've done because that's in the end of the day. There's lots of good companies out there.
So and I'm sure there's some in your portfolio you have to focus on those.

You originally were a CEO before in you came to venture and raised money from venture.
What have you learned from being on both sides of that table?
Well, one is, I think.
The level of respect that I still remember people that were incredibly rude to me when I was an entrepreneur, I remember I was sitting in, I was sitting in Kleiner Perkins giving a pitch and they ended up investing.
But they had the senior partners a really nice guy, and he had to leave and he apologized to, Look, I got to leave, but so-and-so, my associate will finish up and walk you out because you're you're young. I was twenty six year old, twenty seven year old entrepreneur like, you're in the fabled halls of Kleiner Perkins and Saddle Road. You're very intimidated, right?

And I still remember this like two minutes after the senior partner was a really good dude, left the junior and got up and left.
I got to go and just left.
So now I'm like picking up my computer, my laptop and where I put my coffee cup. How do I get out of here?
And I'm just like, like, Oh my God, like.
And so you remember, it's crazy.
They end up investing, too. So it's like, you know, it all worked out.
But you remember those things.
So like, you know, you come to coastal ventures, either I will walk you out or an associate or my someone is going to walk you out, show you where the elevator is and get you set up.
Call your Uber whatever and.
And so because at the end of the day, you know, to have the privilege to invest in entrepreneur, you have to win the deal first.

So I feel like I always put my best foot forward and, you know, try to get to the entrepreneur to want to work with me in parallel with doing due diligence because you're gonna end up signing up for a ten year relationship.
So it's just broader than the the technical diligence or the financials or the IP work itself out.
There is, you know, all young entrepreneurs sitting down in front of venture for the first time are going to be intimidated, but there's something that is extra intimidating about Khosla Ventures, I think.
It's, you know, that's a big name.
I hope. Look, I can understand that, but I definitely hope that because we're all entrepreneurs, it was an entrepreneur.

Other entrepreneurs. David, we've all been entrepreneurs that we've been in those shoes and we I can understand the intimidation walking in.
I hope the intimidation disappears within minutes of spending time with us.
You've just started a new fund of funds, seven, it's enormous.
Well, not by today's standards, you know, because, you know, we were we were one of the first to raise a billion dollar venture fund back in 2008, 2009.
And now that feels like, you know.
Every every other day, it's like Steph Curry scoring 30 points, right?
Yes, I've got a I've got hold on, I'm going to go get I've got a prop on my bookshelf.

It's from the the TV show Silicon Valley, and it's, you know, the marking a fictional IPO for the fictional venture capitalist Monica Hall, in which they raised $26 million, which is a laughable amount of money at this point.
Nowadays, it's a seed round.
Yes. What about valuations?
Evaluations have gotten very high, and it's sometimes, I think, hard to to calculate the risk when the valuations get that high.
Yeah, that's a great question, it's one we obviously get asked a lot.
Right. So there's been.
When you think about valuations, I look at it, as do I think this company, you know, I look at all my investments with four four stools, four legs to a stool.
Is there a really good Medicare, by the way?
He has as a chair, exactly.
So is it is it is the entrepreneur.
Is he or she really good?

Is the market large?
I don't want to take market risk. I don't want to spend a lot of money figuring out whether people need this or not. It has to be done.
It's obvious like, you know, air and contact lenses or plant based foods that taste better cost the same and are widely available.
It has to be something that then is there something really proprietary on the technology side that keeps that becomes a barrier to entry?
And then does the deal make sense?
Right. And when I think about the deal making sense?
I look at it at that if I think a seven to 10 year horizon, can this be a game changing technology in a large market?
And as such, what would that type of company be valued?
You know, am I being rewarded for the risk I'm taking?

But, you know, it does mean that there are times I'm looking at valuation, I'm like, I just I just don't buy it, guys, you know, and or you say, Wow, that's a pretty aggressive valuation, even though I know your next round will be higher.
That might be a better risk reward because you will have that reduced, whether it's market product, market fit or regulatory risk or some milestone.
Technically, if I'm paying to Eckstrom now, it's cheaper actually than paying what you're asking me for now.
And you, like a number of firms, have started opportunity funds where you can go back in.

You're not taking the first risk you're doubling down on on companies that you already trust and know where we were. So we would have taken the first risk in those situations already and what we did. And this was kind of we looked at these companies that we led the Series X or Series B or C.
It's, you know, the impossible QuantumScape, Stripe Square, Instacart, DoorDash, GitLab, Okta, like all these like this, you know, very successful Affirm Rocket Lab, very, very successful companies.
We looked at, boy, if we had just kept our pro-rata rights and done pro-rata across and not even just as successful across all of our companies, we didn't bias it.
The IRR was in the 30s, maybe even low 40s.
And we're like, wow, we're still working really hard on these companies.

So it's not that by not investing, we're like, OK, someone else do the work.
We're just handing 30 to 40 percent IRR away from us and our investors to later stage funds, and we're causing more complications for the entrepreneurs who would prefer for us just to keep working with them. They don't want to go fundraising, then want to add other board members.
OK, we should go do that. And then we kind of.
We're oversubscribed pretty quickly and and we've made some.
And we know so things like Checker and Impossible and Fair, which open trans companies like that, that otherwise we would have you're not participated in their later rounds. We did.
We still see three, five, 10 from where they are now and we know we have the the product or the instrument that allows us to invest in them.

It's nice to have a series of wins that you then get to reinvest in.
Yeah, it it is that's worked out well for us.
The last question I would be remiss, I know you are a sports nut and we are speaking on a day in which your favorite NFL team has announced its name.
And I can see you sort of twitching your lip a little, so I'm glad I asked, What do you us to?
Because I hope you get a leg up?
You know, I just when I thought Dan Snyder couldn't screw up the team more.
So maybe I should jump in and say that the Washington football team, formerly known as the Redskins, is now known as the Commander's.
It's bananas. It's a long name, it's not catchy.
Like, go commanders are the laws they, you know, go Niners, go skins go blue. What are you gonna do?

Go commies? No. If that doesn't work to pick something, at least it starts with an R.
You know, the Redskins or something. I mean, I understand the name Jane.
I'm not disputing that.
But. Oh, no, no, me either. But but you know, I was kind of fond of the Washington football team. It had kind of a soccer sound to it.
It was not terrible.
It's better than commanders. I'm not saying I was a fan of Washington football team either is better than the commanders.
But, you know, I think Snyder just.
You know, and it's amazing like he he still makes, you know, John Riggins is like one of my all time favorite former Washington whatever football team players was, you know, begging people to stop going to the games because then maybe he wouldn't make the kind of money is making them.

Maybe he'd sell the team and so we can actually get reasonable ownership back in place.
But it's you're in Washington, D.C.
Everybody loves the football team there.
You can you can really rally the city around that versus all the other craziness that I'm definitely not going to talk about going on in Washington. But if you screw this up, like I have friends who are now becoming ravens fans because they're like, this, just we've had it.
Those are. Those are my questions for you.
Separately, I have been sort of collecting a, you know, something I'm going to assemble into some, you know, a long string of them.
And as I've just been asking people what their favorite book is.
And you know, it doesn't have to be some Harvard Business Review thing they can be Winnie the Pooh. But you know what?

What, what book resonates with you?
There's a there's a lot, I think the one that I'd say, the one that that I that most relevant or most exciting to me recently is the last days of night.
That written by Graham Moore, and it's it talks about kind of the race to electricity between West Westinghouse or, oh, you know, it was up between Thomas Edison and I believe it was Westinghouse and how they were both kind of vying for our test, Nikola Tesla technology technologies that you actually, you know, get alternating current.
So you could do light light. And that was pretty exciting.
Just about because it was Edison was the Elon Musk of his generation.
Right? Like a lot of show, a lot of aggression.

And it is neat to see that, you know, that kind of entrepreneurial spirit in Menlo Park has persisted now for over 100 years.
Perfect stop there.

Can you hear me now? I can.
Can you hear me now?
I can. I don't know.
Why it's not letting me turn on my camera.
It's not it's not the end of the world.
We don't record audio or absolutely don't record audio, we don't record video. Yeah.
You know, it's mostly just use just sort of, you know what I like, I can tell when you're kidding, when you're not sort of thing.
Yeah, it's just more of a human interaction thing.
You know, for a little bit. But if you can't get it to work, don't stress it because your audio sounds good.
OK, good. Yeah. Just says that it's optional and doesn't give me any other.
Oh, yeah, I see that on your settings.
Yeah. What permissions are?
In my browser, at least, have the camera all set, yeah, yeah, says Cam blocked. I don't know why.
Really a very weird.

All right, well, we'll just not worry about it, how about that?
Yeah, that's OK, that's cool.
Go ahead and count to 10 for me, though.
One two three four five.
Yeah, it sounds good. OK, so the point of this is it's super casual, OK?
If there's if there's a point in which you're answering a question and you think to yourself, Wait, what was the question again?
You know, I tell people, throw their hands in the air, but you know, just just let me know over the audio, you know? Oh, wait, hold on, hold on.
Let me let me let me rethink that.
It's, you know, it's not supposed to be any sort of get your sort of stuff.
It's just supposed to be very casual. So, you know, I want to start with this relatively new news.
Microsoft bought Activision.
What do you think on that?

It's big news. I think it's I mean, I think it makes a lot of sense.
Microsoft has made a lot of great acquisitions over the years, both across all their businesses. But one thing you'll hear from me just from a thesis perspective, look, in the consumer world, I think it's all about cultural relevance.
And to me, gaming has gone from sort of this.
I like to call like the the $100 billion niche market to sort of this mainstream cultural part of the market where, you know, gaming is very relevant for consumers, especially for younger demographics.
I think even for me, growing up as a gamer, you know, I used to kind of like hide that fact, right? Except for the for the friends that I used to game with.
And now, you know, it's cool to be a gamer, right?

And gaming gaming content is like any content, right?
It's content. It's mainstream, it's highly cultural.
And so I think it's really a great move by Microsoft, and I'm not too surprised.
Activision Blizzard itself is an iconic company and has built iconic content.
And, you know, they've been going through their own sort of internal struggles.
Yes. Which I think probably was another reason why they might have been open to some of these discussions, but makes a lot of sense to me.
I saw somebody on Twitter who said they couldn't wait for the Call of Duty Excel mash up, as well as both a gamer and a former banker.
You know, I'm surprised. I think there actually have been some excel sort of almost like EA competitions to see who can create Bottas quickest.

So tell me, tell me about growing up as a nerdy gamer.
I mean, really set the stage for me. What what year are we looking at?
What platform are we looking at?
And obviously, what game was your favorite?
Yeah. You know what's interesting? I have a pretty unique mix of, I think, backgrounds of growing up, you know, being the the eldest child of an immigrant set of parents and growing up in Dallas, Texas.
I was a student athlete at the same time, so I grew up my my parents were really supportive of everything I did.
And I grew up as a swimmer, and that took up a lot of my time all the way from Junior High High School.
And at the same time, you know, I was I was very much a gamer, mostly across mostly a PC gamer at the time. A lot of actually blizzard IP.

So a lot of Starcraft Warcraft, World of Warcraft, Ultima online, very into online gaming, sort of in the high school years.
And, you know, being both a a student and an athlete, there wasn't a whole lot of time for gaming.
And I still remember, you know, setting setting alarms in the middle of the night to game with my friends because there wasn't any other time to to do it.
But, you know, have some really fond memories and still have very, very close friends from kind of growing up and and gaming with them.
And the beauty is now even though we're we're all, you know, we have our careers and we've got kids and we've got all sorts of stuff. We still can find time every once in a while to hop on and and play some multiplayer games, which is great.
What's your game of choice now?

You know, it kind of fluctuates, right?
There's the classic of League of Legends, certainly Call of Duty.
You know, Halo. The new Halo just came out on PC, which has been fun too, and it's just whatever, whatever I can fit in these days with the kiddos running around. I've got three young kids who aren't quite of gaming age yet, but I'm awaiting that day very anxiously.
So my my oldest child is now five, and he's he's probably getting close to being able to play a couple of the Switch games with me, so I'm excited about that.
Now, now gamers won't. Realize that there are, you know, there there's a division in gaming and that is the PC gamers and the console gamers.
Yeah, you're a PC gamer.

So the non gamer, that means you're you're if you're playing a first person shooter, you're aiming your gun with your mouse and you're using a couple of keys on the keyboard to move your character around the world.
Why PC gamer and not a not an Xbox gamer or PlayStation?
You know, I had always just I've been very fortunate to kind of grow up and and, you know, be able to build a gaming PC.
And I had a lot of fun actually. I had, you know, one of my first kind of hobbies was building gaming pieces for friends and family members and things like that.

I've also been a console gamer, but a lot of it was just built over the internet, you know, in the early days of and kind of going back to your question about, you know, in the 90s, we were playing warcraft to over dial up. You know, you had to disable call waiting.
It was a luxury to have two lines. So you know, your game wouldn't get interrupted if somebody got you on that same dial up line at the same time.
So there was just a lot of a lot of online gaming that I did very early on before some of the consoles kind of came up with the networked multiplayer.

And, you know, me and my circle of friends, we used to have LAN parties where we'd all take on our PCs and lug them around and monitors and spend a couple of hours at the time dealing with network issues and TCP IP issues. And and it's just something that, you know, it's very nostalgic because today you just fire up whatever and you're online and you're playing with people all over the world in seconds.
So, you know, one of my theories also about PC versus console is, you know, your parents wouldn't necessarily buy you a Nintendo, but they might buy you a computer. And then if they see you, you know, monkeying around with the graphics card inside, they think, Oh, he's doing some very smart computer.
It's like, No, I'm just making my gaming rig better.

You know, what's interesting is my my dad actually is an entrepreneur, is a business owner.
He works in sort of the tech industry and has always done so.
And, you know, given what I do now as a venture capitalist, having been in Silicon Valley now for I guess, two decades.
Plus, it's funny looking back, but I still remember growing up I just thought of my dad is like a small business owner, which is, you know what, what people used to think of entrepreneurs as.
Right? Yes, that's true. Yeah. And anywhere outside of Silicon Valley, back in the 80s and 90s, you know, these are small business owners.

And and now, you know, talking about cultural relevance, I think even our industry and sort of the the idea of being an entrepreneur has been has become very mainstream and has become sort of very culturally relevant in a way that it didn't used to be. But, you know, I was fortunate that my father was in the industry and I still remember early, early on, even before sort of the PC gaming period of my upbringing.
It was just playing around on kind of the early PC, playing around in dos.
And I actually like one of my very first gaming memories was playing Wheel of Fortune on Dos.
And that was sort of like with the sort of the eight bit music.
Exactly. And that was the cutting edge at the time.

I'm trying to think of what my first gaming experience was, but it was definitely Apple two plus. I mean, I predate you a little bit, but the the luxury of being able to play a game at home instead of going out to an arcade was just and not having to drop a quarter, which we could barely afford was just this amazing thing.
And the first kid to get Pac-Man man, was he popular.
So now you talked about how you were trying to balance athletics and high school and gaming and and one of your investments is play versus in which this is a league for high school e-sports.
And one of the players is a guy named Nick Monteith, goes to Lambert High School or went to Lambert High School, joins the school's Rocket League team, gets a scholarship to the University of Akron to play Rocket League.

He's playing video games on a college scholarship through play vs.
Yeah, I love it. I mean, it's such a it's such a special and interesting company in so many ways. But, you know, being able to combine sort of personal passions and sort of, you know what we talked about just to. Terms of my upbringing and seeing that translate into sort of what I get to do on a day to day basis professionally and work with amazing people that are doing really interesting things, you know, play versus the way I think about play versus is they've really started out with the first fully sanctioned e-sports platform.

Right. And so and I'm trying to let's get an analogy to the listener is are they sort of the Big Ten of e-sports or the NCAA way of e-sports or what? What's our analogy there? Yeah, not not really. I mean, it's there is no analogy, which is so interesting, right? It's sort of a combination of you think about like football or, you know, volleyball or even some of the other high school sanctioned activities like debate trade. It's sort of combining that with different apps within that. You can think of Rocket League, League of Legends, some of the some of the IP and developers and publishers that they partnered with with a conference like a like a Big Ten combined with like you think about.
What it means to actually play and execute on that sport.

Right, and so there's the whole matchmaking infrastructure, there's all the scoring, there's all the identity and sort of logging in and having that, you know, having that student athlete have an identity within that world and you kind of compress it all into one, right?
And nobody's ever really seen anything like this before.
And I think in some ways, you can draw analogies to traditional sports and activities. In some ways you just can't, right?
And so what's interesting is.
A lot of schools have have resources around this, they already have a computer lab.
Most schools are already. The vast majority of schools are already connected to the internet. And then you think about the player base.
Right. And I could be outdated on these statistics.

But there's something like 40 percent of all high school students here in the US participate in some sort of sanctioned activity, whether it be sports or whether it be, you know, like I said, speech and debate or things like that.
And you compare that to the number of high schoolers here in the US that are playing some sort of game, which is close to 100 percent. Yeah, exactly.
And there's a big gap there. Right. And the fact that you can kind of combine those two worlds and really use it as a way to both keep kids sort of engaged within that academic and sanctioned and high school setting, but also do it in a way where, you know, look, the one thing that I will say is like gaming in general has this history and tradition.

And we talked a little bit about Activision Blizzard of being a bit of a toxic environment, right? And not necessarily a super diverse environment.
And. Play versus is really focused on this idea of like we actually want to bring diversity in here.
We want to bring to bear a lot of the positive qualities of participating in a high school sport, right? I learned a lot from being a swimmer in high school, both from a high school team, my club team thinking about time management, persistence, the value of hard work, working with coaches, having teammates, things like that. And you traditionally haven't had that in gaming, right?

You know, I think like the the view that a lot of people have of gaming is like, like exactly sort of how I grew up, which was 2:00 in the morning sitting in my room at my computer, in the dark, you know, chatting with friends over the internet and playing games. That way, it's just go now and play versus can can in a in a club or a team in a high school. There is a video game competitive club then gives that kid a sense of belonging the same way the kid on the team has a sense of belonging or the same way a kid on the varsity football team does.
Yeah, and it's a it's a fully coed experience.
That's yes, that was going to be. My next point is that it's one of those rare sports in which it can be entirely coed.
Yes.

Yeah. And that's a that's very much a feature that is that is prominently pushed in. And we've seen a lot of high school championship teams that are coed, which is also a principle, you know, thinks I want to create a and e-sports team. And so she would she would work with play verses to make that happen.
Right now, I can't think of another instance.
And but I, you know, I may be naive about it, in which a for profit company is involved in a Public Schools athletic program.

And that way you've got a you've got a handful of for-profit companies in the ecosystem. Whether it comes around content, there's a lot actually a lot of content companies. Right. So you're starting to see a lot of companies that pop up around, you know, broadcasting high school sports, for example, or analyzing student athletes for purposes of recruiting.
For example, you have all sorts of companies for for-profit companies that are focused on equipment maintenance or things like that.
Again, it's it's sort of a an interesting new paradigm, right?
Because like I said, you can't really draw analogies to it.

But a lot of what play versus is bringing is they're bringing that structure that bring a lot of the technology architecture there that helps scale something like this, build out the matchmaking infrastructure, build out sort of the scoring systems, the scheduling on board a lot of the users and the teams.
And at the same time, play versus his partner very closely with the the publishers and developers of of these games.
Right. To have a an actual official license to allow a lot of these players to to play these and participate in these tournaments.
I would imagine as a venture capitalist, you know, we've we've been struggling to find analogies in the case of play versus that.
That might be a sign of a good investment win.

When you say I can't find a good analogous way of explaining this, that might be a really good sign. It's not a worry.
It's not the uber of anything or the Netflix of anything.
Right, exactly. And we love those opportunities.
And certainly what we do is is a game from a from a pure investing standpoint is a game of risk reward, right?
And especially in the venture capital asset class, you know, we're willing to take on a lot of risk if that means there's a ton of opportunity out there. Right. And when there is something that you know we do a lot of pattern matching is venture capital investors to kind of say, like, OK, you know, what's worked in the past? Will this work in the future?

But there's also just these these outliers that that are hard to quantify and hard to really draw analogies to.
I will say, look, you know, in the e-sports world, I actually think there's probably been a little bit too much.
Too much pattern matching and trying to match it to traditional sports.
And I think it's been a good thing for the industry overall because it gave it legitimacy. It's still, you know, EA Sports broadly, not just thinking about play versus is still in sort of its infancy.
And even though it's pretty nascent, has grown very, very rapidly.
And I think part of it is because there's been a lot of analogies to traditional sports.
I think sort of the the next step for the EA Sports industry as a whole is to really start. Defining itself is different than traditional sports.

And that's where I think you're going to see some native experiences that people really haven't thought about or talked about that could really take it to the next level.
You do consumer tech for your firm, NBA.
There are a lot of forces making consumer tech and interesting space for entrepreneurs right now, with people spending more time at home.

They got more money to spend because they're not necessarily spending it on travel or other expenses. A good example of that is one of your investments is Masterclass, which I, you know, I signed up for pretty much when when COVID started because I had the time on my hand and masterclass for those who have not seen the ads is is, you know, our lessons from really high end intelligent leaders in their space. So it might be a famous book author, teaching book writing or a very famous chef teaching cooking.

I assume you saw some spikes during the height of the lockdown, but then, you know, I've also read that Peloton is is now reconsidering a lot of its businesses and its spaces, its retail, et cetera, as they see this sort of tail off a little bit. Are you seeing what you you've got to be able to?
You've got to be able to handle the spike, but you've also got to be able to handle a trough as well.
Yeah, absolutely.
You know, I think taking a step back and then we can jump into masterclass.
More specifically, you know, the pandemic has been interesting for our business overall as venture capital investors because a lot of trends have accelerated.

Ultimately, it's just caused a ton of uncertainty in a lot of different businesses and consumer businesses. I think especially have been pretty volatile because of a lot of things that you mentioned.
I think that the great thing for us as both investors and partners with these companies, is that we take a very long term view, right?
As shareholders of a company, we've been investors and master class now for six plus years. I want to say, and you know, when we first invested in them, nobody had ever heard of them.
That's the beauty and joy of what I get to do is now, you know, when you see a master class trailer, you kind of know who it is and and the company behind it.
You know what was interesting for masterclasses?

Certainly, there was a boost from people staying at home, kids not being able to go to school.
I think it played into the overall sort of trend and thesis for master class, which is really pioneering a completely new category of of company, which is edutainment, right?
Which is like, look, as we talked about, content is king and.
If you can create proprietary, high quality content that feels more fulfilling than other content that you might be watching, you know, people feel good about that.
They want to be able to share some of the experiences and some of the things they've learned through Masterclass with their friends, right?

They want their kids to be watching masterclasses, whether it be about, you know, Steph Curry and basketball, or it could be about photography or cooking or writing.
Right. And and these are kind of very fulfilling topics that that if you might not be able to attend school in person, you might want.
I think at the same time, honestly, though, Master Classes Brand was just starting to take off from a mainstream perspective, too. And so you had these compounding factors of a company just hitting that inflection point in terms of brand, combined with some of these more macro forces of people being at home looking for ways to kind of entertain themselves, but also educate themselves.
So it was it was a very good year for for masterclass.

And you know, frankly, for a lot of our companies that are even our later stage companies as we think about them like a masterclass.
It's such a drop in the bucket in terms of market share awareness that they might have that these macro factors will affect them.
But you know, they're going to continue seeing growth if they hit product market fit for a big enough audience because there's just so much opportunity out there.
So while you know, I would say 2020 was a fantastic year for us at Masterclass 2021 was also a growth year, right?
And we expect the same thing to happen in 2020 to because of the fundamentals of the company and sort of the the long term nature of it.

It is interesting in entertainment, and I was talking to Nicole Quinn from a different firm about this, from Lightspeed Ventures that we used to think of entertainment as being, you know, TV, radio movies.
And then we could maybe subdivide that in the TV to NBC, CBS, HBO, that sort of thing. But now the entertainment is Masterclass or Tinder or Tik Tok or Netflix. The things that we were Robinhood or Robinhood isn't that interesting because it's entertaining.
That's one of the appeals of Robinhood to to be entertained and sort of gamified by by watching what is fundamentally a line graph of your investment.
Yeah. No, I think entertainment has.
Completely shifted, right, and there is sort of this consumer companies are all about attention, right?

It's how much how much attention for a given consumer and a size of audience in a given day can you capture?
Right. And it used to be largely TV, right? It used to be largely radio as you were kind of like sitting in your commute or even sitting at home.
And that shifted, you know, gaming is a prime example of this.
Streamers are a prime example of this.
And I think that a lot of companies are thinking about what are those, what are those market opportunities that as you look down into the future, could be very much mass market, but today are very targeted towards a very passionate niche.
Right. And I always just just kind of taking a step back, I always think about one of the best examples of a consumer company that has done this to be Nike.

Right? And having having a shoe that was built for competitive and elite runners to what they are today in terms of just being a cultural icon.
Mass market fashion brand.
I think that to be able to look at that company, be inspired by it for a lot of our companies, like a master class or like a Robin Hood or like many others, to to go after a really passionate niche.
But in a big market opportunity, the ones that break out can really kind of make a dent in the overall kind of consumer world.
Another one of your portfolio companies that's blending things is spider animation studios, where you've got.

The combination of the video games that we've talked about and then the movies, and it's my understanding that more and more movie companies, at least in their workflow, are using video game engines.
They're the things that create the graphics of the mountains and the and the the action and those sorts of things as moviemaking tools and creating something sometimes traditional movies, but something, sometimes something more.
Yeah. And the other thing I'd say about entertainment is it's no longer siloed, right? It's not about like you have this singular TV show that you watch, and that's the only place where you consume that content or IP or whatever it may be. The same thing is happening with movies, right?

It's not just about movies, it's movies that have video games attached to those to that IP and those characters that were originated from a comic book, for example.
Right. And so, you know, Speier is really taking on this idea that if you start from the premise that, you know, we're not a studio that is just making an animated feature film, but we are all about taking this creative and really building a complete universe around it. Part of that is going to be a future feature length animated film. Part of that might be a video game.
Part of that might be a TV show. Part of that might be some sort of audio content only right for those characters.

But if you start from that premise and then you combine it with a lot of the the technological advances that have happened around game engines and content creation engines that really help you in real time, you know, proliferate this universe and and thinking about it at an IP level or an idiot idea level or a or a character level.
And then combining that with the idea of what people think of as the metaverse and really what the metaverse to me is, is just the blending of sort of what we do IRL or in real life.
With all of the different digital interactions that we have throughout the day, right?

And so it's a much more interesting explanation of the Metaverse that I think I've heard because, you know, again, we go back to. It's so hard to create an analogy to explain what true believers in the metaverse believe.
You know, they your meet your brain immediately goes to, oh yeah, it's virtual reality, and you just renamed it. Right?
But I think the true believers are saying, no, no, it's more than that.
But I haven't got something analogous to to explain it with.
Yeah. And I think that, you know, immediately like people go to sort of the Ready Player one type of type of thought when it comes to metaverse, which is like this singular thing that people are immersed in and are just kind of like, you know, with their with their face in the headset.

I do think that as we kind of evolve this idea as we see more of what's happening and frankly, like if you talk to a lot of these companies that are, quote unquote metaverse companies, I think they're starting to realize this too, which is like.
Today, our lifestyles as a consumer, our lifestyles are so blended and complementary between offline and online experiences that I think the idea of the Metaverse really is like everyday life, right? And how do you make those experiences more seamless, more beneficial to the consumer, more valuable to the consumer?
And I think companies that take that viewpoint are actually going to have some great adoption versus, you know, kind of taking the idea of like.

As a as a singular company, I'm going to build, quote unquote, the metaverse, and everything has to be proprietary to what I build.
I think that's a much harder road to go down to, to try to build an experience for a consumer just because consumers want best in class experiences for everything that they do.
Right. And the more you can interoperate with all of those other experiences, I think the better.
You've worked with.
We find it here. Oh, you've worked with creative artist agencies to create connect ventures, you're working as your main job with NEA as as a venture capitalist.
You also work with Stanford's Athletic Departments Investment Fund, which I didn't even know existed.

That's amazing. How do you decide when you see a potential investment which one of those firms benefits from your wisdom and gets the investment?
Yeah. I mean, first and foremost, you know, I I am a partner at NEA, right? And so everything kind of funnels through there.
The Stanford, I work with both the athletic department as well as the engineering school.
Those are sort of like co-investment funds, so those don't have sort of they don't think about things where they're looking for a proprietary deal flow and looking to lead deals and things like that.
That's really just just to sort of benefit a lot of the existing investments that that I may be making or others may be making that are interested in having those those firms participate as smaller investors.

You know what we do with CAA Creative Artists Agency is very, very interesting and is a joint investment partnership between US and CAA.
And for those folks that don't know, CAA is the leading sort of global talent and entertainment agency, and we work very closely with them and the capital that we deploy alongside them is NEA Capital, right? So there's no real conflict of interest there.
You know, what I would say is we really think about it from the standpoint of what is going to make this particular company most successful.
Right? What is going to supercharge the the success of a given investment or portfolio company or founder that we're working with?
And in many cases these days, especially on the consumer side, because there is such a because there is such a.

Supernova of culture and technology right now, we couldn't find any better partner than CEA to do this with.
And so a lot of companies, it's highly relevant to have somebody like CAA involved.
And from that standpoint, we'll get CAA and connect ventures involved in all. All of the companies that Connect has Connect ventures, has invested and has any invested, and we treat them just like they're part of the broader NBA family.
And it's really evidence that you are thinking of entertainment and video game and technology coming together because CAA is one of the most important and influential forces in Hollywood, right?
Exactly. I think it's not just sort of gaming and music and entertainment, it's also fashion.

It's also social. You know, there's just there's such a blurring of lines between all of these different things, and it's been, you know, we launched we launched the partnership about two years ago, and it's been a super fruitful partnership for us on both sides as we sort of try to think of or get our minds around companies that do entertainment with education or entertainment with video game or whatnot.
What's an opportunity that doesn't exist yet, but that you've been pondering?
You know what, if we could do this?
That's an interesting question.
I think.

You know, I think as we one of the areas that we've been exploring quite a bit that I think is starting to take hold, but we would like to see more activity. There is how do we how do we inject sustainability in this idea of sustainability more into everything that we do from a technology investing standpoint? So whether it be around Web3, where there's a lot of discussion about sustainability and how that applies to cryptocurrencies and mining and and things like that, and how do we incentivize sustainability, for example, for participants within that ecosystem, to sustainability in fashion, to really thinking about like there hasn't necessarily been a horizontal technology platform yet that really captures the sustainability of where we interact as consumers in our everyday lives.

I think that could be a huge opportunity and certainly one that we're paying attention to and haven't, haven't quite found the exact right opportunity yet.
Those are my questions for you, unless there's something else you'd like to add.
I don't think so. I mean, we hit on, we hit on a lot of great.
We did. We did. I do have a final question which has it will not be included in this.
I'm just collecting them together and I'll add them together.
And that is what's your favorite book or the most influential book or.
And it doesn't have to be, you know, some deep, you know, the history of the English speaking people.
It can be Winnie the Pooh, you know?

But what's the what's the the one book that you wish everyone would read, you know, to me. It's funny because this question comes up a lot and you hear a lot of very intellectual answers. To me, it's the Harry Potter series.
I mean, that was that was such a phenomenal series that I just I remember I just couldn't stop with that with that series, and it was so wonderfully written and it just captured so much of sort of my my imagination growing up as both a gamer and and sort of really loving kind of the fantastical nature of things.
And to me, it's one of those series that I think everybody should read, because it really does, to me, epitomize sort of the joy of of that medium as entertainment.
Excellent. That's that's all I have for you. I do want to say, have you played Portal?

I have played Portal. Good.
Good. Yeah, that's that's my partner on PC. I've definitely played it on PlayStation.
Yeah, no. That's that's by far my favorite.
I can go back to that a thousand times.
It's a great it's a great game and that's I love those.
Just I love those games with super innovative play.
Oh, right, right. Exactly. Got you again.
Back to the no analogy thing, right? It's like, Well, what's what's it like?

And it's funny because that's and that's the other thing that I think about in my job, right? Which is like, you want to draw analogies, you want to pattern match, you want to kind of be able to predict the future. But ultimately like to me, the most interesting pitches from companies that I get are the ones where you haven't thought about it, but you know it when you see it right and you can't explain it. But just some of these founders and entrepreneurs, they're so creative and so innovative that they put something in front of you that you would have never thought about. But once you see it, you get it right, and that's when the magic happens.
I will tell you an example of that, and that was the first time I saw what you know.

Ultimately, we would call TiVo, but it was the guy who created Roku had created Replay TV.
Yeah, and he he lent me one of the units, just Scott, back in 1998.
Something like that lent me one of the units and said, Have you plugged it in yet? No, I haven't. Now, have you tried it yet?
No. You know, Andy, I got to get behind the TV.
I got to unplug all the things. I'll do what I promised I did, and the minute because I thought it was a VCR, you know, it was a, you know, a DVR, VCR, whatever. I paused live television for the first time.
Yeah, and I went next door to wake up a neighbor so they could come over and see it.
And there's there was no analogy. I was looking at the analogy of a VCR.
Amazing. And it changed the world.
Yeah. And this is before my time.

But NEA was one of the very first backers of TiVo.
Excellent. Yeah. So a lot of history there.
Perfect. Perfect. All right.

They'll have to cut that.
Well.
At some point we need to just generally talk about how COVID was yo, yo.
Yo, yo.
And just prior to COVID, we were supposed to have dinner.
I remember.
And then I was like, After this is all.
Over, I'm like, Right, is.
It over? I guess so.
I think at some point you just have to declare it over. I'll tell you one way.
I did.
Yeah.
And then I have several times and.
You know, I'm still careful and they're super vaccinated, etc..
Yeah, but, but you know, at some point you have to say I'm just really never going to visit my parents again and that's not possible.
So, um.
Yeah, my parents happened to come. They were fortunate when COVID started.
They were in Taiwan. And I was like, You guys are busy.
Don't come home.
Right. No. Yeah. No. Yeah.

I was handling way better day there.
But since then, they have come back and they.
In Seattle, but they were down here in San.
They've been doing pretty.
Yeah. Oh, God. Yeah. And then.
Like, when they came down, they did actually come.
But I mean, yeah, they were all covered.
I was like, stay in Taiwan.
Yeah.
Different time zone. That doesn't matter.
And so we started doing the whole Zoom chat thing with.
My family and stuff. That worked out well for them.
But I was like. You guys are very.
Where you.
Are. Yes.
They put worry about you when you're.
No. Yeah, that's exactly right. Stay put.
Yeah.
I was trying to.

I do when I'm in the voicing booth, you know, and then I'm conscious of it when I listen to the playback and, you know, ideally, no, but but, you know, years of training, you sort of.
Yeah. You get that that habit, I think.
Should I try? No, no. You should just be yourself.
Absolutely. Do me a favor and count to ten.
No, seriously, I'm not getting anything, you know? Hold on.
I used to have a guy who did all the stuff for me.
Now you're on your own.
Exactly.
Okay. And you. Okay.
One, two, three, four.
Okay.
All right. So one of the things that I have to do because we do not have our audio guy, okay, is everyone.

So I have to look down this machine, make sure it's still rolling, okay, and that it's still recording and all that stuff.
And then sometimes I'll have to wear the headphones as well just to make sure that we're getting good, good audio. Yep.
That does not mean I'm not interested in what you're saying.
Okay.
I just have to pay attention to now, if you have notes on your phone, you are welcome to consult them.
But I'm not going to ask you anything you don't know.
Yeah, that's what I ask.
And we go back a long way.
Yes. And you know, I can't imagine.
I wrote down a few things was like in case you ask some specifics, I've got them like start us in. Yes, yes. Yeah.
Generally, it's not a question.
Yes, not at all.
Yeah. So. All right, all right.
I'm just going to double check my own.

Yeah. No, it's like a casual conversation.
Exact thing.
Absolutely.
Yeah. No, I love the podcast.
Yeah, I mean, the whole, whole part. Yeah.
Listen to this. When I'm in the gym and yeah, I'm like out of getting the podcast off. Oh, you're recording or just taking photos?
Yeah. Oh, nice, very nice.
And then I miss it in the morning when you're not here, like the your segment, when it's missing, I'm like, Oh, you don't get the death of like your kind of coverage.
Oh, you're very kind.
I know they throw it to NBC like CNBC and they'll say, you know, they're general things.
But you're right, I miss it when you aren't doing it.
Well, take a vacation, everyone I know.
So I know when you're on vacation, I'm like, Oh, you're gone today and then you're gone for the weekend.

Okay, so let's start with the Acquired Wisdom Fund.
I kind of feel there's some thought behind that name.
Is there some thought behind that name? Yes.
So it goes to kind of a theme and the thesis of the kind of companies we want to invest in. So our philosophy here is we want to invest in seasoned professionals creating scalable technology products.
And so this actually really grew out of the startup accelerator that I've been running for the past decade called Founder Friendly Labs.
And with that, it's the equity free startup accelerator for seasoned professionals.
So our members are people who've worked at places such as Google, Apple, Microsoft, Facebook and a variety of different companies as well, some serial entrepreneurs.

So for example, one of our members was one of the original co-founders of Excite back in the nineties. So it did very well with that.
But he was now starting a mobile company and decided to apply for our program.
We had somebody else who worked with Steve Jobs at Apple and he was a response for the launch of iCloud. So very successful at Apple, but left Apple to start a company and applied for a program with him and his team.
And then we even had someone else who was a partner, Sequoia Capital.
He was involved with the WhatsApp deal and the Evernote deal, very successful there, but got tired of investing and wanted to become a founder himself.

So he left the clear capital, left his board seats and applied for our program with him and his team. So got to meet some amazing people by running this accelerator and they have prior experience as they're now starting their startup.
And so these are the people we love working with.
And so when starting the fund, we said, All right, what kind of startups we want to invest in? And we're like, We want apps that are done by people with prior work experience who've gained some life experience before starting their startup.
And so that's why how we came to this name.
So is FFL the are they advisors to your startups you're investing in or are they the people you're investing in?

So what's interesting is it's a little bit of kind of a both a relationship where through FFL we will see some startups that are interesting and we'll invest in some of those. So it's a little bit of a deal flow, but also the other way around.
Startups that don't go through the program and we decide to invest in what we do is they'll automatically get into the accelerator and we don't charge them any additional fee or any additional equity to go through the program and they get to participate through the accelerator as well because they're now a portfolio company of Acquired Wisdom Fund.
$5 million in the fund, right?
Yes.
That's a really, really nice house on the peninsula. Yeah.
It's not much money, but it's a darn good start, I think.

Yeah. So for our debut fund, we actually really excited that we were able to raise this. You know, it's one of these things we're just getting started, going to see how this goes. Our initial check size into start ups is about 25 to $75000.
So it's not a huge check. And that actually allows us to be very collaborative with other investors. So we can either help kick off the round for the startup or help fill out the round. But it allows us to work really well with other VCs out there, other investors.
And so one of the really nice things about having a fund of that size, it allows us to share deals with other GP's, they'll share deals with us and we get to be very collaborative and work with them.

There are plenty of venture capital firms that do seed investment or very early investment, which you're doing as well.
I suspect part of the reason you chose, you know, early seed investment is you can't make a very big check.
You're smiling and nodding.
Yes, I agree with that. I think doing pre-seed investment is definitely a hard thing to do.
And so a lot of the larger firms like Tiger go to some of these larger ones. It's very hard for them to move to that level.
They are moving earlier and earlier is what I've heard.
But to move to the Pre-Seed side where they're pre product, there's not much data to go off of. There's not revenue numbers you can look at.
That's our sweet spot and that's why we love doing it there.
And we get to get involved with these founders early.

So what do you go off of?
I mean, you said established founders, so you go off their previous success that they've done something good at Google or wherever, and you now think they can do something on their own.
So yeah, there's two things we primarily focus on.
One is the founders, so that they've done something interesting in their background.
They've work somewhere interesting, they can talk about some of their past accomplishments. But the other part is the product that they're building.
And so this really kind of came out as an extension of our own angel investing.
So had done some angel investing back in 2013.
We, we'd invested in a variety of different companies.
One of them was called Osmo and the founders there Promote.

And Jerome had previously worked at Google in video Ubisoft, Lucas Arts.
So it kind of matches the season professional background that we were looking for.
But the other really interesting thing was they didn't have a launch product to show us. They had no revenue numbers, no user data, but what they had was a really compelling demo. What they were building was an iPad accessory that took advantage of of kind of the new technology that was coming out.
And what we saw was it was really compelling because they had a really good computer vision element to what they were doing.
We invested in them back in 2013.
They went on to be acquired by Baiju in 2019, and Baiju is now India's largest edtech company.
So we're looking at a pretty good return there.

And more importantly, the relationship we built with the founders over the years has been really amazing and they liked us so much as investors that both co-founders are actually now investors in our acquired Wisdom Fund.
I was going to ask you, where did the money come from?
Yeah, so we lucked out in working with a variety of different investors that really kind of believed in what we were doing and the thesis that we had.
And so we have over 80 investors and they range from people who've worked at places such as Google, Apple, Microsoft, some of the large tech companies, as well as some who have worked at very successful startups, including Stripe, KADA and Toast.
And so that's been really interesting there.
And then also founders themselves.

So some who've done been a founder in the past, but also many who are founders right now.
And so it's really interesting with these investors is they're really interested in working with other founders, helping our portfolio companies.
And so we will make intros between our own investors along with to the founders that we've invested in.
Was it easy? You and I have a common friend in Elizabeth Yen, and she said that when she was doing Hussle Fund raising money, she alone did 300 meetings in nine months.
So I will say it was easier to raise money last year than it is this.
Year, I'm sure.
And yeah, so, you know, the has changed the whole age change.
We actually lucked out in just having a lot of these friends that really believed in us.

And so we had a lot of meetings, but I think we were in a point where we had a very compelling thesis, we had an interesting deal flow.
And so a lot of these investors believed in us.
And we ended up initially, you know, we said, let's raise a smaller fund, see if we can get this off the ground.
We became oversubscribed in about six weeks, so I end up really fast for us and we lucked out.
But at the same way, you know, we wanted to be very scrappy about this.
And so that's kind of been our approach and I think it's worked out well.
We have a lot of people who believe in us now.
Oversubscribed. You could have turned a $5 million fund into a bigger fund if you had the discipline to say, no, this is what we want to do.
Yeah.
So we actually started our initial target was 3 million.

And so that's where we kind of started. And then we kind of said as we went along, if there were other investors that were interested, we were willing to expand the fund and but we didn't want it to get too big.
And so we ended up going up to five and we said that so allows us to keep to our original thesis, write the size checks that we want and also be very, you know, we have to be good shepherds of this money.
This is the part, you know, as we're talking to startups and founders, we want to make sure, you know, this is going to be a good investment, potentially a good return.
We know it's super risky. We've warned all our investors about that.
But we want to make sure we're also, you know, make making sure we're putting it into the right companies that we're going to be successful.

Give me a give me the pitch.
Let's say you had come to me to invest.
What's the pitch?
What would be part of our fund?
Oh, so, yes, when talking to our LPs, we generally talk about actually first ourselves. I mean, if we, you know, one of us, it's the the major things we look at is the founders and their background.
So first of all, we talk about the general partners.
That includes myself and my husband.
And so we talk about our backgrounds and kind of how we ended up where we are now.
And then we talk about kind of the thesis.
And what's really interesting for what we're looking at is we want to target be seasoned professionals, people with prior work experience and that seems actually pretty unique in the space.
Not many other VC specifically target that.

And so that resonated well with a lot of the LPs that we ended up talking to.
And then most importantly was actually the deal flow, the fact that I'd been running a startup accelerator for the past ten years, I've been talking a lot of startups through it that was very compelling to them, and I'm continuing to run that program as well. And so Founder Friendly Labs, I still run the program and we'll see startups and see deal flow through that.
You mentioned you need to be a good shepherd in your in of the money and it actually reminds me of there's a Bible story about a guy who gives his servants money and one of them goes off and invests it and the other one just buries it in the ground.
And I'm just such a conservative person, right, that I would bury mine in the ground.

Now, the moral of the story is don't do that, because the guy who invested, you know, makes five times as much.
That's going to give you some sleepless nights, though.
I mean, if people hand you money and you make decisions with their money, it's it's that just makes me just worry. Worry. And I don't even have the money.
Yeah. I mean, it's definitely something that puts more pressure.
So this money is coming from a lot of friends that we have, as well as family money, like a lot of my family has put money into the fund as well.
So it is something we realize we need to be good shepherds of this money. But that said, we've warned everyone this is a high risk thing to be investing in start ups.
So don't put in any more than you can afford, of course.

Yes. I mean, to anyone listening money, being a limited partner in a venture capital firm is, you know, one success in ten at best.
I mean, it's I think everyone understands that.
Nonetheless, it is something in which these are friends and these are family. And what if you never do have a hit and they come back to you and say, hey, you know, it never you didn't do anything with my money.
Yeah.
So our focus is actually make sure we do talk to be startups, do our due diligence, understand what they're working on, looking at their background and our hope with this, you know, we understand a lot of these startups may not end up working out, but our hope is to hopefully invest in another Osmo again.

We were able to do it back in 2013. If we could do another thing like that, I think we would be very happy with that result.
You had your own startup, Groupon.
It's how you and I met many, many, many years ago.
It eventually closed down.
Are there things you learned about your own startup that you then take with you as you look at other startups?
Yeah, so what's been really interesting as we've talked to some founders when we're thinking about investing, they actually realized that because I was a prior founder myself, I'm asking very different questions than a lot of other VCs they talk to.
For example, we care a lot about the founders in the background and their journey, kind of how they ended up where they are. And the other thing is we'll look at the product.

What are they building? How does it work?
What is the UI like, what is the functionality?
And so these are the things we look into and we ask questions in a different way because we've been founders ourselves. The other part is we know the whole reason this ecosystem exists. The reason we get to invest is because there are these amazing founders out there. So we're very respectful of the founders time and we will be quick in getting back to them and responding.
Typically, we'll make a decision within a week of meeting the founders.
And so this is a kind of investor that I would have loved to interact with and I was able to interact with when I was a founder myself.
And so this is what we want to be contributing to the ecosystem.

How do you find these potential deals? I mean, if you're Andresen Horowitz, you know, you just have to to put a desk out on Sandhill Road and say, come to me with ideas and they'll line up seven blocks long.
Where do you find the things that you want to invest in?
So some of them come through the accelerator.
So we some interesting startups that come through that others will come through other GP's that are seeing interesting deals themselves and we'll share some of their deals with us and we will share some of our deals with them.
And then most importantly, we actually just have a link on our website that really works.
Yeah.

A.W. I've got VCE, there's a button there that takes you to a form, you fill it out, we respond and look to look at every single application that we receive through there. And so if any startups are interested.
That's got to run any startups. Richard I cut you off.
We go to your website, but that's going to run the gamut of of just completely insane to the occasional, hey, this is got something to it.
Exactly. We'll see all sorts of things.
And so for some, it's very clear it's not the right fit for us.
You know, they might be in an industry or, you know, they're doing biotech or something that's not really in our wheelhouse or their later stage and it's not a fit for us.

But then there's others some gems that we'll see through there where someone submitted an application and we're like, they match our seasoned professional thesis.
They're working on a scalable technology product and all the checkmarks line up and we say, This is really interesting. We will then reach out to the startup and say, Yeah, let's set up a meeting, let's talk about what you're doing.
And you've funded at least two startups so far, right?
Yeah, we've actually done four so far. Okay.
And so we were deploying as we were fundraising, which is also a very interesting challenge for a lot of emerging fund managers.
And so we funded four so far. I'm very proud of them.
And, yeah, it's it's been a very, very interesting journey so far.

Yeah. Give me a give me an example. What which ones are you excited about?
I mean, obviously, I was talking to Emily Melton the other day.
She's this was like, ask me, which is my favorite child.
Yeah, but, but give me give me some high points.
Yeah. So love them all. But one of them we're really excited about is called Design Pro.
They're building a tool for designers.
And what was really interesting about that is actually one of the co-founders, Mohammed used to work at Google. That's actually how we first met back in 2004.
And so he worked at Google and that pretty early on.
And then he left to join a small startup called Siri.
They you know, he was one of the first product people there.
They clearly did really well, got acquired by Apple.

And so he worked at Apple for a few years after the acquisition.
He's since gone on to do a few different startups and this is his latest startup.
And so that's an example of something we get very excited about because of his background, things that he's done and things he's learned over the years.
And so with what he's currently working on now, we're like, This is really exciting.
We want to support him on this journey.
We're in this funny I, I always often say we don't want to talk ourselves into a recession or an economic downturn because a lot of the evidence says we're not there, that the economy's doing okay.
But did he give you pause that your timing here is or maybe it's the best timing in the world?
Yeah. So definitely fundraising has gotten harder.
It was both harder for us.

We saw the change happen. As you know, the downturn started to happen.
It's definitely reflected in the stock markets are it's a top of mind for a lot of investors. And so we see that happening with a lot of founders and stars themselves where it has gotten harder for and raised this year than it was last year.
That said, we think some of the best companies are going to come out from these times.
I often.
Do.
Yeah, startups have to be scrappy.
Getting funding is not as easy as it was, so they need to be careful about their runway and their burn and all these things that I think just as a good startup, you should be concerned about how do you make money?
How do you make more money than it costs you to get that customer?
And so a lot of these things they need to be think about.

So we actually think this is gonna actually be some of the best time to be investing.
So, you know, over the next couple of years, I think a lot of great opportunities are come around and we think as investors we're well positioned to take advantage of that.
When you were fundraising, were there people you turned down and said, you know what, no, I know you want to be in the fund, but I'm not going to let you.
So, yes, so it does happen and it mostly comes down to fit.
I think what's really important, just as startups, should be very careful at the investors they take. Same thing goes for our general partners.

When you're raising a fund, you want to make sure there's kind of the right investors involved. So for us, we primarily focused on high net worth individuals, people with the money that they can.
It's explains why you never pitch me.
Hey, I tried it at one point.
Yes, I remember. You did. Yes, you did.
And so, you know, we practice we've had we focus on high net worth individuals, particularly those that can provide value to our startups.
And so we thought that was really important and we didn't really go after the larger institutions because we knew it wasn't a fit for our debut fund and what we were doing.

That said, we actually did end up with a few institutions that end up investing in our fund. One of them was Carta, so we decided to use Carta for our fund administration. As we were setting up this fund and as we talked to them, they got pretty excited about what we were working on and they decided that they wanted to put money into our fund.
We weren't really looking for institutions, but we had a relationship with them.
Carta actually went through founder friendly labs that, you know, back in the fall of 2012.
So we got to see them very early, help them grow to where they are now.
And kind of the reverse is now happening. They help to invest in our fund and do all the fund admin for our fund.
And so that's been a really, really good relationship to have.

Just kind of a fact check if you're not taking equity at family founder, family.
Founder, friendly lab.
Founder friendly labs. Well, what's the purpose for?
How do you make any money off of it?
Yeah. So for that program, because we target seasoned professionals, one of the things we realized, most of our accelerators take anywhere from 5 to 10% equity to go through the program. But we ask these seasoned professionals that, hey, you know, if we charge 5 to 10%, equity is something you would do.
And they said absolutely not. Yeah, they weren't interested in giving that way because, you know, the co-founder of Excite or, you know, some of the people who worked at Apple understand how valuable equity actually is.
So instead, they ask if they can pay for the program.

And so that's what we do now. We got a fee to go through the program and that's worked really well because it. Gives the founders two really useful things.
One, there's kind of network of other founders to talk to.
And honestly, having been a founder myself, I think that's the most valuable advice you can get is from other founders. Investors and other mentors can be helpful here and there. But when you're able to talk to other founders, that is where you get a lot of the really helpful things, the most helpful things for your startup.
And then the other part is we have relationships with a variety of different vendors.
Probably the primary one is with AWP.

And so our startups can actually receive free credits from AWB to help pay for some of their their fees that they would be paying for hosting. And so the program really works out well for the startups and can manage on both sides of what we offer. One, this kind of light touch approach where they get access to a community of founders and then to be able to take advantage of the offers from one of our partners, including AWB, Card, HubSpot or one of these.
You had mentioned earlier that your husband Derek is the other partner in this fund, and I should point out to the listener that he's in the room.
He's been taking pictures. He's very proud of you.
Yeah, he can I say hi? He says from off camera.
Absolutely. Off of microphone.

Explain to me the decision making process if you have two partners and you are married to that partner.
If one says this is what we should do and the other one says No.
So it does happen at times where we might disagree on stuff generally.
First we discuss it and so we kind of say, All right, here's what I think about this. Here's what I think about this, because we have such a long standing relationship and this is honestly what we like to see about startups as well.
If the co-founders in a startup have some prior relationship.
Yeah, there's, there's a certain marriage to that as well.
Yeah, yeah, it bodes well but we'll discuss it and oftentimes we actually one of us will bring up something the other hadn't thought about, like, oh, did you think about this market problem?

Or There is this opportunity with it and we're actually able to talk it out and convince each other of it. That said, you know, in investing, not everyone agrees and we see this even with other GP's we work with.
Some are very excited about a deal that we're not all excited about and vice versa.
And so we will discuss it and if that works it's great.
But otherwise if one of us has strong enough conviction, we will still make that investment. And I say, Yeah, I really believe in it in these reasons and I say I don't necessarily agree with them, but you sound convincing enough that let's just go, let's try it.

Now, the one advantage to having a disagreement with the GP at the office on Sandhill Road is that you get to go home at the end of the night and maybe you still maintain that friendship and no hard feelings, etc.
But when you go home at night, you're just.
There he is.
Yes. So he's right there. We live with our decision, but we both know investing is really risky and we actually did our angel investments together.
That was discussed between both of us. And so we have a history of looking at startups and investing in them before. And so we just kind of see this as an extension of that.
Those are my questions for you. But were there other things you wanted to discuss?
No, I think you hit upon.
Yeah, you get a good rest of it.
So to check. Did I miss anything, Derek?

I just do a shout out to Adam and anybody who wants to pitch in.
Oh, yeah, I know you already said it. I'll say it at the end, too.
Because out at Yeah. A.W. have.
AVC Yeah. Or they can email us at A.W.
F at A.W. after ABC Burbank.

Your viewers or your listeners will find interesting.
But I really do think that the I chatted with Elm story is huge as humungous.
I agree enormous I had planned.
Okay.
So for sure. So this is very casual.
Okay. And if we get halfway down a question or an answer and you think to yourself, you're answering the question like, Oh, what was the question?
Yeah.
Just say hello.
Okay.
Like, okay, we start over on that. Got it.
EDIT It's fine. Okay.
And oh, the other thing is because we do not have an audio engineer anymore. Yeah. To begin with, I will put these on and then from time to time I will either look at the machine or I will put these back on. Okay. But it's not like I'm looking at my phone.
Oh, no, no worries.
I do that all the time in general.

/content/Preprocessed_Data/SHR Deus Ex Artificialis Intelligentia.txt

So I'm looking at things to make sure that it's still operating.
I the counters are moving.
I hear the audio levels. All right.
Let's start with after I get these on.
But tell me what you what you had for breakfast.
For breakfast. I had a chicken fried steak, which is a.
Yeah. That would make it really more effective.
I think so. So for breakfast, I had chicken fried steak, which is a a little thin.
Sounds delicious.
Oh, my God. It was amazing. But I just don't want to know how many calories was was in that thing.
Yeah. All right, that looks good.
Well, introduce yourself. Who are you?
Okay. I am Chine Tang. I'm the managing partner of the Berkeley Skydive Fund.

Our listeners are going to be very familiar with Berkeley because we've talked to Caroline before, and but I will fill them in in the podcast so that they're familiar with it. Mm hmm.
So instead of talking about specifically the Berkeley Fund, although we will later, let's start with AEI, which is on everybody's mind right now.
You have written. Will there be a substantial percentage of the human species that will be inferior to machines when it comes to creating economic value? If that's the case, how do they survive in a capitalistic society? We're diving headfirst into a deeply uncertain future. That's a.
Lot.
It is a lot. And I will say that my thoughts on AI and the impact on society and humanity is evolving quickly.

I will say that up until about a month or two ago, I was pretty complacent, pretty comfortable.
Even when Chat came out and all the parents and the teachers were concerned about how are we going to teach the kids anymore?
What was going through my head was, I can't wait to show this to my kids because I think it's going to make their lives a lot easier and it's going to impact them.
And I don't think this is a bad thing. It's another tool in the in the toolbox.
But about a month ago, I started to get nervous.
And let me just break in for a second and say that speaks to how big this is, that I was thinking about the future of humanity.
And my opinion on it has changed over the last 30 days.
That's how fast this is moving and that's how big a deal this is.

That's exactly right. And, you know, in the beginning when I started to have some of these, I'll call it darker thoughts.
I mean, I'm not someone that that walks through.
I'm a very practical grounded when I talk to my founders, the conversation is usually about, sure, we want to go for the moonshot, but who are your customers now? Right. So I tried really hard to stay grounded, but over the last month, as these thoughts started to intrude and I started to talk to people, in the beginning they were just completely internal dialog.

And then I started to talk to some people who are very well-informed, who I thought, Don't calm me down. Right? They'll still they'll they'll come back and say, No, John, you're overthinking it. We're too far. I'm talking about founders, researchers, faculty at Berkeley.
And quite honestly, not all of them feel the same way about this.
It's a it's a very, again, quickly evolving field.
But enough of them came back and said, yeah, John, I'm also worried.
You know, I'm some of them said concerns scared that it made me kind of go like okay I now now I'm not alone and it's really time to sort of extrapolate where these things are going to take us and it takes us in some interesting directions.
If there's a giant paradigm shift, it's hard to extrapolate much of anything, isn't it?

That's correct. You know, the we're struggling with the right way of thinking about this. So, again, two, three months ago, the way that investors and founders tended to think about this was, okay, cool.
We're now on a new shift in tech we're now talking about.
Well, we think about 15 years ago when we first had that shift from desktop to mobile, that was a big moment.
There were a lot of companies like Instagram and.
Uber and DoorDash that would not exist if we did not go from desktop to mobile.
So we thought, okay, this is the next one.

We're going to create perhaps a dozen of massively new, exciting companies and our lives will be marginally improved since then. In the last month, I've come to the conclusion that this is as least as exciting as the invention of the transistor. And I've had people go and I thought, maybe it's as big as the invention of the internal combustion engine.
So these are all huge, huge transitions in our life.
I've had people go even further back.
I've had people say to me, I think it's as significant as the invention of fire.
I had someone else say it's as significant, as significant as the invention, not invention, but the ability for life to see it was equivalent to the evolution of eyesight.

So let's pick apart a couple of those, because I do like the cell phone analogy in that I think it sort of underestimates how important it is. But if you were explaining to someone just as recently as 1990 what the world looked like when we all had a device in our pocket that made us available at any moment and had the entire world's knowledge inside of it, you would say you just you can't imagine what it's like in 2023. First of all, you walk into any waiting room or, you know, airplane or airport waiting room, that kind of thing.
Everybody's looking at these devices.
You go to any concert, they're holding them up and recording.
Our behavior changed around them in so many different ways.

I think that's a pretty good analogy that you can explain it to someone who hasn't picked up a cell phone, what the cell phone world looks like, but it does seem like it's underestimating it a bit.
I think that's right. I think so. When you think about you're right, we can't understate how significant that transition to mobile was.
There are an awful lot of investors and founders that have made fortunes in that process, and quite a few and quite a few companies have died because they failed to make that transition effectively.
But I think the difference is, I mean, fundamentally, when I think about the transition to mobile, it was somewhat gradual and it was somewhat predictable.
I mean, you're right, in 1990, we would have had a hard time imagining Tinder and Uber and DoorDash.

Right? Those were that's a foreign concept to us.
But if you go back, let's say five years ago, you know, before or perhaps five years is not quite enough, let's say ten years ago, could we have predicted that these apps would exist probably, and even in 2000 to go by ten years prior to that, could we have somewhat guessed that what would come in 2012?
I would say yes. I would say yes. And we even know which company would do it.
But if you remember back in 2000 and we we had the Palm Pilot back in the nineties and I certainly.
Had one and we don't let the batteries run out.
So so we had already had we had hints and glimpses of the future. Even back then, they weren't quite good enough.

I think this is more fundamental because it opens up, it's happening so quickly. That's the first thing that I want to say, that the speed at which the improvement is coming is remarkable and that that word is not strong enough.
Right. And then at the same time, it's hard to see where where this could lead. So I'll give you one example.
So I was I was talking. So as you are probably probably aware, we're now in GBP four, right?
So GBP three was launched last year.
GBP three, 3.5 was the basis of our chat.
GBP, which came out last fall, GBP four was finally made, made available to consumers last month.
We know that GBP five is coming in six months or so, and after that there'll be six and seven and eight and and beyond.

When I talk to some of those same peers that I talked about, we like speculate where five and six could be.
We talk about is there a possibility and I know that's going to sound extreme, but I think it's it's worth thinking about the extremes here.
We could be inventing our own god.
Yes.
Right. I mean, that sounds ridiculous, but it's not it's not inconceivable.
We could very possibly think about what scientists do now. They read all of the current papers that their peers have written.
They think about facts about our world.
And in our universe, they come up with a thesis about a theory about what what series of facts that have not been explained by what we know now.
And they postulate something and they govern.

They run experiments and they try and they try to either confirm their theories or whatnot. What happens when GPT five comes out perhaps in six months and is able to do exactly the same thing, postulate a theory that we don't yet have, that our scientists don't clearly have based on the facts as we know it suggests experiments that we can then do. And where does that lead?
You know, it leaves a point where we're going to have a.
Machine that's going to feed us knowledge that we ourselves.
Don't know, that.
We don't know. Crazy world.
That's almost godlike.
What happens to the to the people?
I was talking to Bill Davidow.
He called them people of zero economic value and he didn't mean it as an insult.
Right. He just it's a factually true thing.

The radiologist who could and who's not as fast as the computer and not as accurate as the computer someday.
And Bill asked, what do we have to do to live meaningful lives? We're going to have to grapple with that question.
I think that's exactly right. I will say again, this is a my opinions on this are somewhat evolving. So if I could give you sort of the short term view as well as the long term view. The short term view is, yes, disruption is happening, but I think on the short term it will be positive for humanity and for for consumers.
I think about all of the the the stuff, the services, the products that we get to consume that's only available to, let's say, the wealthiest ten, ten, 10%.
We want someone to come and help us decorate.

Our house. We want a professional to teach us how to play the piano.
Right. Right now, it's usually only the wealthy that get to consume those things.
I think on the short term, what's really exciting is that now we're going to be able to use a piano. A piano teacher will be able to use a tool like this to be hands on and teach thousands of of of of students without actually being in the room.
That's a positive. And as consumers, we're all going to benefit.
We can just think about all the services that cost a lot of money and realize that it's going to become a lot cheaper. So that's exciting.
But on the medium to long term, I do question that, right?

You know, people have said, hey, when we made that transition because of the internal combustion engine and now we don't need to work in in the fields anymore. Well, that was okay.
So what's so bad about the upcoming transition?
Maybe we'll just move from being.
They've always worried about the steam engine and whatnot.
It'll be fine.
It'll. We'll just find something else that we're better at.
I think that we have to ask the question, because for 10 to 20% of the population and we can we can we can have a deeper dive on is it 20% or 50%? But for some percentage of the population, they'll be better than the science in some aspects, and they will have a role and they'll be perhaps even more.

Wealthy or economically efficient and have a higher value because now they have an API to to boost them.
But for the 50% that perhaps don't have a single skill that is superior to the A.I., we have to ask the question if we live in a society where you're compensated based on the economic value that you create through your work, what then?
And these could very well be or in some cases it's more likely white collar workers. I gosh, I wish I could remember who said it.
And so I give them credit. But, you know, somebody once said that the best job in the world is motorcycle mechanic.
Yeah.
You can't ship it overseas. Yeah, Good point.
Yeah. And I can't do it either.

Can I go beyond its current knowledge base when we use chat GPT 3.5 and whatnot. If you ask it occurred questions as I don't know anything past 2021.
What was the do you know the limit?
Why the limitation was placed there, and what's to stop us from just continually feeding it information.
Yeah. So the the the way that you create cheap t 3.5 or four or five, there's really two different modes.
The first mode is the training mode.
So when you're training it, you're, you're essentially you're taking some set of knowledge, you're labeling it, you're telling, you're telling CBT, you're telling your, your machine. This is the output I want you to generate for that input and you're feeding that that in.

And that's a train process that costs tens of millions and probably soon hundreds of millions of dollars.
And that's what he said just has a cut off date because, you know, we're going to train it as a now. Yeah the the I actually think that that mode which has been critical so far, I mean, that's been critical to open AI's success so far.
I actually think going forward that mode is going to be less significant.
The other way of working with these models is called prompt engineering, where you actually in the context.
So now you have a train model. So think of it as we've now created an instance of something, right? It's we fed it all of this knowledge.
It has it now. Now, in the context of me working with a model, I give it in the question that I ask.
I give it a lot of content.

So right now there's tools that exist now so you can ask it, Hey, search through my PDF file and tell me what this person said about that topic.
That pedophile was actually not being trained. What you don't see in the background is the peer file is being fed into the prompt.
So what the if you could put yourself in the shoes of the LEM, the model is seeing Hey, model.
Hey, hey Sydney where Hey chat gb t here's the file. You know, line one through line, line ten 10,000 based on that answered this question for me.
Okay, so we're already in.
Now, the surprising part about all of this is how effectively that works.
The surprising part of all of this is how well this works.

I really firmly believe that the engineers that were building this thing, if you asked them a year ago, they would not have thought it would have the capabilities and the buildings that it currently does.
And what we're seeing is that the prompt engineering based approach that I just talked about is very effective.
The result is we get a intelligent feeling machine that understands the knowledge we wanted to have and can give us the answers that we want.
I was going to ad lib a question and I'm trying to think of what it was.
Oh.
You were speaking about, you know, this democratizing or the egalitarianism of A.I.. It is fascinating now because I had a conversation with two fellows just, you know, over a Scotch whiskey or something, which Chet duped came up. And one of them was so excited.

He's a sales guy, you know, I'm going to use it to do this.
The other one, very bright human being, had never heard of it.
And I remember back, this is such a terrible analogy, but it works in my head.
I remember back to the probably the early nineties, and I was sitting in a hotel bar with my wife in Washington, D.C., and we were talking with some other couple.
And they were talking about how expensive the hotel was.
And they said, you don't use Priceline.
And they said, What is Priceline? So it's on the Internet.
They said, oh, we haven't seen the Internet yet.
We haven't we don't have the Internet.

And it was one of those where, of course, I had paid far less for the hotel, obviously, where there was a moment in time in which some of us were using the Internet every day to do amazing things.
And the other half was like, oh, yeah, no, I haven't tried that out yet.
And we're sort of and it may be only a very short period time, maybe six weeks, I don't know in which there are those people out there that have never logged on to chat or similar.
And those of us who use it kind of every day.
Yeah. I encourage everyone to explore, to experiment with it, and really to think through those questions of how is this going to affect my career and how is it going to affect my kids careers.

I think it's a question that is holding on us to try to answer now. What I will also say is that I'm not sure Head Start is going to help a whole lot.
I think change is coming for all of us and every single one of our careers.
I'll give you a concrete example of of what it might look like.
So one fact that people have observed with some concern is that a lot of companies, the CEO, the management team now makes significantly more than the people who work on the front lines.
Right. Contrast that to where things were perhaps 200 years ago, where. Sure, the person who was, you know, the head of the construction firm versus the folks who actually had to swing a hammer, there was a price cap there. But I don't think it was that dramatic.

Well, when when it becomes widespread and I think we're only a matter of perhaps months, but certainly no more than a few years away, I think that gap is going to be even more substantial.
Now we're talking about a future where the management team can accumulate even more wealth.
At the thought of that.
So imagine a world where a 100 acts, which I think most of us already feel uncomfortable with.
Imagine what it's 10,000.
X and you can make the workers more efficient and have fewer of them.
That's exactly right.

So I asked GP for for a question to ask you of late, and so it responded, asking good questions to a venture capitalist like John. I have some grammar issues about asking too, but anyway, it can help you gain insights into the venture capital industry and the strategies and philosophies that guide their investment decisions.
I think that's a terrible question.
It goes on. What advice do you have for aspiring entrepreneurs who yadda, yadda, yadda yadda? Terrible question. I'd rather ask you about your first job.
You were a paper boy.
I was a paperweight. That's right.
Then. So that's up early.
I mean, for those listeners who have no idea what a paper boy is.
It's not really true. Oh, man, I feel old now.
Yeah.
That is up early. What age?

I was in seventh grade. So what would that have been?
11. Yeah, 11. 12.
Yeah. And a bit. What for you.
Well, so I used to do the Sunday Chronicle.
Oh, excellent. And if you remember that, I mean, the Sunday Chronicle.
Oh, it was. I mean, if you guys said I'm sure you've you've seen certainly the pictures of the paper boys with their porches front and back, I could carry for you. I mean, it was it was that big.
So I would have to make multiple runs where I would drop out for a go, go back and and and get more.
And my parents were lovely and so supportive.

And they would actually because we had to get the paper like, you know, maybe four or five because it had to be on people's doors by seven, you know, Sunday morning everybody wants to read their, their a paper and they would help help me fold and help me, you know, put it in into the pouch.
Yeah, it was a really good experience.
What did you.
Do? That's big money. 11.
That's you know, that's a well-paying job.
That's about the only job an 11 year old can do.
What?
You do the money.
Huh? I really honestly don't remember.
I was a pretty good kid. I mean, I collected comic books.
I think there's a decent chance that that a significant amount went in that direction.
Yeah, and I'll tell you, I will tell it.
Tell you one thing that I learned in that process.

Um, I didn't get good. I did not get good at it, but I came to recognize, man, I am weak at this. It was the part when you go collect money from the people that you sent me because, I mean, now I know I learned from some of my peers that that's when you earn the big bucks.
The reason you do that in person is because this is where you you get your tips, right.
And I am.
Embarrassed as heck to knock on some stranger's door and be like, You owe me money right now as a lover. So I was horrible.
I'd be like, Here's your bill. Thank you very much.
Right. Right. So. So that was a lesson.
I was like, okay, okay, I need to learn how to be better at selling.
And although I am certainly curious how A.I.
is going to change that world too.

Well, the whole world has changed because I feel like I have to explain to the young listener that you didn't pay the bill to the San Francisco Chronicle.
The the paper boy came around and got the money for the San Francisco Chronicle.
I really think that they did that because it was a way to supplement your wages.
Right. It makes total sense. But yes, you're right.
It's hard as a young person to demand money of an adult.
So at some point you moved to China?
Mm hmm. What age is that?
Well, so, I mean, I.
We've lived in China off and on over the last decade or so.
So we did it when my kids were like five or six.
We wanted them to work on their Mandarin, which has not been super successful, unfortunately.
And at some point, they're going to hear.

People speak English to them, know, like, we're moving all the way over here.
For sure. Well, I mean, and we have three kids, so they speak to each other primarily in English. So that's a constant struggle. It was like, come on, you know how hard this was?
Just just pretend for me. Pretend And then.
And then the last few years and then. So that was a while ago.
That was like a decade plus. And then about two years ago, with COVID starting to be a major factor, of course, around the world.
But our our kids were were were dealing with the uncertain schooling situation.
And what we knew was that in China, it was it was quite different.
So back in 2020, it made sense to put them in international school in China.

And yeah, and then now that my my daughter is in of an age where she's thinking about college and all that, it's it's hard to transition her now.
But as she applies for college, of course that will change because she will be going and we expect and we hope that she will be going to college here in the U.S..
As someone who has straddled both worlds, then what are we to make of the suspicion of Chinese companies like Bytedance?
I get you know, I get the concern.
I keep waiting for Washington to give me some concrete example of where, you know, they did something wrong.
Where do you stand on biotech?
I think the suspicion is actually pretty easy to understand because it's the same suspicion that I hear in China when it comes to U.S.
companies. So in that sense, the sentiment is the same.

What I think is really unique or is unfortunate about what I'm hearing on the U.S. side is sort of the opposing voice, the idea that, yes, there are justified concerns about data and influence. These are perfectly fair concerns.
What are we giving up by having a concrete ban?
Like, where does that end? Right.
Where are we just completely saying that regardless of what consumer advances what technology advances come from China and there is quite a bit of it.
We're going to say no to it just because.
That's the thing, right? Is that the idea of banning tick tock is that It is.

That Bytedance's would communicate with the Chinese Communist Party, that there is some ownership there that Bytedance wouldn't have any choice but to, you know, turn over data. But that may be true of any Chinese app.
There's nothing unique about Tik Tok, the next big app that comes out of China.
We would have to say the same thing to be fair.
I think that's and I think that's right.
I think the better question to ask is how do we defend data? How do we prevent influence?
And banning a corporation is not the it's not the answer, Right?
I mean, what precludes and I'm not really going to throw out any names, but even an American owned company, let's say that they have an offer for a massive commercial deal in China, but it comes with we want access to consumer data in the U.S..

Well, technically, that's legal, right?
Is that isn't that the primary concern rather than ownership?
So I think that's the better debate in policy on the policy side should be how do we protect data, how do we avoid influence that applies to Ticktalk, to Twitter, to Facebook and whatever comes next?
Let's finish up with.
Your work at Cal. And again, I'll remind the listener that if they want a lot of information about Skydeck, we have done that in the past.
But what sort of companies are you seeing apply?
I assume air is going to be one of the I don't want to call it a trend because, you know, that's not fair to the people who work so hard on their company.
But I assume quite a few of Marriott.
That is a safe, safe, safer.
Safe. Yes. So for sure.

So we are seeing with the macro environment being what it is, obviously it's it's been down with venture being somewhat down.
The deal flow for us is better than ever.
We had a record number of companies apply and I would say the caliber of the companies that we are seeing is just. Amazing.
Remarkable. These are companies that will absolutely change the the world in the coming years. Terms of the fields that that they are going into.
We still see some of the stuff that we always want to see.
Sustainability, robotics, etc..
But the biggest sort of up and rising segment is without a doubt what's happening with with them. Chatbots. And I, I think this goes back to the question that that GP for tried to to ask me and no one's going to. No one's going to shed a tear for us.

But for VCs it's actually very hard to figure out how to place an investment in the same category. Despite what I just told you about how significant all of this is going to be on society.
If I put on my VC hat and go, okay, how am I going to make money? How am I going to pick a company where my investment is going to do extremely well? And that's actually not that clear.
I go back to that the dot com era.
You remember the browser wars.
There was a real question of Netscape, Internet Explorer.
Who's going to win? And it felt like whoever won that battle would own the Internet.
That's why they fought so hard for it.
20 years later, it's all irrelevant.
Yes. And I would even go as far as search.

I mean, certainly Google has done a wonderful job of monetizing that search and being able to drive a lot of revenue.
But I don't know that I believe that that Google has gotten to own the Internet space just because they own search.
I think we were I mean, I was frankly surprised that a platform like a Facebook would be as dominant as it turned out to be.
Without a single handset in the case of the iPhone, could become such a dominant platform that everything else has a flow through it. So the ultimate businesses that will win in this conversion and this transition to the AI first world is unknown.

I even have doubts if open A.I., which is clearly the leader here, which is clearly doing tremendously exciting things, I'm not even positive that there are going to be a massive commercial success.
Because there's real concern in that. I don't see concern, but there is a real potential that what they're doing becomes commodity.
Very quickly.
Very quickly. And how do you monetize?
Yeah.
Those are my questions for Is there something I should have asked?
No, I enjoyed the conversation very, very much, I think.
I want the audience to tell me again the same questions that we just we just talked about. What should our kids do?
My daughter is 16 and I'm trying to give her some guidance on what to study. And and I have to tell you, I'm stuck.

Well, I will leave you then with a quote again from Bill Davidow.
We should never forget that human beings are extraordinary creatures brave, endlessly creative, adaptive and born survivors.
Over the course of the last million years, we've gotten through much worse.
Can I give you one more thought? Of course.
This is also something that has come up in the context of thinking about the evolution that's led us to this moment.
When you think about the human brain and the primate brain.
Yes. So obviously, that comment makes me think about that, that the biological difference between our brain and the primary brain is actually not that significant.

Right? Right. We talk about maybe there's more folds and there's more surface area in the neocortex, But whatever that incremental 1% difference is, it allowed us to write poetry, to cook amazing meals, to have podcasts.
Right. I really think that that the 1% improvement that LED catch CBT 3.5 and tried to be forward to be so significant.
We don't know. It's hard for us to quantify it.
It's hard for us to describe exactly what that marginal improvement was, but the outcome of it seems tremendously impactful.
I want to be hopeful about the human race, but I am really pondering what that ultimate win for us is. What is that critical role for for human humanity?
We we've always lived in a human centered world.
What will it be when we are no longer the center?

What will it be when the best poets and writers and actors and scientists?
Are not human.
I love it. The question I ask lots of people, but I don't include in the podcast. I just collect them and then sort of smoosh them all together once a year. Is what book has been most influential to you?
And it does not have to be something, you know, the Harvard Business Press.
It can be Winnie the Pooh.
Yeah. What's a book you give as a gift or that you think about often or you read often or had some very big influence in your life?

You know, I'm going to come back to one of my favorites, partly because my kids are actually in the process of being forced to not force me, asked to read it in class right now. And that's actually doing interesting doing, which is a wonderful movie as well. Last year that one of the ties back to our current conversation unit is set in a world where thinking machines are banned because of a. A holy war.
Jihad had been launched at some point prior to the setting of the story.
There was a holy war where humans essentially did not want to be on the fringes of the world, destroyed the system that existed prior and forever banned the creation of a machine that could think like a human.
I think in this in this upcoming era, something to think about.
That's I think that's that's awesome.

I'm going to go ahead and start recording. You don't need to send the video.
Send it to you afterwards, do you? No, no.
Because we weren't even going to record the video at all and audio.
Okay. It's purely audio.
It's purely audio.
But the reason we use video even a little bit is just so that, you know, just to get the, you know, the feeling of what the other person is thinking or, you know, easy opportunity to interrupt or.
What human interaction is.
Yeah. Yeah. But, you know, I mean, we've done it without this before.
We can will do it without it again. It'll be totally fine.
So the most important thing to know is this is super casual.

You know, we just want to talk. My my thesis for this podcast is that, you know, a lot of people want to be Silicon Valley's Silicon Glen, Silicon Alley, Silicon Beach.
But and they think, you know, that they can duplicated.
But what they don't understand is the importance of venture capital.
Mm hmm. And now, less and less especially post-pandemic venture capital, being located in a certain spot where they all go to the same coffee shop is is turning out to be less important.
You know, there is venture capital throughout the world and venture offices throughout the world, but at least the major growth of Silicon Valley was that that understanding or people didn't understand.

And so as I do, the podcast, you know, is for people who may not understand what it is and want to know more about it.
So it's not a gotcha kind of thing.
It's it's a, you know, let's talk sort of thing.
So normally if I had video, I would say if you get halfway down an answer and you're like, wait, what was the question?
You know, we do that. Sometimes I would say, just wave your hands in the air.
Go, oh, hold on, hold on. I'm starting over.
But we'll just do that by audio. Just say, all right, hold on, I'm starting that one over again and I'll just edit it out.
It's no big deal.
All right. That sounds great.

Cool. All right. So let me begin by saying let me understand how this story works. It's my understanding that back just before the turn of the century, there's this guy named Frank Sebring who borrow some money from his brother in law to build a factory to make tires for carriages and bicycles named the company after the inventor of vulcanized rubber, Charles Goodyear.
And a few years later, a new customer puts in an order for 1200 tires, not for a carriage, but for something he calls the Model T.
And then Silberling thinks to himself, You know, we need to support this Henry Ford guy, because if he's successful, we could sell a lot of tires.
Yes. And you got the story right.

And I also love to tell that story because often we say, you know, we at our roots for a startup as well, at a major inflection point in the industry, in transportation.
And as you said, we started out selling carriage tires, bike tires. I actually write when they're about to sell, the first automobile were founded.
And if you think back, you know, people are running around saying, what are these horseless carriages?
And you know the story as as we know it, a whole new industry was born.
It wasn't only about the vehicle or the automobile, but it was also about the tire industry is also about the road infrastructure that had to be put in place.
The gas stations that were put in place and that ecosystem that was built up around getting people and goods from point A to point B.

And I like to say that we're at that inflection point again.
And that's a big reason I think we are investing in and partnering in what's coming next in what we call mobility and the future of transportation.
And let's define mobility. I mean, that's an industry word, but it means just simply getting something, a person, an object from point A to point B, right?
Yes, certainly. And it is one of those terms that is thrown around quite a bit. And, you know, we also look at it is how is this getting disrupted?
What do we think it's going to look like in the future?

And you'll you'll see a lot of people in the industry talking about this future of more connected electric automated vehicles, know getting people and goods from point A to point B, I said before. But even more importantly, how do those trends come together and what problems are we trying to solve for?
And it's a really exciting future where we're trying to solve hard problems on how do we make this ecosystem safer, more efficient, more sustainable, even, you know, adding convenience and accessibility.
So those are another lot of big, big words.
But when you dig into it, that's not an easy task.
And there's a lot of technologies and business models that are required to make it happen.

On a highbrow level, you know, you're making the world a safer place, a more efficient place, a more connected place, and a somewhat pardon.
How the crude thought of this is, you know, if we have more things moving, will sell more tires. That's a fair assessment, isn't it?
Yeah, that's part a part of the assessment, certainly.
I think that, you know, when you look at how things are getting moved, the vehicles are looking different.
Ultimately, then the tires are going to look different.
And then more importantly, what can we add to the ecosystem to make the use of our tires more efficient for, for example, and more sustainable, for example?
Now, you you have 100 million in the fund by Silicon Valley standards, under millions. Not a lot of money.
Mm hmm.
Yeah, but it's useful to you.

Yes, it's very useful for us.
We launched the fund and very early in 2020.
We've made about 12 investments since then.
Really, with this idea, we had been working with startups for some time, partnering with them.
But as you as you said earlier in our conversation, it's important you're able to bring some capital into the game as well.
And that's what we are able to do with our Goodyear Ventures Corporate Fund.
A few weeks ago, we were talking with the head of the venture arm of Chipotle, you know, the burrito guys, and it has its own venture arm.
And they were talking about investing in things that made their specific business better.
Robots and communication, restaurant communication, that kind of stuff.
What's your fund's criteria? What are you looking for?

Yeah, certainly our fund's criteria is really looking at who is enabling this future transportation ecosystem, some of them, and what are the core technologies that are making that happen.
And we look at that and then say, hey, how can also Goodyear strategically partner with them to accelerate their businesses forward?
So digging into that, for example, they might be potential customers of ours in the future. We've invested quite a bit in autonomous vehicle companies that are moving goods, and these are our customers of the future and we want to learn what are those problems we can help them solve, how can we help them through our products and solutions and unlock more use cases for them to move goods autonomously?

You want to build that relationship early because the little robot that looks like a little cooler that's going to drive around college campuses is going to need rubber tires. But, you know, there's also Michelin and Firestone.
You want to get in early with that relationship.
Get in early and understand.
You mentioned Starship Technologies.
That is doing a little cooler on wheels, but I mean, very different performance requirements of a tire product than someone's vehicle that they're driving to and from work and between soccer practices, caring for people.
And we're talking about right sizing the transportation vehicle to be efficient for delivery of food and groceries.

And so, honestly, when we first invested in Starship, we looked at that to say, hey, this micro delivery trend really picking up because it can have an impact on our business in the future.
And it was right in 2020, the onset of the pandemic. And we also saw this is a trend that's really getting accelerated based on contactless delivery needs. You know, those people with delivery in different situations.
And that's where we saw we saw it pick up dramatically.
You know, they talk about it took them several years to do their first million and deliveries, another year to do their second million.
And they're well beyond 3 million deliveries today.
And so as as fortunately, we're moving away from this pandemic situation, they found a use case that's sticky and that people love.

And, you know, as you mentioned before, and they need tires.
And quite frankly, it was a new vehicle and similar back to our beginnings that no one really was making a tire for those vehicles.
And that's something that we are uniquely positioned to do.
So we have prototypes out there today and we're also in this application pushing some airless tire technologies into that segment because you don't want to have to manage air pressure each each day for an autonomous vehicle.
You don't want to have a situation where the vehicle can't get back home or can't make that delivery.
So really excited to be providing our airless tire.
And to that segment, you know, partnering with one of our portfolio companies.

I describe them as little coolers, but for someone who's never seen it really honestly, it's pretty good description.
Describe what these things are.
Yes, certainly. So it is a pretty good description.
It is a refrigerated small vehicle that operates on sidewalks and typically the use case is carrying, you know, fast food or Starbucks order from, let's say, the. A student union to a dorm on a university campus and some or in some urban areas as carrying groceries from from the store, you know, to someone's home.
Completely autonomous.
We are operating on sidewalks mainly, but of course, going over curbs, crossing streets.
And it's really starting to pick up a lot of traction.
And if you if you think about it, you might order someone to come deliver one of your meals today.

And, you know, they're driving a vehicle really made to carry four people and and sharing your burrito from the shop to your home and waste, I'd say wasting a lot of extra energy to do that when you can really rightsize that transportation at a much lower cost as well.
So what does success look like for you?
Because, you know, in traditional venture capital, we we would take, you know, some limited partners money. We would put it in a fund, we would invest it and then, you know, return it and say, look, look at all this money we made.
It's not necessarily I'm sure Goodyear, in the people that put you in charge, would not be disappointed if Goodyear made a nice tidy profit off of off of the the little cooler the can.
But that's not the point. Right. It still is.

To learn about the industry so that you are ready to supply the industry.
Yes, certainly it is to, you know, really be partnering with the industry, creating that strategic foresight, understanding what trend, what new transportation elements are coming, which ones aren't.
You can learn that with a seat at the table getting getting your hands dirty a bit and co-creating with them.
You really start to understand what's working, what's not working, where do we need to double down now with all of our investments?
We of course, there has to be a strategic tie in with what we're trying to learn and what we're trying to create together.
But we also will look at some of the financial aspects and most certainly the leadership team of the startup.

And we often say if it's if it's not a sound decision, an investment decision, likely they won't necessarily be around for you to make those strategic call.
It makes it so.
That they go hand in hand.
But we're not making financial only investments.
To your point.
You're a little less concerned what your exit is going to be, though, right?
You know, an IPO or a sale or anything else.
You're so busy learning about that industry.
And yes, of course, it has to be a good investment because you want that company to stick around to be your customer.
Yeah, certainly. Certainly.
So some of the advantages to investing, you get the early jump on technology.
How do you.
How do you balance having the relationship?
And I'm speaking of any company, not just is it Starship?

Correct. That's one of them, yeah.
Not just Starship, but any company I'm speaking of.
Any company. How do you balance having a relationship with them that goes back from their founding and not strong arming them into, you know, more profitable terms?
Hey, you know, we're good here. Of course you're going to go with our tires because remember us sort of thing. How do you balance that?
Or have you gotten to that situation yet?
Yeah, I think the the first thing as you go into especially corporate venture capital and any venture capital, it's with this mindset that it's about.
Helping the startup be successful.

So that is kind of first and foremost top of mind. And and as an investor, you're you're aligned around those incentives of how do you help and make sure the startup can be successful. So things that you wouldn't want to do is come in and strong on them and say, hey, work on our priority.
For example, need to trust the startup leadership to work on their priorities that builds the relationship and then really will come back with dividends in the future.
So that's one of the big mindset shifts.

Often I think it is easy as a big company to come in and say, Hey, do what I want you to do, but we're coming in as an investor that wants to see them succeed so that it's really starting with with that mindset. A second piece to it, we do have a dedicated corporate venture capital team who really fosters those relationships with the startups and does a lot of the bridging back into different aspects of Goodyear so that we're able to bring the best of Goodyear to the startup.
We're in an unusual point in venture capital.
I mean, some of the big venture capital firms have pulled back a little.
Corporate venture capital always struck me as being a bit of a fair weather sort of thing, but but not so much anymore.

I mean, there are opportunities for startups listening right now who not necessarily with Goodyear, might want to look at whatever industry they're in and think about corporate venture capital might be the solution to their funding.
Yes, possibly. I think that's one of the one of the advantages around having corporate venture capital.
And that long term view is we at the same time have an understanding. There are ups and downs in the market cycle, but we are committed to this future. We're trying to create around a more connected electric autonomous future, the mobility term to everybody, the future mobility term that everyone uses.

So I think it's a it's fair to say that I know for us that our fund is here to say during good times and maybe not so good times because we we see that they're just blips in the road on the on the way to something, something greater.
Now, you know, I would say to you, the fundamentals of investing are there, whether you're a financial risk or corporate V.C., you are looking for those startups who are really are trying to solve a big problem and have some unique insight on either what the problem is and or how to solve it.
And I think if they have that that equation well sorted out, I think they'll be able to continue to get funding, getting funding in whatever environment.
You were for a time, project leader, a Goodyear's innovation creation process.

What did that entail? What is innovation in a.
I mean, I probably didn't say triangle tires.
Let's try that. Oh, no, that doesn't work at all.
What is an innovation in a tire?
Yeah, certainly. So, I mean, referring to that role specifically, I mean, we're always looking to to build our technology and our products market back.
So first and foremost, understanding what are those who's who's our customer, what are those problems and pain points that you need to go solve for? And either how can you solve that in today's core tire products? So that might may mean making it last longer, potentially having better fuel economy or less rolling resistance, as we call it, just based on those needs?

Or do we look at creating a brand new solution outside of tires? So a big part of my role today, for example, is looking at how do we create solutions beyond the tire itself.
We are, for example, digitizing our a lot of our tire products where, you know, we're able to pull data and information either about the tire or, for example, the condition of the road and feed that back to customers either into their vehicle or into their fleet management system.
So that's one type of innovation that we're working on.
And the second piece, as we look towards towards the future, another one of those big problems to solve is how do we look at incorporating more sustainable materials into our product?

And that's something that we're all here at Goodyear very passionate about trying to solve for. We did demonstrate a 70% sustainable tire at the end of last year using things like soybean oil, using things like silica from rice, husk, ash, which is you look into it sometimes a waste stream.
And so we're excited about what's what's possible in that space in the future.
And also looking at, hey, who can we partner with to help us get to that 100% sustainable tire?
So the tire of the future or the not even near future, maybe near future is going to be something they can read the road and give you or me information about it.

Yes, certainly. So this is one of the areas, for example, where we're piloting some of our solutions with fleets today and even with some of our portfolio companies. So for example, we're piloting our tire intelligence solutions with Garik, who is a middle mile autonomous vehicle trucking company.
And what we're able to do is some of the we we can identify the current state of the tire.
So monitoring pressure.
The wear state or when that tire needs to be replaced.

But even more exciting is being able to pull information from the vehicle, pair it with information from the tire, and start to provide what is the condition of the road between that tire road interface. If you think about a vehicle, the tire is that main contact patch with the road. We've been doing that for over a century and now we're digitizing that piece.
So as we look to the future, what's going to be able to unlock better safety systems on vehicles?
Unlike other use cases for autonomous vehicles, we can start to provide information like is the road wet, dry, is there, is it icy, potentially snowy?
And that can really support the autonomous vehicle as it looks to, hey, how do I plan that next action based on everything I was able to sense?

What's the biggest threat to the tire industry?
You know, I can't think that there would be one.
The wheel has been around for a long time.
And it's not like, you know, cars are going to switch over to tank treads or something.
Right. So, I mean, we we're pretty excited that we believe the tire is going to stay around and and continue to enable transportation into the future.
And it's more about how do we continue to provide that leading product and continue to enable those next use cases?
Like I said, with respect to autonomous vehicles, like I mentioned, with making the product more sustainable in the future.
So sometimes, you know, you look at what are the risks to our businesses, but then you say, how do you turn those into opportunities?
You're a chemical engineer by trade.

What made you interested in that? And when did you first figure out.
That's me. I'm a chemical engineer there.
So I really have to think back for for that one.
But I think it's a great a great question.
And actually, I think I've told this story a couple of times, but way back in high school, I was actually that kid who really liked math and discovered chemistry. And my father one day said to me, you know, there's this thing called chemical engineering where you can use your math and your love for chemistry. And even better, it's a four year degree and you can get a pretty good job when you graduate.

And so there was a bit of that practical nature, plus something that I really enjoyed doing way back as as a high schooler and then was able to connect with engineering programs and understand what is a chemical engineer do.
And I think, you know, it comes back and I always repeat this, it comes back to learning how to solve problems.
And that's really the crux of of an engineering degree.
That's got to be fun to go from mathematics, you know, on a piece of paper, on a chalkboard, on a computer to a final thing that is a product that works.
Yes, it is. It's a lot of fun figuring out how do you bring that, you know, bring that to reality.

You know, see how your customer responds to it and then start to gain that traction in the market where you really see it helping, you know, change someone's operations or, you know, help support someone's business or even, you know, just getting from point A to point B more safely.
So that has been a lot of fun. I think one of the things that I've learned over time to it's the technology is really important, turning it into a product.
But then, you know, what's that? How do people experience that product?
How do you make it either easy to use or really tied into making that person's life better?
So it really starts with how do you wrap that technology around the people who are going to have to interact with it?

I think sometimes in Silicon Valley we can get a bit full of ourselves as far as, you know, the innovation that comes out here. But there are places all over the United States, including Akron, Ohio, or Battle Creek, Michigan, or Champaign, Illinois, where things are moving forward quickly.
Yes, certainly. And I think I think what we've learned, too, in the last couple of years, it doesn't necessarily matter where you're where you're sitting.
There's so many ways to connect with each other.
Build those build those relationships, get things done over over a video conference call.
And I think that's really made a lot of technology and different types of roles and different types of jobs really accessible to a lot more people.

My last question for you is, you ever, ever have you ever written in the blimp?
Yes. That is one of the perks of the job sometimes.
We we love to showcase our blimp.
And you had a couple of opportunities to host some of our customers on the blimp.
And it's always a good day at work when your job is hosting a customer on the blimp now.
Describe it to me. I've never been in a blimp.
I mean, walk me through it.
What does it feel like? What does it sound like?
And they're surprisingly maneuverable.

Yes. So I mean, what what I would say, what hits me the most when you're in the blimp is I mean, you're you're kind of sitting below below. And the gondola and the windows almost feel like floor to ceiling windows. So it's not like when you're on an airplane, you can just look out a small circle and you get a full almost bird's eye view of whatever you're flying over and you're much lower to the ground. So, you know, you can look out and see your your house, your neighbors house. We've often we'll fly over our Goodyear headquarters or in other locations. And you really get that true bird's eye view and you feel like you're floating through the sky because. Because you are.
And it's one of the most iconic advertising symbols of all time.
Yes, certainly.

Those are my questions for you. Are the things you would like to touch on that I didn't think about.
I think I think we covered a lot of it.
I guess if, you know, let me know if you want more examples on anything. Well, you.
Know, I guess, you know, one question I guess I would ask that I didn't think to ask was, you know, here you're a chemical engineer at Goodyear and you're doing math and you're making products and you're innovating and all that stuff.
Tell me about when they came to you and said, you know, we'd like you to run venture capital. And then you thought, gee, I mean, I know you have a business degree, too, but, you know, you thought, okay, I'm a chemical engineer.
So how did they approach it? How did they come to you?
Was it your idea? Was it somebody else's idea?

Do they call you on the phone and say.
I mean, I think it goes it goes back to actually around you know, my start over.
About five or so years ago, you were really identified.
Where are the next customers coming from?
As you start to look at the automotive industry really transitioning to a tech industry and you saw a lot of that innovation, quite honestly, was coming from Silicon Valley at the time, I think in 2012, 2015, you know, big change in where automotive tech was coming from.
And so I actually said, hey, I think we need to have more presence in Silicon Valley. I think we need to engage with these startups.
And so first we started by putting in office in Silicon Valley. We have an office right in the financial district in San Francisco.

And then as as we learn, what are the tools we need really to be successful, really to have these strategic partnerships where we can start moving the needle.
And then we identified venture capital and I pitched, Hey, we need a venture capital fund. Here's what we think it should look like.
Went out and benchmarked other great corporate venture capital funds and got it started. So I think generally in my career it's more identifying a need and making the proposal and going after it.
And if you don't know how to do it, you go ask a lot of really smart people.
And I think that's one thing that I've learned. People want each other to be successful and they share those best practices. So you can put put what matters together for your company.
Excellent. Those are my questions for you.

I really appreciate you taking the time.
I thought that was super interesting.
All right. Well, thank you so much. It was a pleasure speaking with with you and meeting you. And hopefully next time you'll get to see me as well.
Right? Sounds good. Thanks again.
All right. Thanks a lot.

All right, is this any better?
Perfect. Cool.
Good, then we'll do it.
That's really funny.
Yeah. Let me let me show you this is pretty funny, so they mentioned this to me, so I text them my parents yesterday and I'm going to go grab it from their house and figure out how to digitize it.
But they literally found, I don't know if you can see this, but these are the two CDs.
It says 12 2000 Blair Bar Mitzvah, basically.
So we haven't.
Yeah.
So I started investing in the stock market really when I was like 12 or 13.
And, you know, basically I don't even know why, but I think my dad, who's a doctor, had been investing in stocks just for fun.
And I thought it was fascinating because for some reason, at a very young age, I thought of investing as a way to learn how the world works.

/content/Preprocessed_Data/SHR Hum Capital's Blair Silverberg.txt

And so I thought that if I could just read about how a company works and understand it, I could just do that company by company.
And eventually, maybe I'd read about enough companies that I understand how as a society where allocating our resources. And it turns out that there are too many companies for me to read 10k by 10k about every single one.
So I discovered that as I started back in those days, you could go on to a company's investor relations website and have them send you a physical copy of their annual report. So somewhere in my parents house to this day, we have boxes and boxes of annual reports, and so I discovered that there were only so many annual reports you could store in your closet.

And that became the cap on how many companies I could really understand, but I just thought it was a fascinating way to learn about how the world works.
I did that to I just to spend more time investing and playing Nintendo, I don't know, it got it got boring, but yeah, I mean, even to this day, I mean, I'm just I'm just fascinated by learning and I love learning languages.
I love learning a bunch of different things. But it just turns out that investing is this incredible way to understand the world in a very tangible way and then evaluate how well you know it by placing bets.
And if you're wrong, you know you don't know as well as you think you do how something works. So it's basically a system of accountability we have baked into the economy and our society.

I was yes, I studied product design at Stanford, and when I went to Stanford, I was surprised that there was no undergraduate finance program, so I had this kind of, Oh my god, what am I going to do here? I've been investing since I was a kid, you know, clearly I'm going to go into investing, and it was basically the best thing that could ever happen to me because I learned that a couple of friends in the program and they loved it.
And I learned how to build products.
And it kind of turns out that there's in my simplistic way of thinking about the world, there's understanding how the world works and placing bets and then building things to change how the world works. And so I got basically the best of both of those views during my teenage years.
Yes.

There are two sides to the same coin, and a healthy, functioning economy needs both.
So you need that entrepreneur who's ambitious and has a vision and needs to get her hands on society's resources to make that vision a reality.
And then you need investors to say, Gosh, is that are those the right amount of resources? We don't want to squander our resources.
We want the vision to be achievable.
And so, you know, we can talk a lot about this, but you see failures in the system, day in and day out with companies like we work in there and it's like those are companies that raise way too much money.
Investors weren't doing their job assessing how much of society's resources should go into those projects, which, you know, when we were, we were in case it was not zero.

And there in this case, I probably should have been zero.
But this is a big part of what I do now is really trying to help us understand as a society, how can we allocate our resources? Well, from a very tactical perspective, you know, essentially understanding companies how they work, what parts of them are efficient, what parts are not efficient and then turning around and helping entrepreneurs understand the investors brain and how to access those resources to make their dreams a reality.
I was yeah, and Tim's one of my investors now, but yeah, I work very closely with them.
Yes, he's a fascinating guy, he's also incredibly generous.

He took me when I was a brand new venture capital associate to the Stanford football game. The two of us, when we sat on the 50 yard line and I just asked him any question I possibly had. He's a he's a great guy, but yeah, he's he's got quite the personality.
So I funded a company called Nirvana Systems, together with Steve Jurgensen, who's also one of my investors at home.
And I found it, Steve kind of delegated to me figuring out how it works. We partnered on understanding the business, making an investment in it. So on and so forth.
And it was a company that was making artificial intelligence chips.
And within about a year, year and a half making the investment, it got sold to Intel.
It became Intel's entire artificial intelligence division.

And you know, for me, I mean, it was an incredibly rapid return, and it taught me a lot about how strategic think about acquiring startups.
But it was a it was a tremendous investment. I mean, it was like a multi thousand percent IRR.
I was a great experience. Yeah, because it's such a long feedback loop, it's hard adventure to know if you're doing it correctly because you don't know for 10 years. But yeah, for me, I was fortunate to get some quick feedback.
Oh, yeah, I made tons of mistakes, but the thing indenture that's tricky is you.
Success is about having a couple bets that really work out in venture is not true of other types of investing, but a venture. It's about having two, four, maybe six investments that really work out, which means you can make a ton of mistakes.

You can be wrong.
Right. You can be wrong, 90 percent.
That's right, you can be wrong 90 percent of the time and still be an incredible venture capitalist and this is, you know, this gets into the psychology of like how a venture capitalist thinks it's very different than other kinds of investing they're buying with, you know, financiers would call options a small amount of money, with the potential to earn a multi thousand times return covers up for 90 percent of the time, getting getting the debt completely wrong. And so it's really the kind of business where you can't learn that much from your mistakes because your mistakes are really errors of omission, not commission. It's completely fine to get it wrong 90 percent of the time.

You just don't want to miss the ones that end up being great businesses.
Sure, so. So, you know, when you're shopping for travel, you're trying to go from point A to point B as cheap and comfortably and quickly as possible.
And there's about 6000 airlines in the US.
And so it would take forever to go to each one of their websites.
Compare prices right? Build out the schedule of trips.
And before the internet. We saw this with travel agents.
You had a specialist that really understood how to go from point A to point B in the best possible way. And then the internet replaced that with the search engine.
And so it just so happens, you know, 6000 airlines, tons and tons of hotels.
The capital markets are quite analogous, actually.

So there's about 13000 institutional investors, 5500 commercial banks in the U.S. And yet entrepreneurs are still navigating this search space, manually building lists of who they know, asking for introductions to people they don't know, trying their best to get from Point A to point B. No price discovery, no idea what the different valuations you might get are, you know, the differences between common stock and preferred stock, let alone loans and non-dilutive capital, which are tremendously underused and the in the technology space in particular.

So for me, I just saw as a as a venture capitalist, you know, I would meet in person two thousand companies a year, and I saw that it was very common for a CEO to assume that you're going to spend six months full time figuring out how to raise capital.
I talked to the CEO this morning who's doing exactly this, and it is an insane misallocation of talent and time for the people running companies in our society. And there should be just like efficiencies.
We've gotten them being searched. Search the travel space to kayak.
The same thing should exist for raising capital, so we decided to build this.
That's a great question. So the way our system works is companies come to us and they say, Hey, I think I want to raise $5 million.

And we say, great, we're going to tell you how this entire system works.
So the first thing we need from you is a data room or upload your financial statements, or you can connect your QuickBooks or knotweed or stripe.
We support about one hundred and thirty different systems of record.
We take data in whatever format companies have it.
A long story short, the first thing we do is we transform it in a way where we can compare companies to each other. And so we can say, Oh, OK, now understanding your business and how efficient it is from the data alone, you're going to be able to get a maximum of six point five million dollars of capital.

Here's what a venture capitalist should give you if they're a top 10 DC versus everybody else versus what you can get from a venture bank versus what you can get from a family office. So, I mean, you literally can get in a very rapid.
We're talking minutes. Picture from home what your options are before you go out and you raise capital for you, spend those six months building a data room, networking your way to investors.
So the first thing that it does is it makes data comparable, and I can explain how we do that. And then the second thing that it does is it allows us to understand investor preferences and map them to companies in a way that allows us to navigate this.

You know, I mentioned about twenty thousand possible institutions you could be raising capital from navigate this ecosystem in a way that gives companies the most efficient financing, usually the lowest cost and the fastest amount of time, with the most transparency and visibility into what the terms actually are.
That's right. So, you know, starting in the early 2010s when I was a venture capitalist. You know, I saw businesses get started that were companies like Angel. We're going to help companies raise capital and we're going to put this fundraising process online. And that idea is most ideas in technology are in the beginning was before its time, because in those days, the vast majority companies 80 85 percent of companies were running on Prem QuickBooks, their online banking.

You know, maybe they had several accounts, only a few of them were accessible.
There was no service like plaid to pull down the data from.
And so what really happened in the mid 2010s, 2016 2017 when we started thinking hard about building home is for the first time, you you're the majority of companies running on SAS systems of record.
Today, it's about 80 percent.
So four and five companies that we meet, including we've helped all sorts of companies like one of the largest Native American tribes, has an oil and gas business, multi-stage oil and gas business.
Even they run on that suite with online, you know, API based access to their data.

And so the world's just tremendously change, which we can talk more about why this is a good thing for society. But I mean, you can actually look at a company's data even if the entrepreneurs and charismatic and knows how to pitch particularly well or they didn't go to the right school or worse, they're not from the right part of the country, i.e. the coasts. And you can say, Gosh, this is a pretty good business.
And so that's just critical to us allocating our capital of society to the right places and removing bias from the system, which unfortunately, there's just so much bias and our capital gets allocated. It's not intentional, but it's just, you know, unfortunately, the way that the humans work.

That yeah, that's exactly right, and of course, now it's important to be a good salesperson if you're running a company, you have to be able to recruit.
You know, it's not that how good you are at pitching is irrelevant.
It's just that that is dramatically overemphasized today relative to the actual data the company produces. I mean, there are companies I saw as a venture capitalist a great data. Bad pitches didn't get funded.
And you know what happens if you have great data?
It kind of proves like, you know, how to recruit a team that can build a good business.
You can recruit customers that care about the product to service you provide.

So, you know, with time and with resources, you'll figure out the pitching part that shouldn't get your ability to grow a business that is clearly working, as it unfortunately does without us today.
Yeah, this is a great question, so.
So first, at a high level, we help businesses raise equity debt. Combine that to all sorts of structures.
And so this is something that we in October, we received our broker dealer license from the FCC, which means we can basically help companies raise any kind of capital they're interested in.
Now, a fascinating question is what kinds of capital should a company raise? And it turns out that there are tons of types of capital.
So we think about venture, for example, venture capital as equity, well, its preferred equity. It's highly structured.

There's liquidation preferences, there's pro-rata rights.
There's all sorts of bells and whistles in the standard venture financing today.
That makes it quite different from how people think it works as traditional equity. And so we help companies figure this all out.
And you know, there are cases where a company can have more flexibility in capital raising a term loan than they can venture equity.
And there are other cases where a company should be raising venture equity in its exact current format because it's the most efficient way to get financed.
So we, all companies figure all of these kinds of nuances out.
Oh, gosh, that's a great question. So when you give away 15 percent of your company more successful, you are the more expensive the capital was.

You sell for a billion dollars. You gave away 150 million.
You sell for 10 billion. You gave away 1.5 billion.
So there's a perverse incentive there, right?
Your cost of capital goes up as you succeed.
Debt is the opposite. You have a fixed cost of capital.
You borrow money. Let's say you know, today's rates, depending on the type of company, are anywhere from four to 15 percent and you sell your company for a billion or $10 billion and you owe the same amount in debt back to your lender with interest.
And so, you know, it is always more advantageous to raise capital in the form of debt versus equity.
And that's why people take out mortgages on their house versus selling 20 percent of their earnings until the end of time. That just doesn't happen.

However, like taking out a mortgage on your house, you have to do the math to understand whether or not you'll be able to pay it back.
And, you know, we help people do that math.
But I think the other thing to point out is that a liquidation preference is a lot like owing money back on a loan.
And so it's really important that you understand the nuances and the tradeoffs, and there's different types of debt. There's debt that is unsecured versus secured.
There is hybrid financing.
And there's this there's a new kind of financing called revenue based financing, which is very common these days with SAS companies.
And you know, if you if your revenue goes to zero, you don't know any money back, basically. So it's very equity like even though it is technically non-dilutive.

So there's just a whole world out there. I mean, it's called the global capital markets for a reason. It is global and complex, and we help companies navigate it better than building a list on a spreadsheet and trying on their own.
Yeah, I mean, there's a massive asymmetry between investors who all day every day are meeting companies, crafting financings, setting terms and companies who raise money every one to three years.
Massive asymmetry Just structurally and historically, information asymmetry has been very profitable for investors, just like information, asymmetry was very profitable for airlines.
But the friend of the travel agents and, you know, could obfuscate how the market work.

Now, the internet has made essentially every other industry transparent, and I think you'll see the exact same things and capital raising and capital allocation.
Correct.
Gosh, that's that's a great question, so we charge two to six percent, just like a traditional marketplace, marketplaces charge different amounts.
I think Airbnb charges something like 30 percent these days, but in our marketplace we charge two to six percent depending on the kind of company kind of financing, so on and so forth. And it's a one time fee.
So back to your example of raising, I think, what you said.
One hundred and fifty are selling 15 percent of your company.
So. So it's a one time fee.

So if we charge you two percent, you sell 15 percent of your company, let's say you raise $100 million. That's $2 million to us.
And if you're worth 10 billion or 100 billion or a trillion dollars, you still just beat us to two percent.
Now, of course, if we get you a better valuation instead of selling 15 percent, you sell 10 percent of your company or we help you figure out how to blend equity and debt.

So you sell five percent of your company, raise the same amount of capital by taking on a responsible amount of debt. Then the more successful you are, the more of that money you get the key. And so what ends up happening? And this is why every company in the world that is successful one day will pay Goldman Sachs seven to 10 percent to take them public or to raise them bonds in the capital markets at a at a much larger scale than is possible for private companies to access is because terms and pricing matter quite a bit.
And so the advisors fee basically is always a drop in the bucket relative to getting better terms on financing.

That's a great question, so we've raised up until this point, at least, I guess, publicly announced only equity, I guess with the exception of some non-dilutive capital we raised very early on, but in general.
Yeah, so. So I think the best way to explain this is, you know, different kinds of capital make sense for different points of time. So the money we raised so far was designed to have us create software that didn't exist.
Build a team that didn't exist.
Build a business that didn't exist.
And in general, when you're doing those things, financing with equity is the way to do it because it's unpredictable when you'll be able to pay off the debt and how much.

Yeah, banks are banks are absolutely not excited about it, but, you know, I mean, similarly, like it's going to be like raising a mortgage to go prospect on land.
I don't know what else is out there nor what it's priced at, but I will promise to pay you back over 30 years.
So I think, you know, most businesses, there's a reason they start with equity.
So our business has since flipped to be more stable and predictable.
And you know, I think in the future you'll see us rates different sources of capital.
But like anything else, I think that equity makes a ton of sense at the beginning.
And by the way, like you know, Steve Dermot's is one of our largest investors.

Cowen and Company is an investor at home, and I'm thrilled for these people to profit in excess as we have more and more success because they help us, they help us.
That strategy. They help us figure out who our partner should be, how we should build the business, et cetera. And so they're really partners in the business in a way that as you raise more capital and you scale, you're just less reliant on those those kinds of partnerships for advice and counsel than you were in the early days.
Yep, absolutely.
And I was raising capital before Ho-hum existed, but I think what's really important to point out is there is advice and then there is capital. And those are two separate things.

Sometimes the best person to give you advice is someone who started the last company like yours but succeeded, was sold, was built on an earlier kind of technical infrastructure, et cetera.
And that person may or may not run a venture fund.
In fact, they almost never do run venture funds.
And so the fact that we bundle these two things together, venture capitalists love to talk about unbundling. This is a classic case of tremendous potential coming from unbundling. These two things. And what we've seen in New Zealand over the last couple of years is the emergence of solo GP's people who are founders who've built successful businesses who raise some venture capital.

Usually, they invest alongside that with their personal capital as well, and they basically are leading rounds in the companies. And so we've seen companies raise money from individuals by name, not the name of a fund.
And so this is the emergence of that. It's early innings.
But I think what we'll see is an unbundling of advice and expertize on how to build a business in a particular space from capital. So that's what we're creating.
It just so happens. Steve is an incredibly helpful person in building a business like this, and I can explain why. But it just so happened.
He had the capital and he was the right man for the job.
Oh, of my angel investments.
Oh gosh. I mean, I, you know, this is very much kind of a side hobby because I love to help entrepreneurs.

In the early days, know basically not making mistakes that I made, but I backed a company up to one goal called Win Reality, and they make a virtual reality app that helps baseball players learn how to how to hit.
And it is incredibly interesting and sophisticated.
They've got now, you know, basically tens of thousands of little leaguers doing batting practice inside VR every day.
And so, you know, when I was a venture capitalist, I would learn about these emerging technologies like VR, crypto, so on and so forth.
And it's rare you see a use case that applies to the, you know, to a normal person.

For many, many, many years. And this is one of the first ones I saw on VR where I was like, Oh my gosh, these are, you know, 15 year old little leaguers and 10 year old Little Leaguers. You know, high school baseball players like batting all day after school in VR, and it's just as good as doing it in the real world.
But they don't have to go travel and see their coach and do it once a week when he or she has time.
So I just love kind of learning about things like this.
Yes. So.
So we can talk about my favorite investing books, but a book I read very early on it was called Applied Equity Analysis and it is a book.

Yeah, it's probably 14 when I read this, but there is a there is a I mean, it really changed the way I think about companies because like early on, like Page 20 or something, they talk about the problems with gap accounting and how you can basically think about company data differently to normalize companies to each other.
And you know, I didn't I didn't know how to code at that point in time.
Like, I know building like something like public hospital.
But when I think back to it, I mean, that is so much of what we do.
We transform company data to understand the essence of what is working and what is not working, and then how companies communicate that to investors.
And you know, these are kind of old financial ideas that are locked up in old books that investors may or may not read.

Companies never read these things, but it turns out you can build software algorithms that change the way that companies present data.
And this is stuff I've been thinking about. I mean, literally since I was a kid.
Yes.
Yes. Yeah, exactly, and we get it, you know, on a daily basis provision by the companies themselves, companies start using the analytics we create for them.

We can tell private companies, for example, what they would be worth today if they were public. I mean, we've helped companies over the past year raise a little bit north of $500 million, and there have been a handful of cases that I've been involved in where we raise the valuation by 40 percent just by saying, you know, equity investor, where did you come up to this valuation? You know, if this company republic, it would be worth X. And that's a pretty defensible argument because anyone who does the math, it's hard to refute comps is what investors would call this thing.

