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What each of the top venture capitalists
of all time has in common is each of

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them missed almost all of the great
deals of their generation. And we see

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this a lot. We do performance reviews,
right? We do performance reviews. And so

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it's like, well, they've made 10
investments and, you know, one of them

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is this this just this huge success
and the other nine are like, you know,

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sucking wind. And it's like, okay,
is this a good venture capitalist or a bad

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venture capitalist? And it's like, well,
in any domain that's not probabilistic,

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you say this person's terrible, right?

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You know, it's batting average of like
a hundred, you know, out of a thousand.

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It's like, this person's awful. Um,
and and there's always the temptation to

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say, well, this one thing that's working
is it's like it's a fluke, right? And

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so, who knows whether they'll ever get
it again. And it's at that point where I

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put my head up and I say, we're in the
fluke business. The whole point of this

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is to get the flukes. You don't have
to score 100%. And and not having to score

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100% basically means you can take chances.

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[music]

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[music]

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>> [music] >> Welcome
to the Knowledge Project

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podcast. I'm your host, Shane Parish.

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The goal of this show is to master
the best of [music] what other people have

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00:01:04,960 --> 00:01:08,317
already figured out so that you can
unlock your potential. We interview

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worldclass [music] doers and thinkers
so you can better analyze problems, seize

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opportunities, and live a more
meaningful life. Every episode is packed

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with lessons and insights that never
expire. If you're listening to this,

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you're missing out. If you'd like
special member onlyly episodes, access

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before [music] anyone else, transcripts,

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and other member onlyly content, you can

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join at fs.blog/membership.

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Check out the show notes for a link.

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Mark Andre is here today. Mark
is co-founder and general partner of the

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venture capital firm Andre [music]
Horowits. He's an innovator and creator

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and one of the few to pioneer an entire
software category used by more than a

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billion people [music] and one of the few
to establish multiple multi-billion

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dollar companies. Mark co-created
the highly influential Mosaic internet

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browser and co-founded [music] Netscape
which any of you over 30 will remember.

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I've been wanting to talk to Mark for a
long time [music] and this conversation

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does not disappoint. We explore why he
studies history to see the future. His

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optimistic and pessimistic [music] view

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of the future. How A16Z makes decisions
and specifically what Mark knows about

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decision-m that most [music] people miss.
Our largely dysfunctional

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education system, assessing the judgment

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of founders, and so much more. It's time

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to listen [music] and learn.

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What are you obsessed with right now?

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So there's a lot going on. So
the the full answer to that question would

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probably take [laughter] take the entire
podcast. But you know I would say

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probably two big buckets of things.
You know my my day job is you know being

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obsessed by all of the sort of changing
you know technologies. Um and then you

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know the the the sort of impact that all
all the all the new technologies are

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having on on the you know on on
different industries and on the world

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broadly. Um and then the other thing
I've just you know really I've gotten

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just sort of extremely curious about
I would describe you know like a lot of

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people um a lot of my assumptions about
how you know the world worked and about

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how the US worked and about how politics
worked and about how society worked were

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kind of upended you know kind
of sometime between 2008 and you know 2015

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um you know and then for sure heading
into the last five years um and and and

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so I've I've become somewhat obsessed
with kind of reading my way back and

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basically trying to figure
out essentially [laughter]

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what the hell is going on. Um, you know,
back to my my my kind of day job, which

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is as society changes and as technologies
change society, um, and as

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you know, frankly, also society changes

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technologies. Um, how much of what we

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experience as new is actually new, um,
versus how much is old, right? How many

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of the sort of behavior patterns
or societal changes do we, you know, do we

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kind of experience this brand new
that actually turn out to be quite old

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patterns? what what I find generally is if
I don't understand something, I I try

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to read backwards and and and kind
of the further back back I read, the more

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universal themes I find and the more
things that I think are kind of

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remarkable and unique to our era
actually turn out to be quite universal.

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Um and and I don't know, at least for me,
that's a calming experience. Um

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because it makes me feel less less like
the world is sort of spinning, you know,

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in a in a in a different direction
and more just that we're, you know, we're

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we're playing out patterns that are
kind of deeply rooted in in in humanity,

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which is what I mostly believe. So anyway,
that's the that's the current thing.

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>> Can you talk to me a little bit about
those patterns? What what comes to mind

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when you think of an example
that you're you're surprised by?

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>> I mean, you take almost anything, but I
mean, I'll just give you the the most

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basic one. So, the most basic one
is is societal reaction to new technology,

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right? Um, and so there are, you know,
there are these new technologies of our

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era. You know, we could go, you know,
make, you know, whatever list we want.

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Um, you know, and it could, you know,
everything from, you know, social media

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and internet to, you know, many other
things, automation, robots, uh, and so

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forth. And then there's, you know,
the sort of the societal reaction. There's

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sort of the, you know, the reaction
in the press, there's the reaction from

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politicians. Um, you know, there's
the reaction from different political

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movements. You know, political
candidates, right, are now, you know,

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taking, you know, kind of major stands
on these things. Um, you know, both in

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the US and around the world. You hear
it a lot like around the kid, like what

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technology does to kids, right? It's
sort of the go-to thing, which is, you

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know, that, you know, sort of this
technology is going to ruin the new

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generation of kids. And then you just
kind of, you know, ask yourself, well,

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is this the is this the first generation
of technology for which they have made

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those claims, right? or or in fact,
have those claims been made for basically

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prior generations of technology? And then
of course the the next question is

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like okay are were the claims different
in the past or were they actually the

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same claims? Right? And then to the
extent that they were the same claims,

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you could ask like okay are you know
how are they playing out differently this

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time? Um and and are they playing
out differently this time? And there's

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there's actually quite rich literature
both on the history of technology and on

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the sociology of technology. you know,
prior generations of sociologists who I

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think were actually more more kind of
interesting than the current generation,

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you know, actually grappled with these
questions a lot, right? Um, and um, I

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mean, even like Marxism itself is like,
you know, heavily based on the impact of

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technology on society or at least on
Marxist theories on it. Um, uh, and so I

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found this just like fantastic book that I
just really highly recommend. That's a

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great example of this. Uh, it's a book
written by an MIT professor 50 years a

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50-y year reissue of the book. So, it's
a book that it's very I can state very

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confidently it's a book written before
the internet [laughter] before any of

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the things people, you know, people
are mad about today, right? Um, and it's

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it's this great book with this great
kind of, you know, title from, you know,

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kind of the 1950s, 19 early 1960s called
it's called Men Machines and Modernity.

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I'll have to look it up, but it's Elton
Morrison is the uh is the title, but I

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think it's Men Machines and Modernity,
you know, but but it's this it's

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basically it's a short little book
and it goes through basically it goes

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through this history of like how new
technologies are sort of received. um in

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society and it it it just briefly
it proposes this basically three-step

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process um and sort of uh you know
step one is basically just like flatout

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ignore right new technologies are just
like dismissed all all the experts and

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all the people who are kind of in power
you know just kind of say okay this

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thing is not going to matter it's not
going to not going to be a thing step

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two is rational counterargument
right which is sort of the status quo

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assembles all of the different arguments
as to why this thing can't possibly work

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and won't possibly be important but like
they really get into the argument in

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step two and they really like try to try
to reason it through Um, and then he

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says step three is he says step three
is when the name calling begins, which is

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to say step three is when the status
quo basically goes bananas. Um, and gets

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like super emotional and super irate and
and kind of goes on tilt, right? And and

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and starts name calling and starts
accusing the sort of proponents of the

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new technology of sort of all these evil
kind of moral crimes. Um, and and and

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basically the reason he says it goes
through this three-step process is

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because he says what what people think
of as technological change is actually

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societal change. and specifically
societal change of the form of a of a

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reordering of the power and status
structure. Right? And so all of the

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people who have achieved positions
of power and authority in the world based

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on prior generations of technology are
inherently threatened by new technology

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because new technology will upend
the power and status structures and then a

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new set of people will you know come
to the foreground and and take the power.

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Um and and of course you know in in
in in human society power and status

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battles are the core battles like
that you know they are they are the most

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vicious fights. And so basically what
happens is a lot of technologists kind

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of start out by assuming that they've
built a better mousetrap and of course

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like you know people should appreciate
them for it and then they find out that

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everybody hates them for it and basically
that's the reason why and and

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that this is a persistent pattern through
history that this is in fact not new.

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>> Can you walk me through how you sort
of see some of these technological changes

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and how they'll impact sort of this

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social hierarchy or how people um get

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into positions of power? So, so the

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really big one is um uh is uh you know

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basically hierarchy versus network.
Um right or you could kind of say

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institutions versus network. Um and so
the and by the way for people interested

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in this um Neil Ferguson actually wrote
he [snorts] wrote a really interesting

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book called The Square in the Tower
that goes through this in some detail

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recently that's very you know kind
of historically informed. Another great

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source on this um I should say I agree
a lot with like the first twothirds of the

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book and then I kind of take the polar
opposite view of him on the last third

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of the book. [laughter] So,
it's funny. The last third of the

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book made me very mad. Um, and of course,
the reason it made me mad is

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because he mounts sort of a rising
defense of the old power structure.

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Sorry, rousing defense of the old power
structure, right? Whereas, of course,

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I'm I'm on the side of the new power
structure. So, of course, that would

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make me mad. It's kind of the reverse
of that, right? I'm mad by the resistance.

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And so, anyway, the big battle
is sort of you could call it kind of

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institutions versus versus networks. You
could call it kind of top down hierarchy

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versus sort of lateral, you know, kind
of network building. Um, and so start by

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saying top down institutions. So top
down institution building is kind of how

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the west you know and you know it's
a certain true of some other cultures as

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well but let's just you know I'm most
familiar with the west so I'll just

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focus on that is sort of how the west
was one was we got really good at

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building these basically these giant
hierarchies like we got really good and

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in particular right in the um you know
kind of in the in the late 19th early

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20th century you know we with the rise
of sort of the second industrial

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revolution you know we sort of had all
these masscale technologies of that era

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right so mass manufacturing right um
and then you know mass transportation and

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then mass media rather than mass
government. Um, and so we we got really

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good kind of between call it 1880 and 19,
you know, basically, you know, I

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don't know, 1939 or something. We got
really good at building, you know, giant

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industrial companies, right? You know,
General Motors and General Electric and,

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you know, all these companies. We got
really good at building um, you know,

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giant government, you know, the sort of,
you know, FDR, you know, the New Deal

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and sort of this massive expansion of
state power, you know, that kind of hit,

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you know, after after, you know, after
the 1930s that, you know, that that's

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only, you know, it's only accelerated
since. Um and then we got really good at

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like mass media, mass communication,
right? Radio and television and so

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forth. Um and then also right therefore,
you know, mass politics, right? So this

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kind of absolute dominance of these two,
you know, major political parties. Um

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and then of course, you know, even like
to the extent that you consider America,

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you know, kind of in that era kind of as,
you know, growing empire, we got

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really good at kind of building
the American empire, right? And and and of

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course the American empire kind of,
you know, continues to this day as, you

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know, not as a not as a literal empire
in the old sense, but as a as sort of a,

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you know, a modern empire, right?
which is to say, you know, cultural uh and

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intellectual, right? And and and a
societal empire, you know, that somehow,

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by the way, we still have 800 foreign
military bases, but you know, for the

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most part, sort of a soft soft power
empire. So, so we just we got really

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good at these giant kind of top down
things. And then we we lived in this

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world for 50 or 60 years in which
basically these giant top-down

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institutions just kind of ruled
everything and we just kind of got used

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to it. And you know there are these
famous books from that era you know the

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the organization man is probably you
know the key book kind of of that era

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that kind of described there's this great
line in the organization man where

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he says um you know the the you know in
sort of this era of all these these mass

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systems uh he said you know the route
to he said the route to power leaves you

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know inevitably uh leads through the

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conference room right it's like right
the the the the way that power has been

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exercised in our society kind of through
the through these decades of mass

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systems has been basically people in
conference rooms arguing with each other

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over control, you know, basically of
the of these mass mechanisms, right? Over

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control of what the ad campaign's going
to be, over control of what the, you

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know, the new car model is going to be
next year, over control of, you know,

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which which, you know, which candidate
is going to be the, you know, Democratic

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Republican presidential nominee or
whatever. You know, it's these people at

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the top of a hierarchy kind of battling
at conference rooms. Um, and and by the

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way, it's also right as a consequence,
it's like, you know, all these

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institutions over time kind of end up
run by lawyers, right, of one form or

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another, right? There's sort of, you know,
people who kind of deal in words,

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right? People who deal in kind of symbolic
manipulation at the at the word

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level. uh you know sort of the the sort
of non non-quantitative conceptual

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level. Um and and you know it looked
by the you know kind of 80s or 90s like

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that was just going to be how it was. Um

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and then you know this internet thing

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comes along. [snorts] Um and you know
the the core technological foundation of

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the internet of course is you know it's
a it's a it's not that right it's not a

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top- down institutional thing. It's a
by definition it's a lateral peer-to-peer

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right that you know the core
architecture right famously the internet

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has survived a nuclear strike.

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Therefore, there is no central node,
right? Therefore, you're able to route

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around damage, right? Therefore,
you're able to sort of expand the network

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laterally. Anybody can plug in. Anybody
can build whatever whatever app they

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want. Anybody can build whatever website
they want. They can, you know, put on

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any information they want. They can
organize any movement they want, right?

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Um, and so you have this introduction
of this like fundamentally disruptive

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lateral networkbased technology at sort
of the precise time when it looked like

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we were going to have sort of peak
centralization. Um, and so I think what

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we have now is kind of at the at the
sort of deepest level, what we have is

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kind of this big fight between
people who want to use the internet to

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basically reinforce top down power,
uh, versus people who want to use it to

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disrupt top down power. My analysis
is basically that's what's happened to our

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politics right on both the left and the
right which is the internet is both the

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enabler for traditional political
movements and parties to try to

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establish a right as sort of permanent
enduring advantage but it's also the

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enabling technology for disruptive
movements whether you know on the left

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in the form of whether it's democratic
socialism or you know these kind of more

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energetic you know kind of forms of
leftism or you know on the right the tea

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party and then the Trump movement
and you know mega and you know the the new

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right and all the all the sort of new
disruptive movements on the right and so

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there again you see the same you
you know, the same fundamental battle

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between basically
institutions and and networks.

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[music] C terms. >> I think
that's fascinating. And one of

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the things that that I sort of see
is it's permissionless. I don't need

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anybody in the boardroom saying that I
can go talk to people now. I can just

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put my ideas out there and let other
people be the judge of those ideas.

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>> Yeah, that's right. And there's
this huge tension. So there's this thing.

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Well, so let's take mobile, you know,
because the smartphone is kind of the

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key revolutionary technology in terms of,
you know, sort of access to all this

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stuff. It was not that long ago. As

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recently as 2006, right, which was only

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15 years ago. Um, as recently as 2006,
exactly to your point, if I wanted to, I

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could actually build smartphone apps
in 2006. I could build an app that did

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whatever I wanted on a on a phone. But

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to get it distributed, um, uh, to get
it actually onto the phone for people to

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use, I literally had to go to the
headquarters of Verizon or AT&T, right,

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or one of the big telecom companies, um,
and I had to basically apply, right? And

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literally I had to go into a conference
room. Um you know >> you had a gatekeeper.

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>> Absolutely 100%. And if if and it was
it was famously the term in those days it

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was called the deck. And the deck
basically it was basically the home

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screen or like the UI on the phone. And if
if if you wanted your app in the deck

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um you went in and you started
negotiating in a conference room right

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with you know men in suits. Um and you
know the opening you know the opening

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you know the opening bid was you know
40 or 50% of your thing. Um and and then

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they could basically dictate like
if it does this or that like whatever

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whatever. And then by the way, you know,
to this day, like, you know, Apple, you

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know, opening up the iPhone and the App
Store was a big step forward, but of

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course, even Apple, right, continues
to exercise a fair amount of control. I

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mean, they're far more open than than
Verizon was in those days, you know, but

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even still, like, you know, Apple bans
entire categories of apps and of course,

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they extract their 30% economics. And so,
even still, like there's still kind

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of a legacy holdover of that level
of control. Um, right, but in but in stark

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00:16:21,040 --> 00:16:24,077
contrast, right? And and I think this
is a good news story, right? In stark

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contrast, you know, the web like the web
has never had that property. uh the web

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didn't have that property on day one.

