Keith Rabois’s Most Contrarian Takes on Start-Ups - YouTube

https://www.youtube.com/watch?v=fA00lIUES9A

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(00:00) you've had five bosses in your career is that right Peter tail Reid Hoffman knocks love chin Jack Dorsey arguably the node my job is not to let the person I report to make a mistake whatever I have to do the mistake by the leader is in terms of catastrophic certainly has asymmetric outside so I always play myself when the decision the outcome isn't what I wanted it's not Peter's fault or it's not Reed's fault or it's not Max's fault it's mine because I didn't persuade them correctly and so I

(00:27) think taking that with me allows you to pair very well with Visionary ambitious Founders I think the most important step early in my career was to implement their ambition and their Vision I didn't have an alternative ambition and vision it was like make them Successful by using the skills traits characteristics levers I knew how to deploy foreign thanks for doing this pleasure to be back and I'm going to do stuff different than what you normally I feel like in listening to some of your other uh podcasts you get a lot of like uh

(00:59) politics questions these days like wokism and all that I'm not going to go down that rabbit hole too much what I want to know is so you created a bunch of different interesting concise thoughtful Frameworks I went back and listened to your YC which everyone should listen to how not really 18 2013. three of them that sort of stood out to me ammunitions and barrels uh two by two Matrix of delegating versus consequences uh and then growth rate of an employee versus growth regular business I thought those were you've been in the CEO seat

(01:28) now at open store for how long two years have you changed any of those or any other Frameworks uh that you've had in the past as you've been back in the operating system not yet history Frameworks were designed to answer like three very common problems very common questions I received from followers so I'm adding type count why are things not accelerating why is our product velocity slow a gallon shot first framework second framework how do I know the way to make a decision when he delegate it costs a question from a CEO to a board

(01:56) member to advisor Mentor conciliary third question around how do you know when to replace someone how do you upgrade so when you know what upgrade when you hire a certainly personally promote so basically try to address all the three common questions I get from Congress and years so I don't really have a third or four the fourth question I don't know what the current fourth question is by the way I get a common question I try to find something I can write as a Baseline and then use that with CEO so they can do a lot of

(02:25) pre-digesting versus custom advice every single time yeah Italian also did a really uh concise post on his blog about a bunch of things related to this updated with Graphics I would recommend everyone go look lessons from Keith I think it's version three yeah did you uh have there been any new if you haven't altered any of those any new or different things that you've sort of found in stepping back in and after what eight years not like yeah like almost 10 um it's a little bit like I feel like

(02:54) Michael Jordan release um so yeah your muscles at your feet definitely being eventually develop a lot of bad habits you may get you may learn some new things but you also sacrifice a lot of insights a lot of memories um a lot of skills and it's taken about a year or two for those muscles to be develop uh I for example I buried myself for a quarter and the first year best case I got to be positive order usually there's both of that and myself creating lost Q4 made USB plus q1 this year definitely a minus and maybe this

(03:33) quarter will finally get an A but that's a decade of atrophy what was like riding a white piece sort of stepped right back into it and what what sort of required redeveloping those muscles the easiest answer retainer hiring assessing people closing candidates future essentially doing that as a decent shirts very similar you're a sexy English prayers you're helping them assess executive candidates like I interview a lot 10 15 of my time calendar is interviewing candidates for portfolio companies providing feedback to the founder

(03:59) sometimes helping clothes so that skill really has actually been many noon maybe even a crib the Performance Management of getting people to do things at a faster Tempo increasing the quality working together even though they have different views that those kind of skills really become um difficult when you take your sort of foot off the gas the temple say the temple saying that pace create a problem solving it took me the first year to recreate that ability at the end of last year or I've been pretty good I had to

(04:31) create a problem solving but that that also the Venture capitalists might use that skill once in a while but really leading by example sapra is completely gone like the adventure you're not leaving my example you're not outworking any founder you're probably under working every founder secondly you don't have a lot of change senior later reading by example so there's just a lot of differences I'm actually watching some of the best Scholars has reminded me more than absolutely uh it's probably

(04:58) the best way to rebuild these skills of watching the best one percent of founders of different traits and trying to imagine putting myself back in there she's rather than trying to recreate myself you know not what I was in my Prime yeah that's interesting yeah do you have the other like uh operating things that I've heard you talk about I sort of want to go through some of these points to get you to elaborate on them what a one one of which is you hate okrs I do hate okrs the biggest reason this

(05:23) is a loss and there are one or two views that changed since 2013. one is about outputs versus inputs I used to be more on this side of measuring outputs than high output management by Andy Grove if you watch otherwise I'm not sure it's mostly focused on outputs I've shifted to mostly valuing inputs in in looking at the outputs as a byproduct um that's in a 10-year Journey do you think Venture I mean because in our job in a lot of ways it's hard to actually really impact the outputs once you

(05:51) decide on the inputs do you think Venture sort of drove it didn't drive that it may have reinforced it subtly and subconsciously the biggest Drive was um a square was more input than output driven secondary the uh presentation I watched by Jeff Bezos where he was explicit on all these dimensions of why you need to drive by inputs why you need to gauge people why input is not outputs and it really locked in my brain that he was basically right so I had to recreate All My Views and then try to harmonize my 13 years of running stuff with basis

(06:22) views and a little bit of square and a little bit of extra and so what was bezos's point or what's the reason why inputs should be your focus more than that the biggest reason is that you want people to create fundamental breakthroughs value creation and startups is is the goal and that's usually a proverbial tax breaker if you ask people to drive their room Outlet through your cares they only give you and sign up for things that they know how to do breakthroughs by definition when you start you don't know the answer

(06:51) and so your best people if they think they're being measured by outputs will never raise their hand and say I'm going to take on this heroic initiative where I don't know the answer from how much time it's going to take I don't have live sites as a solution but that's how you create iconic companies is by the best people not the worst people signing up and say I'm going to solve this problem whatever it takes so that was the most insightful comment because it resonated with me instantly this is why

(07:15) we use this at PayPal Here on a different way of framing this at PayPal he had a focus point where everybody was deciding one thing and one thing only and he wouldn't talk to you about anything else you're working on his way of communicating the inputs and the Breakthrough important was I'm only going to allow you to look at One Challenge and don't talk to me to solve that challenge she would bang your head against the wall for days weeks months sometimes longer until you solve that problem so even if you use who cares

(07:44) again you're all puts at the end you measure the success of the initiative you weren't allowed to get distracted and you didn't have a choice for what you raise your hands for because Peter would basically assigned you what he thought the most important problems in the company were so it kind of worked through different mentality so it's really combining a little bit of Peter's Focus Theory with bezos's Theory and then the Venture of world where you have to drive away puts you don't have a

(08:06) choice on the goals point and the focus did did you all push back on like only one thing within a company or every every single executive pushed back theater mostly speeder was hypocritical because he of course did more than one thing yes no we all try to push back and you know it didn't work as Peter wants to make a decision it's very difficult to press this reset button if Rob probably been successful at it three times for 30 years um so we all adopted it and then actually over time I developed a theory

