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Speaker 1: This is Masters in Business with Barry Ridholtz on Boomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: What can I say about Ben Horowitz. He is the

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Speaker 1: co founder at Andrews and Harrowitz, a twelve billion dollar

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Speaker 1: famed vc uh in Silicon Valley. I kind of get

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Speaker 1: the sense that Ben is the inside process guy who

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Speaker 1: looks at the world of venture investing and technology as

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Speaker 1: a series of engineering problems to be solved. His partner,

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Speaker 1: Mark and Reason, also a programmer slash engineer. UM. I

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Speaker 1: get the sense looks at the world slightly different and

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Speaker 1: the two of them have really put together a unique

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Speaker 1: firm in Silicon Valley that has been wildly successful. If

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Speaker 1: you are at all interested in technology startups, venture investing, management, culture,

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Speaker 1: or hip hop, you're going to find this conversation to

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Speaker 1: be absolutely intriguing. So, with no further ado, my conversation

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Speaker 1: with Andresen Harowitz is Ben Harrowitz. This is Masters in

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Speaker 1: Business with Barry Ridholts on Bloomberg Radio. My special yest

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Speaker 1: this week is Ben Harrowitz. He is the co founder

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Speaker 1: and general named partner at Andres and Horowitz, a highly

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Speaker 1: regarded venture capital farm located right on Sandhill Road in

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Speaker 1: Silicon Valley. He earned his MS degree in computer science

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Speaker 1: from u c l A, following a b a in

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Speaker 1: the same space from Colombia. He is the author of

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Speaker 1: several books, including The Hard Thing About Hard Things and

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Speaker 1: his most recent book, What You Do Is Who You Are.

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Speaker 1: Ben Harrowitz, Welcome to Bloomberg. Thank you, Barry. So you

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Speaker 1: began your career at the legendary Silicon Graphics in what

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Speaker 1: was the technology scene like way back then? It was

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Speaker 1: very different, um in that it was just there was

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Speaker 1: just technology people in it. So it's really broadened since

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Speaker 1: then an amazing way. And the reason was, you know,

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Speaker 1: we were selling technology two technology people. It was all

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Speaker 1: B two B. There wasn't really consumer businesses in the space.

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Speaker 1: And then Silicon Graphics was kind of the Google of

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Speaker 1: its stay and that it was where all the best

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Speaker 1: engineers went. Um, you know, it kind of had all

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Speaker 1: the panash Uh. We had done the kind of animation

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Speaker 1: for the Terminator movie, which was like a big deal

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Speaker 1: and that kind of thing. So it was it was

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Speaker 1: super exciting time and just amazing. You know when I

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Speaker 1: got there, how smart everybody was, um, which you know

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Speaker 1: in life. You just never get put in a situation

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Speaker 1: unless you're in a company like that. Quite quite interesting.

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Speaker 1: How did you move from Silicon Graphics to um loud Cloud?

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Speaker 1: How did that come about? Yeah? Well so the big

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Speaker 1: kind of step in between it was be called Netscape

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Speaker 1: UM which I joined. And what was your role in them? Yeah,

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Speaker 1: so I started as a product manager UM on the

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Speaker 1: kind of server product line, which ended up being very

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Speaker 1: important because you know, Microsoft kind of took the money

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Speaker 1: out of the browser product line, which was our first one. Uh.

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Speaker 1: And although that, although it didn't work out all that

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Speaker 1: well for them, eventually led to the anti trust suit

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Speaker 1: which they lost. I yeah, no, it definitely we definitely

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Speaker 1: put the hurt on them, but they kind of forced

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Speaker 1: us to sell the company. So, uh, you know, it

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Speaker 1: was an interesting one where I think they won the

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Speaker 1: battle and we won the war. Also, we broke the

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Speaker 1: Windows monopoly, which was you know, the win thirty two

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Speaker 1: A p I was the kind of key lynchpin of it.

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Speaker 1: And because of Netscape, people stopped writing to that and

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Speaker 1: that kind of enabled the kind of way for everything

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Speaker 1: else that's happened since. So from Netscape, you your partner

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Speaker 1: Mark Andreeson famously created um the first browser. I think

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Speaker 1: he was still in college years old. Yep, then came

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Speaker 1: out and launched uh Netscape, which very quickly when public,

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Speaker 1: really kicked off the whole dot com fifteen months old.

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Speaker 1: When I want public, who U was Netscape? That's unbelievable. Yeah,

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Speaker 1: that fifteen months we we even today as crazy as

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Speaker 1: things have been, although the argument is it's everything has

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Speaker 1: gone much further in the opposite direction. Let me bring

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Speaker 1: this back to you. Um So from Netscape going public,

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Speaker 1: how did you roll into loud cloud with Andresen Yeah

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Speaker 1: so Netscape point uh public. But then eventually, you know,

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Speaker 1: it was a very rough, kind of a legendary battle

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Speaker 1: with Microsoft, and we saw the company to a o

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Speaker 1: L one point six billion something like that. Not well Netscape,

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Speaker 1: this is a Netscape slee So Netscape sold at the

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Speaker 1: time it was four point two billion, but at the

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Speaker 1: point the deal clused was ten billion dollars. Really that's

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Speaker 1: a in transaction. Yeah, amazing trans mid nineties for sure.

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Speaker 1: Oh yeah, yeah, yeah it was it. Look, it was

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Speaker 1: a great outcome for a company. I was four years old.

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Speaker 1: I mean, you can't you can't be mad at it. Um,

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Speaker 1: but at a O l uh we were. I was

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Speaker 1: in charge of kind of a well e commerce. And

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Speaker 1: the interesting thing at a L L e commerce was,

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Speaker 1: you know, it was a way like you come, you

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Speaker 1: pay a well ten million dollars and they put you

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Speaker 1: in the a well mall. That's kind of how the

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Speaker 1: internet worked in those days. And yeah, the walled garden.

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Speaker 1: And once you were in the mall, the problem was

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Speaker 1: that your site would just basically collapse because a well

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Speaker 1: had so much traffic it would basically turn it on

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Speaker 1: you and you would just not even be able to

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Speaker 1: handle fire. Absolutely, Oh my god. Yeah, and so that

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Speaker 1: gave us the idea to create what was, you know,

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Speaker 1: kind of the original or at least the original named

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Speaker 1: so cloud computing company, loud Cloud. The idea is that

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Speaker 1: this is scalable dynamically on a fly. If a ton

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Speaker 1: of traffic comes in and you don't just crash, you

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Speaker 1: get to take full advantage of that traffic. And so,

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Speaker 1: so let me back up a little bit when I'm

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Speaker 1: really curious about you start at Netscape as a middle manager,

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Speaker 1: how do you rise through the ranks and how do

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Speaker 1: you eventually become tight within reason? Yeah, well, I think

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Speaker 1: there were two things UM and they were they were separate.

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Speaker 1: So the relationship with between Mark and myself was due

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Speaker 1: to kind of there's a phenomenon in companies where if

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Speaker 1: you think about UM product strategy and the ability for

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Speaker 1: any individual to create a new proper like to create

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Speaker 1: a new product that works like that lands in the

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Speaker 1: market is a very kind of rare skill. It's kind

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Speaker 1: of rare skill you have in a company, and even

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Speaker 1: in a really big company, they're only like five or

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Speaker 1: six people who can do that, who can create a

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Speaker 1: new product and get a market. And he I and

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Speaker 1: I were like whatever, two of the six at the company,

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Speaker 1: and so we became friends, uh over that, and then

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Speaker 1: I think the rise through the ranks was more. Look,

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Speaker 1: almost nobody in Silicon Valley actually cares about or puts

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Speaker 1: effort into like management and developing people. And so I

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Speaker 1: kind of realized that early and I thought, well, you know,

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Speaker 1: I ought to do that UM and then that will

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Speaker 1: distinguish man. I think that's kind of what led me

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Speaker 1: to being a senior exact and then a CEO. That

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Speaker 1: was a conscious decision, Hey, we're ignoring our staffing, we're

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Speaker 1: ignoring the people who work for us, and if I

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Speaker 1: find a way how to work with these people, manage them,

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Speaker 1: motivate them, etcetera. That's a positive career move. I mean,

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Speaker 1: was it that calculated, Well, um, you know, I don't

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Speaker 1: know if it was that calculated, but that's kind of

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Speaker 1: how it unfolded in that. Uh. Look, you get rewarded

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Speaker 1: in a tech company for kind of having the best

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Speaker 1: ideas and kind of knowing the technology and the products

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Speaker 1: and the market the best like that. That that always

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Speaker 1: gets you points and people usually don't even notice how

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Speaker 1: well you're kind of running your team. Um, at least

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Speaker 1: in the short term. Over time it becomes obvious and

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Speaker 1: uh so that was a big deal. I think that's

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Speaker 1: that was a big deal for me anyway, quite quite interesting.

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Speaker 1: So you go from Netscape to loud Cloud. Eventually loud

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Speaker 1: Cloud becomes OPS where it gets sold to HP for

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Speaker 1: one point six billion dollars. Uh and you stick around

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Speaker 1: HP for a couple of years. What was that like

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Speaker 1: one year? Yeah, like I learned a lot um. You know,

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Speaker 1: HP at that time was I would say, kind of past.

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Speaker 1: It's heyday for sure, and you know it had gone

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Speaker 1: through you know, uh, bunch of c e O s

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Speaker 1: in succession um, which is never generally good. As you know,

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Speaker 1: the culture kind gets twisted around and so forth. Uh.

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Speaker 1: And I think that the thing that I learned was, um,

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Speaker 1: you know, a company's culture kind of goes bad when

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Speaker 1: nobody feels like it's their company, when they all feel

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Speaker 1: like they worked there. And I think we had gotten

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Speaker 1: to that point with HP where nobody felt like, okay,

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Speaker 1: HPS my company. It was like I was meaning no

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Speaker 1: equity participation. They don't feel like it's not a financial incentive,

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Speaker 1: it's a it's more of a spiritual ownership like this

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Speaker 1: is I'm proud of my company and where I work

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Speaker 1: and so forth, and uh, you know, I'm gonna make

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Speaker 1: sure that I represented the best way and the work

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Speaker 1: that we do is high quality and all that kind

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Speaker 1: of thing. Um, they had lost that. And you know,

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Speaker 1: I've never seen a company that had lost it entirely.

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Speaker 1: They had it and then lost it. Oh yeah, I mean,

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Speaker 1: of course you knew work in Silicon Valley that they

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Speaker 1: had it better than anybody. You know. The HP way, Um,

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Speaker 1: you know, Dave Dave Packard was just a legend as

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Speaker 1: a CEO and a manager, and um, you know, and

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Speaker 1: that was kind of they built a lot of the

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Speaker 1: culture of the whole all of Silicon Valley. But by

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Speaker 1: the time I had gotten there, you know, in the acquisition,

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Speaker 1: uh you know, and there there's this kind of thing

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Speaker 1: which maybe you have seen it. People either get rewarded

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Speaker 1: at work for caring or for not caring, a meaning

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Speaker 1: that like, how do you get rewarded for not caring? Well,

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Speaker 1: let's say that the company can't make a decision for

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Speaker 1: whatever reason, it's to bureaucratic. So you work your butt off,

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Speaker 1: you figure something out, you have a new idea, a

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Speaker 1: new project or whatever. You try and bring it forth

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Speaker 1: and get a decision on it, and like it goes

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Speaker 1: nowhere because nobody can decide. Then you're punished for caring

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Speaker 1: because you spend all that time and you get just

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Speaker 1: nothing but frustration. Meanwhile, the guy who was playing video

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Speaker 1: games at his desk, Like, that guy gets rewarded because

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Speaker 1: he did nothing and he's probably going to get the

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Speaker 1: same pay increases, no negative consequences for not caring versus

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Speaker 1: actual time waste and energy way for caring and trying

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Speaker 1: to do. Let's talk a little bit about the early

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Speaker 1: days in terms of raising money and deploying it. What

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Speaker 1: was that like when you guys were first launching A

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Speaker 1: sixteen z as as it's known amongst a small group. Well,

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Speaker 1: it was interesting because we had it had that quality.

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Speaker 1: There's a quality that you always want and I understand

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Speaker 1: it's better as a venture capitalists and I did as

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Speaker 1: an entrepreneur, but you always really want it when you're

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Speaker 1: starting something new, which is you want people to say

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Speaker 1: you're crazy. That's the dumbest thing that I've ever heard,

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Speaker 1: because if you don't hear that, then you don't actually

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Speaker 1: have a breakthrough because if it's obvious to people, then

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Speaker 1: like it's not it's not that great idea. Um. And

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Speaker 1: so we got that big time, which was awesome. So

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Speaker 1: you know, we went and we when you were when

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Speaker 1: you were launching and greesent Harlot's oh yeah, Now was

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Speaker 1: that a function of we were right in the middle

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Speaker 1: of a meltdown or just enrule, who needs another venture

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Speaker 1: capital farm? Well it was those two things. So it

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Speaker 1: was you know, two thousand and nine was the worst

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Speaker 1: time I think in the last thirty years to raise

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Speaker 1: a new venture capital fund. Only only two new ones

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Speaker 1: were raised us in coastal ventures, and of course of

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Speaker 1: the coast is a super legend and venture capital business. UM,

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Speaker 1: so like, yeah, it was a super bad time to raise.

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Speaker 1: Nobody needed another yet another venture capital firm. And then

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Speaker 1: our idea behind it, which was we were going to

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Speaker 1: use um Michael Ovit's as CIA as the blueprint for

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Speaker 1: the firm. Everybody thought was the dumbest thing that they'd

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Speaker 1: ever heard in their lives. I mean it was just like,

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Speaker 1: what are you talking about? Like this is nothing like Hollywood.

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Speaker 1: You can't do that, you guys, are you know that

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Speaker 1: will never work? Like it's been tried a thousand times,

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Speaker 1: you know, like everything, like it's so dumb, nobody would

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Speaker 1: ever try it to Like it's dumb and it's been

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Speaker 1: tried already and didn't work. Like explain the CIA blueprint

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Speaker 1: what you were doing in how different that was from

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Speaker 1: typical vcs. Yeah. So basically if you looked at um,

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Speaker 1: the talent agency business before CIA, when Michael started in

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Speaker 1: seventy five, I think, um, it was kind of you know,

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Speaker 1: you had you looked at any firm, you had agents,

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Speaker 1: and then you had kind of people in the mail

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Speaker 1: room because there was no emails, so you have to

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Speaker 1: deliver the mail. You remember this Barry it's an old

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Speaker 1: kind of school thing. Are you saying, I'm old? Well,

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Speaker 1: you know, you're you're you're kind of at least close

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Speaker 1: to me, okay, um, And then you have I think

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Speaker 1: I actually have a few years on you. Yeah, okay, good,

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Speaker 1: fifty eight you're fifty four some okay exactly so um.

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Speaker 1: But anyway, so then you had secretaries and like that

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Speaker 1: was the firm. And in the economics where you get

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Speaker 1: ten percent of whatever an actress made or you know,

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Speaker 1: an actor or that kind of thing. Um, And so

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Speaker 1: as an agent, the firm would generate tempers and override there.

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Speaker 1: Some would go to pay for the secretaries in the

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Speaker 1: mail room guys, and then the rest would go to

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Speaker 1: the agents. And you know, that's kind of how they rolled.

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Speaker 1: And so kind of as a result of that, every

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Speaker 1: agent kind of was a little bit you know, playing

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Speaker 1: for himself and that newk. Yeah, what you kill, your

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Speaker 1: network is your network, you know, the guys you know,

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Speaker 1: and so you know, and that's how it worked. And

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Speaker 1: then when you were if you were like a great

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Speaker 1: actor and you were choosing a talent agency, you'd always

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Speaker 1: go with the one that had the other big time actors, right,

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Speaker 1: like it's just an obvious thing. And so the rich

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Speaker 1: got richer, and the kind of same firms had been

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Speaker 1: the top for for you know, decades. Uh So, then

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Speaker 1: Michael comes along and he flips the model and he

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Speaker 1: goes so he and his kind of founding partners deferred

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Speaker 1: all their commissions for the first several years and built

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Speaker 1: what he called the franchise, which was the professional I

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Speaker 1: network for talent agency business. And that basically manifest itself

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Speaker 1: in the uh the pitch meeting where they would pitch

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Speaker 1: the talent. So the way it worked at William Morris

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Speaker 1: was you'd go in, you meet with your agent. They'd say, oh, yeah,

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Speaker 1: I know the president like Warrener Brothers Pictures, and I'll

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Speaker 1: get you into that and the da da da, and

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Speaker 1: that was that was kind of the pitch. You go

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Speaker 1: into C A A. They had thirty people sitting around

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Speaker 1: the table. The first person would say, I managed book publishing.

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Speaker 1: Here are the relationships we have with all the publishers.

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Speaker 1: Here are the new books coming out where I think

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Speaker 1: that you would fit as we turned them into screenplays.

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Speaker 1: And the next person would say, I'm in charge of music,

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Speaker 1: and here's how we can cross promote you there, and

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Speaker 1: then next person say, I'm in charge of international. Here

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Speaker 1: the Japanese television commercials we can slide you into. So

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Speaker 1: it was just an overwhelmingly powerful network. And if you

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Speaker 1: fast forward, you know, fifteen years later, of course, Michael

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Speaker 1: became the most powerful man in Hollywood and they owned

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Speaker 1: you know whatever, ninety percent of all the top actress,

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Speaker 1: a screenwriters, everything, and they transformed the industry and now

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Speaker 1: everybody runs like CIA today. But oh yeah, absolutely, um

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Speaker 1: so we thought, wow, venture capital looks just like this,

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Speaker 1: Like this is exactly how it works. You got a

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Speaker 1: bunch of like partners and they are like jack of

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Speaker 1: all trades. They do beat and they help you with recruiting,

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Speaker 1: and they do this and that, and they don't do

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Speaker 1: any of them well. And we knew that because, like,

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Speaker 1: you know, we'd experienced it, and so we said, oh,

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Speaker 1: we're going to do the CIA model here, and everybody said,

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Speaker 1: you guys are stupid. So that's when we knew it

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Speaker 1: would work. So so the transition from being both a

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Speaker 1: entrepreneur and somebody who was on the receiving end of

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Speaker 1: venture capital that sounds like it very much colored the

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Speaker 1: way you wanted the firm to run. Yeah, no, absolutely.