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The web didn't have that property
in 2006 and the web in fact doesn't have

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that property today. And you know it's
like you know you there's a compromise

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like especially on smartphones like
there's a compromise for building a

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mobile website versus building an app
and you know there are issues involved

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00:16:42,320 --> 00:16:44,797
in that but the you know the fact
remains like you can still build

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00:16:44,880 --> 00:16:47,837
whatever website you want. You can put
whatever information you want on it. Um

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and and just from a historical
standpoint that's just such a change. I

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00:16:52,480 --> 00:16:55,277
mean the most dramatic the most dramatic
way of thinking about how big of a

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00:16:55,360 --> 00:16:59,357
change that is as sort of a global kind
of macro level um is that you know the

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00:16:59,440 --> 00:17:02,317
the Soviet Union you know there was this
there was this dissident movement inside

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00:17:02,400 --> 00:17:06,077
the Soviet Union in the 1980s right and
you know they they didn't know that they

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00:17:06,160 --> 00:17:08,957
were going to win like up until I think
the very last minute like they you know

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they didn't know the USSR would ever
fall u but you know they they tried and

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there were some very brave people behind
the iron curtain in in Russia and the

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other you know kind of east block
countries that you know that that

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battled for a long time and so they you
know they had this concept of samazdot

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right, which was was was basically
bas you know was basically you know

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information free information right
about like you know open criticism of the

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Soviet regime um and it was necessarily
an underground phenomenon because if you

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00:17:32,640 --> 00:17:37,197
were caught with it right you would get
shot um and so they had uh and so then

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there's this sort of practical question
of like how do you produce samosat and

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the answer in those days was you produce
samosat by mimograph machine right which

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is sort of the you know the for for k
for kids listening to this this was

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00:17:48,400 --> 00:17:51,997
photocopers before photocopers um you
know so these were sort you know, pretty

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00:17:52,080 --> 00:17:55,197
expensive, complex kind of, you know,
basically basement. You put put one of

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00:17:55,280 --> 00:17:57,437
these in your basement or your office
and you could do you make copies of

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00:17:57,520 --> 00:18:01,037
paper, you know, kind of invaluable.
Um, and you know, sure enough, like there

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00:18:01,120 --> 00:18:03,997
was like a whole thing involving
smuggling mimograph machines into Russia

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00:18:04,080 --> 00:18:07,197
into so into the Soviet Union and then
if you were caught with a mimograph

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machine, you were shot. Um, and so just
the level of overhead involved in even

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00:18:12,320 --> 00:18:15,037
getting, you know, information that
contradicted sort of centralized power

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00:18:15,120 --> 00:18:19,677
out, you know, was still really hard,
you know, even at that point. Um, and

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then, you know, the internet kind
of popped. You know, it's kind of

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00:18:22,000 --> 00:18:25,357
interesting. It's like, could you ever
have another Soviet Union, like in the

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era of the internet, um, you know, North

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00:18:28,240 --> 00:18:32,477
Korea is doing their damnedest to try
to maintain that model, you know, but

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00:18:32,560 --> 00:18:36,077
without going full North Korea, like I'm
not sure you can. I I mean, I guess I'm

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00:18:36,160 --> 00:18:38,957
an optimist on this point. Like,
I tend to think open access to information

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basically makes a lot of these
historical things, you know,

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00:18:40,960 --> 00:18:44,477
fundamentally impossible. not you know
not nec you know not not all centralized

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institutions get get torn down on day
one but like over time um if people are

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able to actually like debate things
people are actually able to see you know

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alternate viewpoints people are actually
able to point out flaws you know kind of

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in the systems that are ruling them
like o over time you know I don't think

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people will put up with the kind
of draconian kind of top down control that

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00:19:01,120 --> 00:19:04,077
that that that you know that we used
to have to put up with you know before

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these technologies existed.
>> Can you give me both sides of the next

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00:19:08,240 --> 00:19:11,997
10 years? So, I'm interested in hearing
your most optimistic scenario and your

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00:19:12,080 --> 00:19:15,917
most pessimistic scenario.
>> Look, optimism is just like it's

349
00:19:16,000 --> 00:19:19,837
basically the Morrison book, right?
It's basically you have you have all these

350
00:19:19,920 --> 00:19:22,237
kits, right? So, you have kind of the
world as it is. You have the status quo,

351
00:19:22,320 --> 00:19:24,957
you have the power structures, you have
the hierarchies, and whatever. They work

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00:19:25,040 --> 00:19:29,117
as well as they do and so forth. And then
you basically have all these kids.

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00:19:29,200 --> 00:19:32,397
Um, and and this is kind of one of the
things in my day job that's just always

354
00:19:32,480 --> 00:19:34,957
so interesting is like because these
kids like walk in the door and they're

355
00:19:35,040 --> 00:19:37,917
just they're and they walk in the door
from all over the world, right? from

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00:19:38,000 --> 00:19:41,677
every walk of life, from every possible
background. Um, and they walk in with,

357
00:19:41,760 --> 00:19:45,837
you know, an idea and a skill set.
And, you know, I would say the ideas are

358
00:19:45,920 --> 00:19:48,797
getting to be kind of increasingly,
I think, profound and the skill sets are

359
00:19:48,880 --> 00:19:51,917
getting increasingly advanced. And part
of it is, you know, kids now are growing

360
00:19:52,000 --> 00:19:54,717
up on on the internet in some
fundamental way. And so, you know, we we

361
00:19:54,800 --> 00:19:57,917
see kids now from all over the world
who walk in and they're they are like far

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00:19:58,000 --> 00:20:01,517
more educated, right, and and skilled
already to be able to do, you know, a

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00:20:01,600 --> 00:20:04,877
startup or or, you know, create new
software or do any of these things um,

364
00:20:04,960 --> 00:20:07,597
you know, than I was at their age.
uh because they've they've learned on the

365
00:20:07,680 --> 00:20:09,517
internet like they've gone online,
they've read, you know, they've read

366
00:20:09,600 --> 00:20:11,837
everything, they've they've watched
everything. They they you know, it's

367
00:20:11,920 --> 00:20:15,197
just kind of their their depth of sort
of technological knowledge and business

368
00:20:15,280 --> 00:20:18,237
knowledge and finance knowledge
and cultural knowledge is just like

369
00:20:18,320 --> 00:20:21,837
incredibly broad. And so these kids walk
in and they and you know like like kids

370
00:20:21,920 --> 00:20:24,317
you know like like like any you know
generation of kids they're they're

371
00:20:24,400 --> 00:20:27,197
idealists and they've got all these new
ideas and they kind of have an intuitive

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00:20:27,280 --> 00:20:30,317
sense of how new technologies could be
harnessed to you know improve the world

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00:20:30,400 --> 00:20:32,877
in some way and they actually have
the power to do it and then you know and

374
00:20:32,960 --> 00:20:35,517
then you know brag a little bit on us
you know we're in a position to be able

375
00:20:35,600 --> 00:20:36,637
to support them and help them do that.

376
00:20:36,720 --> 00:20:39,357
So there's you know there's a system
kind of waiting for them. you know,

377
00:20:39,440 --> 00:20:42,317
basically it's that we're just going
to see this sort and you see it now, but

378
00:20:42,400 --> 00:20:46,557
you're just going to see this sort of
continuous kind of movement um of all of

379
00:20:46,640 --> 00:20:49,597
these new ideas and all these new ways
of doing things. And you and you know,

380
00:20:49,680 --> 00:20:52,717
look it, you know, they're not all going
to work. It's a rebel alliance versus an

381
00:20:52,800 --> 00:20:57,357
empire. It's asymmetric, right? The the
the empire has to win 100% of the time,

382
00:20:57,440 --> 00:21:00,157
right? They have to defend against all
attackers, right? Whereas, you know, the

383
00:21:00,240 --> 00:21:02,317
attack, you know, so you can have many
different attackers who kind of keep

384
00:21:02,400 --> 00:21:07,277
coming. Um and so we're just going
to see in sector after sector just better

385
00:21:07,360 --> 00:21:10,717
and better ways of doing things, better
ways of organizing, better ways of of

386
00:21:10,800 --> 00:21:14,237
you know better ways of organizing the
economy and you know productive activity

387
00:21:14,320 --> 00:21:18,477
and creating you know job opportunities
for people and education and and um you

388
00:21:18,560 --> 00:21:21,757
know how the you know how you know just
like all aspects of how people live and

389
00:21:21,840 --> 00:21:24,877
work you know just like more and more
choice more and more options more and

390
00:21:24,960 --> 00:21:28,077
more better ways of doing things. Um
and you know the incumbents will you know

391
00:21:28,160 --> 00:21:30,557
they'll they'll go through the three
stages right every time and you you see

392
00:21:30,640 --> 00:21:33,597
it you know it's like I said it's either
denial it's sort of rational you know

393
00:21:33,680 --> 00:21:37,517
counterargument or it's name calling
I is that inherent to even the winners

394
00:21:37,600 --> 00:21:40,797
today like Google
is now an incumbent right

395
00:21:40,880 --> 00:21:44,317
>> so so this is one of the funny things
I talk a lot to our founders about um and

396
00:21:44,400 --> 00:21:47,197
this is not a you know what's what's so
useful I think of this view is this is

397
00:21:47,280 --> 00:21:50,397
not a criticism of any individual person
right or any criticism of any individual

398
00:21:50,480 --> 00:21:53,197
company this this is why I try to get
to the broader trends right because like

399
00:21:53,280 --> 00:21:56,557
the broader trends like are impersonal
in the sense of okay if If you see this

400
00:21:56,640 --> 00:21:59,917
pattern over and over again, then it's
not just you. Like when I, you know,

401
00:22:00,000 --> 00:22:02,557
when I tell somebody you're doing X,
it's not like a criticism of you're

402
00:22:02,640 --> 00:22:05,357
doing X. It's more an observation of,
you know, you're doing X just like

403
00:22:05,440 --> 00:22:09,277
everybody else who's ever been in your
situation has done X. And, you know, at

404
00:22:09,360 --> 00:22:11,837
the very least be aware of it, if not,
you know, decide to make a conscious

405
00:22:11,920 --> 00:22:15,277
choice not to be like that. You know,
if you don't like that. Um, but one of the

406
00:22:15,360 --> 00:22:17,677
things I talk to our founders about
all the time is it's actually funny. A

407
00:22:17,760 --> 00:22:22,077
successful company has about five years,
a successful startup has about five

408
00:22:22,160 --> 00:22:24,637
years until they become a new incumbent.

409
00:22:24,720 --> 00:22:27,677
um and and they actually start to behave
like an incumbent. That's rational. Like

410
00:22:27,760 --> 00:22:30,477
of course that's rational. Like they've
now built something worth defending,

411
00:22:30,560 --> 00:22:33,117
right? And they've like they've now
established power in the world, right?

412
00:22:33,200 --> 00:22:36,237
They've established a position
for themselves. Um you know, they've built

413
00:22:36,320 --> 00:22:39,117
something of value. Um and now they
have something worth protecting. And of

414
00:22:39,200 --> 00:22:41,677
course the next, you know, the next
thing comes along very quickly. You

415
00:22:41,760 --> 00:22:44,237
know, the next kid comes along five
years later. You know, and a lot of

416
00:22:44,320 --> 00:22:46,317
times it's really funny because it's like,
you know, the new incumbent's run

417
00:22:46,400 --> 00:22:49,537
by like a 26-y old, right? And then
and then the new disruptor is like a 21

418
00:22:49,620 --> 00:22:53,197
[laughter] year old, right? So it's
like you know it's sort of like one kid

419
00:22:53,280 --> 00:22:55,997
really mad about the other one [snorts]
and it's like yeah well you know that

420
00:22:56,080 --> 00:22:59,997
was you five years ago right like so you
know this is the way of the world and so

421
00:23:00,080 --> 00:23:03,517
yeah so yeah no look so this is actually
a really big question actually Peter you

422
00:23:03,600 --> 00:23:06,717
know my my friend Peter T has talked
a lot about this in public and he he's

423
00:23:06,800 --> 00:23:10,157
much more I would say kind of hardcore
on this than I am but Peter sort of

424
00:23:10,240 --> 00:23:13,597
characterizes Google as as no longer
a tech company Peter now just flat out

425
00:23:13,680 --> 00:23:17,357
calls them they're an anti-tech company
in his view it's an enemy of enemy of

426
00:23:17,440 --> 00:23:20,877
innovation like they're a blockade
of innovation they're no longer doing

427
00:23:20,960 --> 00:23:23,837
anything sort of you know disruptive.
Um instead what they've done is they've

428
00:23:23,920 --> 00:23:26,237
established you know a new monopoly
in search and they're using that monopoly

429
00:23:26,320 --> 00:23:29,357
in search to try to basically prevent
new you know new new new technologies

430
00:23:29,440 --> 00:23:32,797
from coming to market from from from you
know including new competitors but also

431
00:23:32,880 --> 00:23:35,677
just more generally you know a lot a lot
of new technologies and you know they

432
00:23:35,760 --> 00:23:38,317
become very you know draconian
and heavy-handed in terms of what goes in

433
00:23:38,400 --> 00:23:40,957
the search engine and they become very
sensorious and they ban a lot of things

434
00:23:41,040 --> 00:23:43,917
and you know a lot of people get kicked
off YouTube every day and so forth. So

435
00:23:44,000 --> 00:23:46,957
so they become kind of anti-change.
Now I would say that that's Peter's view

436
00:23:47,040 --> 00:23:49,277
it's a it's a very you know strong view.

437
00:23:49,360 --> 00:23:52,477
I I would I would not say that about
Google. I would just say more generally

438
00:23:52,560 --> 00:23:55,037
like that is the incumbent temptation.

439
00:23:55,120 --> 00:23:59,037
Um is is basically go is basically go
from attack mode to defend mode, right?

440
00:23:59,120 --> 00:24:02,077
Go from being the pirate to being
the navy. Go from being the you know rebel

441
00:24:02,160 --> 00:24:06,717
the the rebel to being the empire.
Um and so yeah, it it is a it is a thing

442
00:24:06,800 --> 00:24:09,517
that happens. I I think you know there
you could probably just fairly say

443
00:24:09,600 --> 00:24:12,157
companies like that are caught in some
sort of intermediate state, you know,

444
00:24:12,240 --> 00:24:13,837
where they still have elements of both.

445
00:24:13,920 --> 00:24:16,877
Um and um you know it's kind of probably
their lot in life to kind of figure out

446
00:24:16,960 --> 00:24:18,477
which side of that they want to follow.

447
00:24:18,560 --> 00:24:22,077
>> And what's sort of the most pessimistic
scenario you can come up with with how

448
00:24:22,160 --> 00:24:26,477
technology plays out? Do the incumbent
start using it to squash free speech?

449
00:24:26,560 --> 00:24:27,997
Like how do how do you think about this?

450
00:24:28,080 --> 00:24:31,037
>> Yeah, I think you could paint Yeah,
you could paint maybe two two pessimistic

451
00:24:31,120 --> 00:24:33,357
scenarios. So pessimistic scenario
number one would be the one you just

452
00:24:33,440 --> 00:24:36,157
alluded to and it basically is like okay

453
00:24:36,240 --> 00:24:40,557
um this technology had the potential uh
to be to be revolutionary and to kind of

454
00:24:40,640 --> 00:24:44,637
disrupt all these hierarchies
and institutions. Um but in fact it turned

455
00:24:44,720 --> 00:24:47,757
out that it was you know fundamentally
enabling technology for top down

456
00:24:47,840 --> 00:24:51,437
control. There's 1984 which basically
is the pessimistic view which is like

457
00:24:51,520 --> 00:24:55,357
technology is used by the state you know
kind of the full the full kind of you

458
00:24:55,440 --> 00:24:59,517
know I don't know what the Hegelian
like you know world state dominant like

459
00:24:59,600 --> 00:25:04,157
totalitarian regime Soviet Union kind of
thing. Um you know technology is used to

460
00:25:04,240 --> 00:25:07,597
basically control the populace in sort
of this very overt kind of top down way.

