WEBVTT 00:00:02.480 --> 00:00:03.377 - I wasn't expecting to start here. 00:00:03.460 --> 00:00:06.547 I want to talk about why you were consuming so much caffeine 00:00:06.630 --> 00:00:09.280 that you noticed that your heart was skipping a beat. 00:00:09.940 --> 00:00:13.597 - So, I love caffeine. So for a very long time, I always said that the ultimate day, 00:00:13.680 --> 00:00:15.287 like, the perfect day was 12 hours of caffeine 00:00:15.370 --> 00:00:17.070 followed by four hours of alcohol. 00:00:18.050 --> 00:00:19.550 That's just like the ultimate. 00:00:19.860 --> 00:00:22.847 I did cut out, or at least for now, I've cut out the four hours of alcohol. 00:00:22.930 --> 00:00:26.597 But yeah, caffeine is just one of nature's most marvelous things. 00:00:26.680 --> 00:00:28.597 But yeah, it turns out you can't overdo it. 00:00:28.680 --> 00:00:32.037 And so, yeah, a while ago, I was drinking so much coffee at work 00:00:32.120 --> 00:00:34.027 that I was sitting in a meeting a couple years ago, 00:00:34.110 --> 00:00:35.937 and I started to feel just a little bit... 00:00:36.020 --> 00:00:37.967 Something felt off, and I just took my pulse, 00:00:38.050 --> 00:00:41.010 and I realized I was skipping about every tenth heartbeat. 00:00:41.480 --> 00:00:43.447 And so, I had like an existential crisis 00:00:43.530 --> 00:00:45.387 because I'm like, all right, heart, you know, do I need to call 911? 00:00:45.470 --> 00:00:47.497 It's just like, am I about to have a heart attack? Am I about to die? 00:00:47.580 --> 00:00:50.897 And so I go under the table, and I Google, and I'm like, "Is this a problem?" 00:00:50.980 --> 00:00:53.680 And Dr. Google said, "No, it's okay. It's fine. 00:00:53.780 --> 00:00:56.877 You just might want to cut back a little bit on the caffeine." 00:00:56.960 --> 00:01:00.497 - You said something that I love, and I never hear other entrepreneurs talk about, 00:01:00.580 --> 00:01:03.577 but I think it's super important that you don't have any levels of introspection. 00:01:03.660 --> 00:01:05.117 - Yes. Zero. As little as possible. 00:01:05.200 --> 00:01:08.997 - Why? - Move forward. Go. Yeah, I don't know. 00:01:09.080 --> 00:01:11.417 I've just found people who dwell in the past, get stuck in the past. 00:01:11.500 --> 00:01:14.697 It's a real problem, and it's a problem at work, and it's a problem at home. 00:01:14.780 --> 00:01:17.117 - So, I've read obviously 400 and, I think, now 10 00:01:17.200 --> 00:01:18.467 biographies of history's greatest entrepreneurs. 00:01:18.550 --> 00:01:19.757 - Yeah. - And that was one of the most surprising things, 00:01:19.840 --> 00:01:21.237 like what's the most surprising thing that you've learned from this? 00:01:21.320 --> 00:01:23.427 They're like, "Oh, they have little or zero introspection." 00:01:23.510 --> 00:01:26.447 - Yeah. - Sam Walton didn't wake up thinking about his internal self. 00:01:26.530 --> 00:01:28.517 He just woke up, he's like, "I like building Walmart. 00:01:28.600 --> 00:01:30.357 I'm going to keep building Walmart. I'm going to make more Walmarts," 00:01:30.440 --> 00:01:32.047 and just kept doing it over and over again. 00:01:32.130 --> 00:01:34.057 - And you probably know, if you go back, before 100 years ago, 00:01:34.140 --> 00:01:35.897 it never would have occurred to anybody to be introspective. 00:01:35.980 --> 00:01:38.927 Like, the whole idea of, I mean, just all of the modern conceptions 00:01:39.010 --> 00:01:41.417 around introspection and therapy and all the things that kind of result from that 00:01:41.500 --> 00:01:44.367 are kind of manufactured in the 1910s, 1920s. 00:01:44.450 --> 00:01:47.337 - Say more about that. - Great men of history didn't sit around doing this stuff 00:01:47.420 --> 00:01:49.050 at any prior point, right? 00:01:49.770 --> 00:01:51.020 It's all a new construct. 00:01:53.120 --> 00:01:55.037 So, first Western civilization had to kind of 00:01:55.120 --> 00:01:56.967 invent the concept of the individual, right? 00:01:57.050 --> 00:01:59.357 Which was like a new concept several hundred years ago. 00:01:59.440 --> 00:02:02.477 And then, for a long time, it was all right, the individual runs, right? 00:02:02.560 --> 00:02:05.367 And does all these things, and builds things, and builds empires, 00:02:05.450 --> 00:02:07.737 and builds companies, and builds technology, and does all these things. 00:02:07.820 --> 00:02:13.100 And then, kind of this guilt-based whammy showed up from Europe, 00:02:13.300 --> 00:02:18.267 a lot of it from Vienna, in the 1910s, 1920s, Freud and all that entire movement. 00:02:18.350 --> 00:02:20.057 And kind of turned all that inward and basically said, 00:02:20.140 --> 00:02:23.277 "Okay, now we need to basically second-guess the individual. 00:02:23.360 --> 00:02:24.357 We need to criticize the individual. 00:02:24.440 --> 00:02:26.877 The individual needs to self-criticize," right? 00:02:26.960 --> 00:02:29.767 The individual needs to feel guilt, needs to look backwards, 00:02:29.850 --> 00:02:31.400 and needs to dwell on the past. 00:02:31.550 --> 00:02:32.657 It never resonated with me. 00:02:32.740 --> 00:02:35.417 - Do you find a lot of the greatest founders that you've spent time with, 00:02:35.500 --> 00:02:38.657 and backed, and partnered with or have low introspection? 00:02:38.740 --> 00:02:42.947 - Yeah, generally. Although, in fairness, the introspection is probably linked to 00:02:43.030 --> 00:02:45.420 the personality trait of neuroticism, right? 00:02:45.880 --> 00:02:50.037 So, a lot of the best founders are, I think, at 0% neuroticism. 00:02:50.120 --> 00:02:53.087 They just don't get emotionally fazed by things that happen, 00:02:53.170 --> 00:02:55.357 which is a superpower when you're an entrepreneur. 00:02:55.440 --> 00:02:59.297 But having said that, some of the great entrepreneurs are, in fact, very neurotic. 00:02:59.380 --> 00:03:00.540 That's also the case. 00:03:03.250 --> 00:03:05.937 Maybe it's nice to have to be low neuroticism, but not necessary. 00:03:06.020 --> 00:03:09.170 And so, there are some that kind of get wrapped around the axle 00:03:09.480 --> 00:03:13.187 on kind of personal issues. As you know, these days, sometimes that then, 00:03:13.270 --> 00:03:15.907 kind of turns into the use of psychedelics, 00:03:15.990 --> 00:03:17.787 different kinds, and hallucinogenic drugs. 00:03:17.870 --> 00:03:20.467 And that's like one very interesting kind of trajectory 00:03:20.550 --> 00:03:23.227 for the kind of the culture of the country, culture of the world, 00:03:23.310 --> 00:03:24.377 and we'll see where that goes. 00:03:24.460 --> 00:03:26.377 - So, we've recorded, I don't know, like a dozen of these so far, 00:03:26.460 --> 00:03:29.727 most of them with some of the greatest founders living for the show. 00:03:29.810 --> 00:03:33.957 I can't believe how many times on almost every episode psychedelics pops up. 00:03:34.040 --> 00:03:34.227 - Yeah. 00:03:34.310 --> 00:03:36.437 - And they're like, "You should try them." I'm like, "I'm not doing any drugs." 00:03:36.520 --> 00:03:39.777 - Just want to be clear, I'm not. I never have. I'm never going to. 00:03:39.860 --> 00:03:41.957 You know, the problem is I already have tons of horror stories 00:03:42.040 --> 00:03:45.267 from people I know, or know of, that kind of came out the other side like... 00:03:45.350 --> 00:03:50.690 Well, actually, my deepest conversation on this was actually with Huberman. 00:03:51.220 --> 00:03:54.677 And I was describing this phenomenon where we see in Silicon Valley 00:03:54.760 --> 00:03:58.407 where these guys get under pressure, and they kind of feel anxious or whatever, 00:03:58.490 --> 00:04:01.437 and somebody tells them about psychedelics, and they try it. 00:04:01.520 --> 00:04:03.497 And they kind of come out the other end as a changed person, 00:04:03.580 --> 00:04:05.157 and they kind of come out much more at peace, 00:04:05.240 --> 00:04:07.607 but then they also tend to quit their companies. 00:04:07.690 --> 00:04:10.490 And they move to Indonesia and become a surf instructor. 00:04:10.880 --> 00:04:12.247 They're just like, peace out, right? 00:04:12.330 --> 00:04:15.487 They're just done. There's been a whole bunch of examples of this, 00:04:15.570 --> 00:04:17.767 and I was complaining to Huberman about this. 00:04:17.850 --> 00:04:20.467 And in true Huberman kind of wise Yoda style, he's like, 00:04:20.550 --> 00:04:23.410 "Well, how do you know they're not happier?" Right? 00:04:24.280 --> 00:04:25.477 Maybe that was the positive outcome. 00:04:25.560 --> 00:04:27.587 Maybe the thing that was driving them to be a great entrepreneur 00:04:27.670 --> 00:04:29.737 was a fundamental level of insecurity, right, 00:04:29.820 --> 00:04:32.830 and kind of this unsatisfied, kind of neurotic impulse. 00:04:33.470 --> 00:04:34.707 And now they're just satisfied. 00:04:34.790 --> 00:04:36.537 Now they're just, whatever the serotonin levels or whatever 00:04:36.620 --> 00:04:38.637 have been recalibrated, that they're just kind of satisfied 00:04:38.720 --> 00:04:41.170 sitting on the beach and being a surf instructor. 00:04:41.670 --> 00:04:45.520 Maybe they're better off. And I'm like, "Yeah, but their company is failing." 00:04:45.620 --> 00:04:46.940 And so anyway, yeah. 00:04:47.750 --> 00:04:49.877 There's a possibility that there's a better version of you or me 00:04:49.960 --> 00:04:53.077 on the other side of Ayahuasca, but I'm not willing to find out. 00:04:53.160 --> 00:04:55.877 - I'm not either. Daniel Ek has the greatest way to put this. 00:04:55.960 --> 00:04:58.077 He thinks the best entrepreneurs are not optimizing for happiness, 00:04:58.160 --> 00:04:59.517 they're optimizing for impact. 00:04:59.600 --> 00:05:00.777 - I think that's true. I think that's true. 00:05:00.860 --> 00:05:01.917 I think it's certainly true for Daniel, yeah, 00:05:02.000 --> 00:05:03.607 who's kind of a great case study of that. 00:05:03.690 --> 00:05:06.037 Having said that, I always kind of wonder is that, 00:05:06.120 --> 00:05:09.177 well, intrinsic versus extrinsic motivations. 00:05:09.260 --> 00:05:12.027 Impact strikes me a little bit as an extrinsic motivation. 00:05:12.110 --> 00:05:14.720 It's like, yeah, impact, money, fame, you know... 00:05:15.170 --> 00:05:17.247 And by the way, I think extrinsic motivations are fantastic, 00:05:17.330 --> 00:05:19.317 and I think they can be very motivating. 00:05:19.400 --> 00:05:21.007 The people who kind of get the great rewards 00:05:21.090 --> 00:05:22.497 for building great things deserve them. 00:05:22.580 --> 00:05:25.037 But at least what I've found is it's the intrinsic motivations 00:05:25.120 --> 00:05:27.270 that actually get people up in the morning. 00:05:28.150 --> 00:05:30.827 And there's where you're dangerously close to straying into introspection, 00:05:30.910 --> 00:05:34.017 but it's like, what is the thing that causes somebody 00:05:34.100 --> 00:05:37.150 who's now extremely materially wealthy, extremely successful, 00:05:37.420 --> 00:05:40.137 to get up in the morning and continue to kind of punch away at the world? 00:05:40.220 --> 00:05:41.817 I think those tend to be interior. 00:05:41.900 --> 00:05:45.400 - What's that for you? - Oh, I mean, that would require introspection. 00:05:47.270 --> 00:05:48.517 I'll let other people speculate. 00:05:48.600 --> 00:05:49.767 - No, you have to have... - It's a lot more fun 00:05:49.850 --> 00:05:52.330 to speculate about other people's... 00:05:52.920 --> 00:05:53.987 - But I am curious about you, 00:05:54.070 --> 00:05:56.367 because you have a series of quotes that I absolutely love. 00:05:56.450 --> 00:05:58.257 I save on my phone. I reread from time to time. 00:05:58.340 --> 00:06:00.137 One of them, and I'll butcher it, but it's just like, 00:06:00.220 --> 00:06:02.407 the world is way more malleable than you think. 00:06:02.490 --> 00:06:02.697 - Mm-hmm. 00:06:02.780 --> 00:06:05.957 - And if you just pursue something with a lot of maximum effort, drive, and energy, 00:06:06.040 --> 00:06:08.737 the world will recalibrate around you easier than you think. 00:06:08.820 --> 00:06:09.217 - Yeah. 00:06:09.300 --> 00:06:12.677 - And I actually re-read that this morning before I came over here, and I was like, 00:06:12.760 --> 00:06:16.737 what is that for Mark? Today, what are you waking up trying to change in the world? 00:06:16.820 --> 00:06:18.477 - Yeah, there's a lot that we're actually trying to do. 00:06:18.560 --> 00:06:21.197 I'm suspicious that that's my actual underlying motivation. Yeah. 00:06:21.280 --> 00:06:22.007 - Why? 00:06:22.090 --> 00:06:25.657 - Just because, I don't think an external impact is enough to keep people going, 00:06:25.740 --> 00:06:28.507 or at least I've seen way too many people who had a high level of external impact, 00:06:28.590 --> 00:06:30.540 and then at some point, they just stop. 00:06:30.840 --> 00:06:32.237 - Okay. - Well, here's the problem with external impact. 00:06:32.320 --> 00:06:33.777 It's like, okay, it's 4:00 in the morning, 00:06:33.860 --> 00:06:37.510 you're staring at the ceiling, is that enough? Right. 00:06:37.660 --> 00:06:39.797 External impact is stuff that's happening to other people, right? 00:06:39.880 --> 00:06:42.180 - Yeah. - But all right, what is it about you? 00:06:42.830 --> 00:06:45.867 The story I like to tell myself is that I'm competing with myself, right? 00:06:45.950 --> 00:06:47.507 The story I like to tell myself is I'm getting up in the morning 00:06:47.590 --> 00:06:49.027 because I'm trying to become a better version of myself. 00:06:49.110 --> 00:06:53.650 I'm trying to become smarter and better informed, and reach better conclusions, 00:06:54.240 --> 00:06:57.857 and be better at what I do, and continue to expand my skills. 00:06:57.940 --> 00:07:02.207 But again, to actually analyze that properly 00:07:02.290 --> 00:07:05.640 would require a level of therapy that I'm not willing to engage in. 00:07:07.670 --> 00:07:10.697 So, anyway, so yes, the much more comfortable conversation is, 00:07:10.780 --> 00:07:13.497 "What are you trying to do in the world," which I would love to talk about. 00:07:13.580 --> 00:07:16.347 - I have almost no introspection either, so I understand that. - Right. Yes. Yeah. 00:07:16.430 --> 00:07:18.097 - All right, so tell me what you're trying to do in the world then. 00:07:18.180 --> 00:07:20.207 - Yeah, I mean, look, we have had this... 00:07:20.290 --> 00:07:23.317 It's actually fairly amazing that it's become a controversial kind of thing, 00:07:23.400 --> 00:07:25.937 but we just have this like fundamental view that technology is, on balance, 00:07:26.020 --> 00:07:27.927 an enormously powerful force in the world, 00:07:28.010 --> 00:07:29.817 and basically that the big problem with the world 00:07:29.900 --> 00:07:32.687 is that there's not enough technology, there's not enough information, 00:07:32.770 --> 00:07:34.370 there's not enough intelligence. 00:07:34.600 --> 00:07:36.097 And we have this opportunity, 00:07:36.180 --> 00:07:40.247 we have these special sets of technologies that let us fundamentally improve things. 00:07:40.330 --> 00:07:43.857 And then there's this very special kind of personality type of the entrepreneur, 00:07:43.940 --> 00:07:46.317 who's able to build the product, and then able to build the company, 00:07:46.400 --> 00:07:49.677 and build a phenomenon, and really make an impact on things. 00:07:49.760 --> 00:07:53.460 And so when I look at the world, I'm just like, okay, this is just like... 00:07:53.580 --> 00:07:55.617 The world we live in is just a very primitive and crude place 00:07:55.700 --> 00:07:58.450 as compared to what it should be, and what it could be. 00:07:58.960 --> 00:08:02.257 And so the whole thing that we've been trying to do for 17 years at our firm 00:08:02.340 --> 00:08:06.377 is build kind of the ideal partner to the founders that are trying to do that, 00:08:06.460 --> 00:08:08.247 based on our own experiences of having been founders 00:08:08.330 --> 00:08:09.537 that we're trying to do that. 00:08:09.620 --> 00:08:12.970 Overall, the world, especially the Western world, is just stagnant. 00:08:13.400 --> 00:08:15.147 The overall kind of theme of things- - Mm-hmm. 00:08:15.230 --> 00:08:18.607 - is just everything is stagnant, and we could talk a lot about that. 00:08:18.690 --> 00:08:21.187 But every once in a while, you have somebody who comes along, 00:08:21.270 --> 00:08:22.097 and it's just like, all right, no, 00:08:22.180 --> 00:08:24.357 I actually have an idea of how to make things fundamentally better, 00:08:24.440 --> 00:08:26.317 and I have a way to build a business around that, 00:08:26.400 --> 00:08:28.850 and build a company, build an empire around that. 00:08:29.960 --> 00:08:32.347 And those people, include ourselves in this, 00:08:32.430 --> 00:08:34.690 but those of us that are trying to do that, 00:08:35.170 --> 00:08:37.717 we're like a rough movement basically against stagnation. 00:08:37.800 --> 00:08:40.450 But without us, there's nothing but stagnation. 00:08:40.560 --> 00:08:42.367 - Mm-hmm. - But it's actually really funny. 00:08:42.450 --> 00:08:46.517 There's always this kind of criticism that you get from, whatever kind of, as I say, 00:08:46.600 --> 00:08:48.927 the corporate press or a kind of outside critics, which is like, 00:08:49.010 --> 00:08:50.957 "Oh, you VCs are funding the wrong things," 00:08:51.040 --> 00:08:52.347 or, "You entrepreneurs are building the wrong things." 00:08:52.430 --> 00:08:54.997 It's like, well, nobody licensed us to do any of this. 00:08:55.080 --> 00:08:58.367 We didn't apply for a permit, right? 00:08:58.450 --> 00:09:00.757 Get judged by somebody ahead of time and told, 00:09:00.840 --> 00:09:02.647 "Yes, you get to do this, you don't get to do this." 00:09:02.730 --> 00:09:05.587 Many people could be trying to do this. Anybody can do this. 00:09:05.670 --> 00:09:10.200 Anybody can start, build a product, start a company, start, even try to be a VC. 00:09:11.050 --> 00:09:12.697 These are all completely open fields. 00:09:12.780 --> 00:09:16.180 And it's just shocking to me how few people actually give it a shot. 00:09:16.740 --> 00:09:19.977 And the fate of the world over the next 1500 years 00:09:20.060 --> 00:09:23.060 is riding on the people who actually want to give it a shot. 00:09:23.460 --> 00:09:26.217 I want to tell you about the presenting sponsor of this podcast, Ramp. 00:09:26.300 --> 00:09:28.737 I have been reading a lot about SpaceX lately. 00:09:28.820 --> 00:09:31.407 SpaceX is one of the most valuable private businesses in the world, 00:09:31.490 --> 00:09:33.777 and one of the main themes in the history of SpaceX 00:09:33.860 --> 00:09:36.937 is constantly attacking and questioning your cost. 00:09:37.020 --> 00:09:40.867 Ramp helps many of the most innovative businesses in the world do exactly that. 00:09:40.950 --> 00:09:44.797 The median company running on Ramp cuts their expenses by 5%. 00:09:44.880 --> 00:09:47.137 And one thing SpaceX has demonstrated 00:09:47.220 --> 00:09:49.857 is that a religious dedication to controlling costs 00:09:49.940 --> 00:09:51.897 can help actually increase revenue, 00:09:51.980 --> 00:09:55.157 because you can pursue opportunities you couldn't otherwise. 00:09:55.240 --> 00:09:57.747 And we see that in the Ramp data too. 00:09:57.830 --> 00:10:02.700 The median company running on Ramp also grows their revenue by 16%. 00:10:02.830 --> 00:10:05.807 So, when you're running your business on Ramp and your competitors are not, 00:10:05.890 --> 00:10:09.700 you have a massive competitive advantage that compounds over time. 00:10:09.860 --> 00:10:14.027 Ramp is the only platform designed to make your finance team faster and happier. 00:10:14.110 --> 00:10:17.237 Many of the top founders and CEOs I know run their business on Ramp. 00:10:17.320 --> 00:10:19.617 I run my business on Ramp, and you should too. 00:10:19.700 --> 00:10:22.417 Go to ramp.com to learn how they can help your business 00:10:22.500 --> 00:10:25.437 save time, save money, and grow revenue. 00:10:25.520 --> 00:10:29.477 That is ramp.com. So, when you started the firm 17 years ago, 00:10:29.560 --> 00:10:31.960 was your thesis exactly the same as it is today? 00:10:32.760 --> 00:10:34.660 - I'd say the core thesis is the same. 00:10:34.950 --> 00:10:37.750 The specifics have varied; they have changed enormously. 00:10:38.150 --> 00:10:39.737 We can talk about both parts of that. 00:10:39.820 --> 00:10:43.217 But yeah, no, the core thesis was kind of the startup, the entrepreneur, 00:10:43.300 --> 00:10:46.397 the founder is going to be the core engine of progress in the world, 00:10:46.480 --> 00:10:48.940 and I think that's more true than ever. 00:10:49.120 --> 00:10:51.307 In fact, when we started, it was still controversial, 00:10:51.390 --> 00:10:53.077 the idea that a founder would run their own company. 00:10:53.160 --> 00:10:54.910 - Even in 2008, 2009? - Yeah. Yeah. 00:10:55.300 --> 00:10:56.447 Well, it was still very controversial, 00:10:56.530 --> 00:10:58.887 and in fact, there were high-profile companies at the time 00:10:58.970 --> 00:10:59.867 that were getting heavily criticized 00:10:59.950 --> 00:11:03.100 for basically having these little kids running these companies. 00:11:03.240 --> 00:11:05.087 - Okay, so you have this encyclopedic knowledge 00:11:05.170 --> 00:11:06.757 of the history of Silicon Valley in your head. 00:11:06.840 --> 00:11:08.777 I probably read, I don't know, 30 to 40 books on it, 00:11:08.860 --> 00:11:11.050 so I have some level, but not that you do. 00:11:11.150 --> 00:11:13.077 I remember reading a book on Nolan Bushnell, founder of Atari, 00:11:13.160 --> 00:11:15.887 who was 27 at the time, and it was excessively rare. 00:11:15.970 --> 00:11:18.827 It talks about that. In his story, it's just excessively rare 00:11:18.910 --> 00:11:25.237 for him not to be replaced, once Atari started growing, with an older CEO. 00:11:25.320 --> 00:11:28.340 - Yeah. - Were there other examples before him? 00:11:28.500 --> 00:11:33.337 Well, so Christopher Columbus. Alexander the Great. 00:11:33.420 --> 00:11:36.527 - Yeah. Right? So, throughout history- - Yeah. 00:11:36.610 --> 00:11:38.427 - most of the... Thomas Jefferson. 00:11:38.510 --> 00:11:40.787 Throughout history, most of the great things that have been built 00:11:40.870 --> 00:11:43.687 have been built by this kind of super-charismatic founder type, 00:11:43.770 --> 00:11:46.957 you know, will to power founder type, who, basically, built and run something to... 00:11:47.040 --> 00:11:48.417 - Okay, hold on. - Henry Ford. 00:11:48.500 --> 00:11:50.507 - Hold on. I love that you went here because you don't remember this- - Yeah. 00:11:50.590 --> 00:11:52.077 - but we had dinner in Miami- - Mm-hmm. 00:11:52.160 --> 00:11:53.997 with Jared Kushner, a year ago or something, 00:11:54.080 --> 00:11:56.987 and me and you would wrestle because I was so excited to talk to you, 00:11:57.070 --> 00:11:59.027 and I was trying to get out of you like... 00:11:59.110 --> 00:12:01.257 Because I think about how history's greatest entrepreneurs all day. 00:12:01.340 --> 00:12:02.987 This is what I do seven days a week. 00:12:03.070 --> 00:12:06.197 Who are these entrepreneurs from history that you like? 00:12:06.280 --> 00:12:08.747 You just started naming country founders. - Yes, true. 00:12:08.830 --> 00:12:10.537 Exactly. There's this recency bias, right? 00:12:10.620 --> 00:12:13.247 Which is like the world that we live in today is the normal state of the world. 00:12:13.330 --> 00:12:15.447 And everything that happened in the past is weird and different, 00:12:15.530 --> 00:12:17.577 and those people were dumber than we are, and all screwed up. 00:12:17.660 --> 00:12:19.510 And it's like, well, maybe. - Mm-hmm. 00:12:20.100 --> 00:12:22.067 Or, maybe the world worked a certain way for thousands of years, 00:12:22.150 --> 00:12:23.487 and we're in the weird time. 00:12:23.570 --> 00:12:27.487 Maybe we're in a time that's just really unusual from a historical standpoint. 00:12:27.570 --> 00:12:30.707 And I think this is one of those dimensions in which that is true. 00:12:30.790 --> 00:12:33.577 It never would have occurred to anybody 100, 200, 300 years ago 00:12:33.660 --> 00:12:35.577 that if somebody was going to start something, 00:12:35.660 --> 00:12:38.047 that they were going to be the person who ran it, like obviously. 00:12:38.130 --> 00:12:39.377 It was just obviously the case. 00:12:39.460 --> 00:12:42.347 The book that I always recommend on this topic is called "The Machiavellians," 00:12:42.430 --> 00:12:46.537 which is this sort of famous book from the 1940s, by this guy James Burnham, 00:12:46.620 --> 00:12:49.220 who's one of the great geniuses of the 20th century. 00:12:50.000 --> 00:12:51.167 The way he describes it, basically, is he said, 00:12:51.250 --> 00:12:54.167 look, there have been two fundamental modes of business organization 00:12:54.250 --> 00:12:56.827 over the course of, basically, the history of capitalism. 00:12:56.910 --> 00:12:58.927 There's what he calls bourgeois capitalism, 00:12:59.010 --> 00:13:01.707 which, basically, is like the founder runs the company, name on the door. 00:13:01.790 --> 00:13:03.987 And the classic archetype for bourgeois capitalism 00:13:04.070 --> 00:13:07.117 was Henry Ford, in the 1920s, and today it's Elon Musk, right? 00:13:07.200 --> 00:13:08.367 It's just like, that's you. 00:13:08.450 --> 00:13:10.777 And by the way, in the old days, it was Ford Motor Company, 00:13:10.860 --> 00:13:12.287 you know, it's not Musk Motor Company. - Yeah. 00:13:12.370 --> 00:13:15.620 - But everybody knows Tesla and SpaceX, you know, these are Elon. 00:13:15.720 --> 00:13:17.717 And again, that maps to this historical thing, 00:13:17.800 --> 00:13:19.117 which is that's also how countries ran, 00:13:19.200 --> 00:13:21.850 and that's also how cities ran, and all these things. 00:13:22.270 --> 00:13:26.260 Religions, by the way. Basically, everything, founders led the way. 00:13:26.620 --> 00:13:27.407 That's the historical norm. 00:13:27.490 --> 00:13:29.417 And then what he basically says in this book is he goes through 00:13:29.500 --> 00:13:33.477 and he says that there's this new model that basically is an artifact, 00:13:33.560 --> 00:13:35.757 again, it's an artifact of kind of this weird period of time 00:13:35.840 --> 00:13:37.107 between the 1880s and 1920s, 00:13:37.190 --> 00:13:40.590 where kind of the modern world, as we know it today, kind of formed. 