But yeah, you're absolutely right. I mean, it's all about getting the data and converting it to a format that allows us to see the essence of what's working in a company and how that compares to other companies competing for capital in the global capital marketplace and then ultimately helping companies really lean into that story, the data tells, in order to raise capital in the most attractive terms.
Yeah, because SAS systems were just so, so much less pervasive than they are today. Absolutely.
Yeah, in the entire you know, there's there's nine trillion dollars of capital managed in the private markets and the U.S. stock market, I mean, not not accounting for its recent decline to somewhere in the neighborhood of forty forty five trillion dollars of capital.

And I think all of these companies run on SAS systems of record.
There's no reason why one day a public company doesn't generate its 10Ks automatically from a system like home. So I think what we're doing basically on the back of SAS commercial SAS adoption is going to change how all finance works now in venture capital.
Like we talked about the unbundling of expertize and where the capital comes from, there's a tremendous amount of capital locked up inside of insurance companies and pension funds that invest today through venture funds to access startups.
But actually, they would much prefer to co-invest or directly invest because their fees are lower and in the in the public markets, 50 percent of capital invested is invested passively.

You can go to Vanguard and they'll charge you five basis points to invest your capital in S&P 500 used to pay Peter Lynch at Fidelity one and a half and call it 15 percent of performance on that. To do that manually back in the 80s.
And so I think these same ideas that have already transformed the public markets are going to happen in the private markets and it's just a matter of time.
So yeah, I think what we're doing is going to transform venture in that way.
You'll see capital come in to venture directly access companies partner with the experts who know how to build a company in a particular space to advise companies sit on the board, so on and so forth.

And that's going to be our own kind of flavor of Passover based investing in the private markets versus what Vanguard does in the public markets.
TD Ameritrade.
So there's Ameritrade. It wasn't even TD Ameritrade in those days, it was Ameritrade office. You know, five minutes from my parents house.
And so my dad would drive me over there and I'd place trades in person.
Sometimes I'd make them online, sometimes too.
Let's see. I would go online and because the internet exists in those days, but I'd go to the Investor Relations website or to Morningstar.

I used Morningstar a ton, but I would basically find stocks screen them and Morningstar coach handbags, which subsequently got merged with the big one that I invested a lot in as a kid. But long story short, I would find the stocks and Morningstar.
I'd go to the Investor Relations website, a download.
I guess sometimes I could download most of them, but couldn't.
I would request the 10-K. It would get shipped to my house for free in the mail and a little booklet that I would read and come through.
But yeah, it was. It was. It was a ton of fun, but it was not glorious.

Yeah. I mean, it just depends on where you are on the cycle, but I mean one thing that was really interesting, so I was I was reflecting on this, just thinking about our conversation we're going to have today, and I remember that when I was in college.

I was living abroad in Italy and in Q1, Q2 of 2009, and I was investing in coach, the handbag company like in the depths of the financial crisis and when I was living in Italy, coach basically two and a half weeks from. I don't know what the valuation was in those days, but long story short, it funded my travel all around Europe on the weekends and I wasn't doing anything particularly smart. It just happens. The stock was going up because credit was coming back into the economy and we were correcting in 08 and coach had gotten badly beaten down. But, you know, sometimes you can get lucky in investing and when things are up into the ride, day trading can be really profitable, but that changes when regimes change and eventually they trading is a hard strategy to to run for a long period of

No, no, I mean, this is great, I appreciate the time, I think that, you know, I love what we do and what I'm talking about investing and really love teaching, teaching entrepreneurs how to think about how investors think.
So this is fun.
Yeah, of course, of course.

Six, seven, eight, nine, ten.
All right. One, two, three, four, five, six, seven, eight, nine, ten.
All right, Stand by.
Yes, I did. Peter Levine and Bill David.
And yeah, we've done a bunch of fun ones.
One of my favorite ones was Rory O'Driscoll.
Oh, yeah.
From scale?
Yeah. Yeah. Super nice guy.
He is a nice guy.
And then halfway through the conversation, it just sort of wandered into what it's like to be in our fifties. Yeah.
You know, and what it all means.
And we both, you know, on tape.
He said, Well, I didn't see you come in this direction sort of thing, but it's like you're just, you know, why not?
Well, I didn't know if he shared, but he was he's been kind of a cancer survivor.
And so I didn't know. He did not.
Know. He'd had a cancer scare.
Mhm. Definitely.

/content/Preprocessed_Data/SHR If we could measure moxie, we would.txt

Ten, 15 years ago. Yeah.
And you know is doing fine. Yeah. But I think you know, I know, I mean you interview a lot of people.
For this for a.
Living and, and I think there's kind of two things I've found.
One is brushes with death.
Yes.
Or have travel the world tends to put a spark in people that you don't necessarily see with others.
That's true. And I think, you know, with Rory, I think, you know, maybe a brush with mortality, you know, made him kind of appreciate every day he's got.
And, you know, and I think I appreciate every day.
But I think if you've kind of gone through something that's pretty dramatic, it just it just sort of dials that takes it to 11.
Peter two Yeah, yeah, yeah, yeah.
Okay. So what I'd like to begin with is talking about quantitative analysis. Yeah.

And I think we've got to start with which is which really?
Oh, yeah, Yeah. There's just like, oh, people are like, looking at their phones right now. Well, what other podcasts are there?
Calm down.
What is quantitative analysis?
Yeah. So are we starting or. Yeah. Okay.
All right. So basically, maybe a little context might help.
So all of our portfolio companies, we're using some version of data science to improve their business.
So either in customer acquisition or detecting malware and hacks and attack vectors and cybersecurity, pretty much everything from soup to nuts. And so a little over five years ago we said, geez, you know, we think the venture business is going to head towards data science and quantitative analysis.

And so we hired someone who had basically hedge fund experience and then went to work at LinkedIn, ran marketing, leading analytics. And if you think about the venture business at a very simple level, it's kind of a pipeline management problem.
And he was really good at that pipeline management problem and helping to try to identify people that would come in to top of funnel, middle funnel, bottom of funnel and assess, you know, whether these companies are good.
And so coming back to your question, what is quantitative analysis?

Basically, we're sucking in datasets that we think are relevant and then feeding them into some algorithms that we've developed to basically score companies. And essentially we're trying to score companies at a, you know, a seed or a series, a level to invest in them at a series A or a series B level. And then we're trying to predict what we think the probability of them getting to, you know, a half a billion dollars in valuation or much, much more in a relatively short period of time.
And so things like web traffic, mobile phone downloads, employee hiring, recruiting, a number of heads, people are recruiting are all kind of simple things that you can kind of get your mind around that they give a signal to say, hey, this is probably a better company X than, you know, Y and Z in a space.

Right? And you have to be using, you know, non-financial data at a company that's not necessarily making money.
It's easy to do analysis or I mean, people do analysis of public companies because they publish their financials and and certainly companies that meet with you would let you inside to see the financials, but sometimes there really aren't any.
Yeah. And so I think that's right.

I think both for public companies and for small private companies, it's the same type of thing we're doing analysis that essentially is above the income statement. And so things that would actually feed revenue growth is really what we're we're looking for. So other things would be just team quality is a big signal in terms of scoring some of these companies. Product quality is another thing that that helps in the scoring of the of companies number of likes and shares and whatnot.
In terms of product roadmaps.
Isn't some of this intuitive? I mean, if you're investing in a company that's built an app and they have a lot of downloads, that's, you know, that's a signal, but it's fairly intuitive.
Signal is definitely intuitive.
And a lot of what we do is, is relatively intuitive.

Some of the things that we discovered are a little bit less intuitive.
Give me an.
Example. So, you know, looking at length of service at previous companies is a is a signal in terms of the quality of the talent that's there.
And so that might be something that we would feed in as sort of a new element that we're looking for number of customer logos that they have in terms of areas of scraping websites and identifying, you know, key logo additions. And so we definitely have our own little recipe of I.T buyers who we think are smarter and higher quality as opposed to, you know, being more meat and potato account.

And so if they've got, you know, account X or account Y or account Z where, you know, we take notice and we say, Hey, these guys are really good filters for emerging technology and we should probably pay attention to that.
How much of this is automated?
So almost all of its automated.
And so we started about, you know, five years ago building data sets and cleaning data sets. You know, and part of the trick and challenge of the industry is, you know, people like to talk at an algorithmic level, but a lot of it is just, you know, getting the data right.
And if you get the data right, that actually kind of feeds into the algorithms and then ultimately you get, you know.
Good data in and good data.
Yes, the data is critical, but the algorithm, I mean.

Let's not try to, you know, write out the algorithm.
But how do you write the math of they have a lot of app downloads multiplied by their employees, came from places where they had been a long time divided by.
I mean, I get that the data, you know, the various bits of data, the signals make sense.
You know, lots of app downloads. Yeah, They attracted employees that have been places for ten years and suddenly wanted to move to this new startup.
Yeah, but how do you create the multiply in the divide in the in the squares, in the cubes?
Well, it's it's a good question and I think it a lot of it's you say is intuitive and it's intuitive after the fact.
But what we're trying to do is I guess I guess.
What I'm saying is it's not intuitive how you then add those numbers together.

Yeah, well, we weight them and look at the different weightings of a number of these elements. And it's hard to kind of describe in really simple terms how we work.
Particularly in audio.
In particularly in audio. But basically we we weighed all of these different elements. And over over time, we've kind of come up with a recipe that works really well for, you know, seed companies, series companies and Series B companies.
And there's weightings may change a little bit based on where they are in their evolution of a of a company.
Capital raising and quality of investors is another indication.

But you know ultimately I think what we're looking for in many of these elements is trajectory in terms of change, like how much growth do they have relative to a recent element because, you know, ultimately we're all looking for companies that have $100 billion in revenues, you know, down field.
But, you know, we're looking at these companies that may have a half a million dollars, $1,000,000 or $2 million.
So pretty early in their corporate lives and trying to project an estimate, you know, does this have a trajectory that might imply that it is a higher probability to get to $100 million in in revenue and $1,000,000,000 in valuation?
I did an interview some years ago with Chris Farmer from Beacon.

He is doing something extremely similar and he swears by it. And you've had success to right? You've discovered that your algorithm works.
Yeah. So we've made 90 investments and we have 15 companies that are 15 companies that are unicorns and four that are deca corners.
And so we've had a fair amount of success in terms of using data science, in terms of our investment decisioning, and we use it in different phases of of the process. So in sourcing, we score all the companies that come in either things that we find outbound things that come inbound to us or just generated by the data science team itself.
We then also use it for benchmarking.

And so looking at companies and sectors and seeing how they do relative to all the other companies in their sectors. And so, you know, I sort of half jokingly say, you know, 95% of the companies that that come in to us or that we find one way or the other, we can reject within 5 minutes. And it's because we can take a quick look at where their metrics are and where their scores are and what some of the trajectories are in these different dimensions and and make a quick call. And in the end, you know, the second best answer after yes in sales is no. And and so I think ultimately, you know, it's helpful for the entrepreneur just to say, hey, this is not a fit and they can kind of move on and move to another firm that might be a better fit for them for one reason or another.

But then also from our perspective, for the other 5% of the companies that do look pretty interesting in the comparative space, we then have more time to, you know, do customer calls, to do management checks, to spend more time with the team about their vision, about their roadmaps, about how they want to execute in the future.
You found that your math and your algorithms have led to success.
They work. Have you had an opposite situation in which the metrics said no and you said no and it turned out you missed it?

We've definitely missed our fair share. And I think most most venture, you know, firms do. And so we we basically would say that, you know, data science or quantitative analytics is something that is not, you know, pure. We always use it as a as a supporting element to us making, you know, strong investment decisions.

And so there could be, you know, other issues in the companies, which is, you know, we have heard that there's a product announcement coming from another company that might be competitive that, you know, the the talent on the team may have some, you know, strengths and weaknesses that may not ultimately fit some of their financial modeling, you know, may not necessarily work. And so, you know, it's usually used as sort of a tool to try to help support us. But like most venture firms, we were not perfect.
And, you know, we make our fair share of mistakes.
But I think we've had a relatively low loss ratio.
So I think we've had like a 15% loss ratio in our oldest vintage, which in venture is actually relatively low.

And so that that I think is another kind of data point that helps us feel confident and feel good that we're making good choices along the way.
It reminds me a little of sabermetrics.
Those if you've read the book Moneyball or.
Yeah, or the of course, the movie. Yeah, sure.
That the things can be reduced to data.
Of course. Then the old school people say either, Oh, yeah, we've, we've tried that before or they're old school and they resisted.
Have you seen resistance within your organization to doing it this way?
Today? No. Five and a half years ago.
I think there's a little bit of skepticism with some with some folks.
And, you know, like anybody, it's you know, they're from Missouri.

Show me in. And I would say what's probably been really good for us as a team is it's something that we've built over time.
And and so I guess we're always going is we we use it on the sourcing side, We use it on the benchmarking side.
We also use it in the financial analytics side.
And then ultimately, you know, we're using it to make investment decisions.
And now we're starting to put elements in between each of those phases so that we get a complete workflow.
And ultimately where we're heading is to have a closed loop process where we ultimately identify, you know, companies and invest in companies that we want to.
I think ultimately it's always going to be an investor decision for two reasons.

One is, you know, we're an intensely people driven business and CEOs want to work with investors that they like and they think add value to their situation. And by the same token, the investors, you know, want to work with CEOs that they think are really, you know, thoughtful and have a differentiated approach to how they they're going to execute on this business.
But I think that there's ultimately always a judgment call around is this management team going to be the team that can do what they say they're going to do in? Is their vision very strong in terms of where they're heading with this specific, you know, subsector?
And have they thought through some of the financial analytics that will ultimately drive towards, you know, returns that excite us?

And, you know, we can do tons of mathematical and tons of quality of analytics.
But ultimately, there's a judgment that people need to make when they weigh all those factors and say, you know, there are some benefits and there are some risks and ultimately the scale is tipped towards. This is an investment that we want to do or jeez, this is, you know, something that gives us a little, little pause.
I realize that it's set up for entrepreneurs and startups, but what would happen if you put your own metrics from Telstra through the.
Through the system.
Well, the short version is it wouldn't work so well.

And the reason being is because we've geared everything towards software companies and software companies that have revenue growth trajectories that look really interesting. Our business is, you know, we have a certain amount of assets under management. We generate fees from that and then we generate returns from that for our investors. And we just have a plane simply set up the index to to.
Look at apples and.
Apples and oranges.
Yeah. Where do you see the future of venture in the next five years? It was. I resist seeing that we're living in in tough economic times because the data just doesn't support that.
But we're we're living in odd economic times.
Yeah. And it seems to me there's a shakeup coming.

Yeah, I think there is. And I think ultimately the elements that are going to be really important are, you know, performance number one, because, you know, we're in a business where LP is give us money and so we have to turn that into great returns.
That's job one, you know, no questions asked.
Then underneath the hood, I think there's kind of two major elements.
One is sourcing and the second is value add.
And on the sourcing side, different firms have different elements that they can use to generate really interesting sourcing tactics.
And so for us, a lot of it is using data science, you know, either to find companies, but then also just to support investors who, you know, have relationships and talk to their friends at seed funds and angels and what have you.

And it gives us a quick tool to say yes or no, because ultimately people, you know, their most precious element is their time.
And and so if we can help them with a quick decision that ultimately thing, things are better. The other element is around value add and different firms have conferences and help with, you know, recruiting or helping with marketing and whatnot.
And we basically made a call around helping with revenue acceleration.
And so we have a team of four people and all they do is work with founders of companies and try to generate revenue for them.

And so we've generated $500 million of revenue for our portfolio companies. And out of the 90 investments that we've made, 45 have generated revenue in some way, you know, with us and, you know, with a lot of young entrepreneurs, particularly companies that are in, you know, one in $10 million in revenue, if we can help them with some early wisps of revenue, that really is, you know, huge value add for them.
And it's very, very hard dollar.
And so, you know, most of the CEOs really like it.
And you know, to be open, I think we can do it in half the cases you know so 45 companies we've done it with what that means is 45 companies we haven't done it with.
And the reason for that is in some of the cases, it just takes time.

So we'll get another ten or 15 of those companies will generate revenue over time.
It just is taking longer than we would like.
But then, because our orientation is to be, you know, helpful and supportive, ultimately founders like that vibe.
And I think it just, you know, shows that we want to lean in and be constructive in terms of the building of their companies.
And they even if we can't help them on the revenue side, their intuition is, is that we'll probably find some other way to drive value over time.
As I was researching for the interview, I came across something where you used the term lighthouse leader. Yeah, what's a lighthouse leader?

So, you know, we use the term lighthouse because it's somebody who really acts as a focal point for an opportunity and they really, you know, sure are shining the light in terms of where a world is going. And oftentimes it's in, you know, stormy or dark conditions. And so they're showing where a specific area is. And, you know, in the end, venture oftentimes is very much of a contrarian bet.
And if you have a leader that basically, you know, has a very authentic idea about a where a space is going, that's you know, those are the types of people that we really want to get behind. And, you know, fundamentally, you know, we're investing in companies that may have 20 people and we want them to get to 200 where they have, you know, 100 people and we want them to get to a thousand.

And ultimately, you know, there's a certain amount of smarts, drive, charisma, moxie or grit that, you know, make up the components of a lighthouse leader.
And it's kind of one of those things that that, you know, when you see it and it takes, you know, to oftentimes takes very different forms.
And some people are very extroverted and and, you know, are your, you know, classic homecoming king, football captain, you know, type of thing.
Others can be, you know, a little bit more introverted, reserve intellectual, but, you know, don't sell them short to think that they don't have just as much moxie or grit than the homecoming king, you know?

I like that you brought up moxie because it's one of those things that doesn't fit in your algorithm, right? I assume you do not have a column for moxie.
We wish if we could figure and measure and measure the Moxie score, you know, we might set that up as a side business.
But I think that that's a good example of where we can take, you know, a lot of intuitive things that, you know, you and I were talking about earlier and, you know, help to quantify them, help to summarize them, help to compare them, you know, very quickly in an automated way.
But there's a lot of intangibles in the business.
And, you know, moxie would be, you know, and a good example of, you know, how do you quantify that in terms of a company?

But it, you know, can be a difference maker between somebody actually making a space and being a leader or somebody being, you know, a second or third or fourth or, you know, even further down the list.
What other lessons have you learned over the years as far as investing?
I mean, what are some some key things that you're looking for?
You know, it's it's all about the people.
You know, any any time I've felt great about an investment, it's almost always because I felt great about the the leadership team.
Any time I've had hesitancy, it's because I questioned some of the choices that the leadership team is making. And so, yeah, we just spent a lot of time with the teams, you know, particularly in the dating and courtship process, just to see if there's a good fit.

And we also, you know, talk to a lot of people that have worked with them to kind of validate and enhance, you know, our understanding of who they are. Because, you know, a lot of people are very good at presenting themselves. And and I think we're we take that.
But then we also kind of want to, you know, trust but verify.
And so I think the verification is also, you know, super important to us as were as we're making these investments.
Your firm has roots in an Australian company.
Yeah. But is now independent of that.
But you still make investments in Australia.

We do. And in fact, we I'm not sure we've announced that yet, but we just made it. We just made an investment in December in a climate tech related company in Australia. So I can't really tell you a lot about it, but that's sort of the general neighborhood we do.
We actually started on the balance sheet of Telstra, which is the large Australian mobile operator, sort of like a Verizon or an AT&T, but for Australia.
But they dominate that market and in ways that Verizon and AT&T would would kind of dream about and they've been incredible partner for us.
You know, a lot of the revenue that we were talking about that we helped generate with our portfolio companies, you know, come by either selling to Telstra or through Telstra in terms of of revenue generation.

And then they've provided us, you know, with a significant amount of capital that we've that we've received to invest in other companies.
And about four and a half years ago we split out where they still continue to be, you know, our our largest and probably most strategic investor.
But then we've brought in other institutional investment firms to support us as well as some family offices and some high net worth individuals and, you know, other people that you typically see in terms of backing of a venture firm.

But we're very much independent in terms of, you know, my partner and I own the management company. We make all of our own investment decisions and it's kind of the best of both worlds as sort of the friends friends with benefits of of the venture space in terms of having a great strategic partner, but then also being just passionate about the business and building the business out ourselves.
What is the tech situation in Australia?
I'll tell you about. The only exposure I've had is Melanie Perkins, who told me the story of as she was creating Canva, which now is one of Australia's biggest tech companies. It's worth billions.
When she first went out to find money, she didn't know what a venture capitalist was.
Yeah. What's the what's the tech situation now in Australia?

I think it's pretty active. I think, you know, that's I think unfortunately for Australia, maybe for Melanie.
Australia went through a very big boom cycle in the late nineties, in early 2000, which then turned into a bust cycle.
And so I think there was a little bit of a taint in venture in Australia in the, you know, the naughts and then the 20 tens and I think they've been making up for lost time in the last five years, certainly in terms of the amount of capital it's been raising and the amount of capital that's been deployed. And then I think also it's important to note that Australians are very aggressive in terms of consuming, you know, new and interesting technologies.

And one of the reasons why we've, you know, loved having Telstra as an amazing partner is because, you know, they're aggressive about consuming new technologies and new ideas.
What are you most excited about in the next, say, three years?
I think at the end, you know, the first thing I'd probably say would be, you know, I'd.
Just a sort of a in overlay.
And, you know, clearly it's there's been a lot of heat in the last, you know, two, three, four or five months related related to generative A.I. and then also chat GPT and.
Which is really the general public's first exposure to it, right?

I mean, we all we think of AI or we think of movies, you know, and robots and that kind of stuff. But it was the first time that somebody could really just, you know, fire up their own computer and interact with A.I..
And people love it totally.
And I think that that's sort of, you know, it's important to note that A.I.
has been around for decades. And but it's it's been in many largely in use cases that are less intuitive to, you know, individuals.
And, you know, and it's finally been playing with, you know, chat with my wife and kids. And we've been asking all sorts of questions and coming up with all sorts of answers that have been, you know, really fun and, you know, and also in the Dally Dally, too, around images.

And my son was combining Steph Curry with the Mona Lisa, which she had came up with very, you know, entertaining results.
And so I think that that, you know, quote unquote fun factor has been really, you know, good in in really good for the industry.

But I think it also helps to give people a broad sense of use cases that, you know, as they can see it, if they're asking about you know, I was asking like, you know, British prime minister in World War Two and came back with a paragraph about Winston Churchill. And so, you know, you can play intellectually with this, but then you can start to see where companies like Jasper, you know, might be using generative AI around marketing, how a lot of our cybersecurity companies, you know, are using AI around, you know, threat detection and malware ransomware and, you know, all those types of things.
You can just see how it's unlocking just tons and tons of possibilities.

So I think is sort of the most important overlay in software related, you know, venture investing for decades and you use that three years and I would say that that's decades.
And then, you know, in other elements, I think climate is an area that we're spending an increasing amount of time in and really like and then, you know, there's just a ton of fintech related things that, you know, we think are really interesting with, not to mention, you know, areas that that have been, you know, tried and true neighborhoods for us such as cloud or cybersecurity or SAS or, you know, some consumer investments that we've been making over the last couple of years.
We started by talking about quantitative analysis and we touch there on A.I..
Is AI going to replace you at some point?

I think the short answer is no, but it's certainly going to help me.
And, you know, our head of data science likes to use the analogy of Tony Stark where, you know, Tony's a an incredible human, but when he puts the red suit on to become Iron Man, that's the AI.
And he's better and faster and stronger using A.I..
That's great answer. Those are my questions for you.
Unless there's something else you'd like to touch on.
No, it's been. It's been really fun. I mean, I think in the end, you know, to your point, I think we're in a really interesting time economically.
And I think a lot of our companies are very conscious that it's not up into the right.
And we're in a time that could be a little bit economically uneasy.

And so we're very focused on making sure their short term results are doing well. Having said that, I think I've been doing, you know, tech banking and tech venture for the last 30 years, since 1992.
And I'm is excited today as I was when I was doing my first meetings in in 1992.
And, you know, because so much of the intergalactic software world is becoming interconnected and lots and different pieces of the jungle have been cleared, I think there's just an amazing opportunity to software enable the rest of the world to digitize the rest of the world, to artificial intelligence as the rest of the world.
And I think we'll continue to see that happen, you know, today, tomorrow, and for decades to come.
What what why makes that what do you enjoy about it?

What it would take? What makes you go to work each day?
The people I love, the CEOs that I get to work with every day, because they're they're seeing around corners and they're seeing opportunities that are tremendous and oftentimes have a tremendous amount of enthusiasm and passion for what they do. And I just find it infectious.
And then, you know, working with them, I just get a lot of personal It quenches my thirst and then love trying to help them.
Help them find people, find revenues behind, you know, additional investors.
It's just you know, it's it's super fun. And I look forward to doing it for many, many years to come.
Last question. And it's not going to be part of the podcast, but it's just one I've been collecting to assemble into it, just sort of a you know, a.

I don't know, a midsummer sort of thing is.
What book?
Has been most influential in your life or that you recommend or that you go back and read. And it does not have to be something from Harvard Business Press, right? Winnie the Pooh. Yeah.
What what book is the most important book in your life?
It's an end in mazing question.
I guess. Fascinating answer.
Yeah.
So sometimes I do resolutions, sometimes I don't.
And.
My resolution for this year is to read four books in four subjects that I'd just like to know more about.
And.
My requirement is that they need to have been written in the last two years.
And so my topics are climate.
Data.
Purpose. And then I've been interviewing my friends for the fourth one to try to get, you know, good ideas.

And so I've read a bunch of climate books over the holiday season and two that I'd recommend are.
Investing in an Era of Climate Change by Bruce Asher, who's a Columbia Business School prof and actually a classmate of mine from Business School, which is a terrific book about how to think about just the discipline of investing in the era of climate change.
And then I would say the second one is a book by John Dore called Speed and Scale, which is, you know, I'm probably maybe a little bit more fun book about what's going on in climate.

And I think one of the things that he does well is he includes a lot of little bubble stories about people, you know, be it Bill Gates or the founder of Beyond Meets or, you know, bunch of different people on the way to try to take you through the journey of of climate.
And what I found interesting in both books is both authors were cautiously optimistic about our prospects around climate. And you hear a lot of concern in the media, which is very well justified, but that there's still opportunity and hope for us to make a big difference and just to kind of how I go about it.

So I probably say in the most recent past, those are the the two books that have made the same. I've picked a book called Data Heads for Data that I want to read in the coming months, and then I'm looking for a book on purpose.
And so that's something that I'm just so if you have any recommendations or, you know, as you do this, that's what that's the book that I'm looking for.
Excellent. Yeah.

We'll grab that, Mike, and give me a one to three sort of thing.
Well, how close are you on? Oh, right, right here.
OK? One two three four five six.
I can go on actually to go on.
Seven eight nine three four five one two three four.
The BBC are doing a real quick.
So I don't love wearing the headset, but I'm going to listen to it from time to time just to make sure everything's working OK.
But I am paying attention to you even at the times, and I'm staring at the meters over, which is why I don't totally love having.
What about your other show?
You want to?
Yeah, we've got The Sunday Morning Show, but you know what?
It gets preempted for sports all the time.
It's just it's one of those time zones that are time slots.

It was great. And then New York started running things like soccer. And of course, nine a.m.
Sunday morning is noon.
So you started your own podcast?
I did. I went to them and said, Hey, you know, we ought to try this because, you know, it's kind of fun to learn a new a new thing.
Sure. And is it you have a good following?
Oh god. Yeah. No, absolutely.
People follow.
It's it's in the top 10 percent of all podcasts.
Yeah. Yeah, it's certainly behind Harry Stevens as far as this goes.
But we're catching up on it. OK, yeah, it's all right.
So one when we last talked.
Let me just I have a transcript of it.

I said we were talking about bitcoin, and I said we started talking about whether Starbucks would accept bitcoin at some point, and I said, I'll bet you a nickel. Four years from today, whether or not Starbucks is using bitcoin, I'll say no, I presume you say yes.
Tim Draper in four years, you said four years, you think Starbucks will accept bitcoin? And I said, Yeah, I'm betting you a nickel that your new break in, you're out of your mind. I said four years from today, I bet Starbucks will not be accepting bitcoin and you are grinning. And why is that?
I think you owe me a nickel. But you know, you know, the deal with the nickel is, I think before that, you wanted to bet me more than that.
It was a thousand dollars. Yeah, we would have.

We have a we have a program in our family that nobody bets more than a nickel because of bets, all about pride anyway.
Exactly.
Yeah. Yes, that's exactly right. So I am here to present you with your nickel.
Thank you very much, and I am here to say that this is justifiably a nickel. Well, twenty six.
I don't think I've seen that face on a nickel.
This is a new nickel.
I didn't even realize they gave me special nickel.
I haven't used nickels for a while.
You know, that's funny. I have to pay off bets and I have done that quite a few times.
In fact, I think I owe this to somebody else for for the Niners Seahawks game. I think I owe it to my son in law. So we made that bet in March of 2019, and we gave it a four year time limit, which gave you until March of 2023 to be proven right.

You were proven right much more quickly.
El Salvador made bitcoin legal tender September of last year.
You know whether or not this and and they're using open node to to accept bitcoin down there. They there they have it at IG, not McDonald's.
At Starbucks, they have it. Are all the chains.
And in this, I think, is going to be the beginning of something much, much bigger where it's going to travel from El Salvador to other parts of Latin America and eventually of the around the world.
So it starts with El Salvador.
Both you and the president of El Salvador have made predictions that bitcoin will go up a lot in value, and I want to talk about value in a second, but I want to start with a concept of a currency moving around in value.

People get upset when we learn that the dollar buys six percent less today than it did this time last year.
That's inflation, you know, against a basket of goods.
But bitcoin itself, since its highs in November, is down something like 30 percent.
Well, wait, one bitcoin is still worth one bitcoin.
It is, but then they're not printing anymore.
But to be fair, one one dollar is worth $1.
Yes, they do print more of those.
But but how can we be excited about a currency if its value changes so often?
This is the one thing that bothers me about bitcoin.
I get the value of the blockchain. I get the value of a non fiat currency.
But it's hard to use a currency in which it's worth 30 percent less now than it was in November.
Yeah.
Well, it depends on how you look at it.

I think I look at all these all these fiat currencies against bitcoin, and they're very volatile as they slowly disappear from use.
It's a different way of looking at it. Other people are saying, Oh, bitcoin's volatile because they're still in the dollar dollar platform. Form him, I look at it in a bitcoin platform, and I watch as all of these currencies slowly fall in value and disappear from use, and yes, they're very volatile against the bitcoin as they disappear.
Well, I mean, six percent on the dollar over the last year.
People find that volatile.
No, but the dollar against bitcoin has dropped.
Hugely by 80, 90, 95 percent explain that to me, I mean, if it if it's a one, bitcoin used to be worth six dollars right now, one bitcoins worth forty one thousand dollars, right?

So the dollar?
OK, yeah, that's a it was back then worth, you know, one sixth of a bitcoin.
Now it's worth 140 one thousandth of a bitcoin fair.
But I go back to that, so the dollar is slowly disappearing from use as bitcoin continues to increase in value.
I go back to that question, though, about if I were to purchase an object of some sort with bitcoin on a given day.
The amount of bitcoin I should I would have spent on it today or six weeks previous to that purchase are all going to be different because of the various value of either the dollar or bitcoin.
And it makes it hard to use as a currency in that sense.
Sure. But all currencies are volatile against each other, but their bitcoin is particularly volatile because it is increasing in value at such a fast rate.

The yen and the dollar aren't always one to 100 or whatever they are.
The euro to the dollar or one to one point three all the time they do move.
And so if you're buying in euros or buying in dollars, sometimes it's going to be different. So just that's the nature of currencies.
And and I think what we're going through is we're going through a period of time where people are moving from this, this government centered money supply to one that is that is trust centered around a wonderful software program that somehow has allowed us to have a very secure, very trusted third party.
System and that system is global, and it's open and it's transparent and it's decentralized, so no one politician can decide they're going to print three trillion of them and drop it in value.

One of the things that economists and financial writers are saying about the the recent loss of value in bitcoin is that because of these interest rate fears that investors are taking their money out of more speculative things tech stocks, bitcoin, that kind of things and putting it back into bonds and whatnot, which you and you're nodding, so you agree with that premise.
Yeah, that is all true.
But I think that there are investors who looked at bitcoin and other currencies as speculating, and those investors are the ones who are are leaving.
The ones who are hodling are the ones who are believers in this new anthropological leap that humanity is going through humanity's.
The internet was step one.
Suddenly, we were all connected. We could all trade across borders.

We could use a virtual in a virtual world.
We can trade across borders.
We don't need to travel thousands of miles to get to the place that we're going to do our business.
And so then now we now have a currency that operates, operates effectively in a virtual world and a bigger and bigger part of all that we do and all of our businesses is going to be virtual.
It's going to be a part of the metaverse or whatever it is that we end up doing. And more and more of business is done in a virtual way. Less and less of it is done in the physical way.

And so I mean, if you're thinking about currencies in that way, you're saying, yeah, fewer and fewer needs for dollars to pay for things in the real world when we can operate much more of our life in this virtual world. And that's what's happening. We're all where you.
We order our dinner online, we order our cabs on the line. We these are not paid.
They don't have to be paid physical dollars.

So we we operate our jobs online. In fact, people in California are second guessing the idea of hiring from California because there are so many regulations that have been piled up on any California employer for hiring California people that if those people are just going to work, work virtually, you might as well hire from somewhere that doesn't have all of those regulations in place and in a lot of places. You pay lower salaries, too.
So there is this this world that now is is. Completely open.
So if I'm going to hire an associate, I'm going to look in California, but then I'm also going to look in India and Pakistan and.

Singapore and places where I would pay one third the cost and not be subject to all those heavy regulations and liabilities, potential liabilities that I would get from hiring somebody in California, I want to return to the to the start about bitcoin as a currency.
And I was saying that, you know, with the with the Fed threatening higher interest rates, some people are getting out of the speculation of bitcoin.
And so ironically, a central bank is to some degree affecting the the overall value of bitcoin. But as you predict these, these heady days ahead, both for the value and the use of bitcoin, do you need those speculators in the system in order to drive up the value of bitcoin?
Because when they're leaving, the value of bitcoin falls?

No. I think once people are able to buy their food, their clothing and their shelter with bitcoin, they will have no need for fiat currency. They will have no.
There will be no reason to hold dollars because I can get all the things that I need with bitcoin. Once that happens, once people are using open node and crypto for their accounting and and paying their taxes on a on the, you know, on a system that is not tied to any one, not not forced to go through accounting and bookkeeping and auditing and all that stuff, it's all done automatically on the blockchain. Once all that happens, there will be no reason to for anyone to hold dollars and there will be a mass exodus. It will be like a bank run.

We run on the banks, it'll be a run on the dollar and they will be out of there because they realize that the only thing people are going to want to hold will be bitcoin and maybe other cryptocurrencies.
When we last met, you were wearing bitcoin socks and today you're wearing a bitcoin bitcoin tie. Yes. Yeah, of course, is the fact I didn't wear my bitcoin socks today.
There is a reason there a little each year and I went for a hike and with my son and we both got poison out.
Oh no. Yeah. And so.
So I'm where I understand a little slightly less energy than.
So right, right? So bitcoin tied bitcoin stocks.
Is there anything that could happen with bitcoin that would change your mind?
Or are you absolutely certain this is the currency of the future?
You've said I've always been.

I've always been an optimist. And so you you have to take everything I say with a grain of salt.
But I also have a window on the future because everyone I talk to or most of the people I talk to are entrepreneurs.
And those entrepreneurs have a view of the future that is sort of five to 10 years out. And the entrepreneurs that come to me today are all operating on a and I'm looking over at the chairs where those entrepreneurs would be sitting.
They would all be operating on a.
In a world where they believe that there is a metaverse that is completely operated in with with bitcoin and other cryptocurrencies, that is what I am seeing from the entrepreneurs that come into this office and that is usually something like seven or eight a day.

And those are the images I have of what the future looks like.
So I have kind of a window on the future, and my window on the future says there is going to be a moment where where you don't need to speculate on bitcoin anymore because it is a part of us.
Stop there unless there's anything else you'd like to tell me.
No, go ahead.
No, no, no, I think it's all I got.
Actually, the only other thing I have, and we want to put it in this this episode, but I've been asking everybody is tell me about a book that really influenced you and it doesn't have to be something from Harvard Business School can be either.
So here's here is the book that influenced me the most and I've met.
I've since met the author, and he allowed me to use it for Draper University students.

The book is called Biodynamics by Michael Rothschild, and it's it's a book that explains how biology and economics are interrelated.
He starts by talking about the truth.
I don't get it wrong. Should Triller buy it had 12 buys, and then there was a 13 I Triller diet, and they wiped out all the 12 I Triller, right?
And those were the only ones that live beyond to to show the next century or whatever it was.
And and then he takes it and he starts saying how all of.
Economics is is a an amorphous blob that continues to move, but has this step function changes and so will move along with metal along and will grow at sort of a certain rate.
And then all of a sudden we'll have a breakthrough like the wheel or fire or the automobile or the airplane or the computer or the internet or bitcoin.

These are major breakthroughs that all of a sudden the world moves to toward them. And then there are these innovations that happen that that we all change our lives around.
And but economic, our productivity continues to grow. But it doesn't grow in a smooth line the way an economist would generally think.
It grows in fits and starts with these major innovations and inventions that happened have happened around them throughout the ages. It is a terrific book.
It's very dense, but it's a terrific book.
And then you got to read my book.
Well, of course, out of how to be the startup hero by Tim Draper and my dad's book is fabulous.
It's called the startup game, and he and he's such an optimist that if you're ever sort of down in the dumps, this is the book for you to read.

He he looks at the world with the most optimistic view rose colored glasses.

Terrific. OK, what I'm going to do is put these on from time to time and look at this from time to time doesn't mean I'm not listening or I'm not interested, just means I've got to do two things.
Got it! OK.
So this was cohort number 13, right?
Correct. Lucky number 13. Exactly.
It's been two years since you've been able to do this in person, right?
Yes, this was our first in-person demo day since just before lockdowns of February 2020 was the last time we were in-person and then everything locked down, which is actually good. Good timing in a way because we had just finished our demo and our batch and we were just in between batches. So if if we're going to have to do a lockdown, that was a good time to, but just a little bit closer to OK.
There you go. Perfect. OK.

What was it like doing it virtually, you know?
Well, at first we hated it because we loved the live interaction and sort of the founders. We kind of got used to it.
I would say, and since everybody had to do it, it wasn't so bad, right? It was just the way that everybody had to do.
And we kind of adjusted to it, but we always miss that in person.
Always, always. Now, when you came back to the in-person thing, you are allowing investors to log in remotely for the first time, which now in retrospect seems so damn obvious.
You know, I think we we just came across a brilliant insight as humans, right, which is something should be live and some things shouldn't.
And let's let's make a great hybrid world with the best of both worlds.

And as far as I know, we're the first accelerator demo day that did that hybrid, and it was a great success.
It opens it up to the world.
Yeah, exactly. And people from all sorts of time zones, we tried to pick a time, a specific time where Europe didn't have to stay up in the middle of the night in Asia just had to get up early. So, so, so it was a hopefully we hit that, you know, sweet spot. 3:00 p.m.
Pacific Time and we had huge attendance.
We had over 850 people between the in-person and the remote.
And these are 850 qualified investors.
Yes. So so it is a closed event.
You have to be an accredited investor.
We do invite some of the key members of our community, such as our advisors, but it's for angel investors, seed investors, corporates.

It was really well-attended and we were so thrilled with that, having attended one of these in the past.
I was struck by, yes, there were some that I liked better than others, but any of them sounded incredibly reasonable that any one of them would have been at least sounded like a good investment.
Well, good because that's our goal.
So there's two things you have to do. You have two well, three things.
First of all, as an accelerator, we have to pick good companies to join the batch. And then once they're in in the cohort, we have to accelerate them.
So we have to move them towards a stage where they are interesting to investors.
So we have to help them get customers.

We have to help them make the right hires, coach them all on all the things that that a young company needs to know about.
And then once you've done that, then you have to help them prepare a professional, polished pitch that tells the story that they have created over the last six months with us. And that last piece is important, but it's not the only piece. And so what we like to do at Skydeck is is really focus on that company building, and we have more time with the companies, right?
It's not a three month accelerator. We have almost six months with them.
So by the time they get to demo day, that story is ready to be told and we help them tell it.
What commonalities did you notice this this time around?
I mean, speaking generally, because there were, what, 13 of them?

There were 19 in the cohort and two alumni teams.
So we invite alumni to come back and pitch if they're opening a new round like a series.
So commonalities, I would say the commonalities that that are that are ever true are these are all founders who are incredibly committed to their companies just in a remarkable level.
The grit and determination that they have to build these companies and bring these solutions is always remarkable in terms of right now.
Some of the commonalities are are are issues that all startups are facing right now, which is supply chain, right?
If you're if you need to buy something from somebody somewhere to build your product, it's tough. So startups are dealing with that.
The the there's kind of a fuzzy spot on the curve for investors, right? So we had a.

Wouldn't say awash with capital, but a lot of term sheets flying around the last year or so because there is so much money in the capital markets and investors now are a little more hesitant. They're a little more cautious.
They're still writing term sheets and our volumes are looking very good for investment.
But the investors are now looking at a possible market, shall we say, slowdown.
So they're being a little bit more conservative with with their outreach.
These these are, of course, things that all startups are looking at right now.
Where do they come from? These are not.
I mean, it sounds like they're student projects, right?
That, you know, like we did in business class, you know, we invented something and but it's much bigger than that.

Right. So so our great strength is that we are Berkeley Berkeley Skydeck is not a separate accelerator that that's parked next to campus.
We are a Berkeley program.
But what that means is that people do think that, you know, we're just a bunch, we're student projects. We're in fact we're not.
So we take startups. We're the founders are either Berkeley affiliated or any of our ten sister of the ten sister campuses or.
And this is where we get a lot of our startups from startups who are outside the U.S.
that want to come and launch here in the U.S.
and make a Berkeley affiliation through a co-founder or an intern.

And so from those three, we have quite a large deal flow, right? So we had for this batch, we had eleven hundred applications from Berkeley and the UC campuses and around the world, and we whittled that down to 20. So it's highly competitive.
One of the things you can offer and obviously you offer money and you offer office space in new is access to the Berkeley ecosystem that there is an expert on this campus in everything under the Sun.
Absolutely. You name it, somebody here, either on campus or off campus or in our network is an expert.
Anything from quantum physics to the latest in grid management to you name it.
And we'll find that person to connect with our startup.
How much of this is a little bit of competition with Stanford?

Stanford has lots of startups coming out of it, and the Cal Stanford rivalry is legendary. I don't think anything it can be, you know, it completely away from the Cal Stanford, you know, actually, we love it that Stanford's down the street.
You know why we get a lot of Stanford alums in our program.
They join with a Berkeley alums and they they make a great team.
We've had lots of startup startup there, cofounded by Stanford alums who are very talented. And the only time it gets, you know, rivalry is on game day, right? And the rest of the time, they're happily building companies.
Now what you get out of it is five percent of the company, right?
So we virtually, yes.
So this is this is the magic formula that we've set up.

So. So Berkeley is a public university, can't create a seed fund for startups. That's not something that we are set up to do.
So to fund the startups.
I asked someone to launch a dedicated venture fund that fund the Berkeley Skydeck Fund, which is private venture capital investors and all the companies, and is going to donate half of the fund profits, which is called Kerry to Skydeck to UC Berkeley, which, as you point out, ends up being five percent of the profits because the uh, I'm sorry, 10 percent of the profits, because the the fund managers received five 20 percent or 20 percent of the fund profits when there's an exit.
So if a company is sold, the fact the fund managers get 20 percent of those profits and they share half of that with us.

So we and I guess, yeah, give me the clarification between the incubator side of it. Hey, come in, we're going to give you a desk and we're going to give you some money to get launched in some expertize and then the Berkeley Skydeck venture fund.
Right. So the venture fund funds the companies in the accelerator track. So that's about 20 out of out of our batch, which can be up to 100 companies. The rest are our incubator track or our partner track. These are teams sponsored by other organizations.
The incubator track, which is very large and we have at least 50 companies there.
They don't receive the investment by the Berkeley Skydeck fund.
They're typically earlier stage.
There's a lot of current students and current faculty in there.

We're just submitting a very interesting startup founded by a faculty member who has a lab that's working on removing arsenic from drinking water, and they're just coming out of the lab.
Really interesting solution. They are perfect for our accelerator incubator.
Or track? And then if they get to the point of maturing where they're ready for a venture investment, we'll put them in the accelerator track and then they will receive the investment by the Berkeley Scott Tech Fund.
And if it's incredibly successful, could mean tremendous amounts of money for Berkeley.
Exactly. And that's this unique public private partnership that we set up as an experiment those years ago when we first started working with the Berkeley Skydeck fund.
And we wondered is, is this going to work right?

Is this partnership between private venture capital and our public university going to work? Is it is it going to be successful?
And with the the rays of Berkeley Skydeck fund to add over 60 million in commitments, which is almost three times the size of Berkeley Skydeck Fund one, we can happily say it is a success.
Investors like it. The founders like it.
The fund fund is doing very well in terms of how well are those investments doing?
And here's here's the magic of it.
Here's the real superpower of it.
So as as a Berkeley program, we are part of the Berkeley network. The broader Berkeley network of alums around the world is over 500000 people in every industry imaginable, right?

And so we have a startup that's been invested in by the Berkeley Skydeck fund, and maybe the founder went to Berkeley. Maybe they didn't.
It doesn't matter. We call up whoever it is, some expert in some unique field and we say, Hey, we have a company.
And by the way, if they succeed, Berkeley benefits financially.
Will you talk to them? Will you give them a little bit of your time?
That's almost always a yes. I can help Berkeley with my time.
Fantastic. The alumni love it.
The founders love it, and we're just so happy to be able to connect these these elements that that bring everybody together to help the university, to help the founders and help bring these solutions to market.
What's the. Is there a household name company that has gone through your system that people would know?

Yeah. So the fund is still fairly young.
So those companies are quite young. So none of them have reached sort of a big household name yet. But we have had a company or two that's gone through the program before we had the fund.
Probably the best known one is Lime, which went through Skydeck years ago before we had the funds. So.
So sadly, we don't own a slice of lime, but but they're active in the community. In fact, I just communicated with one of the co-founders today asking for some, some expertize about another company we're evaluating, and they're very, very helpful. So but I expect, you know, come back in a couple of years and and we'll have some names for you that it really, really exploded.
Are the companies that are accepted?

Do they fit into sort of what I would stereotype as a Berkeley?
I know I'm going to talk to the CEO of Wonder Phil, which has an environmental aspect to the business.
But would you accept a company that I don't know was going to figure out a weapons system or a way to to get homeless people off your property?
Or is or do all the companies fit sort of this Berkeley genre that we all think of?
Good question. So we'll take any company for the accelerator track that is a good venture investment.

And so those have all been companies that are doing something interesting, that they're doing something that will help solve a problem for for society that will make money. Right, exactly. And those they're it's hard to name a venture invested company that that doesn't solve a problem that helps society wonder. Wonderful is is obviously doing that, but we have many companies that I say aren't, you know, sort of stereotypically Berkeley.
We have companies making semiconductor chips, we have companies making new materials, we have e-commerce platforms.
We have we've had some gaming companies that are they're making great solutions for gamers, everything you name it.

But but I would say, yes, we we are always on the lookout for a company that's both in and about venture investment and a company that's really going to solve a pressing social problem and wonderful is a great example of that.
So the next cohort, I think, is due May 2nd, so that may be a little bit too soon. But what would your advice be to somebody who's listening to this, who then says, Yeah, I think I would. I think I'd like to be a part of this.
Not just how do you apply, but rather how do you apply and win?
Right? So a couple of things.
So the application that we have is is fairly detailed.
There's a lot of questions and look for the sweet spot of give us detail about what you do, but make it succinct, right?

One of the big skills of being a good startup founder is explaining your story and your product in a way that gets people excited, informs Oh, that's what you make. That's the cool product, but is clear is very, very clear. Start ups are simple, right, that start ups at the early stage are very simple.
I'm making this product for this customer that solves this problem, right? So make that very, very clear for us and then tell us about yourself.
We're we're very early stage, so a lot of what we're looking at is we don't have a lot of metrics, right? Some of the companies that come, they haven't sold a product yet. They have no sales. Maybe they're still even building the product, right?

Tell us about yourself. Tell us maybe what challenges you've had to overcome to get to where you are. Help us get to know you a bit.
Include your video, right? We have it with a spot where you can.
You can upload a little video about yourself.
We want to get to know you as a person.
And then lastly, tell me about one truly wonderful film.
Rather, you watched that presentation.
What struck you?
So these founders, you know, I mentioned earlier founders with grit and determination and passion, and this team has that absolutely in spades.
They are determined.
They're committed. They're passionate.
They really have a clear purpose about what they're doing and what they're doing is helping to prevent plastic waste, which is a huge problem.

And we're all aware of it. And it's a painful problem, right?
That we all feel that pain and they they really feel that and they really bring that to their company in a very intelligent business, process oriented way.
So they have the passion they have, you know, this kind of Berkley solution right to save the planet.
But they're very smart business people and they are not doing this as a project. This is a company, and we just love that about them.
Double check my notes here.
No, that's all I got for you, unless there's something I should have asked.
I don't think so. Excellent. All right.

The other thing I always say is that because I do not have an audio engineer, I am going to put on headphones or look at this little recorder every once in a while just to make sure everything's working totally fine.
Exactly. But it doesn't mean that I'm bored.
I think I'm going to put the stand on the other side because you're going to face these forces in your face in the way.
That you tell me, and you'll notice that I usually will have pen and paper because I think better with a pen and a paper which is.
Right over here and write.
That back. And I am like, Yeah, you do the matter.
Official Yeah, I might have that common You know, sometimes, just like writing two words, it's not even like taking notes. It's just, it helps me like, focus my attention.

So. So I carry this type of notebook everywhere.
It's just. It's just fun.
And I see all this exactly the iPad and I like, like taking notes, like they were born with an iPad and it's at their fingertips.
And I'm like, Yeah, I was.
I know. I still do.
I definitely going to take.
Notes by hand. It's just faster.
And I know what I mean, you know?
Anyway, what I was going to say is that just because I'm looking at this machine.
Still, if I'm.
Right, does not mean I'm bored.
However, if I get my phone out and start playing Candy Crush.
Then. Then I get super bored.
Yes, I get it till I get it.
I'm fine. Honestly, if what I'm competing with is Candy Crush, I think.
I think I can win. That's okay.
Let's start with how you say your name.

So it's a French name. So it's a little different than the way American usually pronounce it. So my l the first name like Mum and then l like she in French male and then in French.
You usually don't pronounce the last letter. So my last name is Agave.
You don't pronounce the T?
I always like the word Vaso because you don't pronounce any of those letters.
In that word.
So Malagasy okay.
Honestly, any any pronunciation would be fine.
Fair enough. Fair enough.
Well, let's start with a very simple question, and that is, what is Techstars?
Techstars is the most active pre-seed investor in the world.
We have 3800 companies in our portfolio and counting.

We have invested across pretty much any technology that you can think of. And we operate in 16 different countries and make investment in 70 different countries around the world.
And that's not just you saying that Crunchbase ran the numbers and said you are the biggest pre-seed in the world. Exactly where does the money come from?
So we are we are an investment business.
So we have funds with LPs, whether it's pension fund or family offices.
The specificity of Techstars is also we have a very large network of mentors and alumni, and a lot of them are LPs in our fund.
So we have so.
Much like much like Sequoia or whatnot, which would have family offices and and large LPs. You do too.
The difference is more on the after the funding stage.
You're more of an incubator.

Yes, so do we. So we only focus on Pre-seed like DVC that you've just name.
Would you talk to pension funds and institutional and family offices? And the difference there is that when you invest a pre-seed, if you do just give money and then walk away and tell them come back when you need more money, their survival rate is not going to be very high.
And so 16 years ago, Techstars came up with the concept of accelerators and what we are now doing when we invest money into a company is we also ask them to come to what is basically a entrepreneurial bootcamp where for 13 weeks we are in the trenches wisdom to help them build their business.
Is it analogous to Y Combinator?

It has some commonalities, starting with the with the Entrepreneurial Bootcamp, where we're different because we are much more distributed.
We we have we have programs all around the world, including San Francisco, but not not only and that goes all the way to Nigeria and Tokyo and Paris and London and Seattle and Washington, etc., etc..
Which is a huge advantage these days.
I mean, we've always talked about tech spreading worldwide, but now it really is post-pandemic particularly.
Absolutely. And I think beyond just the pandemic impact, I think for quite some times in the tech world, there has there has been a sign of emerging ecosystems all around the world.

It used to be that Silicon Valley was really the heart and brain and liver and stomach of the entire ecosystem in the entire tech body.
And now what you're you're seeing more and more is ecosystem like New York, like Seattle, like London, like Paris, who are emerging.
And it makes a lot of sense to be close to the founders and be in this ecosystem to work with them.
Sure. Now, I'm going to be honest with you.
I don't love the name Techstars.
I know you didn't invent it. You're you're not tech Zero risk, right?
What do you think? Just between you and me, of of the name Techstars.
I think it reflects what the founders of Techstars really wanted to do, which is finding the next stars of the tech world.
And so texters was a pretty direct translation of what they were trying to.

It's too late now.
And I think it's too late. I think our brand is too famous.
The cost of retiring the brand would be very high.
What made you come to what made you decide that being CEO would be a good idea?
So I have been CEO before multiple times.
I've been an entrepreneur three times and I love working with entrepreneurs.
And because I've been an entrepreneur three times, I know how how amazing these can be, but also how exhausting this can be.
And that's probably why I didn't build a first business.
For me, Techstars was the opportunity to go and work with hundreds of and your partners every year. This year we're going to do between 607 hundred Pre-seed investment. In one year alone.

I also like the the international aspect of it. It's a it's a business that was born in the US, but that is now truly global and support entrepreneurialism from, as I said earlier, 70 different countries.
So the international aspect was really interesting.
And then the last aspect for me was I think venture capital needs a bit of a reinvention.
I think a lot has been done and I benefited from it as an as a founder myself and as an executive. In many tech companies, VCs have been instrumental in our success. And at the same time, I think that the the way they've been doing it with some small number of investment, very hands off approach to companies, very clear of bias that come from pattern recognition being the prime the prime vehicle for them to make investment.

I think there are better ways to do it.
And so to me, Techstars was an opportunity to disrupt it.
I want to talk more about the future of Venture in a minute, particularly traditional venture capital. But you mentioned small number of deals and you mentioned you're going to do 600 deals this year.
Was it?
Yes, a little more.
You're not making all those decisions. I mean, who's making.
You.
Know, Right. Well, exactly right. But I mean, you know, I mean, some small firms, all the partners are in on a decision who to, you know.
Michael barbaro of of daily of the daily.
What does that look like, that decision?
Where are those decisions made?

So it's very different because the way we structure, often it's almost like an actively managed index. If you're an LP in one of our big funds, you're going to have exposure to 800 and 900,000 positions.
So it's it's already, by definition very different than a traditional venture capital firm. The way we we make our investment is a pretty, pretty robust process. So we have a certain number of application to to our programs.
The numbers actually have have increased quite dramatically over the last 18 months. And there's a lot of entrepreneurs out there.

And with the funding environment being harder, a lot more coming to accelerators for support, we go through we screen this application mostly based on what we call entrepreneurialism profiles. So do we think that the enterprise is resilient?
Do we think that they're curious and willing to learn?
Do they think that they're passionate about the customers more than actual numbers?
Because at the PRE-SEED level, there's usually not a lot of numbers to look at.
Or if they are, they're pretty much made up.
So we go through all of that. Then we have a screening committee that is specialized either by region or by topic.
So we're very big in space and defense.
We're very big in fintech. We've we've done a lot in food tech and agritech.

So we tend to have specialists in-house that will come to this investment committee, whether they are employees of Techstars or mentors at Techstars.
And that that committee is the one that makes the final decision on this investment.
You haven't had any, you know, blow out big names yet, not a not a Facebook or a Tesla or whatnot. But there are companies that people may be familiar with, Pillpack, Digital Ocean, and then the FAA just cleared zipline to fly beyond the operator's site in the United States.
I know.
Which is a huge deal for.
Them. It's a massive deal not just for them, I think in general, because zipline is basically the world's largest automated delivery system and they've they now have a valuation of well over $4 billion, I assume was what was the news that just.

Added to it?
Yeah, that for sure. Added value to to watch.
To watch. It is just extraordinary.
These small drone airplanes flying many, many miles away and returning to base over and over like a bus station.
Exactly. And it's incredibly precise in terms of where they actually land.
And they've tested that in in some of the most challenging environment around the world, including Africa and some of the the more challenging in a different way environment like Japan.
And I bring it up partially because of the worldwide focus that Techstars has. You know, here's a country, a company, rather, that has done a tremendous amount of work in Africa, proving the point of coming to America and saying, we can do this here.
Absolutely. And we have plenty of portfolio that do that.

And that's true to a large extent why they come to us, because I was talking to one of our portfolio companies the other day and they were like, I really think that Japan is my next market and we're talking about America, an American company.
And I was like, Yeah, no problem. You know, we are we know Japan.
We have people there. We work with the Ministry of Economy.
They're like, Tell me what you need and we can do.
That was, I would say, half of the countries in the world, like 70 plus of them.
So what are what about exits?
I assume you take a percentage of the company.
We're an investor.
Yeah. Yes. And then at some point you want your eggs it and it's getting a little harder to exit. These days. I mean, some companies are being purchased, IPOs less so.

Absolutely. So we are an investor. So when we end, we're usually the first check in most of these companies, we're very we're very aligned with the interest of the founder. We do not push for exit.
We support them as they go through the process, but their timing is our timing. Now, obviously, the market hasn't been particularly exciting from a realization perspective in the last 18 months.
At the same time, at the same time, I can see IPO picking up probably in the next 18 to 24 months.
There is a lot of conversations right now happening with corporation around potential acquisition.
I underline the word conversations because it hasn't yet translated into actual deals, but I can see really this conversation increasing in frequency and intensity across our portfolio.

And and I've heard venture capital firm telling me that the same is happening with their portfolio companies.
We briefly touched on the future of traditional venture capital firms.
You have some some ideas about that.
There are going to be some that will not be able to raise another fund but still have to manage the funds they have.
Absolutely. When you look at the percentage of fund being raised by emerging managers, two years ago, it was well over a third like 33, 34%.
This year it was less than 15%.

And so emerging managers are finding it incredibly hard to fund raise. LPs are because of the volatility that they've discovered in the venture capital asset class, in the venture asset class have started saying, oh, we probably need to reduce our exposure to it and really focus on the big fund or top performers.
And so what we're seeing the result of that and we've seen it at Techstars over a year ago because we heard the deal flow to the venture industry to a large extent.
And so we talk to them all the time.
And about a year ago we started hearing some of them being like, Well, I'm going to spend more time with my family. I think it's important.

I think I've raised enough money or have enough companies in our portfolio, which makes no sense. When you a venture capital is like you always want to do more deals.
And so what you're seeing now is the emergence of what we internally at Texas call zombie funds, where you have managers who are still managing their past fund and and managing the relationship with their portfolio companies, but have no ability to raise their next fund and they're not going to go bankrupt because a VC firm doesn't go bankrupt, but they're just going to slowly but surely disappear from the or.

Perhaps some mergers. I you know, I am often pitched by and I enjoy doing interviews with very small firms that have small funds, but, you know, are doing something interesting and fun. I don't want to discourage anyone from that.
But, you know, at some point you do say there are ten of you and there really ought to be one of you.
Absolutely. I think one interesting thing that may happen is a consolidation of all the small or some small emerging emerging manager with a provider of services for VC firms, like some kind of platform where the the emerging manager will be able to come and get all their services and potentially all the way to fund raising.
There's a pretty good business there.
I think there's an amazing business. I hope.
Somebody is here and.
That I would invest in that.

You heard her. Okay. She would invest in that.
What's the prediction on your own funding, the interest in Techstars and funding going forward?
In general, the Pre-seed, the Pre-seed asset class has been pretty stable and remain a very, very attractive stage for for LP.
It's not to say that it's like a walk in the park and people are just throwing buckets of money at you.
But in general, Pre-seed has been pretty isolated and we feel we feel pretty happy.
You used to work for a Russian company, right?
Yes, I did.
And do you speak Russian?
Yes, I do.
Do you keep up on the Russian?
I left the country during the first war in Ukraine, and I have never been back.
That leads to my next question. Do you anticipate you will ever work for a Russian company ever again?

It seems unlikely, given their circumstances.
Which is sad.
I understand why.
I think there are multiple reasons to be very sad.
And the first one is not really my career path is what is actually happening on the ground, of course. And I worked in Ukraine as well.
And I think this war or this war is is senseless and I don't understand it.
So that to me is what makes me the saddest.
And the second thing that makes me sad is that I think in general, the world is not better when human beings are hitting on each other.
Like it's just not it's not great for anyone.
And so, yeah, it doesn't make me it doesn't make me very happy.
Tu parles francais aussi.
Oui, je suis francaise!

So you speak Russian, You speak French. Are there words in Russian or French that. Don't have a corresponding word in English. And I'm thinking of schadenfreude.
The German term, you know that you take a secret joy in someone else's misery.
Is there a is there a useful word in Russian or French you could teach us?
That is an excellent question. I never thought about it.
Um, what is the French word that Americans don't have?
The thing is, you guys have taken a lot of our words.
So Preneur Entrepreneurs to start with.
And so I'm actually wondering, I think you took a lot of the good words.
If you think of a different one, we'll put it on the tail end of this.

We were talking, I was listening a rather on Hard Fork the podcast, and they were talking about how I can turn podcasts into different languages, Arabic or Hindi or French or whatnot.
And I was thinking, Well, maybe that's something worth pursuing.
And then I thought to myself, No, I bet you most people and this I realize I'm sitting in the United States being an American right now.
Most people interested in tech and venture capital probably speak English.
Yes, I think you're absolutely right in your conclusion.
Good to know. Your first job was organizing children's birthday parties in Paris.
Yes. How do you know that?
I do my homework.
Tell me about a French.

First of all, I'm very jealous that every kid got to have his or her birthday in Paris. Yeah, because, you know, I get my first birthday in Paris.
I was an adult.
What goes on at a French birthday party that would be any different than an American birthday party?
I assume you don't take them to some jumpy trampoline thing?
I don't.
Know. Oh, no, it's usually. No, no, it's usually you don't go to a restaurant.
You don't go outside. It's at home.
Yeah. Which is if you have a garden, it's in the garden.
The joy and pride of the mother.
Usually. Sometimes the father, but mostly the mother is is to be able to show that she baked everything that is on the table.
It's very the expectation is a home cooked food, kids playing not a lot of necessarily superstructure.

I did the reason why the business worked really well is because I did bring that structure like I was a fabulous clown, believe it or not.
And I had a I was actually pretty good at doing puppet shows.
And so that's something that the French kids at the time didn't know.
And so that was that was fun.
But yeah, most of my birthday when I was a kid was just my mom baking five different cakes and having all the kids in the neighborhood.
That was what it was in America until the rise of the corporate birthday party, which is, you know, just this process. I have two boys who are now older, but, you know, I took them to the, you know, the Chucky cheese or the jumpy house or the whatever it happened to be, pump it up. I think it was what it was called.

And, you know, it's it's like, you know, it's like a factory.
You know, they go in one door, they are allotted this amount of time to do whatever.
And then there are a lot of this amount of time. They have a corporate bake cake and then they're kicked out the door again.
Yeah, we don't have that. At least not that I know of.
Good, good. Stay away from that.
And I you know, the obvious last question for you is tips on being a birthday clown.
Or B, be ready to do pretty much anything the kids want.
That's usually the way to win their hearts.
Like from makeup to jokes to puppet shows, it's like it'd be nice. But nice is not just for the clown is for everyone.
I think kindness is an undervalued skills and traits.

I'm going to leave it there, except I'm going to ask one last question and possibly included, and that is did you have any of them just turn into disaster?
Were the birthday child.
Some of the birthday parties? Yeah.
Um, I mean, because that was a small business I had, I had people working for me. And then one day, like two of them didn't show up at two different birthday parties. And somehow the parents are not very understanding when the person who's supposed to run the birthday of their child is not showing up and there's already 40 kids around. So that's probably the closest disaster we've come to.
Are there other things you'd like to talk about?
Um, no. You know, I think we covered we covered a lot of ground.

Surprisingly fantastic. You wrote I always ask this last question, and it's not included in the episode, but I collect them together every summer.
And that is you wrote a book called Trumpeted, Trampled by Unicorns.
I'm disturbed that you wrote a book called Trampled by Unicorns, but I always ask every VC I meet what is a book that was very influential on you?
And you know, it's one that you give as a gift or it's one that stays on your nightstand, or it's one that you would take to a desert island to use that cliche.
And it doesn't have to be anything, you know, incredibly sophisticated.

So I have a humanities background and I read a lot in my life the one book. And and you're probably going to roll your eyes when I'm going to talk about it, but let me explain why that book mattered to me.
It was the Jim Collins book. Good to great.
And the reason why it matters is was because it was the first time ever I had just arrived in the United States.
For the very first time.
I barely spoke English.
I had never been exposed to the American business culture by only really contact with the United States was the TV show that were shown on TV.
So I think Beverly Hills and Dallas, that that was my vision of America at the time.
And and the family was home.
I, I was living at the time.
I had this entire almost like bookstore in their in their home.

And the first book I literally picked from the shelf was good to great.
And I started reading it and I was like, Oh my God, this is amazing.
Like, no one ever, ever told me that business could be run that way.
And that to me was completely transformative because because until then I had always thought of building a business almost like, you know, mom and pop and and like, you just get up every morning and you work as hard as you can, and then you go to bed and you do it again the next day.
And that book was like, No, their system, their processes, their best practices are things that you can do differently.
And that to me was just like a complete shift in terms of how I thought about building businesses.
Side. Question What was the most difficult thing to learn in English?

And all your verb tenses, like how do you why should you say I was versus I have been?
That was difficult. Now I understand it, but at the time and no one could explain to me the grammar. And so I was like, I need the rules because in France we're very grammar oriented. So all every kid that goes to to school really early on has a couple of hours a week of grammar to understand how our language is being structured.
And then I was trying to learn English, as I say, a long time ago.
And I would ask questions to the Brits or the Americans I was talking to about like, why are you structuring your sentence that way?
Or why is it I was versus I have been.
And no one could explain it to me. It's just like because this is the way it is.

Here. I will occasionally put these headphones on just to listen to how it's sounding, etc., or I will stare at this machine.
But it doesn't mean I'm not interested in what you're saying.
It just means I'm trying to do two jobs at once.
So. Yes, exactly. So I'm going to test my own audio here and I sound that sounds pretty good. Will you tell me what you had for breakfast?
And we can adjust that the other garnishes is go up, at least.
Get that small.
Yeah.
So right here. Right, it's a direction it's one.
It is directional as that sounds pretty good.
But tell me what you had for breakfast.
Breakfast? I don't have anything for breakfast because I do intermittent fasting, so I will start eating after you and I are done something and you can see this is my food for the day until dinner.

Perfect. All right. One, two, three, four, five.
Yeah.
Yeah. Good. Okay.
All right. Very good. I think I'll wear them, too, to begin with.
Okay.
One of the things that I hear is I'm interviewing people.
Oh, that's the other thing I should have added is we will edit this up.
And if you want to take coffee in the middle, if we get halfway down a question or an answer and you think to yourself, What the hell is the question? I don't even know what I'm trying to say.
Just wave your hands in the air. We'll start over. It is no big deal.
One of the terms that I hear over and over when I am interviewing people in venture capital is.
Product market fit?
Yes.
We're going to talk about. We're going to talk about that.
We're starting. Oh, yeah.
I'm very casual always.

Yes, me is. I mean, I've obviously read the notes and everything.
Yeah.
Then I want to hear your.
When are trying to reach.
Sure. So we have to you know, obviously a great number of our audience are fellow V.C..
Yeah.
That's the bulk of our audience. But the thesis is that people outside of Silicon Valley, the people who want to build Silicon Glen. The Silicon Valley, Silicon Beach, silicon.
Fen silicon.
You know, we'll often try to mimic the things that are in Silicon Valley, like the pool tables. What they didn't understand was that was Sandhill Road, that a concentration of venture capital was key.

You know, it's more than just having the great schools, you know, bringing great students into the system. Now, when we started this podcast was pre-pandemic. And so the thesis was, well, if you can't go down to the local coffee shop and run into somebody from Andres and Horowitz, then, you know, it's it's very different than it's going to be in Silicon Valley.
Where's your venture capital?
And, you know, oftentimes people say we don't know if venture capital is.
And so it was a podcast to explain venture capital to those people and the inner workings of it. Now, obviously, the pandemic changed a lot of that.
People are funding on Zoom and that kind of thing.
But the idea is still the same.
So what I like to do is have, you know, partially a lesson in this case.

Let's talk about product market fit and then, you know, just personality. The where'd you come from?
How did you get to where you are, that kind of thing.
Like market fit, personal journey.
Exactly.
Anything else?
No, I don't think so. I'll walk you through it, that's for sure.
Okay.
Excellent. And so Feroli sees less.
Who? Entrepreneurs like Phil Lewis's economic development.
Yeah. Yeah, corporate type stuff.
That's a fair statement. Yeah. Okay. Yeah. All right.
So a hundred times somebody has said blah, blah, blah, blah, blah, product, market, fit, blah, blah, blah. What's product market fit?
Yes. So I think product market fit is a myth.

Silicon Valley invented this term, product market fit, which basically they intend to say when you're an entrepreneur and you're starting something from scratch, you have to find a bunch of people, hopefully customers, i.e. people who are paying you, as opposed to users who are going to value your product enough that they're going to want to pay for it.
The reason I say it's a myth is the minute you find product market fit, you actually lose it. What happens is you find two dozen customers who like what you do. They pay you a little bit for it.
Number 13 will ask you to tweak something that will upset.
Number one, you're going to lose product market fit only to find it again.

So the myth is there's this line in the sand before product market fit versus after product market fit before you're looking for it, after you're in like hypergrowth or blitz scaling or growth hacking, whatever the term of the moment is.
There's actually what I call 50 shades of product market fit.
You keep finding it, losing it.
So you have to actually look for something else to assess whether you have a great product, which I call the product equation, and it's actually easier than you think.
It's back to basics, especially in a downturn environment.
What are we all here to do? We're here to create revenue for our companies.

And so revenue how do we link that to our product with a very simple equation, saying revenue is your number of customers times the number of transactions per customer, times revenue per transaction. Some businesses are high velocity, so for one customer, they'll have a ton of transactions.
That's e-commerce for you. Some are very low velocity, so for one customer, they'll have more or less one transaction.
That's like selling cars, for example.
But if as an entrepreneur, you can articulate how you're going to get more customers.
You have an acquisition strategy, how you are going to engage them more effectively and drive the number of transactions per customer.

You have an engagement strategy and then how you're going to make money after each transaction, you have a monetization strategy, then you can link your product to your ultimate goal, which is revenue.
So at a basic level, when, when they talk about product market fit, it's if you build it, they will come.
That's right. That's another miss. So let me share this with you.
I used to work for Facebook. I've been in these places where if you build it there, they will come.
But that's another complete mess.

There is no such thing as a product where you build it and they come. In fact, when you look at the I say the DIC accords, right? Companies that are worth 10 billion or more and you look at their business model, none of them have a business model like the Facebook business model, which is I'm going to build something and then I'm going to have a completely different group of people who are actually going to pay for that thing.
Right? Disconnecting users from customers.
Most of the DIC accords today have revenue models where they make money of the people who benefit from the service directly.
So this idea that build it and they will come is is there is the there's a new variation of build it and they will come, which is called product led growth.

Product like growth is this idea that your product is going to be your sales channel.
It requires a very specific kind of offering to make it work.
You have to have a product offering that's number one, viral and number two, sticky.
The best example of that is Dropbox.
Dropbox is viral because if I were to share fire with you, I have to invite you to the service. You can sign up for free.
You have to sign up for free, which is the virality element.
And it's superior to, you know, a one of a reality question because every time I want to share a file, I'm going to share it with a bunch of people who are then going to join Dropbox.
Number two, it has to be sticky. I share file with you.

You want to have continuous access to the file, so you're going to keep your membership of Dropbox. Eventually, a subset of users will find enough value or will have enough stuff stored on Dropbox that they're going to need to pay for it. Short of that kind of virality and stickiness, it's very hard to make product like growth worth.
And what it maybe short of that combination of virality and stickiness, it's very hard to make product led growth work.
You actually end up needing a Salesforce.
Even Dropbox needs a salesforce for enterprise grade offerings.
And aren't there situations in which the product and I'm thinking maybe a consumer product like a Nest thermostat, nobody knew they wanted one. I didn't know I wanted a really fancy thermostat until I used it.
I love it.

That's right. Now, tell me, how many Nest lookalike did you try or did the population at large tried before they landed on this?
It's sort of like, you know, when I hear entrepreneurs trying to create that type of offering, I ask them, do you play the lottery?
Most of them laugh. And they say, Of course not.
The odds are so bad with the lottery.
And then, as they say, that they get the point, you can always try to create the next nest. You can always try to create the next Facebook.
You just have to understand that you're playing a game that's closer to the lottery than the game of building successful businesses.
So tell me, SC What is that?
My name. Okay, so S.E.
is my name. My full name is Sophie.
Charlotte, which is why I go by S.C.
There's a story to this. I, I wrote it.

I was invited to write a book a few years ago on what makes a great product.
And as I was writing my book, my, my publisher asked me and I can see what actually not. AC But hey, what do you think your author's name is going to be?
And I said, I'm thinking of SC. They cut me off right here and said, What a great idea because they didn't want me to go to market with my full name.
So be sure he's.
A beautiful.
Name though. Thank you. But it's so hard to pronounce.
Okay. And so it has nothing to do with with femininity or masculinity or hiding anything. It's just.
SC Like some people are. AJ or PJ.
Exactly.
All right. Fair enough. You grew up in Paris, and my understanding is you had an early access to a computer, I mean, compared to most families, right?

Definitely. So my dad bought us a computer that was like one of the very first ever computer.
I got to love it.
I became an electrical engineer, which, you know, was an oddity in my family. An oddity, of course, as a as a woman and an even an oddity. In France at the time.
Yeah. Tell me about the.
What era are we talking about?
How old would you have been when the. When you got your first computer?
Oh, probably like ten, 12 years old.
Okay.
So what was the the computer or the tech culture in Paris at that age?
So, you know, where I grew up, it was incredibly unusual and uncool to use a computer.
You'd rather have people who were writing poetry, smoking cigarets at a bar or at a cafe, then people, you know, nerding out on computers.

And and then later on, I found some group of people who were, you know, playing video games, playing some Dungeons and Dragons, all the geeky stuff that most engineers do.
But, you know, it was still like really early in that in that in that world.
You told someone after you became an engineer, you discovered you were a very good one.
That's correct. How and how do you.
Determine that you are not a good engineer?
Well, you know, once you're in engineering school and you are with folks who are really amazing engineers, you immediately realize that, you know, they're producing like ten x what what you are able to produce. I had much more of a business mind.

I also have always thought of technology as something that was in the background, enabling and facilitating human to human interactions.
Most of the best engineers I know have amazing human to computer interactions, and then sometimes they have human to human interactions.
Which maybe explain how you got involved in products.
Andrew Chen over at Andrews and Horowitz says you are a genius at making products people love. Are you a genius at that?
Well, I like what he says and the.
Symbol of the product people love that you were involved in.
That's right. I was very early at you know, I was early at Facebook. Obviously, that's a product people love and love to hate.
I was also very early at Nokia, at electronics parts, in mobile games.
I was there before the launch of the iPhone.

And so really had my hands that, you know, building communities before it was a thing, building mobile games before really the phones were able to support it.
As some of the products I built in, for instance, augmented and mixed reality, were in the top 1% of the App Store in the in the early days.
So I've definitely been, you know, ahead of the the curve on all things, you know, digital mobile product related, mostly in the consumer space.
You were at E.A. before the iPhone was invented and then you're at Nokia, kind of an offshoot of Nokia, but you're at Nokia as the iPhone is is the very first iPhone is coming out.
And I will remind our listeners that the very first iPhone was only okay, that Apple had to actually drop the price of the iPhone when people weren't so sure about it.

But you're at Nokia as the iPhone is starting to gain some traction.
What was the reaction at Nokia and what was your reaction?
Because you understand good product and there hasn't.
I mean, there's just never been a product like the iPhone.
And there you are at the competitor, seeing people start to use it. What's going through your head?
Right. So the launch of the iPhone, from Nokia's perspective, you have to see it from where Nokia was at the time, 40% market share globally, absolutely a dominant player.
Better technology by far than the iPhone.
And a very engineering driven company.
And so inside Nokia, the reaction is this product will never work. You have to, for example, like you'll see the engineering might say you have to use your fingers to operate it.

So when it's cold and you wear gloves, you cannot use iPhone.
It's never going to work.
Now, from where I was, which is the innovation labs of Nokia, so right in the middle of Silicon Valley, we obviously see the tidal wave that the iPhone is creating in Silicon Valley only, and we report that back to HQ. Now, our HQ knew that the next generation of mobility and mobility was going to be software.
They were huge software initiatives inside Nokia.
Part of what we were a part of, but definitely underestimating the power of the iPhone, the power of the App Store in particular.
So the Nokia version of the App Store, which was called the OVI Store, was a sort of a pale imitation of of the iPhone.

You know, I'm very happy to say I was part of the team that built that App Store and made a lot of headway on Nokia devices, too, to try and fight iPhone.
But by then, they were just too much of a cultural clash between a software culture of immediacy and a hardware culture that's looking two, three years out. Right? When you plant a device, you have to think about like supply chain and future of like chips and and bill of materials and that culture. Things too slow to compete effectively with a software culture.
As we look ahead to developments, you are a big fan of the blockchain.
One of the marketing problems I think the blockchain has is people confuse it with silly things like Dogecoin or the volatility of Bitcoin. The blockchain run.

Those things run on a blockchain, but those aren't the blockchain.
Can you sell me on the future of the blockchain as a consumer or as someone who doesn't know that much about it?
Yes, absolutely. So you're correct.
I was very early in blockchain. I wrote my first article on the topic in 2014.
And the way I think about blockchain is looking at data leaks.
So 15 years ago, nobody believed in mobile.
Like even I remember conversations where people thought it was going to be very awkward to hold a phone up, to take a photo, as opposed to holding it close to your eyes like like a camera. Right.
Which is what we do everyday now with our selfies.
So behaviors change.

They take some time. Now, if you think of mobile today as being mainstream, mobile captures all of the data that is related to us as individuals that's outside of us. So our identity, like our health data, our context, my location and so on.
Now there's a second wave which is happening right now in genomics, which captures all the data inside of us our heart rate, my genome and so on and so forth. That's also creating a tidal wave of innovation.
Blockchain is the next wave of innovation.
It captures all the data that connects you and AI for business perspective, like smart contract for personal interaction, like exchange of, you know, money and goods and services, but also for exchange of app like this whole idea of NFT.
People will say, Oh, it's a fad. I don't think it's a fad.

I think it's a way for creators to reclaim ownership of their creativity and find a way to monetize it.
So blockchain is really the data leg that captures all of that information of interactions between people.
You are a lecturer at Stanford, Gsb and at Columbia. What one message do you hope your students walk away with if they know, if they learn nothing else?
So I teach three courses.
I teach a course on product.
My key takeaway is it's easier than you think.
When I teach product, i.e., it's not about technology and bits and, you know, zeros and ones.
It's about making us better people.
The second course I teach is early stage investing, and they're my key takeaways.
It's much harder than you think.

People have this idea that if they take a course or if they attend some angel groups once a quarter or so, they're going to become great investors.
Well, just replace the word investor with the word say, doctor.
Right. You take a course, you attended a dinner once a quarter.
You become a great surgeon. That just doesn't make any sense.
Right? It's the same with investor. And then the third course I teach is on governance.
And the key lesson here that I hope people take from that is being a grade board member is a massive asset to any company.
What product as a product expert and a product lover do you look at and say, that's just phenomenal is an example. You know, I mentioned the Nest thermostat.

Tick Tock is another one where you see it the first time you say, Oh yeah, this is going to take over the world.
So.
The framework I use for this. I can tell you, like personally, I'm very ruthless about which apps, which products I put on the first screen of my phone. Yes.
The only rule is I have to use them every single day and every few months or so I'm going to revisit and say, okay, this one I'm actually not using every day.
So it moves to like screen number two or two, even like a folder which, you.
Know, God forbid.
Yeah, God forbid. Exactly.
So that that's sort of the, you know, the rule of thumb.

Now, the framework I use when I look at a product to evaluate whether it's a great product is based on the book I wrote on what makes a great product, which essentially is, you know, technology is an extension of ourselves.
So if we want to think about what makes a great product, we have to think about what makes a great person. And then I use basically the mind body spirit of product in what I call the product formula.
So body, we all want to look good.
We expect that our technology will be beautiful.
It's way more than pretty pictures.
It has to do with efficiency, with the wow factor and spirit. We all want to have meaningful lives, especially after COVID, so we all want our technologies to be meaningful.
That means personalized, but also respecting our privacy.

And then third rule, mind rule.
We all want to learn. We all want to grow.
We expect that our technology will grow and learn with us.
So that's a lot about AI machine learning, continuous evolution, both with a sort of a very fast space like, you know, a B testing and growth hacking, but also longer term like disruption at a at a larger level.
I want to circle back to your your youth.
What brought you to Silicon Valley?
So after immediately after I graduated from engineering school, I got accepted into Stanford Business School.
And that was.
Your impression of Silicon Valley was.
Okay. So my impression of Silicon Valley the first time I went was this is Planet Mars. This is so different from what I grew up with.
That's I'm setting foot here once and that's and that's it.

And then on my flight back, I remember thinking, actually, that's why I want to come live here with the biggest threat I could find from my, you know, upbringings and friends.
And then lastly, what do Americans get right about France and what do they get wrong about France?
Well, so what they get right about France, I think, is this idea that, you know, French people often think of themselves as having very high expectations of themselves being very sophisticated.
The quality of life, I think all of that are, I would say, quote unquote, good stereotypes.
I can see why often French people, unfortunately, are perceived as being snooty or prickly.
I now, when I go back to France can even, you know, notice that.
But I do think it's a misconception.
And what what do we get?

The thing we get right is that the sophistication and the.
Okay, fair enough. Those are my questions for you is are there other things you'd like to add?
I think these are great questions. Thank you so much for having me.

Didn't really brush my hair or do anything, oh, god, don't please don't worry about the other important thing is that because, you know, I'm going to edit this is if you want to take a drink of water, if somebody important calls on the cell phone, whatever, that's fine.
And then further, if you get halfway down answering your question, think yourself.
Wait, what the hell am I talking about? What was the question?
You know, just wave your hands in the air, and it's very interesting.
No, I love that. In fact, I'm going to actually grab a glass of water, if you don't mind.
OK, up here. Yeah.

/content/Preprocessed_Data/SHR Venture Creative - Amy Nauiokas.txt

Excellent. I have to say last week when I was just thinking back to our last conversation, which I think was about a year, about a year ago, like in the middle of. Yeah, I have got I probably never got more feedback on anything I've ever done then.
Then your program, which was great.

And I I remember talking to my team afterwards because I had such a great conversation with you. And I don't think it was until you introduced me that I realized that it was the NBC affiliate in Silicon Valley, and I was like, Oh boy, I, I get it. But at the same time, I'm about to kind of lambast Sandhill Road a little bit, and I just. And I was so and heartened by how much wonderful feedback I got from people who are listening, who are in the valley, who literally appreciated the idea that they weren't alone or that they didn't have to feel like it all had to be the same all the time.
So.
So thank you. That's fantastic. That's very good.
All right. Well, like I said, very casual.

Help me just make sure I mean, I could look up the old television show clip, but help me with your last name and help me with the name of of your of your farm. So why to introduce yourself?
Yeah, sure. So I'm Amy Yorkies.
I am the founder and CEO of the anonymous group That Sea of Amphibious Group, and I'm also the founder and chair of Archer Gray.
So infamous is scientific for telling you it is it? Is it? It sort of stems from a genus of flower that is found in the Swiss Alps, where my co-founder Sean Park has has a home and spends most of his time.
And we we were trying to come up with a name that was more interesting than, say, New York is Park, which is what we called it in the early days.

And and we were trying to kind of come up with something that was the embodiment of what we wanted to do. And the thing that you need to know about the emptiness is that the it essentially sits part of a chemical field that sits in a sort of field of others, but it only its power is in its ability to bloom and blossom and fertilize everything around it. So it exists.
But only as part of a wider ecosystem and part of community, and also then enables kind of growth of other things by brands broadening out.
So it felt like a really great yeah, yeah.
But I think a lot of folks think of it as a I think it's a Greek, right?
A Greek god, you know, which is the antithesis of who we are.

Right, right, right.  My venture firm, if I name it, after a plant near one of my houses because I just have one house would be, you know, something to the effect of those little weeds with those sticky things that get your site?
So you are you. You are heavily involved in movies and musicals co-producing the musical once, which won eight Tonys.
There aren't great songs.
This this.
Yeah. Yeah, it's one of them. It's one of my most favorite projects, actually.
Could you read? Are we on now? Are we are you?
Can you just? I like to talk about my involvement with once deliberately because of the way the matter as one of my projects, not a production.
So can you do it since then, referring to me as a co-producer?

Just name it as one of my projects, then I'm happy to talk about one.
So one of your projects was the musical Once, which won eight Tonys and different fantastic songs.
So it's it's such an amazing, amazing book and an amazing set of set of songs. It was such a wonderful project to be part of.
I wish we could. We could take credit for the the songs themselves as part of the musical, but the majority of those were done as part of the movie, the original movie.
But it was. Yeah, it's still a very special project.
What's the appeal of musical theater to sell me on musical theater?
Oh, it's a tough one. You know, we're not doing a ton of musical theater at our track right now. And I think that has a lot to do with the way the market has evolved.

Even before COVID. It's a tough business to be in and earnestly make a living off of.
As a producer, it really is a business that, you know, in my mind there's sort of two two standouts in the musical world.
It's the Disney's of the world back in these massive franchises and as they should. And then it's kind of that indie theater game where you have this opportunity to bring something to market like a once, but it happens once in a blue moon. And I think it's really hard to build a full business around it.
But for me personally, it was just up.
The whole of our gray was really about wanting to get in touch with the more creative part of my, my, my mind and my my my being.
Having spent the majority of my life on Wall Street and in financial services and in a capitalist pursuit.

And it was just something that I think I probably started in earnest off the side of my desk because I thought it would be fun.
I thought it would be something that that would teach me something that I didn't already know.
But what I didn't know is that I would enjoy it so much kind of being part of the development teams around creating these creative projects generally.
Working with filmmakers and writers.
But I think it's sort of all part of a bigger, bigger journey that I've been on to sort of I don't know how to explain it.

I guess when you look about the fact that at some point I'm babbling on because I wanted to talk about our track, but I realize I'm not answering your question about one so I can talk. Explain to me, explain to me what musical theater does for you. And I don't mean from an investment point of view or returns, but what is it?
You can't be involved in something you don't find fun and fascinating.
Yeah. And what this musical theater specifically do for a living? Yeah, no. It's a great question because I think I grew up always sort of on the outside of of these wonderful creative pursuits, right? I was a kid that loved to go to Broadway musicals and watch fun TV shows and watch fun movies, but was never one that actually ever thought they could participate in any way, shape or form in those.

And I think as I grew up and I had the privilege of being able to spend my time and my own financial resource and my energy against something that gave me joy.

It was one of the things that I always just thought I would be quite interested in learning more about. And I and I think as a as a creative pursuit, anything that that I've been doing in Archer Gray over the past 10 years, I think stems from wanting first and foremost, needing to really love and get excited about something. I have a producing partner that that that said something early on that I really loved that as a producer and as a creative development producer. If you don't love something that you're working on, then you shouldn't do it because at some point, and probably at most points as an independent producer, you'll be the only one that loves it. And so it's kind of great to sort of be in an industry and a business where your personal passions and your joy can drive your

Wall Street banker becomes involved in musical theater and movies. Sounds like a plot in which the Wall Street bankers the bad person, right?
You know the villain? I'm sure you're right.
I could do to your, you know you got the shoulder pads in your suit in that and the briefcase and all of those things. You come to Broadway and say, I'm here.
I've always wanted to be a musical.
How? What gave you the idea that you'd be any good at it?
How did you convince anyone else that you belonged in the theater? Yeah, no, it's a great question.
I think early on it was not that I thought I'd be any good at it.
It was just something that was interesting to me is interesting because it was something I didn't understand.
Certainly not a community of people that I was very well aligned or connected to.

And I think if I, if I were were honest, it was just more of it.
I want to say I. You know, started as a hobby, which is a well, is this something fun that that I've always loved to go to musicals I love to go to?
I'd love to see films. I love to watch television.
Let's see if I can't figure this thing out.
And completely happenstance wise, I was introduced to a team of folks that were working on the one project, which is what started my journey as a producer.
It was never intended that I was going to go in exclusively in a musical theater or be a full, you know, build my own production company.
It was really just supposed how I was going get started.
And and I think I used as you do your skills that you have to kind of complement the team.

They were looking for someone who understood the business side of things who understood how to capital raise, and it was skills that I had and a network that I could bring.
And so I used it as kind of like a, you know, a high end internship to some degree.
Learn a little bit about the business learned about, you know, how teams are created, learned about who I wanted to work with and who I didn't want to work with, and then found my way to sort of having the confidence to start Archer Gray. And I think, you know, as I look back on it now, when I think about everything that I've ever been motivated to do, it's really about.

Trying to do things differently and in many cases, trying to help change happen, and I think, you know, it doesn't take a rocket science to figure out that, you know, collecting a platform now that involves a massive amount of capital and influence in private equity and venture with a platform that is building importance in influence around voice and and trends is a really good way to make change happen.
So I guess I look at it now as just sort of steps on the journey to building what has become a really special, different, differentiated and important platform for change.
I want to make that link between venture capital and creativity in a moment.
But I want to couple of more questions about the creativity side of it.
You are also involved in movies.
Can you forgive? Can you one of them?

I just saw it the other day. I enjoyed it very much.
What does that like to go into the movie theater and see a movie that you had some hand?
Oh, I will listen. I would be fibbing if I said that, that it didn't feel particularly cool to be in that position.
You know, as a as a person who is always grown up, not even understanding how this stuff happened, let alone how it got made to be in that moment when we when we went to market with, Can you forgive me?

Which was such an incredibly special project in a project that was actually our Tigray's first project. It was the project that that my producing partner and Carrie and I met on. And so it was a long, long ten year journey of getting that project made. And so it felt all the things that it should have felt when we walked in. And then to see it have such the success and the appreciation that it had was extraordinary.
Everything about that project, the team, we got to work with, the creative team that we worked with the distributor.
It just it was it was a real joy and and a special project.
I think, you know, you probably wait a lifetime as a producer to have something like that come along, and I'm really thrilled that we could have been part of that journey.

I've been talking with human rights fighter recently about.
What a motorcycle, I think.
How about a great? I've been talking with human rights recently about movies, which he likes very much and he was talking about, you know, something I think I'd like to get involved in movies, and I pointed out to him that a number of Silicon Valley people, including Elon Musk, have gotten into movies.
What advice would you give him if he said, You know, I'd like to, I'd like to try my hand at things.
What's what's the entry point and what?
What have you learned or what advice would you give?

You know, it's interesting because I think look well, the first advice I'd give anybody who is entering a new area of that is not sort of core to their expertize is to find the right partner and and to trust that you can learn from a team of experts and that you don't have to reinvent the wheel and everything, and that they're with the right partnership. You can bring your own special sauce to the conversation and to the project without having to just reinvent the wheel right. There's a lot of people that have been working really hard in this space for many, many decades and and there are a lot of great people out there to work with. And I think if you can subjugate your ego to a degree that it doesn't have to be yours at all times, that that's probably a good way to enter it.

It's it can be a tricky business to enter on your own.
I don't recommend.
I mean, look, there are lots of ways to go about it.
I think particularly for those of us who have the privilege of being able to finance here, act as a financier on certain projects, you can use that certainly as an entry point. But I think have to be very careful to make sure again that you're working with the right people and that you're doing it for the right reasons.
I remember one of our early days and we were working with some investors on a project and we raised capital outside, which I don't tend to do much anymore on the financing side.

And the investor came back to us after, I don't know, six months or so we sent them a check because we made money off of what they invested in, which is what we said we would do. And they were really quite shocked and said, you know, understand how what does this money come from?
And I said, I suppose that was your charitable investment in the arts.
But but we we pitched you an idea and that idea made money and that's your return on your investment.
But it was a novel concept to him, which can be done in the entertainment industry for a reason.
Yeah, yeah. Well, what do they say? They say the best way to make money.
I don't know. What's the best way to become a millionaire is to start off as a billionaire and invest in film and wine. Right?

Like if you do that, then you can you can quickly become the millionaire that you always wanted to be. But but I think that that look, I don't it's not.
It depends on what level you want to come in to it at, right?
I mean, if it's just something you want to be a participant in, you want to learn, find somebody that you can attach your your financial capital to and let them do their job right. And that's a big part of it.
If you know, I think I love to say that I got lucky.
I think, you know, I I I'm one of the things that has always been part of my ability to do.
What I need to do in life is that I'm really good judge of character generally.
And when I meet people, I can tell pretty quickly about whether or not they're going to be a long term part of my life.

And I think it's made me good, probably quite good as an investor, because if you are backing most of your time, whether it's in the entertainment industry or in the venture capital world, if your your goal is to find good people and to back them, then that's that's like a hundred percent of my job, right? And I think it's a good reason why when people ask me, Well, how is it that you could possibly live in both venture capital and and independent filmmaking at the same time? And I don't see them as that different for me personally, right? Because my job is to give the resource to find the people that have the good ideas and to provide them with the resource, the structure, the access, the governance and the connectivity to allow those ideas to grow and to bloom and to blossom and at any

point come in and provide the next level of support. If I have to micromanage and do all of the things to build company A, B and C.

It's not going to work. If I had to do that, micromanage and do all the things to to create Project A.. It's not going to work right.
You need to give you need to have a really good sense of who the people are to back and then let them do their job.
And to me, that's why the two feel so aligned and now.
But I don't know that that's true of everybody who's a venture capitalist.
I think there are a lot of venture capitalists out there who do things very differently than we do at Anthem's. We don't have a tendency to just throw money at a problem and then walk away and hope for the best.
And I think a lot of people currently in the market are doing a lot of that.

We do believe in building resiliency and in organizations and projects and making sure that the team is surrounded. With more than just capital, but intellectual and human capital, not just financial capital, to be able to actually allow things to properly grow and give them a life, and we do the same at our degree.
So I guess short answer to what my advice would be is, is, you know, be honest with yourself about what you wanted.
Why you want to go into the entertainment industry and then make sure you're working with people that you trust, respect and genuinely like, which has been my journey so far.
There is an urge to create that some people have.

I think many entrepreneurs do. It's almost by definition they have an urge to create, but also in the arts, whether it's television or podcasting or film or musical theater.
There's just you have to create things because something in your brain says, I need to create these things to put them out there in the world.
Yeah. You know.
In the game of content, which quite often today, given all of the opportunities for distribution, it can be a game in the game of content.
I think there are two types of creators.

There are those who literally need to create a certain quantity of a certain number of projects that will resonate with a certain population for a certain period of time. And then there are those of us who earnestly want to focus on quality and create things that have a shelf life well beyond their distribution, sell by drop date and who really believe that as the consumption patterns of the human race change that we want to be on the side of creating things to consume that are worthy, right?
We didn't build our true gray with an intent to be the purveyors of cats getting their bellies rubbed videos and yeah, logic dog, right?
There's a market for that.

But I think that if you're if you're if you're a content creator, that that that wants longevity in the industry, that wants to and can move with the trends and whims of of our populace.
You know, it's going to take time and a little bit of effort to stay thoughtful. But but I think it's worth it and certainly it has been for us, it retrograde because I think, you know, whether it's can you forgive me or lost girls or Mr. Holmes or diary of a teenage girl or a whole host of sort of some of these projects that may not be household names?
But resonates, and that's a big part of of what we think our purposes here.

You touched on it a bit, but there's this obvious question of what are the parallels between creating movies and musicals and creating companies and growing companies as a venture capitalist?
What are the parallels there?
Yeah, I mean, I would say by definition, being an early stage venture capitalist and an independent producer of content require you to surround yourself with people, founders, writers, filmmakers, actors who have really good ideas and who have vision and who have the flexibility.
To live and work in a little bit of ambiguity, but that are willing to partner in a way that allows the kind of collection of the group.

To create an opportunity for the thing that they have a vision for to grow and and that is exactly the same if on the early stage venture capital side as it is in in in developing a project content project, right?
And so we go into something.
Listening to pitches, letting people talk, reading their their work. And if there is something there that resonates and it resonates because we think there's a market opportunity for it, we understand it.
We just like it and we like the people.
Then we figure out how to surround them with the resources.
Again, human, financial and intellectual, that's going to make it easy for them to bring this thing to life.
And it and it feels very similar when I'm back in an early stage company.

It feels as similar. What about your company as as when I'm meeting with a filmmaker or a writer for the first time talking about a project that they can imagine seeing on screen?
You've worked hard, as is people of all genders do these days being inclusive, giving people opportunity in tech and venture.
One of the things you've done is created an all woman spark that is the spark itself is entirely made of of women.
So you've got an established company that is run by women in the C-suite that at this point doesn't have anything to do.
That is, yeah, it's an organization of women ready to take over a different company through this special acquisition.
I realize that SPACs can't have specific targets, but are you targeting something that is involved with with gender and inequality?

Or is this just we're going to build a C-suite for women and we're going to create a company, you know, so so. But by definition, the special purpose acquisition vehicles that are all the rage these days are meant to be designed by a team of people who can raise a small amount of capital to then go out to the market to align with a potential target.
And in that kind of reverse acquisition, that company then gets to be a public company. And so we've been thinking about this in an office for quite some time, whether or not this was a space we wanted to dip our toe into and we watched with great interest how the market has evolved over the last year.

And I think for me, the key was when it started to really clearly become so transactional something that is, I think, arguably been a death. By definition, some in the SPAC industry has dominated about one transaction. What is the one company can find and do a transaction?
But just because you're only looking for one target doesn't mean that the entire journey has to be transactional, and that really rubbed me the wrong way.
It felt to me like there could be a smarter, better way to do this right.
Taking somebody's company public or helping combine with a mature team to bring a company to the public market is about the most important thing.

A founder or a management team is ever going to do on the professional journey. And so why people would reduce it to simply a transaction with just some random person felt to me not right.
And so we we sort of did our own digging and went to market with an idea that isn't significantly different than than some of the other ideas out there, but it's about the WHO and the why that is different.
And and our team, which is all women and our board is all women, bring a collective amount of experience across the whole of the financial services world, which is where we're targeting our our our SPAC target.
But what we do differently is that we we are led by impact and a focus on ESG and doing good and not evil.
We're focused on diversity, inclusivity and equity in the markets.

And so we will look for targets that also believe in and and understand what that means.
And for businesses that that have a goal of helping properly transform the financial system for good and not evil and in doing so, create more transparency and more resilience in the financial system generally.
And I think the way we'll go about it. So that's the WHO and really the why.
But the way we're going to be different is that we are going to align ourselves with companies that that truly and authentically align with our values.
But that will recognize an opportunity to get to know us, to get to work with us and and we'll go on a journey together.
So that's our approach.
It's it's ah, I think there's huge amount of opportunity in this particular.

Area of the industry, I think beyond just the transactional nature. There's a lot of upside in that in the sort of SPAC business of sorts, and there's a lot of talk about that upside.
And I think for a team that that looks at this as a way to financially engineer some level of positive serendipity in the markets, it gives us a really good position to to negotiate and a really great position to find a partner that will really appreciate what we're bringing to the table.
You say you're going to look for a company that aligns with your values, but there's a little piece of me that wishes you would buy you with a SPAC.
That's just the process of brewing companies, right?
You know what? It's so funny because we've had many conversations about that.

Look, aligning with our values does not mean you need to be all women or all people of color, but it means you have to be able to prove to us that you actually care about this stuff.
And even if you're earnestly putting your hand up and saying, I care so much about this, but I can't seem to do it, I don't know how to diversify my board.
I don't know how to hire inclusive.
That's OK. We've got resources to be able to help you with that.
But yeah, the broadest of all, broke companies.
I don't know that that's going to be our our particular target.
And in what, 10 women who are now in charge of the entire?
Maybe you can make that easier.
Well, it's one. It's one way to. It's one way to fix it.
Just exactly sorry.
I asked you to sell me on musical theater.
Sell me on your investments.

Are our fintech. Why is fintech so my partner, Sean and I started working together?
Gosh, it must've been back to like 2007 2008.

Now, if you can remember that time in the markets, we had a very early view that what the financial services world was on the verge of was at the hands of sort of, you know, the digital digital world that we were we were living in at that moment is right. When the iPhone was was launched was was this sort of wonderful, monumental catalyst that would forever change the way we did business in financial services. But moreover, that if we got it right as an industry and as a as a as a world, we might be able to use technology to transform the entire financial system in a way that created more resiliency, more fairness, more access and would have a net positive impact on really the entire economy.
And it was a pretty lofty thesis back in 2008.

Not a lot of folks wanted to hear about it. As you can imagine, I think the first day we raised capital, it was the Monday after Lehman collapsed.
We went out to try to raise capital to traditional financial services firms, and it didn't go very well. But the good news was it gave Sean and I the opportunity to decide we were going to back ourselves.
And so the business that we went off to build, which eventually became anthems, really was built on a wing and a prayer to suggest that we had an early view that.

Technology would have a massive impact on the way people interact and behaved and organized around money and sort of off, we went kind of doing our thing and making early bets and places that now are becoming relevant to the betterment of the world, the Happy Mondays of the world, the currency clouds and the like.
And I think we shied away from the definition of fintech because we didn't believe this was going to be the technical version know the technological version of financial services, but instead that technology would enable a full overhaul of financial services.
And we were really early. We talked about it as embedded finance.
I think a lot of folks now are looking at it as a better finance.

But this idea that if you understood how markets work, how markets were regulated, how the structure worked, you could in essence have an impact on virtually every industry that relied on that right.
And so what company doesn't rely in some way shape or form on a payments infrastructure, a risk management, insurance, infrastructure, finance and lending infrastructure?
And so we could see the fin opportunity in any company and this sort of massive view on kind of what became fintech and what will become fintech, which we believe is pretty much everything was really a phenomenon that kind of in earnest, I think, started to pick up a lot of speed like 2015.

I think the pandemic and the events of 2020 and beyond really secured our entire world's appreciation for what needed to change in our financial system, and lots of things started to fall apart. Lots of things started to creak and lots of things started to emerge. And I think that for us as early influencers in this space and I say influence with it with a lot of pause because I would say from 2008 to 2015 16, we wouldn't have been considered influencers as much.

We would have been considered the sort of wacky that were wandering around with spreadsheets and various other pieces of data to suggest the sky was falling and no one was paying any attention to us. But now not only are they paying attention, I think they're listening. And I think the thing that makes me so excited about the work we're doing at Anthem is is that we have a responsibility with our influence to continue to really force authentic change.
Because whatever know, we know what happens when something becomes popular or becomes trendy, it starts to attract a lot of it authenticity. And for us at Anthem as some in our ecosystem at large. Our goal is to hold people accountable for real change, and that only happens if you ask the tough questions.

You force the tough answers and you really do require a level of authenticity that I'm not sure the market's always ready for.
Give me an example of real change, something that you would like to see in the financial industry.
Oh gosh.
I mean, look, I'm the only kind of micro level.
2020 was a massive year for venture capital 2021.
One is poised to be even better yet, still less than two percent of the total amount of money in the VC community, despite everything we've been talking about since MeToo. Despite everything you've been talking about since COVID, despite everything I've been talking about in the world is going to women and even a smaller percentage are going to people of color.

So that, to me is it's it's just the saddest stat, you know, and every time I kind of quote it, you know, a lot of people are like, Yeah, yeah, yeah, everybody knows this is the case, but it just it has to change.
And I think that people are appreciating the opportunity now to lean into that and say, you know, some of the big guys saying, Oh, we're going to put $10 million against people of color or we're going to put $5 million against women.
The reality is billions and trillions that are moving this market, right?
And so I think we need to call for the piece and the limited partners that back all these funds. What are you truly doing at the institutional level to guarantee that your money is getting in the hands of people that will deploy it in a way that moves the needle, right?

I mean, we're for argument's sake, we are sitting on over a billion dollars of assets under influence at AMP's mess, and we have managed to without any rules requiring us to do so.
Put that money in the hands of 40 percent of our portfolio are either women or people of color that is in an industry that we would ever to statistic work globally.
You want to cut it? People, you know, what excuses have you heard about financials or, oh, well, there just aren't that many women there or there just aren't that many black people in that industry or we can't find the good people or there's a pipeline problem.
And all the excuses aside, we just put our head down and did the work, and we found 40 percent of our population fit the criteria, right?
So I just I'm tired of the excuses.

I'm tired of the finger pointing and I'm tired of the inauthenticity.
I think we have to hold each other accountable, put real money where our mouth is.
So that's certainly one way.
One of the things you were very early at, in addition to fintech, was the you're not in Silicon Valley, you're not on Sand Hill Road.
The name of this podcast is Samuel Rowe, but it's meant as a metronome, right?
I mean, like Hollywood or Wall Street, it's not specific, but but you have proven yourself on literally not being a Sand Hill Road address.
Yeah, I mean, I think that's one of the greatest positive trends that has come out of this ridiculously trying time.
The last two years is that I believe the trend towards distributed workforces and the future of work are here to stay.

We started Anthem's in two thousand eight.
John was living in. My partner, Sean was living in Geneva.
I was living or sorry, I was living in London. I was living in New York.
Oh, sorry. No, that's it.
That when we started at the miss in 2008, when Sean and I were both living in London, I think on day two of figuring out what we wanted to build together.
We felt the need to tell one another that he felt the need to tell me he was moving to Geneva, and I told him I was moving back to New York.
And now we'd come up with this great idea of how to build a company and knowing that our first employee was probably going to get hired in London, we thought, Can we do this?
And we said, Why not? You know, we want to invest in companies all over the world.

So why do we have to be in one particular location?
And so we started a trend, so to speak, back in 2008 of hiring people where we needed people and where they wanted to be and letting them do their jobs and keeping a really core commitment to the value system and the kind of structure of how we did things and anthems.
But letting everybody put their own stamp on things, right?
And that's a big part of our commitment to diversity.
We've always believed that diversity isn't one.
It's all and you can't have an all singing, all dancing diverse team if you require them all to live in the same place.
So we quite happily encourage people to live where they wanted to, where it made them happy, where they could get their job done and off we went.

And it's never, ever stopped us from being able to deploy capital across various different parts of the important markets that we cover, which is 50 percent in Europe and 50 percent in North America.
And it has never stop us from getting a deal, which I think is really important.
I mean, in fact, in some cases, there was a certain amount of respect for how much we had to work to try to get to the person before COVID to make sure they knew that we were serious about it.

But since I think the market has really opened up to the idea that it doesn't take a physical space to make things happen and that if you are authentic in your effort to keep people connected and and you align around a sense of, I think having a strong sense of values really helped us at Anthem's because you could you, you know, you signed up for the values and so you could trust that how you interpreted that might be different and might be unique depending on where you were and how you operated. But you didn't. You didn't worry about it because you knew you were there for the same reason. But I'm super excited about that.
I think that's going to continue.
That's what my next question is going to be.

Do you think the advantage you have of being a diversified, geographically diversified venture firm when traditional venture firms stick to Sand Hill Road, the address they discovered during COVID that they can be diversified?
Will you lose that advantage or do you think, do you think the guys in the fleece jackets will stay in Menlo Park?
Yeah. Reminds me of I'm dating myself now, but it reminds me of the late 90s when we all moved to to business casual on Wall Street.
And you went from sort of, you know, a bunch of guys with blue suits and white shirts and blue ties to bunch of guys with tan pants and white shirts and loafers.
And and it was sort of this OK, but have we really changed anything?

We just take them out of one uncomfortable suit and put them into another uncomfortable suit, and then they're still operating as a collective.
Yeah, like you can take the what is it? You take the the the Oh, I'm going to get the wrong. Victor, what is it is official that you take the fish eye camera. I was going to make a good analogy about you take somebody out of something, but there's still something like that. And because I don't, I don't worry about it.
Certainly from our position that, you know, it helps that we've been so far ahead of the market. But that's always the big innovator dilemma, right?
Is like just because you were there for us, doesn't matter.

But I think that that that we always say at Anthem is that if you just because somebody else is now doing the same thing that you had the idea for doing.
If you believe your idea was good the first time, it's even better when other people are copying it right. And so far as we're concerned, let everybody do it right.
It's it's about it's not going to change the types of companies that they invest in.
It's not going to change their requirements for how to deploy capital.
That's the hard stuff. But I do think it's going to allow us to put capital in more diverse hands and hopefully pull from talent pools that otherwise might have felt like they couldn't participate in this wonderful game of venture capital that we that we all have to here.
Those are my questions for you. I do.

I've been collecting at the end of these interviews what people's favorite books book is in the idea that I would then later, you know, assembled, you know, in your 20 venture capitalists.
And it doesn't. I don't know if I want to ask you this question.
It does not. It does not need to be, you know, some some sort of business to. It could be and we the group, you know.
But is there a go to a book or a get a book you give as a gift or one that you always have on a shelf?
Yeah. Well, there are a couple, I would say, probably the most powerful book that I ever read, and it had a lot to do with when I read it.
And how it influenced me afterwards was Victor Frankel's man's search for meaning.

I read it as a 16 year old in a in a high school in this class, and it was the type of book. I don't know how you know, it's a story of a of a survivor of a concentration camp.
It goes on to be a psychotherapist and it's it's work with the kind of community of experiencing that trauma.
And I think that for me, it was the first time I'd really established as a soon to be young adult that all the things that were happening in my little small life at the moment were probably not that bad in comparison to what might be happening around the world.

And it did two things for me. I think it it it cemented for me an element of empathy and appreciation for other people's journeys that has stayed with me forever and and allows me and every conversation that I enter intuitive to kind of appreciate that I don't know what people bring to their conversation.
And you have to kind of keep your eyes and ears open to the fact that because you don't know, you have to be careful and you have to be empathetic and you have to listen. So that's one part of it.
And I think that part is just that sort of like, I guess I'd be described as a perpetual optimist, right? And I think when you read Victor Frankel's book, you can appreciate that if he could remain optimistic in the environment that he experienced, how dare we not?

And I certainly respect my own privilege in my own space and life.
And so that kind of positivity and optimism that sort of gets me through each day, even when it can be frustrating or even when the little things can get to you, I think is really stuck with me.
Excellent. Thank you very much.
That's all I've got for you, Mrs. Emil's.
No, I think we covered, but anything else you want to redo or that, you know, I think I think we're okay there.
The only thing we know we'll be OK because we have we have to.
We're recording this in two different ways. There was a moment in which you were talking about women and people of color in which the internet signal was not great.

But we're also rolling. The cool thing about this software is we're rolling on your side as well, OK? Not just the internet signal, but if I have trouble with that, I'll let you know. And we can. We can.

So normally I have a an audio technician that comes with me because of COVID.
We're trying to keep everything, you know, small, as small as we can.
And so every once in a while I'm going to look at this and but I'm still listening, you know, and I haven't lost interest yet.
No worries. Stop this. Oh, the little sensor from knowing it.
So it should. It'll. It'll do that. Still.
It still do. Yeah. We'll see what happens.
All right. I'm going to write it down and we'll figure it out.
It'll get out of here. That's a really good idea.
We can figure it out.
Right. I got stuck before. Oh, really?
Hey, it.
Makes for a hell of a.
Story.
Apparently me. Make sure it does work close.
That's good enough.

/content/Preprocessed_Data/SHR Erica Brescia's Worldwide Reach.txt

A little further.
Oh, here we go. Okay, now we're stuck.
Yeah. Yeah.
I didn't even test myself yesterday.
Excellent. I can't say it yesterday, but I did in the last couple of days.
And double vaxxed and boosted and.
Was me too. Yeah.
I just want the next one. Like when can I get them.
Do me a favor. Count to ten.
And they'll pronounce your name.
For Erika Brescia.
Brescia. Very good.
Yeah. Easier than it looks, right.
I tend to speak really loud when I get going, so I need to calm down.
You can give me the, like, all.
The more reason for me to.
Go right to.
The levels. Yeah.

My husband's like Erica, you're shouting in our kitchen.
Let's use our inside voice.
Yeah.
I am not great at that.
So let's start with. Oh, and the other thing I was gonna say is, is extremely casual.
We get halfway down the conversation, you're like, Wait, what was the question?
You know, just wave your hands in the air.
If you want to take a sip of water in the middle of it, fine.
We'll edit it out. It's. Oh, absolutely no.
Because if I say something really dumb, you'll edit it out.
No, I'll probably keep that. Yeah.
There are so many collaboration tools out there.
You were at GitHub for a good long time, which is all about collaboration tools. You help that company grow into what it is today.

It is kind of the perfect storm, not just to work from home to leave the office, but a perfect storm for people all over the world who were not involved in tech or didn't have the access to suddenly be involved.
And it's not crazy to think that the next salesforce will be built in Kinshasa.

And when you go from that 20 person company to a thousand person company, it starts creating a lot of challenges. So I think it's important for companies and founders to be very deliberate in how they think about building out their teams across all these time zones to help people still manage their work in a way that they live.

Going to just make just a slick mix.
I didn't see you better.
There you go again.
Yeah, I am a Lacroix addict myself.
My my son is a paramedic and he has a case on the he usually goes through a case by the time he finishes.
The whole shift, but it's.
12 hours. So there you are.
So yeah, I mean, it's kind of cool at a time in which we are thinking about, you know, diversity that it used to be, you know, can I think of the social network movie?

You know, Mark Zuckerberg moves from Massachusetts to Silicon Valley because Massachusetts is not, you know, the MIT, Harvard is not techie enough. He comes to Palo Alto.
Right. And now the tech is spread everywhere to the point where there is an African startup scene.
So much capital and so much opportunity there.
I think what is still a little challenging is concentrations of talent in specific areas like specific roles in different parts of the world.

And again, I think open source played this role in helping bring the worlds coders together and help help developers learn from each other.
You still do have a concentration of that talent in certain areas. And Silicon Valley is one of the.
You know, New York is another one, especially if you're doing fintech.
Right. We're seeing a lot of crypto happening in Miami.
And so I think companies are still starting to you know, when they go to build out their go to market, teams are hiring in specific locations. Now, it's interesting is now that more companies are getting more flexible with work and allowing remote work.

