世界は思っているよりずっと変えられる——マーク・アンドリーセン

Great men of history didn't sit around doing this stuff at any prior point, right? It's all it's it's it's it's all a new construct. It was it was you know, well, so first Western civilization had to kind of invent the concept of the individual, right? Which was like a new concept, you know, several hundred years ago. And then and then, you know, for a long time it was all right, the individual runs, right? And like that does all these things and builds things and builds empires and builds companies and builds technology and does all these things. And then, you know, kind of this kind of guilt-based whammy, you know, kind of showed up uh from Europe from Europe. A lot of it from Vienna in the 1910s, 1920s. Freud and all all all that that entire movement and and kind of turned all that inward and basically said, okay, now we need to like, you know, basically second-guess in the individual. We need to criticize the individual. The individual needs to self-criticize. Right? The the individual needs needs to feel guilt. Needs needs to look backwards. Needs to, you know, dwell on the past. It never resonated with me. Do you find a lot of the greatest founders that you've spent time with and backed and partnered with or have low introspection? Yeah, generally. Although in fairness, um you know, the the the introspection is probably linked to the the personality trait of neuro neuroticism, right? Um so, you know, a lot of a lot of the best founders are, you know, I think like 0% neuroticism. Like they they just don't get emotionally phased by things that happen, which is a superpower when you're an entrepreneur. But having said that, some of the great entrepreneurs are in fact very neurotic. Like it it it, you know, that's also the case. It it's it's not a, you know, it's it's not it's it's a maybe it's a nice to have to be a little neuroticism, but but not necessary. And so, you know, there are some that kind of get wrapped wrapped around the axle um on kind of personal issues. Um you know, as you know, you know, these days sometimes that then, you know, kind of turns into use of, you know, psychedelics, you know, different kinds and hallucinogenic drugs. And you know, that's like one very interesting kind of trajectory for you know, kind of the culture of the country culture of the world. And you know, we'll we'll see where that goes.

I think that's true. I think that's true. I think it's certainly true for Daniel. He's a, you know, kind of a great case study of that. You know, having said that, I you know, I always kind of wonder is that well, intrinsic versus ex- extrinsic motivations. Impact strikes me a little bit as an extrinsic motivation. You know, it's it's like, yeah, impact, money, fame, you know, and by the way, I think extrinsic motivations are fantastic and I think, you know, they can be very motivating. The people who get kind of get the great rewards for building great things, you know, deserve them, but at least what I found is it's the intrinsic motivations that actually get people up in the morning. Um and and there's where you, you know, you're dangerously close to straying into introspection. But, you know, it's like, okay, like what you know, what what is the thing that causes somebody who's now, you know, extremely materially wealthy, extremely successful, you know, to get up in the morning and continue to, you know, kind of punch away at the world? I think those those tend to be interior. What's that for you? Oh, I mean but that would require introspection. I'll let other people speculate.

the problem with external impact. It's like, okay, it's 4:00 in the morning. You're staring at the ceiling. Like is that enough? Right? Like external impact is stuff that's happening to other people, right? And it's like, all right, what what what is it about you? The the the the story I like to tell myself is that I'm competing with myself, right? The the story I like to tell myself is I'm getting up in the morning cuz I'm trying to become a better version of myself. I'm trying to become, you know, smarter and better informed and, you know, have, you know, reach better conclusions and, you know, be and, you know, be be better at what I do um and continue to expand my skills. But, you know, again, to to to to to actually analyze that properly require a level of therapy that I'm not willing to engage in. Um So, anyway, so yes, the the much more much more comfortable conversation is the, yeah, what what are you trying to do in the world? Which I would love to talk about.

Okay hold on. Henry Ford.

And the founder could just learn how to run things at scale.

Well it is because founders aren't necessarily especially founders on day one are not good at doing this. Like okay so in tech let's talk about tech specifically like in tech the founder tends to have been in a lab you know literally or metaphorically for 20 years before they start their company. Like they've been you know probably working by themselves or in a with a small team. They've been building technology. They haven't been running things like they haven't been you know managing large organizations. They haven't been you know running public companies. And so there there is a missing skill set right? And and and on day one they they don't know how to do that. And so they they do need to be willing to learn how to do that and then they and then by the way they do need to be capable of doing that cuz you know some some of them can and some of them can't. But yeah our so this this maybe is like the core thesis behind our firm which is it's you're much more likely to build something important in the 21st century if you start with a founder and train them on management than you are to start with a manager and try to train them on being a founder on creating new things. And I think that this trend is intensifying and so you're because what's happening is all the old enterprises all the old incumbent institutions of the last 100 years that are run by managers they're all in a state of fundamental collapse. Like they're they're they're all collapsing in like trust and credibility because because they can't adapt. And so this issue is becoming more and more acute which is the system that we thought was necessary and sufficient to actually just like does not work. And if anything good is going to happen it's going to have to be somebody it's going to have to be Henry Ford or Elon Musk type who actually does it. You think it's in a vast majority minority of people agree with you. Look it's becoming more common. I mean when when you get an Elon Musk and a Steve Jobs when you get these kind of archetypal examples of it it's a lot easier to you know to to you know to sell it. You know Mark Mark Zuckerberg we were talking about earlier like he you know he's a great case study of this right? He had you know when Mark started Facebook he's never he'd never had a job before. Okay. Not only had he not managed people he had not worked for anybody. Right? And so like he had he started with zero and his his learning curve which by the way was happened fully in the public eye right? His learning curve was vertical and by the way it's still vertical. Like he spends like an enormous amount of time learning how to become better at running running running these these things at large scale. He's still the founder and he's still the innovator and he's still like a fountain of ideas on what to do. So he so he's he's he's that double you know he's he's like the classic example of a double threat. And then what happens is other founders look at that and they're like oh I could do that. Right? Which is exactly what Steve Jobs said when he saw Nolan Bushnell. Exactly. I can run my company. I can do that. Yeah exactly. And by the way you know it's amazing like how fast this stuff shifted because like you know Steve famously had this you know short period of time where he worked for Hewlett-Packard and I think I don't know if it's true. The legend is that Jobs pitched his manager at Hewlett-Packard.

I would okay that's the next question.

So Bob Noyce was So Bob Noyce was 100% the Steve Jobs of his time. Yeah. Just in a short-sleeve white dress shirt and a skinny black tie. Yeah. But it was it's again, it's it's like the exact same thing and so I I, you know, I I never unfortunately never met Bob Noyce, but I I could easily imagine Bob Noyce and Steve Jobs sitting down and being able to talk for 3 hours and completely understand each other despite the fact that they the look and feel was like completely different.