00:13:40.770 --> 00:13:42.367 And he said there's sort of a new philosophy 00:13:42.450 --> 00:13:45.850 of sort of leadership and management, which is called managerialism, 00:13:46.030 --> 00:13:47.807 sort of the rise of the concept of a manager. 00:13:47.890 --> 00:13:50.720 And specifically a manager as contrasted to a leader. 00:13:50.960 --> 00:13:53.727 And so, therefore, the manager, therefore, the idea of a management school. 00:13:53.810 --> 00:13:56.447 Right. - Mm-hmm. Therefore Harvard and Stanford Business Schools, right? 00:13:56.530 --> 00:14:00.430 Therefore, the idea of the manager who replaces the founder running a company. 00:14:00.700 --> 00:14:02.797 Therefore, the idea of management as a skill set 00:14:02.880 --> 00:14:05.527 that can be used to run many different kinds of businesses. 00:14:05.610 --> 00:14:07.687 In the '70s, this then turned into the conglomerate, 00:14:07.770 --> 00:14:09.667 which was the idea that it doesn't matter what the company does. 00:14:09.750 --> 00:14:13.250 If you have a good manager, the company should do 30 different things. 00:14:13.410 --> 00:14:14.787 And so managerialism is this idea 00:14:14.870 --> 00:14:16.817 that you have this kind of interchangeable management skill, 00:14:16.900 --> 00:14:18.447 and that that can basically run anything. 00:14:18.530 --> 00:14:19.907 And actually what Burnham says is he says, 00:14:19.990 --> 00:14:21.637 "Look, people are going to try to draw a value judgment on this, 00:14:21.720 --> 00:14:23.377 and they're going to try to say this is better or worse 00:14:23.460 --> 00:14:25.017 than the old name on the door model." 00:14:25.100 --> 00:14:27.817 But he said, "The reality of the modern world is everything is big." 00:14:27.900 --> 00:14:28.667 - Mm-hmm. 00:14:28.750 --> 00:14:32.297 - For the electrical power grid to get big, or the road network to get big, 00:14:32.380 --> 00:14:34.030 or the car industry to get big, 00:14:34.630 --> 00:14:36.917 large-scale systems need to be run by people who are trained 00:14:37.000 --> 00:14:38.697 in how to run large-scale systems. 00:14:38.780 --> 00:14:39.967 And so he said, "You may or may not..." 00:14:40.050 --> 00:14:40.907 And the same thing with countries. 00:14:40.990 --> 00:14:42.207 Large-scale countries are going to need to be run 00:14:42.290 --> 00:14:44.497 by people who are good at running large-scale things, right? 00:14:44.580 --> 00:14:47.747 And the founding personality type is not the manager personality type. 00:14:47.830 --> 00:14:48.397 Those are different. 00:14:48.480 --> 00:14:50.717 And so there's going to be a handoff when things get big and complicated. 00:14:50.800 --> 00:14:52.807 And so that's the model that Nolan Bushnell talks about, 00:14:52.890 --> 00:14:55.847 and that's the model that dominated Silicon Valley for 50 years. 00:14:55.930 --> 00:14:56.987 The problem with his argument 00:14:57.070 --> 00:14:59.117 is that assumes the managers are going to do a good job. 00:14:59.200 --> 00:15:02.157 - Mm-hmm. - Right? And I think if there's one dominant theme that we're seeing 00:15:02.240 --> 00:15:06.797 in the last 30 years, in the West for sure is that managers, generally, writ large 00:15:06.880 --> 00:15:08.390 are not doing a great job. 00:15:08.870 --> 00:15:11.577 Or another way to put it is the managers maybe are good at managing 00:15:11.660 --> 00:15:13.817 something that's going to be status quo for a long time. 00:15:13.900 --> 00:15:17.047 - Mm-hmm. If it doesn't change, maybe they can run the banks for a long time, 00:15:17.130 --> 00:15:18.457 or they can run the power company for a long time, 00:15:18.540 --> 00:15:21.790 or the car company, and as long as the car is the car is the car, 00:15:21.910 --> 00:15:24.460 or soup is soup is soup, it kind of doesn't matter. 00:15:24.750 --> 00:15:28.230 But the minute things change, the manager personality type, 00:15:28.540 --> 00:15:29.977 because it's not the founder personality type, 00:15:30.060 --> 00:15:31.887 it doesn't know how to deal with change. 00:15:31.970 --> 00:15:32.587 Not everything is changing. 00:15:32.670 --> 00:15:34.117 A lot of things aren't changing, but for the things that are changing, 00:15:34.200 --> 00:15:36.147 they're changing like really, really quickly. 00:15:36.230 --> 00:15:39.120 I mean, SpaceX is like the classic example of this. 00:15:39.400 --> 00:15:41.647 Imagine being a professionally trained manager, 00:15:41.730 --> 00:15:43.927 trained at a top management school, 00:15:44.010 --> 00:15:47.550 working for a rocket launch company, competing with SpaceX. 00:15:48.140 --> 00:15:51.317 And the assumption of the entire rocket industry for the last 100 years 00:15:51.400 --> 00:15:54.150 has been the rockets are used once, and then that's it. 00:15:54.240 --> 00:15:55.477 And the economics of launch are dominated 00:15:55.560 --> 00:15:56.907 by having to build a new rocket every time. 00:15:56.990 --> 00:15:59.387 And then, this crazy guy in California comes up with this thing 00:15:59.470 --> 00:16:01.067 where the rockets land on their butt. 00:16:01.150 --> 00:16:02.500 And you can't replicate it. 00:16:03.340 --> 00:16:04.087 Okay, your management skills... 00:16:04.170 --> 00:16:05.747 Like, what good are your management skills at that point? 00:16:05.830 --> 00:16:08.677 And I think there's like a whole bunch of interesting areas 00:16:08.760 --> 00:16:11.200 of human activity where that shift is happening. 00:16:11.430 --> 00:16:13.777 And so, I think this is where Burnham's thesis collapses, 00:16:13.860 --> 00:16:15.877 where it's just like, okay, the managers actually can't do it. 00:16:15.960 --> 00:16:18.157 Yep. Yes, there's a need to run things at scale, 00:16:18.240 --> 00:16:20.457 but no, the managers actually can't do it because they can't adapt. 00:16:20.540 --> 00:16:22.257 - And the founder can just learn how to run things to scale. 00:16:22.340 --> 00:16:24.067 - Well, that's the theory, and that's a big part of our theories, 00:16:24.150 --> 00:16:25.577 yeah, the founders can actually learn how to do this. 00:16:25.660 --> 00:16:28.557 And look, this is still a controversial topic. 00:16:28.640 --> 00:16:30.600 This still comes up because... 00:16:31.330 --> 00:16:33.177 - Is it controversial? - Well, it is because founders aren't necessarily... 00:16:33.260 --> 00:16:35.747 Especially, founders on day one are not good at doing this. 00:16:35.830 --> 00:16:38.787 Okay, so in tech, let's just talk about tech specifically, 00:16:38.870 --> 00:16:42.857 in tech, the founder tends to have been in a lab, literally or metaphorically, 00:16:42.940 --> 00:16:44.347 for 20 years before they start their company. 00:16:44.430 --> 00:16:47.550 They've been probably working by themselves with a small team. 00:16:47.970 --> 00:16:50.167 They've been building technology. They haven't been running things. 00:16:50.250 --> 00:16:52.397 They haven't been managing large organizations. 00:16:52.480 --> 00:16:54.287 They haven't been running public companies. 00:16:54.370 --> 00:16:56.327 And so, there is a missing skill set, right? 00:16:56.410 --> 00:16:58.337 And on day one, they don't know how to do that. 00:16:58.420 --> 00:17:01.370 And so, they do need to be willing to learn how to do that. 00:17:01.550 --> 00:17:03.537 And then, by the way, they do need to be capable of doing that 00:17:03.620 --> 00:17:06.020 because some of them can and some of them can't. 00:17:06.360 --> 00:17:08.827 So this, maybe, is like the core thesis behind our firm, 00:17:08.910 --> 00:17:13.627 which is, you're much more likely to build something important in the 21st century 00:17:13.710 --> 00:17:16.317 if you start with the founder and train them on management, 00:17:16.400 --> 00:17:17.607 than you are to start with the manager 00:17:17.690 --> 00:17:21.200 and try to train them on being a founder, on creating new things. 00:17:21.610 --> 00:17:23.667 And I think that this trend is intensifying. 00:17:23.750 --> 00:17:25.487 Because what's happening is all the old edifices, 00:17:25.570 --> 00:17:28.717 all the old incumbent institutions of the last 100 years that are run by managers, 00:17:28.800 --> 00:17:31.300 they're all in some state of fundamental collapse. 00:17:31.470 --> 00:17:35.120 They're all collapsing in trust and credibility because they can't adapt. 00:17:35.670 --> 00:17:38.097 And so, this issue is becoming more and more acute, 00:17:38.180 --> 00:17:41.027 which is the system that we thought was necessary and sufficient, 00:17:41.110 --> 00:17:43.090 actually, just does not work. 00:17:43.350 --> 00:17:45.697 And if anything good is going to happen, it's going to have to be somebody, 00:17:45.780 --> 00:17:48.847 it's going to have to be a Henry Ford, Elon Musk type who actually does it. 00:17:48.930 --> 00:17:52.570 - You think it's in a vast minority of people agree with you? 00:17:52.950 --> 00:17:53.817 - Look, it's becoming more common. 00:17:53.900 --> 00:17:55.417 I mean, when you get an Elon Musk and a Steve Jobs, 00:17:55.500 --> 00:17:57.217 when you get these kind of archetypal examples of it, 00:17:57.300 --> 00:18:01.767 it's a lot easier to sell it. Mark Zuckerberg, we were talking about earlier, 00:18:01.850 --> 00:18:04.290 he's now a great case study of this, right? 00:18:05.690 --> 00:18:08.917 When Mark started Facebook, he had never had a job before. - Yeah. 00:18:09.000 --> 00:18:11.730 - Okay. Not only had he not managed people, 00:18:11.990 --> 00:18:13.767 he had not worked for anybody, right? 00:18:13.850 --> 00:18:17.127 And so he started with zero, and his learning curve, 00:18:17.210 --> 00:18:19.317 which, by the way, happened fully in the public eye, right? 00:18:19.400 --> 00:18:21.497 His learning curve was vertical. And by the way, it's still vertical. 00:18:21.580 --> 00:18:23.007 He spends an enormous amount of time 00:18:23.090 --> 00:18:26.640 learning how to become better at running these things at a large scale. 00:18:26.870 --> 00:18:28.257 He's still the founder, and he's still the innovator, 00:18:28.340 --> 00:18:30.207 and he's still like a fountain of ideas on what to do. 00:18:30.290 --> 00:18:34.307 So, he's like the classic example of the double threat. 00:18:34.390 --> 00:18:36.197 And then what happens is other founders look at that 00:18:36.280 --> 00:18:38.847 and they're like, "Oh, I could do that." Right? 00:18:38.930 --> 00:18:41.517 - Which is exactly what Steve Jobs said when he saw Nolan Bushnell. 00:18:41.600 --> 00:18:42.927 - Exactly. - "I can run my company." 00:18:43.010 --> 00:18:44.157 - "I can do that." Yeah, exactly. - Yeah. 00:18:44.240 --> 00:18:46.917 And by the way, it's amazing how fast this stuff shifted, 00:18:47.000 --> 00:18:49.497 because Steve famously had this short period of time 00:18:49.580 --> 00:18:51.857 where he worked for Hewlett-Packard, and I think, I don't know if it's true. 00:18:51.940 --> 00:18:54.347 The legend is that Jobs pitched his manager at Hewlett-Packard... 00:18:54.430 --> 00:18:56.587 - No, Wozniak pitched him. - Was it Wozniak? Okay. All right. - Yeah, Wozniak. 00:18:56.670 --> 00:18:57.407 - Okay, okay. Wozniak pitched. - Yeah. 00:18:57.490 --> 00:18:59.787 There was some other story where Jobs went into a meeting 00:18:59.870 --> 00:19:03.047 with some manager trying to pitch the thing, and the line from the manager was, 00:19:03.130 --> 00:19:05.157 "Absolutely not. This is the dumbest idea I've ever heard. 00:19:05.240 --> 00:19:07.387 Get your feet off my desk and get out of here." Right? 00:19:07.470 --> 00:19:09.137 You can just imagine Steve with his... 00:19:09.220 --> 00:19:10.677 - And they had to be bare feet at that time. 00:19:10.760 --> 00:19:17.097 - Oh, probably. - My favorite Apple lore is that the first sale in Apple's history 00:19:17.180 --> 00:19:20.680 was made barefoot. When he walked into the Byte Shop, he was barefoot. 00:19:21.500 --> 00:19:22.377 - What's amazing about that is, 00:19:22.460 --> 00:19:25.110 yeah, so Wozniak for sure worked for Hewlett-Packard. 00:19:25.350 --> 00:19:26.627 Everything I'm describing was Hewlett-Packard 00:19:26.710 --> 00:19:29.147 in the 1950s, 1960s, and 1940s. 00:19:29.230 --> 00:19:32.437 That was also Dave Packard and Bill Hewlett were that founder type. - Yeah. 00:19:32.520 --> 00:19:35.097 And Dave Packard and Bill Hewlett ran their company, 00:19:35.180 --> 00:19:36.717 between the two of them, for 50 years. 00:19:36.800 --> 00:19:37.827 - Do you think that's the most... - And, by the way, 00:19:37.910 --> 00:19:40.097 Silicon Valley was built, in large part, on HP. 00:19:40.180 --> 00:19:42.330 HP was the original Silicon Valley company. 00:19:42.550 --> 00:19:44.087 - Okay, that's the next question. - And it was run by its founders 00:19:44.170 --> 00:19:45.787 for 50 years, and yet, people concluded 00:19:45.870 --> 00:19:47.257 the founders shouldn't run the companies, right? 00:19:47.340 --> 00:19:50.357 And so, it's one of those things where it's like it's kind of so obvious, 00:19:50.440 --> 00:19:51.467 it was staring everybody in the face, 00:19:51.550 --> 00:19:54.217 and so people had to construct kind of, basically, 00:19:54.300 --> 00:19:56.857 these elaborate kind of lattices of theories 00:19:56.940 --> 00:19:58.557 to basically get around the fundamental fact 00:19:58.640 --> 00:20:01.097 that you need somebody who knows what to do, actually running the thing. 00:20:01.180 --> 00:20:02.057 - Do you think HP might have been 00:20:02.140 --> 00:20:05.200 the most influential company in Silicon Valley history? 00:20:05.390 --> 00:20:09.860 It was, for sure, the most influential company from 1940 to 1980, 00:20:10.140 --> 00:20:11.990 and then probably after that, Intel. 00:20:12.460 --> 00:20:15.267 - Well, go to the founders of Intel- - Yeah. - and you read biographies of them 00:20:15.350 --> 00:20:17.697 and they talk about modeling off of HP. 00:20:17.780 --> 00:20:19.047 - Yeah, that's right. That's right. Yeah, that's right. 00:20:19.130 --> 00:20:22.397 - And then how many founders modeled off of Bob Noyce and Intel 00:20:22.480 --> 00:20:23.177 after the fact- - Yeah, yeah. 00:20:23.260 --> 00:20:26.007 - including Steve Jobs, who would go to Bob Noyce's house for dinner. 00:20:26.090 --> 00:20:26.617 - Yeah. That's right. 00:20:26.700 --> 00:20:29.357 By the way, that's another great example, because Bob Noyce, at least, you know... 00:20:29.440 --> 00:20:30.497 If you look at photos of Bob Noyce, you're like, 00:20:30.580 --> 00:20:32.730 "Wow, this guy's like a pillar of society." 00:20:33.000 --> 00:20:34.617 He's very well-dressed, and he's kind of very adult, 00:20:34.700 --> 00:20:38.140 and he's famously the leader of the Traitorous Eight. 00:20:38.240 --> 00:20:41.627 - Yeah. You know, they're the group that left Shockley to start Fairchild, 00:20:41.710 --> 00:20:43.107 - And then left Fairchild to start Intel. - and then left Fairchild 00:20:43.190 --> 00:20:43.707 to start Intel. - Yeah, exactly. 00:20:43.790 --> 00:20:46.417 - And so Bob Noyce was 100% the Steve Jobs of his time, 00:20:46.500 --> 00:20:49.297 just in the short-sleeve white dress shirt and the skinny black tie. 00:20:49.380 --> 00:20:50.213 - Yeah. 00:20:50.380 --> 00:20:51.997 Again, it's like the exact same thing. 00:20:52.080 --> 00:20:54.787 And so, I unfortunately never met Bob Noyce, 00:20:54.870 --> 00:20:57.677 but I could easily imagine Bob Noyce and Steve Jobs sitting down 00:20:57.760 --> 00:21:00.247 and being able to talk for three hours, and completely understanding each other 00:21:00.330 --> 00:21:02.857 despite the fact that the look and feel is completely unlike. 00:21:02.940 --> 00:21:06.557 - He was almost like a disciplinarian to Steve because Steve was wild and reckless. 00:21:06.640 --> 00:21:08.637 I was also wild and reckless. You need to mature. 00:21:08.720 --> 00:21:12.440 And I think Bob's wife, maybe, went to work at Apple early on, too. 00:21:13.070 --> 00:21:15.460 He talked about this in his biography. 00:21:15.780 --> 00:21:16.957 There's a few great biographies of Bob Noyce, 00:21:17.040 --> 00:21:20.217 but he said that the reason he spent so much time after he was really successful 00:21:20.300 --> 00:21:21.447 spending time with young entrepreneurs, 00:21:21.530 --> 00:21:25.137 he said it was restocking the stream in which he fished from. 00:21:25.220 --> 00:21:27.137 - Amazing. - He thought it was really important, and he's like, 00:21:27.220 --> 00:21:28.607 "I learned from all the guys before me. 00:21:28.690 --> 00:21:31.247 I need to take that knowledge I've built up over multiple decades 00:21:31.330 --> 00:21:32.980 and push it down the generation." 00:21:33.090 --> 00:21:35.267 I want to go back to starting the firm, though. This is interesting. 00:21:35.350 --> 00:21:38.137 What was occurring in your life, either at that time or before that, 00:21:38.220 --> 00:21:40.970 that you had this observation that this had to be done? 00:21:42.820 --> 00:21:43.847 - We've got all these elaborate theories. 00:21:43.930 --> 00:21:45.997 The practical reality of it was, my partner Ben, and I, 00:21:46.080 --> 00:21:48.030 had become very active angel investors. 00:21:48.430 --> 00:21:50.667 And I'd been an angel investor since the mid '90s, 00:21:50.750 --> 00:21:54.527 but then Ben and I started doing it kind of as a real thing, 00:21:54.610 --> 00:21:57.157 putting significant time into it, probably starting in 2003. 00:21:57.240 --> 00:22:00.740 Well, I did it kind of throughout the early 2000s, but 2003, 2004. 00:22:01.120 --> 00:22:03.317 It's hard to remember now, but if you go back to 2003, 2004, 00:22:03.400 --> 00:22:05.037 there weren't thousands of angel investors. 00:22:05.120 --> 00:22:09.480 There were like eight. It was like Ron Conway and a handful of people. 00:22:09.830 --> 00:22:11.697 And then Ben and I were running around doing it. 00:22:11.780 --> 00:22:14.297 And this was very significant in the evolution of the venture capital industry, 00:22:14.380 --> 00:22:16.377 because this was the point at which the traditional VCs 00:22:16.460 --> 00:22:18.627 got disintermediated by angels and seed investors, 00:22:18.710 --> 00:22:20.897 who kind of inserted in before the VCs arrived, 00:22:20.980 --> 00:22:23.797 which was this fundamental change that changed the whole industry. 00:22:23.880 --> 00:22:25.200 But we were part of that. 00:22:25.880 --> 00:22:28.087 But as a consequence, we were investing in all these new companies, 00:22:28.170 --> 00:22:29.377 basically, at the point of formation. 00:22:29.460 --> 00:22:31.910 We were basically playing amateur early-stage VC. 00:22:32.740 --> 00:22:34.797 And we were always like, "We're not going on the board. 00:22:34.880 --> 00:22:37.177 You're going to raise money from a real venture firm later. 00:22:37.260 --> 00:22:38.877 They're going to go on your board and whatever and work with you." 00:22:38.960 --> 00:22:41.007 And what we just found, over and over and over and over again, 00:22:41.090 --> 00:22:43.447 was we ended up getting pulled into these companies, 00:22:43.530 --> 00:22:44.847 either because there were issues that, 00:22:44.930 --> 00:22:47.177 just like the other people that they were working with, 00:22:47.260 --> 00:22:50.307 or they either hadn't raised venture yet, 00:22:50.390 --> 00:22:52.837 or the VCs that they'd raised from couldn't help them with. 00:22:52.920 --> 00:22:53.957 And so we just got pulled in, 00:22:54.040 --> 00:22:57.840 and the reason was we had been running companies at that point for 20 years. 00:22:59.260 --> 00:23:01.337 We at least had some idea of what we were doing. 00:23:01.420 --> 00:23:04.537 And then the other was we kept getting brought in to do conflict resolution 00:23:04.620 --> 00:23:06.997 between the founders and the VCs, right? 00:23:07.080 --> 00:23:07.913 - Yeah. 00:23:10.150 --> 00:23:11.927 - Especially because, again, much more common at that time, 00:23:12.010 --> 00:23:13.527 especially if the VC's fundamental point of view 00:23:13.610 --> 00:23:14.637 is the founder's not going to run the company, 00:23:14.720 --> 00:23:17.577 and we need to replace you with a professional manager as fast as possible. 00:23:17.660 --> 00:23:20.227 The founders are not necessarily going to like that, and they might resist that, 00:23:20.310 --> 00:23:22.517 and by the way, even if they're on board with that idea, 00:23:22.600 --> 00:23:25.637 they might not like the person who the VC wants to bring in. 00:23:25.720 --> 00:23:27.667 And so, we kept ending up in these kinds of, basically, 00:23:27.750 --> 00:23:29.510 as arbitrators in this sort of... 00:23:30.000 --> 00:23:31.997 And in theory, we were kind of trusted intermediaries 00:23:32.080 --> 00:23:33.827 because we knew the founders, we knew the VCs, 00:23:33.910 --> 00:23:35.697 and we could kind of help bridge between that. 00:23:35.780 --> 00:23:36.907 But literally, what happened was after a while, 00:23:36.990 --> 00:23:40.287 we were spending like eight hours a day just doing this. 00:23:40.370 --> 00:23:42.477 And we're like, "All right." And, it's like weird. 00:23:42.560 --> 00:23:43.807 It's like you're writing a 100,000 dollar check, 00:23:43.890 --> 00:23:46.687 and you're spending all this time doing it and then to basically arbitrate it 00:23:46.770 --> 00:23:48.907 with somebody who wrote a 10 million dollar check. 00:23:48.990 --> 00:23:50.067 And it's just like, all right, 00:23:50.150 --> 00:23:53.050 we should probably just write the 10 million dollar check. 00:23:53.770 --> 00:23:56.967 So, I always think like the founders, 00:23:57.050 --> 00:23:58.957 always one of my theories of the great founders is, 00:23:59.040 --> 00:24:02.407 they tend to be able to operate at kind of a strategic, conceptual level 00:24:02.490 --> 00:24:04.377 and then the practical level at the same time. 00:24:04.460 --> 00:24:06.847 And so, we had a whole theory I could take you through 00:24:06.930 --> 00:24:08.507 for the evolution of the venture business. - Please do. 00:24:08.590 --> 00:24:11.057 - Yeah. But underneath that was just this actual... 00:24:11.140 --> 00:24:13.937 The lived experience of what was actually happening on the ground. 00:24:14.020 --> 00:24:16.347 The big theory of the firm that we had at that time 00:24:16.430 --> 00:24:20.087 was linked to this idea of founders running the show, 00:24:20.170 --> 00:24:21.367 but it was also a structural observation 00:24:21.450 --> 00:24:24.207 of what was happening in the venture industry, which was... 00:24:24.290 --> 00:24:26.757 Basically, what we did was we sort of, in line with your philosophy, 00:24:26.840 --> 00:24:27.777 we went back and we studied 00:24:27.860 --> 00:24:31.717 a lot of other businesses that have similarities to the venture business. 00:24:31.800 --> 00:24:36.277 And so, we studied private equity, hedge funds, investment banks, 00:24:36.360 --> 00:24:40.530 law firms, management consulting firms, ad agencies, accounting firms. 00:24:40.890 --> 00:24:44.777 You know, basically anything where the product is fundamentally a relationship, 00:24:44.860 --> 00:24:46.947 a knowledge work, kind of relationship 00:24:47.030 --> 00:24:49.750 as compared to something that gets manufactured. 00:24:50.070 --> 00:24:52.287 And what we observed is, basically, an example, 00:24:52.370 --> 00:24:53.917 Hollywood talent agencies actually is the one 00:24:54.000 --> 00:24:55.327 we've probably talked publicly about the most, 00:24:55.410 --> 00:24:56.997 and so that was a great case study. - Ovitz. 00:24:57.080 --> 00:25:00.027 - Oh, the Ovitz story. - He was in this studio a few months ago. 00:25:00.110 --> 00:25:01.110 - Fantastic. - Yeah. 00:25:01.510 --> 00:25:04.327 And by the way, we make a point of crediting, 00:25:04.410 --> 00:25:06.667 he gave us a lot of this theory, so a lot of this comes from him. 00:25:06.750 --> 00:25:11.200 But, well, actually I'll tell it through his experience. 00:25:11.460 --> 00:25:15.427 So, when he started his agency in, was it 80-whatever? 00:25:15.510 --> 00:25:18.547 No, 75? 75. - In the 70s, I think, yeah. - In the 70s, like in the mid-70s. 00:25:18.630 --> 00:25:19.957 It was actually very similar. 00:25:20.040 --> 00:25:23.727 Structurally, it was very similar to when we started A16Z in 2009, 00:25:23.810 --> 00:25:26.247 which was the configuration of the industry at that point 00:25:26.330 --> 00:25:30.067 was basically a bunch of essentially service firms, a bunch of talent agencies, 00:25:30.150 --> 00:25:32.150 none of which were at a very high scale. 00:25:32.530 --> 00:25:33.287 And then each of them was, basically, 00:25:33.370 --> 00:25:36.760 a tribe of basically solo operators and kind of lone wolves. 00:25:38.210 --> 00:25:41.697 So, the concept in Hollywood was you had an agent, and that was your guy. 00:25:41.780 --> 00:25:44.037 And that agent knew whoever that agent knew, 00:25:44.120 --> 00:25:46.187 and had whatever relationships that agent had. 00:25:46.270 --> 00:25:49.717 But the other agents at your agency were not available to you, 00:25:49.800 --> 00:25:52.677 and there was no collective benefit to the fact that you were at an agency 00:25:52.760 --> 00:25:54.787 that had not just your guy, but like a hundred other guys. 00:25:54.870 --> 00:25:56.737 There was no collective payoff to that. 00:25:56.820 --> 00:25:58.447 They ran that in that way for a very specific reason, 00:25:58.530 --> 00:26:01.037 which was this kind of this, "Eat what you kill" professional services mentality, 00:26:01.120 --> 00:26:04.107 where everybody should have to go build their own book of business. 00:26:04.190 --> 00:26:06.217 But you end up just dealing with a guy as opposed to a firm. 00:26:06.300 --> 00:26:08.467 Like, there's no firm, there's no collective thing. 00:26:08.550 --> 00:26:11.577 And that was basically the condition of venture capital in 2009, 00:26:11.660 --> 00:26:12.407 which is you have... 00:26:12.490 --> 00:26:16.277 And at this point, we knew all the VCs really well, and we had raised venture, 00:26:16.360 --> 00:26:19.467 and we had worked with all these other companies that had raised venture. 00:26:19.550 --> 00:26:23.657 And basically, all of the sort of legacy venture firms at that point, 00:26:23.740 --> 00:26:26.097 they were all like that. They were all just like tribes of lone wolves. 