(08:37) of why I believe it's actually a superior way to drive a company which is this wasn't part of his logic when I ran it by him two years later and he kind of agreed so everybody has this uh kind of list they use we wake up the more you write out a list of things to do and there's a psychological satisfaction of Crossing things off so you usually put the list in order of importance but then you cross things off into the least important problems company building about is about solving the most important problems and so you want to

(09:04) take away the other things out of that list so you don't have the psychological satisfaction of solving the other challenges and could only solve the a well problem and that's all you do and once in a while someone comes through derives the solution to that a little problem and then your company is going to work I call it the for me I've internalized that as the kanban board problem which is on a kanban board each item shows up the same size but not each one is proportional in their impact at all and so it feels equally satisfying

(09:35) pressing the check box but it doesn't mean that that's equally impactful to the actual so I'll give you another way of making decisions that Reid Hoffman taught me in 2002 and three that I think most people totally misunderstand including many people close to me where I spent years trying to communicate this so while some people make decisions by creating lists pros and cons to read convince me uh in 2002 that that's a horrible way to make decisions because when you make a list you're assigning

(10:00) implicitly equivalent weight teacher the factors so I never make a pros and cons list of any decision and I hate when people do that and yeah of course welcome to different methodology but it's equal waiting artificial people waiting at these typical and common techniques lead to very mediocre results it's interesting one of the things um I heard you say I think it was in the YC talk was actually the quality of office space and food can be a a good thing to just get out of the way and focus on like the quality that you want

(10:31) it to be why do you think that's the case well I think basically you're creating a cult there's another heroism but basically any good startup is a cult and occult has unique ways of doing things versus the external World unique belief structures this is like what do we believe that nobody else believes a secret and some zero log vocabulary and to reinforce that you want people to enjoy and choose at the margin to spend time in the office so by making the office better by making the manifestations reflect the cold so

(11:00) you're a design driven company and I swear you want everything every detail in the office to be perfect if you want reflective behavior for example say a niche accomplished you might want you know parks and like you know Landscaping out the windows because there's actually research that that Fosters creativity so depending on what you want in one different layout if you want collaboration then you want an open Office you want concentrated work because like what you need to do the water is concentrated study you don't

(11:26) want them alcohol so this is all very top down like what kind of the company are trying to build why and it makes the physical plant reinforce those behaviors to traits and the food side of it isn't that uh you you believe in all the perks associated with an office but it can be distracting if you don't have what people want I think there's two days one um really good Engineers really good designers or world class is what they do they're certainly got these and you want people who are athletes to consume the

(11:54) best possible nutritional content because it leads to deep performance so by improving the quality of food you get better performance secondarily there's distraction just psychology like what do I mean today where should I go to eat where should we meet that causes destruction from Shipping stuff you want the velocity of shipping is the most important thing like you're an investor around the most impressive thing about ramp is the velocity of product the product velocity is a function of people not getting distracted by artificial

(12:21) things by simplifying decisions that people don't spend time going to get established people don't spend time hearing how much older on door cash but you're providing them food that they can consume quickly easily and health in a healthy nutrition way you're maximizing your performance and after stage and compounds how would you internalize that stuff for open source how is your office laid out where are some of these things well we're actually moving finally about a week to our ideal office one large

(12:48) open floor plan all together all functions um it's it's taken a while to get the right off you know building and doesn't always work at the same velocity and speed of a startup but we're finally going to be in the proper office so super excited I think it's going to reinforce a lot of behaviors but we've always been moderately cautious within the choices we work in person we don't allow them we will work I don't know the law of assuming into meetings than I attend so there's a lot of reinforcement

(13:18) learning on you know why do we have certain behaviors I don't want people to type a laptop and sit on my meeting because I don't want to focus concentrating debating not like typing uh even a subtle noise from a keyboard is distracting people's efforts intellectually so I think you have to decide all this stuff you know from a first principles exactly what am I trying to create more culture am I trying to create what physical principles am I trying to read what business principles am I using to reinforce behaviors along do you not

(13:46) believe in remote work I don't believe in remote work for startups I would not find a comedy founder slug you're probably not going to help me collectively that's based on road work and why is that well I think if you've ever built a company I don't actually I don't know anybody who's ever built it probably successfully believes everyone first of all um the reason why is another feederism is you basically have to build a company an underscovered Talent people ruining their career in that large companies

(14:09) Google Facebook whatever they don't know how to process these people because you don't want to compete on the basis or comps you need to find people that they're not going to want to attract and they need to build a company when people agree in their career or people are really in their craft in any career they learned by osmosis the way you learn by osmosis is you need to be shadowing people from unstructured learning if you take away the other structural learning people cannot Advance Beyond a waste of

(14:33) their years secondly you need to know who to promote the way you figure out who to promote and give them opportunities by watching very soft solo cues that don't pop up on a zoom call so you need to have you can't build a company with undiscovered tolerance and give people internal promotion opportunities if you're using any version of remote work and the other thing is there's this element of Osmosis right that ultimately comes from being able to observe how people interact and yes so as a leader I

(15:01) used to always try to try to have a desk the proverbial desks in the middle of the office that we kind of look it's a walk and look to the right and beat up one of these very subtle huge and now give me um pretty good signal I could not see the automated promo pretty challenged with more complex opportunities another reason why the remote work kind of is destructive is there is collaboration that leads to Sparks so we launched an open store a new product in February called Drive we're actually I devised

(15:31) the product on February 1st we launched it in one six weeks later the three puzzle pieces that led to the product one was a conversation at an office I sparked by my VP of engineering second was friction from ahead of Revenue who didn't like the first version of the idea and chewing on his negative feedback third was sparked solution was sparked by two other things a spontaneous lunch or dinner actually I had with one data scientist at night where he asked me a question about were we taking enough asymmetric risk and

(16:04) then lost was an engineering review he died that I did the four things combined to be the Insight that led to your brand new product that's been the focal point of the company for the last two months that would never have none of those were things probably would have known as you call what do you think about uh moving individual contributors to to managers do you take your best ICS either out of sales or engineering or whatever it is in the manager 100 of the time this is another thing I learned from Peter Peter

(16:32) taught me the first week I said hey Paul they're gonna don't believe in general managers which starts on at the time and this is 23 years ago um believed in promoting the single best person designer engineer to run whatever the craft is so that's my philosophy whoever facet X is going to be running apps that allows you to groom undiscovered talent because they know that the person who's leading the function is pretty damn good at what they do and they can absorb substantive iteration also needs to better problem

(16:58) solving there's a person who's leading the function can solve the problem with very server hands if they beat you and then third is you avoid demoralization people hate when they work for someone who doesn't know what the hell they're doing what about uh so we talked about like things that can be distracting within the the office uh and one that has been on top of mind for a lot of the companies we work with is social issues broadly speaking right I think some people will characterize it as wokism uh

(17:23) and certain companies have sort of been further out of the curve on this versus not where do you think within open Shore or the companies you work with like what is a social issue versus when does it start to see if over into a social issue that shouldn't stay external to the company versus something that's actually impactful to the business or the people I think it's actually very easy to tell if the company there's some issue that's going to interfere with some business metric then it's perfectly appropriate

