WEBVTT - Here's What It Takes to Make a Great Company 0:00:00.200 --> 0:00:03.360 Hey, they're aud Loots listeners. It's Tracy Alloway. 0:00:03.040 --> 0:00:04.000 And Joe Wisenthal. 0:00:04.280 --> 0:00:07.720 We are very excited to announce that Audlots is going 0:00:07.800 --> 0:00:09.680 to Washington That's right. 0:00:09.760 --> 0:00:11.560 For the first time, we are going to do a 0:00:11.640 --> 0:00:16.439 live public odd Lots recording in our nation's capital. That's 0:00:16.440 --> 0:00:19.680 going to be March twelfth in Washington, DC at the 0:00:19.760 --> 0:00:23.560 Miracle Theater and guests will be announced in the coming days, 0:00:23.600 --> 0:00:25.960 but in the meantime you can find a ticket link 0:00:26.000 --> 0:00:27.880 at Bloomberg dot com slash odd. 0:00:27.800 --> 0:00:44.360 Lots, Bloomberg Audio Studios, Podcasts, Radio News. 0:00:47.240 --> 0:00:50.520 Hello and welcome to another episode of the Aught Thoughts podcast. 0:00:50.760 --> 0:00:52.240 I'm Tracy Alloway. 0:00:51.880 --> 0:00:53.120 And I'm Joe Wisenthal. 0:00:53.520 --> 0:00:56.520 Joe, you told me you read a fiction book last year, right, 0:00:57.040 --> 0:00:58.240 just one. 0:00:59.240 --> 0:01:02.400 I read it, so I read too much nonfiction Like 0:01:02.440 --> 0:01:05.440 a lot of dudes. I think it's nonfiction is very 0:01:05.480 --> 0:01:08.399 bro coded. My goal for twenty twenty five was to 0:01:08.440 --> 0:01:10.880 read at least one novel, and I did it. I 0:01:10.920 --> 0:01:13.040 already satisfied my goal. It's not even the end of 0:01:13.120 --> 0:01:17.800 January yet, so back to reading random history and philosophy 0:01:17.800 --> 0:01:18.400 and all that stuff. 0:01:18.560 --> 0:01:21.880 Very very ambitious. You're one fiction book can I make 0:01:21.880 --> 0:01:23.720 a suggestion for another. 0:01:23.440 --> 0:01:25.000 Fiction book you should read, please. 0:01:25.120 --> 0:01:28.759 So there's a book by Margaret Atwood called Orx and Craik, 0:01:29.080 --> 0:01:32.040 and it's sort of a sci fi thing, but I 0:01:32.120 --> 0:01:35.520 think about it quite a lot nowadays because she has 0:01:35.560 --> 0:01:40.320 this vision of society in the future, and in that society, 0:01:41.080 --> 0:01:44.679 companies are the most important part of it. It's not 0:01:44.760 --> 0:01:47.840 about countries anymore. It's all about what company you work for, 0:01:48.360 --> 0:01:50.680 and the companies are kind of the ones providing all 0:01:50.680 --> 0:01:54.800 the social services like healthcare and housing. Basically you're a 0:01:54.840 --> 0:01:58.120 citizen of a company instead of a country. And I 0:01:58.200 --> 0:02:00.240 kind of think about it a lot because I feel 0:02:00.360 --> 0:02:03.920 like we're sort of moving in that direction where companies 0:02:03.920 --> 0:02:08.920 are becoming more powerful, they're becoming more interesting in many 0:02:08.960 --> 0:02:11.959 ways and more important to society than ever. 0:02:12.120 --> 0:02:14.720 I'm looking it up right now, I hadn't heard of it. 0:02:14.720 --> 0:02:17.160 It came out in two thousand and three. Maybe at 0:02:17.200 --> 0:02:20.360 that time it was sort of seen as futuristic, but 0:02:20.480 --> 0:02:24.560 in twenty twenty five it does not even sound futuristic 0:02:24.639 --> 0:02:27.440 or controversial at all. And we could go on about 0:02:27.480 --> 0:02:30.160 what that means, but I just like basically accept the 0:02:30.200 --> 0:02:32.320 premise that that's true now twenty five. 0:02:32.400 --> 0:02:35.160 Okay, great, so you have your second fiction book to read. 0:02:35.200 --> 0:02:37.000 But the reason I bring it up is because I 0:02:37.040 --> 0:02:40.120 think we should do more on these stories of companies 0:02:40.520 --> 0:02:43.320 in general. And so I am very pleased to say 0:02:43.360 --> 0:02:45.760 that we do, in fact have the perfect guests to 0:02:45.880 --> 0:02:48.679 discuss this. I'm very excited about this. I'm a fan 0:02:48.720 --> 0:02:52.600 of their podcast. Lots of people are fans of their podcast. 