BIll Gurley

I was a Wall Street analyst first, and I came at Silicon Valley from having studied investing and studied public markets, respecting the elders of Warren Buffett or Howard Marks. And if you read all of that, there's a... there's a conservatism that gets built into you that isn't just, 'Hey, let's go win. Let's just go take the hill.' And so I found through my years of practice that I'm more uncomfortable in bubbles than dark days. In dark days, I'm very calm and the job's easy to practice and people listen. The rules get turned so upside down in the bubble that the way you win is by being more careless, which reinforces the whole thing. And it gets uncomfortable. What does an analyst actually do?

Technically, what is the job? On Wall Street? Yeah. It's changed over the years, but the sell-side analysts, they call them that because they work for the bank that's selling stocks versus a hedge fund that's buying stocks. You would follow an industry. So you would... go visit companies and write up a report and build out a business model and suggest to your clients that they should buy, sell, or hold that company.

Are projections mainly made up or are they rooted in something real?

I think, in the most, like, craftsman view of the art of being an analyst, you're trying to use math and models and your understanding of the business and the industry to figure out whether a company's overvalued or undervalued. The way that the business has evolved, most analysts are being hand-fed the prediction from the company itself, and they're just regurgitating it. And that seems not so... seems mundane and kind of bizarre in a way. But I'd say that's 80% or 90%. There's just not a lot of independent thought. And coming out of the financial crisis—it's actually the dot-com bubble—Eliot Spitzer created these new rules that separated the analyst from the bankers, and it ended up causing

there not to be nearly as much investment in analysts. And so part of it's that.

Does a VC just provide money or do they provide more than that?

You probably get different people to take both sides of that argument, especially if you talk to founders or VCs. I think the founding partners of my firm, Benchmark, and everyone that operates like we do, feel like the majority of the value-add is not the money. And you'll hear that from most venture capitalists that you talk to. And what would the value-add be? Our firm has focused almost exclusively on early-stage investing. So, two people in a PowerPoint, like you haven't done anything. I'd say 50% of the value-add is recruiting. So you're helping the founder build a team around him or her to go, you know, take the hill. And it often involves just a lot of salesmanship because in addition to that, you're helping them find biz-dev deals.

You're helping them raise incremental rounds of money. So you're out selling on behalf of what they're doing. And then you bring pattern recognition to the table. And I think the number-one skillset that I think evolves in a venture capitalist, especially if they're in a good partnership where you can leverage other people, is this kind of collaborative pattern recognition that you can apply both on investment decisions, but also on the guidance.

Has there ever been a time when your experience led you to a decision that turned out not to be a good decision because you were doing it based on the way it has happened in the past? Sure. Does that happen often?

Well, it can be extremely consequential. So the biggest error that a venture capitalist can make is to miss an opportunity that's really big because you can only lose one time. It's asymmetric, but if something goes to the moon, you missed out on that opportunity and you have to orient yourself that way.

Does that argue for investing in as many things as possible?

There's a limit to that, that will become careless, and then you'll have crappy returns. But yes, it tilts you in that direction. But the reason I was thinking of that is, to your question about has it ever happened, I had both the fortune and now the weight of having brought Larry and Sergey in to present to our partnership when they were 25 employees. We failed to chase that opportunity. Part of it was the search market had collapsed, Excite had gone bankrupt. Yahoo stock had fallen from 82 to 10. There were mental models that were telling you no. Both founders, who were PhD students, wanted to be co-CEOs. That's usually a pattern recognition of a red flag. And so there are just a number of those things that caused us not to chase.

And that's the worst error you can possibly have. Now, two of the best VCs in the business, Mike Moritz and John Doerr, did the deal. So they found their way out of the box that we got trapped in.

Yeah. Did you ever speak to them about that? About that specific thing?

No, I've had wonderful, wonderful conversations with both of them, but I've never asked them about that moment.

I'd just be curious to know how they saw it that was different than how you saw it.

Yeah, it'd be really interesting.

I'll find out. Tell me about the decision to step back from Benchmark.

This is going to be really interesting because I think you're familiar with... Do you know this book by Steve Martin, Born Standing Up? Love it. Best book about comedy I've ever read. So this will sound overly weighty tying it to that, but I was watching Dave Letterman interview Seinfeld, and they both brought this book up. And... I went and read it. And I think I was already thinking about the book that he wrote, so I was interested in his career journey. And in the book, you know, he takes, I don't know how long it takes, like a decade for him to find success, maybe.

Maybe more.

Yeah.

If I remember correctly, he even set a deadline. Maybe when he turns 30, if it doesn't happen by then, he's going to quit. And he turns 30, and it didn't happen, and he didn't quit. He didn't quit. Yeah.

So he kept going, and then all of a sudden, you know, Let's Get Small happens, and this thing goes nuts. And he's touring around, and the venue size is expanding, expanding, expanding. And I think he's in Vegas, if my memory serves, one day. And he comes out, and the upper deck's empty. And he doesn't go on the next night. He quits entirely. Yeah, from the whole thing. And that's a bit overly dramatic relative to... but in that moment, I realized that—I'd say I'd watched some very successful VCs overstay their welcome. Yeah. But I was like, 'You know, this has been an incredible job. I've loved every minute of it, but I think I've gotten all I need to get out of it.' Yeah. There's other things to do in life. Did you feel like you were stepping away from something, or were you stepping towards something else? I think there was a little of both. I think I wanted to consider other things in my life. There's another element I should, should add, which is—and this will tie into the stepping away—the venture capital business is as much a hustle business as it is anything.

And I was part of an equal partnership, and that's what made Benchmark everything it is. And in the equal partnership, everyone makes the exact same amount of money, and it creates this, I think, very healthy peer pressure that says if you're not in it and going and running full bore, maybe you should opt out. So I think there was also an element of me knowing the effort required to stay at the top of that business and knowing that I probably didn't have that gear anymore.

Did you discuss that with your partners? Yes. Tell me about that conversation. That's a big conversation.

I had seen others go through it, and that made it easier. Like, it was easier to be vulnerable in that moment because I had seen my other partners do it. And I think the dynamic of the equal partnership has, like, eight amazing things that happen and maybe two that are offsetting weaknesses, but there's all these emergent properties that come from it. And that's one of them. Like most partnerships in most businesses, the senior people hang around too long and take too much of the equity or the payout, and it alienates the younger people.

I understand everybody shares in the pot. Does everyone agree on everything you do, or does everyone have their own world of choice to make?

Well, it's a remarkably autonomous job, so your day-to-day activities are 90% your own doing. We had a simple construct, which is, on any investment decision, it's a majority wins. I see. And we had a simple one-to-10 voting, no fives. So it was distributed power, which is also really great for recruiting young people and developing young people because you're immediately at the table. And when that happened to me, I saw it from both sides. I saw it at the beginning. I saw it at the end.

Typically, how would voting go? Would you say 90% of the time everybody was in, 90% of the time most people were out? What were the trends?

A few of our big wins, everyone would raise their hand. Like, you could know—like, there are a couple of times you just knew. I remember on Twitter, like, I don't even know if we voted. We just started talking about how we were going to try and win the deal.

Tell me about when Twitter was pitched to you.

So we typically do A and B, and this was a C. Explain to me what A, B, and C are. Oh, Series A, Series B, Series C. What does that mean? It's just instead of numbers, they use letters to count the incremental investments.

So there were already two sets of investors before you.

Correct, which is atypical for us. But Matt Cohler brought them in, and Peter ended up going on the board. But I guess it goes back to the pattern recognition. Everybody's, like, alarm bells start going off. We've been successful investors in a number of social networks, and you see liftoff. And if the retention's there, if you have viral growth and retention, it can go forever. And so, just seeing the number—it was pre-monetization, but, like, you just knew. You just knew. Like, frequently it's divided, even on deals that end up well. And sometimes people signal, like they'll go, "Oh, four," and they really mean one. But there's ways to run the dynamic.

But typically, there were a handful where everybody voted. But what was typical?

More typical was like two-thirds, one-third kind of thing. Yeah. And you tried to pay attention to who was voting what, because over... I've also read a lot of books on group dynamics. One of the benefits of group dynamics is you know the strengths and weaknesses of each partner. So you can not only evaluate the vote, but who's giving the vote and what might they be good at and how that matters here.

Would that be like if you were playing chess with someone and you knew stylistically what they historically have done, you might play differently against that player?

Right. And the way you interpret it, yeah.

So Twitter came in as part of a social media wave. How often are investments done based on a wave as opposed to, "This is a unique thing, there's nothing else like it"?