461
00:25:07,680 --> 00:25:11,997
Um there's this other really wonderful
book um called Orwell's Revenge written

462
00:25:12,080 --> 00:25:14,557
by this guy Peter Huber. Um, and in

463
00:25:14,640 --> 00:25:19,117
Orwell's Revenge, he actually does
a rewrite of 1984. Um, and he does a

464
00:25:19,200 --> 00:25:22,717
rewrite of 1984 through the optimistic
lens, you know, sort of your optimistic

465
00:25:22,800 --> 00:25:25,757
scenario. And and the optimistic lens,
the the twist that he puts in the plot

466
00:25:25,840 --> 00:25:28,637
of 1984 is he basically just makes
the telescreens, you know, the sort of

467
00:25:28,720 --> 00:25:31,837
technology 1984, these telescreens,
interactive sort of interactive TV

468
00:25:31,920 --> 00:25:36,157
thing. Um, he basically he makes the
telescreens two-way, you know, like like

469
00:25:36,240 --> 00:25:38,637
the internet. And of course, then he he
elaborates out kind of the implication

470
00:25:38,720 --> 00:25:42,317
of that in the story. And of course in
in Oral's Revenge, right, the the rebels

471
00:25:42,400 --> 00:25:45,437
win, right? that the totalitarian system
is overturned because, you know, because

472
00:25:45,520 --> 00:25:48,637
people are able to organize and and
and and and hear the truth and so forth

473
00:25:48,720 --> 00:25:51,757
through through the two-way system.
And so anyway, yeah, the pessimistic view

474
00:25:51,840 --> 00:25:56,877
would be the 1984 model um contra
the the the Orwell's revenge model that we

475
00:25:56,960 --> 00:25:59,837
kind of talked about earlier.
Um and then look, there there is another

476
00:25:59,920 --> 00:26:03,997
pessimistic view and this is the Martin
Guri view. Uh if you've read so his

477
00:26:04,080 --> 00:26:06,637
book, the is it the um was it the revolt

478
00:26:06,720 --> 00:26:11,357
to the public? The Martin Gur thesis
basically is yes. Um, and I can hear

479
00:26:11,440 --> 00:26:14,637
him, by the way, talking to me about
this right now in his in his in his

480
00:26:14,720 --> 00:26:18,557
wonderful Cuban accent. Um, you know,
yes, smart guy. Um, you know, the

481
00:26:18,640 --> 00:26:22,877
internet is very good at tearing down,
um, uh, you know, at tearing down these

482
00:26:22,960 --> 00:26:25,517
hierarchies. Um, but the internet has

483
00:26:25,600 --> 00:26:30,157
not yet proven its ability to build
governance systems, right? And so um it

484
00:26:30,240 --> 00:26:33,677
it has not it yes you can build these
new peer-to-p peer networks but can

485
00:26:33,760 --> 00:26:38,477
these peer-to-p peer networks actually
take power and actually serve the

486
00:26:38,560 --> 00:26:42,157
productive roles that the hierarchies
used to serve right and so can you

487
00:26:42,240 --> 00:26:46,397
actually have for example a functioning
democracy right if what you have

488
00:26:46,480 --> 00:26:49,597
basically is basically people arguing
with each other in this peer-to-p peer

489
00:26:49,680 --> 00:26:52,797
network like all the time right
and never basically forming instruments of

490
00:26:52,880 --> 00:26:56,957
state power um you know or if you have
you know this you know if if all of your

491
00:26:57,040 --> 00:26:59,197
finance goes peer-to-peer and you
don't have any banks anymore and there's

492
00:26:59,280 --> 00:27:01,837
nobody to call when your money goes away,
right? Or, you know, whatever the

493
00:27:01,920 --> 00:27:04,237
version of that might be, right?
That they're that they're basically that

494
00:27:04,320 --> 00:27:09,277
these networks are not in fact basically
um sufficient substitutes for for for

495
00:27:09,360 --> 00:27:13,277
the institutions that they're displacing.
Um, and he describes this as

496
00:27:13,360 --> 00:27:17,277
the scenario of sort of nihilism um
which is basically that the peer-to-p

497
00:27:17,360 --> 00:27:20,477
peer networks are good at destroying
um but they're not necessarily good at

498
00:27:20,560 --> 00:27:25,517
building. Um, and so he he's he's fairly
pessimistic and and I think this is why

499
00:27:25,600 --> 00:27:28,157
this is what Neil Ferguson also
is reacting to in his book, which is I

500
00:27:28,240 --> 00:27:30,637
think this is also kind of his
latent fear. He kind of describes it

501
00:27:30,720 --> 00:27:33,677
differently, but also his his kind
of late fear that if the institutions are

502
00:27:33,760 --> 00:27:37,037
torn down that that there's no guarantee
that productive things will be built on

503
00:27:37,120 --> 00:27:40,157
the other side. Um, so this probably
that that would be the other the other

504
00:27:40,240 --> 00:27:42,237
kind of really pessimistic scenario.

505
00:27:42,320 --> 00:27:44,237
>> A lot of people get
scar tissue. They're

506
00:27:44,320 --> 00:27:47,517
still sort of like fighting the last war.
You've been around the first

507
00:27:47,600 --> 00:27:51,757
internet uh big wave in the late 1990s
and the failures that happened there.

508
00:27:51,840 --> 00:27:56,477
How does that affect your thinking? Like
web van for example failed but the same

509
00:27:56,560 --> 00:27:58,637
thing today might be a resounding

510
00:27:58,720 --> 00:28:01,917
success. How do you switch your mind to

511
00:28:02,000 --> 00:28:06,077
um not getting burned? >> Yeah.
So this is really Yeah. So this is

512
00:28:06,160 --> 00:28:09,517
really fun. This is one of these things
again I've just realized is actually

513
00:28:09,600 --> 00:28:13,117
really fundamental to human nature. Um,
and by the way, why I think they're why

514
00:28:13,200 --> 00:28:15,997
I think you have to ask questions about
whether life extension technologies are

515
00:28:16,080 --> 00:28:19,837
actually going to be a good idea.
I think they are, but I think there's a

516
00:28:19,920 --> 00:28:22,957
real question about that from a from
a broader counterultural societal

517
00:28:23,040 --> 00:28:26,397
standpoint, which is right, it's
the most it's the to your point, it's the

518
00:28:26,480 --> 00:28:31,277
most natural thing in the world to try
to learn from experience, right? And so

519
00:28:31,360 --> 00:28:34,317
I, you know, we all go through this,
right? You touch the hot stove, it

520
00:28:34,400 --> 00:28:37,037
burns, we don't touch the hot stove
again, right? And that happens at like

521
00:28:37,120 --> 00:28:40,317
age three or whatever. And then like
from from then on basically like one way

522
00:28:40,400 --> 00:28:43,037
of just viewing like our trajectory
through life is it's just touching hot

523
00:28:43,120 --> 00:28:45,757
stove after hot stove after hot stove
and learning don't do that don't do that

524
00:28:45,840 --> 00:28:49,037
don't do that you know so it's or it's
like you know don't act out of work you

525
00:28:49,120 --> 00:28:51,917
know you know you learn all these things
and then one of the things you learn is

526
00:28:52,000 --> 00:28:55,517
like okay like you know what actually
what a lot of people learn is what what

527
00:28:55,600 --> 00:28:58,237
a lot of people learn is they they they
work at a startup the startup doesn't

528
00:28:58,320 --> 00:29:00,797
work you know the one that they're
in doesn't work and so the lesson is don't

529
00:29:00,880 --> 00:29:04,477
work at startups right um right or by
the way the other lesson right the other

530
00:29:04,560 --> 00:29:06,957
lesson is a lot of people went through
in the last 50 years this thing where

531
00:29:07,040 --> 00:29:09,517
they thought they had lifetime
employment, right, at some big company

532
00:29:09,600 --> 00:29:12,157
and then they got laid off at some point
and then they're and then they and then

533
00:29:12,240 --> 00:29:14,397
sort of the lesson is well don't work
at big companies because you can't trust

534
00:29:14,480 --> 00:29:16,637
them and they don't care about you and
they'll, you know, they'll lay you off.

535
00:29:16,720 --> 00:29:19,037
And so anyway, it's like it's like the
most natural thing in the world to like

536
00:29:19,120 --> 00:29:21,757
sort of sort of learn from these mistakes.
And so what happens is it's

537
00:29:21,840 --> 00:29:25,037
it's absolutely like scar tissue. What
happens is you just as you age, you just

538
00:29:25,120 --> 00:29:27,997
naturally build up all of this all of
this sort of psychic scar tissue and you

539
00:29:28,080 --> 00:29:30,877
have all these cautionary lessons
in your in your head all the time and you

540
00:29:30,960 --> 00:29:34,477
just and and therefore as a consequence,
right, your your aperture of what you're

541
00:29:34,560 --> 00:29:36,237
willing to explore as you get older just

542
00:29:36,320 --> 00:29:39,117
shrinks. Um, and it's just it's just an

543
00:29:39,200 --> 00:29:41,757
incredibly natural thing to have happen.

544
00:29:41,840 --> 00:29:45,277
Um, and so I so I would say the the the

545
00:29:45,360 --> 00:29:49,517
the the good news or you know kind of
the escape hatch for that is is being in

546
00:29:49,600 --> 00:29:52,957
my day job. My my day job is an
incredible teacher that that's a bad

547
00:29:53,040 --> 00:29:56,957
idea. U right? Because what happens
in my day job right is you know basically

548
00:29:57,040 --> 00:30:00,237
you know I've now been you know kind
of doing startups first as an entrepreneur

549
00:30:00,320 --> 00:30:04,077
for 15 years now as a VC coming up 15
years you know coming up 15 years. And

550
00:30:04,160 --> 00:30:06,877
basically what you see if you kind
of swim in in in you know in kind of this

551
00:30:06,960 --> 00:30:10,397
this pond for long enough is basically
you see you know your web van example

552
00:30:10,480 --> 00:30:14,317
you see example after example of startups
that tried something and failed

553
00:30:14,400 --> 00:30:18,157
and then you basically you know you draw
the experience from that. Okay well we

554
00:30:18,240 --> 00:30:22,237
know that's never going to work right
because it failed. Um and you see kind

555
00:30:22,320 --> 00:30:26,077
of a lot of people around you kind
of going through the same process. Um, and

556
00:30:26,160 --> 00:30:29,997
then you just see example after example
of basically what happens next, which is

557
00:30:30,080 --> 00:30:34,397
some kid shows up with that same idea
five or 10 or 15 or 20 years later and

558
00:30:34,480 --> 00:30:38,877
they take another swing at it and it
becomes a gigantic success, right? Um,

559
00:30:38,960 --> 00:30:43,117
and so, you know, exactly your point
like web van doesn't work and now we've

560
00:30:43,200 --> 00:30:46,477
now today you've got these just giant
successful companies in food delivery,

561
00:30:46,560 --> 00:30:50,077
right? Um, that are like huge successes
and so like that idea absolutely works.

562
00:30:50,160 --> 00:30:54,637
Let let's hone in on that just a little
bit more in the sense that the the wrong

563
00:30:54,720 --> 00:30:57,037
lesson to extract from that experience

564
00:30:57,120 --> 00:31:01,677
is this idea will never work. How is it
that we extract the right lesson from an

565
00:31:01,760 --> 00:31:05,677
experience? >> Yeah.
So let's let's say I I think this

566
00:31:05,760 --> 00:31:08,237
goes to I think you want to really

567
00:31:08,320 --> 00:31:09,837
understand the domain in which you're

568
00:31:09,920 --> 00:31:15,277
operating, right? So,
so the the domain that I'm talking about

569
00:31:15,360 --> 00:31:18,397
like the domain of startups
is representative of sort of a a domain

570
00:31:18,480 --> 00:31:23,517
that you might call sort of probabilistic
um it's a probabistic domain right so so

571
00:31:23,600 --> 00:31:26,637
you know it's sort of inherent to the
venture capital startup process which is

572
00:31:26,720 --> 00:31:29,837
you know basically I just give you
the numbers like for top-end venture right

573
00:31:29,920 --> 00:31:34,637
for top end venture back startups um
about half the companies in any given

574
00:31:34,720 --> 00:31:37,677
period work and sort of generate
positive returns and about half of them

575
00:31:37,760 --> 00:31:41,997
don't right and so so we we start out
like every new fund knowing that half

576
00:31:42,080 --> 00:31:44,877
the companies that we invest in are
probably going to fail, right? And and

577
00:31:44,960 --> 00:31:46,797
by the way, they're going to fail
for a bunch of reasons. Like a lot of the

578
00:31:46,880 --> 00:31:49,917
failures are idiosyncratic, right? That
you know, the team, you know, breaks up

579
00:31:50,000 --> 00:31:52,317
or whatever, you know, something, you
know, specific to the startup. But like

580
00:31:52,400 --> 00:31:54,477
in a lot of cases, it literally is like
they're going to fail because they're

581
00:31:54,560 --> 00:31:56,557
just like flat out too early, right?

582
00:31:56,640 --> 00:31:58,717
It's it's going to be, you know, it's
going to be the web van of its time, not

583
00:31:58,800 --> 00:32:03,357
you know, whatever, you know, what the
new companies. Um, and so a lot of it's

584
00:32:03,440 --> 00:32:04,797
just like just simply flatout timing.

585
00:32:04,880 --> 00:32:07,917
And so but but you can see what
I'm saying is like you're thinking

586
00:32:08,000 --> 00:32:11,837
probabilistically like you're right
we're not trying to score a 100 on the

587
00:32:11,920 --> 00:32:14,637
exam right and this is maybe a thing
that is like a big difference right

588
00:32:14,720 --> 00:32:17,757
between the education system and the
real world right is you know in the

589
00:32:17,840 --> 00:32:20,637
education system it's like we're
supposed to get 100 on every test right

590
00:32:20,720 --> 00:32:23,837
it's sort of this deterministic realm
right in which we're you know there is a

591
00:32:23,920 --> 00:32:26,317
way to kind of achieve perfection we're
kind of going for the 4.0 know, grade

592
00:32:26,400 --> 00:32:30,877
average or whatever. Um, you know, in
quote unquote real life, right, which is

593
00:32:30,960 --> 00:32:32,717
starting businesses or, you know,

594
00:32:32,800 --> 00:32:35,837
writing books, right, or composing music

595
00:32:35,920 --> 00:32:40,077
or playing basketball or playing poker,
right? Or basically doing anything

596
00:32:40,160 --> 00:32:43,437
interesting. We're in a probabilistic
domain, right? And in the probabilistic

597
00:32:43,520 --> 00:32:45,837
domain, it's just like we're not going
to we're not going to score 100%. We're

598
00:32:45,920 --> 00:32:48,717
going to score, you know, most of the
probabilistic domains we're going to

599
00:32:48,800 --> 00:32:53,437
score, you know, if world class is like
60%. Right? I don't know what the

600
00:32:53,520 --> 00:32:55,437
numbers are for basketball,
but it's like if you look at I don't know

601
00:32:55,520 --> 00:32:58,237
whatever it was like Kobe Bryant
or LeBron's like lifetime record and it's

602
00:32:58,320 --> 00:33:01,437
like they've scored all these baskets
and then the other fascinating thing to

603
00:33:01,520 --> 00:33:03,997
look at is just you know the the ranking
of the basketball players who have

604
00:33:04,080 --> 00:33:07,837
missed the most baskets, right? And it
turns out like it's the it's the same

605
00:33:07,920 --> 00:33:10,637
people. >> Yeah, >> right.
[laughter] Like Kobe's Kobe's

606
00:33:10,720 --> 00:33:13,917
Kobe might be number one on the list
of like total missed baskets. That is what

607
00:33:14,000 --> 00:33:18,157
it is, right? uh was it Annie Duke has
this great great term uh she she used

608
00:33:18,240 --> 00:33:21,037
brought up for the world of poker um
in her book thinking it best and she she

609
00:33:21,120 --> 00:33:24,637
calls this she says what a lot of people
do is is they basically when some when

610
00:33:24,720 --> 00:33:27,997
they're in a probabilistic listen if
they're in a deterministic domain and

611
00:33:28,080 --> 00:33:30,637
they get less than 100% then there's
then they can self-critique and they can

612
00:33:30,720 --> 00:33:34,157
say why didn't I get 100% I should have
gotten 100% and I did something wrong

613
00:33:34,240 --> 00:33:37,437
right and and that is a correct analysis
like you could have gotten 100% of that

614
00:33:37,520 --> 00:33:39,677
test you probably didn't you know you
didn't study hard enough you didn't read

615
00:33:39,760 --> 00:33:43,837
all the material or whatever right >>
in a probabilistic domain um I it didn't

616
00:33:43,920 --> 00:33:46,477
work Okay, it's again the scar tissue.

617
00:33:46,560 --> 00:33:49,357
It's now now I do what she calls
resulting, right? Which is basically now

618
00:33:49,440 --> 00:33:53,597
I now I need an explanation for the
result, right? And the explanation for

619
00:33:53,680 --> 00:33:55,917
the result is, you know, I don't know,
I should have this or that or I should

620
00:33:56,000 --> 00:33:58,637
have bluffed or not bluffed or done this
or done that or not started this company

621
00:33:58,720 --> 00:34:02,157
or waited five years or, you know,
whatever, whatever. Um, and and she's

622
00:34:02,240 --> 00:34:03,597
like, look, it's a probabistic domain.

623
00:34:03,680 --> 00:34:06,477
Like some percentage of them are simply
going to fail. If you if you try to

624
00:34:06,560 --> 00:34:09,597
explain what fundamentally is kind of
the result of randomness, right, through

625
00:34:09,680 --> 00:34:11,837
a narrative, like you're basically
fooling yourself like you're making

626
00:34:11,920 --> 00:34:14,637
you're making yourself, ironically,
you're making yourself miserable in a

627
00:34:14,720 --> 00:34:18,077
counterproductive way, right? And and
and the right thing to do, right, if in

628
00:34:18,160 --> 00:34:21,117
poker, the right thing to do is to like
play the next hand of poker, right? With

629
00:34:21,200 --> 00:34:23,677
the exact same way you play the previous
hand, right? Because you're you're

630
00:34:23,760 --> 00:34:26,397
operating in this in this domain
of probability. The right thing to do if

631
00:34:26,480 --> 00:34:29,757
you're Kobe Bryant is to is to shoot
the next, you know, the next basket. The

632
00:34:29,840 --> 00:34:32,637
right thing to do as an entrepreneur
is to start the next company, right? The

633
00:34:32,720 --> 00:34:35,597
right thing to do as a venture
capitalist is to fund the next to fund

634
00:34:35,680 --> 00:34:39,117
the next startup, right? Even in a space
where you've already tried and failed

635
00:34:39,200 --> 00:34:43,197
before and and then I I would apply
in tech. I would say I I believe in the

636
00:34:43,280 --> 00:34:46,397
strong version of this. I I used to kind
of say this to try to kind of exaggerate

637
00:34:46,480 --> 00:34:49,037
to make the point, but now I don't think
I'm exaggerating, which is I no longer

638
00:34:49,120 --> 00:34:52,957
think there are any bad ideas. I I no
longer think there are any qualified

639
00:34:53,040 --> 00:34:55,597
people starting tech companies that
actually have bad ideas. I think all the

640
00:34:55,680 --> 00:34:59,037
ideas are good ideas. Um I think it's
just a I think it's just a question of

641
00:34:59,120 --> 00:35:02,397
timing and execution. We we try really
hard to say, "Oh, this idea is stupid.

642
00:35:02,480 --> 00:35:05,837
This will never work." Right?
like we try really hard to never do that.