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Speaker 1: So the other, uh kind of big idea that we

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Speaker 1: had was venture capital was kind of oriented around you

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Speaker 1: had this inventor and you would give them money and

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Speaker 1: then when the company, if the invention worked and people

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Speaker 1: liked it, then you would bring in a professional CEO

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Speaker 1: to build the company. That was the general motion, um,

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Speaker 1: and that we had a couple of observations on that one.

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Speaker 1: If you looked at the history of technology companies, the

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Speaker 1: greatest technology companies were generally run by their inventor founder

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Speaker 1: for a very long time, from you know, Thomas Watson

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Speaker 1: and IBM, Dave Packard and Bill Hewlett at Heulett Packard,

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Speaker 1: Bill Gates, um, you know, and then later on Mark

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Speaker 1: Zuckerberg and all these kinds of things. And so we thought,

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Speaker 1: you know, that's interesting, um. And then as we looked

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Speaker 1: at our own experience, you know, being kind of inventor

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Speaker 1: and you know, in my my case CEO, Like, we

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Speaker 1: knew that professional CEOs could not be taught to innovate,

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Speaker 1: So like you could teach an innovator to be a CEO,

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Speaker 1: but not necessarily a CEO to be an innovator. And

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Speaker 1: so we thought, wow, what if there was a venture

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Speaker 1: capital firm that actually helped a found or become a CEO.

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Speaker 1: And we thought it was two parts of the CIA

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Speaker 1: power network, which gave you a network like a professional

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Speaker 1: CEOs network, and then like the know how, like what

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Speaker 1: is that job? How do you do it? Help them

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Speaker 1: get scaled up? And so that was kind of the

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Speaker 1: idea from from the launch. The idea wasn't let's find

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Speaker 1: entrepreneurs with great ideas and eventually will find the way

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Speaker 1: to turn them into a company. You were looking to

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Speaker 1: create a method to take entrepreneurs with good ideas and

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Speaker 1: turn them into good CEOs of good companies exactly from

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Speaker 1: day one, from day one, and and the rest of

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Speaker 1: Silicon Valley did not embrace that. No, you know, like

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Speaker 1: because they you know, they had been old school and

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Speaker 1: they and look in their defense, it used to be

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Speaker 1: way harder to get ready to be a CEO because

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Speaker 1: if you think about like Tandem Computers, Um, since you're

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Speaker 1: fifty eight, you remember Tandem. Uh. In order to get

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Speaker 1: Tandem to market, you had to build manufacturing, you had

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Speaker 1: to build comprehensive customer support and professional services, and a

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Speaker 1: direct sales channel. To get Twitter to market, you needed

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Speaker 1: like three guys with laptops and aws and like you

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Speaker 1: were gone and very different today, Yeah, very very different.

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Speaker 1: Plus you know they used to go public a lot quicker.

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Speaker 1: There was um relevant to to that concept about three

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Speaker 1: guys in a laptop in And I apologize if I'm

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Speaker 1: confusing books because both of your books kind of all

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Speaker 1: are jumbled in my head. Um, I learned the most

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Speaker 1: important rule of raising money privately. Look for a market

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Speaker 1: of one. Only need one investor to say yes. It's

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Speaker 1: best to ignore the other thirty who say no. That

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Speaker 1: sounds like that comes from real experience. Sadly, yes, yeah, no,

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Speaker 1: so that that that's the hard thing about hard things, right,

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Speaker 1: But yeah, no, that's right. You only need I mean,

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Speaker 1: that's the beauty of raising money. You just need to

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Speaker 1: convince one. And I think entrepreneurs get discourage sometime, you know,

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Speaker 1: particularly if they have a particularly novel or breakthrough idea

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Speaker 1: that's difficult to understand because you know, if it if

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Speaker 1: people can't pattern match it, then you know it's it

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Speaker 1: is difficult to raise money, but you just need one

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Speaker 1: that's interesting. And since we're recording this right after the

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Speaker 1: relaunch of Silicon Valley, the show HBO show your firm

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Speaker 1: was a consultant to the first season at least of

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Speaker 1: right your partner Mark. UM. I think a lot of

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Speaker 1: the rest of America looks at Silicon Valley and they

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Speaker 1: only know it through shows like that. What do you

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Speaker 1: think the biggest misconceptions the rest of the country has

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Speaker 1: about Silicon Valley? Um? Or is the show just dead on?

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Speaker 1: Even the stereotypes and the exaggerations are all based on

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Speaker 1: people we know. I felt you don't like all shows.

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Speaker 1: It's a very kind of cartoonist version of of how

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Speaker 1: it actually goes. I think the biggest misconceptions are one

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Speaker 1: like it's crush singly hard to build a company. I mean,

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Speaker 1: it is like emotionally and kind of rushes. That's a

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Speaker 1: great phrase. Oh yeah, I mean I think Sean Parker

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Speaker 1: said it's like, you know, eating glass. It's just like

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Speaker 1: and that's what it feels like at times, um, Because

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Speaker 1: like you go out, you tell that you have this idea,

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Speaker 1: you're so excited about it. You raise money like from

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Speaker 1: like you know you generally you start with like your

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Speaker 1: best friends or like your parents are like that kind

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Speaker 1: of thing, or like somebody anybody you know with money. Um,

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Speaker 1: and then you know, you hire the best people you

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Speaker 1: can find, you know, and and then you spend all

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Speaker 1: your time on it. So really the only people you

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Speaker 1: end up knowing in your life for the people who

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Speaker 1: work for you, people who gave you money, because like

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Speaker 1: all your times on the company and then starts going

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Speaker 1: wrong and you go, okay, like, well what happens if

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Speaker 1: this fails? And it's like, well, my like that's like

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Speaker 1: not only do I let down everybody that I care about,

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Speaker 1: but like that's my whole life, Like it's just gonna

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Speaker 1: fail with me. Um. So that kind of pressure is

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Speaker 1: not like something that you experience. And I'm sure you

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Speaker 1: know if you're a soldier or whatever, you feel you

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Speaker 1: have even worse pressure. But like it's a very extreme pressure.

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Speaker 1: And and then you're always hiding it as CEO because

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Speaker 1: you never want anybody on the outside to know there's

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Speaker 1: something wrong with your company. And so that you know

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Speaker 1: that part of it is is really really difficult. In

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Speaker 1: the hours are just crazy hard, um and you know,

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Speaker 1: like and then you know things don't work, they go wrong,

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Speaker 1: You're running out of money, like customers don't like the product,

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Speaker 1: like things blow up, people scream at you. It's it's

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Speaker 1: a very, very tough thing for any entrepreneur. I would say,

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Speaker 1: like even the smallest entrepreneurs go through this. So, since

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Speaker 1: we're gonna talk in a moment about your new book,

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00:22:48,080 --> 00:22:51,919
Speaker 1: which is all about culture, I know people outside of

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Speaker 1: the United States who have said to me the genius

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Speaker 1: of America culturally is that you don't punish failure. You're

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Speaker 1: you're describing the pain and agony of failure, of not succeeding.

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Speaker 1: But we seem to be one of the few places

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Speaker 1: that it's not quite I don't want to call it

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Speaker 1: a badge of honor, but it's not punished in the

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Speaker 1: United States. How you tried something, didn't work, try something

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Speaker 1: else seems to be more of a philosophy here than

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Speaker 1: in most of the rest of the world. And some

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Speaker 1: people have credited that as the genius of Silicon Valley.

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Speaker 1: What what are your thoughts? Well, so it is to

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Speaker 1: say it's not punished, I think is um a little

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Speaker 1: bit of it isn't relative to japan Um. I think

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Speaker 1: that's true. You know, there's not the shame you're not

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Speaker 1: expected to commit. Harry Carey at the end of it,

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Speaker 1: even in Europe, if you try something and fail, it's

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Speaker 1: pretty difficult to launch a second company. Yeah, and that, um,

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Speaker 1: I agree, you know, like the kind of rewarding of optimism,

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Speaker 1: although like we're getting I feel like it's um, I mean,

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Speaker 1: well it seems like we work getting punished pretty hard

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Speaker 1: right now prevailing. And I would say that, you know,

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Speaker 1: to contrast that in terms of like how they're looked

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Speaker 1: upon and and like he got a lot of money

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Speaker 1: for himself and all that kind of one point seven

429
00:24:10,760 --> 00:24:14,680
Speaker 1: billion dollars not counting the money he got actually coming

430
00:24:14,760 --> 00:24:19,680
Speaker 1: up with the wee company name and right as well

431
00:24:19,720 --> 00:24:23,520
Speaker 1: as as well as going out and finding buildings owning

432
00:24:23,560 --> 00:24:26,199
Speaker 1: them himself. And then at least that was that was

433
00:24:26,240 --> 00:24:31,520
Speaker 1: the story more of what leverage meant than uh, what

434
00:24:32,080 --> 00:24:34,440
Speaker 1: like it means to fail. I think what it means

435
00:24:34,480 --> 00:24:37,399
Speaker 1: to you know, if you look at even you know,

436
00:24:37,480 --> 00:24:39,840
Speaker 1: little companies when they fail, now I get like pretty

437
00:24:40,200 --> 00:24:44,040
Speaker 1: viciously attacked in the press. And but do those entrepreneurs

438
00:24:44,080 --> 00:24:48,560
Speaker 1: go on and are they capable of now? If it's difficult?

439
00:24:48,640 --> 00:24:50,879
Speaker 1: Is like I I don't think it's that easy to

440
00:24:50,960 --> 00:24:53,120
Speaker 1: fail as an entrepreneur and go on. It is certainly

441
00:24:53,160 --> 00:24:56,480
Speaker 1: easier than in other countries and I think that, Um,

442
00:24:56,520 --> 00:25:01,400
Speaker 1: from a societal perspective, Uh, there's death only more support here.

443
00:25:01,440 --> 00:25:06,520
Speaker 1: But I think the and look among venture capitalists. For sure,

444
00:25:07,680 --> 00:25:11,359
Speaker 1: venture capitalists are very forgiving and will fund you even

445
00:25:11,400 --> 00:25:14,560
Speaker 1: if your last company failed. So it's not But in

446
00:25:14,720 --> 00:25:19,200
Speaker 1: terms of like how you're perceived by people in your circle,

447
00:25:19,480 --> 00:25:23,760
Speaker 1: kind of people in the broader world, it's pretty rough. Uh.

448
00:25:23,840 --> 00:25:25,640
Speaker 1: And then the people who work for you, I think

449
00:25:25,680 --> 00:25:28,639
Speaker 1: most importantly, it's very difficult. There are a few entrepreneurs

450
00:25:28,640 --> 00:25:31,320
Speaker 1: who do such a great job that they can take

451
00:25:31,359 --> 00:25:34,440
Speaker 1: somebody for four years or eight years out of their career,

452
00:25:34,600 --> 00:25:39,080
Speaker 1: get them no financial benefit, and then like start that

453
00:25:39,119 --> 00:25:42,640
Speaker 1: one again. Let's talk about the book. You pretty much

454
00:25:42,680 --> 00:25:46,680
Speaker 1: begin by saying culture is everything in business and sports

455
00:25:46,720 --> 00:25:50,080
Speaker 1: and life. You you write a lot about it. How

456
00:25:50,160 --> 00:25:53,040
Speaker 1: can a young company that is just getting off the

457
00:25:53,080 --> 00:25:58,240
Speaker 1: ground develop a culture and maintain that over time? Yeah,

458
00:25:58,240 --> 00:26:00,639
Speaker 1: and I think that, Um. So there's couple of things

459
00:26:00,760 --> 00:26:03,080
Speaker 1: in that question that I think are important to understand.

460
00:26:03,119 --> 00:26:07,760
Speaker 1: One is, um, you don't necessarily have to maintain the

461
00:26:07,800 --> 00:26:10,840
Speaker 1: exact same culture over time. Cultures do evolve. It's not

462
00:26:10,960 --> 00:26:14,920
Speaker 1: like whatever a mission statement or something like that. And

463
00:26:15,240 --> 00:26:17,200
Speaker 1: I don't get the sense that you are the biggest

464
00:26:17,240 --> 00:26:20,879
Speaker 1: advocate for those sorts of firm mission statements that I

465
00:26:20,920 --> 00:26:22,720
Speaker 1: don't think they did, you know, like they're they're these

466
00:26:22,840 --> 00:26:26,040
Speaker 1: kind of there's a lot of this survivorship bias in business,

467
00:26:26,040 --> 00:26:28,640
Speaker 1: where like you look at something after the fact and go, oh, yeah,

468
00:26:28,720 --> 00:26:30,560
Speaker 1: they had a great mission statement or a cult like

469
00:26:30,640 --> 00:26:34,040
Speaker 1: culture or a big Harry audiation. It's like if you

470
00:26:34,440 --> 00:26:37,320
Speaker 1: that's probably why they didn't succeed, you know, like a

471
00:26:37,400 --> 00:26:40,320
Speaker 1: doubt that that was the thing, like probably like the

472
00:26:40,320 --> 00:26:43,119
Speaker 1: phenomenal product they built and then like the rest of

473
00:26:43,119 --> 00:26:45,399
Speaker 1: it shaped up around them. Another words, go looked at

474
00:26:45,400 --> 00:26:47,480
Speaker 1: the ten thousand companies that failed and see how many

475
00:26:47,520 --> 00:26:49,960
Speaker 1: of them had a great mission state? Yeah, exactly exactly,

476
00:26:50,040 --> 00:26:52,960
Speaker 1: I've seen many. So I don't think that's what it is.

477
00:26:52,960 --> 00:26:56,399
Speaker 1: And look, when we're talking about culture, we're talking about

478
00:26:56,720 --> 00:26:59,320
Speaker 1: and Bushido has a great definition of it, which it's

479
00:26:59,359 --> 00:27:02,560
Speaker 1: not a setuple leafs, it's a set of actions, um.

480
00:27:02,800 --> 00:27:04,960
Speaker 1: And so that begs the question, Look, how do you

481
00:27:05,000 --> 00:27:07,480
Speaker 1: get people to behave how you want them to behave

482
00:27:07,960 --> 00:27:10,639
Speaker 1: when you're not there? So like why do why does

483
00:27:10,680 --> 00:27:13,439
Speaker 1: that person return that phone call that day and not

484
00:27:13,640 --> 00:27:16,840
Speaker 1: like a week later or not never? Um, why do

485
00:27:17,119 --> 00:27:20,360
Speaker 1: people stay at work? Tell eight pm and not five pm?

486
00:27:20,520 --> 00:27:23,199
Speaker 1: Why do people stay at the four seasons versus a

487
00:27:23,200 --> 00:27:26,320
Speaker 1: red roof? In when you do a deal, are you

488
00:27:26,359 --> 00:27:29,200
Speaker 1: optimizing for the price or the partnership? Like? All these

489
00:27:29,200 --> 00:27:33,159
Speaker 1: things are your culture and they're not in the mission statement.

490
00:27:33,200 --> 00:27:35,800
Speaker 1: They're not in the KPI s and okay rs and

491
00:27:35,840 --> 00:27:38,560
Speaker 1: all these kinds of things, And so how do you

492
00:27:38,560 --> 00:27:41,640
Speaker 1: program program them in? Turns out to be a very

493
00:27:41,720 --> 00:27:46,200
Speaker 1: very kind of complex effort and not easily done. And

494
00:27:46,280 --> 00:27:48,840
Speaker 1: I think that, um, you know, which is kind of

495
00:27:48,880 --> 00:27:53,600
Speaker 1: the rationale behind the book. Uh. And you know, it

496
00:27:53,760 --> 00:27:56,240
Speaker 1: is hard to start it right at the beginning of

497
00:27:56,240 --> 00:27:58,920
Speaker 1: the company because you don't know what you want to be,

498
00:27:59,320 --> 00:28:01,600
Speaker 1: and who you want to be has a lot to

499
00:28:01,640 --> 00:28:05,000
Speaker 1: do with your actual business strategy. So an example of

500
00:28:05,040 --> 00:28:08,640
Speaker 1: this if you take Amazon, right, they have a very

501
00:28:08,720 --> 00:28:11,440
Speaker 1: frugal culture. You know, then they like enforce it in

502
00:28:11,480 --> 00:28:13,960
Speaker 1: all the famously the desk on top of the two

503
00:28:14,000 --> 00:28:17,280
Speaker 1: so the door on top of the sources as a

504
00:28:17,359 --> 00:28:20,080
Speaker 1: desk you reference in the book, Yeah, and the whole thing, right,

505
00:28:20,680 --> 00:28:25,040
Speaker 1: But you know they have a strategy where that makes

506
00:28:25,080 --> 00:28:27,400
Speaker 1: sense because they want to be the low price leader.

507
00:28:27,400 --> 00:28:30,560
Speaker 1: And that's like in like Bezos is like original loop

508
00:28:30,800 --> 00:28:33,360
Speaker 1: about you know, his his wonderful drawing about like how

509
00:28:33,400 --> 00:28:36,600
Speaker 1: Amazon works and all that, like that was fundamental to

510
00:28:36,640 --> 00:28:41,080
Speaker 1: their strategy. Apple didn't have that cultural value, um, nor

511
00:28:41,120 --> 00:28:43,320
Speaker 1: do they need it, and that they it would be

512
00:28:43,360 --> 00:28:45,680
Speaker 1: antithetical to what they're doing because they want to have

513
00:28:45,800 --> 00:28:48,000
Speaker 1: they want the most beautiful products out there, and like

514
00:28:48,040 --> 00:28:50,560
Speaker 1: they're going to spare no expense. And Steve Jobs actually

515
00:28:50,560 --> 00:28:53,440
Speaker 1: got fired the first time for sparing no expense, uh,

516
00:28:53,520 --> 00:28:55,479
Speaker 1: you know, which was on culture for him, but not

517
00:28:55,600 --> 00:28:59,240
Speaker 1: for Scully. Uh. So you get you know, the culture

518
00:28:59,280 --> 00:29:02,520
Speaker 1: has to be built for the strategy. Um. And so

519
00:29:02,560 --> 00:29:04,880
Speaker 1: as you are developing your strategy, you might not be

520
00:29:04,920 --> 00:29:07,760
Speaker 1: able to really know what you want your culture to

521
00:29:07,760 --> 00:29:10,080
Speaker 1: be in the beginning. And then look as you scale,

522
00:29:10,120 --> 00:29:13,600
Speaker 1: you run into different kinds of issues and so forth. Um.