I'd say the majority of them are in waves. "Really?" "Yeah, I think that—" "How does that work?" "Well, all the VCs are using pattern recognition, so that plays out. But I also think that— there's a well-known history now of whether it was the first electronics revolution or the PC revolution or the internet revolution or the mobile. We've just seen these things happen over and over and over again. And people get good at them. They get good at identifying them. The expertise around executing becomes... part of the lore in the industry and part of the shared best practice, and so you just start to see these things happen, and a lot of them are built on platform elements. So the part that allowed social media to work was everyone has a computer in your pocket all the time, and so now that framework, like, allows for these things to happen on top of it. But look how many there's been. I mean—"

Tons. Even Discord and Pinterest and Reddit, those weren't even part of the initial grouping.

Would that cause a founder to want to take his... unique idea and make it fit into a wave when really that's not its natural...? "Absolutely. All the time."

Yeah. And right now, venture capitalists have less than zero interest in any non-AI idea. "How can that be? How can that be?" "I've watched it happen so often. If you were some kind of smaller fund, like a contrarian investor, you might go looking for those things in a moment like this because no one will pay attention. But part of it's because the world goes that direction. And so a vast majority of venture investments are in companies that serve enterprises rather than consumers. You know, the CIOs and the CEOs have all read all the same stuff we're reading. And they go back to their management team meetings and say, 'What's our AI strategy? We have to have an AI strategy.' So it affects their allocation of capital and their spending."

You understand? So it affects the customers. It affects everything. And it becomes holistic.

And VCs are more graded on their recent performance than their past. "Mm-hmm." "It seems like there's a push for every physical product to be a smart product." "No doubt." "And it doesn't seem to make the individual products better. In most cases, it makes them worse."

I agree. You get an oven or a refrigerator with Wi-Fi and a screen, and you're like, "What the hell?" And it just creates more work than it does...

Same is true with cars. Buying a car now is more like buying a computer, and, you know, in two or three years, you're definitely going to need a new model because it'll just be a different thing. No doubt. I don't know that it's good. I agree with you. Yeah, I don't know. It's probably not.

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Who else did you discuss leaving with besides your partners? Oh, my wife and family. Any friends? A few close friends, yeah. Did anyone say, 'Don't do it'?

No.

I didn't have that. How does your everyday life change now being outside of the VC world?

Well, so first of all, the way our industry is structured, people serve out the boards they committed to. So it's not a walk-away moment. You quit doing new investments. So I'm still on six venture boards. So I'm still 40% or 50% of my time is still doing that job. But then I started looking for new stuff to do. I went on a listening tour. I went and visited people who had maybe declared victory at 50 or whatever. And like, 'What'd you learn? What'd you do? How'd you fill your time? How'd you keep...' And I had probably 30 ideas and most of them didn't play out.

Tell me some of the people that you met with that were inspiring.

This will sound absurd, but like, I went and talked to Druckenmiller 'cause he had left Soros and was doing his own thing. And he has an interesting reputation beyond that, considered a legend in the industry. Yeah. And what did you learn? A lot of the finance people end up kind of running their own money. And I learned that wasn't interesting to me, like, to make a job out of that. For sure. There are people that do that professionally. I was a venture capitalist. I wasn't an asset manager.

So some people go and do a lot of angel deals. My friend Tony Fadell went and did 200 angel deals. You know, I realized that wasn't for me.

It's almost like venture capital is having eight children. It's like having 200 children. It's the opposite I was looking for. But it was on the list originally. Like, oh yeah, I could go do this.

I saw your lecture, 2,851 Miles. Yeah. And watching that, I loved it. Thank you. And it made me think you'd be a great investigative journalist because I felt like I learned more from that than most documentaries I watch.

Where I've landed is I think I want to go start a policy institute, policy influence kind of organization that looks at big problems like regulatory capture, tries to synthesize them, and then use my ability to narrate as a way to try and influence change.

That sounds great. Yeah. Tell me a little bit about regulatory capture.

Yeah, so the speech I gave was titled 2,851 Miles, and it was the distance from Palo Alto to Washington, D.C., and I ended the speech with this profane gesture, that the reason Silicon Valley is so successful is because it's so far fucking away from— The distance. Yes. Ironically, since that happened, the administration's changed and some of the people that applauded are now doing the exact same thing. But there was a Nobel laureate at the University of Chicago named Stigler that won the Nobel Prize for regulatory capture. And he's the one that is like the author of this idea. But the idea is simple, that regulation, I'd say most often, ends up protecting the incumbent and the world thinks the opposite is true.

And so companies get big, they spend money lobbying, they spend time in Washington, and they get laws written to help them rather than to constrain them. And there's quite a bit of academic literature on this that proves it. So, and I used examples from my venture career that were pretty profound, kind of in my face.

What could be done about that?

It's an interesting question. I've done more work on it since then. I want to, and this will be part of my new thing, I want to go study countries that have less of it and try and understand the policies. One thing that's really amazing that most Americans probably don't realize is once your senator or congressman goes on a committee, they start fundraising in other jurisdictions. Like if you're on the finance committee, you can go raise money from every bank around the country. That just doesn't seem appropriate.

Yeah.

But I don't know if you can fix it. I mean, term limits, like the world's been intertwined for a very long period of time.

You think it's always been like this?

No, I think it's gotten worse over time. I made up this statement once that capitalism and democracy corrupt each other over time. Like, at the starting state, everything's fine. But as they get to commingle for a really, really, really long period of time... And our most broken industries are our most regulated: finance, healthcare, telecom.

I think this is related, that government's so big. And bringing this back to business, if you invest in companies when they're baby companies, how difficult is it to stay true to the mission that the small company had once you're big? Probably impossible.

I mean, well, there's two different angles to that. One would be this regulatory thing. I think, in that, it's impossible because you have to look after your interests. So you immediately start behaving that way. I think, from a product standpoint or a velocity standpoint, some of our best founders find a way to keep that going. I think that's what Jobs did and what Elon's known for and what Bezos tried to do with a whole bunch of philosophies that he brought to the table.

In the early days of Silicon Valley, the idea of moving fast and breaking things, not being stuck with the baggage of the past in moving forward, seemed like a big part of how the tech revolution happened. And now it feels like everybody's scared.

Yeah, well, I think there's two sides to that. I think one thing that happened is just time evolved. People used that phrase, and then certain Silicon Valley companies became really big, and there were questions about whether that had a negative influence on politics, on children—you know, Jonathan Haidt's book about The Anxious Generation—and so you're like... Then that gets villainized, that phrase. I don't think it was intended to say, 'move fast and hurt your customers.'

No, of course not.

It was to not be bureaucratic and move quickly and innovate.

What about Google getting rid of their 'Do No Evil' slogan?

Yeah. I mean, I think anytime a founder creates a mission statement that's overly... altruistic, they're going to invite future criticism at some point. And they're all guilty of it. It's become a very common... I mean, it gets to the point of ridicule, or it'd be easy almost to laugh out loud when someone's presenting to you an enterprise security company and they were driven to do it because their mother had cancer and they worked that into the pitch. And they do it—like, I've seen that. And so I think some of it comes from that. And I think it's dangerous. The original... that Bezos wrote to his shareholders—and I was fortunate enough to be around on that IPO—he was very respectful to shareholders.

It was titled, 'To My Shareholders.' And he said, 'You may not agree with what I'm doing, but I'm acting in your best interest.' Those letters evolved over time to basically say, 'Don't tell me what to do. I know what's best.' Like, they became disrespectful. They read his thing, and the part that resonated with them was, 'I'm going to do it my way.' And they didn't see the nuance of the other part. And I think that's unfortunate.

That's really interesting.

The book is called Running Down a Dream.

Yes. Way to get the name. If it came from the song, it was not intentional. It was just thinking about the concept that I wanted to promote. And I think, like you, I've been a lifetime learner. And I really, really, in my spare time, love consuming information that may be helpful, may not. And not knowing actually means I'm in the right space. At some point, if you become good at something, you can't learn from right there. You have to learn a little bit farther away. So I'm reading these books. And oddly, there's three biographies: Bobby Knight, Bob Dylan, and Danny Meyer, the restaurateur in New York. And I don't know if it was like when I finished the third and I have notes and lines, I just had this aha moment.