0:02:52.800 --> 0:02:55.760 We're going to be speaking with Ben Gilbert and David Rosenthal, 0:02:56.040 --> 0:02:59.640 the co hosts of the Acquired podcast. So Ben and David, 0:02:59.680 --> 0:03:01.400 thank you so much for coming on all thoughts. 0:03:01.480 --> 0:03:03.040 Thank you great to be here, Thanks for having us 0:03:03.080 --> 0:03:06.800 all right, may it was so good career. 0:03:07.600 --> 0:03:07.880 Thank you. 0:03:08.440 --> 0:03:10.440 Tracy and I were talking about like who should start 0:03:10.480 --> 0:03:12.120 this one, and I was like, Tracy, you do it, 0:03:12.160 --> 0:03:14.400 and it was much better than what. 0:03:14.280 --> 0:03:17.959 I Well, thank you everyone. That's very nice. Ben and 0:03:18.040 --> 0:03:21.200 David maybe give us the uh, the elevator pitch for 0:03:21.280 --> 0:03:23.040 the podcast just before we begin. 0:03:23.400 --> 0:03:23.720 Well. 0:03:24.040 --> 0:03:28.120 Acquired is a ten year old podcast that started, like 0:03:28.200 --> 0:03:32.079 many company journeys in obscurity, with nobody listening, and slowly 0:03:32.400 --> 0:03:37.040 doubled year over year over year. Now I bet, I bet, 0:03:37.600 --> 0:03:39.480 uh Yeah, we're now fortunate to be one of the 0:03:39.520 --> 0:03:42.560 top few off of the number one tech podcast on 0:03:43.360 --> 0:03:46.400 Apple and Spotify. Which is a little funny because we 0:03:46.440 --> 0:03:49.920 study these companies that are very often not tech companies now, 0:03:50.120 --> 0:03:53.440 but we look at companies like TSMC and Bars, the 0:03:53.480 --> 0:03:57.840 company behind M and M's ikea, Meta ermez Costco, and 0:03:57.880 --> 0:04:02.320 we really try to through conversation David and I tell 0:04:02.400 --> 0:04:04.920 the entire history of the company from founding to today, 0:04:05.280 --> 0:04:08.200 analyze it and really try to answer the question why 0:04:08.240 --> 0:04:10.920 did the company that we are studying work and work 0:04:10.920 --> 0:04:12.200 at such extreme scale? 0:04:12.640 --> 0:04:15.000 And Tracy it's the reason we do it is literally 0:04:15.080 --> 0:04:19.360 just like you said, you know, the institutions that these companies, 0:04:19.400 --> 0:04:21.839 the biggest companies you know around the world have become 0:04:21.920 --> 0:04:24.880 are you know, they're quasi governmental at this point. You know, 0:04:24.880 --> 0:04:26.880 you can make an argument they're more important than government. 0:04:26.960 --> 0:04:29.560 Somebody said to Ben a few months ago when when 0:04:29.600 --> 0:04:33.560 talking about acquired you know, in two hundred years, I 0:04:33.600 --> 0:04:35.440 don't know if people are going to know the name 0:04:35.520 --> 0:04:37.159 Joe Biden, but they're sure as hell going to know 0:04:37.160 --> 0:04:41.279 the name Mark Zuckerberg. We're like, WHOA, that's that's a 0:04:41.279 --> 0:04:43.080 crazy idea but might be true. 0:04:43.760 --> 0:04:45.760 Yeah, I mean I can't. They're a bunch of random 0:04:45.839 --> 0:04:48.840 presidents from one hundred years ago that I certainly I 0:04:48.880 --> 0:04:51.960 couldn't name, or if I could name them, wouldn't know 0:04:52.000 --> 0:04:55.920 anything about them. Going back to Tracy's fantastic intro, you know, 0:04:55.960 --> 0:04:59.159 there's sort of two things I guess about companies, which 0:04:59.200 --> 0:05:02.880 is one is I guess the business model, the product 0:05:02.920 --> 0:05:05.159 that they sell. You know, you build something and then 0:05:05.200 --> 0:05:07.000 you try to sell it for more money that you 0:05:07.080 --> 0:05:09.440 built it for. And then there is this sort of 0:05:09.480 --> 0:05:13.799 like the internal empire, and there's the culture, and there's 0:05:14.000 --> 0:05:16.960 just the way they work. And these are fundamentally sort 0:05:16.960 --> 0:05:19.800 of like different questions. Do you how do you think 0:05:19.839 --> 0:05:23.080 about like what a company is? Because I get they're 0:05:23.080 --> 0:05:26.120 really portrays it's intro. There are multiple ways to describe it, 0:05:26.160 --> 0:05:28.320 like what is a company that is? 0:05:28.640 --> 0:05:32.000 You know, we typically spend four to six hours on 0:05:32.080 --> 0:05:34.240 an episode trying to answer that question. 