00:26:26.180 --> 00:26:28.907 And then, the thing that we knew that was not publicly known was, 00:26:28.990 --> 00:26:31.047 generally speaking, inside the firms, they didn't even like each other. 00:26:31.130 --> 00:26:33.130 - Oh, I hear stories like this all time. 00:26:33.830 --> 00:26:37.600 - Right. And so it's like, whatever, there's Joe and Mary, 00:26:37.800 --> 00:26:39.907 who are partners at a venture firm, and you're working with Joe, 00:26:39.990 --> 00:26:42.247 and Mary has a key connection that you need access to. 00:26:42.330 --> 00:26:44.337 And so, you ask Joe, "Can Mary introduce me to so and so?" 00:26:44.420 --> 00:26:46.537 And what you don't know is they're having like a brutal fight, 00:26:46.620 --> 00:26:50.037 where they're trying to destroy each other because they're fundamentally economics. 00:26:50.120 --> 00:26:53.450 They're going for a greater slice of the profit pool. 00:26:53.900 --> 00:26:54.677 And so they're really going at it. 00:26:54.760 --> 00:26:57.127 And so, we saw example after example of a venture firm 00:26:57.210 --> 00:26:59.407 that was, basically, either two things, actually. 00:26:59.490 --> 00:27:02.947 One, it's either melting down due to just internal strife and conflict. 00:27:03.030 --> 00:27:04.827 Or by the way, the other was generational succession, right? 00:27:04.910 --> 00:27:07.767 The other issue is a lot of the dominant venture firms in 2009 00:27:07.850 --> 00:27:09.487 had been around for 30 or 40 years, 00:27:09.570 --> 00:27:11.247 and they were now on their third generation of partners 00:27:11.330 --> 00:27:13.580 going to their fourth generation of partners. 00:27:13.940 --> 00:27:14.897 And again, it's the same thing. 00:27:14.980 --> 00:27:16.567 They had been founded by dynamos, 00:27:16.650 --> 00:27:20.697 and then, the later generation people were not like that. 00:27:20.780 --> 00:27:23.487 So, we basically said, "Oh." This is where the Ovitz thing comes in, is we said, 00:27:23.570 --> 00:27:24.547 "Look, that's not going to last." 00:27:24.630 --> 00:27:28.407 And so our theory of it was what we call death of the middle, or we sometimes... 00:27:28.490 --> 00:27:30.147 The negative way to frame it is death of the middle. 00:27:30.230 --> 00:27:31.830 The positive way is the barbell, 00:27:32.050 --> 00:27:33.347 which is what's happened in all these other industries, 00:27:33.430 --> 00:27:36.630 which is basically the industry gets stretched apart like taffy. 00:27:37.530 --> 00:27:40.937 And what you get is you get this barbell thing, and on one side of the barbell, 00:27:41.020 --> 00:27:44.860 you get early-stage angel seed investors who are really like first money in, 00:27:44.960 --> 00:27:47.487 staying very light on their feet, writing a relatively small check, 00:27:47.570 --> 00:27:51.407 but being involved in companies extremely early on, taking a lot of risk. 00:27:51.490 --> 00:27:54.117 And then on the other side, you get basically scaled platforms, right? 00:27:54.200 --> 00:27:57.747 So, you get large-scale enterprises that have a lot of throw weight, 00:27:57.830 --> 00:28:01.147 a lot of access, very big networks, and then access to a lot of money. 00:28:01.230 --> 00:28:03.377 The other comparison we always make is to retail shopping, right? 00:28:03.460 --> 00:28:06.337 Which is, there used to be department stores like Sears and J.C. Penney, 00:28:06.420 --> 00:28:08.857 which basically, where the brand promise was 00:28:08.940 --> 00:28:11.757 a pretty good selection of products at pretty good prices, right? 00:28:11.840 --> 00:28:13.517 And now, those are dead. 00:28:13.600 --> 00:28:16.697 And what you have instead are boutiques like the Gucci store or the Apple store, 00:28:16.780 --> 00:28:19.097 and then you've got this super scale e-commerce companies 00:28:19.180 --> 00:28:20.530 like Walmart and Amazon. 00:28:20.790 --> 00:28:22.227 We're to the point where it's just like, there's no reason 00:28:22.310 --> 00:28:25.057 to ever go to a department store because it's got less selection 00:28:25.140 --> 00:28:28.127 than Walmart and Amazon, but it doesn't have the quality tier 00:28:28.210 --> 00:28:30.257 and the special experience of a Gucci or Apple store. 00:28:30.340 --> 00:28:31.727 - But you had that thought in mind- - Yeah. 00:28:31.810 --> 00:28:32.917 - when you started A16Z? - Yeah, 100%. 00:28:33.000 --> 00:28:34.287 Yeah. Exactly. Yeah. - Wow, okay. 00:28:34.370 --> 00:28:36.137 - It was a conceptual leap for venture capital at the time, 00:28:36.220 --> 00:28:37.917 but the exact same thing had happened to private equity. 00:28:38.000 --> 00:28:39.477 The exact same thing had happened in hedge funds. 00:28:39.560 --> 00:28:40.907 The exact same thing had happened in investment. 00:28:40.990 --> 00:28:42.737 - And you knew that by what? Just reading about the issue? - Reading. 00:28:42.820 --> 00:28:45.217 So, the investment banks are the classic example. 00:28:45.300 --> 00:28:49.057 So, if you read about the sort of the original investment banks in the US, 00:28:49.140 --> 00:28:52.257 between 1880 and 1920, they were all like boutique venture capital firms 00:28:52.340 --> 00:28:54.220 in the 1970s, 1980s, in the US. 00:28:54.600 --> 00:28:57.377 It was like 20 guys. - These are more like merchant bankers. 00:28:57.460 --> 00:29:00.397 - Yeah. Well, and so, the classic stories which I love so much, 00:29:00.480 --> 00:29:03.307 so J.P. Morgan's one of my kind of favorite historical figures. 00:29:03.390 --> 00:29:05.957 And J.P. Morgan was an example that. 00:29:06.040 --> 00:29:09.857 The J.P. Morgan investment bank was basically very important, 00:29:09.940 --> 00:29:12.047 but it was like this tiny little operation. 00:29:12.130 --> 00:29:14.727 It fit in a single office. It was, I don't know, probably 20 principals 00:29:14.810 --> 00:29:17.790 and some office staff or something. It was not large. 00:29:18.030 --> 00:29:22.930 And actually, the hidden secret to J.P. Morgan was he was the son. 00:29:23.380 --> 00:29:25.317 The father was Junius Morgan. 00:29:25.400 --> 00:29:28.377 - Okay. I literally, when you were talking, I was like, wait, 00:29:28.460 --> 00:29:29.887 it was shocking that you would say pick him 00:29:29.970 --> 00:29:32.787 because I actually found his father a more formidable individual than him. 00:29:32.870 --> 00:29:36.267 - Yeah, he was. So, he was, which is almost always the case 00:29:36.350 --> 00:29:37.377 with any famous public figure, 00:29:37.460 --> 00:29:39.877 is the father is almost always a more interesting story, 00:29:39.960 --> 00:29:41.077 which a lot of examples of that. 00:29:41.160 --> 00:29:44.337 But however, yeah, so Junius Morgan and then J.P. Morgan has filled 00:29:44.420 --> 00:29:46.767 a specific economic role that's gotten lost in history, 00:29:46.850 --> 00:29:48.777 which is basically Junius Morgan... 00:29:48.860 --> 00:29:51.827 The Junius Morgan Bank was in London. The J.P. Morgan Bank was in New York. 00:29:51.910 --> 00:29:53.357 And what the Morgan family was doing 00:29:53.440 --> 00:29:56.267 was they were funneling money from the old slow-growth economy of Europe 00:29:56.350 --> 00:29:57.577 into the new high-growth- - Yes. 00:29:57.660 --> 00:29:59.727 - economy of the US. But again, it was exactly your point, 00:29:59.810 --> 00:30:02.370 like it was this little boutique family operation. 00:30:03.020 --> 00:30:04.327 The other great thing about that era of history 00:30:04.410 --> 00:30:07.600 is they were all bifurcated by religion. 00:30:08.320 --> 00:30:12.177 - Yeah. - So, they were the Protestant investment banks, and there were the 00:30:12.260 --> 00:30:13.437 Jewish investment banks. - Yeah. 00:30:13.520 --> 00:30:15.807 - And they did not mix. - No, not at all. 00:30:15.890 --> 00:30:16.657 - Completely different worlds. 00:30:16.740 --> 00:30:19.887 And as a consequence, the Protestant banks like J.P. Morgan 00:30:19.970 --> 00:30:21.147 were able to fund the railroads, 00:30:21.230 --> 00:30:23.147 which were considered the real businesses at the time. 00:30:23.230 --> 00:30:25.457 - Yeah. - But then, all the disreputable stuff 00:30:25.540 --> 00:30:27.537 like movie companies and department stores, 00:30:27.620 --> 00:30:29.617 those are all the Jewish investment banks. 00:30:29.700 --> 00:30:32.337 By the way, almost entirely Jewish founders with like... 00:30:32.420 --> 00:30:35.757 And then, J.P. Morgan is the big survivor of that today 00:30:35.840 --> 00:30:36.827 in the form of J.P. Morgan Chase. 00:30:36.910 --> 00:30:40.847 And then, on the Jewish side, it's Goldman Sachs is the great survivor. 00:30:40.930 --> 00:30:42.307 But again, if you go back, there were... 00:30:42.390 --> 00:30:45.177 - You consider that the barbell in investment banking. 00:30:45.260 --> 00:30:48.497 You have the J.P. Morgan, kind of like family partnership, 00:30:48.580 --> 00:30:50.647 and then you have the complete scale of like Goldman Sachs. 00:30:50.730 --> 00:30:54.427 - And so what happened was both J.P. Morgan and Goldman Sachs started out, 00:30:54.510 --> 00:30:57.717 a hundred years ago, they were actually in the middle. 00:30:57.800 --> 00:30:59.750 They were kind of, again, this sort of, 00:30:59.900 --> 00:31:02.700 they were boutiques, but they were, of their time... 00:31:03.790 --> 00:31:05.297 Today, you'd call them mid-market, 00:31:05.380 --> 00:31:07.627 we sometimes call it bulge bracket kind of thing, 00:31:07.710 --> 00:31:09.437 as opposed to just like a solo operator or something. 00:31:09.520 --> 00:31:12.637 Actually, the way JFK's father got started 00:31:12.720 --> 00:31:16.117 was he literally hung out a shingle in the 1920s, which is Joseph P. Kennedy, banker. 00:31:16.200 --> 00:31:16.517 - Yeah. 00:31:16.600 --> 00:31:20.287 - Private banker, and he just did deals, and he was an angel investor at the time. 00:31:20.370 --> 00:31:21.527 And then you had the big commercial banks, 00:31:21.610 --> 00:31:23.447 but the big commercial banks had no interest in issuing loans 00:31:23.530 --> 00:31:25.827 to these speculative, crazy entrepreneurs. 00:31:25.910 --> 00:31:28.627 And so in that time, J.P. Morgan, and Goldman Sachs, 00:31:28.710 --> 00:31:31.797 and Kuhn, Loeb, and Drexel, and all these other kind of mid-market banks, 00:31:31.880 --> 00:31:34.480 Morgan Stanley, the banks that became Morgan Stanley 00:31:34.790 --> 00:31:35.667 were kind of these mid things. 00:31:35.750 --> 00:31:37.487 Now, what's happened sitting here a hundred years later, 00:31:37.570 --> 00:31:39.367 those are now the scaled players. 00:31:39.450 --> 00:31:42.100 The ones who didn't scale are kind of long forgotten. 00:31:42.600 --> 00:31:45.237 Having said that, there's one firm that survives in the old model, 00:31:45.320 --> 00:31:47.837 and that's Allen & Company. And there are other boutique investment banks today, 00:31:47.920 --> 00:31:49.727 but Allen & Company was founded in the 1920s, 00:31:49.810 --> 00:31:54.327 and is uniquely the one that survived in the original model of boutique 00:31:54.410 --> 00:31:56.647 and deliberately being a boutique investment bank, 00:31:56.730 --> 00:31:57.957 and it stayed that way for a hundred years. 00:31:58.040 --> 00:32:00.607 And so one way to think about it is that today that's the barbell in banking, 00:32:00.690 --> 00:32:01.887 which is Allen & Company on the one side 00:32:01.970 --> 00:32:04.820 and then J.P. Morgan and Goldman Sachs on the other side. 00:32:04.920 --> 00:32:06.557 - I found one of my all-time favorite quotes 00:32:06.640 --> 00:32:07.957 when I was reading the book "Zero to One." 00:32:08.040 --> 00:32:11.067 The quote says, "The single most powerful pattern I have noticed 00:32:11.150 --> 00:32:14.807 is that successful people find value in unexpected places, 00:32:14.890 --> 00:32:17.227 and they do this by thinking about business 00:32:17.310 --> 00:32:19.667 from first principles instead of formulas." 00:32:19.750 --> 00:32:24.470 That is exactly what AppLovin has done with their new advertising platform, Axon. 00:32:24.640 --> 00:32:28.140 Axon is the most powerful advertising platform in a generation. 00:32:28.240 --> 00:32:30.820 Axon allows you to capture undivided attention. 00:32:31.140 --> 00:32:36.390 Axon ads are full-screen videos that are watched for an average of 35 seconds, 00:32:36.510 --> 00:32:40.030 retention that blows other ad platforms out of the water. 00:32:40.130 --> 00:32:41.787 And you can launch in minutes. 00:32:41.870 --> 00:32:44.117 You set the goal, and Axon achieves it. 00:32:44.200 --> 00:32:47.077 No complex setup, no expertise needed. 00:32:47.160 --> 00:32:48.717 And Axon scales quickly. 00:32:48.800 --> 00:32:52.250 They can put your ads in front of over a billion potential customers. 00:32:52.380 --> 00:32:54.797 Other businesses have seen immediate results, 00:32:54.880 --> 00:32:57.967 scaled to hundreds of thousands of dollars of spend per day, 00:32:58.050 --> 00:33:00.257 and increased their revenue by millions. 00:33:00.340 --> 00:33:04.130 And most advertisers aren't even thinking about this channel yet. 00:33:04.230 --> 00:33:09.557 Less than 1% of advertisers have access to Axon, so you want to get started quickly. 00:33:09.640 --> 00:33:12.987 And you can do that by going to axon.ai. 00:33:13.070 --> 00:33:15.120 That is axon.ai. 00:33:16.130 --> 00:33:18.757 So, are you reading about this while you're founding the firm? 00:33:18.840 --> 00:33:20.557 - Yeah. - Before you're founding the firm? 00:33:20.640 --> 00:33:24.057 Yeah, both. Ben and I spent about a year and a half planning the firm, 00:33:24.140 --> 00:33:27.377 and part of it was he was in, we call it industrial servitude. 00:33:27.460 --> 00:33:29.847 He was working for Hewlett-Packard after we sold our company to HP. 00:33:29.930 --> 00:33:32.550 So, he was running a big part of HP at the time. 00:33:32.830 --> 00:33:35.757 And so, we couldn't literally start a new full-time thing until he got free of that. 00:33:35.840 --> 00:33:38.797 So, we had a year and a half to kind of study and think and work. 00:33:38.880 --> 00:33:41.507 - And because you had this period from 2003 or 2002, 00:33:41.590 --> 00:33:43.577 when you're doing angel investing a lot- - Yeah. 00:33:43.660 --> 00:33:45.297 till you start your company six, seven years later. 00:33:45.380 --> 00:33:47.207 - Yeah. - You're observing all of the weaknesses 00:33:47.290 --> 00:33:49.957 in the model, and that's where you have, "Hey, why don't we take the CAA?" 00:33:50.040 --> 00:33:51.897 I think Ovitz calls it like the phalanx, 00:33:51.980 --> 00:33:52.987 where it's like if you have- - Yeah, right. 00:33:53.070 --> 00:33:54.787 - one agent at CAA, you have all of us. 00:33:54.870 --> 00:33:56.627 - That's right. - And they would like roll deep. 00:33:56.710 --> 00:33:59.717 I think he says in his book, it was like, "Oh, my agent's coming to the premiere." 00:33:59.800 --> 00:34:01.477 No, it's like 20 agents are coming. 00:34:01.560 --> 00:34:03.927 And I think they'd be dressed in the same kind of suit maker, 00:34:04.010 --> 00:34:09.510 and they were intentionally trying to intimidate their competition. 00:34:09.600 --> 00:34:14.030 - Armani suits, Sulka Shirts was a shirt maker in Beverly Hills, 00:34:14.260 --> 00:34:17.020 and all sober colors, white shirts. 00:34:17.340 --> 00:34:19.517 And then, I think he had a bulk purchase deal, 00:34:19.600 --> 00:34:21.907 I think, with the local Jaguar dealer. 00:34:21.990 --> 00:34:24.547 And the legend, at least, has it that the license plates all said 00:34:24.630 --> 00:34:26.680 CAA one, CAA two, CAA three. 00:34:27.020 --> 00:34:30.740 And so, you'd go to a premiere, and there would be 20 Jags lined up. 00:34:31.720 --> 00:34:34.070 And then 20 guys in identical suits coming out. 00:34:34.230 --> 00:34:35.467 And yeah, this is exactly the thing. 00:34:35.550 --> 00:34:37.367 It's just like, now that's the Hollywood version. 00:34:37.450 --> 00:34:40.087 But, just imagine the psychological impact of that 00:34:40.170 --> 00:34:41.977 if you're just like an old school agent. 00:34:42.060 --> 00:34:44.910 I mean, this is sort of... Michael is a very dear friend. 00:34:45.050 --> 00:34:46.367 He became very controversial over the years, 00:34:46.450 --> 00:34:48.167 and the reason he became so controversial, I think, 00:34:48.250 --> 00:34:50.497 is just because he smoked his competition so severely. 00:34:50.580 --> 00:34:53.870 Like, he pounded them so hard. There was no response. 00:34:54.410 --> 00:34:57.567 You're just a guy working for an old agency, and you've got your clients, 00:34:57.650 --> 00:35:00.057 and these 20 CAA mother****** are showing up. 00:35:00.140 --> 00:35:02.130 And like, yeah, it's this force. 00:35:02.240 --> 00:35:03.657 And the clients, if you talk to, by the way, 00:35:03.740 --> 00:35:06.187 a lot of his clients are still active today from the period. 00:35:06.270 --> 00:35:08.087 If you talk to them, it's just like, yeah, it's just a no-brainer. 00:35:08.170 --> 00:35:10.287 It's like, do you want to work with a guy or do you want to work with a firm? 00:35:10.370 --> 00:35:11.810 It's just obvious. 00:35:12.590 --> 00:35:13.407 I don't know if he told you all these stories. 00:35:13.490 --> 00:35:15.497 Did he tell you about his morning schedule thing? 00:35:15.580 --> 00:35:20.027 - The getting on the bike, doing the karate call? - No, for the firm. 00:35:20.110 --> 00:35:21.787 - No, no, no, no. I don't remember this. 00:35:21.870 --> 00:35:23.297 - So this is, again, something that's specific to Hollywood, 00:35:23.380 --> 00:35:24.967 but it's a great example of the... 00:35:25.050 --> 00:35:28.917 Okay, at the time he started CAA, the agency business was like 00:35:29.000 --> 00:35:30.107 90 years old or something, right? - Yeah. 00:35:30.190 --> 00:35:32.617 It started out doing Vaudeville bookings and music halls, 00:35:32.700 --> 00:35:35.027 and it had been around for decades. 00:35:35.110 --> 00:35:37.297 And so, the people involved in it had had decades 00:35:37.380 --> 00:35:40.747 to think about the best way to do it, and they had arrived at a set of practices. 00:35:40.830 --> 00:35:42.367 And one of the practices, I think I'm getting this right, 00:35:42.450 --> 00:35:44.007 one of the practices was at every agency, 00:35:44.090 --> 00:35:46.977 they would have their staff meeting in the morning at 9:00 a.m., 00:35:47.060 --> 00:35:49.797 and whatever information was going to get shared in the agency 00:35:49.880 --> 00:35:50.657 would get shared at that point. 00:35:50.740 --> 00:35:52.757 And oh, this studio head wants a script to do. 00:35:52.840 --> 00:35:54.867 He wants to do a crime thriller, and here's the script and whatever. 00:35:54.950 --> 00:35:57.907 And then, this is the point where there would be minimal, whatever, 00:35:57.990 --> 00:36:00.237 minimal handoff existed to the other agency. 00:36:00.320 --> 00:36:01.837 And so this is where everybody would kind of get updated. 00:36:01.920 --> 00:36:04.887 And so, the staff meeting would go from 9:00 a.m. to 10:00 a.m., 00:36:04.970 --> 00:36:06.567 and then at 10:00 a.m., they would start calling their clients. 00:36:06.650 --> 00:36:08.587 And they'd be like, "Oh, we heard there's a whatever. 00:36:08.670 --> 00:36:10.607 There's going to be a casting call for this great new role 00:36:10.690 --> 00:36:11.617 for this professional thief or whatever- 00:36:11.700 --> 00:36:12.687 - Mm-hmm. - and you should consider doing that." 00:36:12.770 --> 00:36:14.187 And so, of course, Michael's like, 00:36:14.270 --> 00:36:17.220 "All right. Well, we'll have our staff meeting at 7:00 a.m. 00:36:18.570 --> 00:36:20.237 We'll be done at 8:00." - Yeah. 00:36:20.320 --> 00:36:22.147 - "Between 8:00 and 9:00, we'll call the clients. 00:36:22.230 --> 00:36:25.970 By the way, we won't just call our clients. We'll call their clients." 00:36:26.130 --> 00:36:27.557 Right? And so imagine you're, whatever, 00:36:27.640 --> 00:36:31.490 Paul Newman, and you've got some agent you've been working with for 20 years. 00:36:32.430 --> 00:36:34.947 Your agent calls you at 11:00, and is like, "I've got this great role." 00:36:35.030 --> 00:36:38.167 And you say, "Oh, the guys at CAA called me about that three hours ago." 00:36:38.250 --> 00:36:40.737 And your agent's like, "They don't represent you." 00:36:40.820 --> 00:36:42.097 And Paul's like, "Yeah, isn't it great? 00:36:42.180 --> 00:36:43.280 Isn't that fantastic?" 00:36:43.580 --> 00:36:46.267 And so you just, again, you rinse and repeat that a thousand times, 00:36:46.350 --> 00:36:49.390 and to the client, it's just completely obvious what to do. 00:36:49.900 --> 00:36:53.547 And so yeah. So, the reason I go through this, the moral of the story is, again, 00:36:53.630 --> 00:36:57.707 it's sort of this idea, incumbency status quo. 00:36:57.790 --> 00:36:59.410 Like you just end up... 00:37:00.300 --> 00:37:02.447 In any business, you just end up with all these embedded assumptions. 00:37:02.530 --> 00:37:04.337 Generally, and then 90 years later, right? 00:37:04.420 --> 00:37:08.217 So, the founders of the agencies 90 years ago, they weren't involved anymore, 00:37:08.300 --> 00:37:10.707 so the people who were running competitive agencies were managers, 00:37:10.790 --> 00:37:12.890 same thing, managers, not founders. Right? 00:37:13.540 --> 00:37:15.817 But the thing a manager never does, unless they're under duress, 00:37:15.900 --> 00:37:18.160 is reconsider fundamental assumptions. 00:37:18.330 --> 00:37:19.200 They hate that. 00:37:20.960 --> 00:37:23.767 The whole point of running something big is you don't have to do that. 00:37:23.850 --> 00:37:25.047 You get to run the big thing at scale. 00:37:25.130 --> 00:37:27.667 You don't have to go in and reinvent it from scratch. 00:37:27.750 --> 00:37:29.550 That sounds like a nightmare, right? 00:37:29.890 --> 00:37:34.137 But anyway, as a consequence of that, you end up with all these embedded assumptions 00:37:34.220 --> 00:37:35.757 that are basically just unspoken. 00:37:35.840 --> 00:37:37.517 Nobody's questioning. It's not happening. 00:37:37.600 --> 00:37:41.227 And if you take the time, you can kind of go in, first principles, 00:37:41.310 --> 00:37:43.437 you can kind of go in, and you can say, "Okay, well, how did they arrive at that?" 00:37:43.520 --> 00:37:45.257 And what we've found in just industry... 00:37:45.340 --> 00:37:46.677 I mean, this is what our founders do every day, 00:37:46.760 --> 00:37:48.387 is just in industry after industry after industry, 00:37:48.470 --> 00:37:49.987 there's all these embedded assumptions that made sense 00:37:50.070 --> 00:37:53.400 in 1970 or 1930 or 1880 that just don't make sense anymore. 00:37:53.680 --> 00:37:56.817 - I love that you did that. I always say it's not what you do, it's how you do it. 00:37:56.900 --> 00:38:00.027 And if the idea that you could take... I'm like, I'm not running a talent agency. 00:38:00.110 --> 00:38:01.637 - Right. - But there's so many of these principles 00:38:01.720 --> 00:38:03.007 that I could apply to venture capital. 00:38:03.090 --> 00:38:04.987 In your blog archive, which I absolutely love, 00:38:05.070 --> 00:38:08.170 and I told you I've read multiple times, I did episodes on it, 00:38:08.370 --> 00:38:09.717 you would give advice to young people. 00:38:09.800 --> 00:38:12.007 And my advice is go work in an industry 00:38:12.090 --> 00:38:15.077 where the founders of that industry are still working. 00:38:15.160 --> 00:38:18.977 - Right. When I read Ovitz's book, the way I would summarize his approach, 00:38:19.060 --> 00:38:20.707 because he is in this big, stodgy, 00:38:20.790 --> 00:38:23.947 slow-moving, very bureaucratic organization, 00:38:24.030 --> 00:38:26.467 is like, oh, mediocrity is always invisible 00:38:26.550 --> 00:38:28.407 until passion shows up and exposes it. 00:38:28.490 --> 00:38:29.447 - Oh, interesting. Yes, right. 00:38:29.530 --> 00:38:30.837 - And that's what he did. - Yeah, that's right. 00:38:30.920 --> 00:38:33.377 - He's just like, "There's so many things that you guys could be doing better here. 00:38:33.460 --> 00:38:35.137 I can't do it in the..." And if I remember correctly, 00:38:35.220 --> 00:38:37.007 he took some of these ideas to his boss. 00:38:37.090 --> 00:38:37.717 - Oh, yeah, yeah, yeah. 00:38:37.800 --> 00:38:39.557 - Because that guy was his mentor. I can't remember his name. Yeah. 00:38:39.640 --> 00:38:41.157 - He famously worked for the CEO of William Morris. 00:38:41.240 --> 00:38:43.907 - Yeah. - Yeah, which was the biggest of the talent agencies at the time. - Yeah. 00:38:43.990 --> 00:38:46.237 So, were you and Ben essentially just designing 00:38:46.320 --> 00:38:47.817 what you wish you had when you were founders? 00:38:47.900 --> 00:38:50.397 - Yeah, that's right. And again, that may be a cheat code, 00:38:50.480 --> 00:38:52.637 but yeah, if you've been the customer, obviously, 00:38:52.720 --> 00:38:54.407 this all becomes a lot more obvious. 00:38:54.490 --> 00:38:56.177 - And I don't know if you want to answer this question or not, 00:38:56.260 --> 00:38:58.497 but in Warren Buffett's shareholder letters, he has this great line 00:38:58.580 --> 00:39:02.877 where it's really important to pick, to play against weak competition. 00:39:02.960 --> 00:39:06.467 - Mm-hmm. - Did you feel like that point in time 00:39:06.550 --> 00:39:08.737 in venture capital history, that you were going to be playing 00:39:08.820 --> 00:39:10.547 against weak or weaker competition? 00:39:10.630 --> 00:39:12.427 I would say not exactly. We didn't view them as weak. 00:39:12.510 --> 00:39:13.857 We viewed them as basically... 00:39:13.940 --> 00:39:17.370 We viewed them as running on a status quo set of ideas. 00:39:18.200 --> 00:39:20.797 And to be clear, and part of why we think about it this way, 00:39:20.880 --> 00:39:22.517 we had raised money from at the time, 00:39:22.600 --> 00:39:24.567 in the time we were probably the two best venture firms. 00:39:24.650 --> 00:39:26.037 So, Kleiner Perkins in the 90s, 00:39:26.120 --> 00:39:28.637 and I worked with John Doerr very closely for five years in Netscape, 00:39:28.720 --> 00:39:30.877 and then Loudcloud, we raised money from Benchmark 00:39:30.960 --> 00:39:32.237 when they were like king of the hill, 00:39:32.320 --> 00:39:34.117 and Andy Rachleff, who was one of the founders of the firm, 00:39:34.200 --> 00:39:36.300 and is a legendary, brilliant VC. 00:39:36.630 --> 00:39:40.327 And so we had worked with... We just had through accident of history, 00:39:40.410 --> 00:39:43.337 we had worked with two of the, whatever, top five or whatever people 00:39:43.420 --> 00:39:47.430 in the field for a long time. And they were and are, by the way, 00:39:48.010 --> 00:39:51.967 brilliant at running on the model that existed. 