Right. I mean, I know countless people who have moved out of the San Francisco area and into places like, you know, I mean, Montana now is growing a ton also.
Of course, Austin, you know, I'm seeing more folks pop up in Arizona, tons to Miami, New York as well.
And I think with the greater flexibility in work, we're seeing some of the, you know, talent concentration kind of disperse a little bit. And I think that's a really good thing because we need to these folks need to share their knowledge and experience and kind of hire folks reporting into them and teach them how to do it in different areas so that we can get the same distribution of marketing and go to sales talent and executive leadership talent that we have in technical and developer talent around the world.

You have investments in dagger and is it exact?
How do I pronounce Zeta?
Zeta? Yeah.
Just looking at the websites, they don't seem to have a location or are they distributed or where did you where are they located?
Case in point.
Exactly.
Right. And in daggers. KS the founders, they're all French, all moved to the U.S. They're based here, but their team is distributed.

Right. So their people are timezone aligned with their peers.

I mean, the before everyone lived everywhere, you ran into people, you had a friend of a friend.
You stumbled across things. You walked past an office building and saw a new logo and said, Who's that? Yeah.
Now, you know, how in the world do you even find a Romanian woman living in Berlin or something in the African startup world, etc.?

That hypothetical startup person in Nigeria or wherever, as Silicon Valley venture capital comes in, I can see some trust issues, right?
I almost think of, you know, the that you're the the Hollywood record producer who's found, you know, the.
Star more glamorous. Well, far more glamorous.
But but also but a little shady as well.
Right.
And I think.
You know, think of the classic shady Hollywood record producer.
Right. Is Hi, I'm from California.
And I have money and you have a great idea.
You have some legit street cred because of all of your time in open source.

And I'm not disparaging any any particular person in venture capital, but as we begin to interact with the rest of the world, there will be some trust issues.
But I think one thing and I need to get better at this, I've been thinking about it, but one thing that you can do is just put your authentic self out there a lot, right?

And it's funny, actually, in Monica's case with Zeta, I didn't meet her in person until three weeks ago, and I. Did a seed investment before I joined Redpoint a year ago. So I did her seed and led the series A having never met her.
And how much money was that?
$30 million. Yeah, I mean, for us.
Well, ours was a we did lead, so we were the vast majority of that.
But we did co-lead with index for money in two.
But it's a lot of money to put in.

And of course you did your due diligence.
But oh yeah, but.
You are maybe the first person I've ever met who gave someone $30 million and then just recently met them.

And sometimes when we can't meet in person and I think when you talk about investing in remote companies around the world, you know, you have to be good at that and you have to be build good at building trust and building those relationships. And that's something I hope to continue to improve.
Four months a.
The four months, yes.

I spoke to one venture capitalist who I think he was downplaying his own skill, but he said that, you know, no, it was all it was mostly luck because I got in at the right part of the cycle. You know, everything had been depressed and and nobody was investing. And I, you know, the stairs started to go back up into the right again. Do you ever worry that you joined at just the right, wrong moment?
Oh.
I talked about this a lot, actually, with my husband when I was taking the job.
I think I knew I was coming in at the height and I told him, Honey, I'm going to need your help because I know this is going to get very, very ugly.
For a while, I knew it was going to get very ugly, and I knew that would be hard for me.

And fundamentally what I'm looking for is amazing founders building like truly impactful companies that can become large, independent, standalone entities that hopefully have a positive influence on the world as well.

And, you know, the market will will do it.
It will. And we just have to be smart about our fundraising strategy.
How did you get started in Linux? Because it seems to me, you know, you mentioned your previous jobs. You mentioned your husband who I assume you met somehow somehow with Lazarus.
Yeah.
The open source. Right. So you get interested in Linux.

Linux that leads you to open source, that leads you to build companies, that leads you to become the founder of Bitten Army and Bit Rock, which leads you to GitHub, which leads you to venture capital.
And we got a husband in there on top of that.
Yeah.
What was the core thing that got you interested in Linux of all things?
I was really fascinated by Linus Torvalds and this early Linux movement and community like the idea that people across the world.
And. I mean.

People are special for lots of different reasons, but these are some of the world's most brilliant technologists and minds coming together to try to build something with no clear commercial outcomes that would just first scratch their own itches and then help a lot of other people.

It was almost like watching an HBS case study play out, like how is this going to happen? And so it was like the intellectual, like the curiosity around this problem that brought me in.

I had studied investment finance at USC, which is not a valley school by any stretch of the imagination.
My dad had a construction company. Like there was nothing that connected me into, like, Silicon Valley. Right. And I meet my co-founder, Daniel, who was really like kind of prototypical nerd, right.
Early member of the Apache Software Foundation, had been working in open source, brilliant product visionary, had never built or run a team or company.
And I had a lot of that experience and kind of DNA from my father being an entrepreneur.

And there were so many people that were incredibly helpful to me, even like the business community. In fact, I just had dinner with Martin Michos, who was the CEO of my sequel, and it has long been an open source.
And, you know, he and people like Larry Augustine who started via Linux were just so incredibly helpful and supportive to this woman. I was usually the only woman there at the time.

And getting to play any small part in supporting that continued like growth and success of open source is is a huge honor and something I think I'll spend the rest of my life somehow involved in the open source community just because I think it's such an important global force for good.
We're going to stop there because that was awesome.
I know I ask you about Web three because you were way more interesting than Web three.
Anything. Anything. I was too naive not to ask.
Oh, no, this is. I mean, I could talk forever about anything.

No, I don't think so.
It's fine. It's fine talking about this stuff. And I haven't gotten to talk about why.
Open source. Yeah.
Now, did you. Did you code before?
No.
You're reading the Scientific American article and you're struck by the, I guess, the social side of it, right? Like how all these people are working together.
But you did. You did not code.
No, I've never I've never been a developer, which makes me very unusual as a founder of an.
Infrastructure and on the board at Linux.
No, I never coded.
I wish I would have studied CSS.
You know, you.
And me both.

And part of what drew me to wireless was actually the way that all the different networks communicated. I got very into like, this was CDMA and TDMA and GSM and how it all worked.

I know. I apologize for being a few minutes late.
No, no, no.
I was late. I was late to. I couldn't get logged in.
Yeah, I was having some problems, but mine were compounds with the fact that I had to move rooms. I'm actually in a hotel right now.
Regina. So I think I can't.
My desktop, because I actually have to do all this stuff at home because it's kind of like, where are we? We brought all this professional video equipment and audio equipment to our houses, right?
And so ironically, in a television station, we're not really equipped to do good audio and video over the internet because I mean, you know, why would we write?
I'm the guy you got me, I'm with you.
It's it's interesting when you're traveling in this remote world.

/content/Preprocessed_Data/SHR Hooman Radfar's Mom Doesn't Need to Worry.txt

I haven't been traveling much, but I'm here for a trip and just like switching gears like I'm in my hotel room, then I'm at the conference and then I have to do this and doing that with remote work actually and not having a really strong internet connection is going to be a challenge.
Yeah, yeah. Luckily, the hotel could accommodate me.
So. Oh, good. Like a little room in here.
I was like, Hey, I got to do this. You guys got to get out here.
So they were super and they were awesome about.
And I think by this time they've they've gotten a little used to, you know, almost the idea to create zoom rooms in hotels. That would be an actually really helpful thing.

I think generally, I mean, one of the big things that's going to change with with this new world is, I mean, I don't know what the new balance is going to be, but we were talking about this, you know, I was a VC for a number of years.
We have hundred some portfolio companies and we talked to CEOs that the offices are all broken. They're not they're not designed for this because like, for example, I have one person that's on my team, 14 reports.
None of them work in the United States. He's like, I don't want to be in an open floor plan. I'm going to be all there. Yeah.
So he's now, he's got to go hide in the closet.
So now what do you do if you have five people like that?
That's true. They're all hiding in the closet.

So open floor plans broken, which is the dominant floor plan in Silicon Valley, which means every office is broken.
I, you know, sometimes I walk past my boss who's just coming in in the morning in the parking lot because I work super early mornings on television and it looks like I'm going home and I'm always assuring her, you know, I'm just going, I'm going to my house to work because the equipment that we need to do all of that is that is at home.
I swear to God, I'm still working.
Yeah, I'm not knocking off at 9:00 a.m.
I think everyone's working. Look, I mean, of course, there's people who are taking advantage maliciously, but I think the vast majority of people are actually working harder, more and they're not giving themselves credit for.

I work a ton. I work a ton now because you're always on and then you have no breaks in between. And I don't know what happened to lunch, but that's a thing of the past.
So. I remember those days when you used to be able to go to lunch with people and you walk back to work and you had a minute to breathe.
Yup. Now lunch is something that you know, you go run to the fridge between meetings, you throw it on the side and you pick that out while you're doing meetings and well in my in my I don't know if your microwave does this, but my microwave will if you do not open the door and get your thing out just before any.
Yeah, right. And then of course, you're in some meeting like I know, I know.
Oh gosh.
I agree, man.

All right. So did you get that thing about let's also roll on a like an iPhone or something nearby?
Roland, iPhone.
Oh, so the idea was this is the first time we've ever used this as an actual podcast recording if your iPhone is nearby. Just set it down on the on the table in front of you.
Ideally not totally flat on the table with me.
Put your wallet under it or something and then just hit voice memo.
And that way we've got a backup copy of your voice, and I'm willing on my voice on this side, which is how we used to do it before we started experimenting with this. And we did do it a couple of dummy podcasts, you know, in the office using this podcast thing.
OK, so then I'll take my earphones out so it can record everything here.

I mean, you would prefer that that because I'm using my AirPods now, I can't do AirPods are connected through the computer.
So, so that's OK.
Because the phone? Yeah, don't. Can I know you're good because the phone is just running voice memo in front of you?
Yeah, but yeah, exactly. But it only hear me talking, right?
No, no, no.
Yeah, that's fine. That's really fine. Yeah.
It'll only hear you.
OK, so you want this war and this will for you.
OK, got it. Got to got it. Just to make sure. Sorry.
No, no, no, no.
It's kind of a weird system. I know.
OK. All right. It doesn't make sense.
OK. All right. We're good to go. I put it on top of my wallet.
I'm going to hit record now and we are recording, sir.
So, all right, I'm all yours, and we're just to be clear, we're only doing what we do now.

So while you are ridiculously good looking and dressed in key, I'm I'm not saying no, this is this is purely audio.
Yeah. And let me get rolling on this.
Yeah, yeah. OK, OK, well, let's give this a shot.
Well, I mean, first, first of all, introduce yourself.
Well, my name is swimming fr. I am the co-founder and CEO of Collective Dot Com, and we are the first online back office platform which is designed for self-employed people.
So for those of you guys who speak English, back office means accounting, tax and bookkeeping.
And I look this up your name in Persian means benevolent and good natured.
I try, I try. Well, you'll let me know at the end, you can ask.
You can tell me if that's the truth.
Now tell me about your first name.

It's it's very close to human and benevolent and good natured. I wish all humans were.
So it is very close to human.
In fact, I'll tell you a funny story.
I was actually born in London.
You can probably tell from my awesome accent, but on my birth certificate, I believe my name was spelled pretty much human.
You know, British people, right? 1980 Sure.
My parents, being Persian immigrants, say my name.
That's how they spelled it. And so there you go.
So when I moved to the states, I think they issued me a new birth certificate and my parents changed the spelling to h o from h u because they thought, Well, we don't want kids to pick on it.
Did it? Did it help?
I'm not going to lie to you. I love my parents, but I think they missed the cultural beta too in that assessment.

It could have been Steve or something.
Yeah, yeah, I think they didn't. They missed the mark, you know, but they're great.
They're great, and they did their best.
But then it builds character to have a name like Hooman in Pittsburgh.
I think you're too young to remember Mr. Magoo, who was this cartoon character.
He was had terrible eyesight, and so he would get into all kinds of scrapes.
Oh, I remember Mr. Magoo. I'm a big cartoon guy.
Excellent. And so, you know, that's exactly what people would call me because it's McGrew, but they would call me Mr. Magoo and not in a nice way, either, right?
And the defense I came up with was, you know, as I recall, he had a dog and could anybody remember the name of his dog?
Of course, this is before Google, you know?

Hey, yeah, no, Mr. Magoo. I love that guy.
You remember the name of his dog, because when I get a dog, I'm totally naming it that, and it usually kind of disarmed them.
You know, it made the joke, you know, hurt a little less because I was turning it around on them.
Well, any time you feel bad or you have some sort of trauma that surfaces, just remember your parents gave you Scott, you know, stuff you could you could have had women, you could have had home and now you're going to be did flee the Iranian revolution.
As you mentioned, you were born in London, so your mom was pregnant at the time, right?
That's right. Yeah, my father and mother left.
I think it was within like a week or two of that famous incident where they raided the embassy.

If you've seen Argo, the movie will get that guy. Yeah, that's probably that's the mean time.
Yeah, that's the moment. And so I think, you know, thankfully they had the foresight to make arrangements.
They were they were thinking about leaving prior and then they sped up and we ended up coming to the states. My uncle and aunt had already moved to Pittsburgh, which is why we ended up moving to Pennsylvania after London, which is where I got this delightful accent.
So you were not part of the fleeing from, you know, a terrible situation, but that that must have affected your parents and influenced the way they raised you in some fashion.
I mean, look, everyone in my family has a slightly different timeline.
We have some people that had the opportunity to leave as things were getting heated.

We had some people left like us during, I would say, the eye of the storm, if you will.
And then some people left afterwards. And to be honest, it really impacted them like my uncle was in jail for years, you know, and you know, not to get graphic, but I mean, he was like whip marks on his back.
I mean, it was pretty. It was pretty intense.
And so it's amazing how much, you know, timing in life can change one's life.
And in our case, you know, I think, you know, my father is a very science based guy. He's a physician, my mom's a physician.
And so for him, it was principles based argument.
And he he wanted to raise us in a country where we could express ourselves freely, where if we worked very hard, we could, you know, achieve our dreams and that we could make our own choice.

If religion was something going to our lives, then we got to choose.
And, you know, I think we take that for granted.
I know now is a time where people are questioning the United States, but I still think it's the best country in the world. I think I'm a I'm a long I'm long on the United States. And yeah, we're having rocky times.
But let's be honest, but I'm very long in United States.
I think it's coming from where I come from and having the parents and hearing stories I did. I'm very grateful for being here.
When I mentioned the Iranian revolution, you immediately mentioned the movie Argo.
Now I'm older than you are, so I would have been in junior high during the hostage situation, etc. So. So I remember it well.

But people who know you well wouldn't be surprised that you used the movie as the as the way of illustrating the point you are way in the movie.
That's right. That's right, I am I'm actually obsessed with movies.
Give me an example of what somebody who's obsessed with movies, you know, it's some sort of obscure fact or, you know, tell me without telling me, you're obsessed with movies that you're obsessed with movies.
I'll give you a game that my fiance and I play.
So every time there's a movie we'll go through as the cast is kind of getting introduced.
You know what I mean at throughout the setup of the plot?
And I can tell you, I'll say, OK, what movie was this person then?

And we can go through everything like I can do the whole network of what they've been in and out of my my current superpower, which I've developed over many years, is I could probably play someone from like, say, there were a kid in a movie.
You know, when they're an older person, I can be like, Oh, that person was a kid in this movie, and it can go all the way back. So I'm a pretty visual person.
I drew since I was a little kid, big comic geek, and so I guess that kind of tuned me there. But in another life, you know, I'm a movie producer versus, you know, building companies because I think it's, you know, building a company is a creative endeavor, just a different medium.

At the end of the day, and so I look at it like, you have a pencil, you have a guitar or you, you know, you have excel and code and there are all of you creating things where you could produce movies. I mean, there are plenty of people in tech Elon Musk included who have been at some point, a movie producer.
Yeah, I actually I'm starting to invest a bit in projects to learn, much like I did early in investing.
You know, I took some of the money I'd made in my first company and I just started doing Angel, which now has become much more prominent part of my life.
But the best way to learn is to dove in, right?
Put skin in the game and get burned.

So it's a tough it's a tough industry, though, and I don't think people appreciate how much goes into. I mean, just imagine when these Marvel movies are.
There are thousands of people that have to work to make like some of these moments, like I am Iron Man. You know, it looks simple, what a line.
But to manifest that, you took thousands of people over 10 years to manifest that one moment of catharsis.
It's it's unbelievable. Like the art is, I think, you know, Scorsese, the things, the Marvel movies, I think it's unfair. It's a it's a symphony you.
You did get into the movie business a little bit many, many years ago with the classic story of, you know, the video store 80 Bucks.
Oh, wow, OK. Yes, I tried.

I tried. I should say my first non company, I should say because it never got off the ground. So when I was in undergrad, I went to Penn and it was doing the Dot-Com. And, you know, I was into movies.
I love them, but I hated blockbuster, right?
And so you and me both know blockbuster. Some kids who listen to something like, What the hell that? That's true. This is where we went kids and we got tapes, and then we put them on a VCR and we listen to movie and watch movies.
And so you had to drive them back. And it turns out I'm very poor at that.
I accumulated a lot of fees, but I was a good programmer.
I had some foresight and I picked up this paper and it was like ninety nine.

So there's a paper in 1993 by Verizon scientists about using ADSL asynchronous DSL to deliver High-Speed video, and they called the system video on demand.
And I thought, How great is that? I don't have to do pay per view, which means you have to wait until the exact time to go watch a movie, right?
Or you miss it. Or I don't go to blockbuster return videos because campus networks were incredibly fast at the time for the time that you could find.
Yeah, yeah. But I mean, you know, going from that dial up AOL World, which I used to pick on Steve case intelligences about that, that ringing noise or whatever.
But, you know, going through that and that inspired me, I'm like, Wait, we we're watching movies, we're using Napster, all these other things.

What if you could stream it? So I built a system with my friend Matt Kissin, and we were going to start a company. But then the boss basically created Netflix.
I mean.
Well, now that story about being angry about the, you know, the late fee, and I'm going to, you know, send movies over, you kind of created Netflix that we have. I'll tell you something even crazier.
And this is about how important timing is. It's is my earlier point.
I am Matt. You know, we built this.
We started, you know, building from the ground up and we're looking at this system.
And I looked at Netflix and I didn't even look them as a cop.
I was like, These guys are jokers.
They're sending DVDs. They're they're in the past.
They're still you get it. They don't even get it right.

And that is to me, one of the I remember that lesson.
I'll never forget it. The timing was right.
So they raised money for a business model that could work and be funded at that time, which got them to the point where they were when streaming became cost efficient, such that they were in a position that they could be there. They are now.
And that is why Netflix is successful is not, you know, they were at the right place at the right time. Then they leveraged it to get the right place later and they kept moving much like. Amazon, remember, this is books, and now they're like one of the largest cloud computing companies, Earth, who would have called that?
Yes, you almost don't think of Amazon is buying it place to buy books anymore.
That's where it's like Google.

It's Google and whoever it is. Totally it's Google and it's a cloud company.
And you know, I think the timing and having like a long view is something that that top me so bottom dropped out.
And then my professor who is sponsoring that said, Well, we're not going to do a company, no one's going to fund. You probably won't even get a job. So but you have a good senior project.
So it is hard to describe to people who didn't live through it the dot com bust.
People outside of perhaps Silicon Valley or outside of tech because you were in Pittsburgh just abandon technology altogether. You could have had the next Google, the next Uber, the next Facebook, the next whatever. But if you tried to do it during the dot com bust, nobody was interested.
I mean, it was it was unbelievable.

I mean, for me now, everyone had an experience.
I don't think my experience was, you know, dissimilar from people my age.
But you know, from my vantage point, it was it was like the biggest tease of all time.
So here I am. I'm a kid from Pittsburgh. My parents are immigrants.
I thought there's like four jobs you get after school because I didn't know anything.
My parents just they didn't know they were like, You should be a doctor or something highly accredited. When I switched to computer science, my mom, like, cried, you know, she literally was like, Oh, if you want to go build bridges and, you know, make $30000 a year, then go do that.
But it's not going to make any money.
And it was really traumatic for her, I think.
And she said, you know, she's supportive and she's she's amazing.

But it was hard for her. She didn't see it.
I go to Penn and I know I don't know if you know, Josh Koppelman was the founder of First Round. Josh Koppelman came in, did a lecture with a guy named Andy Radcliff, Andy Wreckless on a benchmark. OK, I'm sitting in there 19 years old.
I think a banker is a bank teller. That's where I'm at intellectually and from an experience perspective and I go, See these two guys.
Josh looks like a kid, and he's got a cherubic kind of young face anyway.
And at the time, he sold half dot com to eBay, and Andy was the venture capitalist that funded eBay.
And I see these two guys young, fresh, like, and I'm like, You're al lowed to do this.
You're allowed to make stuff. These guys are young.
People are spending millions of dollars.

They're allowed to pretend and technologists were in the forefront.
I always thought I didn't know what we were, you know, because I program since I was 12.
But right now I remember I learned the internet and browser stuff from Mosaic.
I remember I met Mark Andrews and I'm like, Dude, thank you.
Because if you want a built mosaic, I want to learn about the internet and I want to got hooked on this stuff. But that was my moment.
That was when I realized this is what I want to do now.
Then they took it away and the bottom dropped out.
So, you know, everyone said, Well, there's no jobs, you know, grad school applications went crazy. You know, I could have rolled into grad school after it was very difficult.
The acceptance was very low. And then, you know, it was just    dark.

It was it felt icky, to be honest with you.
So I think for me and my co-founder, for my first company that we started out of grad school, we were like, No, we're we're the internet's going to come back.
And then long behold, there was that web to them and it was almost like written like a movie where we had this chance and we had this opportunity.
And social was this underlying wave under Web 2.0, which we could ride up, which was a very strong passion point for me. But it was hard.
It was really hard to be a young person to have that taken away because the first time I ever had a dream you when you got your degree.
It involves social networking and correct.

And I always, you know, when people talk about being an expert on social networks, they think of somebody who can get you more hits on Instagram.
But there is a deep sociological science to social networks because social networks have always existed, you know, even before computers.
You had a social network there.
There is so much interesting human behavior to mine there.

It's I mean, depending on how so when I got my my thesis area and the area that I started in was I came in. OK, so now we talked about that origin story where I was looking at a video on demand platform, right? So at the time, if you remember networking was, it was pretty prominent. There was the telecoms there was and you had to focus on the network as the bandwidth wasn't there. So I went to Carnegie don't study networking because I wanted to build video on demand again.
That's why I went there. Then I realized, I mean, networking was very, very complex.
Lot of complex mathematics. Stochastic process, probabilistic modeling.
Fascinating. I loved it academically, but for me, from an application perspective wasn't where I would spend my time.

I picked up a paper on how you can apply network theory to model and human relationships.
I had been an economics student and a pure science major.
This was like the fusion of what I had done undergrad and I thought, This is so cool and that's that's I shifted up the stack as they say and started looking at how you can use these social network concert scholarships.
Then Friendster came out and LinkedIn came out, and that was the application.
I was like, That's the app. Those are the apps.
But, you know, it was just very early days and I knew that the networks are going to be big. But you know, candidly, you look at Facebook now and you have to give them credit for the The View that Marc had at that time.
And in 2004, when he took off, I mean, they were very singular focus.

Now you can debate all of their practices is different part of it.
But the vision he had for the world that there could be this platform that ran over the internet and connect the world, much like the telephone networks.
And on top of it, it was pretty ambitious and and bold.
There's a lot of science behind it, but yeah, I I've been in social networking for years.
I was in there from the computer science perspective.
Then I built the platform, connecting to 300 social networks.
I went through every single one of them from a technical development perspective that you can imagine and learn how to how to use those systems to share information, how people were sharing study for ten years. So it was one of the best education periods of my life.

Your first big successful company was was AD This, which you sold to Oracle when I'm sure your mother at this point understands that you in computer science are going to work out, that things are going to be OK.
But do you recall the phone call to your mother when you when you sold your company for?
I was a couple hundred million, wasn't it?
Yeah, no, it was. It was up there.
You know, our culture is, you can't you have to be very humble, you know, with your parents. So I couldn't call her be like, Hey, mom, guess what? I sold it for X. And she, you know, I let her know, actually, you know, it's interesting.
My mom really believes in us in a, you know, like any mother does, but in a very deep way.

And she, at the time was almost a little bit like, Hey, you know, like you can keep going, like, keep pushing, you know, she actually, I almost, you know, shut down the company many times, very early in the history, and my mom would be like, No, no, you can't do it, can't quit.
We're not quitting. So as much as she was afraid, she had a deep underlying conviction, both of my potential, but in the power of will and just keeping going.
So I think for her, actually, she was kind of hoping I wouldn't do it.
And then when I saw, I mean, she, you know, if it was better for me, ultimately she supported me. But it was. It was a mixed bag, actually when I called her, and then it was funny. She said, OK, well, what are you going to do?
Are you going to go back and get your Ph.D.?

You know, I think we've been talking to Google at some point because she just didn't have a sense like what? What does one do after that?
And I was like, Yeah, no, I don't. I don't think I need to do that.
I would go back for my Ph.D. It's interesting to me academically, I even as an adult, but she was thinking, Oh my gosh, you have a job.
What are you going to do?
That's you. You just sold your company for a couple hundred million, but you don't have a job. Yes.
No, literally. That's what she thought. And she didn't want me to start burning my money because I took something I wouldn't worry as the as the parent of two very young adults.
If they came into that kind of money, I would.
I think I would be pleased for them, but I think I would worry about them too.

Yeah, I think she had the appropriate amount of concern, a little bit colored by an immigrant experience, right? The defense that most immigrants apply, in particular professionals, you go to school, you go to a market, and if they don't, they don't know what the professions are.
OK, go work at Google. That's a brand I understand used to be Microsoft from when I was younger. Everyone wanted to work and although Microsoft's back again, so yes, it is very much so. So who? Who would I call that?
You take the money and you begin to to to invest.
You're in very early investor in convoy, and two of your fellow investors are Bill Gates and Jeff Bezos.
Yeah, yeah, it was a convoy was was an interesting science has been and I'm unbelievably impressed with what they've built.

I remember we got the domain name for them.
They were originally called Gray Point, and Dan and Grant came and spoke with us because at Expo in the firm where I'd been a founding partner with your campus founded Uber Uber.
OK, well, this is the.
New version of logistics, right, so who better to work with than the person that built the model, which inspired some of the other models?
I learned so much, but you know, as a as an investor, the beauty, as you see these entrepreneurs, I mean, thousands of people work at convoy.
Billions of dollars are moving around as a result and, you know, started with two guys with with a slide deck.
So it's brilliant. You know, people like that. The Sweetgreen team was another one that I was very impressed with from early on. They're going to explain sweet.

First of all, what is sweet green?
So sweet green is, I would say, lifestyle, healthy lifestyle brand where you know, they they sell healthy food at McDonald's.
It's a restaurant. Yeah. And their starting point is they have retail chain, which is rapidly expanding around the country.
But if you talk to the founders, I think, you know, they're much more than that.
I mean, it's a brand that people affiliate with and their lifestyle.
They're going to have products that they can sell.
Eventually, you could, just like Starbucks, has products that you might see outside of Starbucks and stores. You know, there's a little espresso cans and whatnot.
I think you could you could see sweet green getting into that.

I would say they're probably some of the best brand marketers on planet Earth I've ever seen.
The hesitation I have is, you know, I would love to have been an early investor in Starbucks, don't get me wrong, but that, you know, oftentimes the investments go into things that can easily scale very, very quickly. Uber being an example of that.
Retail and restaurants, those are harder to scale.
I agree it was a longer road, I mean, it's been years today.
I mean, from a returns perspective, it worked out because I was, you know, early enough.
Luckily, the team included me on the journey, right?
Because I don't go out of multiple billion dollars if it goes public and I got in it, you know, very little. So that for me, from an economic perspective, it worked out.

But to your point, it took it took twice as long.
Now here's what's interesting about Sweetgreen. And for me, I invest in another company called Spice and Spice was based out of Boston.
A bunch of my two grads now.
Spice had a similar vision this weekend with respect to Hey, how do we make healthy eating accessible at a low price point, but a different execution path?
They built a robot because they're out of a machine, of course.
Of course, that would actually make bowls and they could do cold bowls and warm bowls. Now took them years like they took the technology out of it.
They built this thing out. They ended up deploying it in one or two of their own restaurants. Why does that matter?

Well, they can fundamentally change the cost structure because, as you know, the gross margin structure in restaurants, I think the biggest revolution in gross margin in restaurants is McDonald's. You went from fine dining and it was like, you know, three to five percent and very, very bespoke.
But the McDonald's folks, the innovation was, we're going to run this like a lean manufacturing plant. And and it's I mean, McDonald's to me is unbelievable as a company. You know, a burger in Tokyo at 3:00 in the morning or in San Francisco at 2:00 in the afternoon. The thing that is magical that they can pull that off at the scale that they do. But Sweetgreen now has bought spice and they're doing it and they're going to now start rolling this out.

So I would watch and I challenge you look at this in five years.
If they're successful, this is going to you'll see a step function like when McDonald's kind of innovate in fine dining. Sweet green is going to have something similar and it's going to be a technology company. And I don't know how people are going to catch up with them after that.
I will refer back to this in five years.
Check it out.
The the the efficiency of McDonald's, and I don't know that McDonald's invented this, but now it's obviously common is whoever the man or woman was who sat up in bed one night and said, Holy crap, we should put the soda fountain out in the dining room.

It used to be, you had, you know, and I want a large coke with a little bit of ice, et cetera. When you put that in the customer's hands, they were happier and your employees were moving that much more efficiently.
It's all. It's all supply chain analysis and look workflow analysis.
I mean, you think about it, you don't you as a consumer, don't think, Oh, I sit there and it takes me, I don't know, 10 seconds to fill that thing up.
But you got to add to that that the person the cashier is to go back there, they're going 10 seconds walking. So now you lost 30 seconds, 30 seconds per person when you have 10 people, mine.
So they start, Oh, wow, I can I can increase the speed by 10 percent.

So that mentality is, to me, an admirable I think Sweetgreen has that, but now they have technology where they can really drive McDonald's this too, by the way, they don't get enough credit for it. I mean, there's a lot of technology that goes in the back end and they're starting to move to the contactless ordering with the screens. I predict that within five to 10 years within cities, you're not going to have people working on the order side because the cost per square foot in the cities for restaurants is so prohibitive because the rising cost of real estate.
And so you're going to start seeing the front of house automated with the screens and now with technologies like Sweet Green has the back of house.

So really, the only people and staff are going to be almost like concierge hospitality people. Are you OK? Right?
Are you going to help? What can I help you with?
Exactly. Read I think it was in the Wall Street Journal a couple of years ago that the person that you're talking to at the drive up window at McDonald's may not actually be there in that McDonald's.
They could be several states away or not in person.
Yeah, it just same person handling six or seven different restaurants, you know, with a boom mic over her ear and a computer in front of her typing in what you want.
And she doesn't have to be, you know, even even in the same state today.

Right. But like any cats, so you can you can you can do basically labor arbitrage rates in the United States, the minimum wage is moving up to $15 per hour within the cities. Totally great people should make more money.
But for a restaurant who's really trying to be hyper efficient, they're going to try to outsource that. So you can have that going overseas.
That's one way to reduce cost of goods sold.
But crazy thing.
You know, orders are pretty repeatable, right?
The menu is fixed. Perfect application of voice recognition and AI.
So you're going to see again in 10 years they're rolling out.
So these restaurants, they're going to change so much.

I've spent a lot of time with food, you know, whether it's Uber delivery, you know, we did a project called Onda with David Chang where we did delivery and food.
The face of the food landscape. If you're not a tech company like Domino's, by the way, they're unbelievable. They're unbelievable that company and go look at their stock price and appreciation for Amazon. Unbelievable company to invested ten years ago.
That is where you have to be. If you're not proficient attack, you're going to lose the fast casual battle.
One of the things you're working on now is collective, which helps, you know, very small companies or companies of one person contractors.

That kind of thing deal with these sorts of of of issues getting, I would assume, accountants and other help all through the computer, right?
That's right. That's right. So, you know, I had been a founder before, obviously with add this and it served small businesses, large businesses, you know, 15 million customers at scale and at X Bar with Garrett and team, I had a great opportunity because I could be a founder supporting founders, but it was a lot more bespoke, personalized.
You know, we've brought capital, but we also helped launch and build a number of different companies.
And as much as I enjoyed that and it is a privilege honestly to work with the franchise, you learn so much and to be part of their journey, it's humbling.

I miss that operational building, you know, being there hand-in-hand with customers and I miss the scale of it. I was dealing with millions of customers now, you know, over 10 years, maybe I have 20, 30 and again, I love it, but I miss that piece.
Collective was kind of is the perfect intersection of my my past lives because what's happening in the world and I'm sure you're aware of this and have friends there too, is thirty six percent of the United States has freelanced or run their own business that is shifting to 50 percent.
And obviously with COVID and whatnot, there's an accelerant towards that shift.

Our vision is pretty simple, a collective we want to make what we call these businesses the one, whether they're freelancers, consultants, but parents, my doctors, like my parents, my parents were both solopreneurs. I never thought their business people even know their physicians.
Yes, they run their own and they would be my customer.
And how can we make them more financially successful?
Simple. Let them focus on their passion, not their paperwork.
My mom, next version of her comes over doesn't speak English.
The United States is not easy to run a business you have to incorporate.
You have to do taxes, you have accounting bookkeeping, you have to do it.

You have to do it right. Bad news, if you don't do it right, you can lose money and you shut down your business worse news If you get it right, you don't get points on the board, you still have to run your business right.
And so for us, you know, we look at the entrepreneurs as Batman and we're Robin. We're in the background.
We're trying to help them out. And the way we do that is we provide an online back office. So instead of you going around the corner to H&R Block and handing a bunch of papers, we put the team and the technology in the cloud so that we can do your accounting, your tax and your bookkeeping and within sight.

We had, which was interesting and this is learning for me. I don't know if you know this, but there's billions of dollars of tax savings for entrepreneurs who are making it even sixty seventy thousand dollars plus a year.
And you know, it's you form an escort, so you take an LLC and you, your selected us. We can go to someone, say, Listen, you pay us twenty five hundred three thousand dollars a year. You can pay in installments, so you call it 200 hundred dollars a month.
We will handle your accounting. We'll do the full bookkeeping, we'll do your taxes, but we'll also incorporate you. We'll go ahead and incorporate it.
We'll do the full solution for you.
You pay us that $3000. I'm going to save you $10000.
And I was blown away, and I asked all these folks why they didn't do it.

You know, it turns out, unfortunately, like most things in the United States, running an S-Corp isn't easy. It's not like running an LLC or being a sole proprietor to set up payroll. You have to make sure. Which means you have that set of books you have to separate. There's an administrative burden.
Guess what? Here we are. We'll handle it for you. So that is what when it clicked for us and there are millions of people that can benefit from this structure.
So it's really fun. And to be honest, it's a full circle story.
Now I'm a founder helping founders at scale, and the customer could be my parents. And I look at it and say, if there, if there is such a thing as it, this has to be it. I got, I got, I got to get this out of the park.

So you came into it, you know, already being an investor and now you're back to being an entrepreneur is, as you point out, helping other entrepreneurs was raising capital fairly easy, both because you had a good idea, but also you knew the the world of venture.
You know, we've been lucky the venture community has been incredibly supportive of us. I mean, we've had I'm getting like tons of emails every week, 10 of us and I think, you know, having been in venture for a bit having Angel and also being a founder, there is this unique circumstance that occurs with some companies. When you have a mission that is clear, obvious, like when I tell you what we do, it's not hard to understand, right?

Also, the market is massive, right for us, for example, every reported exactly every forty two thousand members who buys 100 million in recurring revenue. So building a the next square is in the cards, right?
And so and you couple that with the fact that, you know, I've done it before.
And let's be honest, the environment for technology it is we talked about the com heating up, right?
So I think we're we're just there's a lot of good tailwinds here.
I think that I am an effective captors.
I hope that my experience counts for something, but we are lucky and we picked, you know, it's that right place, right time.

And I hope we can leverage it to benefit all these founders because I'm telling you and we get on the phone with them when we do a great job, we're really making a difference in people's lives, like during COVID.
You know, there are people that were crying. Their business were showing this.
We didn't charge them for months. They applied to us.
We give them credit for three months. We'll do your taxes. Don't worry about it.
We did it and came out of our pocket.
I'm proud of that. But you know, when we mess up, like last tax season, we grew really quickly. I mean, the demand is unbelievable.
We have, you know, almost 30000 people that are waiting.

They want to sign up for the service. And so but we try to grow as fast as we could and we went over. Our SKUs have been the few people, you know, things were delayed and have the experience. It hurts. It hurts us because, you know, you know how it is.
I'm sure it's your money. And if someone that the person who's handling your taxes, then get back to as fast as possible, you know you're upset.
So it's like Spider-Man with great power comes great responsibility.
We got to keep leveling up.
I suppose I should end by asking you which Spider-Man of all the many, many, many, Spider-Man's is the best Spider-Man movie.
Oh, man, that's a tough one.
I it's the best Spider-Man movie.
I will, I will say.

I don't know. So the thing is, like for me, I mean, I don't know if you remember this because I'm a comic, but do you remember with like the old 80s movies when Marvel tried to initially start off with these like Spider-Man shows and they were like, pretty grungy, easy. So as soon as soon as Tobey Maguire came in, I was just blown away because for the first time.
My imagination was painted on the screen, right?
I had been in comics, I loved them and I could see it.
I just people didn't dream the way I was dreaming about it, which I understand.
And then for the first time, they put great actors big budget CGI.
So Tobey Maguire and his has a place in my heart because it unlocked.

It opened up the world to the world that I lived in, and I felt like I could be a community with my fiance. And I watched all the Marvel movies and we love them, so I do love that. But the new Spider-Man, I got to say is pretty good is pretty good.
I actually own amazing fantasy.
15 I bought it. I love.
I love. I'm a huge comic geek, so it's one of my most treasured possessions guarded with my life.
So when you're when you're when your mother was worried about, you know, you coming into sudden wealth that you bought a comic book?
I I'm not going to lie to you have more than one idea.
More than one, I'm sure you do. And another with with with the success of collective.
Does your mother still wish you worked at Google?

You know, I haven't asked her. I'm actually going to see her this week, and I'll I'll ask her, but I think my mom and my dad at this point want us to be happy when other families want us to be well-adjusted.
And they've shifted away from the basic needs part of parents, I'm not a parent yet, I hope to be soon.
But I think they've shifted to that and they just want us to make sure, you know, when, when kids are younger, at least the treatment we got was, do they want to make sure we're on our own? We're OK, you know, you're on your own two feet.
Once you kind of get past that, OK, it's do you have some sort of lifestyle that's sustainable? And I think looked candidly, the feedback I get is you work too hard, right? Because I work 80 hours a week sometimes.

And you know, it's one thing when I was twenty five but know I'm not twenty five anymore, so it's a little bit harder. You know, I'm a little more road worn.
They sound like good parents now.
They're great, they're great. And but very classically immigrant parents, like a lot of my friends who come from India or other countries, we often swap stories and there's a there truly is a pattern among them.
And I think there's a, you know, I'm a huge proponent of immigration in the United States, in particular around STEM.
And I think some of the things that these parents are doing to push those kids and create that desire to succeed, that desire to build the desire to prove themselves in this country is helping the country.

And I hope that we continue to do it. I mean, if I had my druthers every single top stem school, I'd stamp a visa.
I'd just give it to them. And we should do that because I'm telling you, when I was in grad school, kids were begging for visas.
I went to speak it. You know, I spoke at Carnegie Mellon about your Stanford Berkeley.
They're going home now because they go to India.
I can go to India and start a company now.
Right. The genius of America is it's like picking, you know, a soccer team on the playground in which instead of, you know, I pick one, you pick one, I pick a kid, you pick kid.
I get to pick first 15, and my soccer team is going to beat you.
Every time you're right, you're right.
And I think the edge that we have.

And again, I think people need to objectively look at the United States.
Yes. Is China rising competitor?
And when you take it seriously? Yes. Is the world difference not going to be the United States only anymore? And we could. That can be a good thing for us.
Sure. But it's still the freest place, the best place to do business.
The values this country are really, really deep.
And if we can invest in what's just made us great, which is to your point, and I love that analogy, the best of the best will come through this place.
Let's keep them. Let's keep them here.
Let's let's make sure that they get to be citizens.
Let's move forward and let's not confuse.
We're a nation of immigrants. Nobody in this country has been here.
I mean, I'm live in San Francisco.

You know, the Asian-American population there, which has recently experienced issues.
If some of the folks there, I talked to a woman, she's been there longer than most people. Her family's been there three or four generations since, like after the railroad that houses all over the Bay Area.
There are more American than me in that regard, right?
And so I think I think it's a feature and we need to keep investing in it.
It's tough. I know, I know we have a we have some things to do in the country, but again, I'm very long in America. I know we started with this. I'm going to end with it, best place in the world to work and build.
I'm also a contrarian believer in the valley, so I guess I used to be not.

It's everyone thought about. Like, I'm all about remote work, but I think Silicon Valley is. You're going to continue to see amazing things coming out of Silicon Valley, and the rest of world gets to do it, too. So that's great.
Let's do it.
Perfect. I think they warned you that I did.
That's those are my questions for you. I think they warn you that I wanted to ask you about your favorite book. I thought it would be fun to, you know, get 20 of these and collect them together. And it could be anything it doesn't, you know, it can be, you know, a business book or a children's book.
What what book would you recommend people read or or and what book influenced you the most?
I thought about this a lot. They did give me a warning.
I'll warn you, I'm a I'm a pretty avid reader.

I don't sleep much, so I read a book every week and I've been doing it since I was a kid.
So when you say favorite for me, that's a tough one.
It's like movies.
But I'll give you one that influenced me the most.
So I have favorites and context. I can give you a business book.
I gave you different categories, but I'm going to give you one that fits me because I think that's the heart of what you're saying. Sure.
There's a book called The Fountainhead By and Read, and the reason that I think it influenced me so much was there's a character, Howard Roark, and the character is, I would say, very archetypal, almost exaggerated.
And this character is an architect and his friend.

I mean, they're almost like rivals Peter Keating, also an architect, but it shows the path of these two people who chose the same profession, but for different reasons. Howard chose it because he just loves the build.
And it was it was. If he didn't do it, he was in pain.
And Peter Keating chose it because it was something his mother wanted to do.
It was a good job. And then it shows the progression of their lives making the same choice in the profession.
But with different tension and how, you know, ultimately, Howard Roark, you know, regardless of the circumstances, was just always enjoyed because just got you when if you could do what he wanted to do, it was so pure. And it inspired me to challenge myself, to say, what is what is it I want to do?

And I constantly revisit it because I think the world is complex, right?
You know, you can have characters, but you can always step back.
And I tell everyone, founders, I advise you need to be in the zone.
It's there's a principle in Japanese culture.
If a guy and that is the intersection of what you love to do, what's marketable right and what you're good at, and if you find that point in time, you're unstoppable.
And that's what I thought Howard Roark did.
And so when I try to pick it up every so often, it's a little bit long and it's a little bit, you know, it can get political points, but that spirit is what I love. So very inspirational for me.
And that's ultimately why I chose, you know, going down this path, which I was lonely.

You know, I don't have anyone to support me on that, but it worked out.
Perfect. Perfect.

What do we have to do to live meaningful lives?
We're going to have to grapple with that question.
I can count on maybe two fingers, people like that that have come my way.
And so Bill stands out as someone who made a huge difference in my life. That's the artist Robert built the men from our interview we published last week.
Robert's artwork is all over the offices of Sand Hill Road.
The bill he's talking about is Bill Davidow, legendary venture capitalist. You know, Bill is just one of the most generous spirits I've ever met in my life.
Now I know Bill, maybe not as well as Robert does, but Bill and I have worked together back when he was promoting his book The Autonomous Revolution.

It was a fascinating interview, and if you'll allow me, I'd like to play it for you this week. This episode, called People of Zero Economic Value, originally ran in early 2020.
It is hard not to sense that something vast and unsettling is emerging from beneath modern life.
Even here in Silicon Valley, where we have become accustomed to continuous change, this time it somehow seems different.
That's Bill David, our long term venture capitalist reading from his new book The Autonomous Revolution.
The change he's talking about is the coming revolution in A.I.
and automation, and I do not use the word revolution lightly.

There have only been two technological revolutions in all of human history the agricultural revolution, where we learned to plant and domesticate animals, and the industrial revolution, the introduction of machines to do work.
Think about that two technological revolutions in all of human history.
And if you're listening to this podcast right now, the third revolution will take place during your lifetime.
In fact, it's already started, and it's going to shatter everything you know about being alive.
This is now a third change in form.
To illustrate that when you had the agricultural revolution, you had the creation of things like money, the creation of the written language.

When you had the industrial revolution, you had the creation of the workweek and the wage. These weren't things that were there before.
So when we talk about an autonomous revolution, we expect there will be things invented effects on society that we don't even have the faintest idea.
Yeah. One of the examples we use in the in the book about the autonomous revolution is we say civilization is undergoing phase change and we draw the analogy between water and ice. And when water goes through phase change, it goes through a critical temperature and it changes form.
It goes from being a liquid to a solid.
It obeys different rules.
Fluid flow for water.
We use different tools, pumps and pipes for water.
And our intuition about water tells us nothing about ice in the same way.

Phase change is affecting our social institutions and their changing form being different roles, using different tools, and our intuition just fails.
There almost aren't words or concepts to describe what happens during a revolution. If we've only had two of them the agricultural revolution and the industrial revolution, and neither you nor I were alive when they happened.
We've never seen a revolution in our lifetimes.
What we're going to do is see a whole new set of experiences, and this is very unsettling. It's creating a lot of insecurity because we're all aware of things going on and then people are worried about where's my next job coming from?
You know, what are my kids going to do?
And there are all these unsettling things going on.
Our value systems are changing.

The physical infrastructure of society is going to change.
Remember agricultural revolution?
We wandered around before it. Then after that, we had settlements, villages and then cities and then cities states.
The Industrial Revolution. We created the industrial city at the start of the industrial revolution.
Ninety four percent of us lived in the country.
Today, 80 percent of us live in urban environments and we created the suburbs. It's reasonable to expect that our physical infrastructure is going to change as well.
I think most people, when they talk about autonomous revolution and robots and whatnot, are primarily worried about their jobs.
I mean, certainly we've seen robots replace people in car factories and things. But the prediction is lots of people will lose their jobs.

Is that the biggest thing we need to worry about?
I think lots of people are going to lose their jobs.
And I think it's something we have to worry about because we've defined our personal identities and our self-esteem in terms of having a job.
But you know, one of the things that one can scratch their head about is that a lot of us do socially useful work and we aren't paid.
The example I use is if I'm a mother and I sit at home and I raise a child, whether.
Or if I'm a father and I sit at home and I raise a child, I'm not paid for that, but if I go to a daycare center, somebody is paid for doing that.
So one could argue that if the government gives me a subsidy, if I work and I have somebody else take care of my child, why shouldn't the government pay me to raise my own children?

Americans, this idea of perhaps a universal basic income, particularly in a world in which there are robots and and and autonomous devices. Americans just seem to hate that idea.
It doesn't matter if you're conservative or not.
Conservatives really hate it.
There's something in American blood that says you can't get something for nothing.
You're absolutely right.
And you know, I think the autonomous revolution calls into question something that we call the Protestant work ethic.
And I think that these are the challenges that we face because these are part of the new rules of society.
So we have to answer that question and is the only way that I can have personal self-esteem is having a paid job.

And the American work ethic was invented at a time during the industrial revolution, in which work meant something in a way that perhaps it won't.
At a time when many of us either don't need to or can't do what robots or A.I. do.
Well, yeah. And then, you know, I mean, I don't want to get too philosophical.
Go for it.
But there are questions about what do we have to do to live meaningful lives? And we're going to have to grapple with that question.
Remember, when we talk about people losing jobs, we're not just talking about machinist replaced by machines, assembly line workers, that kind of thing, we're talking about lawyers and doctors replaced by A.I.
pilots engineers. Their skills would no longer be needed.
They would be people of zero economic value.

That sounds well. It almost sounds a little offensive, but you're not talking about somebody with zero value.
They could be PhDs.
They could be intelligent, giving caring human beings who in a different advanced autonomous world, don't have economic value.
We referred to the zero economic value man.
And by that, we mean that the person could have all kinds of skills, but the economy wasn't prepared to pay him money for that or her money for that.
It's like the mother who raises a child.
I don't see us sending checks to that mother father who's raising that child.
So that person is a zero economic value person. But raising children is really important, no doubt.
But there is alarm bells go off in my head.

If this idea of zero economic value Zev ZEVs, let's call them. It almost sounds like H.G.
Wells that again, these are not people who can't, who can contribute, they can contribute. But in our new autonomous world, can't add to the GDP because machines would just do that and we could be talking about lawyers or doctors at this point, radiologists who would become ZEVs.
What do we do in a society in which some of people can't contribute?
Well, the question is how do you define contribution?
And we've always defined contribution economically, economically and and so these are the kinds of things that happen in phase change our dollars, the only metric for contribution.

And I think we'd agree they're not. You use the example of a mother or a father staying at home, raising children or coaching a little league in which theoretically, the government would then pay them to do that, which as we were speaking earlier, particularly conservatives. But I think a lot of Americans would say, Oh, hold on, that sounds almost a bit socialist, which is funny coming from a famous venture capitalist.
Well, all right, but here I am.
I'm almost 85 and suppose that my kids spend a lot of time taking care of me as opposed to putting me in some institutionalized home. Are they zero economic value people?
Because they did that?
Dollars wise, yes. Yeah, they are value wise.
Of course not.
If we're going to end up having to have a new value system that will come with it.

And these are the kinds of issues that we've got to debate. You know, one of the analogies that I use, which is water and ice and ice breaks, pipes and it also sinks ships. Remember the Titanic, right?
And if you don't deal with phase change properly, they're going to be problems. And our tendency to deal with phase change is to say this is the way it was during the industrial revolution. We are going to apply that same solution to a different form.
Isn't that fascinating that our country is created during the industrial revolution?
And I hadn't thought of it this way.

But a lot of the values that we bring as they are writing the constitution as they are forming a government, this grand experiment is based on ideas from the industrial revolution that possibly wouldn't carry over well into the next autonomous revolution.
Yeah, I think that possibly the ideas in the Constitution, a lot of them came from the agricultural revolution. Fair enough, mostly farmers.
Because I mean, the industrial revolution started around 1750 or 1740, and the ideas of the Constitution were late.
Seventeen hundreds. So the Constitution reflects, I would say, early industrial age thinking, but a lot of it reflects agricultural age thinking, too.
And so a lot of the ideas are not going to apply nearly as well in an autonomous era.

There will be a painful transition, and I'm sure it was a painful transition into the agricultural revolution and out of it into the industrial revolution.
And now we'll have one more paroxysm of pain.
Well, all right, but let's look at it this way the industrial revolution started. I'm going to say roughly three hundred years ago, and we've been adjusting to it over a 300 year period.
The Industrial Autonomous Revolution probably started around 2000.
It's happened much faster.
Whether it's ten times faster or not, can't predict.
Yeah, but the shock of this adjustment, it's a big step.
Oh gosh. My memory is failing me.
The fellow who created the term cultural lag where one step of society gets out of step with another.

We are going to experience cultural lag, big time because the changes are going on so fast.
One of the things that I think is exacerbating that the haves and the haves not is as we have automation, as we have reasonably free world trade stuff is getting less expensive, but rent and health care is not.
And that is killing the American middle class.
All right. So we talk about living in a bipolar society. And if you think of it this way, the value of work is being determined.
I'm going to say by robots.
So value of work is experiencing deflation.
The worker is working in a deflationary society.
The necessities of life are being driven by demographics.
We're running out of land.

So the price of homes is increasing at twice the rate of inflation. Health insurance has increased by 54 percent in the last five years.
The cost of education is going up.
The cost of food is increasing faster than the price of inflation.
So the typical worker is working in a deflationary society and living in an inflationary one.
And that creates a big problem.
In the past, those things were more tightly correlated.
When prices went up, wages went up.
Today, that correlation is broken.
Bill Davidow, legendary venture capitalist and prolific author With all that doom and gloom, I'll let Bill have the last word from his book The Autonomous Revolution.

Despite these warnings and our analysis of the growing dysfunctionality of modern life in the pages that follow, we hope that the reader will come away from this book with a sense of optimism.
We should never forget that human beings are extraordinary creatures brave, endlessly creative, adaptive and born survivors over the course of the last million years.
We have gotten through much worse.
Bill David now from our interview in early 2020.
Next week on Sand Hill Road, you are grinning.
And why is that?
I think you owe me a nickel.
But you know, you know, the deal with the nickel it is.
I think before that, you wanted to bet more than that.
It was a thousand dollar payback.
I lose a bet to the venture capitalist Tim Draper for just a nickel.

Thank goodness me eating crow next week on Sandhill Road.
Sandhill Road is produced by Shawn Myers under the leadership of Sarah Bueno and Stephanie Adran.

What you had for breakfast this morning?
I had no breakfast. I'm doing intermittent fasting.
Okay.
You ready for my lunch?
What are you. What are you going to have for lunch?
Do you love salad?
Tea leaf salad?
Yes, I eat.
It's a Burmese salad. Okay.
And I eat that every single day.
Okay, so a regular sort of is.
Easy, right?
Right.
To give instructions about new things that you want.
Let's start.
Well, just for fun, introduce yourself. I might use that as sound.
My name is Beeple Sinha, co-founder, CEO of Rubric.
My background is I'm an engineer turned venture capitalist, turned entrepreneur.

/content/Preprocessed_Data/SHR Rubrik CEO Bipul Sinha on Risk.txt

Let's talk about risk. Risk is at the center of so much that's going on in the economy right now. You are a risk taker. You left a very solid job in venture investing to create a company. Tell me about that.
Many people get risk wrong because they think about risk as the singular act of starting something or doing something.
In my mind, the starting or doing something is not risk.
The risk is what do you do on day two to mitigate the risk that apparently you took?
So when you start a company, this idea of like you're going to go transform an industry or create a new institution, that itself is not risk. But for you to be successful, what do you have to do to do on day to day three, day, four day fly on and on to make sure that your vision becomes reality?
So that is the rest.

The jump off the cliff isn't the risk.
It's what you do on the way down or up.
Exactly. Because in some ways, starting a business is kind of like what is starting a company in Silicon Valley is kind of like jumping off the plane and building the parachute.
So what are you doing to build a parachute for safe landing?
You dressed as a kid. You dropped out of high school in India in order to study for college admissions. First of all, tell me how that works.
I mean, that's not how it would work here in the United States.
In India. Back in like.
The early.
Nineties, there there used to be this exam called joint entrance examination with about 1% acceptance rate.

And if you pass that exam, then you get admission into the top university and they don't bother or care about what grades you got in your middle school or high school. And so given that I was not a Grade A student and I didn't have good grades in my high school or middle school.
My dad said, Hey, for you to get out of poverty, the only way is to pass this exam because that will wash all your past sins and you can have a bright new future at a grade college.
Just describe poverty to me, because obviously people have different levels of what they feel as poverty. What? What kind of poverty?
My dad was an unsuccessful entrepreneur and he has wanted to start pharma companies that didn't work out.
So we had food security issues.
I mean, we used to live in somebody's basement.

We didn't have money to pay for rent.
And so it was not a great situation.
But my dad was a very ambitious person and his vision was that you can overcome anything you want to.
If you can imagine, if you can visualize and if you walk towards it.
And in his mind, education was a way to get out of your current situation.
So he always asked us to imagine a brighter future and go run for it.
How close to what you are living now is to your imagined future.
I don't think about a particular outcome as my vision. I think about this maximal unlimited outcome that I can't define, and that's what I call it.
Living at your potential. Since you can't define your potential, you can't define what you want to become. What do you want to become?
Huge. Outstanding.
Outlandishly large.

And that's what I'm running for. Every day I get up and try to get to that ideal.
Poker people. Poker players have a term all in.
Is that sort of your approach to risk?
All in all, in kind of the scenes indicate that you are reckless.
Okay. Or you are trying to kind of put all the chips on the table. The way I think about this is that are you maximizing the opportunity that is in front of you?
Are you giving everything possible in that moment?
So you're not hedging.
You're not hedging, you're maximizing.
But maximizing is different from being reckless.
But there's a fine line, isn't there?
Absolutely. In life, there are a lot of fine lines of a visionary and a crazy right.
Have you ever actually. Have you ever accidentally tripped over that line?
Oops. I was reckless, not visionary.

All the time. Because if you are not touching the the edge of knowledge and innovation, then you are irrelevant.
So you ought to always push the boundary, Understand that.
Is this a potential door for you?
And many times you discover that's not a door is a wall.
So you have to backtrack, but you will not understand if there's an opportunity, if you don't go to the edge.
You don't like the term calculated risk.
And calculated risk. To me, it makes sense that if I were to throw a die, I know there's a one in six chance that the die will come up as a three.
That's that. That's a calculation.
And there is risk there. There's a gamble there.
What calculated risk doesn't take into account is a pandemic, the Black Swan, those sorts of things. Is that your take on calculated risk as well?

See, in my mind, when you do risk calculation, you think about expected outcome. But if you want to do something fantastic, something big, something which is enduring, then you cannot take calculated risk because no risk calculation can create that that fundamentally huge outcome. So so if you think about like expected outcome, then you are going for mediocre outcome. You have to aim super high and then you aim super high. By definition, it cannot be calculated and that's why you have to think maximal, because all of us are prisoners of our own imagination. We can become what we imagine ourselves to be. So do we have the courage to imagine?
Do we have the courage to push and think how big it can become?
Now, let me challenge you on one point, and that is you've been very successful.

You got into the college that you wanted to.
By taking that risk, you became a venture capitalist.
You risked again by becoming a CEO of a startup.
When you say take big risks, are those colored by your success? In other words, if I say if I put all of my money in Apple stock many years ago, I would advise people at lectures and things to say.
I would say, you know, you got to just you got to take risk and look at where I am now.
If I put all my money in FCX, I would say be very careful about risk.
You see what I'm saying? I mean, I'm sure there are points where you fail, but how much of when you preach, you know, take the risk, take the jump is from a fella who landed on the other side most of the time.
See, the thing is that everybody is colored by their own own life experience.

And obviously there's some bit of that experience that allows me to think huge and think like take a bigger step.
Having said that, early on in my life, when I was a high school dropout and looking at college admission, I would be selling tobacco on the street corner.
Or the other option was to go to a top university.
So. So it is all about what do you think your capabilities are and how much can you imagine a future?
And the combination of two leads to an outcome.
There is no certainty in anything that you do in the world, even even things that people deem successful can go away unless you are redefining and reorienting yourself because world is changing constantly around you.

We live in this age of acceleration, so we got to always be at the edge and keep pushing the edge because all the great things are happening at the edge.
Your dad believed in you. Is there someone else who is key that believed in you, that put you where you are today?
A lot of people along the way, I mean, I came to America with literally an immigrant experience, $100 in my pocket.
I you know, I love that story.
And I've heard that from, you know, from from Irish, from Indian, from Spanish and Argentinians, Argentineans.
I love that story because it's a story we tell we as Americans tell the world. And I think sometimes we as Americans think of it as a fairy tale that we don't. Really mean it.

Don't come to America with $100 in your pocket and expect to become very rich and influential. But immigrants do it, and not every time that they succeed.
But it just makes me so happy. And I'm interrupting your story, but I love it when it starts with I came to America with a hundred bucks in my pocket.
I mean, when I came to America, my parents were still living in the basement.
It took me to a couple of years, like two, three years in America to get them out of the poverty, to get them a flat and a no and a respectable place to live.
So this is a lived experience for me.
And I can confidently say that we live in a magical country.

We sometimes forget how magical it is, how many, how much opportunities are out there, and how much people believe in your vision and how much people want to take a chance on this driver. I've been all around this country telling people rubric a story and y rubric is a new architecture and would be an important company. And imagine this accent and this face all around the country. And everybody gave me a chance because people want to give us drivers a chance. And that is the magic of America.
It is unparalleled, unreal.
When we look at the listenership India over represents for us.
But it can be for any potential immigrant who's listening to this.
And maybe they're thinking about going to the EU or Canada.
I'm not you know, I'm not saying America necessarily.

What advice would you give them?
Practical advice or or, you know, big spiritual advice?
What advice do they need?
I think at the end of the day, what you think is what you will become.
And if you believe that for your own ideal manifestation, if the America is the right place, America has tremendous opportunity for all the strivers of the world, all the risk takers of the world, all the visionaries of the world, because America truly believes in transformation. America truly believes in self-transformation.
America believes in redefining yourself.
America believes in and in making making sure that there is a transactional governance to make sure your effort is rewarded.

And there are not many countries out there with this combination of self-reinvention transactional governance, fairness in the in the in the way businesses are done, people not judging you by your background or judging you buy, buy, buy your social network.
People are judging by are you going to be productive and are you going to create value in the ecosystem?
If you are going to create value in the ecosystem, there will be a lot of business partners. You'll find a lot of people will invest in.
You will work with you, will collaborate with you, which is unique.
What risks have you taken that didn't pay off?
Tell me about something. You screwed up.
On many things as an immigrant.
What happens is that you have this perception or point of view around overt self-reliance.

So when we started rubric, I always thought that we have to own our own destiny.
There'll be no bigger companies that can be friends with the smaller companies.
And as a result, I didn't believe in partnership.
As a result, I didn't believe that a larger company can be rubrics partnered who can help rubric in the in our go to market efforts.
And I personally didn't take that that out I was overly reliant on our owning our own destiny and creating our own distributor channel and distribution channel. And as a result, a few years later, I got a slap on my face and I had to kind of change our strategy.

And then we refocused ourselves on create and creating an ecosystem, creating partnership, working with larger companies where we are complementing their solution and they are complementing our distribution so that we can together to go do big things.
So sometimes you gain your own experience color you and and I did make a big blunder.
I've known you as a venture capitalist and I've known you as a CEO.
About ten years ago, you told me that CEOs are more optimistic than venture capitalists.
Is that still true?
100%. Because if you think about your life experience as a venture capitalist, nine out of or 99 out of 100 situations that you encounter, you are saying no and you want to invest in just one company.

So you have a very pessimistic view of the world, what I would call realist view of the world in the entrepreneur's journey, 99 out of the 100 situation, you want to get to a yes answer, you want you you are intending to say yes because everything could be a potential opportunity or optionality. As you know, options are entrepreneurs best friend.
So you have to really turn your thinking or your mindset when you go from a VC to to an entrepreneur because you have a portfolio of one and you have what is your oyster.
Do you still take the same approach to risk as you did on day one of founding the company? Now that it's a big company and I think of Apple and of course Apple will trick me, right, and come out with something brand new tomorrow.

But, you know, their latest product is that their phone is now available in yellow, which does not strike me as a risk as a company gets bigger and there are more stakeholders and more people depend on you to feed their families through a salary.
Do you take less risk than you did on day one?
As a startup.
You never take less risk. Will you take different risk?
So let me define different.
When you're starting a company, there's no asset that you start with.
You are creating an asset out of thin air, so you have to be at your maximal disruptive sense to really create something out of nothing.
So the first step of the entrepreneur's journey is, is to disrupt, to create, and that creation creates an asset.

So once you have an asset where you have employees and customers and partners and ecosystem, I call it like an economy around your business, then you have to change your mindset from pure disruptor to an manager of the asset. Because if you are disruptive, continue to be disruptive, then you can disrupt the assets that you've created.
So you have to change the mindset and it's a difficult mindset change from going from disruptor into an manager.
But you feel.
When that change came, did you know when it arrived?
Did you walk in one Tuesday and say, okay.
It is a gradual process, but it's a it's a process.

When you go beyond couple of hundred employees and when you go beyond $5,000 million in revenue, then it dawns on you that that there is an economy around you, there is an ecosystem around you, and you are responsible to managing this ecosystem. There is an asset that you have created and and lot of people's future is riding on this asset, their hopes and dreams about their kids future, paying off their mortgage or buying a new house or buying a new car depends upon how these asset does. So in your mind, you have to change from a pure disruptor to to an asset manager.
But having said that, even when you become an asset manager, you don't stop taking risks because this asset could sink or could go away.
So you have to continuously take risk.

But that risk is different. The risk you are taking is to keep this asset or keep this make sure this buy grows and creates more and more value in this asset. So this is a mindset shift.
Is there different risk? But you never stop taking taking risk because again, if you are not defining what is next tomorrow, somebody else will define that next and you will be behind.
We're speaking in April of 2023.
And so things things change. But as I was walking through the office here at Rubric headquarters, I was surprised by how many people there were here.
I've been in a lot of offices and sometimes there's just nobody.
Where are you on that? And you know how much of it is work from home and and how much do you want people back in the office?
So we are not mandating one way or the other.

We have a strong guidance that if you can come to work, please do come to work a couple of times a week and it makes a bit easier.
Collaboration. We we're also inventing a future every day.
We are thinking about what else we can deliver to our customers and having people together. It easier to create because because we are in this creation phase of our company and folks are actually responding.
Folks want to come, they want to collaborate, they want to have this community feeling.
Because again, we are a young company. We are still in our first decade and as a result, there is a higher propensity of folks coming in.
Without getting too much in the weeds. You you deal with data management, which sounds like something I can do.

How much of how hard are you looking into what I can do and how much risk is there to an employee who works in this field that I might do it for them?
So when's the charge up?
They came on to the scene.
We actually had our top engineers come together and have a discussion around what is the implication of of of GP or overall the technology for RUBRIK and we classify it risk into our classified risk class opportunity into three buckets and could be useful to your listeners. The first thing was can this new air technology disrupt Rubrik itself can eliminate the need for rubrik and and after a lot of discussion and counter discussion, we concluded that it cannot disrupt rubrik because we are securing customer data.

And to IGP we don't see a foreseeable future which AGP could disrupt the need for Rubrik.
I want to hear about bucket two, but I want to point out you had you you had an argument or a discussion as to whether in a wasn't an immediate danger.
Yeah, I can't just completely take over the company.
You had to discuss it.
You got to because again, you need to bring people together the brain trust of the company and have a discussion because again, we believe we as a company believe that the collective brain is better than just one person thinking, Sure, these problems. The bucket number two for us was we eliminated bucket.
Sure. The bucket number two was that can it change the way how we deliver our products and services?

Can it enhance our products? So there are a bunch of ideas that the team came up with which we believe that could have pretty significant implication for our product.
And then the third big bucket was efficiency.
Can it bring more efficiency into the company?
Can can our developers be more productive?
Cannot employees or customer service and other aspects of the business, can they be more productive because of this new technology?
And we are a bunch of ideas. So so we are looking at it both from can we deliver better service to our customers and can we actually do more things with our current resources?
You approach efficiency as a CEO?
If I am a line worker, the word efficiency is not my favorite. What do you feel is the the future for.

I'm not saying specifically your employees, although certainly them to anyone working in data and AI.
When the CEO starts talking about efficiency, I start to get nervous as the employee.
See, the thing is that for for us specifically as a data security company focused on delivering ransomware security, it can really help us in terms of like more insights that we can gather so that we can help our customers better.
We are not looking to to eliminate rules or reduce our size. In fact, so far, Rubrik has not done any lay off in this whole last 18 months period that we have been in and heard about so many layoffs happening all around, you know, because not done in a single layoff in this beat it.

The reason is that we believe that we were more prudent in terms of how we hired we were more prudent in terms of how we build the business and we continue to recruit people. So so we believe that the investment is the way to grow the business. Investment is the way to to attain a fantastical future that we see for data security.
And we continue to going to investigate and invest in the right technology and will be one of them.
Where do we start this conversation with risk?
And you just said prudent several times a work there through with me.
How is one taking a risk and prudent all at the same time?

See, the thing is that, as I said, what you do on day two is what matters. So so if you are looking at is suppose you transport yourself back in 2021 and if you connected to DART and say that this thing is going through the roof, let's hired thousand people or 2000 people, then you are not being prudent even with the risk.
So so the goal is to not eliminate risk.
Goal is to make sure that what do you do on day to day three?
Therefore, are you adjusting and learning?
Because that's what mitigate the risk.
And in your adjusting and learning, you got to make all the prudent decision.
This doesn't mean that you throw the caution out of the window.
Risk means that you be maximum paranoid with maximum risk.

Let's talk finally is my last question about, you know, roughly 2000 days from now, five years from today, when we sit back in this conference room, where do you predict you will be?
Because, you know, I'm going to play the tape back.
First of all, as I said before, I always think about what is our potential as a company.
I can't define our potential.
So I don't know that what five years will bring.
But one thing I'll know for sure will be an enduring institution.
We will be a long lasting, very large company with long tenured people, with market defining products.
But I can't tell you a number because, again, I don't know.
We are we are running for this maximal future.
Those are my questions for you. Anything else you'd like to touch on?
Not really.

Good. Okay. The other thing I have and I'm not going include it in this podcast, but I kind of collect them together and smush them all together.
Is what book in your childhood or, you know, in your adulthood was influential on you?
And it could be that you read it from time to time, or it was your favorite just because you enjoyed it. Or it's one you give as gifts.
What book is is something that you would think of as important in your life.
In terms of my kind of thinking around human potential or or risk.
I like this book. A spiritual book is from Krishnamurti.
First and Last Freedom, and it talks about the how your mind tanks.
And it does it's a it's a it's an understanding.
If I translated back to our world of start up.

The thing is that if you think about the world we live in as an entrepreneur, there is a known world and there's an unknown world.
But do you, as an entrepreneur, go live in the known world and pull the edge off, known to you so that what you imagine becomes the norm and that's when the value gets created?
So how do you live in the unknown world with the contradictions of the known world and still being able to operate to pull the edge off of known to you? And he has this in this book around spirituality and thinking and understanding of self and what does it mean?

But it is I find it like very applicable to how what risk is and how you live in this world. How do you try to reduce cognitive dissonance and reduction of cognitive dissonance actually takes away the ability to live in contradiction because all the innovation and all the value creation happens in the contradiction.

Yes. And that my voice is coming through.
Exactly. And it's there's some weird noise behind us or anything.
Sure. So let's start with you telling me what you had for breakfast.
Okay. Well, I had coffee and I had some toast and butter, so.
Perfect. And then see and spell your first and last name for me.
So to Raj Parang t0urajpara and g.
Terrific. And now I'm going to check my own levels.
I had a leftover eggs benedict from the weekend that we carried home, and it was delicious and a luxurious way to start the breakfast that start the day.
All right. I think that'll start to be good.
Okay. So, again, super casual.
Just it goes where it goes and we'll we'll just figure it out as we go.

/content/Preprocessed_Data/SHR Exit Path Winning the Startup Game (2).txt

You wrote in your book Exit Path, while nearly all entrepreneurs and their board members know that an acquisition is the most common destiny of a successful startup.
They rarely strategize about a potential sale.
Instead, they only take exit planning seriously when their startup either desperately needs to sell.
And you go on. Tell me about your first startup.
Yes. Yes, absolutely. And you know, I kind of learned this the hard way myself as a first time entrepreneur.
I started a company in 2005 called Jack Sur, which was bringing the two worlds of social communications and telephony together. Now, this may sound a little strange because we are so used to.
It's such a normal thing today.

On our phones. Right. But back then, it wasn't a prehistoric pre iPhone era, so we didn't have apps on our phones.
The phones were sort of dumb feature phones where you could all you could do was texting and calling with them. So how do we combine that with, you know, our beloved social networks at the time, MySpace, Friendster, names that are not as common today, but they were pretty popular back then.
So our aha moment was that, hey, look, what if we transferred the voice packets and the text messages over Internet rather than over to cellular networks and bypassed the toll charges because it was expensive.

People would pay per text message and people would pay per a long distance call per minute, which was so much that a lot of students would go broke calling back home. That was at least their excuse not calling home.
And so we, we had this aha moment and we basically took it took a page from Skype's book, which was doing the same thing on computers, on laptop and desktop computers.
So we did the same for four basically phones.
And, you know, since communications is inherently viral, we virally grew. And within a month of our launch, we had a million users. And within the first year, we had 10 million users.
So things were going really well.
And it was a great story we had up and down Sand Hill Road. We had a VC and VCs chasing us really, literally, and had our wish list of investors.

Some of them were early investors in Skype, for instance, and we raised $20 million and were just grow, grow, grow.
We thought we had it all figured out.
We hired the best engineers we could.
We sort of didn't pay much attention to monetization because growth was our, you know, mantra Grow, grow, grow.
And we wanted to just capture market share and go for that big IPO.
Lo and behold, 2008 2009 downturn hit us.
The Great Recession not unlike what we are experiencing today.
So all of a sudden we were like, Oh, we can't raise any more money. VCs were not investing anymore.
They were focusing on portfolio companies that were profitable or had a path to profitability. Very similar again to what's happening today in the venture capital industry.

And so we looked at our books and we realized we have less than a year of runway. So we tried to figure out different things, try to tune or change our funnels to be more monetization focused rather than growth focused.
But it takes time to run those experiments, and at the end of the day, we couldn't figure it out. Now we had less than six months of runway and we said, Well, okay, well, we'll just go and sell the company.
Of course, we were naive first time entrepreneurs.
It takes a lot longer than six months.
I've come to learn after doing many sales and many acquisitions on myself and acquire side.

It takes years actually to build those relationships that can lead to a meaningful acquisition and exit. So we had to sell to the first person who expressed interest in us, and that was a fire sale. So the company.
Pennies on the dollar.
Pennies on the dollar would actually be even more generous way of saying yes, because we got equity in a in a start up that, you know, eventually got diluted and really nothing came out of it.
Right. But it was a good learning experience as startups usually are.
And I tried to change course and not repeat the same mistake, at least in my next startup, and I got radically different results.
Yeah, you sold that one for 100 million.
Over 100 million? Yes. And we we basically turned that around within two years.

I joined as a head of strategy and corporate dev, and we turned it around from, you know, a startup that was perhaps $10 million in value to to what it became in an exit to Vistaprint.
So it was a very, very good outcome, but it took deliberate steps to create and build strategic relationships.
In fact, the first thing I did when I joined was to take the leadership team to an offsite and really think about what what does success really mean for this company?
Who would be our wish list of acquirers and what would they find interesting and what would we find interesting in them?
And that led to a series of changes that eventually led to an exit. One was building relationships with the potential acquirers.

The other one was really changing our business plan and changing the way we were approaching our customers and target customer segments because we were initially a generic website creation platform. Web.com And that was not what was of interested acquirers that we thought would be the best acquirers for us. What they were focused on were small businesses, and we realized that small businesses among our users were the ones that we were monetizing the best. They they retained the most, they complained the least.
So across all the metrics, they were stellar.

So we refocused the company to be a small business platform, and we realized that to be a complete solution for these small businesses and also to be something attractive. Today, acquirers, we needed to add in CRM tools, social media tools, telephony and mobile presence creation. So all these things came together as a result of that.
So bottom line, bottom line is be prepared to be acquired right away. You had written that yesterday is when you think you should be thinking about setting up your exit path.
You don't want to be in a panic mode, right?
If you need to sell or if that time comes.
Yes, that is that is certainly true.
Unfortunately, the reality of the situation is that most startup entrepreneurs and founders do not take the time and prepare for it.

Now, let me challenge you on that, because by that reasoning, you're currently the president and CEO at Serv Robotics.
Yes, you should be prepared to sell it.
We will have an exit strategy.
Absolutely. We have been building relationships with potential acquirers. Now we are not building a company to flip.
Right. So that's that's my question.
Right. Is that it's a hard one to bring up to the board.
Yes. It sounds defeatist. You know, like, hey, maybe we you know, at least you should have a plan to sell it to neuro robotics and the and they say neuro, right?
Those guys those guys are our competitors.
We're going to beat those guys. I mean, it's like it's like looking for the life jackets before you get set off on your cruise.
It makes sense. Yes.

Or maybe even more extreme. Are you a married man?
I am a marine.
Okay. Yes. It's a little like planning for your divorce during your wedding, isn't it?
I would say it's a little different. Maybe it is more akin to being on a plane and they tell you where the landing exits are and where the oxygen masks when they drop or what you should do with them.
So it's it's awareness. It's creating those paths, creating those optionality for yourself. Now, you may never need to in fact, if you can do an IPO, fantastic.
If you have acquirers at the door, when you are going public, there is going to be so much more successful. Right.
So the point here is not to build, to sell, but to build with the option to sell.
Yes. Right.
Yes. Having that option makes you a much stronger story.

How do you build those? I mean, assuming you can convince the board and because it is a logical thing, you know, let's at least know where the exit rows are on the airplane.
How do you build? Relationships with companies that you aren't necessarily going to sell to, but if you needed to sell, that's probably who you would sell it to.
Yes. And, you know, a lot of these potential acquirers could be very strong strategic allies on your road to success.
So for instance with us and dot com and Vistaprint Vistaprint was a partner was someone that we were looking to partner with.
They'd had a website creation tool, but it wasn't that great.
We were thinking about licensing our store them or putting some other features that we had into their platform.

So they can be very much of a distribution part and they don't have to be your competitors that acquire you. They could be natural allies.
When I was at Good Addy for seven years on that quieter side, we acquired a lot of companies that brought features and functionality to our platform that would complement what we were offering.
Right. And it wasn't just a roll up.
We weren't acquiring competitors to GoDaddy, but it was natural synergistic alliances and such. And a lot of them started as partnerships, right?
Could be a co-marketing partnership. It could be just on an API level.
You're integrating with some of their features, calling their APIs, which are calling your API. But building these relationships builds trust over time. Familiarity, you know, brings trust.

And then you get on the radar and roadmap of those acquirers.
So when they start thinking about perhaps creating a division that your company would be a fit for or going into a new market segment or acquiring a new kind of customers, you would be part of those conversations. What happened with my first startup, JAXA, is that there were a lot of like telco companies, even Google, that wanted to get into the telephony space and and acquired a capability as the voice over IP platform that we had. But we weren't part of those considerations and conversations.
And hadn't built those relationships.
We had not built those relationships. So companies and I think with inferior technology, with less users, got acquired at a much higher premium.

In fact, Grand Central got acquired by Google a year before we went under for $50 million, reportedly, and became Google Voice.
Right. Another competitor that started the same year, Georgia got acquired two months after we went under for $200 million by Telefonica, a year before Ribbit was acquired by British Telecom, before they even had publicly launched.
It was really just a lot of slides and a lot of vision that they bought for £100 million. So we were out there and no one was even talking to us.
So that's a hard lesson to learn.
It is. It really is. And I, I that's why I actually after I had that lesson, I kind of I advised a lot of entrepreneurs that I invested in or mentor that that they should do this.

And I've seen them succeed. I've seen this success scenario so many times that I felt that I should write a book about this and and spread the word that way, because there are only so many people that can have one on one mentorship sessions with. So that's why the book Exit Path Now exists.
It came out last month and that that was my way of paying it forward.
There are really two exit paths.
Well, there are three if you consider bankruptcy.
And, you know, but the two desirable exit paths for most companies are either going to be to be acquired or to have an IPO.
But statistics will tell us that acquisition is way, way more likely.
Absolutely. Acquisitions actually happen to be for every IPO. There are 30 acquisitions every year, so way more likely.

And many would even argue that IPOs are not an exit because in a way, it's just another fundraising event.
True, you're just raising more money.
A lot of companies, after they go public, they get acquired.
Happen to PayPal, for instance. So it's true.
There are there are multiple exit path. Again, much better to have those viable options than to find yourself in a downturn or in any any situation. Even if you're doing well, you have an inbound acquisition interest. If you're not prepared, you haven't thought about it.
You could make a lot of mistakes. You could leave a lot of money on the table by either acting or not acting on that offer.
And then choosing the right one is is such a fascinating decision.
Yes. Jay Chaudhry of Zscaler is a regular guest of mine.

There was a point at which Cisco offered him $2 billion for four zscaler. He said no.
He took it public and is now today, the last time I checked, worth $26 billion.
That's right. Andrew Mason, you'll recall, of Groupon.
Google offered him 6 billion or almost $6 billion for Groupon. Wow. And he said no.
And that turned out to be a major mistake.
It was worth a few hundred million.
So making the right decision as to which way you're going to exit becomes critical.
Absolutely. And that takes a lot of thinking, takes a lot of brainstorming with your leadership team, with your board.
That's why those conversations are so important.
In fact, I wrote an article for HBO just this last month talking about this phenomenon called an exit taboo.

I call it. Yeah, because there are so many misunderstandings and so many signaling problems between entrepreneurs and their board and stakeholders around this topic of an exit that gets in the way of having that productive.
Well, it's because I mean, there's a there's an inherent risk taking, you know, a devil may care or a cowboy penis in or cow woman this in in entrepreneurship. We can do this.
We're going to make this happen.
Devil may care. We're going to do it.
And to be able to say, but if we don't.
On the board meeting, everyone looks at you goes, What do you mean if we don't?
Right. Don't you convicted?
Right? Yeah. Don't you have confidence in your own ability?
Yes. So it's it's that conversation that's so important to say that, look, I am totally invested in our mission.

I believe this is our mission. We want to do X, Y and Z.
And sometimes the best way to achieve that mission is to partner with a strategic ally, with more resources, with more funding, etc.
That can accelerate achievement of that.
Those are the great exits, the ones that take you along your mission and make it more realistic.
I feel like a lot of board members can get behind that, but it has to be within the right context. It's not because I want to make a quick flip or it's not a get rich quick scheme. Right. It's it's mission execution strategy.

Now. There are a lot of companies looking to buy at this point. It's kind of a good time to be thinking about acquisition because of inflationary pressures. I mean, companies have cash that they are sitting on that is not doing them any good, that it would be better for them to spend now than later.
Absolutely. Cash is losing value.
Yeah. Whereas, you know, investments hopefully gain value.
So makes so much sense.
The problem is psychology. Again, it seems like in a downturn where.
Let's hold our cash.
Yes. Yeah, let's.
But savvy acquirers are very busy right now.
They are out there. They are making deals happen.
And they're getting a great, great outcome as a result of that.

And investors the same way, you know, a lot of venture capital investors on Sandhill Road are not investing, but this is the best time to invest. A lot of great companies have come out of downturns because you find great talent right now. You can finally find talent again.
You know, even at my company Server Robotics, we had a heck of a time finding great people last year. But this year, this summer has been amazing.
So we've been on a hiring spree, right.
So this is the time to dabble. Done. There are some voices out there like Ali Partovi from Neo, who's one of our lead investors.
He's been very vocal about it, that this is the time to double down, not to be conservative.
And then lastly, I was walking through a bookstore and there was there was your book.

I thought, hey, that's cool. I'm about to sit down with him and chat with him about his book. But it must be very exciting as an author, even as a successful person in Silicon Valley who's had a number of successes outside of writing a book to walk through a Barnes and Noble and then say, Hey, wait a sec, that's mine.
It's really, really exciting.
And exciting for me is the fact that other entrepreneurs get to benefit from the hard lessons I have learned.
And and there are things that every entrepreneur can do to actually tilt is grim odds in their favor in the startup world.

Right. And it just can be as small as just doing some networking every week. And and I have a lot of tips and tricks in there and how to kind of put these wheels in motion so that you do have those strategic options. It has been it has been a labor of love.
I've had multiple jobs that I wasn't able to dedicate full time to writing a book. So it took me about four or five years to get this from start to finish.
But I'm so glad it's out there.
Stop there. Unless other things you'd like to add.
No, that's.
It. Open. Thank you so much. Thank you.

In the air and say, hold on.
I don't remember what the question was like that.
Right. Exactly.
It'll be easy peasy.
The. I was just telling her.
No prepared notes.
Good with. Oh, God. Prepared notes.
It'll catch me on a busy morning with a lot going on.
So I have a lot of stuff swarm in my head to think that's a good thing.
Yeah. Preparedness is the worst idea.
I was telling her that we used to have a audio engineer, very talented guy who could do this for us, but with cutting teams down because of COVID, etc., it is me and like, see how it tangled it.
So every once in a while I'm going to look at this machine here, and every once in a while I'm going to put the headphones on, tangle and all.
And that does not mean that I'm bored. Yeah.

/content/Preprocessed_Data/SHR Rajeev Dham Make Sure the Emperor Has Clothes.txt

Or that I'm not paying attention. It means that I just got to monitor more than one thing at once. If I start playing Candy Crush on my phone.
You are. Yeah, right.
That better. Step it up a little bit.
You got it right there.
I'm great.
Okay.
Like I said, feel free to, you know, take a sip of water.
Stop and collect your thoughts. Yeah.
All of those things are fine. We will edit out whatever we need to.
All right, let's.
Let's start with what you had for breakfast this morning.
Only so I can get an audio check of you.
What did I have for breakfast? I had a banana, actually, so I'm a little hungry.
I've had a lot of people answer that. They're doing the the diet.
The diet in terms of fasting. Yeah.
I mean, my my version of that was cutting out bread, cutting out carbs.

But I still have my eggs or a banana.
Very good. All right. Let me see if I get it.
So it's not not there yet.
Yeah, that's good. Okay.
And then the other factual question is, can you pronounce your name for me, Rajiv?
Mm hmm. Dom.
Excellent. Wonderful.
Are you part of the Sapphire Sports, or is that.
I didn't know it were based on what I know.
Yeah, no, I'm having.
Questions about that anyway, so.
Perfect. No, I'm part of the flagship flagship sort of growth software investment arm.
Mm hmm.
Okay.
Awesome.
Check. One, two, one, two. Very good.
So you grew up in Fremont, right? I did.
Tell me about that.
Fremont. I have incredibly fond memories, believe it or not, of where I grew up. I find that a lot of people sort of run from where they grew up and the high school experience. I loved it.

I think there was something about a lot of what we call free mansions.
We have this tight knit bond, especially the high school.
I went to Mission San Jose High School.
A lot of us still know each other despite us all going to different colleges.
So, no, it was it was great growing up.
Had a great childhood.
What was your first job?
Believe it or not, my first job was at McDonald's.
It was it was sophomore year of high school.
And my mom was like, I don't want you just lazing around all summer.
Yeah, I had some summer school and I don't want you just riding your bikes with your friends, like, go work, do something. So I spent a couple of months in the summer serving fries.
I you know, the number of people whose job or first job had to have been. I mean, it's such a big employer, right?

It's got to be a huge percentage of Americans.
Yeah. Who at some point started at McDonald's.
Yeah, that's exactly right. It's the it's the newer version of what was that tossing out the newspaper. Being a newspaper?
Yeah. I got a couple. That was what they did.
Their first job. Those jobs mostly gone.
What did you learn about working in McDonald's?
I mean, I must tell you something.
How hard it is to work, how hard it is to earn any type of normal money.
You know, the value of money, the value of work, the value of actually doing sort of work with your hands and being on your feet. I'll tell you, I'm not cut out for it.
I'm not good at that. I'm much better behind a computer.

But I have such respect when I see people that actually work with their hands or on their feet. That is just that is just brutal.
You worked for a time at Amazon.
I did. As worldwide corporate development.
Yes, I did.
According to your LinkedIn, it was less than a year.
Was it wasn't for you?
Well, no, it was actually my summer internship between business school year sales at HBC 2011 to 2013.
This was 2012 summer, so was meant to be a three month gig.
I got the offer to come back and I remember my mentor at the time because I was actually considering in Seattle during the summer is incredible soccer games.

Everyone's out having beer and my mentor at the time was like, Rajeev, you're a California kid before you consider it. Just know that the rest of the year, Seattle's not quite like this. It's beautiful, but it's not quite as good as in the summer.
And and I decided to go back to the the buy side, the investment side of the world after business school, which is where I was before as well.
It's over like.
That is something you've I mean whether it's private or venture capital, it seems to be most of what you've done.
What do you find appealing about it?
That's a great question to me.
I sort of take it take it for granted.
Like there's this where did I hear this from?
Sort of a framework where you have an access of what you really feel personality wise and intelligence wise you're good at.

And then and then, oh, I forgot what I was going to say.
Know what you really feel?
You are good at and where you're really interested.
And I do actually think venture capital and private investing is that area for me.
I feel like I'm super gifted to actually be able to have that.
Usually people have one of the two or zero of the two.
Honestly, I think I just have a lot of interest.
I like learning about new things. I like dealing with people.
When you're working in venture capital, you're meeting new companies in new sectors and new technologies and new waves and new cycles in the markets at all times.
It just so hard to be bored.

At the same time. You don't go as deep as an operator would in one specific company, I'll grant that. But it is nice to be able to meet all sorts of different people in different things. That's number one. And number two, it is a still a very much a it combines the financial elements, which I've always prided myself on and being analytical with the people elements, really forging relationships with individual entrepreneurs in management teams, understanding how to work with them, how to persuade them, how to support them through many, many years, how to win a new investment.
There is a lot of IQ and sort of this business is still largely a people business. It's not just the financials on a piece of paper and that part is pretty appealing to me as well.

You in the firm and the Fund have had a lot of successes, early investor and square early an investor in Nutanix as well.
That's right. What led you to those investments?
Well, I mean, taking a step back, Sapphire, our mantra is to invest in and partner with companies of consequence.
What does that mean? That means to us companies that can be sort of enduring category defining category, leading companies, whether that's financial technology businesses or datacentre infrastructure businesses or a software application business. That's all we're looking for.
Hopefully, as far as software nerds go, these will be household names.
They're not the maybe sexy next gen generation of Snapchat.
They're mostly B2B software businesses, but that's what we love and we do.

And so everything we look at is through the general mission and framework of that company as a consequence. And then below that, of course, we have our diligence and our investment considerations.
Are there companies that you did invest in that you wish you hadn't?
You don't have to name them, but I would like to know the lessons learned.
Yes.
There are, although there is a philosophical point is if I had never invested them, I maybe never would have learned those lessons.
Right. And at some point you'll always have to learn a lesson, I think.
I think if you ask those venture capitalists.
2021 was a particularly frothy year.
It was the last year of this bull market in the venture ecosystem and the broader stock market, although there's a nice bounce back this year.

And so a lot of the investments that folks made in that year, particularly the second half of the year, were probably not going to be the best investments.
And so the lessons learned.
I could tell myself that there are lessons learned.
But I think if ten years from now, that same situation happened.
Who's to say that the same individuals may not sort of succumb to the money that's being created and the wealth that's been created and everything moving up into the right and therefore make riskier investments at higher valuations once again.
But I do tell myself that now, going through that to be measured on every single investment decision, regardless of the environment, But that's all you can do is tell yourself when.

You look at the industry, the tech industry, the venture capital industry, M&A, there, there is a certain, you know, emperor's new clothes about some of this. As a young reporter, I can remember thinking to myself, oh, HP is buying Compaq at a at a time in which, you know, the demand for PCs is falling and mobile is is jumping or eBay bought Skype. And I was mystified, but I thought to myself, well, you know, I'm not a CEO. I don't know these things.
And of course, these turned out to be giant mistakes.
There's lots of them.
You took the words out of my mouth. I wish I had that e-mail where I wrote up nice seven takeaways that I've learned. I was just reflecting.

The first one was the emperor has no clothes and that I don't want to name the firms, but some of the largest hedge funds on the planet, some of the largest venture capital firms right here on Sandhill Road with individuals that lead these firms that have incredible names, they were making investments at a breakneck pace in 2021.
Right. And it's easy to look at that and say, well, if they're doing it, there must be something there. Or if they're investing in this particular crypto company, it must be something there. Or if they're already on the cap table.
And and I think looking back is when you have that sneaking suspicion, sort of listen to your gut, an instinct, because really in those times, no one really knows what the hell they're doing. To be honest, no one does.

No one's that much smarter than the next person in our business.
I've realized when it's really speculative in a lot of ways, even if you're at the growth stage, so much has to go right and venture capital for you to actually generate an outsized return that everyone is sort of around the same level.
There are no heroes and there are no, you know, fallen heroes, right?
Either We're all kind of in the middle is what I've learned.
Well, And it takes a certain maturity, a certain level of experience to be the person at that board table. Yeah. Who says, hold on, this is silly.
This is silly. Well, no, but, you know, big firm is investing, so we need to be on this, too. Yeah. Just because they're doing it doesn't mean we need to be.
But you don't do that as a young person.

You don't, do you? You or I wouldn't.
I would listen to the more experienced people around the table.
But I think I'm finally at the point where I can say, Hey, guys, I think women I think I've seen this before.
That's the case, I think.
That's a tricky one. I don't know how to answer that.
That's the case. I think I I'm honestly grateful from a Sapphire perspective to have been in a position where I can be making those decisions.
But I think it's more just having been through, you got to have to go through a couple of these cycles, two or three of them.
You know, I started my career at Goldman Sachs. It was in 2007.

It was right when the Great Recession hit. So I definitely learned a fair share of lessons. And it was tumultuous and it was hard, but it didn't necessarily directly impact me at such an early stage of my career as this particular downturn is. So I think the lessons learned here are going to be significantly more.
One of the.
New, if not the new hotness is I.
Yeah. And it seems to be a revolutionary sort of thing, but everyone keeps talking about it.
And I do sort of wonder, at some point, Silicon Valley goes through cycles the shared economy, the subscription economy, cloud fintech, alternative foods, big data, Internet of Things, crypto.
And we all look back at most of those and think, Oh, that was got really frothy really fast. Yeah, maybe air is just one of those things too.

I, I do think that the advancements in AI as a technology will lead to some pretty incredible set of applications. I think though, as we sit here in 2023, relative to the level of investment and discussion that's happening, it is disproportionate. The enterprise traction, if you really look at true big enterprises using AI in earnest, whether it's for their internal operations or for customer facing applications, if they're a technology company, it is it is quite nascent still. And so the pace of the investment relative to where the technology is today in the hands of actually solving real customer pain points is a bit bit out of whack, frankly. And we try to just we at are try not to get too swept up even in that fray, especially learning the lessons just from just two years ago and

really try to measure, even if it's an AI company, by the way, is a technology.

There's also for us at company in itself a product that solves a problem.
If there's a lever to that, that's okay.
It's we still need to take it through our regular diligence process versus just investing because it's an air company.
I actually think what's happening is, is something different, which is a which is a bit more psychological in that there's almost right now it's a tale of two cities. There's the general market where I think in Q1 of 2023, just three months ago was probably the hardest quarter for private software startups I've seen in a dozen years of investing.
And then you juxtapose that with all the AI hype and and companies sort of investing in that.

And it it's kind of interesting, right, that that there was so much pain on one side and yet it's almost like a microcosm of Silicon Valley and entrepreneur that you have to have this irrational exuberance that things will work out.
And so let's invest in this thing.
The same token, listen, we are massive believers in the long term potential.
I'm I've signed a term sheet right now that's using AI in the fraud and financial crime category for large financial institutions.
But we're just trying to be measured. We have $1,000,000,000 we announced that we allocated that. We're committing to looking at companies that are really leveraging this in a in a specific application or a way that's solving deep customer pain points.
And we're looking at companies all the time.

But again, we're just taking it through our same guiding principles are we'll make any investment.
And I've heard that before from from good investors that you you have to have the problem and the solution.
Yeah. And then I don't really care how you solve that solution.
It's probably A.I.. Yeah, but that for those startups that are looking for a purpose, you always need to find the problem, the pain point, and the way that you're going to ease that pain point.
That's exactly right. Solving a problem, making sure it's a mission critical problem where the customers are saying great things. But then there's a third step.
Scott, it's.
It's is that a defensible manner in which you've salted?

Is your product defensible? There's a lot of businesses out there that are leveraging the underlying large language model, and they're maybe making it slightly more accessible, accessible to the enterprise, or maybe it doesn't hallucinate as much because they put some guardrails around it or the workflow is slightly better than just using the raw, open A.I., whatever they have.
But what's the same here? And you won't start a business and do that same thing, right?
And so it needs to be defensible and enduring as well as solving the pain point. And that's where we're still sort of in the early innings of a lot of those businesses.
Billion dollars is a lot of money.
Yeah. I actually think in the long run, that could be understated, honestly, in terms of the potential impact. I really do.

So, again, it's that that famous quote, right?
That in the short run, in the short term, things are sort of overestimated in terms of the impact. But in the long run, technology platforms just are underestimated. This could be one of those shifts for sure.
There have been new restrictions laid down by Washington as far as investment in China, particularly in Asia. Does that affect you at all?
No. You know, we haven't been investing in China.
Are it safe? Are our core geographies that we invest in are, again, category leading B2B software companies at the expansion to growth stage in in the U.S., North America, really Europe and Israel. Those are our core geographies that we sort of actively invest in.
We were talking earlier about cycles.

Rory O'Driscoll Over at Scale Ventures, I quote him often because he was the first person who really said out loud, You know, a lot of my success in ventures I got in at the right moment.
Yes.
Actually, I'll put it a different way.
It's not just the right moment.
It's just I wish I could show it to you on my phone.
But I was reading what something Bill Gurley said, one of the best investors of all time, as you know, from Benchmark Capital.
He had gone off and spoken to some of the the the the most successful and longest standing limited partners in the business.
And what they revealed was that most of the returns in the venture capital asset class are actually generated in those last two years of that really, really frothy market.

So as I just dismiss 2021 for being a very hard year if you're not in the game in 2019, 2020, and maybe even 2021, you're not capturing those returns. And that's what makes the venture capital asset class as a whole actually have outsize IRRs to private equity and growth equity.
It's because of those last two years. Now the trick is do you have the discipline, the policies to sell and give your money back to the limited partners what we call is GPI. Right.
And do you have that ability to sell?
Because at that moment it looks like everything's going up in the right.

Your company just went public. Why don't we just hold this as appreciating by 30% every year? And so that's the key, is that if you sell, then you can generate these massive windfall in returns. And even even with the fact that your next vintage will be will probably be challenge given the market will go down after that.
And so you're exactly right. Venture capital is a very interesting beast in that way.
You rather anticipated. My next question is that you've worked in private equity and now in venture kind of compare and contrast those.
Well, I honestly, it feels like two different worlds.
It feels like two different worlds.
Private equity is one of the dimensions that we should even compare this. Private equity is is a lot more about financial rigor, financial engineering.

Right. How do you layer debt on a company?
How do you sort of create value through either cost cuts or through acquisitions or roll ups in order to drive some incremental revenue growth? But a lot of times it's EBIT, Don, profitability expansion as well as capital structure transformation.
Venture capital is.
Finding a growth market in a growth company and that's how you generate your return is to growth, not through changing the capital structure or through more profitability.
And so it's very different. The second big difference is the governance.
I mean, in private equity, you own the company.

And so the power and leeway that gives you to make those operational changes are very different than in venture capital, where you own five, ten, 20, 30% of the company, but you don't have a majority of the company.
You have to learn how to work with your other board members, with the entrepreneur or the CEO and the management team to effect change.
It's incredibly hard to do that, and I think people are learning that now when change needs to be effected at major ways since the middle or early last year to now this morning having five conversations with different CEOs in my portfolio.
Right. It just it's very, very it's much more difficult from that perspective as well.
When you have those conversations with CEOs, just a broad theme.
What theme keeps coming up?

That the business is challenged.
How much of that challenge is execution related versus macro.
Environment and the.
Environment?
And as a result of the answer to that question, I would argue maybe it doesn't matter.
How should we be planning our business and the financials of our business?
Second big thing is hiring.
I think a lot of companies hired incredibly fast through 20 really 1718 is when they started. It was in 2020.
If you look at interest rates, it came down in 18 and I noticed valuations started popping up and the frenzy began.

And when you hire so fast and then you look back now in a much harder environment, you may realize that the people you hired then that were leading certain functions aren't necessarily going to be the right people to lead you going forward in a very different environment. And so it's it's a lot of hiring is going on at the executive level or or replacing and shifts going on as well.
You've had a number of very good exits.
Usually we think of or we used to think of exits as being IPOs.
Now they tend to be sales. I mean, companies have cash and they want to use that cash as opposed to just holding on to it. That's right.
What's your prediction on the IPO market ahead?
I mean, it feels like it's it's it's on the precipice of opening.

There's been maybe some non pure software companies, I believe in the news recently.
I do think there are some pretty large, amazing companies.
I don't want to make a prediction on which one will break open the market, but it feels like it's, you know, if it's not imminent and maybe in the medium term it will be open.
You know, this whole idea about the IPO, more IPO market being open or shot is a tad bit of a fallacy. I feel like it's more about are the businesses good enough and predictable enough?
I have businesses today that are 150 million plus and RR.

That's a relatively sizable business that are having a hard time forecast where they're going to be one quarter from now. From a revenue perspective, how do you go public? It's not even about growth or profitability, it's about predictability.
And when the demand environment is so uncertain, some quarters it looks good.
Other quarters it looks like it's a little weak. You don't know where it budgets are, what verticals are, or can you sell into what verticals can you not?
It'd be makes it hard to take that company public and tell investors, here's where I'm going to be a year from now, because if you miss on that, you're in the penalty box in the public markets for 18 months. But it does feel like, well, I said Q1 2023 was the hardest quarter I've ever seen, at least in the last 12 years.

It felt like Q2 was just as hard, but at least predictably hard.
If that makes sense.
It makes total.
Sense, right? So it felt like we're hitting that trough and bottom in the small private software companies. So the bigger ones with a lot of scale, the data bricks and etc.
of the world probably are now being able to predict going forward.
And I think you're going to see companies of that ilk probably test the public markets in the next six months or so.
But I also think that it's not the it's not the end all be all.
I mean, IPO is just another form of of a financing.

And while it feels great and I get the emotional significance attached to it for me by the way having IPOs that I've experience with companies for founders and being at those parties, seeing those life changing events, an M&A outcome is is is also fine. You're right. It's also great. It's also money.
And money changes hands and you may not get to control your business in the same way. If you're a management team and you're being bought by a larger company. But I do think that's going to happen.
I mean, just an incredible amount of money is going to transpire, a lot of it from larger private equity firms doing kind of growth buyouts.
It's maybe not leveraged buyouts.
That's going to be a huge source of absorption from what do we have 600 unicorns today? Not all of them can go public.

Right. And so they need to get absorbed somewhere.
And I think that's what's going to happen over the last over the next 5 to 8 years or so.
Those are my questions for you. Unless there's something.
Yes. Quick. No. Yeah, it's easy. Rides.
Usually about 20 minutes. Unless there's a subject that you're.
You're hot on that you wanted to talk about.
No, no. I mean, I think you touched on the right things.
It's just.
I really find it fascinating. Honestly, sitting in my seat, it was that it was that juxtaposition point I made earlier where there is a lot of pain.
There are second and third round layoffs in private software companies everywhere.

But then again, in true Silicon Valley fashion, there is the thousand RR multiple GDI startups getting funded, and we're all excited about it, including me. But it's just it's just fascinating to see that.
Right. And I think that's what drives a lot of the the innovation, honestly, in Silicon Valley is like, you can't suppress that, right?
It's just it's always going to come out and it's just it's just a fact.
It's kind of a beautiful thing in some ways, too. Right.
So but that for me, that's sort of top of mind is always that when you go through these downturns, how do you maintain the appropriate level of caution coupled with honestly, it needs to not just be optimism.

You need to suspend disbelief at times to be in our business and believe that, hey, this 10 million revenue company, I think it could be 400 million someday, right?
That's a big leap. But in order to be successful, you need to be able to blend that perfectly over decades in your career and just to survive and if not thrive.
Right. And so that's I think that's what's top of mind, frankly, of everyone in the industry today, talking to my colleagues at other firms.

Other last question for you. And this we want, including in this episode, but we collect them together each summer and that is a book that was influential on you. Now it can be, you know, something that you go back and read several times or that you give as a gift, or when somebody says, you know what book or something that had a and it can be it doesn't have to be Harvard Business Publishing. It can be Winnie the Pooh.
Yeah. That's interesting.
I mean, a recent one comes to mind just out of recency.
And it and it was impactful.
It's a book called The Power Law.
You may have heard of it by Sebastian MALLABY.
In fact, we interviewed him at one of our staff hour offsides.

He's written a number of books on different financial ecosystems, whether it's hedge funds. And this one was on venture capital.
But it sort of describes what I've been alluding to, which is this idea that in venture capital and technology, almost unlike many other ecosystems and industries in the world, it's the top 1 to 5% of companies, offices of individuals that sort of capture most of the returns and the proceeds and the dollars and the category leadership in any given market. And I think that's why you see maybe some of the FOMO kind of mentality in VC, because everyone's trying to get to that top one or three or 5%, right, and be in it because after that there's a huge fall off and nothing else matters.
It's not linear at all, not even close.

When you look at the returns of VC funds, when you look at the companies that sort of matter, there's a huge falloff.
And so do you see that feeding frenzy sort of at the top and the valuations get beat up really high? You can easily look at the time and say, Well, that valuation is crazy, it's stupid. You could have said that about a lot of data dogs around and now Data dog is a is a just beast of a company.
And same with Snowflake, right. And so if you had gotten into it, you'd be laughing all the way to the bank. And so that parallel that that kind of reinforced some of that mentality that happened sort of in Silicon Valley.
It's a it's a new book. I suggest you read it. It's a great article.

He just keeps getting better.
How which is the way it's still like three and a half hours.
That is a border terrier.
It's like a kind of offshoot of Yorkshire Terrier.
I saw some of Noel's Instagram posts with him and I was like, you know, like he looks bigger than three and a half pounds and then the city's like, he's like four of the fur, the happy. He's fluffy in his big years, vigorously allusion.
But you know, like, we give him Bath.
He's tiny. Yeah.
Bradley is just full goofball at this point.
He looks like a big dog, but he is not just because he's the same size as like 70 pound dogs, but it's all fluff.

Yeah, which is great, you see, and he'll stand next to a dog that weighs like 70 pounds, something like they look about the same size, but they are not really in these guest appearances and very important meetings and talks.
Well, if my car up in total, I would have brought it here today and he would be out there holding, roaming around, holding court.
I do apologize to him on my way out like, I'm sorry, really.
I can't bring separation anxiety.
Yeah, I have a separation.
Yeah, it's mutual.
My dogs are traumatized right now. They got to deal with the dog walker.
He was traumatized by the car accident, and I think that that is it as a settlement.
He should get a settlement and the settlement should be that they have to hire someone.

Or maybe like the Seinfeld pilot, like the person who hit us has to do this to come and play fetch with him as much as he wants whenever.
Because I think I think in his mind, like the ideal amount of that should be like about eight hours a day.
I think he would accept that as a fair settlement and be like, OK, yeah, I'll do one year, eight hours a day, I'll take it. All right.
So this is very casual.
I mostly want to talk about the relationship.
You know, the the two people create a company have and how that relationship works professionally and personally.
If you start to say something and get halfway down the conversation and think to yourself, the hell are we talking about?

What was the question? Don't worry about just lay your hands in the air and say, Woops, wait, hold on what? And I ended up if you need to take a drink of water, I will edit it out. It is absolutely no big deal, like I said, but you do start by introducing yourself.
Wait, can I ask one question? Of course.
Can you just characterize who your audiences?
Yeah, I have a picture in my mind. I'm talking to you.
Yeah, totally. There are people who are familiar with venture capital.
So they are interested in entrepreneurship and venture.
Frankly, most of them tend to be in the venture capital industry, so they tend to be VCs, not founders.
Correct?
Yes. Yeah.
Or turtles like I know, I know those folks.
Yeah, I know that my boyfriend is excellent, actually.
OK, well, he's had injuries.

Where are you? I'm George Fraser.
I am the co-founder and CEO of Five Train.
In a previous life, I was a scientist.
Uh, and I live here in the Oakland Hills.
Next.
I'm Taylor Brown. I am the other co-founder with George.
I am the chief operating officer and I actually live in in Denver, Colorado.
And he is the one who actually does all the work.
Yeah, I'm going to ask you about that.
I'd say, George is the brains and I'm the muscle.
And which one of you is the CEO?
Why am I the CEO?
Well, I got here first.
It's funny, I can't say I really asked myself that question.
It's been many years in, you know?
Yeah, how are you? Uh, well, I think it's going well.
I think I've done a good job over the years.

I think I have evolved and learned how to do the job over the years. And so that's made me the best person today to do the job.
So you guys started the company together, you are co-founders.
Tell me, tell me about how the evidence you guys did a little bit didn't.
We can not on the other side, you what that?
Yeah.
That's the real reason CEO is because I'm taller.
Yeah. You know what? It's not statistically.
Statistically, that's not a crazy, crazy answer.
For a long time, I was the person that I train and it was a running joke.
That's why I was CEO because I was the tallest. And then Gabe, one of our early software engineers, joined and he was taller than I was, and this was a real problem.
But he said that he would slump to solve that problem.

And now we have Jim, our head of sales, and he's like six foot six.
There's no no amount of slumping. Well, that's all.
That's true.
Yes. You never know.
That's.
So your families meet in Wisconsin every year?
Sure. So every summer, various branches of my family take turns going to this cabin we have up in Wisconsin and it's one of 12 cabins that are close to each other that have a shared dining hall and some other shared facilities and and various branches of Taylor's family also take turns going up there over the course of the summer. And generally, people go at the same time.
And so.
Taylor's family and my family were aligned most summers growing up, and so I would see him every year up in Wisconsin.
Did you ever dream that you would be creating a company together?

I remember initially, though, I never thought we would be starting to come together.
I was actually closer friends growing up with Duncan, who's George's little brother. He and I got into a lot of mischief together, like crashing golf carts and and, you know, almost beaching motor boats and like that kind of stuff.
Whereas I did a lot of fishing and things of that nature.
Tennis, fishing, reading.
Yeah, lots of reading.
But I think at some point when we both moved to San Francisco around the same time, it started to like, I think both of us wanted to start our own company and it it occurred to me it could potentially happen at some point.
Like that could be a good union.
I, my family meets in Minnesota every year and I have an Uncle Elwin, who will be 10 times the man I am forever.

He's a deer hunter and a farmer, et cetera.
But I try to imagine explaining to my Uncle Elwin, and I guess I'm guessing you guys have an Uncle Elwin or something equivalent, right?
We've got all kinds. Yes. Robert, you know, all kinds of locals.
There's 12 cabins and 12 extended families.
And there's it's it's it's quite a network altogether.
We're talking about hundreds of people.
Excellent. OK, so get get, you know, picture your most uncle, Uncle Elwin, in your in your head. How do you explain to Uncle Elwin what it is you do in this office?
I feel like George and I have tried to tell my dad, like maybe five or six times exactly what we do and he still doesn't get it.

And you know, there's various different analogies that that I think we've used over that I've used over the years, for example, like, Hey, you know where the moving truck for our companies and we help them, you know, take their data to a storage unit for their data and then they use that data for analytics and other things.
That sometimes helps. But oftentimes people say, well, what is data and like?
Why do I, you know, where do I generate data?
And so I think it really depends on, you know, the audience.
Yeah, I I pretty much always do the same thing, which is that companies have lots of data. This data lives in all kinds of different places, but you can't really do anything with the data unless you get it all in one place.

And that's what we do. And some people understand that, and the people who don't understand it usually say, Oh, you mean like?
And then they say something that's completely wrong. And then I just say, Yeah, that's right.
All right. Let me give you my interpretation of what you do, and then I know you're going to say that I got it right, whether I got it wrong or right.
So here here's my interpretation is you have two scientists who are working on the same project, but one speaks English.
The other French, one uses Celsius, one uses Fahrenheit.
You've got to have some way of getting that data to a central database in which you're interpreting that data the same way, right?
That it's all fitting together.
Is that similar to what you do? And I know you're going to say, yes, it isn't.

It isn't. You know, we get it things all into one databases, but one database, but we don't.
Necessarily make it fit together.
It it may be.
Very. It may be in very incongruous formats to take your example, if you had one database that was in English and another database that was in French, they would still be in two different languages. We delivered them to a single database, so we really solved the technical problem of data movement and the more semantic problems of making it all work together.
You still have to solve in the database after we move it, and that was really our key insight was that if you separate these problems into two stages that you can build something much better, especially for that first stage.
That first stage is a problem that really can be solved by software.

That second stage always has to involve a lot of human judgment in order to solve it.
And so it's best to keep those two stages separate.
And when you explain to Uncle Owen all this and he says, How's it going?
And then you say, Well, I mean, we have a five point what, six billion dollar valuation? Yeah. Well, what does L1 say?
I mean, usually I was pretty impressed or the families of five point six billion dollars?
Yeah, I mean, honestly, I don't try to talk about it that much in terms of like, Hey, we're all of this.
So I think it's more like, I mean, that was great business. And you know, and and honestly, try not to talk about business that much up at the cabin anyways, right?
I'm the one who forced this scenario.

So. Right? No. But I mean, somebody is going to ask, you know, Well, how's it going?
And then I just it's, you know, with the boys did what they made a what?
Definitely. People feel like that a little bit.
Yes, they do. And the funny thing is, I think there's a camaraderie because even the very early, earliest days, we had a few folks from the cabins that invested, and there's always folks cheering on the sideline and expecting a lot out of out of George and I because this is the first venture that's ever come out as far as we know.
You know, come out of the the kind of collective group there.
And so it's it's been a big win, I think, for the whole kind of the whole community.
And you know, certainly my folks have been very proud of us.

Yeah, it's in remember, it's it's a tight knit, longstanding community.
And and overall, I I think everyone's very proud and everyone feels like, yeah, this is this is great.
This is right. Like, like this is , you know, a special community and that that it helped to give rise to this great thing makes sense.
Who came up with the name five Tran and what does it mean?
I did. It is a pun on FORTRAN, which was a programing language that was used in a lot of data analysis, among other things, many years ago.
Uh, doesn't really make a whole lot of sense for what we are doing today.
But you know, over the early months and years, we changed what we were doing and didn't change the name. And I think it served us well and the tea is not capitalized, you know, isn't that the point?

I just got to get that out there into the world. You know, it's it was a real battle.
It took me about three years to get my mother to stop capitalizing the tea, right?
She had signed on to that Silicon Valley sort of thing and probably dropped a vowel as well. That would be, you know, five turn.
Well, and she did pronounce it right, but OK.
But Silicon Valley always makes, and I don't want to single her out her and everybody else.
I think my dad still might capitalize the tea.
What did you ever consider doing co-CEOs?
I mean, a number of companies, including a number of companies in the data space, have done co-CEOs. Was that ever a thought?
No. I mean, so the funny thing is actually, George came from a company prior who had co-CEOs, and it was never really on the table for us.

I mean, I think it was like we talked a bit about like, who should be a CEO, who shouldn't? And when you're, you know, two people, it doesn't really matter.
Initially, I think as we've grown, I mean, George is certainly grown into the CEO role, and I think him understanding the technology first and foremost and got him as a leader within the company.
It just it just works like, I think we've just kind of gotten into the right mode.
And then I think I like doing a lot of the gaps around it, which is kind of the what was the CIO do every day? Well, we do all this stuff that like George doesn't necessarily want to do and we go figure out like or I go figure out or my team or our team like, what else do we need to do to operate this business?