You know, they all had a very similar strategy and execution approach. And they're in very different fields and very different people. And I love the fact that they all three were very intentional at the beginning. And I love the fact that the industries weren't the kind that your parents would allow you to go do. Like basketball coach, folk singer, restaurateur, they generally tell you not to do that. And they brought this kind of programmatic, intentional approach. And I saw these similarities and I couldn't get it out of my head. I've written a lot over the years as blog posts. At first, it was this systematic thing where I told myself I had to do it every week. But I got to the point where I only did it when I had

a nugget like the regulatory chapter thing that kind of started chirping at me like, you know, 'Oh, this has come into line,' and you see something that should be shared. And so that happened. And for about two years, I didn't do anything with it. And I have a lot of notes of ideas that are coalescing that I keep. And I told myself I wanted to give the speech at an MBA program because I find it's... that people are in a transitional point there where they might be introspective. And so I put it together as a PowerPoint, and it was about eight or nine years ago. And I gave the presentation and didn't think much else of it at that point in time.

And then how did you decide to make a book, and how do you decide to do it now?

Well, now, I mean, it's taken better part of a decade from the original idea to now. 10 years ago, in your mind, you started researching a book? Well, no, I didn't think of it as a book at the time. I just thought about it as a PowerPoint presentation. And to be fair, it had no correlation or importance for my day job. It's not like I had a history of doing passion projects. And so it was something like, 'Oh, it was eating at me. I want to do this.' So I did that. Now, after that, a couple of odd things happened. One, James Clear, who wrote Atomic Habits, found it. It was on YouTube. He found it, and he put it on his website and tweeted everyone should go watch this, or that it's pretty—it's like affirmation. Yeah. And then the weirdest thing happened, and I was at a bespoke conference in the mountains—Bespoke—that this friend of mine had, and his wife had aggregated a bunch of people that normally aren't aggregated as an idea.

And I met Brian Koppelman there, who you know. And Brian was going around to almost everybody, asking them, 'What creative project are you doing outside of your career?'—like, almost in an uncomfortable way. Yeah, yeah. And when he got to me, I said, 'Well, I just gave this speech at University of Texas.' And he listened, and he's a huge Dylan fan, as I think you know. And so, you know, one of the three stories was Dylan, and we're talking about it, and he looks at me and he goes, 'You have to make this a book. Like, you have to,' just like poking. And I get the sense that he takes pride in encouraging people to step outside of themselves and go do something uncomfortable.

Yeah. I love the fact that something outside can inspire something beautiful to happen. It didn't have to come from, 'I have to get this done.' Inspiration comes from outside of you.

And I don't think I would have that almost directive coming from this guy, very talented, creative person to go do something creative. I think it was that moment that I said, 'Okay, I'm going to think about doing this.' Do you keep a journal? I don't. I keep notes on ideas. Lots of them. Is it physical or is it digital? It's digital now, yeah. It's almost always been digital, I would say, yeah. And it's moved platform—Notes app in the phone, or it's in Notion now. It was in Quip for a while. I like these apps that synchronize extremely well between a desktop and a mobile, and they're always up to date, and that I can share with other people, because sometimes I'll invite other people into these note areas. And how often would you write blog posts?

So when it started, I was working as a sell-side analyst. It actually started as a fax, like that's how old it was. And it was once a week back then. Fortune published it for a while, republished it. And then as I became a VC, it dropped off to every two weeks. And as it became a successful VC, it dropped off to two or three a year. But more thoughtful, like way more work would go into it. There's this great conversation, interview, I think someone had with Michael Lewis where they said, 'How do you decide when to write a new book?' And he says, 'Well, luckily I've been successful enough that I only do it when I am inspired. So I don't have to.'

Yeah.

And that's a wonderful place to be. That's great. Tell me about your spiritual life. It's an odd question. I grew up in the Episcopal Church, going every Sunday. My mother's—she's passed away, but she was quite religious. And so it was just ever-present. Like, the friends of my parents, the kids that I knew came from there, and acolyte and confirmation and all those things. As I got away from there, I got really focused on school and then eventually my career, and I started reading a lot more, and I think have developed a lot of questions about a lot of different religions. And at this point, I'd like to believe in the ability to have a strong moral compass and moral purpose without the weight of having to declare an allegiance to a particular creed.

Do you pray? I do not. Do you meditate? I have at different points in my life, and slept way better when I was.

Yeah, it's helpful.

The ability to turn your brain off at three in the morning is really, really useful.

One of the things that I love that you pointed out, Seinfeld using the word 'fascination' in your book—fascination is different than passion. I thought that was a really beautiful, helpful thing to think about.

Yeah, and I stole it from Seinfeld, giving him credit. He did that at a Duke graduation ceremony. Yeah, the word passion got overused a bit. One element of being very successful in a career is having the desire to learn all the time. And that becomes tedious unless it's free. And when I say it's free, it means it doesn't cost you any energy to go do it. I had so much help with this book along the way and so much fortune in terms of who I got to talk to. But at one point we went on a kind of academic learning journey and we ended up talking to the people that are known in that field: Amy Wrzesniewski and Adam Grant and Daniel Pink and Angela Duckworth. And she had recently done a podcast. So Angela wrote the great book, Grit, that said you need to have perseverance and passion.

She said, upon reflection, the passion part's more important than the perseverance. And she felt that we've taught our children to persevere, and like, almost at an obnoxious level. Like, we put them in this grinder, and we teach them how to do the athletics, and play the cello, and take the test, and learn a foreign language. And they're just going, going, going, going. And if what they're doing isn't something they love, they get to a point of exhaustion, and then they burn out. And it's almost worse than having never started in that direction. And you may lose the perseverance gear having gone through that. I think the fascination part is super interesting. There's the desire to learn about a field

at an exhaustive level. And for that to feel wonderfully rewarding as you do it is something that I don't know that people talk about. You had a comment in your book about studying, like, the legends of the industry. And I think everyone should do that. Like, imagine how differentiated a young person is walking into an interview if they have knowledge of the greats in the field. There are certain industries, journalism or creative writing, there's some that study the greats, but for most of them, that's not something that's taught. I mean, it'd be highly differentiating to a candidate. There's this great anecdote that I found, I think on a podcast. I don't know where I found it. Someone may have sent it to me, but there was a chess tournament where they did a pause and did a trivia

test, and guess who won? Magnus Carlsen won the trivia contest. And so, like, this idea of knowing the history and the bedrock, and then you can innovate on top of it. Your book also mentioned painters, and I had mentioned Picasso. Like, you go into that.

I love that story. I love the fact that when he was young, he painted in the style of the day and won an award. But if you look at it now, you wouldn't know that Picasso painted it because it wasn't representative of his originality.

It's so mind-expanding when you go in that Barcelona Museum and see the realism and how good it is. Yeah. And how different it is from the perception that everyone has. And I just love this idea. I think it's like being able to study the bedrock is so... I think it's just so wonderful for the people that do it. Not everyone does it. And by the way, it's a great test. If the thought of doing that is uncomfortable to you, this probably isn't the field you're going to thrive in. It's true.

Like in hip-hop, there's always great respect for the... early days of hip-hop. And I met some young hip-hop artists who completely disregard the past. This was in your documentary, I saw it. And it actually makes, it makes them stronger. It doesn't make them weaker. So it's like, I would say it's not a universal rule. Yeah, I think it's possible. I think any path is possible.

The main purpose of me wanting to launch this book into the world is to give people the permission to go chase something that they want to do and to give them a set of tools that should give them confidence in chasing it. And so, I think this idea of studying the greats will be very helpful to most people.

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Tell me about making decisions based on data versus intuition.

As a venture capitalist that focused mostly on early-stage things, it's almost entirely intuition because there is no data. Like, this is the very beginning of a company. It doesn't mean you don't think about numbers. I think there's a lot of people that consider how big a market could be. It's very useful to have a point of view on what price point a product might be willing to—but it's more intuition than analytics. The later-stage investors, it's the opposite, I think.

I think there's tons of numbers and they're able to hire massive amounts of people.

And because of its intuition, I think this concept of a group of independent thinkers who have different perspectives—I think that's why that's the normal approach to the decision-making in there, because you get more intuition out of a group decision than you would out of an independent decision.

Can you think of an example of a company that had a good growing business moving in a great direction and because of overinvestment ended up flaming out?

Well, I mean, all the dot-com companies that went bankrupt, you could theoretically put in that place. And in many cases, they're now category leaders. For Pets.com, there's now a multi-billion-dollar company that's standing there doing what they did. So I think you could put every one of them in that place. Now, you get caught up in the moment. Amazon almost went under, and they were losing over a billion a year. And part of what they were trying to do is create escape velocity from everybody else. And so maybe that strategy worked in that they sailed close enough to the earth that everyone else augers in and then you woke up.