0:05:37.000 --> 0:05:37.200 You know. 0:05:37.520 --> 0:05:44.200 It's what we've tended to find is the only pattern 0:05:44.839 --> 0:05:49.360 that tends to really exist across these greatest, biggest companies 0:05:49.400 --> 0:05:53.960 in the world is that they are each totally idiosyncratic 0:05:54.120 --> 0:05:57.520 in some really one or multiple really really really important 0:05:57.560 --> 0:06:00.200 to mentions. And so I think I would say, you know, 0:06:00.520 --> 0:06:05.119 for those incredibly successful, you know institutions of our time, 0:06:05.640 --> 0:06:09.560 what they are is they are something unique that no 0:06:10.000 --> 0:06:16.039 other institution, you know, company, corporate, governmental, otherwise can well. 0:06:16.240 --> 0:06:19.919 TSMC that we just covered, we just interviewed the founder 0:06:19.960 --> 0:06:22.960 of Morris Chang in Taiwan, which is an incredible experience. 0:06:23.520 --> 0:06:27.560 You know, they make all the leading edge chips in 0:06:27.600 --> 0:06:30.760 the world, so you know, to the extent that computing 0:06:30.880 --> 0:06:34.400 and compute is important in our world, like all of 0:06:34.440 --> 0:06:37.880 it flows through TSMC. There is nobody else in the 0:06:37.880 --> 0:06:41.880 world that has the capability to make the incredibly powerful 0:06:41.920 --> 0:06:43.400 chips at the leading edge that they do. 0:06:43.800 --> 0:06:46.280 I think our episodes tend to hinge on this question, 0:06:46.600 --> 0:06:50.039 in what way is this company singular? Because nothing gets 0:06:50.120 --> 0:06:54.159 to five hundred billion dollar trillion dollar scale without being 0:06:54.560 --> 0:06:58.880 the only one that can do X. And in TSMC's case, 0:06:58.920 --> 0:07:02.839 they're the only company that doesn't ever compete with their customers. 0:07:02.839 --> 0:07:06.240 They're purely a foundry. They are not also a chip designer, 0:07:06.560 --> 0:07:09.120 and they're the only ones capable of doing what is 0:07:09.640 --> 0:07:13.720 the current technology generation two nanometer process the most sophisticated 0:07:13.800 --> 0:07:17.640 leading edge chips, and almost every big company you look 0:07:17.680 --> 0:07:20.320 at that has been successful over in a long period 0:07:20.320 --> 0:07:23.400 of time or reached outlier status is singular in some 0:07:23.560 --> 0:07:24.200 way like that. 0:07:24.360 --> 0:07:27.280 And TSMC, it's like it's wild because of that, that 0:07:27.360 --> 0:07:29.160 is the only thing that matters there. They are in 0:07:29.160 --> 0:07:32.600 this you know, island nation of you know, depending on 0:07:32.600 --> 0:07:36.320 who you ask, disputed sovereignty. It's insane. There's something like 0:07:36.360 --> 0:07:39.560 six or seven percent of the country's GDP and like 0:07:40.760 --> 0:07:43.280 I think, like fifteen percent of the stock market you know, 0:07:43.360 --> 0:07:46.720 of the equity value of companies in the country. Yet 0:07:46.800 --> 0:07:49.160 it exists, and yet the world order, you know, at 0:07:49.240 --> 0:07:52.640 least thus far, has reorganized itself around it. 0:07:53.800 --> 0:07:56.120 So the way I kind of think of your podcast, 0:07:56.240 --> 0:07:59.760 the analogy that I use is you're the business equivalent 0:07:59.840 --> 0:08:04.080 of Dan Carlin's hardcore history. Like these are long episodes 0:08:04.120 --> 0:08:08.000 where you are digging very deep into the profile of 0:08:08.040 --> 0:08:11.080 a particular company. But as you mentioned, you also do 0:08:11.200 --> 0:08:15.560 interviews or you weave interviews into your company profiles, and 0:08:15.600 --> 0:08:18.720 you just did that one with Morris Chang, the TSMC founder. 