(17:48) for the company to focus on if it's not going to interfere with some kpi then it's totally inappropriate we like to say at Founders fun you bring your work self to work and so if there was some discriminatory law in Florida for example right on transgender or gay rights or black or whatever it is something uh would that become an open store issue or probably not in fact I would assume because Florida has a Melting Pot people will have a refreshing different perspectives there'd be people at Olympics or who had

(18:17) completely different views on all of those topics interesting so so it's just what's happening outside even if it impacts you on the inside well it's a person yes that's an absurd philosophy uh we wouldn't fund the founders on companies Founders that have that velocity they can go take money from other people interesting um Switching gears to investing yes what do you think of the role of a BC great question um spiritual I'm doing it for example now um my personal version of it which is

(18:48) not for everybody is I think my role is to fuel and Propel a Founder as a credible potential to achieve his or her Ambitions but arguing the Capital Insurance and so how does it manifest itself like what do you actually do in that practice um actually usually it's respond to questions so really good Founders are driving decisions executing constantly but they have questions they want um either an intellectual framework on how to resolve there's trade-offs there's short trade-offs or sometimes there's experiences they haven't caught

(19:21) in like they're hiring their first CFO what should they be looking for how do you assess the CFO they may be an MIT grad is a brilliant engineer who's never met a CFO before so helping them triangulate to solve a new problem that's pretty important to the business's success and or how to navigate home much trade-off decisions the easy questions they've already resolved by definition I almost laugh every time I do a one-on-one with a Founder because two or three questions in it's all the hardest they have across

(19:49) students in the world and I'm laughing because they're so damn hard because they wouldn't be asking me because they're so good they would have decided everything that's easy how was it hard for you to shift that two by two Matrix of consequences versus is a delegating decisioning that you talk about one of the things I've seen when people come in after having success is they're very opinionated about uh well here's how we did it and laying their exact framework or how past experience sits on top of

(20:14) the company itself But ultimately you don't get to make the decision right you're sort of an advisor to that was that difficult with for advising companies or was it kind of natural I thought it was very natural I think the benefit of being on a lot of different companies you know so helped build PayPal LinkedIn Square all the different companies had the vantage point of being on two or three other boards I think y'all have been Zoom for example and just see how different each of those companies were with different challenges

(20:39) different people different cultures led to me to believe that there's not a one-size-fits all answer ever there are other trade-offs that can be subtle the grass isn't always greener and my job is to communicate there's trade-offs so the founder can make a wise decision based upon knowledge and the better benefits of history but I'll never almost never uh I can think of one example is really music I know the other Amazon you have to do X all right at one time it did it's really amazing it was on the most

(21:10) subtle Monday in detail if you ever listen to this you could all die laughing but um my conversation is always around here's how I'm think through that problem or here's the subtle things to look for that might be going wrong you know if you go X like here's the early warning signals that you might want to reverse course but I'm very rarely prescriptive I might be more prescriptive on judging a candidate but they asked me to interview a candidate I might have a strong allergy or strong enthusiasm and I'll communicate that but

(21:38) on the business strategy execution the pacing and all of that it's really it's no company it seems like you think about about what can go right you're a people-centric investor that thinks about what can go right in certain situations have you uh one is that fair and two have you ever been surprised by an outcome like in your wildest dreams it out kicked what you expected and you're what can go right so the what could go right foreign directly through my Morris I'm like always reminding yourself to ask that

(22:08) question because when you meet an early stage company particularly I'm mostly focused on early stage if I say I've really called C Series a maybe series B there's so many things that go wrong it's not very difficult it's actually to find things in totally hard that's like a trivia sounds smart yeah it was very easy there's lots of things that are improving there's lots of things that can backfire so you have to imagine you have to course correct yourself to retrain your brain to imagine well if this were to

(22:34) come together is this going to be a company of consequence because not every company will be a company of consequence it would not be iconic it will not be worth 10 billion dollars plus so you need to think about what's the outside potential against the risks that something go wrong and then what is the strategy for minimizing or addressing the risk of things that go wrong does the Elder understand the potential problems it falls do they have a probable mistake approach that is likely to work but you want to start with what

(22:59) could this be when it grows out what's the potential it's like nothing you know if you look at like an athlete in high school you want to imagine not just like one of the limits of that athlete but could they be the next you know Michael Jordan or so and so on it's a lot of damage because also being a lawyer is really about training for this because the way they're great into law schools issue spawning so when you take an exam the canonical exam law schools to identify all the things that can go

(23:22) wrong in the scenario and then you have to kind of resolve them and you get massively penalized for missing an issue so so you don't want to do that as a special couple this is the early stage Ambassador so start with what would this be yes once a while by talking iconic Founders but when you realize someone has ridiculous potential sometimes they do surprise you on the upside but that's what you're you're making a conscious decision that the linear solution of this business probably only looks like

(23:48) yes but this founder is clearly special so even if most people would take it to a billion dollar Outlet there's a shot this could be five or ten and that's worth me funding so we actually did that relatively recently in Miami classic camera I invested a fertilized company worth of natural extrapolation of the business is a 500 million billion dollar company which typically would not accept that was fun but he is exceptional and there's a shot he can permanently that into an outside success how do you pass

(24:18) that along because one of the things when people are early in their career there's a uh a natural bias to not want to up pray like hey I don't want a big zero to go up on my scoreboard as my first deal but it's a it's attention because that's ultimately the Venture is a game of Outlaw kind of or power law distributions how do you encourage that with people within Founders one to be willing to take that level it's really complicated dynamic because I think to be an early stage investor that's good

(24:44) you have to be bullied to lose money and that's easy to say the more success you've had the easier it is to say but unless you start with that Dynamic I think it's really hard to have success and so it's like which comes first the confidence to be totally comfortable losing money actually I actually didn't like for a while during the bubble or this fall 2019 to 2021 where not enough Focus I was funding or failing and I felt that that might be that wasn't taking enough risk now I think it was

(25:12) partially propelled by people propping up companies with a lot of money excess capital and inflated prices and then that's changed but I was nervous I wasn't losing money um were you far enough on the risk yeah well they're making enough rest for us being too constrained and worried about what other people think derivatively which is another idea so one way I of course grab I mentioned this on a podcast before is I like to fund things that I run through my algorithm of what half my friends who are VCS the wife

(25:41) test works pretty well because it's pretty intuitive like can I imagine you laughing at a company when you read that I just let them know yeah yeah and so if I think half of the smartest species I know a while then I know I'm taking some risks how does that actually play out within Founders fund like from a decisioning standpoint right you've been here while in your your uh have all the credibility in the world so I assume not too many people laugh at you they still do I mean I've been here for years but I

(26:05) still occasionally filter myself and maybe too much I did a kbe it wasn't my fault though my partner's fault but there were times when feedback and a Partners meeting led me to either be less aggressive or more aggressive sometimes and I still own the decision every time at KV but it does affect you even if you don't want it to and you know you shouldn't um stereo surround is useful but you can also get caught in too much stereos around like so I want I don't read the papers they might determine and you gotta be careful to