He thought it was really important and he's like, "I learned from all the guys before me. I need to take them that that knowledge I've built up over multiple decades and push it down the generation." Ooh, I want to go back to starting the firm though. This is interesting. What was occurring in your life either at that time or before that that you had this observation that this had to be done? Oh, so so the you know, we've got all these elaborate theories. The the practical reality of it was Ben Ben, my partner Ben and I had become very active angel investors. Um and and I'd been an angel investor since like the mid-90s um but then Ben and I started doing it kind of as a, you know, as a as a as a as a real thing, putting significant time into it probably starting in, you know, 2003. Well, I I did it kind of throughout the early 2000s, but 2003, 2004. It's hard to remember now, but if you go back to like 2003, 2004, there weren't like thousands of angel investors. There were like eight. It was like a sure, you know, it was like Ron Conway and a, you know, handful of people. And then I and then Ben and I were running around doing it. And this was a very significant in the evolution of the venture capital industry cuz this was the point at which the traditional VCs got intermediated by angels and seed investors who kind of inserted in before the VCs arrived, which was this, you know, fundamental change that that changed the whole industry. But, you know, we we were part of that. Um so but as a consequence, like we were investing in all these new companies, you know, basically at the point of formation, you know, we're basically playing playing amateur early-stage VC. Um and we're getting into it, you know, it's like we're not going on the board like, you know, you're going to raise money from a real venture firm later, they're going to go on your board and whatever and work with you. And what we just found over and over and over and over again was we ended up getting pulled into these companies um either because there were issues that just like the other people that they were, you know, working with or they're, you know, they're either they either hadn't raised venture yet or the the VCs that they'd raised from couldn't couldn't help them with and so we you just got pulled in. And the reason was we we had been running companies at that point for, you know, whatever 20 years. Um and so, you know, we we at least had some idea of what we were doing. And then the other is we kept getting we kept getting brought into new conflict resolution between the founders and the VCs. Yeah, that's right. So that cuz, you know, like it was especially especially cuz again, much more common at that time, especially if the VCs' fundamental point of view is the founder's not going to run the company and we need to like replace you with a professional manager as fast as possible. Like the founders are not necessarily going to like that and they might resist that and by the way, even if they're on board with that idea, they might not like the person who the who the VC wants to bring in. And so we we kept ending up in these kind of basically as arbitrators in this sort of you know, in theory, we were kind of trusted intermediaries cuz we knew the founders, we knew the VCs. And we could kind of help help bridge between that. But literally what happened was after a while, we were like spending like 8 hours a day just just doing this. And and we're like, all right. And and you know, it's it's like weird. It's like you're writing a $100,000 check and you're like spending all this time doing it and and then to basically arbitrate a dispute somebody who wrote a $10 million check. And it's it's just like, all right, we should probably just write the $10 million check. And and that was that was that So it was it was I always think like the best the the founders I always one of my theories of why they're great founders is they they tend to be able to operate at kind of a strategic conceptual level and then the practical level at the same time. And so we So we had a we had a whole theory I could take you through for the evolution of the venture business. Yeah. But but underneath that was just this actual, you know, the the lived experience of what was actually happening on the ground. The the big theory of the firm that we that we had at that time what was linked to this was linked to this idea of founders and the show, but it was also a structural observation of what was happening in in the venture industry, which was Basically what we did was we we sort of in line with your philosophy, we went back and we studied a lot of other businesses that are are have similarities to the venture business. So we studied private equity, venture capital or sorry, private equity, hedge funds, investment banks, law firms, management consulting firms, ad agencies, accounting firms. You know, basically anything where the the product is fundamentally a relationship, you know, a knowledge work, you know, kind kind of relationship as as compared to something that gets that gets manufactured. And what we observed is basically an an an an exact Hollywood talent agencies actually is the one we we probably talked publicly about the most and so that was that was a great case study. He was in this studio a few months ago. And so and and he actually And by the way, he he gave us, you know, we always make a point of crediting like he he gave us a lot a lot of this theory. So a lot of this comes from him, but well, I actually I'll tell it through through through through through his through his his experience. So when he started his agency in was it '80 whatever? No, '75. '75.

Yeah, 100%. Yeah, exactly. Okay. It was a conceptual leap for venture capital at the time, but the exact same thing had happened in private equity. The exact same thing had happened in hedge funds. The exact same thing had happened in investment And you knew that by what? Just reading right? So like investment investment banks are the classic example. So if if you read about the sort of the original investment banks in the US between like 1880 and 1920, they were all like boutique venture capital firms in the 1970s, 1980s in the US. And there was like 20 guys. And these are more like merchant bankers. Yeah. Well, and so the the the the the classic story is that which I love so much. So J JP Morgan one of my kind of favorite historical figures and and and JP JP Morgan was an example of that. The JP Morgan investment bank was like this this basically this It had It was very important, but it was like this tiny little operation. It was a, you know, fit in a single office. It was, you know, probably 20 principals and some office staff or something. It would, you know, it's not it was not large. Um and and actually the the the the hidden secret to to to JP Morgan was he was the son. The the The father was Junius Morgan. Okay. I literally when you were talking, I was like, "Wait, you you you I I was shocking that you would say pick him because I actually found his father more formidable individual than him." He was. So he was. Which I I It's almost always the case with any famous public figure. It's the father is almost always a more interesting story. Which a lot of examples of that. But however, yeah, so Junius Morgan and then and then JP Morgan filled a specific economic role that's gotten lost in history, which is basically Junius Morgan the Junius Morgan Bank was in London the JP Morgan Bank was in New York and and what the Morgan family was doing was they were funneling money from the old slow growth economy of Europe into the new high growth economy economy of the US. But again, it was exactly your point. Like it was this little boutique family operation. The other great thing about that era of history is these these were they were they were all bifurcated by religion. They were the Protestant investment banks and they were the Jewish investment banks and they did not mix. No, not at all.