00:39:52.050 --> 00:39:54.057 Like John was brilliant at that, Andy's brilliant at that. 00:39:54.140 --> 00:39:55.277 They're still brilliant today. 00:39:55.360 --> 00:39:57.187 It was less a competition of, oh, these people are soft, 00:39:57.270 --> 00:39:59.167 or these people aren't smart. It was none of that. 00:39:59.250 --> 00:40:00.987 It was, "No, they're really good at executing 00:40:01.070 --> 00:40:02.770 against this particular playbook." 00:40:03.100 --> 00:40:04.307 And by the way, that's why it's okay. 00:40:04.390 --> 00:40:07.887 Like, if we're going to do this, we need to be playing by a different playbook. 00:40:07.970 --> 00:40:10.347 - There was no such thing as scaled venture capital at the time. 00:40:10.430 --> 00:40:13.837 - No. At the time, no. No. Because the firms, they all hit this limit. 00:40:13.920 --> 00:40:15.880 They all fundamentally hit this limit. 00:40:16.070 --> 00:40:20.277 They all hit this limit where the idea of a partnership of equals 00:40:20.360 --> 00:40:22.420 or even a hierarchical partnership, 00:40:22.530 --> 00:40:26.247 like it just breaks at some point because there's just too much internal dissension. 00:40:26.330 --> 00:40:28.547 It is too hard to coordinate, and then everybody's fighting 00:40:28.630 --> 00:40:31.980 for slices of what was viewed, at the time, to be a fixed-size pie. 00:40:32.290 --> 00:40:34.240 And so none of the other firms could... 00:40:35.070 --> 00:40:37.127 Structurally, there was just no way to get to scale. 00:40:37.210 --> 00:40:40.607 - Where else did you take ideas from besides the agent business in Hollywood 00:40:40.690 --> 00:40:43.107 and the merchant bank, investment banking industry? 00:40:43.190 --> 00:40:46.257 - Oh, I mean, it was just very obvious that it happened in private equity. 00:40:46.340 --> 00:40:48.617 This was the time when it was actually really... 00:40:48.700 --> 00:40:51.037 This was around the time when KKR and firms like it 00:40:51.120 --> 00:40:52.227 were hitting their stride with... 00:40:52.310 --> 00:40:55.137 They're actually building a lot of operational capabilities in-house. 00:40:55.220 --> 00:40:58.337 They were actually building their own investment banks in-house. 00:40:58.420 --> 00:41:01.137 One of the things we've never done, but has always been on the idea list, 00:41:01.220 --> 00:41:03.320 is to actually just have an in-house bank. 00:41:03.710 --> 00:41:06.977 And KKR had actually done that, just build a captive bank. 00:41:07.060 --> 00:41:09.560 And so, they had done a bunch of things like that. 00:41:09.980 --> 00:41:10.757 So, we saw it happening, 00:41:10.840 --> 00:41:13.757 which is the mid-tier private equity firms were collapsing, 00:41:13.840 --> 00:41:15.197 and you either needed a solo, 00:41:15.280 --> 00:41:17.807 very light on your feet kind of solo operator on the one side doing small deals 00:41:17.890 --> 00:41:20.290 or you needed to have a scale platform like KKR. 00:41:20.410 --> 00:41:23.090 It happened in hedge funds. It happened in... 00:41:24.140 --> 00:41:27.360 Actually, the TV show "Mad Men." 00:41:27.740 --> 00:41:29.457 "Mad Men" tells the structural story of this happening 00:41:29.540 --> 00:41:31.840 in the advertising field in the '60s and '70s. 00:41:32.290 --> 00:41:34.117 And I will ruthlessly spoil "Mad Men" 00:41:34.200 --> 00:41:36.857 because it's been off the air for like 20 years at this point. 00:41:36.940 --> 00:41:39.857 But a big part of the arc of "Mad Men" is those guys are working... 00:41:39.940 --> 00:41:43.950 Sterling Cooper is a classic mid-market ad agency, right? 00:41:44.640 --> 00:41:47.140 And then at the end of whatever, the third season, 00:41:47.390 --> 00:41:50.900 they sell it to McCann, which was the scale player at the time. 00:41:51.160 --> 00:41:52.397 And they show you all the pros. 00:41:52.480 --> 00:41:54.147 They clearly talked to people who had been through this 00:41:54.230 --> 00:41:56.037 because they showed you all the pros and cons of working for McCann, 00:41:56.120 --> 00:41:57.047 because McCann's this giant machine. 00:41:57.130 --> 00:41:59.237 And so if Don Draper's used to making all the creative decisions, 00:41:59.320 --> 00:42:00.977 and now he's just in this conference room 00:42:01.060 --> 00:42:03.777 arguing with people until he just gets up and walks out. 00:42:03.860 --> 00:42:06.907 - But then, Don Draper and Roger Sterling start their own startup. 00:42:06.990 --> 00:42:09.077 They start Sterling, Cooper, Draper, Pryce. 00:42:09.160 --> 00:42:12.207 That's the second one, which starts out as a true startup, 00:42:12.290 --> 00:42:13.467 as a true boutique startup. 00:42:13.550 --> 00:42:16.447 And then they have this, whatever, year and a half of just f***** hell. 00:42:16.530 --> 00:42:18.177 Like, they can't get anywhere. 00:42:18.260 --> 00:42:20.817 They can't get clients because they're too small. 00:42:20.900 --> 00:42:22.340 - Yeah. - They're subscale. 00:42:23.750 --> 00:42:25.687 And then I think in the end, I forget. It's been too long. 00:42:25.770 --> 00:42:27.837 But I think they end up selling it. 00:42:27.920 --> 00:42:29.947 No, no, no, no, no, no, no. Sorry. I got it wrong. 00:42:30.030 --> 00:42:32.830 They sell the first one to the British- ad agency- - Mm. 00:42:33.000 --> 00:42:36.197 - that just completely destroys it, and then they sell the second one to McCann. 00:42:36.280 --> 00:42:38.880 So, they actually show that process happening twice. 00:42:39.800 --> 00:42:40.827 Again, if you go back in history, 00:42:40.910 --> 00:42:44.407 that is what happened to the ad agencies basically between the '40s and the '70s. 00:42:44.490 --> 00:42:45.737 Basically, television catalyzed that. 00:42:45.820 --> 00:42:48.497 When television emerged, advertising became a much bigger deal 00:42:48.580 --> 00:42:52.227 than it had been before, and it had to be professionalized in a different way. 00:42:52.310 --> 00:42:53.217 The other thing that happened is, of course, 00:42:53.300 --> 00:42:54.797 the external environment changes, right? 00:42:54.880 --> 00:42:57.357 So, everything we just talked about just has to do with the internal mechanics 00:42:57.440 --> 00:42:58.327 of how these things run. 00:42:58.410 --> 00:43:01.667 But the other thing happens is the external environment changes, right? 00:43:01.750 --> 00:43:03.287 I think what Michael would say, I think he would agree with this, 00:43:03.370 --> 00:43:05.547 part of what made CAA possible is at one point, 00:43:05.630 --> 00:43:07.760 basically Hollywood was just movies. 00:43:07.970 --> 00:43:10.197 And then there was whatever, a low kind of TV division. 00:43:10.280 --> 00:43:11.690 And by the '70s and '80s, 00:43:12.290 --> 00:43:14.177 Hollywood was becoming much bigger than just movies, right? 00:43:14.260 --> 00:43:16.897 It was movies and TV and advertising and music and sports 00:43:16.980 --> 00:43:20.460 and politics and culture and all kinds of things. 00:43:20.750 --> 00:43:23.040 In fairness to kind of our competitors, 00:43:24.400 --> 00:43:26.437 Silicon Valley between, call it 1950 to 2010, 00:43:26.520 --> 00:43:28.757 was primarily just in the tools business, right? 00:43:28.840 --> 00:43:31.187 Primarily, the companies, starting with Hewlett-Packard, 00:43:31.270 --> 00:43:33.547 the companies that we all backed and built, were basically just building tools, 00:43:33.630 --> 00:43:36.197 and you'd build a tool like an operating system or a disk drive or something, 00:43:36.280 --> 00:43:39.097 and you'd sell it to people and they'd figure out what to do with it. 00:43:39.180 --> 00:43:41.087 It was right around the time we started our firm 00:43:41.170 --> 00:43:44.137 that the Valley was going from being primarily tools businesses 00:43:44.220 --> 00:43:48.947 to actually building directly competitive companies in incumbent industries, right? 00:43:49.030 --> 00:43:52.340 And so Airbnb going directly into the hospitality industry, right? 00:43:52.460 --> 00:43:56.307 So, alternate universe Airbnb is just boutique booking hotel software, right? 00:43:56.390 --> 00:43:58.557 For an Airbnb. So, it's a tiny little boutique business 00:43:58.640 --> 00:44:00.527 building basically little spreadsheet software. 00:44:00.610 --> 00:44:03.080 But no, Airbnb, Brian Chesky decided brilliantly, 00:44:03.360 --> 00:44:04.917 "We're just going to go into the hospitality business 00:44:05.000 --> 00:44:06.597 and compete with hotels directly." 00:44:06.680 --> 00:44:09.697 Uber and Lyft in the old world were just taxi dispatch software. 00:44:09.780 --> 00:44:12.397 In the new world, they're full transportation providers. 00:44:12.480 --> 00:44:16.130 Tesla in the old world would've just been software for self-driving cars. 00:44:16.490 --> 00:44:18.740 Tesla in the new world builds the entire car. 00:44:18.890 --> 00:44:20.700 By the way, Facebook, same thing. 00:44:21.030 --> 00:44:24.397 Prior to Facebook, if you built online ad software, 00:44:24.480 --> 00:44:26.630 you were selling it to the media companies. 00:44:26.810 --> 00:44:28.597 Mark's like, "No, we're just going to be the media company. 00:44:28.680 --> 00:44:29.637 We're just going to build the entire thing." 00:44:29.720 --> 00:44:32.227 And so this was the other thing that happened for us, 00:44:32.310 --> 00:44:33.607 was that that was right around the pivot point 00:44:33.690 --> 00:44:36.027 when the Valley's ambitions went from just building tools 00:44:36.110 --> 00:44:38.257 to going directly into incumbent industries. 00:44:38.340 --> 00:44:39.627 And then, this goes back to the scale thing. 00:44:39.710 --> 00:44:41.767 It's like, okay, why do you need to scale a venture firm? 00:44:41.850 --> 00:44:44.117 Was because the companies need to scale, right? 00:44:44.200 --> 00:44:46.277 And then of course, AI now makes that crystal clear, right? 00:44:46.360 --> 00:44:49.277 Because the winning AI companies are raising billions, 00:44:49.360 --> 00:44:52.537 tens of billions, in some cases hundreds of billions of dollars, right? 00:44:52.620 --> 00:44:54.767 The old world of 10 million or 30-million-dollar 00:44:54.850 --> 00:44:58.837 or 50-million-dollar checks, where VCs tap out, is just not a relevant thing anymore. 00:44:58.920 --> 00:45:00.977 - But did you know the scale was changing at the time you founded the firm? 00:45:01.060 --> 00:45:02.317 - We had a pretty good idea. 00:45:02.400 --> 00:45:06.487 So, I'd been involved with Facebook, basically informally since inception, 00:45:06.570 --> 00:45:08.670 and then formally on the board since 2007. 00:45:09.550 --> 00:45:10.777 And that thing hit the knee in the curb. 00:45:10.860 --> 00:45:11.757 It was just very clear. 00:45:11.840 --> 00:45:14.697 To us, it was just very clear that we didn't know how big it was going to get, 00:45:14.780 --> 00:45:16.547 but it was going to get much, much bigger 00:45:16.630 --> 00:45:18.940 than the internet 1.0 companies had gotten. 00:45:19.740 --> 00:45:21.327 And so there was that. What else? 00:45:21.410 --> 00:45:24.117 It was also around the time Apple was directly entering the cell phone market, 00:45:24.200 --> 00:45:26.200 which was another great example of this. 00:45:26.330 --> 00:45:28.187 Silicon Valley didn't used to make cell phones. 00:45:28.270 --> 00:45:29.637 The original cell phones weren't made by Silicon Valley. 00:45:29.720 --> 00:45:31.557 They were made by these giant industrial companies 00:45:31.640 --> 00:45:35.467 like Sony and Nokia and whatever, and Motorola in Illinois or whatever, 00:45:35.550 --> 00:45:38.807 and then Silicon Valley would make the chips that go into them or the software. 00:45:38.890 --> 00:45:40.307 And of course, Steve was like, "Yeah, no, screw that. 00:45:40.390 --> 00:45:41.697 We're just going to make a phone," right? 00:45:41.780 --> 00:45:43.037 There were these signals that it was happening, 00:45:43.120 --> 00:45:46.287 and then the other thing was just the internet itself was maturing, right? 00:45:46.370 --> 00:45:50.080 And so, at that point, the consumer internet was 15 years in 00:45:50.540 --> 00:45:52.290 and we had seen every part of that. 00:45:53.370 --> 00:45:55.087 I forget what the number was, but that was probably around the time 00:45:55.170 --> 00:45:57.717 the global internet penetration was crossing a billion users 00:45:57.800 --> 00:45:59.150 on its way to five billion. 00:45:59.370 --> 00:46:02.357 - Yeah, you have a very interesting lived experience where you were there 00:46:02.440 --> 00:46:04.390 at the very beginning of the internet. 00:46:04.660 --> 00:46:06.327 One thing that I'm fascinated by, 00:46:06.410 --> 00:46:09.797 and this actually was going to be the first question for you, 00:46:09.880 --> 00:46:12.827 because I've never heard you speak about this, at least on a podcast, 00:46:12.910 --> 00:46:16.237 but your partnership and relationship with Jim Clark. 00:46:16.320 --> 00:46:17.787 - Yep. - You were what, 20 when you met him? 00:46:17.870 --> 00:46:19.107 Ho old were you? - I was old-fashioned. 00:46:19.190 --> 00:46:20.937 I actually graduated from college and got my degree. 00:46:21.020 --> 00:46:23.770 It's a very Stone Age concept these days. 00:46:24.060 --> 00:46:28.270 So, that was in 1994. So, I was probably 22. 00:46:28.620 --> 00:46:29.727 - So, there's this great book, 00:46:29.810 --> 00:46:32.227 I don't even think you like the book written by Michael Lewis, 00:46:32.310 --> 00:46:34.087 "Silicon Valley's Story." - I've skipped it. 00:46:34.170 --> 00:46:36.927 - I've read it twice, just because I don't know if anything's in there is true, 00:46:37.010 --> 00:46:40.937 but the portrait he paints of this very eccentric character 00:46:41.020 --> 00:46:42.847 is just wildly entertaining to me. - Yeah. 00:46:42.930 --> 00:46:45.087 - But what's shocking to me is when you talk to young founders, 00:46:45.170 --> 00:46:47.430 I'm like, this guy started three... 00:46:47.660 --> 00:46:48.997 I think he was the first person in history 00:46:49.080 --> 00:46:51.667 to found three separate billion-dollar technology companies. 00:46:51.750 --> 00:46:53.667 - Yeah, I think that's right. - And almost no one knows who he is. 00:46:53.750 --> 00:46:55.467 - Yeah. - Can you just talk about how you met him? 00:46:55.550 --> 00:46:56.667 What was it like working with him? - Oh. 00:46:56.750 --> 00:46:59.447 I knew exactly who he was, and the reason was because his company, 00:46:59.530 --> 00:47:02.957 Silicon Graphics, his first company, they were the company in the Valley, 00:47:03.040 --> 00:47:06.507 between call it, yeah, '87 to '94 or something. 00:47:06.590 --> 00:47:09.807 They were like, whatever, Google or OpenAI or whatever comp you want to make. 00:47:09.890 --> 00:47:13.157 They were like the company. And by that I mean they were the company 00:47:13.240 --> 00:47:15.277 where the smartest people in the industry all wanted to work there. 00:47:15.360 --> 00:47:16.487 They built the products that were 00:47:16.570 --> 00:47:18.687 the coolest products you could possibly imagine. 00:47:18.770 --> 00:47:21.477 They had this incredibly young and vibrant, and dynamic culture. 00:47:21.560 --> 00:47:25.337 And then they hit this cultural moment that was just incredible in, I think, '92, 00:47:25.420 --> 00:47:28.527 which was the turning point in the movie business 00:47:28.610 --> 00:47:30.277 when computer graphics really kicked in. 00:47:30.360 --> 00:47:33.457 And the two movies back to back were "Jurassic Park" and "Terminator 2." 00:47:33.540 --> 00:47:34.787 - Run on the machines they made. 00:47:34.870 --> 00:47:36.347 Built on the machines they... - Yes. - It was the technology they made. 00:47:36.430 --> 00:47:39.477 Technology Jim invented was the technology that made that possible. 00:47:39.560 --> 00:47:42.197 And those are still two of the great all-time movies. 00:47:42.280 --> 00:47:45.087 But at the time, I mean, I still remember the chills that you get 00:47:45.170 --> 00:47:47.627 seeing dinosaurs on screen. It's just like, "This is..." 00:47:47.710 --> 00:47:51.597 And then there's this company that builds the machines that do this. 00:47:51.680 --> 00:47:54.657 By the way, the Silicon Graphics computers are actually in the movie. 00:47:54.740 --> 00:47:57.797 There's a scene in "Jurassic Park" where the kids are navigating through Unix. 00:47:57.880 --> 00:48:00.357 - Yeah. - And it was actually the 3D software. 00:48:00.440 --> 00:48:03.380 Those were actually the Silicon Graphics computers. 00:48:05.540 --> 00:48:10.537 That was this moment where they're just the absolute it company of all time. 00:48:10.620 --> 00:48:14.110 But by the way, their legacy lives on in Nvidia. 00:48:15.720 --> 00:48:20.867 Nvidia is Silicon Graphics', basically, it's like a Traitorous Eight thing. 00:48:20.950 --> 00:48:22.947 It had to be a new company for reasons we could describe 00:48:23.030 --> 00:48:26.947 to do the GPUs instead of the workstations and servers. 00:48:27.030 --> 00:48:29.237 Nvidia fundamentally is based on Jim's ideas. 00:48:29.320 --> 00:48:30.797 That's where that stuff all comes from. 00:48:30.880 --> 00:48:34.107 And so, he was already legendary. And again, he was one of these... 00:48:34.190 --> 00:48:37.247 He was the full deal. He was legendary as an innovator in technology 00:48:37.330 --> 00:48:41.387 because he has a PhD in computer science, and he himself invented the original, 00:48:41.470 --> 00:48:43.617 I forget what they call it, I think it was the reality engine. 00:48:43.700 --> 00:48:47.487 The original interactive 3D graphics on a chip thing was actually him, 00:48:47.570 --> 00:48:49.150 I think it was his PhD thesis. 00:48:49.910 --> 00:48:52.960 And then he started the company, and then he ran the company. 00:48:54.070 --> 00:48:57.067 By the way, and then the VCs brought in a professional manager. 00:48:57.150 --> 00:49:00.037 By the way, and the reason we know about Nvidia today and not SGI 00:49:00.120 --> 00:49:03.580 is because of this founder-manager issue, which we can talk about. 00:49:03.720 --> 00:49:04.797 - No, let's talk about that real quick. 00:49:04.880 --> 00:49:06.717 - Yeah, yeah. - Because I don't remember this part of the story. 00:49:06.800 --> 00:49:12.050 - Yeah. By the way, there's two sides to the story. And I wasn't there. 00:49:14.100 --> 00:49:16.047 And so, I just reflexively side with Jim Clark, 00:49:16.130 --> 00:49:19.080 but I'll try to at least represent both sides of the story. 00:49:19.350 --> 00:49:21.517 So Jim... I don't even remember what's in the Lewis book, 00:49:21.600 --> 00:49:27.210 but Jim is like a true Elon, Steve Jobs level guy. 00:49:27.730 --> 00:49:30.007 And so, incredibly creative, incredibly bright, 00:49:30.090 --> 00:49:32.137 incredibly charismatic, but he's volatile. 00:49:32.220 --> 00:49:37.337 Like, he's exciting. He's exciting. 00:49:37.420 --> 00:49:39.177 It's like being around him is just incredibly exciting. 00:49:39.260 --> 00:49:41.037 There's always something new. He always has new ideas. 00:49:41.120 --> 00:49:42.597 And again, that was in that time where it's just like, 00:49:42.680 --> 00:49:45.007 okay, that's the personality type that clearly can't run the company. 00:49:45.090 --> 00:49:48.070 And so the VCs brought in a guy out of Hewlett-Packard, 00:49:48.620 --> 00:49:50.197 who had been trained at Hewlett-Packard. 00:49:50.280 --> 00:49:53.887 Because at the time, what happened is he wanted to hire a professional CEO. 00:49:53.970 --> 00:49:56.897 He went and hired a general manager out of either Hewlett-Packard or IBM, 00:49:56.980 --> 00:49:59.057 were the two training grounds for this guy. 00:49:59.140 --> 00:50:01.197 So, they brought in a really, really sharp guy. 00:50:01.280 --> 00:50:02.347 I don't really know. I think I met him once. 00:50:02.430 --> 00:50:05.437 I don't really know. By all accounts, he was like a very good example 00:50:05.520 --> 00:50:08.540 of this kind of HP general manager type who became a CEO. 00:50:08.940 --> 00:50:10.537 He took over the company. 00:50:10.620 --> 00:50:14.007 And by the way, in his defense, under him, the company scaled enormously. 00:50:14.090 --> 00:50:17.397 I forget when he took it over, but it was like '87 or '88 or something. 00:50:17.480 --> 00:50:20.927 And then by the time I got to the Valley in '94, this company had become huge, 00:50:21.010 --> 00:50:24.460 and whoever's running the company gets at least some credit for that. 00:50:24.800 --> 00:50:26.950 But anyway, they got in this classic fight. 00:50:27.250 --> 00:50:30.247 They got in this classic fight, and the classic fight was... 00:50:30.330 --> 00:50:32.110 It's the same story every time. 00:50:32.400 --> 00:50:35.257 The founder is talking to the CEO, like, 00:50:35.340 --> 00:50:37.237 "We need to do things completely different." 00:50:37.320 --> 00:50:39.677 And the CEO's like, "No, like what we're doing is working. 00:50:39.760 --> 00:50:43.347 Stop f***ing with the thing that's working." 00:50:43.430 --> 00:50:44.137 And the founder is like, 00:50:44.220 --> 00:50:46.457 "No, it's working now, but it's not going to work in the future." 00:50:46.540 --> 00:50:49.457 And the CEO's like, "Well, then we'll deal with it in the future." 00:50:49.540 --> 00:50:51.807 And the founder is like, "You can't wait to deal with it in the future, 00:50:51.890 --> 00:50:53.767 because by the time the future arrives, it's going to be too late." 00:50:53.850 --> 00:50:55.697 And the manager is like, "Why are you in my pants? 00:50:55.780 --> 00:50:57.787 I'm making you all this money. The company's super successful. 00:50:57.870 --> 00:50:59.527 Like, get out of my shorts." Right? 00:50:59.610 --> 00:51:03.160 And you see this, and that was exactly the deadlock that they got into. 00:51:03.380 --> 00:51:05.457 And Jim Clark basically made two predictions 00:51:05.540 --> 00:51:06.547 as the founder of Silicon Graphics. 00:51:06.630 --> 00:51:08.487 So, Silicon Graphics at the time was selling... 00:51:08.570 --> 00:51:11.367 Their computers, basically started list price at like 50,000 dollars 00:51:11.450 --> 00:51:14.087 for a desktop workstation and then scaled up into the millions. 00:51:14.170 --> 00:51:16.647 And Jim was like, "Look, two things are going to happen." 00:51:16.730 --> 00:51:19.687 It's amazing that he... And he figured this out by 1991 or something. 00:51:19.770 --> 00:51:20.627 He said, "Two things are going to happen." 00:51:20.710 --> 00:51:23.427 He said, "Number one, everything that we sell today for 50,000 dollars 00:51:23.510 --> 00:51:25.327 is going to go on a chip, and that's going to go on a card, 00:51:25.410 --> 00:51:27.887 and it's going to go on a PC, and it's going to cost 300 bucks. 00:51:27.970 --> 00:51:29.637 And either we're the company that's going to make that, 00:51:29.720 --> 00:51:32.207 or we're going to get destroyed," right? 00:51:32.290 --> 00:51:34.840 Which, by the way, is what happened. That's Nvidia. 00:51:35.530 --> 00:51:37.167 Like that's what actually happened, right? 00:51:37.250 --> 00:51:38.947 So, he was completely correct about that. 00:51:39.030 --> 00:51:40.377 The other thing that he had was, he's like, 00:51:40.460 --> 00:51:43.317 "Look, this idea of standalone computers is not going to be the thing. 00:51:43.400 --> 00:51:44.777 These computers are all going to get networked together, 00:51:44.860 --> 00:51:46.787 and the network is going to become the important thing." 00:51:46.870 --> 00:51:48.717 At the time, there were different terms. 00:51:48.800 --> 00:51:51.307 People were using terms like information superhighway, 00:51:51.390 --> 00:51:53.357 or video on demand, or 500 channels. 00:51:53.440 --> 00:51:55.527 You had all these kind of concepts kind of coalescing 00:51:55.610 --> 00:51:57.210 around what became the internet. 00:51:57.440 --> 00:51:59.277 And even before the internet kind of became a mainstream thing, 00:51:59.360 --> 00:52:00.657 Jim was just like, "Look, it's just inevitable 00:52:00.740 --> 00:52:01.777 that this is all going to become connected, 00:52:01.860 --> 00:52:03.027 and then the function of a computer 00:52:03.110 --> 00:52:05.107 is no longer going to be mainly what just the computer does. 00:52:05.190 --> 00:52:07.547 It's going to be the fact that it can talk to all the other computers. 00:52:07.630 --> 00:52:10.737 And we need to do that." And to do that, he actually went to Japan. 00:52:10.820 --> 00:52:12.437 He actually got this incredible deal. 00:52:12.520 --> 00:52:15.840 Nintendo then and now is like this giant video game company. 00:52:16.130 --> 00:52:18.917 So, he actually had this deal with Nintendo, where number one, 00:52:19.000 --> 00:52:21.117 and Silicon Graphics actually did this, 00:52:21.200 --> 00:52:22.787 actually built the original 3D graphics chip 00:52:22.870 --> 00:52:26.290 for a consumer game player, the Nintendo 64. 00:52:26.460 --> 00:52:28.467 So, he did that deal, and then he went to Time Warner, 00:52:28.550 --> 00:52:33.167 which at the time was this very important media company doing all kinds of things. 00:52:33.250 --> 00:52:35.867 And he struck a deal with them to do what's called interactive TV, 00:52:35.950 --> 00:52:37.277 which was basically pre-Internet. 00:52:37.360 --> 00:52:41.320 Basically, it was like Netflix before Netflix in like 1991, right? 00:52:42.630 --> 00:52:46.200 Like, amazing foresight, right? Just like amazing foresight. 00:52:46.580 --> 00:52:49.407 But again, he and the CEO got in this conflict, and the CEO's like, 00:52:49.490 --> 00:52:53.267 "Look, we just can't. We have to focus on the thing that we're doing. 00:52:53.350 --> 00:52:54.157 We're not going to do these things." 00:52:54.240 --> 00:52:57.787 And so Jim did the classic founder thing, and he left. 00:52:57.870 --> 00:53:00.387 And when I met him, basically, that was the state that he was in, which was, 00:53:00.470 --> 00:53:04.857 "Okay, I, Jim, am in the prime of my life. I know I have all these ideas. 