(26:41) make sure talking to too many other people might deter you and that's not what you want to do so for example um I was pretty I had a very hiding dick on your house she's very controversial at the time at KB globally I'm lost in your life there's this coming in at those sisters this company that was at the economics are going to work I mean so many now excuses I would have not had enough conviction to pull the trigger and just shut everybody out other than Tony had worked for me like if I didn't have that little

(27:09) Delta asymmetric information I could just rely on not really in my career I would I would I would have listened to too many people um there was another time when fair was started um everybody was like oh my God you're doing retail mobile real world Amazon Amazon Amazon and had Max not worked for me I would not have been able to make that investment there's so many critics like ad on the sea ground that the Delta Max and Jeff two of the four co-founders have not only worked I swear but worked for me were directly higher for me

(27:40) directly reported to me I was like no these people are going to make this work and you guys were all idiots like and you know so you need to have that conviction um sometimes but there's times when actually I was a little too let's say nervous about it bring into a partner media let's say KV and people would be more enthusiastic than I expected so it cuts both ways but you've got careful about like not listening to other people and if you found it's harder or easier to take that level of risk now that

(28:08) you've seen all these successes along the way because I can imagine in one way it's like hey well my body of work will speak for itself regardless if this goes to zero the other way is like does this actually live up to those other companies I don't know I don't know if this is really going to be a fair or a doordash potentially and so I could pass on you know potentially great outcomes I hope not I think where the real rubber meets the road is you get so consumed with board commitments other events that

(28:35) you don't have time to take these fresh provocative meetings so like you know I I gauge myself I make the right decision with the information that's available all the time not only having something because that that doesn't play home and I think my biggest weakness is in filter which meetings you take because you can't take every meeting that you get introduced to and I've made some mistakes on which meetings do not take in my career both as an angel and as I should probably us but as you get more

(29:02) busy and more established in Venture Capital it's harder to retake incremental random meetings from some founder out of left field that those are the ones that often pay the best dividends now one of the things I think you're very conscious of this is something I think a lot about as well is the why you in a potential investment and uh it's it's something that I found people can delude themselves into thinking like hey well of course me right but I think you're very conscious of hey there's there's other investors

(29:30) out there why would I uniquely do that can you talk through how you think about that and not dilute yourself first thing is let me say that the reason for the importance is most Financial returns are mediocre at best so you don't want to act like a really Adventure couples because you're going to reduce returns like other Adventure problems either in your fund or go out it's a shitty asset classic sounds right it's not very good so like being the door is not what you want to do see one way is to create

(29:53) alpha is to say like what is special about this or me that's going to lead to the probabilistic distribution being different in the normal distribution and so I always want to answer that question indicate why me or why do I have unfair Advantage so the fair and doordash space is both of the followers yeah it works with me I should go to make that call better than anybody else in the client like if I can I shouldn't be a VC now what I need a random founder like for coffee how do I have the competitive Advantage

(30:23) versus you that's not so easy to imagine so I asked myself very seriously why am I getting their call to Logan on this because if not I'm going to produce the same returns as you know you or Collective advantages collectively the vascular VCS and so unless I have an answer I know I'm going to arrest the middle of the bell curves I'm like oh so yes it can be I have a personal relationship with this person so I can make a call without these traits that are that's a very good answer it can be

(30:51) in some vertical perhaps where I have death of knowledge but that cuts both ways too sometimes you get burned by knowledge in some weird ways but there should be a really damn good answer or you're going to be in the middle of the bell curve and that doesn't help so I've heard you say you've never done a cam analysis is that actually true it's actually true and why is that the case I think markets are either larger or two are they small they're gonna be a large figure out whether they're a trillion

(31:16) dollars or two trillion dollars is is it useless especially where you're investing yeah yeah so especially really I think as you get later maybe there's some doubt about each of this but what I want to do is really stage investing 80 percent of time secondly I think you're fooling yourself because an extraordinary founder will create Market opportunities you never imagined and so the last thing you want to do is constrain yourself you know when you're talking to an 801 founder and then third of all is the best

(31:44) investors often in non-consumption markets where any town is like a silly construct like what's the Tam for Instagram if I wanted to do it but like for example when I had some chance concerns where the uh the team has outperformed in either a classic let's say Tam analysis I was the first investor first seed investor in um Australia turned out to be a pretty damn good company I don't think you could have talked to rain to The Tam of shama with any careful analysis maybe you could have said there's this many bikers but

(32:18) actually there's the First Market it's actually pretty small runners bigger Market definitely um so maybe but then nobody's paying for these things at the time so what's your cam like you really do need to buy Founders I I think in early stage and they will take you to places that make sense um unless you guys have a price to pay you know if you're gonna invested a billion dollars you need to make sure there's 10 100 billion dollars there yeah um actually people misunderstood the potential of

(32:46) Eventbrite pretty massively when Julia County started the company and basically nobody externally really appreciated the company until they hit a hundred million dollars of gross ticket sales which isn't that large but once you hit 100 million dollars for first ticket sales with about four or five employees then this season I mean some VCS two particularly appreciated them if there's a hundred million dollars of long tails it sells that four or five people contaminate you there must be billions somewhere there's otherwise four or five

(33:14) people would not have been able to get to that level of scale so sometimes you are using like data points this this time to Market like four months environment four people get you here well there must be some afterburners so it sounds like I'm immune for Mac data you can convince me with data about oh there's a bearer there when my internet is wrong so there's time out there people did expect that Amazon was crossing all these independent videos dollars and now I said one slide that was incredibly compelled to me whereas

(33:42) he showed post 2008 actually independent bookstores were actually thrown so I was like okay well bookstores were dry I guess Amazon anybody can grow against Amazon like totally false narrative so I needed one data point to unlocking my brain about the Amazon destroying everything it just Falls so yeah I do want those data points but I'm not like doing a talk downtown in being a people-centric investor I've Rich talk about wanting people that spike in some regard but they need to be the uh the hero for the story or whatever it is are

(34:12) there questions that you actually are able to ask to assess this or is it a total intuitive thing how do you think about fitting the founder to the story then in that case like how do you know what what what they need so there's two different comments one is I think I'm looking for an extraordinary trait the reason why is the chance if you think about what's the likelihood that someone starts a company and reinvents the world or an industry in the proverbial garage with like their college roommate sure

(34:37) rounds to basically zero so unless you're you have a trait that is so extraordinary that the probability shift off rounding to zero you should not invest so that's why I need a top one percent top ten basis points something Spike or I'm not going to invest then you want to ask a question a second question is does what the person spikes on relate to the skills that are required to build this particular company some of these traits are transferable like if you can recruit better than anybody else in the planet

(35:05) like if you can assess people close people that will apply to any company whether you're building SpaceX or Facebook some skills don't translate like for example if you're this the savviest technologist in the history of the world there are some companies where you could like let's say we're doing a database company a new novel architecture for database sure that's perfect company to fund for that kind of founder they want to do a photo sharing app I'm not sure they can really leverage that trait so you do oust that

(35:28) but that's usually the second question not the first and when is domain expertise a Good Thing versus a bad thing so remind you it's never a good thing I don't fund people with domain expertise I do like them to be able to answer the Balaji and the Chris Dixon blog post that summarizes it intellectual maze question which is Balaji what he's teaching startup engineering at Stanford had this great paragraph that explained how the main the most amazing Founders can walk you through the roadmap from where they are