And so what happened was both JP both JP Morgan and Goldman Sachs started out 100 years ago. They were on the one side of the 100 100 years ago they were actually in the middle. They were they were kind of again this sort of you know, they were boutiques but they were like of their time. They were like you today you call them like mid-market you know, who's sometimes called bulge bracket you know, kind of thing. As opposed to just like a solo operator or something. Actually the way JFK's father got started was he literally hung out a shingle in the 1920s which is Joseph P. Kennedy banker. Yeah. You know, private banker and he like just did deals and he was he was like an angel investor of the time and so and then you had the big commercial banks but the big commercial banks had no interest in issuing loans to these speculative crazy you know, entrepreneurs. And so in that time JP Morgan and Goldman Sachs and Kuhn Loeb and Drexel and all these other kind of mid-market banks Morgan Stanley which became Morgan Stanley were kind of these mid things. Now what's happened you know, sitting here 100 years later those are now the the scale players. The ones who didn't scale are kind of long forgotten. Having said that there's one firm that survives in the old model and that's Allen & Company. And there are other boutique investment banks today but Allen & Company was founded in the 1920s and has you know, has is uniquely the one that survived in the in the original model of boutique and deliberately being a boutique investment bank. And it stayed that way for 100 years. And so one way to think about it is that today that's the barbell in banking which is Allen Company on the one side and then JP Morgan and Goldman Sachs on the other side. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says the single most powerful pattern I have noticed is that successful people find value in unexpected places and they do this by thinking about business from first principles instead of formulas. That is exactly what AppLovin has done with their new advertising platform Axon. Axon is the most powerful advertising platform in a generation. Axon allows you to capture undivided attention. Axon ads are full screen videos that are watched for an average of 35 seconds. Retention that blows other ad platforms out of the water and you can launch in minutes. You set the goal and Axon achieves it. No complex setup, no expertise needed. And Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day and increased their revenue by millions and most advertisers aren't even thinking about this channel yet. Less than 1% of advertisers have access to Axon. So you want to get started quickly and you can do that by going to axon.ai. So are you reading about this while you're founding the firm before you're founding the firm? Like Both Both. Ben and I spent about a year and a half planning the firm and part part of it was he was in we call it industrial servitude. He was working for Hewlett Packard after we sold our company to HP. So he he was a he was running a big part of HP at the time. And so we we couldn't literally start a new full-time thing until he got free of that. So we had a year and a half you know, to kind of to kind of study up and kind of work. And because you had this this period from 2003 or 2002 when you're doing angel investing you know, a lot till you start your company 6 7 years later you're observing all of the weaknesses in the model and that's where you have hey why don't we take the CAA think Ovitz calls it like a phalanx where it's like if you have one agent at CAA you have all of us and they would like roll deep. I think he says in his book like they it was like oh my agent's coming to the premiere. No, it's like 20 agents are coming and I think they would dress like the same kind of suit maker and like they were intentionally trying to to intimidate like their competition. Armani suits Sulka shirts was a shirt maker in in Beverly Hills and so we're you know, all super collars white shirts and then I think he had a bulk purchase deal I think with the local Jaguar dealer and the legend at least has it is that the license plates all said CA1 CA2 CA3. And so like you'd go to a premiere and there would be like 20 Jags lined up. And then 20 guys in identical suits coming out. And yeah, just this is exactly the thing. It's just like you know, that's that's the Hollywood version but like just imagine the psychological impact of that if you're just like an old school agent. This is sort of that you know, Michael's a very dear friend. He you know, he he became very controversial over the years and the reason he became so controversial I think is just cuz he smoked his competition so severely. Like he pounded them so hard. There was no response. You're just a guy you're just a guy working for an old agency and you've got your clients in these 20s … are showing up and like it's just yeah, it's this force. And the clients if you talk to them by the way you know, a lot of his clients were you know, still still active today you know, from from the period if you talk to them it's just like yeah, it's just a no-brainer. It's like do you want to work with the guy or do you want to work with the firm? It's just obvious. He has I don't know if he told you all these stories. Did he tell you about the his morning schedule? I think The like getting on the bike doing the No, no, for the firm for the firm for the firm for the firm. So so So this is again something that's specific to Hollywood but it's it's a great example of it. Okay. So the agency business at at the time he started CAA the agency business is like 90 years old or something right? It like started out doing vaudeville bookings and like music halls and like it it had been around for like decades and so the people involved in it had had decades to think about like the best way to do it and then they had arrived at a set of practices and one of the practices I I think I'm getting this right. One of the practices was at every agency they would have their staff meeting in the morning at 9:00 a.m. And they would basically share you know, whatever information was going to get shared in the agency would get shared at that point. You know, you know, this studio head wants a script to do. He wants to do a crime thriller and here's a script and whatever and then you know, this is like the point where there would be a minimal you know, whatever minimal handoff in system to the other agency and and so this is where everybody would kind of get updated and so the the staff the staff meeting would go from like 9:00 a.m. to 10:00 a.m. And then at 10:00 a.m. they would start calling their clients and they'd be like oh you know, we heard there's a you know, whatever there's going to be a casting call for you know, this great new role for this professional fee or whatever and you should consider doing that. And so of course Michael's like all right, well we'll have our staff meeting at 7:00 a.m. We'll be done at 8:00. Yeah. Between 8:00 and 9:00 we'll call all the clients. By the way, we won't just call our clients. We'll call their clients. Right? And so imagine you're whatever Paul Newman and you've got some agent you've been working with for 20 years and he calls you at your agent calls you at 11:00 and it's like I've got this great role and you say oh the guys at CAA called me about that 3 hours ago. And and your agent's like they don't represent you and Paul's like yeah, isn't it great? Isn't that fantastic? And so you just again you just like you just repeat that a thousand times and it's just it to the client it's just like completely obvious what to do. And and so yeah, so the the the more reason I go through this the the moral of the story is again it's sort of this this idea incumbency you know, incumbency status quo like you you just end up you end up with you end up in any business you just end up with all these embedded assumptions. Generally and then you know, 90 years later right? So the so the founders of the agencies were 90 years ago they weren't involved anymore. So the people who were running competitive agencies were managers not right? Same thing managers not founders. Right? And so the and the thing a manager never does unless they're under duress is is is reconsider fundamental assumptions. Like they hate that. Like they like that's not the whole point of running something big is you don't have to do that. You get to run the big thing at scale. You don't have to like go in and like reinvent it from scratch. Like that sounds like a nightmare. Right? And so but but anyways as a consequence of that you end up with like all these embedded assumptions that are basically just like unspoken nobody's questioning is not happening and if you take the time you can kind of go in and go back you know, first principles you can kind of go in and you can say okay, well how did they arrive at that? What what we found in this industry I mean this is what our founders do every day is just an industry after industry after industry there's all these embedded assumptions that made sense in like 1970 or 1930 or 1880 that just don't make sense anymore. I love that you did that. I always say it's like not what you do it's how you do it. And if the idea that you could take I'm like I'm not running a talent agency but there's so many of these principles that I could apply to venture capital. You and your blog archive which I absolutely love and I told you I've read like multiple times. I did episodes on it. You would give advice to like young people and it's like my advice is like go work in an industry where that's still the founders of that industry are still working. Right. When I read Ovitz's book the way I would summarize his approach because he is in this big stodgy slow moving you know, very bureaucratic organization is like oh mediocrity is always invisible until passion shows up and exposes it. Oh interesting. Yes, right. And that's what he did. Yeah, that's right. He's just like there's so many things you guys could be doing better here. I can't do it in the and I remember correctly he took some of these ideas to his boss.