00:53:04.940 --> 00:53:06.427 I don't know exactly what to do with my next company, 00:53:06.510 --> 00:53:08.477 but I know it should be a software company, not a hardware company. 00:53:08.560 --> 00:53:11.337 I know it needs to be a company that is able to anticipate these changes 00:53:11.420 --> 00:53:13.020 that are happening in the world. 00:53:13.200 --> 00:53:15.507 And I know that Silicon..." And he was very sad about this. 00:53:15.590 --> 00:53:17.907 "Silicon Graphics is not the company that's going to be able to do these things 00:53:17.990 --> 00:53:20.897 and so I have to build the new company that's going to do it." 00:53:20.980 --> 00:53:24.117 - Brad Jacobs has started eight separate billion-dollar companies. 00:53:24.200 --> 00:53:29.147 He said, "I've come to know a lot of extremely successful people in my life, 00:53:29.230 --> 00:53:31.057 and they all have one thing in common. 00:53:31.140 --> 00:53:33.870 They think differently than most people. 00:53:34.210 --> 00:53:37.897 All of them, to a person, have rearranged their brains 00:53:37.980 --> 00:53:42.057 to prevail at achieving big goals in turbulent environments 00:53:42.140 --> 00:53:45.090 where conventional thinking often fails." 00:53:45.240 --> 00:53:49.377 What Brad noticed is that great business leaders are pattern spotters, 00:53:49.460 --> 00:53:52.867 but you can't spot patterns if you can't see all of your data. 00:53:52.950 --> 00:53:55.817 Most businesses only use 20% of their data. 00:53:55.900 --> 00:54:00.127 Why? Because 80% of customer intelligence is invisible. 00:54:00.210 --> 00:54:03.577 It's hidden in emails, transcripts, and conversations. 00:54:03.660 --> 00:54:05.480 That's where HubSpot comes in. 00:54:05.670 --> 00:54:07.617 With HubSpot, all of your data comes together 00:54:07.700 --> 00:54:10.087 so you can see the patterns that matter. 00:54:10.170 --> 00:54:12.907 This is important because when you know more, you grow more, 00:54:12.990 --> 00:54:15.667 and that is a pattern that never fails. 00:54:15.750 --> 00:54:19.580 Visit hubspot.com today. That is hubspot.com. 00:54:20.640 --> 00:54:22.347 I want to hear more about what it was like working with him, 00:54:22.430 --> 00:54:26.610 but there was a very astute observation you made in your blog archive 00:54:26.960 --> 00:54:30.327 because you were trying to, essentially this post was trying to educate founders, 00:54:30.410 --> 00:54:32.037 just like recruiting is the most important thing you're doing 00:54:32.120 --> 00:54:33.917 at the very beginning of a company, maybe forever, 00:54:34.000 --> 00:54:36.657 and you're underestimating how difficult it is, 00:54:36.740 --> 00:54:39.597 and you tell the story of Jim Clark in the blog archive. 00:54:39.680 --> 00:54:41.837 You're like, "This guy was a legend." - He was, yeah. 00:54:41.920 --> 00:54:44.707 - Like, most famous person, best entrepreneur, 00:54:44.790 --> 00:54:47.667 and he tried to recruit all these other people, and I don't know, 00:54:47.750 --> 00:54:48.787 it was like 100 people, and you're like... 00:54:48.870 --> 00:54:52.277 Well, you were one of two or three that actually followed through- 00:54:52.360 --> 00:54:55.357 - Yep. - and took the chance and jumped and started working with him. 00:54:55.440 --> 00:54:59.237 - Yeah, again, this is like, I don't know, Zuckerberg or Sergey Brin or Elon 00:54:59.320 --> 00:55:00.747 or whatever decides to start a company. 00:55:00.830 --> 00:55:03.247 That was his candle power wattage in the community at that time. 00:55:03.330 --> 00:55:05.737 And so, yeah, you would think that the obvious thing people would just say, 00:55:05.820 --> 00:55:07.347 "Jim Clark wants us to start a company with you," 00:55:07.430 --> 00:55:09.580 just the obvious thing is you just say yes. 00:55:10.010 --> 00:55:12.180 It was not happening. 00:55:12.780 --> 00:55:15.907 I don't know if I told this story, but the crystallized memory 00:55:15.990 --> 00:55:19.727 is a dinner of 12 of us at this famous Italian restaurant 00:55:19.810 --> 00:55:21.417 in Palo Alto called Il Fornaio. 00:55:21.500 --> 00:55:23.417 It's where a lot of these companies were formed. 00:55:23.500 --> 00:55:24.827 It was Jim's favorite restaurant at the time. 00:55:24.910 --> 00:55:26.347 And so Jim had like a dozen of us, 00:55:26.430 --> 00:55:28.777 and us being people who were in existing companies, 00:55:28.860 --> 00:55:31.327 who were basically technical people who he knew. 00:55:31.410 --> 00:55:33.027 Well, this is another thing. He was constrained. 00:55:33.110 --> 00:55:34.817 He had a non-solicit agreement with Silicon Graphics, 00:55:34.900 --> 00:55:38.797 and so he couldn't just rip people out, and he didn't want to violate that. 00:55:38.880 --> 00:55:41.427 And so he needed to basically reach out to the technical community- 00:55:41.510 --> 00:55:43.417 - Mm-hmm. - and find new collaborators. 00:55:43.500 --> 00:55:44.647 So, there were like a dozen of us in there. 00:55:44.730 --> 00:55:48.647 And I remember that dinner very precisely for two reasons. 00:55:48.730 --> 00:55:51.580 Number one is I was the only one of the dozen to say yes, 00:55:51.900 --> 00:55:55.450 and then the other was it's the first time in my life I drank red wine. 00:55:56.210 --> 00:55:58.060 And I didn't know what to make of it. 00:55:58.420 --> 00:56:01.870 And so, I kept sipping it, trying to figure out if I liked it or not, 00:56:02.040 --> 00:56:05.040 and I didn't realize that I was getting completely hammered, 00:56:05.230 --> 00:56:08.010 because I had no idea how to calibrate red wine. 00:56:08.530 --> 00:56:10.997 And so, the true version of the story is, I leave the dinner, 00:56:11.080 --> 00:56:12.227 and I'm like, "Wow, this is amazing." 00:56:12.310 --> 00:56:13.807 Like "I'm going to say yes to this. We're going to do this." 00:56:13.890 --> 00:56:16.767 And I go to my car in the parking garage in Palo Alto across the street, 00:56:16.850 --> 00:56:20.027 and my brand new car, my first new car I've ever owned, right? 00:56:20.110 --> 00:56:22.267 My brand new car. And I gun it, and I pull out, 00:56:22.350 --> 00:56:24.650 and I rip the entire front end of the car off. 00:56:25.570 --> 00:56:29.817 It's like this screaming metal sound. 00:56:29.900 --> 00:56:32.637 So, the whole front end of my car is just hanging on the ground, 00:56:32.720 --> 00:56:34.340 and I'm like, "Oh, f*** me." 00:56:34.710 --> 00:56:37.007 So anyway, I park the car, get out of the car, walk home. 00:56:37.090 --> 00:56:37.817 - No Uber this time. 00:56:37.900 --> 00:56:43.617 - No Uber. I'm just like... A three-mile walk at whatever, 11:00 at night 00:56:43.700 --> 00:56:45.477 with six bottles of red wine. 00:56:45.560 --> 00:56:47.797 - And you're what? 22? - No problem. Twenty-two, yeah, exactly. 00:56:47.880 --> 00:56:51.430 - Twenty-two. I'm like, "I think I probably won't mention this to Jim." 00:56:52.960 --> 00:56:54.387 I don't know, there are some wild stories in that book. 00:56:54.470 --> 00:56:56.077 He might have admired you even more. 00:56:56.160 --> 00:57:00.160 - He might have. Yes. - How many founders of the company? It's just you and him? 00:57:00.580 --> 00:57:01.967 - So, yeah, originally it was him and me. 00:57:02.050 --> 00:57:04.027 - Okay. - Yeah, we started the company, and 00:57:04.110 --> 00:57:07.477 it was again one of these things where we had long conversations about what to do. 00:57:07.560 --> 00:57:11.467 Well, okay, so then the problem that he had was... 00:57:11.550 --> 00:57:15.347 There was the idea of doing the graphics chip, and again, that’s what NVIDIA did. 00:57:15.430 --> 00:57:17.567 But NVIDIA was essentially a spin-off of SGI. 00:57:17.650 --> 00:57:20.107 But at that time, starting a new chip company from scratch would’ve been tough, 00:57:20.190 --> 00:57:22.820 and he didn’t want to compete with SGI doing that. 00:57:23.190 --> 00:57:26.037 And then the interactive... What you would call the interactive is lost to history, 00:57:26.120 --> 00:57:28.427 but this interactive television, it wasn't time for that yet. 00:57:28.510 --> 00:57:30.217 There wasn't actually time for Netflix yet. 00:57:30.300 --> 00:57:33.267 And so it was going to be cost-prohibitive. 00:57:33.350 --> 00:57:36.067 Time Warner had rolled out this interactive television thing in 00:57:36.150 --> 00:57:37.777 Orlando, Florida, to 500 people. 00:57:37.860 --> 00:57:39.617 - Yeah, and Microsoft was involved 00:57:39.700 --> 00:57:41.457 in some way. Yeah. - They were doing a ton in Oracle. 00:57:41.540 --> 00:57:42.897 At the time all the big companies were... 00:57:42.980 --> 00:57:44.907 - It's all these Bill Gates biographies. - Yeah. Exactly. 00:57:44.990 --> 00:57:49.057 He talks about that a lot. But the CapEx per house was like 50,000 dollars 00:57:49.140 --> 00:57:51.707 or something, because you had to have a Silicon Graphics workstation in the house, 00:57:51.790 --> 00:57:54.790 and it wasn't going to work. So he couldn't figure that out, 00:57:55.060 --> 00:57:57.237 and then we cycled through a whole bunch of ideas. 00:57:57.320 --> 00:57:59.837 He actually went back to Nintendo, and we almost 00:57:59.920 --> 00:58:03.587 pulled the trigger on basically building what today you'd call Xbox Live, or 00:58:03.670 --> 00:58:06.117 what is it called? PlayStation Network or Xbox Live? - Yeah. 00:58:06.200 --> 00:58:08.087 - An online gaming service for the Nintendo 00:58:08.170 --> 00:58:12.240 64 in 1994, which might've been a good idea. We thought it was too early. 00:58:12.640 --> 00:58:15.637 We almost did that, and then what happened literally was the internet... 00:58:15.720 --> 00:58:18.947 I had worked on the internet in college, and then, this is 00:58:19.030 --> 00:58:22.670 fortunately only a few months later, but the internet just kept growing. 00:58:23.100 --> 00:58:25.427 - Hold on, Marc. - Yes. - You had worked on the internet 00:58:25.510 --> 00:58:27.077 a little bit? That's a little bit modest. - I had worked on the internet. 00:58:27.160 --> 00:58:27.993 Yes, well... 00:58:28.410 --> 00:58:30.267 - I think a lot of people listening to this will know, 00:58:30.350 --> 00:58:33.800 but you should probably explain how you were working on the internet. 00:58:34.060 --> 00:58:36.177 - So this is part of the story. At the time, it was not that big of a deal. 00:58:36.260 --> 00:58:40.010 It's not nearly that much big of a deal at the time as it's viewed now. So, 00:58:40.220 --> 00:58:43.187 the internet... I've told this story many times, so I won't go into huge detail, 00:58:43.270 --> 00:58:46.737 but yeah, a group of us at Illinois did this thing called Mosaic, which was 00:58:46.820 --> 00:58:50.127 the first, as I said, widely used web browser, than the first one with graphics. 00:58:50.210 --> 00:58:53.587 - Explain what was different about what you made compared to what existed before. 00:58:53.670 --> 00:58:55.697 - Yeah, so the previous web browsers were text-based. 00:58:55.780 --> 00:58:58.047 There was this nascent concept of the web, 00:58:58.130 --> 00:59:01.757 but it was text-based terminals, and then it didn't have graphics. 00:59:01.840 --> 00:59:02.977 It wasn't point-and-click. 00:59:03.060 --> 00:59:06.937 It didn't work in the way that you would expect this type of software to work. 00:59:07.020 --> 00:59:11.507 And then, by the way, it didn't also have scripting language, no security, 00:59:11.590 --> 00:59:15.667 none of the actual capabilities that make the browser a useful thing. 00:59:15.750 --> 00:59:18.887 And so there was this nascent idea, but it needed to get built into a full thing, 00:59:18.970 --> 00:59:23.867 and so we built the original kind of full thing, a full browser, at Illinois. 00:59:23.950 --> 00:59:27.537 And then we also built the first kind of mainstream web server, like 00:59:27.620 --> 00:59:30.017 the first web server, again, that kind of had everything that people needed. 00:59:30.100 --> 00:59:32.620 This had been a project at college, 00:59:33.560 --> 00:59:37.410 and again, at the time, the internet was not viewed as a consumer phenomenon. 00:59:37.600 --> 00:59:39.427 - Wasn't it illegal to commercialize? 00:59:39.510 --> 00:59:41.617 Steve Case of AOL tells a story that - Yeah. 00:59:41.700 --> 00:59:43.257 - he had to lobby and get a law changed. 00:59:43.340 --> 00:59:45.717 - Yeah, that's right. Yeah. - What were the details there? 00:59:45.800 --> 00:59:50.410 - So the internet as we know it today, in the 1980s, was called the NSFNET. 00:59:51.170 --> 00:59:53.097 NSF stands for National Science Foundation, 00:59:53.180 --> 00:59:56.037 which is a branch of the U.S. government that funds research, 00:59:56.120 --> 00:59:59.230 and the National Science Foundation funded the internet. 00:59:59.610 --> 01:00:02.237 The reason I was able to do the work, I was able to do it at Illinois is because 01:00:02.320 --> 01:00:06.137 the NSF had actually dumped a ton of money into four universities 01:00:06.220 --> 01:00:08.797 around the country to build what were called the supercomputer centers, 01:00:08.880 --> 01:00:11.137 and then those were also the main hubs for the NSFNET. 01:00:11.220 --> 01:00:13.457 And the function of the NSFNET was fundamentally to 01:00:13.540 --> 01:00:15.597 connect the supercomputers to all the people 01:00:15.680 --> 01:00:18.957 who were going to use them. So it was this government research academic program, 01:00:19.040 --> 01:00:21.707 and it was very exciting in the technical field. But 01:00:21.790 --> 01:00:25.790 there was no conception that ordinary people were ever going to use any of this. 01:00:25.900 --> 01:00:29.320 Nobody thought that this was a thing that normies were going to use. 01:00:29.540 --> 01:00:35.557 And NSF, it's taxpayer funding, so the government at least is not supposed to be 01:00:35.640 --> 01:00:38.810 funding businesses directly, although sometimes they do. 01:00:39.110 --> 01:00:45.907 But there were formal legal restrictions on funding things with 01:00:45.990 --> 01:00:47.807 commercial applications. And so what there was was 01:00:47.890 --> 01:00:50.637 there was something called the AUP, Acceptable Use Policy, 01:00:50.720 --> 01:00:54.657 and the Acceptable Use Policy said that basically the internet, 01:00:54.740 --> 01:00:58.397 the NSFNET turned internet, was for academic and research use, and 01:00:58.480 --> 01:01:01.687 commercial activities were strictly prohibited, literally not allowed. 01:01:01.770 --> 01:01:04.217 And again, it's just like, as a taxpayer, that makes total sense. 01:01:04.300 --> 01:01:07.217 I'm glad my tax money's not going to fund something like that. 01:01:07.300 --> 01:01:09.567 But as a user, you're just like, "All right, that's nuts." 01:01:09.650 --> 01:01:13.397 That's clearly crazy, right? And if you took the conceptual leap 01:01:13.480 --> 01:01:15.457 to say, "No, this is going to escape the lab, 01:01:15.540 --> 01:01:17.587 and this is going to be something that normal people are going to use," 01:01:17.670 --> 01:01:20.547 then it just became obvious that it would have to have commercial activities. 01:01:20.630 --> 01:01:24.157 Yeah, and then AOL was one of the early pre-internet online services that 01:01:24.240 --> 01:01:25.867 wanted to connect to the internet. I think they 01:01:25.950 --> 01:01:28.297 famously connected to the internet in 1993. 01:01:28.380 --> 01:01:30.397 Do you know about the concept of Eternal September? 01:01:30.480 --> 01:01:35.137 - No. - Oh, okay. So there are two internets. 01:01:35.220 --> 01:01:37.047 There is the internet that existed before 1993 01:01:37.130 --> 01:01:39.037 and the internet that existed after 1993. 01:01:39.120 --> 01:01:43.070 People who were on the internet before 1993 often describe it in utopian terms, 01:01:43.470 --> 01:01:46.207 because it literally was like you take the whatever million 01:01:46.290 --> 01:01:48.247 smartest people in the world and you put them on a network together, 01:01:48.330 --> 01:01:51.597 with no commercial activity, no advertising, no nothing, 01:01:51.680 --> 01:01:53.647 just the million smartest people in the world, and 01:01:53.730 --> 01:01:55.097 you just let them talk to each other, 01:01:55.180 --> 01:01:57.537 and it's just amazing. It was amazing. Like, there was this... 01:01:57.620 --> 01:02:00.717 The old messaging system was called Usenet, and the discussions on Usenet 01:02:00.800 --> 01:02:04.057 were just absolutely spectacular. It was amazing. 01:02:04.140 --> 01:02:06.417 It was the most pure, clean, 01:02:06.500 --> 01:02:11.777 intellectual, vibrant space since, I don't know, Athens in 500 BC. 01:02:11.860 --> 01:02:13.377 It was just this amazing phenomenon. 01:02:13.460 --> 01:02:15.027 And then AOL connected. 01:02:15.110 --> 01:02:18.817 AOL had, I don't know, whatever, a million or two million people at that point. 01:02:18.900 --> 01:02:21.917 They connected all the AOL users, which were just normal people, 01:02:22.000 --> 01:02:26.840 to the internet in September 1993, and that became Eternal September. 01:02:27.640 --> 01:02:29.657 That's the day the internet changed. And by the way, 01:02:29.740 --> 01:02:32.357 I'm pro that, I'm glad that happened. But the pro and the con of that is 01:02:32.440 --> 01:02:35.737 that took the internet from this ivory tower kind of thing to this basically 01:02:35.820 --> 01:02:38.367 mainstream consumer, ordinary people thing, 01:02:38.450 --> 01:02:42.087 which is, of course, just a fundamentally different thing, obviously, right? 01:02:42.170 --> 01:02:44.447 The concept of Eternal September literally was 01:02:44.530 --> 01:02:47.477 when every new wave of college graduates graduated 01:02:47.560 --> 01:02:49.337 and got their first job, and then went online. 01:02:49.420 --> 01:02:53.470 September is when the new crop of internet users showed up for a long time, 01:02:53.590 --> 01:02:56.347 so the "September effect" didn't just happen once. 01:02:56.430 --> 01:02:59.737 It happened over and over and over and over and over and over again. 01:02:59.820 --> 01:03:02.457 And every cycle of internet users would basically be like, 01:03:02.540 --> 01:03:05.057 "Oh my God, this is great, but it's all going to get ruined in September." 01:03:05.140 --> 01:03:07.977 - Yeah. - Right? And so the internet that we live in today is the result of... 01:03:08.060 --> 01:03:09.257 - If they could only see us now. 01:03:09.340 --> 01:03:15.147 - 30 Septembers, right? But yeah, and by the way, there was controversy 01:03:15.230 --> 01:03:19.507 at the time about whether the Acceptable Use Policy should be revoked. 01:03:19.590 --> 01:03:24.070 There was controversy over whether normal people should be on it or not. 01:03:24.290 --> 01:03:27.107 There was controversy over whether the kind of content normal people 01:03:27.190 --> 01:03:28.817 wanted to be on it should be allowed to be on it. 01:03:28.900 --> 01:03:31.027 There was controversy about whether there should be... 01:03:31.110 --> 01:03:33.177 There was controversy... We got quite a bit of flak at the time for 01:03:33.260 --> 01:03:34.717 putting images into web pages, 01:03:34.800 --> 01:03:37.027 under the theory that that would fundamentally make everything worse 01:03:37.110 --> 01:03:40.620 because you'd have normie content, and that would be bad. 01:03:41.000 --> 01:03:44.000 And it's the same about e-commerce. By the way, advertising, 01:03:44.310 --> 01:03:47.890 I remember there was actually a moment that... 01:03:48.810 --> 01:03:51.817 There was a guy named Sanford Wallace, and he became known as 01:03:51.900 --> 01:03:57.000 "Spamford Wallace." He literally sent out the first spam message on the internet 01:03:57.110 --> 01:03:58.377 in 1992. 01:03:58.460 --> 01:04:01.487 And literally, it was the first internet ad, and it was a spam for, I don't know, 01:04:01.570 --> 01:04:03.187 whatever, legal services or something. 01:04:03.270 --> 01:04:06.757 He just drops it on the UseNet, and it was like a thermonuclear explosion, 01:04:06.840 --> 01:04:10.890 because it was like, "Get this commercialized crap out of my newsfeed." 01:04:11.170 --> 01:04:16.127 So all of these things were hot and controversial. 01:04:16.210 --> 01:04:18.587 I was generally on the other side of all these arguments 01:04:18.670 --> 01:04:20.657 because I was like, "Look, this thing is great. 01:04:20.740 --> 01:04:22.797 Obviously, everybody should have access to this. Obviously, 01:04:22.880 --> 01:04:26.607 we need to connect everybody to this. Obviously, to do that, these need to be 01:04:26.690 --> 01:04:28.867 businesses, there needs to be commerce. There needs to be advertising. 01:04:28.950 --> 01:04:30.837 All these things obviously need to happen." 01:04:30.920 --> 01:04:33.827 - So was that the discussions you and Jim were having, where you're like, "Okay, 01:04:33.910 --> 01:04:36.257 we're going to start an actual company around this"? - Yeah. 01:04:36.340 --> 01:04:39.087 So yeah, that's how we got to the conversation Jim and I had, which was 01:04:39.170 --> 01:04:41.827 basically like, okay... Because that was right at the pivot point. This was in 01:04:41.910 --> 01:04:44.970 early '94, so the AUP had just been revoked, and 01:04:45.270 --> 01:04:49.467 AOL had just done the first September, and the whole thing was just about to tip. 01:04:49.550 --> 01:04:56.380 And I knew that because I was tech support for the browser personally. 01:04:58.800 --> 01:05:00.570 - No, explain that. - Just me. 01:05:00.710 --> 01:05:03.717 Well, Mosaic at the time was the browser everybody used, and so if you 01:05:03.800 --> 01:05:06.187 used Mosaic, there was a Submit a Bug report or whatever, 01:05:06.270 --> 01:05:08.367 "You have a question, submit it here," and that went to an email box, 01:05:08.450 --> 01:05:12.140 and that email box was me. So I became tech support for the internet. 01:05:14.180 --> 01:05:17.700 For like three years. - How? - I got all the emails. 01:05:19.070 --> 01:05:19.937 - How many emails were you getting? 01:05:20.020 --> 01:05:22.697 - Well, there were actually two. That was one email box, and the other email box 01:05:22.780 --> 01:05:26.137 was... Mosaic was actually created under... It was also funded by the 01:05:26.220 --> 01:05:30.627 National Science Foundation. So it was actually not... The original license said 01:05:30.710 --> 01:05:33.557 it couldn't be used for commercial use, it was for academic, research, and 01:05:33.640 --> 01:05:37.387 individual use. So, we had this thing. We did a deliberately ambiguous license, and 01:05:37.470 --> 01:05:40.987 we said, "If you want to use the browser commercially, you need to email us 01:05:41.070 --> 01:05:42.807 to arrange terms." Now, we had no 01:05:42.890 --> 01:05:45.747 concept at all of what those terms would be, but we just said we need to 01:05:45.830 --> 01:05:47.317 create this incoming flow. So 01:05:47.400 --> 01:05:49.407 I was getting bombarded with tech support requests. 01:05:49.490 --> 01:05:50.137 And by the way, 01:05:50.220 --> 01:05:52.787 tech support for the internet means you're tech support for everything. 01:05:52.870 --> 01:05:58.217 So it's like the old PCs had CD-ROM trays, you press the button, 01:05:58.300 --> 01:06:00.687 the CD-ROM tray comes out, you put the disc in the thing. 01:06:00.770 --> 01:06:04.447 The problem is a lot of people thought that those were cup holders, right? 01:06:04.530 --> 01:06:06.317 So you press the button, the cup holder comes out, 01:06:06.400 --> 01:06:07.427 you put your cup of coffee down, 01:06:07.510 --> 01:06:10.257 and then 10 seconds later, the cup holder retracts back into the PC, 01:06:10.340 --> 01:06:11.777 spills your coffee all over the place. 01:06:11.860 --> 01:06:14.217 You're like, "How the f*** do I keep the cup holder out," right? 01:06:14.300 --> 01:06:16.497 - Let me email Marc. - Yeah, let me email Marc. 01:06:16.580 --> 01:06:19.050 It's like, "Sir, that's the CD-ROM drive." 01:06:19.650 --> 01:06:22.130 So there was a lot of that. 01:06:23.350 --> 01:06:25.637 One of the funnier things you can always do, 01:06:25.720 --> 01:06:28.517 in politics, they call this "focus groups," but you could do user testing. 01:06:28.600 --> 01:06:30.907 You see this over and over at tech companies, 01:06:30.990 --> 01:06:33.627 take whatever amazing new thing you have and just 01:06:33.710 --> 01:06:35.907 put it in a room with normal people and let them try to use it. 01:06:35.990 --> 01:06:40.097 You just learn so much about how much of a bubble that you're in, - Yeah. 01:06:40.180 --> 01:06:42.367 about the kind of things that you're familiar with, that normal people 01:06:42.450 --> 01:06:44.157 are just like, "I don't know what the hell Yeah. any of this stuff is." 01:06:44.240 --> 01:06:46.037 So, there was a lot of that. 01:06:46.120 --> 01:06:49.537 But then I had this other email box, which was all the commercial licensing requests. 01:06:49.620 --> 01:06:51.217 And so I saw the consumer takeoff 01:06:51.300 --> 01:06:52.967 on the one side, and then I basically, I think that... 01:06:53.050 --> 01:06:56.317 And then the commercial requests hit 400 messages 01:06:56.400 --> 01:06:58.197 of people wanting to pay money for this thing. 01:06:58.280 --> 01:07:00.537 And so I basically took those to Jim, and I was like... 01:07:00.620 --> 01:07:03.780 - There's a business. - Yeah, this is going to happen. And then 01:07:03.890 --> 01:07:10.557 we actually went to... My old boss at NCSA actually had gone to... 01:07:10.640 --> 01:07:13.097 We actually went to Washington in '93 to try to get 01:07:13.180 --> 01:07:15.310 NSF funding to staff a support desk 01:07:15.510 --> 01:07:18.857 and so that it wasn't me answering all of the emails. 01:07:18.940 --> 01:07:21.287 And the National Science Foundation people were very nice, 01:07:21.370 --> 01:07:23.727 and they were like, "Yes, the National Science Foundation is not in the business 01:07:23.810 --> 01:07:26.807 of funding customer support desks for your software." 01:07:26.890 --> 01:07:30.840 And so I still have the denied NSF grant that would've kept the whole thing 01:07:31.420 --> 01:07:36.967 an academic project. But yeah, at that point, at least to Jim and me, 01:07:37.050 --> 01:07:38.897 it was just obvious that that was going to be a business. 01:07:38.980 --> 01:07:41.217 By the way, again, very controversial, 01:07:41.300 --> 01:07:43.447 the original press coverage on Netscape for the first year 01:07:43.530 --> 01:07:45.557 was that these people would never make money. Like, this is ridiculous. 