0:08:19.040 --> 0:08:21.120 One of the things that really surprised me in that 0:08:21.240 --> 0:08:24.720 interview was he said he never fired people and never 0:08:24.800 --> 0:08:27.600 did performance reviews. What did you guys, think of. 0:08:27.520 --> 0:08:31.640 That, it's really interesting. So David and I got to 0:08:31.680 --> 0:08:36.480 read an unauthorized translation of his Chinese only memoir to prepare, 0:08:36.520 --> 0:08:40.040 and he went into great length in the memoir explaining 0:08:40.040 --> 0:08:45.560 the philosophy, and the idea is that performance reviews are 0:08:45.960 --> 0:08:50.880 entirely separate from the idea of who should get laid 0:08:50.880 --> 0:08:54.360 off if there's a layoff. Performance reviews are specifically about 0:08:54.400 --> 0:08:56.480 coaching you on how to be a better employee for 0:08:56.520 --> 0:08:58.640 the company next year, so both the employee and the 0:08:58.640 --> 0:09:01.880 company benefit if there is a layoff. There should be 0:09:01.880 --> 0:09:06.160 an entirely different way of determining where we need to 0:09:06.240 --> 0:09:10.520 trim to cut budget versus looking at people's performance reviews. 0:09:10.559 --> 0:09:12.520 And Morris goes so far as to believe that in 0:09:12.559 --> 0:09:15.840 his industry, with his business model, you should actually never 0:09:16.000 --> 0:09:18.880 lay people off. And I think that comes from the 0:09:18.960 --> 0:09:22.760 fact that, a if you believe the economy or your 0:09:22.800 --> 0:09:25.440 industry is going to turn around within twelve or eighteen months, 0:09:25.960 --> 0:09:28.440 you know it's not actually worth it to lay people off, 0:09:28.480 --> 0:09:31.040 pay a whole bunch of severance, need to hire people back, 0:09:31.160 --> 0:09:33.320 need to retrain them. But the other big part is 0:09:34.240 --> 0:09:36.920 Moore's law marches on and so. 0:09:36.640 --> 0:09:39.200 If you believe in Moore's law, you will always need more. 0:09:39.520 --> 0:09:41.920 Yes, and you'll need more people, you'll need more machinery, 0:09:41.960 --> 0:09:45.760 you'll need more capacity. And the semiconductor industry is so 0:09:45.880 --> 0:09:48.560 cyclical that part of the way that he believes you 0:09:48.559 --> 0:09:51.640 can kind of avoid these huge gluts and then you 0:09:51.640 --> 0:09:56.000 know bubbles. Basically this boom and bust of the semiconductor 0:09:56.000 --> 0:09:59.959 industry is to sort of behave less in this whiplash 0:10:00.160 --> 0:10:02.040 like fashion where oh no, there's a little bit of 0:10:02.080 --> 0:10:04.679 an asset bubble and you know, stocks are in a 0:10:04.760 --> 0:10:06.439 draw down, so we need to lay off people. 0:10:06.440 --> 0:10:07.000 Oh my god. 0:10:07.320 --> 0:10:10.560 And I think he sort of blames layoff as a 0:10:10.679 --> 0:10:14.600 piece of the massive cyclicality of the industry. 0:10:14.720 --> 0:10:17.520 And he had a really scarring experience around this back 0:10:17.520 --> 0:10:19.880 when he was at TI Texas Instruments. So, I mean, 0:10:19.920 --> 0:10:21.920 the crazy thing about Morris he didn't start TSMC un 0:10:21.960 --> 0:10:25.640 till he was fifty six years old. He's not Taiwanese's. 0:10:25.960 --> 0:10:28.640 He was born in China but then became an American citizen. 0:10:28.880 --> 0:10:32.120 He had a whole incredible career in the semiconductor industry 0:10:32.160 --> 0:10:37.760 in America. Long before starting TSMC, he ran TI's semiconductor 0:10:37.880 --> 0:10:40.439 group and before Intel and. 0:10:40.480 --> 0:10:44.840 Really what you might chuckle about, like TI they make 0:10:44.880 --> 0:10:47.160 those calculators for high school students, right. 