And it's a really good relationship. I mean, I think that we certainly are, you know, we talk to each other's teams all the time, but we're focused usually on very different things and we have different, very different approaches towards it.
And that combination works quite well.
So yeah, it's interesting.
We really do divide the company up and tend to focus on different things day to day. There's all kinds of things at five train, which you could ask me, and I just have no idea. I do not know the answer.
I say, ask Taylor.
And Um, and that that reflects that it's rude.
I think just that we are very different and we know that.
And so we've gravitated towards different things.

Over the years, it also reflects that we trust each other a lot, and so we're not sitting there worrying about whether the other person is handling their part of the picture. Well, we both know that they are and it allows us to really have like a multiplicative effect.
And our board has commented on this over the last couple of years and how well we work together. And a great example of this was the HPR acquisition where there really was a hand-off going from, you know, the the the transaction and the fundraising and into the integration phase. And there was a period of time where, you know, we were we were trying to. I was trying to close the deal.
And meanwhile, Taylor was spinning up the whole integration machine.

And then I remember the day after the deal closed, I was like, Boy, I hope Taylor has a good plan for integration because I have no idea what's in there.
And of course he does.
Yeah. Kicked off. It was great. I like it.
I think it just it just, you know, we've just found a way to make it work, and it's usually pretty clear which things we're going to own.
And then we just go and do it.
Was HBO your first acquisition?
It was not. Our first acquisition was a much smaller company called Teleport Data.
OK, so but SVR is a big acquisition as a big acquisition, and it is highly unusual to jump to such a big acquisition.
Yes. At from, you know, not from now from zero, but we kind of went for one mile an hour to 100 miles an hour.

And the reason we did it, we did it knowing that the reason we did it is just the synergy and the logic of it is so compelling that it was worth it to learn how to integrate really fast.
Are you allowed to tell me how much you paid for it?
Yeah, it's public. We paid 700 million dollars and a mix of cash and stock, which is a great outcome for the for our investors and employees and founders.
I'm just thinking, I mean, you're buying a new car.
Most of us, you know, the biggest decision we make is buying a car or buying a house, and you guys spend 700 million dollars.
Was there ever a moment you thought to yourself, Oh, I hope this is the right thing to do?
Yeah, I had never I've never bought anything that cost $700 million before that, and I can tell you it involves a lot of lawyers.

But you know, it's funny.
There was lots of.
Due diligence and validating that it was the right thing to do, but from beginning to end, it was clear that it was the right thing to do. As I said, the logic of the combined company is so compelling it was sort of obvious from day one to day 60 of the process. And it's a great example of something I've observed over the lifetime of five trainers as the company gets bigger and more successful.
The decisions we have to make.
Actually gets simpler but scarier, and there's less and less need to be clever and more and more need just to be brave, I say to tailor all the time. Let's not overthink this.

The main danger is not failing to see the intricacies of some decision, but of just overthinking it, which is very strange because in the early years it was the opposite. You know, you had to you had to be really clever every day in order to claw your way up from obscurity into being a real company. But the larger we get, you know, it requires a little bit less cleverness and a lot more bravery to do these things as as jurors often would say.
But be bold and be right.
Yeah, that's one of my Steve Ballmer.
That's one of my favorite quotes. It's something Steve Ballmer said to Satya Nadella when when he handed off being CEO of Microsoft, be bold and be right.
And and I love it just because, you know, be bold is is very real and you need to have that boldness.

I find myself needing to draw upon boldness regularly.
But you also need to be right, and you can't give short shrift to that either.
It's no good to be bold if you're being bold doing the wrong things.
And I think sometimes people talk themselves into the idea that they just need to be bold, and that is not true. You need to be right with this huge Series D right investment, which is just enormous. How big is it?
Five hundred something million dollars came in.
Isn't it amazing? You're like rounding millions of dollars to five hundred and change, right?
I think it was five. Sixty five, I remember correctly.
So I mean, first of all, that's a mind boggling.
You know, at least a couple of years ago, that would have been a mind boggling investment. Absolutely.
But it boggles my mind even now.

Even now, even as we speak, it puts pressure on you. Nick Metta talks about over again, say, talks about how you know, you get to a certain valuation and any talks about, you know, the wall of logos of of customers that you paste on the wall.
We've got these guys, we've got these guys, all those customers that there are a finite number of customers. And at some point you you will find that finite point and then you need to live up to that valuation.
And he says it can be scary.
The scariest thing for every startup is that you'll hit that wall, that tam wall, where it turns out that there's, you know, you've reached your career approaching the limit of how many customers there really are out there who want your thing. And in many ways, as a founder, you don't really control this.

You can try to choose a space that has a big TAM, but there is a big piece of luck there. Now you can screw it up.
You can be in a big TAM and you can mess it up.
And there are lots of companies who were started doing the same thing as us around the same time, and none of them have grown as valuable as we have.
But there's definitely a piece of luck there, but we have recognized what a great market we are in and we are just continuing to invest aggressively in order to dominate it. That the the story of five 10 is just watching the TAM unfold as the company grows along with it.
What keeps you up at night?
By the way,  TAM stands for total addressable market, I guess for anyone who doesn't know that.

You know, honestly, there's there's like there's not that much data keeps you up at night. I like to joke in Georgia and laugh about like right after we launched our first product or you know, that we kind of went public with our pipeline product in 2015.
The next year and a half, we spent largely growing the business on revenue and it was like, you know, George.

And now and then a couple of their engineering folks we hired to build and maintain the connectors and myself to sell it and to do the marketing and the partnerships and everything and bring George in to be like that, you know, technical seller with me and Mike. You know that I would say 18 months were so hard because we had to keep the business afloat, making enough money every month to pay the bills, to keep growing it, that it really like burned out the stress receptors, I think, and in our body, my body, and we're able to make it through that. And that kind of helps to show us that like, look, we can we can better ourselves and we we can be successful. And then, you know, ever since then, yeah, there's things that come up, but you know, we deal with them and they're not, as you know,

stressful and complicated. I think, is that time and now it's pretty straightforward.

You know, you set a goal and you go after it. And you know, I think last year's a little stressful because of all the stuff with COVID and all the changes that happened and you know how big of a company we were. But, you know, I think you just deal with those things. It's like the day to day of, you know, we're having a problem here, cool during early super sleep over it now. Maybe, probably not.
You know, I think if you want, it's a marathon.
If you let everyone, are you let.
Kind of sleepless nights happen every night, then you're just going to be like a total wreck, right?
I completely agree with that period of time was the most stressful period of the company.

Believe it or not, even though it is so much smaller at that point, you could have asked either of us and we would have known at any given point in time exactly how much was in the bank, what the total salary cost was, what receivables were out there, that we were expecting to get in the next few weeks.
And one of the lessons I drew from that period was a lot of empathy for every small business owner out there who was running a laundromat or a restaurant or a little accounting firm because that's the world they live in and they don't get to have a billion dollar company.
And so I really I have a lot of admiration for the people who do that year after year because this is not easy.
Take a drink of water and adjust your makeup a little bit more, and maybe it's going to make that work.

Live and learn as I learn audio cues, one cool little anecdote, Scott, even learning on our own hands last week is all company trip called Campfire Friends coming up right after Thanksgiving. Yes.
And part of the policy of the team came out of their Wisconsin cabin family.
Oh, that is interesting. All right. Tell me.
Yeah, yeah. Tell me about that. You've got a you've got a retreat coming up.
Yes, every year. Well, we had to take a couple of years off because of COVID.

We do what we call camp five 10, where we bring everyone together from across the world or as many folks as we possibly can to a place where we get together for the week. And so the last few times we've gone to a dude ranch in Colorado and in the kind of rule is, to our degree, no work. The only rule is you have to come to meals.
You have to show up and come to meals.
And the purpose of the of the week is really just to get to know each other and to build relationships and build trust. Because we've since we were at a 12 person company, we started our office in in Bangor and we were 12 people.
So we've been an international company since then and we continued to add more and more offices. So getting the chance to bring everyone together is is absolutely critical.

And this really stems, I would say, from our place up in Wisconsin, where, you know, the only rule is you have to go to meals.
And outside of that, you know, everything, including taking naps is an activity and you can do whatever you want.
It's a very fun traditionally have it ever at five a.m.
it, we we.
Some people do have to work, for part, at the time.
I mean, yes, sales and support and things have to be sure.
But we we try to keep it under control and we have all kinds of activities. It's very much like summer camp for grown ups.
So if you choose to partake, you can go, do you know, archery and rivalry and horseback riding and all kinds of stuff?
It's really great. And a lot of great ideas have come out of Camp five train because there's so much unstructured time.

It's a recipe for serendipity where people just talk about things.
And, you know, a lot of great things that have shipped to production started there at some point. Logically, you become a public company, and some of this will change a little bit. I mean, there will be pressures that are quarterly pressures.
Can you maintain what it is you're both grinning about when you talk about how much you like your company as a public company?
I think so, because at its core, 08:55 is an incredibly straightforward business.
We're in the data movement business and everyone understands how important data is in the public markets. There's lots of precedent, other highly valued companies and in the data business.

And as customers add more data sources and we add more customers, we provide more value and we make more money.
And so it's a it's a very you can you can see how that grows and grows and grows into the future for many years.
And so I think I think the public markets are going to love five.
I would add from a cultural standpoint, I mean, scaling any business and maintaining your culture or enhancing your culture is is hard.
It's complicated. And I think we've done a pretty good job of that.
And it starts with hiring the right folks and just really having a values based culture and protecting those values.
You know, going public is is is just another kind of speed bump or kind of challenge that we'll have to face with that culture as well.

And I'm sure there will be tweaks and changes to it.
And it's always evolving. But I think it's a challenge that our culture can, can with, withstand and will withstand.
Well, go back to the Series D..
What do you do with a half a billion dollars?
Well, most of that went to finance the HBO acquisition since about $200 million that went onto the balance sheet.
OK, what do you do with 200 million?
You just the disappointing answer is you just fund the operations of the company with it.
It doesn't, you know, money is fungible and it doesn't actually go towards any one particular thing.
I guess you could ask the question differently of like, what would we do differently if we had to run the company at break even?

And we would not be able to do as much R&D that as hiring software engineers and product managers and things like that. We invest in R&D because if we have more connectors, if we have more cross-cutting features, lower latency, higher data throughput that we can provide all these things, we provide more value and we may make more money and we will not be able to invest as much in sales.
There's a lot of people out there who would benefit from five trained who just don't know about it or they used other tools that we're not as easy to use that didn't actually bring as much value.
And they've been burned, and they sort of don't believe that an ETL tool can, can be, can do these great things for them, and someone needs to to find them and teach them to love again back to the team.

One of the things you.
All right. So I stole this from the internet.
This is a how well do you know your spouse quiz exam?
Are you willing to play? Yeah, let's play.
Do you want the one in my left hand or my right hand?
I'll take the one into your left hand.
Very good. That's yours. And that's yours.
And George will start with you if you'll read out the question aloud and then answer it, obviously about Taylor.
The question is, who does he most admire?
Mm.
Probably some some.
Some great sports figure. Coach.
It would be my guess.
Yeah, yeah, OK, yeah, I suppose we should get answered.
Decide if these are right or wrong as we go.

The Bill Campbell certainly is someone I admire so so like on the right path there. Bill Campbell was both a he's a he's a football coach, but then he also became a world renowned CEO and then CEO coach.
So you know him, I think other folks like Andy Grove are certainly, you know, big time admirer. I'm a big time admirer of the best ice Taylor.
One to read your first one.
What food would he never get sick of?
I would say there's two things I'm going to go with a sandwich from whatever sandwich shop or sandwich place he makes or make the sandwich that he makes every day. And then also, I think Indian food, I think there's a certain Indian food. He's always searching for the best Indian food, but those would be the two that I would. I would say absolutely right.

I do, in fact, eat the same thing for lunch every day and eat sandwich. What kind of sandwich?
The turkey sandwich with Swiss cheese.
Yellow mustard mayonnaise and avocado?
I'm sorry. No test.
And and I finally found another good Indian place.
I moved from San Francisco to the East Bay, and I used to live across the street from the best Indian restaurant in San Francisco.
And it was fantastic. It was the best thing about that apartment.
And then I couldn't find another Indian place up to my standards, but I finally found one tiger Lily in Berkeley. Fantastic.
Perfect last night, actually.
All right, you in this room?
Yes. Yes.
Your turn. All right. The next one is what's his favorite movie?
I really don't know this one.

Well, if I have a favorite movie, I mean, I like you because you're not like a huge TV movie guy.
No, I mean, I like I've been watching more of the classics recently.
So even like Forrest Gump, I mean, you can't not like that one.
But yeah, I don't I wouldn't say it's like I have a favorite movie kind of person.
But uh, what's his secret ambition?
And.
I would say.
I don't know, I actually I oddly would say that it would be like being able to is from years ago, work from home or there are times when he would just lie on the couch and work, and it would be like running the company from his couch would be the would be the thing I'd say.
But the funny thing is now he's he works from home and he has like a great little office.

And so you're like pretty close to being able to do that right now.
That's not my secret ambition.
I don't know if you see him obsession started.
I mean, I think that was the real vision was to start a company, and that's already happened. So maybe it's to get to level four and tennis, but that's not a secret.
So that is an ambition.
Yeah. And we got more left.
We do. Who is his favorite relative?
This one's easy. His mother.
No, it's true, Amy.
It's true. I'm a mama's boy, for sure.
All right. My last question is, if you could travel anywhere, where would he go?
It would definitely be the cabin in Wisconsin.
That's right. I hate to travel, except they're bringing it back to the cabin. The last question which I didn't give you.

And again, this was from a marriage quiz is where do you see us in 10 years?
So, you know, where do you see you and this company in 10 years, George?
Well, we've been running it for just about 10 years so far, and I would not be surprised if we were still running it in 10 years because the runway ahead of us is just so, so long.
You know, don't. 10. Yeah. Running by train.
I mean, by then. We're a public company and I, you know, I think much larger company, but. I think outside of that, Bristol, Bristol just chugging along, there's probably still actually a lot of headroom past that perfect this this will be a multi-generational company and that's what we're aiming to do.
Oh, are there generations the kids with either adult to be our generation, our offspring?

But that is going to be like, yeah, like Taylor and Son?
No.
He means that there will be generations of five trainers.
Not yet.
And you guys will not be able to blend relevant to Reagan where you got you got a lot to choose from.
Neither one of us has children.
It's OK. Yeah, but other than our dogs?
So you will be those those old pictures on the wall, you know, in some office somewhere 50 years, 100 years from now.
Exactly. Who are those old guys? I was the Hewlett-Packard. Like, Who are those old farts?
Right, exactly.
Perfect. Stop there for us. That was great.
I really enjoyed that.
I hope you did, too. Yeah, yeah. Oh, good.

Today we're doing one with unshackled.
And it's all about immigration.
Yeah, it's just I learned a lot, which is fun.
All right. Will you tell me what she had for breakfast?
Yogurt with some granola.
Tilt that just up. Yeah, exactly.
All right.
Is this uni directional or omni directional?
I think it's a cardioid, which means it comes out like this.
Oh, yeah. Like a heart.
Yeah. Nice.
Yeah.
Because it really just needs to be. Yeah.
Yeah.
Okay. Same thing, you know, as last time.
If we get in the middle of a conversation, you're like, What was I going to say?
Or what was the question or whatever? Just we harmes in the air and say, hold up, hold up, grab your coffee at any time of your water or whatever.
We're in no rush and I'll just edit out the edit, out the pauses.

/content/Preprocessed_Data/SHR From Bomb Shelter to Venture to CEO.txt

So I guess I really enjoy our interviews where I show up, you know, when you're brand new to a new place. Yeah, right.
Yeah. So how long have you been here?
I have been working on Parnaby for the last 18 months or so.
Okay. And obviously, I've got to ask, what is Parnaby?
What does it.
Do? Parnaby is a platform for growth teams.
We bring experimentation, insights and metrics into one place, basically so that heads of growth can get promoted by managing up and managing the C-suite and getting all of the details right.
And Pan, where did the word the idea come from for the word pan is everything.

Yeah, yeah. OBE is a Japanese belt that brings everything together. And we came up with this justification later because how we started was looking for available URLs and we found a six letter available URL that had a nice ring to it.
Yeah, it does.
Yeah. Now is there a service that does that or you just type in into the web browser?
I don't know. Try a you now.
There's a Yeah. There are some services that that host a bunch of free.
Or what was what was the runner up.
We really liked another one. My co-founder and I are both a little goth and we liked one called Anti Pattern as this kind of challenger mindset.
And Anna Pickard, who's one of our advisors and the first voice at Slack really very quickly taught me that.
So you are CEO, you have never been CEO before.

What? Yeah, What is it like?
It's it's really fun to be CEO.
It is a lot of responsibility.
I feel like I need to really do right by the incredible people who came to work for me and our investors as well.
So I feel both a lot of freedom but a lot of responsibility.
You had a big success as an operator when you were at Slack and then you became a venture capitalist and now you're an operator again.
Was was venture capital not your thing.
Venture capital is so fun.
Wow. What an incredible role for someone who's super curious.
And I think I learned an enormous amount, but I really missed being in the dirt with my other friends, trying to farm vegetables and, you know, hoping something is going to spread out of the ground.

I think I asked you that the last time. Was that when you were coming in to venture capital, did you have to resist, you know, saying, all right, here's how we're going to do this to your year, to the companies you had invested in, because you knew and maybe they didn't, but that's not really how you handle that relationship.
No? Yeah. Your shoulder to cry on, a fist to pump in the air when appropriate. And an adviser.
But you're not someone who can tell them exactly what to do, much as it might irritate you.
You told me in the first few weeks of being a venture capitalist, that quote, being the person who asks questions that seem like maybe you should already know puts you in a position where people reach out to you and are helpful in return.

Are you asking questions about being a CEO or does it all come naturally?
I ask a lot of questions. Yeah, I'm a big researcher, you know, a huge nerd. And I always, you know, I Google words that I'm pretty sure I know what it means, but I want to be sure.
I'm always surprised when I find out it doesn't.
Yes, exactly. And then you're like, wow, I'm really glad I got that.
So what did you learn from your time at Lightspeed?
Oh, my gosh. So much. I'm going to.
Say it again because I was walking away from Mike as I was getting my coffee, which is delicious. What did you learn at your time at Lightspeed?

I learned so much. And I think that the thing that I really am bringing into the new company especially, is what the perspective of a board member is and what the perspective of a CEO is, what they want from their growth teams, how they want to be communicated with, and what strategy at the actual strategic level really looks like and how that should and can influence the tactic.
Can you give me an example of that?
Yeah. So as an investor, I would often ask CEOs and sometimes even their heads of growth for specific metrics.
So I would want to see certain things laid out a certain way and they would tell me, Sure, we can get that together for you.
And I would say, Hey, don't do it for me.
I mean, I want to see actually the data that you're looking at on a day to day basis.

What's important to you? Because, of course, that's kind of part of my judgment about what kind of an operator they are. But I also want everyone to measure their businesses in a particular way, because I think that that's the clearest view into what's really happening. And so it was very interesting to see how other people are running their businesses. The things that really great CEOs have in common with each other and how they presented the business and talked about it.
And so I'm trying to bring a lot of that into Parnaby to help people kind of by default, be looking at the things that really great investors are going to care about.
You were I mean, you were a huge contributor to the growth of Slack.

I forget the numbers, but it was it was from tens of thousands to millions under as you were supervising growth.
You're in a situation now in which growth is difficult for your company because you help other companies do something.
Yeah. And that's a tough position to be in in a I don't even know what we call it, a softening market.
Right. Here we are in the softening market.
Yeah. But at the same time it has there has never been more pressure on growth teams. It's funny because I thought there was an intense pressure in what turns out to be the frothy est market, you know, of the last, I don't know, 50 or 100 years.
And so it was very interesting to watch everything soften, everyone turn around.

But I haven't heard about any growth teams being taken apart or there's been some reorg and things like that.
But people are still very invested in growth.
They just know that they need to do it more efficiently and a lot more quickly than before.
And lower customer acquisition.
Costs. Yes. Yeah. Yeah, exactly.
So oftentimes the metrics that companies had been looking at were about engagement and about the speed of growth. And increasingly people are looking at things like CCAC and LTV instead and prioritizing those metrics over things like just down now.
Are the things you learned doing growth at Slack that you are now using here?
Like what?

So I think the most important thing that that we're bringing from Slack is an understanding that while getting all of the details right is very important, you know, you need to be scientific in how you're experimenting.
You need to be focused on finding new opportunities and you need to be really scrappy in how you launch things and ship things quickly.
It's also very important to tell the story of growth at your company well and to translate those facts that you're amassing into knowledge for their organization and to spread that knowledge cross-functionally so that your sales team can improve so that you're in sync with marketing and their goals.
And so that as a company you are growing quickly in a way that other people can rely on you and you can rely on them.

What's your hiring plan or staffing plan?
Where are you now? And I mean, a lot of companies are worried about the cost of human capital.
Yeah, we we're lucky to be pulling from mostly the ranks of Slack people. So of our 11 people who are on the payroll today, ten of us were the first 200 people at Slack.
I think that relieves a little bit of the pressure, but it also means that we have a very senior team, so we're not hiring anyone with fewer than ten years of experience, and that enables us to be fully remote as well. So my co-founder lives in Brooklyn.
I live in San Francisco. We have a large presence, you know, commensurate to the size of our company in Vancouver and then people sort of all around the United States as well.

Ten years ago, I mean, we were talking about work from home, but or at least work remotely, but not a lot of companies did it.
Now it's, you know, almost the the way that most companies do it.
And obviously that was the pandemic. But ah, would you have started this company remote only had the pandemic not happened?
No, I would not have. And I think in part because talent moved and I want to be wherever talent is and it.
Turns out that's their bedrooms and their living rooms and, you know, lower cost of living places.
You've been in the Bay Area for how long?
Since 2007.
Okay. So what does this mean for the Bay Area if I mean, you're still here?
Yeah, I'm still here. I think, you know, ambitious young people and and ambitious people in their power alley.

Executive Time of Life are going to continue to move here and want to come here to win.
And then people who are incredible high level ices.
So individual contributors who are staff level engineers who are incredibly senior designers, they'll continue to be able to live anywhere.
But if your job is mostly management and coordinating other people, it can be, I think, more important to be in person.
I think it's right that in order to really take something seriously, you know, a musician needs to be in Nashville, or at least for some part of their lives.
A finance person needs to be, if not literally, on Wall Street in New York City, that that there is an artist in Paris.
You need to have done your time.
Yeah. Yeah. Taylor Swift moved to Nashville as a teenager.

She got her parents to uproot their considerable careers and that.
Working there.
And now Taylor Swift could be literally anywhere she wants and still be incredibly successful.
You have an angel investment from Stuart, who founded Slack, and you have investment from Index Ventures.
Why not Lightspeed Ventures?
Mercy. Grace is no longer a partner at Lightspeed.
Okay.
And so I was really the person, you know, at the time that I started this company that really deeply knew PLG there.
And so I would be a great board member to myself and then decided to sort of diversify and look outside for another firm.
So there's some hard feelings there.
No.
No. But you have a funny expression on your face.
Yeah. I don't know.
Yeah. Not sure how to. How to talk about that.

You want to take a second just to think about it?
It's a natural question, of course.
Yeah. Yeah, I guess so.
Yeah, I think that's really the the main thing is the.
Partner with a lot of expertise in this kind of business motion.
All right, Fair enough. Thanks.
So did you pick index or did they come to you?
Oh, I pitched them. Yeah.
And actually, I had to have two really cool CEOs email Danny before he would email me back. But I think part of the reason I'm so glad I did venture is and I think a lot of founders don't know this necessarily, but as a VC, you get rejected all the time and you get very used to having to almost bring down the door of a founder that you want to invest in.
And so the fact that it went a little bit the other direction at first was literally like no skin off.

My, you know, popular culture. You know, you watch Silicon Valley on HBO or whatnot.
Popular culture is the opposite way around.
Right? Is it's, you know, the entrepreneurs that are desperate to get into the VC office and make their pitch. Yeah, but oftentimes I do hear that it is the VC that is chasing down the promising young entrepreneur.
Yeah, Yeah, exactly. That's often the case.
Yeah. And I think that will always be the case for especially in frothy markets for for a really top talent, they'll get chased.
And it's funny, since the launch of Pornhub, my inbox is now, you know, full of pings from a lot of venture capital investors and assistance.
Yeah. Having been on both sides, what advice would you give other I mean.

Yeah, that's the way I want to ask that. Having been on both sides, what advice would you give to other entrepreneurs and startups?
Because you have seeon mn both sides of that board table?
Absolutely. I think the main thing is it is a numbers game and there for the founder, there is a lot about a venture firm that is sort of in the back room, right?
You're in the front room, you do the pitch and then they go into the back room.
They may be invested in something that you didn't think was competitive, but the founder of that company is perhaps pretty expansive in their plans for the future.
And so they might not realize until you give the full pitch to the full partnership that actually this is a little bit too competitive.

The partner who you really want to invest in your business may have just had to battle super hard and really put their reputation on the table with their partners and say, Hey, this deal, I really want to do the series B, that could have been two weeks ago. So they might not actually have the social capital at the firm at that time to do your deal as well. And so I think the main thing, just like getting any job, getting any investment, make your list, go through it, be strategic, be consistent, have a process, and you are running that process.
They are not running the process. You are in charge.
And don't take a know personally.
Exactly. Yeah.
Well, I'm legally required by the bylaws of Tex podcast to start that again.

I'm legally required by the bylaws of Tech podcast to ask you how A.I.
works in your company.
Yeah.
A check this box.
Yeah. Thank you. Yeah. And you know what is funny is that that is kind of how it's become for operators as well. That's the expectation I think that consumers kind of newly have and especially early adopters that a company like mine is targeting is that there's going to be some sort of an API integration.
We talked about it internally a lot and we were not yet comfortable sort of with the privacy implications.

And there's just a lot to sort of work out in terms of compliance and wanting to be very sure that people's incredibly important business data stays exactly within their. But sort of using the lens of AI really prompts the question, I think for product designers and and product teams, which is how can you deliver a really smart sort of prompt or opportunity to the user of your product based on what you already know about what they're doing.
So instead of it being just like a desk with some tools laid out, it's a desk with some tools laid out, and also, you know, a Pinterest board, like some examples of things, Hey, with these, you can do this, with that, you can do this.

And so just taking on that lens in terms of thinking about our roadmap, we came up with some really fun things that we can do, like automating weekly reports and calculating the metric changes for people taking something that used to take heads of growth 8 hours to do, making it 5 minutes.
And we're actually doing that without A.I., but we're very open to using it in the future.
I was gonna ask you how you knew there was a market for this, but you're experiencing growth. You saw there were tools that were missing.
Yes, I saw that. There were two things that were so interesting to me.
One, you know, missing tool, but also an existing workflow that everyone is doing.

So heads of growth at PLG Enterprise companies and heads of growth at consumer companies are all running really the same process.
They have the same workflow. There's an experiment board, there are insights.
They're looking at metrics once a week every two weeks, once a quarter, they're creating a roadmap. They're reporting up to senior executives.
They're getting a slide into the board deck, slide deck.
And that's pretty much consistent across all of these types of companies.
And we have all been doing that kind of for the last ten years.
And it's a little bit surprising to me that no one has really sort of cracked this.
Not yet.

What was the genesis of it? Was this something that had been in the back of your mind for many years, or was it something that you, you know, doodled around on when you were a venture capitalist? Like, well, what if we created a company?
How did it come about?
Yeah, it's it's funny how it came about, in part because once we arrived at what Parnaby would be, I looked at it and I thought, Damn, I could have really thought of this like six months ago before doing all of this work.
Like the try hard nerd that I am.
But I actually started off with more of a product led sales idea, so I knew that I could go into kind of any company and within a couple of weeks figure out, here's a good candidate for your activation metric.

Here's what I think your product qualified lead should look like, and here's how to set up this system. So I thought, okay, I'm going to see if there's an appetite for this in the market. And at first, it seemed extraordinarily positive.
People really want to pay for a concrete answer.
And that answer being yes.
You know, James at this company is your champion.
He's using it all the time. Go get him.

But as I dug in further and I showed people mockups and I talked to them about pricing and I talked to a wider range of people and went sort of deeper into sales. I figured out that while people think that they want a sort of priority list of scores, the sales team doesn't yet have really a playbook for looking at a senior engineer who's been using their tool, you know, five out of five workdays a week for the last six months.
They don't know what to do with that person. Their title is wrong.
They don't know if they have budget. There isn't spend.
They don't have a sales playbook. And so you can sort of generate, you know, a very wealthy stack of product qualified leads for sales teams, but they're not yet ready to go attack that stack.

I should ask, how does someone who majored in fiction writing become a software CEO?
Oh, man, there's lots of jokes there, isn't there?
I think the main thing that I learned from getting a degree in fiction writing is it is really that you just have to sit down and grind it out.
Getting that first draft out there is so important and not being precious about your creative work. Is this credible, incredible emotional armor that you can wear? So the most important thing when you're trying to figure out what to build or an idea is to show people literally anything that they can react to.
It can be a drawing on a whiteboard.
It can be pieces of paper.
It will look like shit.
And you won't feel proud about this thing, but it will elicit a response.

It will start a conversation, and it will inspire questions from your customer.
And the same thing is true in fiction writing. You sketch out a character, you have an arc. It's interesting where you're going with this.
What does this make you think of? And those are all the sort of investigation of the human psyche that you do when you're designing products.
Have you written?
Sense or often do you write privately at home?
I don't write fiction privately at home. Yeah, I do.
I do love to write about product and and I love to sort of blog, I guess, which sounds so lame.
Anything like that doesn't pan out.
Yes.
I should have a newsletter or something.
But yes, I do. I love to write about.
I love to write. To think.
Is it possible that there's a novel somewhere?

I think every human being probably has at least one novel.
Yeah, but not all of majored in fiction, right?
No, that's true. Yeah. The thing that I think about writing the most is more something of a memoir.
What would be the title of your memoir?
Oh.
Oh, man. I often will sort of joke with that with myself about that. I think something around that a reality is what we we have together. I was raised in a in a new Age cult that, you know, sort of escaping the cult had a big influence on on me as a young person.

And rejecting magical thinking had a big effect on me as well. And it has been scary for me to see my generation get really caught up in things like astrology and basically snake oil, tinctures, and the idea that you have to do this major cleanse on your body when that's the function of your liver, and it's incredible that your liver evolved to do that.
You know, I'm such an author of the universe and I love reality.
And I think it's incredible.
And this desire to escape reality instead of making it better is something that has me worried.
And I think there is.
You can be non-religious and still awed by everything.
It doesn't have to be an AI.
You're free to believe it if you want to.
It doesn't have to be a man and a woman eating an apple.
For humanity to be an amazing thing.

Yeah, exactly. And for the universe to be so incredible.
I remember when I was probably a teenager, I found a list of quotes from I wish I could find it again. This set a list of quotes from great scientific thinkers and philosophers over the ages.
And it was, you know, incredible people saying, basically, we're at peak civilization. And so people in the 1400s, people in the 1700s, people in the early 1900s, they're like, we did it.
Guys here wasn't.
There wasn't there a pattern? It was I think he ran the patent office and said everything it's been invented hat can be invented at.
Exactly. Exactly. And it's like, yeah, you can totally see from that vantage point why he would think Yeah.

And so I love to remind myself of that, especially in Silicon Valley when you see things and get used to them for a couple of years before it's on CNN and really in the mainstream media even still.
So things like crypto and stuff like that, we would see that and get honestly bored with it. Before then, people were really it was in the mainstream consciousness.
There are lots of things, you know, Uber is a good example of it, that it's just so obvious.
Yeah.
But it took the I mean, there's an emotional leap that has to happen where you get in the car with a stranger who has no, you know, state license to be picking anybody.
Yeah, that was, that was a big leap. Yeah.
But a lot of the things that may amaze us, you know, in the next couple of years will think in retrospect, well, duh.

Yeah, exactly. I once read.
I'm not sure who the quote is should actually be attributed to you, but that it's not that the truth was always obvious, but that once you hear it or once you hear a good idea, you're like, Oh, of course, of course it's that way. Yes, that makes sense that something that is true is becomes obvious.
We started with the as we were talking about your memoir with the title, What is the I know you haven't written it yet. Yeah, but what's the takeaway from it?
You know, let this be enough.
Let this be enough and live your life that way.
Be grounded in reality. Help the person that's in front of you.

Don't save your intentions for, you know, a peaceful moment with your coffee in the morning. Save the difficult thing to the person that you love that you want to find forgiveness from.
Don't have it. Be an internal thing.
Don't you know, tell a stranger and not that person.
Right. This is the one incredible life that we have.
And you should live it grounded in what it really is and then try to make that better.
That come from experience or just.
Unfortunately so.
So you do a different this time?
Yes.
The cool thing, I didn't know anything about that. What?
What is that now? Your parents still in it?
My, my mom was until her dying day, but my dad left after we had a sort of failed apocalypse.

So when I was four years old, we lived in bomb shelter under the town of Livingston, Montana, for, I think like two days or something like that, and became clear. Yeah, Russia's not going to new gas.
This isn't the apocalypse.
The Nephilim are not coming for the United States of America.
We are not these like spiritual warriors, etc..
And that really disillusioned my dad, who's a very, you know, intellectual thinker. And it really put him off his his religious path.
And he went actually a lot more into science after that.
Was it LDS?
No, it was a church universal and triumphant.
Okay. Elizabeth Claire Prophet was the leader.

She, I think maybe the most mainstream famous that they got is that I believe that she debated Madonna on some daytime show and she was definitely on Oprah at some point.
And you were part of it until you were held.
I was raised quite deeply in it.
So I, you know, had a childhood where I wasn't allowed to listen to rock music, eat sugary chocolate, where the color is orange or red, tell people what our religion was either because we weren't in the main enclave in first Malibu, California, and then later around Livingston and Gardner, Montana, just north of Yellowstone.
And so it was a very isolating experience as a young kid to be based, basically raised outside of the United States, within the United States.

So we couldn't, you know, watch TV. And I have very different childhood memories from other people. I kind of left during high school.
I just stopped participating in the rituals at home and with my mom.
And then in college, I had quite an existential crisis and got into it again on my own as a maybe 18 year old and went back to Montana and spent some time with people my age and then was finally very turned off by it when I came to it as as an adult.
And then I did decide that, you know, this is fully a cults.
I don't need to cloak myself in magical thinking to live in the world.
It must have given you some benefit or peace if you came back to it.
At one point.
Yeah. It was a an encompassing myth about my childhood is that we were these avatars.
So it wasn't it wasn't a Christian cult.

It was this amalgam of Hinduism, some Catholicism, and then a lot of sort of like spiritualism from the 1920s.
And it's related to Helen Blavatsky and that sort of spiritualism tradition.
The philosophical society was there had a big impact on it.
And so there was a prophecy about us, about my generation of kids who were born into the church at the time that we were these avatars which are people who have have died and relived and been through the cycle of karma and reincarnation for a long time, and that we had actually transcended our sort of quota and were coming back as a kind of demigod.
Yeah. Wow. So it's, you know, that's an intoxicating.
Oh, yeah.

Personal method. Yeah. And it's, I think, you know, hard to let go of that sense of really cosmic meaning and hard to then look around you, you know, at the sepia toned reality and say, okay, this is also bright and you like on its own.
Well, and when you're taught something as a very young person, you know, I don't go to church but on holidays sort of thing.
But I was raised as a Protestant Christian, so that's my belief.
But, you know, I'm rational to understand that other people have other beliefs that may be just as legitimate.
Yeah.
But but it's the one I default to because it's the one I was, you know, when I was in second grade, I went to Sunday school.
Yeah, exactly. Yeah. Yeah.
My default is it's my job to save the world.
No pressure.

Those are my questions for you. If there's other stuff you'd like to talk about, that would be. That's fine too.
Let me see.
Yeah, I think we covered the stuff that I wanted to cover about.
About Penelope.
Did we talk about the first time?
And I gotten in the habit of asking you about it. Your favorite book.
It's it's something I do, you know, where I just collect them and and each summer I'm like, you know, over the past 50 interviews here's what people are.
So the the the phrasing question I use is something the effect of what's a book that you read over and over or that you had some big effect on your life, or you give it as a gift often and it doesn't have to be some amazing business thing, you know, from good to better or whatever it is, it can be Winnie the Pooh.

Yeah, yeah. My my favorite book that I have read over and over is is a business book called Never Split the Difference by Chris Voss.
It's a negotiation book. It's very readable.
Lots of good stories, and you get a lot from it in terms of sort of insights per minute. It's very actionable stuff and it really helps you understand honestly how to better communicate with literally anyone in your life and to understand that almost every conversation is a negotiation.
Is that the FBI guy?
It is the FBI guy, Yeah. And he has a fantastically popular master class as well.

If you find yourself recoiling against the new and dismissing it, you need to quit to be brutal about it. You need to what you've done.

/content/Preprocessed_Data/SHR Scale Venture Partners' Rory O'Driscoll Will Not Attend Your Networking Event.txt

When I'm interviewing venture capitalists with any point of view about any issue. I often challenge what they're saying with some quote from Rory O'Driscoll.
Two things people never get is what they looked like.
And.
What they sound like.
That's Rory partner at Scale Venture Partners.
Now, Rory doesn't know any more than anyone else.
He's made great deals, but so too have many others.
He himself says it's a great deal of luck, but his approach is so approachable, his views so human.
Is that the right word that I often go back to my past interview with him when challenging some of the ideas or viewpoints I hear during my current interviews.
I do see our Sandhill Road podcast is gaining some subscribers lately, so I thought you might enjoy hearing the whole thing with Rory.

This interview was first published in November of 2019, before the pandemic.
I don't want to get to know you. I want to understand your business.
I understand you in the context of your business. I'm not looking for a friend.
I am looking for an investment opportunity.
That's Warrior Driscoll. And despite what you just heard, he's actually a really nice guy. He's a partner in scale venture partners and is LED investments in Box and DocuSign and ExactTarget, among others.
He likes investing in entrepreneurs.
He just doesn't like networking with them.
You told someone once you're an awful networker.
Is that true?
I think.
I think you said it.
Yeah, I did say it. Probably.

I don't lead with networking. I think in this business, there's two ways to do the business. It's kind of the dimension of the who, you know, dimension and what you believe dimension. Right.
And I tend to be much more there. What do you believe and why do you want to invest in first? Which means that your kind of first instinct of action is to step back and think, is this a market I believe in to do some research rather than the other method of, you know, do I know these people?
You know, do I want to back them just because I know them right now?
As I've done it for a long time, I've actually recognized a there's actually wisdom in both and both methods work. I see people who are all in on one method, all in on the other method, and both works.

But I think the best way in the end is to be able bit about.
But I don't think you can do this business unless you can both read people and get on with them.
Right. And I think at the one on one level, I very much enjoy that.
Right. I don't enjoy so much there, you know, interminable, meaningless conversations. Right. I much prefer to have like I love to meet a founder and talk about what they're doing right.
The idea of and know really genuine talk about them, about what they're doing and think about it and kind of process through it.
You know, the idea of just meeting for coffee, you know, makes you want to tear my hair out, right? And when I say that, it always feels a little jerky because in the end, these are deeply human relationships for five or ten years.

And, you know, many of the people I've back ten or 15 years ago are close personal friends. But it starts through the prism of the business rather than just the touchy feely, because I don't think you learn anything that.
Way, but it's unlikely you're going to find Rory O'Driscoll at a networking event.
Don't do a ton of them, I will admit, right? I mean, my wife, after about ten years, said, Did you ever get anything from any of them? And I had to go.
And she said, So how about you be home with the kids?
And I rolled.
Now, is this because you introverted and.
Is there such a thing as an introverted Irishman?
It is. No. I mean, people who know me would not say.
I mean, it's rarely been I've really been accused of it, but it's more.

Yeah, that's a funny thing, though. I will say I love the Susan Kane book on introverts.
Right. I thought it was a really profoundly important book about, you know, that you don't have to be a writer. And I think we're seeing a lot of that now, which is is that, you know, some of the information and successful leaders who are much more about managing teams and being a little and much less about the world.
So I think that I, I like that story and I think I don't think I'm as introverted as that. I like people. I like going out. I like a few drinks on a Friday night.
I enjoy company, but I think when I'm doing the work, as I say, I think it's I think it's as simple as if you lead from what are you doing versus who are you? It's you're not just trying to meet people.

You're trying to understand what's happening and what matters, and therefore how that falls into whether or not it's an interesting investment opportunity for you.
You came to America from Ireland with $200.
250. I think there is technically.
I actually came most recently from London.
I'd actually moved from Ireland to London, had a business.
It didn't work out. But fundamentally, yes, you have to be able to prove you can support yourself to get into the United States. So, yes, I had to save up for my 200 bucks to get in so that the guy at the immigration couldn't say send you back because you can't support yourself.
So, yes, I had that money.
Now, this sounds like you came in on a horse cart or something like that, but you were coming from, what, the London School of Economics, right?

Yeah, indirectly, actually. Yeah. I had a great degree from the.
Let's go back. Not. But then I'd done my own business in the U.K.
and it hadn't worked out, and four years later I was genuinely broke.
And what you discover is, especially at that time, it was super hard in the U.K.
to recover from something like that in your career.
And, you know, it was just you'd gone off the track.
You'd not done the accepted thing of, you know, joining Goldman Sachs after Loan School of Economics. And now you are some dude of 26 who had a failed business.
And it was just really hard to make it there. And, you know, the bet was it would be easier over here, which in retrospect turned out to be a good bet.
So, yeah, so it was it was odd and, you know, but initially it was hard here.

But then what happened is, you know, the degree stands you in good stead eventually.
And, you know, I was able to, you know, start work ultimately in venture capital.
But yes, it was a there was a convoluted period of around two or three years where I would have to say that at the time you look back and go, this was probably not a good move from the it hasn't really worked out as planned.
When I was, you know, emigrating, there were 200 bucks of work in a graveyard.
But I was going to ask, what was your first job in the United States?
I think I've said this a lot. I always feel like I'm dining out almost on the story.
But yeah, I worked in a graveyard and it wasn't that I was digging holes.

I was actually doing the accounting for the books as a temp and you know, the you know, it was it was a job. It was the first job.
Every immigrant has a shitty first job story.
It's just the nature of the beast, right?
And you know what sticks? And, you know, they was totally fine.
And I was lucky enough to meet someone who was working at Bank of America and ended up joining Bank of America's Venture Capital Group and have been there ever since.
But yeah, everyone has a tough first job. So and I remember it's not the whole great thing, but actually realizing that, you know, as an immigrant, you know, you four years ago you graduate from the LSC and now before I got that job, they gave me an accounting test. Could I add and subtract?

I mean, I literally was sitting there going, Hmm, four years ago I had a first class honors degree and now the person at the temp agency is confirming that I can do basic mathematics. We have gone down a long way, but.
When you put LSC on your application and no one.
No agency. No, no.
No, I know what it is.
That's exactly what it was always that. But look, it all worked out great, you know, No complaints.
It looks that way. In fact, it worked out great.
I was looking it up. I think you have 54,726 shares a box. This is a company called Box for those who were not familiar with it at $17.87, that's $1,000,000 and change right there just in your in your box holdings.
There's obviously other things. So from 250 bucks to in box stock alone, a million bucks sound about right.

That sounds about right. It sounds okay.
I'll go with it.
And I realize that's just, you know, a very small part of your overall net worth.
But what does that feel like to go from $250 coming in on the, you know, the pretend oxcart, Right?
Yeah.
Exactly.
Doing well, though? I don't know.
I didn't expect to talk about this.
Look, I think yeah, I think for a while honest answers for a while I'm a at you know you had to have and because you're poor, I mean, you know, I'm not going to give the the money doesn't matter speech because we built it. You know when I came here I had no money and candidly, I owed thousands of dollars back in the UK because my company had gone bust.
Right. So I wanted the money. Right.

And I worked really hard to get the money right because, you know, the the old you know, I think you know that Zaza Gabor used to say I've been which I've been poor and which is. Better, Right?
And, you know, you really only have the luxury of despising money once you have it.
Right. So there was a period of time like where you just hustle and you worked really, really hard because you remembered what it was like.
I mean, I said I had 200 bucks.
I came over here. I didn't tell you. I borrowed half of it for my then girlfriend.
Now wife. Right. And, you know, she reminds me now as she explains community property to me way back when she bought me a pair of shoes.
But that's when the first month of meeting, because I couldn't cover them.
But that is the ultimate seed investment.

She did Well. She didn't. Well, she finds out you do good deals.
I did a better deal. But you get the freedom to choose what you want to do.
But and I actually am lucky in that I really enjoy the job I currently have.
I think that's the ultimate in luxury because I am in the same place.
I am doing exactly what I want to do, the way I want to do it, which means Monday morning rolls around and I'm perfectly fine with going into the office.
I love Mondays. No, I mean, I remember one of my partners who also loved his job and it was also like me raising, you know, kids under ten.
So he said, TG, I am, thank God it's Monday, but my wife is.
You'll go to an office, you'll tell people what to do, they'll do it, they'll be order, there'll be structure. You like what you do.

How bad is that? No, it totally it's, it's a great luxury.
And, you know, lots of people don't have it. I mean, I'm in my mid-fifties and one of the interesting phenomenon you start happening now, I think is and this will not resonate even slightly to any twentysomething listener out there.
So old is at early fifties.
You start having conversation with your friends and your parents.
Are you what are you going to do? What's it all about?
Everyone's come to that point with the kids on college and you get really fundamental.
What do you know? What do I want to do?
You know? Do I like what I do? What do I want? Something different.
And then second is, can I continue doing it or do I have to quit?
Right. It's kind of a two by two matrix there.

There's a lot of jobs where people are very structured out, times where they're done, and I'm lucky enough to have a job, but that isn't the case. And then I'm lucky enough to like what I do. So in a kind of a two by two matrix, I'm clearly in there.
I'm really happy space, right?
And, you know, not everyone gets that. You know, I think especially and as you get older, you realize that is is that you know it's it's a careers are an interesting thing on the back end arc of the career as you head 50 plus.
It's just an interesting time and I think it's interesting the honest conversations you have, your friends about it. They're very different than the conversations you would have with someone a 30. You know.

I'm 51. I think I'm having more fun currently than I ever have. I just I'm good at what I do.
I'm comfortable. The kids are pretty much set.
Totally.
Yeah.
Yeah, I totally buy that. I think, you know, I think there was a great article in The Atlantic Monthly. The, you know, the arc of your career as it goes down is closer than you think It really got what and it was very good it made but it kind of and it sounds like it's a counterpoint to what you're saying actually is and because it made it was Arthur Brooks who heard it.

And it was it made the point that there are things that one does better in your twenties, thirties and forties. No different things. You do better in your forties, fifties and sixties. And there's an arc down as you transition and probably sounds like the business you're in the business. I mean, it's a business you can pursue in your forties and fifties to some extent. If you have, you know, you need good business judgment, but there are things you just, you have to compensate for the things you can't do as well.
And I think in all but adventure, the number one non-negotiable thing is this If you find yourself recoiling against the new and dismissing it, you need to quit to be brutal about it. You need to get you done right.

If you lack the curiosity to check that curiosity to look at imagine.
And if you find yourself instinctively saying, you know, I saw that 20 years ago, that won't work, then you need to either change or get out because you will absolutely fail. So as to that, that is one the hardest thing you've got to watch, which is not becoming that crusty old guy who, you know, knows why it doesn't work.
Which I think happens to lots of people because, you know, maybe not in venture capital, but maybe in politics or something. You see people as they get older and older, be more set in their ways, not willing to accept, you know, a new idea.
And I do fear that that when I am 70, there will be something in which my grandchildren will say, Oh, come on, Grandpa, everybody knows that's okay.

And I'll say no and can. But I, I can't think what that would be, you know, that's.
Because so and that's. Yes, exactly. Because you can because if you could it would be there now. Yes. I don't think you just have to fight against it.
I mean, I think that, again, this is where a collegial group, a partnership helps, which is because we all I know I exhibited that behavior. And I one of the things I like about don't call me on it, but I know say, you know, you remember you said that about X and I'm like, yeah, I did.
And I was wrong. And I think just I think one of the interesting things about a venture capital business or any investment business is we're in a decision business.

We don't make widgets, we don't make phones, we don't make software, we make decisions right, and we make 8 to 10 positive decisions a year and a whole lot of no's. And if 3 to 5 of those positive ten decisions are right, we do well.
And if none of the no decisions are catastrophically bad, and that is to say.
Think I'm something amazing. You can kind of sleep at night, but that's the product we make. So it requires a high degree of intellectual honesty among the group around things like this.
And looking at your. We talk a lot about biases anyway, you know, anchoring all the classic Kahneman thinking biases.
But one of the ones is the one hope it'll never work, because I saw that 20 years ago.
Right? And in fact, I've actually internalized the exact opposite.

The most things that ultimately work were tried 20 years ago and failed.
And then the situation changes. And in our work.
You said that about I that I is not as revolutionary as some of the people pretended to be, that this has been more of a slow progression of AI.
And looking back at it many years from now, we won't think of companies as being A.I. companies because I will just be part of what computer software is.
Yeah, I mean, it's definitely there's a lot in that.
Yeah, I mean, look, kind of people started talking about AI in 1956, which, you know, depending on where you create any act, was probably ten years after the first, you know, massively mainframe vacuum tube based computer.
Right. So this has been thought about a long time.

Anyway, what's happened is there's been these bursts of productivity in AI and then kind of these AI winters, you know, there's been one in the eighties, one in the nineties, and, you know, not a lot happened then for ten years.
And then this latest explosion know probably starting in 2012.
But the whole deep learning the papers on deep learning and then the progress on vision.
So yes, this is another one of those.
I mean, if if you went to us and you also vice brings this is clearly an AI spring and it's came out of you know, the stuff that was invented ten, 20 years ago.
You right now doesn't seem like I.
I mean if you if you turn someone Alexa Yeah you know what, 20 years ago they would have said that's impossible.
Yeah. I mean, we.
That's not even Iris.

Yeah, I mean, we were investors in speech works, which became part of nuance in 99. Remember, We did very well on that.
And that was early speech recognition.
And you're right, it's the and it was so it was the idea of speech recognition was there. And I think there've been generations before that, but it was very limiting in terms of what you could do. And, you know, you didn't.
I mean, the best things, I think United was one of the best, biggest customers.
And if you think back, I say that the very practical if you think back to how you used to interact with the united voice recognition system, like even eight, ten years ago, it was, you know, they'd say, you're telling me yes or no, It was very structured. Tell me yes or no.
Is this your flight? Say yes, say no.

And it was very leaden, right. And painful.
And over the last eight, ten years, you can see that in real time.
Now you can talk to it. Much more conversation.
It's still nowhere near perfect, but you can interrupt, you can go back, you can do a lot more. And that's, you know, just watching the speech recognition technology improved significantly in that period of time.
Now, I'll give you an insider's tip if you want to pitch O'Driscoll at his conference table at Scale Ventures, there are two words he really dislikes. Don't call yourself a revolutionary.
And for goodness sakes, never say your company is shifting the paradigm.
If you read, you know, paradigm, it's the word came from Thomas KUHN.
The structure of scientific revolutions, right?
Yeah. Newtonian physics was a paradigm shift.

Once you agree that that's a paradigm shift and relativity is a paradigm shift, I'm sorry, most software is not right.
There are a few there. Maybe like I think some of the stuff obviously Jobs and Apple did was I think a lot of data stuff is not at that level of paradigm shift. So you know, so it's a useful word but then want people to be even vaguely correct.
You say a paradigm shift within the industry of.
BLOCK, Right. So you end up, you know, it's a paradigm shift within a teeny tiny industry that you've never heard of. So whatever. I mean, it's a descriptor.
I'm fine with it. So what's the reason I push back?
It is much more a especially in a bull market I'm inherently suspicious of on where this stuff, right?

I mean, I think that, you know, you get back to the question, what does it do?
Does it do it well and is it working?
And who's going to cut us a check?
That's exactly right. No, in the end, who's going to buy this? And a friend of mine is to say, you know, who gets promoted for buying this this year?
Right. It's like forget about you. Think about the customer who at the end of the year who's boss says, I'm so glad you bought that software.
This year. We are doing really much better. If you can't pass that test, it's really hard.
Look, looking ahead to whatever happens next, and I don't know that we know what happens next. You've written in almost every company in my portfolio.

We're taking a more judicious approach to investment, looking to prune the marginal initiatives. Are you spending less money, investing less money, investing more carefully?
And I think the answer is.
Yes.
I think that when everyone's happy, you should be a little nervous.
And I nervous. He should be a little aggressive.
I never was very happy right now. Right.
I think that, you know, we're continuing to invest a continue invest, you know, I would say reasonably aggressively at a fairly steady pace.
You know, we end up doing eight deals a year.
We're going to end up doing deals this year. We did deals last year.
We did a deals in 2010.
Right. And the composition, stage value, all some parameters.

Those deals might change. But, you know, in venture, I mean, adventurous, unlike some lower growth industries where it's all about how well you buy, right? Because at the end of the day, if something can only grow at 5% a year, if you buy wrong by 40%, you're never going to grow it.
You can hold it for eight years and you done right.
If something can grow at 100% a year, you can survive a little bit of out payment provided the provided the wall investment works.
What that means is one of the strengths of the venture capital business is that if you're picking good companies, you can invest throughout the cycle at a reasonably consistent rate.

And they'll, you know, the truth is in periods where the timing of both valuations going in and valuations coming out are positive, you know, you will get a left, you know, a fund that might have been at 3x1 could be a4x fund just because you buy cheap and you sold there.
Right. And the other way also a fund that could have been three X might be a2x, Right.
But the thing that you have within your control is if you're picking companies that have secular growth trends, then the impact of cyclicality is by definition much less in a way that, for example, in a buyout business, that's not the case.

You know, if you as I say, if you buy a mature business at the wrong price, there's nothing because nothing magical will happen to a company that's growing at 5%, it'll grow at 5% or six or four grade, whereas our businesses, you do get that magic so you don't have so you can manage around the cycle easier.
But kind of going back to your quote at the same time, I remember years ago someone said to me, You always run these companies to some extent on the current rules, right?
Not the rules, but the current rules. And you and you got to be ready to change.
I mean, I think at the moment, the truth is you can be judicious, but at the same time, people are spending, you know, fairly aggressively and trying to grow aggressively and to get left behind. You're left behind. Right.

And it would be wrong and bold, but foolish. And one friend said of companies, hey, you know, you should go all into cash conservation. What the truth is, in many of the markets we're playing and other companies are being aggressive and you have to be relevant, right?
So I think one of the things experience brings to the table, actually going back to something I said earlier, is you also got to know when to changed, right?
If the market changes, you've got to be able to say, look, not in a whiplash kind of way, but look, is that we have to accept that now the availability of capital has changed, which is bad. But on the other hand, the likelihood of new competitors emerging has changed, which is good. It might have gone down.

So therefore, if your ultimate goal is to build a one, two or three winner in a space, you can, as it were, adjust how your race plan to use a kind of sailing metaphor.
Right. Based on the conditions.
Right. And, you know, sometimes you have to sprint for the line because the other guy's just pointing to totally mixed metaphors.
But on the other times, you know, you say the key is to survive and be the winner right. In that market. So I think it's very much time dependent and deal dependent.
Sort of going back to the beginning, what would you tell the young Irishman with $250 in his bars?
Give it a little inflation, $350 in his pocket.
Who has come to America?
Well, yeah, that just this is a great business.

I mean, I think that the first thing I'd say is, yes, take more risk, take more risks. Definitely.
I think that be more optimistic.
Right. In the sense of not in a Pollyanna kind of way, but the truth is.
Yeah, I think a lot of investing is, you know, in the public markets is a temper tempered cynicism. I think this business is tempered optimism, right?
Because the truth is, you know, there's no other business equity business in the world that has the same uncapped upside.
Right. And I look back and I go, you know, you have to be clear eyed. You have to be realistic.
But at the same time, you have to look for those investments that have big markets, have big operation and are thinking big.

But and and because that's just the correct strategy to win. Right. This is not this is not a I mean, as a member, one of my partner, many of us said the investors aren't coming for us for the safest equity investment, their portfolio, but they don't want to throw it all away. They don't want to be drunken sailors, but they want you to invest and create the companies that can, you know, give them that massive extra return and believe it's doable.
I mean, it's very hard to until you've seen it.
I mean, I think the hardest thing to convey is until you've seen it happen and felt it happen, it's very hard to understand.
Right. But then you kind of go, oh, I got it.
Coming myself from a family who has roots in Ireland, I am a bit reluctant to bring up the concept of luck.

Luck of the Irish is quite the cliche, but O'Driscoll isn't afraid of it, not afraid to admit something we really haven't heard up until now.
Some of the success of those in venture capital is just plain old lucky timing.
The main thing in the last ten years as anyone has been putting money out in the last ten years has been incredibly lucky. It turns out if you buy at the bottom of a ten year bull market and you hold a lot of stock all the way up, you look really, really smart.
But and if you're honest, I mean, I think is a truly a drunk man who, you know, that lied to the American in power.
She has a great expression. It's a 90% cohort.
Most of your life is 90% cohort, in other words.

And actually, if one of the principles was actually giving you the same equivalent in venture, he said they did some research on trying to identify patterns of success in venture. But, you know, school background, education operator versus investor, no statistical correlation whatsoever.
And the only thing they found statistical correlation on was this year of first deal. In other words, if you did your first deal in 1999, you didn't make it. I watched all that. I did my first deal in 95.
I watched all those people in 99 enter the industry, do five deals and get fired.
Right. If you did your first deal in 2009 or 2010, you made out like a bandit because you got good positive feedback early on and you just rolled it up, right?
So no one ever wants to say it but repeat it.

You know, we all think that we are, you know, the great man School of Life or the Great Woman School of Life, 90% cohort, 90% timing.
I turned out I was lucky enough to be a software investor with a checkbook in hand in March of oh nine when, you know, the equity markets started on a ten year overall upward trend and cloud software started on a ten year upward trend that accentuated that.
Lucky me. And, you know, I think the only smart thing to do is to be able to admit it.
Rory O'Driscoll of Scale Venture Partners, in an interview published in November of 2019 next week, Amy, new Yankees, when she's not investing for her firm, Anthem US, she's working on movies and musicals.

I had thought I probably never got more feedback on anything I've ever done than than your program, which was great.
And I, I remember talking to my team afterwards because I had such a great conversation with you.
Speaking of feedback, we'd love to hear what you think.
Leave a review wherever you get your podcasts.
That activity actually helps surface our podcast to other new listeners.

And so not I'm not going I'm going to edit it lightly.
Yeah. That's good. Yeah. So if you want to take a step back.
That's good. Even though it doesn't being or.
Anything, you know, it doesn't make.
I know you don't have it all turned off.
Or you get halfway done. The conversation figures out.
Wait, what was the question? Just wave your hands in the air and we'll start over again.
Yeah. No big deal. I'll focus.
Good. Good.
Yeah. That's the other two graces.
So get it.
So being my own audio engineer, I am going to look down the scene every once in a while and I'm going to put the headphones on for a while and I'm going to stare back at the machine, etc. It doesn't mean I'm not listening.
It just means I'm trying to do two people's job at once.
So. Yeah. So.
Thanks for coming out.

Oh, happy to do it. I was just saying, I think I interviewed Scott in this room once.
Well, you count to ten for me, please.
One.
Two. Yeah, we're going to need that. Oh, yeah. There you go.
Say, yeah, wherever it's comfortable. Yeah.
One, two, three, four, six.
And what'd you have for breakfast?
Uh, I had some cashews.
Oh, then I had a kiwi sprinkle with the skin of.
Oh, you.
See, some things never change.
It just.
Yeah, I've been big.
I know. If you going lean back, just pull torture, okay?
I live down in. I live in Santa Barbara and I'm not up here very often.
Yeah. So when I see it, it's not part of the podcast, whatever.
But now I'm seeing I used to be here, I used to be here and.
Saw the Shanghai.

And all that stuff. And now coming back it's like coming, you know, to yeah.
To a reunion. When I come back here.
In fact, this office here, this part of the building used to be the only office we had this little.
Oh, it's very much younger. Yeah.
Oh yeah. I mean, originally this was the original office right here. Cool. A little bit of historical, historical trivia.
So introduce yourself to me. Who are you and what's your.
What's your title around here?
Uh, I'm Peter Levine, general partner at Andreessen Horowitz.
Business Insider calls you an astoundingly accurate futurist.
Is that accurate?
Um.
That's probably a little, a little bit of overkill, but, um.
Yeah, I try to.
Well, what have you predicted? Right. You certainly predicted GitHub, right?
Well, that's true.

I enjoy thinking out of the box on what some of the you know, what some of the new trends might be.
I had. I mean, GitHub in the whole developer ecosystem has been one of those areas for sure. And we've done a number of, uh, we've had a number of nice investments in, in sort of the developer ecosystem place, which we called early.
Other ones have been this whole sort of evolution of cloud computing into edge computing, which has been one of those things that I sort of thought about early on. And one of the new ones that I'm on now is this whole composite A.I. thing, where I think there's a lot of potential for A.I.
to be a very fundamental part of the compute ecosystem, which is really just, you know, is starting to become a thing right now.

Well, let's circle back to that in a minute. And the first those talk about this impact lab. What does an impact lab?
So the impact lab is, uh, uh, a.
A joint project with the Honnold Foundation to where I too, where I felt we could offer venture capital like services to nonprofits.
And, you know, when I came here to Andreessen Horowitz, there was a new model where we were Ben and Mark and, you know, the early team. I was part of the early team here.
We really did sort of a new model in venture capital where there were a number of services that we provide to companies.
That was a very new thing at the time.
A lot of other venture firms have sort of, you know, done that since that was by which.

You mean the idea that a venture capital firm does more than just writes a check and says, good luck.
Corrected you and more. Yes.
And more than just the general partners sitting on boards.
Right? Right. Always would be money plus general partner on the board.
Here are there's a bunch of additional services, whether it's marketing, fundraising, recruiting, all of those pieces which every company needs to.
Every company does those things. And so we have centralized service, and.
You're doing it for nonprofits.
And so my view was, why don't we take that model and provide it to non to nonprofits to where it is more than just the money. Right. And in the same way that you just said, for venture capital, it's more than just the money.

I believe that the the help and services that this the impact lab can provide to nonprofits will perhaps be transformational for that community.
And this explains why your money that you're giving is a gift.
Because you can't take a percentage of a nonprofit.
Yeah, it it. Right.
Coming into this, I had a lot of different.
It's actually an interesting point.
Well because yeah, there are there are lots of firms that are going to change the world and make it a cleaner place that are going gonna make money.
Exactly. Like we could have done investing in, you know, do good companies right.
Or just make these gifts.
But I wanted to make it less about the monetary return and more about providing a framework where nonprofits can really benefit from the types of programs that we're offering.

Give me an example of a nonprofit. I know there was one that was Native American Land on reservations.
So right now we haven't started working with any non with any of the nonprofits.
Okay. One of the reason it'll start after January 1st, one of the one of the reasons to partner with the Honnold Foundation is all the curation just all the curation of nonprofits will come through the Honnold Foundation.
And I thought that that was really a great thing, because if we had gone out there and just said, okay, let's, you know, start this outside with, you know, just on our own, there would be lots of applications of all kinds of nonprofits.
We're here. The Honnold Foundation has already worked with these downstream nonprofits.

They're curated. They under, you know, like there's a whole history with some of these. And so we've we've are right now in the process of choosing the initial cohort. And then this program will start up probably around the first of the year.
The Honnold Foundation, named after Alex Honnold, who some of our listeners may not know who that is. Who is Alex Honnold?
Well, Alex Honnold, he's a philanthropist.
He has his start, actually. So Alex Honnold is a as a world famous professional rock climber. And for for those for those listeners who. Well, you know, Alex Honnold, if you saw the movie Free Solo.
Yeah, he is.
He's a I mean, it's an incredible athlete and and notable for his sense of this, these insane.
Without.
Walls, without a rope. Right.

Yeah. I mean, and I often say that people even with rope or, you know, normal people couldn't do one move, that he's doing thousands of these moves on, you know, rock walls all around the world.
So he's he's an incredible athlete.
That said, one of the things that I found particularly interesting about Alex, notwithstanding his athleticism and all that, was that very early on he said, I'm going to take half of my salary and start this Honnold Foundation, half of his salary in way early days. I mean, it was an incredible act of philanthropy on his.
Let me interrupt and ask a question. I'm sure a listener is thinking to himself, do do rock climbers get paid a lot of money?
I don't I mean, I'm not a professional rock climber, so I don't know.
But.
But nonetheless half of his salary.

But nonetheless, well, you know, half of a little bit let's say it's a little bit to start with. Half of a little bit is like.
Yeah. Very interesting. Which.
Okay. Yeah.
Exactly. And so now, I mean, I'm sure with the endorsement, the endorsements and movies and all that, I have no you know, I of course, I have no idea.
But it's I'm certain it's gotten greater over the years.
And so. But his commitment early on to go do this with like a little a little bit and say, I'm going to take half of a little whatever it was is amazing to me. Right. And that's what I really am drawn to. Alex's commitment to give back at that level is really the element that that that drew me close to him. And then we had a lot of discussion.
I've become friends with him over the years.

I mean, I go rock climbing myself and I ice com.
I've done a bunch of mountaineering over the course of my life, so we have a common interest there. But I would say that our real interest is in this philanthropic, uh, model where both of us, through our collective interests and all that, can, you know, somehow make a change in society.
And I mean, I don't question his dedication for a minute, but you also found him to be knowledgeable as far as running a foundation that has anything to do with green energy and environmentally sensitive topics.
He's he has educated himself on, you know, a lot of the solar projects that they work on.

And yeah, the foundation I mean, the foundation is also run as an independent entity. It's not him that actually spends all the time running it. There's a whole group of people who I've worked with over the years at the Honnold Foundation who are phenomenal in their own right to actually go and do this. So, um, yeah, he's set up a great organization.
You mentioned you yourself are a climber during a fireside you conducted with him at a conference, you showed him a picture of you climbing some sort of of ice wall.
Describe that picture to people who can't.
Well, so it was it was kind of a it was like it.
Was a to.
Flex. It was a joke, right?
I mean, not I do. I actually do.
I really do. Yeah. Go ice climbing and climb big frozen waterfalls and all that. But it was it was funny.

I've invited Alex to come ice climbing with me, and he's like, Oh, it's too cold.
Whatever, you know, which is sort of the the professional athlete comment that, you know, like, Oh, it's too cold for me.
You know, if.
You just if you invite Shaq to go one on one, he's going to say a reason not to do it.
Yeah, exactly. Like there's always like the stock.
Let's see what they say.
Oh, right. Yeah. Like, let's stay friends, though.
I am going to go rock climbing with him in a couple of weeks down in Vegas.
Uh, so he's always said, oh, I don't want to, you know, ice climbing, lots to call.
So at this the, the fireside chat that we did, I said, okay, I'm going to I'll make up some I'll have a funny intro.
Sure. Which was I have a bunch of, you know, pretty cool pictures of me ice climbing.

And so it was I started the conversation by saying, Hey, Alex, I have these pictures that no one's ever seen before.
And I started to click through them and, you know, I'm on some big ice walls in Canada, all that stuff. And I'm like, Man, these are really interesting leading people.
To think it's.
Correct. And then, you know, you see like this giant ice wall with a little speck on it. And I kept getting I sort of narrowed it and I had a bunch of different pictures. And at the end was a picture of me in an ice cave or whatever on a wall. And I said, Whoa, that's not you, that's me.

And so I just wanted to, you know, it's it's I we look I'm certainly not a professional rock climber or ice climber, but I have enjoyed it, the outdoors and I have enjoyed climbing my entire life. I go to the rock gym and do all you know, I'm I enjoy it.
And so I think that common bond is also it's it's it's meaningful, right? Like I really embrace the outdoors and all that. I understand the climbing, you know, kind of all the methods of different types of climbing and that.
And so it's just it's it's been a fun hobby of mine since I was a teenager.
Now we all know the punchline to the joke is because it's there, you know, why climb the mountain? But why climb the mountain?

And you could, I think for a lot of climbers, especially in ah, let's say for me where I have a there's a whole life outside of climbing when I'm on a ice wall, a rock wall.
You have to be really focused, right?
Like and being in that environment strips away all of the outside commotion that fills our mind.
Right. And it's one of those purifying moments where if you don't focus, you know, serious shit could happen.
So it does require you to kind of let go of the rest of the world. And I find that to be very, very liberating and very relaxing. It's also like I mean, all the every every most climbs have ratings on them, right?
All climb still, whether ice climbs or rock climbs.
And there's always an opportunity to get better.

And it's a real sense of satisfaction when you climb to the top of some of these things.
And it's like, wow, I actually did it. I mean, it's an amazing feeling to get to the top and that's why, you know, so it's beyond just because it's there.
I mean, there's a real sense of satisfaction.
It's tremendously athletic. It's a great workout.
Um, and it does allow for me to, you know, for me to escape all the, you know, again, the chaos of everyday life.
It is also dangerous.
That's insane. Yeah, it is dangerous.
Um, no doubt.
Of course, without a rope is way more dangerous.
Yes, but it's still dangerous with it.
Yeah, it's. Yeah, it's.
You said once I want to double down on life experiences.
Why is that?
Well, it's a couple of years ago, I was diagnosed with cancer.

I think it's a well, and I have a blog post on this and all that.
Prior to that.
I mean, I still did all this climbing and all that.
That was a life changing event for me.
And here I had been healthy my whole life.
And, you know, you hear about people getting cancer and you say, well, it can happen to me. Like those are those other people that didn't take care of themselves or whatever.
And then it happens to me. Right?
And. What became clear is that and everyone will say this like there's more to life than just work and more to life than just like being focused on one.
Nobody ever said I deathbed. I wish I spent more time at work.
Right. But no one in turn, really.
And like. Okay, everyone, like, it's a very obvious thing.

But then everyone works, like, all the time and you know, it doesn't seem to change, and it's fine to work. You know, no question.
And, you know, like, if you enjoy working, which I do, and love what I do, then it's great, right? But I think that doubling down on experience that I have this interesting relative to my cancer diagnosis, I have an interesting, really interesting, um, exercise that I went through. So I had a period of time between I was diagnosed and when I had to go for this pretty massive surgery.
And I sat down and I said, okay, I'm going to make a list of all the things that I need to do before I die. Like I thought maybe I would die in might.
The surgery was super complicated.

I thought, well, you know, I'm going to die on the operating table and then I won't wear whatever.
So I sat down and I.
I.
Tried to write this list of all the things that I had and all the things that I need to do before I die. New things.
And there wasn't one thing on that list. That list was empty.
Okay. So then I made another list, all the repeat experiences that I want to have in my life.
And that list was full.
So your bucket list was empty?
Yeah, pretty much. Good on you. I'm good.
I'm good. Like, I mean, I had a it's like I mean, you know, now it seems like, oh, well, like it's and really is an empty and all that.
But I seriously had a look at like death in the in the in the in the eyes and say okay am I?

Maybe it was a little bit of self rationalization like I had a, I had to be okay with like this is it.
So maybe. But pretty much, I mean, I, I did really feel because I had a number of months there before my surgery and I said, you know what, if I don't see the Great Wall of China, which I haven't seen or haven't seen the, you know, all the Seven Wonders of the World or whatever it is, I'm good.
However, the repeat experiences and doubling down on it, that's what I mean. And there's a lot of them with friends and family and, you know, just going out again, a lot of outdoor stuff, a lot of being with friends, but wasn't what was not on that list was like, you know, work harder, right? It was not it was really doubling down on.

And when I say doubling down, it's exactly that double down, triple down on on experiences. So I'm trying to tick through that list now. Right. And this is one of those things.
Right. Helping. Being philanthropic in the future and all that stuff.
Right.
Why? Why the environment, I mean, is because it affects so many people.
I think for for me, the environmental climate crisis is is a real threat to, you know, the let's say, the future of our planet. And if we can make a difference on this and we can start to chip away at some of the issues that we face with, you know, our our climate.
I think, you know, it's very to me, very beneficial.

But let me also say that as part of the Impact Lab, one of the things that we're doing is we're going to create an you know, I call it the open source framework on how nonprofits ought to do, you know, how they should market and hire people and create boards and all that stuff.
So we're going to go create a playbook by which other nonprofits can go and do this. So, one, I'm very interested in the environment.
My kids are interested in the environment like we all have.
Like it's a real thing for me.
But I'm hopeful that the material that we produce from the Impact Lab will impact many other nonprofits beyond just environmental.

Because nonprofits, which some people may not realize, may know a whole lot about something specific, a specific childhood disease, and they're passionate total their parents that are absolutely passionate about, but they know nothing about lobbying.
They know nothing about marketing. They know nothing about investing for the future, etc..
Or, you know, creating budgets or goals or whatever.
I would say there's a lot. And so where this idea came up, there's a lot of similarities between brilliant founders who are, you know, steeped in their technical background and all that, who over time evolve into much better leaders and much better CEOs as a result of building that skill set.

And so the parallels are very similar, you know, people who are very passionate, knowledgeable about their particular idea, but need these additional skills and resources to really execute on the vision.
We started with talking about you being a predictor of the future, and you touched on A.I. and I'm sure there are people who want to hear more about that.
What is your prediction as far as artificial intelligence and how it will affect us?
Well, I. I have been a big believer that a I. Will become a part of every application that we use. So as you know, as we use applications and whether they're for professionals or for consumers, they will become a property of the of those applications.
I'll either even go I did a TechCrunch thing.

Um, but, but uh, speaking Ming a couple of weeks ago and. Um, I don't know if well, I don't know if folks are familiar with a new program called Deli.
And that is a it's a way of typing text into your computer.
And what's very interesting about Deli and what this notion of composite A.I.
is, is I type in, let's say, you know, uh, dancing panda bears, throwing a football.
Okay. Something crazy, right?
And there is no stock image of a dancing partner.
They are throwing a football. Okay.
So what composite A.I. does is it takes that tech string and actually creates a picture as if an artist were drawing dancing panda bears.
And not grabbing it is as, say, clip art, correct?
It knows what a football looks like.
It knows and it knows it knows what throwing is.
And that is what dancing is now.

Knows how big the football should be in relation to the panda bear.
So this is what's called composite A.I.
that the image is actually a composite developed in real time. It's as if you have an artist in the back room sort of drawing this real quickly. And that to me is is.
Now that to me is the start of a very interesting sort of future in whether its applications or our interface with computers, where you could imagine that being not so much draw me panda bears throwing a football which is interesting technologically. But imagine for a business if I said give me all the sales reps in a email that have, you know, beat their quota and sold X number of, you know, things, whatever.
The point being, you're not instructing the computer what to do.

You're instructing the computer, you're requesting the outcome.
Yes. So exactly.
And I've used this quote in the past application in the past up until right about, you know, a couple of years ago, applications have have given us the data.
Okay. Now, the reverse is going to happen where the data is actually going to give us the application. Okay. That the data is there.
We're going to ask the data for information.
And it's going to it's actually going to create a real probe, a program, if you will, or a response based on the data that's in there.
So the application doesn't necessarily create the data anymore.
It's the data that creates the application.
And I think that that's the interesting thing.

And these like imagine you can ask, you know, and there's so much data out there that I would say deserves to be composited through this textual or, you know, voice interface, whatever it might be. And I think that that's I think that that will be quite transformational in terms of computing.
And we can see it like who thought that you could type something in and a drawing would come up based on a drawing that doesn't exist.
It's fascinating.
Those are my questions for you. If there's other things you would like to chat about or add, I am. I'm all ears.
What do you think, Grace?
The question that I ask off camera, so to speak.

I mean, I am still recording, but because that I composite together and I did it after 30 or 40 interviews the last time is what book made a difference in your life? Or you give to friends and say, Read this and and it doesn't have to be, you know, some Harvard Harvard business press thing.
I have a crazy I have a crazy story.
Here, please.
Which. I'm happy for it to go on this.
This is this is actually crazy.
So I go to the rock climbing gym with a bunch of people and.
And one of the one of the women who we go climbing with.
She grew up near where I did. I grew up in New York.
She grew up there. And she said she's an attorney and.
She said you ought to come to tourist study with me on Saturday morning. Tourist study, right. The Old Testament.

And I looked at her, I'm like, Are you crazy?
I wouldn't like, why would I do that?
Why would I waste a Saturday morning to go to Torah study?
Right. And she's like, I'm not even Jewish.
And I go and I find that it's interesting.
And she kept on board, like, for months.
Come to Tara's setting. I'm like, Deb, all right.
I'll go to Tara's study with you. Like, no problem.
I figure you got to show up and and, you know, just go and then that would be the end of it. And they took that off.
So I went and it's actually fascinating and I'm not religious or it is fascinating to me.
So.
It really, you know. And it's crazy that I'm talking like this because I have know, you know, for years and years I had nothing to do with religion whatsoever.

And it's really interesting that the Old Testament or the Bible, I mean, just the history of it and where our ethical frameworks came from and how life is supposed to be lived, it's all in there.
And so like the most recent thing, it's like a crazy answer. What's the book? Well, it's the Bible.
It's a great answer. It's it's like.
There's only one there's only one of.
The most popular book, you know, ever written.
And when people say the book, you know.
But I go now every week and I realize that's great stuff.
And I'm telling you every it's fascinating.
And, you know, the things that look, I also have said that, uh, if I ever went back to which I likely won't do, I, I teach at Stanford, at the business school and I have an engineering and business sort of background.

I said if I ever go back, went to college or wanted to learn something new, it'd be history or English or poetry or something where I have very little, you know, real deep knowledge of that.
And again, this is about new experiences.
Perhaps this should have been on my bucket list, but I didn't know what I didn't know.
So, um, it's actually fulfilling a need of mind and a desire to learn some different, you know, really different things and. It's now fascinating to me where I'm like becoming, you know, knowledgeable about this historical document that was written that was verbally transcribed 3000 years ago.
Right. And so that's my answer.
It's a fantastic I mean.
Just like right now, there are many books, but that's my most recent book.
Right. That's a great answer.

All right. Do you have a headset or what are you aware, are you recording or you just count to 20 for me?
One two three four.
Oh no, you sound good. You sound good.
I've got a, you know, professional mike here.
Oh, wonderful. Well, lean, lean a bit towards it and too far back.
And we should be OK. So as I was saying in the email, the video was just so that we can say, Hi, how are you?
And and it's not, you know, it's not even recorded.
We're just recording the sound.
Yeah. And then the other important thing is this is very casual.
And so if you if I ask you a question, you start to answer it and then you think to yourself, I have no idea what I'm saying, just wave your hands in the air and say, Oh, you know, hold on, time out.

Let me start that again, or you need a drink of water or the ups guy comes.
No big deal will ed about it. It's totally fine.
OK.
Sounds wonderful. Sounds good.
Well, and again, I just need to get an actual mike check from you.
So tell me what you had for breakfast this morning.
Whenever I have my usual green drink.
Excellent. Perfect. All right. Yes, I know it feels tempting to lean back in your chair.
I'm not going to do that.
You can tell the difference between this and this up here.
So very good.
Yeah, scooch. I know where I'll have good posture.
Right, right. Just like your teachers in Milwaukee told you, Yeah, I grew up in Madison, so.
Yeah, yeah, that's awesome.
Awesome. So let me let me start with this, and that is.

The New York Times described you as one of the most successful women in the ever lofty realm of venture capital.
First of all, I think I'm going to start calling it the ever lofty realm of venture capital firm.
I love that moniker.
So secondly, secondly, what do you think of what they said?
What do I think? Well, you know, it was interesting that was 15 years ago.
I think they were at that. And I guess that, I would say is I never really liked the qualification of women, venture capitalists.
I guess I'd like to write You are one of the most successful people in venture capital firms had first put you in the top 50 venture National Venture Capital Association says you're one of the top investors in health care, ever.

Well, thank you, so I will let other people say that, but I, you know, but I did.
I think at this point, having the qualification given how many women, especially 15 years ago, were actually in venture capital industry, I didn't feel that it was actually a great shout out.
So talk to me about twenty twenty to twenty twenty one.
A banner year in funds invested but also funds raised a lot of money in venture capital in twenty twenty one big funds making big rounds.
What do you think is ahead?
Well, you're right, we've raised an extraordinary amount of capital as an industry globally. And, you know, people have to put it work, but I do believe that 2022, the pace will slow down.
And I think it's because there is.

Well, first of all, look at the public markets and usually there's a lag of six to nine months between what happens in the private markets and the public markets.
And I'm, you know, I'm sure look, the first quarter maybe more positive in terms of the public markets correcting. But I think if you're in this period where people are separating the wheat from the chaff and they're trying to figure out what's great and what's not, and there will be and right now, they're just funding everything in high prices, writing and venture all the way from early seed to late stage growth. And I do think there will be separation and more a more discerning investor out there as particularly what causes that, what cause.

There's so many things to laugh that out there these days right now, and it's incredible what makes us get more serious?
Well, you know, when I tell them, you know, the coaches and tigers and others you know, that are in the public markets as well as the later stage and now or the earlier stage private, you know, when 75 percent of IPOs are underwater?
Yeah. And you know and stock portfolios have gone down, then people are a little less bullish about what's happening in the private market.
And they shouldn't be less bullish from the quality, from the tailwinds.
The quality of the entrepreneurs and the companies and what's going on.
But, you know, valuations have certainly peaked.
I think I think you could call the fourth quarter perhaps a peak in the market.

So, so sobriety is is an is a natural just outcome of of 2021 and 2022 because people do get burned then then they're going to look more carefully.
I think they will look more carefully. I do still think the great companies will still command tremendous valuations, particularly if you look at global opportunities in fintech. I mean, there will be companies created now that have 20 to $100 billion market caps in the future.
There will be great health care companies created.
So I think that know capital will flow to those opportunities.
But you know, that does reduce returns for everybody in these great companies.
The name of your firm, HFT, that's going to be health care and fintech, right?
Those are your two areas of focus here.

Is it is it because there's so much ahead that is so untapped or because the returns are so good or all of the above?
Well, we chose these two areas really 20 plus years ago, and there were two highly regulated areas that you really needed to deeply understand to not get burned.
And we felt like health care needed.
There was incredible opportunity is 20 percent of the economy payment in fintech, you could say, touches everything.

And there were very few players in 2002 and we started doing fintech before we created HFT. Even there were very few players in it, so it was an incredible time to establish position knowledge and then build a team. Over the last seven years, the tailwinds have arrived in both of these sectors, and it's incredible to see the inflection point of it not just investing, but really growth of these companies and demand for their services.
As as you know, any shop now is interested in health care and fintech.
I'm guessing you think your experience gives you quite a leg up.
Yeah, absolutely. I mean, I think if you talk to our entrepreneurs, we are incredibly helpful and supportive of our entrepreneurs.

And I think just we have so many repeat until probably about 30 percent of what we do is just repeat entrepreneurs that we backed before, you know, they keep coming back to us.
And yeah, I think the our ability to connect them finally with customers. But we, you know, we have five people that are dedicated to health care and fintech and talent.
And so talent allow like we spend every day just talking to people who understand both of these sectors. And it's I think any the best testimonial will come from our entrepreneurs.
I saw that statistic that roughly one third of your investments are repeat entrepreneurs, because that makes sense if you know that they're successful, that they do well, that they're a good team. Why wouldn't you?

But the flip side of that would be what we call pattern matching right that you invest in what you know now, to be fair.
That also means that two thirds of your investments are not pattern matching.
That is true at least people wise, but there's pattern matching in terms of the type of entrepreneur, the business model.
You know, the knowledge of the individual areas in the sectors.
But as far as you know, looking at places you wouldn't or people you wouldn't have expected. We're also very careful these days as we darn well should be about making sure that we're looking at minority owned businesses, women owned businesses, that kind of thing.

Does the fact that you're not on Sandhill Road perhaps give you you're not even in Northern California, give you the advantage of not falling into that fleece jacket pattern matching thing?
Well, we do have an office in San Francisco where we are represented there, but I actually think the East Coast centric and frankly in Connecticut has been an advantage throughout because we're not always influenced by groupthink. And I think it's one of the reasons we went behind in both of these areas earlier. And then obviously, New York has been become a mecca for the entrepreneurs.
Seven years ago, we did not have one New York City company and we now have, I think, 14.

So it's exciting to, you know, to see what's happening there and things with both. Oh, I didn't mean to interrupt you, but it does mean one of the things with with health care in particular are Google and Amazon being very, very interested in it.
And you had said that the you think Google and Amazon coming into the health care industry is generally good. Why is that?
And I think it would be it's great because I think they have different skill sets than than entrepreneurs and they have different resources.
They invest in different things that aren't necessarily available to entrepreneurs.
Now do I think Google hasn't really made an impact in health care to tell you the truth? I don't even I don't.
They don't even know how to play.

You know, they're trying to play. They can play in the life sciences sides.
They have great resources there and a huge amount of dollars to put behind things.
But I and I think Amazon, what they're leveraging their strengths in terms of distribution. But there's so many areas in health care that they won't be able to do that with. I do not worry about any of the tech companies in terms of competition for our entrepreneurs.
I want to circle back to a question I had missed when we were talking about predicting twenty twenty two. As we look ahead to 2022.
Can you throw out any sort of, you know, black swan sort of disruptions that might worry you? If we were doing this in twenty nineteen, we should not would not have guessed global pandemic? Right? Well, some some people actually did.

But are there things the your though they wouldn't be on your radar because it's a black swan, but but something that would really throw off what you're trying to do.
Well, I think, you know, they're small things that that become big things like CMS saying that they're not going to reimburse telehealth in the same way they do in person.
That would dramatically change many of the models in the progress has been made.
I think particularly you think about virtualization and treat people at home, and so that would be a negative. And then obviously in crypto, we're all waiting, you know, we're waiting on blockchain and crypto and video to what the regulations are going to be.

And I'm not really worried. I mean, I think right now they're probably going to be judicious and hopefully smart about how they do this.
But if they, you know, and I think what would happen if they dramatically, you know, if they really shut things down or are they said, you know, stablecoin couldn't be a thing that people would just move offshore.
So they're just they would just push innovation off out of the United States, and we'd probably just be doing more investing offshore.
Is there an advantage to working in industries like health care and fintech that are so highly regulated?
I mean, beyond the returns, but the fact that they are regulated.
Yeah. Well, no, I think they're because there is probably the the guidelines are more are better understood.

I think it's a competitive advantage because we understand the regulatory environment and the regulators so well.
So I feel like we've got pretty good insight into what they will and won't be doing, which I think is helpful if you're going to play in these areas.
And I I think I mean, when people's first are coming into health care, you know, they were saying in Silicon Valley, right, you ask forgiveness is the best for mission and we're very much in the we're going to ask for permission before.
That is such an extraordinary you would think of maybe Uber as being the opposite of that. Well, we'll break the rules and create the industry and government will come come around eventually and in health care.

No, you don't. You know, you're dealing with people's lives. So there's actually a reason that there's a regulatory environment that matters.
How do you think you're starting in venture capital?
When I got out of Stanford, it was an incredible moment in Silicon Valley and it was really the beginning of the explosion.
And through a friend, I was interviewed, introduced to a investment boutique investment bank that also did venture.
And in my first three months there, we took Apple public.
I carried Steve Jobs' bag on the Apple IPO roadshow and we took Genentech public. So that's how I really got introduced.
That's a very damn good start to the venture.
It was an amazing start.
I just, you know, I couldn't believe these entrepreneurs.

I was absolutely mesmerized and excited about working with them. And, you know, literally like six months into my work life, I said, I want to be a venture capitalist. I could imagine nothing more exciting for the rest of my life to just be working with the with entrepreneurs.
So I. A year and a half in, I told everybody I knew this is what I wanted to do. And luckily one of those people talked to the original founder and then he hired me.
And the rest is history. I moved to Westport, Connecticut, met my husband, and it was just karma.
So when you say you carried Steve Jobs bags, this is not.
This is not a metaphor for something.
No, not physically carried here.

Physically, I did like Jerry, like the handle written presentations, you know, on the on the Apple Road show. Just give me a taste of what that was like.
So, yeah, you know, I'm twenty two years of age and Steve Jobs is wearing a suit now. Well, yeah, you know, he's wearing a suit, but that was actually my most interesting moment on the whole roadshow was with George Quist, the other founder have been Chris. George pulled me into the room with Steve Jobs as they were screaming at each other about whether Steve would wear a suit or his Apple T-shirts.
And I can tell you after an hour, actually, George goes one that you know, really?
Yes, he went. Which is amazing, right of probably the first concession and only one that Steve Jobs ever made. But it is funny, right?

Because you actually see Steve in a suit.
And from then on and then you saw obviously his black outfit.
But it was it was. It was like, you know, it was amazing to see the intensity of Steve Jobs. You know, he was only a year and a half older than I was.
It was it was a wake up call.
I met him in the late 90s when he had just come back to Apple Computer and you knew that he was smart and you knew that that he you definitely knew he was intense.
But even at that time, Apple was not a very valuable company.
People were thinking about breaking it up, for goodness sakes.
We had no idea it would be the most valuable company in the world, or the iPhone was not even a glint in his eye at that point.
What did you sense about the two of them and the company back then, other than just intensity?

Did you know that, hey, someday this is going to be the most, most valuable company in the world?
I think he still stands as the most impressive entrepreneur I ever met, and I think the the is it is the passion, the intensity, the conviction he had just in the vision.
I mean, he's just he he was painting a vision then that was maybe not iPhone apps, but but similar like just he was going to move the world.
And he just he needed to grow up as a manager, you know, and he ended up doing that and understanding his strengths and weaknesses.
You know, over the next decade, which, you know, was incredible when he returned to Apple to to create what he did. And I keep wondering is I know I use Apple TV. Like, what would that look like?

What would it look like today if Steve Jobs were still around?
I mean, it's pretty great, but it would be better.
It would be better.
No question.
So, you know, I was I was laughing when you said, you know what?
I got into venture capital in my first two companies that I dealt with were Apple and Genentech. You got into venture capital at a time when women were very rare in venture capital.
What have you learned or what advice do you give young women these days as it is a, you know, obviously much more common these days.
But but what sort of wisdom do you pass down?
Well, it did take 30 years, but I do feel like I feel like, you know, one thing that's happening is that women are much more aware of the industry, so they're coming into it early and as we recruit people.

I mean, it was just not on their minds even a decade ago.
And now women do see it as a career path.
And you know, one thing I do say is you don't have to you don't have to have a female mentor. You just have to.
For me, I just I took pieces of people I respected, you know, and and modeled off of different characteristics of different people. And so I think, you know, that's the thing you do is you different, you find different mentors, but you really just incorporate those things that you respect in the people around you to, you know, really.
And then obviously put your own take on it.
And you know, and that's really how you build a career and and you know and you create your own path.

Normally, I would not care at all what a woman's husband did for a living, but the fact that the person who introduced you and me did not mention this to me, actually, you know what?
It took a while the Google on it, you know, I mean, you are such a.
You're such a good investor and you're and you've done so well as an investor that it doesn't pop up immediately.
You know what your husband does for a living.
After all, you are one of the most venture.
What is it? Successful women in the ever lofty realm of venture capital?
But in this case, I do want to ask about your second job.
Yeah, you're the first lady of Connecticut.
That is true.
When?
It I've never talked to a first lady of a state before.
I don't think it was a rare breed.

Well, there are only 50 of you. I want you to know that in less than 50 because we've got women governors first.
Korea Yes, that's what I've ever talked to a first spouse before.
Is that something that that consumes a lot of time or is it?
Does it come up? Is it relevant?
I mean, like I said, most people, you shouldn't care with what the spouse does for a living. In this case, it's sort of interesting.
Well, I mean, I think what's beautiful about I was a political science major at Stanford, so I do have an interest in the topic.
And we I think it's one of the reasons you and I were attracted to each other is that we love, you know, the issues.
But I think he's found his calling and I found mine.

And I think that the great thing about the first lady position in Connecticut or the first spouse is that nothing really is expected of you.
And so you can make it what you want to you want it to be.
And you know, and in our case, when we do, we have very full lives and he runs the state and I run a firm.
And you know, and I think that when we talk about health care issues and when there are things that I can help him with, absolutely, you know, I I'm happy to give my opinion about health care in Connecticut. Actually, I jotted this down.
Connecticut consistently rates at the top or near the top on vaccinations and lows in hospitalizations and deaths.
Obviously, these numbers move back and forth a lot.

But is it? Is it something that your state has done properly or is it the the type of person who lives in Connecticut?
What is that? I mean, the size, obviously.
No, no. I think you're you're hitting an all good point.
I think I think there are a couple of things. I think that we do have a highly educated population and I think we have a not particularly polarized population. So I think that's helpful.
I also think my husband has hope that in the sense that he has tried to through common sense, you know, deliver messages, not a really mandate and simply govern through common through common sense. And I and I do think it's it's interesting we have a fabulous chief operating officer of the state who did happen to be one of my CEOs and one of my companies in Connecticut.

And we recruited him, you know, the very first days.
And it's one thing I love about what we've done is it's a wonderful, you know, what he's done in his administration is a mix of people who understand government and there. But we've got a former Goldman Sachs partner running economic development. We have a former entrepreneur who was at IBM before that running information and being the CEO of the state. And since he knew health care, it was extremely it was great to have his support and literally driving testing sites and then vaccinations. And so, you know, I think they've done a great job in terms of making things available operationally running things well.
And I think my husband's communicated well.
The people seemed to like the way he's done it.
I do.

But. But I do think we have like an unbelievably great population that is pulled together and like some states, have been very divisive. And let's and this is now I mean, I think people are really they're all in and they're really proud of Connecticut.
You know, they're proud of the fact we really we do have the highest vaccination rate.
You know, they're proud of the fact that we've we've handled it well and and smartly and not just women, you know, meaning the governor's administration, meaning the citizens of Connecticut.
Those are my questions for you. Is there are there things I should have touched on or things you'd like to add?

Good question. Well, you know, I think it's know it's good. I mean, I, you know, I sort of have a story as to why I'm particularly interested in health care.
I would love to hear it.
OK, so one of the driving reasons that I was excited about investing in health care was that I actually had to drop out of Stanford my junior year because my mother called me.
My father was ill. He was running his own business, and if he didn't work, he didn't make money and we didn't have any health insurance and he didn't have any health insurance. So I had to go back to Wisconsin.
I worked for a quarter.
I went to University of Wisconsin, Madison for a summer to make some credits, and then miraculously, they were able to send me back to Stanford and.

In the fall. But it was a hell of a lesson to me and I when I found out later my dad cashed in his life insurance in order to, you know, put the Mac in school. And, you know, so there are two things really resonate.
One, the cost of education, obviously, where we're at and the cost of health care and accessibility. And you know, so I really in 20, I just said after doing a lot of biotech investing, I just want to focus on lowering costs, improving quality and access. And health care is just a it's a real passion of mine and very, very personal to me.
It is certainly one of the biggest challenges, no matter where you land on the political spectrum. One of the biggest challenges is is health care for all at a reasonable price, which is not a crazy thing to ask.

It's not a crazy thing guesswork now at this point.
You know, and I and and it's sort of like, you know, the government is actually providing subsidies right now, and so exchanges are less expensive.
But the reality is that doesn't mean the cost of health care is lower.
That just means consumers are paying less is great.
The consumers are paying less. But we have we really need to move the dial in lowering the ultimate costs of health care.
And it is the exciting part about what's happened with COVID and in that moving to more virtualization, moving people out of institutions, out of nursing homes, having more things done at home versus in the hospital or in clinics.
You know, you're just you are automatically going to lower the cost of care.
You feel that Washington is coming along.

I know here in Silicon Valley, we sometimes point and giggle at the Senate hearings where the senator doesn't quite understand what you know, instant messaging is or whatnot. But do you think Washington in general and I realize there's, you know, an administration side with with FDA and then there's Congress and whatnot.
But in general, do you think U.S.
government is beginning to understand how how exciting some of this health care could be ahead?
I think that is a topic nobody want, nobody actually wants to touch health care right now, so I actually don't think there'll be much reform or innovation.

I just I just hope that the administration doesn't get in the way of what's already happening right and supports virtualization and supports some of the programs that have begun. I do think that, you know, the Affordable Care Act and Obamacare, I mean, I think that had a big impact on Biden, and I think he really has so many other issues to deal with.
I just think health care is what is not on the list of priorities is he's got a long list and a long list. As long as he's got a very long medicine is just not there.
Yes, I should point out we're talking on the day in which build back better.
Looks like it is. It is pretty much dead.
So yes, it's it's a tough road for him.

My last question, which is unrelated to our conversation here, but I've been sort of collecting them just as sort of fun and I'll put them all together someday is what your favorite book and why.
And it does not have to be, you know, some sort of Harvard Business tome.
It can be a children's book.
It doesn't make any difference. But what?
I wanted to kill a Mockingbird.
Now that's easy.
Well, I.
I I think I just it really struck me as a child in terms of social justice and understanding it and the impact on, you know, the historical moment and understanding where we are and then as society and where we're going. I know it's always been.
I mean, it just I think that's the reason I was a political science major because I just that spoke to me and it was something larger than yourself.

And I grew up in Whitefish Bay, Wisconsin, where there were no people of color.
And it was, you know, it was like an exposure to other people's lives.
And I don't think really understood, even with the South was like, you know, that era in the sixties, right? There was so much.
I hope you know about civil rights and where the world was going and and to think of what it was really like for people that were, you know, in an era that was watched 10, 20 years before that, this was, I think, shocking to, you know, seventh grader.
Yeah, absolutely, Scott. Great to talk to you.

Well, it's got to be the microphones as well.
Yeah, normally this is just breezy, easy, you know, you just.
Yeah, yeah, yeah. You log on and you're like, bang, we're going in early.
Get ready to go.
Yeah, no, but I think we're okay. Okay.
Love it. Love it. Well, thanks for so thanks.
Thanks for the invitation.
No, no, I'm delighted. I you know, I subscribe to the national venture capital stuff and and and thought kind of some of your back story was super interesting. And of course, biotech so important.
Of course. Of course. But yeah, super casual.
Love it. If we get halfway down a conversation and you're like, what?
What was the question? You know, just weave your arms in the air.
They hold on. I'm starting that one over.

Drink your coffee or tea or your water or whatever whenever you want.
Sounds good. And we'll just add it around.
It sounds good. Sounds good. No worries.
So let's start with your name and how to pronounce it.
Yeah. So, Shawn Gandhi.
Oh, that's much easier than I was I was looking for.
Okay. I'm Gandhi. Yes, very good.
So you lead North Pond Adventures, biotechnology investment team. You were recognized as a rising star by the National Venture Capital Association. Congratulations.
Thank you. Thank you.
On that, what do you suppose makes you a rising star?
I frankly don't know.
It was a I was nominated for the award.

And it's typically my understanding of the award is that it's it's given to folks who are literally rising stars. So individuals that are up and coming in the industry that have that don't lead firms yet or aren't general partners at firms yet, but may have the potential to do to be in some leadership role in the future.
And so I was incredibly honored and pleased to to be nominated for the award and then and then to be actually awarded it.
There are lots of exciting bits of progress in the world of technology. You know, a robot will do something it's never done before, or there will be a new gadget that is smaller and more powerful.

But biotech seems like an entirely different level of exciting because of the potential. Can you, in layman's terms, explain what makes biotech the potential that is ahead so world changing?
Absolutely. No, I share your enthusiasm and it comes down to the tools that are at our disposal to understand the biotech landscape.
So when we think about what biotechnology is, what we're what we're actually doing is we're manipulating the ways in which cell the cells and organs in our body work.
And and for the longest time, we didn't really understand how all of that actually operated.

We didn't understand how our cells carried out the functions that they carried out. We didn't really understand how our organs, like our lungs, how do they actually help us breathe, how do our kidneys helpful to our blood? I mean, it was only in the 1950s, so not that long ago. So like 70, around 70 years ago, it was only in 1950s that we even understood what DNA, which was the building block of how who we are and how all of our cells work and how the cell of any living organism in the world.
It was only 1950s that we even knew what that looked like.
So it's interesting to contrast progress in biotechnology versus progress in technology, because I feel like the broader technology industry has had a a significant head start. We learned about electricity in the 1700s.

We learned about engineering and physics principles in the 1700s.
So there's been a lot of progress made in miniaturizing tools and in increasing the speed of communication, increasing the breadth of communication. And so but in biotech, we're still, by and large, still learning how the world works were and particularly like at North Pond, when we invest in companies that are in biotechnology, there are a number of companies we invest in where the innovation that the company has identified is we have discovered a new area of biology that no one else has discovered before.
And that is that is what's interesting about them.
They've discovered this new area, biology. It has importance in this disease area or in keeping people healthy in this area.

And so they're going to go after that biology, understand it, unpack it.
And then hopefully develop a drug or drugs that will change that biology in a way that hopefully could lead to better human health.
And so so we're still doing that. We're still doing that today.
We're still discovering new areas of biology today.
It's almost like like inventing the the science of astronomy and only now discovering that there are other worlds. Exactly.
Wrong. Exactly. Exactly. Or or even thinking about the thinking about like the computing industry.
We're at a point where we're still figuring out how semiconductors work.

And and so, you know, once we figure that out, of course, there will be massive changes and and significant leaps forward and in how we understand biology and how we're able to develop drugs for drugs for human health.
But we're still figuring it out right now.
So you're at the center of all this. Do you ever wish you know, you're in the very early days of this science.
Do you do you wish you were born maybe 100 years later, you'd find out what it all ends up doing? Or are you content being that on the Copernicus level of astronomy?
Well, I wouldn't I would definitely not compare myself to Copernicus, but.
Some guy Copernicus knew. Yeah. Okay.
Fair enough. I would you know, someone who like Copernicus at a party.
And guy thinks it's terribly the universe.
Yeah.

No, it's. It's exciting right now. I mean, I would think about when I read, you know, when I read history textbooks about the history of science, it's so fascinating that at certain points in history, all of the fundamental our fundamental understanding of how physics works and chemistry works and how our world works, people were people discovered that.
And that just sounds so exciting to figure out like to be, you know, to be in the same room as Copernicus.
When he figured out that the sun was at the center of the solar system and not the Earth.

I mean, that's so fundamental to how we think about the cosmos and how we think about our place in the galaxy and and like to hat and for him to have figured that out and to have scientific data to substantiate that, that's super exciting. And I feel like to a certain extent, we're still we're still in that place in in biotechnology.
We're still learning every day.
We're still learning things about how our body works and how biology works and how cells work. It's absolutely fascinating.
What potential development, you know, that's theoretically possible excites you most.
There, there, there, too.
And there interrelated. So the the first the first area is gene therapy.

And what I mean by gene therapy is the ability to go into our cells and to change the genes or the building blocks of who we are as people, the ability to to change it and to have it be and have that gene be changed for every cell in the body's that you can fix diseases that may have originated in some issue that that happened with that particular gene.
And what's really fascinating about gene therapy is that you have the possibility with a single dose, you can you can treat a disease and have that disease be fundamentally cured and have that person get this one treatment and then be better off and to not suffer from that illness ever again in their life. That, to me is that to me is mind blowing.
And gene therapy can take on many forms.

I'm sure a lot of your listeners have heard about these new technologies called gene editing technologies.
They may have seen words like CRISPR Cas9 thrown around.
That's like one example of gene therapy, where with with gene editing, you have the ability to actually go in, to go into our genome, the, you know, all of the genes that that make up our cells and kind of instruct our cells work in everybody's work.
You're able to go in and actually replace individual individual bases or individual genes and fix them inside the cell.
There are also other ways which you could do gene therapy, where you can swap genes, you can put a new gene in, you can take a gene out.
But gene therapy, something that I'm really that I'm really, really excited about.

And then the the inter-related component to it is, is our understanding of how our genes affect our human health. So there have been there's been a significant advances in our in our diagnostic abilities to understand at a single cell level how genes are operating.
And not only not only how the jeans themselves look, but how they're affecting the rest of the cell.
They're the RNA molecules.
They so the way the way in which our genes work is we have we have our genome all made up of DNA.
Our cells basically create a like a scratch pad of of that DNA, and they use another molecule called RNA in order to do that.

And then with those RNA molecules, the cell goes on to make proteins which make up our cells and make up our bodies. And that's the proteins are basically the molecules that do most of the business that goes on in our in our cells, in our organs and in our bodies.
And so our diagnostic abilities to not only understand what's going on with the DNA, the genes, but also to understand all those other bits that happen because of those genes.
So what's going on on an RNA level, what's going on in a protein level?
Our understanding of those aspects is only just getting started.
And and so I'm incredibly excited for a future where we for for all aspects of human health, we can understand how our DNA, how our RNA, how our proteins are contributing to that human health or maybe detracting from it.

And and then we now have therapies that we can go in and actually fix them at a molecular and a molecular level so that we can hopefully create a lot more cures for diseases that still afflict us.
As a venture capitalist, there are a lot of startups in which you would not necessarily it might be helpful, but you would not necessarily need the expertize in order to be a good investor.
If I said to you, Hey, I've got this idea where we'll we'll put an app on the phone and you could have a private citizen come and pick you up in their car and we'll call it Uber. Yeah. You'd say, all right, you know, I don't know how to write an app, but I get the principle and it sounds great.
You know, a lot of you know, a lot of people didn't get it when, you know, a lot of people didn't get it. Yeah.

But, you know, we'll make it. We'll make millions. It'll be great.
But there are some there are some things like biotech in which just to even begin to sit down at a pitch meeting, you would have to know an awful, awful lot about what they're saying.
That's that's mostly true.
And the big challenge I think the big challenge with what biotech is, we're still learning the biology.
And so when when I meet with a company, for example, part of their innovation inevitably is we have this new we have this new understanding of biology.
We have this new understanding of human health.
And and because of that insight that we have, the product that we're making has value and has merit.

And so in order to and by the way, we have such a thing as product market fit in biotech, but it's but you don't get that product market fit for many years. It's only after you you've developed a drug and you've tested it in clinical trials and you're in you're starting to see you see that it's starting to work in people. That's when that's really when you when you start to have product market fit. But that's not for many years.
And so if you're looking at a company that still has a few years more to go before they have a drug that could potentially be tested in a clinical trial and tested in people you you have to rely upon you have to rely upon the biology that you know and the biology that they're talking about. And you have to reason you have to reason with it.

You have to get to figure out whether that explanation makes sense and the biological principles they're relying upon make sense that the data that they're showing makes sense. So it does help to have technical knowledge of of biology.
You don't necessarily have to know everything about biology, and I definitely don't know everything about biology. And so I often lean upon my colleagues.
I lean upon experts in the field, you know, not a lot more about specific niches to then for me to ask them questions, but having, having, having a core understanding of biology, having an understanding of the vocabulary and like what questions to ask and how to critically analyze data.
That's actually very helpful in in understanding biotechnology innovations.

Now, prior to venture, you were attending physician at Mass General and an instructor at Harvard Medical.
You know, it seems like a shame for for medicine to lose you.
I don't think medicine's lost me.
I, I see it as.

I see medicine as a profession that aims to increase human health. And you can you can accomplish that in many different ways. Now, the most common way in which physicians increase human health is by being a clinician, being in a hospital or in a clinic, taking care of patients and and helping address their health concerns and diagnosing and treating, treating illness. But I also see other ways in which physicians can increase human health. And so for me, I saw an opportunity to make a significant impact by helping emerging biotechnology companies with capital, with expertize, with guidance, developed drugs that the world needs. I mean, it's there are just countless examples like as you as you mentioned, I, I trained at Mass General and I practiced there as a physician, obviously Mass

We took care of patients from all over the world that would come to us for second or third and fourth opinions.
And and so we saw a lot of patients.
I saw a lot of patients for whom most of the most of the common treatments for their illness has been tried.
And unfortunately, in their case, those treatments were not working.
And so they were looking for some creative out of the box, thinking they come to us and we try our best to figure out something else.
Maybe there's a clinical trial they can enroll upon.
Maybe there is. Maybe there's some drug that has some effect where we can use it off label to hopefully help the patient.

Maybe we have surgeons with surgeons on our staff that are exquisitely skilled in their craft and their they would be able to accomplish things that that others may not be able to. But there were countless examples where even with all of that, we just were unable to help a lot of patients because their disease was so severe or so complicated. We just didn't have any tools at our disposal to help them.
And that got to me after many, many after many experiences of we have these patients who are still who still are in need of care.
We don't have the drugs. We don't have the tools to help them.
What if what if I could help in that regard?

What if I could find a path where I could contribute in a way to the development of new drugs and new tools so that those diseases could now be treated because we've developed those new drugs. And so that's that's how I see myself still contributing to to increasing human health.
Well, you certainly sold me now. Did you?
Did you did you sell your parents?
Because I was talking to another physician, a man abosede.
Yes. Who said that? She said, when I called my parents to say, you know, I'm not going to be a doctor anymore.
It didn't go well.
I mean, it was it was a long conversation with them.

But no, they they they were very understanding that they they saw it. They saw that this is something I was very passionate about. I was still in the medical profession, kind of maybe, again, not necessarily taking care of patients directly on a day to day basis, but I was still contributing to human health.
And so, yeah, maybe maybe the conversation went better than I expected.
Good. Oh, I'm glad you.
You were a Rhodes Scholar, which took you to Oxford for your undergrad.
Which college? I was at Boston College.
Okay, so that's the one that I for for anyone who's been to Oxford, they have a they have a massive deer park in the center of the college.

And I think they have like 200 or 300 deer and they just kind of mill about all day and people walk by as they go to class or they, you know, they go to the dining hall or something. So it's a it's a very it's a very special place.
I have wandered around Oxford and I recommend it to anyone.
Yes. It's it's literally it's Harry Potter.
It's Harry Potter was shot. It was shot.
You know, it just. Yeah, yeah, it is. It is lovely.
From then you go from there you go to Harvard Medical School and an MBA at Harvard Business School. And looking at the dates, there's little overlap.
Overlap? Yes. Yes.
So you were at med school at Harvard and Harvard Business School at the same time.
So it was never truly at the same time.

But what Harvard has is a joint degree program between the medical school and the business school, where you go to medical school for a period of time, then you go to business school for a period of time.
And then in your final year, you you take electives at both schools.
So so this was a way for me to obviously, you know, get my. Training in medicine and be well prepared to be a resident physician and continue my training in medicine, but also get a lot of exposure and training in management and in business.
And so there were the programs around for a while now, and there's typically 10 to 15 students out of the like a normal class of 900.
There is about 10 to 15 students who are in that program every year.
And they have they have other programs. Do they have?

I think there's a there's a joint degree program with the law school.
I think they have other joint degree programs as well.
The 10 to 15 students who say, you know, Harvard Medical School is not quite hard enough.
But I think it it's I think it it came as an outgrowth of just an understanding.
And I think I mean, now we kind of get it more than ever that there is such a great degree of interplay between medicine and business, that if there are people who have been trained in both, the the hypothesis is that they would be better equipped to address those challenges.
And and I feel a an industry like venture capital where you truly are marrying both of those disciplines.

You are looking at the medical data, you're looking at the biological data, but you're also looking at the at the potential at a potential market, at the potential commercialization path. These are both medical challenges as well as business challenges. And so I'm I'm grateful for the education that I received because it it started me on that path of thinking about both of those both of those areas and how to how to think about them simultaneously when when solving challenges.
At the beginning of that path, there's the Rhodes Scholarship.
Where were you when you got word that you had you had achieved it?
It was at my interview.
So I was a senior. So I went to Case Western Reserve University for undergrad.

I was a senior at the time and I flew to Minneapolis, Minnesota for my Final Round interview for the Rhodes.
There were I think there were 15 or maybe 16 people.
It was they do it, they do their interviews regionally.
So I was in a region, so I'm originally from Michigan, so I applied through my home state of Michigan. So it was the the region was Michigan, Wisconsin and Minnesota. So all the people there had some connection to one of those three states.
Either they were from there or they went to school there.
And and so they have a there is a reception the night before where you meet all of the judges that I will interview with the next morning and then the next morning on a Saturday, you each person goes in and has a 30 minute.
I think it's a I think it's a 30 minute interview.

It may have been 20 minutes, but it was relatively short, a 20 to 30 minute interview with the panel. And they ask you questions about all sorts of things.
Like what?
Like what? What would you what would you ask?
So one question I was asked was this. I was I was involved with a lot of public speaking activities in college. And so they asked me a question, do you think India should become a permanent member of the U.N.
Security Council?
That was one question they asked me. I they asked me they asked me some specific I had done a lot of cancer research in undergrad.
So there was a person on the panel who was a who was an oncologist.
So he asked some specific technical questions about my research.

They asked me what was the last book I read that it's like very it's very, very diverse questions.
And like each person probably has their own set of questions they like to ask.
And so they, they went around and they, they asked it, but everyone kind of went through everyone went through their interviews.
And we all basically sat downstairs in the building while the panel was deliberating. And then they just randomly say, like, we've made our decisions, everyone come up and then they just announce it in front of everybody.
So that's how I found out in person when they told me.
And the phone call back home.
And then the phone call back home was quite exciting.
My parents obviously were over the moon and.
Yeah, no, it was, it was.
It was it was unreal.

It was unreal. And it was such a such a great such a great opportunity, such a great experience to go to the UK and to study an emerging area biology. I studied cancer stem cell biology at the time at Oxford, but also just meeting a lot of people, meeting my fellow classmates who were also scholars, meeting other students, undergrad and grad who came from all over the world to study at Oxford.
And of course. Living in the UK when my early twenties it's this is back in the day when those low cost flights were still around. And so you could, you could like get a ticket from London to some like random town in the south of France for like a pound or like £2 or like a few bucks.

You can take it. It costs more money to actually take the bus to the airport than the actual flight to to the to whichever city.
So it was it was an absolutely amazing experience.
I'm going to ask this question and I want you to approach it.
You know, I want I don't want you to deny it. And I want you to approach it as a as a scientist, what does it feel like to be that smart, not just the Rhodes Scholarship, but what does it feel like inside your head?
And we have established you're damn smart.
I will have to deny it formally.
I will. I will have to. But I have the evidence I get from women every day. I get proven every day that I am not I am not that smart.
I get that just.
Means you're stretching yourself, right?
Or do you mean.

Fair enough. I mean, it's I think venture I think science, medicine and venture.
One of the commonalities across all three is you are hypothesis testing. You put a lot of analysis into how you see the world and how you think.
You come up with a conclusion based on analysis and then many times you are proven wrong.
You know that you think you think you have the diagnosis of the disease that the patient has. Right. And then, lo and behold, that's not what's going on in something totally different. Or you think that this particular area, biology is very interesting and a drug could be developed and you find out, no, actually you can't do it. So it's I it's there. It's it's interesting in that in all three cases, we are we're proven wrong a lot.

But I you know, I see those as I see those as learning.
I see those as learning opportunities that I feel like that's the best way to go about it. Not really. Oh, like, this is terrible.
Like, how could we have gotten this so wrong? But let's revisit our let's revisit our analysis and see. Well, now we know what happened.
Could we have predicted this? And how do we refine our assessment so that in the future we hopefully will do a better job of analyzing data and and hopefully get it wrong fewer times?
Well, and that that's an attitude which can be replicated by someone who, you know, doesn't have the gray matter to become a Rhodes Scholar, but can still make major achievements in life.
Because this idea I will test this hypothesis.
I may be wrong. I will not get down on myself.