01:07:45.640 --> 01:07:47.437 Everybody knows the internet's free. 01:07:47.520 --> 01:07:49.487 Everybody knows that none of this is going to work, so, 01:07:49.570 --> 01:07:51.867 - What did you think the business model, though... 01:07:51.950 --> 01:07:53.197 - even then it was controversial. 01:07:53.280 --> 01:07:54.557 - Was just literally licensing it? 01:07:54.640 --> 01:07:56.927 - It was a combination of things. So, it was definitely software licensing, 01:07:57.010 --> 01:07:59.177 and we made this thing up where the browser was free, 01:07:59.260 --> 01:08:00.637 but the server software cost money. 01:08:00.720 --> 01:08:03.147 And then, out of the gate, we started building all these, we called, 01:08:03.230 --> 01:08:08.057 applications, server-side applications. So we built the first publishing system 01:08:08.140 --> 01:08:11.407 for running a newspaper or magazine online, a content management system. 01:08:11.490 --> 01:08:14.247 We built the first e-commerce system for selling... This is pre-Amazon, 01:08:14.330 --> 01:08:16.807 so we built the first e-commerce system for selling things online. 01:08:16.890 --> 01:08:20.300 So we built and sold a lot of that software. 01:08:20.650 --> 01:08:25.097 And then we owned the main website that the browser had as its default homepage, 01:08:25.180 --> 01:08:28.677 and so we built the original internet advertising business, was basically... 01:08:28.760 --> 01:08:32.267 So Netscape was the largest internet advertising company until, I think, '97. 01:08:32.350 --> 01:08:35.147 - That's incredible. I didn't know that. - When Yahoo passed us, yeah. 01:08:35.230 --> 01:08:39.117 And so yeah, we invented, or people at the firm invented, at the company invented... 01:08:39.200 --> 01:08:42.757 I don't know exactly who gets credit, but the original ad formats 01:08:42.840 --> 01:08:46.097 were right around that time, and a lot of them rolled out on our site first. 01:08:46.180 --> 01:08:51.680 So it was literally advertising pre-Yahoo. It was e-commerce pre-Amazon. 01:08:51.880 --> 01:08:56.077 It was, yeah, content pre... We literally sold... 01:08:56.160 --> 01:08:57.437 I mean, we put The Wall Street Journal online. 01:08:57.520 --> 01:08:59.367 That was our software that did that, 01:08:59.450 --> 01:09:02.637 and a lot of other newspapers, magazines, and all that stuff. 01:09:02.720 --> 01:09:05.567 And so yeah, it was a lot of that, and then it was the web operation. 01:09:05.650 --> 01:09:09.387 And again, it all looks obvious in retrospect, but 01:09:09.470 --> 01:09:11.687 again, it was like, okay, when we started this... 01:09:11.770 --> 01:09:13.437 I don't know what the total number was. 01:09:13.520 --> 01:09:15.437 So we started the company in April '94. 01:09:15.520 --> 01:09:17.657 There couldn't have been more than two million people total online, 01:09:17.740 --> 01:09:20.740 right? And then almost everybody was coming in over dial-up. 01:09:21.050 --> 01:09:22.407 This is like pre-broadband, right? 01:09:22.490 --> 01:09:25.157 So everybody's coming in on, like, 14.4 kilobyte modems, 01:09:25.240 --> 01:09:28.287 and we're hoping that people are going to upgrade to 56 kilobyte modems, 01:09:28.370 --> 01:09:30.007 that that would be like super helpful. - Yeah. 01:09:30.090 --> 01:09:33.017 - Computers at that time did not come with TCP/IP installed, 01:09:33.100 --> 01:09:35.427 so to get your PC actually on the internet, 01:09:35.510 --> 01:09:38.177 you needed to buy a TCP/IP stack. 01:09:38.260 --> 01:09:40.907 Try explaining to a normal human being what a TCP/IP stack is. 01:09:40.990 --> 01:09:42.240 It makes no sense at all. 01:09:42.880 --> 01:09:44.687 - They're going to ask if they can put it next to their cup holder. 01:09:44.770 --> 01:09:47.607 - Exactly, yeah. It was just like talking to Martians, right? 01:09:47.690 --> 01:09:49.267 Their talking to us was like talking to Martians. 01:09:49.350 --> 01:09:53.300 And then monitors were like three feet deep, and just bathing you in radiation. 01:09:54.340 --> 01:09:57.537 You're kind of hoping that the radiation stays up here and not everywhere else. 01:09:57.620 --> 01:09:59.797 In retrospect, it was super early, and it was all very... 01:09:59.880 --> 01:10:02.570 And then again, it was just like, "Okay, e-commerce, 01:10:02.810 --> 01:10:05.447 are people going to buy things online?" It's like, "I don't know, maybe." 01:10:05.530 --> 01:10:07.937 But the press at that time was just like wall-to-wall, like, 01:10:08.020 --> 01:10:10.267 "If you put your credit card number online, hackers are going to steal it." 01:10:10.350 --> 01:10:11.587 - I was going to say, if you read any books that were 01:10:11.670 --> 01:10:12.497 around this time, they're like, - Yeah. 01:10:12.580 --> 01:10:13.617 - "There's no way in hell anybody's - Yeah. 01:10:13.700 --> 01:10:15.087 - ever going to put their credit card on the internet." 01:10:15.170 --> 01:10:15.857 - But by the way, the other thing 01:10:15.940 --> 01:10:18.717 you would never ever do is put your real name online 01:10:18.800 --> 01:10:21.347 because it would be immediate identity theft, your life would be ruined. 01:10:21.430 --> 01:10:22.817 So you would never ever do that. 01:10:22.900 --> 01:10:24.917 By the way, the other thing was right in the beginning, 01:10:25.000 --> 01:10:27.897 you had all the panic around kids, "This is going to destroy children, 01:10:27.980 --> 01:10:30.447 this is a huge risk to children." So you had all that panic. 01:10:30.530 --> 01:10:34.077 And then there was immediately the beginning of the calls for censorship. 01:10:34.160 --> 01:10:35.897 There's clearly all this stuff that you have to take down. 01:10:35.980 --> 01:10:37.137 The New York Times kept running stories 01:10:37.220 --> 01:10:38.767 talking about how the whole thing was fake anyway. 01:10:38.850 --> 01:10:40.637 They kept saying that all the numbers were made up, 01:10:40.720 --> 01:10:42.317 and there actually wasn't anybody online. 01:10:42.400 --> 01:10:43.677 It was like a tiny little user base, and 01:10:43.760 --> 01:10:45.927 we were all inflating the numbers and committing fraud. 01:10:46.010 --> 01:10:48.067 So it was just this... 01:10:48.150 --> 01:10:51.907 In retrospect, it's all quaint and cute and sweet, but it was like the precursor. 01:10:51.990 --> 01:10:55.917 It was all the moral panics around technology today. - Okay. But... 01:10:56.000 --> 01:10:57.737 - You could see nascent versions of them back then. 01:10:57.820 --> 01:10:59.297 - You pick up on something that... Because 01:10:59.380 --> 01:11:01.837 me and you have read a bunch of the same books, where it's like, humans' reactions 01:11:01.920 --> 01:11:03.277 to something new is just consistent - Yeah. 01:11:03.360 --> 01:11:06.127 - throughout history. - Yeah. - And so I heard a podcast with you. 01:11:06.210 --> 01:11:07.177 I thought I was the only one that 01:11:07.260 --> 01:11:09.247 would tell the story in private about bicycle face. 01:11:09.330 --> 01:11:10.320 - Bicycle face. 01:11:11.840 --> 01:11:15.097 - Exactly. Do you want to say what bicycle face is? - Bicycle face. Bicycle face. 01:11:15.180 --> 01:11:16.937 Bicycle face, yes. So it basically turns out 01:11:17.020 --> 01:11:19.677 every new technology is greeted with what they call a "moral panic," 01:11:19.760 --> 01:11:23.207 right? So, a moral panic basically is, whatever this new technology is, or 01:11:23.290 --> 01:11:25.377 this new form of media is, it's going to ruin everything. 01:11:25.460 --> 01:11:28.927 Specifically, it's going to ruin society, it's going to ruin morality, 01:11:29.010 --> 01:11:31.477 and then, especially, it's going to ruin the children. 01:11:31.560 --> 01:11:34.407 And then back... The bicycle was pre-feminism, 01:11:34.490 --> 01:11:36.197 so it was also going to ruin the women 01:11:36.280 --> 01:11:37.987 very specifically. It's going to ruin the women, 01:11:38.070 --> 01:11:41.367 because women, clearly, in 1880, cannot be trusted to 01:11:41.450 --> 01:11:44.810 use a bicycle without getting into real trouble. I'll explain why. 01:11:45.240 --> 01:11:48.417 So this is this persistent theme, and basically you go all the way back, 01:11:48.500 --> 01:11:52.427 and this is like this famous thing where Plato and Socrates thought that, 01:11:52.510 --> 01:11:55.387 basically, written language was a big mistake, 01:11:55.470 --> 01:11:58.767 that all information transmission should be oral, and they had this whole thing 01:11:58.850 --> 01:12:01.127 back in 500 BC. And then it was just like every... 01:12:01.210 --> 01:12:05.227 You just have to imagine. So I always like to hypothesize that 01:12:05.310 --> 01:12:07.467 the first guy who brought fire, like, 01:12:07.550 --> 01:12:08.887 down from the mountain. - They probably killed him. 01:12:08.970 --> 01:12:12.337 - Yeah. They're like, "What the f*** is this?" Right? Exactly, like, 01:12:12.420 --> 01:12:14.907 "This thing is horrible. This thing could burn down the village. This is awful. 01:12:14.990 --> 01:12:16.517 This is going to destroy everything." 01:12:16.600 --> 01:12:18.717 And so it's just been this consistent thing. 01:12:18.800 --> 01:12:21.837 There's this great website called Pessimist Archive, where 01:12:21.920 --> 01:12:24.247 these guys go back and they find all these newspaper articles that are 01:12:24.330 --> 01:12:27.657 contemporaneous to these things. But it's everything. So when I was a kid, 01:12:27.740 --> 01:12:32.470 it was like heavy metal music, Dungeons & Dragons, like all this stuff was awful. 01:12:32.900 --> 01:12:35.957 I remember the moral panic around the Walkman, the very first portable cassette 01:12:36.040 --> 01:12:39.037 player with the headphones, because it was going to destroy society 01:12:39.120 --> 01:12:41.677 because everybody was going to just be listening to their own music. 01:12:41.760 --> 01:12:43.457 I remember the moral panic around the calculator, 01:12:43.540 --> 01:12:44.747 it was going to destroy education 01:12:44.830 --> 01:12:46.757 because kids were not going to learn how to do math anymore. 01:12:46.840 --> 01:12:48.067 And then you go back, and 01:12:48.150 --> 01:12:51.817 it's like in the '50s, it was like comic books, and it was rock and roll music, 01:12:51.900 --> 01:12:54.117 obviously, it was going to ruin everything. In the '20s, by the way, 01:12:54.200 --> 01:12:55.707 jazz music was going to ruin everything, 01:12:55.790 --> 01:12:58.287 playing cards were going to ruin everything. What else? 01:12:58.370 --> 01:13:01.857 Novels, paperback novels, were taking... 01:13:01.940 --> 01:13:03.997 Kids were going to sit around and just read novels all day 01:13:04.080 --> 01:13:05.317 instead of doing any real work. 01:13:05.400 --> 01:13:07.797 So it's just over and over and over again, it's this constant story. 01:13:07.880 --> 01:13:09.680 So the bicycle one is the great one. 01:13:10.630 --> 01:13:13.457 The bicycle rolls out in like 1870, 1880, and so the U.S. 01:13:13.540 --> 01:13:17.417 still, at that point, was thinly populated from today, but the West had been settled. 01:13:17.500 --> 01:13:20.037 So you had all these little towns and villages scattered all over the place, 01:13:20.120 --> 01:13:23.087 but to get from one town to the next was like 5, 10, or 15 miles, 01:13:23.170 --> 01:13:25.070 and people didn't generally walk that. 01:13:25.390 --> 01:13:27.627 And so the bicycle comes out, and all of a sudden it's easy to go 01:13:27.710 --> 01:13:29.087 five miles into the next town. 01:13:29.170 --> 01:13:31.997 And then young people discover the bicycle, and they discover that 01:13:32.080 --> 01:13:33.687 there are young people who they didn't grow up with 01:13:33.770 --> 01:13:36.577 who are in the next town over, and they head out to do it. 01:13:36.660 --> 01:13:38.360 And so the specific- - "To do it." 01:13:38.980 --> 01:13:43.097 - Well, to do it, yes. To do everything. To do whatever it is that young people do, 01:13:43.180 --> 01:13:46.247 they're going to head to the... Yeah. Because look, it's just the nature... 01:13:46.330 --> 01:13:49.287 If you've known the same group of people since you were two, 01:13:49.370 --> 01:13:51.707 you're going to want to... Yeah, it's going to- - What's over that hill? 01:13:51.790 --> 01:13:53.577 - What's over that hill? Yes, exactly. Right. 01:13:53.660 --> 01:13:56.950 I grew up in a small town. I can identify with that. 01:13:57.520 --> 01:14:01.627 And then specifically at that point, young men, obviously, 01:14:01.710 --> 01:14:03.967 but specifically young women started to do the bicycle. And so 01:14:04.050 --> 01:14:06.687 this was a big threat. And so, if you're a guy in a town and omen are 01:14:06.770 --> 01:14:08.907 all the attractive young women are heading over the hill 01:14:08.990 --> 01:14:11.077 to the next hill on this bicycle thing, that's a big problem. 01:14:11.160 --> 01:14:14.607 - Mm-hmm. - And so the press at the time created this thing called bicycle face. 01:14:14.690 --> 01:14:16.377 And the idea of bicycle face... 01:14:16.460 --> 01:14:19.937 It was part of the moral lecture that was given to young women in the press 01:14:20.020 --> 01:14:22.237 at the time, which was basically that young women should not 01:14:22.320 --> 01:14:24.807 use bicycles because if you go on a bicycle, you have to exert yourself, 01:14:24.890 --> 01:14:26.217 and if you and if you exert yourself on the bicycle, 01:14:26.300 --> 01:14:30.167 you're going to end up making an exertion face. 01:14:30.250 --> 01:14:33.600 But the thing was, if you did that too much, your face would freeze 01:14:33.770 --> 01:14:36.947 into bicycle face. - They literally thought it would stay that way 01:14:37.030 --> 01:14:38.577 permanently. - It would stay that way permanently, 01:14:38.660 --> 01:14:40.537 and then you would never find a husband. 01:14:40.620 --> 01:14:43.457 Right? And so yeah, that was that moral panic. 01:14:43.540 --> 01:14:46.837 Yeah, and so these things just rip through every... 01:14:46.920 --> 01:14:50.177 I mean, well, it's incredible. Music is always a great one, because it's like... 01:14:50.260 --> 01:14:53.667 I don't know, it's over now, but in the '90s and 2000s, 01:14:53.750 --> 01:14:55.337 there was all this moral panic around hip-hop. 01:14:55.420 --> 01:14:57.497 - Dude, Jimmy Iovine, who is your neighbor, 01:14:57.580 --> 01:14:59.537 - Yeah. Yeah. - he was in here two weeks ago. 01:14:59.620 --> 01:15:02.170 And he had to deal with... They called him a - Yes. 01:15:03.100 --> 01:15:06.567 - chemical gas or mustard gas. They compared him to literally, 01:15:06.650 --> 01:15:08.607 what he's doing is the same as genocide 01:15:08.690 --> 01:15:10.657 because he's funding hip hop music, - Yes, that's right. 01:15:10.740 --> 01:15:12.667 - and white kids are starting to listen to hip hop music. 01:15:12.750 --> 01:15:14.537 - Hip hop music in the late '80s, early '90s. 01:15:14.620 --> 01:15:15.797 - In front of... Like, - That's right. 01:15:15.880 --> 01:15:17.567 - congressional hearings on this. - That's right. 01:15:17.650 --> 01:15:18.887 - The media behind him. - That's right. 01:15:18.970 --> 01:15:21.447 - He was pushed out of a conglomerate. - Yes. 01:15:21.530 --> 01:15:24.997 - This wasn't a joke. - Yes. That's right. And it's actually funny because we... 01:15:25.080 --> 01:15:28.297 I'm not in the music business, but hip-hop has become so normalized that 01:15:28.380 --> 01:15:30.580 today it would just never even occur to you. 01:15:30.970 --> 01:15:32.177 In fact, hip hop was kind of 01:15:32.260 --> 01:15:34.317 a cultural phenomenon. It's even kind of fading today. 01:15:34.400 --> 01:15:36.067 But yeah, no, that was super intense 01:15:36.150 --> 01:15:38.447 at the time, and then rock and roll, that was super intense in the '50s and 01:15:38.530 --> 01:15:40.007 '60s. And then the amazing thing is that- 01:15:40.090 --> 01:15:41.767 - Remember Elvis Presley? They wouldn't - Yeah. 01:15:41.850 --> 01:15:43.697 - shoot him because he would shake his - That's right. 01:15:43.780 --> 01:15:46.177 - hips, so they're like, "No, it's waist-up 01:15:46.260 --> 01:15:47.877 on TV from now on." - Yes, that's right. 01:15:47.960 --> 01:15:49.617 But here's the one that I love, jazz. 01:15:49.700 --> 01:15:51.487 They said all the same things about jazz 01:15:51.570 --> 01:15:54.727 in the 1920s and 1930s. It was jazz music corrupting the... 01:15:54.810 --> 01:15:56.410 And it was the exact same thing. 01:15:56.780 --> 01:15:57.837 It's because kids are going to get together, 01:15:57.920 --> 01:15:59.737 and they're going to dance to jazz, and then who knows what happens. 01:15:59.820 --> 01:16:02.107 And then it was like there was a jazz musician that's smoking pot, 01:16:02.190 --> 01:16:04.237 and that means all the kids are going to start. 01:16:04.320 --> 01:16:08.467 So it's the same story over and over and over and over again. 01:16:08.550 --> 01:16:12.647 And I'll just say, by the way, in fairness it's not that society doesn't change. 01:16:12.730 --> 01:16:16.777 Many of the technologies that we just described did cause society to change. 01:16:16.860 --> 01:16:18.597 Things are different pre and post the bicycle. 01:16:18.680 --> 01:16:20.397 They're different pre and post the car. 01:16:20.480 --> 01:16:23.977 They're different pre and post the creation of modern culture, rock and roll, 01:16:24.060 --> 01:16:27.657 roll, or whatever. But again, this idea of the moral panic, 01:16:27.740 --> 01:16:30.207 this idea of just outright panic, end of the world, 01:16:30.290 --> 01:16:32.857 is just this repeated over and over again thing. 01:16:32.940 --> 01:16:37.767 And then what's happened is, this is the obvious way to sell newspapers, right? 01:16:37.850 --> 01:16:41.067 This is the meta story of the press, which is just like, 01:16:41.150 --> 01:16:44.517 "Whatever's happening is horrible and awful, and it's going to kill everything. 01:16:44.600 --> 01:16:47.130 Be sure to buy our newspaper tomorrow." 01:16:47.990 --> 01:16:51.537 - Deel is the best company in the world at building infrastructure for global hiring. 01:16:51.620 --> 01:16:52.967 Deel will help your business hire, 01:16:53.050 --> 01:16:55.387 pay, and manage any worker anywhere in the world. 01:16:55.470 --> 01:17:00.667 Deel is one platform for payroll, HR, benefits, and device management across 01:17:00.750 --> 01:17:02.737 150 countries. 01:17:02.820 --> 01:17:06.647 Deel gets you everything you need to run a high-performing global workforce 01:17:06.730 --> 01:17:09.177 on a single AI-native platform. 01:17:09.260 --> 01:17:12.177 From the first offer to final off-boarding, 01:17:12.260 --> 01:17:15.657 Deel handles the complexity so you can stay focused on your business. 01:17:15.740 --> 01:17:19.387 The best founders and operators in the world have one thing in common. 01:17:19.470 --> 01:17:22.537 They control as much of their business as possible. 01:17:22.620 --> 01:17:24.827 The founders of Deel do exactly this. 01:17:24.910 --> 01:17:28.237 When you use Deel, you aren't using a third-party payroll processor 01:17:28.320 --> 01:17:30.737 or a messy network of in-country providers. 01:17:30.820 --> 01:17:33.467 Deel built and owns their own rails. 01:17:33.550 --> 01:17:37.437 That means faster speed, better service, and total accountability. 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That is D-E-E-L dot com. 01:18:12.720 --> 01:18:15.057 I want to go back to Jim Clark real quick. 01:18:15.140 --> 01:18:16.877 - Mm-hmm. - Is there anything that you learned... 01:18:16.960 --> 01:18:19.067 Because Jim Clark was, what, probably 20 years older than you? 01:18:19.150 --> 01:18:22.067 - Yes, about that probably. - So, is there anything that you learned working... 01:18:22.150 --> 01:18:24.567 What a f***ing education you had to be able to work with that guy 01:18:24.650 --> 01:18:26.047 when you were in your early 20s. - Yeah. No, that's right. 01:18:26.130 --> 01:18:28.037 - So is there anything that you learned 01:18:28.120 --> 01:18:32.130 by working with him back then that you still use today? 01:18:32.860 --> 01:18:34.277 - I mean, yeah, a lot. 01:18:34.360 --> 01:18:37.797 It's easy to say it was very formative for me, so a lot of it. But yeah, I mean, 01:18:37.880 --> 01:18:40.347 you mentioned that sort of quote earlier about the world is a malleable place. 01:18:40.430 --> 01:18:42.597 Jim was like the ultra version of that. 01:18:42.680 --> 01:18:45.307 And so yeah, he would just... Yeah, when he had an idea... 01:18:45.390 --> 01:18:46.917 And he was right. His ideas were correct 01:18:47.000 --> 01:18:51.487 almost all the time. And he would just pound the world into adopting them, 01:18:51.570 --> 01:18:55.370 into believing them. The idea of being like a complete force of nature. 01:18:55.730 --> 01:18:57.537 - One thing that was malleable was himself. 01:18:57.620 --> 01:18:58.587 He has this great quote in that book - Yeah. 01:18:58.670 --> 01:19:01.937 - where he calls himself a "self-described loser" at 38 years old. 01:19:02.020 --> 01:19:05.647 I mean, the guy had like two PhDs, he was a professor, but I think 01:19:05.730 --> 01:19:08.227 he'd been in his second or third divorce, and he just snapped one day, 01:19:08.310 --> 01:19:08.817 and he's just like, 01:19:08.900 --> 01:19:12.777 "I had woke up one day with the undeniable urge to achieve something." 01:19:12.860 --> 01:19:15.537 And that's when he goes from academic to founder - Yeah. 01:19:15.620 --> 01:19:18.277 - and just rips off company after company for like a few decades. 01:19:18.360 --> 01:19:19.327 - Yeah. - So it's like, oh, 01:19:19.410 --> 01:19:22.607 he realized that he's malleable too. He just reinvented himself 01:19:22.690 --> 01:19:24.567 over and over and over again. - Yeah. And of course, he does that 01:19:24.650 --> 01:19:27.747 not just by starting a company, but inventing interactive computer graphics. 01:19:27.830 --> 01:19:30.480 - Yeah. - Like completely changing the field. - Yeah. 01:19:30.770 --> 01:19:33.007 - Indirectly, like completely changing Hollywood. 01:19:33.090 --> 01:19:34.827 - But is there anything about recruiting or managing or 01:19:34.910 --> 01:19:37.477 any other way that he ran his company? - No, so my two mentors at that time 01:19:37.560 --> 01:19:39.207 actually were, in some ways, polar... 01:19:39.290 --> 01:19:41.537 They always got along, but they were kind of polar opposites. They were both Jims, 01:19:41.620 --> 01:19:45.207 so Jim Clark and Jim Barksdale. So the Jim Clark side of my personality is like the 01:19:45.290 --> 01:19:49.140 will to power, "I'm just going to bludgeon the world into doing what I want." 01:19:49.810 --> 01:19:54.357 And then the idea of just like trying to be a fountain of creativity. 01:19:54.440 --> 01:19:59.050 There are many new ideas out there, and you just need to go find them. 01:19:59.730 --> 01:20:02.457 And then I would say also... How to put this, like 01:20:02.540 --> 01:20:05.197 a sense of professional dissatisfaction, like, "Okay, whatever..." 01:20:05.280 --> 01:20:06.587 Look, this is the other part of the story. 01:20:06.670 --> 01:20:09.277 A lot of founders would have had a success selling graphics, 01:20:09.360 --> 01:20:11.737 and that would have been it. They would have spent the next whatever... 01:20:11.820 --> 01:20:13.777 Whether they were totally happy with how it turned out or not, 01:20:13.860 --> 01:20:16.227 they would have spent 30 years just coasting on that, right? 01:20:16.310 --> 01:20:18.297 And having a great time, taking credit for it, and the whole thing. 01:20:18.380 --> 01:20:22.807 - Mm-hmm. - But Jim was always, at least in that part of his life, 01:20:22.890 --> 01:20:25.017 dissatisfied, in the productive, positive sense of like, 01:20:25.100 --> 01:20:27.047 "Okay, no, there's something better, there's something bigger, 01:20:27.130 --> 01:20:28.717 there's something new that we should do." 01:20:28.800 --> 01:20:31.907 So there's that side of it. And then Jim Barksdale was the other, 01:20:31.990 --> 01:20:37.630 who I just literally was with yesterday in Jackson, Mississippi. 01:20:38.250 --> 01:20:39.837 Jim Barksdale's on the other side, which was... 01:20:39.920 --> 01:20:42.067 Jim Barksdale is the manager of managers. 01:20:42.150 --> 01:20:43.917 So Clark is like the ultimate example of that 01:20:44.000 --> 01:20:47.207 bourgeois capitalist thing I mentioned, so the Henry Ford, Elon Musk type, 01:20:47.290 --> 01:20:50.850 and then Jim Barksdale's the ultimate example of the super manager. 01:20:50.950 --> 01:20:53.827 And Jim had run big parts of IBM, AT&T, 01:20:53.910 --> 01:20:57.767 and Federal Express, and came in to run Netscape. 01:20:57.850 --> 01:21:00.507 What was interesting was that's kind of where I got a lot of this from, 01:21:00.590 --> 01:21:03.697 and a lot of my skills from. I got trained by both of those guys, and then 01:21:03.780 --> 01:21:05.107 kind of both of those guys at the same time, 01:21:05.190 --> 01:21:07.637 and then was able to very clearly observe 01:21:07.720 --> 01:21:09.687 what is just the difference between those mentalities. 01:21:09.770 --> 01:21:12.637 But then the other is, of course, how those concepts converge, 01:21:12.720 --> 01:21:15.607 right? Because just the fountain of creativity, 01:21:15.690 --> 01:21:19.247 you can't build anything big just with that. 01:21:19.330 --> 01:21:22.127 Just the management, you don't do new things. 01:21:22.210 --> 01:21:25.097 - Who's a great example of that from history? So would it be like Nikola Tesla? 01:21:25.180 --> 01:21:26.187 Fountain of creativity... 01:21:26.270 --> 01:21:28.257 - Oh, that's right. Yeah, so... - He needed like a George Westinghouse 01:21:28.340 --> 01:21:30.847 to commercialize his ideas. - Well, it's a Tesla versus Edison. 01:21:30.930 --> 01:21:35.167 - Okay. - Yeah, so Tesla versus Edison. So I'm an Edison guy. 01:21:35.250 --> 01:21:38.917 I mean, that's the thing. So Elon's a Tesla guy, obviously. 01:21:39.000 --> 01:21:41.747 But Elon, of course, himself has now become the really outstanding... 01:21:41.830 --> 01:21:45.067 I mean, he's obviously become an outstanding manager in his own way. 01:21:45.150 --> 01:21:47.527 In fact, to the point where I think he's actually inventing an entirely 01:21:47.610 --> 01:21:49.807 new school of management, which we could talk about. 