0:10:47.280 --> 0:10:49.480 But before Intel and for the first like ten years 0:10:49.480 --> 0:10:52.360 of Intel's existence, they were the pipsqueak and TI was 0:10:52.720 --> 0:10:57.360 the semiconductor giant, and Morris ran the semiconductor division at TI. 0:10:58.080 --> 0:11:01.480 And at some point part of how they really lost 0:11:01.520 --> 0:11:05.560 the crown to Intel was the corporate you know, the 0:11:05.600 --> 0:11:09.120 CEO decided we need to have La off for whatever reason, 0:11:09.280 --> 0:11:11.080 you know, gyrations were going on in the stock market 0:11:11.120 --> 0:11:13.439 or whatever. They ended up as a result of that. 0:11:13.440 --> 0:11:15.240 I don't know if they're directly laid off, but as 0:11:15.280 --> 0:11:21.440 a result, the Moss team mos metal oxide semi conductor 0:11:21.440 --> 0:11:25.760 some of the uh yeah, which was sort of the 0:11:25.800 --> 0:11:30.160 next generation of silicon. That team within TI left the 0:11:30.160 --> 0:11:33.959 company started a new company called Moss Tech. And then 0:11:34.120 --> 0:11:36.520 anybody who knows anything about semi conductors knows, you know, 0:11:36.640 --> 0:11:40.400 Moss was like the key technology that Intel leveraged and 0:11:40.480 --> 0:11:43.320 like you know, really helped expand More's law and t 0:11:43.440 --> 0:11:45.960 I just totally missed out on that because they you know, 0:11:46.040 --> 0:11:48.960 parted ways with this really important group and like, who 0:11:48.960 --> 0:11:50.920 knows what's going to be really important in the future. 0:11:51.160 --> 0:11:54.319 So this actually gets to something that is a very recurrent, 0:11:54.640 --> 0:11:57.480 odd lotch theme. And of course when I described what 0:11:58.440 --> 0:12:01.640 companies are sort of in the theoretical sense, you know, 0:12:01.679 --> 0:12:05.559 one thing I didn't mention is their preservation of collective 0:12:05.600 --> 0:12:06.400 knowledge and memory. 0:12:06.440 --> 0:12:06.600 Right. 0:12:06.640 --> 0:12:09.880 So TSMC may be the best in the world at 0:12:09.960 --> 0:12:14.680 producing chips, but there is no individual at TSMC that 0:12:14.800 --> 0:12:17.880 knows how to build chips, right, It's a collective process 0:12:17.920 --> 0:12:19.840 and there's no one person that stores it all in 0:12:19.840 --> 0:12:22.280 his head and just can walk across. And you see 0:12:22.280 --> 0:12:25.520 this in the failings of certain American manufacturers. They do 0:12:25.600 --> 0:12:28.040 have these layoffs and then they're like out of practice 0:12:28.040 --> 0:12:30.160 and they get rusty. And we talk about it a 0:12:30.160 --> 0:12:32.640 lot in the nuclear industry and the plan industry, et cetera. 0:12:32.960 --> 0:12:36.480 Talk to us maybe TSMC, but also other examples of 0:12:36.679 --> 0:12:40.520 the company as this sort of knowledge preserver. 0:12:41.080 --> 0:12:43.800 Totally. Well, TSMC is so vivid in our minds right 0:12:43.800 --> 0:12:47.080 now because we just were there and we toured the 0:12:47.120 --> 0:12:50.880 science park Kinschy Science Park in Taiwan, where not only TSMC, 0:12:50.960 --> 0:12:54.520 but the whole semiconductor ecosystem is located. Like media texts there, 0:12:54.640 --> 0:12:56.559 arms there, you know, Apple's there, like, you know, it's 0:12:56.600 --> 0:13:03.160 like a it's all all right there, right together. You 0:13:03.240 --> 0:13:06.120 are so incredibly correct that there is no one person. 0:13:06.200 --> 0:13:09.080 There's not even a group of one thousand people who 0:13:09.160 --> 0:13:12.120 know how to make chips or know what TSMC is. 0:13:12.160 --> 0:13:14.960 You can't just like airlift, you could take all the buildings, 0:13:15.160 --> 0:13:16.760 you could take a bunch of people out of there, 0:13:16.800 --> 0:13:21.720 and like, you cannot recreate this. It is a whole 0:13:21.760 --> 0:13:24.920 ecosystem contained in one physical location. 