There's a possible version of things where they didn't escape. That could have happened.

Just based on the numbers. Oh, sure, sure, sure, sure. That was possible.

I mean, there were reports written saying they were going to go under. Companies used to raise money when they needed money. Now there's so much capital and so much information availability that the money is chasing the companies. Almost any company that's hot, all of their financings are preempted now. They have people begging them to take money. Is there an AI bubble? Almost certainly. There are books that have been written that I kind of wanted to go back through, but there's just a—there's a natural human greed cycle that happens when euphoria happens. It doesn't mean it's not real. In fact, if it weren't real, you wouldn't have the euphoria. But it gets too many people too excited and they go over the top.

The bubble is outsized based on the reality of the wave. And just the carelessness that starts to happen. Yeah. And it's allowed. I mean, we have the biggest companies in the world right now doing transactions that I would say are of questionable accounting. and everybody seems cool with it, but it's just, you get caught up in everything that's going on. And then the speculation happens on the side. So people that have nothing to do with Silicon Valley see the, and the get rich quick mentality comes in. And then, you know, there's data center projects popping up in every state with five, $7 billion of funding.

If 10 years ago you presented a project around AI, would that have been something, "Let's go," or would that have been something to be wary of?

I think in certain categories, it would have been acceptable. And I think there are some companies now that are in those types of categories that were funded back then. And the part that's different is this was pre-LLM. And so the LLM innovation hadn't happened. And there were problems that you could apply AI to back then, like ad networks and things. But they were traditional AI, not LLMs. I don't know that many people could have foreseen LLMs before that magic happened with the DeepMind paper and this new construct came out.

So once that happened, has it been full charge ever since?

Yes. And in a way, I've—I mean, I've seen a lot of waves and a lot of bubbles, and this is like nothing I've ever seen.

Like when Amazon was losing a billion or 2 billion a year, that was considered crazy. And what we did at Uber, we had the same kind of burn rate, but OpenAI has got a burn rate that's five times that size. So, like, this is not your father's venture capital. Yeah. What do you predict happens? Let me tell you one thing that I think has happened, which is there were concepts that were investable notions when I got started. So there's this one that Brian Arthur had written about called increasing returns. Like, there's things about technology companies that might cause someone that gets big to get even bigger, like a winner-take-all dynamic. And social networks have this, and marketplaces have this.

And if you believed in that, you could invest ahead of the curve because there were people in most industries who thought if you got 30% market share, that was it—you were going to top out, it's going to be hard to serve all the niches. And these markets were slamming towards monopoly. And so when you're one of the minority that thinks that it's an investment opportunity... People also talk about power laws and this Mag-7 and how these companies have just gained more and more power. If everyone believes in those things, then you're willing to invest—everyone's willing to invest way ahead of the curve. You start trying to arbitrage what was once kind of a unique idea. And I think that's what's played out.

And so now we're in a weird world where the amount of money that gets thrown at every project... I kind of lived through this with Uber and Lyft because both companies had billions and billions of dollars. And there was no business school you could go to that said, "How do you behave on a board when your competitor is willing to lose $2 billion?" And there was no precedent. Yeah, uncharted territory. But now, that may be every category in venture. And it's just because the number of people that have come to believe in increasing returns, power laws, and waves. Oh, we all believe in all those things, and now the money... So every, every one of the most interesting AI categories, you may have to be willing to lose a billion a year just to compete for the prize.

So it's become more of an F1-type endeavor than it used to be.

Do you think there'll be one winner in AI?

I would say there's strong evidence that OpenAI has escape velocity on the consumer side. I don't think that's definitive on the enterprise side, but on the consumer side. And if they get better at things like memory and get more access to more of your stuff, that'll become self-reinforcing. OpenAI is highly aware of my book and my book project and is much more helpful as a result when I use it. How do you use AI in your life? Like 30 or 40 times a day, all the time. For what? And when did you start? We talked about being curious in your industry. And for a venture capitalist, that means if there's an app in the top 20 in the App Store and you don't know what it is, you should be scared shitless.

Like you want that anxiety to drive your curiosity. So I've taught myself that. When anything pops up, you dive in. In fact, I'm diving into these AI products with zero concern for privacy, which may not be the right answer, but I want to see what they're capable of. So I'm willing to take the risk. And so, I mean, it started like everyone else, just being a kind of more nuanced, responsive Wikipedia, like, oh, I can learn fast, I can learn fast. Now... If there's an idea that I have or a person I'm going to meet or an industry I want to understand, I'll use the advanced version and tell it to go away for 20 minutes and write something. What would be a question you would ask it? I mean, the the most obvious is just, 'I'm curious about this industry I know nothing about, and, you know, go tell me.' It can be more nuanced. I say, 'I'm going to go meet with so-and-so about my book. Like, like, let's walk through all of the books that they've written, and where do you see the overlap, and what might be a great spark for conversation?' It's fantastic at that.

Being willing to try it most times for most things, you start to see more on the edge. How often do you get an answer that you think is not correct?

Probably, I'm going to just assume it's in the 10% to 15% range, but I would suggest that that's true of most sources of information. And so I'll double-check stuff. I know it's wrong some of the times, but I don't let it stop me from using it. I've been hanging out with more academicians recently, and some of them say, 'Oh, I've made it create an error,' and so they just turn it off. I tell them, 'You know, you should... take a model from three years ago and a model from a year ago and a model that you get tomorrow and run the same prompt. And I bet you're going to find that it's different each time and getting better. And so having an attitude that means stop is probably not the right.'

Why do you think there's so much fear around AI?

I think there's always been fear of new technologies. I mean, it goes back to the looms, right? And it's been a constant in the history of mankind. I think this one hits particularly hard because no one ever thought of the white-collar jobs being threatened. I think that's the part that's really alarming to the people that write the articles. The previous technology waves were agriculture and whatnot and had a big impact on certain parts of the labor market, but this one hits in a different place. And obviously, I think there are two other areas of concern people have. One is, could it be used to create a weapon and those kinds of things? And that's been true of most technologies. And I don't think that it's possible to put it back in the box.

No, like, fire does a lot of good things, and it burned down, you know, big portion of this town.

Yeah. Yeah. And then the other one is just the stuff that hate pushes on around social media, you know, and the book, The Anxious Generation. I think there is a risk of—and you could say this of addictive video games, but there's a risk that people go into a cave with AI—that affects their ability to be present in the world. That's a real risk. Yeah.

Also, like the movie Her. Yes.

That movie is so amazing. The fact that it was done kind of 10 years before this happened and that, I think, you could watch it today, there's not some error in the way they conceived it that would make it unbelievable. And imagine acting in that role where you're just talking to a computer. Like, it's really remarkable.

And at the time, it must have seemed so far-fetched. I agree. And today, it's ordinary.

It's amazing. I meet people in the AI world who aren't familiar with it.

And I'm like, you really need to go watch this. So you said that when you met with the Google guys the first time, there were some red flags that pushed you away. When you meet with founders, what would be a list of the things that would be good signs?

Well, the one thing that pops to the front of my mind, I once asked Bezos why he was such a successful angel investor, because he's kind of busy with his day job. And his answer was, "I only look for one thing. Is this person going to do this no matter what? Whether I give them money or not, whether no one gives them money or not." This kind of unbridled determination.

Yes.

So that's one. Salesmanship is really powerful, like the ability to sell as a founder. Some of the best are the best at it, you know, and they all do it in different ways. I remember when Adam Neumann, you know, first pitched us on WeWork. Yeah, I was very positive on doing it, and it was 97%—this was an industry we don't invest in, but it was 97% because of his effectiveness as a salesman. I mentioned increasing returns. There are times when some product already has a little momentum and all you're doing is extrapolating that. That happens in open-source software. A lot of projects get momentum before you try and monetize them, but you've seen the pattern of having it happen before. So that's another one.

There might be some intellectual insight that a founder has that you then test with three people you know, and it's truly innovative or revolutionary. That's another one. I think many of the most successful companies in the venture industry have a clever or unique go-to-market approach. Whether that's consumer or enterprise, they have come up with an idea that's new or differentiated around how they're gonna grow customers.

When you met with Adam Neumann and he brought you WeWork, you say it was outside of what you typically invested in. Just real estate. We'd never done anything. So you'd only done tech investing? Yeah, 100%. 100%. Since then, was there ever another one, or no?