643
00:35:05,920 --> 00:35:09,917
Instead, we try to just say, "Okay, this
idea, if this is a smart enough person

644
00:35:10,000 --> 00:35:14,477
and they put enough work into it,
um then this idea is probably a good idea,

645
00:35:14,560 --> 00:35:17,597
it is likely to work at some point."
And then we just have a very specific

646
00:35:17,680 --> 00:35:20,557
question which is like, is this the right
person to bet on? Is now the right

647
00:35:20,640 --> 00:35:23,917
time to make the bet? And then and then
as as evidence of my strong view, I

648
00:35:24,000 --> 00:35:27,117
basically I basically say you can go
through the entire I think at this point

649
00:35:27,200 --> 00:35:31,517
catalog of all of the failed.com ideas
of the late 1990s and I believe they've

650
00:35:31,600 --> 00:35:35,517
now all worked. How do you assess
the judgment of founders? If you're not

651
00:35:35,600 --> 00:35:37,997
assessing the idea,
how do you assess the judgment?

652
00:35:38,080 --> 00:35:39,517
>> Yeah. So,
say there's two two categories

653
00:35:39,600 --> 00:35:42,317
of two categories of founders to two
two ways to do this. So, there's sort of,

654
00:35:42,400 --> 00:35:45,277
you know, there's sort of there's
the ones who've done it before, right? Um,

655
00:35:45,360 --> 00:35:48,237
and so the ones, you know, the ones
where this is their second or third or

656
00:35:48,320 --> 00:35:51,357
fourth time starting a company. Um,
you know, with them you have this just

657
00:35:51,440 --> 00:35:54,557
obviously enormous advantage which
is you can basically look at the work that

658
00:35:54,640 --> 00:35:56,637
they've done. You know, it's like
anybody else who's done, you know, who

659
00:35:56,720 --> 00:35:59,437
now has a track record. You can look at
the work that they've done. And again on

660
00:35:59,520 --> 00:36:02,157
this it's not that you're necessarily
looking for the track record of like the

661
00:36:02,240 --> 00:36:07,357
level of success per se, right? Although
you know as Nap was it Napoleon you'd

662
00:36:07,440 --> 00:36:10,797
rather you'd rather have a lucky general
than a smart general. So like you know

663
00:36:10,880 --> 00:36:13,757
somebody who's had a highly successful
company once right has has you know

664
00:36:13,840 --> 00:36:16,237
people has an enormous benefit of the
doubt when they walk in the door for for

665
00:36:16,320 --> 00:36:19,677
obvious reasons. Um but you know
but even people who haven't had a big

666
00:36:19,760 --> 00:36:23,437
success before it's like okay you can
look at kind of how they did the work

667
00:36:23,520 --> 00:36:26,397
right and so you can look at like you
know h you know how did they prosecute

668
00:36:26,480 --> 00:36:29,357
the opportunity you know the previous
time you know and you can talk to the

669
00:36:29,440 --> 00:36:32,077
people right who they worked with it's
like okay you know how were they under

670
00:36:32,160 --> 00:36:34,877
pressure how were they on in terms
of like inventiveness how were they in

671
00:36:34,960 --> 00:36:38,077
terms of you know you know persistence
you know how did how did they make the

672
00:36:38,160 --> 00:36:41,357
decision about when to give up right u
you know or when something just you know

673
00:36:41,440 --> 00:36:43,757
simply wasn't going to work and so forth
and so you you can kind of you know you

674
00:36:43,840 --> 00:36:46,557
can you can kind of learn from their
experience you know the harder one is

675
00:36:46,640 --> 00:36:49,037
somebody brand new, right? The harder
one is somebody shows up, you know,

676
00:36:49,120 --> 00:36:52,157
right out of college or something or,
you know, or or you know, these days,

677
00:36:52,240 --> 00:36:55,117
right, the ultimate golden credential
is they got admitted to a top end school

678
00:36:55,200 --> 00:36:59,997
and then dropped out after one day.
Um, right. [laughter] So, so um you know,

679
00:37:00,080 --> 00:37:02,877
it's sort of the kid, right? And of
course, you know, I say kid because I I

680
00:37:02,960 --> 00:37:05,437
you know, part I think of myself
because, you know, this was me at one

681
00:37:05,520 --> 00:37:09,037
point. And look, a lot of the real
breakthrough companies, the a lot of the

682
00:37:09,120 --> 00:37:12,477
big franchises, you know, Mark
Zuckerberg had not had a job before he

683
00:37:12,560 --> 00:37:16,077
started Facebook, right? like you know
the the Google guys came straight out of

684
00:37:16,160 --> 00:37:19,757
Stanford M you know Stanford the PhD
program and so forth and so on you know

685
00:37:19,840 --> 00:37:23,437
Bill Gates dropped out of college and um
and so you know a a lot of times these

686
00:37:23,520 --> 00:37:25,837
these big breakthrough companies are
people that you know they have no track

687
00:37:25,920 --> 00:37:28,477
record like their track record you know
you could ask for their high school to

688
00:37:28,560 --> 00:37:32,957
you know GPA or something but like there
there's no track record right and so

689
00:37:33,040 --> 00:37:36,877
there you're kind of you know evaluating
you know denovo and I think there what

690
00:37:36,960 --> 00:37:41,517
we do the the cliche is basically right
that it's you know some kid with some

691
00:37:41,600 --> 00:37:44,637
crazy idea and then some crazy VC goes
some money and you know some miracle

692
00:37:44,720 --> 00:37:48,077
happens and oh my god you know what
a weird you know non-reproducible thing or

693
00:37:48,160 --> 00:37:52,877
whatever. Um the reality is the kids
that make new things work from scratch

694
00:37:52,960 --> 00:37:56,557
it actually turns out that they actually
have been deep in the domain for a long

695
00:37:56,640 --> 00:37:59,837
time on almost every case they've been
thinking hard about the problem that

696
00:37:59,920 --> 00:38:04,637
they're trying to solve actually for
in a lot of cases for many years. Um and

697
00:38:04,720 --> 00:38:07,597
and and what that actually means you
know this is actually really kind of

698
00:38:07,680 --> 00:38:10,317
interesting and maybe software is kind
of this unique kind of area like this

699
00:38:10,400 --> 00:38:13,837
but you know as a consequence you like
in software you can have a 21-year-old

700
00:38:13,920 --> 00:38:18,077
who's basically been a professional level
programmer for 10 years right >> right

701
00:38:18,160 --> 00:38:21,197
>> because you know you can trace it back
and it's like well you we hear the story

702
00:38:21,280 --> 00:38:24,637
all the time it's like well the specific
story you hear all the time you know I

703
00:38:24,720 --> 00:38:29,037
really loved video games right um and so
therefore right when I was you know 11

704
00:38:29,120 --> 00:38:33,357
or 12 I you know learned how to code so
that I could figure out how to like make

705
00:38:33,440 --> 00:38:37,277
my own video games based on that.
I found it really interesting how, you

706
00:38:37,360 --> 00:38:41,517
know, for example, clans or tribes form
inside games. And so when I was in high

707
00:38:41,600 --> 00:38:44,797
school, I built this app that, you know,
did people matching for whatever World

708
00:38:44,880 --> 00:38:48,477
of Warcraft, you know, guilds
or whatever it is. Um, and then, you know,

709
00:38:48,560 --> 00:38:51,997
in college, I got a degree in computer
science and then I did this project

710
00:38:52,080 --> 00:38:56,077
which is to do this new kind of social
networking app. Um, and now I've been

711
00:38:56,160 --> 00:38:58,717
thinking about that and building that
for the last five years. And now here I

712
00:38:58,800 --> 00:39:01,837
am. And now you know after 10 years
of thinking about this now here's my new

713
00:39:01,920 --> 00:39:06,077
social networking idea right like
that this is not a rare thing and and

714
00:39:06,160 --> 00:39:08,637
literally they've been thinking about
this now for you know think about this

715
00:39:08,720 --> 00:39:11,917
specific thing for five years and the
general kind of pattern for category for

716
00:39:12,000 --> 00:39:15,357
like 10 years and of course you know
for things you know this of course is

717
00:39:15,440 --> 00:39:18,317
heavily biased towards domains in which
kids get to participate right and so

718
00:39:18,400 --> 00:39:21,517
that this is less true in you know
anything involving you know you know

719
00:39:21,600 --> 00:39:24,237
there's lots of areas you know there's
lots of areas of technology where you

720
00:39:24,320 --> 00:39:27,917
know 11 year olds are not working on it
but but there are areas increasingly

721
00:39:28,000 --> 00:39:32,637
where they Um and so and so basically
it's basically we call the idea mace. It's

722
00:39:32,720 --> 00:39:36,637
basically the backstory. Um it's what
have they done in the past to really

723
00:39:36,720 --> 00:39:39,997
kind of reason their way through
and and often and often you literally have

724
00:39:40,080 --> 00:39:41,997
people who have been like writing
prototypes and a lot of the time you

725
00:39:42,080 --> 00:39:45,197
actually people who have writing code at
that point right and then it's like okay

726
00:39:45,280 --> 00:39:48,077
now now you're dealing with somebody
where yes they're on the surface they're

727
00:39:48,160 --> 00:39:51,277
21 in reality they're already five or 10
years into the journey. Um and you're

728
00:39:51,360 --> 00:39:53,837
like okay now I get it. Now I have
somebody who's like a primal creative

729
00:39:53,920 --> 00:39:57,117
force who's actually like really thought
deeply about this. So it's a so so it's

730
00:39:57,200 --> 00:39:59,117
it's a it's a much
safer bet than it looks.

731
00:39:59,200 --> 00:40:03,197
>> Can you walk me through in detail
how you make those bets? Like what is the

732
00:40:03,280 --> 00:40:07,437
big capital allocation decision-making
process that you use at A16Z?

733
00:40:07,520 --> 00:40:10,077
>> So there's basically there's three
tiers. The way we operate is there's

734
00:40:10,160 --> 00:40:14,557
basically three tiers of bet um sort
of small, medium, large. And the small one

735
00:40:14,640 --> 00:40:16,637
is so-called, you know, seed funding.

736
00:40:16,720 --> 00:40:19,437
The medium one is soalled venture funding.
And then the large ones are

737
00:40:19,520 --> 00:40:24,957
growth funding. um you know the the seed
bets the small ones are you know two you

738
00:40:25,040 --> 00:40:28,717
know any I don't know anywhere two to5
million dollars on average um which you

739
00:40:28,800 --> 00:40:31,277
know is a lot of money absolutely
speaking but it's it's small in the

740
00:40:31,360 --> 00:40:34,557
context of you know the you know it's
small in the context of the global

741
00:40:34,640 --> 00:40:37,757
economy it's small in the context of
funding new businesses it's small in the

742
00:40:37,840 --> 00:40:39,677
context of our funds the the venture

743
00:40:39,760 --> 00:40:44,877
bets are much more serious the venture
bets are 10 plus uh million and then for

744
00:40:44,960 --> 00:40:47,357
the venture bets they're more serious
for us because that's when we get really

745
00:40:47,440 --> 00:40:50,077
involved in the companies like that's
when they form a board of directors

746
00:40:50,160 --> 00:40:52,797
and we have, you know, somebody who goes
on the board and we tend to really like

747
00:40:52,880 --> 00:40:55,677
work hard on the company. And so that
that's like a, you know, that's signing

748
00:40:55,760 --> 00:40:59,277
up from our standpoint to like a 10-year
journey with the company, including, you

749
00:40:59,360 --> 00:41:01,517
know, an obligation to put more money
in later rounds and so forth. So that

750
00:41:01,600 --> 00:41:05,437
that's a that's a more serious bet. It's
our sort of size 10 10 million and up.

751
00:41:05,520 --> 00:41:07,997
Um, and then the growth bets are
for companies that have kind of, you know,

752
00:41:08,080 --> 00:41:10,077
they kind of hit their stride and they
have a business that's working and

753
00:41:10,160 --> 00:41:12,957
they're growing and so it's like
expansion capital. So, you know, it's a

754
00:41:13,040 --> 00:41:15,517
different thing and and you know,
the check size there is sort of 50 and up

755
00:41:15,600 --> 00:41:18,957
and then, you know, on the high
side it's 100 or 200 or 300.

756
00:41:19,040 --> 00:41:21,197
million. So, you know, the amounts
of money get large, but at that point,

757
00:41:21,280 --> 00:41:23,517
you've got a business that's working
and you're you're trying to figure out how

758
00:41:23,600 --> 00:41:28,637
to scale it to, you know, to to kind
of to be a global global champion. Um, and

759
00:41:28,720 --> 00:41:30,557
then there's just there's there's
there's different criter, you know,

760
00:41:30,640 --> 00:41:32,797
there's sort of similarities of the three,
you know, we're trying to it's

761
00:41:32,880 --> 00:41:35,597
the same we're trying to back the same
kind of founders and the same kind of

762
00:41:35,680 --> 00:41:37,597
businesses across the three categories.

763
00:41:37,680 --> 00:41:40,637
Um, but, you know, there it's very
different decision-making process, very

764
00:41:40,720 --> 00:41:44,637
different criteria depending on the stage.
Um, on the seed side, it's almost

765
00:41:44,720 --> 00:41:47,917
100% a bet on the people. you know,
it's a little bit on the idea, but it's

766
00:41:48,000 --> 00:41:51,197
mostly the people and it's and basically
the way you evaluate the idea at that

767
00:41:51,280 --> 00:41:54,317
point is like you're basically
evaluating the idea as a lens to

768
00:41:54,400 --> 00:41:57,917
evaluate the people, right? So, it's like,
you know, it's like it's like it's

769
00:41:58,000 --> 00:41:59,997
like I was talking about like
the 21-year-old comes in with this like

770
00:42:00,080 --> 00:42:02,477
crazy idea, something they've been
thinking about working on. They have a

771
00:42:02,560 --> 00:42:05,437
college project or something and they
want to start a company. Um, and it's

772
00:42:05,520 --> 00:42:07,757
like you're you're evaluating the idea,
but really what you're doing is it's

773
00:42:07,840 --> 00:42:11,517
like, okay, is this person capable
of doing this kind of thing? and then

774
00:42:11,600 --> 00:42:14,157
you're evaluating the idea and the work
they've done so far to kind of just draw

775
00:42:14,240 --> 00:42:17,997
a beat on how good the person is as
opposed to saying oh you know we've been

776
00:42:18,080 --> 00:42:21,917
waiting to back this idea at the venture
stage there's the people component but

777
00:42:22,000 --> 00:42:24,797
there's also this other really important
thing which is you have to have some

778
00:42:24,880 --> 00:42:27,997
reason to believe that this thing is going
to be the one that wins um because

779
00:42:28,080 --> 00:42:30,637
we we sort of take on this sort
of formal conflict at that point we get

780
00:42:30,720 --> 00:42:33,197
very involved in these companies
and we you know we can't invest in in

781
00:42:33,280 --> 00:42:36,557
competitors after that in that category
and so then there's this thing of like

782
00:42:36,640 --> 00:42:40,157
okay out of all of the different teams
both current teams and future teams that

783
00:42:40,240 --> 00:42:43,437
might pursue this idea um you know,
is this really the one that

784
00:42:43,520 --> 00:42:47,757
has the best chance of going all the way
to victory? Um and so that's you know,

785
00:42:47,840 --> 00:42:50,797
trying to kind of dig in harder kind
of competitive advantage and and you know,

786
00:42:50,880 --> 00:42:54,317
capabilities at a deeper level. And then
at the growth side, it's a that you

787
00:42:54,400 --> 00:42:58,557
know, that's more of a of a of a of a
business analysis. The growth side is

788
00:42:58,640 --> 00:43:02,877
where you start get to start to make
the decisions based on numbers. Um, right.

789
00:43:02,960 --> 00:43:06,397
Um, and so you start to get to evaluate,
you know, revenue growth and and market

790
00:43:06,480 --> 00:43:10,237
size and, you know, profit margins
and and uh, you know, then and then by the

791
00:43:10,320 --> 00:43:12,717
way, but but also you're still
evaluating the people, you're still

792
00:43:12,800 --> 00:43:15,437
evaluating the idea, right? And then
you, by the way, at the growth stage,

793
00:43:15,520 --> 00:43:18,157
you're also still looking for new ideas,
right? Where you're you're looking for

794
00:43:18,240 --> 00:43:22,157
existing businesses that also have new
growth opportunities inside them. Um,

795
00:43:22,240 --> 00:43:26,157
and so you're looking for basically,
you know, does is this person so good that

796
00:43:26,240 --> 00:43:30,317
they have additional kind of venture
quality ideas that they haven't even

797
00:43:30,400 --> 00:43:33,197
gotten to yet? And so, you know,
the best case scenario is you make this

798
00:43:33,280 --> 00:43:35,997
investment in a company that's doing
X and then over the course of the next

799
00:43:36,080 --> 00:43:39,997
five or 10 years, they also do Y and Z
and A and B and C and they just keep

800
00:43:40,080 --> 00:43:42,797
layering in all these new things and then
you get this kind of multiplicative

801
00:43:42,880 --> 00:43:44,637
effect. >> Is there a challenge function

802
00:43:44,720 --> 00:43:47,437
internally? Like how do you decide in in

803
00:43:47,520 --> 00:43:50,797
terms of making the actual decision?