0:13:25.480 --> 0:13:27.720 I think it's fair to say it's the most complex 0:13:28.160 --> 0:13:33.200 process that humankind has created and the most complex product, 0:13:33.520 --> 0:13:36.080 like the science and technology in R and D that 0:13:36.200 --> 0:13:40.080 goes into etching a two nanimeter wafer for use in 0:13:40.320 --> 0:13:42.800 whether it's AI chips from Nvidia or you know, the 0:13:42.840 --> 0:13:46.120 chips in our MacBooks or iPhones from Apple. That is, 0:13:47.120 --> 0:13:49.480 you know, there's a joke in the semiconductor industry that 0:13:50.000 --> 0:13:52.400 this is a technology given to us by aliens. That's 0:13:52.400 --> 0:13:54.120 how sort of insane it is. 0:13:54.320 --> 0:13:56.440 It is the closest thing to magic in the modern world. 0:13:56.679 --> 0:13:59.199 Yes, I think that's exactly right, and so yeah, I 0:13:59.240 --> 0:14:02.640 think lots of indust have examples of what you're talking about, 0:14:02.640 --> 0:14:06.240 This idea that the culture of the company contains this 0:14:06.600 --> 0:14:09.320 sort of fabric of knowledge that not one person can have, 0:14:09.360 --> 0:14:13.080 but is blown out to its extreme in semiconductors. 0:14:27.560 --> 0:14:30.840 So if we agree that companies are sort of collections 0:14:30.960 --> 0:14:35.640 of institutional knowledge, more broadly, I guess I'm wondering how 0:14:35.760 --> 0:14:39.360 much of a role does management play? Then, Like, are 0:14:39.400 --> 0:14:43.920 there instances that you've studied where management has made a real, 0:14:44.280 --> 0:14:45.280 real difference? 0:14:46.480 --> 0:14:51.400 Yes, of laughing, Meta Facebook is like such an extreme 0:14:51.480 --> 0:14:54.520 example of this, Like, yes, Meta, And I'm sure Mark 0:14:54.560 --> 0:14:58.720 would be the first to say, is just like TSMC, 0:14:58.880 --> 0:15:02.359 a collection of all the people and knowledge and processes. 0:15:02.400 --> 0:15:04.200 And if Mark were to go start another company, he 0:15:04.200 --> 0:15:09.720 couldn't recreate you know, Meta and Facebook. But there have 0:15:09.880 --> 0:15:12.600 been so many moments in the history of that company 0:15:13.080 --> 0:15:17.480 where a decision or a set of decisions made solely 0:15:17.520 --> 0:15:21.720 by Mark have completely changed its course and enabled it 0:15:21.760 --> 0:15:23.880 to become what is it, you know, before this most 0:15:23.880 --> 0:15:26.680 recent draw down one and a half trillion dollar market 0:15:26.760 --> 0:15:27.400 cap company. 0:15:27.680 --> 0:15:31.040 I would say I draw a distinction between management and leadership. 0:15:31.200 --> 0:15:36.920 I think management tends to play a role in stabilizing 0:15:36.960 --> 0:15:41.280 companies and creating companies that are maybe one two standard 0:15:41.320 --> 0:15:43.480 deviations away from the mean. On the positive side. You know, 0:15:43.560 --> 0:15:46.440 how to create good companies, and leadership is how to 0:15:46.480 --> 0:15:51.280 create great companies. These founder led companies Jensen and Mark 0:15:51.360 --> 0:15:56.480 Zuckerberg and Forrest Mahers and in the case of the 0:15:56.720 --> 0:16:01.000 Eminem's you know, Snickers Candy Corporation, and Bill Gates in 0:16:01.000 --> 0:16:03.360 the case of Microsoft, Dehak in the case of Visa. 0:16:03.440 --> 0:16:08.280 These are people that are visionary, that have an idea 0:16:08.400 --> 0:16:11.120 of the way the world should work. John Collinson has 0:16:11.160 --> 0:16:12.920 this great quote that when you look around the world 0:16:13.000 --> 0:16:15.800 as a museum of passion projects, and I think it's 0:16:15.840 --> 0:16:20.240 the leadership of these like true visionaries that you know, 0:16:20.280 --> 0:16:22.200 when they first started, you didn't know for sure they 0:16:22.240 --> 0:16:25.400 were going to be right or not. But in hindsight 0:16:25.640 --> 0:16:29.960 it was it was their leadership, their stubbornness, their stick toitiveness, 0:16:30.200 --> 0:16:34.040 and their insistence that their way of arranging the world 0:16:34.040 --> 0:16:36.760 around them was correct that ended up actually shaping the 0:16:36.760 --> 0:16:39.200 world and creating the biggest companies on Earth. 