I will attack the problem again.
Doesn't matter where you are on the IQ line.
I think it's it's I think it requires you know, there's some I forget what the name of it is, but there's that, there's that famous curve where it shows your confidence level in your in your conclusions. And as you learn more and more, you like your, your confidence level. It goes up initially because you feel like you know everything and then it drops down because you know that you actually don't know anything.
And then it's start it finally starts to creep up.

And I think it's called the Dunning Kruger Effect. I forget what the name of it is, but it's maybe it's understanding, understanding all the things that I don't know and being being open to the possibility of being proven wrong, that I feel like that that actually could be a difference.
Like as someone becomes more expert in a particular field and learns more, they probably actually get more comfortable that they're going to be wrong a couple of times versus at the very beginning is like, No, I can't be wrong. I have to be right.
I've did this analysis perfectly. And so it cannot it cannot end up any other way.
Donald Rumsfeld got teased for saying it, but but he once said with there are things we know and things we don't know, there are things we know we don't know.

And then most critically, there are things we don't know.
We don't know. Yep. And that's, you know, oftentimes where where the development or the excitement or the danger really lies.
Absolutely. No, I the we when we when we invest in a company, we actually have in our investment thesis, we have a slide at the end.
Of our deck where we list out our known unknowns and we actually list them out. And and basically the statement we're making is we are we have to be comfortable not knowing the answers to these questions in order for us to do an investment. Because if we're not comfortable with it, then like these questions we just cannot address at this time.
We need to do more experiments. We need to see how the drug looks.

We need to test it in different scenarios in order for us to understand it for real.
And and we won't have those data available to us now, and we just have to be comfortable with that. And if we're not comfortable, we probably shouldn't do the deal then the unknown unknowns that we try to get to the bottom of as much as possible.
And I think that's actually the point of due diligence in in venture capital is not necessarily to answer every question, but it's really to uncover every potential risk and at least have it listed out. So it flips from unknown unknowns to known unknowns.
And then you can start then you can start deciding, am I comfortable with this level of uncertainty or not?
As we're talking about intelligence, have you given thought to where it comes from?

Are your parents terribly bright?
I mean, this field, nature versus nurture, they're incredibly right by parents.
Where where does the intelligence come from?
It's it's I mean, it has to be from it's a probably a combination of the two.
There is definitely intelligence is heritable to a certain extent.
You know, it's interesting, you know, the way in which you ask a question where like, what is intelligence?
I think that's still that's still an open question for a lot of neuroscientists. Like what is when you compare the brain, when you look at the brain of an intelligent person, what is actually going on internally that makes them intelligent? I mean, my my hypothesis is it has to do with connectivity and connections that the brain can make.

So you can take different pieces of data and put them together in ways that aren't obvious. And someone who's intelligent is just able to do that much faster and is able to pull in even more disparate pieces of data and make and make connections between between the two.
But that can also be learned to a certain extent.
And and so that's why even though nature is a pretty significant component to intelligence, in my view, nurture is also quite significant.

I mean, it's it's, you know, not to get not to get political, but I, I am certain that, like when we talk about policies that help educate and train the country, they're important because not only is it just fundamentally a right thing to do that everyone should be taught and everyone should be educated. But when we're thinking about how do we push our society forward, how do we think about next the new innovations that our society will need? We will need intelligent people in order to identify those innovations and go after them.
And I think we can all agree that there are many parts of our country where the education system that we have is not equipped to teach children what to do, when to train people for train people and how to think and and how to learn.

And so I'm certain there are people stuck in areas where they're not getting trained while they're not getting educated well that have the nature component down. Their brains are primed and ready to go.
But they weren't educated, they weren't taught.
They didn't have great they didn't have a great education system.
They didn't have great teachers. And so as a result, they won't they'll never be able that potential will never be visible.
And I think that's that's a that's a loss for society.
There are probably Einsteins running around today that will never know about because they didn't go to a school or they didn't have the right family situation or didn't have the right neighborhood situation that could allow that to allow them to understand the potential.
But they really have.

I'll probably end there because it was such a lovely thought.
But but I'm going to ask one other question, and that is, when did you know in school or as a boy?
Oh, hold on. I think I think I'm kind of bright.
There's a there's got to be a moment and I'll give you I'll give you a mind.
And you know, I am not a Rhodes Scholar, although I do go to Iowa State, which many people consider the Oxford of of the Midwest.
I have to say I have to say one thing, actually, Iowa State and one of the best neuroscience and neurosurgical programs in the country.
It did not know that.
Some of the best some of the best neurosurgeons in the country were trained at Iowa State.

So. Excellent, excellent. So but there was a moment, you know, my my ability is and this is not surprising is in reading and writing and processing language.
And the fifth grade teacher, I think it was fifth grade, looked down to what I was carrying with me.
And it was a copy of James Herriot's, All Creatures Great and Small, which is a a pretty thick book and not a fifth graders book usually.
And he kicked me out of reading class and I got to sit in, you know, in a in a storage area and read that while it was reading time.
And as a boy, I was thrilled because I got to lean.
I this was actually also in Michigan, in East Grand Rapids, Michigan.
And I got to lean up against the steam room and.
From Battle Creek. So.

Oh, perfect. Yes. I got to lean up against the steam radiator and read James Herriot. And I was just now later I'm like, oh, my God, they put me in a closet.
That was their you know, their gifted program is they just sent me to a closet.
We had a it was a little bit nicer for us.
We had this was back in the day when I elementary students would take IQ tests in school.
Yeah. So I think it was in second grade.
We all took IQ tests and and they basically picked the people who scored very well on the test and put them in the gifted program.
Ours was in our libraries. So we would there was, I think, ten of us and we were in the library.
And we got to do like for like artistic things.
I think we went to the ballet as third graders.
We like went to like local museums.
That's to me.

I thought it was really cool. Like I didn't have to sit in class.
I just I basically got to go to a library and like, read whatever I wanted to read or like, I don't know, go look at pictures or like go take a field trip, right?
I mean, going we went to the ballet like that was a field trip.
Like we got to go on a field trip that no one else got to go on.
So that that was really cool.
But yeah, that was probably the first time people were when people told me it's like, oh, you know, you know, you seem to be pretty smart.
I was a delight talking with you. Unless there are things that I didn't.
No, no.
No, that's great. No, no, this is great, Scott.
Oh, wonderful. Well, I really appreciate you making the time.
Same here. I know. Thanks for the. Thanks for the invitation.

You bet. You bet. Thanks, John. And I'll let you know when it's on.

I think a lot of companies have different motivations for contemplating everything from, you know, remote work as a permanent thing.
Yes. But it is sort of all premised upon this notion that a lot of things we were doing were pretty inefficient.
It is. It's totally.
Pretty.
Inefficient. Yes, very. Yes.
You can't run a manufacturing plant out of your backyard.
So, you know, if you work in that industry or a bunch of others, like you need to commute. But a lot of just workers really didn't.
And we kind of, I don't think, ever questioned also didn't have the technologies to provide the ability to do work right and work effectively as a team or even as an individual until probably the last like ten years, really.
In many ways, the pandemic came around just.
Yeah.
Yeah.
Yeah.

I figured I would just readjust so I can look at you all.
Look at.
You know, I don't want you to spend a whole time, like, doing this.
Yeah, like creating.
You feel like. You know what? I actually prefer to sit over here.
Just let me know.
No, I'm great.
The other half of this is, you know, this.
I will edit this. And if you get halfway down, if you get halfway down, you know an answer and you're like, wait, what was that?
What was the question? You know, just wave your hands in the air and say, hold on, hold on, hold on. Ask the question again.
So let's get for starters, let's have you count to ten.
You'll check my nervousness level right here.

All right. I'm going to check me. One, two, three, four, five, six, seven, eight, nine, ten. That sounds pretty good.
And then just tell me your name.
Aiden Madilyn. Curtis.
Excellent. And what did you have for breakfast, Aiden?
I had a Frappuccino and a granola bar.
Perfect. I've gotten some very weird answers to that question.
Oh.
I can only imagine.
Yeah. A duck egg and a yeah, a duck egg.
At least that's, like, kind of reaching at breakfast.
Yeah, that's true.
I guess the people who are like, I wish I had a steak, and you're like, No, I would be on your diet.
And a surprising number of. I didn't have anything.
Yeah, yeah, yeah. Either because of doing the intermittent fasting or because they just don't. Oh, yeah. And that's also, you know.
Yeah, you know, I just had coffee.

Drinking coffee any time, you know? I mean, thank you.
We can we can edit as much as we need to.
So you have a degree in economic development in Asia from Harvard?
Yes. Yes. And we're rolling, right?
Yeah. Okay, great. Yeah.
So actually, I would love to be able to retrospectively rationalize my degree, but what actually happened is I went in and I was really interested in I'm come from I come from Canada originally, so, you know, pretty communal roots in that respect. And I was excited to potentially have a role in government in the long run. And so I really walked through a lot of different majors at the beginning of my time at school and.

At the same time, I also ended up getting really involved with a nonprofit called Harvard China Care. And so what ended up happening is I spent a lot of summers in China working with this nonprofit, which essentially did fundraising in the U.S. and Europe and brought those funds over to China to provide health care and surgeries for kids that were in what they call the state welfare institutes or the orphanages. And so I was kind of getting this really interesting look at what was going on in China.
I was also studying, you know what, I hope to be something I could transition to a law degree. At some point I was looking into human rights and other sort of more they called the concentration or the major at Harvard government.

And I realized that actually I was interested in the intersection of policy economics. And I had taken a bunch of Chinese so that I wasn't so useless in, you know, in the orphanages when I was there over the summers.
And so I petition to have this become a degree that sort of pulls all three of those threads together. And I called that the economic development of East Asia and wrote a thesis on it and a bunch of stuff, and they and they honored it. So that's how I got my degree.
Now, East Asia is awfully big.
It is. It is. And actually, I still kind of cringe when I think about the name of my thesis. Say something like From a mudslide to a cosmopolitan.
You know, I don't know why. I thought it was funny to bring in drinks.
I was not even 21 yet at the time.

But this notion that like you could go from.
You know, where China had been or where slavery had been, invariably.
I know. It was like I think I think they were like a couple of other things after I was like mostly to cosmopolitan, like the economic, you know, comparative economic development of India and China.
And India isn't even technically East Asia, but my thesis really was much more focused on China and the ability to actually create policies.
When you have a much stronger regime and stronger control over what's going on in your country that dictated economic outcomes.
And it was sort of this sense of if you take a more hands on authoritative approach, can you actually create higher economic growth?
And will the rising tide lifts all boats?

And I spent a bunch of time in India, had a lot more time in China studying this.
And I think my you know, the end of my thesis was sort of like, yeah, you can do some pretty powerful things if you have that level of control.
But there's also probably some unintended consequences to think about in terms of personal freedoms and.
You know, and self-expression and things like that, that as a government you may want to consider.
So one of the reasons I wanted to talk is coming up later this month, President Xi and President Biden will will meet at the at the G-20, if not officially.
Certainly casually. What should we be thinking about as those two meet? There has been quite a bit of tension lately.
Right.

I think that we are actually at the precipice of, you know, what some people may dramatically describe as a new world order.
If you look back over the last 40 years, the.
The self-expression and self-interest of companies has led them to develop their supply chains in other parts of the world.
Understandably so. If you can manufacture something and source your components for far, they are far cheaper and you actually, you know, kind of create great output, stronger output, higher throughput.
It's super efficient to to take those supply chains and put them in other parts of the world. And actually, as U.S.
consumers, European consumers, we've benefited from this set of trends significantly in terms of a very disinflationary environment that we lived in.

So, you know, we've seen a lot of our supply chains grow up in other places.
And that has compounded not just to be sort of a labor arbitrage, but now its whole ecosystems exist elsewhere.
You know, U.S. manufacturing has fallen from 27% of GDP to 12% of GDP over the last 25 years or so.
And I think that as a function of that, you know, China in particular has had tremendous economic growth.
It historically has been, you know, due to all this foreign direct investment and all of that kind of manufacturing and exports.
And in the last 15 years or so, there's been also a significant push to bring a more kind of consumer element of GDP focus within China.
So they've really grown up a lot, actually. It now looks like exports are only about 20% of their GDP. Consumer spending is almost 40%.

You know, internal investment is another 40%.
So they really shifted the way their economy works.
So all of this is a set up for when you look at what's going on in the U.S.
and in Europe, which are different in a couple of ways we can tease out if you'd like.
But, you know, we're facing a moment in time where from a technology perspective, we have an edge in terms of the way that we can manufacture, the way that we have advanced semiconductor capabilities.
But a lot of that is also reliant upon our partners overseas, including, you know, TSMC and Taiwan. And China's also coming into its own and sort of far better able to express itself economically.
And so I think we're sort of seeing the real birth of two different superpowers kind of coming to heads about.

Where we're going to go in the world and sort of both economically and from a policy and a personal freedoms perspective, you know, which which regime, if you will, will continue to have, you know, major global influence.
One of the things that President Biden had said was he said at least late last month, we don't see conflict with China.
This was shortly after Xi Jinping said China was willing to work with the United States to find ways to get along for the benefit of both.
It sounds like maybe they're ratcheting down their.
The sort of the rhetoric or.
Yeah.
That the escalation of tensions.
Yes.
It. There are there are real strong voices on both sides of this argument.
And I think that I'm a real power politic kind of person.

I think there's a lot of talking heads in the room, but you probably just want to take a look at like what's actually going on economically and from a defense perspective and technologically in both countries to say, you know, who's actually really in a position to to push on what?
I actually think that China has developed significantly to the point where, you know, even though there's still major global interdependencies, I think they're still a net importer of energy.
For example, as I mentioned, they've pretty successfully transitioned their economy. And what I think we've seen from Xi Jinping over the last 12 or so ten years that he's been, you know, at the head of the Chinese at the party is that they have.
Sorry. I'm just, like, lost in thought for a second here.

Your question was what again it was like that to that she sides.
Yeah.
Rick And then your answer was something to the effect of, you know, China's been able to sort of.
Transition its.
Economy. Yeah. To to greater independence.
So so right. So the what I was saying about that was China's transitioned economically to be far more independent, even though it still is somewhat energy dependent on other parts of the world where it's not completely independent yet or where it hasn't quite caught up is on the technology side, which is why you see the U.S.

sort of coming out, you know, hitting them where it hurts a little bit in terms of the foreign direct product roles and limiting China to a 12 to 16 nanometer domestic capability in terms of semiconductor manufacturing and just straight up blocking the in videos of the world from sending advanced chips over. So that is an interesting needle.
Right. And on the other on the other side of the equation, you also see the US still being very dependent on China both for, you know, some you know, I think we still import something like $500 billion worth of goods directly from China over the past several years. That tends to be the annual rate and a lot of those goods.
Yes, they do you final assembly in China. But the whole ecosystem, the whole supply chain exists within Asia.

And so if China were, for example, to agree upon Taiwan like that would really change the tables, because Taiwan is actually the place in the world, as we all know, the most advanced semiconductor manufacturing it a kind of three and soon to be two nanometer level. So we get a lot of our advanced imports from Taiwan. And so that could really sort of shift the balance.
It is interesting that we are limiting the chips that we are sending to China, but those chips are made from rare earths and other things that we get from China.

Yeah. Yeah. And it's actually that's a really interesting part of the equation, too, because it relates to you can like consumer electronics that relates to medical devices, that relates to automotive parts. Like so much of what we used to, you know, so much of the backbone of our economy is made out of these parts and pieces that are sourced from these rare earths. Also, not only rare earths, but if you think about, for example, the big shift that we're doing towards renewable energy or electric vehicles, something like 85% of the world's lithium is processed in China.
It's sourced in other parts of the world, Australia, Chile, also in China.

But the processing stuff, which is dirty and carcinogenic and not necessarily we historically wanted here in this country, happens, happens over there.
And so we are incredibly dependent on China continuing with its lithium processing, with its graphics, something like 90 plus percent of the world's graphite is processed in China as well.

These are, you know, make up over 50% by weight of what electric vehicle batteries are comprised of. Right. So as we and that's just electric vehicles, we're also trying to make a shift towards longer duration energy storage and things like that so we can better use our renewable resources and get that energy into the grid in a cost efficient way. So a big part of that transition is still highly dependent on China. So whether it's, you know, the semiconductor and electronic parts, whether it's, you know, our shift towards a more electric future, there's still a ton of interdependency.
And I think actually in that respect, the the U.S.
is a little bit more dependent on China than China is these days on the U.S..

I also think we're seeing China shift its economy, not only, as I mentioned, towards kind of a more consumer based and internal investment base, but they've actually really ratcheted down sort of this notion of needing to be an ultra high growth country.
They're trying to do some smart deleveraging when it comes to what was going on in the property sector. That was kind of a buzz about and what she was saying in the last party. Congress, the one that we just had, was that that was okay.

You know, he sort of set high expectations that China would be growing at a slower pace in the coming years, and that that is something that both Chinese citizens and the world should expect in the interest of kind of creating a greater China for all and being able to navigate the country towards, you know, sustainable growth and essentially a GDP per capita by 2035 that would be on par with, you know, the world's developed economies.
Give me a short term in a long term outlook that you see.
Again, you know, very short term, the two leaders, the American leader and the Chinese leader will meet at the G20.
What's the six month bet on our relationship with China and what's maybe the ten year bet on our relationship with China?
It's a great question.
The six month bet is that.

From a U.S. perspective.
It doesn't seem beneficial because again, back to my real power politics stance, it doesn't seem super beneficial for us to.
Rock the boat further than it's necessarily been rocked so far.
Obviously, we've got midterms coming up in a week.
There'll be some interesting follow up from that.
You know, to deal with as we go along, heading towards the election in 2024.
The U.S. is facing crises of inflation like we've never seen before.
It was demand driven inflation after COVID in terms of the stimulus and, you know, ten, ten years of low interest rates and what that did to the ability to kind of have dollars chasing a scarce amount of goods.
We see the Fed taking action.

Yeah, extreme action these days, too, to clamp down on that and effectively doing so from a demand side. But there's not much we can do in terms of the supply side of the equation. And, you know, until we see unemployment rates actually rising, until we see kind of the real economic impacts, and until we see the ability to, for example, manufacture in this country again at a more efficient level, a higher throughput level of leveraging, you know, technologies that come into play there. We don't necessarily have the capability to get inflation down. So I think we could see some real supply side interactions, and that's not even counting energy, which is the other kind of key input.

So, you know, labor and energy, as well as the ability of how you pull it all together is kind of what creates the price of goods, right?
And price of goods is literally inflation goods and services.
So I think that in the U.S., you know, we don't necessarily benefit from having to redo all of our supply chains in the next six months.
And given the significant level of interdependence globally, it wouldn't be highly beneficial for us to, you know, escalate further.

So I think just in terms of like the U.S. motivations, there isn't a major one to really rock the boat. That said, you know, there has been a longer term kind of ratcheting up of the rhetoric around Chinese espionage, things like that. So we'll we'll have to kind of see what happens on that on that front and on the defense front when it comes to China.
You know, she just having solidified his control again for a third term, you know, this is his chance to potentially do a bit of a victory lap, but it's unlikely, I would suspect, that, you know, so immediately there would be an escalation given those other interdependencies that we already talked about.
So I think that on the ten year front, that's where things get a lot more interesting.

The U.S. has committed at this point between the CHIPS Act, the Inflation Reduction Act, you know, hundreds of billions in capital to restructuring our supply chains.
And China has committed to, you know, reunifying with Taiwan, right. Among the other kind of economic shifts that we've mentioned.
So I think that the table is set for some very interesting geopolitical dynamics in the next ten years.
But in the next six months, my guess is, you know, there's been a lot of a lot of change and a lot of disruption these past couple of years.
I think we've seen a lot of escalation of tension in the last few months.

I'm hopeful that the G-20 is a chance for everyone to get back together for the first time since COVID and sort of take a breath and yeah, think a little bit more long term, which I think is where things get a lot more interesting.
It's certainly been in both countries best interest to have a good economic relationship.
As you pointed out, you know, prices are low for all American goods as you walk through one of those big box stores and and it's lifted so many Chinese into the middle class.
But the push in America in particular is to be ready to do a lot of this on our own, the CHIPS Act with building, you know, chip factories. Your organization is looking into.
And we find it.
At Eclipse, you're looking for companies to help you innovate the way out.

I mean, this kind of presupposes that nationalism and a drawback of of globalism is is permanent.
So. Eclipse has been around for the past seven or so years, and the main focus was on digital transformation of physical industries.
And the desire came from, you know, what we saw.
It wasn't just a function of, you know, nationalism or anything like that.
We saw it in COVID, too. This notion that really the industries like manufacturing, supply chain, transportation, logistics, how we manufacture our food to or our pharmaceuticals, you know, we're where in the world we source the raw elements that go into all of these things that those supply chains and the technologies that we leverage to to actually enable those outcomes hadn't been revisited in a very long time.

And as I mentioned earlier on it, it didn't necessarily make sense to do so when, you know, you could sort of chase that geographically.
Right. And kind of get a, you know, with a little bit of CapEx in a smart geographic kind of strategy as a company, you could come up with better throughput pretty fast.
And that has been making, you know, kind of the most sense for the past 30 years.

But we've seen in the last seven or eight years is that that's probably not enough to keep prices low. That's probably not enough. And to really kind of increase productivity, we need to leverage some of these technologies that I'm happy to to share more about on the manufacturing side or on the supply chain side or on the transportation side in order to keep up with, you know, the desire not to see prices rise and also to kind of build, I would say build back, but it's actually build different or build better our domestic capabilities or in your short cuticles, I guess.

I think that's my point is without, you know, accusing anyone of being nationalists or anything like that, when you're making a bet as to where to to invest because you are betting the world is going that direction when you're betting on increasing American manufacturing and things, that is to some degree a bet on well, that's the way this is going to go, because logically it would make much more sense to continue to manufacture things in China or Vietnam or wherever, because cost labor is low.
They they already know how to do all of those things.
The infrastructure is there, but if you're betting on it, you know, it's a good thing to bet on America, don't get me wrong. But it also kind of says, well, but I think this is the direction the scale is going to play.

I actually think that what we saw was more the direction of what technology was capable of. So, you know, insofar as labor arbitrage made a lot of sense in terms of cost input to goods, we can see with, you know, what, for example, we saw happen in the warehousing automation transition that Amazon fostered, right?
This notion that you could actually create a far safer environment for people to work in, to be frank, rather than all sorts of ergonomic, you know, issues or other sort of workers, you know, health related challenges.
You can have robots and automation doing some elements of that work that allow the human beings in the loop to be more value.
Right. And kind of move up the value chain.

I think we're seeing that transition now in terms of what we're capable of with robotics, with software, with AI into far more reaching applications across different industries.
So in this case, it's the labor that we may not necessarily need.
What used to require ten people to do could now be two Americans and a whole lot of robots.
I actually think it's about bringing people up the value chain.
So, you know, we actually see there being the capability to employ more people in higher value out areas within these industries, especially if we're bringing you know, we're doing more of those industries here again.
Right. So to say that you know, to say that we really believe technology can be leveraged to create higher throughput is also to say that we need people sitting behind the controls.

Right. Getting skilled in how you actually run an automated manufacturing line, being skilled at drone operation. If you're trying to, you know, survey a landscape, being skilled in different ways, in ways that are healthier and hopefully really upskilling for people.
And so that's the focus in that respect, is to be able to have people do more technical roles and roles where they are, you know, healthier as a as an outcome.
You were with Apple for a number of years and were key with getting the Apple Watch manufactured. Do you envision a day in which there's a factory that big in the United States making Apple watches?
I do. Yeah, I really do. I think that again.

Yeah, to the point of being able to leverage modern technologies here, I think we're really on the precipice of being able to see.
And I think it's wonderful to see the government take some action in incentivizing companies to to do that style of manufacturing here on shore overseas. You know, we've seen the Chinese government since you're talking about China, pour tens of billions of dollars, hundreds of.
Billions are depending on what timescale you look at into subsidies and credits for their everything from semiconductor up through assembly manufacturing capabilities.
So to say that you know, it seems very fair for the U.S.
to take the same action is an understatement, I think.

And I think as it becomes really in companies interest to, you know, leverage some of these technologies that can allow for higher throughput to skill their labor in a way that allows for, you know, happier, healthier workers.
And to be able to, you know, even, you know, bringing onshore the inventory.
Right. The kind of closer you are to your end user, the the lower your carbon footprint in terms of like taking things on a trip, sometimes multiple times around the world.
And the less inventory you necessarily need to stockpile as you're trying to figure out and read, you know, the ever changing demand and and flavors and tastes of your of your consumers. So there are a ton of benefits in terms of being closer to your own consumption.

I also see companies like Apple and other kind of major global companies having consumers all around the world. So I think it's really about being able to leverage the technology and the capabilities just closer to your and consumer, really, no matter where they are.
What did you learn about.
Factories and industry with your time at Apple, I mean, obviously, you learned a great deal, but but what big lesson did you pull away from it?
I learned how incredibly you know, it's funny because I wish that I could say something about the technology or, you know, so, you know, related to my role in B.C. But actually, I learned maybe my most important lesson about people and about culture.

So. I think the the biggest takeaway for me is that no matter where you are in the world, people want to feel respected.
People want to do work that is of value.
And, you know, a lot of my takeaways from the time I spent on those manufacturing floors, whether they were on shore or elsewhere, is that everybody just wants to be proud of what they do. And so, you know, we had to when we were bringing up the manufacturing sites for the Apple Watch and I was specifically involved in the system in package, which is a really new process for Apple at the time that, you know, we had a lot of hard work to do in a very short period of time.
It involved setting up a whole different manufacturing process.

It involved training a number of workers about different manufacturing stops and involved some really tense moments getting, you know, yields up from the kind of thing you'd see in a prototype style build to mass production and what it took to sort of rally and motivate those teams, many of whom didn't speak, you know, the same languages as as some of the people who were on the Apple side was kind of pretty common from what you see anywhere, how do you actually get people to feel proud of what they do? And so a lot of the techniques that that made helped to make me successful in my role. And I think others were appealing to, you know, giving giving everybody a strong sense of positive feedback as well as like some pretty open, honest transparency around data and letting the workforce

there from engineers to the operators understand what was going on and really working together as a team to do an incredibly hard thing in a very short period of time.

That is key. I mean, if you're an American company, I mean, yes, Apple's a multinational.
But if you're an American company with proprietary devices. It is still important to bring in engineers in the home country and China in on the process because they need to feel valued and also they'll probably have some pretty valuable input.
Yeah, it's actually funny because, you know, we've spent a lot of today talking about globalization and it really was a phenomenal experience to see. You know, I'm Canadian, right?
And so I was me. It was my American counterparts at Apple, many of whom are actually also from many other countries in the world.

It was, you know, a lot of the Chinese, both operators, as well as the staff that were, you know, the owners of the the plants that we were manufacturing and even a number of of Taiwanese engineers as well who were involved in the company that we were working with. So it was very much like United Colors about it. And, you know, all of us sort of coming together to make this work.
And in some respects it is it's a little sad or scary to think about globalization because there are tremendous benefits that you get from learning the humanity of each other when you're working hand in hand to get something incredibly difficult and incredibly rewarding done.
When you watch politicians talk about America first or building chip factories in America, it makes logical sense.

I mean, you know, especially when it comes to things that we might be vulnerable if other countries were to pull away.
On the other hand, it's also just as.
Worthwhile and laudable to talk about globalization.
And, you know, if we could all just get along here, we'd all benefit.
Yeah.
I think that it was very fortunate that it was sort of in everyone's interest these past several decades.
You know, the U.S. for a very long time had a policy of, you know, this notion of mutually assured economic destruction. Right.
With China. And it was a big part of U.S.
foreign policy to encourage globalization for exactly the reasons that you're talking about.
You know, what's the thing about? No, no. Two countries who have McDonald's ever fight.
I wish that were true. I think we've seen that.

Unfortunately so. Unfortunately.
But but it has been amazing to watch what the you know, I talked about being hand in hand, if you will, sometimes literally like hands on all the same stuff, you know, in these overseas factories.
It's also about social media. It's also about, you know, what what we see over Instagram or TikTok or Twitter, the ability to actually share cultures and communicate and laugh at the same jokes.
You doesn't you don't even need to speak the same language often to find something amusing. And it's kind of hilarious how humanity is so similar.
You know, human nature and what we find funny or adorable is, you know, it's really a tie that binds.
So, yeah, you know, there is that sort of like headline rhetoric going on right now.
I think there's a lot to that.

There's a lot of politics to it.
But at the end of the day, there is also a reality to the need for our ability to manufacture medical devices and build data centers that power the, you know, cloud compute.
That is sort of the backbone of a lot of the way that we communicate, the way that will get this podcast out to your audience, that, you know, there's just so much between the, you know, the phones that we use in our hands, which everybody always thinks about and talks about to the pieces that we do our work on, to really more of that datacentre infrastructure, to everything in between, you know, the parts that go into our vehicles, our jets, our, you know, our medical devices that we absolutely have to be able to, you know, ensure that our economy can survive.

So I think it's smart to try and do a bit more of an analytical review around what capabilities we need to be sure that we have.
And that hasn't necessarily been front and center in the last 30 years.
But I. The optimist in me hopes that it doesn't mean a complete shift away to a, you know, more much more protectionist, holy sort of political.
Spectrum, complicated.
State.
Ten years from now, more globalization, less global.
Do we all pull back into our respective countries and try to go on our own?
Yeah. I really think, as I've mentioned, the table is set for what could be a very pessimistic world view in the next ten years.
And I'm personally pretty torn on how I think it will play out. Like so many things, there's a bit of a randomness to it, you know?

What? Actually. The table could be set for.
For really either direction.
A compounding of the benefits that we've seen in terms of globalization.
But. The tenuous ness of, you know, kind of what we've realized between COVID and the last couple of years of the need to kind of be more nationalistic in our approach to our domestic industry is causing, I think, a very rational response.
And that does escalate tension and that does mean that kind of any.
Yeah, I think World War One was started by like a crazy person, right?
With a random shot. Right. So it kind of is like, well, what's going to happen to stir the pot? And when tensions are high on both sides, very little things can create very outsized, unfortunate impact.
So, you know, sort of cross my fingers.
Hope that.

You know, we end up on the right side of history in that respect.
But I think there's a decent chance that.
You know, the way that the chips are stacked, we end up in a much more tenuous place than we have been in the last several decades.
On a lighter note, I realized the absurdity of this question.
What do you know as a person who studied China at Harvard and then lived in China and speaks Chinese?
What do you know about China? I don't.
I was going to say, in case you asked me to speak Chinese, that my favorite my favorite thing to say in Chinese is they have a dish.
Very well. Shiraishi Jong went on show Shanghai.
I will go Anguilla to China, which is?
Yes, at Harvard. I studied Chinese, but I've like totally forgotten it all.
Now I apologize.

It's sort of my it's my party trick these days.
But I would gosh, I think that I'm.
First of all, I wouldn't pretend to know what you do or don't know about China and.
I actually think that.
You know, China's just China from a media perspective and a cultural perspective and a technology perspective.
I think the people involved, you know, when you look at like Alibaba or Jack Ma, like Tech China, you know, there's a lot that's come out of China that is that has really permeated American culture and that has kind of created an impact for us.
And so I think people know a lot more about China than they think they do.

One of the things that's always striking me as something that's very sort of different about China that I think is you're not universal. I would never see something as universal.
But very deep within the Chinese culture is the sense of family and community first. And so I would say, you know, the level to which that really has an impact on the decisions that not are not only the decisions made at the top, but how that really influences the thinking and the value system. And you know what what individual Chinese citizens are okay with and what they'll take and what they'll be open to.
For example, like extreme lockdowns, right.
For the better of greater China.
You did see people in Shanghai getting pretty frustrated with that.

But in overall acceptance, I think, you know, on behalf of the greater country, that that policy might have made sense for them.
I'm not changing my opinion about whether I think that policy makes sense for China, but it is really fascinating what that Family First and Community First culture means for the Chinese people.
So how does a young woman from small town Canada in the Rocky Mountains.
Get I mean, mechanically, yes, you go to Harvard, but how does she get interested in in China? How did how did that connection take place?
Yeah. And there's different there's different ways in which I've been I feel like China keeps calling me back.
Hopefully they'll still call me back after this podcast.

I'm I've been a I've been to China finally feel I've been in love with the country, you know, since I was, you know, very young and I was always fascinated by. So I was a big.
My father, who passed away this summer, was a big part of Amnesty International.
Not he wasn't, you know, important now to see international.
He just really believed in everything they did. And he taught me from a young age that, you know, I needed to think about the rights of people.

And so I was always very involved in in human rights related thinking and work and volunteering. When I was when I was young and when I got to Harvard, I really wanted to make, as I mentioned, kind of a career out of, you know, international policy and human rights. And I imagined myself arguing cases at The Hague, if I were so lucky to, you know, kind of achieve something like that.
And in pursuit of this, you know, kind of love of human rights, I got involved with this organization that was doing nonprofit work in China, working with orphans to to bring them, you know, life saving and and sometimes just hopefully life bettering surgeries.

And in going there, you know, I really thought I was going to see I really thought I was going to show myself the horrors of what, you know, a country that didn't respect human rights in some respects, the way that I kind of thought they should be respected coming from my flag bearing Canadian background, I thought I was going to see what I really look like up close and personal. And I landed in China and I was just struck by the challenge that that government faced this year.
And this was in the early 2000s, like the sheer number of people in the country, that the challenge to educate everyone, to feed everyone to to really kind of set an economic framework that enabled people to provide for themselves and their families in the long run.

And I really felt like I kind of got handed a lesson about what it meant to be fervent in one's own beliefs about something.
And so it's not that I don't still very much believe in human rights, but I think the time I spent in China really helped me realize that there's a lot of complexity to these questions.
So my original my original work there, you know, transitioned to a real deep interest in economic development and how you could help countries and the people in them, you know, develop the tools to grow their economies that hopefully would be rising tides that helped everybody out.
So that's really how I got started.

And then my work at Apple was a bit of a another kind of way that China pulled me back. You know, I'd gone from this nonprofit work and then trying to pursue economic development, which is what led me to Bridgewater Associates straight out of college. You know, the desire to really understand how economies really work and be at an institution that really kind of put its money where its mouth was every day.
I wanted to go work in technology after that to be able to be much more hands on in terms of creating, creating the types of devices that were changing the world.
And, you know, thankfully, Apple was willing to take a risk on me.

I knew a little bit about manufacturing. I'd done some I'd done some studies on the computer science and electrical engineering front, but nothing, nothing too serious.
But they thought that my experience actually getting things done in China in nonprofit would hopefully help me be effective. And I seemed like someone who could hopefully learn pretty quickly if thrown overboard.
And and I think I did. And so, you know, in that respect, I got to see a whole other part of China, you know, the working part of China and the manufacturing backbone and everything that had transitioned in the economy, you know, from the ten years really that it transpired since I'd been there doing nonprofit work.
And so that was another amazing look at what China was capable of.

So I guess, you know, China keeps pulling me back in in today's economy.
It's it's also interesting to be kind of thinking about and studying what's going on over there.
Those are my questions for you. Unless you have other things you'd like to have.
Know what an interesting conversation is there.
I'm just thinking about whether there's anything else.
Well, do you feel like you got what you were looking for?
Well, I wouldn't have stopped. I wouldn't have stopped asking questions about it.
That makes sense. So let me just from a factual question, what are you specifically doing at a clips like what's your what what is your role and what is your thesis?
Right. I'm an early stage investor at Eclipse, so there's nine partners at Eclipse. We have about $2.7 billion under management today.

The investigative two funds.
Currently, we've been doing a rolling series of $500 million funds.
We have one currently focused on Series A investments in three seed investments.
So we write checks anywhere from, you know, 3 to 20 million out of that fund.
And then we have a growth fund that does follow on investments, compounding of our views and our existing companies or kind of later stage investments and all focused on digital transformation of physical industry.
One thing we didn't talk about is that my background prior to Eclipse, I've been there for about a year and a half, but prior to that I was at a company called Samsara.
So between Apple and Eclipse was Samsara.
Samsara is an industrial focused Iot company.

Connected operations company really got its footing in fleet telematics.
The founders of Samsara are a group of people who had formerly built a company called Meraki, which was a Wi-Fi sort of software, hardware, advanced Wi-Fi networking company that was acquired by Cisco for a little over $1,000,000,000 in 2012, which is a lot of money back then.
Right. And just a brilliant group of people who saw, you know, post that acquisition in their ability to kind of pick their heads up and look at the world again.

Just an incredible transition that had happened in terms of, you know, the power of compute could put in a very tiny sensor device, you know, the power of cloud and being able to bring access to, you know, millions and millions of data points to someone's fingertips by, you know, gathering that data and presenting it in a way in the cloud.
And at the same time, they'd also had a lot of experience with industrial customers who were buying their Wi-Fi and felt like those industries were, you know, really stood the chance to benefit from the infusion of technology.
So they set off in to late 2014 or early 2015 to, you know, figure out what made sense in industrial Iot and really landed on telematics as an initial entry point, grew to be, you know, a very dominant player in telematics.

So I joined the company in its first year of operation was running kind of and and operations was doing that role up until about 300 million and RR and then got the chance to work direct with our CEO and and GM a totally new business unit leveraging some of our computer vision that we were using and dash cams, bringing it into industrial facilities to help with worker safety. So I had seen really firsthand the power of what bringing technologies to these industrial settings could do in terms of reducing workplace injuries, in terms of having far more data for efficient route optimization, for fuel optimization.
And hopefully that helps with greenhouse gas emissions, too.

Right? Just and the and the you know, the way that these industries were hungry for it, you know, they were ready to make these purchases and to get their operations into a much more digital format.
So Eclipse's thesis made so much sense to me and I was with Samsara basically up through the IPO, which happened kind of late, middle, middle late last year, then transitioned over to Eclipse.
But yeah, my, my role at Eclipse is to try and now choose the next generation of founders for these types of businesses across across all of these industries that we really think are the, you know, the underpinning of the US economy.
I've been throughout my career, I've worked in the Midwest and I've been on a lot of assembly floors for car companies.

Tell me what the middle of the assembly floor at a Apple Watch factory, what does it look and sound like?
Yeah, that's a great question.
And for what it's worth, we have a couple of partners at Eclipse who were very involved in the bringing up of Tesla's Fremont site, or one of them is actually formerly the head of engineering at Rivian.
So automotive is something that's very near and dear to us.

Yeah. When it comes to consumer electronics or specifically the manufacturing that I was doing at Apple, it's interesting because what they'll tell you about semiconductor manufacturing is that you expect to hear, you know, kind of a thundering roar of machines and equipment, but it's incredibly, incredibly quiet because it's so automated. You know, what I saw in my my role at Apple was kind of a mix, right? There were parts of the assembly that are much quieter in areas of the room that, you know, really everything is is pretty streamlined. And you have chip shooters, you know, basically with robotic arms, like placing all the chips, you have a sort of a gigantic squeegee almost, it looks like putting the soldering paste on top of your PCB and you all that kind of flowing through a flow

And you hear the the whirring of, you know, small parts and rotors and machines, but nothing overwhelmingly noisy.
And then you've got other parts of the room that have to do with, you know, either like loud or pieces of equipment. In our case, we had some pretty gigantic, you know, equipment for conformal coating, for transfer molding, things that were much noisier. And so you would definitely hear a much greater kind of mechanical set of noises.
And then there's obviously the sounds of people, you know, as you get kind of more into the parts of the assembly that are still relatively human based.
So people are pretty quiet, but there's still there's, you know, coughs and hiccups and, you know, the general the general buzz of humans, that's hard to avoid.

One of the questions I usually ask that sometimes I forget, but that won't go in this podcast. But I ask too, so I can assemble it in a podcast. Leaders What book made a huge impact on you? And it doesn't have to be something from, you know, Harvard Business Press.
But what book made a big impact for you or is is just a favorite?
I know this sounds funny, but I.
Early last year was reading Walter Isaacson's code breaker.
By Jennifer Doudna and CRISPR.
And so, you know, while there are certainly books that have had a big impact on me, there's one called Now which sort of talks a lot about China and sort of the history of a modern China.
My answer to your question about sort of the thing that's really.

Really moving the needle for me was reading about how difficult it is, you know, within the scientific community to make the kind of advances that that team made and to have also sort of a female role model in that respect.
You Bush believes in the in persevering, right.
And in putting the work in and doing so in a really understated way, even though there are times when you still need to make sure that your voice is heard or that your stamp is on something in the scientific community.
If not, it's easy to get passed over.
So I just really thought that sort of the struggle, the reality of what that community is like and how it works, and then just the sort of female protagonist of it all was, was really it had a really big impact for me.

I remember trying to explain on TV how important Jennifer is to the scientific community.
Have pointed out Walter Isaacson has written four books and I believe it's Einstein, Da Vinci, Jobs and Jennifer Doudna. That gives you the idea of what company she's in.
I think CRISPR will absolutely change the way that medicine works.
And I'm hopeful that we get to see some of those advances in our in our lives before too late. You know, I've always believed that, you know, hopefully my generation will be the one that sees an end to Alzheimer's and a change to how we combat cancer.
I think we're already seeing some really incredible changes on that front.
So fingers crossed. And I think that Doudna's work will have a big impact on that stop there.

Okay. And it would. And I'm going to do it while you're talking in the middle of something as appear as if I you know, I'm distracted or not paying attention.
I swear I am paying attention. You know, if I pick up my phone and start playing Candy Crush.
That's this.
You're boring. Yeah.
This still interesting?
Interesting. Boring. Yeah.
Got it. All right, so let's start with what you had for breakfast this morning.
This morning I had no breakfast.
I'd coffee, actually. I'm trying intermittent fasting right now, and, uh, yes, that's my current experiment.
Excellent. How's it going?
It's not quite at my weight target, but getting there.
So I think it's working.
I saw something. It said it's my intention or my goal to lose £10 this year, and I've only got 15 to go.
Wrong direction.

/content/Preprocessed_Data/SHR One to Grow On with Brian Rothenberg at Defy .txt

Question for you. If. If I mess up anywhere.
Well, we ate it.
I was just about to you know, I was just about to say exactly that.
And that is we will edit this in any way we need to.
Okay. If you get halfway down the answer to something and you stop, do you think yourself. Well, what was the question?
Just go. What was the question?
Okay, got to start over again.
If you feel you need to have more coffee or water in the middle of it, do that. Okay. It's totally fine. So we'll cut as we go.
So it's it's easy.
Rothenberg Rather. Good, good, good.

Yeah. I want to start with Eventbrite, because you were head of growth there, and I think it very much influenced your understanding of what growth is. I think the first thing I need to understand is what's the difference between a growth manager and a marketing manager?
Yeah, it's a great question and it turns out the term growth is actually a fairly charged word in many ways and controversial.
And so I think part of the reason why is, you know, a question I've often gotten is why isn't the whole company working to grow the business and people become maybe disenfranchized with the snake oil salesman of people?
It does vague.

It does sound vague. And there's been this this coining of this term growth hacking, which I think implies that you sprinkle some magic growth dust on the business and it'll just take off or.
That is somehow a trick.
Yeah, exactly. And really, it's not a trick.
It's a series of systems in a way of working together.
And so the way that I think about it is that growth is a blending of marketing, product and engineering all put together, and it's really about getting people across an organization out of their own silos and working together and in sync to impact the for customer experience to grow the business.
And it spans both marketing channels.

It's also the core product and it ranges from awareness to acquisition to activation to retention revenue and referrals, really the whole whole customer.
And ultimately it means having more customers tomorrow than you had today and a lot more customers next week than you had this week.
That's right. Yeah. And these businesses, as you start to understand what is actually fueling the growth, it can actually become much like an equation.
You pull this lever, the numbers go up.
Oh, you made a mistake, you pulled this down. Let's fix that and then look in this other area. And so it's really, again, systems and teams working together to to get the equation to grow faster.
And eventually it becomes a loop, right? I mean, the growth creates growth.

Creates growth. Exactly. And that's why, you know, marketing marketing historically has focused on the top of the funnel awareness and acquisition.
That was really the core. Yeah.
And if we if we tell people we have a thing, they'll want to buy the thing, right?
Or there's this belief if we build it, they will come.
And that's not really the truth of it. But if we focus on the full funnel and to your point, past the time where a customer has had a good experience and focus on, well, how do we get that person who loves our product to tell more people, it can be really self-reinforcing and as you said, a loop that comes back to the top.
You see this like in an Uber, you know, like I order an Uber, and while I'm waiting, you know, I may come across.
Do you want to drive for Uber? Exactly.

You're creating both riders and drivers.
In Eventbrite case, you saw the people buying tickets thought to themselves, Hold on, my church does a thing.
We could use this.
That's exactly right. That was actually one of the biggest growth loops for Eventbrite and one that I had a hypothesis coming in, talked to the founders about before joining. And then as I unpacked, after joining some of the key levers for the business, it was very clear that a huge portion of people who ended up organizing events on Event Brides platform started out by buying a ticket.
And as we unpacked sort of what's going on here, can we influence this?

We learn certain things, like once somebody bought a ticket to two or more events and once they bought across two categories, so say a beer tasting and a food event or a beer tasting in a marathon, they had this epiphany of, Oh, I can use Eventbrite to organize anything.
And so when they had the PTA fundraiser, they would think of Eventbrite.
And we found ways to amplify that awareness, that understanding and drive people to convert from attendee to event creator on the platform.
Through the product and marketing channels.
One of the things and I should say you were at Eventbrite when it was tiny, took you know, went all the way to the IPO. So back when it was still tiny.

One of the things I'm guessing you figured out was that or customers figured out was, I don't have to charge for my ticket.
It can be a free thing, which does doesn't really do anything for your bottom line. But you still allowed it.
Well, there's a really funny story there.
And it was kind of we stumbled upon it through dumb luck, but it ended up being so powerful to the business. So in the early days with Eventbrite, there was a question in the onboarding flow how much we charge per ticket, and we assumed in the intention was to always be a paid product, but people started entering $0 into the pricing field and we saw this and we scratched our head entire.
Huh? Like, what do we do here?

And I remember talking to Kevin and Renaud and Julia and others at the company, and we decided, let's let this thing go and let's see what happens.
And over time, free usage became enormous.
In fact, over the course of the company's life, it accounted for roughly two thirds of all events were free. And another interesting thing that we saw emerge is free growth typically led growth of the paid business.
And so at a very consistent rate, it was basically like a freemium product.
People would try the free product and then convert over its paid into paid over time.
I remember writing in our S-1, filing, showing the chart of that conversion rate and also seeing it. It was just incredibly steady. So it was a very powerful growth loop there.

We found ways to increase that free to paid conversion again through working with these growth teams across the full product and across the full funnel.
And it was super powerful.
And growth when you're calculating that is more than just we had ten customers last month, we have 100 customers this month and we hope for a thousand customers next month.
It's not just a linear thing, it's it's how long you hold on to them and what they do.
That's exactly right. Yeah. So we we did a lot over time as the user base became enormous, tens of millions of consumers on the platform, hundreds of thousands of event creators. You really have to segment the audience to understand, well, are there power users driving the numbers that we care about like revenue?
Is it, you know, are all users equal?

And what we learned is, like in most businesses, it tends to be a power lot, 20% drive 80% of the value. And so finding ways to keep those customers happier, to solve their needs, to focus on types of creators who were driving the business, like people who hosted repeat events versus one off events as an example.
So yeah, it's really full funnel retention, monetization, everything.
You know, one of the ones that surprises me as far as growth or usability is iMessage on Apple.
Now, if you're the one guy using an Android, all your friends do pressure you to, you know, Oh dude, you turn the whole conversation green, right?
Yeah. So there and certainly there's no doubt that Apple iPhones are very good sellers. I am surprised considering how often my imessages are central to my life.

I'm texting, you know, my my girlfriend on them, but also our group chat, also the boys trip coming up, chat, etc.
that yes, there are things that you can incorporate into it, but that it hasn't become the way to move money, the way to to, to schedule calendar events, etc..
It seems to have gotten stuck.
Yeah, it's interesting. I'm similarly I use it every hour of every day and I would have expected over time there to be more functionality.
So as you said, payments, calendaring, sort of a vertical vertical experience is built within it. I just haven't seen it and I'm not sure why.
But you look at like China for instance, WeChat payments are a prolific other use cases.
That's really the core. And so I don't know the exact driver, but it is a curious it's a good question.

The other place where there wasn't as much growth, I think, as you were hoping was the previous job, and that was TaskRabbit.
It did not take off.
Now eventually IKEA buys it. I mean, right, There's there's an exit.
Right. And I always thought Lebowski was a wonderful leader.
She's amazing. She is. She's in venture.
Now. Yes. Yeah.
Which is cool but it just didn't catch.
And can you kind of compare and contrast your experience at TaskRabbit with your experience at Eventbrite?
Yes, the history with TaskRabbit is I actually started a company in the local services space. So tangential to TaskRabbit.
Yeah.
You got acquired, right?
Yeah. So we ended up selling two to TaskRabbit.

And the back story that's not widely known is we were talking to Thumbtack, we were talking to others. And I think if you played forward, you know, going with a thumbtack may have been a better outcome for us.
But, you know, at the time, TaskRabbit was growing extremely quickly.
It looked like a rocket ship. I think some things that they got right.
Early on. Were they really a pioneer of the gig economy?
And if you think back to that time, it was it was.
A wild idea.
Wild idea. People were blown, their minds were blown.
They captured the imagination of both consumers and new entrants to the gig economy in terms of what's possible. And with TaskRabbit, it's trading money for free time and what's our most valuable resource? Often it's our time, right?

Or helping people flexibly make more money on their own terms, on their own schedules, etc. So it was a big idea and they captured a spark in the early lightning.
So when we did sell the TaskRabbit, the business was growing 30% monthly consistently, it looks like.
And the sit ups there, I mean, it's just like Uber.
Oh, you know, it's like I could hire somebody. Wait a minute. I have a skill I could do.
I could be a TaskRabbit. It's just like Eventbrite I need to have ever need.
Wait a minute, I have an event, but you know.
But somehow it doesn't catch on.
Yeah. And I think there are a few reasons, but, you know, it was growing word of mouth.
People were sharing it. It was it was amazing. You'd see it would penetrate a neighborhood in San Francisco and quickly spread.

And so I think all of us thought, oh, this is going to the moon.
There were venture capitalists walking into the office trying to pitch us.
They preempted the next round. It was amazing.
But some things that went wrong, I think one is there was actually a flaw in the initial product that was not helpful to their growth and our categories.
That is, the initial model was a bidding model where consumers would come in, they'd post a task to be done, say, I need this type of work.
I think it's about 5 hours or whatever.

And then the task is we are on the supply side providing the service they had to bid on a project basis. So they would think, Oh, I don't know, I guess maybe it's 5 hours, maybe it's ten. So oftentimes there would just be a mismatch in terms of expectations of the job to be done.
And what would happen is consumers would either way overpay for what would actually happened or the tankers would perform a job and end up working twice as much and they felt burned. And so what happened is it impacted liquidity.
People stopped bidding as much on projects or they bid and hedge by pricing at super highs and the consumers wouldn't follow through.
And what ultimately happened is the matching rate between somebody posting it has to be done and getting that job completed successfully.

It was steadily declining and it dropped towards 50%, which is just too low to come in to a new product experience.
I'm not going to try it again if I can. Yeah, that's exactly right.
So people who weren't successfully matched and didn't get the job done in a successful way, they never came back. And so the top line was growing so fast, I think it masked that problem. But as we came into the business through this acquisition, we started to see, Oh, this looks problematic, we've got to solve this.
And they ultimately did. They pivoted the business.
They moved to a more hourly based model.
They went into a much more vertical focus and they did reaccelerate the business.
But it was a painful period.

And the second big thing that I think went wrong at TaskRabbit is there's this this well-known image. I don't know if you've seen it of Craigslist with all the links on the Craigslist page.
Oh, yes. And it's it's everything on the Internet is essentially Craigslist.
It becomes this and that.
It becomes StubHub and Elance and Airbnb and all these vertical solutions.
And if you looked at TaskRabbit home page circa 2011, and I'll show you this image here, you know, the page looks kind of like TaskRabbit.
There were house chores, grocery shopping, all these different categories.

And if you look at the companies that came up behind them with a vertical approach like Instacart for grocery delivery, yeah, there were even tasks like my first task on TaskRabbit that I had fulfilled was give me a ride from my apartment to the airport.
Which is lifted, right?
Yeah, left. So again, these vertical, very specific use cases became multibillion dollar companies and I think they sort of eat away at TaskRabbit horizontal approach.
So yeah, this visual you show me is the 2011 version of the TaskRabbit home page where you can get house chores done, delivery, shopping, office help and then in the margins with arrows pointing to them are all the things that eventually became those things, things like Postmates and Instacart and Thumbtack and GrubHub and Lyft, etc..

Yes, they were almost too general.
It would have been better if they had decided to be a food delivery service or just a person delivery service.
That's right. We actually had a discussion as we saw these rides starting to take place.
Lyft was just pivoting from Zoom right into Lyft and pushing this forward, and we pitched, Hey, maybe we should create a vertical app around this, and we ultimately didn't pursue it. So, I mean, these strategic decisions happen, but we know how that played out there.
An idea and went very early with the television station website.
I said, you know, we're selling these banner ads.
What if, you know, we the computer examined the wording in the article that the person was interested in travel to France or whatever.

Yeah, they basically invented Google ads. That's right.
Could what it should. It could have what it should.
What sort of lessons from TaskRabbit or Eventbrite have you taken as you are guiding new portfolio companies now that you're in venture?
Yeah, I think one benefit of the experience across the growth side is every founder's looking for ways to grow faster.
Sure, etc.. So it turns out that skill set is in pretty high demand.
And I think one of the things that we've done successfully in transitioning to venture is really bringing that operator mindset and partnering with founders.

And for example, early on when I joined the FEI, I actually spent a day a week at one of our portfolio companies as their interim head of growth, helping them work through a really important inflection point in the business was helping them with their growth experiments, product feedback, etc.
And ultimately, you know, they did the hard work, they get the credit but helped them get to their next level, the next funding round, etc..
So again, I've done everything from spending a day a week in the office to whiteboarding sessions on strategy, to helping to hire, reviewing data with companies.

I will go as far in the weeds as founders want me and try to let them do their own thing when they don't. But really I think that that foundational experience of learning how to grow a business from founding through to IPO is at least.
Nathan tell me it's it's super invaluable.
Absolutely. Now, when you're when you're a small startup, what works for a Google like an AB test doesn't work, you know, because I've only got five customers.
That's right. Yeah. So I found I actually have a post that I wrote about this, how growth is not one size fits all and it has to evolve.
And so one of the things is very early on, you don't have a lot of data.

I tend to be very analytical and data driven, but that applies at a later stage when you have the data. And so early on it's really how do you find your core base of 100 fans that love you.
And why are they showing up?
Why are they showing up? What do they actually specifically love?
How can you communicate the value that they receive to new people who come to visit your service, your app, or your service?
But really, it's much more qualitative and working to dial in.
Do people love us? Are they telling other people about us?
Are they spending money? Is that velocity of spending money and or sticking with us growing and improving over time? And then once you have that core nucleus, you can expand into more ways to attract, you know, the next thousand hundred thousand million users.

And then it becomes a different approach to growth from there.
Can you give me a specific example of something that worked?
You have to think about that.
No, no problem. And take a sip of water, too, while you're at it.
Yeah.
Do you mean work from the early stage or.
No, just, you know, as I was advising companies, they were doing X and I thought, well, wait a minute, maybe Y would be better.
Hmm. And maybe not, you know.
Yeah, well, hopefully, yes, because that's your job.
But.
Yeah, Yeah. You know, I'm trying to think of the best example.
I don't know why. I'm like, you know.
You know what? You know, Then we'll come back.
We can do it out of chronological order.
Okay. Tell me about life in Defi and life as a venture capitalist.
What? What? What didn't you expect?

Yeah. So I've now been it's a five, four, four full years have been my fifth year here.
I joined the, the first fund and you know, to be candid, it was quite a transition.
Having spent my prior career as a founder and 15 years as an operator, despite being an angel investor for quite some time, there's a difference between that and being a full time investor, but it has overall been great.
I love the job. I want to do this for the rest of my life if I'm fortunate enough to do so. One thing that I found, uh, it's sorry, I forgot the question was.
Oh, just tell me about life and Defi, you know, I mean, you're you're not a new venture investor, but relatively, this is the first.
You're not coming from lightspeed or something, you know?
Yeah.
Yeah. So having joined.

Defi. I think one of the things that I've appreciated most is that we do embrace a team first approach. So some of my friends at other shops, they're great firms, but they are sometimes kind of a lone wolf out to hunt and find their own deals.
And you eat where you kill and it's it's a little bit lonely.
I often hear from them. Here at Defi, we have a slide that we've used in fundraising decks where we approach like a basketball team.
We're often, you know, I may meet the entrepreneur first, but we quickly pull in my partner, Madison or Kamil or Bob.
We're then meeting together.

One of the things that I think is novel that we do is if we discuss a potential company and there's somebody skeptical in the room, we'll actually pair up that skeptic with the lead partner to help push our thinking and, you know, see if can we convince that person. And when we do, we feel good about that or help push, push and ask the really critical questions. So I've really loved the team based approach.
I think I've also learned there's a lot of nuance to the job that I probably didn't appreciate from the outside in. So things like fundraising, how you manage the firm, recruiting and building the best team nuances of being a great board member when to get involved versus versus when to sit back.

You know, one thing that I found very natural throughout my career is being an empathetic confidant. And so I think that's working with the founders I work with.
But learning when to push and when to to take a more passive position has been something that I've had to to learn and develop over time.
You have entered if you entered four years ago, you you came into the system when the money was free flowing.
There was almost no place to put it all into a whatever we are in now.
Nobody can come up with a good definition of where we are now.
Yeah. What sort of changes have you seen in those four short years?
It's been a wild time. I joined in 2019.

We were at a period of time where you could actually meet over the series of weeks and or months, get to know a founder, you had time to do diligence, etc.
and then fast forward to yeah, March of 2020, people thought the world was falling off a cliff.
And I remember people were scared. They didn't know what to do.
And I'll tell you, Defi was actually our most active quarter of investing ever.
So we put to work a huge portion of our second fund in that quarter.
And I think that comes from having seen past downturns and believing, hey, you know, this is meaningful, but we believe it's a temporary dip.
And so we had the conviction to go to work hard in that period.
Then you fast forward to the back half of 2020 and it starts to get crazy.

I think people felt like they were sitting on the sidelines.
There was a lot of FOMO. You know, Feds were pumping money into the system.
Venture firms were raising billion dollar, then 2,000,000,003 $2 billion funds.
And all the money had to go to work. And so it was just this frenetic time.
And then you put that also in the context of it has moved to zoom entirely for first meeting. So you're spending a day where you have 16, 30 minute meetings back to back. You know, it's an extreme example, but it just the pace was frenetic.
And, you know, as we went into the back half of 2020, we actually worked to get a lot of our companies marked up and funded in that period of time and into 2021.

And 2021 was actually one of our slower deployment paces just because we felt like pricing was getting out of whack, it was getting a little bit extreme and well, it felt uncomfortable at the time to not be playing the game of let's just throw money around. In hindsight, it was the right thing to do.
And now that we're back in the current market or where we are, where it's, you know, more measured, people are not deploying.
We just activated the new funds. We've been fortunate to raise our third funds, $300 million or early stage vehicle.
We've made three or four investments out of that new fund, and we're meeting entrepreneurs every day. And well, I think a lot of people are pencils down.
We're actively working to find great entrepreneurs and back them despite it being a down market.

It is strange that in the four years you've been doing this, it's been like the the sampler platter of investing of of the boom times, the, you know, maybe not bust times and throw a pandemic in there.
And it's just in four years.
It's been a wild ride. Yes. I feel like maybe that's been eight years of normal learning time, but. Oh, easily. But it's been it's been great and challenging and all the things.
Your family is from San Francisco and it goes back a long way.
Tell me tell me about who came to San Francisco and when.
Yeah. So I'm proud to be I call myself a fourth generation San Franciscan, although I live outside of the city, but my great grandparents immigrated to the US in the 1800s, so they made their way to S.F.
They operated two jewelry stores in the post Gold Rush era.

My grandfather that came from that, that side of the family was very blue collar.
He was a mason and an electrician in the city.
My grandmother worked at Lowell High School, which is a well-known high school in.
The sunset. My my grandpa, my father and his sisters grew up in the sunset, and so my brother and I were the first to move out of the city, to the suburbs, the East Bay. But we just came back to the city all the time.
It was my dad's life and we learned the history of the city where he had grown up, where my grandmother first grew up, etc.
And so I just have this amazing affinity for the city.
I lived there for over a decade as well myself, post-college, and I think it's one of the greatest places in the world. Although facing its own challenges now.

That was going to be my next question, right, is, is that someone who can authentically say they are a San Franciscan and has seen so many changes and of course, the generations before us saw changes.
It used to be a military town and then, you know, it was the the summer of love and then it was a tech boom.
And and now it is whatever it is.
What what is it? And and what do you make of it having so much history in your family in San Francisco?
Yes, I was in the city yesterday and and taking things in.

And I think it feels like it's coming back from the COVID deaths. I would say it was a little bit sad for me over the last couple of years to see the state of the city. It felt like it was in many ways in disrepair, people had left, etc. and there was probably a time where I would have said, I don't think the network effects of San Francisco can ever be broken.
One story that I love is I actually started my last company Skill Slate in New York.
I convinced my co-founder to come out to S.F.
to see the city, and I was trying to convince him that we have to move to San Francisco.
We were sitting in a Starbucks talking through a problem that we were facing.

We didn't know how to solve around our business, and the person next to us had been NYC had started a similar company and chimed in and said, I'm sorry to interrupt, but here's how we thought about that problem. And it was this unlock for the business.
And so that cubism, oh my goodness, there's this depth of talent and serendipity happens and and it's just incredible.
And, you know, I think maybe the density is less than what it was five years ago or so, but it is getting better.
People are out there seeing each other.
And I just have a lot of confidence that hopefully it will come back.
I think we have to get some things right around safety and people have to feel safe and hopefully we do get there.
Those are my questions for you. Is there something else you'd like to add?

I don't think so. The question I missed was how?
Oh, yeah.
Yeah, yeah. Was there an example of, you know, Yeah, I have this portfolio company and you don't have to name it, but I have this portfolio company called X and, and you know, I suggested or we the team together, figured out that, you know, if we did this, it would double growth.
So.
Yeah. Okay, I've got an example.
Okay, good. Okay.
Great. Um.
So one company that I'm proud to work with is called Alto.
It's a real estate marketplace, helping homeowners sell their homes directly to qualified buyers outside of the MLS.
And they're calling it self-serve real estate.
So putting people more in control, selling for lower fees, etc..
And I've known this founder Nick for about a decade.
We met as founders in New York. He's great.

He and team are great. But one thing that I helped them think through early on was they saw a similar dynamic where people would start out browsing homes as buyers on the site to see new listings, and then they might find a property that they're interested in purchasing and think, Oh, well then I have to go sell my house.
And so if you remember the example I provided earlier about Eventbrite, people starting as attendees, people looking for things to do, and then Eventbrite becoming top of mind and then converting into the creator event, creator side.
Well, there's a very similar loop here where people discover homes and then they convert into home sellers on the platform too. And so really help them think through some of the past parallels with Eventbrite.

Whiteboard sum flows for how we can increase that awareness on their platform, and it's been a really big channel for them. So it was fun to take some of my prior experience, be able to apply it in this case and help them think through that to grow faster.
I can see the frustration, right? I mean, the person goes on and finds a house they want to buy and then goes to find a realtor to sell their house. The firm would be alto would be like, No, wait, hold on. You don't get it. You could sell your house here, too.
That's right. And you can do it. Do you really want to pay 3% to the seller or do you want to? We'll help you. But you do some of the work and you pay 1% instead.
And it's a really valuable offering.

Last question I have for you, which is one that I won't include in this episode, but I ask everyone this and then I got to smash them all together in a in a summer episode.
Is what book was influential to you?
And influential can mean anything.
It can mean it's one you give as gifts or one you read more than once.
Or it doesn't have to be some Harvard Business Review thing.
It can be publishing. It can be Winnie the Pooh.
Yeah. You know what? What book is important to you?
I think one of the books that left the most lasting impression on me was actually Warren Buffett's biography, Snowball.
I really enjoyed it. I loved learning about his life, his way of thinking.
I watched his annual meetings and it's I feel like it's a mix of life wisdom, but also just investing wisdom as well.

And so I really appreciate his long term way of thinking.
You know, it's not a venture style per se, but he takes a long term view.
He is incredibly thoughtful. He focuses on on family and and bigger things in life. And I appreciate his wisdom.

Watched. Really?
When I keep telling him, I think you might enjoy it.
All I know is it's a great movie, you know, period.
And then on top of it, you know, a search for submarines.
But, you know, kids these days, it's they don't trust that, oh, gosh, it's not going to come.
Yeah. Where did it come down? I don't know.
Maybe 1990 is like, oh, I'm not going to watch some old movie.
Yeah.
Yeah, yeah. That's like a really old movie. Alec Baldwin, he's 20 in that movie.
Yeah, that's true. He does Disney.
Okay, so we don't record the video, but we just use it, you know, just.
Oh, sure. Yeah. For expression and that kind of stuff.
Yeah.
And then it's very, very casual.
And so if we get halfway down the conversation, you can't you'd like.

/content/Preprocessed_Data/SHR A woman, a man, a dog or a rock.txt

Well, what was the question? Just wave your hands in the air and and and start over. And then where is your microphone?
Let me show you this.
That's the mike.
Oh, good. Okay. Excellent.
It's like it's right in front of the screen.
So it's a little bit.
Yes. Good, good. Should be fine.
Excellent. Then just count to ten for me.
Sounds good. You know, the thing I want to start with was one of the things that was mentioned in the email and will touch on a number of subjects.
But is that you've worked with companies that want to diversify their boards by hiring a member of the LBJ LGBTQ support?
It's hard to say.
But you do.
It's actually GQ plus.
Yeah, well, that too. Yes.
Yeah.

Tell me about that. I mean, what experience have you had and how did it work out?
Well, what we're seeing now, Scott, is that when we asked the question about diversity and inclusion and we asked, you know, would you be willing to consider an LGBTQ plus candidate, we're getting back the responses that, yes, we want to consider everyone. You know, if they're great, if they've got an ability to impact our board and improve governance, we want to consider them.
So it's just starting to become something that people are cognizant in terms of their market to want to include, particularly in consumer products, entertainment, retail, you know, areas where they're aware of a particular market that they're serving. But it's just becoming something that's important to include everyone.

And now this is not something I mean, in your long career, this is not something that's necessarily been the case.
No, not at all. It's something that just wasn't talked about.
And in fact, you know, people, you know, like the CEO of Apple, you know, coming out there are there are a number of individuals that have come out that are known that are sitting on boards, many in leadership today. And it's just becoming something that's moving forward.
And there are a couple of organizations that help promote that.
There's an LGBTQ there's several LGBTQ organizations that are to promote leadership among their members, you know, being able to see, know, trying to break down some of those barriers that are that are that are really not all that visible.

Meaning they're not something that you actually see all the time or people always talk about. But we're seeing that that the LGBTQ community in general is becoming more prominent.
And as a result, you know, companies are realizing when you talk about balance, we talk about inclusion.
It's not just gender and it's not just gender and racial backgrounds in terms of equality or inclusion, but it's also people that are gay or queer and how they talk about it.
And so now from a recruiting point of view.
That's difficult because, you know, if if someone if the board comes to you and says we want to further diversify you, you obviously are looking for qualified candidates first.
Mm hmm. But then how how does that even come up in the conversation?

I mean, there are very strict legal issues about asking about somebody's sexual orientation, but also just determining that at all.
Sure. Well, when we talk about when I make an introduction, I talk about balance and I talk about the fact that we don't like to use the word diversity because it's misused. And now women are really aware of that because they'll say that we're looking for a diverse candidate, which doesn't mean anything.
What does that mean? Diversity of thought? Is it diversity of what?

And so the word diversity, or at least using the word diverse associated with a person, doesn't make a lot of sense and is often a bit of an irritation, particularly to women. So when I'm talking at the very beginning of a conversation and I'm talking a little bit about our board practice and that we call it Balance Director and that we don't like to use the word diversity because it is misused and that we believe in balance in all areas, including LGBTQ class.
So I'll make that statement upfront and I don't hear about it from as many males as I do women.
That will be very they'll tell me I was just speaking with a woman yesterday that is a very strong leader who has built many companies and sat on many boards.

And she was telling me about her partner. And and then she also talked and we start talking about the LGBTQ community.
And so it's really me talking about balance at the beginning and leaving the door open for them to, you know, let me know and and to flip their, you know, you know, being able to express what.
You know, what their backgrounds are and and whether or not they're in that community based on me leaving that door open.
And and mostly I'll see women do that.
Rarely I will find a male that will be open.
But often the way in which they express it is by talking about their partner. So often they'll that's how I'll know.

They'll say, well, you know, my partner or my, you know, who happens to be a man or happens to be a woman, or they'll say, My partner, he or she, and and so then I know. And that's their way of expressing it to me and letting me know.
It is a difficult assignment, though, because it's one of those things.
It's not apparently obvious the way that a headshot would be.
Absolutely. No. And, you know, even in the past when we were just using the phone, you know, pre LinkedIn, we would never know who we were talking to.
Didn't know if it was Latino candidate or African-American male or African-American woman. It was often when I met them in person.
And for many years I did not meet an African-American male as the CEO candidate. It wasn't until I met John Thompson, the CEO of Symantec.

Really wonderful guy, by the way, ended up on Microsoft's board, but he was the first African-American male CEO candidate I met and I didn't know it until I actually met him in person.
I we've interviewed John, and I'm going to tell the listener that he he tells a funny story about that whole situation.
And I'll let the listener look that up on Sandhill Road in our archives.
There is whether you're looking for a female candidate or you.
The word I guess you used is balanced candidate.
When you're looking for a candidate, that helps balance a board.
Mm hmm. There is a very delicate search that you have to do in which you're looking for qualification, but you're also looking for a person that would balance out an all male board.

Exactly. And so that that oftentimes is a it makes the search not more difficult, but.
Surely it makes it more.
Well, does it make it more difficult?
Well, the way in which we do and conduct a search, God is we we call ourselves a science based firm. So we're really all about data.
And at the very beginning of a project, we are identifying the candidate ecosystem.
And if we're looking for a woman, then we are only identifying women.
We're doing a search. We're doing a couple of searches right now for women to be added to boards. One is a public board, one is a private board.
And we are looking for women that understand automotive, tech or data as a service.

And we could also consider someone out of an insurance company that, you know, serves the automotive space, you know, that is in the automotive insurance space.
And we're looking for either chief customer success officer as chief strategy, officer, as Chief Marketing Officer, as chief technology officers and or CEOs.
So we identify those by title and company.
We can identify the women. We have a fairly good network of women that we go to first, and we pretty much know who we're going after at the beginning of the project based on capturing that ecosystem.
I guess what I'm.
Maybe it's maybe it's much more familiar to you because you're in the headhunter business, but.

I guess you're just speaking of it quite plainly, you know that if you are assigned to go out and try to find a board member who the board would prefer is a woman, you're going to look for a woman candidate regardless.
Exactly. We may consider a few male candidates, white male candidate. You know, those that are not considered diverse are white males, East Indian males and Asian males.
That is not a diverse candidate.

And so anyone that's not within those three categories would be considered diverse or someone that would improve inclusion or balance on the board. So we will, again, isolate those that we identify upfront. We might include a couple of white males or an Asian or East Indian male under the slate. So it is a balanced slate and that the client has the opportunity to know that they're making a decision among the most qualified candidates.
Now, are there any legal obligations on your point, because you are an outside contractor and hunter not to be paying attention to race or gender?
Oh, absolutely. On all searches, we don't and will try to encourage a client to always use our diversity first model.
We have a way of doing search work on any search.

In fact, I was just talking with the CEO and our chief operating officer about $100 million software company earlier today.
And they mentioned that they would love to find a woman for their chief revenue officer search that they're considering.
And I said, well, we do something called diversity first, where we just identify the women that are either in the job that we're searching for or could be promoted into that job out of every one of your competitors and peripherally related industries.
And they said, What do you do that for all your clients?
And, you know, I didn't a we don't.

Mainly because some clients think it's going to take longer or others want to make sure that they include everyone and make a decision from that because they also have to be concerned about people internally in the company.
Because if you're doing a search this just for a woman that used to be the case years ago, I couldn't get Hewlett-Packard to consider doing multiple searches, and they wanted to improve diversity and they wanted more women and people of color in leadership jobs. I said, Well, why don't we just do an overall search where we're looking for people in multiple disciplines and multiple roles and see who the best candidates are, you know, people of color and and women.

And they found that there was pushback internally because they thought they weren't being considered, you know, the white male population predominantly, that that wouldn't be fair to them. So that never went forward.
Now, that was 20 years ago. So today it's much different.
Companies are willing to look just for a woman, and there's no problem in doing that.
And we may not be including others, but because it's such a well-known fact that there are not enough women in leadership positions and people of color, that searches can be done specifically.
Now, occasionally we'll hear that, you know, we'd love to find a Latino male because they've got women, but they don't have a person of color, you know, an African-American male or a Latino male.
I guess I'm not being in the hiring business.

It is okay from a legal standpoint to say I am going to exclude a certain subset of people from the search.
No, I don't think that it's okay to exclude any subset of people. The language that's used as we're doing a search is a preference, so we prefer a woman. So that's okay.
To say that we only want to see women candidates is probably not okay.
But though you just said that you sometimes present only a slate of women candidates.
And we call it diversity first, meaning that we'll find the women candidates first, and then we'll also show them the other grouping, which is, you know, white, Asian and East Indian male candidates.
You placed the one of the HP CEOs.
Now, there have been a lot of HP CEOs.
Tell me which one in your experience doing that?

That was Carly Fiorina. So the board came to me when they selected us to do the search, and they had a copy of Fortune magazine that Carly was on the front of as the most powerful woman in technology.
And they said, we'd really like to hire Carly.
She was not my number one candidate.
In fact, I tried to dissuade the board from hiring her, which I was unsuccessful at in the final hours of the search.
When we look at the history of HP, and again, they've had quite a quite a long history of of CEOs.
Carly Fiorina did not turn out to be the CEO that HP needed.
No, I don't think she was at all. In fact, I think she pretty much destroyed the HP culture that I loved. I was doing all the search work for you at Packard.

I did about half the work when Lew Platt was promoted to run half the company and then when he was promoted to CEO.
I did all the work there and I even had the chance to meet David Packard.
He would sit right on the aisle as you came in to corporate headquarters, as I was walking down to lose office.
He was always there. I only talked probably about 20 words together.
But, you know, someone that I'd always admired and knew, and there was something called the HP Way, and I loved it, you know, which was a commitment to, you know, the best technology, a commitment to customers and commitment to their people.
And I think that all went out the window and Carly was there.
One of the first things she did was upgrade the jet fleet.

She was angry at me and angry at HP that they picked her up in a jet that was older than the AT&T Jets that I guess she was used to using.
And I thought that was just terrible.
It is important when you are advising companies to argue against a candidate at times.
You know, we think of headhunters and advisers as as advocating for a choice, but sometimes saying, no, this is the wrong choice. That is just as or possibly just more important.
Absolutely, Scott. And I think that really is what defines a good search person, is someone that's willing to stand up when they know someone is not right and be willing to to go up against a client's opinion and say, this is someone that you really shouldn't hire.
And that was something that I discovered about Carly.

I really felt that I what I ended up doing was I started doing references that that she had not given me.
And she was very precise and letting me know that I was not allowed to talk to anyone other than those that she'd vetted because she had to keep it confidential, etc., etc., which I discovered.
I decided I had to do something.
And we had two people that were actual candidates that worked with Carly that were, I discovered, were two or three levels above her.
And I called one of them who was another female candidate, and I said, I'm sorry, you know, you're not a finalist.
And I wanted to ask you about Carly Fiorina.
And there was silence on the other end of the line for about 30 seconds. And I knew something was the matter.

And I discovered that Carly was not who she professed herself to be.
She did not have the general management experience that she claimed and what was in the Fortune article, and she was trying to keep me from finding that out, but she had, what I would say actually manipulated the board, which she was very good at.
That was one of her primary skills, and there was nothing I could do about it at that point. There was one person, particularly on the board, that was a very significant advocate, and Lou, who they were pushing out, had pretty much been exhausted by the process because it was very difficult to get the board to decide and to move forward.

My top candidate was Ray Lane, but he was decided to turn the role down. He later became the chairman of HP and is still on the board. The company would be significantly different if they had brought Ray and he's a fine. He would be a wonderful person, incredible leader, and the company would probably be twice its size today and you know, probably owned Google or something like that.
Now.
In modern day, you say it's a good time to take a job as a CEO. Why is that?
That's always a good time to take a job as CEO.
I'll take the offer if you if anyone's offering.
But why is it why is it a good time to take a job as the CEO?
Well, I think when we're in a time like we are today, Scott, where a market is in turbulence and there are many companies that need to be turned around.

Many of the companies that have been darlings on Wall Street and Nasdaq that have been high fliers have really been lifted by a very strong market. And the fundamentals of the company are not sound.
And so someone who is a strong leader that can come in and turn a company around and really understands the blocking and tackling of driving a company forward and scaling it and creating new efficiencies and and lowering costs, etc., can really make a name for themselves.
And it's a time when companies need to be cleaned up.
They've been running kind of fat, dumb and happy, many of them, for many years now because there's been such an abundance of clients out there now calling.
And they're starting to tighten their belt.

Many have already bought a lot of technology and we're going into a recession.
So or at least many people believe we're going into a recession.
So this is the time where the real CEOs stand out and those that are up and coming chief operating officers, business unit heads, general managers that are getting into their first CEO role have an opportunity to really come in and just apply, you know, leadership one on one and turn a company around and make a name for themselves.
What's the most important quality you're looking for in a CEO?
I mean, you may have a CEO candidate, for instance, that's of a company that's never made a profit but still has the skills that you're looking for because it's more than just sales figures on a on a graph.

Sure. Well, there are a number of things, Scott, that we that we look for at Christian Timbers. We number one, we look for honesty, integrity, shared values.
You know, that's kind of table stakes. Number two, we look for incredible intellectual horsepower, but the ability to use that intellect to make things happen, finding critical paths through complex problems and being able to do that easily.
Number three, we're looking for people that have a passion and intensity that's infectious within an organization and love building things, growing things, making things happen. And they just seem to be able to do it over and over again.

Next, we're looking for someone that has a repeatable leadership model, something that they've used over and over again to build companies or to scale an organization.
We're looking for people that understand customers.
And and and whether it's a customer, whether it's a client, whether it's a corporate client or whether it's a consumer.
They listen, they understand, and they bring that knowledge and data back to the company to make sure that they're always on the forefront of whatever they're offering to their market. Next, we're looking for people that have humility and that have the ability to learn. And that to me is incredibly important because only humble people are learning and only learning. People build learning companies and only learning companies grow.

Is there a person out there who's unavailable that you wish was a free agent that was on your roster?
Oh. I mean, there's always someone that we think is fantastic that we've run into, and it's either on our network or what we capture in data at the beginning of a project that we get it.
I used to have years ago, I would.
There were about, I don't know, 20 or so people that were great general managers and we were always doing SEO searches and a couple of them were actually at HP before HP became a client. And back then, this was before people were, you know, before there was email. Of our back it goes.
And I would be calling in at night looking up phone numbers.
And what I'd find is, is and trying to call people at home.

And and these were generally those that I could not get to respond to me any other way. I couldn't get there. They weren't responding at their work number.
They weren't responding to any correspondence that was going out.
And today, it's the same thing. You know, we'll run into people that don't respond to our emails, don't respond to our outreach.
We get very aggressive. We're using LinkedIn, we're using text based communications.
And those that are the best are always those that are the hardest to get to. So some of the doesn't respond.
That gives me a signal that that's someone I've got to aggressively go after.
I believe they call that playing hard to get.
Steve Jobs asked you to put into place a couple of board members.
What what sort of criteria did he have?

Well, that's a funny story, Scott.
An interesting story.
I think I just got lucky and happened to call Steve at the right time when he was in a bit of a conflict with his board.
The board wanted him to bring in a woman.
And Steve wasn't against bringing in a woman, but he wanted to get the absolute best person. He actually told me, he said, I don't care whether it's a woman, a man, a dog or a rock. I'm just going to bring in whoever the best person is and whoever I want to bring in who's the best. And so he really kind of put me between himself and the board in dealing with this issue.

He ended up bringing in at the end well, in the middle of the search, she brought in Al Gore, which I thought was interesting, because the board wanted a woman and I had a slate of candidates. I think it was I didn't know at the time, but he knew, I think, that they were going to have some problems that had to do with government regulation, regulatory issues. And it was a brilliant ad actually at the time.
He did then bring in Andrea Young from Avon, which was the candidate that I presented, as well as Ron Sugar. So he actually brought two people.
And Ron was the CEO of Northrop at the time.
He's an incredible CEO. So that was the first woman on Apple's board.
And he was looking for what was important to him.
And he wasn't always letting me know that he didn't play his hands.

He was someone that was somewhat secretive.
One of the things I was asking is I said, Steve, we really need to know what the future of Apple is to be able to tell people, you know, what's exciting, what's coming next. And he would not tell me anything about what was coming next because he always made a big deal. You know, anytime there is a new product launch, it was a big you know, it was a show that he put out to us.
Yeah.
As you as venture capital invests, they place their own people on boards.
And one of the easy ways to exit a board is after the IPO.
But companies have been slow to market lately, meaning that a number of venture investors will find themselves on a lot of boards without a way of getting out of it.
Yeah, and that can be a problem.

Absolutely. And that's something that we're seeing more and more of.
And the board membership is adding up for many of the top venture people, particularly in the Bay Area.
You know, some of the top area of venture partners are finding their their dance card getting incredibly heavy and and somewhat cumbersome because there is no IPO market and that's when they get off.
A good venture capital is just going to stay on the board and make sure that the company transitions well as as a public company and then gets off the board as they start to sell stock.
But because we don't have an IPO market there, that type of search work has as really pretty much come to a halt.
So now we're doing mostly current public companies and companies that may have gone public in the last couple of years.

And lastly, if I'm listening to this and I feel I am at the point in my career I have risen just below CEO and I'm ready to be considered for that position.
What do I do to make myself more visible as an obvious CEO candidate?
Well, I think there are three things that are important to become visible as a CEO candidate. Well, one of them is just making sure that you've got the right LinkedIn profile because all recruiters, as well as boards, whoever is doing any hiring, is looking on LinkedIn.
So making sure that your general management skills are there if you've, you know, most likely, like the best candidates for CEO are either coming from the chief product officer role.

So you're chief product officer, you're going to be called for early stage and maybe later stage venture backed companies.
If you're a general manager, a business head, a chief operating officer, making sure that you, you know, talk about and that you've presented the things that you've done to scale and what you've done in hypergrowth and and making sure that that scene and and that your profile really is representative of the general management qualities that people look for in a CEO.
But the more important things is to use your network, get to know people in venture capital, you know, look and find those individuals that are CEOs today. And sitting on boards and making sure that you're known using your network is going to be the most important thing.

But being visible to people like ourselves is also something that you can do.
But the bottom line is, no matter what, the most important things that you can do is get things done, work hard, make stuff happen, get results.
Because people end up finding out about that.
No, that's great. I, i thank you, Scott.
I hope I gave you things that your listener.
Yes. Interesting.

Look at this screen, make sure that it's rolling, that kind of stuff.
And occasionally I'm going to put on the headphones, but not all the time.
But I am listening to your rants. Okay.
Yeah, I'll.
Pretend not to notice.
Exactly. Yes. It's not like I'm checking my phone, you know.
I mean, I am actually interested in what it is you have to say.
Go ahead and pull that towards you so that it's about like this, you know, about.
All right.
Whatever's comfortable, if you need to pull it further back because you want to recline or whatever, that's fine, too. Okay, well, you count to ten for me.
I got that answer right in that.
Yes, you did. One, two, three.

/content/Preprocessed_Data/SHR Will Glaser Take the Cookies, Leave the Data.txt

One of the questions that real professionals ask is, what did you have for breakfast?
Because you get a much more natural answer.
All right. Yes. And in Silicon Valley, you can get some pretty weird answers.
I bet. I bet.
All right. I'll leave the headphones on to begin with.
I'm going to start obviously with Pandora, but we will get into grab and go after that.
Cabango You're kidding.
Cabango And you know what? You are not the only one to make the mistake.
It's it's.
Unclear. I didn't know. I assumed it was.
Well, when I first read it, I thought grabbing go good.
And then I realized what it stood for.
Grab and go.
Right.
Which is the whole point. And yet it's great.
Group bango.
Group bango. That's right. That's what.
Holy cats. All right.

So you started you started Pandora in your living room.
I did. I do.
So it actually started a few years before it started.
And by that I mean to say it didn't it was not originally designed to be for music.
It was originally for video. And so I was in a video rental store, not a blockbuster, but similar to Blockbuster, deciding what VHS tape I wanted to rent.
And I had this problem that I had an opinion about the ones I had already seen and had no opinion about the ones I hadn't seen.
But I wanted to rent a new one for the first time and realized that's my problem in a video store, but it's everyone's problem in a video store.
And as I want to do, I started solving the problem mathematically.
It's a very human problem, but I tend to solve things with mathematics.

That's my bag.
And came up with a solution. I think documented it, wrote it out pretty thoroughly, and then put it away for years. Never thought about it again, didn't seem like a thing I wanted to do. Then it wasn't my job.
It was a hobby and exercise.
Some people do crossword puzzles, I do stuff like that.
And then several years later, two friends came to me and said, We want to develop a system that recommends music to people.
And it was myself, product and technology guy John, a business guy, and Tim, a musician.
We were all friends, acquaintances, not, not we.
I didn't know them as well. We were acquaintances.
And Tim believed he understood people's taste in music and could make recommendations.
So I said, I don't believe you.

Come to my apple, we're having a beer, come to my apartment and tell me what I like and why. So he came to my apartment.
He looked at my collection of CDs and told me all about my musical taste, what I liked, what I didn't like, and why in a way that I didn't understand.
I mean, I didn't understand beforehand.
I came to understand through talking to Tim, and then he recommended some new artists to me I'd never heard of. And I tried them and he was spot on.
He had my taste completely nailed just by reading the titles of my CD collection.
And I said, That's amazing.
And at that moment, John, the business guy, said, Well, you're a tech guy.
Can you computerize that?
I'm like, I don't know, Tim, how'd you do it?
He said, I don't know.
I definitely can't computerize that. There's no chance.

But I have this idea that I developed four videos that might work for music.
Let me go away and think about it for a while.
So I spent a few days and converted this video idea to a music idea.
Again, algorithmically, it's all numbers at this point.
And then I sat back down with Tim, who was a very accomplished musician and composer, and I described the the the project. And then he and I spent several months finishing it, so finishing the mathematical side and then Tim populating it with the musicology. And we got it up and working and it worked.
And that was the genesis of. Of.
Can you explain to me like I'm five.
Any part of the algorithm? I mean, Duran Duran gets gets a, you know, a five on a ten point scale of rhythm or how does it work?
Mm hmm.
So.

We broke down music into about 400 characteristic keys.
And one of them is is the lead singer a male or a female?
Is the lead singer a single person or a duet like Simon and Garfunkel, or is it a large choral arrangement? Or is it a 50 piece chorus?
And those are characteristics of the vocals.
Another is, is the vocalist pitch perfect with a velvety smooth voice, or is the vocals kind of gravelly and kind of close to pitch?
But not not that's spot on.
There are maybe 20 characteristics of the voice that we capture and a similar toe of the rhythm and a 20 of the lyrics and 20 of the the guitar solo and all those components.
And it adds up to be hundreds.

And there are some that I care deeply about as a listener to music, and there are some that you care deeply about as listeners in music, and they may not be the same. And so you and I both may like that same Duran Duran song, but for wildly different reasons. You may be responding to the vocals and I baby responding to the keyboard part. But we all have things in music we like and things we don't like and things we just don't care about.
And the system is designed to absorb all of that, all those 400 characteristics about music and then learn which of them I respond to and which of them you respond to.

And the idea at the time, which is kind of commonplace now, but it was novel at the time, is to build a single website that looks the same, operates the same, but in fact shows different music to 100 million people simultaneously.
And so that was sort of the genesis of I at Consumer Scale, which is teach this one website to behave differently for you and me.
Now it's common. Now Google and Facebook are part of our ordinary experience.
Take me back in time and remind me Pandora is now a streaming service.
But was it at the time because I can remember interviewing Tim about CD.
DB Mm hmm. And then that became Penn or the next project was Pandora. But it didn't.
Did it play the music? It's been so long.
I don't remember.
No. KDB and pandora are not related.

No, I understand. Yeah, I understand. But. But.
But. But once Pandora started to exist and I went to Pandora.
E-Com. Yeah. What did it what did it do.
So when we first started the company very in the year 2000, again in my living room.
Yeah. The goal was to develop radio stations that were customized.
Okay. Because back then FM played what it played and you liked it or didn't like it.
And we built the company in that direction for a while.
And then the dot com recession happened and during the dot com recession 2001, two, three, it wasn't possible to raise funding for anything consumer facing.

So creating a brand was not a thing that that the venture capital community wanted to fund because there was so much money poured into sock puppets, like there was a lot of money was wasted. So we pivoted the company to doing other things.
So we built kiosks for Tower Records and we built a recommendation engine for America Online. We built technology for other people's brands, and it was a marginally successful business.
So it was successful. Technically, it worked really well, but it wasn't particularly profitable for us or our investors.
And then in 2004, the market changed and we were able to raise funding to pivot back to being a consumer facing brand.
And that led to Pandora dot com that you know, which is online customized streaming radio.

There was a point, though, where the company ran out of money.
Oh, several. Oh, yeah. We we scraped the treetops and more.
Oh, absolutely. Tell me about that. That must have been terrifying.
It was tough. So as a business person, you have success and you have failures and you have challenges and you overcome them.
And we ran out of money not once, but but repeatedly. And when you run out of money, you have to not pay salaries. You can't afford to pay people because you don't have the money to pay people. And so several times, Tim or me or both of us or sometimes John as well, went to the team and said, we have the money to pay your salaries for the period you're currently working in.

But starting on the 15th of the month, we're not sure we can pay that pay period. And if you guys need to leave and go find another job, there will be no hard feelings. But if you're able to stay and continue working, we will foundries you. It's a word we invented and founders in the early days of companies work for free in exchange for stock options. So we gave people more stock options than they would have otherwise gotten for working for free.
And we took that or took the salary and accumulated his debt.
So we still owed you the salary, but we weren't able to pay it.

So we were upside down with the labor board.
And two, you have this ethical, interpersonal commitment to your people to to pay their salaries so they can pay the rent by trustees.
And they trusted us. Right. They did it because they believed we would succeed.
And we did. We pulled it out. We paid back every dollar we owed and gave all those folks significant shares in the company.
And every one of them is now a millionaire.
Yes, because Endora, Pandora is sold for a staggering amount of money. It was right. Do you remember how much it was?
It was a lot.
Three and a half billion dollars was the exit.
And that's a lot of money to go around. And so all of those people that stuck with us and risked not getting paid did very well.
Yeah.

But boy, like taking a business risk is a thing I'm comfortable with, but having those people rely on you to pull it out, you really better pull it out.
And it wasn't obvious we were going be able to. So it was it was scary.
So in the end, we we know you are a good entrepreneur.
We also know that you're very good with mathematics.
You have a triple major in computer science, math and physics.
And so post Pandora, you decide and I'm going to ask this question in a way that might hurt your feelings.
Okay. Yeah. You decide to take your talent and your ability to use mathematics to solve the world's problems.
And apply it to something that makes it easier to check out of a store.
Mm hmm. Is that the problem that needed to be solved?
It's a well phrase question.
So thank you.

I mean, I did buy some cookies.
So I came about it a little bit backwards in the same way that it came about Pandora backwards. So technology is my hobby.
Like, I'm fascinated by all kinds of things that I don't do for a living.
And one of the things that fascinated me dating back to the Pandora days, frankly, is the computer vision technology.
And I originally learned about it in the context of driverless cars and a ton of time, energy and smarts was being vested in teaching automobiles to drive themselves without a steering wheel or a human pilot.
And I don't know that I can contribute there, but I recognize the value of computer vision. So computer computers can now really see they can really tell a stop sign from a yield sign from fudge covered cookies from two Oreos.

We can really tell.
I think that's a key thing that people who are not familiar with the technology and who haven't tried out your technology need to understand is a simple camera is able to detect me the product that I pick up. Is it the larger the medium?
Mm hmm. What I then do with it do I walk halfway out the store and then turn around and set it back down again?
Mm hmm. Or do I keep it?
Not easily. I mean, there's a lot of technology there, but routinely.
Mm hmm. That's amazing.
It's. It's amazing. It's amazing to me.
And I work with it every day, and we all have it in our pockets.

So if you pull out your smartphone right now and you look at your pictures of yourself and your family, your smartphone is able to organize you and your wife and your daughter and your son and your grandma and all that stuff into buckets only by how they look.
And in in many smartphone operating systems, you can type in Oreos.
And if you have a picture of Oreos in your phone, it will find it.
It will come up. Yeah. And that we're already able to use ourselves.
It's in our pocket. And we're taking that same technology and applying it on a larger scale to grocery stores to find to fight Oreos in the wild.

Now, you know, I give you a hard time that of really of all the things that we could solve. But you put one estimate that you spend in your lifetime 32 days in line in groceries. Mm hmm. Yep. I mean, I guess, you know, I used to, you know, look at the magazines on the on the rack.
Now, I don't know who any of the people on the covers are.
So I fiddled with my phone and I answer email.
But yeah, I could see that over the lifetime. 32 days in line.
Yep. Yep. So the question is, when you have this powerful technology or computer vision, what can you do with it? And so I started looking for business applications and.
When you add up all the time that people spend waiting in line for groceries and for convenience, it's economically a bigger market than driverless cars.

It's enormous. We all spend our time in line.
Every survey about retail lists, the things people like and people don't like in the top of the list is always lines. It's the worst part of shopping.
And if you can eliminate that, you give a gift to every person who's using it.
Every consumer gets the gift of time and you eliminate the thing everybody hates and you speed up the economy like everything works financially more efficiently.
When you don't have both the cashiers and the customer sitting around waiting for the barcode scanning to happen.
Now, someone, particularly once somebody who lives in San Francisco's hold on, this already exists. The Amazon go stores have existed for a couple of years now. What are you doing that Amazon isn't?

Or, you know, maybe another way of phrasing the question is.
Of all the companies to compete against, you want to compete against Amazon?
Mm hmm.
People have called me crazy, and this wouldn't be the first context.
So, yeah. So Amazon has the just walk out technology.
And I think to be successful in this space, you need to be good at three things.
You need to be good at the user experience, you need to be good at retrofitting and need to be good at economics and the user experience at an Amazon shops walk out store is phenomenal.
They've done a great job of delighting consumers by eliminating the lines.
They've done a great job. No one's better.
So yes, clear win and it exists and you can go try it today.

And we are similarly good at the user experience. People love our or they love getting through the lines. Right. So that's it's easy to win there.
The other two are the areas that we differentiate ourselves.
So Amazon's.
Business, just like our business is to build a store that works with their technology.
So their technology is what it is and they're designing stores to be compatible with that technology.
We took exactly the opposite approach, which is to say we built our technology to meet stores where they already are because we want to operate in existing stores.
And the idea is, if you can go into an existing store, that's where the shoppers are. That's where the business is. And you can expand much more quickly.

So if you can expand into a fleet of stores operated by Circle K as one example, you reach a lot of people really quickly.
So retrofit is a thing we're very good at because we're designed to work with existing stores. Amazon's not yet there and the.
Good know, please continue.
And the third leg of the stool is economics.
So it's really important to me that we run through mango as a business.
And by that I mean to say we need to sell our product for more than it costs us to make it. And the people we sell it to, the retail partners like Circle K need to spend less on the product paying us than they realize in value.
So the value stack has to go. It creates value.
It's cheaper to buy than that. And we and we can make it for less than that.

And I don't believe Amazon is operating profitably today, nor do I think they're on the path to do it. I think what they built is the most awesome tradeshow booth ever.
Mm.
How it's.
I understand, at least intellectually, how you detected the box of cookies.
You know, it's a certain color. It's a certain size.
How do you know that I have a pound of lemons that I want to leave the store with them?
Yeah, great question. So produce is sold in grocery stores, mostly in two ways.
One is as a package. So you might buy the £5 package of lemons for 495, or you might buy while there's three ways you might buy, you might buy by the packaged way. You might buy lemons for a dollar 15 each.
Or you might buy them, by the way, you know, a dollar 25 per pound.

And you're asking about the third. The first two moralities.
Look, not that different from. But that's true, right?
You count the lemons on your computer.
Could figure out a bag of lemons, right?
Exactly right. The third one is the one that's that I think you're asking about.
So we know that they're lemons.
We know whether they're conventional lemons or Meyer lemons, and we know whether they're organic or traditional. We know that by looking at them and by where they are in the store. Yes, we don't know the weight.
So the consumer picks up the three lemons. They need to weigh them at a scale.
And so the scale gives the weight and we merge that with the player that we know to get the final price.
What doesn't it do or what is it not very good at where you're where you like?

Gosh darn it. It just still doesn't quite understand whatever.
There's two answers to that question. So the first answer is it's really good at a lot of things. And we've chosen the go to market of grocery stores and convenience stores for business reasons.
You can't go everywhere, but it works pretty well in home improvement.
It works in in office supplies.
It works it works in a lot of different domains.
We've chosen grocery and convenience for for business reasons because you have to focus.
The thing. It's not that good at his garments.
So clothing is deformable, and it's really hard for us to tell a medium from an extra large order. And so the technology's not ready to go into Macy's anytime soon. It may get there eventually, but that's not our market today.

You've got a huge market already. You're talking about convenience stores and then eventually grocery stores. And how soon.
Now you are this technology is out there.
You are working with retailers right now.
But how soon until whether it's you or a competitor, am I going to walk out of my major chain grocery store, you know, with a cart full of stuff and never having even checked out really.
At a convenience store today, there's a bunch of competing stores open with grab and go technology today. And we will open our first partnered grocery store this year.
Wow. With a major brand that we all know.
What did you learn from Pandora that you're applying at grab and go?
A lot. A lot.
So there it was.

This is not my observation was pointed out to me, but they're sort of similar companies because they're both solving a problem that's personally annoying to me.
Well, but that I share that annoyance with others in the world.
So I didn't like FM radio. It wasn't quite right for me.
I don't like waiting in lines. Those are very normal human problems and I believe both are solvable with very nerdy mathematics.
There's a lot of mathematics inside Pandora, there's a lot of mathematics inside Cabango, but importantly, they're wrapped in a really easy to use show.
So Pandora is very user friendly as is Cabango.
So my mom and my daughter can use both without me needing to tell them about how it works. It just works. So that's the that's the similarity.

What I learned is at Pandora's Ada that works and b the value of team. So the reason Pandora succeeded is not because somebody had a good idea once. The reason Pandora succeed was because we had a phenomenal team of people that every day made 100 really good decisions.
And then those decisions compound on the decisions made tomorrow and the day after.
So you pass everybody else and your ability to execute when you have a team doing the right thing. At Cabango we've done the same thing.
We put a phenomenal team here that's really good at each department, like name of department. We've got a strong team there and that's what leads to success and we're doing it again. Bango Based on learning about it at Pandora.

As far as raising money, you have said that when you're raising money you're sort of hiring someone. So you have that same that same idea in your head of hiring the right people. That's right. When it comes to taking money.
That's right. And as a as a.
As an entrepreneur. I talked about the Silicon Valley recession of the early 2000s.
Then it was very hard to raise money.
Now it's relatively easy to raise money.
The capital markets are flush with venture investors because they figured out value creation. I mean, look at the top five most valuable companies in the world.

They're all tech companies and that will continue to be true for years. It may be a different top five, but the top five most valuable companies for a long time will be tech companies, and they'll be founded by tech entrepreneurs, funded by venture capitalists. There's a lot of money to be made.
The world's figured that out. And so the venture market is flush with capital, which is great for the entrepreneur because I can choose who I want my investors to be. It's like I can't choose from the entire array of everyone available, but I have a lot of flexibility and there are people who want to work with the people who don't want to work with.

And so I've said it before, when you're taking investment, you're, you're bringing someone onto the team. And we've got a great set of investors here, really smart people that are really.
Helpful and just fact checking or for my own narration who are here, I didn't look it up.
Who are your V.C.?
Our lead investors are Commerce Ventures and Propel Ventures.
But we have other investors as well. Sure.
And speaking of hiring, you're still hiring.
Oh, yeah. Oh, yeah. We're growing. We're growing as fast as we can find good people.
And my talent team tells me we are ten times harder to get into than Stanford University.
So really, our higher rate is very low.

We're very particular because a great employee is five times more effective than a good employee. And so we only want to be surrounded by great people because also great people are more fun to work with.
You have a number of rules, you know, some of them I think would be common to many companies. Integrity do the right thing, particularly when you don't have to.
The one that I thought was interesting is don't live with the broken, have the courage to admit mistakes and the urgency to correct them.
What's that all about?

It's funny because those seven values we talk about all the time and that one you just mentioned, I literally was on a call right before you walked in talking about the don't live with broken idea. So everywhere in our lives, whether it's your personal life or your professional life, there are things that aren't quite right.
And most of us sort of tolerate them, tolerate that little annoyance in the thing that you just kind of hope is going to go away. But it never does.
We try not to tolerate it. We try not to live with the broken.
And if you see the broken, let's go look at it. Let's go talk about it.
Let's figure out why it's broken and either decide to fix it or decide it's broken. For some reason it's broken because it's not.

Today is not the day to fix it or because it's serving some other purpose.
But don't just tolerate things being wrong indefinitely.
Go, go. Dove into that and decide what you want to do about it.
If got an example of that.
Um, I'm sure that I do.
If you don't, don't worry about it. It's not a.
Let me think of an example.
Well, you know, an example in my personal life is that squeaky door.
Mm hmm.
It would only take 3 minutes to put a drop of oil that door and make it stop squeaking.
But most people wouldn't. Most people leave that door squeaking for years when it would take, again, 15 seconds to put a drop of oil on it.
In the professional context, you're constantly looking for improving things.
And so one of the things that.
Cabango is really good at his efficiency.

And so our system worked for the first time years ago, but we're constantly making it more efficient, making it more accurate, making it faster, making it able to respond to a larger number of SKUs and a larger number of cases.
So we're constantly improving both the efficiency and the coverage all the time.
And each one of those things is fixing something that's a little bit broken.
And lastly, I was sure as I researched the company, it was called Grab and Go or Grab and Go because that's what the letters and that is what you do.
And yet you're somehow called Grab Bango, which I was going to ask you.
It's in my notes how many people accidentally call you Cabango Bango because they don't get it. It's grab and go.
So what happened there?
So naming things is hard.

Yeah. Like naming anything Assad. Naming your child is hard.
Naming a company is hard. In the case of naming a company, you want a word that's easy to say that somehow meaningful and importantly, you want to barely get the trademark in the URL. And so in naming Cabango like naming Pandora, there were pages and pages of possibilities and more than half of them get crossed out because you can't own the name. And so the Banga was a name that satisfied all those criteria. It resonates well, saying grab and go is easy.
There are indeed a few people that say grab and go or grab and go or grab and go. They're all wrong, but they're not that wrong, right?

It's not like when you say it wrong, it becomes offensive, word it through some other language. It's not like the Chevy Nova story, which I think is apocryphal, but Cabango rolls off the tongue nicely and it's a friendly name.
Okay, fair enough. And then I think this is a, you know, just a once in a lifetime opportunity to ask the creator of Pandora, what music would you recommend?
I know you don't know my tastes, but but what is a band that I haven't been listening to that I should be?
I'm not qualified to answer that question.
Oh, man.
So what one of the one of the founding ideas of Pandora is I want to build a website that has only the good music on it and not that junk that you other people listen to.
And the idea is I can't I'm not smart enough to recommend music to you.

The system is the AI behind Pandora is.
And Tim, if you had him here, it could absolutely do that.
But I'm just a guy that builds algorithms.
I don't know the answer, but I could run you through it.
Fair enough. One of the questions this is that's those are my questions for you. Unless there are other things you'd like to discuss or add, or you're like, Oh, you didn't even mention.
Let me circle back to Broken.
Yeah, please.
So early on in the company, we were really aware of the strengths and weaknesses of AI, and so it's been written about a lot that I could accidentally become racist. They're examples of AI treating people.
Those are Microsoft. Yeah.
Microsoft had a terrible, terrible blunder there, as did IBM, as did Facebook.

Like a lot of the people that were doing human centric AI, not intentionally, but accidentally built AI.
That was racist in some way or another.
And we didn't make the mistake because we were cognizant of it.
We're vigilant against things like that.
Our system is, in fact, better at picking up cans of Coke and Pepsi that are in the majority. And we're less good at picking up pickled capers with with mint because they don't get purchased very often.
That's how it works. It's better at things that are popular.
So you're allowed to discriminate against unpopular items.
Sure. You just can't discriminate against minority people.
Not a mistake. We made mistakes. Others are made.

But we did make a mistake along that vein, which is to say we built the technology in the state of California and we matured it here and we trained it here and it worked great.
And then we shipped it to Pennsylvania in September of 2020 was our first live retrofit store, and it worked great there too.
So we had a huge party, literally. We had a party like couple of blocks away celebrated and it worked well and it worked well and it worked well.
And then around mid-November of that year, our accuracy numbers fell.
We were no longer 99.6% accurate.
We fell to 98 and a half percent accurate.
We were losing accuracy and we had no idea why.
And we dove in and looked for examples and look for examples and look for examples.

And um, one of our team members put up a bunch of videos of examples of us getting it wrong on the screen.
And it was immediately obvious we're not good at people wearing gloves and people in California just don't wear gloves and it just not a thing we Californians do.
But you know what? In Pennsylvania, November, a fraction of the population wears gloves and doesn't take them off to go shopping. We were not good at gloves.
And once you know that, all you have to do is tell that to the guy.
Just get a bunch of examples of people shopping gloves that are actually came back up again within a month. But there was a period of time where we had made that mistake.
We were living with broken. We didn't know we were living with broken.

And then someone drove in and tried to figure it out and we stumbled across.
Weirdly, we're bad at gloves.
My last question for you is and this will not be in this podcast, but I collect them together is what's what's a favorite book.
You know, when you give as a gift or one you return to and it doesn't have to be some epic, you know, it doesn't have to be Harvard business stuff, you know.
But what's what's a book you enjoy?
You know, I was I, I just sat down with John Doar not long ago and he gave me a copy of Measure What Matters, which was his version of OKRs.
And it's just simultaneously brilliant and obvious.
And it's both of those. And it's, of course, well written because as John Dawes, a black man, but it's also incredibly effective.

And we use it here and it doesn't make us smarter and it doesn't make us do the right thing, but it makes us not do things that aren't useful.
So incredibly valuable.
Terrific.
Just count or tell me what you had for breakfast this morning.

Wrong in the tech impasse was government's role, if any.
Yeah. Okay.
So as we covered before, Covered, we had an audio engineer who said all this stuff up.
Now we do not. And so what I'm going to do is I'm going to monitor this little machine from time to time.
Sure. Put on the headphones, look away, etc..
Does not mean I'm not listening. Yeah.
Now, if I play Candy Crush on my phone.
Might be different.
Maybe I might be like, Oh, that's boring, you know?
But go ahead and just tell me what you had for breakfast.
You're looking at it.
And what have you got there?
Coffee?
All right. Well, let's start with if you would just sort of introduce yourself and in why should anybody listen to you? What what expertise do you have in this area?

/content/Preprocessed_Data/SHR Hey Senator! Listen to This Before the AI Meeting.txt

So I am the managing director for policy and society at the Stanford Institute for Human Centered I. And in this role, essentially what I do is I work with government officials, civil society leaders, a variety of people in the public to ensure that they are as properly informed about the technology as possible and what that ultimately will mean and the ramifications for society.
There is a closed door meeting on Wednesday in Washington between tech and lawmakers about A.I..
I mean, you're on the advisory council at the Stanford Institute for Human Centered Artificial Intelligence. What do you think they should be talking about?
I'm actually on the AI index steering committee.
I'm here. I'm staffed. I'm staff on the action for the Institute for Human Centered A.I..

I think it's good that in general, lawmakers are paying attention to this and what it will ultimately mean for society.
At the same time, we need to ensure that we have a more set of diverse people at the table, and that is obviously we want gender diversity, we want racial diversity and what those basic parts of society that need to be at the table.
At the same time, we need diversity of thought.
And by that, we don't want just a strong grouping of industry leaders in this space, but at the same time academic leaders.
Well, you to to address that. I mean, the people that we believe are attending are named Ellen Sundar, Mark Sam, Satya Jensen and Eric. And they're, well, no known enough in Silicon Valley even to use their last names. Let's start with the fact they're all men.

Yeah, Not their fault. You know, they run A.I.
companies, right? But everybody worries about the potential bias, a bias creeping into A.I..
And here we have just starting from the learning of meeting with legislature that there's already a bias right there.
Yeah, there are some women I know that are going to be at the meeting as well, but clearly it's very heavily male dominated and that's a problem.
We can't have this singular source of advice coming from industry.
That to me is one of the biggest problems.

And what we need to ensure is that there are different voices at the table. Bear in mind, I itself actually is has been historically an academic endeavor, and it's in 2014 when you had the deep learning revolution, you see this divergence and we have the data that shows that and that divergences.
Academia starts going down in this space and industry starts coming running away with it. And why is that?
It's because of this massive amount of compute and data that industry has access to, that academia does not.
And the problem with that is, is what we're really talking about and focused on right now is what's coming out of product labs, not research labs.

Product labs have short time horizons or have to have commercial viability, are thinking about, you know, shareholder value as they're working towards something.
Research labs are designed to potentially fail or leave their work behind for other the other possibilities.
But ultimately what you get from this is breakthroughs.
They crisper the Internet, GPS.
Right. And those are later commercialized out and down the road.
So right now you have this incredible imbalance and who policy makers seem to be turning to quite often here are industry leaders because they're captivated by what's on the product market.
But the reality is, is this technology is a general purpose technology and will be pervasive across multiple domains and fields.

And so if you're just talking to the industry people, it is going to create a longer term problem than we know.
And I think it makes a better press release or a better photo op.
Right? As I met with the head of Microsoft, I met with Elon Musk.
I met with the head of Google.
When it comes to academia, it's not necessarily as well-known names.
Well, sure, there's a lot of celebrity in there, isn't there?
And, you know, are we going to be talking more about AI and advancements?
Are we going to talking about the pre cage match between Elon Musk and Mark Zuckerberg?
Say you were well, let's say you were representing Stanford's A.I.
efforts at this meeting on Wednesday.
What would you what would your number one agenda item be?

Yeah, well, first, I would say that there's plenty of other, well, more qualified people in here to be at that table than me.
But what I would say and probably what they would say is the need for clearly we need a there's a need for regulation.
And I understand that. I'm very for that.
But even if we came up with the optimal regulations tomorrow that held the industry's feet to the fire but still let them innovate, we couldn't enforce those because we don't have the human capital we need.
And so what we ultimately need when we're talking about regulations, we also need a pairing of investment in this and public sector investment in AI.

There's plenty of private sector investment. We need the public sector investment to ensure that academia is turning out the next generation of people to go into industry potentially or stay in academia or go into government and have a more holistic approach towards this.
So my first thing would be for them for Congress to pass the Create Air Act would be one of the first things that I would be pushing for.
But in general, a larger approach towards investment and looking at this from a national perspective, that would include maybe changes towards immigration.

It's a shame that in on this very university that we're sitting at right now, there are brilliant air PhDs who have no desire to return to their country of origin and would love to stay in the United States, but unfortunately they cannot. So where do they go? Data showing us primarily to Canada.
And so that's a loss for us in general.
So what we need is more human capital in this space to be able to inform the conversations more. To get more human capital, you have to think about it from a larger perspective of investment as well as right.
You'll be pleased to hear that next week's episode is actually entirely about how America is losing some of its immigrant scientists to Canada.
It's an unfortunate problem.
It's a it's a very strange problem.

So if we're going to regulate technological progress, how do we do that?
You say you want air to be developed and deployed thoughtfully and responsibly.
Those are your words. Has any radical new invention been developed thoughtfully and responsibly?
You know, I think it's the the first thing I would say in answer to your question is transparency is one of the biggest keys that we need no matter what.
Right. I think that's a huge area.
There's a lot of nuance and it would take multiple podcasts for us to get into that level of transparency. But that's the first layer is what I would say to you on that.
The second part of this is let me give you an example of a way of doing business in this particular space.
So at Stanford, I what we have done here is we have.

We're grantmaking organization internally within Stanford.
So a faculty member couldn't say, I'm going to work on this human centered A.I.
project and we will help fund that in some way.
But before they do that, what we helped come up with and the Stanford community in general helped come up with come up with this was an ethics and society review statement.
So in advance of even starting any project, they have to sit there and start to say, This is my intention.
But what are the ethical implications of this?
What are the dual use capabilities of this if I'm developing this?

Is it just an easy, quick shot over into something that can be used for nefarious purposes? And what you are able to do through this is you're able to sit there and have a committee review this particular proposal and they come back to you.
And it's not a checklist that they come back to you with.
It is a thorough analysis of saying you didn't think about X, Y, and Z. Why didn't you think about.
What could possibly go wrong?
Correct. Correct.
Now, isn't all science what could possibly go wrong?
I mean, if I can figure out how to fuze two atoms together, we could do a lot of cool things with it. We can also do some really terrible things with it.

Absolutely. You know, technology can always be used for very dangerous purposes as much it is for human advancement and life saving and whatever that very well may be.
We will struggle with this and this will be a perennial problem for the human experience.
The issue here is this Even the development of something might be so beneficial for humanity in general that under proper circumstances you might be able to still have an advancement towards this.
A cure for cancer might actually be great, but it also could help lead to a development of different kind of pathogens or things like this.
Do we say we're not going to cure cancer? Or do we try to find a way to limit the possibility of new pathogens being created?
Feel free to have a cup of tea or coffee at a better.

Stanford calls its efforts human centered.
And you've said that as well, explained Human centered.
What does that mean?
Yeah. So originally, when the design team was thinking of creating A.I., human centered actually seems a bit antiquated at this point. And we're just talking about a few years ago, but it actually shows the success of that concept being widely adopted.
And the first part of it is, is the idea that it must be the technology should be developed to benefit humanity.
That's pretty much a no brainer, I think, at this point.
But a few years ago when it was talked about, it was not a no brainer.