523
00:29:13,680 --> 00:29:17,640
Speaker 1: But yeah, there there's definitely I would say they're techniques,

524
00:29:17,680 --> 00:29:20,680
Speaker 1: but you've got to, you know, to get it right,

525
00:29:20,720 --> 00:29:23,600
Speaker 1: you really have to understand culture in the kind of

526
00:29:23,640 --> 00:29:26,520
Speaker 1: the gestalto of it, like the entire thing. And uh,

527
00:29:26,880 --> 00:29:30,920
Speaker 1: that's um how I approached the book and and and

528
00:29:31,120 --> 00:29:34,959
Speaker 1: why like it took a whole book to explain it.

529
00:29:35,320 --> 00:29:39,360
Speaker 1: So let's talk a moment about Shaka singor Well, all

530
00:29:39,400 --> 00:29:41,640
Speaker 1: the proceeds of the book, I have to add, are

531
00:29:41,680 --> 00:29:45,440
Speaker 1: going to helping people who get out of jail stay

532
00:29:45,440 --> 00:29:48,360
Speaker 1: out of jail. Tell us why you want to focus

533
00:29:48,400 --> 00:29:52,640
Speaker 1: on the culture that Shaka am I pronouncing the name right, Uh.

534
00:29:53,120 --> 00:29:57,640
Speaker 1: Tell us a little bit about Chaka. Yeah. So Shaka

535
00:29:58,040 --> 00:30:01,400
Speaker 1: uh went to prison when he was nineteen years old

536
00:30:01,480 --> 00:30:06,440
Speaker 1: for murder that he did commit um and UH became,

537
00:30:07,080 --> 00:30:09,880
Speaker 1: you know, a rose to kind of a leadership position

538
00:30:09,920 --> 00:30:12,760
Speaker 1: in a in a very kind of violent prison gang

539
00:30:12,840 --> 00:30:18,960
Speaker 1: called the Melanax and um and spent nineteen years in prison,

540
00:30:19,000 --> 00:30:23,680
Speaker 1: seven of those in solitary confinement. Uh and Uh. The

541
00:30:23,800 --> 00:30:26,320
Speaker 1: reason that I wanted to tell his story of how

542
00:30:26,320 --> 00:30:28,640
Speaker 1: he did that UM was several folds. First of all,

543
00:30:30,040 --> 00:30:33,200
Speaker 1: you know, the big mistake people make on culture is

544
00:30:33,280 --> 00:30:37,000
Speaker 1: they take too much for granted, make too many assumptions.

545
00:30:37,440 --> 00:30:40,280
Speaker 1: And it's easy to do in Silicon Valley where I'm from,

546
00:30:40,320 --> 00:30:44,200
Speaker 1: because when employee comes to you, they have a lot

547
00:30:44,240 --> 00:30:47,640
Speaker 1: of cultural basis. They're already doing a lot of things right,

548
00:30:47,760 --> 00:30:50,000
Speaker 1: I mean, you know, and it's everything from simple things

549
00:30:50,040 --> 00:30:51,560
Speaker 1: where they know how to show up to an interview

550
00:30:51,600 --> 00:30:53,040
Speaker 1: on time, and they know how to go through that

551
00:30:53,120 --> 00:30:55,960
Speaker 1: process that they've had like some kind of schooling and

552
00:30:56,080 --> 00:30:59,160
Speaker 1: education and like you know, which includes kind of a

553
00:30:59,160 --> 00:31:02,320
Speaker 1: cultural background on and how educated people behave and then

554
00:31:02,360 --> 00:31:04,840
Speaker 1: they've probably worked at a Silicon Valley company that had

555
00:31:04,880 --> 00:31:08,920
Speaker 1: some elements. When you get a guy in prison, they

556
00:31:08,960 --> 00:31:11,400
Speaker 1: don't have any of that. They don't they have almost

557
00:31:11,480 --> 00:31:15,320
Speaker 1: nothing culturally that you can use because the way you

558
00:31:15,320 --> 00:31:17,440
Speaker 1: get to prison is you come from a very broken

559
00:31:17,440 --> 00:31:20,440
Speaker 1: culture and that you know, that gets you into behavior

560
00:31:20,440 --> 00:31:23,840
Speaker 1: that gets you locked up. And so he had to

561
00:31:23,840 --> 00:31:29,720
Speaker 1: start from first principles on everything, which is amazingly instructive

562
00:31:30,240 --> 00:31:33,000
Speaker 1: way to understand how culture works. But the other like

563
00:31:33,080 --> 00:31:36,960
Speaker 1: remarkable thing about Chaka was he got to the top

564
00:31:37,000 --> 00:31:40,640
Speaker 1: of the gang. He ran it very effectively, but then

565
00:31:40,640 --> 00:31:43,120
Speaker 1: he realized he didn't like the culture and changed it

566
00:31:43,360 --> 00:31:45,760
Speaker 1: and uh and had to change himself to do that.

567
00:31:45,880 --> 00:31:49,840
Speaker 1: So that transformation process, I thought was super interesting as well.

568
00:31:50,280 --> 00:31:53,720
Speaker 1: And what what organization you're working with that the proceeds

569
00:31:53,720 --> 00:31:56,400
Speaker 1: of the book are going to to help X cons

570
00:31:56,720 --> 00:32:00,440
Speaker 1: stay out of prison. Yeah, so there's several one is

571
00:32:00,680 --> 00:32:03,680
Speaker 1: I one in them all, but the Anti Recidivism Coalition

572
00:32:04,160 --> 00:32:08,120
Speaker 1: out of l A uh Scott Bude's organization, and then

573
00:32:08,320 --> 00:32:12,360
Speaker 1: UH cut fifty UM which is was founded by my

574
00:32:12,440 --> 00:32:15,240
Speaker 1: friend Van Jones, are two of them. Let's let's talk

575
00:32:15,240 --> 00:32:18,560
Speaker 1: a little bit about VC today. There seems to be

576
00:32:18,600 --> 00:32:22,080
Speaker 1: a whole lot more venture capital firms now than there were.

577
00:32:25,320 --> 00:32:30,520
Speaker 1: How how has that competition impacted the way venture capital

578
00:32:30,640 --> 00:32:34,240
Speaker 1: is practiced in general and doesn't have any impact on

579
00:32:34,400 --> 00:32:37,800
Speaker 1: Andrews and Harrowitz. Well, so I'd say, first of all,

580
00:32:37,920 --> 00:32:40,720
Speaker 1: like the reason there's so much more money is, um,

581
00:32:40,840 --> 00:32:43,640
Speaker 1: my partner Mark was right, and software's eating the world.

582
00:32:44,040 --> 00:32:47,160
Speaker 1: And so what's happened is, you know, as we discussed earlier,

583
00:32:47,760 --> 00:32:50,600
Speaker 1: it used to be we just sold technology to technology

584
00:32:50,640 --> 00:32:54,320
Speaker 1: companies and that kind of made the market for new

585
00:32:54,360 --> 00:32:59,760
Speaker 1: technology companies just not that big. Now every business is

586
00:32:59,760 --> 00:33:03,080
Speaker 1: because coming a software business, and so the market is

587
00:33:03,120 --> 00:33:06,080
Speaker 1: greatly expanded. So there needs to be more money to

588
00:33:06,120 --> 00:33:10,640
Speaker 1: fund all these you know, new ideas. Um, the money

589
00:33:10,680 --> 00:33:14,400
Speaker 1: coming in has kind of changed the landscape a bit

590
00:33:14,560 --> 00:33:17,960
Speaker 1: in that you know, the tiers, the kinds of venture

591
00:33:18,000 --> 00:33:19,920
Speaker 1: capital that you can get are different. You know, there's

592
00:33:20,920 --> 00:33:24,480
Speaker 1: seed funds and precede funds and a round firms and

593
00:33:24,520 --> 00:33:27,440
Speaker 1: be around firms and you know, growth firms. And then

594
00:33:27,440 --> 00:33:30,680
Speaker 1: there's even now kind of substitutes for the public markets,

595
00:33:31,040 --> 00:33:36,240
Speaker 1: you know, like soft bank UM for US UH, the

596
00:33:36,600 --> 00:33:38,920
Speaker 1: kind of increased number of firms, I mean, it does

597
00:33:39,080 --> 00:33:43,960
Speaker 1: change things tactically. There is this other aspect though of

598
00:33:44,040 --> 00:33:48,680
Speaker 1: venture capital which we benefit from, which is unlike other

599
00:33:48,720 --> 00:33:52,680
Speaker 1: asset classes. So if you look at UM whatever you know,

600
00:33:52,800 --> 00:33:55,520
Speaker 1: stocks or bonds or real estate or so forth, like

601
00:33:55,560 --> 00:33:59,120
Speaker 1: the top managers for like the eighties are never the

602
00:33:59,160 --> 00:34:02,560
Speaker 1: top managers for nineties are never the top managers. No persistency,

603
00:34:02,920 --> 00:34:07,080
Speaker 1: no persistence among the top managers because you know it's

604
00:34:07,120 --> 00:34:10,560
Speaker 1: an open playing field, so to speak. But venture capital,

605
00:34:10,640 --> 00:34:13,480
Speaker 1: the top managers are super persistent. Like MKOY has been

606
00:34:13,520 --> 00:34:17,759
Speaker 1: a top firm for you know, fifty years uh. And

607
00:34:17,800 --> 00:34:23,080
Speaker 1: the reason for that is UM, the best entrepreneurs will

608
00:34:23,120 --> 00:34:26,759
Speaker 1: only work with the best firms, and so if you're

609
00:34:26,800 --> 00:34:30,719
Speaker 1: in the top tier, UM, you you don't compete with

610
00:34:30,760 --> 00:34:32,919
Speaker 1: anybody who's not in the top tier. And they're only

611
00:34:32,920 --> 00:34:35,560
Speaker 1: about four or five firms in that class, and so

612
00:34:35,719 --> 00:34:37,560
Speaker 1: US being one of them, we always compete with the

613
00:34:37,640 --> 00:34:40,839
Speaker 1: same kind of four or five. So it doesn't matter

614
00:34:40,880 --> 00:34:43,320
Speaker 1: if there's more money coming from left or right or whatever,

615
00:34:43,440 --> 00:34:46,920
Speaker 1: because like to build a company, it's great to have

616
00:34:46,960 --> 00:34:49,720
Speaker 1: the money, but there's other things that you need, for example,

617
00:34:49,800 --> 00:34:53,640
Speaker 1: like how do you attract with so many startups out there,

618
00:34:53,640 --> 00:34:56,200
Speaker 1: how do you attract employees to come to your company?

619
00:34:56,560 --> 00:34:58,160
Speaker 1: And you know a lot of that is who did

620
00:34:58,239 --> 00:34:59,800
Speaker 1: you get money from? Did you get money from the

621
00:34:59,800 --> 00:35:01,719
Speaker 1: small arst guys, the best guys, or did you get

622
00:35:01,719 --> 00:35:04,720
Speaker 1: money from somebody nobody heard of who just has some money.

623
00:35:05,200 --> 00:35:07,600
Speaker 1: And then like that becomes a spiral for you because

624
00:35:07,600 --> 00:35:09,200
Speaker 1: you don't get the best employees, you don't build the

625
00:35:09,200 --> 00:35:11,640
Speaker 1: best product, and then you know, you don't get the customers,

626
00:35:11,680 --> 00:35:13,680
Speaker 1: you don't get the money, and you've go out a business.

627
00:35:13,680 --> 00:35:17,360
Speaker 1: So so cumulative advantage is a real thing absolutely a

628
00:35:17,480 --> 00:35:23,080
Speaker 1: venture capital Yeah, it is probably the most the driving

629
00:35:23,120 --> 00:35:26,160
Speaker 1: factor of returns, much more than um you know whatever,

630
00:35:26,200 --> 00:35:29,759
Speaker 1: how smart I am. Really you're gonna say, wow, that

631
00:35:29,880 --> 00:35:34,480
Speaker 1: that's a fascinating statement. So, if you are fortunate enough

632
00:35:34,520 --> 00:35:36,960
Speaker 1: to be funded by one of the very top tier firms,

633
00:35:37,920 --> 00:35:42,840
Speaker 1: the statistical odds, the probabilities of you as a startup

634
00:35:42,920 --> 00:35:46,879
Speaker 1: succeeding are a little higher, a lot higher, a lot

635
00:35:46,960 --> 00:35:49,919
Speaker 1: higher then a second or third tier firm. Oh yeah,

636
00:35:49,920 --> 00:35:52,440
Speaker 1: no question. Now, like you may have any repressible product

637
00:35:52,760 --> 00:35:56,440
Speaker 1: um that just goes viral and berserk and then you

638
00:35:56,480 --> 00:36:00,400
Speaker 1: know that, yeah, that that can conquer a lot. Although

639
00:36:00,480 --> 00:36:05,879
Speaker 1: even with that um, the counterfactualism would have done with

640
00:36:06,000 --> 00:36:07,959
Speaker 1: a top tier fill And then if you do happen

641
00:36:08,000 --> 00:36:09,959
Speaker 1: to have a competitor funded by a top tier firm,

642
00:36:10,080 --> 00:36:12,080
Speaker 1: is going to get better employees than that could be

643
00:36:12,120 --> 00:36:14,759
Speaker 1: a real problem for you. Yeah, that's actually you know

644
00:36:14,800 --> 00:36:18,480
Speaker 1: a lot of the Facebook MySpace thing, and Facebook just

645
00:36:18,640 --> 00:36:22,680
Speaker 1: had better people doing better work. Huh. That's quite interesting.

646
00:36:22,719 --> 00:36:28,560
Speaker 1: You mentioned soft bank as a UM alternative to public markets.

647
00:36:29,360 --> 00:36:32,279
Speaker 1: Is that still the case? Post we Work, post uber

648
00:36:32,719 --> 00:36:35,200
Speaker 1: have has a little bit of the blush come off

649
00:36:35,280 --> 00:36:39,760
Speaker 1: that rose. I know they're already the Saudis are renegotiating

650
00:36:40,160 --> 00:36:42,840
Speaker 1: the profit split and trying to lower fees and everything,

651
00:36:43,360 --> 00:36:46,759
Speaker 1: and they're working on raising a second funds, which was

652
00:36:46,800 --> 00:36:49,279
Speaker 1: originally gonna be another hundred billion dollars. I don't think that.

653
00:36:49,400 --> 00:36:52,520
Speaker 1: I don't imagine there anywhere close to that and commitments

654
00:36:52,560 --> 00:36:58,359
Speaker 1: these days, what does SoftBank mean to the public markets. Well,

655
00:36:58,400 --> 00:37:00,240
Speaker 1: so I think, you know, it's a very bold idea

656
00:37:00,480 --> 00:37:03,800
Speaker 1: and you know that that that was certainly the proposition

657
00:37:03,920 --> 00:37:06,600
Speaker 1: to kind of new companies is like you don't need

658
00:37:06,640 --> 00:37:08,760
Speaker 1: to go public. Well I'll give you or will invest

659
00:37:08,800 --> 00:37:11,319
Speaker 1: five million or a billion or you know, and we

660
00:37:11,360 --> 00:37:19,279
Speaker 1: work dollars into you. And uh, you know, I think

661
00:37:19,320 --> 00:37:22,520
Speaker 1: that definitely over the long term for it to be

662
00:37:22,600 --> 00:37:26,200
Speaker 1: significant and to change, uh, kind of the landscape ad

663
00:37:26,239 --> 00:37:29,600
Speaker 1: venture capital and public markets, it's got to work. Uh.

664
00:37:30,280 --> 00:37:32,120
Speaker 1: And so you know, like the jury is still out

665
00:37:32,120 --> 00:37:35,400
Speaker 1: on it. It's not done yet. Um, but you know,

666
00:37:35,560 --> 00:37:40,799
Speaker 1: like terrible pr doesn't help. But you know, even I

667
00:37:40,840 --> 00:37:45,960
Speaker 1: couldn't tell you the impact of the we work pr

668
00:37:46,080 --> 00:37:49,279
Speaker 1: on entrepreneurs yet because we're just too early into it.

669
00:37:49,400 --> 00:37:52,040
Speaker 1: But um, yeah, that's something that they definitely have to manage.