804
00:43:50,880 --> 00:43:54,957
>> Yeah. So, there's there's a there are
if you kind of pull top- end venture firms

805
00:43:55,040 --> 00:43:58,797
on this, you'll get actually every
possible answer. Um and so there there

806
00:43:58,880 --> 00:44:02,797
are some firms that run on a a unanimous
vote model um where they they literally

807
00:44:02,880 --> 00:44:05,037
need unonymity. Um you know there are

808
00:44:05,120 --> 00:44:09,997
other firms that have a um you know they
have a majority thing um or they need a

809
00:44:10,080 --> 00:44:12,957
certain number of people to get critical
mass. There are some firms that run a

810
00:44:13,040 --> 00:44:16,157
top down so-called investment committee
where you you know young the younger

811
00:44:16,240 --> 00:44:19,117
partners in the firm get to propose
ideas and then there's sort of a council

812
00:44:19,200 --> 00:44:23,117
of elders you know that either you know
does the does the glad gladiator wine

813
00:44:23,200 --> 00:44:24,717
phoenix thing you know thumb thumbs up

814
00:44:24,800 --> 00:44:28,157
or thumbs down. We have optimized very

815
00:44:28,240 --> 00:44:31,917
strongly towards what we consider to be
kind of the most aggressive and most you

816
00:44:32,000 --> 00:44:35,357
know you might say contrarian model.
So our model is what what we call single

817
00:44:35,440 --> 00:44:39,517
trigger puller. There's no vote. There's
no investment committee. There's no

818
00:44:39,600 --> 00:44:43,677
override. There's no like I don't you
know I formally sign off on you know Ben

819
00:44:43,760 --> 00:44:46,717
and I formally sign off on all
the investments but like I don't I don't

820
00:44:46,800 --> 00:44:50,237
like evaluate the investment proposal
and then basically do thumbs up thumbs

821
00:44:50,320 --> 00:44:53,997
down. Like that's not like I don't
do that at all. Um, instead what we do

822
00:44:54,080 --> 00:44:57,517
basically is we basically we basically
delegate budgets like so the the

823
00:44:57,600 --> 00:45:00,717
governance mechanism is is budgetary.
So we basically we raise a fund we have a

824
00:45:00,800 --> 00:45:01,917
certain number of investment partners.

825
00:45:02,000 --> 00:45:05,197
We we delegate the budget down to those
partners and then basically if you're a

826
00:45:05,280 --> 00:45:09,597
partner at our firm um within your budget
envelope you could make whatever

827
00:45:09,680 --> 00:45:12,797
investments you want. There are
expectations around how you're going to

828
00:45:12,880 --> 00:45:15,757
do that right and so there's
an expectation you're going to do the work

829
00:45:15,840 --> 00:45:18,637
right by which it's going to be like
you're going to go in like really deep.

830
00:45:18,720 --> 00:45:20,317
You're going to like you know talk
to all the people. You're going to really

831
00:45:20,400 --> 00:45:23,597
investigate everything. We don't mind an
investment that doesn't work. What we do

832
00:45:23,680 --> 00:45:27,117
mind is like we're we're in the wrong
one and the right one was out there.

833
00:45:27,200 --> 00:45:30,077
Like the winner in the category was out
there and we didn't even know about it.

834
00:45:30,160 --> 00:45:33,277
Like that that that in our firm is like
a big problem. And so you're expected to

835
00:45:33,360 --> 00:45:35,757
do the work and we you know we have we
have you know we have a whole kind of

836
00:45:35,840 --> 00:45:38,877
system for that. Um and then there you
know there is you're expected to like

837
00:45:38,960 --> 00:45:41,197
you have to communicate. Everybody has
to know what you're doing. There's no

838
00:45:41,280 --> 00:45:44,237
secret deals. Um, you have to, you know,
and you have to be willing to kind of

839
00:45:44,320 --> 00:45:47,117
describe it and you have to, you know,
be willing to kind of deal with, you

840
00:45:47,200 --> 00:45:49,517
know, we weigh, you know, everybody
weighs in on everybody else's things and

841
00:45:49,600 --> 00:45:52,717
so you have to be willing to kind of have
the conversation, you know, because

842
00:45:52,800 --> 00:45:55,757
you know that you get to make
the decision. You know, you are hopefully

843
00:45:55,840 --> 00:45:59,677
less defensive than you would normally
be when other people say things like,

844
00:45:59,760 --> 00:46:02,637
"This is really stupid. Why are you
doing it?" You know that the peer

845
00:46:02,720 --> 00:46:05,677
pressure basically doesn't turn into an
actual explicit veto. Like you can still

846
00:46:05,760 --> 00:46:08,237
do the deal and you know that you're at
a firm that really prizes that and wants

847
00:46:08,320 --> 00:46:10,477
wants us to do do investments like that.

848
00:46:10,560 --> 00:46:13,997
Um and so but but you know you do have
to you have to be willing to like sit in

849
00:46:14,080 --> 00:46:16,157
a room and describe what it is and you
have to be willing to like listen to

850
00:46:16,240 --> 00:46:19,357
people you know crap on it right without

851
00:46:19,440 --> 00:46:23,197
getting dissuaded. Um and then you know
there there is this thing this conflict

852
00:46:23,280 --> 00:46:26,717
thing right which is it's a big deal
for us internally which is is probably our

853
00:46:26,800 --> 00:46:29,597
biggest limiter our ability to do
business as we take on these conflicts.

854
00:46:29,680 --> 00:46:33,837
So, you know, the stickiest conversation
we'll have internally usually is like,

855
00:46:33,920 --> 00:46:37,757
boy, like it would be like between
teams, right? It's like, okay, if one

856
00:46:37,840 --> 00:46:41,277
team does or if one partner does this
investment, then it conflicts the entire

857
00:46:41,360 --> 00:46:43,437
firm out of the category going forward.

858
00:46:43,520 --> 00:46:47,357
Um, and so, you know, you can imagine
pretty vigorous arguments and debates

859
00:46:47,440 --> 00:46:51,117
around that. But the result of that is
basically it's like I think we're way

860
00:46:51,200 --> 00:46:53,997
out on the edge of being able to be,
you know, sort of creative in the

861
00:46:54,080 --> 00:46:57,357
investments. Um, we're able to back
the entrepreneurs that color outside the

862
00:46:57,440 --> 00:47:00,317
lines, right? that that basically come
in with ideas that sort of, you know,

863
00:47:00,400 --> 00:47:03,997
break the existing paradigm, you know,
that there's no precedent for, you know,

864
00:47:04,080 --> 00:47:07,277
that just where where at a more
structured or formal, you know, firm, it

865
00:47:07,360 --> 00:47:10,557
might be like, well, I don't even know
what box this goes in, right? Like it's

866
00:47:10,640 --> 00:47:14,077
just this is so weird and like offbeat,
like what how do we even classify this?

867
00:47:14,160 --> 00:47:16,797
And then, you know, if we have
to explain this to the council of elders,

868
00:47:16,880 --> 00:47:19,917
how are they going to ever understand it?
Right? And in our firm, it's like we

869
00:47:20,000 --> 00:47:22,957
can we can make all those bets and and
and the history of of venture and new

870
00:47:23,040 --> 00:47:25,837
technology is those are often the most
successful bets. So, that that's why we

871
00:47:25,920 --> 00:47:29,997
we've optimized that way. And you
also get speed. It sounds like a lot of

872
00:47:30,080 --> 00:47:32,717
velocity with how fast
you can make decisions.

873
00:47:32,800 --> 00:47:34,077
>> Yeah, we have a partner.
I won't I won't

874
00:47:34,160 --> 00:47:37,197
name names, but we have a partner where
he was in the he was in he was in the

875
00:47:37,280 --> 00:47:41,437
west coast office. Um it was in the Palo
Alto office of an East Coast firm. Um a

876
00:47:41,520 --> 00:47:43,597
firm that had historically grown up
in the East Coast, very successful

877
00:47:43,680 --> 00:47:47,677
investment firm. Um but you know,
he would have to fly to New York and

878
00:47:47,760 --> 00:47:50,957
present all of his investment ideas
to a group of five senior partners in New

879
00:47:51,040 --> 00:47:54,397
York. And and by the way, the five
senior partners in New York, incredibly

880
00:47:54,480 --> 00:47:58,077
like established, you know, legendary
investors like with incredible track

881
00:47:58,160 --> 00:48:01,677
records with like absolute moral
authority to be able to, you know, make

882
00:48:01,760 --> 00:48:05,197
such judgments. The problem, exactly
to your point, the problem is, yeah, speed

883
00:48:05,280 --> 00:48:09,517
and then just like, you know, this stuff
changes, right? Um, you know, the scar

884
00:48:09,600 --> 00:48:12,557
tissue thing, um, the scar tissue thing,
there's a specific form of the scar

885
00:48:12,640 --> 00:48:16,317
tissue thing that we see a lot. I I call
this sort of the the is it's like the

886
00:48:16,400 --> 00:48:19,837
idea event horizon or something which
is there there's a point a lot of people

887
00:48:19,920 --> 00:48:23,277
reach where they're just done with new
ideas. It's like the general version of

888
00:48:23,360 --> 00:48:26,317
the problem. It's just like okay like I

889
00:48:26,400 --> 00:48:28,797
got through the PC, I got through the

890
00:48:28,880 --> 00:48:31,437
internet. Um I got Facebook. All right,

891
00:48:31,520 --> 00:48:37,437
I got okay food delivery works
but like Tik Tok like really

892
00:48:37,520 --> 00:48:39,997
>> too much. Yeah, >> it's just
too much. is just like, okay,

893
00:48:40,080 --> 00:48:43,517
this is just at this point the world is
getting ridiculous and like I don't want

894
00:48:43,600 --> 00:48:46,877
to process this anymore. And like almost

895
00:48:46,960 --> 00:48:48,877
everybody hits that point at some point.

896
00:48:48,960 --> 00:48:53,357
Um and and so I I just think like
the the the the let's see, yeah, I I just

897
00:48:53,440 --> 00:48:56,717
think that the bad way to do venture um
is to have people who have reached that

898
00:48:56,800 --> 00:48:59,437
point doing sign off on the decisions
and and I hope Ben and I have not

899
00:48:59,520 --> 00:49:02,237
reached that point, but even if we do
reach that point at some point, we want

900
00:49:02,320 --> 00:49:04,637
the firm to continue to be able to make
the good investments. What have you

901
00:49:04,720 --> 00:49:08,877
learned over the years about making
exceptional decisions that most people

902
00:49:08,960 --> 00:49:11,277
miss? >> So quite honestly,
I think I think a lot

903
00:49:11,360 --> 00:49:15,037
of it is embracing the the probabilistic
nature of the domain. You know, a lot of

904
00:49:15,120 --> 00:49:17,997
these questions like venture teaches
you they're very direct versions of these

905
00:49:18,080 --> 00:49:21,677
lessons because it you know what is it
that the old submariner slogan is stupid

906
00:49:21,760 --> 00:49:24,797
will be punished. when when you pass
on enough companies that turn out to be

907
00:49:24,880 --> 00:49:27,837
these giant, you know, kind of global,
you know, kind of behemoths, you know,

908
00:49:27,920 --> 00:49:31,117
at some point you're just like, okay,
like obviously I'm not I'm not a super

909
00:49:31,200 --> 00:49:35,117
like I have to have some level
of epistic humility here because I'm not

910
00:49:35,200 --> 00:49:37,917
making all these decisions properly.
And and again, the nature of the domain is

911
00:49:38,000 --> 00:49:40,797
I'm not going to make all the decisions
properly. Like what what each of the top

912
00:49:40,880 --> 00:49:44,237
venture capital capitalists of all time
has in common is they they all each of

913
00:49:44,320 --> 00:49:47,597
them missed almost all of the great
deals of their generation. The the bad

914
00:49:47,680 --> 00:49:51,277
news is you're going to like make all
these mistakes. The the good news is you

915
00:49:51,360 --> 00:49:54,797
don't have to score 100% and and not
having to score 100% basically means you

916
00:49:54,880 --> 00:49:57,997
can take chances, right? And and
and and specifically the way that you

917
00:49:58,080 --> 00:50:00,877
instrumentalize that is it's basically
and this we talk about this a lot inside

918
00:50:00,960 --> 00:50:05,517
the firm is success or failure is not
at the unit of an individual investment,

919
00:50:05,600 --> 00:50:10,157
right? Success or failure is at the
level of a portfolio, right? And so um

920
00:50:10,240 --> 00:50:13,117
and and and we basically see these
portfolio effects everywhere in the

921
00:50:13,200 --> 00:50:16,077
business. So we see the portfolio
effect happens at the level of individ

922
00:50:16,160 --> 00:50:19,837
individual partner. It happens at the
level of a fund. It happens at the level

923
00:50:19,920 --> 00:50:22,957
of what we call a strategy which is like
a basket of investments, you know, in in

924
00:50:23,040 --> 00:50:26,317
the same theme, right? So, let's say
we're we're at our firm and we decide,

925
00:50:26,400 --> 00:50:28,717
well, I'll give you an example. We have
this big gaming push right now, right?

926
00:50:28,800 --> 00:50:31,357
Um, as we just brought up this this new
gaming partner we're very proud of and

927
00:50:31,440 --> 00:50:34,317
we got this big gaming push and we've
been you kind of investing in gaming now

928
00:50:34,400 --> 00:50:37,117
for a while and it's like, okay, so we
want to go out and make whatever, you

929
00:50:37,200 --> 00:50:39,677
know, we want to go out and make whatever,
you know, bets in in new game

930
00:50:39,760 --> 00:50:42,797
companies. And so we we we literally
have a strategy to like back new game

931
00:50:42,880 --> 00:50:45,997
studios, new new new game new new game
companies. And like we go out and we

932
00:50:46,080 --> 00:50:49,517
invest not in one of them, but we invest
in 10 of them, right? And you know, in

933
00:50:49,600 --> 00:50:50,877
making different kinds of games, right?

934
00:50:50,960 --> 00:50:53,997
You know, different different kinds
of approaches. Um and then we're going to

935
00:50:54,080 --> 00:50:57,357
evaluate the success of that program
not based on any of those individual

936
00:50:57,440 --> 00:51:00,637
investments, but based on that, you know,
the basket as a whole. And so when

937
00:51:00,720 --> 00:51:03,117
you liberate yourself away from I have

938
00:51:03,200 --> 00:51:05,517
to get this decision right to I have to

939
00:51:05,600 --> 00:51:08,157
execute a strategy that is going to

940
00:51:08,240 --> 00:51:10,957
result in a series of 10 bets um and

941
00:51:11,040 --> 00:51:15,197
then I'm going to be evaluated not
by you know any individual one and by the

942
00:51:15,280 --> 00:51:18,557
way I'm not even going to get evaluated
by the average outcome right I'm going

943
00:51:18,640 --> 00:51:20,237
to get evaluated by the total

944
00:51:20,320 --> 00:51:23,117
performance of the basket um and if one

945
00:51:23,200 --> 00:51:28,717
of those bets um accounts for 99% of the
profit of the basket that is a perfectly

946
00:51:28,800 --> 00:51:32,877
fine outcome Right? We see this a lot.
We do performance reviews, right? We do

947
00:51:32,960 --> 00:51:36,317
performance reviews. And so it's like,
okay, we we do performance reviews of a

948
00:51:36,400 --> 00:51:38,957
of an investment partner here. And it's
like, well, they've made 10 investments

949
00:51:39,040 --> 00:51:42,157
and, you know, one of them is this this
just this huge success and the other

950
00:51:42,240 --> 00:51:44,077
nine are like, you know, sucking wind.

951
00:51:44,160 --> 00:51:46,637
And it's like, okay, is this a good
venture capitalist or a bad venture

952
00:51:46,720 --> 00:51:49,997
capitalist? And it's like, well,
you know, in any domain that's not

953
00:51:50,080 --> 00:51:52,557
probabilistic, you say, this person
is terrible, right? You know, it's batting

954
00:51:52,640 --> 00:51:55,037
average of like a hundred, you know, out
of a thousand, it's like, this person's

955
00:51:55,120 --> 00:51:58,077
awful. Um, and and there's always
a temptation to say, well, this one thing

956
00:51:58,160 --> 00:52:00,637
that's working is it's like it's a fluke,
right? And so, who knows whether

957
00:52:00,720 --> 00:52:03,437
they'll ever get it again. And it's
at that point where I put my head up and I

958
00:52:03,520 --> 00:52:04,957
say, we're in the fluke business, right?

959
00:52:05,040 --> 00:52:08,637
Like the whole point of this is to get
the flukes. Um, and so, of course, that

960
00:52:08,720 --> 00:52:12,157
person should get full credit for the
fluke, right? And in fact, I hope they

961
00:52:12,240 --> 00:52:15,517
go make 10 more investments and get
another fluke. And so, anyway, it's it's

962
00:52:15,600 --> 00:52:18,797
basically like it's getting into
a domain in which you can basically make

963
00:52:18,880 --> 00:52:21,917
those risky bets in a way where you know
that you're not going to lose everything

964
00:52:22,000 --> 00:52:25,197
if you don't score 100%. Um and you know

965
00:52:25,280 --> 00:52:29,277
and look like you know like not all
domains are like this like you know the

966
00:52:29,360 --> 00:52:32,557
person running a nuclear power plant
doesn't get to live in this world right

967
00:52:32,640 --> 00:52:37,757
um but you know put it this way anybody
doing anything creative right does live

968
00:52:37,840 --> 00:52:41,037
in this world um and I you know I think
that the creative artists of all kinds

969
00:52:41,120 --> 00:52:43,997
you know basically live in this world
and and and the really good ones are are

970
00:52:44,080 --> 00:52:46,957
unafraid to take the bets you know
because of because because they know

971
00:52:47,040 --> 00:52:49,357
that this is the domain they operate in.