were you were you and Ben essentially just designing what you wish you had when you were founders? Yeah, that's right. And and again again again that maybe a cheat code but yeah, if if you've been the customer obviously this this all becomes a lot more obvious. I I don't know if you want to answer this question now but Warren Buffett's shareholder letters he has this great line where it's like really important to pick to to play against weak competition. Did you feel that there was going to be like that that point in time in venture capital history that that you were you were going to be playing against weak or weaker competition? I would say not exactly. We didn't view them as weak. We we viewed them as basically we viewed them as running on a status on a status quo set of ideas. And so and to be clear like we we part of why we think about this way we had to raise money from at the time in the time what were probably the two best venture capital firms. So Kleiner Perkins in the 90s and I worked with John Doerr very closely for 5 years and that escaped and then we we I thought we raised money from from Benchmark when they were like king of the hill and Andy Rachleff who was one of the founders of the firm and is a you know, legendary brilliant VC. And so we we had worked with we just had you know, actually in history we had worked with two of the whatever top five or whatever people in the field, you know, for a long time. And and and and they were and are, by the way, um brilliant at running on on the model that that that they that that that existed. John was brilliant at that. Andy was brilliant at that. They're still brilliant today. It was less of a competition of well, these people are soft or these people aren't smart or anything. It was none of that. It was no, they're they're really good at executing against this particular playbook. So, that and by the way, that's why it's okay. Like if we're going to do this, we need to be we need to be playing by by a different playbook. There was no such thing as like scale venture capital. Yeah. It's a top down. Because because the firms all hit this they all hit this limit. They they all fundamentally hit this limit. They all hit this limit where they just could the the the the idea of a of a like partnership of equals or even a even a hierarchical partnership. Like it just it break it just breaks at some point cuz there's just too much internal dissension. It is too hard to coordinate and then and then everybody's fighting for slices of a what was viewed at the time to be a fixed-size pie. Um and so none of the none of the other firms could they they they structurally there was just no way to get to scale. Where else did you take ideas from besides the agent business in Hollywood and like the merchant bank investment banking industry? Well, I mean it was just very obvious that it happened in private equity. Like it it you know, this this was the the this was the time when like it was actually really this was around the time when like KKR and firms like it were hitting their stride with they were actually building like a lot of operational capabilities in house. Um they were actually building their own actually investment banks in house. Um one of the things we've never done, but it's always been on the ideal list is to actually just have an in-house bank. Um and and and KKR had had had actually done that. Just just built a captive bank. Uh and so they you know, they they had done a bunch of things like that. And so we so we saw it happening, which is the mid-tier um private equity firms were collapsing. And you either needed a solo, you know, very light on your feet kind of solo operator on the one side doing small deals or you needed to have a scale platform like KKR. It happened in hedge funds. Um it happened in But I mean it had a long so actually actually the TV show Mad Men. Uh Mad Men tells the structural story of this happening in the advertising field in the '60s and '70s. Um and and I I will ruthlessly spoil Mad Men cuz it's been it's been it's been off the air for like 20 years at this point, but um you know, a big part of the arc of Mad Men is those guys are working at Sterling Sterling Cooper is a classic mid-market ad agency. Um all right. And and then and then it's and then it whatever the third third season they they sell it to McCann, which was the the scaled player at the time. And and they show you all the pros and they clearly talked to people who had been through this cuz they showed you all the pros and cons of working for McCann cuz McCann's this giant machine. And so Don Draper's used to like making all the creative decisions and now he's just in this conference room arguing with people um until he just like gets up and walks out. But then Don Draper and Roger Sterling start their own startup. They start uh Sterling Cooper Draper Price. That's the second one. Which starts out as a as a true startup as a true boutique startup. And then they have this whatever year and a half just just … hell. Like they can't get anywhere. They can't get clients like cuz cuz they're too small. You know, they're they're they're subscale. And so it it kind of and then I think I think in the end I forget it's venture capital, but I think in the end they end up I think they end up selling it. No, no, no, no, no, no, no. Sorry. I got it wrong. They sell the first one to the British ad ad agency um that just like completely destroys it. And then they sell the second one to McCann. So so so they actually show that process happening twice. Um and so that that Again, if you go back to history, that that is what happened to the ad agencies basically between the '40s and the '70s. Like basically television catalyzed that. Like when when television emerged, advertising became a much bigger deal than it had been before and it just it had to be professionalized in a different way. The other thing that happened is of course the external environment changes, right? So So everything we just talked about just has to do with the internal mechanics of how these things run, but but the other thing that happens is the external environment changes, right? And so part of what I think what Michael would say, I think he would agree with this, part of what made MCA possible is at one point basically Hollywood was just movies. And then there was like whatever a low kind of TV division. And and by the '70s and '80s the you know, Hollywood was becoming much bigger than just movies, right? It was movies and TV and advertising and music and sports and you know, you know, politics and culture and like all kinds of things. In fairness to the kind of our competitors, um you know, Silicon Valley between call it 1950 to 2010 was primarily just a tools business, right? Primarily the companies that you know, starting with Hewlett-Packard, the companies that we all backed and built were basically just building tools. You'd build a tool like an operating system or a disk drive or something and you'd sell it to people and they'd figure out what to do with it. Um it was right around the time we started our firm that the valley was going from being primarily tools businesses to actually building um directly competitive companies in incumbent industries. Right? And so Airbnb going directly into the hospitality industry, right? So, alternate universe Airbnb is just boutique booking hotel software. Right? For for any Airbnbs. It's a tiny little boutique business building basically little spreadsheet software. But no, Airbi Brian Chesky decided, brilliantly, um we're just going to like go into the hospitality business and compete with hotels directly. Um Uber and Lyft in the old world were just taxi dispatch software. In the new world they're full transportation providers. Uh Tesla in the old world would have just been software for self-driving cars. Tesla in the new world builds, you know, the entire car. By the way, Facebook same thing. Prior to Facebook, if you built like online ad, you know, software, you were selling it to the media companies. Mark's like, "No, we're just going to be the media company. Like we're we're just going to build the entire thing." And so this was the other thing that happened was, you know, for us was that that was right around the pivot point when the valley's ambitions went from just building tools to going directly into incumbent industries. And and and then this goes back to the scale thing. It's like, "Okay, why do you need to scale a venture firm?" It's cuz the companies need to scale. Right? And and and and then of course AI now makes that crystal clear, right? Cuz right, the winning AI companies are raising, you know, billions, tens of billions, in some cases hundreds of billions of dollars. Right? The old world of $10 million or $30 million or $50 million checks, you know, where where VCs tap out is just not a relevant irrelevant thing anymore. But did you know the scale was changing at the time you founded the firm? We had pretty good idea. So, I'd been on I'd been involved with Facebook, um you know, basically you know, informally since inception and then formally on the board since 2007. And so I I saw the thing hit the knee in the curve. It was just very clear it is to us and it's just like very clear that you know, how big it was going to get. Oh, it it was going to get much much bigger than the internet 1.0 uh companies had gotten. Um and so there was that. What else? It was also around the time Apple was directly entering the cell phone market, which is another great example of this. Um Silicon Valley didn't used to make cell phones. And the reason why cell phones weren't made by Silicon Valley, they were made by these like giant industrial companies like Sony and Nokia and whatever um and Motorola in Illinois or whatever. And then Silicon Valley would make the chips that go into them or the software. And of course Steve was like, "Yeah, we'll screw that. We're just going to make a cell phone, right?" There were these signals that it was happening. And then the other thing was just the the internet itself was maturing, right? Um and so, you know, at that point the consumer internet was 15 years in um and and we had, you know, seen every part of that. And so we you know, we saw I forget what the number was, but that was probably around the time the global internet penetration was like crossing a billion users on its way to 5 billion. Yeah, you have a very interesting lived experience where like you were there at the very beginning of the internet. One thing that um I'm fascinated by and I that is actually was going to be the first question um for you cuz I've never heard you speak about this at least on a podcast, but your partnership and relationship with Jim Clark. You were what, 20 when you met him? How old were you? I was old-fashioned. I actually graduated from college and got my degree. Very Stone Age uh concept these days. Um so that was in 1994. So, I was about 20 22 22. So, there's this great book. I don't really think you like the book by written by Michael Lewis, Silicon Valley story. I've skipped it. I've read it twice just because I don't know if anything's in there is true, but he the the the portrait he paints of this very eccentric character is just wildly entertaining to me. But what's shocking to me is when you talk to young founders, I'm like, "This guy started three I think he was the first person in history just to found three separate billion-dollar technology companies. And almost no one knows who he is. Can you just talk about how you met him? What was like working with him?" I knew exactly who he was. And the reason was because uh his company Silicon Graphics, his first company, they were the company in the valley between like call it 1980 19 call it yeah, '87 to '94 or something. They they were like whatever Google or OpenAI or whatever, you know, copy copy of Like they were like the company. And and by that I mean like they were the company where the smartest people in the industry all wanted to work there. The prod they they built the products that were like the coolest products you could possibly imagine. They had this incredibly young and vibrant and dynamic culture. Um and then they hit this like cultural moment that was just incredible in I think '92, which is yeah, which was the turning point in in the movie business when computer graphics really kicked in. And then the two movies back-to-back were Jurassic Park and Terminator 2. Built on the machines they made.

No Uber. Yeah, for a mile walk at, you know, whatever, 11:00 at night with, you know, six bottles of red wine. And you're what, 22?