(35:53) to Super success and know how to avoid the pitfalls chop doors and navigate and when you hear the clarity of a roadmap it's extremely rare it happens once a year or so that's a reason to invest maybe independent of the traits but the traits that are acceptable plus the intellectual roadmap is like a home run it's like instant investment here's your money do not pass go you don't have to meet my colleagues here's your money please please please do not take any more meetings um that that rarely happens that can be

(36:21) based upon some experience so for example um one of the founders we work with in Miami uh before he left Uber to start his company had been a warehouse supervisor uh before we went to Uber and he started a labor Marketplace that connects workers to light industrial warehouses so the fact that he'd started his career out of college as a warehouse supervisor was insightful but it's the other traits about this founder that make him extraordinary and a top one percent founder in the planet and do is there if the if not in the

(36:55) founders that some some of these companies you need domain expertise brought in so that you don't fall in so you can borrow it this is a trick you can always call up people with domain expertise and ask them questions they're actually pretty happy to talk to you usually if you just say why can't this work so the question I always ask when I do diligence like when let's say I invest in case you invest in some pretty deeply technical things like autonomous driving or genomic sequencing so when I

(37:18) call up experts what I'll ask them is tell me why this can't work I don't want to know whether it can work I want to know metaphysically point to something that will make this impossible to solve and if they can't articulate a specific blocker then I'm pretty comfortable back your world-class founder to try to solve it I've heard you say that the most successful Founders are trending older than they were in the past yeah we've observed at Founders fund that there's about a five-year shift on average of

(37:47) the most successful Founders in the let's say median age over the last five years we have no agreement internally on what the cause of that shift is do you have a theory I actually don't have a great Theory I can walk you through some proposed hypotheses but I think most of them are confounded by the actual data so for example some people think it's cultural there's different influences et cetera et cetera some people think it's like this entitlement and wokism and all this other stuff I don't think that

(38:11) really drives some people think that the businesses are more Enterprise which requires more experience than let's say maybe a consumer I don't think that's actually true I think most of the logical hypotheses are defined by the actual data so I'm not at all convinced of a theory that works and so it's more descriptive than prescriptive for me right now now you've stepped into more of a firm management as we touched on earlier and developing young investors setting firm strategy all of that I

(38:37) think that was uh at least ellian said with KB you were more IC oriented sort of eat what you kill and now it seems like you've taken on more of a firm initiative setting is that no I wouldn't say that I don't I don't wouldn't agree with that I think that one one of the keys in Venture is grooming more and more talent because it's a 10 20 year Journey and you need to replace yourself I don't think Venture capitalists age very well like there's a point in which you improve and there's a point which you

(39:05) start decaying we can talk about why and where but so I think you always need to be consciously aware of how do you get more tolerant into your firm and how do you how do they learn about osmosis to be world-class investors so at KV I hired several people dellian included I recruited Evan Evan Moore uh to KB like three times to try to add to the talent at KV so I don't I don't think that's accurate um you know maybe just because of my profile I may get more inquiries from other upcoming investors that want to

(39:34) join us and they may route to me more frequently so I may interview them or assess them more but I don't think it's a conscious strategy how do you think about setting uh Founders fund strategy for the next whatever it is and influencing where you're headed as a firm well the way we generally do it is the GPS debate a fair amount um yeah we meet let's say every quarter we do an off-site but like the GPS will debate what do we want to do different or better or would we want to amplify or not so that's basically how we work and

(40:04) decisioning how do you actually think through making an investment decision as a group the historical way we've worked at Founders flood which is pretty different than most VCS including our KV we have voting thresholds so for different size checks you require a different level of support from different colleagues so let's say you wanted 10 million dollars there's I translate to our voting rules and know how many people need to approve that and we'll introduce the founder to the requisite number of people or the people

(40:29) I think are differentially likely to approve at the KV we would do more like a traditional founder uh sorry partner meeting on a Monday team would come in and present and then we'd have a dialogue debate after and decide whether to approve an investment you know what terms what characteristics have you found in the good young VCS that you've been around or you've worked with well there's not that many of them by the way I think one of the fictions of the 2019 to 21 error was Ventures easy and so

(40:56) people thought that entering venture early in your career was attractive lucrative and potentially easy from a lifestyle perspective and it's none of those things Venture is a really hard business it's to to be successful in terms of driving true returns and distributions to the LPS into yourself and your colleagues is pretty rare it's about the equivalent of being an NBA All-Star and to be a consistent NBA All-Star is pretty rare and so I think now there's very few people that are young investors quad investors they're

(41:27) actually truly driving distributions for their LPS or for themselves so I don't know what the formula is I wish I did it is something we actually discussed like what's the formula for a future great BC but it's a little bit like trying to predict who the next Steph Curry is Steph Curry didn't look like the Patrick Ewings and Elijah watts and Moses Malone's uh nor did Charles Barkley actually and you know the so you're trying to figure out where the sports going and try to project what you want

(41:55) to hire recruit train for and so when you bring in someone like Sam blonde joined recently uh which he was a cro of brex and zenefits before that right and and so when you're hiring in an operator that hasn't done investor before like are you doing the same assessment of where they spike is it more of a holistic liberal arts there was a couple couple Dimensions to hiring Sam one was he had a pretty significant Angel track record so that is a good proxy it's not a perfect proxy prevention but it's

(42:23) relevant be as a bipolar to that he also had referenceable CEOs who are in our portfolio that we respect deeply let's say Parker at Rippling for example that worked with them very closely so that's a good proxy like would you differentially take money from this person that's the answer you want to hear from Founders is yes I would prefer to work with this person versus the rest of the world so like having a repertoire of people you've served very closely with that are very close to us that we

(42:50) deeply respect um is a good proxy so Angel Investing plus CEO respect are pretty important predictors what do you think about the firm brand of Founders fund specifically how much of it is something that is set at a top-down versus this totality of the people that work there are there elements of both or how do you sort of think about it I think we'd like it to be maybe set a little bit more top down but what it's become is kind of a bottom-up Evolution so I think what the brand now stands for being courageous

(43:21) having conviction being Direct I I think we can add some things on top their conscious intentional but right now I think that's the manifestation is people want to work with Founders fund because when we believe in something we'll support it we don't care what other people think we will fund things that other people might not want to fund and we will take you know the proverbial contrarian stance that later becomes a consensus view think Ander also you know my partner Trey co-founded the company

(43:49) Andrew to propel the United States forward in defense technology by using the classic tools of technologists and then allowing the United States to be in the world at the time nobody else in Silicon Valley would have fun to this company period now because of the work some of the changes in the world and the success of the company there's lots of investors that chase after the company but that's years later so we're looking for areas where at the time other investors have blind spots intellectually ideological Maybe by

(44:18) founder trait like you can think about Parker that way and then we'll we'll take a conviction based query religious investment and then later the company and the founders become successful in everybody else's view speaking of contrarian you guys hired a crypto partner right which I it's been amazing to me how many people were so dogmatic about crypto investing and then pulled back versus actually leaning it like if you believe this stuff this should be the best time to invest right that's the