670
00:37:52,719 --> 00:37:57,520
Speaker 1: So I'm trying to remember the name of the study, um,

671
00:37:57,600 --> 00:37:59,799
Speaker 1: and I'm drawing a blank on it. There has been

672
00:37:59,840 --> 00:38:04,920
Speaker 1: a study that specifically looked at the rate at which

673
00:38:05,480 --> 00:38:10,319
Speaker 1: venture capital firms were forming and raising capital. And in

674
00:38:10,360 --> 00:38:12,760
Speaker 1: the nineties it was at a certain level. It ticked

675
00:38:12,800 --> 00:38:15,279
Speaker 1: up in the two thousands, and it really ticked up

676
00:38:15,480 --> 00:38:20,600
Speaker 1: post crisis like two thousand two twelve and then seventeen

677
00:38:20,840 --> 00:38:24,000
Speaker 1: in walks the eight hundred pound guerilla with a hundred

678
00:38:24,040 --> 00:38:28,800
Speaker 1: billion dollars funds forget the future and will let the

679
00:38:28,880 --> 00:38:32,280
Speaker 1: jury decide on that. What was the impact on things

680
00:38:32,320 --> 00:38:36,160
Speaker 1: like valuation and raising money of the soft Bank Vision

681
00:38:36,200 --> 00:38:40,760
Speaker 1: funds since they launched in seventeen, Did they really shake

682
00:38:40,800 --> 00:38:45,120
Speaker 1: things up and affect things? Well? I think they, Um,

683
00:38:45,320 --> 00:38:48,319
Speaker 1: they definitely affected the companies they invested in it. You know,

684
00:38:48,520 --> 00:38:52,319
Speaker 1: I would say more so than the landscape itself, because

685
00:38:52,320 --> 00:38:55,960
Speaker 1: it's such a like a unique, slash unusual deal. There

686
00:38:55,960 --> 00:38:58,160
Speaker 1: were some like regular deals that they did, Like they

687
00:38:58,200 --> 00:39:00,359
Speaker 1: put money into Slack and you know that was kind

688
00:39:00,360 --> 00:39:02,200
Speaker 1: of in a very regular way, just like they just

689
00:39:02,239 --> 00:39:05,600
Speaker 1: look like a growth investor. But in many companies they

690
00:39:05,640 --> 00:39:10,480
Speaker 1: wrote you know, quite enormous checks and uh, you know,

691
00:39:10,560 --> 00:39:14,279
Speaker 1: with the expectation that the company would live up to

692
00:39:14,320 --> 00:39:16,239
Speaker 1: deploying that money. And I think you know some of

693
00:39:16,560 --> 00:39:20,319
Speaker 1: you know, when people write the retrospective on we Work, um,

694
00:39:20,360 --> 00:39:22,880
Speaker 1: you know, like some of what was distorting for we

695
00:39:22,960 --> 00:39:26,200
Speaker 1: Work was they already had a very ambitious plan and

696
00:39:26,239 --> 00:39:31,200
Speaker 1: then soft Bank encourage them to be more ambitious, and

697
00:39:31,239 --> 00:39:33,719
Speaker 1: the difficulty with a new company and that kind of

698
00:39:33,760 --> 00:39:39,160
Speaker 1: idea is if you if you're an entrepreneur, and this

699
00:39:39,200 --> 00:39:41,440
Speaker 1: gets back to what we talked about earlier about how

700
00:39:41,560 --> 00:39:46,120
Speaker 1: market I met. But you know you have always like

701
00:39:46,840 --> 00:39:49,000
Speaker 1: not one good idea, but you usually have like six

702
00:39:49,120 --> 00:39:51,600
Speaker 1: or seven like really good ideas. And you know that

703
00:39:51,680 --> 00:39:55,319
Speaker 1: we works were all named we something, but we we

704
00:39:55,480 --> 00:39:58,080
Speaker 1: school whatever we school. Yeah, so you had all those

705
00:39:58,080 --> 00:40:04,279
Speaker 1: good ideas. Um, the problem is that from a talent perspective,

706
00:40:05,440 --> 00:40:07,080
Speaker 1: there are only a few people who can get you

707
00:40:07,120 --> 00:40:09,200
Speaker 1: to product market fit on any of those ideas in

708
00:40:09,239 --> 00:40:14,600
Speaker 1: your company. So like you just very quickly dilute yourself.

709
00:40:14,600 --> 00:40:17,840
Speaker 1: So if you if you do like your top idea,

710
00:40:18,040 --> 00:40:20,040
Speaker 1: even if it's you're not your best idea, there's a

711
00:40:20,040 --> 00:40:21,759
Speaker 1: real chance you can make it work. But if you

712
00:40:21,840 --> 00:40:24,360
Speaker 1: do your top ten ideas, none of them are going

713
00:40:24,400 --> 00:40:28,200
Speaker 1: to work. And that's almost guaranteed. And because you've deluded

714
00:40:28,239 --> 00:40:30,840
Speaker 1: your talent too much. It's not it's not a money issue.

715
00:40:30,880 --> 00:40:35,040
Speaker 1: It's a talent issue. And so you know when you

716
00:40:35,520 --> 00:40:38,240
Speaker 1: and the problem is entrepreneurs don't know whether their first

717
00:40:38,280 --> 00:40:41,200
Speaker 1: idea is better than their tent idea, So that was

718
00:40:41,239 --> 00:40:44,279
Speaker 1: a question you immediately that I put myself in that category. Like,

719
00:40:44,320 --> 00:40:46,520
Speaker 1: it's very hard to distinguish which is your best idea,

720
00:40:46,840 --> 00:40:51,800
Speaker 1: don't you don't. Really good ideas require the marketplace to

721
00:40:52,160 --> 00:40:56,080
Speaker 1: validate them, or a little bit of baptism of fire

722
00:40:56,239 --> 00:40:59,719
Speaker 1: for the entrepreneurs to sharpen their skills and be able

723
00:40:59,760 --> 00:41:04,040
Speaker 1: to get their best ideas to the market now exactly so. Uh,

724
00:41:04,280 --> 00:41:06,279
Speaker 1: A very good friend of mine wrote a paper called

725
00:41:06,320 --> 00:41:11,160
Speaker 1: the Idea Maze, which describes the apology screen of us

726
00:41:11,200 --> 00:41:14,680
Speaker 1: and I remember seeing that, and in fact, Uh, your

727
00:41:14,760 --> 00:41:18,319
Speaker 1: partner Mark talks about the idea Maze and is surprised

728
00:41:18,360 --> 00:41:22,360
Speaker 1: that entrepreneurs come to Andrews and Horowitz not having read it. Yeah, No,

729
00:41:22,480 --> 00:41:24,640
Speaker 1: it's it's It's one of the I would say, most

730
00:41:24,640 --> 00:41:27,960
Speaker 1: important things to read if you're an entrepreneur, um, because

731
00:41:28,000 --> 00:41:31,640
Speaker 1: it describes that process you have an idea, um, but

732
00:41:32,000 --> 00:41:34,520
Speaker 1: any idea, there's tons of stuff wrong with it because

733
00:41:34,560 --> 00:41:37,000
Speaker 1: it hasn't right. It hasn't bumped into the market and

734
00:41:37,080 --> 00:41:40,680
Speaker 1: the partners and the competitors and the technology landscape and

735
00:41:40,680 --> 00:41:43,080
Speaker 1: all the things that's going to bump into. And so

736
00:41:43,160 --> 00:41:45,400
Speaker 1: as you hit all those things, you have to navigate

737
00:41:45,440 --> 00:41:47,640
Speaker 1: your way through to the maze to the actual product,

738
00:41:48,160 --> 00:41:52,239
Speaker 1: and doing that with one product is like it's hard enough. Yeah,

739
00:41:52,280 --> 00:41:54,600
Speaker 1: I mean it's like it is like the kind of

740
00:41:54,640 --> 00:41:57,239
Speaker 1: business equivalent of giving birth. It's very difficult. So like

741
00:41:57,320 --> 00:42:01,160
Speaker 1: having tried ten babies simultaneously, like all the babies are

742
00:42:01,160 --> 00:42:04,000
Speaker 1: going to die, and that's that's I think what can

743
00:42:04,120 --> 00:42:06,880
Speaker 1: happen if you get a giant infusion of cash And

744
00:42:06,960 --> 00:42:10,400
Speaker 1: so that's the thing that now on the other hand,

745
00:42:10,480 --> 00:42:12,960
Speaker 1: and Peter Tiel describes as well, there's zero to one,

746
00:42:13,160 --> 00:42:15,239
Speaker 1: which is getting to this product market fit, and then

747
00:42:15,239 --> 00:42:18,440
Speaker 1: there's one to end. And I think that, you know,

748
00:42:18,480 --> 00:42:21,000
Speaker 1: in theory, SoftBank could certainly put money in something that

749
00:42:21,120 --> 00:42:23,360
Speaker 1: was going one to end and help it get to

750
00:42:23,400 --> 00:42:26,520
Speaker 1: one to end faster. Um. But you know, like, well

751
00:42:26,560 --> 00:42:28,319
Speaker 1: we'll see if that's how it works or if it

752
00:42:28,360 --> 00:42:31,680
Speaker 1: works in a different way. Is too much capital potentially

753
00:42:31,680 --> 00:42:35,560
Speaker 1: your burden for either the venture fund like the Vision

754
00:42:35,600 --> 00:42:40,479
Speaker 1: fund or for a scrappy startup um like we work.

755
00:42:41,040 --> 00:42:44,600
Speaker 1: Is that just too much money for a young, untested

756
00:42:45,400 --> 00:42:48,239
Speaker 1: sort of green CEO to deal with? Well, I think

757
00:42:48,280 --> 00:42:53,080
Speaker 1: that it is for a company if it causes the

758
00:42:53,160 --> 00:42:56,799
Speaker 1: ideas that you try to implement to multiply. If you

759
00:42:56,840 --> 00:42:59,480
Speaker 1: do that, then then that's going to be very dangerous.

760
00:43:00,160 --> 00:43:03,279
Speaker 1: Um as opposed to take that one idea and see

761
00:43:03,280 --> 00:43:06,520
Speaker 1: it through to its natural conclusion. Take it global. Um

762
00:43:06,600 --> 00:43:08,840
Speaker 1: That like, if you need more money to take the

763
00:43:08,880 --> 00:43:13,160
Speaker 1: market faster, that's a more scalable activity. It's straightforward, there's

764
00:43:13,239 --> 00:43:15,399
Speaker 1: kind of known methods and so forth. You can throw

765
00:43:15,440 --> 00:43:18,279
Speaker 1: money at it, and if you waste it, it's not destructive.

766
00:43:18,320 --> 00:43:21,319
Speaker 1: But if you throw money at product, that's destructive. And

767
00:43:21,400 --> 00:43:25,719
Speaker 1: so it's a it's a tricky balance um And yeah, no,

768
00:43:25,840 --> 00:43:29,000
Speaker 1: it's it's something that they sure surely have to struggle with.

769
00:43:29,320 --> 00:43:33,759
Speaker 1: So in in the book, you quote your partner Mark Andreessen,

770
00:43:34,400 --> 00:43:38,840
Speaker 1: you only ever experience two emotions euphoria and terror. I

771
00:43:38,960 --> 00:43:41,600
Speaker 1: find that lack of sleep enhances both. Yeah, that's a

772
00:43:41,640 --> 00:43:46,080
Speaker 1: description of entrepreneurship. So so is all that extra capital

773
00:43:47,280 --> 00:43:50,759
Speaker 1: not helpful if it or does that takes away some

774
00:43:50,840 --> 00:43:53,239
Speaker 1: of the euphoriaan terror? And I think that that is

775
00:43:53,520 --> 00:43:59,160
Speaker 1: actually dangerous because it's that level of focus caused by that,

776
00:43:59,280 --> 00:44:01,040
Speaker 1: Like you have to be able to handle the emotion.

777
00:44:01,160 --> 00:44:04,279
Speaker 1: But like nobody ever, it's very hard to build a

778
00:44:04,280 --> 00:44:11,839
Speaker 1: great company without that kind of feeling of oh my god,

779
00:44:11,880 --> 00:44:16,080
Speaker 1: I've got one bullet and I have to hit the

780
00:44:16,120 --> 00:44:19,120
Speaker 1: target and if I don't like, that's it. Like the

781
00:44:19,200 --> 00:44:22,160
Speaker 1: level of focus you have to have to do that

782
00:44:22,960 --> 00:44:25,480
Speaker 1: is kind of what makes the company. The culture, like

783
00:44:25,520 --> 00:44:29,840
Speaker 1: everything gets built off of that. And if you take that, like,

784
00:44:29,960 --> 00:44:33,400
Speaker 1: if you take that away, you just have like, you know,

785
00:44:33,440 --> 00:44:37,640
Speaker 1: you just end up with a big, fat, slow, bureaucratic startup.

786
00:44:38,280 --> 00:44:43,520
Speaker 1: You know which big companies don't execute that well generally,

787
00:44:43,600 --> 00:44:45,839
Speaker 1: but they do. They are so large they can just

788
00:44:46,239 --> 00:44:49,360
Speaker 1: pound you with money, but they've got a sustainable underlying

789
00:44:49,400 --> 00:44:52,080
Speaker 1: engine like Google Search or something. If you don't have

790
00:44:52,080 --> 00:44:54,239
Speaker 1: that underlying engine, you just have the money somebody gave

791
00:44:54,280 --> 00:44:56,840
Speaker 1: you and you start acting like that. That that that

792
00:44:56,880 --> 00:45:02,200
Speaker 1: can be super, super destructive. So I'm fascinated by your

793
00:45:02,280 --> 00:45:05,480
Speaker 1: concept of the hard thing about hard things, which is

794
00:45:05,520 --> 00:45:09,839
Speaker 1: effectively spoiler alert, Hey, there's no formula for doing this,

795
00:45:09,840 --> 00:45:13,279
Speaker 1: there's no framework. That's what makes them hard. It's a

796
00:45:13,280 --> 00:45:18,440
Speaker 1: case of first impression. Um, that was a really insightful observation.

797
00:45:19,000 --> 00:45:23,400
Speaker 1: Does that come from your work as an entrepreneur or

798
00:45:23,480 --> 00:45:26,040
Speaker 1: is that something you really see as a venture capitalist

799
00:45:26,200 --> 00:45:29,680
Speaker 1: or both. Well. I think it was mainly my work

800
00:45:29,680 --> 00:45:33,080
Speaker 1: as an entrepreneur. I think that UM crystallized being a

801
00:45:33,200 --> 00:45:36,600
Speaker 1: venture capitalist working with other entrepreneurs, realizing that my experience

802
00:45:36,680 --> 00:45:40,680
Speaker 1: was far from unique. UM. But yeah, And I think

803
00:45:40,760 --> 00:45:43,040
Speaker 1: this is what's wrong with most of the business literature

804
00:45:43,040 --> 00:45:45,040
Speaker 1: as they try to put it into some framework like

805
00:45:45,120 --> 00:45:47,319
Speaker 1: here are the three steps you need to go good

806
00:45:47,360 --> 00:45:49,399
Speaker 1: to great or be a built at last or whatever

807
00:45:49,480 --> 00:45:54,719
Speaker 1: gym concepts. Because it's not like it is very situational.

808
00:45:54,800 --> 00:45:57,080
Speaker 1: It's very specific to your company and your product and

809
00:45:57,160 --> 00:45:59,480
Speaker 1: your market and your people and and all these kinds

810
00:45:59,520 --> 00:46:03,640
Speaker 1: of things, and so um, yeah, the things that you're doing,

811
00:46:05,520 --> 00:46:07,600
Speaker 1: you know, you have to understand at a different level.

812
00:46:07,640 --> 00:46:09,840
Speaker 1: There's not the A. B C's of building a company.

813
00:46:10,040 --> 00:46:12,720
Speaker 1: You can follow the thirty steps of building a company

814
00:46:12,719 --> 00:46:16,080
Speaker 1: that anybody puts out and get nowhere all the time.

815
00:46:16,160 --> 00:46:18,880
Speaker 1: And you know the same with the culture. Uh, you know,

816
00:46:18,920 --> 00:46:21,319
Speaker 1: with the uh the new book, like people have these

817
00:46:21,320 --> 00:46:23,279
Speaker 1: step by step Oh, have an off site and like

818
00:46:23,880 --> 00:46:26,759
Speaker 1: you know, create your values and then like put it

819
00:46:26,760 --> 00:46:29,040
Speaker 1: in people's performance reviews. That doesn't do anything other than

820
00:46:29,120 --> 00:46:31,640
Speaker 1: get you a hypocritical culture where people go, yeah, we

821
00:46:31,680 --> 00:46:34,200
Speaker 1: have those values on the wall that we don't live. Uh,

822
00:46:34,440 --> 00:46:38,800
Speaker 1: so you know you have to get to the real thing. Um.

823
00:46:38,920 --> 00:46:41,319
Speaker 1: In other words, create your own values, don't follow someone else.

824
00:46:41,400 --> 00:46:44,799
Speaker 1: Understand how systems work, you know how well, it's not

825
00:46:45,200 --> 00:46:48,840
Speaker 1: even so much create your own values. It's like you

826
00:46:48,960 --> 00:46:50,680
Speaker 1: got to focus on, like how do you get people

827
00:46:50,680 --> 00:46:52,239
Speaker 1: to behave the way you want them to? Give you?

828
00:46:52,280 --> 00:46:55,919
Speaker 1: An example is so like Tom Coughlin could have put

829
00:46:56,160 --> 00:46:58,480
Speaker 1: values on the wall that said, like we're going to

830
00:46:58,560 --> 00:47:01,840
Speaker 1: be very detail oriented, we're gonna care about like everything

831
00:47:01,880 --> 00:47:04,279
Speaker 1: more than anybody else does, and like nobody would have

832
00:47:04,280 --> 00:47:07,160
Speaker 1: done anything. But what he did is he said, here's

833
00:47:07,160 --> 00:47:10,160
Speaker 1: the role. If you're on time, you're late, and if

834
00:47:10,239 --> 00:47:13,239
Speaker 1: you came to meeting on time, he'd find you like

835
00:47:13,360 --> 00:47:15,719
Speaker 1: thousands of dollars because you needed to be there five

836
00:47:15,760 --> 00:47:18,880
Speaker 1: minutes early. Now, like why is that better? One? Like,

837
00:47:18,920 --> 00:47:21,080
Speaker 1: as soon as he says that if you're on time,

838
00:47:21,120 --> 00:47:23,400
Speaker 1: you're late, you go like where the hell am I?

839
00:47:23,560 --> 00:47:25,840
Speaker 1: Like what is this? Why is he saying that? And

840
00:47:25,880 --> 00:47:27,600
Speaker 1: when you ask yourself why is he saying that? Then

841
00:47:27,680 --> 00:47:30,359
Speaker 1: what you're gonna find out is because like we're out

842
00:47:30,360 --> 00:47:33,520
Speaker 1: working everybody, we're paying more attention to everything than anybody,

843
00:47:33,600 --> 00:47:36,600
Speaker 1: Like the way we practice every detail that we go over,

844
00:47:36,760 --> 00:47:43,000
Speaker 1: like we're going we're gonna be here before everybody. Then um.

845
00:47:43,040 --> 00:47:44,719
Speaker 1: And if you run into it every time you go

846
00:47:44,760 --> 00:47:47,120
Speaker 1: to a meeting, like you can't like get away from

847
00:47:47,160 --> 00:47:49,359
Speaker 1: that cultural value. Whereas like you put on the damn

848
00:47:49,400 --> 00:47:50,600
Speaker 1: wall and you see it once a year in your

849
00:47:50,600 --> 00:47:53,080
Speaker 1: performance review, come on, like that's not doing anything. And

850
00:47:53,120 --> 00:47:55,320
Speaker 1: for people who may not be familiar with it. Kauflin

851
00:47:55,440 --> 00:47:58,120
Speaker 1: was the coach and New York Giants one two Super Bowls.