I mean, it happens occasionally if, like, let's say you just asked me for a list of like five or six things that might trigger you to do something. If two or three of those things are going off super loud, you learn to turn down the "no" rules. Yes. Because once again, if it works, the multiple is extreme and you're only going to lose one times your money. So there's an optionality to the game that you want to bend towards. But my partner Bruce came up with this phrase, "What could go right?" because of this asymmetric thing. And you really have to be more afraid of it working and not investing. And that puts you in a state of mind that you evaluate things a little differently.

You'd be way more open to this strange thing. Yeah, "What could go right?" It's a beautiful thought. Yeah.

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I know you're an obsessive music lover. Have you ever invested in anything in the music world? I don't think I have.

It was a graveyard up until Daniel Ek built Spotify. And even the three or four things that got VC funding pre-Spotify turned out to be really bad for the investors. Not just losing their money, but the RIAA came after. Like one guy that invested in Napster told me the head of the RIAA came up to him and told him that she knew what schools his kids went to and told him. That kind of thing will scare you away.

That's crazy.

But Daniel, who I assume you've probably met, is such an old soul, such a wonderful, warm human. I wish I had invested in Spotify, not just for the money, but the journey would have been so incredibly fun.

Do you think there's any danger in, if you're emotionally involved in the subject? Oh, 100%. Like if you were to invest in something music, would it cloud your vision?

No doubt.

I think 100%.

This is why wineries and restaurants and nightclubs are really bad investments because you have so many people that are investing on a non-IRR basis, right? Like they want to be a part of it. And so you get over-entry, over-supply. Yeah, I think that's for certain.

What would be key attributes you might have looked for early in your career that you realized over time maybe those were not so important?

When you come into venture investing, I think you want to overemphasize a broader intellectual palette. So you want to believe that I need to be able to understand markets and technologies and customers and all of these things. And you probably are underweighting the critical importance of the founder themselves and what they're capable of. And I think over time you learn that there's a small percentage of the population that's just capable of bending the earth to their will.

So you're betting more on the person than the idea.

I think as you spend time in the business, you get to that place. And you see that they can, even if they're on the wrong idea, they can pivot. Even if they're on the wrong industry, they can pivot. But the skill set they have, which is a combination of speed and, and vision and, and the salesmanship thing, which is so critical, is just different.

How do founders and operators differ?

Some of them learned to become one. There's this blog post from Andreessen Horowitz where I think they're doing what most venture firms do, which is you kind of want to speak out to all the founders you haven't met to come to me. And so they wrote a blog post called, you know, 'We Only Want to Bet on Founders That Go All the Way,' which I think is a truism for every investor because hiring a CEO is like a 50/50 proposition. Yeah. But deep in there, there was a paragraph that said, of course, they've got to want to learn to be a CEO. And we talk a lot about founders around product and speed and ideas and salesmanship even. But leading 10,000 people is leading 10,000 people. And I don't—I don't think very many people are born with an innate grasp of how to do that.

And it's hard. I think some of them learned. There was this amazing person in Silicon Valley named Bill Campbell, who has passed away, that was known as this kind of coach whisperer—maybe the Rick Rubin of Silicon Valley. And if you could get him—and, by the way, he worked with Larry and Sergey. He was still running their management team meeting 10 years after they went public. Wow. If you can get that kind of person attached to the founder and get all the good pieces of founder, but the operating learnings, like, come along, that's amazing. But you don't always get that, and running 10,000-person org is hard. One of the things—I was rereading your book and thinking about venture, and one thing that's really different from the artistic creative process is if you're winning, everything just gets harder.

It gets bigger. There's more employees. There's more money involved. There's more at risk. And it always gets that way. You talked about artists taking a creative break and re-tuning and refreshing. There's no place for that in this endeavor.

It's hard. It's really hard. Yeah, no one prepares you for what success is actually like.

I've had long conversations with entrepreneurs about, 'If you think this is bad, wait until you're more successful.' But it's not something that people think about when they start at the beginning. How has crypto changed Silicon Valley? It was kind of an interesting back-and-forth. Crypto came along, and a number of people got excited about it. There's a data point that people always look to, which is when all the developers go run at something, pay attention. So that happened. There was a lot of behavior that was gray area, and that scares some investors away. It brings in regulators. It makes it dangerous. What were the gray areas? Oh, I mean, there were stories of people hiring hitmen through crypto.

There's fraud. There's people stealing things. There's just the ability to move money that's not traceable. There's just all kinds of NFTs and the stuff that looks like snake-oil salesmanship that comes along with it. It had all those dimensions. Then AI happened. And so when AI happened, all the developers went to something else and the world went away. Everyone followed the wave. Yes. And maybe that was helpful to crypto in that just the limelight wasn't on it for a while. And I think it had developed enough escape velocity that the rails are working.

And now, kind of in an unexpected reality, the Trump administration becomes pro-crypto, which is extremely elevating to that industry. And the rails have enough proof points now that it's not a speculation. And people are finding real-world use cases, especially for stablecoin. And so as long as the administration stays pro-crypto, I think it could be very disruptive even from here going forward. What is stablecoin? Obviously, the blockchain is just this ability to track digital information in a way that can't be hacked because there's a shared ledger. And in doing that, you can create a digital representation that tracks something. So people call it like a token or crypto token. And so stablecoins have evolved into this thing where that digital token represents an actual dollar, an actual U.S. dollar.

You could have a stablecoin for any currency, but the ones that are popular for the U.S. dollar. And part of what's evolved is the government has said you have to have one-for-one backing. And so now the people that are running these, if they sell more than they have, they'll go buy real dollars in Treasuries or whatever and keep it underneath it so that they're still— So if the stablecoin goes up in value, does that mean the dollar automatically goes up in value?

How does that work?

Well, I mean, there's arbitrages out there everywhere, but the way the stablecoin is designed, it does not move away from the dollar. It's always traded. There have been times where there's been concern about the stablecoin provider and they've dropped in value, but there's no reason for a speculator to believe they'll be worth more than a dollar. So if there's a doubt in the system, it can fall, but there's no reason.

So how is it different than the government just issuing digital dollars?

So many of our peers as a country have created digital dollars. So the U.K. created something called Faster Payments 17 years ago. And China has one, and India has one. Brazil created one seven years ago, six years ago, called Pix that's wildly successful. And in every one of those cases, and this is pre-blockchain, you can move money from your account to your friend's account instantaneously in all those countries. And I think here, almost certainly because of regulatory capture, that hasn't happened here. I mean, there's things like Zelle now, that if your bank happens to be part of that, but an ACH takes three days to clear, a wire costs 25 bucks and you got to fill out five pages of forms and do a verbal. Like, it's just nuts.

And now if you have a wallet of any kind and I have a wallet of any kind, I can send you, you know, 25,000 U.S. dollars in two seconds, and it'll cost me two cents to send it to you.

Is there any downside to the government having the coin versus the private sector having the coin?

I mean, the only thing I can imagine on that front is most people think of Bitcoin as a government arbitrage tool, like that's where the value comes from. So if you lived in a country where you were worried about hyperinflation or didn't trust your government, Bitcoin would be a good place to move your money so that you could potentially leave and get out. So I think in most cases, especially in how we've thought about the U.S. dollar, you'd want the government to stand behind it just for risk of asset loss. And in fact, most of us keep our money in banks, I think, not because you trust the bank, but you trust the FDIC insurance that stands behind.

It's funny to hear you say that after watching the 2,851 Miles.

Well, there's a difference between whether you trust the government to hold up their obligations that they back versus whether you trust them to be arbiters of fairness in business. I see.

Yeah. If someone cheats in one of the areas, does it give you any concern in other areas? Sure.

But I mean, I think that happens every day. I think there's concerns about the U.S. dollar. I mean, gold's at a crazy all-time high, which is theoretically an argument of doubt against the U.S. dollar. So yeah, that happens.

Tell me the process of writing the book.

So I had never done anything like this before. And I had written, as we talked about, I blogged. And some of those were pretty long. Like there's some 25-, 30-page blogs. And I've been a fan of writing, like a real student of writing. And at some point, I would almost call it a hobby. There's just this wave of great non-fiction writers from Malcolm to Krakauer to Michael Lewis. And there's a book about that called The New New Journalism.

Oh, I haven't seen that.