(44:46) internal thesis there you go so how did that how did that actually come to be and because crypto you guys hold Bitcoin for a while that was public and but you weren't as involved in other we followed the the historical View at Founders fun going back to I think 2014 even was most of the alpha and crypto could be obtained by buying Bitcoin directly and it had the liquidity advantages go in and out you know opportunistically versus obviously the company we don't do that even if we wanted to we probably

(45:15) couldn't so fundamentally crypto investing in Bitcoin was a very successful uh set of investments in Maneuvers by really Napoleon and Peter for the most part over time we developed some views that there might be Alpha in specific companies in that we weren't perfectly set up to capture that Alpha so we wanted someone to help us if there is Alpha in crypto oriented companies how could we make sure that we would capture this proportionate share of that Alpha what do you think a lot of money has been raised over the last or

(45:50) 2019-2021 2022 whatever you want to call it a ton of venture firms popped up a bunch of people raised a bunch of money uh what do you think happens to all those new Venture firms that were founded I think they're in trouble there will be some to break through I mean I've looked at the list of like what I consider to be the top Venture firms you know who do I compete with for real who produces returns that are real about half or new over any decade about half are the same so there's always been a

(46:16) velocity of change like half the funds right now that are pretty good I suspect were created post 2005 and the other half have been around for 50 years and so I think there's always several pressure rate and variability in Venture but it's not it's not going to be easy to break through and raising too much money is definitely not the formula as you know we announced a year ago a 1.

(46:37) 8 billion dollar Venture fund and then we decided to cut it in half and make it an 800 800 million dollar Venture fund to we're voting with our feet that the opportunities are not going to be vast that too much capital is not a good thing for either Founders companies LPS or GPS and so we we literally sloshed in half a fund that was already raised and how did I I expect more people are going to follow a suit with that I think I think LP is definitely it definitely resonated with they were appreciative of it oh of course like we're going to

(47:08) produce significantly better returns for them and uh you know because we don't rely upon management fees at the end of the day we were very late on the management fees and compensation and we have significant potential and upside and value creation just like a healthy startup should and so LPS like the alignment where we're only going to make real money if we produce real carry which produce a function of real returns to them uh I want to I want to go through some quick hitters here so I'm going to

(47:36) transition a little bit but I think you've had five bosses in your career is that right uh yeah here's the list I had Peter Peter tail Reid Hoffman Bachelorette chin Jack Dorsey arguably of a node he wouldn't describe himself that way but yes what uh can we go through each and well I guess first what do you think I mean those are all opinionated people big personalities what do you think as a compliment to those people what do you think you do particularly well that that's allowed you to sort of resonate with big

(48:03) personalities I think the most important step early in my career was to implement their ambition and their Vision I didn't have an alternative ambition and vision it was like make them Successful by using the skills traits characteristics levers I knew how to deploy so I think that's being a compliment to a very strong-willed Visionary founder type that's required I think secondarily is to understand what absorb the brain as much as possible so I learned this actually as a law Clerk of all things my

(48:32) first job at a law school is to work as a law clerk for the public court judge in Texas on the fifth circuit and the way she sort of explained the job to me on day one my first professional job in life was your job is never to let me make a mistake and I took that very seriously and I'm always taking it very seriously my job is not to let the person I report to make a mistake whatever I have to do however I have to persuade them I have to go find new data points Marshall different arguments figure out how to because a mistake by

(49:01) the leaders potentially catastrophic certainly has asymmetric downside so I always play myself when the decision the outcome isn't what I wanted it's not Peter's fault or it's not Reed's fault or it's not Max's fault it's mine because I didn't persuade them correctly and so I think taking that with me allows you to pair very well with Visionary ambitious Founders we've talked about lessons from Peter I want to go through quickly best lessons you learn from some of these folks so Peter

(49:26) I think we've hit on a few but anything in particular that that we didn't touch yeah I mean I basically quote Peter every day yeah and they're often remix is to be to be fair now I've taken a lot of his views and slightly remixed him to make them my own but then like in Just Like Music a remix can be arguably better so how's this work sometimes it's better so I'm hoping I'm getting the galantis remix of kygo not the not the worst version but uh so yeah Peter taught me you have to find undiscovered

(49:51) company uh discover Talent that's how you scale companies be the weakness of General managing you want people who are excellent at their craft and you want to promote them so a lot of philosophies that I apply all the time the benefits of focus allocating time people systematically undervalue their time and happiness there's another peterism from 23 years ago so I applied those literally daily did he are those derivatives from some other I mean everyone's sort of remixing some concept for standing on the

(50:18) shoulders of giants but what what has allowed him to come up with so many different Frameworks and ideologies I don't know I actually think most of them are fairly original uh maybe they're pithy succinct distillations Peter's really good at taking a lot of data points and describing it describing a lot of data points in a really succinct powerful explanatory you know equation simplifying complex things is when if someone can't explain it to me it probably means they don't understand it yeah it's true like I also learned to

(50:48) law school I had the benefit of taking constitutional law with some really good professors including Charles freed and he basically said all complicated arguments are wrong right arguments are always simple uh Reed Hoffman uh read uh retaught me the benefit of um uh two things the decision making framework that I mentioned of not falsely equivalating using a you know pros and cons don't wait everything equally and then in negotiation specifically the dimension of time so when you're negotiating most people

(51:17) focus on economic terms and other you know pieces of the puzzle but time can be your friend or Foe and how do you lever how to use time to affect other terms is something that's very subtle but very very powerful what about Max Max taught me a couple things um the bottom up uh how to use metrics and kpis to really Drive outcomes secondly by the way and maybe talk about dashboards and how that relates to that well that's another whole topic I gave a speech on the first I was invited to present uh to the coastal Venture CEO Summit before I

(51:48) joined as as second exact was to talk about dashboards and how to do dashboards properly which doesn't sound scintillating but I turned it into a talk that hopefully kept most CEOs attention but anyway so I'm a big proponent of dashboards and that you want to orchestrate the dashboards as CEO or CEO by yourself um like literally go to whiteboard and write out the business equation and then make the dashboards reflect that and use that to drive decision making across the organization down to every single person

(52:12) including csrs and if you don't do that you can't expect them to make wise decisions you're going to get frustrated anyway Matt's taught me the benefits of tenacity Max is one of the most tenacious people on the planet also subtly taught me the benefits of Fitness like um whereas working at PayPal we worked really hard but Max we'd go for like a three mile run basically every day and I remember looking up to the co-founder CTO and saying if he has time to run I'm going to run and I'd also

(52:36) trying to Shadow him the problem was and Shadow me Max on a run is he easily runs like a six minute mile like very easily he can run 430 probably um I can't so it wasn't the best but it is aspirational um but yeah Max Dobb also the benefits of certain technologies that I didn't have an appreciation for once in a while I can Spike on there's a new technology which has certain characteristics that can lead to a breakthrough in business and I didn't know how to do that kind of analysis in my brain and he taught me