972
00:52:49,440 --> 00:52:52,957
We sort of talked about the the
probabilistic thinking in terms of the

973
00:52:53,040 --> 00:52:55,357
magnitude and test taking as it relates

974
00:52:55,440 --> 00:52:59,997
to the education system. To me,
I mean, from the outside looking in, the

975
00:53:00,080 --> 00:53:04,557
education system seems a bit
dysfunctional. Uh, you're a parent. What

976
00:53:04,640 --> 00:53:08,237
do you think is wrong with it? And how
do you go about navigating it? And what

977
00:53:08,320 --> 00:53:11,997
can we do to fix it? >> So,
it's completely unfixable. So, so

978
00:53:12,080 --> 00:53:15,037
it's it's it's it's like none of the
specific point things people are worried

979
00:53:15,120 --> 00:53:18,557
about are fixable because the whole
thing is built in a certain way. Uh so

980
00:53:18,640 --> 00:53:21,837
it it goes back to this this it goes
back to this historical thing we started

981
00:53:21,920 --> 00:53:26,237
with which is it's it's a it's a mass
education system right so it's a mass

982
00:53:26,320 --> 00:53:30,157
education system that was created in a
time and place um and it was created in

983
00:53:30,240 --> 00:53:32,157
a time and place and you know you
probably know the history of this it was

984
00:53:32,240 --> 00:53:35,197
created in a time and place you know
roughly 100 years ago 110 years ago and

985
00:53:35,280 --> 00:53:37,677
there were a set of you know
theoreticians and with names like you

986
00:53:37,760 --> 00:53:42,157
know John Dwey um and they you know
developed a you know a system and and at

987
00:53:42,240 --> 00:53:45,677
the time by the way at the time it was
like a huge advance right because it was

988
00:53:45,760 --> 00:53:47,917
like we were going from
like a nation of farmers

989
00:53:48,000 --> 00:53:50,957
right into this into you know this sort
of second industrial revolution and into

990
00:53:51,040 --> 00:53:54,317
the 20th century you know most kids
didn't have much education in the 19th

991
00:53:54,400 --> 00:53:58,157
century and you know um you know grew up
in farms or whatever and like they they

992
00:53:58,240 --> 00:54:01,677
knew the theoreticians the experts knew
like we need a system to educate all the

993
00:54:01,760 --> 00:54:05,677
kids um and then and then they built
a system the way that you built systems

994
00:54:05,760 --> 00:54:09,757
you know the way you built systems
in 1910 or 1920 um which is you built a

995
00:54:09,840 --> 00:54:13,277
mass manufacturing system right so you
you took all of the same methodologies

996
00:54:13,360 --> 00:54:17,197
that were being used to make the factory
for model T cars and all the same

997
00:54:17,280 --> 00:54:20,317
methodologies that were being used to do
you know radio you know RCA was doing to

998
00:54:20,400 --> 00:54:23,997
do radio broadcasting to the masses and
that the you know that General Motors or

999
00:54:24,080 --> 00:54:26,397
you know General Electric was using
to kind of you know build out the

1000
00:54:26,480 --> 00:54:29,357
electrical grid for the country you know
these these it's a mass system you built

1001
00:54:29,440 --> 00:54:34,077
mass a mass education system um and and
you built it like a factory right um and

1002
00:54:34,160 --> 00:54:37,197
and that made sense because number one
that let you get to massive scale that

1003
00:54:37,280 --> 00:54:40,557
solved the problem they had at that point
um but but the other thing was you

1004
00:54:40,640 --> 00:54:43,437
knew that you were training kids
fundamentally for the industrial economy

1005
00:54:43,520 --> 00:54:45,997
right and so you were training kids
at some fundamental level to work in

1006
00:54:46,080 --> 00:54:49,677
factories right?
Or or by the way to work in

1007
00:54:49,760 --> 00:54:53,117
offices and of course the offices
in those days were also factories, right?

1008
00:54:53,200 --> 00:54:56,557
They were factories for knowledge work,
right? Um and so if you know know the

1009
00:54:56,640 --> 00:54:58,957
history of mass manufacturing,
there were all these ideas like time and

1010
00:54:59,040 --> 00:55:02,397
motion studies and all these guys like
was it Turner u you know who had these

1011
00:55:02,480 --> 00:55:04,717
you know who optimized mass
manufacturing and basically all of the

1012
00:55:04,800 --> 00:55:07,517
leading intellectuals of that era
basically said we use that that same

1013
00:55:07,600 --> 00:55:10,237
battery of techniques we use for mass
manufacturing we're also going to use

1014
00:55:10,320 --> 00:55:14,077
for mass media or we're else we' use
for mass education. Um, and so these are,

1015
00:55:14,160 --> 00:55:17,517
you know, these are factories to these
are schools are factories to stamp out

1016
00:55:17,600 --> 00:55:21,117
kids who are optimized to work in either,
you know, if they're blueco

1017
00:55:21,200 --> 00:55:24,397
collar to work in a literal factory
or if they're white collar to look to work

1018
00:55:24,480 --> 00:55:27,437
at General Motors or General Electric in
the, you know, in a conference room, you

1019
00:55:27,520 --> 00:55:31,277
know, in a in a in a giant hierarchy,
you know, to to be an organization man.

1020
00:55:31,360 --> 00:55:35,677
Um, and so we built that system and then
we set it on autopilot. Um, and it's

1021
00:55:35,760 --> 00:55:39,277
been on autopilot for hundred years and
here we are and it doesn't fit at all to

1022
00:55:39,360 --> 00:55:42,317
the world we live in today. Like not
even a little bit. And then of course it

1023
00:55:42,400 --> 00:55:46,237
it it it has you know it has suffered
the fate of every institution that sort

1024
00:55:46,320 --> 00:55:49,517
of goes across multiple generations
which is it has been taken over by a set

1025
00:55:49,600 --> 00:55:52,717
of people right incentives right it has
been taken over by a set of people who

1026
00:55:52,800 --> 00:55:56,477
have absolutely no intention to change
it right 100% they're not going to

1027
00:55:56,560 --> 00:56:01,037
change it like the people who run
this system 100% of their power and status

1028
00:56:01,120 --> 00:56:03,677
and authority in the world and their
income and everything else and their

1029
00:56:03,760 --> 00:56:07,677
lifestyle it's 100% you know bought
and paid for by this legacy system and of

1030
00:56:07,760 --> 00:56:08,637
course they're not going to change it.

1031
00:56:08,720 --> 00:56:12,637
Um, and so it's not I'll tell you one
thing I don't believe in is reform. Like

1032
00:56:12,720 --> 00:56:16,077
I have all these friends that work on
like, you know, school reform. God bless

1033
00:56:16,160 --> 00:56:18,717
them. Like they're just the wonder most
wonderful, sweetest, well-intentioned

1034
00:56:18,800 --> 00:56:21,757
people in the world and they're just
burning huge amounts of money at time on

1035
00:56:21,840 --> 00:56:24,157
trying to reform the system that has
absolutely no intention of being

1036
00:56:24,240 --> 00:56:27,117
reformed and and they're they're having
no impact whatsoever. Like it's not

1037
00:56:27,200 --> 00:56:29,517
working at all. >> Of course,
like we have a biological

1038
00:56:29,600 --> 00:56:33,517
tendency sort of to defend our territory,
right? So it it would be it

1039
00:56:33,600 --> 00:56:37,277
would be hard especially with the
organized unions and all of this other

1040
00:56:37,360 --> 00:56:40,397
stuff that's involved with the
education system to reform it.

1041
00:56:40,480 --> 00:56:44,237
>> Well, it's like the tip off the tip
off if they just you know step back and

1042
00:56:44,320 --> 00:56:46,557
think about it for a second. Like you
could be pro- union or anti-UN. You have

1043
00:56:46,640 --> 00:56:48,797
whatever people have whatever views
and unions they want organized labor, you

1044
00:56:48,880 --> 00:56:51,437
know, big debate for a long time.
You can have whatever views you want. But

1045
00:56:51,520 --> 00:56:55,197
the idea of a unions the idea of unions

1046
00:56:55,280 --> 00:56:57,677
of public sector employees,

1047
00:56:57,760 --> 00:57:02,237
right? Like, so you now have
people, you have a double

1048
00:57:02,320 --> 00:57:06,477
layer of civil service
protections and union protections,

1049
00:57:06,560 --> 00:57:10,637
right? And you're going to reform
that system. Like, no, you're not like

1050
00:57:10,720 --> 00:57:12,957
they're going to take your money,
laugh at you, and like nothing is going to

1051
00:57:13,040 --> 00:57:17,437
happen. And so, yeah, there there is no
on this. There is no fix. There is only

1052
00:57:17,520 --> 00:57:19,037
one thing to do in my my opinion.

1053
00:57:19,120 --> 00:57:21,997
There's only one thing to do, right,
which is to build the new system, right?

1054
00:57:22,080 --> 00:57:24,877
And the new system has to get built
from scratch. It has to get built the hard

1055
00:57:24,960 --> 00:57:29,277
way, right? um it will probably not look
right or sound or smell like you know

1056
00:57:29,360 --> 00:57:31,757
these it probably you know the new
system will probably not be a giant

1057
00:57:31,840 --> 00:57:35,197
hierarchy it'll probably be something
else >> right it'll look like synthesis or

1058
00:57:35,280 --> 00:57:37,277
something like that >> yeah
it'll be or it'll be like it'll be

1059
00:57:37,360 --> 00:57:40,637
distributed you know it'll be uh you
know like this I'm just going to I'll

1060
00:57:40,720 --> 00:57:44,397
paint a vague picture of what it might
be but it might be you know look the

1061
00:57:44,480 --> 00:57:47,037
country clearly right now and I'm
actually we're actually living this with

1062
00:57:47,120 --> 00:57:49,277
our six-year-old right now like there

1063
00:57:49,360 --> 00:57:51,917
needs to be like a homeschooled network

1064
00:57:52,000 --> 00:57:54,157
right there needs to be a whole like

1065
00:57:54,240 --> 00:57:56,637
support structure right? And network um

1066
00:57:56,720 --> 00:57:59,117
and knowledge flow and expertise flow

1067
00:57:59,200 --> 00:58:02,877
and talent hiring pipeline, right? And

1068
00:58:02,960 --> 00:58:05,277
you know, quality standards and and

1069
00:58:05,360 --> 00:58:10,237
resources and activities, right? For for
homeschool kids, right? And and for the

1070
00:58:10,320 --> 00:58:12,637
for these like micro schools that are
popping up all over the place, right?

1071
00:58:12,720 --> 00:58:15,517
And and you know, and by the way, like
now is a perfect time to do that, right?

1072
00:58:15,600 --> 00:58:18,237
Because then the postcoid, you know,
all the changes you're well aware of, but

1073
00:58:18,320 --> 00:58:21,277
like you know, there's this massive
spike in homeschooling. um there's this

1074
00:58:21,360 --> 00:58:24,077
massive spike in parents who are very
unsatisfied with with formal you know

1075
00:58:24,160 --> 00:58:29,197
all are sort of say newly unsatisfied
with the the the legacy model um and so

1076
00:58:29,280 --> 00:58:32,077
now is obviously the right time for this
and look there are lots of example there

1077
00:58:32,160 --> 00:58:34,957
are lots of people working on this and
there are lots of early examples of this

1078
00:58:35,040 --> 00:58:37,197
and so I hope something really takes here

1079
00:58:37,280 --> 00:58:38,957
>> it's also interesting
when you look from

1080
00:58:39,040 --> 00:58:42,957
the outside in that there's sort of like
no individual to blame right like I feel

1081
00:58:43,040 --> 00:58:47,277
for the teachers in the classroom I feel
for the principles I feel for everybody

1082
00:58:47,360 --> 00:58:51,597
involved in the system but the
end outcome is just terrible.

1083
00:58:51,680 --> 00:58:55,437
>> Yeah. Charlie Mer has this great thing
I really like which he says look if if you

1084
00:58:55,520 --> 00:58:58,477
often in the world this is a great
example you often have a system and the

1085
00:58:58,560 --> 00:59:02,637
system has incentives and this and the
incentives result in terrible behavior

1086
00:59:02,720 --> 00:59:05,757
and then you have a choice which is do
you blame the people who are exhibiting

1087
00:59:05,840 --> 00:59:09,677
the terrible behavior or do you blame
the people who created the incentives

1088
00:59:09,760 --> 00:59:13,037
right and and and he he believes and I
agree on this I I think 100% you blame

1089
00:59:13,120 --> 00:59:15,437
the people who create the incentives
right I think I think you're right like

1090
00:59:15,520 --> 00:59:17,917
I I think when you take human beings and
you put them in a system where they have

1091
00:59:18,000 --> 00:59:21,117
bad incentives and you get bad results
like at at some level it's not their

1092
00:59:21,200 --> 00:59:23,997
fault you know, you could say maybe they
should resign a principle or something

1093
00:59:24,080 --> 00:59:26,477
like that, but like most people need
to live their lives and they need to like,

1094
00:59:26,560 --> 00:59:29,197
you know, put food on the table for
their families and so forth. And so like

1095
00:59:29,280 --> 00:59:32,877
I just don't have expectations
of like mass revolt um against people's

1096
00:59:32,960 --> 00:59:36,157
self-interest. Um and so yeah, no, I I
totally agree with that and so therefore

1097
00:59:36,240 --> 00:59:39,197
I think you have to look at incentives
um and then you have to look at the

1098
00:59:39,280 --> 00:59:42,717
people who are putting the incentives
in place um and you and you have to judge

1099
00:59:42,800 --> 00:59:46,237
them and and and that's the that's the
thing with this thing is like the people

1100
00:59:46,320 --> 00:59:50,077
who put these incentives in place are
dead. Like they're gone, right? like we

1101
00:59:50,160 --> 00:59:53,277
we can you know I can I can sit here
and yell at John Dewey all day long. It

1102
00:59:53,360 --> 00:59:58,477
doesn't matter like he's you know he's
he's gone. Um and and the people who are

1103
00:59:58,560 --> 01:00:01,597
running these institutions now are
just basically at some fundamental level

1104
01:00:01,680 --> 01:00:05,357
executing scripts that were developed
100 years ago. And like it it to some

1105
01:00:05,440 --> 01:00:08,797
extent it's like not their fault.
And then look, you know, there is

1106
01:00:08,880 --> 01:00:11,997
corruption, right? I mean, like
the level to which a lot of these legacy

1107
01:00:12,080 --> 01:00:14,877
systems are intertwined with the
political system, you know, up to the

1108
01:00:14,960 --> 01:00:18,237
level of just overt corruption, like
at some point you're you're in this like

1109
01:00:18,320 --> 01:00:22,157
really sleazy zone where, you know,
politicians have just be bought off to,

1110
01:00:22,240 --> 01:00:24,477
you know, to basically preserve
a system that's obviously, you know,

1111
01:00:24,560 --> 01:00:27,677
dysfunctional and corrosive. And so
anyway, you you can certainly, you know,

1112
01:00:27,760 --> 01:00:30,877
I don't I don't mean to let everybody
off the hook, but but yeah, look, the

1113
01:00:30,960 --> 01:00:35,437
the key thing at the core of it is yes,
how was the system constructed? Um, and

1114
01:00:35,520 --> 01:00:38,317
then um and then and then what are
the what are the incentives for for its

1115
01:00:38,400 --> 01:00:41,517
continuity? Um, and and again, that's
why I said like I'm not that's why I

1116
01:00:41,600 --> 01:00:44,397
think reform is impossible. Like there's
no way at this point to go in and change

1117
01:00:44,480 --> 01:00:47,357
the incentives inside one of these
systems. Like I it just there's too much

1118
01:00:47,440 --> 01:00:48,957
vested interest. It just can't be done.

1119
01:00:49,040 --> 01:00:53,597
>> What would a political policy platform
look like that encourages innovation?

1120
01:00:53,680 --> 01:00:56,477
What are the sort of like
key variables that matter?

1121
01:00:56,560 --> 01:00:59,357
>> I don't know if it's too I don't know
if it would work um because it's a little

1122
01:00:59,440 --> 01:01:02,717
bit too abstract, but it it it is kind
of at the heart it's a little bit at the

1123
01:01:02,800 --> 01:01:05,037
heart of populism. It's a little bit
at the heart of actually a lot of the

1124
01:01:05,120 --> 01:01:09,277
leftwing critique um actually a business
also. So you you see you see it actually

1125
01:01:09,360 --> 01:01:13,597
there's a critique from both the left
and the right and I think the critique

1126
01:01:13,680 --> 01:01:16,717
the way the libertarians to say the
libertarians have the answer but the way

1127
01:01:16,800 --> 01:01:20,077
the libertarians would put it is there's
a difference between being um pro

1128
01:01:20,160 --> 01:01:23,677
business and pro market right um and so

1129
01:01:23,760 --> 01:01:27,357
and what they mean by that basically
is it's like there's one concept of a

1130
01:01:27,440 --> 01:01:30,557
business right or an entity of any kind
let's start with a business but we can

1131
01:01:30,640 --> 01:01:34,637
apply the same thing to to other other
kinds of institutions down the road like

1132
01:01:34,720 --> 01:01:38,237
um there's one form of business is like
actually forc forced to compete in a

1133
01:01:38,320 --> 01:01:41,677
fully competitive market, right? So sort
of fully subject to market discipline,

1134
01:01:41,760 --> 01:01:44,557
right? And so like if whatever, you know,
and I don't even say like the car

1135
01:01:44,640 --> 01:01:47,517
industry works like this or something,
right? Which is or I don't actually the

1136
01:01:47,600 --> 01:01:48,877
car industry gets repeatedly bailed out.