852
00:47:58,560 --> 00:48:02,160
Speaker 1: Wrote a book, Earned the Right to Win, which I

853
00:48:02,239 --> 00:48:06,320
Speaker 1: do not love sports books as business metaphors. This is

854
00:48:06,360 --> 00:48:10,160
Speaker 1: a great book. Really really comes across his meeting we'll

855
00:48:10,239 --> 00:48:12,760
Speaker 1: we'll talk about this later, his whole concept of meetings.

856
00:48:13,080 --> 00:48:16,479
Speaker 1: If you're not there and and prepared and thinking about

857
00:48:16,480 --> 00:48:18,640
Speaker 1: what's going to happen at the meeting, like you can't

858
00:48:18,640 --> 00:48:21,360
Speaker 1: show up at the line of scrimmage a moment before

859
00:48:21,400 --> 00:48:23,920
Speaker 1: the bullet snapped out. It's all the prep work that

860
00:48:23,960 --> 00:48:28,040
Speaker 1: goes into it. He he was really a very deep philosopher. Yeah,

861
00:48:28,120 --> 00:48:32,440
Speaker 1: and a cultural philosopher. Yes, yes, absolutely. We have been

862
00:48:32,480 --> 00:48:36,239
Speaker 1: speaking with Ben Horowitz. He is the author of what

863
00:48:36,280 --> 00:48:38,839
Speaker 1: you do, is who you are, how to create your

864
00:48:38,880 --> 00:48:42,520
Speaker 1: business culture. If you enjoy this conversation, be sure and

865
00:48:42,600 --> 00:48:45,080
Speaker 1: come back for the podcast extras, where we keep the

866
00:48:45,120 --> 00:48:49,400
Speaker 1: tape rolling and continue discussing all things venture capital related.

867
00:48:49,760 --> 00:48:54,799
Speaker 1: You can find that at Apple iTunes, Stitcher, Spotify, Google Podcasts,

868
00:48:54,840 --> 00:48:58,360
Speaker 1: wherever your final podcasts are sold. We love your comments,

869
00:48:58,400 --> 00:49:01,800
Speaker 1: feedback and suggestions. I to us at M I B

870
00:49:01,960 --> 00:49:04,880
Speaker 1: podcast at Bloomberg dot net. Be sure to give us

871
00:49:04,880 --> 00:49:08,040
Speaker 1: a review on Apple iTunes. Check out my weekly column

872
00:49:08,080 --> 00:49:11,400
Speaker 1: on Bloomberg dot com. Follow me on Twitter at Riolts.

873
00:49:11,920 --> 00:49:15,239
Speaker 1: I'm Barry Retolts. You're listening to Masters in Business on

874
00:49:15,280 --> 00:49:19,600
Speaker 1: Bloomberg Radio. Welcome to the podcast, Ben, Thank you for

875
00:49:19,680 --> 00:49:21,680
Speaker 1: doing this. I have been chasing you down for a

876
00:49:21,719 --> 00:49:26,560
Speaker 1: good couple of years to join. I eventually had to

877
00:49:26,560 --> 00:49:29,200
Speaker 1: work my way through the rest of all the employees

878
00:49:29,360 --> 00:49:32,799
Speaker 1: at Andres and Harowitz, and now I have you in

879
00:49:32,880 --> 00:49:37,040
Speaker 1: my in my lair, I have to ask about the

880
00:49:37,080 --> 00:49:40,839
Speaker 1: origin of a sixteen Z. I know that there are

881
00:49:40,880 --> 00:49:43,960
Speaker 1: sixteen letters between the A and Andrews and the Z

882
00:49:44,160 --> 00:49:48,279
Speaker 1: and Harrowitz. How did that come about? And full disclosure?

883
00:49:48,280 --> 00:49:50,680
Speaker 1: When I was in your office, you guys gave us

884
00:49:50,719 --> 00:49:54,839
Speaker 1: some swag. I have that hat which I where all

885
00:49:54,880 --> 00:49:57,759
Speaker 1: the time. I really enjoy it. Where where did a

886
00:49:57,880 --> 00:50:01,640
Speaker 1: sixteen Z come from? Well, so we named the The

887
00:50:01,680 --> 00:50:03,680
Speaker 1: reason we named the firm first of all Andrews and

888
00:50:03,760 --> 00:50:07,080
Speaker 1: Horowitz was the big question we got when we were

889
00:50:07,160 --> 00:50:10,279
Speaker 1: raising money from the LPs was they were like, hey,

890
00:50:10,320 --> 00:50:15,560
Speaker 1: you guys are like already kind of successful entrepreneurs. Why

891
00:50:15,600 --> 00:50:18,160
Speaker 1: are you really going to stay doing this venture capital thing.

892
00:50:18,200 --> 00:50:20,200
Speaker 1: We think you're just gonna like raise some money and

893
00:50:20,239 --> 00:50:23,799
Speaker 1: then quit and really yeah, yeah, yeah, that was a

894
00:50:23,800 --> 00:50:27,680
Speaker 1: big objection. And uh so I actually got the idea.

895
00:50:27,680 --> 00:50:30,399
Speaker 1: It was like Mark, like, if we name it after us,

896
00:50:30,480 --> 00:50:33,040
Speaker 1: then they'll still be stuck to it, and then they'll

897
00:50:33,040 --> 00:50:36,360
Speaker 1: know we're stuck. And yeah, so that was Andrews and

898
00:50:36,400 --> 00:50:38,880
Speaker 1: Horowitz and then but then we had an immediate problem,

899
00:50:38,920 --> 00:50:42,200
Speaker 1: which is, uh, nobody could spell that if they were

900
00:50:42,200 --> 00:50:44,320
Speaker 1: going to send us email or something to ease to

901
00:50:44,600 --> 00:50:46,920
Speaker 1: S is an inres and not an easy name to spell,

902
00:50:47,080 --> 00:50:49,920
Speaker 1: not at all. And so I came up with the ideas.

903
00:50:49,920 --> 00:50:51,880
Speaker 1: So when I was an engineer, like way back in

904
00:50:51,960 --> 00:50:54,879
Speaker 1: the Stone Age, it's such a geek thing to do. Yeah,

905
00:50:54,920 --> 00:50:58,839
Speaker 1: we used to have to internationalize code um to make

906
00:50:58,880 --> 00:51:01,160
Speaker 1: it work, you know, make it go from like whatever

907
00:51:01,239 --> 00:51:04,000
Speaker 1: single to double by uh strings and all this kind

908
00:51:04,000 --> 00:51:08,319
Speaker 1: of thing. And so we called that internationalization and we

909
00:51:08,360 --> 00:51:12,239
Speaker 1: abbreviated it I eighteen and I eighteen letters in the end.

910
00:51:12,280 --> 00:51:14,120
Speaker 1: And I was like, oh, this will be great. Book

911
00:51:14,120 --> 00:51:19,720
Speaker 1: called a six Z and and the domain was easily available.

912
00:51:19,760 --> 00:51:22,360
Speaker 1: Not that entrees in Horowitz probably wasn't available. You know,

913
00:51:22,480 --> 00:51:25,480
Speaker 1: that was available to it was just a nightmare to

914
00:51:25,640 --> 00:51:31,439
Speaker 1: right now. So when I had UM your CFO or CEO,

915
00:51:31,600 --> 00:51:35,919
Speaker 1: Scott Scott Cooper, So he was in his book, he's

916
00:51:35,960 --> 00:51:41,600
Speaker 1: telling the story that essentially post opswear loud Cloud, you

917
00:51:41,719 --> 00:51:45,279
Speaker 1: and Mark were effectively I think he called you check

918
00:51:45,360 --> 00:51:50,920
Speaker 1: book vcs. You were funding companies literally out of you know,

919
00:51:50,960 --> 00:51:54,040
Speaker 1: writing a check to people. And and he didn't say this,

920
00:51:54,160 --> 00:51:56,600
Speaker 1: I put these words in his mouth. But he's like

921
00:51:56,640 --> 00:51:59,920
Speaker 1: a very he's a lawyer. He's very rigorous, he's very struck.

922
00:52:00,000 --> 00:52:03,600
Speaker 1: Shared I pictured him like, what are you guys doing? Wait,

923
00:52:03,800 --> 00:52:06,120
Speaker 1: you're just writing checks out of your purse. Like I

924
00:52:06,160 --> 00:52:08,759
Speaker 1: pictured him losing his mind and saying no, no, no,

925
00:52:08,840 --> 00:52:10,520
Speaker 1: we have to set up a legal structure we have

926
00:52:10,560 --> 00:52:14,319
Speaker 1: to get organized. There's a lot of um, you know,

927
00:52:14,320 --> 00:52:19,360
Speaker 1: a little urban legend about the origin stories of how

928
00:52:19,400 --> 00:52:22,560
Speaker 1: how accurate is you guys were just kind of like, yeah,

929
00:52:22,640 --> 00:52:24,920
Speaker 1: let's give these guys money and give those guys money.

930
00:52:25,000 --> 00:52:27,800
Speaker 1: Well we I mean we were, but like we started

931
00:52:27,800 --> 00:52:30,120
Speaker 1: out as an angel fund before we even like formed

932
00:52:30,120 --> 00:52:32,360
Speaker 1: the kind of structure of the firm and so forth,

933
00:52:32,640 --> 00:52:35,000
Speaker 1: which now we have many entities, so Scott is very

934
00:52:35,000 --> 00:52:37,320
Speaker 1: happy with that. I can't even count all the entities

935
00:52:37,320 --> 00:52:40,359
Speaker 1: we have. Uh, but you know, like we would meet

936
00:52:40,480 --> 00:52:44,040
Speaker 1: entrepreneurs and we were writing you know checks for hundred grand,

937
00:52:44,080 --> 00:52:46,120
Speaker 1: two hundred thousand dollars. I mean that does sound like

938
00:52:46,160 --> 00:52:51,360
Speaker 1: a lot of money, but right it's seed or angel

939
00:52:51,520 --> 00:52:54,160
Speaker 1: rounds and yeah, so if we loved an entrepreneur, we

940
00:52:54,160 --> 00:52:58,719
Speaker 1: would you know, yeah, absolutely, Um, and you know a

941
00:52:58,719 --> 00:53:04,040
Speaker 1: lot of those turned out uh really you know quite well. So, Um,

942
00:53:04,120 --> 00:53:09,120
Speaker 1: what were some of those first checkbook firms? Uh funding?

943
00:53:09,120 --> 00:53:12,080
Speaker 1: What companies did you fund? Yeah? Yeah, so well there

944
00:53:12,200 --> 00:53:14,279
Speaker 1: was a few that where I mean, like probably the

945
00:53:14,320 --> 00:53:19,800
Speaker 1: best checks were like things like, uh, LinkedIn and Twitter.

946
00:53:19,880 --> 00:53:22,400
Speaker 1: I think we're probably the you know, two of the best,

947
00:53:22,640 --> 00:53:26,120
Speaker 1: but you know one that I really um meant a

948
00:53:26,120 --> 00:53:28,759
Speaker 1: lot to me. Was a company called app Nexus. I

949
00:53:28,760 --> 00:53:30,399
Speaker 1: don't know if you know them, they're here in New York,

950
00:53:30,480 --> 00:53:33,919
Speaker 1: but they sold to A T and T for well

951
00:53:34,000 --> 00:53:38,480
Speaker 1: over billion dollars and um, you know they those guys.

952
00:53:38,520 --> 00:53:40,520
Speaker 1: You know, it was just a bet on Brian the CEO,

953
00:53:40,680 --> 00:53:44,600
Speaker 1: and uh man like he was tough. He just went

954
00:53:44,640 --> 00:53:48,000
Speaker 1: through everything and you know, changes of the business, like

955
00:53:48,280 --> 00:53:51,359
Speaker 1: you know, people giving up on him and all these

956
00:53:51,440 --> 00:53:54,359
Speaker 1: kinds of things, and he just kept going and built

957
00:53:54,480 --> 00:53:56,880
Speaker 1: quite the company. So so so a couple of my

958
00:53:56,920 --> 00:53:59,719
Speaker 1: favorite quotes from the book and I'm not again I

959
00:54:00,160 --> 00:54:03,120
Speaker 1: jezz I don't know which book this is from. I

960
00:54:03,160 --> 00:54:05,840
Speaker 1: think this is from the Hard Thing book. No matter

961
00:54:05,880 --> 00:54:08,400
Speaker 1: who you are, you need two kinds of friends in

962
00:54:08,440 --> 00:54:13,200
Speaker 1: your life. Explain that. Yeah, so that was you know,

963
00:54:13,200 --> 00:54:15,319
Speaker 1: it was just kind of trying to come up with

964
00:54:15,360 --> 00:54:21,120
Speaker 1: a the way to describe my friend Bill Campbell you know,

965
00:54:21,200 --> 00:54:24,400
Speaker 1: late Bill Campbell Um was the chairman of Into It,

966
00:54:24,840 --> 00:54:27,719
Speaker 1: chairman of the CEO and then chairman of into it um,

967
00:54:27,800 --> 00:54:30,440
Speaker 1: you know, and kind of legend around Silicon Valley. He

968
00:54:30,520 --> 00:54:32,880
Speaker 1: mentored Steve Jobs and Larry Page and a bunch of

969
00:54:32,880 --> 00:54:35,640
Speaker 1: other guys but someone called him that. That's in the

970
00:54:35,880 --> 00:54:39,239
Speaker 1: book the trillion Dollar Coach, Trillion Dollar Coach, right exactly.

971
00:54:40,280 --> 00:54:42,600
Speaker 1: But you know the way I always saw him was, um,

972
00:54:42,880 --> 00:54:44,879
Speaker 1: you know there there there's two kinds of friends you need.

973
00:54:44,960 --> 00:54:47,760
Speaker 1: One is, you know, if something good happens in your life,

974
00:54:48,360 --> 00:54:50,360
Speaker 1: who do you want to call? Because they're going to

975
00:54:50,480 --> 00:54:53,920
Speaker 1: be as excited about it as you would be yourself

976
00:54:54,000 --> 00:54:55,719
Speaker 1: like and then you have very few friends like that,

977
00:54:55,800 --> 00:54:57,640
Speaker 1: you know, like your faith. And that's always a great

978
00:54:57,680 --> 00:55:00,200
Speaker 1: line between like fake friends and real friends. Is your

979
00:55:00,239 --> 00:55:01,879
Speaker 1: fake friends, you know, like they hear it and they

980
00:55:01,880 --> 00:55:05,720
Speaker 1: pretend they're happy, but they're not really happy and ahead

981
00:55:05,719 --> 00:55:09,840
Speaker 1: of me again. Uh and then uh, you know the

982
00:55:09,840 --> 00:55:12,040
Speaker 1: second kind is like if you're really in trouble, like

983
00:55:12,120 --> 00:55:13,719
Speaker 1: you know, like you're in jail and you have one

984
00:55:13,719 --> 00:55:15,799
Speaker 1: phone call to make, who you're gonna call? And you know,

985
00:55:15,840 --> 00:55:18,760
Speaker 1: both those guys for me were Bill Campbell. That that's

986
00:55:18,840 --> 00:55:23,640
Speaker 1: quite um, quite fascinating. Um. Another quote from that book,

987
00:55:24,440 --> 00:55:27,360
Speaker 1: what's the worst thing that could happen? What would I

988
00:55:27,400 --> 00:55:30,279
Speaker 1: do if we went bankrupt? And you described that as

989
00:55:30,320 --> 00:55:34,000
Speaker 1: a very freeing question. Yeah, yeah, I know, so that

990
00:55:34,080 --> 00:55:36,680
Speaker 1: was so you know, I didn't know what called sweats

991
00:55:36,719 --> 00:55:38,960
Speaker 1: work until he became a CEO, and then you know,

992
00:55:38,960 --> 00:55:40,880
Speaker 1: I'd be you know, it would be three o'clock in

993
00:55:40,920 --> 00:55:44,120
Speaker 1: the morning, I'd be wet um and you know, awake,

994
00:55:44,760 --> 00:55:46,919
Speaker 1: and my guts would be boiling, and I'd be like, oh,

995
00:55:46,960 --> 00:55:49,080
Speaker 1: this is what they meant. And so, you know, we

996
00:55:49,080 --> 00:55:52,040
Speaker 1: were in a lot of trouble. Um. The company was

997
00:55:52,120 --> 00:55:55,839
Speaker 1: definitely hitted for big bankruptcy. And I asked myself the question.

998
00:55:55,880 --> 00:55:58,080
Speaker 1: I was like, okay, like, yes, what what's the worst

999
00:55:58,120 --> 00:56:00,200
Speaker 1: thing that could happen? So, like, what is the worst

1000
00:56:00,200 --> 00:56:02,120
Speaker 1: thing that could happen to the company? And I was like, Okay,

1001
00:56:02,200 --> 00:56:04,240
Speaker 1: the worst thing that could happen is world go bankrupt.

1002
00:56:04,320 --> 00:56:07,040
Speaker 1: I'll lay everybody off. All of our customers who trusted

1003
00:56:07,120 --> 00:56:09,600
Speaker 1: us would fail, like all the investors who trusted me

1004
00:56:09,640 --> 00:56:12,640
Speaker 1: would lose their money, and like I'd have no friends.

1005
00:56:12,880 --> 00:56:16,359
Speaker 1: And I was thinking, Wow, that's like pretty bad. And

1006
00:56:16,400 --> 00:56:18,680
Speaker 1: so then I then my next thought was like, well,

1007
00:56:18,800 --> 00:56:22,160
Speaker 1: is there a way to kind of oh And then

1008
00:56:22,400 --> 00:56:24,919
Speaker 1: the last part of it was really essential, which is well,

1009
00:56:24,960 --> 00:56:28,200
Speaker 1: maybe after all that I could buy the intellectual property

1010
00:56:28,239 --> 00:56:30,640
Speaker 1: out of the bankrupt thing and make it into a

1011
00:56:30,680 --> 00:56:35,640
Speaker 1: new company. Um, and then I thought, whoa, why wait

1012
00:56:35,680 --> 00:56:37,719
Speaker 1: for bankrupt? Yeah, maybe I could do that before we

1013
00:56:37,760 --> 00:56:41,360
Speaker 1: went bankrupt, and that that's how loudcloud became ops where exactly?