(53:07) with one specific illustration around Flash in 2003 and then I applied it later to other Technologies which led to your investment in YouTube it did specifically led to the investment in YouTube Max told me to look for something based on flash in 2003 in May 2005 I found a career Javed Kareem who had co-founded YouTube and the first question I asked him was is it coded in Flash he said yes I was like We're Off to the Races uh Jack Dorsey jock uh so jock taught me literally how to do design driven thinking so I've been an

(53:39) apple Fanboy you know for all my life literally since like eighth grade but there's a difference between like reading about Steve Jobs and apple and actually understanding what design driven thinking really means that every crafting every single detail paying attention to every single detail and how to scale an organization so that's the most important thing the thing that makes Jack so powerful is he actually is a first-rate designer the damn good technologist and a first-rate business person and that that combination of all

(54:07) three people maybe it doesn't exist uh Max is actually a first-rate business strategist and a first-rated technologist even that Venn diagram m is extraordinarily powerful by the way this is the other founder answer the third founder answer for me is combining two things you don't see together so a first-rate sales person and first-rate technologist I'd invested that almost ever happens like I remember this first-rate technologist first-rate business person description of Max Reed Hoffman articulated this to me January

(54:36) of 2001. that that's what was going to make Max special is like there's he's like there's five people it's all of Silicon Valley who have that trait and what about the node so the nerd is um a technology Visionary he can immediately see a new technology and feel like almost intuitively all the ways it can be levered to change business equations and it's extremely uh powerful but the most actionable piece for me because I'm not a technology driven investor was when he's on the board of square he pointed out to me

(55:09) this adage the team you build is the company you build and you can get distracted in everything we do around products technology but it all comes out as a team and that adage is the most important succinct way to communicate it it's always about the team you build because we talked about the node and we talked about YouTube and you would have a unique opinion on this as a former lawyer an IP licensing rights what do you AI these days uh it's it's I guess what is your perspective on AI these days it also there's a fair use debate

(55:40) going on about all the training do you have an opinion on that well the decomposers actually so let's talk about the YouTube examples is a really good illustration of the question you asked me about why me so I was able to do the IP analysis in my brain for YouTube and then literally walks sequoia's outside Council through the analysis on behalf of the company which is what everyone was scared about everybody was scared of YouTube because of Ip and I had been partially an IP litigator and so I knew how to do the analysis and was

(56:09) comfortable like taking a risk it was a probabilistic assessment but I mostly got it right um there's one little thing I screwed up but there's fortunately background music yes background music yes definitely the the separate licensing scheme that doesn't work like the rest of Ip law which is really annoying but I sort of forgot about it and that's why YouTube had exposure there so the sales kind of recursive but I had a very specific reason I also had worked with all three of the co-founders

(56:32) at paper also had unique people and an intellectual IP background that allowed me to make a diligence assessment without having to call some external counsel that has the wrong you know sort of risk appetite so that's a good illustration um on AI my question on AI is not is it transformative not is it you know revolutionary blah blah it's like where's the value creation because that's what I do for a living is try to find things that are going to create you're going to capture the value people

(56:59) use metaphors like mobile well you know most the mobile value is captured by Apple so if open AI wants to ship a device or Microsoft that's powered by AI I can see that comes from a lot of value some people use AWS as a metaphor okay well all the large institutions captured value in cloud computing well that may mean that startup funding and AI might not be that great but the way I approach AI as investors I'm looking at products I'm always looking at products what's the value proposition to a particular set of customers AI is

(57:28) the magic wand that enables you to deliver a value proposition that would have been impossible before and so I want to find Founders who want to create unique products and they know how to use the tool of AI to deliver a unique product experience or an economically affordable one that would have been actually impossible think your proverbial why now Slide the why now slide is I can use AI to do X Y or Z but the x y and z are completely independent of AI in the sense of the customer experience customer doesn't know this is

(57:54) a i x y or Z so that's what I'm looking for personally when I invest from an IP perspective it depends exactly what you're using for what like you'd have to give me a specific like this company is going to do ax I guess an interesting one I mean certainly we're seeing it play out in real time with Grimes and Drake and all that stuff which I think is pretty clear like I feel like that's pretty now the the training on top of Reddit data Twitter data or whatever a bunch of things that are controlled by a

(58:23) company in some way but is being used to then train on top to answer questions that are attracted away from the underlying data I guess is that a fair use thing I think there's a strong argument for fair use there that the weakness in the argument insofar as there is a piece that's the weakest is that they're training on the entire Corpus typically fair use works better when you're taking a snippet of something and we're using the entire collection you can run afoul of some of the ingredients

(58:51) in analysis but I think more people would get on that it would be comfortable on the fair use side because you're abstracted in a way so much that said there is a concept of a derivative work and you got to be very careful that depending upon how it's used it could be closer to a derivative work versus a new work so anyway it's it's more complicated I think you're right the music stuff is actually pretty easy uh do you think there's an existential risk that we face as a country with artificial intelligence in China yes so

(59:19) um I knew China would get you the biggest the biggest competitive threat from a existential threat to the United States in my lifetime is with the CCP the biggest Arc of that competition is going to be through AI both for economic leverage and for military application it has actually a combination of both and we are behind in several Dimensions um a they have a bit more of a training set just more people less privacy more data makes things a lot easier you don't have to have as good amount if you have a lot more data like order magnitude

(59:50) 2009 do more data trade that from out secondly um they absolutely have better chips Than People realize so you need compute power Computing capabilities they have some pretty Cutting Edge ships that have not been appreciated I didn't really appreciate it until relatively recently third is the organizational structure that leads to success in AI may be generated by some Brute Force like large organizations with Brute Force that's not the typical Silicon Valley style management so it may be at a competitive

(1:00:17) disadvantage there too those three things are pretty dangerous because if we lose this war the United States is going to be be very much in jeopardy you said a year ago when we sat here with Miami Tech week San Francisco was the next Detroit we've seen some reinvigoration with artificial intelligence energy in the last few months have you changed that opinion at all uh no San Francisco is next Detroit you can look at crime statistics vacancy statistics Holo statistics I see the governors sending in federal troops or sending a National

(1:00:46) Guard or something which actually sounds like Detroit the only thing that would make it more Detroit is like riots to the National Guard um they would actually look like 1960 you know montages um so no it's getting worse not better I think you can see some Trends in the South Bay that might be a little bit better I think there is a bit of Resurrection around energy about company building that's real versus entitlement versus woke you know in the pockets like Mountain View itself um so maybe slightly more optimistic

(1:01:15) there but of course that's also a lesson of History San Francisco has the episode of Technology wasn't really a true story until at least 2010 all of the technology companies that people remember were built in the South Bay not San Francisco and it's only like the modern Square Twitter you know Airbnb that were SF phenomes and that relatively recent error so I I think it's an anomaly anyway that San Francisco is equated with technology how is Miami trending these days I've seen people on Twitter

(1:01:47) claim that there's certain people moving back to San Francisco every time I see someone tweet that someone moved back from Miami San Francisco like name a single person and they never cite a name like I'm like I don't know a single person socially professionally that moved from the Bay Area that's what about single person I'm happy if anybody tweets a name that'd be great um I do know people who've come here from New York and been back for whatever set of reasons and maybe some other GEOS