Yes. You had worked on the internet a little bit That's a little bit modest. Well, I think a lot of people listening to this will know, but you should probably explain how you were working on the internet. So, at the time it was not So, this is part of the story. At the time it was not that big of a deal. It's not nearly that much of a big of a deal at the time as it is as it's viewed now. So, so the internet I I I've told the story many times, so I won't go into huge detail. But yeah, so we, you know, a group of us at Illinois did this thing called Mosaic, which was the the first, as I said, first widely used web browser. Then the first one with graphics. And Explain what was different about what you made compared to what it existed before. Yeah, so the like previous web browsers were like text-based. So, there was like this nascent concept of the web, but it was like a it was like text-based terminals. And then it didn't have graphics. It wasn't point and click. You know, it didn't it didn't work in the way that you would like this kind of software to work. And by the way, it didn't also have like, no scripting language, no security. You know, none of the actual capabilities that like make make the browser a useful thing. And so, there there was this like nascent idea, but it but it needed to get built into a full thing. And so, we we built the original kind of full full thing full browser at Illinois. And then we also built the first kind of mainstream web server, like the the first web server again that kind of had everything that people needed. You know, this had been a project at at at college. And and then this was a and at the at the time the internet was not viewed as a consumer phenomenon. Wasn't it illegal to commercialize? Steve Case of AOL tells a story that he had to like lobby and get a law changed. That's right. What was Yeah. the details there? So the the internet as we know it today in the 1980s was called the NSFnet. NSF stands for National Science Foundation, which was a branch of the US government that funds research. Um and the National Science Foundation funded funded the internet. The reason I was able to do the work I was able to do at Illinois is cuz the NSF had actually dumped a ton of money into four four universities around the country to build what are called the supercomputer centers. And then those were also the main hubs for the NSFnet. And the function of the NSFnet was fundamentally to connect the supercomputers to all the people who were going to use them. And so it was a it was this government research academic program and it was like very exciting in the technical field, but there was no conception that like ordinary people are ever going to use any of this. Like it was just not not Nobody ever thought that this was a thing that that normies were going to use. Um And and so so NSF it's it's taxpayer funded. So the the government at least is not supposed to be funding businesses directly. Although sometimes they do. Um but um there was there was there was you know formal legal restrictions on on on on on on funding things with with with with commercial applications. And so what what there was is there was something called the AUP, the acceptable use policy. And the acceptable use policy said that that basically the the internet the internet the NSFnet turned internet was for academic and research use and commercial activities were strictly prohibited. Like literally not allowed. And again, it's just like oh as a taxpayer that makes total sense. Like I'm I'm glad my tax money's not going to fund something you know like that. But like as a user you're just like all right, that's nuts. Like that like that's clearly crazy, right? And and and if you if you took the conceptual leap to say to say no, this is going to escape the lab and this is going to be something normal people are going to use. Um then it just became obvious that it would have to have commercial activities. Yeah, and then AOL was one of the early pre-internet online services that wanted to connect to the internet. I think they famously connected to the internet in 1993. Do you know you know about the concept of eternal September? No. Oh, okay. So So There are two internets. There are two internets. There is the internet that existed before 1993 and the internet that existed after 1993. People who were on the internet before 1993 often describe it in utopian terms because it literally was like you take the whatever million smartest people in the world and you put them on a network together with like no commercial activity, no advertising, no nothing. Just the million smartest people in the world and you just like let them talk to each other. And it's just like amazing. It was like amazing. Like there was this the old messaging system was called Usenet and like the discussions on Usenet were just like absolutely spectacular. It's just like this. It was like It was amazing. It was like the most pure clean intellectual like vibrant space since like I don't know Athens in you know in 500 BC. It was just like this amazing phenomenon. And then AOL connected. AOL AOL had I don't know whatever million or two million people at that point. They connected they connected all the AOL users which were just normal people to the internet September 1993. And so so there it became eternal September, which is that's the day the internet changed. And by the way, I'm I'm I'm pro that. I'm glad that happened. But like the the pro and the con of that is that took the internet from this like ivory tower you know kind of thing to this basically mainstream consumer ordinary people thing, which of course is just a fundamentally different thing. It's you know obviously, right? The concept of eternal September literally was it was like when when every new wave of college graduates like graduated and got their first job and then went online. So so September is when September is when the new crop of like internet users showed up for a long time. So so the September effect didn't just happen once. It like happened over and over and over and over and over and over again. And every cycle of internet user would basically be like oh my god, this is great, but like it's all going to get ruined in September. Yeah. Right. And and so the internet that we live in today is is the result of

Just me. Uh well so if you did Mosaic at the time was the browser everybody used. And so if you used Mosaic there was a you know submit a bug report or whatever you have a question submitted here and that went to an email box and that email box was me. And so I became tech support for the internet. For like you know a three years. Um I got all the emails. How many emails were you getting?

Yeah, there this this this is going to happen. And then we actually went to my under bite my old my old um my my old boss right at at NCSA actually had gone to We actually went to Washington in '93 to try to get NSF funding to staff a support desk. So that it wasn't me answering all the answering all the emails. And the National Science Foundation people were very nice and they were like yes, the National Science Foundation is not in the business of funding customer support desk for your for your software. And so I still have a denied NSF grant. would have backed up the whole thing um an academic project. But yeah, so like at that point it was like at least to Jim and me it was just obvious that that was going to be a business. By the way, again very controversial. The original press coverage on Netscape for the first like year was that these people would never make money. Like this is ridiculous. Like everybody knows the internet's free. Like everybody knows that none of this is going to work. So you know even even then

It was a combination of things. So it was it was definitely software licensing. And when we we we did this thing up front the browser was free, but the server software cost money. And then we And then we out of the gate started building all these we called applications server side applications. So we built like the first publishing system. We we built the first like publishing system for like running a newspaper or magazine online. You know, content management system. We built the first e-commerce system for selling you know, this is pre-Amazon. So we built the first e-commerce system for selling things online. Um so so so we we we built a whole lot of that software. And then and then we we owned you know, the the main website that the browser had as its default homepage. And so we built the the original internet advertising business was was basically And so Netscape was the largest internet advertising company until I think '97. That's incredible. I didn't know that. pre-Yahoo cos yeah. Um and so yeah, so we we invented a people at the firm invented at the company invented I I don't think I don't exactly who gets credit, but like the original ad formats you know, were right around that time and a lot of them rolled out on on our site you know, first. And so it was it was literally it was advertising pre-Yahoo. It was it was e-commerce pre-Amazon. Um it was yeah, content pre you know, we literally sold I mean we put the Wall Street Journal online. It was our you know, that was our software that did that. Um and a lot a lot of other newspapers magazines all that all that stuff. And so yeah, it was a lot of that. And then it was the the web operation. And again, it was again it it all looks obvious in retrospect, but like again, it was like okay, when we started this like I don't know if the total number wasn't like So we started the company April '94. There couldn't have been more than two million people total online, right? And and then almost everybody was coming in over dial-up. This is like pre-broadband, right? So everybody's coming in on like 14.4 kilobit modems. And we're like hoping that people are going to upgrade to 56-kilobit modems. Like, you know, that that would be like super helpful. Computers at that time did not come with TCP/IP installed. Um so, to get your PC actually on the internet, you needed to you needed to buy a TCP/IP stack. Try explaining to a normal human being what a TCP/IP stack is. Like, it makes no sense at all. Uh so, that