The second part of this, and I think one of the things that's actually coming up most in the news today is that it should be designed to augment human capability, not replace it. So I have a colleague in the medical school that has been quoted in the New York Times with this of where he is.
He's a radiologist. And he says the question is not whether I will replace the radiologist. The answer is the radiologists that uses AI for replace the radiologists that doesn't.
And in that area, what you're looking at is a tool that's being used to help advance, not replace the human in that particular situation.
And we actually are seeing the pairing of this is much better versus either standalone or not in some cases.

And then the final part of this is the idea of intelligence and seeing what is in nature and the human brain as intelligence as a guidepost for some of this.
And what can actually be designed. As we see the brain is one of the most important parts of intelligence. And what that can ultimately.
I totally understand the human centered part of it, that it should benefit humanity.
But doesn't all technology have the risk that humans won't be involved in? In other words, if we set up a research center or a set of rules that said, listen, buggy whip manufacturers want to be involved in this new development of the car, and as long as a buggy whip is involved in some way, you know, we're okay with this development.
Are there things in automation and things that that.

Well, yeah, humans won't be involved.
Well, certainly you're going to want to If you could pull humans out of dangerous situations, you would want to do that.
But that's not to say that the humans not involved, you're just not putting you know, if there are if there's the ability of a human to not have to go into a burning building and there's a robot that can go into a burning building, great. I think we would still say that, you know, bomb operating robots are still operated by humans and some extent, right?
So there always seems to be the human benefits.
Yeah, right. So so there are certain limitations to that, of course.
But the point that I'm trying to make here is that calculators did not make humans not do math. It made humans do better math.

Right. And that is ultimately what we are trying to get towards is the tool purposes of this and using it as a tool.
I'll tell you a real quick anecdote here.
In this very room we're sitting in, there was a bunch of foreign journalists that came in to talk about this, and there was this one journalist from Spain who was saying to me, You're going to take our jobs. You're going to take our jobs.
And my role here is certainly not to be an advocate for that, but quite the opposite.
But I said to him, you know, if your job is simply to watch something like the State of the Union address and write something up on the AP and have that go out there and did, your job might be in trouble.

But if your job is that of an investigative journalist, you've never been more valuable because what can a machine not do?
Build trust, relationships, chase down a story, understand all of those key factors that are purely human there.
But the author, as a reporter, does not need to now write a story.
They can take their notes and dump it into a language model that will be able to write the story for them. You see what I'm saying? I do.
So it's should be seen as a tool, not as a replacement factor.
What are the things in journalism we're worried about as Deepfake right?
That, you know, how do we know what it is that we're seeing is authentic?
One of the interesting points that you've brought up is it doesn't need to be a deep fake for there to be doubt about whether it is a fake.

That is only if there's plenty of deep fakes that poison the well.
Right. But I could say, you know, that that image of me with that woman who's not my wife, that's that's a fake picture.
You could in an era of where we're probably headed towards.
Yeah. What essentially that is, is what two prominent scholars have referred to as the liar's dividend. In a world where you have enough, you don't need to have even a majority.
You just need to have enough synthetic media.
You will question the veracity of everything and who will win when.
New question, the veracity of the liar.
They will have that benefit to be able to see or warp the truth into their favor and say that never really happened.
And you're starting to see evidence of this now.

I've seen some evidence from interviews recently that I saw of certain political fans of one particular political candidate, or they're saying that's just not true.
You can fake voice recordings.
I can't imagine who you're talking about. Are you are you optimistic for the future as far as A.I. goes?
Yeah. You know, I bizarrely am, because there's so much doom and gloom that we hear right now and. But what I would like, particularly your listeners, maybe to walk away with, is we're at a moment where you're either hearing it's going to kill us all or it's going to fix everything and that.
And neither, I don't believe, to be the truth at this time.

Right now, there's more of a grounded area of where there are significant risk from this technology of where we must be careful as we start to bring this into our society. And it is an inevitability that it's going to be integrated into society more. So how do we make sure that we apply a level of responsible guardrails that can protect people in certain situations? But the other part of this is, is to be a bit of a techno optimist. There are amazing advancements and we're starting to see the dividends from this. Bear in mind that there are a lot of emerging technologies that people, particularly government officials and policymakers, need to be aware about.
But there's only one that's truly cross-cutting, and that's A.I..
I informed Synthetic Biology.
AI Informs Nuclear Fusion.

A.I. can inform.
Other areas of computing or something along those lines.
They don't have the same crossback.
Synthetic bio doesn't necessarily inform AI.
So what you're doing is you're ultimately taking that tool that I refer to and applying that into all of these domains. And what that could potentially do is supercharge new knowledge and advancement that we aren't even remotely prepared for.
You're talking about someone, a mathematician that's been working on the 50 year old math problem, expecting to leave their work behind for somebody to solve the problem in another 50 years and instead it's being solved tomorrow.
That is huge and that has massive implications for society.
I'll make sure to keep you on time.

If you could say if one of the people who are going to attend Wednesday's meeting were driving to the meeting and listening to this podcast, what would you tell them? Make sure to do this at the meeting.
Make sure that you are being responsible with your comments to policymakers and what that means.
And by and what I'm referring to is what we just talked about a moment ago, which was this idea of hype in the field.
Don't hype it of where it will fix everything because it will not.
And don't oversell this existential risk of where it's going to kill us. All right. So there is this middle lane of the positive potential from it and extraordinary risk that we have to be careful about, mindful about.

But if we're going to be polarizing ourselves like everything in society seems to do, it's not going to do the development of this technology a service.
I'm encouraged that the politicians, politicians seem interested.
I mean, we can run any number of sound bites from Congress in which senators and members of the House ask terrible questions in which you're just you know, you put your head in your hands.
How do you not understand this technology yet?
And a lot of us don't understand A.I..
But but in this case, they're trying.
Yeah, 100%. I hope you know, elected officials.
This is what I tell a lot of people. Elected officials need to know Medicare, Social Security, foreign affairs, constituent issues.
Many of whom are running.
For.

Space exploration. Many of them are running for reelection.
And so they have to think about fundraising and all of that that comes with their role. So what they're in a position of is knowing things to be an inch deep, a mile wide.
So we we're not we don't need them to be experts.
We need experts for that role.
We need them to be policymakers. But what we do need for them to understand is what the what the technology can and cannot do, its limits and its overall impact.
That's what we need for them to do. And what we most importantly need for them to do is make sure that they are bringing various stakeholders to the table and not just one sector academia. Correct.

Academia is doing incredible stuff in this space, even without the ability of having a certain level of compute and data that is desperately needed. Now, imagine if you were to supply academia with that level of compute and data, you would be able to have significant advancements that weren't just from the product lab but were from the research.
And that's what you would tell them if you're at the table.
Hey, guys. Congress More money for academia to study A.I..
Yes, 100%. Because this is, again, a general purpose technology.
This is going to affect so many different domains.
And you don't want just the computer scientists in this building working on this.
And that's one beauty about Stanford's in Superhuman Center today.
It's a multidisciplinary institute.

We work with the law school, we work with philosophers and in the humanities, the business school, the medical school, as well as engineering and computer science.
So there's all of these different areas of academics that are going to be needing to use this technology, and they're not computer scientist, So but they will need that level of compute access to be able to do that, designing this similar work.
Last question for you is one we don't include in the podcast episode, but I collect them and I put them together each summer.

What is a book that was influential in your life that did you that you go back and read very often or you would give as a gift, Or if you were standing somebody next to somebody at a bookstore and it doesn't have to be some deep business, you know, it can be Winnie the Pooh.
I haven't been asked this question, and normally it's What's the last book you read from my. For me, what was foundational was a book that I read in high school. It was written in the 1960s, I believe.
I'd have to look it up who the author was. John Hershey.
I went to say Hiroshima.
Oh, yeah. And that was, for me, such a powerful book, because it was a description of the horrors of what nuclear weapons could do.
But it was in an era of that wasn't YouTube, right?

And so it was you. You couldn't see to the same level those horrors, but on some black and white grainy images.
But the description of it was so overwhelming that it made me realize and always fascinated in the policy field, because what we're talking about are decisions made.
And there was a decision made to do something here.
And for me, that has always been just a chilling, chilling book and I have always recommend it. And I have actually given it to a couple of people as gifts.
It's not a light read. It won't make your stomach churn, but it's really powerful.

Really have. Well, when I wake up with enough time scrambled eggs and avocado toast. And coffee.
As you can see, I'm on my second coffee, which is necessary.
I get up for the morning news at 215 in the morning.
So you.
Do that.
First of all, you get used to it.
And secondly, you know, by now I've had many, many, many coffees.
But I'm done for the day with coffee, that's for sure.
What time do you go to sleep?
Usually about five or six. I kind of wind down about five, and I'm usually in bed by 6 p.m.. And yes, that sounds like that's terrible.
But I will say most people don't do anything interesting on a Wednesday night past six eight. I mean, like, Oh, did you see Star Search or what?
I'm like, No, I didn't. Sounds boring.
And once I'm finished with you, I'm done.
That's great.

/content/Preprocessed_Data/SHR Kristina Simmons on Startup Stress.txt

That's it, you know? And so I can go and go, but probably not today.
It looks kind of crappy out there, but I can go play golf.
Let's go and get a tee time. And it's actually really wonderful.
That's a good balance. It is. Do you change your sleeping habits on the weekend?
Yeah, to some degree. I mean, I go to bed earlier on Friday than I probably would like because I didn't work that day.
But by Saturday I can rally. And then Sunday, it's oftentimes a little tough to get to bed. Yeah.
I hear you.
But yeah, my friends run about 9 p.m.. My friends, particularly if we've had a couple glasses of wine, are pretty used to me just going.
Yeah, like I go to bed. Yeah.
All right, So.
Start with just introducing yourself. Who are you?

I am Christina Symons, founder and managing partner at Over Water Ventures.
I ran into a company actually just today that mandates.
What are some of my 400 mandates?
Meditation twice a week, twice a day.
The CEO makes people meditate, which, you know, kind of seems to me the opposite of what meditation ought to be.
Mandatory meditation.
Yeah. I mean, I always think you have to give people the option to choose their own destiny and what they want to do.
That's interesting.
Hold that microphone a little bit closer to you.
One thing I failed to mention is because this is so casual.
If we get halfway down a.
Answer or whatnot. You're like, What? What?
What was I even talking about? Wave your hands in the air.
Okay, you know what? Let me start that one.

And then you can go a little bit more towards you.
Yeah, you can pivot that little like this.
Um, that way.
Oh, this way. There we go.
I'm curious, though, before we get started. What's been your favorite podcast episode you've done so far?
There are.
I think one of my favorite was Rory O'Driscoll, who is from.
I can't come up with it. But we got on kind of the subject.
He's about my age. He's, you know, mid-fifties.
And we got on the subject of just sort of growing older and what it all meant.
And it was not what either of us expected.
Right. And he even said, you know, boy, I didn't think this is what we were going to do.
And I kind of like I didn't either.

But it was it was really fun to just, you know, kind of go down that road and and and understand, you know, what he was thinking about just sort of personally.
Yeah. Yeah, It was really cool.
It was cool.
More interesting than your typical.
Yeah, it's, you know, it's not R right.
Yeah, yeah, yeah, yeah, yeah, yeah.
You know, as we start this, I think we all pay lip service to work life balance, right? But you're saying there's an actual return on investment, on work life balance.
Yes, that's my philosophy. So for I'll back up for a moment with Over Water, I was really excited about, you know, where is there the most innovation happening. And I think that's in Human and Planet Health.

And one of the gaps that I was seeing was that the best founders were usually highly technical and the gap was, okay, how do I go from R&D project into a real business and a brand that people love, whether it's consumer enterprise. But to become a brand that people love, it starts with the founder.
And I think that that was missing.
And to start with the founder, you have to really be thinking about how can that founder show up as their best self, he or she as their best self in the office environment? And what does that take?
And in a similar way that athletes have coaches in all different aspects of their life, Why don't founders, why aren't they thinking about their sleep or their meditation or their physical fitness or their mental wellbeing?

Because I think that that is extremely important to be able to build a successful company over time.
And to your point, I just don't think you can build a big company if you don't have you know, if you don't have a team who loves coming to work and loving their job and loving their life.
Now, as you encourage your your client companies, your portfolio companies to adopt healthy lifestyles and healthy behavior, does it some concerns kind of nanny issues like, hey, we're going to do a follow up you know, funding.
But but did you eat your piece?
That is not the way first of all, that is not the way.
I don't think it's ever I think it's always one size fits all.
And it's more of I think authenticity breeds authenticity.

And so you have to be able to have the conversations with founders to say, okay, great, your revenue numbers are fantastic, but let's talk about how you're doing personally and what are the gaps, what are the challenges?
Talk to me about what's happening.
And and then from there, you know, figuring out what is the right development plan or what are options, Here are some choices.
And then of course, the founder can choose no, I don't even want to listen to that or, you know, yes, I'm very interested.
But but give me your elevator pitch on. This is important.
You know, that's fine. But you know what?
We're really busy. You know, we're trying to push a product.
I'll get more sleep tomorrow.
No, I haven't eaten anything.
You're going to come back with. No, this is important.

Yeah. I mean, if you look at the stats, there was one study that came out that said founders are 50% more likely to have mental health issues.
19% don't have enough fitness.
There was just a report that came out from UC Berkeley that said 75% of founders have some sort of mental illness and there's a lot more to it.
That's the root. What's happening at the company building startups stressful.
And so to me, you know, I was at Lululemon quite early and it was the opposite approach to many of the companies in Silicon Valley where it was really around how how can you develop yourself?
How can you know, a company is all about velocity in which it which it can scale.
And so for, you know, when you dig into it, it's really about the people.
The company is only as strong as the people behind it.

And so Lululemon had a very different approach where they said, okay, how can we really help each person be their own CEO within the company?
How can we give them tools and different options to really be thinking about this?
And I saw that culture firsthand and it felt like that was a big opportunity in Silicon Valley. And you can see what the rise of Barry's bootcamp classes as an example. And there's more and more conversation around the importance of this with founders. And I think even within the economic environment that we're in, it's going to become more and more important.
You bring up the economic environment because I think this is one of those things that is sounds great when everything's going great, right?
The profits are rolling in, etc..

And you know, we shorten the meeting so that we can all go do our take care of our mental wellbeing.
Sounds great when we're. Making money.
But otherwise it's like, Hey, you know what?
Meditation time is canceled because we got to fix this.
Is there some truth to that, that that that surely work life balance goes more towards work when we're desperate to keep the company afloat?
Mm hmm. I, I have a different approach, which is, in these environments, it's more important than ever to be thinking about.
How is the team doing? How is their own mental health?
Because with, you know, with these environments, it's harder to raise capital.
It you know, they have to be able to cut teams.
As you have seen from the last few weeks, there's more and more layoffs.
So that well-being is more important.

Now, that doesn't mean necessarily having meditation classes or yoga classes. It's more around, how can you help, help really think about building the potential of the team.
And the mental health. Part of it's very serious.
I mean, this is something we didn't talk about in Silicon Valley for years, particularly men didn't talk about for years.
And now this is something that that still a lot of people are reluctant to talk about, but it is at least considered.
Yes. And I so I used to be on the board of Ginger.
I oh, I don't know if you've heard of the company, but they do.
27, 24, seven mental health care access and their peak time of usage was 2 a.m., which is fascinating to me because that's the time when, you know, therapists are not right taking patients.

And you can only see you can see the rise of it becoming more and more a conversation.
What about the four day workweek?
You know, I think every person and every company operates differently.
And it's a question of how, based on their unique product, the culture, the team, how do they operate in their best environment?
I think it's possible, but I think that there are pros and cons to that.
It means that you have to be more efficient during those four days.
You do. And I also think there's it's there are times in which I think to myself, what do you mean the company is not open on Friday?
You know, like get to work, get take your work seriously.
You know, there's that, too.

Yeah. I think it's a balance and it depends on you know, it really depends on the company and what their mission in their vision is to what sort of structure works best for them.
There is pressure, too, on a lot of companies to get rid of the creature comforts of work which have made Silicon Valley so appealing.
You know, Google was classic for this with, you know, the free meals and the little kitchen workstations that are dotted throughout all the offices and the pinball machine.
Are those still valuable?
I think it depends on what it you know, what the program is and what you know, what employees are saying about it as an example.
I you know, I can't comment too much on that because I focus more on small companies. Small teams.
Well, no, but it just that idea of work life, right.

Because you go back to the fifties, you know, the idea of having a you know, a ping pong table in the in the break room, I mean, come on.
And it became de rigueur. And, you know, in the dot com boom and there are some things that, you know, in retrospect feel a little silly, other things that have become mandatory, things that that offices need to have.
Yeah. I mean, I think some of those were created as incentives for employees and retention tools. Today, the landscape is very different, where I think employees want different things, whether it's more of this work life balance, being able to work from home versus being in the office.
And so I think the times are changing and what those incentives are.

I took a look at your portfolio of companies that you're advising and you funded a lot of your firm's investments have to do with fertility, women's fertility, but also men's fertility as well.
Is there a reason that that is one of your areas of specialty?
Yeah. So first of all, I invest in human and planet health.
I like to look for companies that have some sort of breakthrough science or technology and have the potential to build big businesses.
And I like to look for areas that I think have gaps in the market.
One of those gaps in particular is fertility.
It's one of the fastest growing areas within medicine.
And I had a very strong thesis of how can you how can you not just think about incremental innovation, but disruptive innovation?

And so I had a goal of with egg freezing and IVF, how could you go from 25000 to 50000 all the way to $4,000?
How could you make it more affordable, more accessible and with better results?
And so I one of the companies that I originally invested in was a company called Overture Life, which was rethinking egg freezing IVF.
So to automate the embryology lab.
More to come on them. They just had an exciting update as of today in terms of their technology. So I will stay tuned.
Yes, good information there.
But I was on the board of a richer life and saw firsthand.

I actually went through the process myself two times just to learn about what's broken from a consumer perspective. And then I've invested in four companies within the over water portfolio that together I think can really disrupt the industry and have better results for for families.
How was your experience? Obviously, this is not something I have any any experience in.
Yeah, I actually did a talk with CNBC Chrissy Farr at the time around. Oh, Chris is the best. I love her.
She's I've been friends with her for a while and she was really curious in my experience.
And, you know, I went to three different clinics.
I tested the experience. It's not necessarily made for egg freezing.
It's more tailored for IVF, whereas the growth rate with egg freezing is quite high.

And I saw firsthand that the processes just felt really broken to me.
The experience, the, you know, why do I have to go to the doctor to take my blood every day?
The medications are not necessarily great.
It's a very it's not it's an analog experience.
It's not digital. And so how could you better automate the process?
And I should Chris has been on this podcast.
I should point out to her fans, she just had a baby.
Yes. Yeah. A few weeks ago.
And then also male fertility. Was that something where you thought something was broken or you just thought to yourself, Well, we probably should know both sides of the coin.
Yeah, well, half the problem, it's it's not just women, it's also men.
And so you have to be thinking about both sides of, you know, of the process.

So I invested in a company called Fellow, and they are doing at home both in sperm analysis and then cryo.
And to me, it was really fascinating because they took a strong approach in terms of their science and their R&D pipeline as well, to say, okay, how do we think about men's health in this? How do we educate both men and women around, you know, their own fertility journey? And the idea is how in the future at least, how can we start creating tools and technology for people to be thinking about it earlier in the process versus in their late thirties or forties, for instance?

And I mean, circling back to our companies, providing mental health or health in general, this is something that some companies but not all provide as a benefit. But again, for employer retention and employee ease of mind, it's a good benefit.
Yes, I think it's a great benefit. I read yesterday that Amazon provides this benefit and that there were people just just joining Amazon to be able to get those benefits. And it's crazy to me that insurance doesn't provide that. I hope that that's changing. But again, I'm investing in technology and and companies that I think can lower the cost and make it more affordable.
Inaccessible. With or without insurance.
Before you went out on your own, you were at injuries and Hurowitz and Khosla Ventures.
First of all, why go out on your own?

Yeah, lots of reasons.
For me, I you know, if I'll take a step back and I'll kind of talk about my journey.
Do. But I want to move before you do.
For the person who may be less familiar with brand named venture capital, if you could be from two different firms, Andreessen Horowitz and Khosla, they've got to be two of the top.
It was an amazing.
It's like I went to Harvard for my undergrad and Yale for my, you know, for my masters, right? Yeah, in Princeton, for my Ph.D..
Yeah, I did none of those things, by the way.
I'm very grateful to be at both of those places.
And they're similar in the way that they think really big about the world.
And I love that and very different.

So I'll kind of go back and I'll explain how I got to and Andreessen and Khosla, but I am from Michigan originally and I her I always love companies that I think our nation growing into larger markets and I heard about this company early called Lululemon and and Lululemon to me was it wasn't about the black spandex pants.
It was around this healthy aspirational lifestyle.
And I went to their website.
They had no e-commerce at the time and I thought, this is crazy.
They should be launching e-commerce. So I put together a pitch and sent it to the contact portal and they wrote me back and said, No, we're not even thinking about that yet.

And long story short, after a lot of hassle flying myself to Vancouver to take a meeting with the CEO ended up getting the job. So I joined Lululemon and really helped found their digital program, helped launch e-commerce, started off social and that was when not a lot of brands were even thinking about social being on social media or building their digital presence.
And that evolved to digital channels.
And then it evolved to a team called Emerging Products and Concepts, and that was really anything new for the company. It was how do you innovate in a large organization?
And we were starting to look at building our own digital products and then also looking at partnerships and acquisitions. So I started meeting all these startups.

We started doing, you know, talking to companies like Spotify and Pinterest when they were five people and square when we were thinking about how to really bring digital into the store.
And I just loved spending all my time with founders.
That's what I love doing. And so I laughed and I ended up at some point getting a call.
You know, I ended up after almost five years at Lululemon, and it was really the early days. I mean, I saw 50 to 2700 people and I realized I love startups, I love technology.
And so I decided to leave and I got a call from injuries and Horowitz and they said something like, We heard that you're talking to a lot of our companies, we should probably meet you. And so I ended up going in and getting the job. So I joined and it was I.
Started getting the job.
Yes, sir.

Sinking. Sinking, right.
Yeah, of course. And hopefully this is this gives you more of this answers your question.
You know, it actually does take you down.
Yes, sure.
So I ended up getting the job, I think was where we were.
Yes. So I ended up getting the job to join Andreessen Horowitz.
And this is when it was quite early.
It was when everyone could fit in one conference room.
The firm is definitely much bigger at this point.
We had just invested in in companies like Airbnb and Pinterest and Coinbase. I remember there, it was like a small, tiny team of 20 year olds at the time.
And I loved I love that experience and what I what I took away a lot of learnings from from being there.

But I love the way that Marc and Ben thought about not just how do I build big companies, but how do I change markets, how do I really think about, you know, working with large companies, working with government leaders on on really creating creating opportunities for the companies that they invest in that otherwise wouldn't exist.
So then you go over to Coastal Ventures, one of them see where we can find it here.
Oh, it's about the economy. You know, many are predicting that smaller venture firms may not do as well if the economy takes a turn. Vinod Khosla said What happens in China, what happens in the stock market has nothing to do with whether an investment is a good idea or not. Do you think small ventures firms will survive?

Yes. So I think there's actually more opportunity with smaller venture firms and larger ones for a number of reasons. I think that I think that entrepreneurs are changing their mindset.
They want a more boutique, personalized experience.
They don't want to be just one of 400 seed portfolio companies at a large firm.
And then from a small fund perspective, it's much easier to have great returns for LPs if you're a small fund versus a $3 Billion.
Question.
Because there are there are more paths to you know, it's there are more paths.
And I think for a large billion dollar fund, the returns are smaller.
They're 2 to 3 X verses.
If you look at the last ten years, the best performing many of the best performing funds.

I mean, there are exceptions like Sequoia, but many of the best performing funds were emerging managers. And so I think that there's a massive opportunity and in this an economic environment, as an example, a lot of the larger firms are firefighting with their companies. They're trying to figure out how can the companies that they already invest in raise their series A, B and C, whereas smaller firms and newer firms can say, can really look at the world of, you know, where is there the opportunity, where is there, the next big company?
I, I originally asked, why did you leave?
You know, you went from injuries in Horowitz to Khosla.
Why did you leave and strike out on your own?
Yeah. So I, you know, at Khosla and I, I loved working for Vinod.

He taught me so many things in terms of managing 400 active portfolio companies.
And he himself is amazing example of work life balance and I can talk more about that. But I saw where the most opportunity for the big the next big company in my opinion, is in Human and Planet Health.
It's where entrepreneurs are going and spending time. It's impactful to the world.
It's because of this acceleration of tools and technology from AI to biotech.
There's a lot of innovation happening now.
The gap I was seeing was that these founders take, you know, Pat Brown from Impossible Foods. They were technical founders.

And how do you actually commercialize and how do you go from R&D project into, you know, real business? And based on my experience from having been at companies early and seeing different growth periods, I saw a gap in Venture where I couldn't find many investors that had been at.
Tier one firms are big firms because there is a discipline there combined with having operated and, you know, built websites from scratch, launched products from the beginning, scaled a brand, built it digitally as an example of this.
And so I was seeing a lot of founders come to me and founders would say, Christina, why aren't you doing your own firm? Why aren't you going in around?

And my while I'm focusing on human and planet health and my wedging is really helping to commercialize and not just another generalist tech investor.
And I can talk about specific examples like I invested in GM Ito because they really wanted an investor who could think about how to commercialize.
But again, I'm assuming this is a fertility course.
That's a company that's really very interesting.
They're using cell engineering with the mission to reverse menopause.
Okay.
So very interesting company.
It's spun out of George Church's lab at Harvard.
Now, what I you know, what I was seeing, though, is that it starts with founder.

So if you can go earlier stage and help these technical founders from the beginning, not only think about how do you build a product for the consumers that you're actually trying to reach or sell to you, but how do you start thinking about your own leadership development from the beginning?
How do you start thinking about, you know, your culture from the very beginning, diversity of teams and thinking at Pre-seed seed stage.
As just something you felt you couldn't do it?
Khosla I know that's not necessarily true, but I think that Khosla is known for our deep science and technology, and I just felt like that there's so much more and my approach is different.
How can I bring that Lululemon mentality into venture?
The only way to really reinvent something in any way, not just in venture.

Is a clean sheet you have.
Yeah, you have to you have to be outside of the, you know, the existing organization to innovate.
And so when I decided to leave to start over water, I said, how can I really rethink every part of venture?
What does that look like from, you know, the colors on my website?
They're not the normal, boring navy, blue and red.
How can I be something different? And I think that there's an opportunity to to do things differently at every level.
Tell me about that first day. Had you had the LP's come in, did you have funding secure or did you walk into a rented office and put down a pencil and paper and say, okay, here we go.
No, my philosophy was I you know, I knew that.

And I knew from the very beginning at Khosla, I when I met Vinod and I, I again, I love him, he was really rethinking how, you know, how could he shift Khosla from a generalist tech firm to really a firm that was focused on impact and reinventing societal infrastructure.
But I think that too, to really create from nothing, you have to be outside.
So I decided, you know, I was going to leave.

I have always wanted there was something that was pulling me to towards being both an entrepreneur and an investor gives me more empathy for the founders who are meeting when they're raising capital. And I said, okay, I want to take some time to really think, to leave and think through what is my strategy with over water and then how do I think about the even the LPs that I want in my fund to be different?
So the answer is no. You had no funding.
I didn't know. But you know, yeah, I can't comment too much on the specifics of who came in, but people who I think are who share my.
You were confident that the funding would come?
Yeah, I was confident. And, you know, I, I was determined.

I was very, you know, very clear on what I wanted to do, how I wanted to do it differently. And I was I was investing in founders regardless whether it was angel investing and my deal flow in terms of the the founders I was seeing were founders who, you know, some were first time founders and some had started two or three companies before. And so that gave me a lot of confidence to say, okay, there's something here, I should go for it.
We've talked a bit about what you've done in the past.
And, you know, the one that just has to be mentioned is due.
Sara Yes.
Now to someone who is unfamiliar with you, Sarah.

They think perhaps we're just talking about a company, perhaps a company that didn't do well. But you, Sarah, almost has this legend that just the single word creates this evokes this whole thing.
Can you. From your point of view, explain why do Sarah is more than just a word of a company that used to exist?
Yeah. I mean, I think Silicon Valley, I mean, the world loves to you know, Silicon Valley has an appetite for failure.
And so it's always interesting for companies that raise large amounts of money.
You know, they have there's a lot of conversation around them.
So.
Were you there when the Bloomberg article came out?
Because that was the most devastating moment, I think.

No, I was not there. You know, I so it wasn't Andreessen Horowitz and I got a call from some legendary invest other investors who you may have had on your podcast at one time and they lobbied hard for me to join join a scrappy startup.
And to me I was like, This sounds like an interesting challenge.
I saw 50 to 2700 people at Lululemon.
What would it be like to to start from nothing?
And so I thought, you know, I got to have the opportunity to be able to understand what it's like to hire from the beginning, launch a product from scratch.
And, you know, it's helped me tremendously at over water to have this playbook of how do you launch something from nothing.
And lessons like I can credibly say, don't raise, you know, $100 million pre-revenue with constraints comes creativity.

And that was actually really helpful in 2020 and 2021 when you saw entrepreneurs raising massive rounds and huge valuations. I was like, No, no, it changes the culture.
It changes the types of people that you hire.
It changes your product strategy, right?
Even the design we can put any part in there we want because we have the money to fund it.
Exactly. And it's harder.
You know, you have a lot more pressure when you raise that amount of capital.
It's much easier to test and iterate and learn when you're a scrappy startup.
What lessons did you. Other than that, did you did you pull from that experience?
What other things do you bring to your your clients?

You know, a lot of things, but it made me learn the importance of culture, really trusting, hiring great people and trusting those people and the importance of, you know, the founder in that culture and also what happens when perhaps all those things don't come together.
And so for me, even in at Overwater, in the diligence process, I think a lot about team and culture and the founder's ability to recruit and retain people over time.
Going back to just circling back on a couple of things.
There is a difference in the case of Lululemon, there's a difference between a company that makes yoga pants and Lululemon.
Any company can make yoga pants and yes, some of it is brand recognition, some of it's quality. I mean, there's no no doubt doubt that some of it's quality.

But there is that difference between.
You know, the company that makes a fleece vest and a company that makes a fleece vest and gives back and it protects the environment and protects its employees and becomes a well-known brand.
But there are a lot of companies out there that just this is a thing we make and that's what we do.
Mm hmm. I you know, I think to build a big company, you have to build a brand. And a brand is, you know, it's what other people say about your company. But to me, it starts with the people.
It starts with the the team and the culture.
That to me is really important. And Lululemon did that really well.

Of course, Lululemon had exceptional product, they had proprietary product, and they were able to also enter a niche at a time where it turned into not just yoga pants, but really this healthy, aspirational lifestyle brand. But what they did so well, in my opinion, was that they empowered every single person on the team to feel like they were the CEO or whatever they were doing. And there was a sense of entrepreneurship at every level.
I went and climbed a mountain with Chip Wilson, the founder of Lululemon, and it was fascinating to me. He said, Don't tell me about your your background.
Tell me about who you want to be and how I can help you get there.

And there was something really powerful around that, and it helped people perform at their best and live up to their potential. And then therefore, in my opinion, that's what really helped make this small yoga company brand into a big, massive company that it is today.
You said the founder of Lululemon asked you at a younger age who you want to be. Now that you are the head of a venture capital firm, who do you want to be?
Yeah, it's always been the same, actually.
I've always wanted to do things that matter in the world, and I always think about where can I make the biggest impact.

So, you know, if you look back, in my experience, it was, where can I learn and where can I contribute the most? Now, at over water, it's all around really partner supporting and enabling founders who are solving big problems in human and planet health that ultimately will do something positively for our society.
And then circling back to what we were talking about earlier, about, you know, work life balance, do you, as the head of a venture capital firm, practice good work life balance?
Yes, I think about this a lot, even on my calendar every Sunday, sit down and say, okay, where where is my energy depleting?
Where am I getting energy from? Am I you know, what are the things that make me the best and who do I need to show up for?
I for me, I love working out once a day.

That's something that gives me energy.
I think about my own leadership development path and having that coach as an example.
And what I did that was a little bit different was for over water, not only building a support team similar to Andriessen in some ways, but not in the firm of people who could help founders more holistically on their business, whether it's product or recruiting. But then also experts from my Lululemon days and all different categories, whether you're thinking about nutrition or personal training.
And so for me personally, I live that brand.
I am the brand. I think it again, it starts with the founder.
I am that brand. I'm doing those things.

I'm actively thinking about how can I be the best, you know, venture capitalist I can be. I don't even really like that word because it's more than that. I'm working with founders. That's what I get excited about.
It's not just writing a check, but how can I be the best that I can be every day?
Those are my questions for you. Is there something else you'd like to touch on or something? I should have asked.
Yeah. Thank you. Hopefully that. Oh, I.
Was delighted to.
Answer some of your questions.
You know, I could talk more on.
There's so many different areas that I could talk about with Khosla and working for V.A.
if you wanted me to talk.
You know, this is about. You never know. Right?
Yeah.

Yeah. And it was, you know, what I think was missing in in Silicon Valley was this IQ to the IQ. And to me, that's really important.
It's you know, it's not just looking at a company from is there tech and science differentiate it is that you can they build a big business but having really looking at.
What's the communication with the founder?
You're going to be working with this person on ten years.
It's not just about the technology.
Do you want to work with this person for ten years?
Can you have great communication? Can you think about, you know, all of these nuances that are outside of just looking at a pitch deck?

I think that's really important. And so for over water, you know, I thought from the beginning, beginning that where you can make the most impact is at the earliest stages for companies and helping them helping them. Think about IQ, an IQ from day one.
Emotional quotient, I assume, is the. Yes.
Helping them to think through, you know, how to how do they be great leaders?
How do they develop? You know, I will have sessions with my founders and I sit down on a monthly basis with every founder.
And I have somewhat of a programmatic approach where we look at all the things like their burn rate and all that stuff. But then like let's actually talk about the challenges.
What what are you struggling with?

And sometimes, for instance, it's like, okay, let's do a practice run of this conversation you're going to have with this exec on your team.
So, you know, you're really thinking about you're showing up as your best version of yourself. So we do that or I'm that or I say, okay, let's connect you to this person.
And you can you can talk to them.
Do you think that's because you're a new generation or because you're a woman? Or where does the emotional side of this all come in?
You know, I always say I always think that the emotional side can be men or women.
I always think about it equally.

I try to. But I do think that there's an element of that, that in terms of how to juggle a lot of things or the conversations that I have with founders, it's slightly different where founders will tell me and some founders of big companies or even VCs who are well known, they'll they'll talk to me about perhaps their anxiety or relationship issues that they're having or.
You know, as a man that as a man, that doesn't surprise me at all.
I think if I were a CEO, founder of a small company, I'd probably open up to you more than I would.
Vinod Khosla.

Exactly. Sometimes, sometimes intimidated by these, you know, these investors who have been around for 20 years and that's actually the stuff that matters. Those oftentimes when a company fails and you really look under the hood and have five layers deeper of conversation with the founder, it's usually an issue that is related to needed to be confessed.
Exactly. And if in if you would have had those conversations sooner or saw you know, saw what was going to happen or issues that were going to arise, you could prevent them. And that's my philosophy at over water.
Like if you can if you can have those conversations and not all founders will have those conversations, and that's okay. And it doesn't need to happen.
It's all it's only if they want to talk about those.

But you can somewhat derail a failure from happening if you can get under it faster.
The other question I have for you, and it won't be included in this podcast, but I often ask this and I sort of assemble them together.
Is what book was influential in your life or what book do you give people as gifts? Or if you were on a desert island, what book?
You know what I'm getting at, right? Yeah. And it doesn't have to be something out of the Harvard Business Review. It can be. It can be Winnie the Pooh.
I mean, you know, But what what your go to or that made a difference book.
Yeah, there's a lot. In fact, I just created a library list for my founders and it's something that I'm going to do is have is send out this welcome package.

When I was growing up, one book that I just loved was a book called Think and Grow Rich. It just helped me think about having a different mentality towards the world in terms of now which book has made a huge impact is I have to get the exact name.
It's 1515 limit, let me tell you.
Hold on.
I was just talking about his 15 conscious leadership, The 15 commitments of conscious leadership. Have you heard about this?
No. What does it say?
It's one of the most inspiring books to me.
And actually when I asked a lot of founders and there are multiple founders now that the companies just went public in the last few years, they would say, this book.
It's all around the your communication style, your integrity, how you show up as a leader.

A lot of the stuff that you don't get from their traditional Sandhill Road books.
Interesting. All right. Add that to my list.
I highly recommend reading it. Excellent.
Well, that was a pleasure. Thank you so much.
For your.
Time.

I used to work for Comcast. I was like, Comcast Ventures.
Yeah. Uh, yeah.
No. Well, because I started my career off in.
The entertainment industry, I was working at MGM Studios.
I was a film lawyer, of all things.
Yeah. And so I lived down in.
L.A. and loved entertainment, never thought I'd.
Leave. And.
You know, just I came up here for a boy and.
Enough stories and and left entertainment and got I went to the tech side. So.
Yeah, boy. Tell me the boy that worked out right.
Well, we.
Have a daughter.
But we were no longer together. So it was ten years, I think.
Ten years, Yes. Good. Yeah.
And, you know, if if truth be told and honestly.
The entertainment industry and a lot of my friends are, you know, struggling right now, switching over. I came to work at Apple and then a bunch of other.

/content/Preprocessed_Data/SHR Microsoft M12's Michelle Gonzalez.txt

Google and, you know.
Other places.
And truthfully, from a career.
Perspective, I wouldn't have done it if it hadn't been for him because.
I loved L.A. and I love the media industry.
But it's, you know, allowed me to be a lot more, you know, I would say, like career wise, it's.
So anyone who's ever seen it did, right?
Yeah. I've never take that. Exactly.
It worked out, but it definitely was meant to be.
It was funny because I was literally meant to be like, Hey, we're going to come up here for two years.
Because he got a job up here.
Actually during kind of the 2008 and then promptly lost it when.
All the layoffs happen.
And then we're going to, you know, then we're going to go back down to L.A.

and now we'll be here for another ten years at least. So anyway, but I have just to say that I a.
Lot of my friends are in the industry and I have my kind of first love was always kind of media.
So. Okay, So I understand a little bit about your profession.
Well, I understand a little bit about my profession as well.
Very good. Tell me, you know, I should have been getting an audio check that entire time.
Tell me what you had for breakfast.
I had some oatmeal with bananas.
Excellent. That was usually.
Well, no, but I got a root canal last.
Week, and it. Yeah, and it's still.
Kind of filling a little. I hope it's actually.
Not, uh, failing, but, uh, so I've been eating soft stuff, like soup and lamb, and that's.
A good plan.
So I took some Advil today, so hopefully.
Yeah.

But, yeah, my daughter, she got the.
Well, she had pancakes, but we didn't have enough pancake mix for.
For me to have some, too.
And like, a good mom, You put up with that?
I know. Yeah, I'll take that.
The. Oh, right. Oh, you can have the fun pancakes.
So as I'm interviewing you, if you get halfway down an answer and think to yourself, What was the question?
Yeah, just throw your hands in the air, you know, and say, Hold up, hold up. What was the question?
You know, if if you you know, I should have offered you a water.
You can I can get one if you need one.
But you know, take a take a break and and take a long pause and think about the answer.
That's fine, too. We'll edit it.
It's supposed to be friendly. It's supposed to be casual.
So, you know, just take your time.
Appreciate it.

Let's start out with what M12 means.
Ah, that's a good question.
So M is for Microsoft, and 12 is the letter.
The number of letters in the word entrepreneur.
So I actually think the the name is very apropos because we are Microsoft's venture fund and we focus on founders.
You know, I thought it might be influenced by A16z, but it turns out computer scientists do this all the time. This is a common way of abbreviation.
Well, I hear a rumor from our head of marketing that we did actually hire prior to me joining the fund.
A16z is brand manager, but I love that that there's actually a technological.
So my first suspicion may have been the right one.
You were. Yes. Oftentimes, that's that is the case.
Yes.
You got go with your gut. Go with your gut and the thing.
Silly me.

Oh, I should turn off.
Yeah, go for it. I'm going to just your mike anyway, so.
Oop.
That is.
I didn't know what it meant either.
I was like, Right. Yeah, I know.
Well, there's. There's an L.A. firm called M13.
Also, like. Yeah, I know, But they were after us.
But again, I don't know what they mean, what that means.
Next 47 is Siemens. I think they were started in like 1847.
Oh, that's cool. That's like, well, that's.
Yeah, that's flexing.
So it's been around a long time.
I found an old article in 2001, my friend Joe Men back when he was Reuters talking about how much money Microsoft had lost in venture investments long before your time at M12.
But it does bring up a central question in venture firms that that are tied to bigger organizations, Salesforce or Boeing.

We even did an interview with Chipotle.
Do you pursue the financial returns like a like a traditional fund, or do you try to incubate and grow companies that are complementary to your company's goals? And to begin with, Microsoft was just trying to make money on this thing, but there was a bit of a pivot.
Yeah, so just one quick correction.

When Microsoft was investing off its balance sheet in a number of companies, that was during the first kind of tech wave. M12 was actually started in 2016, dedicated this the first time Microsoft had a dedicated venture team that had a focus on early stage investments in technology companies. And this kind of coincided with Satya is becoming CEO, embracing a number of things like open source as well as the rise of Azure and the ecosystem of that ecosystem.
So in terms of how we think about things.
Yes, I think, you know, the team originally and I think.
Oh, actually.
No, take your time.
Yeah, sorry.

And I can I can rephrase the question and that is, you know, there is a tension when we've talked to. Yeah, yeah, we've talked to a bunch of different the either spin out of the main company or they're still supported by the main company, Boeing, Airbus.
I've talked to them one at Goodyear, I've talked to Goodyear's venture capital firm, A Chipotle actually has a venture capital arm.
But there is a tension between are we here to make money, which is, you know, what Sequoia's trying to do?
Or are we here to make better stuff?
You know, encourage companies to to create the things that will make our company better. And and there was, you know, a decision to be made at M12 as well.

Yeah, definitely. And I think you're always when you're in corporate venture capital, I like to say you're always on a seesaw. And if you're kind of out of whack on one end is the financial returns. And those are really important, right?
So if you start to lose a lot of money, CFOs are not very happy.
And also, if you're investing in companies that aren't returning capital, then, you know, by nature you're not sort of investing in companies that are sustainable, that you're going to be learning from, that you're going to be wanting to partner with.
And on the other end, as the I would say, kind of the strategic impact that you can bring to the organization and to your companies as well.

We look for a lot of things that are one plus one equals five, and where we can help with the distribution, the growth of the company through a number of the Microsoft channels, access to, you know, technical expertise.
Recently with Gen AI, many founders are actually looking for not more than just capital, so they're looking for access to technological expertise.
They're looking for new access to new models, to GPUs, to customers, to for design partners, as well as distribution.
So I do think that as a, you know, leader in CVC, you've kind of always got to understand where you are on kind of the balance.
And I would say, you know, for us we do try to make that that balance.

And it's important to our founders who truly want to partner with Microsoft and look to us as more than just capital, where capital plus plus.
There was when you were put in charge, you help pivot towards more of incubation and more what helps Microsoft, because the business of Microsoft is Microsoft.
Yeah, I led the strategic shift two years ago so that we were more what we were more focused. So the organization is now thesis driven in a number of areas that are strategically aligned to Microsoft.
So we invest in cybersecurity, we invest in generative AI, we invest in cloud infrastructure as well as deep tech and enterprise SaaS.
So we've pivoted the team to become almost have major and minor.

So subject matter experts, folks on the team that can go really deep, really understand those areas, be more proactive versus reactive in terms of the companies that we're focused on. And we also have half the team focused on the success of our portfolio from and through Microsoft.
So again, connecting companies with access to partnerships, distribution, technology.
So all of those things require if you've ever worked kind of big company versus small company, right? There's a very different time horizons different.
Ways of speaking. And so we have folks that are there to help navigate for for our startups. But that was really necessary for us to deliver on that promise of more than capital.

We are also providing kind of again, that that, that plus plus so that we can drive again the growth for some of our portfolio companies.
Not everybody agreed with it. I mean, some executives left, some investors left, But you felt it was the right way to go.
And I assume Satya thought it was the right way to go.
Yes, I think, you know, look, our our team needed to evolve, just like in startup.
You know, in the startup world, we've seen the seismic shift, which I there's been a lot of evolution companies, you know, pivoting capital was freely flowing when interest rates were zero. Now it's different.
It was growth at all costs. And now it's focused on efficiency and growing sustainably.

And quite frankly, you know, a lot of the company, a lot of investors are looking for profitability or cash flow, you know, break even.
And so just like, you know, the the startup world and ecosystem, we needed to evolve to better serve our founders as well.
And we, you know, have a team that's very excited about our mission.
And, uh, and we're, we're excited.
It's kind of a really good time to be pivoting from, you know, purely financial returns to growth and development returns.
Yeah, definitely.
Well timed.
Thank you, Scott.
I cut you off. You think?
Oh, yeah. No, I was going to say, look, I think as I.

Mentioned before, I think in particularly in the growth stage, a number of companies are having to, you know, make adjustments and and pivot and truly determine if they've got product market fit with, you know, budgets being tighter and the need to get to to grow sustainably and profitably. And, you know, again, we've had this seismic shift with with Jenny I and a number of companies, you know, needing to adapt because there's been I was just reading Crunchbase had 9000 new gen I you know air companies that were started, you know in the last year.
And so, you know there's even for existing startups they will need to evolve right to take advantage of the technology.
You even tried to use generative AI to write the announcement that you were pivoting them.
12 Yes.
That work out.

You know, it's actually been.
Pretty I think it's getting better and.
Better, right? So I think we we initially kind of had a a version of that and then we ended up reverting to kind of analog with humans. But I do think actually.
I'm speaking on a panel on Wednesday interviewing a number of Latin SBC and technology investors.
And we we originally we gave Chatbot a prompt that said we were here.
The people were we're going to be interviewing here is kind of some of the goals of of the interview and panel and write us up a script.
And it was I would say 90% there in terms of like some good questions like my kind of as I'm the moderator, my kind of bullet points.
To to hit. And then we just kind of again had some light editing. But things are things are getting better.

I do I do a television show called Press Here, in which my editor had given one of the segments a title.
And it was such a clever title.
And he's, you know, fairly young in the business.
And so I shot him a text and said, I just want to say I'm really what a good job you did with with thinking that up.
And about four days went by and then there was this, you know, sort of meek text back.
He said, Scott, I've been really upset about this the entire time.
I that was Chad.
And I said, Hey, you know, it's a resource.
You still did your job, right?
Yeah. Actually, we.

Found we've been starting to implement in our own organization in terms of, you know, looking for research, looking up as we kind of diligence, you know, companies. We used to have somebody that would take notes at some of our meetings and you'd be astonished that what the notes that come back from, you know, the team's integration where it has a summary of what happened, who said it, and then literally the action items like the bullet points of what's what is, you know, okay, tide, you know, is responsible for doing X, Y, Z.
And again, it was astonishing.
And that just allows, you know, the one nobody really wants to be the note taker.
And so it allows kind of folks to then fully participate in a in a meeting or to do something else.

Right. Like in terms of if you were just there to take notes and do something that's more high value. So I'm actually pretty excited about what this is going to drive in terms of productivity for, you know, for for folks like us.
You told a venture capital newsletter you thought your team probably met with a.
180 companies a month.
That doesn't seem possible.
It is.
I think the team's now met with at least over 600, so there was a bit of a swarm, I would say, in kind of the October-November time frame where the team, you know, we were each of us was.
You know.
Really kind of trying to understand what was happening.
Right. This was technology that was created.
I mean, the attention all you need is attention.
Paper from Google came out in 2017, so it wasn't open.

Air has been around, you know, for some time.
But it was really, you know, when there was an application of tattoo beauty and the explosive growth that that saw and then what it spawned in terms of a number of startups.
But it was I will say it was a constant and some of that was one too many.
So we were hosting a bunch of events with our partners, Microsoft for start ups, number of hackathons as well as one on one meetings, but it was pretty intense. But it does give you the opportunity then to really understand a space and and build some thesis again about how we think things will evolve.

I think I think it's easy to see how this will change the world. But that said, and I was talking to Rajiv Thomas of Sapphire Ventures, we came up with a list, you know, crypto cloud, fintech, alternative foods, big data, Internet of Things.
You know, we were excited about all of those things or, you know, there would be a flood of companies that were all doing those things.
And so, you know, fool me once and then fool me 600 times, you know, that that some of those companies out there are not as A.I.
as they're claiming to be, first of all.
Yeah, no, that's true.
And it's it's interesting. I've met with.
A few.

Folks who have said, hey, two years ago you guys were talking about, you know, Web3 and there was a lot of investment and capital invested, you know, searching, I would say in the case of Web3 for for a true use case beyond kind of a store of value or, you know, digital currency, I think there's there's something that feels a bit different, Scott, this time.
So I lived through, you know, Web 1.0 and there was, you know, at that time, you know, a a flurry of activity and it spawned a number of, you know, new new businesses, many of whom, you know, didn't make it in the kind of earlier, you know, too early for their time. And then you've got things like Amazon, but really took 25 years to to fully come to fruition.
I joined Apple the month the App Store launched.

And at the time I will, you know, say I it was just an incredible ride. But initially it was a lot of, you know, experimentation, right, in terms of the type of applications.
And nobody was thinking about what it would create in terms of things like Uber.
Right. And the change in behavior that would need to happen.
I actually took a number here today. And if you told me, you know, back then that I'd be getting in stranger's cars on a regular basis, I would say, you know, that's crazy.
That'll never happen. But but that also took rate that was, you know, again, 15 years ago. So I do think these things you know and time still will tell on some of the ones that you and Rajeev listed.
But they seem to the years seem to be slow.

I heard the decade fast record and so and so that's kind of what and we are looking at kind of these further time horizons.
But I think what happened here, we had just this compression in the last six months given the the technology and the access that it will bring.
And, you know, look, many of those startups will not survive.
You know, that is just a fact, which is.
Which is Norm was going.
To say which is normal. Right.
What I will say is that there will be a lot of experimentation.

I wish I knew what that kind of net new behavior, particularly in the consumer space, whether it's you're starting to see little green shoots, like things like Character II, where people are talking with, you know, three characters that could lead to, you know, maybe your personalized coach or an agent that acts, you know, on your behalf and helps you in a number of ways.
I but I'm going to be looking and that's why it's important to kind of meet with, you know, there are going to be some incredible founders that will, you know, take this technology and think about it in a net new way.
And so that's that's kind of what gets me really excited for this wave.
But but I acknowledge.

That our industry as one by nature gets really excited, right, about, you know, these potential seismic changes, because when they do happen, there's a lot of disruption. And that typically happens for incumbents and there's a lot of, again, net new value that happens, one for society, I would say.
But overall for for investors as well.
Microsoft is an investor and open a I.
Which makes chad CBT, but that investment happened at the headquarters level.
Did that happen above, you know?
Was there a moment where he said, Wait a minute, I'm in charge of doing this?
Oh, you know, that actually.
Happened before I came.
Okay. Microsoft. But but as I understand, that was that was Satya and Kevin Scott.

But what a wonderful investment just in terms of being so prescient, seeing what could be, you know, the possibilities of investing in, you know, in openai and what could, you know, ultimately be, you know, very transformative.
But but Microsoft definitely put its chips on the table.
This it is a big company that said, we believe in this.
Yeah, they did. And and then they partnered very deeply in terms of, you know, openai running its infrastructure, you know, on Azure and partnering to to make that a reality.
So it was a deep partnership in addition to the investment as well.
One of your investments is typeface, which creates content that that's what Chad Beatty is really good at and generative A.I. is the creation of content.

Yeah, that's one of the things I think touchy about now, especially with the launch of kind of Multimodal, where you have different, you know, inputs, rate, voice, etc.
and, you know, image, text, creation, AI, and they have obviously Openai has a number of different models.
Call it daily, call it techy beat talk TV.
You know, three, four type is a really interesting company started by the former CTO of Adobe who recognized that companies will want to be able to today it's actually pretty cost prohibitive. Right. And in a number of cases to create, you know, a lot of different, you know, advertisements in a in a number of different languages and for a lot of these global brands and then managing all that content, whether you know, from an IP perspective.

And so with what they are focused on is is really selling into the enterprise with kind of all of the trust and safety and management that's that's needed for that. And I think it's a very interesting use case.
You're starting to see a number of companies focus on kind of that marketing and video areas where, you know, perhaps in the past it was cost prohibitive to try out 10,000 images or, you know, create a number of videos in a number of different languages where now that cost is is coming down dramatically.
And that then can increase kind of the ability for those companies to to have, you know, more personalized content for consumers.

And when you're selling something that is a service like that, that does something that is something you can charge money for, because that's the next question I write is how do I charge money in the sense that, you know, most of us are exposed to A.I. through Bing or through Jen, and it gives us answers to search, but not advertising, which is what search depends on.
Yeah, it'll be interesting. I think we're starting to see experimentation with monetization on the on the B2C side, A lot of companies are still, I would say, pre monetization.
So a number of companies have like character and and others have engagement.
You're starting to see things on the the media side, creation of characters and perhaps content.

But but it's still early. I guess that's kind of a big theme is it's early days and so a lot of experimentation still happening.
And I think eventually then folks will will start to charge, whether it's, you know, in a subscription format or in a digital goods format.
I think during mobile, a number of different net new kind of ways of monetizing like freemium kind of came out of came out of that that change as well as in the cloud era, the SAS business model.
And so on the enterprise side, you've got, you know, companies starting to to charge for that.
And typically there's a usage model like you've reached, you know, a certain amount, like if you think about mid Journey and others where you've got you've used so many, you know, kind of you know, images, etc.

and then there's also starting to be subscription models as well.
So I think it's still early days.
I think there will be, you know, interesting models that will come and maybe in the future they'll even be, you know, things like if there's so much value created, maybe there's a percentage of that that value creation.
So I think we'll have to see how things evolve.
One of the things that I think people are generally aware of, but I think is underappreciated, is that Microsoft went from a giant in tech, a company so big the Justice Department is was worried about it to. Not a second ran company, but it had its moments in which it had not.

And then all of you know where its accomplishment was the Zune music player. And then all of the sudden, Microsoft is once again one of the most important companies in all of tech.
It's an extraordinary pivot, not pivot, but but an extraordinary, you know, just just lifespan.
And and I think that doesn't come without great leadership.
Having been in a number of companies. I've been at Apple, have been at Google, now Microsoft. And I forgot, I think maybe Microsoft's maybe 40 years old plus.
One of the things that my team and I talk a lot about is that the average lifespan of companies on the S&P 500 is getting shorter.

I think it's like 17 years. And so, you know, the former or the co-founder of Intel's quote, Andy Grove, only the paranoid survive, I think is is pretty important to to think about that you've got to keep, you know, transforming.
But I do. I was here 16 years ago when I joined.
I came up to Silicon Valley and the Microsoft brand wasn't in the same league as some of the companies that were here. And I think with Sasha's leadership, embracing open source, buying GitHub, buying LinkedIn, really pivoting the company hard, and you can read about that.

He's written about, you know, in his book hit restart about pivoting the company hard into cloud even though it wasn't you know a you know completely obvious and it was a very tough choice. So making those tough calls, taking big bets, I think those those acquisitions are big bets.
I think the investment in opening AI is big bets and and you've got to do it before it's obvious. And so I do think that credit to to Satya and his leadership team for, you know, truly transforming the country the company from a, you know, cultural standpoint, but then also from a technological standpoint.
You've mentioned that you've worked at Apple, you also worked at Comcast, which is the parent company that employs me through NBC. And you worked in virtual reality.
At.
Comcast.

Convince me VR is even a thing.
Well, you know, at.
The back to you, kind of you and or Jeeves, you know, there are sort of, you know, new technologies that emerge.
And I think for, you know, some time we've been, you know, thinking about what is that next thing outside of mobile, right. For for particularly for consumers.
And typically there's a you know, a hardware component, something that that happens, that change. You mentioned, you know, the Zune or the iPod was the thing that ushered in, you know, a lot of changes for the music industry.
It was mostly the iPod.
But but, you know, with virtual.
Reality and we were also looking at augmented reality.
Uh, the thought is, you know, look, I think there are some, you know, pretty interesting use cases.

I think, you know, for folks that are fans, they're they're superfans, right, in terms of games and, you know, perhaps some of the things that we were also looking for, as in could that be an interesting use case for the the game rather the the studio parks right.
So when you're going to you know, the Universal Studios part, could that be something that's interesting as well?
I think for us, we were making a number of beds in different areas.

So investments in areas in animation, investments in areas that we're focused on, sports, some in hardware, some in are to to learn and to see if there was, you know, Comcast with you know, as you mentioned with NBC, Universal is a content company and a you know, and a parks company. And so I think the thought there was investing in areas one to make money but then to to see if there was opportunities to leverage some of the assets that Comcast had, which was content through this new technology. I think we're still.
TBD on, you know, the metaverse and some of these.
Yeah.

It is important, though, for legacy companies, even if they don't end up pursuing and I'm not aware of a Comcast virtual reality headset, but I think it's important for legacy companies to say we need to at least understand what this is. We need a working knowledge of this so we don't get caught flat footed.
Yeah, I I've always I felt like most of my career has been at that intersection of innovation and within kind of also bigger corporations and I think often times.
In a corporation and I was a product manager at at Apple, where you're looking, you know, maybe you're looking quarter to quarter maybe or even looking a year or two ahead, but you're not looking ten years ahead.
You're not looking 5 to 7.

And oftentimes, you know, what's happening with startup seems very small, since in some ways it's kind of insignificant until it's not.
And so I agree with your statement in terms of it's important to to learn. It's important in the case of Comcast, you know, the majority of the Ventures team was based in San Francisco, not Philadelphia.
It's important to be, you know, again, kind of really, you know, embedded in the in the community and and then, you know, experimenting.

Right. And keeping an open mind, always being kind of intellectually curious. And I think as an investor, it's, you know, my my day is filled with meeting with, you know, amazing, you know, founders, folks in the venture and startup ecosystem and, you know, others in the corporation are really focused on, you know, their product and and as they should be.
Right. And so I think it's a nice opportunity to to your point for a corporation to to understand, to learn.
And as I mentioned before, I think really, you know, oftentimes you do have to make these pivots.
You do have to, you know, make some pretty risky bets in order to to continue to stay ahead.
You made sort of a grand tour. You were at IBM, you were at Google, you were at Apple, you were you are at Microsoft.

Uh, you know, that's a that is a grand tour of the big names of of tech things.
It wasn't planned. I originally started my career off in the film industry down in Los Angeles at MGM Studios.
Moved up here to the Bay Area, very fortunate enough, as I mentioned, to start at Apple, the month the App Store launched and had the opportunity to to learn product management and and I would say.
Having this non-linear, you know, career trying out, you know, venture at Google.
I was running Area 120, which is there was their R&D incubation efforts and now running M12.
The fund has all been very interesting.

I think the one kind of throw line is I've been attracted to people in terms of people that I would get to work with leadership teams and as well as kind of I think it's important to think beyond kind of even your your direct boss, but the people that you'd be working for the culture.
And what are you going to learn in the case of, you know, IBM and even Google? I learned about Enterprise.
Most of my career had been in consumer.
And so understanding the pretty big differences between enterprise and what it takes to sell into the enterprise versus kind of a consumer product and how you build those products very different.
So I think kind of constant learning as well as as people, the people that you get to work with and the culture of the company.
But it definitely wasn't planned out.

But I feel very fortunate to work for some truly incredible companies and leaders.
Was there one company that did something that had a practice that you've you've carried to two other companies, something you know, oh, that Google did, where we are going to do it this way?
Yeah.
At Google.
When they didn't.
Have the Google News as random. Yeah.
Actually.
I was actually, as you were speaking, thinking about one thing, but I think I learned it at Google is one of their core values is thriving in ambiguity.
And one of Microsoft's core values is creating clarity.
And so so with.
Our team and the type of work that we do, it can be uncomfortable to thrive in ambiguity. We're making bets that are 5 to 10 years out.

Most of our bets will fail because because we're focused on the early stage investment at, in some cases, the earliest stages.
And so.
One of the things that, you know, I think I took from Google is how to have that resilience. And it's okay to not know, right. But to also then create kind of the environment where people can take risks, where people can experiment and it's rewarded, it's not punished.
And that's what we really need in particularly in the venture community, is folks that are going to go out on a limb, that are going to be comfortable and and quite frankly, even thrive in that ambiguity because we don't know the answers.
So I once had a friend, you know, say jokingly, well, why don't you just invest in the.
Good companies, you know, if only.
So.

So that's when I would say value and practice that I've of you know, that I've embraced and that I learned at Google and and respect deeply the company for having that cultural value.
I suppose to be irresponsible if I didn't ask the opposite question.
And that is what it was. There's something just so dumb and mean.
Maybe don't mention the company. We thought, Oh, we are never doing that again.
I'm so glad I am rid of that.
I will say at a.
Certain.
Company we used to.
Spend, I would say.
At least for weeks.
Preparing for performance reviews and going through.
Calibration.
And folks writing novels.
In order to get promoted and an appeals process.

Even for that, I, I very much value again, the the ability to to connect to talk about that career goals as well as you know how people are performing.
But to take that amount of time twice a year out of your your schedule.
Let's just say.
It wasn't my my favorite.
Activity.
You grew up in Oklahoma. Tell me about growing up in Oklahoma.
I actually grew up in Texas.
I went, okay, all in Oklahoma.
You grew up on the border, then?
Yes, I grew up. Yeah, that's my real Grand Valley.
Yeah, a little town called Westlake. Oh, my.
My family is still still down there.
Very different than Silicon Valley.
Yes.
I'd say it's one of the poorest counties in Texas, kind of a mix of because we're so close to the Mexican border, a mix of cultures, which was a really kind of interesting upbringing.

I will say, when I go back home, not a lot of folks are talking about Chatty Betty and others.
And so it's it's definitely.
Grounding in terms of sometimes I think we can be a little bit in a echo chamber in a bubble here in Silicon Valley.
And so really understanding, you know, what what's meaningful then to a wider community.
It's gotten better. But I you know, I would find that going back to the Midwest where I'm from, just having a good solid cell phone connection at all times, you know, was something that that I took for granted here.
And you think if I'm building an app, you know, I'm just going to assume that everyone has it. And. No, they don't.
No, they don't. And I think we learned with COVID, many children don't have access to reliable Internet. Yeah.

Either. And so in, you know, lots of particularly rural areas, but even urban areas.
And so I think that's something that is important for us, let alone the rest of the world, right?
US as a technologist and investors thinking about different communities, what's it going to take for, you know, technologies, whether it be web3, whether it be Gen AI or, you know, VR to actually kind of cross a chasm, right, of those folks that are the superfans that are what's that use case that's really going to delight and have, you know, a nice payoff, really sort of solve a problem or create, you know, kind of space for somebody, whether it's entertainment, etc., to, you know, improve their life.
And so, you know, I do think about that.

I think, you know, having grown up in Texas, you know, gone to school in Oklahoma for college, helps with some grounding and thinking about how, you know, other parts of the U.S., the world don't have maybe perhaps as as much in terms of, you know, some of the technology or usage of some of that technology here.
I was going to ask you.
What values did you bring out of small town Texas that still serve you well today?
In my personal life, family.
So my dad's family is is Hispanic.
And I think one of the things that I love so much is it's very multigenerational.
Very. My mom mom's actually here today and she helps out a lot with my daughter.
And so I love having my mom spend time.
And I think having a, you know, kind of a close extended family, which is a value.

And you see that throughout where you have folks, you know, multigenerational, living with, you know, their parents and grandparents. So that's that's one.
And I think also some, you know, humility as well. I think, you know, for for me, I am very, as I mentioned, kind of curious.
I want to understand I want to to learn.
But I don't think I, you know, am.
You know that I know it all or that.
And so Sasha has a phrase of a learn it all versus, you know, know it all. And I think that was something that, you know, also being, you know, kind of from Texas. I you know, I want to be humble.
I want to, you know, also understand, you know, before kind of I would, you know, kind of express, let's say, a, you know, a strong opinion or so.
You don't sound like you're from small town Texas.

I do say still say y'all.
And but I've been living in.
California since 2001, so.
Yeah, I know.
Speaking of family, you told someone once you wish your grandmother could see you now.
Oh, yeah, that was so.
I recently was awarded one of the top 50 Latinas, and.
And I was very close to my my grandmother.
She was someone who.
I think we think she.
You know, maybe got kind of a grade school education.
So she had to go work and but she always valued education. And so all she had five children.
They all went to college. Some of them even got a masters and.
You know, I think and then she had, you know, I would say most of her grandchildren also went to college. And it for her education was was so important.

And so I wish she was here and I could kind of share this, you know, with her. She she used to pick me up from school.
Both my parents work. So, you know, we relied on on her to help, you know, take care of me and my cousins.
And, you know, she was someone who was just, you know, incredibly.
Um.
Inspirational, you know, in my life about what she had accomplished without, you know, kind of that education, but how she instilled the love of learning in her children and then, by extension, her grandchildren.
Those are my questions for you. Unless there's other things you would like to touch on.
No, I think that's good. Thank you.
You're very welcome. So I have one last question that we won't include in this podcast, but I do collect them. Okay.

And then we put them together in the summer and we call it the VC reading list.
What's a book that was important in your life?
Is important in your life that either you read over and over or you give it as a gift, or if you were, you know, minimizing your bookshelf, you'd say, Dan, and I'm going to keep that one.
And it doesn't have to be, you know, something, you know, from good to great sort of thing. It can be We the Pooh.
Yeah.
Can you? I was. So I used to be the product manager for books at Apple, So I'm actually.
Looking at my books of see, as I read, because there are a few books like that in my life.
And so take your time.
All right. Thank you.
Let's see.
You look at my library.
I was once at a party and in the city and.

Ran into Elon Musk, and here I was the product manager of books at that time, and he.
Gave me a laundry list. He was a books, uh.
Uh, reader and user.
And so he gave me a laundry.
List, emailed me all these products, just like, I'm not kidding.
And I got sent back to the engineering team.
I like a customer.
A customer.
A customer who had some interesting feedback for us.
Well, so there's this one book.
Uh.
But I, um. The achievement habit.
I think perhaps that I'll go back.
To every few years.
So many.
What's here, Scott.
You know, I always use Winnie the Pooh as the as the example.
You can read it as a child's book.
You can read it as an adult.
And Eeyore is such a funny.

Sarcastic character, the adult humor in not adult dirty, but adult, you know, sophisticated humor is just tremendous. And then the other one that I really like is the fellow who wrote Devil in the White City, whose.
Yeah.
He wrote one. And it's the it's the story of the sinking of the Lusitania.
And he's got the, you know, the ship logs from both the passenger liner and the submarine.
And so he walks you through as the submarine is getting closer to Ireland and its Lusitania is getting closer to Ireland.
And he puts you in the in the the cockpit of the bridge of both of those ships.
And you know, what's going to happen in the end. But still, it's incredibly compelling.
It's just so interesting.
All right.
I found the author's name.
Oh, good.

What is it? Okay, so it's the achievement Have It by Bernard Roth.
And it kind of the essential piece that I come back to is and they've got to kind of almost a ten week step plan around sort of how you can, you know, transition from trying, wanting to actually doing.
And I think, you know, really sort of, you know, some inspiring anecdotes, but then then actually kind of some real tactical ways if you're looking to make a career transition, if you're looking to go deeper and learn something, but then actually, you know, doing something and having, you know, taking action in your personal and professional life, it's there are some good inspirational stories of people who have done that.

And then there's also some, you know, great tactical, you know, pieces of advice to do that. And so I think kind of coming back to when I think it's it's a good book for folks who perhaps are looking at, you know, perhaps transitions or maybe not satisfied, perhaps either in their personal or professional life and don't know where to start and gives you again, kind of I wouldn't say a roadmap, but a little bit of, again, that kind of inspiration and things that you can be doing tactically. And and then also, you know, for me, coming back each year, I've had a number of different careers.
So I've been, you know, a lawyer, a BD product manager, B.S.
And, you know, each of those required kind of this transition.

And so kind of also something to come back to and, you know, ensure that I'm I'm actually not just kind of wishing or hoping I'm actually doing. And so so it's a I recommend that one.
And then just a fact check. When you were at Apple, you were there to do the books or you were on the App Store.
Oh, no. So when I was at Apple initially, I started off in the iTunes movies. It was called iTunes movies back then.
And we were bringing movies to, you know, the iPhone and later to the iPad.
We hadn't even launched the iPad.
And then I transitioned to had the fortune to transition to being the product manager for books.
And then ultimately, I was the first product manager for News the news app.
Oh, wow.

I just happened to join the month, the App Store launch, and we were all kind of in the same group under Eddy Cue. So it was it was just a frenzy of kind of, again, activity during that time with a number of, you know, different applications.
You mentioned that you can't see and no one can know how big something is going to be. One of the most popular apps on the App Store to begin with was this guy had at home had coded this little cannon that you would fire a little bullet and, you know, charge $0.99 for something.
He got terribly, terribly rich.
And it's so primitive now, you know, and nobody could have possibly.
It was exciting when Steve pivoted from he was going to you know, he wasn't allow third party apps on at all other than, I think YouTube.

Everything had to be web based. And then all of a sudden out came an SDK and the world changed. But we couldn't have seen it.
We couldn't have seen it. And even, you know, big companies, you know, like Facebook didn't see it, right? They were focused for, you know, the first year still on mobile web and almost missed completely, you know, mobile.
So it was you're right, when you look at those kind of early applications.
They they do seem, you know, pretty primitive or and we.
Weren't thinking about things like Uber or perhaps, you know, even Airbnb and what what things could be enabled from, you know, this new functionality.

And you're right, we at Apple, we originally had a first party gaming team that were creating games, you know, for the iPhone before there was the decision to to open it up.
And thank God there was the decision to open it up.
Look at all the creativity. That, you know, that that decision spawned. It's kind of hard to believe what our lives would be like if that hadn't happened.

Yeah, usually the weekend breakfasts or burgers like the pork loin with egg and broccoli and one more inch closer to you and I think we'll be good.
Hello, testing.
Yes, good, well, and everyone's longing to throw those headphones on just to make sure everything's still kosher. Yeah, no worries.
The other thing is that as we talk, this is, you know, it's it's prerecorded.
I'm going to edit it to some degree.
If you get halfway down the conversation and think to yourself, what the hell am I talking about? I have no idea. You just wave your hands in the air, we'll cut it out.
It's you know, or you know, you're you say, you know, there's no executive I like better than the CEO of my portfolio company.
His name is Will cut that out to just figure it out. We'll fix it. It'll be fine.

/content/Preprocessed_Data/SHR Playground Global's Jory Bell.txt

Well, first of all, introduce who you are.
What's your name and how do you spell it?
My name is George Bell. That's Joab Y and the last name is Bell and Bell.
Does jury have any significance to it?
So my understanding is that my mother named me after Victor Jaurès, who was a 1930s era leading silent film star, and she just like the sound of that last name and so used, it wasn't necessarily a huge film fan, but just like the name.
Yeah. I mean, I think maybe her mother, maybe my grandmother had liked it, but that really didn't figure into much to this story.
I subsequently actually had talked to there was a group on the Internet of people named Joy because it's a low frequency name and they all had very unusual sources for where their name Kashua from.

So and then the other thing I wanted to get off to right off the top is your is your obsessive Twitter habit, constantly posting to Twitter Yomi tweets, you've actually made probably like four two because I'm not counting three tweets.
Yeah, I mean, I'm a little more so I'm not big into social media. I'm a little more into LinkedIn.
Part of the problem with Twitter is I have just enough awareness of the complexity of the conversation and the culture there to understand how much work it would be to do Twitter.
Right. And that's a little little, Don.
That's and that's in your personality. You know, if I'm going to do something, I'm going to do it right.
I like to think so. My wife might think otherwise, but dishwasher just. Well, actually, I like no, we don't have a dishwasher.

I'm the dishwasher. I like dishwasher.
You know, in most families, men pretend like they can't competently load a dishwasher and then they don't have to do it anymore.
I like to clean by hand as I'm going and I do the cooking, too, so.
Oh, perfect. Excellent. So tell me, why playground?
Why did I come to playground?
Why do they need it? Playground.
You know, I think that.
So technically, it's playground global, and I think the combination of, you know, building really technically challenging large companies are a combination of, you know, a really joyful practice of building new things. You know, we walk around, you saw our shop.
It's really it's really kind of exciting.
Yeah.
If you bring things to the robots, it is a place.
Yeah.
At the same time, it's it's a lot of work.

So you have to combine those two things, especially because these are you know, it's a long haul to go from an idea to having a big successful company.
So it should be nice to have a component of fun along the way there. And then why did you come to a playground?
I came to playground because the founding partners, like, had had a really great track record of building both hard technologies and really successful businesses, and I wanted to learn from them also. My own path was kind of, you know, I started out in academia, so did climate change research at MIT.
And I came out to Silicon Valley, worked at Apple for a number of years designing laptops. Then I had a startup that was making kind of pocketable Windows machines before there were smartphones.

And so I had kind of, you know, background in solving or trying to work on really hard problems in academia, in hyperscale or company, in a startup context.
And then I wanted to be able to work with kind of a broader range of startups to kind of bring that experience and going to help them make their own successful companies.
Start with with Mittie architecture, literature, earth atmosphere and planetary studies.
And to be clear, you don't have majors in these.
I do. Those are three. Those are OK. Three different. I was going to say these are three different degrees, three different undergraduate degrees. It's true.
Yeah. Yeah. I mean, I have two majors, but, you know, I don't think of it as two degrees. You have four degrees from or three degrees from MIT.

Yes, a little bit indecisive, actually.
I like to say I decided I wanted to go to MIT when I was seven and I started showing up to their, you know, preview nights they would have.
And, you know, this is in Rochester, New York, upstate New York.
And, you know, they were a little concerned that I was overly focused at a young age.
But but my goal had been because I had read a lot of science fiction.
There were characters, you know, frequently, you know, characters who had gone to MIT and dropped out and then done some interesting, you know, science startup or business. And so my goal was to go to MIT and drop out.
So I like to say I really disappointed my parents because I ended up graduating with three degrees instead of dropping out.

So so MIT was a bit concerned that you were a little bit too intense for MIT at the age of seven. Yes, yeah.
They you know, later on they warmed up to it, but it's OK to have a severe time.
When you were at Apple designing notebooks, what did you do specifically?
So, you know, it started out with smaller components that I don't like latches and mechanisms.
And then then I owned for a number of the laptops, the display, the whole display assembly on the laptops.
And then the last thing I did there was kind of conceiving and architecting the titanium power book at the time, which was kind of the first metal design and also the first widescreen design, which which had a whole longer story.

That was that was one of the one of the things that I really had the most fun doing was kind of creating widescreen displays for laptops.
So I realized I asked a question out of order because I did want to follow up with one more MIT thing.
Architecture, literature, Earth atmosphere and planetary studies link those together for me that so I think I knew going when I went to college that I wanted to, you know, divide my energies between the sciences and the arts. And so that's the architecture and earth atmosphere and planetary sciences.
The literature, one I felt is a little bit of a guilty pleasure in that I've always been a voracious reader, especially of fiction.

And so it seemed kind of like a cheat to just be able to read a bunch of books and write about them and get a degree for that. So that was kind of thrown in there for free.
You've hit on what we English majors had hit on early is you mentioned science fiction as a boy. What kind of science fiction?
Well, I think apropos the current moment, Dune and, you know, a lot of the.
Trying to think of the range of the most impactful ones, so Stanislaw Lem, Larry Nivan.
A lot of the Russians I ended up liking, so, you know.
I think the both things that kind of imagine what the future could be like, so things that kind of allowed you to ideate about, you know, where you could push things.

And also, I think it's always been an interesting lens through which you can look at the current culture and try to understand, you know, what's really happening with a little bit of separation from it.
And then and again, kind of with an eye towards how can you solve problems.

I think people who are not necessarily science fiction fans don't realize that is one of the most valuable things about science fiction, is that you can take a current event, give it robots and monsters and things like that, and disguise it in a way that you can talk about it in a way that maybe if you had the actual characters involved in the current event, you couldn't, you know, take the January six attack on the Capitol or something. You make a metaphor out of it and you can you can explore it in ways that you couldn't in some other ways.
Yes. Yeah. So, yeah.
So we were out of order there a little bit.
But back to designing Apple notebook.
So you would have done this under Steve Jobs.
So I, I straddled Steve.

So I was there for a little over six years and the first three years was when Steve wasn't there and and then the last three were when he had come back.
OK, so you worked with him? Yep.
So Kinko's Uganda, who invented iPhones, keyboard said nerve racking doesn't even begin to cover it.
Step in the room with Steve Jobs and the adrenaline starts flowing.
And your nervous Steve could be intimidating when I showed him something and he didn't like it.

So I guess my only comment there is that I didn't find Steve nerve racking or whatever that phrase was right there, because invariably I felt like he was making the right choices when I would see a range. You know, typically we would have to prepare a range of possibilities of here, the screen sizes here, the options for how thick it could be or whatever the whatever the question was. And he would have a very clear idea about which one was his preference for sure.
And and I think it was usually in every case I saw the right choice.
So I found that really reassuring.
When you moved on and you had your own computer startup, what sort of things did you take from him or reject from him?
So.

I don't know, I think a lot of people, the thing that I was always want that the thing I always wanted to be careful of was, you know, Steve did have a pretty strong and sometimes kind of abrupt communication style.
And I think that's there's there's a risk that I've seen people take that as the the low hanging fruit of what they can emulate.
And I think it's more the thoughtfulness about are you making the right product, you know, putting the customer first in your mind and not, you know, trying to over triangulate on, you know, the reasons that don't have to do with what is going to give a good customer experience and in this consumer context, especially so.

Also, the other thing that I think Steve did a great job of was just hiring incredible people and letting if you hire the right people, then everything, you know, as an entrepreneur, everything's a lot easier and you need to give them space to do their jobs. So.
You are now working on, you know, really another stage of tech, I mean, a lot of this is deep tech. It's not consumer.
You know, a lot of your background is in consumer.
And there's no question that the iPhone and all of those things are a technological miracle.
But you're working on things like genetics and space travel.
Why why go from a fellow who designed notebooks and had a computer company to something that is much more in the weeds of science?

I don't know if I would I would actually I don't know if I would call that in the weeds of science. I think the.

I think there are a few reasons why I think the action is in these tech areas right now, regardless of kind of my own background or preferences, some of that is that the, you know, the maturing of the computer market, which is now the phone market and the hyper scalars and the cloud, means that there is less room for really kind of transformative foundational companies. You know, and and there's been some, I think, really compelling arguments that there's going to be, you know, that light in the same way that GM and Chrysler and Ford kind of locked in for nearly a century is kind of dominant in that industry that these these hyper scalars are you know, there may be a prolonged period where the Apple, the Apples, Facebook's Microsoft, Googles of the world are really dominant.

And there's less room for building these huge multigenerational companies.
I do think that on the flip side, areas like the life sciences, next generation computing in you know, in a in a more kind of foundational sense in areas like quantum computing and optical computing and aerospace and manufacturing are all now seeing their own kind of industrial revolution, akin to what happened with Silicon and Moore's Law, kind of culminating in kind of the current age of the smartphone.
When we walk around the playground, you can see that a lot of it is oriented towards hardware. I mean, obviously, I mean, genetics in a way is hardware, but it's not hardware that you can put a label to.
Is that your first preference? Are companies that that are making a thing?

I mean, you know, Airbnb is not here, right?
I mean, wonderful company, but they don't make a thing.
The companies that I see in the playground facility are making things so.
It's definitely the case that the majority of our portfolio, not 100 percent, but the majority of our portfolio, are kind of working on some something that is both Adams and bits.

It's always going to have a component of software and even kind of the most hardware centric businesses. Some of our most hardware centric businesses are fundamentally software businesses. But if you're going to have a big impact on the world, kind of beyond kind of social media and apps, that's going to require making something that's going to impact people's health, getting something into space, sequencing your genome. So so I think we we do believe that.
Having an impact on the real world frequently requires that you interact with it in ways that are, you know, part of what we specialize in is that focus on vetting and investing in companies that are taking on that kind of real world challenge.
You mentioned space in one of your portfolio companies.

Is relativity space? Have you been to a rocket launch?
The excuse me that we've got that part out.
Yeah, yeah, I have not like like test hats, shoes, interview.
I listen, when I was pregnant, when I was prepping, I've not been to a rocket launch in person.
No, it's got to be amazing. I haven't either.
You know, I've seen the Spaceship One, but that takes off with an airplane.
Yeah. I'm looking I'm looking forward to relativities first launched this in the early queue. I mean, I'm sorry.
In early. Twenty, twenty two.
Excellent. So they are 3D printing rockets.
One of the things that always surprised me when weather space X or its relativity or anything else is what seems to me to be a bit of reinventing the wheel.

You know that Space X today announced that they've got a new space helmet sort of thing.
Well, space helmets have been around forever and worked well.
Right. I understand you can improve them, but isn't rocket science really well established?
I mean, it was kind of one of our earlier I mean, it dates back to the, you know, the forties and fifties.
Yeah, I think there's a number of things going on there.
So for a long time, things like building rockets, building spacesuits, you know, going to the moon were incredibly expensive undertakings that only a government could even conceive of. Right. And then in the last, you know, decade or two, we've seen the rise of, first, these kind of billionaire funded new space companies, which I think, you know, in terms of, you know.

Especially in in the context of SpaceX and Blue Origin, the focus on reducing the cost and making the rockets reusable right is is critical in terms of establishing both the ability to have a lot a larger number of launches where you don't have to build every single rocket that you're then immediately throwing away. You can just keep reusing it like you an airplane or your car for four new trips. And and also just the being able to amortize that cost of a launch over, you know, some, you know, of that production cost over a larger number of launches.

And so I think what's really interesting now is that those those billionaire funded companies, Blue Origin, SpaceX, Virgin Orbit, have now both established a new culture and a new generation of engineers who have grown up in new space and are now going out to kind of transplant that culture and create their own startups where they're kind of pushing that, you know, the ideas that were established in that kind of first generation of new space into a next generation of entrepreneurial effort that kind of tries to build upon or optimize that.

It sounds like you were, you know, at least somewhat supportive of the I think a lot of people tried to do thought pieces and look very deeply into the billionaire space race in a way that was just, hey, you know, if you had a rocket, you know, if I built a rocket, I'd write it to, you know, if I had confidence in it.
As somebody who actually is in or at least an investor in rocketry, what did you think of the kind of the hoopla around the whole thing?
I mean, frankly, it's mostly marketing for new space from my perspective. Right?
It gets, you know, new generations of entrepreneurs and new generations of children interested in science and technology in kind of looking to to space and exploration.
So I think that's all a positive.

But the thing that, again, is really transformative to me is how those companies are training this next generation of engineers and entrepreneurs like, you know, our our space companies, you know, can't really hire out of old space.
Those companies have really atrophied in terms of their ability to execute technically. And they're used to doing that with just billions and billions and billions of dollars of taxpayer support and long timelines and and an engineering mindset that will get you somewhere with decades of support from the government. But, you know, now new space companies need to do it in, you know, single digit years with private money.
And that's very, very different game.

If you ever heard Justin Trudeau, the prime minister of Canada, explaining quantum computing, I have not heard that explanation.
No, I've run it a couple of times and maybe I'll run it this time.
It's a press conference in which he's gone and he's, you know, toured around the quantum computing facility.
And one of the reporters asked him, you know, what did you think?
And is that do you think it's revolutionary? But then the reporter interjects, Not that I I understand that you don't understand quantum computing.
And the prime minister of Canada says, hold on, hold on.
Yes, I do. And he nails it.
Now, someone said asked Jori about quantum computing and bring a second pencil.
I've got a pencil. I think I'm pretty good.

Yeah. I mean, so I'm not going to try to explain in a concise manner quantum computing. I think our view.
On quantum computing is probably well is different than most other investors and a lot of kind of the prevailing view on quantum computing in that what people have seen to date from folks like Google and and some of the other startups, IBM in quantum computing, have been people making tiny numbers of physical cubits, you know, 10 physical cubits, 50 physical cubits when everyone acknowledges, you know, in in in the scientific community that to do to address really interesting and kind of transformative problems.

You need something like a million physical cubits, which if you've seen if you looked at the pictures of the Google machine, which is kind of an exquisite artisanal construction, they're clearly not scaling that technology to a million cubits.
So our focus was on finding a manufacturing technology that was scalable and then transferring that making that technology quantum instead of taking the low hanging fruit of quantum technology and trying to scale that.
And so that kind of led pretty obviously in retrospect.
I guess at the time, I don't know that I should be so, so, so assertive on that to a company we invested in called PSI Quantum, which came out of University of Bristol.
And it's a no, it's some professors who had focused on making silicon photonics.

Into a quantum computer, so using the the same technologies that are in your iPhone, where we've as a civilization just spent trillions of dollars and kind of the pinnacle of our tech development is focused on making semiconductor chips and silicon photonic chips, and they're going to take that infrastructure and make a million cubitt physical and million physical compete.
Sorry, I can't speak a million physical cubitt quantum computer in this decade for a bounded amount of money.
And no one else has kind of has a path to anything like that.
The, you know, a million cubits is staggering because what you're saying is we went looked around and saw people working on, you know, computers that had vacuum tubes.

And we decided instead to become Intel that we're going to build a microprocessor at a time in which we haven't really figured out vacuum tubes.
I mean, vacuum tubes are probably I'm trying to make a little bit too optimistic. It's probably more like the, you know, an advocacy empowered situation, a Babbage machine that I've ever seen that yet.
Nobody's machine was what came to mind.
So I can go with you.
I can. Yeah, I can. Yeah.
So the so yeah.
I mean, I think in.
I mean, one of the things that I find really.

Challenging, but also really interesting about what we do a playground is that the areas that we invest in, like quantum computing, like gene sequencing, like, you know, launch satellite launch vehicles are areas where you can you not only have to have the right thesis about where you know, where the business opportunity is going to be.
But you need to select a technology that is perfectly suited to that with a team that's going to be able to execute on that technology.
And it's not something where you can just, you know, iterate with AB testing on your app and see if you get there. This this the level of kind of expertize, both in the conception of the architecture and the execution, just has to be kind of exquisite.
And so finding those are what we get to do.

But at the end of the day, when we see them, it's it's not super ambiguous to us because the you know, there is we've only come across that single quantum computing company that we think has an actual path to making a million physical qubits, which is what everyone acknowledges. You need to solve interesting problems.
So where does the expertize for something like that come in that as a venture capitalist and maybe it's not you, but the person from playground who walks into that company and says, yes, these guys, these women are capable of creating a computer with a million Cubans. So somebody who's going to be at least as smart as the people in the company.

So I think the playground is different than most venture capital firms in that we have a substantial technical team that is part of our organization that works on both diligence and supporting our portfolio companies. So I think the you know, in a lot of instances, it's more standard to kind of outsource diligence to to an expert and technical diligence and.
And then just make an investment decision, and so we we kind of take take enough, we can I know our approach is, you know, we have a team of technical experts on staff. We build out theses of where we think there are going to be particular opportunities.

We try to deeply understand those technologies before we are engaging with the companies that we are looking at so that we have a prepared mind and kind of us more set idea of what we are looking for than just, you know, responding to whatever the flow of the zeitgeist is around us.
What are you bad at, what are some things you don't know in which when the meeting turns to that subject, you have very little to say.
So speaking personally, I am particularly averse to assessing market risk and new business models. And so, I mean, I'd say probably true as a firm that we are drawn to things that have very deep technical risk.
You know, like we we will say, like we like to invest at the boundary of improbable and impossible, but but we want to take a kind of relatively shallow market risk.

And so, you know, if someone can build a million qubit quantum computer, we have no doubt that there are a myriad of applications for that. And actually, Quantum has a number of really interesting engagements with companies already on that.
So so I think that.
That is that is fundamentally it, that said, some of my partners are a lot kind of more clever and experienced on assessing new business models and market risk than I am.
And that's an area where I'm always constantly trying to learn as well.
When we talk about robotics, like what you have in the lab or quantum computing or anything, it the the lazy comparison everyone goes to is is something like Terminator, right.
And Skynet and all those things.
But there is.

I think all inventors need to ask themselves, what are we building and what effect will it have on the world? You know, a quantum computer with a million cubits could decode just about anything almost very, very quickly, couldn't it?
If you're referring to encryption, certainly any it actually doesn't take much of a quantum computer to break a lot.
Right. Because historically, a lot of people are working to six cubits.
Yeah, yeah. So I think the you know, and the U.S.
government is working on quantum cryptography, which isn't fundamentally that hard. It just wasn't something that was designed for because that was that was seen as so far off into the future for so long.
You know, I think the.

We definitely try to think about what kind of future we want to live in and kind of underwrite companies that we think are going to push it in a positive direction. And, you know, we look at something like quantum computing.
You know, we're excited about applications like improving batteries for electric cars, modeling, modeling, the performance of in the molecular dynamics of therapeutics. But, you know, there's also applications and financial modeling, which are kind of more neutral, but also will have a big impact.
It is hard to predict. I mean, it I'm not saying don't invent these things, but I think the people sitting around creating the first iPhone could not have imagined walking through a train station and everyone bent, hunkered over, staring at the same device.

You know, whether that's a negative or positive, you know, I'll let people decide on their own. But there are things in which when you invent new things that you think, oh, I could not possibly have anticipated that.
I think that's frequently the case, if not always the case.
But I think you can still make responsible choices and avoid things that are obviously not positives for society. So I think that's that's the thing where we try to think of what the impacts of these things, of these technologies and companies we're investing in are going to be. And we generally have an overwhelming sense that each company is going to have a positive impact in kind of building this future we want to see come to fruition.

But there will certainly be use cases that that are kind of unforeseen that will be disappointing.
You have an interest in space and space travel, you know, dating back to when you were reading science fiction as a kid, you worked for a while at Woods Hole and made robots for underwater. The the parallels between underwater and outer space are pretty, pretty obvious.
Yeah. I mean. So they're both really harsh environments where once you send that thing down, it's going to have to survive and exist on its own. I mean, I do think we should be spending kind of more, more or as much energy on understanding the ocean as we do space.
And a lot of the you know, personally, a lot of.

The focus of space technologies that I find interesting are things that are not only about exploration and kind of expanding outside of the Earth, but looking back at the earth and understanding, you know, understanding it as a system and working to mitigate things like climate change and such.
So think a security check my records and.
Did I read somewhere that your first three investments were unicorns?
That is true, yes.
What were they?
So velho 3-D, which does industrial scale metal printing, they're going to be going public in about a month.

They actually, for what it's worth, that they're kind of one of their claims to fame is that the raptor engines on the space starship cannot be built without their printers. So you'd have to redesign the engine if you wanted to change manufacturing technologies.
The second one is relativity space, which we talked about a little bit, and then the third one is a very stealthy, very late stage gene sequencing company.
Excellent. I look forward to coming back and hearing more about that.
What didn't work out for you?
So so far we haven't had so far I haven't had any investment failures, which actually is definitely an argument for we're not taking enough risks and I'm not taking enough risk.

Right. Because you'd expect that to there's a great quote. I think it's Gordon Moore and it's on the outside of the tech museum in San Jose, in Silicon Valley that says if you're not failing, you're not trying hard enough.
Yeah, so so I think the I mean, the area that's new is to kind of my portfolio is investments in the life sciences and especially therapeutics. So those companies are all doing well, but they're much earlier. So that's where that's where I worry just because it's so early.
I was going to ask you, what keeps you up at night? What's the way you know things are going? Well, but what what's the thing in the back of your head that says, oh.
So I think.
In a little bit of a different vein, the thing that I'm so.

I think for playground, as a deep tech investor, you know, while there are, you know, huge numbers of SAS be to be SAS unicorns every year, and, you know, if you're a top, you know, general v.c, you just need to kind of select the right ones.
And it's kind of a little bit of a lottery. But, you know, if you're at the top, you can get the pick of the pick of the crop. And that can be there's enough of those to support the success of your portfolio. I think there's a much smaller number of multibillion dollar opportunities in deep tech kind of writ large.
And and I think critically, where those opportunities are is constantly evolving over time as the kind of needs of society and the fundamental kind of technology shifts that are happening in individual subsectors are developing.

And so we have to and I have to constantly be looking for new areas where we think there's opportunity to have these really big impacts and thus really big outcomes.
And so, you know, looking for new entrepreneurs in new technical areas, solving new kinds of problems instead of just having like, oh, well, we'll just keep doing space and kind of turning the crank. Maybe that will be a really exciting area for the next 20 years, maybe the next 10 years.
And we need to keep looking for kind of new areas.
That's also what's really exciting and kind of rewarding about the job, is I'm constantly getting to learn and, you know, find adjacencies to what we already have, you know, develop some expertize and and be able to, you know, learn new areas that we're going to invest in.

I am excited by deep tech and Silicon Valley's sort of return to just revolutionary things.
And I can see you nodding. You know, you think I may not have been alive at the time, but, you know, the birth of the semiconductor and those sorts of things.
And there was an era in which, hey, we all made a lot of money inventing, you know, not that there's a darn thing wrong with Zappos and I love it to death, but they sell shoes. You know, the eBay sells your your grandmother's old tea set. Again, lovely contribution to the world, but not the the revolutionary sort of things that maybe we had done and now we're doing again now.

I think that's exactly right. So we definitely will say that we're taking venture capital kind of back to its roots in terms of investing in things that have really significant technical risk. But if they can be done, they will have a transformative impact on society.
So what would you suggest?
You know, people look at Silicon Valley and young people and think, well, I'll still study coding and then I'll come out to Silicon Valley.
And what would you suggest that young people study to be ready for the next generation of employees that your companies are looking for?
I'm a little wary of.

Suggesting that people pursue kind of an educational or a little wary of suggesting people pursue an education whose goal is just getting a job right, I think a little bit too much of our educational system has turned towards just trying to train workers instead of trying to kind of make, you know, citizens and, you know, thinking and well-informed people.
So that's number one. I have a little bit of a bias that the kind of evergreen areas in education are probably math and physics.
Right. So so I think that's one where regardless of what happens, you know, with the shifts that I was just talking about in the deep tech landscape, that there will always be demand for people who understand math and physics.

I think the specialty areas that are kind of I think lifescience is currently undergoing its own industrial revolution.
And so I think if that is an area that people find really that that someone finds really compelling, I think that's an area where there will be an ongoing amount of really, you know, really interesting work to be done as we transition from biology as kind of an artisanal discovery process to actually being able to engineer biology, engineer pharmaceuticals to be more effective and more lifesaving across a broader range of diseases.
So that that's one that I'm particularly passionate about at the moment that specialize.

But math and physics that we're talking about,  education reminds me of what we were talking about earlier, and that is you're started at MIT originally at seven.
What what fascinated you about MIT at age seven?
So I think it was the.
I think it was the kind of the popular press coverage of exactly the kind of kind of deep tech efforts that were frequently just associated with MIT, you know, I can recall around that time reading about maglev trains and it just seemed like a really elegant idea is going have a long timeline. And someone was just really committed to doing that.
And, you know, just so many times those kind of.

Breakthrough moments and kind of really cool technologies were coming out of MIT when I was about the same age, my parents got me a subscription to Science magazine and then it was it was Science 81 and then it was Science 82, the following year, that kind of stuff. And there's still you know, there's still a pile of them at my parents house. And it's interesting to open them up.
You know, the the car ads are hilarious, you know, the new Pontiac car sort of thing. But it's interesting the number of things like maglev and whatnot that we're still working on.
Yes.

I mean, there are definitely things timing is always an issue from the investing perspective, although I do think there's an acceleration in some of these critical technologies. I think, you know, people have joked forever that, you know, fusion is now and always will be the future of energy production.
Right. Right. But, you know, they just had a significant advance at MIT, you know, in conjunction with Commonwealth.
I forget the full name of the company.
What does that.

CFS, Commonwealth Fusion Systems had believe that, you know, in terms of getting one step closer to fusion energy being being viable, you know, our work with PSI Quantum on the quantum computing company, you know, MRN Therapeutics, which seemed like it was, you know, for decades, not quite ready for prime time, suddenly swooped in and kind of saved our lives.
Yes, exactly. And so I think the I do think we're in a at an inflection point in a lot of these critical technologies where where things are really coming together and we're going to see more substantial progress in areas. There'll be some that don't don't pan out.
But, you know, that that that's I think we need to be able to take risks on things that.

Are exciting and promising, even if we, you know, doubt the possibility of of when they're going to come to fruition.
What's your favorite book?
My favorite book, probably Tetris Scroll by Buckminster Fuller.
You want to describe it to me?
So Tetris Girl was originally a set of prints that Buckminster Fuller made on these triangular plates that illustrated.
Yep, there you go.
That kid that I brought it, I brought it with me.
So I you.
Well, I'm glad I got the right answer. Unless you have a lot of books.
I know I got tons of books. Yeah, yeah, yeah, yeah. You know that that started out with.

Buckminster Fuller kind of telling his daughter the the story of Goldilocks and the three bears, and she always wanted to hear that same story and it got a little boring. So over time, he kind of evolved it into a math and physics lecture.
And and this is the kind of distillation of that into a number of prints that he did.
I can't remember the woman's name, who's the the lithographer that he did in conjunction with her. And and that's the book.
So I really enjoy reading this to my daughter.
Now, what age did you discover in?
I think I discovered it pretty late, actually, because this was, you know, pre Internet where finding kind of rare Buckminster Fuller books was impossible. It was easy peasy.

We talked about, you know, on eBay, you mentioned, you know, you're selling your grandmother's T-shirts. He said, I think that's where I probably first found Tetra Scroll as it was somewhere like that where I was like, I really got to try to get a hold of this thing.
And so one of the miracles also of the Internet is that if you're in this, you may be interested in that to somebody who didn't grow up with you with the Internet or didn't grow up with the lack of the Internet, couldn't possibly understand that.
You can't discover a new band. You can't discover a new book if you literally don't know they exist.

Yes. Yeah. So it's funny, you know, a number of years ago, I got rid of all all the paper in my life, so, you know, scanned every document, you know, identified all the books that were available electronically and put that in a database.
And there's just a handful of books that are either unavailable electronically or, you know, just want to have physically and really it ends up being like a half dozen Buckminster Fuller books.
So you you scanned all the all the books that you like.
I didn't scan all the books. I just found the ones that were found, the ones that were available online.
You had an avocado for breakfast this morning.
We we often ask people what they had for breakfast as a sound check.

And it wasn't a very good sound check because, you know, the word avocado isn't enough time for us to engineer the sound.
You're wearing a plain black T-shirt.
Does does some of this come from your personality or is this.
I am going to simplify because that makes my life easier or I'm and, you know, you are terribly smart.
I'm terribly smart. And I have identified the most efficient way of doing this was just who you are.
So I think it is mostly the latter kind of an expression of my preference is esthetic and otherwise I think the.

You know, and do it to a certain degree, I found that a challenge in terms of trying to work on kind of in past lives, consumer devices, because my preferences didn't always overlap one to one with what the mass market preferences were. But, you know, in deep tech where we're trying to get to the fundamental question of will this technology work?
Is this the optimal solution?
Is this the right team that kind of lends itself a little bit more to that kind of search for elegance in a solution and a team and a technology. And so part of that's why I love doing what I do and I love avocados.
I avocados are great. Yeah. They're they're like the perfect food and actually, you know, fiber, fat.

Those are my questions for you. There's anything else I should have should have asked about whether you like to talk about.
No, I mean, I like to talk about on my portfolio companies so I could dove into any of those. Right.
The DeVillers when we missed that, we I mean, I don't know. There's a from the discussion.
I don't know that I would Webjet and probably Strand is the most exciting one, which is the a company.
Right. They they.
They're the like in that kind of crop of platform therapeutics companies, they're the farthest along, so, you know, to the question of, OK, they're really early, they're the first one and they're showing signal now.
And, you know, as it's the context for their success was really accelerated.

Yet the tragedy of covid, but that accelerated kind of MRN, a development and regulatory approval probably by a decade.
So that's kind of set at the same time.
The reason we invested in Strand is because we looked at companies like Moderna and Biogen Tech and translate bio and said these companies, you know what? What is it that is lacking in Marnay therapies and kind of precision and controllability has been really frustrating.

How do you get it to a tumor, to disease tissue and how do you turn it off if you want to, if there's an adverse adverse reaction and Stran therapeutics, which, you know, to to continue the the threat is is an out of Mittie, out of the Ron Wises and Darryl Erving's Labs at MIT is a company that had developed genetic circuits that allow you to program Marnay therapies like you would program an electronic circuit or a software or a piece of software.
And so that kind of next generation, that many 2.0 that they're developing is is really exciting.
And now we're that much closer to that happening where it could have felt like fusion energy, where it's, you know, forever, 10 years away and now it's here.

It's amazing how fast that has moved and how important that turned out to be in everyone's life.
Yeah, I mean, the.
So.
That has long been kind of viewed as a promising modality, it's just hard to bring new modalities to market anywhere.
But in drug development, it's that much harder because of the regulatory barriers are high. However, the programmability so kind of MRN, a 1.0 with Moderna and Biotech still has kind of a software component into in that once you have the platform, you know, when you sequence the protein that you want to express, which they did almost instantaneously, you are basically encoding that into the vaccine immediately.

It's not like again, it's not an artisanal process of trying to culture things in the lab with, you know, with decades of knowledge and, you know, really artisanal is the right word.
And so the only problem with that is it works well for vaccines where. You want it to go everywhere in the body and it's a very simple program, you just want. OK, I just wanted to load it on there, but you can't change that program and it's not responsive to what's happening in the body, but you don't need that for a vaccine. So Imani 1.0 was perfect for vaccines.

And actually in the industry, I like to joke also great for treating liver diseases because it tends to just accumulate in the liver, but not great for the rest of the applications. And so that's kind of what we were looking at and what we think Stran solves for.

All right, Have a seat.
So like I said, pre-COVID, I had an audio engineer.
Now I do not. So a couple of things.
One is that occasionally I am going to be just staring at this machine, even as you're talking. And it does not mean that I'm bored.
Yeah. If I get my phone out. And although you.
Could also be bored.
Like when I get my phone to start playing Candy Crush.
Yeah, that's it. But it just means that I'm double checking the audio.
And speaking of audio, tell me what you had for breakfast.
We used that as.
I didn't have breakfast other than two espressos.
Oh, You okay? You're good to go.
Yeah, very good. Excellent.
And then just tell me who you are.
Rex Salisbury, founder and general Partners at Cambrian Ventures.
Excellent. All right.
You do fintech, you invest in fintech.

/content/Preprocessed_Data/SHR Rex Salisbury Cambrian Ventures.txt

But of course, that's a big category.
Define fintech for me.
Yeah, FinTech is the application of technology to financial services.
And to your point, financial services is a large enduring component of economic activity. I think it's about 7% of U.S.
GDP is covered by financial services.
So similarly, my important in terms of what I look at and kinds of companies I fund is very, very broad. So it's everything from insurer tech proptech technology sold into banks to, you know, neobanks, neo brokerages, infrastructure, all sorts of like other interesting intersections between finance and health care, finance and education, finance and H.R..
So it's a huge, huge category and keeps me keeps me pretty busy.
I'm interested. You mentioned education.

There are fintech applications, you know, like Robinhood and some others that I think probably know what's going to happen in October when there is a whole category of Americans that will have less money because of the student loan payback.
I'd like to get your thoughts on that that that the the rush into investing in things like Bitcoin or stocks or whatnot go away when it when some young person has to pay $600 back to the U.S.
government.
Yeah, absolutely. If we back up first to I covered 2020.
We had the massive stimulus bills. We had about $2 trillion of government stimulus.
I forget exactly how much, but close to a trillion or at least many hundreds of billions of dollars, for they direct cash transfers directly into consumers bank accounts.

And that was right when people were maximally bored because they couldn't go outside.
So they took all that free money and showed up in their bank accounts.
And you can see this in the data of their bank accounts ballooning.
And they use that to pay down credit card debt, to pay down debt generally.
But another thing a lot of folks did with their, quote, stimulus checks is they went out, they put into a brokerage account and they started day trading.
And because everyone started doing that and because the capital markets generally were really well-received was kind of a shock.
Following COVID, everything went up.
It's like, oh, you put money into this magic account, the the account goes up.
Then you tell your friends that more people put money in.

So there's this huge surge of day trading during the pandemic and just investing generally that drove a lot of people to invest a lot of money.
But what goes up comes down, often starts to come down when, to your point, people, you know, spend through some of that excess savings or they start to have higher car payments or higher rents or to your point, you know, when student loans come back.
And those are average, you know, six, $700 a month that was getting spent somewhere else and cannot be spent somewhere else now.
Absolutely. And for that, you know, demographic of people who have student debt, that's a very material thing. And they're in forbearance for several years and they've gotten used to not having to pay that now. Now, that will come back.

At the end of the day, though, you know, the capital markets, what will happen in the stock market, There's large other traders who are out there taking positions.
It will be interesting to see exactly what kind of second order implications it has for a lot of other of the platforms, though.
Do your companies have exposure to that or are they more, you know, property tech, you know, that sort of stuff?
Yeah, 90% of what I do is B2B.
So fintech companies that are building technology sold to other businesses, so not directly to consumers. So B2B versus B2C, the CBN consumer, the baby business.
So my companies, very few of them, if any, have any exposure, particularly around the student lending aspect of what's going on.

They're much more about long term durable trends in terms of how we're rebuilding the base and the technology that underpins a lot of how our financial services infrastructure operates. So short answer No, no, no.
Real exposure for me personally through the through the portfolio companies.
As a solo GP, you have been investing in fintech.
Tell me about the story of becoming a solo GP.
Yeah, so my story, I kind of accidentally became a venture capitalist.
It turns out something that I enjoy and do a lot of the activities by default.
So the story begins.
A long time. My very first career was doing investment banking.
Learned a lot. Totally hated it. Taught myself to code.

And then, like many other folks who were interested in technology, I left my old job, quit it, drove cross-country, moved to San Francisco without a job, and then networked and found a really great opportunity.
Also.
I want to just stop you there because that alone was a huge achievement.
I taught myself how to code, and I think you did a little coding camp too, right?
And then you ended up being a coder.
I mean, I taught myself to code and then you create the whole back end of a fintech system.
Congratulations.
Thank you.
I mean, that's an amazing accomplishment. It is.
But one of the cool things about living in a place like San Francisco is I feel like most of the people I know have a story like that, only it's much more interesting.

And the things they've built are also much more interesting.
So I've become desensitized to the fact that it's an interesting story to tell it all.
But yeah, for me, I was working on a trading desk at an investment bank.
I took an online course in artificial intelligence that required pseudo coding.
So thinking algorithmically, but not actually having to write, you know, Python, JavaScript, Java, any of that. And that was so engaging and engrossing.
And that course was actually the course that then became Udacity.

So Sebastian Throne and Peter Norvig, when they were still two professors at Stanford teaching the first, what would then later become a massive open online course, or MOOCs, which probably is an acronym most people have forgotten about now, but at the time was like a very big idea. Like what if all of the courses that you could access through Stanford, MIT, Harvard were instead offered online either for free or at very low cost?
It's like, wow, you get access to the best educational content and curricula in the world, right, online.
It turns out that has been a transformative model.
But, you know, like many things in the hype cycle, not as transformed as people were maybe thinking it would have been early on.

Turns out education, a lot of other things. But anyways, I was on my trading desk.
I did that very first move.
Really key me to why technology, why software engineering and then artificial intelligence is so interesting.
This is a long time ago now and then moved out here, actually learned to code, did a coding bootcamp and then joined.
I actually worked under the CTO of a company called San Diego.
He was one of the former co-founders of Sofi and built a fully automated online mortgage pre-approval system.

That company failed. But that was when I started just interacting with a lot of people in the fintech ecosystem. So this is a part that actually started like moving in San Francisco. But then the part that really started pushing me down the venture career path is I built a community then also called Cambridge, and so the fund is called Cambridge.
And but, you know, about ten years ago now, I also started a community called Cambridge.
And the idea was let's bring together technologists, working in fintech to talk about interesting things we built. And so we would have meetups in downtown San Francisco.

We'd have like 100 people show up. And at our very first event, we had like plaid, for example, show up in their API. And then we had two companies demoing stuff they'd built that used Plaid's API for some of it.
So one of those other teams was my team at San Diego showing the mortgage pre-approval we built and then someone else had built like a personal financial management chat bot that Credit Karma later acquired.

So it's just like a really good core of people. And then from building that community over time, we had a point was our monthly events in San Francisco Monthly, that's in New York doing two annual summits out here in the Presidio, which is actually where we're recording right now. And then quarterly jobs fairs started doing some investing, realized that the ecosystem level work was something I enjoyed as much or actually more than my day job, really like my day job being a software engineer.
But I realized the ecosystem stuff was something that like I was even more excited and passionate about. In 2019, the plan was to go and start a fund called Cambrian as a solo GP based on kind of the networks and relationships I built through the community as well as my day job.

And that's when Injuries and Horowitz reached out to me was like, Hey, we know you through what you've been doing with the community at Cambridge and why don't you join us and help build the fintech practice at A16z.
So at the time, the fintech practice, Andriessen Horowitz was very small, despite the fact that the firm had made a bunch of great investments in the category.
And so I joined as the first investor, hired externally and we grew that team from about three investors to about ten investors.
You thought about building a fund even before.
So you had you had not been in venture capital and you were thinking about building a fund and then suddenly Andreessen Horowitz gives you a call.
But what would you have known about building a fund if you had never built one before?

That's one of the reasons why why.
You didn't do it.
Yeah.
So you're Andreessen Horowitz and then you left to go out on your own, which to me is a little like leaving the Golden State Warriors to go play basketball by yourself.
I mean, that is the team.
It's it's a great team. I had an amazing experience.
I owe them a huge debt of gratitude and was a great place to get a lot of exposure to see how, you know, venture capital is done, especially at scale.
But it's also. A very different than you know, it's in some ways it's like leaving a giant bank. So when I joined A16z, it was about 100 people.
When I left, it was about 500 people.
And so it's just become a very, very, very big place, which is great.
There should be large firms within venture.

I think A16z has done a lot of interesting work to change the types of things, especially the services that venture firms provide.
But as the ecosystem has grown, that also means there's room for new entrants who specialize in particular areas.
And as someone who likes going out, doing my own thing, who really loves focusing exclusively on the preceding seed, so the very earliest stage of company formation, it's way more interesting for me to be outside of a massive firm than inside of one.

And then that actually translates into how I am able to find really great companies because I'm less adversarial with other investors in the ecosystem and very able to collaborate. And then that helps me support my portfolio companies in terms of finding follow on investors for them, as well as how I just kind of utilize and leverage the network through the community that I built, which was harder to leverage when I was inside of a large term. We have a lot of compliance requirements.
You can't run events, you can't, you know, do podcast.
There's a lot of different stuff you can't do, as I'm sure you know, sometimes from your own day job about like, you know, things you can't cancel.
You're like, Man, I just want to do my own thing and focus on this particular area.

So really great experience, but much more exciting to be out independently doing very early stage investing.
I think in the background. I heard the doorbell.
You may want to double check upfront.
I could have just imagined I'll.
Go check.
But no worries.
And you did hear. But people often.
Very.
Very good.
Some new shoes.
Mm hmm. So. I've noticed.
I've done a number of interviews with solo GP's lately.
What happened? That all of a sudden I'm seeing so many of them, including you.
So one big thing that happened is Venture got a lot, lot bigger as a category.
So that's probably the primary thing that happened.

If you look at dollars deployed in the venture in 2012, in the U.S., it was about $20 billion. If you fast forward to 2022, which granted was the height, although we're getting back towards there, there's about 200 billion deployed in the U.S.
and so that's a growth of ten X. And as I just talked about, A16z is a firm when I was there, I grew from about 100 to 500 folks.
So if you think about a category expanding massively in size, that means there's now room for firms that specialize in different kinds of things.
So ten years ago, there was no venture firm that had 500 people.
Now there's A16z and there are a few other large firms that will probably cross that 500 mark. So that's a whole new category of not new firms, but of new mega firms.

Conversely, as a category has gotten bigger, you also need specialization.
You need people who focus really on the early stage but have really dense, relevant networks for the areas of stuff that people need to build in.
And so that's where you see a lot of the small solo funds focusing is on pre-seed and seed and very specialized area.
So I'm a specialist focused on fintech.
As we talk about, FinTech is actually quite a broad category.

It makes up about a third of venture dollars, both dollars in and then outcomes dollars out return to our peers. But you'll find solo GP's are a hyper specialized know climate is one where a lot of interested you'll find firms that are even more narrowly focused on like I'm a sole GP who focuses on mental health or fire technology or rather anti fire climate resistance type stuff.
So there's a whole lot of diversity that's great.

If you want a vibrant venture ecosystem that tackles all kinds of problems and creates all kinds of companies, you want a bunch of small firms, you want lots of midsize firms, and you want a few massive firms because that gives you a lot of diversity along the different funding stages of the companies to grow up and pull capital from. And another big trend too, is just the crossover funds coming down into venture from the public markets.
So that's all because venture has grown, you know, ten acts in about the last decade.
If somebody wanted to repeat what you've done, I'm guessing it's your network that's more important than the fund.
I mean, obviously the fund is necessary for a venture capitalist to invest money, but this your strength is in your network.

Yeah, and I think that's true for a lot of folks.
But yeah, for me, my goal is to be dollar for dollar at the most helpful person on your cap table. And that's largely because of the network I've built by doing this for over a decade. So if you have a question about how to do something, about who to hire, about who to partner with, about who you might be able to sell your company to, I can help you talk to those people.
Or if you have like very esoteric questions, I, I might have like an idea of what the answer is, but probably when I have is a connection to someone who is the best person in the world to talk to, to answer that, where.
Does that talent come from?
So a lot of it is just within the fintech ecosystem.

So for my fund, I raised about 50% of the capital from founders in fintech and the other 50% from more traditional APIs.
So founders from places like Sofi, Wealthfront, Betterment blend Plaid, check out the list goes on.
And all of those folks are just really great sources.
If you have a question of like, Oh, I want to build something like this, like, well, one of these founders.
No, what I'm asking is where does the talent you have come from to do that?
We all know people like me.
We all know people like you, Right?
You know what? You need to talk to Wrex because he will know the person or you need to talk to Susan because she will get you to the person you need.