1014
00:56:42,280 --> 00:56:45,439
Speaker 1: And that worked out pretty well? Yeah, no, thankfully, um

1015
00:56:45,440 --> 00:56:47,920
Speaker 1: it did, it did. I would probably not be here

1016
00:56:47,960 --> 00:56:50,560
Speaker 1: today had that worked out, you know, speaking of failure

1017
00:56:50,640 --> 00:56:52,839
Speaker 1: like that failure would have my life would have been

1018
00:56:52,880 --> 00:56:54,759
Speaker 1: very different. I think if we had failed at that,

1019
00:56:54,840 --> 00:56:58,080
Speaker 1: Why did loudcloud not work? Was it just too early

1020
00:56:58,440 --> 00:57:04,759
Speaker 1: in the evolution of bandwidth, server technology, etcetera? For like

1021
00:57:04,800 --> 00:57:09,359
Speaker 1: that was Amazon Web Services a good couple of years before. Well,

1022
00:57:09,520 --> 00:57:12,200
Speaker 1: and I would say all those are true. And then

1023
00:57:12,360 --> 00:57:15,279
Speaker 1: maybe the most fatal thing was it was built pre

1024
00:57:15,719 --> 00:57:21,400
Speaker 1: UH virtualization, which there's a technology called UM virtualization which

1025
00:57:21,480 --> 00:57:25,920
Speaker 1: kind of transformed UM your ability to do cloud computing

1026
00:57:25,960 --> 00:57:29,600
Speaker 1: costs effectively, which is you could take a single computer

1027
00:57:29,640 --> 00:57:33,080
Speaker 1: and make it look like many computers. And breakthrough technology

1028
00:57:33,120 --> 00:57:35,960
Speaker 1: from a company called vm ware many years ago, uh,

1029
00:57:36,120 --> 00:57:38,520
Speaker 1: and that really kind of changed the nature of it.

1030
00:57:39,280 --> 00:57:43,800
Speaker 1: Vm Ware I E. MC bought them about them right

1031
00:57:44,080 --> 00:57:49,120
Speaker 1: right right, And that was another giant uh pre Amazon

1032
00:57:49,400 --> 00:57:55,720
Speaker 1: cloud UH data storage company back from late nineties. Yeah, yeah, yeah, no,

1033
00:57:56,080 --> 00:57:59,080
Speaker 1: absolutely one of the biggest. Uh. There was one other question.

1034
00:57:59,160 --> 00:58:01,560
Speaker 1: I wanted to pull out one of your quotes that

1035
00:58:01,640 --> 00:58:07,120
Speaker 1: I thought was so interesting. Oh, um, this one. I

1036
00:58:07,240 --> 00:58:10,919
Speaker 1: love this quote. A healthy company encourages people to share

1037
00:58:11,000 --> 00:58:14,840
Speaker 1: bad news. A company that discusses its problems freely and

1038
00:58:14,920 --> 00:58:18,400
Speaker 1: openly can quickly solve them. A company that covers up

1039
00:58:18,480 --> 00:58:24,720
Speaker 1: its problem frustrates everyone involved. Describe that, well, look, um,

1040
00:58:25,640 --> 00:58:28,480
Speaker 1: you know there's this whole saying that like NBA has

1041
00:58:28,520 --> 00:58:30,720
Speaker 1: come with a lot of the time, which is, you know,

1042
00:58:30,920 --> 00:58:33,960
Speaker 1: don't bring me a problem unless you have the solution.

1043
00:58:35,320 --> 00:58:39,320
Speaker 1: And that's kind of good, except for what happens when

1044
00:58:39,360 --> 00:58:43,640
Speaker 1: they don't have the solution. Um, And then what you're

1045
00:58:43,640 --> 00:58:47,840
Speaker 1: really saying is don't bring me problems. Uh. And that

1046
00:58:47,960 --> 00:58:52,160
Speaker 1: can become like pervasive in the culture where you know,

1047
00:58:52,240 --> 00:58:56,000
Speaker 1: and I always uh liken it to the Wicked Witch

1048
00:58:56,040 --> 00:58:57,920
Speaker 1: and the Whiz where you know she sung that song,

1049
00:58:58,040 --> 00:59:00,400
Speaker 1: ain't nobody bring me no bad news? You know, like

1050
00:59:00,840 --> 00:59:03,360
Speaker 1: you don't want the whiz wicked Witch running the company

1051
00:59:03,840 --> 00:59:06,680
Speaker 1: because you need you need to know what's wrong, because

1052
00:59:06,720 --> 00:59:09,440
Speaker 1: the faster you know it, the better it is. Uh.

1053
00:59:09,600 --> 00:59:12,360
Speaker 1: And the slower you know it becomes a Kimchi problem.

1054
00:59:12,440 --> 00:59:15,280
Speaker 1: The deeper you bury at the hutter it gets. And

1055
00:59:15,600 --> 00:59:17,800
Speaker 1: so but it's a very much a cultural thing because

1056
00:59:17,840 --> 00:59:21,600
Speaker 1: people don't want to be associated with problems, so you know,

1057
00:59:21,920 --> 00:59:24,640
Speaker 1: getting them to bring them to you, you know, there

1058
00:59:24,720 --> 00:59:27,160
Speaker 1: there has to be some kind of like reward in

1059
00:59:27,240 --> 00:59:30,680
Speaker 1: the culture for doing that. And one of the things

1060
00:59:30,760 --> 00:59:34,120
Speaker 1: we didn't get to doing the earlier segments I wanted

1061
00:59:34,120 --> 00:59:38,000
Speaker 1: to ask about. I I work in the financial services industry.

1062
00:59:38,240 --> 00:59:42,200
Speaker 1: Diversity is a big problem there. Um, it tends to

1063
00:59:42,320 --> 00:59:44,960
Speaker 1: be male dominated, it tends to be not a lot

1064
00:59:45,040 --> 00:59:47,640
Speaker 1: of people of color. I know a lot of firms

1065
00:59:47,680 --> 00:59:50,720
Speaker 1: are working on that, but it's progress has been slow.

1066
00:59:51,440 --> 00:59:56,760
Speaker 1: You guys have have created specifically a cultural Leadership Fund

1067
00:59:56,840 --> 01:00:00,680
Speaker 1: to try and change that. Tell us about the lack

1068
01:00:00,760 --> 01:00:04,200
Speaker 1: of diversity and venture capital and and what andrews in

1069
01:00:04,280 --> 01:00:08,120
Speaker 1: Harwitz is doing about that. Yeah, so, like, let me

1070
01:00:10,080 --> 01:00:11,800
Speaker 1: this is big. So there's a chapter in the new

1071
01:00:11,840 --> 01:00:15,120
Speaker 1: book called Genghis Khan Master of Inclusion, which kind of

1072
01:00:15,440 --> 01:00:18,640
Speaker 1: goes through this theory. And uh, it's a very I

1073
01:00:18,720 --> 01:00:21,560
Speaker 1: think it's very important topic. And it's something that you know,

1074
01:00:21,720 --> 01:00:24,880
Speaker 1: generally silicon values getting exactly wrong. And I think Wall

1075
01:00:24,920 --> 01:00:28,000
Speaker 1: Street probably the same. And it's not intention so like

1076
01:00:28,120 --> 01:00:31,360
Speaker 1: the first misinterpretation as people think, oh, everybody is racist

1077
01:00:31,440 --> 01:00:34,520
Speaker 1: and sexist and finance and in venture capital, and that's

1078
01:00:34,560 --> 01:00:38,360
Speaker 1: not actually the thing. Um. And in fact, starting from

1079
01:00:38,400 --> 01:00:43,800
Speaker 1: that point actually makes you effectively systemically racist and sexist.

1080
01:00:43,880 --> 01:00:47,320
Speaker 1: And I'll tell you how, because then you go, oh,

1081
01:00:47,840 --> 01:00:51,080
Speaker 1: I need you know women minorities in my company, and

1082
01:00:51,200 --> 01:00:54,919
Speaker 1: then you hire them, and then everybody in your firm

1083
01:00:55,000 --> 01:00:57,440
Speaker 1: knows they came in the side door, the women and

1084
01:00:57,520 --> 01:01:00,400
Speaker 1: minority door, as opposed to the front door. Um. And

1085
01:01:00,480 --> 01:01:02,560
Speaker 1: the real problem is you can't see the talent. So

1086
01:01:04,680 --> 01:01:06,200
Speaker 1: i'll give you a metaphor on this. So my friend

1087
01:01:06,280 --> 01:01:09,680
Speaker 1: Steve Stout, who ran Sony Urban Music, calls me one

1088
01:01:09,720 --> 01:01:12,320
Speaker 1: day and he talks in these kind of ways. He goes, Ben,

1089
01:01:13,160 --> 01:01:15,400
Speaker 1: I ran Sony Urban Music. And I was like, yes,

1090
01:01:15,440 --> 01:01:17,720
Speaker 1: I know that, Steve, but I also knew he was

1091
01:01:17,800 --> 01:01:20,800
Speaker 1: going to tell me a longer story. And he goes,

1092
01:01:22,440 --> 01:01:25,840
Speaker 1: but it wasn't Sony Urban music. It was Sony black music. Um.

1093
01:01:25,960 --> 01:01:28,080
Speaker 1: But we couldn't call it urban music because or black

1094
01:01:28,120 --> 01:01:29,680
Speaker 1: music because that would have been racist, So we had

1095
01:01:29,680 --> 01:01:31,320
Speaker 1: to call it urban music. I was like well, that's

1096
01:01:31,360 --> 01:01:33,120
Speaker 1: kind of silly, and he goes, no, that wasn't What

1097
01:01:33,240 --> 01:01:35,320
Speaker 1: was silly, he says, because we called it urban music,

1098
01:01:35,880 --> 01:01:39,200
Speaker 1: I couldn't market in rural areas, like no black people

1099
01:01:39,280 --> 01:01:41,840
Speaker 1: live in rural areas. And I goes, wow, that's really dumb.

1100
01:01:41,880 --> 01:01:44,080
Speaker 1: He's like, Ben, you're not even listening to me. I

1101
01:01:44,200 --> 01:01:48,320
Speaker 1: had Sony urban music. I had Michael Jackson. What white

1102
01:01:48,320 --> 01:01:51,800
Speaker 1: people don't like Michael Jackson. It's not black music, it's music.

1103
01:01:52,800 --> 01:01:55,080
Speaker 1: And I was like, oh my god, that's what we're

1104
01:01:55,080 --> 01:01:58,240
Speaker 1: doing in Silicon Valley. We call it diversity, but it's

1105
01:01:58,240 --> 01:02:01,960
Speaker 1: really urban talent. It's this like we've categorized it into

1106
01:02:02,080 --> 01:02:05,560
Speaker 1: something that it doesn't need to be categorized in because

1107
01:02:06,160 --> 01:02:08,560
Speaker 1: we haven't trained ourselves to see that kind of talent.

1108
01:02:09,200 --> 01:02:12,080
Speaker 1: So just give you an example of what I mean

1109
01:02:12,200 --> 01:02:15,200
Speaker 1: by that. So at my firm, when we started, UM,

1110
01:02:16,120 --> 01:02:19,320
Speaker 1: we were like, you know, we were like every other firm.

1111
01:02:19,440 --> 01:02:21,960
Speaker 1: I had Frank Chen and he was running research, and

1112
01:02:22,040 --> 01:02:25,680
Speaker 1: everybody in research was Asian. And I had you know, Margaret,

1113
01:02:25,800 --> 01:02:28,520
Speaker 1: she was running marketing, and everybody in marketing was a woman.

1114
01:02:28,880 --> 01:02:31,440
Speaker 1: And I had you know, Cooper. Everybody he hired was

1115
01:02:31,440 --> 01:02:33,560
Speaker 1: an investment banker, and like it just went on like that.

1116
01:02:33,880 --> 01:02:36,360
Speaker 1: People hire people who look like them, sound like them,

1117
01:02:36,440 --> 01:02:39,360
Speaker 1: have their backs. I know what I'm good at, I

1118
01:02:39,480 --> 01:02:41,240
Speaker 1: value it highly, and I can test for it in

1119
01:02:41,320 --> 01:02:44,160
Speaker 1: an interview. So by default, that's what I'm hiring. And

1120
01:02:44,280 --> 01:02:46,640
Speaker 1: so I go to market and I go market. What

1121
01:02:46,880 --> 01:02:50,040
Speaker 1: is in your criteria where no man can get the

1122
01:02:50,120 --> 01:02:52,200
Speaker 1: job in marketing? Like? What is it? And you know

1123
01:02:52,240 --> 01:02:56,680
Speaker 1: what she said to me? Helpfulness? Really? And I was like, oh, snap,

1124
01:02:56,760 --> 01:02:59,320
Speaker 1: I don't know any helpful man. And but then, but

1125
01:02:59,480 --> 01:03:01,760
Speaker 1: like here's a real dumb thing about what I was doing.

1126
01:03:01,960 --> 01:03:06,040
Speaker 1: Is we're a venture capital firm. We're in the services business.

1127
01:03:07,360 --> 01:03:09,960
Speaker 1: You don't think helpfulness is important in the services business,

1128
01:03:10,240 --> 01:03:12,600
Speaker 1: like to be able to anticipate somebody's needs to get

1129
01:03:12,640 --> 01:03:14,360
Speaker 1: to it before they know you do. You don't think

1130
01:03:14,400 --> 01:03:18,040
Speaker 1: that's a differentiation. And so like, we didn't have that

1131
01:03:18,080 --> 01:03:21,120
Speaker 1: in our criteria for anybody's profile other than hers. When

1132
01:03:21,200 --> 01:03:26,160
Speaker 1: we added it, that's all we did. We don't have

1133
01:03:27,800 --> 01:03:32,360
Speaker 1: anywhere like a head of diversity, a diversity program, nothing,

1134
01:03:33,520 --> 01:03:36,840
Speaker 1: people were women. All we have to do is actually

1135
01:03:36,880 --> 01:03:39,440
Speaker 1: be able to see the talent. We're a talent blind

1136
01:03:40,440 --> 01:03:43,800
Speaker 1: and so the right thing to measure is blind. Yeah,

1137
01:03:43,880 --> 01:03:47,560
Speaker 1: the right thing to measure on diversity inclusion is what

1138
01:03:47,800 --> 01:03:53,000
Speaker 1: is it like like from attrition standpoint, employee satisfaction standpoint

1139
01:03:53,240 --> 01:03:55,560
Speaker 1: for your diverse groups, Because the only way you get

1140
01:03:55,760 --> 01:03:57,760
Speaker 1: that to be where it should be is if you

1141
01:03:57,800 --> 01:03:59,919
Speaker 1: can see the talent. And if you can see the talent,

1142
01:04:00,360 --> 01:04:02,320
Speaker 1: guess what, You're not gonna have a pipeline problem. You're

1143
01:04:02,320 --> 01:04:04,120
Speaker 1: not gonna have any of those other problems that people

1144
01:04:04,240 --> 01:04:06,439
Speaker 1: run into because you can see it and the talent

1145
01:04:06,600 --> 01:04:08,800
Speaker 1: is out there. And so when you get to the

1146
01:04:09,040 --> 01:04:14,720
Speaker 1: Cultural Leadership Fund, people think that's actually a diversity idea.

1147
01:04:14,800 --> 01:04:18,920
Speaker 1: It's not. It's actually a bet on black exceptionalism. And

1148
01:04:19,280 --> 01:04:22,800
Speaker 1: what I mean by that is this is us recognizing

1149
01:04:23,320 --> 01:04:28,720
Speaker 1: that in the last hundred years, every new musical art form,

1150
01:04:28,920 --> 01:04:32,720
Speaker 1: from jazz to blues, to rock and roll to hip hop,

1151
01:04:32,800 --> 01:04:37,360
Speaker 1: was invented by the same group African Americans, African Americans.

1152
01:04:38,000 --> 01:04:42,160
Speaker 1: Almost all new fashion ideas were created by African Americans. Lately,

1153
01:04:42,520 --> 01:04:46,560
Speaker 1: almost all the important new visual artist African American. What

1154
01:04:46,600 --> 01:04:48,400
Speaker 1: does that mean. It's means like you have a group

1155
01:04:48,680 --> 01:04:53,040
Speaker 1: that's genius at moving consumer behavior, like we can see that.

1156
01:04:53,920 --> 01:04:58,720
Speaker 1: So we partnered with the best leaders, people like Quincy Jones,

1157
01:04:58,960 --> 01:05:03,480
Speaker 1: Sean Combs, so forth, where they would invest in our

1158
01:05:03,520 --> 01:05:08,680
Speaker 1: cultural Leadership Fund. We could then connect them to our entrepreneurs,

1159
01:05:09,440 --> 01:05:12,960
Speaker 1: get an advantage on moving consumer behavior, and then we

1160
01:05:13,080 --> 01:05:16,000
Speaker 1: just take the money and put it back into getting

1161
01:05:16,040 --> 01:05:19,000
Speaker 1: more African Americans into tech. So for us, it's a

1162
01:05:19,080 --> 01:05:21,760
Speaker 1: bet on talent that we can see that the other

1163
01:05:21,880 --> 01:05:25,520
Speaker 1: venture firms can't necessarily see and we're benefiting greatly from that,

1164
01:05:25,640 --> 01:05:27,440
Speaker 1: and you know, we win deals all the time on that.

1165
01:05:28,200 --> 01:05:30,360
Speaker 1: Uh So, you know, it's just the right way to

1166
01:05:30,480 --> 01:05:33,120
Speaker 1: think about diversity and inclusion, which is like, how do

1167
01:05:33,160 --> 01:05:35,560
Speaker 1: you gain advantage And you can't gain advantage if you're

1168
01:05:35,640 --> 01:05:38,040
Speaker 1: running around blind and then changing your criteria to race

1169
01:05:38,080 --> 01:05:40,120
Speaker 1: and gender. That's not going to get you anything that

1170
01:05:40,200 --> 01:05:43,040
Speaker 1: you just set up Urban HR. So you mentioned hip

1171
01:05:43,120 --> 01:05:50,080
Speaker 1: hop um amongst the list of musical inventions from African America.

1172
01:05:51,440 --> 01:05:56,040
Speaker 1: So we're only about five years apart in age. But

1173
01:05:56,680 --> 01:06:00,960
Speaker 1: my hip hop fandom kind of stuff opt with Poles

1174
01:06:01,000 --> 01:06:06,560
Speaker 1: Boutique and right, I mean, Paul's Boutique is a spectacular album.