0:16:39.240 --> 0:16:41.640 You know, I have a question since you started off 0:16:41.680 --> 0:16:44.680 by talking about performance reviews, and here's something that I 0:16:44.720 --> 0:16:47.440 think about some time, which is that let's say you 0:16:47.520 --> 0:16:51.120 have like a Mark Zuckerberg starting Facebook in his dorm room, 0:16:51.280 --> 0:16:54.920 or Larry and SERGEI and Google in their garage and 0:16:54.960 --> 0:16:58.080 they have this cool technology and they're growing, and that 0:16:58.200 --> 0:17:01.720 it's eventually they hit a point where someone comes to 0:17:01.800 --> 0:17:04.080 them and says, you know what, we really need to 0:17:04.160 --> 0:17:07.199 like write an HR manual, we really need to like 0:17:07.240 --> 0:17:10.399 come up with all this stuff. And I think about myself, 0:17:10.600 --> 0:17:11.919 that would be the point where, like, you know what, 0:17:11.960 --> 0:17:15.040 I'm selling the company I hate. I hate dealing with. 0:17:15.040 --> 0:17:17.400 Like Joe, I hate paperwork. 0:17:18.040 --> 0:17:20.200 I don't want to like write a manual. I don't 0:17:20.200 --> 0:17:22.800 want to start having performance reviews. I don't want to 0:17:22.840 --> 0:17:25.240 like come up with all these like HR policies. This 0:17:25.320 --> 0:17:28.159 sounds like a headache. I'm curious, though, like, because you 0:17:28.280 --> 0:17:32.000 talk about these visionaries, how do they sort of accept 0:17:32.040 --> 0:17:36.320 the fact that as they get bigger, certain aspects of bureaucracy, 0:17:36.400 --> 0:17:40.000 which they probably find kind of annoying to are sort 0:17:40.040 --> 0:17:41.280 of must haves. 0:17:41.320 --> 0:17:44.919 With scale hm, I would push back that it's must have. 0:17:45.160 --> 0:17:47.760 I think it is most common to have it. But 0:17:47.880 --> 0:17:51.840 I am of the opinion that you can accomplish the 0:17:51.880 --> 0:17:55.400 same set of tasks through process and through culture. 0:17:55.960 --> 0:17:58.840 They all have, right, they all have rules, they all 0:17:58.880 --> 0:18:02.640 have like man, I mean, eventually, like they all have 0:18:02.720 --> 0:18:07.440 a HR department, and they have a specialization all that stuff. 0:18:07.480 --> 0:18:10.160 One hundred x more than others like you. Look at Nvidia, 0:18:10.280 --> 0:18:12.880 and I honestly believe this is true from speaking with Jensen, 0:18:13.000 --> 0:18:15.360 from interviewing him, from speaking with a number of directs, 0:18:15.400 --> 0:18:21.120 from spending time at headquarters. It is a pretty unstructured 0:18:21.240 --> 0:18:25.600 environment with comparatively few people. I think, what's in Nvidia's 0:18:25.600 --> 0:18:27.159 head count, David something and. 0:18:27.240 --> 0:18:30.880 I don't know, compared to the other tech giants. 0:18:30.800 --> 0:18:33.280 Five to ten x less less than the other big 0:18:33.280 --> 0:18:37.200 tech companies, way less process. 0:18:37.160 --> 0:18:40.760 Small, Yeah, according to twenty nine thousand people, twenty nine thousand, 0:18:40.800 --> 0:18:42.840 six hundred, All right, keep going, keep going, And. 0:18:42.800 --> 0:18:45.480 What's Apple somewhere in one hundred thousand, Microsoft's like one 0:18:45.560 --> 0:18:49.000 hundred and sixty seventy thousand. I mean, it's a comparatively 0:18:49.040 --> 0:18:52.199 small headcount company. And I really do think you can 0:18:52.240 --> 0:18:58.679 accomplish tasks through incredibly strong culture or process, and usually 0:18:58.680 --> 0:19:00.680 it's the sum of both. But it's always interesting to 0:19:00.680 --> 0:19:03.560 see which companies are able to lean much more heavily 0:19:03.640 --> 0:19:07.160 on You would just never violate some tenet of our culture, 0:19:07.200 --> 0:19:09.639 and therefore we don't need rigid process around it. 0:19:09.920 --> 0:19:12.840 And it's funny, you know, it's not you can kind 0:19:12.840 --> 0:19:14.359 of go one way or the other or somewhere in 0:19:14.400 --> 0:19:17.639 the spectrum. So with Jensen, and in Nvidia's case, clearly 0:19:17.720 --> 0:19:21.040 that's how he loves to operate. Forest Mars at the 0:19:21.040 --> 0:19:23.640 Bars company was the total opposite end of the spectrum. 