1137
01:01:48,960 --> 01:01:51,677
So they're probably not the right example.
I don't know, soft drinks are

1138
01:01:51,760 --> 01:01:54,637
something. It's like, you know, Coke and
Pepsi and Dr. Pepper and so forth. Like

1139
01:01:54,720 --> 01:01:58,397
they, you know, every time you,
you know, buy a can a soft drink or, you

1140
01:01:58,480 --> 01:02:01,917
know, any any, you know, I went to,
you know, was a gas station the other day

1141
01:02:02,000 --> 01:02:04,717
and it's like, you know, there's like
400 different, you know, bottles and

1142
01:02:04,800 --> 01:02:08,077
cans of drinks right on the shelves. you
know, those companies are like forced to

1143
01:02:08,160 --> 01:02:12,077
compete every day, right, for for every
purchase. And so there there's a there's

1144
01:02:12,160 --> 01:02:13,597
a standards bar that they have to hit.

1145
01:02:13,680 --> 01:02:18,317
Um, and then there's as as and and sort
of libertarians are kind of classic free

1146
01:02:18,400 --> 01:02:21,197
market economists are like that.
That's that's market economy. Like in the

1147
01:02:21,280 --> 01:02:24,397
market economy, you you you don't want
businesses to kind of run untrable. What

1148
01:02:24,480 --> 01:02:27,117
you want them is you want them subject
to market discipline. You want them

1149
01:02:27,200 --> 01:02:30,717
forced to compete all the time. And and
that's how you you get quality control

1150
01:02:30,800 --> 01:02:34,637
and innovation. Um, and then and then
there's there's pro business. And pro

1151
01:02:34,720 --> 01:02:37,437
business basically the problem with pro
business is basically what happens is a

1152
01:02:37,520 --> 01:02:41,197
lot of industries over time end up
not like that. They end up not being

1153
01:02:41,280 --> 01:02:43,757
actually a fair and free market
with market discipline. They end up as

1154
01:02:43,840 --> 01:02:47,277
something else. In the business world
what they end up with is either just you

1155
01:02:47,360 --> 01:02:50,957
know one company with a follow-up
monopoly or more commonly they end up

1156
01:02:51,040 --> 01:02:52,477
with what's called an oligopoly, right?

1157
01:02:52,560 --> 01:02:55,837
They end up with a small number
of companies that sort of dominate the

1158
01:02:55,920 --> 01:03:00,157
entire sector. Um and then what you get
and you know you see this over and over

1159
01:03:00,240 --> 01:03:02,797
in the economy. It's like, you know,
three car companies, um, you know, for a

1160
01:03:02,880 --> 01:03:05,677
very long time. It's, you know,
four movie studios. It's three accounting

1161
01:03:05,760 --> 01:03:07,677
firms, you know, it's just, you go right

1162
01:03:07,760 --> 01:03:09,357
down the list, right? Um, and it's just,

1163
01:03:09,440 --> 01:03:13,117
you know, three big banks. Um, you know,

1164
01:03:13,200 --> 01:03:16,797
um, and so, and these are oligopies and
oligopies are not monopolies. Like each

1165
01:03:16,880 --> 01:03:19,117
company doesn't have to, you know,
there's no one company that has total

1166
01:03:19,200 --> 01:03:21,917
control, but, you know, now you've
only got three companies. And are three

1167
01:03:22,000 --> 01:03:25,197
companies really, is that sufficient
competition to really have market

1168
01:03:25,280 --> 01:03:28,637
discipline or do they kind of end up
as sort of a cartel? And there's all these

1169
01:03:28,720 --> 01:03:32,317
ways that they like signal to each other
to price fix and so forth that sometimes

1170
01:03:32,400 --> 01:03:37,117
verges into overt price fixing.
Um and then what happens is the oligopies

1171
01:03:37,200 --> 01:03:40,397
basically they get big and stalifying
and then what happens is they basically

1172
01:03:40,480 --> 01:03:43,997
end up sort of colonizing politics right
and then this this leads to this concept

1173
01:03:44,080 --> 01:03:47,517
of regulatory capture right where
basically the the you know the the

1174
01:03:47,600 --> 01:03:51,197
companies end up basically essentially
occupying the government you know

1175
01:03:51,280 --> 01:03:53,677
usually at the same time
the government's occupying the companies

1176
01:03:53,760 --> 01:03:57,197
right and so you end up with these like
giant regulatory edififices you know

1177
01:03:57,280 --> 01:04:00,237
DoddFrank and all these things u you
know you end up with you know these

1178
01:04:00,320 --> 01:04:03,517
bailouts you end up with all these
you know intertwining this you know

1179
01:04:03,600 --> 01:04:06,717
revolving more right where you've got
these regulators that all know that

1180
01:04:06,800 --> 01:04:08,717
they're going to get you know these
really high paying jobs at these

1181
01:04:08,800 --> 01:04:11,437
companies when they when they when they
step out of government service or you

1182
01:04:11,520 --> 01:04:15,917
know or you know it's like you know
my friends at Goldman Sachs you know like

1183
01:04:16,000 --> 01:04:18,637
the number of people who had like you
know Goldman Sachs their business card

1184
01:04:18,720 --> 01:04:22,077
who now work for the federal government
is just incredible right like it's just

1185
01:04:22,160 --> 01:04:25,597
this incredible talent flow right um
and so you end up with this sort of

1186
01:04:25,680 --> 01:04:29,197
intertwining um of business
and government and then of course you know

1187
01:04:29,280 --> 01:04:32,877
we experienced this in a very tangible
way which is okay then you know imagine

1188
01:04:32,960 --> 01:04:36,477
being a startup Right? Imagine being
a new bank, right, or a new car company or

1189
01:04:36,560 --> 01:04:39,037
a new movie studio or a new whatever
going up against, you know, these

1190
01:04:39,120 --> 01:04:42,237
cartels and it's just, you know,
it's just like, oh my god, like, you know,

1191
01:04:42,320 --> 01:04:44,637
it's like it's like a mountain that is,
you know, for at least for most

1192
01:04:44,720 --> 01:04:47,917
entrepreneurs is almost impossible
to conceive of climbing, right? There was

1193
01:04:48,000 --> 01:04:52,797
not a new car company in the US that
mattered for 80 years, you know, between

1194
01:04:52,880 --> 01:04:55,437
the establishment of the of the oligopy
in the US and then and then the

1195
01:04:55,520 --> 01:04:57,277
emergence of Tesla, right? So that's

1196
01:04:57,360 --> 01:05:00,797
like a eight years is a long time. Um,

1197
01:05:00,880 --> 01:05:02,957
and so, you know, what is that, right?

1198
01:05:03,040 --> 01:05:06,237
It's it's certainly not a free market
economy, right? Um it's not company

1199
01:05:06,320 --> 01:05:09,517
subject to market discipline. It's it
but but it's also not just like flatout

1200
01:05:09,600 --> 01:05:11,597
top down socialism or communism, right?

1201
01:05:11,680 --> 01:05:15,117
It's something else, right? It's
this it's this kind of hybrid mutant, you

1202
01:05:15,200 --> 01:05:19,677
know, kind of entangled thing. Um
and then you can generalize this idea to,

1203
01:05:19,760 --> 01:05:20,877
you know, many of these other topics.

1204
01:05:20,960 --> 01:05:24,157
And so it's the same, you know, higher,
you know, education, education through

1205
01:05:24,240 --> 01:05:26,317
that lens, education all of a sudden
starts to make a lot of sense because

1206
01:05:26,400 --> 01:05:29,597
like what is education? K- through2 is
a monopoly, right? It's it's a government

1207
01:05:29,680 --> 01:05:31,917
sponsored and run monopoly. And so,
of course, it's going to, you know, it's a

1208
01:05:32,000 --> 01:05:34,717
Soviet it's a Soviet system, right?
It's going to it's going to it's it's run

1209
01:05:34,800 --> 01:05:37,597
exactly the same way education was front
of the Soviet Union. Of course, it's

1210
01:05:37,680 --> 01:05:40,797
going to generate the exact same results.
It's going to generate worse

1211
01:05:40,880 --> 01:05:45,117
results because the Soviets were really
good at math and science. Um um and

1212
01:05:45,200 --> 01:05:47,757
then, you know, higher ed is a cartel,

1213
01:05:47,840 --> 01:05:52,157
right? It's it's quite literally a cartel.
And the universities form, you

1214
01:05:52,240 --> 01:05:54,797
know, they have an industry group uh
they have these industry groups that

1215
01:05:54,880 --> 01:05:58,717
they run then and then they have what's
called accreditation. Um, and they

1216
01:05:58,800 --> 01:06:02,077
control the accreditation process and you
need to get accredited to get access

1217
01:06:02,160 --> 01:06:04,717
to federal student lending and all
and federal research funding and all these

1218
01:06:04,800 --> 01:06:09,997
other things, right? Um, and so it's
it's a it's a flat oligopolistic cartel.

1219
01:06:10,080 --> 01:06:12,877
Um, and so of course it's going to be
non-innovative and of course prices are

1220
01:06:12,960 --> 01:06:15,437
going to spiral like crazy and of course
there's going to be more more government

1221
01:06:15,520 --> 01:06:18,077
subsidies over time and of course the
quality is going to collapse over time.

1222
01:06:18,160 --> 01:06:20,637
The sort of intellectual version
of the platform would be sort of anti-

1223
01:06:20,720 --> 01:06:24,557
monopoly, anti-oligopoly, anti-
concentrated power, anti-government, you

1224
01:06:24,640 --> 01:06:28,877
know, in a government entwining itself
in the economy, right? Anti-regulatory

1225
01:06:28,960 --> 01:06:31,757
capture, anti-leacy institutions
that are no longer being run by their

1226
01:06:31,840 --> 01:06:36,877
founders, right? Um anti-systems for
which there's no competition, right? Um

1227
01:06:36,960 --> 01:06:39,757
anti- anything that basically tries
to, you know, do what's called rent

1228
01:06:39,840 --> 01:06:42,637
seeeking, you know, to kind of,
you know, extract, you know, basically

1229
01:06:42,720 --> 01:06:46,477
economics from the broader society
without competitive alternatives. Like

1230
01:06:46,560 --> 01:06:49,277
that would be the core of it. the the
right-wing populist version of that I

1231
01:06:49,360 --> 01:06:51,917
think is sort of very straightforward
which is basically you know it's tea

1232
01:06:52,000 --> 01:06:55,197
party right it's basically just like
how absurd is it that we have these huge

1233
01:06:55,280 --> 01:06:58,877
things that just keep getting bailed out
like what the hell um and then you know

1234
01:06:58,960 --> 01:07:01,677
and by the way you know sort of occupy
and tea party actually kind of had the

1235
01:07:01,760 --> 01:07:04,237
same you know in a lot of ways the same
argument um you know from the different

1236
01:07:04,320 --> 01:07:08,077
sides of the spectrum and then you know
the the modern form of that is you know

1237
01:07:08,160 --> 01:07:11,757
the you know the leftwing version
of that is is you know you do hear it and

1238
01:07:11,840 --> 01:07:14,157
and you know the left the left wing
people argue more directly for the

1239
01:07:14,240 --> 01:07:17,357
government should just do all this but you
know they are on to something I with

1240
01:07:17,440 --> 01:07:21,677
a critique of like look like are these
even companies, right? Is is this even

1241
01:07:21,760 --> 01:07:24,557
capitalism, right? And and and is the
market actually delivering what the

1242
01:07:24,640 --> 01:07:25,517
market is supposed to deliver?

1243
01:07:25,600 --> 01:07:28,157
>> Well, you got my vote, man.
When are you running? [laughter]

1244
01:07:28,240 --> 01:07:31,997
>> Never. Never under any circumstances.

1245
01:07:32,080 --> 01:07:35,357
>> You once said that you had this little
I remember this interview. It was like

1246
01:07:35,440 --> 01:07:38,797
several years ago. You had this little
mental model of Elon Musk on your

1247
01:07:38,880 --> 01:07:41,837
shoulder. Is that true? And if so, why?

1248
01:07:41,920 --> 01:07:46,077
And who else do you have mental models of?
And how do you use them to help you?

1249
01:07:46,160 --> 01:07:48,717
You know, one of the things is you kind
of, you know, as you study kind of, you

1250
01:07:48,800 --> 01:07:51,837
know, very very kind of smart people
and you people who have like done a lot of

1251
01:07:51,920 --> 01:07:55,517
important things. It's like, you know,
they they all had some way of operating.

1252
01:07:55,600 --> 01:07:57,997
You know, they all had some theory,
right? Some some some structure

1253
01:07:58,080 --> 01:08:01,037
framework of the world and how it worked
and how how to cause things to happen.

1254
01:08:01,120 --> 01:08:03,517
Um, and and there one of the things
that's interesting, you know, there

1255
01:08:03,600 --> 01:08:07,277
there are many such frameworks. Even
even the same kind of person, you know,

1256
01:08:07,360 --> 01:08:10,797
there many very of the most successful
investors generally each of them had

1257
01:08:10,880 --> 01:08:14,157
some unique take on the world and they
and they weren't necessarily compatible

1258
01:08:14,240 --> 01:08:17,997
takes, right? and they just they figured
out, you know, kind of a a way to do

1259
01:08:18,080 --> 01:08:20,477
things. It's very different than the way
a lot of other people did things. And

1260
01:08:20,560 --> 01:08:22,957
the same thing for CEOs and entrepreneurs
and, you know, by the way,

1261
01:08:23,040 --> 01:08:25,517
same thing for artists and, you know,
any any other kind of, you know, these

1262
01:08:25,600 --> 01:08:31,277
these sort of very sort of successful
people. Um, and so like I'm I'm pretty

1263
01:08:31,360 --> 01:08:34,477
convinced there's no way to like
synthesize all of their kind of

1264
01:08:34,560 --> 01:08:37,837
different approaches and views
and frameworks into a single model. Like

1265
01:08:37,920 --> 01:08:41,117
it's just it's too complicated and it's
too contradictory and it it it kind it

1266
01:08:41,200 --> 01:08:46,077
wouldn't really work. At least I I don't
think so. Um but what you can do right

1267
01:08:46,160 --> 01:08:49,277
um you know when when you and then what
what you do is like you you know as you

1268
01:08:49,360 --> 01:08:51,997
go through life you you know you talk
a lot about this in your work and we

1269
01:08:52,080 --> 01:08:54,397
talked a lot about this today is you
do try to assemble your own kind of

1270
01:08:54,480 --> 01:08:58,237
worldview and your own framework
and your own way of of of sort of uh of

1271
01:08:58,320 --> 01:09:02,717
doing things. Um and and by default your
your your your kind of framework on that

1272
01:09:02,800 --> 01:09:05,437
will get probably narrower over time
because you'll get kind of more locked

1273
01:09:05,520 --> 01:09:10,237
more set in your ways um and you'll get
more resistant to new ideas. Um, and so

1274
01:09:10,320 --> 01:09:13,917
like one of the ways to offset that is
to like quite literally have like have

1275
01:09:14,000 --> 01:09:17,837
the mental model for how somebody else
would think about the same situation,

1276
01:09:17,920 --> 01:09:21,277
right? And and in a way that's like not
threatening to you, right? Which is it's

1277
01:09:21,360 --> 01:09:24,317
not like okay, this is like now I have
to have an argument with myself, but

1278
01:09:24,400 --> 01:09:27,757
it's more just like okay like if you
know I take your pick of who you admire,

1279
01:09:27,840 --> 01:09:31,677
but you know in my case it's like Elon
Musk or you know or Steve Jobs or you

1280
01:09:31,760 --> 01:09:34,157
know Andy Grove or Peter Teal, you know

1281
01:09:34,240 --> 01:09:38,797
we're in the room, right? Uh you know
what would they say? And you know and by

1282
01:09:38,880 --> 01:09:41,117
and by the way this itself is a daunting
challenge because these people are

1283
01:09:41,200 --> 01:09:43,997
incredibly smart and I I don't know
that I can even you know kind of replicate

1284
01:09:44,080 --> 01:09:47,597
their thought process. Um but you know
I do know you know I I do know a fair

1285
01:09:47,680 --> 01:09:51,757
amount about their thought process and
that you know they and you know it it so

1286
01:09:51,840 --> 01:09:54,957
happens that I also have known them
but also like you know they they both have

1287
01:09:55,040 --> 01:09:57,197
written they've all written and talked
a lot about kind of how they how they

1288
01:09:57,280 --> 01:10:01,117
think about things. Um so then it's
like okay what what's my mental model for

1289
01:10:01,200 --> 01:10:04,797
yeah how how would Elon think about this
right? And so and so I just get you know

1290
01:10:04,880 --> 01:10:07,997
the simple one like the simple one for
this the simple one for Elon and Elon's

1291
01:10:08,080 --> 01:10:11,037
very complex guy but the most simple
kind of form of Elon that's useful in

1292
01:10:11,120 --> 01:10:14,797
this way is is what he calls first
principles thinking right which is it's

1293
01:10:14,880 --> 01:10:19,037
like okay like basically in Elon's view
we all basically just like assume too

1294
01:10:19,120 --> 01:10:22,237
many things from from the way things are
and the right thing to do is to kind of

1295
01:10:22,320 --> 01:10:24,797
you know he kind of gets this from
physics because he was trained as a

1296
01:10:24,880 --> 01:10:28,397
physicist originally u which is a very
different mentality than than the one

1297
01:10:28,480 --> 01:10:32,237
that I come from um and it's basically
okay script things all the way down to

1298
01:10:32,320 --> 01:10:35,197
basics again and start and basically
start the logical thought process over

1299
01:10:35,280 --> 01:10:39,277
again, right? And so basically,
you know, go deeper into the idea to the

1300
01:10:39,360 --> 01:10:42,877
very foundations and then build your way
back up. Um, and and you know, just

1301
01:10:42,960 --> 01:10:46,077
going through that process is a way
to kind of really catalyze your thinking.