going to say, if you read any books around this time, they're like, "There's no way in hell anybody's ever going to put their credit card on the internet." But By the way, the other thing you would never ever ever ever do is put your real name online. Because it would be immediate identity theft. Your life would be ruined. So, you would never ever do that. Um By the way, the other thing was right in the beginning, you had all the panic around, you know, kids, you know, this is going to destroy children, you know, this is a huge risk to children. So, you had all that panic. Um And then, there was immediate, you know, there was the beginning of the calls for censorship, you know, there's clearly all this stuff that you have to take down. You had a bunch of running stories talking about how the whole thing was fake anyway. They kept saying that like all the numbers were made up and like there actually wasn't anybody online. It was like a tiny little user base and we were all like inflating the numbers and committing fraud. And so, it was just this It was just this In retrospect, it's all like quaint and cute and sweet, but it was like the It was the precursor It was all all the all the all the moral panics around technology. Okay, but But you you you could see nascent versions of it back then. You pick up on something that cuz me and you have read a bunch of the same books where it's like humans' reaction to something new is just consistent throughout history. And so, I heard a podcast with you. I thought I was the only one that would tell the story in private about bicycle face. Bicycle face? Do you want to say what bicycle face is? Bicycle face. Bicycle face. Bicycle face. Yes. So, it basically turns out every new technology is greeted with a what they call a moral panic, right? So, in a moral panic basically is whatever this new technology is or this new form of media is, it's going to ruin everything. But it's going to ruin everything. It's going to ruin It's going to ruin society. It's going to ruin morality. And then, especially, it's going to ruin the children. Um And And And then And then back This is Bicycle is pre-feminism, so it also was It's also going to ruin the women. Very specifically, it's going to ruin the women. Which clearly cannot be cuz women clearly in 1880, you know, cannot be trusted to use a bicycle without getting into real trouble. I'll explain. I'll ex- I'll explain why. So, this is this persistent theme. And And basically, you you go all the way back and this is like, you know, this is like this famous thing where Plato uh and Socrates thought that like the pre- you know, basically, they they thought that written language was a big mistake. That all information transmission should be oral and they have this, you know, whole thing back in 500 BC. And then, it was just like every You just You You just have to like imagine. It's I I Everyone's like to hypothesize like, you know, the first guy who brought fire, you know, it's like down from the mountain.

it. To do Well, to do it. Yes. To do everything. To do whatever it is that young people do. They're going to hit They're going to hit head to the Yeah. Cuz like Look, look, it's just the nature You have If you've known the same group of people since you were two, like you you're you're going to want Yeah.

over that hill. Yes, exactly. Right. Um I grew up in a small town. I I can identify with that. Um And so, um So So, and then specifically at that point, you know, young men obviously, but specifically young women started to do the bicycle. And so, And this is a big threat. And so, like if you're like a guy in a town and like all the, you know, attractive young women are like heading over the hill to the next town on this bicycle thing, like that's a big problem. Um And so, the press at the time created this thing called bicycle face. Uh And the idea of bicycle face was it was a It was a It was part of the moral lecture that was given to young women in the press at the time, uh which is basically young women should not use bicycles cuz if you go on a bicycle, you have to exert yourself. And if you exert yourself on the bicycle, you're going to end up making like a, you know, an an exertion, you know, exertion face. Um but the thing was if you did that too much, your face would freeze into bicycle face. They literally thought it would stay that way forever.

Yeah. And he had to deal with They called him a uh Yes. like a um chemical gas or mustard gas. Like they they compared him to literally like what he's doing is the same as genocide. Yes, that's Cuz he's funding hip hop music and white kids are starting to listen to hip hop music.

Remember Elvis Presley? They would They wouldn't shoot him. They Cuz he would shake his hips. So, they're like, "No, no. He can't It's waist up on TV from now on."

Yes, about that, probably. So, like is there anything that you learned working What a … education you had to be able to work with that guy when you were early 20s? Yep, that's right. So, is there anything that you learned by working with him back then that you still use today? I mean, yeah, a lot. You know, as he said, it was very formative for me. So, so a lot of it. But yeah, I mean, you mentioned that the the sort of quote earlier about the world is a malleable place. Like Jim was like the ultra version of that. Um and so, yeah, he would just like Yeah, when he had an idea and he was right. Like his ideas were correct almost all the time. And he he would just like pound the world into adopt into into believing them. Like you should, you know, the idea of being like a complete force of nature. One thing that was malleable was himself. He has this great quote in that book where he calls himself a self-described loser at 38 years old. I mean, the guy had like two PhDs. He was a professor. But he just like I think he'd been in his second or third divorce and he just snapped one day and he's just like, "I had I woke up one day with the undeniable urge to achieve something." And that's when he goes from academic to founder. And just rips off company after company for like a few decades. I was like, "Oh, he's He realized that he is malleable, too. He just reinvented himself over and over and over again. And of course he does that not just by like starting a company, but like inventing interactive computer graphics. Or like completely changing the field.

No, so let my two mentors at that time actually they were they were in some ways polar opposite they always got along with they're kind of polar opposites. They were both Jims. So Jim Clark and Jim Barksdale. So the Jim Clark side of my personality is like the like will to power like I'm just going to bludgeon the world into doing what I want. Um you know, and then just and then the idea of just like you know, try to be a fountain of creativity like just like there are many there are many new ideas out there and like you you just you need to you need to go find them. Um uh and then you know, I would say also I got to put this like a sense of professional dissatisfaction. Like okay, like what whatever it look it is the other part of the story like a lot of founders would have had a success like selling selling graphics and that would have been it and they would have spent the next whatever. Whether they were totally happy with how it turned out or not like they would have spent 30 years just coasting on that, right? And having a great time and taking credit for it and the whole thing. Um but Jim you know, was always uh you know, at least in in that part of his life, you know, dissatisfied in the productive positive sense of like okay, no there's something better there's something bigger. Um you know, there's something new that we should do. So you know, there's that side of it and then Jim Barksdale was the other um uh was the other who I just literally was with yesterday uh in in uh in in Jackson, Mississippi. Um uh Jim Barksdale is the other side which was Jim Barksdale is like the the manager of managers. So Clark is like the ultimate example of that bourgeois capitalist thing I mentioned. So the the Henry Ford Elon Musk type and then Jim Barksdale is like the ultimate example of like the super the super manager. And Jim had run you know, big parts of IBM and AT&T and Federal Express um and you know, came came in to run you know, came in to run Netscape and what was interesting was like that that's kind of where I got a lot of this from and a lot of my skills from is I I got trained by both of those guys and then kind of both of those guys at the same time and and then was able to like very clearly observe what is just the difference between those mentalities but then the other is of course how how those concepts converge. Right? Because because just the fountain of creativity it it it you you can't you can't build you can't build anything big just with that. Um just the management you don't you you don't do you do it in your thing.

say Tesla versus Edison. Uh yeah, so Tesla versus Edison. Tesla versus Edison. So I'm an Edison I'm an Edison guy. But then this is the thing. So Elon was a Tesla guy uh is a Tesla guy obviously. But but Elon of course himself has now become like a the really outstanding I mean obviously become an outstanding manager like in his own you know, in his own way. In fact to the point where I think he's actually inventing an entirely new school of management. Which we could talk about. But like Let's go there next. Yeah, he's maybe the greatest manager of our era despite the fact that nobody thinks of him that way. But um but yeah so I actually think Elon is more like Edison than he is like Tesla. Um and then there was a big war and it was kind of this thing cuz it's it's every everything kind of turns into these little morality morality plays. And so kind of the this the the basic story of Tesla and Edison was Tesla had all these ideas but couldn't couldn't couldn't commercialize them. Couldn't turn them into companies ultimately you know, couldn't couldn't figure out how to make money on them. Couldn't build like big big big companies uh you know, kind of based on them. And then Edison you know, it basically at least the way the legend goes is he was more of this grinder. He was less incandescently brilliant and he was more of a grinder. He's just like we're going to just going to try a thousand things. He was like when they invented the filament for the light bulb they just tried like a thousand different combinations of things to get to the filament to you know, sort of this brute force approach. But then he built General Electric. Like he built the like national electric grid. You know, he built these giant companies. Um and then he you know, he funded by funded funded by funded by JP Morgan.