1175
01:06:07,000 --> 01:06:11,120
Speaker 1: I think most people will admit the scratching and mixing

1176
01:06:11,200 --> 01:06:16,680
Speaker 1: and sampling in just just an unbelievable In fact, that

1177
01:06:16,800 --> 01:06:20,560
Speaker 1: was before the copyright wall came down, so they were

1178
01:06:20,600 --> 01:06:29,080
Speaker 1: doing stuff that you really came later charge. But I

1179
01:06:29,160 --> 01:06:32,160
Speaker 1: don't know, if what what the basis for my lack

1180
01:06:32,280 --> 01:06:36,200
Speaker 1: of because I still listen to new music, but most

1181
01:06:36,280 --> 01:06:40,280
Speaker 1: of it tends to be jazz and pop new stuff

1182
01:06:40,320 --> 01:06:44,240
Speaker 1: that comes out. How have you managed to stay current

1183
01:06:44,400 --> 01:06:47,760
Speaker 1: current in uh hip hop? And what are you listening

1184
01:06:47,800 --> 01:06:51,360
Speaker 1: to these days? Oh? Well, you know, like I get

1185
01:06:52,080 --> 01:06:54,400
Speaker 1: that's an interesting thing to describe. I think the art

1186
01:06:54,440 --> 01:06:58,680
Speaker 1: form really evolved in um, you know since Paul's boutique. Uh,

1187
01:06:59,120 --> 01:07:03,320
Speaker 1: you know rock Kim was just an amazing breakthrough lyrically, uh,

1188
01:07:03,600 --> 01:07:06,440
Speaker 1: and then Dr Dre musically, and then you had the

1189
01:07:06,520 --> 01:07:10,760
Speaker 1: great I'll Go. You know, I progress somewhat. Yeah, that

1190
01:07:10,880 --> 01:07:15,480
Speaker 1: era I mean Wu Tang nas jay z uh Notorious

1191
01:07:15,520 --> 01:07:18,080
Speaker 1: b I G was an amazing kind of era. UM.

1192
01:07:18,160 --> 01:07:20,760
Speaker 1: So that there's still like very good things happening. I mean,

1193
01:07:21,760 --> 01:07:24,040
Speaker 1: so Young Thugs new album is quite good, Like I

1194
01:07:24,080 --> 01:07:28,280
Speaker 1: would recommend it highly uh so much fun as the

1195
01:07:28,400 --> 01:07:32,000
Speaker 1: name of the album. UM, I think that you know

1196
01:07:32,320 --> 01:07:35,760
Speaker 1: the baby is uh, like everybody loves the baby, and

1197
01:07:35,960 --> 01:07:38,160
Speaker 1: he's got a new album out that's pretty good. Um

1198
01:07:38,840 --> 01:07:41,360
Speaker 1: that I like. So there's there's definitely good new stuff

1199
01:07:41,360 --> 01:07:43,920
Speaker 1: happening to Like Drake is amazing. I think he doesn't,

1200
01:07:44,680 --> 01:07:47,120
Speaker 1: you know, because he's almost so big that like real

1201
01:07:47,200 --> 01:07:49,320
Speaker 1: hip hop hits don't give him the credit he deserves.

1202
01:07:49,400 --> 01:07:52,320
Speaker 1: But this guy is an absolute genius, and uh, it's

1203
01:07:52,360 --> 01:07:56,360
Speaker 1: putting out continues to put out phenomenal music. I Um,

1204
01:07:56,600 --> 01:07:59,080
Speaker 1: I just got a new car not too long ago,

1205
01:07:59,640 --> 01:08:04,400
Speaker 1: and all the new cars have them the music hard

1206
01:08:04,520 --> 01:08:07,680
Speaker 1: drive that if you so, between the phone and the iPod,

1207
01:08:07,760 --> 01:08:09,960
Speaker 1: I got a bazillion things. But every now and then

1208
01:08:10,000 --> 01:08:12,520
Speaker 1: I just bring out a stack of discs and transfer

1209
01:08:12,600 --> 01:08:17,000
Speaker 1: it to the to the drive and right, I mean

1210
01:08:17,080 --> 01:08:19,960
Speaker 1: that's where we are. The previous car, you could use

1211
01:08:20,040 --> 01:08:23,160
Speaker 1: the SD drives. This car you can't taken. You can

1212
01:08:23,320 --> 01:08:25,960
Speaker 1: take your phone on Bluetooth, yeah of course, but you

1213
01:08:26,040 --> 01:08:29,160
Speaker 1: know the phone only has you know, five twelve gigs

1214
01:08:29,240 --> 01:08:31,519
Speaker 1: of music and I want to put some of my

1215
01:08:31,640 --> 01:08:34,240
Speaker 1: favorites in. But the reason I'm bringing that up is

1216
01:08:35,200 --> 01:08:40,960
Speaker 1: I brought I brought out seven James Brown discs and

1217
01:08:41,120 --> 01:08:46,160
Speaker 1: I transferred um, the James Brown Party people three dis

1218
01:08:46,240 --> 01:08:49,920
Speaker 1: set and then the Showtime three four disc set, And

1219
01:08:50,040 --> 01:08:52,719
Speaker 1: as I'm listening to all this stuff with a hundredth time,

1220
01:08:54,120 --> 01:09:01,759
Speaker 1: it's amazing how much hip hop pulled vocal samples, beats, baselines, rhythms.

1221
01:09:02,040 --> 01:09:04,639
Speaker 1: Just I don't I have a lot of young guys

1222
01:09:04,680 --> 01:09:08,160
Speaker 1: in my office. Brown was originally like the most sampled guy.

1223
01:09:08,640 --> 01:09:12,560
Speaker 1: I don't think people realize how influential he still is

1224
01:09:12,640 --> 01:09:16,200
Speaker 1: to this day. Amazing driving music. It's it's just fascinating.

1225
01:09:16,320 --> 01:09:18,400
Speaker 1: So I've got a tip off your James Brown fan.

1226
01:09:18,479 --> 01:09:20,760
Speaker 1: So there's a there's a show called Tales from the

1227
01:09:20,840 --> 01:09:25,240
Speaker 1: Tour Bus might judge, there's to James Brown episodes. You

1228
01:09:25,400 --> 01:09:30,880
Speaker 1: have to they're the most from It's on I think Cinemax.

1229
01:09:31,680 --> 01:09:35,320
Speaker 1: But it's uh, it's an amazing show generally, but season

1230
01:09:35,400 --> 01:09:40,880
Speaker 1: two James Brown amazing. Like so first of all, like

1231
01:09:41,400 --> 01:09:44,599
Speaker 1: just how genius he was the band he put together,

1232
01:09:44,680 --> 01:09:48,840
Speaker 1: and how incredible they were, and how absolutely nuts out

1233
01:09:48,920 --> 01:09:52,000
Speaker 1: of his mind was He never really like he barely

1234
01:09:52,120 --> 01:09:54,240
Speaker 1: drunk and he never did any drugs until he was

1235
01:09:54,320 --> 01:09:58,439
Speaker 1: fifty five, and then he started on Angel Dust like

1236
01:09:58,600 --> 01:10:00,960
Speaker 1: that was his first rock. He didn't anything part way,

1237
01:10:01,120 --> 01:10:03,880
Speaker 1: he was Yeah, pedal to the metal, and so you know,

1238
01:10:03,920 --> 01:10:06,040
Speaker 1: when people see him at the end, they wonder, like,

1239
01:10:06,160 --> 01:10:08,240
Speaker 1: what the hell happened? Is Angel Dusk? And so like that.

1240
01:10:08,360 --> 01:10:11,560
Speaker 1: The whole thing is just like a crazy tale of

1241
01:10:11,920 --> 01:10:14,160
Speaker 1: of of him. So it's much better than any of

1242
01:10:14,200 --> 01:10:16,680
Speaker 1: the James Brown movies. So last question before I get

1243
01:10:16,720 --> 01:10:19,479
Speaker 1: to my favorite questions, what what else are you watching?

1244
01:10:19,520 --> 01:10:22,400
Speaker 1: I mentioned Silicon Valley? What what are you streaming? What

1245
01:10:22,479 --> 01:10:24,360
Speaker 1: are you watching these days? Well, the new season and

1246
01:10:24,479 --> 01:10:27,639
Speaker 1: Mr Robot, which one of the great the last season,

1247
01:10:27,720 --> 01:10:30,760
Speaker 1: final season, Yeah, what an amazing The first season was

1248
01:10:31,200 --> 01:10:34,439
Speaker 1: very stressful, Yeah yeah, yeah, like and that was like

1249
01:10:35,080 --> 01:10:38,360
Speaker 1: challenging to work your way through. Yeah yeah, yeah, that

1250
01:10:38,560 --> 01:10:41,960
Speaker 1: was It was very intense. Um that it continues to

1251
01:10:42,040 --> 01:10:47,040
Speaker 1: be intense. Yeah, uh, you know, I watched uh succession.

1252
01:10:47,439 --> 01:10:50,120
Speaker 1: Um people like that. It's you know, it's a very

1253
01:10:50,200 --> 01:10:54,240
Speaker 1: well done show. I a little little bit of touches

1254
01:10:54,320 --> 01:10:56,800
Speaker 1: the Murdochs, I know, and I'm friends with them, and

1255
01:10:57,000 --> 01:10:58,960
Speaker 1: I feel like it's not fair if you look at

1256
01:10:58,960 --> 01:11:01,559
Speaker 1: it through that lens, But it's still like a super

1257
01:11:01,600 --> 01:11:04,280
Speaker 1: well done show. So if you saw that, did you

1258
01:11:04,360 --> 01:11:06,640
Speaker 1: see loudest voice in the room. I haven't seen that

1259
01:11:06,720 --> 01:11:10,040
Speaker 1: yet things about it's the showtime I want to say

1260
01:11:10,080 --> 01:11:13,560
Speaker 1: it's a six or yeah, who's amazing in it? And

1261
01:11:13,600 --> 01:11:17,240
Speaker 1: it's based on the Gabriel Sherman book. Really it's shocking

1262
01:11:17,360 --> 01:11:20,320
Speaker 1: to look at Russell Crowe and say, how did's one

1263
01:11:20,360 --> 01:11:26,320
Speaker 1: guy play Roger Ales and some of the Gladiator and um,

1264
01:11:27,120 --> 01:11:33,280
Speaker 1: what was the beautiful mind? Like, it's incredible? How different range? Well,

1265
01:11:33,439 --> 01:11:36,479
Speaker 1: and then the really unusual thing about him to me

1266
01:11:36,720 --> 01:11:40,320
Speaker 1: is he not only has the range, but he also

1267
01:11:40,479 --> 01:11:44,320
Speaker 1: has the intangible. He's a movie star. He's a Humphrey Bogart,

1268
01:11:44,400 --> 01:11:47,840
Speaker 1: He's like a Denzel Washington like that. But those guys,

1269
01:11:48,000 --> 01:11:50,679
Speaker 1: you know, the most movie stars, they're amazing because they're

1270
01:11:50,680 --> 01:11:52,880
Speaker 1: movie stars, but they don't have rain like Robert de Niro,

1271
01:11:53,120 --> 01:11:55,160
Speaker 1: but they don't have that kind of acting range as well.

1272
01:11:55,320 --> 01:11:58,000
Speaker 1: So he's he's really unique. Um, what we'll give me

1273
01:11:58,080 --> 01:12:01,960
Speaker 1: one more thing that you're watch him. Um, let's see

1274
01:12:02,320 --> 01:12:04,800
Speaker 1: what else I watched. I want to give you a

1275
01:12:05,320 --> 01:12:06,920
Speaker 1: good one. By the way, I'm gonna have to add

1276
01:12:07,000 --> 01:12:08,920
Speaker 1: this as a regular question because this is a really

1277
01:12:09,000 --> 01:12:12,760
Speaker 1: interesting question. Yeah, I'm trying to think what, oh you know,

1278
01:12:12,800 --> 01:12:16,720
Speaker 1: what I liked is uh, the Righteous Gemstones. Really yeah, yeah,

1279
01:12:16,760 --> 01:12:19,400
Speaker 1: that did started out a little slow, but you know

1280
01:12:19,439 --> 01:12:22,000
Speaker 1: it's the guys who did Vice Principles and He's bounded down,

1281
01:12:22,560 --> 01:12:26,120
Speaker 1: which are both like outstanding. So now I have your

1282
01:12:27,200 --> 01:12:29,639
Speaker 1: I think Righteous Gemstones may be the best of the set.

1283
01:12:30,280 --> 01:12:32,320
Speaker 1: So I only have you for a few minutes. Let's

1284
01:12:32,479 --> 01:12:36,000
Speaker 1: uh get to my favorite questions and I'm gonna do uh,

1285
01:12:36,040 --> 01:12:38,720
Speaker 1: I'm gonna do an abbreviated version of this. What's the

1286
01:12:38,800 --> 01:12:44,200
Speaker 1: most important thing we don't know about Ben Harwitz? I

1287
01:12:44,280 --> 01:12:47,360
Speaker 1: feel like people know so much now really, because I

1288
01:12:47,439 --> 01:12:50,400
Speaker 1: think you're kind of an enigma. Your partner is more

1289
01:12:50,520 --> 01:12:54,800
Speaker 1: public than you are, generally speaking. Yeah, no, he definitely is.

1290
01:12:55,000 --> 01:12:56,920
Speaker 1: Well I am, I mean, and maybe people don't know

1291
01:12:57,040 --> 01:13:00,080
Speaker 1: this about me, but I am the best barbecuer in

1292
01:13:00,160 --> 01:13:03,040
Speaker 1: all of Silicon Valley. Yeah that's a really low bar. Yeah,

1293
01:13:03,320 --> 01:13:05,080
Speaker 1: you know it's a low bar, but like still I

1294
01:13:05,240 --> 01:13:07,800
Speaker 1: wear the crown parality. There you go. Um, who are

1295
01:13:07,880 --> 01:13:10,639
Speaker 1: some of your early mentors you mentioned Bill Campbell has

1296
01:13:10,720 --> 01:13:13,120
Speaker 1: to be on Andy Grove. I would say Andy Grove

1297
01:13:13,240 --> 01:13:17,360
Speaker 1: is super high on that list. What an amazing, amazing guy. Actually,

1298
01:13:17,400 --> 01:13:19,960
Speaker 1: the highlight of my professional career was when he asked

1299
01:13:20,000 --> 01:13:23,960
Speaker 1: me to write the new forward High Output Management, And

1300
01:13:24,280 --> 01:13:26,000
Speaker 1: I still think that's the best thing I ever wrote

1301
01:13:26,040 --> 01:13:28,040
Speaker 1: in my life? Is that for it? Because it just

1302
01:13:28,160 --> 01:13:31,800
Speaker 1: meant so much to me? What amazing, amazing human thing.

1303
01:13:31,920 --> 01:13:36,160
Speaker 1: That's an amazing pair of mentors. Um, what venture capitalists

1304
01:13:36,439 --> 01:13:40,639
Speaker 1: influenced the way you think about venture investing? Or maybe

1305
01:13:40,680 --> 01:13:44,760
Speaker 1: I should, knowing knowing your firm, I should ask who

1306
01:13:45,040 --> 01:13:48,800
Speaker 1: really influenced your approach the venture capitalists? You mentioned Mike

1307
01:13:48,960 --> 01:13:52,439
Speaker 1: ovit's before who else influenced? I think like structurally in

1308
01:13:52,479 --> 01:13:54,559
Speaker 1: the approach. You know, Michael Ovits in terms of how

1309
01:13:54,640 --> 01:13:57,080
Speaker 1: we run the firm was by far the most influential.

1310
01:13:57,160 --> 01:14:00,400
Speaker 1: I think that, you know, in being vcs UM, you

1311
01:14:00,479 --> 01:14:02,120
Speaker 1: know we we knew a lot of the great So

1312
01:14:02,560 --> 01:14:08,280
Speaker 1: you know Jim Bryer, you Kosla, you know John dor Um.

1313
01:14:09,280 --> 01:14:13,120
Speaker 1: We're all very influential. You know Neil Boozery, although he's

1314
01:14:13,160 --> 01:14:15,479
Speaker 1: more of an entrepreneur than a venture capitalist, but like

1315
01:14:15,600 --> 01:14:21,320
Speaker 1: he certainly was very kind of helpful and influential on

1316
01:14:21,439 --> 01:14:24,880
Speaker 1: at least me early on. Um, those are some of them. Yeah,

1317
01:14:25,200 --> 01:14:27,320
Speaker 1: let's talk about books. What are some of your favorite

1318
01:14:27,360 --> 01:14:31,320
Speaker 1: things to read? Technology related or not well. So I

1319
01:14:31,560 --> 01:14:38,080
Speaker 1: have been reading Victor Sebastian's um Lenin biography, which that's

1320
01:14:38,240 --> 01:14:42,120
Speaker 1: Vladimir Lenin Vladimir Iliot. Uh. That's a pretty big book

1321
01:14:42,120 --> 01:14:47,200
Speaker 1: if I remember the big book. Um, it's just astoundingly amazing,

1322
01:14:48,200 --> 01:14:51,320
Speaker 1: and you know, particuling in today's time because you know,

1323
01:14:51,479 --> 01:14:54,559
Speaker 1: people people have sort of forgot the hundred year history

1324
01:14:54,600 --> 01:14:59,280
Speaker 1: of communism, which just a brief summary everybody dies U

1325
01:15:01,120 --> 01:15:04,320
Speaker 1: but going down, going back through the Bolshevik Revolution, you

1326
01:15:04,400 --> 01:15:07,880
Speaker 1: can really see why. And it's you know, it's a

1327
01:15:08,120 --> 01:15:13,200
Speaker 1: really interesting systems thing because it's marketed as power to

1328
01:15:13,280 --> 01:15:16,600
Speaker 1: the people and it's the exact opposite thing, which is

1329
01:15:16,920 --> 01:15:21,479
Speaker 1: it's a massive concentration of power where you transfer all

1330
01:15:21,560 --> 01:15:23,880
Speaker 1: the wealth to a very few number of people running

1331
01:15:23,920 --> 01:15:28,560
Speaker 1: the government. Yeah, it's well, but it's too high a

1332
01:15:28,640 --> 01:15:30,439
Speaker 1: level of power. So like if you get anybody gets

1333
01:15:30,479 --> 01:15:32,599
Speaker 1: too power, Like if there was a company like Evil

1334
01:15:32,680 --> 01:15:36,879
Speaker 1: Corp is in Mr Robot, that company would be massively

1335
01:15:36,960 --> 01:15:39,960
Speaker 1: destructive because it's just too kind of concentration. So it's

1336
01:15:40,000 --> 01:15:44,360
Speaker 1: not specific to government or business or anything else. It's

1337
01:15:44,439 --> 01:15:47,160
Speaker 1: just specific to power. And I think the problem with

1338
01:15:47,280 --> 01:15:49,880
Speaker 1: communism is it's just such a big concentration of power.