Yeah. And there was a new journalism before that, but someone wrote one about this modern... called The New New Journalism. And so I've read these things and I've thought a lot about what great writing entails. I've also become a huge fan of great long form nonfiction narratives. So there's this website, Long Reads. I don't know if you've ever been there. That just aggregates them. It's a lot of Atlantic and New Yorker and things like that. But I view it as a wonderful art form if someone can pin a 10 or 15 page thing that you just want to get to the end of. And doing it in nonfiction, which is with this new new journalism, I think is a particularly interesting art form. And so I came at the project with that mental framework of wanting to be able to do that.

And so I was very fortunate. There's this gentleman in Dallas that wrote this long-form article I had seen like 15 years ago in D Magazine called 'The Most Amazing Bowling Story Ever.' And I would encourage everyone to go read it. It holds up. It's fantastic. And I had read it and it was one of my favorites. It was about an amateur in Dallas that was right at a 900, was about to do the triple perfect score. Wow.

But it was the way that Michael wrote it that made it come alive. Yes, yes, yes.

Anyway, I met him, and he had seen my presentation. The odds of me knowing his piece of work. Amazing. And so we just started talking. So I ended up hiring Michael as a research partner, co-writer. Great. And we did this journey together. And we started doing once-a-week Zoom calls. And we got distracted in all these most wonderful ways. And we would go on journeys, learning journeys. We'd read all kinds of documentaries and biographies. Great. Malcolm, actually, his team introduced me to a researcher named Joseph Fridman who pushed us to study the academic part. So we started reading all the research. We started talking to all the best academicians. And that was super helpful. It led to us doing this survey with Wharton where we asked people, 'If you could go back in life, would you choose a different career?'

And six in 10 people say yes.

Interesting.

Yeah. And so that was a great nugget that we put in. And then we just started searching for stories. And one of the things that comes out of the New New Journalism is they're all great at narrative and they try and build character arcs and beginnings and ends and a hero, like, into the work that they do. And it makes it more readable. This guy, Morgan Housel, who wrote The Psychology of Money was on a podcast recently called How I Write. And he said, 'It's all about the storytelling. It just has to be about that. If you can do that right, I think it makes the reader more engaged, which gives you more memory and your ability to deliver.' And this may be similar to my regulatory capture speech where you try and think about what you're doing in that way so that it's consumable.

And so I had, once again, the good fortune of knowing Malcolm. So he really helped me think about structure in a way that I could bring the stories together. And the book has a unique structure in that we alternate profiles, which are stories of success, with principles, which I would call tools of success. And I'd like to believe, since my objective function is to influence people to chase their dreams, that if it were just a list of principles, it would read like a textbook. And I think it'd be harder to envision yourself, like, launching through it. But what I'm hopeful of is, by alternating these full stories that are meant to read as almost standalone stories, they reinforce the principles, but don't come out...

...hit you over the head, that it's both more readable, but has more of an influence as a result of choosing to do it that way.

It also makes it episodic as you're reading, where each chunk feels like you get something from each chunk. You don't feel like you're just reading endlessly and waiting for the payoff. There's a payoff every page or two.

I love that. I love that you said that. And it gets back into the readability, making it enjoyable.

We also—one thing we searched for in the stories was intentionality.

If I want to convince someone they can stop what they're doing, change direction, and chase their dreams, I need the stories not to be stories of accident, but intentionality. And so I think in almost all of them, we tell, you know, the leading character, the hero has made a decision at some point in his life to just go do this thing. The Danny Meyer one's perfect, but he's studying for the LSAT. He's been a successful security technology salesman. And his uncle goes, 'What are you doing? You know you've always wanted to open a restaurant.' It's a great story. And for him to pivot on that moment and then to completely change his life is pretty powerful.

It's another example of an outside influence changing our trajectory on an outsized scale.

My co-writer came up with this phrase he loves: 'disinhibiting.' Yeah. I think I wrote the word down to talk to you about it. Yeah, so this idea that I might chase my dream job. And by the way, there's this great book by Daniel Pink called The Power of Regret. And he talks about the most powerful regret possible, something he calls boldness regrets. And it's about the thing you didn't do. He says, 'What haunts us is the inaction itself. Foregone opportunities linger in your mind in a heavier way.' Apparently, like if you ask a bunch of people at the end of their life what are their biggest regrets, it's the thing they didn't do that they always thought they wanted to do. So how can we help people actually get past that and do that thing?

And so anyway, this word 'disinhibiting'—like Seinfeld read two books. He thought about the notion of being a comedian, but he didn't believe it was possible until he read these two books where someone had basically made a list of 14 people who had made money doing this. And here's how they do it, and here's their interesting techniques. And that gave him confidence that it was possible. And so I think one kind of heavily altruistic goal of the book is to disinhibit as many people as possible, to let them think they can go do these things.

Beautiful.

Do you think of it as a self-help book or a business book?

I'd probably think of it as a self-help book. I might use the word 'personal development' that I think has a nicer air to it.

But yeah, no, I think it's that. Yeah.

Yeah. Look, we live in a time where I think two things are happening that both cause anxiety. One, we are putting young people through a pressure cooker where they don't really know where they're going. And Haidt likes to say we've also taken away play. And by taking away play, the discovery part's lessened. And so, like, how are you gonna go find what you wanna do with the rest of your life if you're never exploring? And then other little things, like in many schools, you have to apply to the major to get into the school. So you've pre-baked where you are. I met this professor at Michigan who studies how kids move through classes. And by the time you've taken four classes, she can predict what your major is gonna be.

Like 95% of the time. So you're path-dependent. You're locked in. And so that's going on. And now AI, a lot of the jobs we thought were stable may not be. And so my partner, Kevin Harvey, has this phrase that I adore. And we searched for it even all through AI. Couldn't find it anywhere. Life is a use-it-or-lose-it proposition. And it ties into the boldness regret point.

Yeah.

Like, why not do what you love?

Yes.

With this life that we have.

What's something that you take seriously now that when you were younger you didn't put much stock in?

Reading, for sure. I didn't fall in love with reading until I was about 25.

I wouldn't have guessed that.

Yeah. Yeah. Yeah, I mean, like, I had a C in high school in reading and writing. Oh, this one's fun. On the SAT, I had a 780 math, 410 English.

Wow.

Near remedial. Like, you need an 800 to play college, or you used to play college sports. Yeah.

But I just never read.

Was it just not in the culture of your family? Maybe not.

Maybe I was just doing other things.

Were there a lot of books in the house growing up?

A lot of National Geographic magazines. A lot of Apollo stuff. No, I don't know why. But when it flipped, it went completely over the top.

Yeah, it's such a great feeling, the love of books and the excitement of what you can find out.

Yeah, yes. But it came to me later, for whatever reason. And that's why I think these teachers would find it odd that I'm writing. Which podcasts do you listen to? I listen to a lot of them. Patrick O'Shaughnessy in the investing world is such a great interviewer. Like, he's just phenomenal. Invest Like the Best. You know, depending who's on, Lex Fridman—I can't do four hours with everybody, but if it's the right person, it's wonderful. Tim Ferriss. Austin's the hotbed of podcasts.

Really thanks to Tim. He was the first one to move there, and everybody followed him. Yeah, but Joe and Lex, they all lived there. Yeah.

I like finding some esoteric ones. Like, I didn't know about this How I Write thing until someone forwarded me something. And some of those are fun.

What do you use as trusted sources?

People I know. I mean, I've built a huge network of people that I know. So if there's a particular area that I want to dive deep on, I'll go to. I've gotten very comfortable cold calling people. And so I don't mind reaching out to someone I don't know. Venture helped with that. Once again, the amount of salesmanship in venture is hard to understate. You get over it.

Tell me about philanthropy. I want to ask about your involvement with it now and your thoughts about it now, but I'm wondering if it's grounded in any long-term thoughts.

I mean, based on what I said about how you approach other things, I should certainly go study the history of it. Based on some of the things I talked about in the regulatory capture thing, I think intent is very different than outcome. And I think a lot of politicians and philanthropists hang their banner out on their intent, but don't follow up to see whether the actual outcome is impacted. And good policy and good philanthropy also, I think, should hold themselves to the bar of impact. And so I think it's really hard to find philanthropy that you have high confidence in impact. That's what I'm certainly searching for as I go forward and look to redistribute my wealth. But I think it's very hard to find that.

Well, I'm hoping that you can create the format that other people will use going forward.

Other people have thought about this a lot and tilted into it. And one of the things I want to do after I get the book out and launched is I'm planning to put together, I might call it a policy institute or policy influence thing that's going to look at bigger problems. And if there are areas where it's demonstrable that capital will lead to success, that's interesting. My podcast partner, Brad Gerstner, helped launch this thing, Invest America, where they're going to put $1,000 for every child the day they're born into an account. Beautiful. Pretty powerful that he was able to get that done. And at least in its current version, they're going to allow private donors to come in behind it to adopt a state, to adopt a ZIP code, to adopt a region.