you tell a story and I knew because I read the book, too. Yeah. We should tell people what he thought the phonograph was going to be used for. So this this is a a bit of a digression but it gets the personality stuff. So one of the things that people look for is it's like oh, what are the consequences of a new technology going to be? Oh, let's go ask the people who invent them because obviously they know. And so this is what happens when like these when the AI guys get you know, AI uh the pioneers of AI get interviewed in the press. It's like oh, tell us the future of AI. And it's like you get the like the I'll pick on Geoffrey Hinton who's like an actual self-declared socialist. Like he's an actual so like he's an actual capital S socialist and people ask him what's the future of AI. And of course he says it's going to be rapid unemployment and we need to give you UBI to everybody. It's like what a coincidence the answer from the socialist is communism. Like like what an amazing coincidence. But people think cuz he's one of the inventors of AI that he must be the guy who knows. And so the story I always tell is the Edison story. Thomas Edison was like a he was like a very proper WASP. He was like a WASP you know, a WASPy you know, personality type of that era. Extremely proper gentleman always like impeccably dressed very you know, kind of very ethical uh you know, upstanding you know, kind of citizen of of that time. Um and um and very religious very religiously devout. And so for him it's just obvious that the application of the record player was that everybody would buy a record player and everybody would buy a cat a library of discs that would be the great sermons religious sermons of all the great preachers of the time. And then you get home at night after a long day of work and you turn on the record player and you would listen to a sermon you know, with your with your with your wife and kids you know, gathered around you. And of course the record player drops and immediately of course like it's just it's music. It's just like obviously music. And it's like ragtime and you swam in his jazz and and you know, Edison is just like completely horrified. He didn't know that if you put the phonograph in the window and you play good music then you have all these girls on bicycles coming over there. With bicycle fists. Exactly. Exactly. And so this is what I was telling this is always my thing. It's like if Edison didn't know what the phonograph was going to be used for the idea that you know, I don't know whatever Joe Joe AI entrepreneur is going to be able to forecast the economic implica no. No. Like that's not going to happen. And in fact the people who invent the technology are often like the least qualified people to understand the long-term implications because they're just they're too they're too buried in the specifics of the here and now. And then and then and then all these other questions you know, these are all big cultural social economic questions. You know, and by the way I don't know if there's anybody that can predict big cultural or economic and social trends but it's it's certainly not somebody who's been in the lab for 20 years including myself. So how this started you think you greatly benefited from the two Jims essentially like being polar opposites.

But also working very closely together. Do they get along? I don't know if I've told this story publicly. So I should tell the story. So um They got along great became very good friends. They but they both did great and they're both you know, very responsible for certainly everything that I that I've done. But you know, it's it's a it's an it's different disciplines different world views. You know, there's so there's an oil and a water kind of aspect to that and so so you know, Clark ran Clark ran the company for the first like nine months which at the time felt like you know, just like internet time it felt like much longer but it was it was like this highly compressed nine month period. And and you know, and then it was like we were like doing it we were all these new things we were doing all these new things. Like the the company was just doing like a a hundred new things. It was amazing. But like we were nothing was being systematized, right? It was not it was not going to by default it was not going to turn into like a a large a large company without the management component. And so Barksdale comes in and he basically is like well, the this inventiveness is great but we need to like actually start to have systems and like schedules and processes and and actually like run this thing run this thing like a business. And and and you know, as founders do Clark you know, he originally you know, found that a little bit frustrating cuz it's like you know, whatever is the latest idea is not the thing that we're just going to turn the entire company you know, to you know, to pursue. And this is when Clark was still coming to Jim's Barksdale staff meetings. And so Clark got up got up got got um uh uh he had a negative reaction to Barksdale saying no, we're not going to do this new thing. We're going to we're going to keep doing the thing that's already working. You know, it's one of those moments and Barksdale is like you know, can I talk to you outside? And so you know, they went out back and and um and uh I heard the story from both of them later and you know, Clark is like you know, look this is the whole reason we're here is cuz we do these new things. Um you know, if we don't do these new things we're going to destroy the company. And and Barksdale looks right at him and says, Jim I hear you. This is as serious as dick cancer. What? It was in the deep Mississippi drawl, right? And Clark stares him right in the face and Barksdale laughing. And and they got along great ever since. Like like like they just love they they loved each other ever since. Barksdale basically saying look we we can't we we we we're not going to make these decisions in a state of kind of superheated passion. Like we're not going to do that. We need to have the full version of this conversation but we're we're going to have it in kind of this this this longer and and maybe more dispassionate way. Uh but it was to it was to puncture the stress of the moment. And so that that I I will say I have used that one a few times. Yes. But I could see Clark And Clark thought it was hysterical. Like nobody had ever talked to him that way before. So But I could see Clark like oh no, here we go. This is a replay of what happened at Silicon Graphics. Oh.

Yeah. Although we we do mix it up a little bit more um because he does have he does have his own edge um but um yeah, there there is something in that. Yeah. So like for example like our friend he runs the firm um and then I yeah, I will I tend to come up with new I you know, he comes up with lots of new ideas but I do tend to come up with new ideas. And then we we do we do have this kind of discussion you know, frequently. So if I was to follow you around without you knowing with a camera, what would your day look like then? Are you just like a fountain of ideas or you're like this uncontrolled energy like a Jim Clark back in the day?

Well, unedited is really fun. Um unedited is very enjoyable. Um it it it it is very disruptive. Um and so yeah, it has to be yeah, it has to be calibrated.