1302
01:10:46,160 --> 01:10:48,957
you know, Peter's form, you know,
Peter's kind of core mental model that,

1303
01:10:49,040 --> 01:10:51,837
you know, that I borrow that I've kind
of drawn from is, you know, his focus on

1304
01:10:51,920 --> 01:10:55,517
this this philosopher Rene Gerard and,
you know, this idea of of sort of, you

1305
01:10:55,600 --> 01:10:58,477
know, mimemetic dynamics and and,
you know, people copying, you know, people

1306
01:10:58,560 --> 01:11:01,917
copying behavior between each other
and then also, you know, rivalries forming

1307
01:11:02,000 --> 01:11:04,957
and and how that plays out, you know,
human dynamics and Gerard had this very

1308
01:11:05,040 --> 01:11:08,157
kind of sweeping whole theory about how
that kind of determines how well society

1309
01:11:08,240 --> 01:11:10,877
kind of functions and maybe that's
not completely true, but like there's

1310
01:11:10,960 --> 01:11:14,557
there's clearly a lot to that. And then
of course there's this scapegoating

1311
01:11:14,640 --> 01:11:19,437
cycle which which does seems to play out
every day especially when dealing with

1312
01:11:19,520 --> 01:11:22,637
any of these internet things or systems
things networks you know it's a very

1313
01:11:22,720 --> 01:11:25,677
useful framework and so you know being
able to kind of have an imaginary debate

1314
01:11:25,760 --> 01:11:29,917
with Peter um and kind of say okay what
would the lens on that be um you know

1315
01:11:30,000 --> 01:11:33,117
and then obviously we could go on length
but you know Jobs and Groven these guys

1316
01:11:33,200 --> 01:11:36,477
had their own their own views of things
um and so it's just it's it's a way to

1317
01:11:36,560 --> 01:11:40,477
kind of keep the actual um you know I
don't know keep keep ideas flowing and

1318
01:11:40,560 --> 01:11:44,557
then sort of enable yourself or force
yourself to like basically stress test

1319
01:11:44,640 --> 01:11:49,037
your own ideas uh through a lens that's
not just your preconceptions I think is

1320
01:11:49,120 --> 01:11:51,597
quite helpful. >> I think you
get a different perspective,

1321
01:11:51,680 --> 01:11:54,397
right? Like you see the problem through
the lens of somebody else which helps

1322
01:11:54,480 --> 01:11:57,677
you actually understand the problem
a little bit better than you do just

1323
01:11:57,760 --> 01:12:01,597
seeing it through your own lens because
we can't fully understand a system that

1324
01:12:01,680 --> 01:12:06,077
we're part of. So by assuming somebody
else's persona, we get more detailed

1325
01:12:06,160 --> 01:12:09,517
information about what we're missing
and we eliminate some of our blind spots.

1326
01:12:09,600 --> 01:12:12,397
And then I also think it's also um I
also think a lot about it's like it's

1327
01:12:12,480 --> 01:12:17,437
also keeping a high bar um for yourself
and for your work, right? And and and

1328
01:12:17,520 --> 01:12:19,917
this maybe is also something this also
has to do another thing that happens

1329
01:12:20,000 --> 01:12:23,357
with kind of age and success is and and we
see this actually with founders is

1330
01:12:23,440 --> 01:12:25,837
like at some point there are some
founders where they start you know

1331
01:12:25,920 --> 01:12:30,157
company three, four, five, six at some
point they get tired of doing the work

1332
01:12:30,240 --> 01:12:33,757
like they get tired of going all the way
back to basics. Ben and I had this uh we

1333
01:12:33,840 --> 01:12:36,957
had this we had this uh we talked
to Jeff Bezos about this at one point and

1334
01:12:37,040 --> 01:12:40,957
um he asked us why we were starting
a venture capital from another company and

1335
01:12:41,040 --> 01:12:44,717
another startup and and and and we asked
him well if if Amazon you know for some

1336
01:12:44,800 --> 01:12:48,397
reason Amazon got sold or whatever um
and you were a free agent again like

1337
01:12:48,480 --> 01:12:51,597
would you start you know would you start
another company and he laughed and he

1338
01:12:51,680 --> 01:12:54,477
said you know not in your life he's like
you know he's like that would be going

1339
01:12:54,560 --> 01:12:57,677
back to kindergarten and he's like
look don't get me wrong I really liked

1340
01:12:57,760 --> 01:13:01,437
kindergarten >> right >> but like
you [laughter] know having

1341
01:13:01,520 --> 01:13:03,677
built Amazon I'm not going back
to kindergarten, right? Um, you know,

1342
01:13:03,760 --> 01:13:06,637
having to build Amazon. I'm not starting
a company again from scratch. And so,

1343
01:13:06,720 --> 01:13:09,517
you know, and so there's this this like
where the first principles thinking

1344
01:13:09,600 --> 01:13:13,517
comes in handy, which is it's like,
okay, like what's the bar, right? Like

1345
01:13:13,600 --> 01:13:16,237
what's the bar that you're applying
to your own work and to your own thought

1346
01:13:16,320 --> 01:13:19,837
process? And are you actually being as
rigorous as you, you know, are you being

1347
01:13:19,920 --> 01:13:24,397
as rigorous at say 50 as you were when
you were 25? Um, and are you able to

1348
01:13:24,480 --> 01:13:26,557
actually, you know, because when you're
25 or whatever, you're doing something

1349
01:13:26,640 --> 01:13:29,197
new, like the world is judging you every
step of the way, and it's like a harsh,

1350
01:13:29,280 --> 01:13:31,277
you know, it's a harsh environment and,
you know, the world corrects you

1351
01:13:31,360 --> 01:13:36,157
quickly. H how do you keep that bar
rising, right? And not let success sort

1352
01:13:36,240 --> 01:13:39,597
of turn into complacency.
>> You need you need some you need some

1353
01:13:39,680 --> 01:13:43,597
forcing function, right? You need
a reason. This is why we always and the

1354
01:13:43,680 --> 01:13:46,077
the smart the smart entrepreneurs
all know this, but this is why even

1355
01:13:46,160 --> 01:13:49,037
entrepreneurs starting company number
four or five, six, you know, this is why

1356
01:13:49,120 --> 01:13:51,197
they should have like a board of directors
and they should have people on

1357
01:13:51,280 --> 01:13:54,237
their board who are actually like very
smart and strong willed who will argue

1358
01:13:54,320 --> 01:13:57,197
with them, right? Um as opposed to just
them doing whatever it is they're going

1359
01:13:57,280 --> 01:14:00,557
to do on their own is because like they
you need no matter how good you need

1360
01:14:00,640 --> 01:14:04,237
some force. Mo most people need some
forcing function where they're they're

1361
01:14:04,320 --> 01:14:07,517
sort of forced to fully think things
through. They're forced to do all the

1362
01:14:07,600 --> 01:14:10,717
work and they're forced to be able
to defend it, right? And if to your point,

1363
01:14:10,800 --> 01:14:13,917
like if they don't do that, it's it
turns into complacency and laziness and

1364
01:14:14,000 --> 01:14:16,157
at some point it turns into arrogance
and it it just it becomes very

1365
01:14:16,240 --> 01:14:19,117
destructive and then you stop being
effective. And so there be some forcing

1366
01:14:19,200 --> 01:14:22,957
function. The the the the Peter Teal
on the shoulder thing is is a forcing

1367
01:14:23,040 --> 01:14:26,317
function is how I use it. Um it's like
a forcing function of my own thought

1368
01:14:26,400 --> 01:14:29,757
process. It's like, okay, if I were
explaining this to Peter or to Elon or

1369
01:14:29,840 --> 01:14:32,717
whatever, like, would they be like, "Oh,
that's a good idea." Or they'd be like,

1370
01:14:32,800 --> 01:14:36,157
"Mark, like Elon would say,
that's stupid." Peter would say, "I

1371
01:14:36,240 --> 01:14:38,557
don't I don't think you fully thought
that through." And, you know, and then

1372
01:14:38,640 --> 01:14:41,357
it's like, "Okay, now I know that I
have to go like, "If I'm going to do this

1373
01:14:41,440 --> 01:14:44,077
work, now I know that I have to go back
and do it for real." Like, I I have to

1374
01:14:44,160 --> 01:14:48,397
be able to justify this. Um, and and and
it's and it's an obligation to myself,

1375
01:14:48,480 --> 01:14:50,877
you know, number one, because like why
am I wasting time on something if I'm

1376
01:14:50,960 --> 01:14:53,837
not actually set up to do it right?
But then of course it's also an obligation

1377
01:14:53,920 --> 01:14:56,477
for any of us in a position where other
people are going to make decisions based

1378
01:14:56,560 --> 01:14:59,277
on what we do right people are going
to come to work for us right are going to

1379
01:14:59,360 --> 01:15:02,237
participate in things that we're leading
you know then we have a real obligation

1380
01:15:02,320 --> 01:15:05,997
right because like it's you know
imagine how unfair it is you know for an

1381
01:15:06,080 --> 01:15:08,157
entrepreneur who gets lazy who doesn't
think things through who starts a

1382
01:15:08,240 --> 01:15:11,197
company who hires a bunch of people like
that you know that's really unfair to

1383
01:15:11,280 --> 01:15:15,277
those people um and so it's it's a self
you know this is the the surface level

1384
01:15:15,360 --> 01:15:18,397
answer to your question but like it
has to be a self-imposed standard at a

1385
01:15:18,480 --> 01:15:22,157
certain point um and people either
want to people say people either have a

1386
01:15:22,240 --> 01:15:24,317
reason to impose that standard
on themselves or at some point they should

1387
01:15:24,400 --> 01:15:26,157
stop trying to do the things
that they're doing.

1388
01:15:26,240 --> 01:15:29,117
>> Uh last question.
What's the last book you reread?

1389
01:15:29,200 --> 01:15:33,597
>> That's a really good question.
Um you know, I'll tell you one book I keep

1390
01:15:33,680 --> 01:15:37,437
coming back to. I keep coming back to um
I keep coming back to the the Henrich

1391
01:15:37,520 --> 01:15:41,597
the Joseph Henrich book. Um the weirdest
people in the world. Um another book

1392
01:15:41,680 --> 01:15:45,437
that I keep coming back to is a book
called the Mack the Machavelians by this

1393
01:15:45,520 --> 01:15:49,437
guy James Burnham. um which I think
is probably the best book on politics of

1394
01:15:49,520 --> 01:15:52,557
the 20th century and has been like
incredibly helpful to understand what's

1395
01:15:52,640 --> 01:15:54,877
happening right now. Um so those are two

1396
01:15:54,960 --> 01:15:59,757
big ones. Martin Gur's book uh
the revolt of the public. We'll put all of

1397
01:15:59,840 --> 01:16:03,197
these in the show notes on the website
to make it easy for people to get them.

1398
01:16:03,280 --> 01:16:05,197
>> Oh, I'll give you a fourth one.
I'll give you a fourth one. We don't have

1399
01:16:05,280 --> 01:16:08,797
time to talk about it now, but um
a fourth one that people haven't a lot of

1400
01:16:08,880 --> 01:16:11,117
people haven't read, but it's had
a really big impact on how I think about

1401
01:16:11,200 --> 01:16:16,397
things. Um uh it's a book called
The Ancient City and it's written by a uh

1402
01:16:16,480 --> 01:16:20,317
it's a it's from the it's from the 1860s.
Um but it's a still a very

1403
01:16:20,400 --> 01:16:23,197
relevant book because it's based
entirely on original classical sources,

1404
01:16:23,280 --> 01:16:27,197
Roman and Greek sources. And it's sort
of a it's sort of and it the the history

1405
01:16:27,280 --> 01:16:30,637
of it is holding up really well.
It's a reconstruction of basically human

1406
01:16:30,720 --> 01:16:35,277
society kind of pre the Romans and Greeks
of what it was actually like and

1407
01:16:35,360 --> 01:16:38,237
then sort of how that turned into Roman
Greece and then how that turned into our

1408
01:16:38,320 --> 01:16:40,797
world. Um, and it's written by a French

1409
01:16:40,880 --> 01:16:43,517
uh a prominent French academic 150 years

1410
01:16:43,600 --> 01:16:47,917
ago. Um, but it's a it's a really
profound and striking book. Um, and if

1411
01:16:48,000 --> 01:16:51,517
you read it, you're like, "Oh, this
explains a lot." It in particular, it's

1412
01:16:51,600 --> 01:16:54,637
the best book I've ever found. It's the
best book I've ever found on sort of the

1413
01:16:54,720 --> 01:16:57,597
creation of civilization, the sort
of prehistory of civilization. And then

1414
01:16:57,680 --> 01:16:58,877
it's the best book I've ever read on

1415
01:16:58,960 --> 01:17:02,077
like basically the role of the cult,

1416
01:17:02,160 --> 01:17:07,357
right? So like why cults exist, um, what
they are, um, and what it feels like to

1417
01:17:07,440 --> 01:17:10,557
be in one. Um, and of course,
you know, one way of

1418
01:17:10,640 --> 01:17:12,877
looking at the world is the world
is just basically this, you know, sort of

1419
01:17:12,960 --> 01:17:16,637
series of cults [laughter]
of one form or another. I

1420
01:17:16,720 --> 01:17:19,437
don't know that I would even say that I
fully understand it yet, but um, it it

1421
01:17:19,520 --> 01:17:22,397
is it's one of those books. I don't
know about you, but like when I there's

1422
01:17:22,480 --> 01:17:25,037
something interesting in a book,
I I underline it and then if it's really

1423
01:17:25,120 --> 01:17:29,997
interesting, I I do doggeear the the
page uh that it's on. Um, and then

1424
01:17:30,080 --> 01:17:32,877
there's there's a few books that I've
read where it's like they they

1425
01:17:32,960 --> 01:17:35,037
destabilize the piles of books because

1426
01:17:35,120 --> 01:17:40,077
I've doggeared like every single page
and now the book is like crooked. Um,

1427
01:17:40,160 --> 01:17:42,717
and the books on top of it will like tip
over at some point. And this is one of

1428
01:17:42,800 --> 01:17:45,757
those books where like I just I've dogge
eared every single page. There's just

1429
01:17:45,840 --> 01:17:48,477
stuff that just jumps right off the page
at you and just like bites you like

1430
01:17:48,560 --> 01:17:51,117
right in the nose and it's like, okay,
this is like the world has not worked

1431
01:17:51,200 --> 01:17:53,677
the way you thought it did. People are
not the way that you thought they were

1432
01:17:53,760 --> 01:17:56,317
and here's all this, you know,
here's 4,000 years of history kind of

1433
01:17:56,400 --> 01:17:59,117
explaining why. Um, and so anyway,
we maybe we'll talk about that one another

1434
01:17:59,200 --> 01:18:01,907
time, but that one I keep coming back to.

1435
01:18:01,990 --> 01:18:04,010
[music]

1436
01:18:06,080 --> 01:18:08,397
>> Thank you so much
for taking the time today, Mark.

1437
01:18:08,480 --> 01:18:10,877
>> Yeah, good chain. A real pleasure
and congratulations on everything you've

1438
01:18:10,960 --> 01:18:15,800
been up to. It's it's I'm
a I'm a huge fan. [music]

1439
01:18:19,120 --> 01:18:24,157
>> The Knowledge Project is produced by
the team at Farnum Street. I'd love to get

1440
01:18:24,240 --> 01:18:28,077
your advice on how to make this [music]
the most valuable podcast you listen to.

1441
01:18:28,160 --> 01:18:32,637
Email me at shanefs.blog. [music]

1442
01:18:32,720 --> 01:18:37,277
You can learn more about the show and
find past episodes at fs.blog/mpodcast.

1443
01:18:37,360 --> 01:18:41,197
[music] To get a transcript
of this episode, go to fs.blog/tribe

1444
01:18:41,280 --> 01:18:45,757
or check out the show notes. Can you
do me a small favor? Go online right now

1445
01:18:45,840 --> 01:18:50,237
and share this episode with one friend
who you [music] think would love it.

1446
01:18:50,320 --> 01:18:54,967
Thanks for listening and learning
with us. Till next time.

1447
01:18:55,050 --> 01:18:57,070
[music]