That'd be pretty powerful if you had the combination of government and private. I haven't seen any vehicle like that before.

What is effective altruism, and why do people who practice it go to jail? I think that's such a good question.

The second part, I think, is easier to answer than the first. They've convinced themselves that the ends justify the means. Once you've put yourself in that place, you're very likely to cross a line that would potentially put you in jail. And you're also admitting to being comfortable with being duplicitous, which is off-putting to many and myself.

Have any of the founders that you worked with ever lost your trust in the process?

Yeah, certainly. I think in both directions. I think that's probably true of almost anyone that's practiced venture capital. Things don't always go right. And when they're not going right, it's probably the hardest time to maintain a relationship because you're obligated to consider alternate paths, even if those may not work either.

But just doing nothing feels like you're not doing your job. And so that'll lead to conversations about replacement or augmentation. Those are uncomfortable. I mean, it's some of the hardest parts of the business. Yeah. Tell me about corporate boards. Yeah.

What makes a good one?

Yeah. I think it's really hard to have a great board. I think there are certain CEOs and founders that work very hard at it to make it successful. I think for many companies, especially the bigger companies, you end up with a lot of bureaucratic committees that have a checklist of things they have to do that mostly have to do with not getting in trouble with lawyers. And the amount of time that you spend on either making the company and the management team the best it can be or looking after the interest of shareholders, which is what Delaware law says you're supposed to be doing, is minimized.

That sounds broken.

I think it is broken. I don't know how to get out of it. I would say, though, good boards are hard in general. I think you need to have a group of people who bring together a diverse set of skills and experiences that have mutual respect for one another and take the job seriously. You need all that. And I think that's hard.

What's an example of what can go wrong on a board?

I think for the average American shareholder, what can go wrong is you just have a bunch of career board members whose main activity and their main decision-making is to minimize legal risk for either themselves or the company. And so you're just checking a bunch of boxes. 'We did this the right way. We paid the compensation consultant. We know it's fair.' You're not thinking innovatively. I think this Elon pay package is an interesting example. If I could, for any company I've ever invested in, if I could take that original Elon package that led to the lawsuit, I would be ecstatic as a shareholder in every company I've ever invested in. And I would think 98% of the CEOs would say no to the package.

Of course. Because it was so insanely in line with shareholder interest. And you only make money if they make money. And I don't care if it's outsized, if we're all winning. So that deal, I would support on any company I've ever been in front of. I don't think the CEOs would do it. And I don't think the other board members would OK it.

What's a direct listing?

So this is something I tilted at for a long time. I think the IPO process, almost certainly also because of regulatory capture, is remarkably broken. I don't actually think the average citizen even knows. I think they think what is happening is what I think should happen, which is what a direct listing does. I think they think a bunch of people put orders in, you sort them based on who's willing to pay the highest price, and you hand them out that way. And I've often said, if you took a freshman comp sci student and a freshman finance student and said, 'How should a company go public?' they would craft a direct listing. It's obvious that you should match supply and demand and be indifferent to who.

It should be an anonymous auction. And that's how every bond is sold. But with IPOs, the banker picks who gets the shares and picks the price. So it's a handpicked price and it's hand-allocated. And for the past 25, 30 years, you have these pops that have become expected, I would say. And it's a one-day giveaway to their clients. It's really ugly. The IPO is one of the only high-dollar transactions in our world where the same advisor is advising two people on opposite sides. And the one they spend the most time with is not the company. The company goes public once. Most founders or CEOs will do two at most. Most do one. So you have no experience coming into this. So the direct listing was just a match.

It was just what I think most people think happens.

Is it legal?

Yes, it's legal. It had momentum. We probably did 20 or 30 of them. Spotify, Daniel did the first one. Wow. And he and his CFO spent probably the better part of a year making that happen. It was hard, not easy. And I find the smartest founders are the ones that see the problem and are most open to it. A lot of people... treat an IPO, I say, like a, like a wedding. Like, "Oh, it's once in a lifetime. Pull out all the stops. Don't do anything non-traditional." Like they're afraid to think. Yeah. Did you interview Tobi at Shopify? I did. What a wonderful human, huh? So he said, "If I could go back..." They weren't available when he went in. "If I could go back, I'd do it." Like, but you need this. I think Bezos, if he could go back, would do it.

But those people think fairly independently. Most people, they're just so anxious by the time they get to that place, they let it roll over.

Are there any companies that are better off not going public?

There are certainly historic examples of high cash flow companies where some of the sin businesses, people used to- Like what? Cigarettes or alcohol or gambling. Some people felt that the markets wouldn't give you a multiple because people didn't want to be associated. So if you have high cash flows, you're better off not being there. There is a- wave of discussion in the past 10 years where people started recommending not going public. What are some of the biggest ones now that have not? Stripe is the predominant one. And is it not going public? They used to talk about not now, and it more recently sounds like not ever. Wow, that's interesting. And I think Koch Industries is a famous one that's never gone out.

I didn't know that.

Yeah. And I think the Collison brothers are remarkably, they're high intellect and they're curious, and I'm sure they've gone and talked to everybody. It creates a problem because a lot of the people in Washington think that all citizens should be exposed to the opportunities in the financial markets. And if... Well, Amazon went out at like a billion-dollar market cap when they had like 60 million in revenue. And if you bought the stock, then you made a ton of money. If these companies wait and go public after they're fully mature, those growth opportunities aren't available to the average investor. And that upsets Elizabeth Warren and all those people. And the solutions that people want to bring to, like, have crypto track a private company, like, the lack of transparency that exists is just going to lead to massive amounts of fraud and grift.

And so I don't know the right answer. I mean, certainly. I think the number of public companies today is half what it used to be. That's interesting.

And I think that's concerning to a lot of people.

And so you'd have to lower some of the regulation, make it less expensive. I think the litigation part is a big part of it. Like D&O insurance, even for small private companies, $2 to $3 million just to protect the board. And I think there are things you could do on that front to bring it down. What do you spend most of your time outside of work doing? Reading, listening to music, and sports appreciation, probably. What sports do you watch? I love the pageantry of college football. I just don't think there's anything quite like it. Yeah. The fact that most of these campuses have huge parking lots full of RVs. These are people that, that's their weekend. They're going to go do this thing. And if you've ever been to LSU for a night game, I mean, they start outside that stadium at 8 a.m. Wow.

It's just something. It's an amount of passion and, passion, fandom that I have in a different way, in a different tilt. It may not maintain because of NIL and open transfer and some of the things Saban's very worried about. But I just, I mean, I grew up playing basketball. I have way more knowledge of basketball, but I think college football has a really special character to it.

Yeah. Your story about college football in the book is spectacular. So great. I loved it. So great. I didn't know any of that. And it inspired me to think about creating curated text threads with friends on particular subjects. I've never done that.

Yes.

But it's a great idea.

I'm on several.

What are the subjects?

One of them's on regulatory capture and AI. There's a group of people that really are worried that the leaders are trying to affect that outcome. One of them's on the college that I went to and the athletics around it. One of them's on music. For the past kind of four years, my passion area in music's alt-country, and we've got one, and, you know, like, now we have in there, you know, famous people in the industry, which is fun, like, way out of... but like, it's great. It's just great. So I have several.

What do you think happened for country music to rise to the top for you at that point?

And by the way, alt-country. So there was a period in my life where I'd gone from listening to rock and roll to listening to college rock, which I think a lot of people made that transition to R.E.M., U2, you know, that kind of thing, 10,000 Maniacs. And two albums came out that just changed everything for me: No Depression by Uncle Tupelo and Mystery Road by Drivin N Cryin. At the time, they had a little bit of R.E.M., a little bit of Allman Brothers, but a little bit of punk. That has left the scene, but that first Uncle Tupelo album... And when they interviewed the band, they were listening to X and they were listening to The Replacements. There was a punk background to it. It was more fun back then.

Some people called it cowpunk. They say that, like, your music influences in that 18 to 23 kind of stick. And that was where I turned 23. And I've just been, you know, in the middle of that kind of stuff: Jason Isbell and Chris Stapleton and Brandi Carlile. Yeah. All the stuff. So people that are really passionate about alt-country will object to the country thing because they don't listen to pop country. They don't like it very much.