And those people like you, these mavens really enjoy it. You know, I introduced, you know, Laura to Sam and they partnered up and they're, you know, just building this really great fintech company. How where do you get the ability to do that, the social strength to to make those connections?
So you brought up mavens.
And I think that's a great example. There are just certain people who really, like, do it like doing it and that's Maven by Malcolm.
Malcolm Yeah. So I think I just do it by default and naturally I couldn't tell you. I was just like an inclination.
Have you always done that.
And I've, I've pretty much always done that.
I've, you.
Got homecoming dates for your friends and in high school there's.
Loose networks of of folks.

I think it also you need people who are just intensely curious about a particular sector like they really want to know and understand what's going on.
And then they're also intensely interested in the individuals within that sector and know how to kind. Of coalesce and navigate and create networks.
And so you need both and kind of the, you know, domain specific engagement as well as the proclivity to to build and maintain networks. So I think you'll find there there are a fair number of folks in venture who, you know, skew on both of those things.
Gooden took a sip of your coffee there.
Your network. A lot of people get together on Slack.
More than a thousand, isn't it?
Yeah. So I have a bunch of different community apparat.
So one of them is a Slack community for fintech founders.

I started that during the pandemic. We now have about 1900 fintech founders.
Yeah, that's Slack community, which makes it, as far as I know, the largest, you know, digital aggregation of fintech founders in the world.
The reason I started is, like I said, I used to do these monthly in-person events in downtown San Francisco. Then the pandemic came along.
I was also very busy at my day job at A16z.
And so between those two things, organizing in-person events became very, very hard.
And so I started the Slack community just for fintech founders.
And now it grows organically over time as people, you know, start thinking about starting something. Often they get kind of, Well, that's.
What I was going to ask. Joined right up. Yeah, we have.

This year it'll probably be anywhere from 500 to 1000 new folks who will join that community.
And I think it's most it's helpful for all sorts of folks.
There are a lot of founders in there, you know, from, you know, multibillion dollar late stage fintech companies you've heard of. But most of them are very early stage folks who are still waiting or, you know, just about to try and raise a pre-seed. And they have questions about like, how do I get these licenses? Like what? Who should I use for these KYC vendors?
Like, has anyone else done this thing here?
And then it's a very easy way to speak to a very targeted audience in a not like overtly public forum, like a Twitter.

Well, this is I mean, that's you know, the value of this is, you know, as you see trends about what they're worried about, I realize you're an active participant.
But when you're lurking, what is the trend of things that they're concerned about?
I think it's mostly just the nitty gritty of what it takes to build a company in fintech. So one of the big categories of questions and probably the biggest category generally is how do I build this product in financial services and how do I what vendors do I have to build it on top of and which ones should I do? So like a classic question would be I want to build not just like consumer neobank, but some kind of fintech business that needs to issue a card. So which banking as a service provider should I talk to?

Given this is my target customer, This is how the card fits into a broader platform.
And so like should it be stripe's banking as a service platform?
Should it be a unit? Should it be, you know, a direct partnership with like a Celtic bank? Celtic does a lot in the business banking space.
So that's a big category. Like how do I build things?
Who do I partner with to build things?
And then there's nitty gritty technical one. So like a question I saw this morning with someone was like, I need to do KYC requirements for my consumers.
How important is it for me to actually collect customer middle names?
And then you can kind of hear, you know, like, is it important?
Does it not matter like some places do require and other places don't require it?

And you kind of get just a little bit of, you know, color and then you can take that conversation offline with someone else. Sure.
Get a better understanding of, you know what?
It's someone who's already been down that path.
For the for the list or KYC. Know your customer.
One of the important things, if you're going to do any sort of banking right, this thing's full of regulation. If you're going to get into people in fintech, dealing with regulation becomes an enormous challenge.
Yeah. I'd like to get your reaction to Elon Musk deciding that he'd like to turn X into, you know, this WeChat of it's going to be, you know, how you pay for your bus ride.
It's going to be how you check out your library book.

It's going to be how you do your banking and it's going to be Venmo and it's going to be smart guy, obviously, But I think he's underestimating the enormous amount of regulation, not only federal, but then 50 individual states.
Yeah, And I think, you know, even the regulatory side of things, I won't talk about Elon Musk and what he's trying to do with acts, but I also want to come back to like, Sure.
Regulate and why that's interesting as an investor and some other things so on.
Will they be successful building a super app?
So the answer, the short answer is effectively no.
But if you look globally, super apps have actually been some of the most successful fintech companies of all time. A great example is New bank in Brazil, which is worth many tens of billions of dollars.

There's also grab in Indonesia, there's one in Korea, there's maybe some other ones are being built around the world.
Can you do it in America?
So what has worked internationally is that you have leapfrogging technology.
Basically, you go from not having much to develop banking system to having everyone on a smartphone. Then you have so you have a relatively greenfield market as a result of this leapfrogging technology. And then you have some kind of unified, you know, regulatory interface. But the big thing is it's a massive greenfield market and you get these network effects when you become the first one to get big and then.
He's got really, really big, really fast. The U.S.
is not a greenfield market. We have 5000 banks.
We have 4000 credit unions. We have five massive banks.

We have 20 or 30 super regionals. We have five or six well, three or four massive consumer payment networks.
We have that Moselle Cash app, right?
So all of the little things that some became the Leapfrog or the base for folks to capture massive market share.
They're already populated by competitors and we're already in a large competitive ecosystem. So for X to actually become its aspiration of being a super app for everyone, it's just not going to happen.
Could it become an interesting financial platform for some users, for some specific use.
Case.

Maybe? And that's really going to come down to like targeting a very specific use case and leaning into that. But it's not clear that Twitter now is kind of brand positioning naturally follows into a particular area where they can be powerful.
Part of it.
So even in a more tailored specific use case, I think they will really, really struggle.
An example of what I mean by like a specific use case.
So PayPal was originally a way that basically was used to buy things on eBay and that spun out, became independent and worth more than eBay.
And PayPal actually goes back to where Ellen and a lot of people file Mafia came from.
So they're familiar with what used to be called X.
Yeah, which used to be called x. So like full circle.

But if if PayPal, the original x couldn't become x, like why would X 20 years later become X?
Could anyone do it? Could chase do it?
I don't I don't think the UFC lends itself to being.
I think you're right. Yeah. It's just it's too difficult for now.
But that's why I spent a lot of time in B2B is because there are these massive broken components of infrastructure that are 20, 30 years out of date that like just do need to be built. You need really sophisticated teams who understand how to build them, who to sell to all of that.
You talked earlier about fintech being highly regulated.
One thing that makes it really rewarding as an investor is there's a lot of indigeneity within the ecosystem and a lot of interconnectedness.

That's not true, saying general consumer venture or an enterprise.
Because any time someone has to build a product, they have to partner with other folks who do certain of like the regulatory lifts.
And so there's just so much like if if you want a network driven investor in consumer, it doesn't really help you because you're like, I either need to capture lightning in a bottle and have viral growth or not.

And having a great investor doesn't really matter where's is a great investor in fintech, where you have regulators, you have infrastructure providers, you have channel partners, like someone can really help you in terms of understanding how to navigate that ecosystem, bring your market your product to market faster on the right infrastructure with the right partners. And it's also really rewarding because for me as an investor, the more time you spend on the ecosystem, the more you kind of start to understand all these constituent parts. And you also talk about regulate, to be reductionist like what is fintech? I think a lot of the companies that invest in what the product actually is from a COBRA aspect of it, some sort of regulatory rules engine.

So one of my investments at A16z was deal.
They empower payouts for contractors globally.
So if you're a US based company, you can pay a contractor compliantly and you know, 100 plus countries around the world. So their international payroll, that's what they do. But you think about what their code and software base, a lot of it is it's a global rules engine for how to compliantly do payouts in-country. So like, yes, there is the rail and the money movement.
But it's not just like saying move this much from A to B, move this much from A to B file report with this entity.
Make sure you have this legal entity. Make sure that this much is like withheld for payroll debt. And so it's really a compliance rules engine.

And that's true for a lot of different companies that under the hood, the compliance rules engine is the complexity of building a product from a technology perspective. And there's also complexity building it from like a regulatory and licensing perspective.
Your first job in Silicon Valley is coding for a fintech company.
You create a fintech network and then you now invest in fintech.
Would you be investing in health tech if somebody else had hired you?
I think potentially I think health care is one of those areas like.
Oh, it's an interesting area. But I guess what I'm more asking is, is, you know, your life revolves around fintech. Is it can we can we trace that back to the person that that's where you got hired?

Yeah, well, I would say that like if you think about technology's application to the real world, technology started off as relatively isolated.
If you think like the consumer wave of Google or Facebook is kind of permissionless innovation where you scrape the open web, you serve search results, you allow people to create social profiles and then they network each other.
You don't actually have to interact too much with the real world, but you can only saw certain kinds of problems when you have businesses that aren't more deeply interconnected. So there. Kind of three big areas where business are more connected health care, finance, education.

I would say finance where I am is actually probably like the least interesting from like the amount of social welfare improvement you can get by fundamentally solving some of the problems.
But the flip side of that is when you do solve problems in financial services, you can often reach scale much, much more quickly.
And so that's what makes it exciting to me is it's one of the most important areas that technology has yet to be, like, fully applied.
But when you do apply it, you can reach tremendous scale relatively quickly.
Whereas if you look at health care or I think especially in education, those are places where we need a lot of work done.

But even if you figure out like what works at one school and one place that you may have no idea how to actually scale that elsewhere, and then health care. Health care is just like this morass of just insane complexity.
And so I feel like I can better grok financial services than just like there are so many payers in health care, There are so many perverse incentives, there's so many different regulators.
There's, you know, preventative care is like so hard to charge for. Like they're all of these aspects of it that are so broken.
I am excited and have done investments at the intersection of fintech and health care because I think those two things naturally come together.

Anything around health care reimbursements, around billing, around operations, around adjudicating insurance claims, those are kind of natural areas where financial services and health care come together and you can see technology starting to creep into those. And so I probably will get to get some exposure to those areas because, again, finance is pervasive throughout the entire economy.
But in terms of like why be in fintech for me and why it's been particularly interesting, I think particularly good timing. It's because it's, you know, a big problem.
And then when you fix things, you can reach scale pretty quickly.
Just a factual question. Did I read you went to LSC for.
College and then some.
So I went to Davidson and undergrad.
Okay. And then I did study at LC for a summer.

Okay. Towards my econ major.
Okay. Right. Right on. Yeah. Okay.
I was particularly with your name.
I rather expect you to have British accents.
And those are my.
Sorry. Sorry to.
Disappoint. No, the mid-Atlantic here.
Right. Those are my questions for you. Unless there's other things you'd like to touch on.
No, I think final thing I'll touch on is I think now is, like, the most exciting time probably ever to start a fintech company.
Because if you look at financial services revenue, some people write off fintechs over. So it's not over. Financial services, only 2% of the revenue that's been captured by fintech companies. So that means literally 98% of the opportunity still there.

Then to the talent that is accessible, if you want to go and build a fintech company is so much better than it used to be before. So I have a podcast.
I interview founders of places like Betterment and Credit Karma, and if you talk to like Ken and John, like, how did you find your co-founders?
Like, I don't know, like I had no idea who I should talk to or maybe like I had someone, but they were like someone I'd work with inside of a big bank.
They also had never been to a technology company before.
And then if you ask them, like, Who did you raise money for?
They're like, I have no idea. Because like, this is 2010.
There are no fintech. Yeah, venture capitalists.

One of the very first ones, the one that actually led Credit Karma series was QED, which at the time was essentially a family office.
Today, they're, you know, a very large fund with, you know, physical presence is on like three continents around the world. But then they're basically just a small family office. And then you're like, well, who do you hire?
And it's like, I don't know, like, I don't want to hire more bankers or like consultants.
And you fast forward to today. You're like, you there are so many specialized fintech investors. The infrastructure, like the tools you can build on top of to actually bring your product to market are so much better.
And then the people you can hire, there's so many more numerous talented individuals.

And so and we just talk about like 90% of the revenue opportunity is still there.
So market as big as ever, people are smarter than they have ever been.
There's better sources of capital. And so if you're like, oh, fintech, maybe it's not going to happen, is like, no, now is actually an amazing time for financial services.

And conversely, if you look at the last decade, most of the revenue sources that people have found haven't been adversarial to the incumbents, like the big banks have just gotten bigger. It's going to be very interesting the next decade to see not only the extent to which fintech continues to grow, but it's very possible that starts to grow in a way where it impacts the rest of the financial services industry and you start to see market share get taken away from incumbents in interesting ways.
And that's when fintech can be really transformative.

A way that's kind of visible in this role for folks in society is like, Oh my goodness, like some of these large institutions, their business models just don't work because tech companies have figured out new ways of providing differentiated products with potentially differentiated business models that are really challenging.
So that's the thing I'm really excited about in the next decade is, you know, as somebody like worked at a bank and hated it, I have like a chip on my shoulder and like I like success isn't success until like the big banks.

I don't want them like blow up or that. But like, I just want to see like real challenge to the fundamental business models underlying some of our large, like long tenured institutions in a way that creates better products and conservative and services for consumers. And I think I think we'll start to get there this decade.
We have a little bit in the past decade, but I think this decade could be really, really interesting in terms of figuring out what that looks like.
Hmm. Last question for you.

And we don't include it in this podcast, but I collect them is what is a book that has been influential in your life that you either read often or you give as a gift, or if you could only pick, you know, the old saw, you can only pick one book for the desert island and it doesn't have to be anything.
You know her Harvard Business press?
It could be Winnie the Pooh. But what book has been very influential on you?
Yeah, that's a good question.
I have. Probably my favorite thing to do is just read a whole lot of blogs, have a lot of econ bloggers. I follow the first book that comes to mind, and my favorite book generally to read in the book I've probably read the most is Ender's Game.

And whenever I try and learn a new language, a great hack is you read a book, you know well in that new language, because then you don't have to worry about losing the train of thought or like, what's going on in the story.
Like, I don't understand that. Well, so it's like a good way to, like, revisit something you really like learn the language and keep on.
So Ender's Game is really the book I've read the most in terms of.
Books I've read recently that I really like, I guess, to come to mind.
One is Andrew.
I think it's McAfee.
More I think it's more from last is the title or it could be the Sure.
And it basically it's to some extent an apology for capitalism.

These are the environmentalism saying that yes, capitalism does depend on markets and there can be massive market failures, but markets tend towards the lowest cost solution, which can be a problem if you have massive externalities. But that means that they tend towards less resource consumption over time generally.
So, you know, bits are way cheaper than atoms.
So that's, you know, kind of related to the technology story that if you can push things in a software that isn't physical versus bits which are physical, that can have massive implications. And some of the surprising insights from that book are the fact that we've actually reached peak resource consumption in absolute terms for a whole bunch of things you might not have thought were the case like oil.

I think we've reached peak resource consumption of oil.
Absolute terms. Then there's a whole nother category of things where we've reached peak resource consumption relative to GDP.
So GDP is still going up. Your consumption of that item therefore is still going up. However, the amount you need for each incremental unit of GDP is going down. And so that's like a pretty interesting idea that you can actually get more from class by leveraging markets.
Big caveat you really have to solve for places where markets have these huge massive negative externalities, the production of carbon being a very obvious example, but a lot of times people want to put these two things at odds with each other.
You know, capitalism, environmentalism.

The reality is, if you think intelligently and look back historically, there are ways in which you can put these things together. So I'm sure that's given a bunch of people who are at least some people probably. Oh, that's really interesting.
Exciting. Other people probably like having heartburn right now.
I'd be like, This guy is terrible, but that's a very, very interesting one.

Great.
All right. You can hear me, okay?
I can. I had to get it. And he's using my GoPro webcam for this because the screen, the one on the computer just doesn't cut it for these things.
Oh, right on. No, no, no. That's good. So this one is audio only.
Yeah, we use the video just, you know, so that I can gauge your reaction, and it just makes. Yeah, exactly. Right. Right. You can tell I'm kidding about something.
Whatever it happens to be. Let me call it my notes here.
So how'd you end up in Chicago? I mean, I haven't started yet, but how did you end up in Chicago?
My wife went to Northwestern Law and Order here.
That's how most people end up in Chicago as they follow their significant other who grew up in the area.
Yeah. Yeah, I, I did did most of high school or.

No, all of high school in Chicago. I was following their parents because I had no choice because I was a kid.
Where? In Chicago.
Northbrook.
Oh, yeah.
My dad went to Northwestern, so he's a huge Northwestern band.
Yeah. My yeah, my wife went to law school there, which is not like you don't end up going to the football games even though law school's a different sort of different used.
Home. Printers never work the way they're supposed to having their way.
I like the art deco microphone in the background there.
Which one?
The microphone in the background.
Isn't that fun? I got that at a great antique flea market evening out in Alameda once a week.
And I screwed up three off the off the screen here.
I remember going to Alameda and selling signing up restaurants.

Oh, sure. Yeah, I bet you did.
And they're here because it was our second city.
The Chicago on the San Francisco. And so I don't know if you read the book, but I had like literally walked all over the city trying to pick up paper menus.
You know, and I have not read the book, which is very unusual for me.
Usually I have read the entire book.
I'll get back rent. Well, no, no. Because it's always funny because, you know, authors do a lot of book tours where the guys never read the book.
Right. And then every once in a while, you know, I mean, I mostly always read the book and and I'll see the author go, oh, god.
Okay. Yeah, you did. You know, that's from the middle.
Yeah.
Okay. Let's see them. Make sure I'm recording.

I am. So I want to I want to start with pizza because GrubHub started with pizza.
Let us discuss the best pizza.
You're in Chicago?
I'm from Chicago.
Chicago style pizza like they have on at p quads on the north side is, in my estimation, one of the best pizzas in the world.
Well, you are in conversation with a person who is an expert on all things pizza, because I've had literally thousands.
And even though I am from Chicago, I'm a Chicagoan.
I actually think New York style pizza typically is better than like the big.
You can fold and eat on the run.
Yeah, I like that. The best the best place in the country is called JB Alberto's. It's like a mile from my house in Rogers Park, Chicago.
But there's a lot of there's a lot of great pizza out there.

And there's it's a whole it's not just an item, it's a whole cuisine.
So it is.
A lot of what is it like a St Louis or a Detroit pizza?
And I'm like, I never even heard of that.
Yeah. Like in a pan. Yeah.
It's like it's it's like the pan. Like the old Pizza Hut pan pizzas.
It's similar to that.
Got it. Okay. And you've heard Jon Stewart's rant about Chicago pizza, right?
I mean, that's fine.
He didn't start a multibillion dollar delivery of pizza delivery website.
So one of us is the expert, and Chicago pizza's great.
So I don't. I can't hate on it.
Right. Right. Take me back to the first days of GrubHub.
This was, you know, I mean, easily ten years before DoorDash.
In fact, it was before the iPhone.
So this was all being done on the Web, right?

Yeah. So you may remember in 1998, there was a movie called The Net written by and Sandra Bullock was in it and in she actually uses a website to place an order. So that didn't exist until I made it.
Right. Like it was on a movie.
And you could see someone doing that in a movie.
And then, you know, six years later, that was 1988.
Six years later, in 2000, where I'm like, okay, it's time for this thing to exist.
And so I went from having a I had built a delivery guide to find information about restaurants delivered, you see their menus. And then I switched to doing online ordering pretty quickly after that.
It's interesting. It's interesting you starting with menus because yeah.
To remind the listener, I mean, we're talking long before iPhone.

I mean, this is not where you ordered something by clicking a couple of checkmarks on your iPhone. You started with menus and menus have kind of come full circle because of the QR code.
Yeah. You know, it's funny, like we're in web three or four.
I don't know, you know, whether it's not web something point zero, probably 3.0 at this point. Web 1.0 is taking offline businesses and bringing them online.
That was like the first wave of companies that we started.
And then Web 2.0, a big part of it was user generated content.

And so the there is this world now where people just upload menus and you can just see all the menu story restaurant because it's just sourced from the people going to the restaurants. But that didn't exist at the time. You literally couldn't find those menus anywhere. So I walked around all the the first two cities anyway.
I walked the entire city picking up all the menus.
Paul Graham, you know, he famously said, do things that don't scale.
Well, that's a great example of something.
It was really hard, but it gave us it gave me a leg up.
We had we had a way to attract people to the website before we even signed up all the restaurants for online ordering.
We had to unplug my printers, make it a little bit of humming noise, so I'm going to blow that core of the printer. That didn't work.

All right.
So this starts. So this starts as a hobby at first.
But it must have been weird to hire that first employee who then becomes part of the team. I mean, for a while, your you and your co-founder are GrubHub, and then at some point there's a third person, right?
Yeah. So I started the business in 2002 and then went full time as it was a hobby. And then I went full time in 2004 and we had no investment.
And so we the first employee that I hired was a salesperson in like a year later. And actually Matt didn't join full time until a year and a half after that.
And so it was just me for a little while.
But that, you know, there's a couple of big transitions that happen in the business.
The first is going from $0 to more than $0.

That's the that marks the difference being a hobby in a business.
Right. And then there is when you get the first customer who pays you again for the second for a second time for a product they already liked.
Right. And this is the restaurants in this case, not the not the customers.
And then another one is when you hire your first employee.
Interestingly, another one is when you find out there's an employee that your company hired that you didn't like, you don't even know them.
That's also.
A weird yeah.
That's a really weird moment. Like here I'm like.
Do you work? And they say, What do you do around here?
You say, Well, I'm the I'm the co-founder.
Yeah, yeah, that's right. Usually that conversation happens in an elevator and you're like, okay, this has gotten big.
Yeah.

So. Is there a temptation when you only have a few employees and it's something that you created to look over your shoulder, over their shoulders and say, no, no, no, no, not like that.
Because after all, if you hired well, that person should be able to do their job without much supervision and ideally bring new ideas to the table.
Not only is it hard, it's especially hard if you've never managed anyone before and you're 27 years old and you started this delivery guy, and now suddenly you have a business and you're employing people.
You have to learn. You know, one of the things I learned is that my job and I didn't know this at the time, but it took 20 years and 4000 employees before I learned my job is to set the strategy like this is where we're headed.

Get the right person and make sure that they have what they need to be able to do their job and then get the heck out of the way.
Just get out of the way. And so I had to work through a few years of micromanaging before I realized that it's just not fruitful for anyone.
And you really need to just trust people.
So at some point, you decide to get funding.
What did you know about venture capital at the time?
The first investor that I put a balance sheet in front of, looked at it and said, the sheet, this doesn't balance. And I was like, does it have to?
And he's like, It's balance.
So I knew less than nothing about venture funding when I started.
And so it was really challenging.
I had I had no idea. I didn't know what the terms were.

I didn't know how you went and go find it. I mean, I ran the business for four years without investment. So it was like, Oh yeah, maybe this would go faster if I had some cash to actually hire people instead of having to like scrape for every dollar from customers. And so it was challenging and I ended up learning about that through a variety of sources. You know, there was a couple of websites early on ABC like was one, it was like a, it was like a blog and there was a few others. And then I ended up getting a mentor, Chuck Templeton, who who had founded Open Table, ended up becoming my mentor.
And he taught me a lot about how the venture world works.

We also my partner rolled in University of Chicago and I went to some classes down there and they had some they had some like a startup competition where I learned some stuff about venture capital there too. But honestly, it wasn't until I had been through it for a number of years before I really started to get a handle on how that worked.
Tell me about those first meetings. What were those like?
And you've said that you know, it timing is very important when it comes to seeking venture capital.
Yeah, the first meetings were, you know, getting that first venture capital check is is ten times harder than the second one.
Like once when you're an unproven entity, it's so hard to convince somebody to invest in your business.
And I had a mentor who had done it before.

I had, you know, the university show business finance competition helped.
But some of the the the the the organization that ended up putting the first check into the business.
We had been talking to them for 13 months before we actually closed the deal.
I mean, it took a long time and we talked to hundreds of VCs before we finally got good at it, to the point where we actually closed that first deal.
And that first deal is for millions, right?
It was for $1 million, 1 million small.
Business owners, this relatively young man who has this idea and he's got a company and it's reasonably successful and it's a check for $1,000,000.
It's not you know, it's not a lottery when he can't go buy a boat with it.
I mean, you could, but you'd end up in jail.

But nonetheless, you know, there's $1,000,000 in that bank account.
It's it's a big moment when you're literally taking home food.
I was taking on food from restaurants because, like, I was paying myself so little that I could, you know, I did want to eat ramen. And so the restaurants were giving me free food. Going from that to, Oh, look, I can make payroll, like, no problem, this is going to be easy. And it was great.
We went from we rent from basically one one we tried running to San Francisco, wasn't going great.
We went from one city to four on that first million dollars and then we went to get to 13 cities on the on the next check, which was another 2 million.
And and that's atypical.
Like usually companies take a lot more money than $3 million to get to 14 cities.

But we did it. It sounds like a lot of money.
But in startup world that was doing it on the cheap.
Now there's there's got to be some sort of critical mass as you come into a new city.
Right. Because if my if I go to this app that I've heard is, okay, well, they're finally in San Francisco, let's check this app out.
And you've got two restaurants. That's pointless.
What is the magic? What's that?
It's funny you say that because we had an internal number that we used.
You had that 18% of the restaurants signed up in a in an area, too.
So that was our definition of critical mass. And then the first page that a customer came to see to see needed have five different cuisines.
So couldn't all the pizza and.
The.
Chinese sushi Italian like you had to have.

A bunch of variety. And so those those two things were the predictors for whether or not a city was going to do really well.
Would you would you have ever guessed the existence of ghost kitchens?
Yeah. I mean, it was. It came up fairly early in the business.
Oh, really? Yeah, because what happened is we had restaurants, we had a restaurant that, like, was a Greek restaurant, and they said, well, why not?
Has a pizza? Is a Greek restaurant? I'm going to sell pizza.
We can make pizza and Greek food in this kitchen.
So why don't we just have two different brands?

And so it came up from the restaurants creating multiple brands to use their kitchen for multiple cuisines because it's a lot easier to sell Greek food as a Greek restaurant and pizza as a pizza restaurant. And so it came from the restaurant, started it first and then and then that transitioned to well, maybe, maybe GrubHub should have its own kitchen.
Like maybe we should just sell some of our own food.
And I don't know how far down the company actually got in that path, but like that was a discussion from like to like really early on like 2000 627.
It did surprise me when it came up, but then after like thinking about it, I was like, Yeah, I guess if they make great food.
Yeah, I guess I hadn't realized it was as old as it was.

Was it was there any confusion or resistance, you know, as you were managing the company? Well, wait a minute. But you are in a pizza pizza restaurant.
The pizza restaurant doesn't even exist.
So who's to say? Right, like if a if a restaurant makes pizza, aren't they a pizza restaurant? It was a really like it was a confusing thing.
We what we decided was if it was confusing to customers, it was confusing to the diners, we weren't going to do it.
But it turned out to not be very confusing to diners.
What they actually cared about more they think was, is the food good?
So if a Greek restaurant makes bad pizza, then like it's a problem. If if a Greek restaurant makes great sushi, everyone's fine with it.
So it really came down to the quality of the food was what really mattered.

So what don't I know about food delivery apps?
I'm guessing that some of those restaurants that first appear on a screen have been promoted in some fashion.
Right. It's not all purely just based on what I'm searching for.
Yeah, I don't know how they are done now, but at the time that at the time I was at the company, the restaurants that paid most got sorted to the top, but that wasn't entirely true. There is also a modifier for quality.
So the best restaurant, best restaurants would get bumped up sometimes beyond what they were paying and the restaurants they had trouble delivering like high quality food consistently would sometimes be dropped down to a lower spot.

But we had to be careful about doing that. Right. So and then the other thing that came into play was you just needed to make sure that there was a variety of cuisines so you couldn't have five restaurants that were sushi restaurant at the top, which were always the ones that were willing to pay the most because they made the most margin on their food.
Sushi restaurants paid the most because they could have the biggest profits.
Yeah, that's right. Well, they had the highest prices. So, yeah, the margins meant more.
And in terms of a pure dollar basis there.
So yeah, I learned something about app based food delivery right there.
And here's the other thing that nobody knew.

Like 2009, the price of chicken wings went up like 400%. Like the demand for chicken wings went up so high that that chicken wings, which used to be the solution for how you sell the parts of the chicken that aren't chicken breast became the most expensive part.
And that was like it was, you know, when Wingstop kind of exploded and everything like that, like chicken wings just became this huge thing in the 2010 to 2015 timeframe and it's remained that way.
Well, they are delicious.
They are great. I'm a sucker for.
So you you've.
You've said that customer service is critical.
I don't really think of.
An app based delivery is as having a customer service, perhaps because I haven't had any trouble with them or any complaints or any any wrong orders.

But but even on an app, you're saying that customer service is supercritical.
Yeah. That's how it was customer service that that enabled us to beat all of the competition going up to the IPO. It's it was the reason why GrubHub was the biggest player at the time. And and that's because literally 14% of all delivery orders have a problem with them. Like, wow, forgot an item, you know, put up Thai iced tea instead of a tie. Iced coffee, showed up late, didn't went to the wrong apartment. It's a very high error rate sort of a process.
And so we decided that instead of like saying, hey, it's the restaurant delivering the food, we we leaned in and we decided that and I talk about this a lot in the book.

It's sort of the climax of the of the business part of the book when we decided we were just going to own the quality of the food regardless.
And what it does is it makes you start making choices around promoting the restaurants that create the best quality experience for the customers as opposed to the ones that pay you the most. And, and that really served us well.
So that one of the reasons why people didn't have problems is because we were promoting the restaurants that didn't have that kind of our error rate.
And then we were sharing best practices with the other restaurants.

And then if you called, you know, we would say, well, hey, it looks like your food is 52 minutes late. Let me text the driver and I'll text you, text you where it is, and you wouldn't even have to say anything. We would know all of that as soon as you call.
And so that kind of experience drove really high satisfaction.
And and that it is it it all all delivery is is it in it's at its core a service.
And so customer service is 100% of what the company does.
What was the most unusual complaint you got or strangest or biggest or.
You're the most? My favorite compliment that really blew my mind.

This wasn't the biggest problem was the like the best like heartwarming moment was when we had a we had a serviceman who was in Afghanistan who had ordered a anniversary dinner for his wife from Afghanistan.
And that that sort of like warms my heart.
I was like, that was cool. This thing's great.
That's cool.
We check my notes here. Hold on just a second.
So you. You.
Shepherd the company all the way through the IPO.
What what was that like?
I mean, an IPO is great. Everyone should do it.
It's it's a lot of fun.
It's a big it's a big party after a lot of work.

But in all seriousness, you know, growing the business from my first restaurant to at the time of the IPO, so that was 2004 was the first restaurant, 2014 we had 70,000 restaurants on the platform. And, you know, at every stage of the way, like it was, the business had to change fundamentally.
Every time you got ten times bigger, it just changed totally fundamentally from what it was before. And you had to keep innovating, keep solving these problems.

And every time you solve a problem, some smaller problem, now that you're ten times as big, you know, and you go through all this process with your team and it's this amazing experience. And then and then the transition through the IPO is tricky because with with venture capital and with VCs, you know, venture, one of the things I love about venture capital is that they're trying to create products. They're trying to create something from nothing.
Bill Gurley said, You know, you're painting on a blank canvas at one point during when we are creating this one new product we are doing.
And like, it's ultimately it's a creative exercise.
The public markets don't care about creative exercises.
They want to get people want to get paid.

They want their stock price to go up. And that's the only thing that they care about.
And that's difficult for a private startup to go through that transition to a public company. And so and so, going through those growing pains leading up to the IPO, I understood why it had to happen, but also it made it really clear to me that this wasn't the company that I was gonna be part of. I wanted this.
I wanted to stop that and go do something new so I could sort of create something from nothing again instead of managing an asset through a public company.
And so I took off. I literally rode my bike into the sunset and rode my bike from Oregon to Virginia.
Yes. All the way across the country. Yeah. Right.

So great about that. This idea that, you know, I get that startup entrepreneurs are creating a thing.
But and you've written you worried that that Wall Street's insatiable appetite for profit might turn the company? I found it into a trap.
This is me quoting you. Will GrubHub stay true to its roots?
Businesses ultimately are businesses, right?
I mean, let's say there's a clothing company.
It makes outdoor, you know, clothing for outdoor sports.
It's going to see itself as a company that that does something magical or big, but ultimately they make fuzzy jackets and they sell them for more than they manufacture them for.
Is there a point in which.
The creativity ends and and you just got to be a business and face facts, which you are.
I could not disagree with you more.

And so let me tell you why I think that businesses, companies, they exist.
They do not exist to create a profit.
Businesses exist to create value for customers.
And they coincidentally happen to make a profit because of it.
And as soon as a company loses sight of the fact that the reason they exist is to create value for customers and start optimizing towards the profit motive.
Instead, they lose the urge to differentiate and they lose the the necessary animus to to innovate and and their products get worse.
And then they the competition shows up and they get destroyed right away.
Yeah. And so I actually think it's great.
One of the great paradoxes of business like. Yes, you have to return to shareholder.
Yes. You need to make cash. Yes, you have to pay your employees.

But if you lose sight of the fact that those things are all secondary to creating customer value, then you can't do that thing.
You can't make the profit. And so.
So Patagonia does a great job of making wonderfully comfortable fuzzy jackets.
And they just happen to make a profit and they do a really, really good job in the first one, which means they do a really good job at the second one.
You've been described as a techno libertarian explained to me.
I grew up in my in my research. Is that you do.
Had you not seen that?
I haven't seen that before. Okay. Well, all right.
Let's roll with that.
Okay. Yes. No, you know, what are your your your thoughts or your politics or your.
Thoughts on America and business today.

So I think that I think that businesses are huge levers for social change, whether you want them to be or not.
So regardless of my politics, like if I create a company, it changes the environment in which it operates by nature of existing.
And so the thing that I've been saying and the main point of the book, aside from just hopefully being funny and entertaining and helping, helping people like sort of to see what it's like personally to go through it through an experience.
The main point is that the main sort of lesson or idea in the book is this idea of that, that because businesses are such big levers for social change. Be explicit about the change that you want to be in the world.

I'm not saying it has to be any one thing in particular doesn't have to be environmental or social. It can be entirely about just making cash.
That's fine. But it's really important that it's not implicit that that you're aware of the change that you're making in the in the communities that you serve.
And your new project is essentially it. It reminds me a bit of, Oh, no, I've forgotten the name of the company.
But what's the company that does the.
IKEA bought them.
Hold on. Let me Google it.
Obviously we'll edit the long pauses out.
TaskRabbit. That's what it is.
You've got something you've got a new company now.
First of all, why start a new company when you could just, you know, spend the rest of your days on a sailboat?
And secondly, describe it to me.

It reminds me a little bit like a TaskRabbit on steroids.
Yeah. So that company is called Fixer and it's a an on demand handy person service.
And the big difference between us and TaskRabbit or Angie's List or Home Advisor or any of those companies is we employ the workers full time with benefits and and we train them from scratch.
And the whole reason we do that, there's really two reasons to do that.
One is because I wanted to create.
There's no way to to create a great experience for customers in the home unless you actually have a sufficient supply of workers to do it, who work in a specific way to create a really great outcome.

And none of those things are things you can guarantee if you have if you're employing contractors, especially since the supply is insufficient relative to the demand.
Like there's just more people who want someone to come into their home and do the work than there are people to do it, which everyone has experience.
It's like you've got a guy that you've got to. It's never a girl, by the way.
Like you've got a guy and you want him to come to your house.
You have to wait two weeks, and then you need to patch up 8 hours of work.

And it's a pain in the neck. Right. And so he's trying to create a great experience for the customer. And so we said, well, if the supply is an efficient, insufficient, we should just train people. And if we're going to put investment in training people, then we we should try and make sure we can hold on to them and actually employ them for the long term if we're going to invest in people.
And so that's what we've created, which creates an amazingly good experience for customers in the home.
And and so it's very different from the marketplaces just because we employ the people and we're very focused on, on handy person work, not we don't do everything, we don't we're not electricians, we're not plumbers.
We we do a little bit of electrician work and a little bit of plumbing work.

But it's a broad base. And then we can we can help you with just all the little things that happen around your home. The name of the company is Fixer, by the way, Fixer Dotcom.
And I think it's good to go back to our well, why don't you just call the restaurant and order the food?
Especially this next generation that grew up entirely digital is when they own their first home.
If they ever do and the pipe is dripping, they're going to Google.
They're not going to go to the Yellow Pages, which, as far as we know, don't even exist anymore. They're going to Google and they're going to expect to be able to book a handy person online by filling out a form.
And that's exactly where you're meeting them.
Yeah, that's right. That's exactly what the expectation is.

And, you know, by having an employee base, we know exactly when everyone's available. So if you want somebody tomorrow at two weeks and someday tomorrow, too, and actually show up on time. Right. So being able to book it right, right there instead of just sort of fill out a form and send it and hope somebody gets back to you.
Right? Like it's really important that, that, that experience go as well for the customer. And it makes sense because we don't we don't we know we no longer feel like we have to be generalists and everything.
We don't have to even drive our own car or cook our own food.
We could be just really good at being a lawyer or really good at being a graphic designer, and then we can hire those other services out.

So there's more specialization and people can do what they're interested in.
And there's no stigma associated with like, yeah, I don't, I don't, I don't fix my window when it breaks because in the same way that I don't like, you know, I don't, I don't have to cook every type of food that I can get for delivery.
Right? And so the idea that people can use us as the tool to get their home fixed is what we're trying to create.
And will you seek venture capital on is.
You know, we've raised about 20 million so far and so you have.
Yeah, it's it's it's getting pretty large. We're in six cities now, Chicago, Seattle, Denver, Phenix, Minneapolis and Dallas.

What when you're you're in six cities with fixer, what how do you pick that city? I mean, is it that there are a lot of digital natives in that city or how does that.
Craig We go to the places where the shortage of skilled workers is the most acute, and then we go in and we start training people.
That's it. The whole thing.
And as you saw, venture capital verb for fixer, what did you do differently or did you do it all the same as far as when you were a young kid doing it, going to venture capital for the first time?
I tell you what, getting venture capital after you've had a company that IPO'd is easier than when you're a 26 year old kid with an idea.
So somebody who is out there is trying to have an IPO under your belt.

Yeah, I mean, I was cheating the second time around for sure, but I also picked a harder business. I picked a business that was we have W-2 employees, we have operational complexity. We had to figure out how to train people and educate people.
And so I decided to do a harder business because it would be harder to raise money for it. But I would have it. I'd be able to cheat when I when I did it.
And it's worked out great.
Those are my questions for you. Unless you have other things you'd like to add.
No, that's great. Thanks. I appreciate it.

I'll bet you a nickel. Four years from today, whether or not Starbucks is using bitcoin, I'll say no, and I presume you'd say yes in four years, you said four years. Do you think Starbucks will accept bitcoin? Yes. And I am betting you and Nicole are out of your mind.
You have a big personality. You're wearing a bitcoin tie in bitcoin and bitcoin socks. I'm Scott McGrew.
Tim Draper is one of Silicon Valley's most outspoken venture capitalists, the son of a venture capitalist, the grandson of a venture capitalist.
He finds his way into news headlines often.
Draper launched a ballot initiative to break California into smaller states.
He defended Elizabeth Holmes, the creator of the blood testing firm Theranos, even as the feds accused her of fraud.

/content/Preprocessed_Data/SHR The World According to Tim Draper.txt

He told Detroit the only way they can compete is by building flying cars.
The journalist Mark Yarn once said Tim Draper has some crackpot ideas.
Perhaps you should listen.
This was the thing I was most interested in.
What makes Tim Draper act like Tim Draper?
But then I made a tactical mistake.
I mentioned bitcoin, and mentioning bitcoin around Tim means you're going to talk about bitcoin.
You get into the news cycle by saying fascinating things.
You know, bitcoin is going to go to a quarter million dollars or whatever it happens to be.
Okay, I'll get on out.
I'll talk about bitcoin today. But no, no, no, no, no, no, no.
You got to be in first.
Let me see you through a bunch of stuff out there, and I didn't remember all those things. Let me go ahead, OK, and hit bitcoin.

All right. OK. So bitcoin is one of the greatest opportunities that human beings have ever had.
Bitcoin and all the associated technologies, the blockchain, the smart contracts, all the artificial intelligence now because of all the big data, and that data will be secure because of bitcoin and the blockchain.
This is one of the the greatest technological advances that humanity has ever seen, and it can make a bigger change in society than any of us ever imagined.
Draper owns a lot of bitcoin. We'll get to how much in a minute.
A few years ago, he predicted the value of a single bitcoin would pass $10000 by 2017, and he was right, though bitcoin has since plummeted to around $4000.
Nonetheless, Tim is bullish, predicting each bitcoin will be worth a quarter million dollars by 2022.

The reason I predicted 250000 in 2022 was that I I realized that once bitcoin is capable of doing what people are capable of, doing anything with bitcoin that they can do with dollars and that's probably two years away, people are going to make the tradeoff and they're going to say, Do I want a currency that is tied to political forces that is swings with the political winds?
Or do I want a currency that is frictionless and open and global and I can take it wherever I want. I can use it wherever I want.
I think they're going to choose that one. And if they do, then then bitcoin will spread, and the more it spreads, the more value valuable it becomes.
Draper also predicts regular people will routinely use bitcoin in their everyday lives four years from today.

Say, to buy a coffee at Starbucks.
I think when you go to Starbucks to buy a cup of coffee and you try to pay with dollars, they will laugh at you because you are not using bitcoin or other cryptocurrencies.
For years, Starbucks, that's the largest laugh at you. It would be like the old lady with the penny paying out in pennies.
I have been to that CVS where you wait, you wait in line while they're pulling pennies out of their purse.
They will look at you and they'll say, My gosh, really, you're still tied to political currency. Why are you doing that?
Fair enough. You're terribly, terribly rich.
I am not. Do you want to bet a thousand dollars to our favorite charity that in four years, whether Starbucks will be using bitcoin?
Well, one way to get rich is not to bet.

We have a we have a maximum of a five cent bet in our family.
You can bet five cents. Would you like to bet five cents of pride?
Because I think you you throw your pride out there and then you then you realize that you lose your value, you lose your mind a little bit with your pride. So what are you trying to bet me?
I'll bet you a nickel. Four years from today, whether or not Starbucks is using bitcoin, I'll say no, and I presume you'd say yes.
In four years, you said four years, you think Starbucks will accept bitcoin?
Yes. And I am betting you and Nicole are out of your mind.
Sean, our producer, is here. We have better Nicole and we should send it to a charity.
Totally out of his mind. OK, let's do this.
Where have you been living? Let's do this coffee.
Did a whole.

So Tim believes bitcoin will be the coin of the realm, the common currency we all use at Starbucks. But Tim also sees bitcoin as an investment by a bitcoin now for $4000, and he predicts it'll be worth a quarter million dollars in just a few years.
But both cannot be true, right?
Let's do this coffee math for a minute.
Hold on. Let's do this coffee math for a minute.
One tenth of one percent of a bitcoin right now is worth roughly four bucks.
OK. OK. A coffee unfortunately costs about four bucks these days.
If your prediction for 2022 of a quarter million dollars per bitcoin is true, then one tenth of one percent of a bitcoin is 250 bucks.
Mm hmm. So if I buy my coffee in bitcoin now, I'm going to regret it because that was a $250 cup of coffee, isn't it?

The problem with bitcoin? You have bitcoin, but you're not spending it.
Is that a problem? That's a temporary problem.
And there is a market for bitcoin right now and people are buying and selling bitcoin, and they are actually buying and selling things and services with bitcoin.
And there's a market for it.
As it spreads, it will go up in value and it is spreading.
The people were saying, Oh, it's hard because the bitcoin blockchain doesn't. You can't make that many transactions very fast. Well, now with the Lightning Network and open node, you're going to be able to make transactions much faster.
I don't disagree that it's going to become more popular, but isn't the problem?

If it gets more valuable, then you have this sort of deflationary pressure not to spend the money because you're holding on to the money.
As much as it gets more valuable, you will be more willing to spend it as it gets less valuable, you're more anxious to hold on to it.
All right. Oh, I think I think as but I think there's a marketplace out there, and that's right now that marketplace is valuing it at $4000.
I am one point of view. My point of view is that, yeah, you probably want to buy a $4000 because I think it's going to be worth 250000.
Is it fair to say you have at least $120 million of the bitcoin?
I haven't really calculated that.
So a reasonable number.
You know, why count that?

That's the difference between you and me, as I'm constantly checking my chase out to make sure I got enough money to pay for the car.
I want to go back to that original question about your personality, though you have a big personality, you're wearing a bitcoin tie in bitcoin and bitcoin socks and you wear and you you announce interesting things.
You tell Detroit that they should build flying cars.
You are unique in that way. A lot of venture capitalists are quite quiet and understated. You are not.
Is that because you are creating a brand or is that your real personality? If you and I just hung out every day?
Is that who you are?
Well, I mean, you brought up Detroit.

I'm I am looking to see humans progress as in as fast away as they possibly can. And if that means that I need to take a stand somewhere and say this is unpopular.
I mean, at least it's not what is being talked about today in the press.
I'm willing to do that being a little unpopular for a year while everybody else comes around.
I think it's fine. I mean, I think I'm always looking toward the future.
I have a very good sense of what's going to happen in five to 10 years because I spend most of my time interviewing entrepreneurs who are telling me how the world's going to look in five to 10 years.
And and just because that five to 10 year view is not the same as the view that is being talked about in the press on that day doesn't mean I don't believe it.

I have a good sense for what the future is going to look like.
And so that's when I was in Detroit and they asked me, So, you know, what should we do?
And I said, Well, look, you. We totally missed the the electric car boat electric boat car got us the electric car.
So you've got to start thinking five years ahead so you better make them fly.
And that's what I said, and it upset the president of GM and the president of Chrysler. Actually, the president of Ford was very open to the fact and said, Hey, we're we're, you know, we really should innovate a little bit more. And then the president of GM went ahead and bought.
Cruise automation from us and.
Paid a good, hefty price, and he was and he bought it.
So obviously, he was listening.

I mean, so look, I mean, if if that's what it takes to move humanity forward, I'm going to go ahead and do it.
What's the least interesting, most important thing you've ever done?
You are often quoted for the outrageous things that you say are the most interesting things you say. What's the least interesting, most important thing you've accomplished?
I think the most important thing.

That I've accomplished, I don't know how interesting it is, is probably that I came up with viral marketing through and through Hotmail and then it was used for Skype and it was used for Gmail and for almost every communications product that has been spread throughout the world. So I'd say, yeah, that would be one maybe doesn't always make headlines, but it is pretty awesome that now 60 70 percent of the population of the Earth are now interconnected because we figured out a free way of spreading the word by having the customer become the sales force.
I've interviewed him many times in the past, and one of the most notable was in the spring of 2018, shortly after the feds charged Theranos founder Elizabeth Holmes with fraud. Tim is personal friends with Elizabeth.

He invested a million dollars in Thera Knows.
I invited him on the TV show. Press here to talk about a different issue.
I warned him several days ahead of time, though I'd be switching topics on him.
Here's a clip from that show.
Good morning, everyone, I'm Scott McGrew. I am always completely straightforward, my guests and I invited my first guest, venture capitalist Tim Draper, on today to talk about the three California project.
But then the news cycle interfered in.
My promise to Tim is we're going to talk about his idea to break California into three parts in a moment. But before that, we got to talk about their nose.
Tim was pretty angry about that switcheroo, even a year later.
In fact, he mentioned it off, Mike, before we started our podcast interview.

If you care about that, I'm willing to talk about Theranos.
There is an HBO series coming out or a documentary out for blood. Do you plan to watch it?
Probably not. I've got a lot of other things.
Have you heard the podcast The Drop Out on ABC's podcast?
No. Have you read Bad Blood by John Kerry?
No.
You defend Elizabeth Holmes and you have every right to.
But you you aren't listening to these claims by these various journalists about what she has done.
Why wouldn't you listen or watch these programs to hear the counterargument?
Oh, you know, sometime I might get around to it.
But I've I read John Kerry first article and and he was damning with innuendo.
And there was no there were no proof.
There was nothing there. And and I thought.
You know, why would I follow that person?

You know, I'm I'm going to follow people who who do deep research and really understand things, not people who have an agenda and want to take down a great entrepreneur.
I've seen an entrepreneur do extraordinary things.
And then when they've done these extraordinary things and they are moderately successful, nobody seems to care.
But if they're enormously successful, they get picked off.
And and so you see the attacks on Zuckerberg, you see the attacks on Bezos, you see the attacks on Travis, see the attacks on.
I mean, if the press could find who Satoshi Nakamoto is, I'm sure they'd be after him, too.
And and attacks on Elon, I I think that that I look and I say, those people are heroes. They took huge risks.
They they sacrificed huge parts of their lives.

They made the world better for all of us.
They they did extraordinary things.
And now that they're hugely successful, somehow we're supposed to come back at them and say, Hey, you're doing something wrong.
I don't think that's right. I don't think it's proper.
I do understand that sometimes when a business gets so big and so influential that it it can start harming a population in some way.
But but by forcing entrepreneurs hugely successful entrepreneurs to go take it, change their their whole personality, which was a risk seeking and risk taking personality and suddenly become, you know, ordinary citizens, I think is unrealistic.
And I think it's it's really quite amazing what these entrepreneurs do.

And by driving them away, we are discouraging future potential entrepreneurs from going after great things.
So I think the press is doing what they're supposed to do. They're there and hopefully encouraging free speech and encouraging the news to spread.
But I don't know where this schadenfreude comes from.
This this attack and vicious rumor mill to try to take down Elizabeth Holmes has been a real setback for humanity.
Next week, Alphabet chairman John Hennessy will talk about possible government regulation, entrepreneurship and Google's big plans in San Jose.
That's next week on Sand Hill Road.

If you're in the San Francisco area, that's Sunday mornings on NBC Bay Area and everywhere in the world on iTunes at a press here.

For breakfast.
Let's see. What did I have for breakfast?
I had some yogurt, some berries.
And then I had a second breakfast with eggs, fried eggs and some fruit. Yeah.
Coffee?
Yeah. Decaf, though not. I can't drink coffee, unfortunately.
And then just count to ten for sure.
One, two, three, four, five, six.
That's good if you're closer to them.
Okay, I'll get closer.
So you double check me.
Okay. Especially to begin with.
Yeah. Like I said, this is aa1 man operation.
Since we've since covered.
I am going to either look at that or I'm going to put those on occasionally.
Sure. If I look at my phone, I'm super bored.

Okay. Okay. With what you're saying? If I'm. If I'm playing Candy Crush.
Whoa. Superbook, if I'm looking at this stuff.
Very interested. Okay. Okay.
But it'll be a bit distracting, and I apologize.
That's right. So it's very casual.
And if you get halfway down a sentence and think to yourself, What the hell was I talking about? Yeah, What is even the question? I completely forgot.
Just with your hands in the air. Okay.
And we'll start over. Sure. No big deal.
So let's start with who are you?
All right. Let's see how.
How far back you go with this.
So, like, you know, where do we start for the Genesis story?
Right, Exactly. Yes, sure.
Who are you and what do you do?
All right, So I'll I'll work in reverse chronologically.

So I'm the and the managing partner of a venture capital fund called Canonical Canonical Crypto.
It's a crypto focused early stage fund.
20 million in size do mostly pre-seed and seed investments in blockchain infrastructure companies. And I'm also a venture partner at Lightspeed.
I've been doing this for about a year and a half now as an investor, and prior to that, for over 20 years I was an operator.
I worked in big tech and I was the founder of a consumer marketplace company.
What do you know now, a year later at Lightspeed that you didn't know a year ago?
Well, I'm I'm getting better at managing capital.
That's not that's not directly mine.
My wife and I used to angel invest back in the day.
But, you know, it's a whole other profession managing other people's capital.

So it's a lot of learning there. But I mean, I don't know if you can cover all of this. The next 30 minutes is. So much has happened in the last year.
You know, it has I mean, whether the banking crisis or the crypto crises of which is something new every week or month.
And there's so much that I can share with you. But it's I'd say that, yeah, they're just different worlds. Being an operator and being an investor like this is like, fundamentally different. Yeah.
Let's start with your Twitter handle. You're the guy I read about.
You're the guy taking all the jobs.
I don't know about that just yet, but is it is it happening yet? Are all the jobs going away?

I mean, it's funny. I'll tell you, like a random story you asked about the weekend before we get started, but my mom, one of my daughter's daughter's best friends, but her daughter's best friend's dad is a teacher at our school.
And he was saying that it's funny, the narrative is largely around how students are using AI. Right. And but he's like, you know, there's a flip side of this.
The teachers are using chatbots.
So he's like, you know, it goes both ways.
You know, like we can we can use these tools, too.
So, yeah, I don't know about job elimination, but I really job enhancement is happening, right?
It was about ten years ago. You made some news by walking in and quitting your job so that you could be a full time father.

Yeah, That puts your daughter at, what, about 12, 13?
No, ten. I mean, she'd just been born.
Oh, it really was. Yeah. Oh, you did it right off the top.
Right off the top. Yeah. Yeah, It was.
It was new. I mean, you know, my wife and I were just getting a grasp on things, and it felt like I think the pinnacle moment really was that, you know, being at a startup. And I think a lot of a lot of people struggle with this, which is there are no boundaries for when you stop working, you know, it's just like you.
It's just this thing you do, it's a part of your DNA.
And I grew up like that. My father was like that, and it's still embedded in me to a large extent. My daughter still talks about this. She's ten now.

It's funny, she says, when when, when this is going to change and you know, it's sorry, I'll go off on a tangent because this is this conversation so real for me.
Because last exact last Monday, I was I was at home and I, I, you know, I would just drop it off at school and I walked past a room and I don't know why a flashed forward eight years.
And I said, you know, just like it hit me that, you know, at some point it's going to be, you know, like we're going to be empty nesters, our daughter is going to be gone.
And so and I don't think I was this thoughtful when I was younger.
And, you know, I think the youth today, there are a lot more I think they've got a lot more dimensions to how they think than, you know, when I was in my twenties and thirties.

But all this is to say that, yeah, I realize that I just, you know, we we work so hard so that we can spend more time with our families, yet we work so hard that we don't get enough time to spend a lot of time families while we're in the thick of it. So yeah, I that was sort of a pinnacle moment for me.
And it was, you know, one thing catalyzed the other in terms of what I wanted to do next. But one of them was, you know, oddly enough, starting another company.
What was the most beneficial part of being a stay at home dad for you?
And what was the most beneficial part of for Ava?

You know, I think we're still it's a great question because to me. I'd say that I think she took the brunt of it, you know, being that we been with the the worst parent in me and being at home and this happened twice. So there was the the damage she was, you know, when she was born.
And and as we were going through the machinations there and the other was recently with COVID when I was ah, I was ah, you know, teacher slash it technician. So that was, that was fascinating.

But I'd say that, you know, we have a really close bond, my daughter and I, and it feels I was here's the, I'll summarize it this way telling our friends that it was it was a few months ago just coming out of all sorry, maybe, you know, years ago coming out of COVID us, telling our friends that, wow, I just realized that my daughter can have a very edgy and strange personality and you're like, Wow, That's just like, Why would you say that about your daughter? And it sounds mean. And I said, No, no.
It's because she spent so much time with me that I realized what you know, that she's picked up all the worst parts of who I am. I was like, Is this what I've been doing to people this whole time? Well, this is.
This is not the thing I was expecting, you know?

Hey, congratulations. You're a stay at home dad.
What have you learned and what did you you know?
Well, you know, she picked up the worst parts of me.
I know. That's right.
It would have been better if you were at the office.
Exactly right. I mean, I mean, in in all honesty, though, I think what it has done is I think we reflect on this like my wife and I, which is it's given us a chance to bond. And I think I've also perhaps set the modality for what what she should expect from her partner, perhaps when she grows up or what fam what a family model should look like.
And even coming out of COVID, I think as I'm starting to travel more now and things that nature, this is new to her, right?

So she doesn't know that there used to be periods of time when, you know, parents used to have to fly away for weeks on end. But, you know, I'm sure you've had friends, other friends about to do that. They're like, I'm going to go to Brazil for, you know, two months every month for 12 months.
Right? Like, that's just what they had to do. So and that's tough on families for a variety of reasons. But the result of this is closer bond.
I think the way she talks almost sounds like an adult at times, or people have told us that because she's young, she's an only child and she hears me.
And, you know, I don't I don't talk.
I don't do baby, I never have. So there's no baby talk.
So she sometimes speaks like an adult.

And and there's people have told us that, like, that's somewhat symptomatic of children who are, you know, solo kids who spent a lot of time with their parents.
And I'll give you last example.
Like you started the conversation talking about I write and I talk about technology trends with her all the time. And some of it she doesn't really care about, but some of it is really intriguing to her, like.
And so she has been tinkering around with it and using it.
And she used a presentation tool the other day to make a presentation about her school.
And I kind of guided in a direction to use this product called Tome to do that.
So things like that are really fascinating, right?

So she's a she's truly sort of embodying the spirit of like being a technologist, living in the Bay Area and yeah, listening to someone like me who's kind of in the throes of everything, you know, technology these days.
One of your first exit, so to speak, from stay at home dad was to create a child care service. That's right.
Which is so Silicon Valley, I mean, you know, stay at home dad, you know, entrepreneur sits at home and thinks I should create a childcare service.
How did it work out?
Well, it was a lot of fun. I tell founders this that, you know, if you if you if you're doing something in your building, something that you're really passionate about, it doesn't feel like work. You know, you really enjoy it.

And I think it took me a few hits to kind of get to this point of realizing that I really want to work on something that I'm truly passionate about.
And this is a this is a difficult industry, right?
Like there is you have a lot of variables to think about.
It's a complicated business. You know, you're you have children that are being, you know, that that need to be watched. And you feel like technology can solve a lot of problems.
And and it did for us but a lot of problems that it can't so.
Net net it it's great I mean the product is still embedded into a you know, into a larger platform that's being used.
And yeah I mean all in all I'd say that yeah.
Let me, let me give you the way that I really process this.
So I'm, I tend to be nostalgic.

I think you kind of caught this right out of the gate, right?
So I still have screenshots I'd take of people who had messages and saying, you know, trusted was a game changer for us.
Without this, you know, I don't know what I would have done, blah, blah, blah.
And we've had so many such testimonials over the years, and I use an app on my phone much like, you know, have you have the memories app on your photos app and things like that. The memory section, this app is called Time Hop.
It just tells you exactly what you did one year ago today or two years ago or whatever.
Like for however long you had photos on your phone, it got to reflect on that.
And so every now and then I'll launch and just kind of look at a look at how the family has grown and changed. But also screenshots.

I'm like, Wow, was May our Internet September 2013.
This news came out about trusted and something like that world like that's insane.
You know like I didn't it just feels so great to have been in the middle of something that could have had such a great impact on families and for caregivers.
And now it still continues to be used around the around the country.
And it feels really gratifying. That's the that's the most you know, I think to me, that was a definition of success and gratification that came from building this thing.
What are what are some of the challenges that still remain in child care and what are some of the challenges that we can overcome?
Yeah, well, I'll start with the you know, going back to the conversation started again, which is just this morning.

I was thinking, wow, this may be a profession that maybe I cannot replace.
Right. So I think, sure, there's that.
And there was a really interesting graphic that I going to I'm blanking on the name of the person who published this now.
But and it was an HBS study which was talking about the number of students who are graduating the degrees, you know, kind of a histogram that shows which degrees are getting most popular over the last couple of decades, like computer science being, you know, the most interesting one.

And my question really was around like, how do I think that might change as we look over the next ten years? Like if AI is going to be such a big catalyst, catalyst for software development, what is that going to look like and what are some other professions are going to come into the fray? Because I think we will thrive as humanity and we will create an opportunity and find purpose for ourselves.
So with that is sort of the backdrop and answer your question about the problems that we faced and we continue to face.
You know, the reality is that we don't culturally in the United States, I think we don't look at caregiving as particularly a glamorous position. You know, it is like it's something that needs to get done.
But the reality is let's get back to work.

And those two are like, you know, they can coexist, right?
Like we can say that, you know, caregiving needs to happen and we need to get back to work. And we never you know, there needs to be compromise that needs to happen.
It's really easy for me sitting here.
Village sitting in Silicon Valley to be able to say this.
But there's, you know, millions of people around the country who don't have access to the same kind of childcare. So net net, I think I guess if I had to summarize, I'd say that childcare is not a problem if you're affluent and you live in major metropolitan cities.

I think as you as you get into the throes of it or you get into the middle of the country or other parts where you know, you're you're struggling to make ends meet, it becomes really challenging. And so, you know, there's a real struggle there, right? Like, how are you going to have a kid and get back to work within a short period of time? Like these are things that we struggle with.
The other piece was, you know, we and maybe the narrative around that's changing now, but, you know, even just in the last ten years, just knowing who needs to stay at home for how long. These are all things that were our constant debates.
I don't think it's been solved by any measure, but I remember my wife having to go back to work within three months of having given birth.

And so, you know, there's there's like endemic issues like this that I think we we kind of grapple with. And, you know, the counterpoint being, you know, some countries in the world where they're like, you know, fathers are have to take leave like it is a it's not an option. You know, you have to take leave just as much as I.
Wonder, you know, the certainly the fatherhood thing had gotten easier.
People would understand you as a father needed to go pick up your children from school or take them to the doctor, which, you know, 20 years ago, I don't think was the case. And I think the pandemic also changed a lot of things.
And our parents stayed at home. And of course, now many of us work from home, at least occasionally, which frees up childcare.

So I think parenting becomes a higher priority.
That's right. Yeah, it's it's such an interesting shift.
And, you know, and and that's why there's a there's a new company that, you know, my wife and I are proud to be investors in a company called Order where they're really sort of leveraging this model of parents who are staying at home.
And not only can they watch their own children, but they can watch, you know, another child as well. And so and this was this was this was something that, you know, there was headwinds for when we were starting trusted back in the day.

But to your point, yeah, post-pandemic, you know, you have you have this optionality now that previously did exist so yeah it's it's been an it's been interesting really coming out of this out of the pandemic to figure out what is childcare in this world look like. How do you really you know because the counterpoint to this is that I know there are some folks who really struggle to draw the line between work and home. Right. Because you left home is when work began, Right?
And now there's that. The lines are super blurry.
So it's it's something we're all struggling to figure out.

I think we'll we'll see how this and now, of course, at least in even within our portfolio companies, I'm starting to see a lot more of, you know, hey, let's get back and work like this face to face interaction actually means something.
It's viral and it actually moves the needle.
It's got meaningful impact. So, yeah, I think, you know, we're going to continue to test the test the limits and where we can go with this.
So your focus now both at Lightspeed and at your own fund is crypto.
Yeah. Which, you know, sounds a bit out of fashion. Yeah. Your focus now is parachute pants.
Yeah, your focus now is disco.
Crypto, you know, has really taken it on the chin.
Yeah. Lately and not a lot of people believe in it.
Yeah.

Define crypto for me because you're not just talking investing in bitcoin, right? Yeah. Define what you find interesting or even compelling.
Again, we'll have to, you know, time. Check me here if I go.
All right. But have 3 minutes.
My, my journey in earnest. And I just tweeted about this the other day because it's coming up on ten years now. So I, you know, my Bitcoin story, which is the first sort of crypto entries.
To mind them yourself.
Yes. And that was ten years ago.
So that's kind of how the process started.
And, you know, I didn't I didn't know how how big this could be then.
And as I've gotten deeper and deeper in this rabbit hole, I've realized, wow, you know, this is a whole this is a whole other world that we're a part of.

But to summarize, I'd say that you're 100% correct.
The word crypto is feels, you know, sounds like a bad five letter word. It almost.
Looks silly. And sports stadiums at this point.
Yes. You know, and it's they're still pervasive and it's like we're holding the fort down and it was able to pay for the stadium. But it's there, you know, and it's Coinbase or Crypto.com, but it means, you know, it means so much to some people.
I'll give you maybe I'll talk to you about this from an example.
And maybe that fortifies like what crypto means, right?
Or what the blockchain has to offer, which is the technology lying underneath.
But there are some countries in the world where the inflation is so out of control, right, that your ability to trust your sovereign currency doesn't exist.

There are families who've had to flee their home countries.
And, you know, let me give you an alias like I was I was watching the show called Breaking Bad.
I was rewatching it recently, and there's a situation where I don't.
You seen the show, but I.
Have yet to start.
It. Well, you know, it's a it's a long haul.
But, you know, there's this point when someone's like, you know, you've having to deal with like large sums of money and like, what is the way in which you might be able to move that capital? Like, how if I had to flee my country, right.
And I did that, you know, and I was forced out of here and I had to take my money with me, like, how would I do that? Like how to carry all this cash on me?
I can't take a cashier's check. That may not mean anything outside of my country.

Right. So, you know, being able to, like transport.
Being able to hold your money without having to stuff it under a mattress or put on a pillowcases and like having to move it and stuff like that, I think is a it's a it's you know, this is somewhat what like the crypto rails kind of offer, you know, you're not betting on your own sovereign currency. You're betting on this standard so decentralized that no one can really shut her down and it holds value.
And that is to a large extent, what crypto is really is it's like this the concept of sovereignty, the ability to break away from the shackles of what governments offer in terms of actual currency, what we're conditioned to think about and having the flexibility to do with it what you want.

Yeah, I realize you're talking, you know, about how the value might be good in in overseas situations, but is the average American really ever going to care about crypto the way we care about Tik Tok or iPhones or I mean, you think about, you know, there's no killer app for crypto in which Americans go, Oh, I get it even shaggy But you're like, It'll do your homework.
Yeah. Oh, I get it.
Right? Right. It's a good point.
And I think there's two ways to think about it.
One, my hope is that in ten years, maybe we should do this again.
Like 20, 23. Let's do this again.
You know, there is there's this you know what I like to think of as a steady state where we're using crypto, but we don't care. We're using crypto, right?

So, for example, when you go swipe your Visa or MasterCard today, there's a pile of stuff that happens, by the way. Yes.
Yes. Cryptography not not crypto in the way that it cryptocurrency or blockchain.
Yeah. This is I mean even that's not cryptography right?
It's it's basic financial rails. Sure.
But there's a lot of efficiencies that can be realized if you were to use crypto rails behind the scenes and maybe that's the end state, right?
Like that's where we get to where the average user doesn't need to care.

Right? So for example, if you and I had caught up, let's say, instead of doing this in person, we've done it over Zoom, There's a pile of stuff that happens behind the scenes, including, you know, stuff that maybe my old employer, Cisco Systems, had to offer, like back in the day, because that's a low level. The stuff gets in terms of transferring packets over the Internet, but no one really cares about that.
And that's okay. Right. And maybe that's an end state that we want to get to is that there's beautiful, efficient infrastructure behind the scenes that the average user doesn't need to care about. Now, what has that's point number one.

Point number two is that what has happened, however, is that we're conditioned to think of these cryptocurrencies, some of which are just means or coins, that all they're meant to do is go up in value.
Right. And so we speculate on them and you go, okay, I'm going to buy this thing because I think it's going to go up and I heard something or I got a tip, etc.
And I think a large lot of the speculation is driving the price of those coins, some of which do something credible. Most of them don't.
Right. And that's the piece when you sort of break away from, which is kind of unfortunate. Like I think.
It damages it damages the whole.
Yeah.
Reputation of it.
Absolutely true. Yeah. And that's that's the good and bad of this world, right?
That there is no one nothing that stops anyone.

It doesn't stop Scott from launching a Scott coin, you know, and saying, hey, this thing could go up in value like you should bet on it. Like there's going to be the next big thing, right? And you'll start to, like, pump it and try to get people excited about it.
There's nothing because of the truly decentralized world that this is.
You could do that, but at the same time you could have another company that's like building something truly credible.
You could have the theory and we could have an arbitration.
You could have, you know, a sushi or anything like that, which is actually doing some really meaningful stuff behind the scene. And there is a token associated with it.

It's kind of like saying, Hey, back in the late nineties I heard about this great company called Microsoft and it's got it's creating software and we think that there's going to be a desktop and everyone's, you know, desk, right?
And they're like, okay, maybe I should go buy this stock and maybe it'll go up in value, right? So I think that's there's a difference in that saying, Hey, I'm going to bet on something that we think is highly, you know, it's like feels like a casino speculating in gambling versus I'm going to bet on something where I feel like there's underlying value and the price is going to go up.
Right? Because I did it the day like we all want to buy it and something fitting the price is going to go up.

Right. I think I think you were absolutely right that there is there is value behind crypto and the blockchain. Yeah.
However, Dogecoin and Sam Bankman-fried are the two faces of crypto blockchain.
Yeah. And it's a disaster as far as a public relations sort of thing goes.
Yeah, we haven't done ourselves any favors and I think it's, it's, you know, it's, it's truly unfortunate, right? But I think you know the best.
That, you know, we can do as builders, as investors in this space.
And one of the so the core tenets with which, you know, even as an investor today that I really aspire for in our founders is integrity.

Right? Let's operate with a sense of north and wanting to solve big problems because that's where we hear like the beauty of like living and having worked here. And I'm really fortunate to have had this opportunity to have really kind of grown up in the Valley is being surrounded by people who want to make an impact.
And I kind of aspire to see that in founders that I want to back as well.
So yeah, there are there are bad actors out there, but let us not get caught up in that. Let let us form our sense of north, because I really want to be able to create an impact.

And, you know, look, we may we may fail dramatically and drastically, but we will have tried really hard because that's what we want at the end of the day is that, you know, we're solving for these efficiencies that I talk to you about briefly.
These inefficiencies exist. Right. And I think we can make them so much more performant and efficient. And I'm talking about abstract terms that fully understand.
But, you know, there are there are ways in which the blockchain can do things that other systems cannot. And I think that is the entity we need to get to.
We're in a rough patch and I, I really hope we come out of it.
You've launched a six week program, the University of Texas Austin, the 2023 crypto Summer Lab. Yeah. What do you hope people get out of it?

Yeah, I, I think we're sort of in the, you know, the 2008 era of the Internet.
Like, that's kind of how I think about when I think about like where we are, the crypto infrastructure wave. So I came here to the Valley in 2001, you know, Cisco was crashing and I joined Cisco Systems as it was crashing.
And it was I saw a lot and I was one of the very fortunate to not have gotten laid off.
It was funny if I just moved here right out of college and I got laid off on the same day. But fortunately that didn't happen. But I saw you know, I think there's a lot of fortitude that went into building, you know, software and hardware that will continue to power the Internet.

We went through down we went through a lull and then we came back and more applications got built. Some of that never saw the light of day.
We went quiet again, and the next thing you know, between 2002 thousand, seven, 2000, eight onward, still right about now, we've just seen incredible foundational building blocks get built without which companies like Airbnb or Uber would not have been able to thrive. And so shortly that don't answer your question was simply, I think with this sort of course, what I'm hoping we can do is encourage people to think about those building blocks, those Lego blocks that on top of which beautiful things can get built.

And because there is a lot of sound beauty that exists in the world of crypto and blockchain infrastructure, and we just need smart people who are looking to solve difficult problems to roll up their sleeves and go, I'm going to I'm going to take a swipe at this. And again, know, as we talk about earlier, I may fail, but, you know, if I don't try this now, I'm going to regret it. And I want to I want to give it a shot. So those are the kind of people we want in the program. Those are the kind of people we have as a party and a Professor Freeman Austin and a bunch of others in this ecosystem who want to see this industry get pushed forward.
And, you know, it's a rising tide situation.

If we can sort of educate people and they could educate us about how how we should be thinking about the space and some incredible companies come out of this.
Wow. I mean, like what, you know, will be extremely proud that we were able to make this impact. And in ten years, you know, remember that the team we spoke to is now kind of like the, you know, the Amazon Web services of the crypto world.
Right. Like that would have been that's that you know, will feel really great about that.
So that's the that's aspiration here.
We started with me asking you about fatherhood.
I've been told you like dad jokes.
Yeah.
What's your favorite dad joke.
Oh man, how PC can you get on this?
You can do anything.
Man. I mean, shoot.
Although dad jokes are not known to be dirty.

This is true. I mean, this is not dirty. I mean, it's more.
It's more crass than it's dirty, I guess.
Okay. I'll tell you this one. So and I'll say the way my daughter said it, right. So it's going to be a little it's going to sound like a ten year old, What I said. So she told me, this is not a dad joke. This is a girl joke.
That was just a daughter joke. A daughter joke.
So she goes, are there are there are two flies sitting on some poop and one of the flies farts and the other five says, Excuse me, I'm trying to eat over here. So that's the that's the latest one that's on the top of my mind.
And when I tell you that this is the kind of stuff that my daughter is, you know, like this.
Stay at home was so valuable.
Exactly. Exactly. Exactly My point.

You know, like, she's got like zingers and one liners that I think are kind of fascinating. But, yeah, you know, so this is there is more to come, but there's a whole catalog.
She's got a whole book on dad jokes. I'm not making this.
So I think this was gifted to her this past Christmas.
But my my favorite is.
About the geese. You know, you're flying, see, and flying south for the summer.
Yes. And they kind of form that. Yes.
You know, oftentimes one side of the V is longer than the other side of the V.
And you know why that one side of the V is longer now?
Because there are more geese on that side.
Oh, of course. Yes. Dodge of Jack Wald.

Answer those. I have one last question for you that we don't include in the podcast itself. Yeah, but that I kind of collect together and smash together with all the different voices I talk to. And that's what book was important to you, what book was influential? And it doesn't have to be something out of HBO or Harvard Business Press. It can be, Yeah, Winnie the Pooh.
I mean, it doesn't matter what is a book that you gift to people or that you would make sure to have on your shelf or you read a lot.
Yeah.
This is I mean, this is a relatively new one, so it's not it's not particularly old, But I'll tell you the name of the book and and I'll tell you why.

So, Trevor, Noah's born a crime is like a really fascinating book to me for so many different reasons, primarily just sort of the the way he's rose in to success, a risen to success and the way he is.
The adversity that he's had to go through.
But the the the mild hearted nature in which he explains these things has been really interesting. And so I've gifted that, I think, more than I can imagine, especially to people much younger than I am.
And I feel like there's just something to be learned there.
And I think what resonated to me resonated with me the most was the immigrant story.
Like the, you know, just kind of breaking out of where you are.

And and in spite of all the things that got thrown your way, how you know, how you were able to. How he able to use that energy into something that's more powerful and bigger than yourself. So maybe maybe one of those outlier books, maybe not the one, not a traditional one in the sense of, to your point, not an HBC. No.
It can be easily repressed.
But this is I really like this book. And, you know, it was a really quick read for me.
I really enjoyed it. Yeah.
Excellent. Stop there. That was great.

Pretty good here.
I should know this. How long is the podcast going to be or do you just cut it?
Is that I'm to be about 20 minutes.
25 minutes. Okay. But in the interviews, never more than 30, really.
But, you know, to go shorter than that, that's fine tune.
If it goes longer than that, that's fine, too. But generally I feel that if we haven't presented something interesting and there are podcasts to go an hour and a half and I just don't see it.
I it's not that you can't do it or that those people are doing a good job, but maybe because I work in television, I think to myself, Ooh, that's a long time. Yeah.
So 20 minutes. Okay, excellent.
Well, you better pronounce your last name for me. You just want to make sure.
Melton Well, it's. What exactly would it looks like?

Yeah, it's shocking how many people like Nelson.
Mandela, but.
You know.
So you are the chair of the NBC, a board of directors.
You have been for a few months now.
Why do they pick you?
Well, I I'll I'll step back.
So I officially joined the board, I guess it was three years ago. And when Maha from Canaan reached out to me, it was Maha and Patricia from Trinity.
I'd be I'll be honest. I thought the NBA was the stodgy old white man group, and I was surprised they were on the board or that they wanted me on the board.
I had just come off of spending a lot of time setting up all races with a group of of women investors, I think very highly of.

And that had led me kind of my progression of my career had been one just getting the job to trying to prove you're good at it and surviving in an industry which has been challenging and particularly for women, and then trying to think outside of myself, like, how can I, you know, provide opportunities for other particularly women or people of color within venture industry?

And when I spent more time with the NBA and the chairman there or the CEO there, Bobby, I started to realize the importance that policy plays in driving incentives for creating the kind of ecosystem that allows for that more level playing field. And so a lot of the work that I was doing and always you need to make sure you had the policy infrastructure to be able to continue to to incentivize an innovation economy. And so I was kind of just drawn in to it for interest, and then I got sucked into it. I ended up enjoying those conversations.
I participated in a lot of the policy discussions, I'd say political science as an undergrad. So it was flexing a muscle that I hadn't used for a while.

And so I think when they were looking for the next chairperson one, they want someone who's interested and cares and is passionate about it.
And the two, I think they also were looking for diverse representation and I mean that broadly.
I started as a big platform firm and then set up my own fund.

And when you look at a lot of the growth of the venture industry, the average venture fund is $50 million. We spend a lot of time talking about the big platforms, but it's usually the small guys. And so I deeply understood the challenges that come from setting up your own firm and thinking about the administrative components of that and making sure that I could support not just the large funds which are really important members of the MVC and constituents, but more broadly speak to the entire industry. And so having someone in the room who represents not what I think people think of venture capital typically looks like, but also has had a different path and understands that ecosystem broadly, I think really drives a different kind of conversation and helps us have more real discussions

with policymakers that aren't just about identity politics. Like you're some rich person, I think badly, but I go walk me through this. You're from Utah. Your parents grew up on farms and now you're a venture capitalist, right? Your husband was from West Virginia.

Dad used to work for Joe Manchin. Like it's not you know, when you start to really take it down a level and people really are willing to have real conversations, you can usually have much better outcomes.
You to some degree answer the question, but what do you see?
What do you think your job description is?
For the NBA. Mm hmm. I think it is.
Well, we're it's an organization that is trying to drive, you know, policies that help venture capitalists and buy an extension of that.
And one of the things I think is really important for people to recognize about venture capital is that we are a derivative asset.
What do I mean by that? Our success is derivative to that of founders.
Right. If you look at it, we own a piece of the company.
They usually own more of that company.

So when I'm representing venture capitalists in a way, I'm also representing the innovation ecosystem and founders, because we're trying to establish a an environment where there is risk capital that can go behind these amazing founders that are looking to change the status quo.
And that the incentives are aligned so they can be successful, which then allows venture capitalist to be successful. So when I'm in the room, yes, I'm thinking about, you know, my venture peers broadly, which includes multibillion dollar.
Are there people on the board that have $10 billion funds and then people on the board that have $10 Million funds?
But we're all part of the same ecosystem to try to put capital to work in these innovative companies at different stages.

And then I always try to make sure I'm also being reflective and thinking about what is it the founders need and how do we make sure that there's more opportunity for these founders, meaning there's more of these funds in geographically diverse locations that are going after and solving really big problems that are important.
And how do we make sure that we can articulate how our role in the economy services?
What is the ultimately, when you're talking to policymakers, they have their own agenda and where there overlaps in terms of what we can do and their agenda there is.
I'm going to just that make sure.

I don't think necessarily in Silicon Valley, but people outside of Silicon Valley might see a you know, a trade group, the National Venture Capital Association, and think negative negatively of it.
Yeah. You just immediately went, oh yeah.
Well lobbyist groups. I thought that. Yeah.
So not only are you a lobbyist group, but then it's a lobbyist group of like, you know, big money.
But venture capital does so much good for the world.
Well, it's not so. Yes, I do think venture capital does good for the world.
And it is one of those existential questions you get at a certain stage of your career.
It's not like, am I only good at this, but do I like it?
And do I think it is something that I'm proud of doing right when I sit down?

I'm a mother of two daughters. I have a 13 year old, a ten year old.
I explain to them what I do and I feel very confident in that explanation that it's, you know, again, that derivative success, that the kinds of investment companies that I'm investing in and the kind of things that venture capital does overall has improved our society.
I invest in digital health and health care technologies, and the true North star of most of my investments are, you know, increasing access and driving better clinical outcomes. Right? That's where I take success.
There's financial incentives along with that, but the outcomes are usually much bigger and broader than that. So, you know, I do think that the venture industry plays a really important role in our ecosystem.

The U.S. has created an innovation economy that is the envy of the world. There is no one else that has anything like this.
Right. And if you think about step back and go like, how do we make sure that we continue that and how do we make sure from a competitive perspective that we're able to continue to drive that that kind of innovation and that economic prowess, but also solving really big problems. Right. We have climate change issues.
We have there's there's, you know, increasing the whole economy in terms of how people are going to get jobs, how they work, how they live.
Those are all changing. And venture is going to play a role in that.

And when I look at my daughters, the world that I grew up in, from the eighties to, you know, globalization, everyone getting along a lot of stability, that's highly unlikely for the next 20 or 30 years.
And we as a country need to actually start to make sure we can control our own supply chain. We as a country need to invest in our innovation.
And if you look at what happened most recently in the legislation, the Chips Act, the bi two bipartisan bills, the Infrastructure Act and the CHIPS.
And then what you've seen with the Inflation Reduction Act, this is like a new era, right, of investing in U.S.
innovation. And the government is basically saying we need to invest in ourselves to be able to compete in the future.

And the reason that we were the table for some of those discussions is because they recognize that the government is just like somewhat one of the policymakers I was having a conversation with this week. So this it's a down payment, but we need you to run with it. We need people who are going to find those entrepreneurs, find those investment opportunities, take some of that capital, but then get the bigger opportunity. We alone can't drive this. And you've seen this.
You've seen state run innovation, not work.
You need the private market to actually take a be a participant in it.

The last thing I would say is when we say we're big money, it's kind of funny because we're in the room in these conversations. Venture is small, like in our world it seems big, but on a relative basis to private equity or hedge funds or we are we're a drop in the bucket.
We are so teeny, but we have outsized impact and everyone wants us to be in the room because they recognize that we play such an important role in the ecosystem. And to me that is just exactly what venture is.
It's about leverage. It's looking for amazing people with amazing ideas at the right time. We're just a little bit of investment can drive an outsized return, right? That's the entire reason our industry exists.

And when you think about, you know, kind of economic stimulus or others, again, solving these huge problems that are facing us, like climate change and others, we can't just throw money at them. We need the smartest, targeted investments, the smartest and best people with the smartest, the best ideas to find.
Some of those outsized returns are going to really drive impact.
I appreciate you following the microphone as it begins.
Right? Right.
I tend to talk pretty loud. So I'm hoping you articulate enough that you.
Really you know, it's my experience, I think a lot of your friends because I'm sure a lot of you.
I have known my husband pretends he's a rock star at night, so I'm set up like this.
But other than that, I have very limited experience in these.

So, you know, those are those are big topics.
And, you know, in the in the quote that was given out when when you took the job, you know, you talked about from immigration reform to climate crisis, the U.S.
must remain attractive in a place I didn't think of.
The head of the National Venture Capital Association.
Thinking about immigration or climate crisis.

Oh, so I'll start with immigration and where it unfortunately was something that we would hope would be included in the Chips Bill. It was not, but we are still actively pursuing it. When I talked about that innovation ecosystem, one of the most amazing things that we've had as a country, and this goes all the way back to the work on the atomic bomb, let alone to see that. Or the reason is that we are the place where the best and the brightest minds have wanted to come.
And they come here because we don't punish failure and we reward risk and we reward, you know, doing things against the status quo, doing things that people say that's impossible. And yet you try to do it and you recognize that there's value in that. Most other societies are highly conformist, right?

You don't you get punished for going outside, trying outside of the lines you want it.
And I think that one of the things that has made us so great as a country has been that that ecosystem that has drawn those minds and that's allowed us to win wars, drive economies, build bays and companies.
And unfortunately, in the last couple of years, we've really started to move away from that, both from our own policy perspective in terms of welcoming individuals to our society, but also culturally making it more challenging or not being as welcoming of an environment for people.
I think that's deeply troubling and doesn't seem the signal well for the next couple of decades. I have two founders of portfolio companies.

One of whom is currently still stuck abroad trying to get their visa to get back.
And we'll work it through. But we have made it.
This is a company that has raised over has raised a lot of capital at over $1,000,000,000. It's doing amazing things in health care.
It's saving lives. It's a brilliant technologist doctor.
And he's sitting in a hotel room waiting for process to get a visa.
And you're just like, how are we?
How is this bureaucracy?
And that's at the high level, right? Think about all the amazing people who've come here for school or colleges who want who've built our business, these companies who've had massive contribution. So when I when I tell people what I do, I say I invest in companies, but companies are built by people.

And I want the best and the brightest people here working at my companies or venture backed companies and trying to tackle these all these most difficult problems to solve. And so I do think that immigration reform is a critical component of that because we need that talent to be able to to build those businesses.
For someone who is not in the business but has heard or saw President Biden signed the Chips bill.
What should the average American know and what should the average American say? Oh, good. I'm so glad that got signed.

I think that the well, you've had that bill signed and then you've heard a lot about Taiwan. Right. And so I think that your average American can look around any room of their house and see that there are chips in almost every single device. Everything they take for granted, their cars, their your phone, your TV, your toaster, everything has kind of leveled up in terms of the technology.
And we have largely been as a as a country, the IP innovators there, where the best and the brightest have come here to create the technology on the chips. But we have been manufacturing them outside of our country, and that has created some substantial risk, both from a geopolitical perspective, but also from a supply chain issue perspective.

And you've seen that with delays of cars and the cost of cars like your average American looking to buy an auto and waiting.
I remember I had friends who were trying to buy trucks in Utah, were like, I can't get a truck for six months.
What's going on? And a lot of that was supply chain issues and backlog.

And so I think of what the Chips Act and what Senator Warner, who's really been an amazing advocate for this for years, this is that's one of the things that's humbling for me in this job, is to realize these aren't just ideas that people do and they these are years in the making finally got through and it was a bipartisan bill was really I think the reason that you got both sides of the aisle to agree to this, because they recognize that it's very important not only to continue to drive innovation in the U.S., but to be able to control our own destiny. And you can start to bring some of those plants to places like Arizona or Texas and those jobs.
And then we don't have that same geopolitical risk that we currently have now.
But it's also good for our economy.

As you advocate for the venture capital industry, what sort of things are on your radar as far as trying to convince Washington?
I think one of the important things is Washington seems like this amorphous concept, but you're usually having a conversation with an individual and those can be different individuals. Some of those are, you know, people who work for certain kinds of organizations that are trying to understand the implications of the policy, the implementation of the policy.
We're having a lot of conversations with individuals that says, see, there's a lot of concerns around some of the current language in their regulations.

And it's one of those things where it looks great on paper and it sounds good academically, but these are people who've never worked or practiced in industry and don't understand the application or what the long term impact of that is going to be.
And so sometimes it's that sometimes it's just explaining what we do and trying to have education discussions for legislators.
A lot of that is trying to their thinking not just about the overall U.S.
economy, but they're rightfully so, looking at their constituents.
How does this help my my people?
What's it going to do for people in my state?

And so one of the things that where we have been doing and one of the initiatives that I have is to really make sure that we broadened the diversity across the board, not just in terms of gender and racial diversity, but also geographic diversity, because there are a lot of these smaller funds in these different states and make sure that they have a voice at the table.
But also talking with those investors and entrepreneurs in that aren't on the cuffs and seeing and being able to be able to introduce those legislators to people that are building amazing companies in Colorado, in Texas, in Arizona.

One thing I will say is that it's a really great time to be doing this because post-COVID, I think there has always been this question of can companies be started anywhere? And I think that is a resounding yes, and we're going to have distributed teams. And so it is an amazing opportunity for different states to be able to tap in to some of this economic growth engine that venture has provided for California, Boston, New York.
And I'm very excited by that. Again, I'm from Utah like I, I remember, you know, the area that is now Thanksgiving point was where my parents had my dad was raised on a chicken farm.

It was just farmland. It was desolate. And now you go and there's homes and buildings and all these companies. And I see just within my life, just in a brief time, in a decade, how transformative that has been.
I think that's an opportunity that can that can happen across multiple different states.
And we're at an interesting point economically.
You got your start in venture in 2000 when, you know, it was an economic downturn.
And there are lots of people in venture and in startups who've never seen an economic downturn, who have never seen their employee stock value go down, who have never had a down round.
What what what did you learn in the last economic downturn?

And I hesitate to say we're in one now, because that's just the evidence one way or the other is very difficult. It you it's it's it's difficult to read.
Yeah. I'm not going to pretend we're not. We're not sometimes.
No. And we're not in Jackson Hole this week with the Fed trying to figure out what to do, which is not a role that I envy. And the market is watching way too closely.
So I started in the venture industry in March of 2000 and it was a surreal couple of weeks because I remember walking into the office and at the time there were these shares that doesn't have any more. They're like friends and family shares of companies or giving before IPOs that they were like giving to assistance.

And so the system was telling me how she'd just bought a red miata because she'd gotten the shares and everyone was just flush with cash.
And then like a couple of weeks later it was like the sky was falling and all these companies were going to go to zero. And I just remember for a while just being like, Well, am I going to get fired? Like, Hey, what does this mean?
And then recognizing that for venture, you know, you have your raise, your find, your magic reason you have to work through these problems.
And so I was the junior person. And so most of those problems rolled downhill and ended up on my lap. So I was doing assignment for the benefit of creditors.
I was selling fancy chairs.
I was arguing with landlords about long term leases.

If you talk to any of my founders, they will tell you that I will not allow them to sign long term leases unless they have cash for the term of that lease, because that was deeply ingrained on me during that period of time.
So I did. I saw the excesses of that kind of downturn.
And then I was a primary investor. I was on the board of companies like Redfin and others in oh eight or nine where, you know, I would say we were running to a standstill.
It was a great business. But, you know, the market, when you have the real estate market go down by 20%, you can just, you know, basically do everything and grow.

But you're you're just actually at the same place you were the year before and having to do layoffs in right sized companies. But seeing those companies do that transition to then where they were able to go public the other side up, I don't think either one of those are perfect analogies for where we are today.
I think everyone wants to use an. Jews from their own lifetime, and that usually doesn't work. In 2000, there was so much investment in the promise of technology, the promise of the Internet that wasn't there yet.
Right. You didn't have that. The device, a mobile device with you.
That was a computational device that you everywhere.
My parents had DSL that took forever.

And so they were right in terms of the concepts, but they got way ahead of themselves in terms of the opportunity. And there wasn't a real business there in oh, eight or nine, it was more of an isolated. There was a financial blip right where you saw that in financial services and real estate, but most of that meant cost cutting, that then you had to get more leverage out of technology, which benefited, I think is what's been driving the last decade of returns that we've had.
When I try to think about today, most of our businesses, even the ones that are, you would say, are going to be, you know, doing layoffs. They have real businesses.
Some of these companies are generating hundreds of millions of dollars of revenue.

I think one of the challenges is that they've been told to grow at all costs.
And I say the rules changed literally mid-game for them, which is like, oh, you know, this was where you're supposed to go now.
Slower and slower growth, but better unit economics.
And so you're seeing corrections and people trying to to adapt to those new realities.
But I'm pretty bullish that a lot of great companies are going to to make those adoptions and get through it. I think the challenges is the psychological component that you alluded to, which is, you know, if you're a young founder and you or a young entrepreneur, young investor, and you're like, my company is worth $1,000,000,000.
Like those were just made up numbers along the way.

At the end of the day, the public market is the waystation that really like decides how you're valuable. And so I think your job is to raise capital at least a lot of terms as possible, but be recognize that at the end of the day you have to drive a business that has unit economics, that, you know, profitability, that that are going to trade at certain multiples that are going to be the value.
And so I think it's just psychologically recognizing don't think about a valuation, think about the capital you have, how far that's going to get you and are you going to be able to to use that to get to the break even point?
Or do you need to raise more capital? And if you structure where you can raise more capital at equal or better terms than what you raised in the past.

Do you find working with younger associates or younger startups because they didn't live through a downturn?
I mean, it's all been gravy for a very long time.
It's going to be tough like that.
Yeah. I mean, I tell people like I, you know, eight I had just been named partner and I was just on the board and then suddenly I was doing layoffs.
That was my first couple of years of my venture career, was just trying to help people survive. And then my husband was at Lehman Brothers, and one of our stable things was our issues will never go right.
That will never.
Happen. We'll always have Lehman.
We'll be okay. That's always going to be the risk.
And then, you know, we bought a house and we almost lost the house.

So I, I have personally lived through it and I have enormous amount of empathy for people who are trying to put their head around it.
But yeah, I think it's I think that's going to be that's why I'm saying I think where people focus on the economic component of the downturn, I think the psychological one is a bigger challenge and helping them walk people through and resetting expectations.
Even with our own team, we did a portfolio review and we were talking about future rounds, investor rounds. I said, Don't look at what's happened the last 2 to 3 years.
Go back and look at our earlier funds and look what series A's or B's or C's looked like in 2011, 2012, 2013, 2014.
So I think those are going to be more indicative of what the future holds.

The one thing I will say is that people, particularly entrepreneurs and then most venture capitalists follow.
But I have young entrepreneurs. This is their first downturn.
Entrepreneurs by nature are some of the most and I love my job because I get to work with these people, the real ones.
They are the most resilient people that exist, like they're doing something that most people think are crazy and is bound to fail.

It's not like a rational choice. They have an rational drive to do something bigger than themselves. And so you'd be shocked at how quickly they get to the new reality and they can play that game. And I think that the best founders are really going to emerge not only through this, but with much better and stronger businesses because they've had to rationalize some of the, you know, some of the expenses and because they have to really focus on the economics. So I'm very again, I'm really bullish on the entrepreneurs, investors.
I think the good ones will the good ones have seen it before.
And I'll help navigate with the younger ones and the ones that can't actually deal with the fact that it's not all gravy can go and find another.

Well, and then they flocking into your fund already, right?
I mean, the fund has been set up in the.
Well, I think some some people I think it'll be interesting.
So we you are I think there is a difference here when you think about venture capital versus what I maybe some of the participants in the venture ecosystem that aren't truly venture capitalists. And when I whenever I raise a fund as one of the managing partners of that fund, I'm looking at my partner, Josh Stein, and we're making a commitment to work together for a decade.
Right, but probably longer by the time you look at that.
So I'm not thinking about it in terms of what's the short term cycle.
I'm thinking about helping companies navigate, navigate a decade plus to create value at the end of that.

And later stage funds may be shortening that purview, but the venture, by its nature, is a long term asset that we're creating long term value.
When people from hedge funds or others come in that are looking for arbitrage or short term gains.
They're not going. I think you've been able to do that in the last couple of years.
I think that is a game that can't be played going forward, and I think the ecosystem will be better for it.
You have two new funds thresholds for and Threshold Select.
What are the differences between them?
So the threshold for is our core fund.
And what I mean by that is that's what we venture capital's getting.
Everyone I say being a venture capitalist can meet a lot of different things.
There's, you know, seed funds that are kind of ideas.

There's, you know, people that are investing at early stage and then there's following capital. The analogy I like to use is kind of bear with me, but this mechanic where, you know, there's tinkering, I think I have an idea and I'm tinkering.
I'm not sure if it's going to work. That's where a lot of the seed investment is.
Then there's the mechanic component, which is like, okay, something that's tinkering is working. I need to now build the engine to make that scalable.
I need to actually show that tinker product, early product, market fit.
And that engine is often people in process and making a product, a company.

And then once you have an engine that's running, there's a ton of people who want to put oil or gas in it, like make it go faster so that it works on the gas side. And the tinkering side are pretty scalable because they don't require a lot of time as an investor like you can put a lot of money to work and just come back to me to tell me if something's working or once the gases, you put the gas in and it's going your help direct it. But it's already kind of established that phase where we are, the engine building is a little bit more of an intense hands on process, but that's what we love and that's what I love, that's what my partners love.

And so that's what threshold for investing. It's usually it's called the series, but most we are taking board seats. We're actively partnering with our founders for this long journey of 7 to 10 years.
We like to tell our founders that over time our investment equity looks a lot like them in the cap table because we come in at the series A, we're participating in supporting the company, but because the size of our funds, we're never going to be trying to put 50, $100 million in a company.
That's not what we do. So we're like, they don't.
We're looking to help them get leverage with the right investors at the right time to minimize dilution, to build the best business.

And a number of our founders would say that that's been a very helpful resource because they know that while we are investors, we are aligned capital, we are thinking about things in a very similar way to them and they love having us on the board for those extended period of time. So fun for is that we get right those early checks in those businesses we're taking board seats select is what we actually a number of our LPs came to us and said you guys do great work.
You have a lot of these great businesses. And then, you know, because of the size of our fund, after about $20 billion into investment, we're tapped out.
We're not because we want to put too much of a concentration in any one company.
And we. But you're handing that off to other people.

Why are you doing that? And so select was a smaller vehicle.
And we're not again, not looking to put substantial capital but we're we continue to support companies through yeah follow on fund through you know through IPO and that's just usually an opportunity for us to participate in a couple million dollars in some of these later stage rounds.
And I always say investing at its best as an information arbitrage because if the world had perfect information that it would just be access.
And so what where we've sat on the boards of these companies, we've been working with these founders oftentimes for years.
So we have a unique purview into how strong we think the companies are.
And so that fund kind of reflects the opportunity to capture some of that.

What what company in your portfolio are you most excited about?
That's like saying Which child do you love more?
You're never allowed to say that.
There is like, I don't I don't in my personal, we have a lot of great investments and in in thresholds and I'm excited about a number of them.
I think for me personally, I do do a lot of investing in the intersection of technology and health care. And one of the things that I think about is where technology can truly improve outcomes.
There's mistakes that are being made that don't need to be made.
So two of the companies that are a little bit more mature and one is called Imagine once called Visit, I imagine was one of the first companies to get a de novo application from the FDA approved for a diagnostic of X-rays.

And I was when you're talking to founders, it's usually not what they do, but the why? Because the why doesn't change the what how they go to market.
But this founder, Alex, his dad was misdiagnosed when he got an x ray that they said he just had a cough and he had lung cancer. And by the time they caught it, it was too far.
And so he died. And this technology essentially allows algorithms to be able to make sure that those errors are never made.
And it's really shocking when you start to look at the data, just how much, because people are doing x rays, they're losing money, how quickly they're running, how many mistakes, diagnostic errors are made that don't need to be made.

So this is a company that is now starting to roll out those services broadly, working closely with a lot of primary care practices. So you can go and get those x rays right at the point of care. But instead of wondering about what quality of service you're getting, everybody's getting the best service.
And Alex has there's a poster.
The first day that his algorithms ran his dad's scan, it was able to detect it.
It was a big day because you realize that no one else has to die unnecessarily.
So I think there's a big opportunity there. I think there's a financial return.
But also, you know, some of these companies, it's you have this outsized again, this outsize impact. This is also a company that had FDA approval for a workflow to help diagnose strokes.

So you can more quickly get somebody in who is experiencing a stroke into the life saving surgery. And that is a company that has had a profound impact.
There's a lot of data being able to demonstrate. They've taken people from, you know, 75 minutes to being diagnosed 2 to 20 minutes, getting them on a table and being able to save lives. But also, it saves a lot of money because those people that aren't, you know, aren't actually able to get that surgery are usually end up in long term care homes and are debilitated for the rest of their lives.
So those are the kinds of things we think what's technology that can meet and improve, you know, these workflows that have financial impact but also have a substantial kind of outcome impact for the overall health care system.

So those are the things that get me really excited is when both of those things are aligned.
What do you see the venture capital industry looking like ten years from now? I mean, we've seen so many changes already, you know, that the diversity of founders is very different than it was ten years ago.
Just the sheer spread of people post-pandemic, you know, you can do funding rounds on Zoom.
What do you see ten years from now?
Yeah, it's I started in 2000.
And when I started in 2000, it was like a handful of funds.
They were all up and down Sandhill Road.
There was like only a couple of us that were like associates, not partners.
And we would go and get drinks and talk and complain about our partners and had a very diverse experiences.
But it really started to become more professionalized.

So, you know, everybody was kind of doing the same thing.
Like, most funds were about the same size.
You had some mezzanine funds. You knew there were 30 funds that you should talk to.
There wasn't a lot of diversity or opportunity.
And if you fast forward to today, a couple of things.
One, you've had megaphones. So you have these platform funds that have that I think will end up starting to look like hybrid funds, like private equity and venture, where they're playing a different role in the ecosystem. But they can really help founders, particularly at later stages, with additional capital.

But you have a whole other ecosystem of seed funds as well as early stage funds, oftentimes with more specific focuses that are available for investors. And so the positive view of this, which I really hope is true, is that all of those are able to flourish in this ecosystem and that you are able to, with that increase of capital and increase of exposure to capital, to be able to find entrepreneurs that might otherwise not have made the trek.
You know, to stand tall or not had the Stanford credential or dad knew somebody to get a meeting. But now if you have somebody in Minnesota and you're able to you're in Minnesota, you're able to go pitch them and get that exposure.

So on the positive side, I think that the geographic diversity and the specialization should allow different and newer companies, different kinds of companies to be formed. I think right now we've played a lot in do health care technology. Social focuses on health care and enterprise, both, which we think are too very stable in large markets.
But you think about the future of things like climate change tack and what that that what would that actually look like? I believe that there's going to be technology or industries in the next decade that I can't even articulate to you today because we don't know what they look like in the same way.
In 2000, I had no idea there wasn't the web was just publishing things to me.

I didn't even think about a participatory web until three or four, right when Adobe started to Flash. And then you saw things like LinkedIn and Facebook.
So where do we go from here?
I don't know, but I think in ten years we're going to have new industries and I think there's going to be new entrepreneurs that have founded and built those industries.
And I'm really hopeful that there's a diversity, that it's benefiting more of our country from a geographic perspective.
But those large entities are also still able to fund that scalable growth and being able to give them access. Once you've got that tinkering, working and build, like how do you make sure they get access to be able to be big, long term, sustainable companies?

Those are my questions for you. Unless there's something you'd like.
We didn't cover that.
No, I just I think that there is I am a venture capitalist.
And what I have realized is as a venture capitalist, you have to be an optimist.
Otherwise you should find a new job.
But I think that you should also want to be a thoughtful optimist.
I'm not just optimistic on everything.
I really try to look at it and think about my role is being optimistic, but then de-risking right there because there's risk inherent in everything we do.

And sometimes I am especially with, you know, there's my venture happened and there's my mom hat when you're seeing what's being said in the news and press and how people are reacting and in this downturn, even more so than some of the others, there's just a lot of negativity that I think can come out of that or finger point.
You're blaming. And one of things that I'm just hopeful for as our society is that we can hold on to that optimism and actually look for the good and tell some of the good stories. We should hold people accountable that, you know.
Don't that.
Squander money or make bad decisions or that hurt other people 100%.
But also recognizing that there's an enormous amount of opportunity with an optimistic approach to actually tackle some really big problems.

And that's I think that's our role. That's where I think venture plays a role and BCA plays a role. But I'm just really hopeful that, that, that we don't get too dragged down in some of the volatility in the next couple of years and lose that optimism.
QUESTION That won't run in this podcast, but I like to collect them is I did one where I collected 20 or 30.
What was your favorite book or the most influential book?
And the other day I we published that one, and then I thought I'd switch it up and ask about restaurants. And I got to where I'm like, I'm in a restaurant years, so I'm back to books. What's a book that that it can be?
You know, it doesn't have to be hard business review stuff.
It can be Winnie the Pooh, right?

What's a book you would give as a gift or was very influential in some point of your life?
So I have a joke.
It's not a joke. I've actually given this book as a gift, and it's not what people think.
I love to read and I have a lot of and I do philosophy so I can go down one path. But this is a children's book and it's one that I read to both of my daughters, and I've given it both to people with children, but also to founders.
And it's called What to Do With a Problem.

And it is a great book of a little kid who has this cloud following them that they think is a problem. And the mindset that you get into when you think something bad is going to happen in the spiral, and then really looking at it and starting to see it differently and seeing what the opportunity is and at the end seeing like having this transformation where you take on the problem and see how to fix the problem and it transforms how they see the world. And for me that is like that's kind of my job.
And I think it is the role where positive psychology, I think a play, a critical role for individuals, for founders and for our society, which is anytime you look at a problem, it's really easy to point to why there's a problem or to fixate on the problem or to get angry about the problem.

But where the world gets better is where you look at a problem and say, How do we solve it? What what's the, you know, one of my partners how you reasonably says never waste a good crisis like what comes out of this that can be done differently and better.
And so it's something I love to to share with people.
And it's a framework that I whenever my kids are complaining about a problem at school or a problem or like, well, what's the opportunity to reframe it and to think through it?
And it's just been a really useful tool for my family.

And I said, if we get a third dog, I'm going to get a chicken.
And this one chicken.
Well, that I didn't know.
I did have one chicken.
Little did I know when I showed up at the Los Gatos Hardware store where they sell little baby chicks. You can't have one, but you.
Can't have one.
They're social. That's luck.

/content/Preprocessed_Data/SHR Rebecca Lynn of Canvas Ventures.txt

Experience, exceptional service and endless inspiration at one of our four Berea showrooms. Find the perfect finish at all Natural stone.
Rebecca Lin used to run a nuclear reactor.
She's now partner at Canvas Ventures and number 31 on Forbes list of moneymaking venture capitalists, the Midas List.
Do you take pride in that?
Do you take it seriously? Do you not pay attention to it?
I mean, I do take I take I take pride in it.
I think it's great to to be sort of in that list of investors. I can tell you, my mom is very proud that that's where I'm at.
But at the same time, it's always about, you know, forward thinking and things like, what are you doing, you know, today, tomorrow and the future and and not sort of resting on that accomplishment.
Well.

Being number 31 is like having two Michelin stars.
You know, it's better than having one, but it's not quite three.
Not quite.
Three. But you could.
Yeah, you could, you could, you could go up.
But I think it's, it's sort of an afterthought.
Like you have to spend every day just doing the best job you can do.
And it's sort of like when I was in college when I made my fat and my absolute best grades is when I didn't pay attention. I just did what I was doing because I love doing it. So I always think about that.
I like to I like to focus on what I'm doing just because I enjoy my job and not on the rating I get.
Well, and this is the equivalent grade of you once said that the only metric that matters is what you return to the limited part.

That's our job. Absolutely. Our job is returning money to our limited partners and helping our entrepreneurs succeed. And by helping our entrepreneurs succeed, we return money to our limited partners. So it's a great, non confusing goal.
I don't doubt that you are very proud with changing the world and making the world a better place, but it is refreshing to hear somebody finally say, Well, no, we're here to make a lot of money for the people who gave us money and trusted us with that money.
Well, and for me, it's really interesting.
When we look at who we make money for.
We we have a lot of endowments, we have foundations, we have pensions.
Those are the people. And I think that that's not well understood.
But those are the people who are our limited partners.

Those are the people who we're actually making money for to continue to fuel their charities, to continue to help them do the public good that they do.
And so when we look for limited partners, it's one of my criteria because right now you're being the mom of three kids doing this full time, you know, and everything else that I'm involved in.
I don't have the time. I wish I had to do my not for profit work and to do my sort of world changing. You know, I do good work.
And so I see that as my day job.
And so I do think that, you know, when it comes to our help is and what our job is, it really is that those are the interests that we actually do make money for.
There is some questionable money coming in to Silicon Valley.
There's a lot of money in Silicon Valley right now.

I'm thinking specifically sovereign wealth funds.
And I won't give any names out necessarily, but that might be something you'd hesitate to take.
I would hesitate to take any money from an organization where the values weren't aligned. I really would. And we did the same thing with startups.
We we back startups that we feel really good about what they're doing.
And so there are there are startups.
We're like, wow, they're going to make a lot of money. But that just isn't.
That's not what we do.
You've seen a number of companies you've funded be acquired, check in future Advisor and Relate IQ.
And then and figure eight.

And figure eight. Yeah talk to me about the role of a venture capitalist takes in the acquisition of a company that she's funded because you're looking for returns the same way a real estate agent is looking for a percentage.
So there is a temptation to tell the founder, Let's sell, because that's a big amount of money.
The founder might say, No, I'm not ready yet.
You have a vested interest in selling.
Sometimes, sometimes not.
Sometimes we think it's better to go the distance and to keep going. So when you look at each one of those acquisitions, they all had very unique circumstances around it.

And when when a company comes to talk about acquisition and there's a conversation that happens with the founder and quite frankly, with the founding team in terms of, you know, how are you feeling about this?
You know, where do you want to take this company?
What are the risk? You know, what are what do you want to have in your life?
And it's really hard when when an acquirer comes in.
There are a couple of cases that you listed and I won't name which ones.
Where we felt like there was even more opportunity.
But for the founder, it was life changing money, right?
And so I'm really pragmatic, especially coming from where I came from.

I have a lot of respect for what that means to an individual, and their risk basis might be different than mine. So I see it as incredibly collaborative, right, in terms of whether or not it's the right time and the right acquirer that we want to pursue. So we have several conversations about, you know, is this right?
And if if the founding team is like go and the rest of the board is go, that's when I like to move into action. And I love to help sell companies.
And so I like the negotiation and sort of part of the deal.
So I think if you talk to any of the founders that were involved in that process, they'll tell you that's really where I like to get involved.
And I help with the strategy and lining people up.
And, you know, Future Advisor was really a great example.

John Mack and I had become friends in the board of the Lending Club and he became an advisor to Future Advisor and really helped us with that whole process in terms of, you know, who do we want to talk to, how do we.
And we were talking about strategic partnerships and he was helping us with that.
And then suddenly it turned into an acquisition offer.
And that was really interesting.
I listed some of your big successes. You mentioned Lending Club IPO'd at $15 a share. Last I checked was trading under $3 a share.
Oh, wow. I haven't checked in a long time.
Okay. Was that a win for you?
Absolutely. Yes. We came in really early at the Series B, Right. And I sold a piece of that company at like a $1.6 billion valuation over a year before it goes public.

Right. And so I sold about 30% of it then.
And then the next then went public at around 1,000,000,006.
And so then I sold a bunch more and was out of it before they started kind of having problems. Because one of the things that might be unique about us is that we're very focused on what we're good at and what we do.
So we are Series A and B investors, right?
We're not public market investors.
And so we know that again, our LP is want public market investors to do public market investments. And so we we tend to start, you know, kind of phasing out as that company gets closer and closer in most cases. And so, yeah, I mean, going from like 20 million to 1000000006 is pretty good.
I'd call that.
That's one. Okay.

You mentioned that you're very focused, and I've noticed that a lot of your portfolio is, is, you know, fintech and insurance and wealth advising and that kind of thing. And then there's owl.
Explain what owl Luminar You forgot Liberty Global.
But owl. Explain what Owl.
Okay.
I will explain Owl. But let me tell you a little bit about the scatter and it so I mean, I love sort of edge technology.
Now I'm going to jump in here. She doesn't actually explain what owl is.
It's a very cool, smart dashcam for your car.
And when I was a chemical engineer, I worked at a nuclear research reactor where we had a ton of edge technology. We had the O-rings from Nassau, we had space crystals, We had, you know, amazing stuff. And I, I love that.

And so I think in every portfolio, you're going to see something of that, right?
And I also had a consumer product background with Procter Gamble.
And so I have looked at a lot of the companies and the consumer hardware companies that have ended up doing well like Fitbit and and Dropcam and those.
But we we sort of didn't do them at that point in time.
Right. Which, you know, here we are.
So so anyway, so with Owl, they came to me through an Apple reference that I had and the founder is an ex Apple guy and amazing team and it just made a ton of sense, right?
It made a ton of sense that, you know, really security and video and all of that. You need it in the car more than you need it in the home.

In terms of the damages that you have happened in the car, in terms of the life threatening issues that happen in your vehicle.
And the car is really where it's at, far beyond home security.
And so the technology is actually really, really, really hard because it's continuously streaming into the cloud of this video.
And so when they when they came to me, I actually looked at the early around the and we didn't quite get there and my friend try it decided she's a product person and X Kleiner she actually did nest when she was a cleaner and so then when the next round came around we jumped in.
So that that's all.
Me again. Trey, who Rebecca mentions there is Trevor Sela, and we'll have her on the podcast in just a few weeks.

Rebecca got her start at Procter and Gamble, the toothpaste and soap company.
P&G.
Otherwise known as Prophet and God.
Yes, exactly. You were at Procter and Gamble, where my understanding is you sold products into Latin America.
Right. I was actually on.
I worked out of Cincinnati, so I worked out of the mother ship and was in the research and development and branding kind of area of the country.
So when I was there, I was in paper.
We weren't in Latin America yet, so I actually got to be on the new market entry team to launch new products in new markets, which was phenomenal.
Rebecca I'm so excited to ask this question.
You know.
Did you sell Febreeze in Belize?

I did not sell Febreeze in Belize, but but I was there when they were trying to really figure out the messaging around Febreeze, which was which was really interesting.
He's cracked himself up.
I mean, I would imagine that teaches you because it is such a household company. Yes. It teaches you a lot about consumer behavior.
It does what sells and what doesn't.
You know, and it I mean, it totally does it.
It tells me a couple of things.
One thing it tells me, which I think many VCs on Sandhill forget often as I am not the target market, it doesn't matter at all.

But I think I think, think, think this is the next whiz bang product or whatever, but it doesn't matter. What matters is what the consumers think and who this target market is. And so often I hear VCs saying, well, my family and likely your family is not middle America and the target market so that it's irrelevant.
Right. And they judge it through that lens.
And I think that's a big mess. And when you see a lot of money going into a startup and you're kind of scratching your head and there are in a few those, I call it like Tech Gone Wild kind of. Yes, that's that's often what happens.

And then the other lesson at Procter and Gamble that I've learned is customers don't want a bunch of options. They want freedom from choice, not freedom of choice. And when you see this really play out, it's just Apple versus Google, right?
Apple nailed, you know, freedom of choice.
Just do it.
Freedom from choice.
A freedom. Yes, freedom from choice.
And, you know, do it like I think it should work.
Right. Whereas Google thinks, you know, people want every whiz bang option and they don't they want people, you know, keep it simple, essentially, and give me freedom from choice and make my life better.
And that's what consumers are looking for.
You mentioned earlier you are a chemical engineer.

You thought about being a nuclear engineer, you know, at risk of sort of making some sort of metaphor stretch.
Is there any connection between that and what you do now?
And, you know, I think the biggest connection is just what I was drawn to.
And it's all the new science and new ideas.
And I love that when I was at the research reactor.
And the other thing, too, is that when you look even at who like a Procter and Gamble hires, right as a new product, people and people that develop, you know, the company, even their brand managers, a huge majority of those are chemical engineers. And it's because we have to take, you know, a little bit of everything.

We take coding, we take organic chemistry, we take, you know, materials and we take all of those things. And so and we also have to develop all the models behind it. And so it's really interesting in terms of, you know, just looking at different things all the time.
It sort of prepares you for that. And I that's I mean, every day I'm looking at, you know, things that are incredibly diverse, as you pointed out, from our camera to wealth management. So it prepared me for that.
Is there anything you can tell me about your days at PPG that would P&G.
Not not the energy company.
That's right. Yes, exactly.
Don't get me started on the fires.
Not exactly. Is there anything from your days at PSG that you can tell me about that's no longer secret?