1339
01:15:49,920 --> 01:15:52,479
Speaker 1: And you really see this. I mean, so just some

1340
01:15:52,640 --> 01:15:56,280
Speaker 1: of the things in the Bolshevik revolution, you know, the

1341
01:15:56,960 --> 01:16:00,439
Speaker 1: so the first thing is, okay, anybody in government, anybody

1342
01:16:00,479 --> 01:16:03,559
Speaker 1: can do a government job. You know, any peasant could

1343
01:16:03,600 --> 01:16:06,080
Speaker 1: do it, because like, these are just the rich people

1344
01:16:06,120 --> 01:16:08,519
Speaker 1: who have these jobs, and they're all evil, And so

1345
01:16:08,600 --> 01:16:10,599
Speaker 1: he gives all the jobs to peasants. And within three

1346
01:16:10,680 --> 01:16:13,320
Speaker 1: months of them taking control, there's a famine so bad

1347
01:16:13,840 --> 01:16:16,080
Speaker 1: that they have to put out propaganda to keep parents

1348
01:16:16,160 --> 01:16:19,720
Speaker 1: from eating their children. And then like so coming off that,

1349
01:16:19,920 --> 01:16:22,519
Speaker 1: like what do we do about the famine, Well, we've

1350
01:16:23,040 --> 01:16:25,000
Speaker 1: killed all the rich people, so now we've got to

1351
01:16:25,040 --> 01:16:29,040
Speaker 1: start killing the kulaks who were farmers with like two horses,

1352
01:16:29,680 --> 01:16:31,680
Speaker 1: and so like this is how it rolls when you

1353
01:16:32,680 --> 01:16:36,439
Speaker 1: kind of give somebody massive power and you're driven on

1354
01:16:36,680 --> 01:16:39,240
Speaker 1: hate of anything, and like, you know, I mean, I

1355
01:16:39,360 --> 01:16:42,160
Speaker 1: understand people don't like rich people, but like hating anybody,

1356
01:16:42,720 --> 01:16:47,440
Speaker 1: um is just a very bad source of uh political ideology.

1357
01:16:47,880 --> 01:16:50,920
Speaker 1: So forty million deaths later, what what ends up happening

1358
01:16:51,040 --> 01:16:54,479
Speaker 1: in uh Communist Russia? Yeah, I mean, you know, like

1359
01:16:54,720 --> 01:16:57,200
Speaker 1: and then we discover it and then you know, it's

1360
01:16:57,320 --> 01:17:00,599
Speaker 1: very hard to convert from a system like that into

1361
01:17:00,640 --> 01:17:04,280
Speaker 1: another system, is you know, you know, we're we're finding

1362
01:17:04,360 --> 01:17:10,320
Speaker 1: also it's complicated in China, it's complicated buttitarian than it

1363
01:17:10,560 --> 01:17:14,240
Speaker 1: is communists. But they go to totalitarian and communism go

1364
01:17:14,320 --> 01:17:19,120
Speaker 1: together because you're going for that concentration of control like

1365
01:17:19,240 --> 01:17:21,280
Speaker 1: you can't have kind of So here's here's the thing

1366
01:17:21,320 --> 01:17:24,840
Speaker 1: on communism that you know, my friends who have grown

1367
01:17:24,920 --> 01:17:26,960
Speaker 1: up in you know, Russian Romania and so forth say,

1368
01:17:26,960 --> 01:17:30,080
Speaker 1: it's like people think, oh, Stalin was crazy. Stalin wasn't

1369
01:17:30,120 --> 01:17:31,880
Speaker 1: like if you read his work and so forth, like

1370
01:17:31,960 --> 01:17:35,240
Speaker 1: he wasn't very smart. The problem is you've taken away

1371
01:17:35,280 --> 01:17:37,800
Speaker 1: the carrot, so all you have is a stick. And

1372
01:17:37,880 --> 01:17:39,599
Speaker 1: so if you all you have is a stick, then

1373
01:17:39,680 --> 01:17:42,320
Speaker 1: you need totalitarianism to control the people. You need to

1374
01:17:42,400 --> 01:17:45,920
Speaker 1: be you need you need to go to work because

1375
01:17:45,960 --> 01:17:51,760
Speaker 1: you're not paying him. Um that's one book. Give us another. Um, well,

1376
01:17:52,040 --> 01:17:55,200
Speaker 1: you know, i'll reference. Let me reference kind of the

1377
01:17:55,640 --> 01:17:57,719
Speaker 1: book that I've read over and over again in preparation

1378
01:17:57,800 --> 01:18:01,080
Speaker 1: for this book. It says The Black Jacoban's by C. L. R. James,

1379
01:18:01,160 --> 01:18:04,600
Speaker 1: which is, uh, so you appreciate this story. It's recommended

1380
01:18:04,640 --> 01:18:07,439
Speaker 1: to me by the late Christopher Hitchens. And all I

1381
01:18:07,520 --> 01:18:10,160
Speaker 1: asked him was like, what books should I read? He's like, oh,

1382
01:18:10,280 --> 01:18:14,400
Speaker 1: the best book, like is The Black Jacobin's written in

1383
01:18:14,479 --> 01:18:17,200
Speaker 1: nine seven, you know. And really he said that this

1384
01:18:17,320 --> 01:18:20,600
Speaker 1: to me maybe like seven eight years ago. Uh, and

1385
01:18:21,360 --> 01:18:23,760
Speaker 1: that was the story of the Haitian Revolution And just

1386
01:18:23,880 --> 01:18:26,920
Speaker 1: an amazing book. Is that how that you found its

1387
01:18:26,920 --> 01:18:29,240
Speaker 1: way into this book? Absolutely? You know that was the

1388
01:18:29,400 --> 01:18:31,880
Speaker 1: kind of uh that's the very first thing I read

1389
01:18:32,040 --> 01:18:36,120
Speaker 1: kind of on the Haitian Revolution. Uh and really really

1390
01:18:36,360 --> 01:18:39,560
Speaker 1: really amazing tell us about a time you failed and

1391
01:18:39,640 --> 01:18:43,519
Speaker 1: what you learned from the experience. Uh, well, you know,

1392
01:18:43,520 --> 01:18:45,479
Speaker 1: I wrote a whole book on how I failed to

1393
01:18:45,560 --> 01:18:49,640
Speaker 1: build the first cloud computing company. Uh. You know, I

1394
01:18:49,760 --> 01:18:52,680
Speaker 1: felt a lot of things. I actually just um, so

1395
01:18:52,840 --> 01:18:55,080
Speaker 1: one of the let me tell you, like a really

1396
01:18:56,000 --> 01:18:59,080
Speaker 1: one of the many failures a loud clouds. So the

1397
01:18:59,240 --> 01:19:02,599
Speaker 1: company you and we came out of the gates faster

1398
01:19:02,760 --> 01:19:06,439
Speaker 1: than any company that I've I've seen since. So in

1399
01:19:06,600 --> 01:19:10,760
Speaker 1: quarter number three after founding, we booked twenty seven million

1400
01:19:10,800 --> 01:19:13,760
Speaker 1: dollars in revenue, like so like just astound. And that's

1401
01:19:13,760 --> 01:19:15,560
Speaker 1: when seven million dollars was a lot of money in

1402
01:19:17,400 --> 01:19:21,320
Speaker 1: uh and we were growing so fast that the fire

1403
01:19:21,400 --> 01:19:24,360
Speaker 1: marshal was threatening to shut down the company. UM, so

1404
01:19:24,479 --> 01:19:28,760
Speaker 1: I had to get yeah, and so it's had to

1405
01:19:28,840 --> 01:19:32,080
Speaker 1: get more real estate. Um. And so I kind of

1406
01:19:32,200 --> 01:19:37,720
Speaker 1: delegated it to uh my finance team and um and

1407
01:19:37,840 --> 01:19:39,320
Speaker 1: I just didn't pay any attention. I was just like,

1408
01:19:39,400 --> 01:19:40,760
Speaker 1: get as more real estate. We got to get it

1409
01:19:40,800 --> 01:19:44,080
Speaker 1: before they shut us down. So we leased the building. UM.

1410
01:19:44,240 --> 01:19:47,360
Speaker 1: I signed off on it thirty million dollars in restricted

1411
01:19:47,439 --> 01:19:51,080
Speaker 1: cash to hauled it down. And it was kind of

1412
01:19:51,160 --> 01:19:53,160
Speaker 1: at the time, I think it was like ten dollars

1413
01:19:53,240 --> 01:19:57,280
Speaker 1: a square foot a month. Within two months of that,

1414
01:19:57,800 --> 01:19:59,760
Speaker 1: it was very pricy. Within two months of that that

1415
01:20:00,040 --> 01:20:03,120
Speaker 1: Tom crash real estate in the next twelve months drop

1416
01:20:03,240 --> 01:20:07,160
Speaker 1: to nine cents of square foot. Like we had a layoff.

1417
01:20:07,400 --> 01:20:10,320
Speaker 1: We never really and Ernest moved into the building. UM

1418
01:20:10,439 --> 01:20:13,760
Speaker 1: and I had this thirty million dollar bill. Uh. You know,

1419
01:20:13,840 --> 01:20:16,440
Speaker 1: in a startup company, it was which was just absolutely

1420
01:20:16,520 --> 01:20:20,200
Speaker 1: killing us. And you know, the thing I learned was

1421
01:20:20,479 --> 01:20:25,839
Speaker 1: like I knew when I delegated it it was probably

1422
01:20:25,880 --> 01:20:28,640
Speaker 1: a problem. Um, but I didn't want to deal with

1423
01:20:28,800 --> 01:20:31,439
Speaker 1: it for even five minutes. And uh, you know. What

1424
01:20:31,560 --> 01:20:38,519
Speaker 1: I learned is like, if you see pain, darkness, failure,

1425
01:20:38,600 --> 01:20:41,000
Speaker 1: you have to run towards it. You can't run away

1426
01:20:41,040 --> 01:20:44,920
Speaker 1: from it. When you're CEO, embrace the pain, run straight

1427
01:20:45,000 --> 01:20:48,759
Speaker 1: at it. So let me move this in a different direction.

1428
01:20:48,840 --> 01:20:50,120
Speaker 1: What do you do for fun? What do you do

1429
01:20:50,200 --> 01:20:54,439
Speaker 1: when you're not in the office? Yeah, yeah, so you know,

1430
01:20:54,479 --> 01:20:56,400
Speaker 1: I listened to hip hop. I've got like an amazing

1431
01:20:56,479 --> 01:20:59,479
Speaker 1: sound system. I am a big sports fan, so I

1432
01:20:59,760 --> 01:21:02,040
Speaker 1: give who's your sound system, what's your MP and what's

1433
01:21:02,040 --> 01:21:06,719
Speaker 1: your speakers? By the way, this question is for seventeen people.

1434
01:21:07,400 --> 01:21:12,280
Speaker 1: It's a little company called Aristecca, and they have this

1435
01:21:12,960 --> 01:21:17,040
Speaker 1: amazing technology which is there's a software layer kind of

1436
01:21:17,120 --> 01:21:21,320
Speaker 1: that runs over the top that like a problem with

1437
01:21:21,640 --> 01:21:26,000
Speaker 1: speaker systems is certain sounds hit you first. So like

1438
01:21:26,439 --> 01:21:29,920
Speaker 1: the vocals, the guitars, the base don't all hit you

1439
01:21:29,960 --> 01:21:31,839
Speaker 1: at the same time. They hit you at different speeds.

1440
01:21:32,600 --> 01:21:34,280
Speaker 1: This makes it so they all hit you at the

1441
01:21:34,360 --> 01:21:40,040
Speaker 1: exact same time and the clarity on the system is justable.

1442
01:21:40,080 --> 01:21:42,400
Speaker 1: I promise we are going to get emails from audio

1443
01:21:42,479 --> 01:21:45,519
Speaker 1: engineers challenging that. We'll see, we'll see what the pushback.

1444
01:21:46,600 --> 01:21:49,640
Speaker 1: My final two questions because I know we have to

1445
01:21:49,720 --> 01:21:53,040
Speaker 1: get you elsewhere, right, Um, what sort of advice would

1446
01:21:53,080 --> 01:21:56,320
Speaker 1: you give to a recent college grad who was interested

1447
01:21:56,600 --> 01:22:00,400
Speaker 1: in the venture capital world. Well, I'd say do something

1448
01:22:00,439 --> 01:22:03,880
Speaker 1: else before you going to venture capital, because the most

1449
01:22:04,000 --> 01:22:07,720
Speaker 1: important thing in venture capital is understanding there. One of

1450
01:22:07,760 --> 01:22:10,000
Speaker 1: the most important things is understanding the process of how

1451
01:22:10,080 --> 01:22:14,800
Speaker 1: companies get built, and that's a little bit difficult to

1452
01:22:14,920 --> 01:22:17,200
Speaker 1: do from the outside. So if you can do that

1453
01:22:17,320 --> 01:22:20,200
Speaker 1: from the inside and then you know, maybe going to

1454
01:22:20,320 --> 01:22:24,519
Speaker 1: venture capital later, I think that works better. Uh. And

1455
01:22:24,640 --> 01:22:27,000
Speaker 1: then the the other thing is right if venture capital

1456
01:22:27,080 --> 01:22:29,439
Speaker 1: is like one of these dumb fields and that doesn't

1457
01:22:29,479 --> 01:22:32,640
Speaker 1: prepare you very much for anything else. So like if

1458
01:22:32,720 --> 01:22:34,920
Speaker 1: you have a tenure career and it doesn't work, then

1459
01:22:35,080 --> 01:22:37,680
Speaker 1: that you know you're really starting from scratch, Whereas if

1460
01:22:37,720 --> 01:22:40,599
Speaker 1: you're an entrepreneur or you work at a startup, then

1461
01:22:40,640 --> 01:22:42,760
Speaker 1: there's many things you can do off. It's something the

1462
01:22:42,800 --> 01:22:45,559
Speaker 1: full back on. And finally, what do you know about

1463
01:22:45,640 --> 01:22:48,880
Speaker 1: the world of venture investing today? You wish you knew

1464
01:22:49,080 --> 01:22:52,360
Speaker 1: when you guys were getting launched in the late nineties,

1465
01:22:52,520 --> 01:23:00,720
Speaker 1: I'm sorry, the late two thousand's. Um, Well, that's a

1466
01:23:00,800 --> 01:23:05,480
Speaker 1: great question. Isn't it though, Yeah, I think, um, probably

1467
01:23:06,680 --> 01:23:10,560
Speaker 1: I wish we knew more about the investing process, like

1468
01:23:10,640 --> 01:23:12,960
Speaker 1: what did good investing process look like? I think it's

1469
01:23:13,000 --> 01:23:16,320
Speaker 1: something that we've learned over the years, and you know,

1470
01:23:16,400 --> 01:23:18,880
Speaker 1: we've had to develop, uh, and we're you know, like

1471
01:23:19,200 --> 01:23:21,360
Speaker 1: I would say, we're way way, way better at it

1472
01:23:21,439 --> 01:23:23,160
Speaker 1: now than when we started. And I think, you know,

1473
01:23:23,280 --> 01:23:25,760
Speaker 1: like at this point I can tell that we're as

1474
01:23:25,800 --> 01:23:29,120
Speaker 1: good as the best firms because you know, we end

1475
01:23:29,200 --> 01:23:33,120
Speaker 1: up landing like any deal, you know, just by the

1476
01:23:33,200 --> 01:23:35,560
Speaker 1: deals we pick, Like you can tell by you know,

1477
01:23:35,640 --> 01:23:38,880
Speaker 1: what they really smart competitors pick. So we've gotten much

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Speaker 1: better at it. But it was something we learned kind

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Speaker 1: of the hard way. I would say, quite quite interesting. Ben,

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Speaker 1: thank you for being so generous with your time. We

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Speaker 1: have been speaking with Ben Harrowitz, co founder and general

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01:23:50,080 --> 01:23:53,800
Speaker 1: partner at Andrews and Horowitz and author of the new

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01:23:53,880 --> 01:23:56,040
Speaker 1: book What You Do Is Who You Are How to

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01:23:56,160 --> 01:24:00,639
Speaker 1: create your business culture. If you enjoyed this converse station, well,

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01:24:00,760 --> 01:24:03,000
Speaker 1: look up an Inch or down an Inch on Apple

1486
01:24:03,120 --> 01:24:07,080
Speaker 1: iTunes and you can see any of the previous two

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01:24:07,640 --> 01:24:10,800
Speaker 1: eighty seven conversations we've had over the past five years.

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01:24:11,400 --> 01:24:14,800
Speaker 1: We love your comments, feedback in suggestions right to us

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01:24:14,880 --> 01:24:18,720
Speaker 1: at m IB podcast at Bloomberg dot net. Be sure

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01:24:18,760 --> 01:24:21,479
Speaker 1: and check out my weekly column on Bloomberg dot com.

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01:24:22,080 --> 01:24:25,599
Speaker 1: Sign up from my daily reading list at Ridhalts dot com.

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01:24:26,200 --> 01:24:28,120
Speaker 1: I would be remiss if I did not thank the

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01:24:28,160 --> 01:24:31,840
Speaker 1: crack staff that helps put these conversations together each week.

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01:24:32,120 --> 01:24:36,560
Speaker 1: Karen O'Brien is my audio engineer. Michael Boyle is my producer.

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01:24:37,120 --> 01:24:40,799
Speaker 1: Michael Batnick is my head of research. I'm Barry Ridholts.

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Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.