0:19:23.680 --> 0:19:23.840 You know. 0:19:23.920 --> 0:19:30.720 Forrest was one of the most idiosyncratic entrepreneurs in American history. 0:19:30.760 --> 0:19:33.320 And because the company is so private and the family 0:19:33.359 --> 0:19:35.080 is so private, it's not as well known. We did 0:19:35.080 --> 0:19:36.080 an episode audit. 0:19:36.200 --> 0:19:38.200 By the way, I said, Candy and Pet company worth 0:19:38.280 --> 0:19:41.360 probably over one hundred billion dollars, totally privately held. 0:19:41.119 --> 0:19:44.960 Totally owned by the family one hundred percent. Forrest was 0:19:45.280 --> 0:19:49.040 so extreme on process, so he just instituted this set 0:19:49.080 --> 0:19:51.640 of rules that were completely crazy to the outside world 0:19:51.640 --> 0:19:53.760 at the time, but like we're how he wanted to 0:19:53.880 --> 0:19:57.280 organize things, and then everybody in the company just fell 0:19:57.320 --> 0:20:00.000 in line with the rules. So stuff like they're no office, 0:20:00.359 --> 0:20:02.360 there's no conference rooms. Well there are a few conference rooms, 0:20:02.400 --> 0:20:04.119 they don't have doors on them, they're made of glass. 0:20:04.400 --> 0:20:07.840 Everybody open floor plan. This is in the nineteen thirties. 0:20:08.440 --> 0:20:11.359 Imagine this, like no executive offices, no perks. 0:20:11.960 --> 0:20:15.240 A large bonus is determined if you are on time 0:20:15.280 --> 0:20:16.199 to meetings or not. 0:20:16.520 --> 0:20:19.919 And everybody punched a time card, including him, the CEO. 0:20:20.600 --> 0:20:23.440 By the way, Tracy, I can think of another privately 0:20:23.520 --> 0:20:28.480 owned company with open floor plans and all glass windowed offices. 0:20:28.760 --> 0:20:30.960 Yeah, do you guys punch a time card? We don't. 0:20:32.119 --> 0:20:34.919 We kind of do, yeah, kind of, kind of. 0:20:35.000 --> 0:20:36.679 Some of this sounds from it. We don't get a 0:20:36.680 --> 0:20:40.119 bonus for showing up at a meeting time. Some of 0:20:40.200 --> 0:20:41.719 this sounds familiar anyway, keep going. 0:20:41.800 --> 0:20:44.520 Sorry, And the way that he did this is you know, 0:20:44.600 --> 0:20:47.240 again these were radical, radical concepts for like you know, 0:20:47.520 --> 0:20:51.439 pre war and post war America and Europe at the time. Uh. 0:20:51.920 --> 0:20:54.040 He just said, like, we are all about performance here. 0:20:54.040 --> 0:20:57.240 We're all about the company's bottom line, and if the 0:20:57.280 --> 0:21:00.800 company performs well, you will make an sane amount of money. 0:21:00.840 --> 0:21:03.960 And so his goal was, like, assuming we outperform our targets, 0:21:04.400 --> 0:21:07.400 everybody you know, on their salarly base should make three 0:21:07.440 --> 0:21:10.520 times what an average salary for their job would be 0:21:10.560 --> 0:21:12.640 elsewhere in the industry. And so like, you just set 0:21:12.680 --> 0:21:14.639 up those incentives and you set up those hard rules, 0:21:14.680 --> 0:21:16.960 and you're going to get people to follow them. 0:21:17.400 --> 0:21:19.800 Wait, so I don't know that much about the Mars 0:21:19.840 --> 0:21:22.919 company other than you know, Eminem's are delicious and all 0:21:22.960 --> 0:21:26.520 of that. But when you're researching a privately held company, 0:21:26.680 --> 0:21:30.040 like that's what's the actual research process for you? Like 0:21:30.160 --> 0:21:33.000 how do you dig up information on a company where 0:21:33.119 --> 0:21:37.280 you know there aren't as many like public publicly available 0:21:37.480 --> 0:21:39.560 documents and financial statements. 0:21:40.600 --> 0:21:45.040 We rely heavily on the or at least historically. We're 0:21:45.040 --> 0:21:48.760 now getting more primary source access, but historically on the 0:21:49.000 --> 0:21:52.840