Something like that. It's one of I'm not sure if it's that one but it's one of those. I think it might be that one. Yeah. And he actually went back and this is like you know, this is like we're talking about like 1940s, 1950s, 1960s. And he went back and he got them at that time they they had a they had a secretary transcribing in real time all of the executive staff meetings every every Monday morning. And he went back and he actually got the archives of the transcripts of the executive staff meetings and it's just literally Thomas Watson just like cursing everybody out and just like just like a complete tyrannical psychopath just like screaming at people. And it's all it's all in the records. And so it's like you know, it's how much of this stuff ever changes, you know, it's like you know, whatever I don't know, whatever Elon gets accused of or whatever Steve Jobs is like oh no, that guy was Yeah. whatever it is, it's a pale version of what that guy was doing. Um But anyway, point being is like IBM. So by the time I got involved in IBM it was like 60 years later, you know, yeah, 60 50 years later after that. And so they were kind of peaking in their power. But what happened was I I remember this cuz I was there in China when I was trying to figure out whether I should I should work should work there after college and they had a their internet was a mainframe mainframe app and you one of the functions was a it was a was was the org chart and I got I calculated there were 12 layers of management between me and the CEO. Which meant the following. It meant it meant that my bosses bosses bosses bosses boss had a boss boss boss before it got to the CEO. And then really what happened, the story of the thing, really what happened was and I saw that. I saw this happen. I saw this happen up close. What I saw this happen was each layer of management was lying to the one above it, right? Cuz each layer wants to wants to look good and wants to you know, whatever, put a little spin on the ball. And like if if one layer lies to the next layer above it, it's you know, maybe that's that's okay. But when that happens two or three times, the lies compound. If that happens six times, the lies really compound. If that happens 12 times, the CEO has no idea what's happening. Like absolutely no clue what's going on in the company. Which was the state of play that that IBM had. They actually had a term it was actually a term they had a whole vocabulary. I mean this company was like a nation state at the time. Um And you could like live your whole life like in Austin, Texas and never meet anybody who didn't work for IBM. Like it was just like this this incredibly this incredible thing. They had this concept called the big gray cloud and it was literally the cloud of men in gray business suits who followed the CEO around and prevented him from ever talking to anybody who was ever actually doing the work. And so when he would come to visit it was like a state visit. It was like a visit from the king and it was like the the king and the and the traveling court. Yeah. And so they it was completely impervious to what they get information through. And so but I I tell that story cuz that's the polar opposite of the Elon approach, right? So so so and by the way, being a CEO of IBM in 1989 was a great way to live, right? Cuz it's just like wow, everybody's bringing me good news all the time. Like Like I wake up in the morning and like everything is great. And I'm famous and I am like rich and I am successful and like I've got a chauffeur and I've got a jet and I've got these 80 guys in gray suits who are like taking care of everything for me and I don't have to ever talk to engineers and like this is great. You know, until you know, it's like the turkey on Thanksgiving, you know, until things change and there's a problem and then you have no idea what to do about it. Which which is what happened to them. The Elon approach is the polar opposite of that. And the polar opposite of the approach is literally like I'm only going to talk to engineers. Right? And so when there is an issue, I am going to go straight to the source of truth and the source of truth is the engineer who actually knows what's going on. And so what he literally I've seen him do this. What he literally does is he he goes to whatever the when when there's an issue in his companies, he goes to whatever is the engineer who's working on that problem and he sits down with the engineer and they solve that problem. And like and I can just tell you like the number of CEOs in tech even the great ones who do that, like I mean almost nobody ever does that. Why does nobody ever do that? Well, first of all, it's just like a giant pain in the ass because like your life consists of like having actually solve all these problems. Like the whole point of being like big and powerful and successful is you you pay people to do that and now you're doing it. And you're in there at like 2:00 in the morning doing it, This sucks, right? And so like most people won't do it. Um and then the other is you have to means the CEO of the company has to have the skill set to be able to do that. So the CEO has to not just be a great CEO, they also have to be like a great technical technologist. Not just that they have memories of having been a programmer or a clock binder or whatever or chip designer or they can actually sit down with the chip designer right on Thursday night at 2:00 a.m. in Austin and they can actually figure out like what's wrong with the chip. And you know, Elon has that ability and he's like encyclopedic on like every area of technology and is is able to go hands-on with rocket designers and AI designers and everything in between. And almost no CEO has that. And so but that's literally what he does. And then and then the way that he thinks the way that he thinks about it, I think is basically, you know, he runs whatever six six companies or something. It's like basically at any given week in any given week, he thinks about everything as a production basic production line, you know, production process. It's like he's actually like an old school industrialist. So everything's like a production process. And and then any given week there's In any production process there's always a bottleneck. So there's always there's always the thing that is slowing down the process the most. And and that's always one thing. So what he does for each of his companies is he identifies what he he charts he literally maps out the production process and he literally has these like monitors where he like has the whole thing laid out. Um and then he he basically says okay, this is the issue that's holding up production this week and then he goes and works and And the thing that he goes to work with the engineer on is he goes to fix that bottleneck. And he does it every week for every company, right? And so think about what that This is why Tesla is smoking the is is is like has been so much dramatically outperforming the rest of the auto industry, is because Tesla he's he's fixing the critical production bottleneck at Tesla 52 times a year. Himself. Yeah. I can tell you what the CEO of the legacy auto makers are doing. Like they're not doing that. That is not what's happening, right? And so and in contrast like a normal company it might take 6 months to solve these problems. And he wants like fixing it like right now, tomorrow. Like let's go fix it right now. Um and so he just like runs this he runs this loop over and over again. Um he he's just he's absolutely indefatigable. Um I offered he famously for a while he had sold all of his houses um and he was literally couch surfing. Um you know, he was one of the most successful people on the planet.

Okay. Um including people you know work work for him and you know probably probably some some of the leaders of the companies are involved in different ways. Um but um it it literally is the thing I noticed it's literally a rotating cap it's it's the point engineer on each of the important things coming in and presenting for 5 minutes. And and then the question is like how's if it's going great that's great. If it's not going what's the problem? And then how does that problem rank? Right. It is is that the is that the production bottleneck? Um and if it is the production bottleneck then that's the thing that he then fixes. And then that's when he's there from whatever 8:00 till 2:00 a.m. working with that engineer to fix that problem. You know, one way to think about this is the the the velocity like in military affairs it's called maneuver warfare, right? So it's just that that that the the speed at which he operates is just the the cycle time is just so much faster than anybody running in a in a traditional method. It's just it's hard to even compare the difference. It's like 4 hours versus 6 months. Like it's it's just this incredible gap. And then and then the other part of it is so somebody I know once worked worked worked for SpaceX and and and they asked what it was like and he said it's it's like being dropped into a into a zone of shocking uh competence. Um like like everybody is like ultra competent. And the reason everybody's ultra competent is because number one if if they're not Elon sniffs it out and fires them. But he knows cuz he's he's talking to the people actually doing the work. So he and he you know at this point in his you know having done this for whatever 25 years he he he can he can sniff this out pretty quickly now. And then the other is the best engineers in the world want to work for him cuz he's he's the one CEO like this who's able to work with them as a peer on whatever the technology is. And as an engineer you're just like this is this like what would be better as an engineer than being able to design a rocket engine with Elon Musk as your engineering partner? Right? And so he just has this like incredible positive selection where like the smartest people in the world want to work for him and then anybody who can't cut it gets fired. The world sees this as like raw aggression, but it's beyond that, right? It's a very systematic way of optimizing these companies to be able to take on these like profound challenges and then being able to actually solve all the problems and do these things and at a speed that is just like completely unmatched. The challenge of all of this is like okay, that all works great if you've got Elon. Right? And so so one of my con one of my concepts is um I I think we need a metric um uh for um founders in Silicon Valley called the milli Elon. Right? And so are you how many milli Elons are you, right? Are you 10 milli Elons? That would be great. Are you 100 milli Elons? You know, that's 10% of an Elon. Well, that'd be fantastic. You know, you know, 500 milli Elons like I'm going to give you all the money. Right? Most people are like one milli Elon or 0.1 milli Elon. The question that falls out of this, which is the question that you know bedevils us, is like okay, like how you know, you can't can't clone him. You can't bottle the essence. So what out of that can be transplanted to like normal human beings? And how much of it is predictable or knowable when he's much younger? Because like the the famous example of this in um is Michael Moritz passing. Made all his money in PayPal with Elon. Obviously there was contention there he got kicked out and everything else. But then Elon pitched him Tesla and he passed cuz he's like there's no way that you're ever going to surpass Toyota. And then Moritz to his credit was just like I drastically underestimated the guy's determination and pain tolerance I think is the term he used.

That's right. And the previous real attempt to start a car company in the US before Tesla in the in the preceding decades was Tucker or something. Tucker Automotive.

Yes. Did you ever read Eric Berger's book Liftoff?

Yep. And just stops.

Yep. And it's just nothing good in the book. It's just reading one failure after another after another and one catastrophe after another after another. It's a great read.

Good. Awesome. Fantastic. Thank you. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.