It's its own thing, what you're talking about. It has way more blues in it. You're more likely to be behind the beat. It's also less poppy. No doubt. Yeah. The key point about the college football story you told were the group of people who saw themselves as part of a tribe instead of as adversaries. Yes. And I thought that was really a beautiful, beautiful, helpful thing to think about.

In your book, I think you have a chapter called The Abundant Mindset that I think is the same idea. I think you say the more we share, the more our skills improve. And there is an attitude that I think many people adopt, not with malintent. They just feel like that's what everybody else is doing. Yeah, that they have to protect their territory. And they view peers as competitors, and they just see them that way. And if you see all your peers as competitors, you know, you get insular, and you raise up fences, and you block things off. And I'd say one of the principles in the book that I'm most kind of proud of, and I think maybe the one thing that kind of really breaks new ground, is this idea of embracing peers.

A lot of people talk about mentors. I love it, though. But how many peers can you possibly find? There are people that are on the same journey. And can you share learning in a way that's going to accelerate? Because if you're all out gathering ideas and you come back and share them, you're learning at 4x the rate or 5x the rate that you would be otherwise. And I think I've done that in my career. And I think it's an area of green grass that more people could do more things in. It's interesting because I try and encourage this in all the companies I work with, and I've been surprised at the pushback I get. But I've often gone to my founders or CEOs and I say, 'You should tell every one of your direct reports to develop five peers in nearby companies, not direct competitors, things that look similar, and have them meet with them four times a year and then bring back and report up.'

And I've been very unable to make that programmatic or make that successful, and people find it foreign. But when I study these stories and these areas of greatness, I see more and more and more of that, and these people that are willing to share without concern. Yes. And a lot of the great people in many different fields write about what they do. You know, Buffett writes about what he does. Howard Marks is so incredible that he shares as he goes along. I just think it's great for the world. For sure. You know? Tell me about mentors. A lot of people have written about mentors. So in the book, I tried to come at it in a way that is unique. So I think some people move too quick, too fast, or call up too high, too fast, and they burn out that way.

I think you've got to reach to the right level at the right point in time. And I think you can have mentors you don't talk to, especially in today's world, like with podcasts and blogs and YouTube videos. Danny Meyer did this. So in his story, when he first got started, he created a list of 10 people who were doing interesting things as innovators in the restaurant world and being noted for it. And he studied each of them and he wrote it all down. And he didn't know those people, but they were disinhibiting because he could see that they were successful and that people could make a career this way. And he studied them. And right before I gave the speech at UT, I was on the way over there, I texted Danny, I said, 'Did you ever meet any of these people?'

And he texted back, the hundred emoji on the phone. So he met them all, but he didn't start by knowing them. The one thing I say, I don't think mentors have to be someone that you have coffee with every day. I think you can have aspirational mentors, which are separate from your in-person mentors. And if you're wildly successful—and I've had this benefit—you start meeting these people. And you talk about rewards in life or career, like people talk about how, 'Oh, I got money and it didn't mean anything.' Meeting those people and establishing a relationship with them, I would argue, is one of the most rewarding things that can happen in your life.

Somewhere you mentioned dispassionate analysis. You say Graham's ideas were radical before Warren Buffett. I guess when Benjamin Graham wrote his book, it was not considered mainstream. It was a fringe idea. And maybe Buffett's success made it mainstream.

I do think people should be open to—and there's a phrase that's used in venture, not just venture, other people use it—'strong opinions, loosely held.' And I try and run through life that way. Like, if you don't have strong opinions, it makes it very hard to act. So you have to be willing to make bets. You have to be willing to commit time. You have to be willing to do things. But you should be continuously worried that the world may change or the mental models may change. And you should be particularly interested in something that's inconsistent with your worldview. Like, if something pops up that doesn't make sense to you or that, 'If this were true, everything I think is not true.'

You should want to, like, either prove that wrong or understand what they know that you don't, and, like, always be thinking that way.

If I find something that's inconsistent with what I've been thinking, I'll roll around in it. I'll send it to other people. Yeah, you want to know the most you can know. That's how I try and think about it.

Yeah. Do you think of yourself as a gambler? Yes.

Tell me about that. Somewhere, like the end of college, we started going to Vegas. And I think I read—I don't know when, when did the book come out about the MIT students that were counting cards? I mean, the whole notion of counting cards was on everyone's mind. And so we were able to do it. We were able to go to Binion's downtown, they're dealing single deck. And we got good enough at it that they're kicking us out. And then the game is, how do you not get kicked out? How do you not get noticed? I think part of it led me to the venture industry just because this idea of being willing to bet on an edge was interesting to me. And so when I got to my first job as an engineer, I joined Prodigy, which was this precursor to even AOL.

And I opened a stock trading account. And I read Peter Lynch's One Up on Wall Street, and I started trading. And I played poker. I would never describe myself as an expert, but I'm comfortable sitting down with pros.

Yeah.

And just sitting down with pros and not losing my ass, I consider a win. Are you playing to win or are you playing to play the game? I literally believe—and essentially someone was telling me earlier today about a group of women that try to encourage other women to play poker just because of the mindset it puts you in—I do believe that there were moments in my venture career where I'm making a decision or I'm in a negotiation and I'm bringing up lessons that I've learned at the table about knowing edge and where you are in position and whether you have the ability to press a bet or not.

Would it be something that you would recommend business people learn? I think you can learn a lot from it.

I don't know if people would be willing to invest enough to get to that place. And who you're playing against matters a ton. Really experienced people hate playing against inexperienced people because you raise and they stay in, and there's usually a cap, so it's harder to learn.

So I think you can learn from it, but I think it involves quite a bit of involvement. Are there any other outside skills, like becoming a gambler, that you wouldn't obviously think, "This is something helpful to learn for business"?

I mean, it's going to sound redundant, but I go back to the salesmanship. You know, Buffett said that he didn't have his degree on the wall, but he had that Dale Carnegie certificate on his wall. And he says that all the time. And, like, I don't think anyone would not benefit from speaking in public, speaking in front of a camera, watching yourself back after you spoke in front of a camera. Like, the skills you'll develop by doing that are going to be really valuable, probably in any field, not just the one I was in.

What are your thoughts on the Thiel Fellowship and higher education in general?

Yeah, let me start with the latter. Look, I think we have a problem with higher education. Like, I think there's a couple of problems. One, because of the way it's evolved—and the healthcare system has this same thing—the price point is going up much faster than GDP or inflation or whatever, and the footprint's not increasing. So more and more kids want to go to college, but the universities with the biggest brands won't increase enrollment. And so that's just going to cause price to go up or people to be disappointed. There are some efforts, you know, at some state schools to, like, triple, quadruple enrollment. I think those should be rewarded, and not enough attention is spent on that. And then this other thing we talked about, like applying to a major when you're 17, that's just crazy.

I don't know how to—it's too specific too soon. I think so, yeah. I don't know how to get out of that. And the path dependency from there—for the next six years and maybe seven until you realize you hate your job—it's just a lot. And so I don't know how to do that. Now, as it relates to the Thiel Fellowship, I do think there is a benefit to having a social playground before you go into the real world. And I had so much fun in college. I just think there were parts of learning the real world, but you still had, I don't know, rubber bumpers on the wall or whatever.

Would you say most of what you learned was not in the class? It's possible.

It's possible. I had some interesting experiences in the basketball program. Yeah, you grew up real fast. But yeah, it's possible. And so as it relates to Thiel, I mean, obviously, he's proven that it can be successful. He's picking the best of the best of the best. But to extrapolate it and say everyone should just go straight into the workforce and no one should go to college, I think that's a bit extreme.

Yeah. It also relates to basketball players going pro out of high school. It's the same argument. I agree.

And there are some that can make that leap. And there are many that the skill development or the coaching that they receive, or not having to go against the best right away, will benefit from the other path. I'd like to maybe end with this thing from Greenlights, the book by Matthew McConaughey, because it relates to this. So he was at the University of Texas. He had told his whole family for a long time, through a number of things, became fascinated with film, and decided he wanted to switch majors, and had an immense amount of anxiety about calling his father. And when he called his father, his father said, 'Well, don't half-ass it.' And he says, of all the reactions I could have had, 'don't half-ass it' were the last words I expected to hear and the best words he could have ever said to me.

And he says it gave him blessing and consent, approval and validation, honor, freedom, responsibility, and rocket fuel, just in that word. Amazing. And so my extremely ambitious expectation for the book is that it could do that for lots and lots of people. I hope so. Give them that permission.

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