01:21:49.890 --> 01:21:51.187 - Let's go there next. - Yeah. Okay. 01:21:51.270 --> 01:21:52.827 He's maybe the greatest manager of our era, 01:21:52.910 --> 01:21:55.510 despite the fact that nobody thinks of him that way. 01:21:55.720 --> 01:21:58.247 So I actually think Elon's more like Edison than he is like Tesla. 01:21:58.330 --> 01:22:02.110 And there was a big war, and it was kind of this thing because 01:22:02.470 --> 01:22:05.917 everything kind of turns into these little morality plays. And so kind of the 01:22:06.000 --> 01:22:08.807 basic story of Tesla and Edison was Tesla had all these ideas 01:22:08.890 --> 01:22:11.397 but couldn't commercialize them, couldn't turn them into companies 01:22:11.480 --> 01:22:14.727 ultimately, couldn't figure out how to make money on them, couldn't build 01:22:14.810 --> 01:22:17.187 big companies kind of based on them. 01:22:17.270 --> 01:22:20.807 And then Edison basically, at least the way the legend goes, he was more of this 01:22:20.890 --> 01:22:23.457 grinder. He was less incandescently brilliant, and he was more of a grinder, 01:22:23.540 --> 01:22:25.547 and he's just like, "We're just gonna try a thousand things." 01:22:25.630 --> 01:22:27.627 When they invented the filament for the light bulb, 01:22:27.710 --> 01:22:29.897 they just tried like a thousand different combinations of things 01:22:29.980 --> 01:22:32.407 to get to the filament, and sort of this brute-force approach. 01:22:32.490 --> 01:22:34.277 But then he built General Electric, 01:22:34.360 --> 01:22:38.950 right? He built the national electric grid and built these giant companies. 01:22:39.810 --> 01:22:42.547 - Funded by... - Funded by J.P. Morgan - There you go. 01:22:42.630 --> 01:22:46.197 - as a venture capitalist in his spare time. 01:22:46.280 --> 01:22:51.887 Yes, exactly, 100%. And then Edison also invented the movie projector 01:22:51.970 --> 01:22:55.387 and then literally spent years trying to enforce his patents, right? 01:22:55.470 --> 01:22:56.327 - And the phonograph. 01:22:56.410 --> 01:22:58.797 - And the phonograph. - Which you tell the story, and 01:22:58.880 --> 01:23:00.697 I knew because I read the book too. - Yeah. Yeah. 01:23:00.780 --> 01:23:03.957 - We should tell people what he thought the phonograph was going to be used for. 01:23:04.040 --> 01:23:06.647 So this is a bit of a digression, but it gets to the personality type. 01:23:06.730 --> 01:23:08.677 So, one of the things that people look for is just like, 01:23:08.760 --> 01:23:10.687 "Oh, what are the consequences of a new technology going to be? 01:23:10.770 --> 01:23:13.417 Oh, let's go ask the people who invent them, because obviously, they know." 01:23:13.500 --> 01:23:16.230 And so this is what happens when, for example, 01:23:18.690 --> 01:23:20.977 the pioneers of AI get interviewed in the press. 01:23:21.060 --> 01:23:23.260 It's like, "Well, tell us the future of AI." 01:23:24.230 --> 01:23:26.560 The one I'll pick on is Geoffrey Hinton, 01:23:27.210 --> 01:23:28.437 who's an actual self-declared socialist. 01:23:28.520 --> 01:23:31.297 He's an actual capital socialist, and people ask him, "What's the future of AI?" 01:23:31.380 --> 01:23:31.977 And of course, he says, 01:23:32.060 --> 01:23:35.047 "It's going to be rampant unemployment, and we'll need to give UBI to everybody." 01:23:35.130 --> 01:23:36.657 It's like, what a coincidence, the answer from - Yeah. 01:23:36.740 --> 01:23:39.727 - a socialist is communism. Like, what an amazing coincidence. 01:23:39.810 --> 01:23:41.927 But people think, because he's one of the inventors of AI, 01:23:42.010 --> 01:23:43.097 that he must be the guy who knows. - Yeah. 01:23:43.180 --> 01:23:45.407 - And so, the story I always tell is the Edison story. 01:23:45.490 --> 01:23:48.647 Thomas Edison was a very proper WASP. 01:23:48.730 --> 01:23:51.197 He was a WASPy personality type of that era. 01:23:51.280 --> 01:23:56.960 - Yeah. Extremely proper gentleman, always impeccably dressed, kind of very ethical, 01:23:57.950 --> 01:24:02.887 upstanding kind of citizen of that time, and very religiously devout. 01:24:02.970 --> 01:24:05.767 And so, for him, it was just obvious that the application of the record player 01:24:05.850 --> 01:24:07.347 was that everybody would buy a record player, 01:24:07.430 --> 01:24:11.347 and then everybody would buy a library of discs that would be the great sermons of 01:24:11.430 --> 01:24:14.067 - Yeah. - religious sermons from all the great preachers of the time. 01:24:14.150 --> 01:24:16.277 And then you'd get home at night after a long day at work, 01:24:16.360 --> 01:24:19.147 and you'd turn on the record player, and you would listen to a sermon, 01:24:19.230 --> 01:24:21.977 with your adoring wife and kids - Yeah. - gathered around you. 01:24:22.060 --> 01:24:24.837 And of course, the record player drops, and immediately, of course, it's music. 01:24:24.920 --> 01:24:26.267 It's just, like, obviously music. 01:24:26.350 --> 01:24:28.307 And it's ragtime, and swing, then it's jazz. 01:24:28.390 --> 01:24:30.297 And Edison's just completely horrified. 01:24:30.380 --> 01:24:32.517 - He didn't know that if you put the phonograph in the window, 01:24:32.600 --> 01:24:36.577 and you play good music, then you have all these girls on bicycles coming over the... 01:24:36.660 --> 01:24:39.307 With bicycle fists. - Exactly, exactly. 01:24:39.390 --> 01:24:40.777 And so, this is what I always tell. 01:24:40.860 --> 01:24:42.737 This is always my thing. It's like, if Edison didn't know 01:24:42.820 --> 01:24:45.667 what the phonograph was going to get used for, the idea that, - Yeah. 01:24:45.750 --> 01:24:47.667 - I don't know, whatever, Joe AI entrepreneur is 01:24:47.750 --> 01:24:49.227 going to be able to forecast the economic implications... 01:24:49.310 --> 01:24:51.367 You're like, "No. No. That's not going to happen." 01:24:51.450 --> 01:24:54.397 And in fact, the people who invent the technology are often the least qualified 01:24:54.480 --> 01:24:56.227 people to understand the long-term implications, 01:24:56.310 --> 01:24:59.607 because they're too buried in the specifics of the here and now. 01:24:59.690 --> 01:25:02.397 And then, all these other questions, you know, these are all big 01:25:02.480 --> 01:25:04.550 cultural, social, economic questions. 01:25:04.730 --> 01:25:07.527 And by the way, I don't know if there's anybody that can predict big cultural, 01:25:07.610 --> 01:25:10.217 or economic or social trends, but it's certainly not somebody 01:25:10.300 --> 01:25:11.877 who's been in the lab for 20 years, including myself. 01:25:11.960 --> 01:25:14.907 - So, how this started, you think you greatly benefited from the two Jims, 01:25:14.990 --> 01:25:17.737 essentially, being polar opposites, - Yeah, basically. - and showing you... 01:25:17.820 --> 01:25:19.707 - But also working very closely together. 01:25:19.790 --> 01:25:20.497 - Did they get along? 01:25:20.580 --> 01:25:22.907 - I don't know if I've told this story publicly, so I should tell this story. 01:25:22.990 --> 01:25:25.607 So, they got along great and became very good friends. 01:25:25.690 --> 01:25:27.907 They both did great, and they're both very responsible 01:25:27.990 --> 01:25:30.347 for certainly everything that Netscape did, and everything that I've done. 01:25:30.430 --> 01:25:34.380 But it's different disciplines, different worldviews. 01:25:34.870 --> 01:25:36.547 So, there's an oil-and-water kind of aspect to that. 01:25:36.630 --> 01:25:39.990 And so, Clark ran the company for the first nine months, 01:25:40.210 --> 01:25:43.087 which, at the time, this was Internet time, 01:25:43.170 --> 01:25:46.037 it felt like much longer, but it was like this highly compressed nine-month period. 01:25:46.120 --> 01:25:48.487 And it was like, we were doing all these new things. 01:25:48.570 --> 01:25:49.587 We were doing all these new things. 01:25:49.670 --> 01:25:51.847 The company was just doing a hundred new things. 01:25:51.930 --> 01:25:55.460 It was amazing. But nothing was being systematized, right? 01:25:56.390 --> 01:25:59.620 By default, it was not going to turn into a large company 01:25:59.830 --> 01:26:00.817 without the management part. 01:26:00.900 --> 01:26:03.057 And so, Barksdale comes in, and he basically is like, "Wow, 01:26:03.140 --> 01:26:06.397 this inventiveness is great, but we need to actually start to have systems, 01:26:06.480 --> 01:26:10.230 and schedules and processes, and actually, run this thing like a business." 01:26:10.690 --> 01:26:14.667 And as founders do, Clark originally found that a little bit frustrating 01:26:14.750 --> 01:26:16.287 because it's like, whatever is the latest idea 01:26:16.370 --> 01:26:19.677 is not the thing that we're just going to turn the entire company to pursue. 01:26:19.760 --> 01:26:22.257 And this is when Clark was still coming to Jim's Barksdale staff meetings. 01:26:22.340 --> 01:26:26.090 And so, Clark got up 01:26:27.900 --> 01:26:29.627 He had a negative reaction to Barksdale, saying, 01:26:29.710 --> 01:26:30.667 "No, we're not going to do this new thing. 01:26:30.750 --> 01:26:32.267 We're going to keep doing the thing that's already working." 01:26:32.350 --> 01:26:33.827 You know, it's one of those moments. 01:26:33.910 --> 01:26:36.797 And Barksdale's like, "Can I talk to you outside?" And so they went out back. 01:26:36.880 --> 01:26:39.200 And I heard the story from both of them later. 01:26:39.360 --> 01:26:41.357 And Clark's like, "Look, this is the whole reason 01:26:41.440 --> 01:26:43.437 we're here is because we do these new things. 01:26:43.520 --> 01:26:45.597 And if we don't do these new things, we're going to destroy the company." 01:26:45.680 --> 01:26:49.070 And Barksdale looks right at him and says, "Jim, I hear you. 01:26:49.450 --> 01:26:51.320 This is as serious as dick cancer." 01:26:53.640 --> 01:26:54.473 What? 01:26:57.020 --> 01:26:58.870 In the deep Mississippi drawl, right? 01:26:59.320 --> 01:27:02.520 And Clark stares him right in the face, and bursts out laughing. 01:27:03.740 --> 01:27:05.540 And they got along great ever since. 01:27:06.660 --> 01:27:08.267 They loved each other ever since. 01:27:08.350 --> 01:27:11.710 It was first up basically saying, "Look, we're not going to make 01:27:11.830 --> 01:27:13.767 these decisions in a state of kind of superheated passion." 01:27:13.850 --> 01:27:15.057 - Yeah. - "Like, we're not going to do that. 01:27:15.140 --> 01:27:16.517 We need to have the full version of this conversation, 01:27:16.600 --> 01:27:18.737 but we're going to have it in kind of this longer 01:27:18.820 --> 01:27:20.697 and maybe more dispassionate way." - Yeah. 01:27:20.780 --> 01:27:23.280 - But it was to puncture the stress of the moment. 01:27:23.640 --> 01:27:26.240 And so, I will say I have used that one a few times. 01:27:27.530 --> 01:27:29.080 - Yes. But I could see Clark... 01:27:29.290 --> 01:27:30.877 - And Clark thought it was hysterical. 01:27:30.960 --> 01:27:33.477 I mean, nobody had ever talked to him that way before, so. 01:27:33.560 --> 01:27:35.297 - But I could see Clark like, "Oh, no, here we go. 01:27:35.380 --> 01:27:38.017 This is a replay of what happened at Silicon Graphics, though." 01:27:38.100 --> 01:27:42.427 - I think he was, probably, afraid of that to a certain extent. But yeah, yeah. 01:27:42.510 --> 01:27:44.990 And then I would say, "Yeah." 01:27:45.210 --> 01:27:48.357 I don't want to say anything negative about the SGI guy, but yeah. 01:27:48.440 --> 01:27:49.897 I mean, like I said, Clarke was just like... 01:27:49.980 --> 01:27:52.087 Barksdale was the manager of managers. 01:27:52.170 --> 01:27:53.940 He was so advanced on this. 01:27:54.310 --> 01:27:56.777 That story notwithstanding, Barksdale never took the position of like, 01:27:56.860 --> 01:27:58.960 "No, it's time for the new ideas to stop." 01:27:59.250 --> 01:28:02.407 But it was always like, "Okay, we need to thread the new ideas into a business," 01:28:02.490 --> 01:28:04.517 which is kind of the hybrid of the two. 01:28:04.600 --> 01:28:07.867 - So, I just had this thought while sitting here listening to you speak. 01:28:07.950 --> 01:28:10.417 Is there something about your partnership with Ben, - Yeah. 01:28:10.500 --> 01:28:14.030 - where he's more Barksdale, and you're more Clark? - Yeah. 01:28:14.490 --> 01:28:18.520 - Although we do mix it up a little bit more, because he does have his own edge. 01:28:18.890 --> 01:28:23.130 But yeah, there is some of that. Yeah. So, for example, he runs the firm. 01:28:23.580 --> 01:28:26.897 And then, yeah, I tend to come up with new... He comes up with lots of new 01:28:26.980 --> 01:28:28.947 ideas, but I do tend to come up with new ideas, and then, 01:28:29.030 --> 01:28:31.660 we do have this kind of discussion frequently. 01:28:32.060 --> 01:28:35.247 - So, if I was to follow you around without you knowing with a camera, 01:28:35.330 --> 01:28:37.187 - Yeah. - what would your day look like then? 01:28:37.270 --> 01:28:41.127 Are you just a fountain of ideas? Are you this uncontrolled energy like Jim Clark 01:28:41.210 --> 01:28:41.897 back in the day? 01:28:41.980 --> 01:28:44.517 - But I've got both. This is the thing, because they both trained me, I've got 01:28:44.600 --> 01:28:48.437 both parts of it. Okay. - So, you're not as uncontrollable or unmanageable 01:28:48.520 --> 01:28:51.057 - Yeah. - as Clark? I believe Ben would tell you... 01:28:51.140 --> 01:28:52.677 Oh, I mean, look, Ben's been working with me now for 30 years, 01:28:52.760 --> 01:28:54.147 and so I think if this was a real issue. 01:28:54.230 --> 01:28:56.247 I think their partnership would not have lasted. 01:28:56.330 --> 01:28:59.157 - But I think he would say that I have a pretty strong internal edit function. 01:28:59.240 --> 01:29:02.640 - I want to see unedited. - Well, unedited is really fun. 01:29:03.750 --> 01:29:07.080 Unedited is very enjoyable. It is very disruptive. 01:29:08.160 --> 01:29:11.007 And so yeah, it has to be calibrated. 01:29:11.090 --> 01:29:12.940 - When do you show the unedited side? 01:29:14.750 --> 01:29:18.960 I don't tend to do it in the spur of the moment... Yeah, this is the thing, and 01:29:19.140 --> 01:29:22.940 Elon threads this incredibly well, just incredibly well, as does Zuckerberg. 01:29:23.730 --> 01:29:25.120 It's like, is this thing, 01:29:25.990 --> 01:29:27.757 and again, this goes back to the Edison-Tesla thing, 01:29:27.840 --> 01:29:33.467 that when you're responsible for an organization, 01:29:33.550 --> 01:29:37.200 when you're responsible for a team of people that's more than five or 10, 01:29:37.420 --> 01:29:40.007 if you're going to have an organization that's a hundred or a thousand or 10,000 01:29:40.090 --> 01:29:42.807 or a 100,000 people, you can't change the plan every day. 01:29:42.890 --> 01:29:46.427 You just can't. You'll just burn everybody out, you'll destroy everybody, 01:29:46.510 --> 01:29:50.160 there'll just be mass confusion, and people will quit. You can't do that. 01:29:50.370 --> 01:29:52.457 There has to be some calibrated middle-ground. 01:29:52.540 --> 01:29:55.917 There are a handful of examples of great business successes 01:29:56.000 --> 01:29:58.287 where it's one, or two, or three people, right? 01:29:58.370 --> 01:30:02.257 And so maybe it's like Bitcoin and Minecraft and WhatsApp and Instagram, 01:30:02.340 --> 01:30:06.727 and then, I start running out of examples. But with AI, there will probably be more. 01:30:06.810 --> 01:30:09.717 There will probably be more single-person companies - Yeah. - from here on out. 01:30:09.800 --> 01:30:13.520 Or, by the way, an artist, a novelist. 01:30:13.780 --> 01:30:16.447 Let me say, there's a difference between a novelist and a movie maker. 01:30:16.530 --> 01:30:19.177 A novelist, it's like, you can put whatever the f*** you want in your novel. 01:30:19.260 --> 01:30:21.617 But if you're a director of a movie, you can't change the - Right. 01:30:21.700 --> 01:30:24.237 - entire plot on Tuesday while you're shooting the movie, or there's 01:30:24.320 --> 01:30:27.327 three hundred people who are relying on you to complete a movie. 01:30:27.410 --> 01:30:31.760 So anyway, the point being is in tech, if you're going to have an organization, 01:30:32.070 --> 01:30:34.547 or by the way, in anything, in any field of activity, if you're going to have an 01:30:34.630 --> 01:30:38.250 organization, you do need to have some calibration, titration process. 01:30:38.820 --> 01:30:42.167 Change does need to happen, but it needs to happen in a measured way. 01:30:42.250 --> 01:30:44.930 And so, you can't just blow it up every day. 01:30:45.550 --> 01:30:48.100 And so, yeah. So, either what you need in that case 01:30:48.990 --> 01:30:51.677 to get kind of the holy grail of the large-scale organization that's still 01:30:51.760 --> 01:30:54.167 innovating, either you need two people involved 01:30:54.250 --> 01:30:55.567 who are able to balance each other. 01:30:55.650 --> 01:30:58.647 And by the way, you could say this is like Steve Jobs, and Tim Cook would be - Yeah. 01:30:58.730 --> 01:30:59.567 - a canonical example. 01:30:59.650 --> 01:31:02.467 Or by the way, early on, Zuckerberg and Sheryl Sandberg, or early on, 01:31:02.550 --> 01:31:06.137 Bill Gates and Steve Ballmer. So, you can have that kind of configuration. 01:31:06.220 --> 01:31:09.387 Or every once in a while, you can get that in a single person, right? 01:31:09.470 --> 01:31:13.347 Which is very rare. But Jensen Huang would be a single-person example of that. 01:31:13.430 --> 01:31:15.280 So, every now and then, you get that. 01:31:15.690 --> 01:31:16.947 And so, I would say Ben and 01:31:17.030 --> 01:31:19.627 I have a version of the yin- and-yang kind of aspect to it. 01:31:19.710 --> 01:31:21.347 But like I said, he's very creative on his own, 01:31:21.430 --> 01:31:23.567 and I have this, because I have the Barksdale training. 01:31:23.650 --> 01:31:28.027 I have this additional level of sort of, most of the time, sort of self-governance. 01:31:28.110 --> 01:31:29.620 Like I get it. I'm not... 01:31:30.310 --> 01:31:32.877 But so my big thing is just like, look, if I'm going to walk in and I'm going to 01:31:32.960 --> 01:31:35.017 throw a fit and I'm going to be like, "We have to change everything tomorrow," 01:31:35.100 --> 01:31:38.000 and Ben's going to be like, "F*** you, this f***** sucks." 01:31:38.120 --> 01:31:40.020 That leads nowhere good,right? - Yeah. 01:31:41.130 --> 01:31:44.400 And so, yeah, I do do a lot of self-editing. 01:31:44.710 --> 01:31:45.397 - You just said something, 01:31:45.480 --> 01:31:48.897 - I think you said you believe Elon is inventing a new way to manage. 01:31:48.980 --> 01:31:52.057 I think he may have figured out the best way to reconcile the two, the fountain of 01:31:52.140 --> 01:31:53.247 ideas with the systematic builder. 01:31:53.330 --> 01:31:54.957 I think he might have figured out a fun... 01:31:55.040 --> 01:31:56.927 I don't know if it's a new way to do it, but I think he might have cracked the 01:31:57.010 --> 01:31:59.567 code on how to do that for the next hundred years or something. 01:31:59.650 --> 01:32:02.607 - So, break down what you've observed, with the way that Elon's managing. 01:32:02.690 --> 01:32:04.157 - Yeah. So I'll just start by saying, look, 01:32:04.240 --> 01:32:06.997 Elon's method has been described by people before. 01:32:07.080 --> 01:32:09.117 And I should say, I work with him, but from the outside. 01:32:09.200 --> 01:32:10.717 So, I've not worked in one of his companies. 01:32:10.800 --> 01:32:14.197 So I have one layer of indirection, but I work with him quite a bit now, 01:32:14.280 --> 01:32:15.867 and I study him very, very carefully. 01:32:15.950 --> 01:32:18.187 It's this extreme focus on substance. 01:32:18.270 --> 01:32:20.257 It's this extreme focus on getting to the truth. 01:32:20.340 --> 01:32:22.147 So, one of the things you notice in any organization 01:32:22.230 --> 01:32:25.017 with multiple layers is that, basically, there's compounding lies. 01:32:25.100 --> 01:32:27.517 And I got this lesson early, because I worked for IBM at 01:32:27.600 --> 01:32:30.217 the point of their kind of maximum size and importance in the world. 01:32:30.300 --> 01:32:32.607 - Can you explain? I don't think people understand 01:32:32.690 --> 01:32:37.300 - Yeah. - just how big, and powerful, and almost monopolistic IBM was. 01:32:37.630 --> 01:32:40.377 - Yeah. So I worked for IBM at the very height of their power, 01:32:40.460 --> 01:32:41.920 right before they fell. 01:32:43.180 --> 01:32:45.830 It was my first job when I was in college. 01:32:45.930 --> 01:32:47.757 And they were in the mid-'80s, 01:32:47.840 --> 01:32:51.077 they were 80% of the market capitalization of the entire tech industry, right? 01:32:51.160 --> 01:32:52.367 -There's nothing even close to that today. 01:32:52.450 --> 01:32:53.397 - There's nothing even close, right? 01:32:53.480 --> 01:32:54.557 So this is like Google times 10 or something. 01:32:54.640 --> 01:32:59.687 It's just Apple times 10. It's a level of scale and importance that just nobody had. 01:32:59.770 --> 01:33:02.457 And by the way, the TV show actually that does a great job of this is 01:33:02.540 --> 01:33:04.327 Halt and Catch Fire, - Mm-hmm. - in the first season, 01:33:04.410 --> 01:33:05.977 has this point where these guys are 01:33:06.060 --> 01:33:09.447 basically inventing the PC effectively, and it's a point where IBM shows up. 01:33:09.530 --> 01:33:13.187 And it gives you a sense of... It's like the CAA story you told earlier. 01:33:13.270 --> 01:33:14.317 It's like the phalanx. 01:33:14.400 --> 01:33:16.907 It's like 20 people in blue suits who are just here to completely crush you. 01:33:16.990 --> 01:33:19.537 It was just this overpowering kind of thing. 01:33:19.620 --> 01:33:21.470 And they invented all kinds of stuff, 01:33:21.560 --> 01:33:23.057 and the industry wouldn't exist today without them, 01:33:23.140 --> 01:33:25.447 and they were an incredible company for a very long time. 01:33:25.530 --> 01:33:28.477 And the whole thing, and by the way, run by their founder for 30 years, 01:33:28.560 --> 01:33:32.527 run by the founder's son for 30 years, this incredible company. 01:33:32.610 --> 01:33:33.557 But then, they're not that anymore, 01:33:33.640 --> 01:33:37.037 but they're still a big and important company today, 01:33:37.120 --> 01:33:40.347 whatever, 1940, so 80 years later. 01:33:40.430 --> 01:33:43.330 It's like how many companies survive in tech for 80 years? 01:33:43.500 --> 01:33:45.367 My favorite IBM story is Thomas Watson Sr. 01:33:45.450 --> 01:33:49.480 had been convicted of antitrust crimes before he started IBM. 01:33:49.620 --> 01:33:52.470 - Is this the cash register? - The cash register. - Yeah. 01:33:53.990 --> 01:33:57.657 And so, he had previously run a company called NCR, National Cash Register. 01:33:57.740 --> 01:34:00.467 And he had been convicted by the federal government of monopolizing the cash 01:34:00.550 --> 01:34:03.230 register business before he even started IBM. 01:34:03.940 --> 01:34:06.117 And then at IBM, he monopolized the mainframe business, 01:34:06.200 --> 01:34:07.900 and then they convicted him again. 01:34:08.870 --> 01:34:12.887 He's a double dipper. He got very used to being in antitrust court. 01:34:12.970 --> 01:34:19.477 So he was incredible. By the way, there's Kevin Maney, old-school tech reporter, 01:34:19.560 --> 01:34:22.457 who wrote a book, a biography of Thomas Watson Sr., in which you... 01:34:22.540 --> 01:34:24.837 It's called "The Machine and the Man" or "The Man and the Machine," right? 01:34:24.920 --> 01:34:27.127 I'm not sure if it's that one, but it's one of those. 01:34:27.210 --> 01:34:28.127 I think it might be that one, yeah. 01:34:28.210 --> 01:34:32.857 And he actually went back, and we're talking about the 1940s, 1950s, 1960s. 01:34:32.940 --> 01:34:35.097 And he went back, and he got the... At that time, 01:34:35.180 --> 01:34:39.017 they had a secretary transcribing, in real time, all of the executive staff 01:34:39.100 --> 01:34:40.677 meetings every Monday morning. 01:34:40.760 --> 01:34:42.497 And he went back, and he actually got the 01:34:42.580 --> 01:34:44.237 archives of the transcripts of the executive staff meetings, 01:34:44.320 --> 01:34:47.900 and Thomas Watson is just cursing everybody out, 01:34:48.820 --> 01:34:52.537 and just like a complete tyrannical psychopath, just screaming at people. 01:34:52.620 --> 01:34:56.880 And it's all in the records. And so, how much of this stuff ever changes? 01:34:57.410 --> 01:34:59.967 It's like, I don't know, whatever Elon gets accused of 01:35:00.050 --> 01:35:02.257 or whatever Steve Jobs, it's like, oh, no, that guy was... 01:35:02.340 --> 01:35:05.990 - Yeah. - Whatever it is, it's a pale version of what that guy was doing. 01:35:06.570 --> 01:35:07.747 But anyway, the point being is IBM... 01:35:07.830 --> 01:35:10.347 So by the time I got involved in IBM, it was 60 years later. 01:35:10.430 --> 01:35:12.577 Anywhere, yeah, 50 years later after that. 01:35:12.660 --> 01:35:14.277 And so they were kind of peaking in their power. 01:35:14.360 --> 01:35:16.517 But what happened was, I remember this because I was there 01:35:16.600 --> 01:35:17.937 as an intern, and I was trying to figure out 01:35:18.020 --> 01:35:19.967 whether I should work there after college. 01:35:20.050 --> 01:35:23.177 And their internet was a mainframe app. 01:35:23.260 --> 01:35:25.957 And one of the functions was the org chart, 01:35:26.040 --> 01:35:27.877 and it calculated that there were 12 layers of management 01:35:27.960 --> 01:35:30.297 between me and the CEO. Which meant the following: 01:35:30.380 --> 01:35:34.080 It meant that my boss's boss's boss's boss's boss 01:35:34.980 --> 01:35:40.360 had a boss, boss, boss, boss, boss, before it got to the CEO. 01:35:40.740 --> 01:35:43.890 And then, really, the story of the thing, really what happened, 01:35:44.060 --> 01:35:46.560 and I saw this happen, I saw this happen up close. 01:35:46.770 --> 01:35:48.487 What I saw happen was that each layer of management 01:35:48.570 --> 01:35:49.777 was lying to the one above it, right? 01:35:49.860 --> 01:35:52.557 And because each layer wants to look good and wants to, 01:35:52.640 --> 01:35:54.187 whatever, put a little spin on the ball. 01:35:54.270 --> 01:35:57.467 And if one layer lies to the next layer above it, maybe that's okay. 01:35:57.550 --> 01:36:00.057 But when that happens two or three times, the lies compound. 