Something where we you came up with an idea that didn't work Because it's fascinating, the ideas that come out of there, you know, the Febreeze and the Swiffer and the things that have become household names in which you think, I can't believe somebody said, you know, let's get a spray, and it just smells good and we will market it.
Yeah. You know, I learned a lot.
I don't know if there's any double top secret thing I can tell you.
You know, the one thing I think as I'm diving into a lot of this functional medicine area is one of the products they were launching or talking about launching when I was there was this product called Telstra.
And then if you've heard of that product or not.
This is the one that was in the potato chips.
Yeah. So it's a side effect.

Now you're just you think about it, you're like, Oh my God, do they think this was a good. Idea. Right. And it was this long chain fight that basically the theory was if people a potato chips with this kind of fat and they wouldn't they wouldn't digest it.
So they could have as many potato chips as you possibly wanted.
But there is this little anal leakage issue that was that was a side effect.

And the fact that it was ever that good of an idea to have that many carbs just blows my mind. Right. And now you read all this information on other kinds of fats like Crisco and Wesson oil and all these things that have this ridiculous omega six content. Right? Right. And and you think that that's a really bad idea. You know, and so I have now eliminated all of those fats from my household. And we are back literally to like animal fats and coconut oil and things like that, because that's what people actually should be eating.
You grew up on a farm in Missouri.
I did.
You now have animals of your own at your at your home.
What to chickens?
As you want me to go through the academy.
I would love for you to go.
Okay. So. So here's the truth. So I actually loved living in San Francisco.

Really loved it. And so I'm a city girl or I think or I just kind of go the other way, right, with country.
And so when we moved out with kid three, which most people do, it's the joke in San Francisco, where do all five year olds get, you know, for their birthday in San Francisco, a new zip code that that's what happened here.
And so we moved south and and really loved it and wanted to really embrace it. Right. Because what we were giving up in the city were the museums and the shows and all the educational and cultural stuff.
And so, you know, my kids love being outside and I loved having animals when I was little. So we went we we embraced that.

And it started out really innocently with a few chickens and then an incubation project. So I had my daughter actually make her own incubator from scratch with a thermocouple and all of that when she was like eight.
So she learned how to do that. So then of course I had to support, you know, the quail that we got next. And then now we have I think, you know, the numbers of chickens vary depending upon the predator issues happening at any point in time. But we have about eight chickens.
We have a pigeon that we rescued from the SPCA.
We have two parakeets, four horses, a cat, a dog.
And I think that's where we're at right now.
Okay.
I think that's where we're at.
And the chickens are egg laying chickens.
They lay eggs. They do tricks.

Well, I guess the other side is that they could be meat chickens.
Well, that doesn't happen in our household, right?
They're all they're all pets.
I had.
Several pets.
I had I had two dogs.
My. My sons wanted another dog.
Yeah. My wife said that she would get them another dog.
And this one chicken?
I did just have one chicken.
Little did I know when I showed up at the Los Gatos Hardware store where they sell little baby chicks. You can't have one.
Just can't have.
One. Their social, their flocks. Right.
So I ended up with two chickens, just Chelsea.
And and. And it was a Chelsea.
And it was another choice sound that we made it a chicken.
Nice.
Yes.

Yeah. We always joke. We're going to name it like, for to.
You know, and the kids don't think that so funny.
But yeah, you're lucky you didn't end up with roosters because then you have a whole different problem of.
Yeah, I think you live further out in the country.
Yes. Have to. You have to, you have to do the rooster giveaway thing and that that's never so fun there.
We were talking earlier about how there's so much venture capital money out there.
Yeah. Is VC money to some degree propping up some of these businesses?
I know when you look over Uber and Lyft's, you know, reports, they appear to be losing money on every ride, which logically means that venture capital is actually subsidizing my Uber ride or my Lyft. Right.
I prefer Lyft is subsidizing my Lyft.

Right. I realize you're not an investor in Uber and Lyft, but all of the sudden I have this fear that some of what we're seeing is just subsidize companies.
It's funny, there was an entrepreneur that came and told me this the other day.
He's like, I have a phenomenal life in Silicon Valley.
You know? DoorDash subsidizes food delivery.
Uber and Lyft subsidize all of my ride stuff.
You know, I can't answer that question for you.
I wish I could. I always think maybe I'm missing something and, you know, maybe that we did Luminar right.
Which is in the autonomous space, which is how they're telling us it's going to work out in the future. I love Uber and Lyft.
I also like Lyft better.
But yeah, I don't know.
I wish I wish I had a don't.
Lyft specifically necessarily, but.

Almost everyone going public, right? Yeah.
Yeah. No, I, I don't disagree with that.
You know, then they always point to Amazon right here.
You know, here's an example. Although I feel like Amazon always had a way if they needed to go get profitable quickly, they could.
Right. And they were investing in expansion.
So, you know, I don't I don't know.
I don't it's not typically how I like to invest.

I mean, I like to I mean, I'm more of a nuts and bolts, you know, like to see the profitability piece of it. They've obviously built phenomenal businesses and our life changing for so many people, including the workers that they that that service them. So I don't know in terms of the question about venture capital propping up, I would definitely say maybe in the later stages like that very late stage capital coming in, you're seeing these huge rounds, you know, 100 million, the number of hundred million dollar, you know, rounds has just skyrocketed.
Series A has stayed really steady, if you look at the numbers, incredibly steady.
And and those later stage rounds have just gotten, you know, more and more numerous.
So last question for you is.
The last question.

Yes. How does someone become a venture capitalist?
You started at P&G, then you become this you know, you started as a chemical engineer background.
You move on to a credit card company.
You're your story. Obviously, everybody's story is going to be unique.
But. Right. But what is the path somebody takes to get to where you're sitting?
You know, this is interesting. I get asked this all the time, usually by, you know, people I went to Berkeley and some people at Berkeley or Stanford, and there's not a good answer. There was a really good answer.
And law you know, I went back to law school late in life and, you know, you do this and you do that and you get up the ranks, you know, in venture, it's not it's not that way.
And so I think almost everyone's path is a little different.

I think there are some things you have to have you have to have a fair amount of A.D.D., right, because you have to be comfortable, you know, switching gears continuously and actually enjoy it and get energy from that.
I think that's important. I think you have to be incredibly curious.
I think you have to be like a natural networker slash connector because what we're doing every day is pattern matching both on companies and people.
Right? And so trying to help the right person find the right opportunity within a company. And it can be game changing for a company to get the right CMO or get the right head of engineering.
And so I spend a lot of time on that, both from a.

I'm looking at talent. It's from culture, from a cultural perspective, as well as just, you know, can they do this or not?
So I think that that is really key.
And and I think it's the number one thing is the ability to live in a world of uncertainty. And so really to be able every day to kind of be very self-directed and self-guided and not have all the sort of constructs of a normal job.
Right. Because, you know, there's a long time between when you make a decision to write a check and you actually get real true feedback.
Right. On whether that companies doing well or not.

And there's a lot of work to be done. So I do think the really good VCs are sort of innate fixers. They're willing to come in and roll up their sleeves and help the founder and figure out, well, you know, where do you need me?
Where on the field can I be helpful to you?
And then you step in and you help. And and that's what I really enjoy doing personally.
So I don't think I answered your question.
Rebecca Lynn, partner at Canvas Venture.
We hope you've enjoyed our interviews so far.
We release them once a week in sets of ten, and that was number ten for this set. So we'll take a couple of weeks to get back out there on Sand Hill Road to record interviews with more really interesting people.
And we'll meet you back here mid-September.

/content/Preprocessed_Data/SHR Exit Path Winning the Startup Game.txt

How's it going?
Very well.
I am sorry, I'm a few minutes late, I was trying to get my speaker and hold on one second. I think it's like I brought a nice microphone for you.
I just need to figure out how to get it up and running.
Here we go.
I was just sitting there answering emails, so that works just fine.
Perfect.
So the default is that's the.
And it doesn't give me an opportunity to switch it out.
You know, I'll be honest with you, you sound pretty good.
Yeah. All right.
Maybe because you're close to your computer, usually the the the laptop maker. Just awful.
Maybe, maybe it's already picking this up automatically and it's showing us that it could be. Yeah. All right.
Yeah.

/content/Preprocessed_Data/SHR Lotti Siniscalco of Emergence Capital.txt

No, we'll go with that then. So this is, hey, this is very casual. We do record the video, but not for any purpose other than just so we can talk to each other, right?
This is purely audio.
If I ask a question and you're answering it and you think to yourself, What the hell am I talking about? What was the question?
You know, just throw your hands and say, Hold on, hold on.
Let me start that over again and we'll just will edit around it.
It's supposed to be very simple and very, very casual.
I think we best start with how to pronounce your name.
OK, yes. So my full name is a colossus and escargot, but I go by Lottie. Everyone calls me Lottie.
All right. I think you need to do that slower.
Yes, I do my.
So my actual full name is Carlotta Maria de La.

This is a sculpture. That's my real name.
But let's say that it's not very American friendly, so I have adopted a nickname to make it easier for everybody to address me.
Tell me about your family.
You know, obviously from Italy. But but but you know, who were they and who are they and and where in Italy?
Yes. So I was born and raised in Milan, which is a bigger city in the north of Italy. I was born in a big family.
Pretty traditional family actually grew up with all my cousins, brothers, sister, uncles, grandma, grandmas, boyfriend, pets, all in the same house.
Who was a pretty big, big household.
I have the most wonderful memories from from my childhood.
And to this day, my family still lives in the same big house in Milan.
They have no idea what venture capital is.

They are baffled at what I do, and they still ask me when I'm coming back. It's been 17 years that I've lived in the United States. But, you know, I love them dearly and and they, you know, they're they live there. My mom is a store clerk and my dad is a civil engineer.
So how does a young lady from from Italy end up in Silicon Valley as a venture capitalist?
You know, like everything, it's a mix of luck and hard work.
I would say in my case, the really lucky break happened fairly early in my life. When I was 16, I decided to spend a year abroad in high school as a foreign exchange student.
And, you know, to put this in context, this was totally unheard of in in. My family was really against it.

My friends thought I was crazy, but I was just curious to see what life would be like outside of the outside of Italy.
And so I ended up living for a year in a small township called Cranbury Township outside of Pittsburgh with a wonderful host family that taught me English and showed me the American way of living life.
And to me, that was the moment my my bubble was popped in a way.
And after that, it was almost like, you can't unsee an opportunity once you see it. So I had to go back to Italy to finish high school, but the thirst for for trying something else was was was really what was driving me. And so I decided to try my luck and apply to the Wharton School as an undergrad.
I was really fascinated by business.
I ended up getting in. That was my second lucky break.

And then from there on, it was kind of a lot of hard work and trying to find fine-tune my passion for business, for innovation. So I started off in the East Coast and that I'm spending five years there after graduating began as an investment banker and as a private equity investor.
And then at some point I took a step back and I thought, OK, I'm an Italian in the East Coast.
I think I like investing, but this doesn't seem quite right yet.
Let me try the West Coast and see if earlier stage is more in line with where what I really want to do long term.
So I went to business school, I got my MBA at Stanford.
I try to work for a startup and I realize I'm not meant to be an operator and decided to move to early stage investing.
And so I joined that early stage of C right after business school.

And as soon as I realized VC was what I wanted to do, I started to look for a place I could go. For many years, and that's how I ended up it emerges over three years ago in my notes, it says that you your first opportunities is VC, were at 19. Is that right?
Well, yeah. So how is that possible?
So when I was 19, I was a sophomore at Wharton and I had a couple of months off in the winter because I was doing a study abroad in France, and the semester started in March.
So I had two months to be home in Milan and I couldn't sit on, you know, you couldn't sit and do nothing.
And so I had heard about venture capital.
Remember, this was 2007 in Italy.

I heard, I heard about venture capital, and I was fascinating at the thought that someone could help entrepreneurialism get their idea off the ground.
I want it to be. I wanted to watch that process.
I wanted to see how that magic is is how the magic happens.
And so I actually ended up emailing every V.C.
fund in Italy. I somewhat illegally got my hands on the listserv of all the VC firms in the country, and I literally sent individual emails to every single one and two of them go back to me and said, You know, you're crazy enough that I'll talk to you and I got a job opportunity.
And that was that was my first taste of B.S..
So you were recently promoted to partner?
Tell me about that promotion. How did they approach you?

And I think my second question is going to be, what does that mean?
Yeah. So emergence has a really structured way to think about how to bring in partners into the firm.
And it's very intentional way that started from day zero, 19 ago, 19 years ago when when the firm was established.
And the approach is that we don't hire laterally, we only hire from within. So if you want to become a partner, you kind of have to start as a, you know, senior associate principal and work your way up up until the partnership feels like they have trust in your judgment.
And most importantly, that there is an alignment of values so that you can become really an equal member of the partnership in the long term.

And so that was a little bit on the premise when I was hired as a senior associate almost four years ago. And and so I knew that as long as I kept performing and I kept true to the values of the firm, I would be given an opportunity to try to get to this promotion.
And so in the last three years, I just, you know, worked really, really hard to to make that happen.
And and I, you know, and and what it means to out to answer your second question, what it means to me, this is a point of beginning, really.
It's not a point of arrival.
It's a great honor and privilege to have this job.
I think not just that emerges, but I think being a venture capitalist is a huge privilege because of how we got to work with with interpreters.

And so for me now, I have to prove to my partners and the rest of the VC ecosystem what I can do for entrepreneurs and as we all know, it takes seven 10 years to build a great business.
And so I'm three years in.
I have at least four more years to really prove myself out and show that I can be a good partner and a good person to have on your board.
And I find that incredibly motivating.
Explain that just from a factual point of view, you know, investor, principal partner, general partner.
You know, I understand Private Corporal Sargent, you know, lieutenant captain.
Well, how does he explain that to someone who's not in the business?
How does that work? Who's who?
Where, who was where? Yes.

Great question. And honestly, it took me a long time to figure that out myself, where I was not into venture, so I'm very glad to answer this question.
So from and I'll tell you what what it is like from the inside in because from the outside out and you have certain firms that give, for example, equal partner title to everybody.
And so it's a little bit hard to understand who does what in practice.
When you when you're first starting off in venture, you typically start off as a associate or analyst and you're doing a lot of sourcing work.
And some people externally, you know that that that person is called an investor sometimes, but it's a lot of hands on the ground.

What is the market doing? What are the interesting trends that are going on and and how do I surface those opportunities to the rest of the team as you continue to go through at least that emergence?
The work shifts more towards, OK, there's an interesting opportunity.
Let me do some analysis on it.
Let me do market work. Let me do a competitive landscape.
Let me really understand the financials of this company.
Let me talk to customers and ultimately develop a point of view on whether I think this is a good opportunity or not.
And let me present an opportunity to the rest of my partners.
So that's what a senior associate does.
The principal does here it emerges.

As you moved from principal to partner, there's a lot more expectations around what you can do and why you're what you must do for your portfolio companies. You start taking on board seats, you start getting involved in multiple projects and efforts that the portfolio companies may need. And so you're almost proving yourself as as a valuable board member and valuable thought partner to the entrepreneur.
And then is general partner above that or yeah.
And general partner is above that and general partner starts to get into more like firm management. So there's a lot of, you know, we think of emergence as a startup, you know, where we are 19 years old, but we're always thinking about new processes and new ways of doing things more efficiently.

And with that comes more structure or more people to hire.
So these are the decisions that are typically made that the general partner level.
And also, you know, we we have we have two type of customers, we have the entrepreneurs and we have our LPs, our limited partners, our investors and the general partners spend quite a bit of their time developing relationships with them. I'm starting to do some of that, but I'll do a lot more of that when I'll make it. Could you be? So now that you're a partner, what does that allow you to do?
In practice, that allows me to bring entrepreneurialism in front of my of my investment committee without requiring approval, so it allows me to trust my gut a little bit more.
And and, you know, ultimately we still make decisions as a team.

So none of us is a lone wolf that can make decisions on our own.
But I got the trust of my of my partners, so much so that they will take an hour of their time to listen to a picture that entrepreneur that I think has a shot at becoming someone that we partner with.
Now you're the first female partner at Emergence ever and the only female partner at Emergence.
First of all, it's kind of hard to believe. I mean, I know a lot of the folks at Emergent's, they're progressive people.
Or am I if I've been wrong of the if they fooled me this whole time, they have no fool you. They have no fool you.

So I think this really goes back to the way we think about hiring and the way we think about promoting everyone. So we have six partners at emergence today, and one of the six and five of the six started off as associates.
And the six is a founding group.
So in order to make it to partner, you kind of have to again come from within brands doesn't hire from outside.
Yeah.
And so that the the the way you know, to to really get more people, more women in the partnership is to get more women to start off as associates of principles, which I can tell you, we're doing a lot of work right now on that, but is just a lot of small numbers in a way.

So I can tell you with like, I feel very strongly that this is a place that really allows women to thrive to get a sense, I got pregnant four months into my job here.
I'm pregnant again now.
I feel incredibly supported by my team.
My family is very close to everybody on, you know, on the partnership and beyond. And so it's really just a matter of being super disciplined in how we expand the team.
And I am excited at the idea of having a lot more women on the partnership one day.
You, you brought up your pregnancy.
This is something also that you had pinned to your Twitter.
I was astonished that you were astonished.
I mean, I realized the listener doesn't know the story yet.

If you're OK with talking about it, yeah, but yeah, the bottom line is you were so astonished by your all male coworkers rallying with you.
And to some degree, that made me sad.
You know that you were astonished, but if that's a story you're comfortable telling, I'd like to hear it.
I would love to tell that story.
Scott, so the story and you can go on my Twitter to to see the the series of of of tweets that I wrote about it.
But the long story short is that when I was roughly actually three months into my job, I got pregnant and then I had the miscarriage, which is something that's extremely common for women. Women don't talk. I mean, people don't talk a lot about it.

It makes people feel uncomfortable, and it's a very difficult thing to go through. And what happened to me was that I had a complicated miscarriage that forced me to go to the hospital for four a day, and therefore I had to miss a day of work.
And it was a Friday. And so when I got back to work on Monday, my partners were like, Oh, hey, are you OK?
And we heard you were sick on Friday and kind of in the heat of the moment then I wasn't sure how whether it was OK to share that news with them. I said, Yeah, you know, I had a miscarriage and I'm recovering and I got a really overwhelming and touching amount of support and is an all male partnership.
And and the reason that I was overwhelmed by it.
So there's a couple. The first is.

It's so hard to break into venture, and it's so hard to break into venture as a woman and as an immigrant who has no connections whatsoever to to the world that I was afraid that sharing that I was trying to get pregnant so quickly after getting my job would convey the message that I wasn't committed, that I was not going to work hard enough.
And you know, this is not because of what emergence made me believe, but it's because of what.
In a way, my experience up until that day made me believe which was in other firms and in other systems, in more traditional systems where there are a lot of women at the top with kids.
So I was really nervous about that.
And and in a way, my superpower had always been to work harder than anybody else.
And to be more intense than anybody else.

And there was almost this tension between How can I continue to do that and also be a mom?
And that's that's a process that emerges deeply supported me through.
And frankly, I'm still going through it right now as I'm becoming a partner.
And actually, I got my news that I got the promotion two days after realizing I was pregnant.
So the next elections and both, yeah, you are very comfortable talking about, you know, women in venture and and I think most women are.
I will tell you that sometimes I'm uncomfortable, not by the subject, but I'm well aware when Jake Saper, who works in your office and I talked to Bartowski at no time did we talk about being men and and this idea of women adventure is an important subject to discuss.
On the other hand, I generally only discuss it with women.

What's your and I'll give you an example of that.
I was talking with Maria Donofrio of Bessemer, who had become a partner at a very young age.
I want to say 29, and it was just it was astonishing how well she had done. And I think I even said to her, You know, I don't want to sound like I'm patronizing because it wasn't.
But.
At the time, it felt as if.
How do I want to phrase this?
I was just so happy for her.
Mm-Hmm. With her accomplishment, and I think some people thought it was being patronizing in a way that it wasn't, I wasn't trying to.
And I got myself into that trapM of being, you know, the older, the older, middle aged man, you know, good on you.
I was a genuine compliment.
Wow.
Yeah. Yeah, I get it. I totally get it.
So to me, this comes down to.

Then there's a standard of, oh, there's a perceived standard of what success in venture looks like.
And when you are a young woman coming up, you're kind of coming up against the standard because you look up at the stage of who's speaking it, all these big events and you you read the book, so who are these legendary legendary venture capitalists?
And there's really a very small group of women in it.
So the reason I like to talk about it is that I like to make it more normal for women to see themselves as successful venture capitalists.
Because you go on Twitter, there's a lot more male voices than female voices. And as a result, there's a from a point of view where really, really young woman starting off maybe twenty one twenty two in the city.
Hey, is it? Is this a career for me or not?

If you don't see representation at the top, you'll think, Oh man, I really have to go against the current L need to be.
I need to work so hard because there's so many stereotypes they'll have to break and hoops that I have to jump through.
And and my hope is that you said it right.
My hope is that one day we don't have to talk about it.
Hey, like a young woman making partner is no longer big.
but I think we're very far from considering you're the only partner at your firm so far.
Yes, it's still and in general, you know, I think I was reading a stat that less than 10 percent of decision makers in B.C. are women.
So that's that's not great.

All right. Now the other thing I like to talk about when it comes to venture is investments. One of your very first was Talent Hack $17 million series. What did you see in that company?
What does it do and what got you excited?
Yes. So, so Talent Hack is a company that allows this new group of people are calling creators.
Think of them as independent workers.
People who want to work for themselves allows them to run a small business specifically around being a fitness fitness instructor.
What I saw in it, the real answer to that is that I saw a founder that I thought was the one in a million.
And the reason for that is that she has an incredible magnetic energy that allows her to attract very high caliber people on her team.
She makes her a very effective saleswoman.

And a very effective fundraiser.
And so in the context of being an effective leader, those are qualities that I really look up to. I also think this is a market that's going to grow tremendously. We've seen a lot of the way people work has shifted. What people are attracted to in terms of working opportunities has shifted.
And this group, again that we can call independent workers creators has grown very meaningful in the last in the past few years.
And in fact, I hope that this is not my last investment in this space.
So we're talking about things like coaches and trainers and dance teachers and instructors who are able to use software to create scheduling and billing and those sorts of things.
Exactly. That's what talent hooked us. Yes.

But when we talk about creators more broadly, there's a lot of other categories.
Sure, we'll have consultants.
You have people who are digital creators, photographers, videographers.
So it's it's it's it's, you know, the the size of the market is is north of 40 50 million people in the world today, growing the digits.
Let me ask you a question. I think your family back in Italy would ask, and that is 17 million dollars. You know, you create some software and I'm sure it's wonderful software and a great service, and I'm sure she's a great founder.
But 17 million dollars?
Yeah, I mean, this speaks to one where the markets are then and especially when the where they were.

I think in 2021, obviously there's been a correction since the summer, but finding great founders is difficult and there's a lot of capital chasing these founders.
And so when we come across them, we want to make sure to give them what they need to build a great business. And if that's 70 million dollars, that's 70 million dollars. My grandma will still blink twice.
So you've written that operational issues for female founders, they encounter a lot more challenges in hiring and funding and developing and maintaining a female friendly culture.
Talk to me about those sorts of challenges.

Yeah. So again, to me, this this goes back to what is considered the norm and what is considered a standard in tech. And how does that differ from the way a female founder, a female CEO, might want to start her business?
So there's a little bit around what type of culture you want to build and and getting people excited around the table so that you're not seeing a someone going against the current buy you're seeing as a thoughtful leader, setting up the right structure from zero on fundraising specifically actually have a lot of thoughts here because.
There's all sorts of biases that people have.
And I really believe that very few people actually mean to have.
Very few people are trying to be biased.
Most of us are biased, but in a subconscious way, in an unconscious way.

And when you are a woman founder and you're pitching, there's there's some biases that you have to go up against and I'll give you a few examples. Women tend to be asked a lot more about downside than upside, for example.
There's a lot of research on that.
Women are typically described as less visionary than men are, even if they're literally reading the same script or less agreeable if they are a little bit more pushy in what they're saying.
So there's all sort of nuances that need to be navigated by a woman to be perceived as effective as a man. And I'm very excited to coach and help women go through it. But honestly, to me, the coaching is to be done as much on the founders side as on the investor side.

Step one for for me is becoming aware of what even my own biases are and helping my team be become aware of what their own biases are. So we can actually be objective in the way we assess.
To me, that's that's baseline.
You've said that it's the best and the worst time to become a woman founder.
Yeah, so so I think COVID.
Created a few interesting dynamics.
It's no secret during COVID, a lot of the work housework, childcare work ended up being on the shoulders of women and to and that's that's in a way why it's probably it can be a very big burden to to have to carry a household.

Make sure your kids are sitting in front of Zoom and attending virtual preschool. And at the same time, getting a company off the ground at the same time. I do think that there are a lot of a lot of trends and underlying like tectonic shifts in place that make it very like the perfect moment for for women to start. People are starting to pay attention.
Our LP's, the environment in general, is starting to realize, hey, if we can't continue to deny opportunities to women. And so if you are a woman founder today, there's an abundance of tools and networks and support available that was just not available before.
I also think employees really care.

So in this moment in life, in the history of the world where there's a lot of competition for talent in particular, whatever you can do to attract the best employees is a competitive advantage.
And if today Gen Z's care a lot more about diversity than ever before, then if you have a diverse leadership that's going to give you a leg up and hey, like that is going to help you build a great company.
So, so I really do think that these two things are true.
I'm starting to believe more and more that is the best time possible for a woman to start to become a founder. And I'm excited to find more and more women do.
So I'm going to end on that because that's a great positive thought.
I do have one last question that is not going to run in this podcast, but I'm sort of collecting them.

And that is what what book was very influential to you, and it doesn't have to be a Harvard business book.
But, but but if you if you were to give a gift of a book to somebody, which one would you give?
Yeah. So I love science fiction.
My favorite movie in college was The Matrix, and I find science fiction interesting because it allows me in a unleashed way to imagine what the future can look like, which in a way is a little bit of what you have to do as a VCR you have, especially when you invest in the series like me.
And so I'm a big science fiction book reader.
The latest one I've read that I fell in love with.
It's called Nexus, and it's a it's a trilogy.

It's called the Nexus trilogy, and it's a book that describe a world in which humanity invents technology to build software on top of your conscious consciousness.
And old and it's and it's a very real it's almost Black Mirror Irish like, but it has a very deep philosophical implications on how we should think about technology in the context of bettering the human experience.

Thank you so much for that. Yeah.
Have you ever been in this building before?
I don't think so, because I think I would have remembered the funny little thing you have to do to go past the golf course, right?
Yeah. So, no, I don't think so.
I mean, since you have the park as just a 32nd history.
Yeah.
This floor of this building.
Actually, that office was the first, I believe the first commercial office ever on Sandhill Road in 1972.
Oh, wow.
And that was when our founder actually literally moved in here and set up a firm called Ivy Institutional Venture Associates.
And then downstairs, two of colleagues of his when he new came in, they formed Kleiner Perkins.
Oh, yeah, sure. Yeah.

And then this four building complex became the epicenter of venture and the first commercial area of Sandhill Road in the 70s and 80s.
Sequoia Capital started right there.
Yeah. I think NEA started their Menlo ventures like it all is all here now. As time has gone in the last 10 to 15 years, people have kind of moved around.
Center road itself expanded. People moved up and down.
A lot of people moved to the city. Some people moved to park for Summer Woodside.
So now it's much more distributed. Right.
And now with the pandemic, I think a lot of firms are hiring like they're only in the office 2 to 3 days a week.
Some are expanding more, let's say in New York and London totally than in S.R.O..
But the history actually is of venture capital.

And Sandhill Road starts right here, like in this floor of this building and that office. So like, I think that's kind of a neat little way to kick this off.
It totally is. I like that.
The epicenter. I used to know the the word for, you know, Hollywood or Wall Street.
When you see those things, you don't really mean literally Hollywood Boulevard.
Right? There's there's a word for that. I can't remember what it is.
And Sandhill Road has become the same thing.
It is that yeah, it's it might not be on Sandhill Road.
Oh, exactly. Yeah, yeah, yeah.
Most companies around the Valley.
Well, that's the thing, right, is, especially with San Francisco, you know, Silicon Valley. It's. It's like was in a valley.
Tell me just so I can get this properly calibrated, which I had for breakfast today.

I had avocado toast and smoked salmon at the rosewood.
Oh. You know what I like about the rosewood is at the Major D's desk. They ask you your name, even though you know you don't have a reservation. But then later, the waiter calls you by your last name.
It's cool.
Well, I'll tell you another funny thing.
I was a really early. At like 6:45 a.m., I had another meeting in Palo Alto, and then it came up.
The person I was with ordered orange juice, and the waiter comes up to me and says, Sir, because of the season, our oranges aren't as sweet as the last time you visited us in the summer. Is that okay?
And I said, Wow, only at the roses. They ask you if it's okay, if the oranges aren't as sweet.
And they remember.
And they remember your last name. It's like an episode of Portlandia, right?

Where the chicken's happy.
Yeah, that's right. Oh, my God.
Let's start with coffee.
Speaking of.
I understand you make an incredible cup of coffee.
I do. Tell me. I want to know.
I'm going to make a little closer. Yeah.
Tell me the process of making coffee the right way.
To do the right way. The most important part is the beans.
You got to make sure you have the right beans, whether it's medium roast, dark roast espresso, and you have to make sure the beans are fresh.
One of the things I didn't realize until the pandemic, I was, you know, frequent in many cafes in, say, you know, in Sandhill Road, San Francisco.
But I never made my own coffee properly.
You have to have beans that are fresh and and, you know, whole beans.

I grind them myself. And then like many other things that involve food or or beverages, it's the right proportions of heat and water. And so, you know, if you're making a lot, it's the right proportions and the right temperature of milk to coffee.
Or if you're making a Gibraltar, it's water to espresso.
It's a lot of fun. It's like being your own mini chemist.
But I found in in the pandemic.
Being a wannabe barista.
The ritual of it actually gave you a little bit of a mental break from just the stress of being on Zoom.
And so I've kind of continued to enjoy doing that.
I've enjoyed, you know, I do cold brews in the summer.
It's been a lot of fun.
When you have a cup of coffee, what is your most frequent complaint that you didn't make?
That I added too much milk.

So and that's usually from one person, my wife.
I tried to guesstimate the exact proportions for her, but I've realized it's not a linear curve. It's more based on her mood and her sleep from the night before.
So the lack of sleep is proportionate to wanting less milk and a lot of sleep is I'm okay with more milk.
And then when somebody serves you a cup of coffee, what what do you notice?
Oh, they didn't do this or they didn't do that.
I think well, you know, the main thing is.
If you add too much other stuff.
Sirups sugar, you know, that takes away from the taste of the great beans and the freshly ground ones.

Like that's the thing that people have to get right is I think Starbucks has in our culture, created this orientation of sugar and, you know, drinks and it's actually moving you away from great coffee.
San Francisco, Portland, some cities, I think have come back to that.
And but overall in the world, I think when people think coffee, they actually think Starbucks now. And so that's a good it's good for Starbucks, bad for I think the purity of like the process of of coffee roasting.
My order always involves extra heart because, you know, any time this folks this isn't chocolate milk. I mean this is this is coffee.
I want this thing to be hot.
Exactly. Exactly.
So did I read you were at the White House signing for the.
I think I was, yes.
Tell me. I walk me through that whole thing.

I mean, you you, you I because I've never been to the White House other than as a tourist. You know, you fly in, you get up in the morning, you put on your best suit, you Uber to the White House.
Well, so I had also not been to the White House except as a tourist.
And I considered it a real privilege and honor.
I am the son of immigrants.
You know, I it was never kind of destined for those of us that came from those roots or my parents were immigrants, that you end up in a house like the White House.
I ended up staying actually in downtown.
So walking distance from the White House, which I think was really, really helpful, although.
Although be kind of cool to Uber, to the White House or taxi because then you get to say, take me to the White.

House. That's true. That's true. Next time we'll have to do that.
I'll stay artificially far away just so I can see that one line.
But I you know, I was able to, you know, get to the White House.
I think what was really intriguing, actually, was it happened to be the day before Halloween. And so the first thing I notice was I'll just a long line of families and kids in Halloween outfits standing outside the White House that went a few blocks. And I guess the White House every year does this where they enable a few people to come to trick or treat at the White House.
So I thought that was kind of interesting.
You know, what was also just to me, the most breathtaking was when you walk in, just the amount of history in that building was frankly overwhelming at points, emotional.

You know, you see pictures of people you you studied who all lived in that home.
And you think about how much a part of American history the White House has obviously been, but a part of world history also, America has been in the last, you know, 300 years. And the one portrait that I just remember that was probably the most memorable was there's this beautiful portrait before you go up the first set of stairs of Michelle Obama.
That was an oil painting. And it just it really strikes you that how historic and amazing it was that President Obama and Michelle Obama were in the White House for eight years.
And you look at some of the other portraits of a different time in the 1800s, and you could see American history kind of evolving within your eyes.

The other very comical thing was there were every 30s there was somebody telling you, welcome to the White House, just in case you forgot.
It's like, I know I'm in the White House. You don't need to keep reminding me.
Everybody here knows they're in the White House.
The other thing I'd note is because there was a there was different live musicians, a different like literally in different parts of the White House.
And there was a there was a quartet that was very elegantly dressed and they were playing a beautiful song. And then I listened more closely.

And Ries are actually playing Thriller by Michael Jackson because it was a Halloween themed. So I think they found a little bit of comedy in there. So not to get too too political, but it was noticeable that there were no pictures of Donald Trump on the White House walls right now.
And there were pictures of Michelle Obama.
There were certainly pictures of Michelle Obama, as well as most other presidents and first ladies that may have been influenced by the person who's president right now.
And that's I'll.
For the walls. The other thing I'd note is that there were some very beautifully ornate rooms that were pretty close to, you know, the large ballroom that we all were ushered into that were pretty vacant.
And I asked somebody later on what happens in these rooms?

And he said, well, you know, a lot of people just come in and use it almost like a wee work where they just come and work out of there. They do small group meetings, they prep in there. Sometimes people, if they've been working hard, take naps in there.
So it actually helped humanize in some ways that yeah, the building a lot you know as far as the exact order was was concerned I think it was a wonderful thing that the president vice president brought together an interesting combination of policy makers, folks from industry like myself, both. The startup ecosystem.
Large tech companies, of course, the venture ecosystem, as well as lots of advocacy groups for whether it's minorities or groups that could be adversely affected.

They were very inclusive. You know, in the White House exact order.
So many of the people I met actually came from either small city states or advocacy groups that wanted to make sure that a seat at the table.
I think it's also important to note it may be, you know, on your mind, you know, an executive order is not law, right?
The way I make the analogy is an executive order is like a business plan that an entrepreneur writes when they're formulating what the next 5 to 10 years could be.
It's a template and a blueprint. It is not exactly your board approved PowerPoint.
Right. And so I think a lot of entrepreneurs I talked to don't understand the distinction. They kind of assume this is law.

It's not law. It is meant to serve as a guideline to many of the stakeholders that include the cabinet, of course, but also Congress and lots of the different departments, whether it's Cong, whether it's Commerce, Homeland Security, defense.
A lot of this is basically a mobilizing tool to make sure people come to the table together. And, you know, it's 110 pages. But if you think about the key things in there, one is an acknowledgment that is brand new. Right?

This is a new world that, you know, I think most people I've met with in Washington, what they're still learning about, they felt better knowing that it's also new for us in Silicon Valley. Right. And this is while it's not the technology's been around for a long time. This new age of AI, the kind of post 11 world, is still only 14 months old. And so a lot this is kind of the beginning of year two in what's likely to be a 20 year phenomenon.
In fact, you said it's like we're seeing the Geocities and Lycos of A.I..
We haven't seen the Google yet, first of all.
Great analogy. Secondly, makes you kind of old.
Like this is not your first rodeo, is it?
Right.
Yeah, I think as well. I'm glad you're one of the few people I could mention.
Just these one actually knows what that did.

I know what it is too, right?
I think I think the the point I was trying to convey in that is if you think about the Internet era in in the kind of early the mid-nineties, most the companies that emerged whether it was, you know, Josie's Lycos IVP was an investor actually in the series of companies like Excite and Ask Jeeves.
You know, these were very successful companies in kind of years, one through five, even one through ten of the original Web 1.0 phenomenon.
But interestingly, if you look now, after 25 years of kind of the commercialization or 30 years of commercialization of the Web, Google ended up running away with the entire search market.

You know, everybody else combined is less than a percent of market share versus Google, I guess. If you had Microsoft, that's, you know, the duopoly.
Same with social networking. If you think about it, there was lots of social networks in the early 2000s.
And then when we looked at, for example, Facebook, its hide our anti portfolio list, you know, there was ten other venture funded social networks that people have all forgotten about, maybe except for Myspace, which is still kind of remembered.
But all those companies could end up, you know, getting to it.
When we looked at Facebook, we had a real question on could this be a 5 to $10 billion outcome? Well, here we are.
It's a $500 billion outcome and it's taken a huge percentage of, you know, the shares in that market.

I think there's a good and bad to that.
The good is it's important to stay patient.
Right. These if A.I. is going to be similarly a 20 year phenomenon like the Internet, the cloud where most of the companies that we're seeing today aren't going to be the the gargantuan winners among the startups.
The bad of it is it's important also for the government to ensure that there is fair competition and that startups really have a seat at the table and can make inroads.
So it's not completely dominated by large public tech.
And I think we learned that lesson with because, you know, the government do get did not get involved with whether Lycos or Google or Yahoo!
Was going to be the most important search engine.
It didn't get involved in social media, probably to everyone's regret.

I think that's exactly right.
History, you know, is both long and short.
I think people forget that right now.
While it may feel like the government is overstepping perhaps, and overregulating, especially in antitrust and other things for many, many years, whether it's Microsoft in the client server area at Intel or it was Google in the search era or Facebook, you know, in the Internet Web era, the reality is they were kind of left almost under-regulated to a large degree.
And that has that harmed a lot of the startups that wanted to compete and wanted to have a fair shot? I want to make this distinction also.

I think a lot of people assume the exec order is is kind of anti startup in anti-open source. I think the most important thing that the regulators are I think focused on is can we secure the United States of America from our nation state adversaries or from corporate espionage and all the other hacks that could occur with AI from this technology falling into the wrong hands, but also harness the power of open source to make sure it's secure.
So I don't think I think one of the big misconceptions right now, especially on Access F-k Twitter is open source is going to be regulated away. And I don't think that is the goal at all.
I actually think it's much more there's going to be lots of different ways for companies to harness. Ello. Some of that's going to be through open source networks.

Some it's going to be through closed source, large proprietary networks.
Some of that's going to be international. We're seeing actually, even right now the data set that suddenly a lot of films are coming out of China that a lot of developers are accessing. And so even in real time last few weeks, we're seeing changes in the open source world. And so I think this is such an exciting but daunting space as well.
I think everyone's got to stay tuned because we're going to.
What's the most exciting to us at IVP is this is going to be the kind of paradigm shift that you don't get that often in technology.

And as I've you know, most venture funds of ten year funds, you know, over the course of ten years, you know, if you think about we're only in the beginning of your to it's hard to even imagine in 2033, 2035 what AI looks like.
But what's exciting is we're all going to get to be a small part of that if you're going to be in this ecosystem for the next decade.
Historically, it's been, you know, the small startup that that runs away with the new technology and disrupts.
But AI needs a lot of smart people and a lot of data, in which case the future.
You know, we were using the analogy of the Google of AI may actually be Google.
Mm hmm. I think that's the question everybody is debating right now.

And I think, you know, in the question itself, there may be an interesting paradox because when you say something like the Google of a Google at its core, if even today, if you look at the business model.
It's largely still driven by PageRank.
Search is still the gift that keeps giving, right?
There are other businesses, of course, like Android, you know, and and other applications that have taken off for the cloud business for Google or GCP.
But it is a search business that's predictable, highly scaled, high margin and subsidizes a lot of the other investments in AI.

I think similarly, the it likely will be that in the LLN world there will be a few startups, I think Chachi, GPT being one of them, and maybe a few other vertical sized labs that I think will be prominent and be, you know, in the kind of 30 to $50 billion market cap category.
But actually, what's more interesting is it's a lot like the cloud.
You know, the initial cloud, you know, winners were actually all the public cloud vendors. If you think about it, was Amazon with AWB and GCP and then Azure with Microsoft, and then to a smaller degree, Ali Cloud, Oracle and others.

Now, if you look at who are the big cloud winners, it's actually the application layer or infrastructure, plumbing, tooling companies, whether it's snowflake and data warehousing or, you know, databricks in the new API tools.
I think the same thing will happen in the AI.
We're going to see health care companies, consumer companies that are going to be massive in impact and scale. They're going to harness all these different labs.
They're going to be able to utilize some stuff from Google and Microsoft, some stuff from OpenAI, some stuff from verticals, data vendors.

I think that's going to be the next 5 to 10 year journey as this becomes more mainstream and commercial. We're still early on enterprise use cases, just like the cloud was early in 2011, 2012. Today, the majority of revenue for cloud companies is enterprise no longer just startups.
You have a long history of enjoying and understanding technology.
I understand you had an Apple two computer.
Yeah, well, there's a happy and sad story about that.
So I grew up in San Jose, California, and I went to public schools.
Actually, through undergrad, I went to UC Berkeley for undergrad and I was always somebody. My parents worked in the technology industry.
My father actually worked at IBM and I still remember the day he brought home, you know, the first kind of IBM.
PC But it was a hard thing to use.

Ms-dos was pretty rudimentary, to say the least.
And as a young kid, it was clear this thing you had to know command line interface to be able to get anything done. And then I came across an Apple two, you know, in our school system, and it was just a game changer.
Now, laughable today, if you think about what that Apple two computer was.
You know, one of my old boss, Frank Clayton, always made the analogy that like that today could literally, you know, be the amount of memory in computing that could, you know, be measured in like, you know, pico meters, basically.
Right? Yeah. It's the chip in your fuel pump.
But at that time, what it I mean, galvanized for me was an excitement about what technology could do and how much fun you could have with it.

I think the brilliance, if you think about that era, whether it was, you know, initially IBM, you know, but really Apple over time is humanizing computers. So they were no longer the mainframes of the 60s and 70s that sat in massive computer labs and research centers across universities and government sponsored institutions. It became things that people use in their homes.
And I you know, I was very inspired growing up in Silicon Valley.
We drive in the 280 and you'd see this building right off the 280, and it had a colored apple with a bite taken out of it. I was also fascinated that as a kid and I would always ask my parents about what is that? Why is someone take a bite out of it?
Not the whole thing. And I think that was the genius of Apple.

And Steve Jobs is being able to like actually catch the fancy of young kids.
If you look at today, you know, I have young kids even to this day, Apple products, you know, 40 years later are so ubiquitous in the minds of our kids.
And to give Google a lot of credit, the Chromebooks have been game changers in education in K through 12. And so that I think focus on education that, you know, Apple initially did in Google and has been amazing.
The sad story of Apple two, though, is that I went to a public school in San Jose and even though we had lots of really bright kids, a lot of kids were like me, kids of immigrants and very academically oriented.

Our school was previously under budget and did not sorry over budget and didn't have funds coming in. And so even in high school, we actually still had apple juice with what nearby Cisco had basically like been commercializing Ethernet connections and, you know, high speed Internet connections for lands and lands.
We were still using Apple tools in high school, which was sad.
And I and I think hopefully, you know, the next 20 years we figure out how to reapportion public school education so that, you know, not just kids who go to private schools, but also kids who go to public schools, get access to good technology that they can utilize.

I am constantly surprised. I've lived in California in the San Jose area for 20 plus years. But when you think of there are more PhDs per square mile than anywhere else, I think in the world, you know, our houses are worth millions of dollars.
Generally speaking, the median income in in Santa Clara County is very high compared to and my kids went to public school to.
They're solid.
They're nice and it every teacher out there.
My parents are both teachers. I know you're working hard.
But you'd think Silicon Valley would have.
How are we not spending most of our money on the school systems?

Some of that has to do with when we say Silicon Valley, we're really thinking about the commercial entities, the companies that are geographically in this area that are innovators and the market caps and cash balances.
But think about what you just said also. I went through this myself.
If you're a partizan as a unified school district like I was and my wife was.
My brother was. Yeah.

The the delta in the center of that unified school district was and is pretty stark. You have certain areas that have high degrees of affluence and high per capita median income and highly educated with graduate school degree parents like my school was one of those. But then you had other schools where a lot of people didn't have high school diplomas. You had only 40 to 50% going to college, and they were all part of one big school district.
And I think that's a microcosm of California.
California's a state, if you think about it, would be like the fifth or sixth largest GDP in the world if it was a country. But in some ways, there's disadvantages that they don't have the ability to be able.

It's got such large of square footage mileage in terms of the area of the state and population making a decision at the state level that's both helpful to one part of the economic spectrum and the other is difficult.
So you end up kind of whether it's the teachers they teach to the middle or the school funding, it sort of apportions appropriately based on averages.
I felt it firsthand where many of the theory at that time, and I have to profess I'm not an expert anymore. I have left Sara Lee a long time ago.

The theory at that time was if you get the best T-1 connections and the best computers to those kids who need inspiration, like where there are certain schools where there's about 45, 50% graduation rates to go to college, give them the best tech stuff, and the kids at the really good schools are going to be great either way because they have good stuff at home and they're from affluent families.
My issue with that was I think there are other variables that actually matter a lot. And I, I think the biggest one I saw was going I met a young entrepreneur a few years ago who had a nonprofit doing this, just going to there's refresh cycles at every tech company.
So if you go to an Intel and say, Hey, you guys are going through a refresh cycle, what are you doing with your old stuff?

There are so underutilization of actually being able to take that old equipment and being able to bring it into the schools. And these things are perfectly fine.
They may not be great for like the Nvidia chip designer anymore, but they're perfectly fine for a 10th grader. And I hope that the schools will be more scrappy and be able to procure more of that recycled equipment or donate equipment. It is happening more than it used to when I was in school, from what I've heard. But it's still not addressing the needs.
And I also implore that tech companies themselves should think a little bit about this.
Yes, on one hand, you're a global tech company.
Your employees are hybrid. You know, you're half in the office.

People are all over the world. But, you know, this is an area that has really foster an ecosystem that's created so much economic gains.
It's so important for that to, I think, be fostered in K through 12. Education is one of the best things that America has.
And if that goes away, American competitiveness will also be affected in 24, 30 years.
You know, the the number of companies within a 20 mile circle of where you and I are sitting right now have created so much wealth in the world that it sometimes frustrates me that you think, well, hold on, why are we not able to pour money into into the children of the people creating the wealth?
I think as I've grown up here and seen this, there's stages of companies.

I will give companies like Salesforce, Adobe, Google, a lot of credit. Many of them have had great corporate philanthropy programs, have done a lot in the community. The nonprofit sector has done lots of things.
We individually at IVP and collectively have supported many of them over the last few decades. But I think the bigger thing is just making people conscious that you can be globally minded but locally focused as well.
You can do both. You don't have to pick one. Some people have this false dichotomy of, well, you know, Google me happen to physically have a building in Mountain View, but we're really a global product with global users.

Yes, we agree. But as much as, you know, philanthropy can help solve some of the big global issues, it's also important to be able to like take care of local communities because that's where the biggest needs sometimes exist and are least filled by local budgets and municipal municipalities.
So, you know, one, I'll share a story that happened earlier this week.
I went to lunch in San Francisco and was waiting for my table, and I noticed an elderly gentleman come and sit next to me.
And the he looked familiar, but I couldn't quite place him.
The staff kind of greeted him and they sat him and I realized it was Arthur Rock.
And and, you know, just for those who don't know, Arthur Rock really was one of the founding fathers of venture capital.

And. You know, I and I had an inkling of this, but I looked it up right after on Wikipedia. Arthur Rock was, I think, the first person who actually coined the term venture capital in the 60s.
And he had actually been the one who had a personal connection with folks that were at Shockley.
He when Bob Noyce and Gordon Moore decided to leave to start Fairchild, he was the one who basically raised his hand and said, Let's do this.

And that was probably that was the beginning that then spawned into Intel, where he was the founding investor. But beyond that, one thing I did not know that I learned was Arthur Rock. Also, when Intel was getting started, their thinking about how to do wealth distribution. Now, those founders could have created a system where they took all the economics for themselves, and Arthur could have, you know, basically there was no precedent set it up so that he, the venture capitalists, would have had the lion's share, almost like a private equity style control ownership.
He didn't do that. They actually set up a system of stock options that even today is being used so much. The four year vest and the one year cliff was something he kind of came up with apparently in like 48 hours on a napkin.

And that is still being used today, right, with companies.
And I bring that up just to say, you know, Arthur Rock today is more focused on education in San Francisco and in California more broadly, K through 12.
And I think he noted that, you know, it is so important to do both to create these great global companies through venture capital, which is such a powerful source, but also to be able to provide means and education for American kids all around the country.
If not, we're going to lose our competitive edge to other places.
And so I just thought it was remarkable that we still live in an area and in a time where the founding fathers of venture capital, while aged, are still around, and there's a lot to learn from them.
Your grandmother was very important.
Tell me why.

So my my grandmother, my family comes from India, from eastern Indiana State called Orissa, now pronounce Odisha.
They keep changing the positions and spellings of these things.
And just to give a little like 30s of family history.
Her father, my great grandfather, was a freedom fighter.
He went to jail twice during the Freedom independence movement.
Most people will know, but India was actually a British colony from the mid 1800s until 1947.
My great grandfather became very involved in the independence movement.
And at that time, like many of the colonial places in Asia, there was no free press. The British basically only published in English, actually The Daily News, because they did not want people to exactly know what was going on.

And they were very knowledgeable that most people didn't know how to read or write in English. So it was really to communicate back home to folks in London.
They started a secret press for which they were actually imprisoned that actually published in the local language.
And they would secretly, at night start publishing what was really going on in the native language area and after independence.
Actually, my grandmother was born when my great grandfather was in jail.
So that's an interesting, you know, piece of family history.
He became the editor of that newspaper.
He continued on as editor and he was 102.
And then my grandmother, actually, after he passed away, became the editor in chief.
And she was a pretty amazing person.

She had four kids, including my mom, and actually went back to school, ended up graduating top of her class, became an economics professor.
The equivalent like the poet laureate in the state, were from in India.
But really, both she and my great grandfather always did social service.
Anytime there was a natural calamity, she mobilized resources and goods and brought him to some of the most, you know, cyclone and flood torn villages in the state. She advocated for women's rights.
She was a big advocate of LGBTQ rights way before it was commonplace to do so. So I think she wore multiple hats.

And when she passed away, it was interesting, like a lot of my family members actually learned on Twitter because the prime minister of India, Prime Minister Modi, tweeted about her and her life. And I think and they gave her full state burial, which was, you know, a huge honor, obviously. So I spent a lot of time with her.
I was very influenced with just a lot of the stuff I saw her do for policy, advocacy and social rights. Now, interestingly, a lot of what we're seeing now is India come to the forefront itself, like the Indian diaspora, has been pretty prominent in Silicon Valley, like my parents and others since the 1970s.
But now what we're seeing is actually India as a country has more political stability.
It's got GDP growth north of 7%.

And even in our day to day, what we're seeing is a lot of air founders, a lot of infrastructure founders, consumer companies, many of them are Indian immigrants, kids of Indian immigrants. Many of them are very comfortable, like the Israeli community, of going in and out of Silicon Valley in Bangalore or, you know, San Francisco and Mumbai. And I think it's become more and more seamless.
There needs to be more direct flights. I've asked the Indian government to do more direct flights from SFO, but there's a lot of similarities to the Israeli tech community and the Indian tech community and the US.
India relationship is so strategic they're going to be natural allies in many ways for the next, you know, 50 years.

And I had the privilege of being in DC when Prime Minister Modi visited this summer and I got to see firsthand just how much excitement there is in the tech ecosystem for doing more with India.
Tell me about your grandmother as a poet, What did you write about?
A lot of her poetry actually had to do with the role of women, the the poorest, the destitute, many of them. So I actually don't I'm not fluent in the native language.
My mom tried to teach me. I lost, you know, it wasn't offered as an AP class since as a unified school district. And so but in the translations I've read, a lot of them have to do with identity is probably the common word I would use.
And specifically she at a time where it was not a common to do so, she spoke with the voice of women, both working women.

Women weren't working married women.
I just remember when she visited, she would go to places like Yosemite and would just be so enthralled with seeing these places that we all take for granted as Californians or Lake Tahoe.
And instead of talking, she would just take out this this pad in the back of her Toyota and she just starts scribbling stuff down.
And they ended up being these award winning poems.
Right. Later on. One thing I do remember, she was very she wrote a poem that was, I think, pretty hard hitting.
And I remember reading it. It was something like it translated to America.
Everything has a price. But does everything have value?

Right? And I think she was noticing coming from a place where people were there was much more poverty, you know, in the part of India she was from than in.
Silicon Valley. She noticed how, you know, the capitalistic culture had everything.
Everybody was so well versed in transacting and so fast.
But then the joy that people had that I saw in my own relatives when the light bulb would come to the village or someone would get a refrigerator.
Right. That was different than when what you saw here where people kind of took a lot of stuff for granted. So I just remember that one poem a lot.
I do have a two follow up questions that I will not include in this podcast.

Is there a go to joke that you have, you know, relatively clean one for you that makes you giggle every time you tell it?
I'm not a good joke teller. I always tend to mess up the punchline.
So the answer is no. I'm a great joke listener.
I'll.
Unabashedly copy one joke that I reheard recently. So I went to see Jerry Seinfeld in San Francisco.
I am a big fan of standup comedy and Amazon Prime and Netflix, and I think those two platforms because it's almost like being able to go to a comedy show every night in your own house. They've really invested in comedy as a genre.
But Jerry Seinfeld is the one classic joke that I remember hearing and I heard again, it was even funnier this time around. And he was talking about first class in U.S.

airlines versus economy class. And he said, you know, they they've designed this place to, like, really send a message like you walk in and, you know, there's literally you have to go to the left if you're first class, but you're immediately ushered to the right if you're not.
And he said whenever they pull that curtain right to close it before the flight takes off, they stare at you for seeing a comedy classic Go.
You know, if you'd worked just a little harder, you'd be on this side of the curtain versus that one. That was a good one.
Second question Is there a book in your life that has been influential when you give as a gift or one that you return to often or think of often?
It doesn't have to be, you know, something from Harvard Business Press.

Wow. You know, when you ask me the question, like 30 different books just flashed in my mind in different genres.
It's like one.
That's going to be hard. Let's see.
So the one I would highlight is a book called Soft Power by Joseph Nye. I've read it a few times now, each separated by about a decade.
And I actually had a chance to meet Joseph Nye at something this summer, and I told him how influential his book was in the 90, I think in the early 2000 when I first read it.
You know, America was involved in the conflict in Afghanistan.
I was a young graduate. I just moved back from India, where I lived during 911, right after during 911 to California.

It just felt like we were going to a bit of a Cold War mentality about D.O.D. spending, going through the roof, arming up conflict in different parts of the Middle East, whether it's Iraq and Afghanistan.
And I remember the reason Joseph Nye's book continues to be like a huge influence to me is his research at Harvard.
You know, and throughout his career has shown that the real influence of America is not our military might. It's our soft power, our culture.
And so he did a lot of studies where he went and actually looked at places in Africa, in the Middle East, and found that in China, even in those places, what people really loved about America, even the our biggest adversaries was MTV, our film or our music, Right.

Our cultural ambassadors. And so his his nudge at the end was to harness the power of soft power, not just hard power, and realize that the greatest American export ever is defense mechanisms.
And our missiles and our D.O.D. budgets, which are large in the world.
It's actually what we've created, our creative communities.
And I've seen it myself, where when I would go to villages in India, you know, my cousins would be listening to like Bryan Adams, right?
People that were kind of out of favor here, right?
Or later. Richey And would be going crazy for with posters and villages of rock stars in the United States. And sometimes we forget, like, how influential our media industry is.
I think as time goes on, they'll become even more influential.

But also as we become more global global artists, you know, beats being a great example. This K-Pop are becoming more popular here, right?
And so I actually think like, I hope we lean in a little bit more about just like how many people love our creative community, the books, the magazines, the music, the movies.
And it's not all about military might.

Yeah, it is. It is. I like that.
Perfect. Good. All right.
Good. All right. Great.
So this is a very casual interview.
If you get, you know, halfway down an answer and you suddenly think to yourself, What the hell am I talking about? Just wave your hands in the air and and start again. And we'll edit it out.
You know, the person who put us together was so eager that I ask you about your bar mitzvah.
Yes. So tell me. Well, and I asked her, You know, you're young enough that your parents might have video of that.
If you can find a clip or something. I just need the audio.
But my mike, let me let me show you this is pretty funny.
So they mentioned this to me.

/content/Preprocessed_Data/SHR Hum Capital's Blair Silverberg (2).txt

So I them my parents yesterday, and I'm going to go grab it from their house and figure out how to digitize it.
So we have a home.
VIDEO That's awesome.
Yeah.
All right. So so you got money as one does at one's bar mitzvah and you did what with it?
And, you know, basically, I don't even know why, but I think my dad, who's a doctor, had been investing in stocks just for fun.

And that became the cap on how many companies I can really understand.

But I just thought it is a fascinating way to learn about how the world works.
You know, some kids buy a Nintendo with their bar mitzvah money.
They did that, too.
I just just spend more time investing than playing, though I don't know it got it got boring. But yeah, I mean, even to this day, I mean, I'm just I'm just fascinated by learning and I love learning languages.
And if you're wrong, you don't know as well as you think you do how something works.

So it's basically a system of accountability we have baked into the economy and our society and then went off to Stanford and were you at the school?
I was, yes. I studied product design at Stanford, and when I went to Stanford, I was surprised that there was no undergraduate finance program.
So I had this kind of, Oh my god, what am I going to do here?
I've been investing since I was a kid, you know, clearly I'm going to go into investing, and it was basically the best thing that could have ever happened to me because I learned had a couple of friends in the program and they loved it.

That's interesting. There is kind of a dichotomy that I hadn't thought of before.
You know, when one sets out to make money, you can essentially be the funder or the give a wager or you can be the person doing the action.
Some people are both and neither one's bad enough that neither one's better, but, but they are different.
There are two sides of the same coin, and a healthy, functioning economy needs both.

And then you need investors to say, Gosh, is that are those the right amount of resources? We don't want to squander our resources, we want the vision to be achievable.
Investors weren't doing their job assessing how much society's resources should go into those projects with. You know, when we were we were in case it was not zero in their attempts, this case I probably should have been zero.

When you entered venture capital, you were a Draper Fisher Jurvetson.
Were you there when Tim was there?
I was, yeah, and Tim's one of my investors now.
But yeah, I worked very closely with them.
He's quite the personality.
Yes, he's a fascinating guy. He's also incredibly generous.

He took me when I was a brand new venture capital associate at the Stanford football game. Like the two of us, when we sat on the 50 yard line and I just asked him any question I possibly had.
He's a he's a great guy, but yeah, he's he's got quite the personality.
What was your best investment at in your first venture capital attempt?
And I found it, Steve kind of delegated to me figuring out how it works. We partnered on understanding the business, making an investment in it, so on and so forth, and it was a company that was making artificial intelligence chips.

That's that's nice to be a young young person in a venture capital firm and one of your earliest investments turns around that fast.
That was a great experience. Yeah, because it's such a long feedback loop, it's hard and venture to know if you're doing it correctly because you don't know for 10 years. But yeah, for me, I was fortunate to get some quick feedback.
Is there a mistake you made that you learn from?
Oh yeah, I made tons of mistakes, but the thing in venture that's tricky is you.

Success is about having a couple bets that really work out in venture, this is not true of other types of investing, but a venture. It's about having two, four, maybe six investments that really work out, which means you can make a ton of mistakes.
If you could, if you got six, you're a genius.
Yeah, right. You could drive 90 percent.

That's right. You can be wrong 90 percent of the time and still be an incredible venture capitalist. And this is, you know, this gets into the psychology of like how a venture capitalist thinks it's very different than other kinds of investing they are buying with financiers would call options a small amount of money, with the potential to earn a multi thousand times return covers up for 90 percent of the time, getting getting the sat completely wrong. And so it's really the kind of business where you can't learn that much from your mistakes because your mistakes are really errors of omission, not commission. It's completely fine to get it wrong 90 percent of the time.

What you're doing now, linking companies that need money with people that have money and are willing to lend it.
I think of it sort of almost like a Hollywood agent, you know, you connecting the actor with the movie. But from what I've read, you think of it more like the replacement of the travel agent replacing a travel site with kayak.
Explain that analogy to me.
Sure, so. So you when you're shopping for travel, you're trying to go from point A to point B as cheap and comfortably and quickly as possible.
And so it would take forever to go to each one of their websites, compare prices, build out the schedule of trips and before the internet.

We saw this with travel agents. You had a specialist that really understood how to go from point A to point B in the best possible way.
And then the internet replaced that with the search engine.

So there's about 13000 institutional investors, 5500 commercial banks in the U.S. And yet entrepreneurs are still navigating this search space, manually building lists of who they know, asking for introductions to people they don't know, trying their best to get from Point A to point B. No price discovery, no idea what the different valuations you might get are the differences between common stock and preferred stock, let alone loans and non-dilutive capital, which are tremendously underused and in the technology space in particular.
So for me, I just saw as an as a venture capitalist, you know, I would meet in person two thousand companies a year, and I saw that it was very common for a CEO to assume that you're going to spend six months full time figuring out how to raise capital.

We've gotten them being searched. Search the travel space kayak.
And you've got air powering some of that.
What is the air doing?
That's a great question. So the way our system works is companies come to us and they say, Hey, I think I want to raise five million dollars and we say, great, we're going to tell you how this entire system works.

A long story short, the first thing we do is we transform it in a way where we can compare companies to each other. And so we can say, Oh, OK, now understanding your business and how efficient it is from the data alone, you're going to be able to get a maximum of $6.5 million capital.

We're talking minutes picture from home what your options are before you go out and you raise capital for you. Spend a six months building a data room, networking your way to investors.
So the first thing they does is it makes data comparable and I can explain how we do that. And then the second thing that it does is it allows us to understand investor preferences and map them to companies in a way that allows us to navigate this.
You know, I mentioned about twenty thousand possible institutions you could be raising capital from navigate this ecosystem in a way that gives companies the most efficient financing, usually the lowest cost, the fastest amount of time, with the most transparency and visibility into what the terms actually are.

That's incredibly powerful that you can take all of that data and unify it in a way, you know, from Stripe, from CRM, from all the different things, and unify it in a way that you can make an apples to oranges or apples to. Apples comparison with other companies.
That's right, so, you know, starting in the early 2010s, I felt I was a venture capitalist. You know, I saw businesses get started that were companies like Angel. We're going to help companies raise capital and we're going to put this fundraising process online. And that idea is most ideas in technology are in the beginning was before its time, because in those days, the vast majority companies 80 85 percent of companies were running on Prem QuickBooks, their online banking.

You know, maybe they had several accounts. Only a few of them were accessible.
And so what really happened in the mid 2010s, 2016 2017, when we started thinking hard about building home is for the first time you the majority of companies running on SAS systems of record.
Even they run on that sweet treat with online, you know, API based access to their data.

And so the world's just tremendously change, which we can talk more about why this is a good thing for society. But I mean, you can actually look at a company's data, even if the entrepreneurs and charismatic and knows how to pitch particularly well or they didn't go to the right school or worse, they're not from the right part of the country, i.e. the coasts. And you can say, Gosh, this is a pretty good business.

And so that's just critical to us allocating our capital to society, to the right places and removing bias from the system, which unfortunately, there's just so much bias and our capital gets allocated. It's not intentional, but it's just, you know, unfortunately, the way that the humans work that does seem like a powerful benefit is that if everyone is using mostly the same SAS data, et cetera, that you can cut through the bias and it doesn't matter what location or what age you are or what gender or anything, it's all going to be good data that you can say, yes, this is the company that rises above the rest.
That's yeah, that's exactly right. And of course, now it's important to be a good salesperson. If you're running a company, you have to be able to recruit.

Know, it's not that how good you are at pitching is irrelevant.
It's just that that is dramatically over emphasized today relative to the actual data the company produces. I mean, there are companies I saw as a venture capitalist have a great data. Bad pitches didn't get funded.
It kind of proves like, you know how to recruit a team that can build a good business.
You can recruit customers that care about the product or service you provide.

Now, most of the funding that you are able to connect to your entrepreneurs that sign up with you is non-dilutive, right?
It's non-dilutive debt, which I think is a fancy way of just saying a loan versus venture capital explained to someone who doesn't understand the difference.
The difference?
Yeah, this is a great question. So, um, so first, at a high level, we help businesses raise equity debt.
Combine the two all sorts of structures.

So we think about venture, for example, venture capital as equity.
Well, it's preferred equity.
It's highly structured, there's liquidation preferences, there's pro-rata rights, there's all sorts of bells and whistles in the standard venture financing today.
That makes it quite different from how people think it works as traditional equity. And so we all companies figure this all out.
And you know, there are cases where a company can have more flexibility in capital raising a term loan and they can venture equity.

What is the advantage? I mean, I guess I don't give away equity, but but, you know, a situation in which I'm taking on debt, particularly, you know, looking at this calendar.
By the time we run this interview, the Fed may have raised interest rates significantly with plans to raise them further.
You know, debt seems scarier to me than giving away over 15 percent of my company.

You borrow money. Let's say you know today's rates, depending on the type of company or anywhere from four to 15 percent and you sell your company for a billion or $10 billion and you owe the same amount in debt back to your lender with interest.
And we help people do that math.

And there's this there's a new kind of financing called revenue based financing, which is very common these days with SaaS companies.

Well, and some of the companies that are coming to you, they may be good at the thing they do, but as mid-cap companies, they may not.
They may not know much at all about the availability of capital.
But the friend of the travel agents and, you know, can obfuscate how the market works.

Now you take a cut, you don't fund the companies, you match the Thunder with the company, but you take part in that deal.
But.
Instead of taking a cut, if you would take an equity, you know, would you have been better off?
Gosh, that's that's a great question. So we charge two to six percent.
Just like a traditional marketplace, marketplaces charge different amounts.
I think Airbnb charges something like 30 percent these days, but in our marketplace, we charge two to six percent depending on the kind of company kind of fans and so on and so forth. And it's a one time fee.

So back to your example of raising, I think, what you said one hundred and fifty dollars say selling 15 percent of your company.

So you sell five percent of your company, raise the same amount of capital by taking on a responsible amount of debt. Then the more successful you are, the more of that money you get the key. And so when ends up happening and this is why every company in the world that is successful one day will pay Goldman Sachs seven to 10 percent to take them public or to raise them bonds in the capital markets at a at a much larger scale than is possible for private companies. Typekit access is because terms and pricing matter quite a bit.
Your company itself just raised a series.
Right? So was that dilutive or non-dilutive?

That's a great question. So we've raised up until this point, at least, I guess, publicly announced only equity, I guess, with the exception of some non-dilutive capital we raised very early on.
But it's just funny for a guy, for a guy who you know, is pushing non-dilutive.
Yeah, you took you took an equity position or your investor took an equity position.
Yeah, so. So I think the best way to explain this is, you know, different kinds of capital makes sense for different points of time. So the money we raised so far was designed to have us create software that didn't exist.

And in general, when you're doing those things, financing with equity is the way to do it because it's unpredictable when you'll be able to pay off the debt.
And how is going to say another way of saying that is when you don't have something that we have something that doesn't exist. Banks are not excited by that.
Yeah, banks are. Banks are absolutely not excited about it.
But, you know, I mean, similarly, like it's like it would be like raising a mortgage to go prospect on land. I don't know what else is out there, nor what it's priced at, but I will promise to pay you back over 30 years.

And I think in the future you'll see us raise different sources of capital.
And by the way, like, you know, Steve German sons, one of our largest investors, Cowen and Company, is an investor and a home, and I'm thrilled for these people to profit in excess as we have more and more success because they help us, they help us.
That strategy, they help us figure out who our partner should be, how we should build the business, etc. And so they're really partners in the business in a way that as you raise more capital and you scale, you're just less reliant on those those kinds of partnerships for advice and counsel than you were in the early days.

It is ironic, though, that I mean, one of the the ideas behind you rethinking the way that companies could get funding is it's going to be a little through Hum.
It's going to be a little less about who you know.
Which, of course, is the major model of venture capital.
But your investor is Steve Jervis in your old boss who you knew.
Absolutely. And I was raising capital before him existed.
But I think what's really important to point out is there is advice and then there is capital, and those are two separate things.

Sometimes the best person to give you advice is someone who started the last company like yours that succeeded, was sold, was built on an earlier kind of technical infrastructure, et cetera, and that person may or may not run a venture fund. In fact, they almost never do run venture funds.
And so the fact that we bundle these two things together, district IPOs love to talk about unbundling. This is a classic case of tremendous potential coming from unbundling. These two things. And what we've seen in venture land over the last couple of years is the emergence of solo GP's people who are founders who've built successful businesses who raise some venture capital.

Usually, they invest alongside that with their personal capital as well, and they basically are leading rounds of the companies. And so we've seen companies raise money from individuals by name, not the name of a fund.
And you're doing some of this yourself, you're making some angel investments on the side.
What's your favorite?
Oh, my angel investment.

Oh gosh. I mean, I, you know, this is very much kind of a side hobby because I love to help entrepreneurs in the early days, basically not making mistakes that I made, but I backed the company up to one goal called win reality. And they make a virtual reality app that helps baseball players learn how to how to hit, and it is incredibly interesting and sophisticated. They've got now basically tens of thousands of little leaguers doing batting practice inside the every day.

But they don't have to go travel and see their coach do it once a week when he or she has time. So I just love kind of learning about things like this.
Circling back just following up on some of the past things we were talking about is your air comparing the different companies.
It's somewhat similar to you at 13 or 14 in your closet with your with your financial reports.
Yes. So.

So we can talk about my favorite investing books, but a book I read very early on it was called Applied Equity Analysis and it is a book and early on and we're talking with 13.
Yeah, it's probably 14 when I read this, but there is a there is a I mean, it really change the way I think about companies because like early on, like Page 20 or something, they talk about the problems with gap accounting and how you can basically think about company data differently to normalize companies to each other.
Like, I know building like something like how would be possible.

And this is stuff I've been thinking about. I mean, literally since I was a kid, you make your money off of connecting the investor and the company.
But but really this, you know, the secret sauce, as they call it, is this ability to bring the data in, normalize the data and then compare the data company to company. That's what drives your company.

Yes. Yeah, exactly. And we get it, you know, on a daily basis provision by the companies themselves, companies start using the analytics we create for them.
We can tell private companies, for example, what they would be worth today if they were public. I mean, we've held companies over the past year raise a little bit north of $500 million, and there have been a handful of cases that I've been involved in where we raise the valuation by 40 percent just by saying, you know, equity investor, where did you collect this valuation? You know, if this company were a public, it would be worth X.
And that's a pretty defensible argument because anyone who does the math, it's hard to refute comps is what investors would call this thing.

And that's something that would have been impossible six seven years ago.
Yeah, because tax systems were just so, so much less pervasive than they are today. Absolutely.
Is what you're doing the future of venture capital?
If we think of venture capital as being taking the meeting and taking the equity in writing the term sheet and writing the check.

That's very simplistic over simplistic assessment of venture capital, but venture capital is pivoting to new ideas like yours.
Yeah, in the entire, you know, there's there's $9 billion of capital managed in the private markets and the US stock market.
I mean, not not accounting for its recent decline to somewhere in the neighborhood of forty forty five trillion dollars capital.
And I think all of these companies run on south systems of record.

But actually, they would much prefer to co-invest or directly invest because their fees are lower than in the in the public markets.
50 percent of capital invested is invested passively.
You can go to Vanguard and they'll charge you five basis points to invest your capital. S&P 500 used to pay Peter Lynch at Fidelity one and a half and call it 15 percent of performance on that.
To do that manually back in the 80s.

You'll see capital come in to venture directly access companies, partner with the experts who know how to build a company in that particular space to advise companies sit on the board, so on and so forth.
And that's going to be our own kind of flavor of passive or beta investing and the private markets versus what Vanguard does in the public markets and those families want to circle back to when you were a kid it.
What did? Well, first of all, mechanically, how did you do it?

What is the age of ETRADE or where are we in the Ameritrade, the back of the newspaper? I can remember the back of the newspaper in the stock.
So there's Ameritrade. It wasn't even TD Ameritrade.
It was Ameritrade office five minutes from my parent's house.
I used Morningstar a ton, but I would basically find stock screen them and Morningstar coach handbags, which subsequently got merged with the big one that I invested a lot in as a kid. But long story short, I would find the stocks and Morningstar.

I'd go to the Investor Relations website I download.
I would request the 10-K. It would get shipped to my house for free in the mail and a little booklet that would read and come through.
It is funny to think that, you know, the people who consider themselves day traders and whatnot today that are trying to make money.
Your statement, I would go to the investor, you know, portion of the website and do my research.
I think we've lost that with a certain number of investors.
Yeah, I mean, it just depends on where you are on the cycle.

But I mean, one thing that was really interesting. So I was I was reflecting on this, just thinking about our conversation we're going to have today.
And I remember that when I was in college.

I was living abroad in Italy and in Q1, Q2 of 2009, and I was investing in coach, the handbag company like in the depths of the financial crisis and when I was living in Italy, coach basically two and a half weeks from. I don't know what the valuation was in those days, but long story short, it funded my travel all around Europe on the weekends and I wasn't doing anything particularly smart. It just happens. The stock was going up because credit was coming back into the economy and we were correcting in 08 and coach had gotten badly beaten down. But, you know, sometimes you can get lucky in investing and when things are up into the ride, day trading can be really profitable, but that changes when regimes change. And, you know, eventually they trading is a hard strategy to run for a long

No, no. I mean, this is great. I just appreciate the time.
I think that, you know, I love what we do and what I'm talking about investing and really love teaching, teaching entrepreneurs how to think about how investors think.
Excellent. Blair, I appreciate it.
Yeah, of course. Of course. Great.
Have a great rest of your day.

Question and I'm like, doing this doesn't mean I'm not listening.
Or you're just checking the.
Play to get my phone. I start playing Candy Crush.
Then we have a problem.
We have a problem.
All right. Well, let's start with what you had for breakfast this morning so we can get you some audio levels.
What do you have for breakfast?
Actually, I didn't eat breakfast this morning.
I had coffee.
Yes. Are you doing the.
The moon, as they call it.
Intermittent fasting.
Is.
Not purposefully.
To do as a matter of time. You're a brand new mom.
That was the rebrand of not eating breakfast.
I love that theme. Like the best rebrands of all.
Right. Yeah, totally. Totally.
Yeah.
The leather. The vegan leather.
Yes.
There's some really good ones.
The other one is a side hustle.

/content/Preprocessed_Data/SHR Christina Melas-Kyriazi of Bain Ventures.txt

It's just a second job.
Yeah, it's the marketing.
Makes all the.
Dough. It totally does.
And then pronounce your last name for me.
MELLAS Kyrie. Aussie.
Very good. All right, terrific.
So I think I would like to start with well, I'm just going to check my hand, like, one, two, three, four, five, six, seven, eight, nine, ten.
The thing I want to start with is my absolute astonishment about marriage pact.
Had never heard of it.
I think I know most things that are going on around here.
I had never in my life heard of marriage pact.
What is marriage pact?
It's a good question. So marriage pact is a very interesting phenomenon that started on the Stanford campus and the founder of marriage pact, Liam.

What if we had people take a 40 or 50 question quiz about their values and what they care about and then we match them with their best back up match. So it's not supposed to be your soul mate.
It's supposed to be the best back up.
The always be my maybe thing.
Exactly. I think the concept of marriage pact has become kind of popular with young people, which is if we're not married by whatever age, 40, 50, like just marry your best friend. He's like, Well, that's not efficient.

Why don't we actually find your optimum back up match?
And how do you do that? Well, let's figure out your values.
So everybody on campus takes a quiz, and then after the end of the quiz, they get paired with someone on campus.
And so it just spread. And I think over 500,000 students now have participated in it.
Yeah, I've got numbers here, 131,000 matches on 78 campuses, according to the website.
Yeah.

And he decided to just go build something and it struck fire.
Do we need to let Alison? Is she going to have a queer vibe or whatever?
Yeah, she can get it.
So if you ever run your husband through it.
Yes. So Marriage Pack launched an app called Check Me, which we can all download. And you can take a quiz.
We're like, 90%. Oh, good.
92%. Yeah.
Be terrifying if you suddenly say it's 40%.
Goodness. Thank goodness.
Right. How compatible?
Hold on. You have a more competitive you're more compatible with the founder than you are your own husband with.

How do you make money off of it? This is an investment of yours.
It's an investment. But how do you.
Let's go. Let's. Lady.
She seems like she's struggling.
Yes.
I.
It's a cool thing, but.
We just got set up. We were just starting.
Grab any chair. That's not that one. But there you go.
There you go. And I was telling Christina that, you know, we can stop and start as we need to, and that it's very casual and that I used to have an audio engineer, but now I do not because of COVID.
Not that he died or anything, you know.
Because of COVID.
Right. But, you know, they started stripping down, you know, making things more, more efficient. And so occasionally I am going to look at these machine, this machine or put on the headphones.
And it doesn't mean that I'm not paying attention.

It just means that I'm trying to make sure to do both jobs.
Yeah. And so we were talking about marriage pact.
Marriage pact, Yeah. And so my biggest curiosity is how you make this is one of your investments, but how do you make money off of it?
I mean, how does it make money?
Well, it doesn't right now. And the question is we don't know.
And so in consumer social, in any time, you know, you're trying to build a company that consumers come on, especially one in social media, monetization is kind of the second order question.

And Tinder's done it and Bumble has done it.

And so they with their new app, which is called Checkmate, they will give you one option a week.
And so they're experimenting with what's the right format to present you with optionality but but also make it make it so that this is actually who we think your soulmate is Like, this is a real match.
Go give it a good shot.
So I think it's quite different than other dating apps and it's really interesting.
Matching markets.
You know, it works in love, but it can work in other things where markets are inefficient. Could this algorithm be used in something else?
Yeah, I think it can be used in a number of different places.

There's actually a big industry with compatibility for your coworkers or your friends or thinking about introspection.
There's a big market around how do I understand myself more deeply and use that to improve and kind of get to know myself better so it could be used in those things.
Also, I right now, their data set is incredibly interesting.
If you actually have a data set around who you are, what you care about and who you've connected with, you know, in theory that could be the basis for an AI girlfriend.
Which is a whole can of worms to go down.
Well, people are experimenting with that.
That's one of the big surprises of some of the developers, is that people are turning them into companions. People that they can they can tell secrets to via chat in the middle of the night.

Yeah. And I think it's a good thing.
And we're going to see a lot of companies come out that try to provide companionship and support and friendship.
And a bunch of other things via a chat bot or an A.I. friend that knows you really well that's personalized to you.
I think we need to figure out how to give that A.I.
more context so that you actually believe it's a relationship you're building right now. There is.
You know that you're talking to an AI. Doesn't feel like you're talking to a friend, but that will get better.

I want to talk more about AI in FinTech in a second, but I want to talk about one of your other investments, and that's answer habitual use, low transaction value things like coffee shops where if you are charging, you know, $4 for a burrito or whatever, the small business is paying a lot of money to the credit card company because nobody's using cash anymore.
But if you do what Starbucks did, which is create this Starbucks card or burrito card or what have you, then you can have the money ahead of time.
It's an investment you made and into is.
Developing this sort of as a turnkey right for for other small businesses.
What surprises me about it is how obvious it is.
It's kind of not that far.

There's a fine line between this just being a gift card and being an actual enterprise sort of, you know, development.
But I'm surprised by how obvious it is and why isn't anybody done it before?
Well, I think there's a few reasons.
The main one is that fintech infrastructure and all of the different pieces of the stack that you need in order to build these applications have really only developed over the last call it like five or six years.
So that has enabled new applications like answer.
So an example of that is all of the API first identity providers, all of the ways in which you can check whether something is fraudulent or not.
All of the banks that have now become API first that allow you to be able to actually, you know, open accounts quickly.

And so the fintech infrastructure world has only been kind of recent. I think gift cards are very popular and and I hope that they can actually use some of the same insights from the way that people like having gift cards.
But what they want is, is for you to be able to order ahead.
We actually. Let me let me let me kind of take a step back on that.
So one of the reasons why I think this wasn't as popular before is because order ahead, apps and digital ordering apps were more popular only recently.
And actually COVID was a big thing that eats through all of these small businesses into saying we need a digital ordering strategy.
And that enables them to then have something like ANSA and say, this should be a core part of our.

Inventory, right? If I'm already going to order ahead, I might as well be paying for it and have it all done within the app.
Yeah. And so people are now demanding more seamless payment methods, like people expect Apple Pay.
People expect to be able to order online in an app.
And so that creates a place for ANSA to come in and say, okay, people are asking for this. And you're also spending a lot of money on payments.
We're going to allow you to have a wallet for all of your customers and do it seamlessly.
And then you can add loyalty and all of the things you were doing with punch cards as part of our platform.

So I think I think there's a few reasons why it was both not possible from the infrastructure side. And also there wasn't a way to distribute it to small companies. You know, toast has been a recent huge story.
Point of sale systems have gotten better in order ahead is is really like the standard now.
Right. The consumer's expectation is very high as far as the efficiency and the speed of all of this.
Yes. And so, yeah. So ANSA, you know, has said it's it's you know, it's bad that your most loyal customers are costing you the most money, especially on small dollar trends.
That's right. The one who shows up every day and makes a small transaction cost the most.
Yeah. And so they're they're fixing that.
You introduced the founders.

I did. They they are both amazing. And Sophia, the CEO, was a product manager at Adyen Payments Company, and she left and she was writing a book. And I just like to make sure that I know all the smart, young, you know, high potential product managers and builders.
And so we both connected over being payments nerds.
And I knew the co-founder from a firm.
He was a really well-respected engineer.
And I was talking to them both about wanting to start a company.
And I said, You guys have a lot in common and you both are interested in the same things you should meet. So they ended up connecting, really just clicking, sharing this passion for wanting to solve this problem.
And when they started a company, I said, Great.
I'll fund you.

You funded three companies in the relatively short time that you've been at Bain. Is there pressure to get more money out into the system to get that deployed?

Little activity before you were at Bain, you were an angel investor.
Yeah. Have you had something that you just fell flat on your face on?
Asking you to.
But I think that the nature of venture is that you want to back people who are taking big, big swings.

And so if some of them don't fail, I think that's a sign that you're not taking enough risk. Sometimes the most ambitious ideas just have a lot of risks attached to them. You know, I've backed companies that were trying to build new, you know, food sources from alternative proteins or are trying to, you know, disrupt meditation industry or trying to, you know, disrupt fertility care, you know, for health. Some of those work and some of those don't.
I do think as an angel investor, you want to.
Ideally have companies that just flame out and don't make it.
And that's like a good sign that you're in the right ballpark.
I think sometimes if you're too risk averse, you try to back, you know, ideas that make too much sense and those don't end up being the biggest outcome.

So in angel investing, I try to be the first call from from people who say, Hey, I have a big idea and I want Christina in my corner because she's going to help me think through products.
She's going to help me think through. What are the first steps I need to take to get this off the ground? And also, she's just somebody that I trust and she's just going to have a good opinion.
And so that was the, you know, the journey I had as an angel investor.
I made almost 30 investments and.
Yeah I think the the my main learning through all of that was just.
The person actually matters a lot more than the founder or the founder matters a lot more than the idea.

Ultimately, at the end of the day, it was like I almost didn't even care what they were building. If they if someone came to me and I got to know them and I understood that they were going to run through walls.
I was like, Here's a check.
I have some other learnings on Angel investing, too, actually, that that helps.
That helped shape my career in a bit.
I think one thing that Angel investing also helped me realize was like. You have to just put yourself out there.
And the too many people are afraid of failure as a reason that they don't do things.
And that just.
Actually going and spending the time to explore an idea.
And also on my side, like raising my hand and saying, hey, I'm someone who wants to go down that rabbit hole with you and I'm willing to spend the time.

That was the unlock that then led me down this path of being someone who was in these communities that people wanted to start companies and who were exploring weird things or weird fintech ideas.
And that ultimately led me into venture.
Yes.

So I, I think that, you know, one obsession with the customer and understanding, like deeply what they need is, is this is the thing I try to bring to founders and like hammer that home with them.
I'm always refocusing on like, okay, what problem are we solving?

How how, how much of a problem is it?
What are the other ways that they could solve it?
And then the second thing is thinking through trade offs like the product management job is all about. We have a number of decisions we could make on the design, on the ways in which we go about solving this problem. How do we quantify those tradeoffs and use frameworks to make better decisions to learn faster?
And so at the earliest stages, when someone's going 0 to 1, those are those are the really important things.
We only have limited time. How do we make sure that we.
Get there faster to the right answer and unlock a key insight.
You know, so for for ants, it might be.
Hey, we have.
We have a number of different.

Cost, you know, customers. We could go after large, large coffee chains. Small coffee chains.
Gaming tipping. Like there's there's a lot of different places in which people make.
High frequency like low dollar value transactions.
Who feels this pain the most?
And how do we go figure out who that person is and how we get there fastest?
And then what do they really need?
And so in a in a world where there's limited like limited time and resources, but kind of like unlimited surface area product is about narrowing in on what's the most important thing we have to figure out right now.
Kind of just off the wall, completely out of the timeline.
QUESTION How many stores or companies has is answer in roughly there?
They're just launched.

Oh, just launched. Okay. So you don't have any data insight into what the consumer is doing as far as because, I mean, that is something that's going to be a huge advantage, right? Is you're going to have a huge amount of data.
That's right. I can't speak, you know, to to details, but it's improving retention. It's having customers spend more.
It's doing the things that we expected.
One of the things that, you know, a firm does very well, this is the, you know, pay now or buy now pay later that we've all run into.
And when doing e-commerce is figuring out very quickly who will pay back and who will not.
That's one of the best uses probably of A.I.
as far as fintech goes.
Yes. So.
I so I in fintech.
Sorry. Are you saying like who will pay back or.

Well it's just you know I mean of all the advantages that.
Yeah. One of the one of the big struggles in fintech is figuring out who will pay you back. Absolutely. And and I seems naturally fit for that sort of thing. Past behavior, analyzing past behavior, that kind of thing.
Yeah, Well, you know, people have been using machine learning models in credit and underwriting, trying to figure out, okay, what's the data we understand about an individual and how do we know whether that that person will pay us back or not based on characteristics about that person, like their credit score and their cash flow information and you know who they are and what they're buying all that information.

How do you use that as a predictor for for one, how to give that person like an internal score that quantifies the percentage chance you'll they will pay you back? And then how much credit do you extend them?
Air models today I actually don't think are better at solving that specific problem because that's more of a linear regression style problem where you're trying to use.
Attributes, assign weights to them and predict a you know, take another random sample and then understand like what's the prediction of how they'll pay you back. The current wave of I think the applications are much more interesting for like large unstructured data sets.

Large language models are really good at taking natural language and allowing you to to parse through unstructured data and and actually tell, you know, tell a computer to take actions.
So some of the more quantitative parts of fintech, like credit and fraud, I actually think are not going to be the first places that large language models go and disrupt fintech.
I think it will be more on the side of I think the first applications are going to be around document processing, like, Hey, we're an insurance underwriter and we've been doing all of this manual work or like, we are, you know, we are we are a firm and we have a big servicing arm of customer service agents.

People are coming in and saying, I want to know that, you know, the term of my loan or I have a question about a specific part of my, you know, contract before you'd have to take you'd have to spend a lot of time training agents on like long documents and rules and regulations.
Now, you can say, like, how do you allow someone with natural language to ask questions and get to the answer much more quickly?
So I think some of the use cases in fintech will start with large documents or processes where you have to follow like a compliance set of steps like, Hey, how do we identify a business? How do we go to get information about that business?

How do we then make sure that that business packs passes like, oh, fact checks or all these other checks and I can actually string together those steps and make it so that someone's just checking the final step as opposed to before. You need a team of people like going through all, all of that and sorting through it with their judgment.
So the AI now has the judgment of a person and can automate that those chain of processes. So I think those would be more the use cases, you know, versus I think that the credit underwriting actually works well today and isn't doesn't need like we don't have data actually that's that's unstructured in the way.
That makes sense.
Yeah.
You were also at shift for a while.

I don't know that that car marketplaces have really worked out as well as we expected them to.
There's no.
You know, there's no apple of the car world online.
Well, CarMax.
Yeah. I suppose.
Yeah. I mean, they're definitely not the apple of the world.
I think actually Tesla's come the closest.
That's true. And I really hadn't even thought of that.
I mean, obviously it's a marketplace, but I hadn't thought of it that way.
People do order Teslas online.
Sight unseen.
Well, Tesla is the only company that that is like fully vertically integrated in the sense that they also own the dealerships and.
So they're the closest car company.
I think that's that's built like a tech company in the user experience that you would expect from a tech company.
I think otherwise.

You know, shift and other companies that are dealing with.
Moving of physical goods in the world.
It's really hard to do that and it's really hard to do that well and at a cost that makes the, you know, these businesses like high margin sustainable and I think Shift and some others have.
Done really well at trying to figure that.
Is that something you would invest in, in the future, or is that a marketplace you're not interested in?
I think a lot of companies have been built.
I mean, I'm interested in the in the auto space in general.
Like, how do you give consumers a better experience for buying a car?
All right. That's that's my point, is that, you know, it's a it's a high value transaction that is that nobody likes.
Yeah, that's just seems ripe for disruption.

And you're right, Tesla. I hadn't thought of Tesla, but.
But otherwise, nobody's really, really, really cracked it.
Yeah, no, no one's cracked it.
I think you have to. You have to think. About what?
For for this market. Like, why has no one made it better?
There's a few reasons, and some are structural, which is that dealerships have a very deep lobby and they they actually have a lot of power in how cars can be sold to customers. And so dealerships have have just been the standard forever.
And there and they don't want to give up that power of being the standard.

And so if you want to come and try to go around dealerships as as other companies have, you are going to deal with moving physical assets and you're going to deal with, you know, maybe holding inventory, maybe not you're going to deal with.
How do you match supply and demand in a local area, which is a hard problem to and you're going to deal with?
The fact that consumers also do have choices like Tesla, which is a hard bar to compete against.
And so I think that has been the challenge with a lot of car marketplaces to date. Do I think that there is room for disruption?
Yes. And actually, the most disruptive companies have been the autonomous vehicle companies.
I mean, I think that the way that we get around is going to look really differently in 20 years.

Like I hope I don't have to go and buy another, you know, used car again.
Ideally, but who knows?
I was part of Sequoia's program, which was fantastic.

We've got the money. You've got you've got you're out there seeing all of this.

When you're at when when you're scouting or when you're angel investing.
Versus when you're at a company building product, like the thing that you can do as an early company is you can move so fast.
The larger the companies get, shipping product just takes more time.
There's more alignment, there's more internal.

Who have.
So those are my two categories. So maybe.
Savvy. I'm interested in the business accounts. Let's get started.
Right. And to those who don't understand what a meme account is.
So a meme account is.
They often start as jokes.

Where?
People make fun of something on social media?
On social media.

And since then there are like thousands of meme accounts of of different scale.

And so instead of just paying them in the normal way, like a pay for post, which is what a lot of influencers on Instagram do.

They will be able to invest in that company and have a much more aligned partnership of, yeah, I'm going to help bring this company to my community because I'm a I believe it should exist. And I think that kind of alignment is different than the kind of classic create or partnerships that have mostly happened on Instagram where it's like, okay, I'm I'm trying to sell this like gummy bears, you know, vitamins, and I'm going to go find Kylie Jenner and, you know, pay her $100,000 to post this.

That liquidity in particular has made because of his seat as a creator that he's seen early in that have worked well, like he invested in a substack competitor that, you know, is early days but is is growing well. And he actually builds his newsletter on this technology.
And so he was working with them and he said, this is this is exactly what I need is a creator building a newsletter. This is a great tool.
The benefits of that seats in that kind of partnership.
A lot.
That's a good question.
There's honestly so many so many answers to this question.
I'm trying to figure out, you know, which ones to highlight.
I think you know, venture is.
Is a long game and.

Relationships are for the long term and.
Well, let let me let me think about this one.
Sure.
Yeah.
Yeah, It's a big jump.
No, I was like, it's a really good it's a really good question because.
Because there's a few, you know, different dimensions of.
Of things I things I now know one about like the the role of a, of an of like being at a venture firm is one big bucket.
Mm hmm.
I think.

And so.

And that seems to be happening now with AI.

And we and we have the benefit at Bain Capital of owning a number of large private equity companies and across a lot of industries, health care, industrials, retail. And so spending more time like actually understanding what's happening outside of this bubble has been really beneficial.

And so yeah, I said, okay, I'll take the risk of ten years later, you know, not waiting that long to know if I'm any good at this.
Are you from the Bay Area Region?
I'm from L.A..
Oh, right on. But you're in San Francisco now?
I live in San Francisco now.

I was talking with Brian Rothenberg of Defi Ventures the other day, and he's his family goes way back in San Francisco. And we were talking about the state of San Francisco.
You have so many opinions on that.
You live in the city.
I live in the city. And I'm always going to be in the city.
I'm not leaving. I was always long S.F.
even when everyone was leaving during COVID.
It's.
Do you feel optimistic?
I do feel optimistic.
I think.
Look, it's a tough it's a tough time in San Francisco.
It's really sad. I mean, I feel often this big cognitive dissonance between.
Meeting with these startups that are have these big visions and like so much funding and are so amazing. And then I drive through the Tenderloin and it feels like a third world country.
And so I think something needs to change.

But I'm optimistic because I think people are paying attention.
And I think that there was a period of time where there was a lot of tech workers who came in and out of San Francisco and were not paying attention to politics. I think we're in a new age where, like, it is cool again to be civically engaged.
And so I'm optimistic about people wanting to be involved again in politics and, you know, care about causes.
And I think that.
That we have started to move closer towards.
Better solutions, like we need more housing in San Francisco.
How do we get everybody aligned around more housing?
I think we need we need to make sure that we preserve access to education in public schools.

And I think people like Gary Tan, who have been a loud voice for this, are doing an amazing job saying let's keep the advanced math classes in public schools. So I think, you know, and then safety.
I think people need to feel safe in a city.
And I think that people need to find ways to compassionately enforce laws so that people can go back to offices.
And Nordstrom doesn't need to shut down.
We can actually have like a vibrant city life.
And I think we're getting closer to like realizing that those three things are really important. We need the right people working on them and we need to make progress.
So I'm optimistic, but we have a long ways to go.
And I just think that the vibrancy of San Francisco is is still there.
The network effects of the people building that run really deep.

It takes a long time to unravel network effects, and we haven't done it.
And AIG has created this new like excitement and buzz in the city around what's possible. So. So the combination of like I think we're moving closer to understanding the true issues and getting to better solutions and then the the kind of excitement around this next wave of technology has made me very happy to be here.
One of the questions I ask everybody, but I don't include in the episode, but I collect them and put them together. Every summer is just book.
Tell me about a book that has been very influential in your life.
Either you read it more than once or you hand it out as a gift, or if you only, you know, the classic desert island.
And it doesn't have to be something from Harvard Business Review.

It can be. It can be Winnie the Pooh.
What's a book that is important to you?
Yeah, I have a number of books that know.
You get to choose one. Okay.
One.
A book I have always loved.
Like founder biographies.
So I love people's stories and how they built things and where they got. So there's this whole whole set of books of founders kind of telling their story about what they built. Those are kind of my favorite books and the one that I feel like I read over and over again for some reason, a Shoe Dog by Phil Knight, which it's because it combines like a consumer story with.
You know, a don't give up narrative like it wasn't always open to the right and is also kind of an easy read.

So I find myself being drawn back to those stories, especially in moments where you kind of think all these founder journeys are up into the right.
And when people actually tell you what happens, it's quite up and down.
And that's a nice rejoinder.
As a venture capitalist.
Those are my questions for you. Is there anything else you'd like to add or something I didn't touch on?
Well.
Oh, I'm. I'm trying to think of what else.
What else? We. We didn't cover that we could talk about.
Um.
Yeah. Any anything we should talk about?
Yeah, I think it's great. It's really wide ranging.
I know a lot of topics.

Software. I just have to remember.
How everything goes here.
Will you count to ten for me?
Excellent. And where is your microphone?
Right.
Right in front of you. Okay, very good. You're a little echoey, but you're not bad, so just come a little closer to it. You should be all right.
Okay. All right. Very good.
So we. We don't record the video.
The video the point of the video is just to show that we see each other.
Get some sense as to, you know, whether we're being silly or sarcastic or, you know, so that that the know better or better communication.
But we will not be publishing the video.

The other important thing is that we do edit this. So if you get halfway down a thought or an idea and you think to yourself, Wait a minute, I've forgotten the question, just wave your hands in the air and and start over.
It's it's absolutely no big deal.
Let me start with how do you pronounce your last name?
Alomar.
Alomar Very good. And I'm 13.
I'm assuming that's named after the star.
That is the most insightful.
I've never actually had anyone get that right off the bat.
But yes, Messier 13 is exactly how his name and how to have the Dorian gang. Right.
It's either it's either a very, very important part of the galaxy or a Salvadorian gang. Yeah. Oh, yeah.
One or the other. You pick, you know, pick your own adventure.
How did that come about? That name.

It was before my time. But the idea of the name is that the Ms.
13 is the, you know, brightest galaxy of stars in the in the sky brightest cluster.
And and the idea is that the brightness of any of the individual stars is or the brightness of the galaxy is greater than the brightness of the individual stars added together. And so, you know, it speaks to the theme of what we built in M13.
I can talk about it if you want to include it in the podcast, but it's about the idea of bringing all these operational experts to the table and having them, you know, brighten the the the, you know, the brightness of our portfolio, essentially.
Oh, that makes sense. I like it. Well, let's talk about, you know, what what venture is doing in this situation.

I know founders are usually trying to get to the next round.
So let me ask you, is there a next round?
The question we ask ourselves every day.
But yes, the interesting thing is there's a significant amount of money sitting on the sidelines. We know that.
We know that investors want to invest.
We see it ourselves. We have to put our money to work.
The the situation right now is that I think everybody is really taking their time. They they have time as opposed to where we were a year ago.
Every deal was rushed. And so they're being branded very carefully.
Everyone's trying to pick the best companies, but it is a challenging time to raise money. We found it a lot across our portfolio, great companies off portfolio.
They're just having a hard time securing capital.

And I think a lot of firms who have, you know, lead positions with portfolio companies are taking the initiative to follow on and, you know, do bridges or do extension rounds or do things that allow their companies to exist.
But I think everybody sees that with the tidal wave of, you know, the Fed and what's happening with rates.
Obviously, the inflation numbers came out today, which were very positive.
But as that passes and the markets begin to settle, I think that I think that investors will will become active again.
And I think it's you know, it.
Is a time to be careful. It's a time to, you know, pick companies carefully will be at all times are times to big companies.

They are. But the reality of the situation is when you go into a hot market, everybody's trying to invest and you got people fighting tooth and nail for for participation in around.
And as a result, you do get into situations where you do get confident and comfortable with the company, but you don't have the opportunity to do the level of diligence you'd want to do in a typical investment.
And so you're forced into quick decisions in some cases.
Today, that doesn't happen. But historically that has been the case, especially in the last two or three years where the market's been so hot.

And so I think now, you know, firms like yours essentially have the luxury of really being able to spend time and get to know companies before making their investments rather than being rushed into decisions before they're truly ready to make those decisions.
Hold on. A quick check of my furnace. Came on to the blower, came out to shut the door.
When you when times were flush, were you making quick decisions and did you end up regretting any of them?
Luckily, we haven't regretted any decisions.
I would say we have probably in a couple of different occasions been forced into moving quicker than we would have typically wanted to.
Yes.
But in a weird way, this kind of advantage, venture capital, right?
I mean, as opposed to advantage startup.
The quick moving.
Oh.

My God. You know that there is time.
You're competing less against each other for that for that start up, and you have more time to think about whether this is the right investment.
I think it's healthy on both sides. I think it's healthier on on, you know, us because we're actually able to build relationships with companies and get to know them better and and, you know, make much more kind of clear decisions on on who we love and who we want to support.
But I also think for the founders as well, instead of being bombarded by 100 different venture funds that are all sell, sell, sell, you're actually getting to know the people that are going to sit across the table from you for the next five, ten years.
And you're getting to understand them much better, understand the way they think.

And I think that's a huge advantage as well, whereby in the old days, it's like everybody's throwing all their credentials at you and you kind of, you know, even as a founder might end up making the wrong decision in terms of who you want to be you want to be funded by.
But there's a speed dating sort of to it outside.
The venture was competing with each other for what startup they could grab, but then the startups were overwhelmed with the number of venture that they were being offered.
Yes, it works both ways for sure.
So what do you need to see if you are going to do a follow on fund or are you going to do a new investment?
What do you need to see in this environment out of a startup?

So I think that two different things. I think with the follow on funds, we know these companies really well and we understand our thesis on the companies.
And really what we need to see in that regard is a validation of our thesis.
Like, do we truly believe that these companies can build what they're saying they build is their validation with their customers.
You know, we're intimately working with them every day.
The key thing is to try and divorce emotion from the discussion and really focus on like true value of the business.
And that's what we try and do in terms of our follow on investments.
But for us, it's relatively obvious where companies feel like they have real potential but are not.
But the market condition is getting in the way of them raising money.

And we we do what we can in those situations, not only to put our money in, but also to help them, you know, fill that round and secure capital from other places.
In the meantime, from an outside investment standpoint, I don't think the rules have changed. I think, you know, we're still looking for great, great teams.
We're still looking for great market categories that are, you know, defining, defining businesses within particular market categories, you know, good metrics, good validation on as many fronts as possible. Do they have customers? Do they have revenue?
You know, is the products impactful in the market?

So a lot of the same things. I think that it just gives us the ability to be a lot more detailed in understanding that. So we speak to customers, we speak to stakeholders. We, you know, we get a much better feel for how the business is running as a whole. And that gives us much more confidence and, you know, the opportunity and the outcome.
What recommendations do you have to companies that are not getting funding who either can't get follow up funding or decide maybe they don't want it?
Well, you know, it's very different for different types of companies.

So, you know, for companies that are saying, I'm going to go to the market a year from now to raise money, even my biggest suggestion is start building those relationships today. You one, you know, insiders as well as outside potential investors to get to know you and get to know the company early so that when the decision time comes, it's very easy for them to make a decision.
For companies that are, you know, that are short of capital and wanting to go to market quickly, but not seeing the opportunity or not getting the opportunity.
I mean, it is it's a tough road.
If they don't have a lead inside investor that has the ability to do an inside round, then they're really challenged to go out and find new investors.

And it's you know, it's it's it definitely is a question of, you know, numbers like, you know, you have to speak to a lot of people.
You have to connect a lot of people. You have to just kind of work, work, work and push those walls down until you get to you know, you only need one.
Yes, you only need one firm to believe in you.
And so you you do have to do the work to get that done.
But it's challenging. I mean, you know, often I get asked the question, should companies, you know, cut off their staff and this, that and the other?
In some cases, yes, they need to.
But when you only have two or three months of money or two months of money, you know, how much are you going to extend by, you know, giving up 10% of your cost?
It's it's not the thing that's going to save you.

But ultimately, you need to find that capital.
You need to be able to go about 24 months.
You've recommended.
I'd say, from the point of investment. Yes, from the point investment, 24 months.
I mean, you can't stay 24 months forever, because if you're 12 months into raising into having raised money, then you're not going to have 24 months left.
But I think the goal right now is, from the point of investment, have at least 20, 24 months of breathing room. And then obviously if the markets turn, you may be able to opportunistically raise money. You know, well before that.
You had said to Bloomberg that this is different than it was in 2008 and the global financial crisis, that there was no money to be had back then. But now the money's just sitting on the sidelines.

Yes, absolutely. Night and day difference.
And so I was a founder back in those days.
Now I'm an investor. So I've kind of sound both sides of the table that but back in the 2008 era, all the money dried up, those little, you know, money to go around. And so everybody was really just struggling to navigate how they were going to get through and they didn't have avenues to find money.
I think the way the market is now is you kind of see the market on a temporary pause.
And one of the key things to think about is as long as there's a huge amount of volatility in the valuations that that that companies are using to assess your business. So the public markets are volatile.

There's no real stability. Then, you know, you going out to try and pull money or try and get a valuation from a from an investor is going to be challenging. And so the investors are going to basically be nervous about how to set price, how to do these things.
It's on pause, but as the market stabilized.
So if we go to Q1, Q2 and we see the, you know, the stabilization of the equity markets and the slow growth, again, of technology stocks, then that gives a baseline for investors to start investing again.
And, you know, they're going to need to invest. So.
Right now, it's a patient's game. It's like how how?
You know, you have to survive through the timeframe.

Back in 2008, we didn't even know that the financial markets were ever going to come back. And it was it was more about trying to figure out how how can businesses survive. And I think, you know, I ended up being acquired back then. And I think those probably have a lot of M&A going on.
Just companies that knew that they weren't going to be able to continue to fund through through venture sources.
Are the things you've done at M13 to to batten down the hatches, so to speak?
Without portfolio? Yes, I think a lot of our focus this year has been on internal portfolio companies and thinking about how to help them navigate the environment. You know, as a firm, I think, you know, we're lucky in that we're a fund, we have fixed revenue, we have fixed fee structure.

So we are able to continue to provide the same level of support to our portfolio companies as we were, you know, a year ago or two years ago.
But in terms of how we think about deploying our capital, we think about, you know, the best companies in our portfolios and how we can support them, follow on funding. And then we think more modestly about how do we continue to roll out investments into new businesses. And so there is a slight change in the way that we approach our model and our business to kind of accommodate for the market condition.
You've invested in, in cryptocurrency and Bitcoin businesses.
Is that something you would do again?
Yes. I think we still believe.

So just to be clear. Most of our investments are actually infrastructure in crypto. And so we really believe in the infrastructure of blockchain and the future of that and the applications of that into the future.
There are more speculative opportunities for investment out there around, you know, tokenization and things that.
Make one of the worst. I think one of the worst things that happened to the blockchain was cryptocurrency.
Yeah, perhaps the.
Blockchain makes total sense and made up nonsense money to me does not.

That's a fair comment. I'm sure there's going to be people that will debate you on on all of that. I, I probably aligned closer to you just in the sense of, you know, there are too many too many coins out there. There are too many there's I think 18,000 different coins out there.
The the value in a lot of the NFT projects out there, I think is is hard to find.
But, you know, there are diamonds in the rough.
You know, there are gems out there that you can find that have real, you know, solid technology, solid value.
And I think if you find those, there is value that ultimately, though.
I'm personally a real believer in the infrastructure side of it.

You know, if if you can invest in things that will feed the future blockchain environment, kind of the web3 environment, then those will survive when the application layer of things may, you know, may consolidate or may fade away over time.
You in an interview, you said one of your regrets was not taking cryptocurrency very from a company called NBA Top Shop.
They offered you a million in coins instead of taking equity and you took the equity.
Have you tracked the value since?
Well, we didn't take the equity. It was actually a it was they didn't give us the option of equity. It was invest in the coin or nothing.
NBA top shot. Yeah. I mean, at the point that we were being offered the million dollars, I think that was a peak moment where it was, what, 360 million or something?

I wouldn't call it a regret. I think the question that I was asked was, you know, is there a deal you think you missed that you would have?
Okay. So you did not you ultimately did not end up taking taking a position in Topshop as a they would only offer the coin.
Exactly. And at the time, I think the regret was that we weren't thinking about, you know, the ever evolving investment marketplace and the type of asset that we were willing to invest in and buy.
I mean, since then, we've we've done a number of deals where there's been a combination of equity and tokens and things like that. But at that time, it was the very first one that came across, and we were just very, very hesitant about the idea of taking a token position rather than add to equity in the business.

The business has boomed. I mean, it's is doing incredibly it's done incredibly well.
Obviously, the markets as a whole are fluctuating pretty significantly.
But but as I said, there was a time where it was a $360 million value from a potential million dollar check. And at that moment in time, which is probably when I was asked the question, obviously it would have been nice to return our, you know, our overall fund, plus some from one small investment.
And that would have been a good outcome.
But you haven't track track the worth of it since.
I don't have the worth of it today. But I do know say it's come down significantly from there. But but it's still even today would be a very valuable return on the million dollar investment. But do you think.

Obviously we want to we want to get rid of, you know, crypto exchanges and things that that are not working with the world, honestly, etc.. But do you do you see this shakeout as being healthy?
Yeah. I mean, shake out's off and on healthy.
It goes back to what you said. I think a lot of the projects and a lot of the businesses out there are, you know, House of Cards and they're building, you know, unsustainable, you know, constructs for token valuation or nfts or whatever it is or COIN valuation.
And so I think having a shake up that makes people think about, okay, let's look at true value and look at what provides utility.
Those are the things that will survive the long run.

And one of the key pieces of kind of how I think about investing is I don't really care if something's going to boom, you know, and be a top shop as a.
As an example. I don't really care if it booms in a year.
I want to know what it's going to look like 5 to 10 years from now.
That's our investment horizon. And I want to make sure that, you know, we've seen so many businesses flare up and then disappear.

You want businesses that have sustaining power and have the ability to build, you know, multibillion DECA billion valuations in the 5 to 10 years ahead rather than something that's going to create like a quick retirement year from now. And so I just think it's a healthy investment philosophy to think about, you know, the fundamentals of a business and how that's going to really create value over the long term.
What do you what makes you happy in this job?
Why? What makes you excited to go to work on a monday morning?
So I love this job. Best job I've ever had.
I've spent, you know, prior to this job, 20 years, slightly more than 20 years running companies by myself founded two of them with CEO at the site Digital Ocean.
And that doing that is the hardest job in the world.

Taking that knowledge and that experience and everything that I've gained and all the relationships and everything that I built over those years and giving that, you know, sitting day to day with a series of young, energetic, innovative, super smart entrepreneurs and helping them navigate through the challenges that I had to go through so that they can accelerate through them for better run and achieve far bigger things than I have achieved is the most exciting thing that I could ever wish for. And I think every Monday morning, coming in and knowing that I'm going to speak to these really creative and just inspiring founders all week and navigate problems on a day to day basis is just very exciting to me. A lot of fun, you know, very, very rewarding.

And then tell me about your background. Is it an English accent?
It is. I was born in the U.K., grew up in the U.K., did my I did engineering degree in Imperial College in London when I was 21. I graduated and moved to Los Angeles, where I ultimately started my first tech company.
But yeah, I grew up in the U.K. I, I then moved from Los Angeles after I sold that company and moved from Los Angeles to New York to do an MBA at Columbia and then stayed in New York for the following 20 years and continued to work in tech.
So why why moved to the United States?
What what what was that story? What what inspired that?
Well, we're talking in the early the mid-nineties and anyone who lived in the UK, the early to mid nineties knew that it was a little bit depressing.

It wasn't, it wasn't the best environment.
My father actually was living in Los Angeles and I had a green card.
And so having finished university, I had the option of taking advantage of that.
And I have two sisters as well.
We all did the same thing and moved to Los Angeles just to start our lives.
And that's kind of how we began our careers.
So I've never actually my you know, my fintech company in the 2000s, I had an office in London, headquarter office in London.
But generally I've never really worked or lived in London.
It's always been the U.S. I've got very accustomed to kind of U.S.
business culture and kind of how things work in the U.S..
I worry about Great Britain a little bit.
You know, it seems like a tough time.
I mean, the queen has died. It's Brexit, there's a recession.

It seems like a tough a tough time.
Well, I mean, I would say seems like a tough time everywhere, doesn't it?
I mean, we can point we can point to any country and look at the problems.
I think that it's just incredibly tumultuous time globally, including in the US. So I do think the U.S.
has the benefit of just really kind of being ahead of everybody else from an economic standpoint. Just I think that I think the U.S.
will emerge out of kind of a bad cycle more effectively than the rest of the world. But but but, yeah, I mean, the U.K.
does have its challenges that try you know, hopefully they're finding their footing with the new prime minister.
But it's been a lot of a lot of shaky movement in the UK.

You're right for a guy who was, what, three, three prime prime ministers in three weeks, practically. Yeah. And then just lastly, what's your just sort of general forecast? I mean, we'll run this after, you know, the Fed will have made a decision. You know, I don't think we're going to run this till next week.
But but I mean, more a forecast for the next six months or the next year.
Where do you see us going?
A soft landing, something more harsh.
So I'm the eternal optimist. Let me open with that.
So I'm always going to try. And I feel like being an optimist, I always have in my life being able to navigate towards the best outcome.
You know, I'm always fighting for the best outcome rather than defending against the worst. You know, obviously you have to be ready for it.

So I will give you an optimistic outlook.
I do think that inflation as you go through Q1 will come down pretty significantly. And I think the reason mainly is because year over year inflation, you know, last year and this year in January, February, March as well, we really started seeing inflation rise. And when you think about year over year inflation, that's very different comparing December to December versus comparing March to March.
So I think that naturally there's going to be an organic reduction in inflation even though, you know, other factors like energy prices and the like are all kind of coming down as well anyway. So with that, I would hope, you know, the expectation right now, I guess, is that the Fed rate will do 50 basis points tomorrow. We'll do another 25 February.

I think the Fed will probably follow through with that because, you know, I don't think they will leave anything to chance.
I'm hoping that if inflation numbers do come down the way that I'm hoping they will, that'll be the end of it. And then you'll start seeing a flattening of the Fed rate.
With that, I think the market will be set for a stabilization, then the opportunity to start building on itself a little bit more.
The great news for me that I think is that, you know, even though there's been a lot of layoffs, the job numbers have stayed relatively strong, wages have stayed relatively strong.
And so, you know, the kind of the root source of of, you know, consumer health in the U.S.

market has remained relatively strong, even though we've gone through a pretty tumultuous time at the economic level. And so if those numbers can stay relatively stable through this period where the Fed ultimately, you know, flattens out, then I'm hoping that we're going to get somewhat of a soft landing. I don't think we're going to see anything like 2008.
I was also around during 2000. I don't think we'll see anything like that.
So I'm hoping for a relatively soft landing.
I think, you know, there's an engine restart that needs to happen.
It's just going to be how efficient that can be.

Is it going to be a quick engine restart when money starts going back to work and people start getting back to growth? Or is it going to be a stuttered start where it takes six, nine months to kind of get people back onto the growth mindset?
So I'm just not sure where that's going to land right now.
You said you're an optimist, and when I'm thinking about it, Ventures is sort of an up an optimistic industry.
Yeah, it has to be right. We're trying to change the world.
See optimistically thinking about, you know, what companies are going to truly impact and change the world. You have to think about the positive for sure.
Excellent. Well, we'll stop there on this.

No, that's great. I appreciate the time. I actually didn't realize you were quoting at the very beginning, but I guess we jumped straight into it.