01:36:00.140 --> 01:36:02.277 If that happens six times, the lies really compound. 01:36:02.360 --> 01:36:04.747 If that happens 12 times, the CEO has no idea what's happening, 01:36:04.830 --> 01:36:07.107 like absolutely no clue what's going on in the company, 01:36:07.190 --> 01:36:08.987 which was the state of play that IBM had. 01:36:09.070 --> 01:36:10.337 They actually had a term. There was actually a term. 01:36:10.420 --> 01:36:11.637 They had a whole vocabulary. 01:36:11.720 --> 01:36:14.570 I mean, this company was like a nation-state at the time. 01:36:14.960 --> 01:36:16.617 You could live your whole life in Austin, Texas, 01:36:16.700 --> 01:36:18.147 and never meet anybody who didn't work for IBM. 01:36:18.230 --> 01:36:20.117 It was just this incredible thing. 01:36:20.200 --> 01:36:22.437 They had this concept called "The Big Gray Cloud." 01:36:22.520 --> 01:36:24.557 And it was literally the cloud of men in gray business suits 01:36:24.640 --> 01:36:27.877 who followed the CEO around, and prevented him from ever talking to anybody 01:36:27.960 --> 01:36:29.367 who was ever actually doing the work. 01:36:29.450 --> 01:36:31.897 And so, when he would come to visit, it was like a state visit. 01:36:31.980 --> 01:36:32.777 - Yeah. - It was like a visit from the king, 01:36:32.860 --> 01:36:35.310 and it was like the king and the traveling court. 01:36:35.450 --> 01:36:35.677 - Yeah. 01:36:35.760 --> 01:36:39.057 And so, it was a completely impervious bubble to get information through. 01:36:39.140 --> 01:36:40.667 But I tell that story because that's the polar 01:36:40.750 --> 01:36:42.587 opposite of the Elon approach, right? 01:36:42.670 --> 01:36:46.677 And by the way, being the CEO of IBM in 1989 was a great way to live, right? 01:36:46.760 --> 01:36:50.660 Because it's just like, "Wow, everybody's bringing me good news all the time." 01:36:51.320 --> 01:36:53.767 I wake up in the morning, and everything is great. 01:36:53.850 --> 01:36:54.167 - Mm-hmm. 01:36:54.250 --> 01:36:58.227 - And I'm famous, and I am rich, and I am successful, and I've got a chauffeur, 01:36:58.310 --> 01:37:01.567 and I've got a jet, and I've got these 80 guys in gray suits who are taking care of 01:37:01.650 --> 01:37:03.857 everything for me. And I don't have to ever talk to engineers, 01:37:03.940 --> 01:37:07.610 and this is great until it's like the turkey on Thanks giving, 01:37:08.080 --> 01:37:09.407 until things change and there's a problem, 01:37:09.490 --> 01:37:11.787 and then you have no idea what to do about it, which is what happened to them. 01:37:11.870 --> 01:37:13.897 The Elon approach is the polar-opposite of that. 01:37:13.980 --> 01:37:16.117 And the polar-opposite approach is literally like, 01:37:16.200 --> 01:37:17.957 I'm only going to talk to engineers, right? 01:37:18.040 --> 01:37:21.067 And so, when there's an issue, I am going to go straight to the source of truth, 01:37:21.150 --> 01:37:24.057 and the source of truth is the engineer who actually knows what's going on. 01:37:24.140 --> 01:37:26.457 And so Elon, I've seen him do this, so he literally does this. 01:37:26.540 --> 01:37:28.827 When there's an issue in one of his companies, 01:37:28.910 --> 01:37:31.617 he goes to whatever is the engineer who's working on that problem, 01:37:31.700 --> 01:37:33.817 and he sits down with the engineer, and they solve that problem. 01:37:33.900 --> 01:37:37.027 And I can just tell you, the number of CEOs in tech, even the great ones who do 01:37:37.110 --> 01:37:39.187 that, I mean, almost nobody ever does that. 01:37:39.270 --> 01:37:41.967 Why does nobody ever do that? Well, first of all, it's just like a giant pain in 01:37:42.050 --> 01:37:44.417 the ass, because your life consists 01:37:44.500 --> 01:37:46.237 of having to actually solve all these problems. 01:37:46.320 --> 01:37:48.897 The whole point of being big, and powerful, and successful is you pay 01:37:48.980 --> 01:37:50.717 people to do that, and now you're doing it. 01:37:50.800 --> 01:37:52.797 And you're in there at two in the morning doing it, right? 01:37:52.880 --> 01:37:56.390 It just sucks, right? And so, most people won't do it. 01:37:56.980 --> 01:38:00.547 And then the other is, it means the CEO of the company has to have the skill set 01:38:00.630 --> 01:38:01.730 to be able to do that. 01:38:02.030 --> 01:38:05.457 So the CEO has to not just be a great CEO, they also have to be a great 01:38:05.540 --> 01:38:07.947 technical technologist, and not just that, they have memories of having been a 01:38:08.030 --> 01:38:10.167 programmer at one point or whatever, a chip designer. 01:38:10.250 --> 01:38:12.107 But where they can actually sit down with the chip designer, 01:38:12.190 --> 01:38:14.157 right on a Thursday night at 2:00 AM in Austin, 01:38:14.240 --> 01:38:16.607 and they can actually figure out what's wrong with the chip. 01:38:16.690 --> 01:38:21.150 And Elon has that ability, and he's like encyclopedic on every area of technology, 01:38:21.310 --> 01:38:23.257 and is able to go hands-on with rocket designers, 01:38:23.340 --> 01:38:25.537 and AI designers, and everything in between. 01:38:25.620 --> 01:38:27.070 And almost no CEO has that. 01:38:27.670 --> 01:38:28.737 But that's literally what he does. 01:38:28.820 --> 01:38:30.647 And then the way that he thinks about it, 01:38:30.730 --> 01:38:34.567 I think, is basically, he runs whatever, six companies at once or something, 01:38:34.650 --> 01:38:37.447 and it's like, basically, at any given week, 01:38:37.530 --> 01:38:38.977 he thinks about everything as a basic 01:38:39.060 --> 01:38:41.770 production line, sort of production process. 01:38:42.230 --> 01:38:44.037 He's actually like an old-school industrialist. 01:38:44.120 --> 01:38:45.577 So everything's like a production process. 01:38:45.660 --> 01:38:48.557 And then, any given week, in any production process, 01:38:48.640 --> 01:38:49.857 there's always a bottleneck. 01:38:49.940 --> 01:38:53.630 So there's always the thing that is slowing down the process the most. 01:38:53.730 --> 01:38:55.460 And that's always one thing. 01:38:55.810 --> 01:39:00.247 So what he does for each of his companies is he identifies, he charts, he literally 01:39:00.330 --> 01:39:03.347 maps out the production process, and that's like, he literally has these 01:39:03.430 --> 01:39:05.780 monitors where he has the whole thing laid out. 01:39:06.000 --> 01:39:07.157 And then, he basically says, 01:39:07.240 --> 01:39:09.707 "Okay, this is the issue that's holding up production this week." 01:39:09.790 --> 01:39:11.607 And that's the thing that he goes to work with the engineer 01:39:11.690 --> 01:39:13.187 on, is he goes to fix that bottleneck. 01:39:13.270 --> 01:39:16.407 And he does that every week for every company, right? 01:39:16.490 --> 01:39:19.100 And so, I think this is why Tesla is smoking, 01:39:20.450 --> 01:39:21.727 has been so much dramatically 01:39:21.810 --> 01:39:23.277 outperforming the rest of the auto industry, is 01:39:23.360 --> 01:39:26.577 because he's fixing the critical production bottleneck 01:39:26.660 --> 01:39:30.190 at Tesla 52 times a year, himself. 01:39:30.550 --> 01:39:31.383 - Yeah. 01:39:32.270 --> 01:39:34.217 - I can tell you what the CEO of the legacy automakers are doing. 01:39:34.300 --> 01:39:35.450 They're not doing that. 01:39:36.040 --> 01:39:37.077 That is not what's happening, right? 01:39:37.160 --> 01:39:39.327 And so, in contrast, a normal company, 01:39:39.410 --> 01:39:41.957 it might take six months to solve these problems, and Elon's fixing 01:39:42.040 --> 01:39:44.837 it right now, tomorrow. Like, let's go fix it right now. 01:39:44.920 --> 01:39:47.630 And so, he just runs this loop over and over again. 01:39:48.090 --> 01:39:50.760 He's absolutely indefatigable. 01:39:52.050 --> 01:39:54.077 He famously, for a while, he had sold all of his houses, 01:39:54.160 --> 01:39:56.137 and he was literally couch surfing as one 01:39:56.220 --> 01:39:58.407 of the most successful people on the planet. 01:39:58.490 --> 01:39:58.967 - Yeah. 01:39:59.050 --> 01:40:01.387 -And so they have a vacation house, and I offered him, I said, "If you want to take 01:40:01.470 --> 01:40:03.757 a week and use the vacation house and whatever, take the kids, feel free." 01:40:03.840 --> 01:40:05.577 And he'd sent back five minutes later, 01:40:05.660 --> 01:40:09.007 it's like, whatever, 11 o'clock at night, the forward response, 01:40:09.090 --> 01:40:11.140 "I don't take vacations." Right? 01:40:11.770 --> 01:40:13.467 Which, again, is like, there's no CEO like this. 01:40:13.550 --> 01:40:14.383 - Yeah. 01:40:14.520 --> 01:40:17.570 - The whole point of being a CEO is you get to go jet around. 01:40:17.980 --> 01:40:22.187 And so anyway, so he's doing that, and then he turns this into a routine. 01:40:22.270 --> 01:40:26.017 And so, he does that a day a week at each of his companies, 01:40:26.100 --> 01:40:27.677 and he'll basically do it all day. 01:40:27.760 --> 01:40:32.440 He'll do a 12-hour to 14-hour stretch where he'll do design reviews with... 01:40:32.900 --> 01:40:36.257 But the way that he does it, he does it with five minutes per engineer, right? 01:40:36.340 --> 01:40:38.910 And so he does 60 divided by five... 01:40:40.080 --> 01:40:41.927 It's been way too long in this podcast. 01:40:42.010 --> 01:40:45.960 How much is that? 12? - 12. - He can do 12 design reviews an hour. - Yeah. 01:40:46.050 --> 01:40:47.937 - Yeah. - And then he does it for 10 hours a day. 01:40:48.020 --> 01:40:51.537 So, Elon will do 120 design reviews in the course of a day. 01:40:51.620 --> 01:40:53.677 - Are these one-on-one? - I have not actually sat in on these. - Okay. 01:40:53.760 --> 01:40:55.357 - I suspect there are other people around, - Okay. 01:40:55.440 --> 01:40:57.147 - including people who work for him, 01:40:57.230 --> 01:41:01.027 and probably, some of the leaders of the companies are involved in different ways. 01:41:01.110 --> 01:41:04.057 But it literally is the thing I know. It's literally a rotating cast. 01:41:04.140 --> 01:41:06.867 It's the point engineer on each of the important things 01:41:06.950 --> 01:41:08.807 coming in and presenting for five minutes. 01:41:08.890 --> 01:41:11.787 And then the question is, if it's going great, that's great. 01:41:11.870 --> 01:41:13.057 If it's not going, what's the problem? 01:41:13.140 --> 01:41:14.657 And then how does that problem rank, right? 01:41:14.740 --> 01:41:16.880 Is that the production bottleneck? 01:41:17.320 --> 01:41:20.107 And if it is the production bottleneck, then that's the thing that he then fixes. 01:41:20.190 --> 01:41:21.737 And then that's when he's there from, whatever, 01:41:21.820 --> 01:41:24.707 eight o'clock till 2:00 AM, working with that engineer to fix that problem. 01:41:24.790 --> 01:41:29.597 One way to think about this is the velocity in military affairs, it's called 01:41:29.680 --> 01:41:35.717 maneuver warfare, right? So the speed at which he operates is just, the cycle time 01:41:35.800 --> 01:41:38.557 is just so much faster than anybody running in a traditional method. 01:41:38.640 --> 01:41:41.997 It's hard to even compare the different... It's like four hours versus six months. 01:41:42.080 --> 01:41:43.990 It's just this incredible gap. 01:41:44.350 --> 01:41:47.357 And then, the other part of it is, somebody that I know once, went to work 01:41:47.440 --> 01:41:50.427 for SpaceX, and they asked what it was like, and he said, "It's like being 01:41:50.510 --> 01:41:53.720 dropped into a zone of shocking competence. 01:41:54.650 --> 01:41:56.860 It's like everybody is ultra-competent." 01:41:57.320 --> 01:41:59.997 And the reason everybody's ultra-competent is because, 01:42:00.080 --> 01:42:04.550 number one, if they're not, Elon sniffs it out and fires them. 01:42:04.810 --> 01:42:08.457 But he knows, because he's talking to the people actually doing the work, so he 01:42:08.540 --> 01:42:11.927 knows at this point, you know, having done this for, whatever, 25 years, he can 01:42:12.010 --> 01:42:13.307 sniff this out really quickly now. 01:42:13.390 --> 01:42:14.827 And then the other is, the best engineers in 01:42:14.910 --> 01:42:18.927 the world want to work for him because he's the one CEO like this, who's able to 01:42:19.010 --> 01:42:21.267 work with them as a peer on whatever the technology is. 01:42:21.350 --> 01:42:23.547 And as an engineer, you're just like, "This is..." 01:42:23.630 --> 01:42:25.467 Like, what would be better as an engineer than being able 01:42:25.550 --> 01:42:28.337 to design a rocket engine with Elon Musk as your engineering partner, right? 01:42:28.420 --> 01:42:31.227 And so, he just has this incredible positive selection where the smartest 01:42:31.310 --> 01:42:32.357 people in the world want to work for him, 01:42:32.440 --> 01:42:34.357 and then anybody who can't cut it gets fired. 01:42:34.440 --> 01:42:37.757 The world sees this as raw aggression, but it's beyond that, right? 01:42:37.840 --> 01:42:41.357 It's a very systematic way of optimizing these companies to be able to take on 01:42:41.440 --> 01:42:44.067 these profound challenges, and then being able to actually solve all the problems, 01:42:44.150 --> 01:42:46.567 and do these things, and at a speed that is just completely unmatched. 01:42:46.650 --> 01:42:50.467 The challenge of all of this is okay, that all works great, if you've got Elon, 01:42:50.550 --> 01:42:55.737 right? And so, one of my concepts is I think we need a metric for founders in 01:42:55.820 --> 01:43:00.167 Silicon Valley called the "MilliElon," right? And so, how many MilliElons are 01:43:00.250 --> 01:43:02.547 you, right? Are you 10 MilliElons? That would be great. 01:43:02.630 --> 01:43:05.497 - Yeah. - Are you 100 MilliElons? That's 10% of an Elon. 01:43:05.580 --> 01:43:06.767 - Yeah. That'd be fantastic. 01:43:06.850 --> 01:43:11.007 You know, 500 MilliElons, I'm going to give you all the money, right? 01:43:11.090 --> 01:43:15.440 Most people are one MilliElon or 0.1 MilliElon. 01:43:15.550 --> 01:43:16.727 The question that falls out of this, 01:43:16.810 --> 01:43:22.017 which is a question that [unintelligible] ask, is, like, okay, you can't clone him. 01:43:22.100 --> 01:43:23.327 You can't bottle the essence. 01:43:23.410 --> 01:43:27.970 So, what out of that can be transplanted to normal human beings? 01:43:28.220 --> 01:43:33.437 - And how much of it is predictable, or knowable when he's much younger? 01:43:33.520 --> 01:43:39.640 - Mm-hmm. - Because the famous example of this is Michael Moritz's passing. 01:43:39.980 --> 01:43:42.427 Made all his money in PayPal with Elon. Obviously, there was contention there. 01:43:42.510 --> 01:43:43.797 He got kicked out and everything else. 01:43:43.880 --> 01:43:45.710 But then Elon pitched him Tesla. 01:43:45.950 --> 01:43:47.627 - Yep. - And he passed because he's like, 01:43:47.710 --> 01:43:49.767 "There's no way that you're ever going to surpass Toyota." 01:43:49.850 --> 01:43:52.727 And then Moritz, to his credit, was just like, "I drastically 01:43:52.810 --> 01:43:56.687 underestimated the guy's determination and pain tolerance," I think is the term 01:43:56.770 --> 01:43:59.097 he used. -Well, I wasn't there for that, so I don't know about that. 01:43:59.180 --> 01:44:02.947 I will say the idea of having been a software entrepreneur, 01:44:03.030 --> 01:44:06.437 and building a car company... Okay, when Tesla started building, 01:44:06.520 --> 01:44:08.917 there had been no new successful car companies in the 01:44:09.000 --> 01:44:10.567 For 100 years, right? United States for 100 years. 01:44:10.650 --> 01:44:13.497 - Yeah. - It was like 2000 of them - That's right. 01:44:13.580 --> 01:44:17.727 - founded from 1900 to 1910, and three that survived. 01:44:17.810 --> 01:44:21.757 - That's right. And the previous real attempt to start a car company in the US 01:44:21.840 --> 01:44:24.157 before Tesla in the preceding decades was? 01:44:24.240 --> 01:44:25.507 Tucker or something? Tucker Automotive. 01:44:25.590 --> 01:44:26.407 - Yeah, yeah, Tucker. 01:44:26.490 --> 01:44:30.387 -Which was such a disaster that they made a movie called "Tucker," which is about 01:44:30.470 --> 01:44:31.720 what the disaster it was. 01:44:32.560 --> 01:44:36.420 And so, obviously, you don't do that, obviously, 01:44:36.540 --> 01:44:38.417 this is insane, and for a software guy to do this is insane. 01:44:38.500 --> 01:44:39.997 Oh, by the way, this is only one of the things he's doing. 01:44:40.080 --> 01:44:41.417 He also has the rocket company. 01:44:41.500 --> 01:44:46.520 - Yeah. Which is also insane, right? And so, yeah And by the way, I didn't see it. 01:44:47.230 --> 01:44:49.627 I'm a software guy, and I was like, "I don't know, whatever. 01:44:49.710 --> 01:44:52.077 I guess he's going to go do cars. I don't know anything about cars." 01:44:52.160 --> 01:44:56.327 So, it's not like I saw it, but I'm just saying the level of incredulity 01:44:56.410 --> 01:44:59.557 that he was greeted with at the time was, I think, almost uniform. 01:44:59.640 --> 01:45:01.897 And there's that famous photo. The most famous Elon photo, 01:45:01.980 --> 01:45:05.267 I think, the most powerful one is the one where he's, it's young Elon, probably 01:45:05.350 --> 01:45:08.317 2005 or whatever, and he's in the... - He's in the shorts and a polo, - Yeah. 01:45:08.400 --> 01:45:11.117 - and he's crouched down, and there's nothing but 01:45:11.200 --> 01:45:14.830 the explosion remains of the third rocket, the second or third rocket. 01:45:15.550 --> 01:45:17.467 - yes. - The one he had been funding personally, like... 01:45:17.550 --> 01:45:19.967 - Yes. - Did you ever read Eric Berger's book, "Liftoff?" 01:45:20.050 --> 01:45:21.407 - No, I didn't. - Oh, you got to read it. Is it? 01:45:21.490 --> 01:45:23.260 I'm surprised you haven't. 01:45:23.760 --> 01:45:27.627 I like these company histories that focus on the first six years. 01:45:27.710 --> 01:45:29.357 - Yep. - And it just stops. - Yep. 01:45:29.440 --> 01:45:31.487 - It's a first six years history of SpaceX. 01:45:31.570 --> 01:45:33.867 - Yep. - And it's just, nothing good in the book. 01:45:33.950 --> 01:45:37.187 It's just reading one failure after another, after another, and one 01:45:37.270 --> 01:45:39.497 catastrophe after another, after another. It's a good read. 01:45:39.580 --> 01:45:42.307 -Yeah. When my kid was five, he loved rockets, and so his favorite rocket video 01:45:42.390 --> 01:45:45.190 was the compilation of all the SpaceX rocket explosions. 01:45:45.490 --> 01:45:50.057 - Geez, well, Elon talks about this, that before his friends, after he sold them 01:45:50.140 --> 01:45:52.957 to... I think he had 180, I think the story tells 180 million after taxes, and 01:45:53.040 --> 01:45:56.087 he's like, "I'm going to do this rocket company." 01:45:56.170 --> 01:45:59.217 One of his, I think Adeo Ressi, or I forgot the friend, sat him down, 01:45:59.300 --> 01:46:01.837 and they made him watch all the rocket... 01:46:01.920 --> 01:46:05.567 There was a compilation, this is probably pre-YouTube, of just rockets blowing up 01:46:05.650 --> 01:46:06.267 over and over again. 01:46:06.350 --> 01:46:08.727 Like, "No, you're literally going to light your fortune on fire. 01:46:08.810 --> 01:46:10.510 It's going to explode in the sky." 01:46:10.940 --> 01:46:13.997 - Yep, exactly. Exactly. - So, I mean, obviously it's working, right? 01:46:14.080 --> 01:46:17.297 So, his method, obviously, is working, and it's obviously working far better than... 01:46:17.380 --> 01:46:19.867 I mean, it's certainly working far better than anybody else's method in cars and 01:46:19.950 --> 01:46:23.100 certainly working better than anybody else's method in rockets. 01:46:23.470 --> 01:46:25.267 And then in a bunch of other areas also. 01:46:25.350 --> 01:46:27.617 So, it's clearly working, and so it's like, "Okay." 01:46:27.700 --> 01:46:30.737 And then he just draws, because of just who he is and what he's doing, 01:46:30.820 --> 01:46:34.420 and how he does it, he just draws so much heat, there's just so much... 01:46:34.720 --> 01:46:38.120 The environment is just full of criticism and attacks, just nonstop. 01:46:39.340 --> 01:46:41.247 And we all kind of get sucked into these narratives. 01:46:41.330 --> 01:46:46.007 But I think the key thing, for me, it's just like, okay, there is a method 01:46:46.090 --> 01:46:48.737 there that he has been working on and refining for 01:46:48.820 --> 01:46:51.817 coming on 30 years that has worked better than anybody's method. 01:46:51.900 --> 01:46:54.307 Like I said, I don't know how many people can do it. 01:46:54.390 --> 01:46:56.367 And maybe there's just a fundamental limitation, 01:46:56.450 --> 01:46:59.227 which is you can do it if you're Elon, and you can't do it if you're somebody else. 01:46:59.310 --> 01:47:01.387 Or maybe, you need to be above 30 MilliElons, 01:47:01.470 --> 01:47:02.947 but not below or something like that, right? 01:47:03.030 --> 01:47:05.467 Maybe there's some threshold where you break through on this. 01:47:05.550 --> 01:47:07.217 But it is clearly the best method. 01:47:07.300 --> 01:47:09.617 Like, it clearly is generating the best results. 01:47:09.700 --> 01:47:12.800 And then, again, conceptually, I like it, because again, 01:47:12.950 --> 01:47:16.640 it's this bridging of the founder mentality with the manager mentality, 01:47:16.880 --> 01:47:19.137 because he's not just doing, these are not just one-offs. 01:47:19.220 --> 01:47:20.697 He's scaling. Everything is scaling. 01:47:20.780 --> 01:47:23.007 What is it? Starlink just hit, what was the number? 01:47:23.090 --> 01:47:25.607 Starlink just hit 10... Was it 10 million subscribers? 01:47:25.690 --> 01:47:27.657 - I'm one of them. - Yeah, exactly, right. 01:47:27.740 --> 01:47:30.517 You probably have read about Iridium and Teledesic. 01:47:30.600 --> 01:47:33.227 - No. - Oh, okay, okay. So, Elon's not the first guy who said, 01:47:33.310 --> 01:47:35.407 "We're going to do satellite-based internet access." 01:47:35.490 --> 01:47:36.323 - Mm-hmm. 01:47:36.650 --> 01:47:39.457 There was Bill Gates, Craig McCaw. 01:47:39.540 --> 01:47:42.157 So, when Microsoft went on top of the world, 01:47:42.240 --> 01:47:45.557 and Craig McCaw, basically, built cellular telephony in the US, built 01:47:45.640 --> 01:47:46.990 what's now AT&T Mobile. 01:47:48.560 --> 01:47:50.547 Those guys teamed up in the early '90s and did this thing 01:47:50.630 --> 01:47:53.777 called Teledesic, where they put up satellite-based voice, and then it was 01:47:53.860 --> 01:47:55.197 going to be internet access. 01:47:55.280 --> 01:47:57.457 Complete catastrophe, total bankruptcy, complete disaster. 01:47:57.540 --> 01:48:00.957 And then Motorola, which used to make all the cell phones in the US, 01:48:01.040 --> 01:48:03.897 had another one system that's actually still up called Iridium. 01:48:03.980 --> 01:48:06.497 And again, it's just this classic business school case 01:48:06.580 --> 01:48:07.947 study of just complete disaster capital - Mm-hmm. 01:48:08.030 --> 01:48:10.117 destruction. And so Elon's like, "I know. 01:48:10.200 --> 01:48:13.407 I'm going to do number three of those with Starlink as 01:48:13.490 --> 01:48:15.257 a side project at the rocket ship company." 01:48:15.340 --> 01:48:15.807 - Yeah. 01:48:15.890 --> 01:48:19.827 Right? And, you know, in retrospect, it's total genius because he's like, 01:48:19.910 --> 01:48:21.517 "We're going to be putting up... If the rockets are reusable, 01:48:21.600 --> 01:48:22.837 we're going to be launching them all the time." 01:48:22.920 --> 01:48:24.807 And then the question becomes, "What's going to go in the rockets?" 01:48:24.890 --> 01:48:26.887 And he's like, "I could wait for the customers to come to me with more 01:48:26.970 --> 01:48:29.277 stuff to put in the rockets, or I could just put up my own satellites. 01:48:29.360 --> 01:48:31.807 "What would be the satellite to put up? Oh, it would be consumer-grade, 01:48:31.890 --> 01:48:33.687 consumer-priced internet access. 01:48:33.770 --> 01:48:36.517 And it's just like, "Okay, anybody who knew anything about the history of 01:48:36.600 --> 01:48:40.497 satellites, knew that that's the new craziest idea in the world. 01:48:40.580 --> 01:48:44.247 And of course, it's this giant success. It's like the side project. 01:48:44.330 --> 01:48:46.197 There's clearly a method. It clearly incorporates invention. 01:48:46.280 --> 01:48:47.507 It clearly incorporates scale. 01:48:47.590 --> 01:48:49.640 It does a brilliant job at both of those. 01:48:49.960 --> 01:48:52.710 It's clearly in part, Henry Ford, whatever, 01:48:52.920 --> 01:48:55.190 Alexander the Great method, clearly. 01:48:55.300 --> 01:48:57.930 But there's also real scale and heft to it. 01:48:58.400 --> 01:48:59.617 SpaceX now is building, you know, 01:48:59.700 --> 01:49:04.107 they got their own city, down in Texas, right? And so it's a formula that 01:49:04.190 --> 01:49:08.397 captures both sides of it. And it may be the least studied and understood thing 01:49:08.480 --> 01:49:10.130 I know of in the world right now. 01:49:10.230 --> 01:49:12.647 - It's incredible. Mark, we're running out of time. 01:49:12.730 --> 01:49:14.647 When I started the show, you were at the top of my list 01:49:14.730 --> 01:49:16.707 for one of the guests I want to talk to. Thank you so much for doing this. 01:49:16.790 --> 01:49:18.157 I hope you come back in a few months, because there's a 01:49:18.240 --> 01:49:19.717 million other things we need to talk about. 01:49:19.800 --> 01:49:21.287 - Good. Awesome. Fantastic. Thanks. 01:49:21.370 --> 01:49:22.667 I hope you enjoyed this episode. 01:49:22.750 --> 01:49:26.007 Please remember to subscribe wherever you're listening and leave a review. 01:49:26.090 --> 01:49:27.557 And make sure you listen to my other podcast, 01:49:27.640 --> 01:49:31.897 Founders. For almost a decade, I've obsessively read over 400 biographies of 01:49:31.980 --> 01:49:35.057 history's greatest entrepreneurs, searching for ideas that you can use in 01:49:35.140 --> 01:49:39.617 your work. Most of the guests you hear on this show, first found me through 01:49:39.700 --> 01:49:40.533 Founders.