(1:02:10) but I don't know anyone in the Bay Area which it'd be like yeah it's like do you want to like set for the next 10 years and be in misery or do you want to be happy when people move to Miami they are inevitably hobby so for example UH 60 of the teal fellows are in Miami this week for their reunion 10-year reunion and most of them actually had not been to Miami before I went to an aggregation a party sort of thing Saturday night and talked to a lot of teal fellas probably talked to 40 till fellas um

(1:02:36) my my uniform dad's takeaway was wow they're being blown away by Miami in the first 24 hours that they're on the ground and I've already persuaded about five or six to cancel the return flight that's pretty good for you know two days in Miami yeah no for sure I mean listen I love coming down that's my metric for Tech week by the way so what fraction do people here come as in the magnet is Tech week and what faction cancel the return flight what's what's your most contrarian View today it's a great

(1:03:02) question is actually I don't have a good answer and it's very embarrassing I gotta ask this at that teal fellow event and I'm super embarrassed by this all my views that I've had or out there in the public domain and I think most of it validated by history um you know the idea that remote work was fiction I think is more conventional the idea that you know the coronavirus was you know not a byproduct of some bat biting some you know random person in somewhat lab is almost surely true you know but which Bloomberg dismissed is a

(1:03:33) fringe Theory um only a year ago um the uh idea that you know the markets were over inflated they were on the precipice of a 1999 2000 collapse has obviously been true and proven um so I have to come back with new ideas um the more interesting version of this is how do you get these new ideas props and so what I tend to do is I like to read books like real books and by reading books that other people don't read you spark you you encounter new anecdotes new data points and new ideas and then there's kind of combining your

(1:04:06) brain often when I'm sleeping in the middle of the night to be a spark and that's spark is somebody that creates the next contrary an idea what's the single most impactful book to you over the last whatever 30 years uh to me is a little bit different than the single most impactful book I highly recommend the upside of stress um about it's all about why the benefits of stress the challenges of stress are good for you physically emotionally Health uh Health you know financially and from a health perspective it's very

(1:04:35) counter-intuitive but I already believe those things the book is just a manifestation of evidence that I can give to other people um the most impactful to me that's a really good question most books that really resonate with me are manifestations of things I already sort of believed professionally high output management you know for the first 15 years of my career in technology I reread it at least once a year and always learn new things always wound up underlining new sentences because I appreciated them differently based upon

(1:05:04) my new experiences so that was probably pretty influential actually speaking of contrarian views what's the biggest misconception of open doors business today what would you say to short investor or people that don't believe in the business well some people think it's unprofitable which is ridiculous um like if you look at uh it's in live in 52 markets and with a blip of maybe one quarter when interest rates spiked all in the same quarter the company's been profitable for 22 of the last 23

(1:05:33) quarters I think or something like that and in 47 of the 52 markets the the inventory looks pretty good right now I mean they're going to do an earnings on May 3rd to be able to get the latest update but I think there there's some Mis information actually truthfully out there secondly is I think that people don't understand um I think it's actually been good to go through kind of the housing crisis once the company gets through it and shows that it can navigate it well I think it'll get disproportionate credit Square

(1:06:01) went through something like this Tesla sort of went through something like this Amazon went through something like this 30 you know 23 years ago a misappreciated business um eventually you know the metrics line up people have to you know realize and recognize reality a top-down perspective on Open Door is simply it is impossible to Fathom that in all of the trillions of dollars of residential real estate that goes on the United States that the largest market cap company is going to be at 10 billion dollars which is

(1:06:30) roughly where Zillow is that just doesn't make any sense you're a frequent user of Twitter uh are you friends with Elon how would you care if you used to work with them I was on the board when I was at PayPal I've considered working with him at SpaceX back in the day in 2016.

(1:06:45) so you've known them for a long time yeah what's your opinion of Twitter right now uh I like Twitter I use Twitter um I think you know as I said uh on stage recently at a conference he's making all the right enemies so I use the Lincoln add-ons to judge people you can judge by someone by who their enemies are and it's all the all the people are most wrong in the world and most evil hate him he's doing a great job how do you use Twitter like what is your intent besides besides Pro you know you do a good job of using your platform

(1:07:10) for companies and whatever but sure um the original use of Twitter for me it was just like a custom New York Times like I used to read the New York Times on Sundays and so I created the right people to follow in sports politics and technology and I would then be able to you know wake up in the morning and track what was going on in the fields I care about and so that's how I used it I didn't actually use it as a broadcast mechanism for a very long time then when I joined Square I started using it for

(1:07:33) customer feedback meaning I read every single tweet about Square for two and a half years and I'd retweet some to you know help the company amplify its message and story which actually helped raise Venture Capital truthfully this before became cool to do this and like so VCS weren't quite as Savvy about this but that's how I mostly use it and then I would typically only use it for broadcast around Sports uh because I was a big sports fan and so I figured that was safe you know running companies I

(1:07:57) could talk about sports less controversially it wasn't until I became a VC that I started using it more to proselytize and I used it to process because I realized out a platform I had a lot of followers I had over 100 000 followers and I didn't want to wake up up the end of my life and say I have this platform I had the ability to influence people remotely that I'll never meet and change the world and impact their views and not have taken advantage of it and it was actually refreshing at the same teal fellow party

(1:08:20) I had a couple sales come up to me and say thank God you treat what you do because it's helped reshape my brain around X Y or Z so that totally justifies the effort to proselytize ideas but mostly it's because I know I have the potential to impact people and I don't want to regret living my life without having been able to try to influence people have you ever regretted anything you've treated yeah I mean mostly because of the destruction um meaning like I think most of the way they treated or all of what I treated is

(1:08:48) accurate but or wouldn't have tweeted it but there are times when either you slightly Miss say something or you step into a landline and then the rest of the day you kind of have to respond to it and like look I have things to do I have a company to run and Investments to make meetings to take and so once in a while like oh shoot you know it really is it really worth like three hours of distraction to have done this for whatever upside you do meet Founders this way Founders are really happy about your willingness to defend their company

(1:09:15) every company struggles at some point and having uh VCS people with you know presence on Twitter that are willing to defend the company when the company is under pressure I did this with respect to doordash when people are like oh door that's never going to be more successful than new reads well Jordan is never going to make money so like leaning in and you know helping uh crystallize the true story can be very valuable to companies but there's attraction isn't always worth the cost so I've been more

(1:09:41) guarded sometimes now about like oh this week I'm really busy I don't have time for two extra hours on like Twitter debates yeah one that I wanted to ask when we can answer if you want but you overlap with bubbly at Square yes and he had moved to Miami he did how will you remember obviously tragic events and was still sort of unfolding what what would you like people to know about Bob uh yeah so give me something unique I'll give you like unique insights like obviously or the you know lots of other

(1:10:08) people will comment that you know better you know um but um two Bob anecdotes um one in Miami one is to show you how Miami was really tracking he literally moved here and texted me after he signed the lease like I had nothing to do with moving him here he just texted me like I signed the lease in Edgewater so that's when I knew Miami was really working was like Bob moved here proactively without my involvement and texting me after the fact okay second a kind of better anecdote was probably actually hired

(1:10:37) Delian um the engineering team at Del when Delhi interviewed as an intern had rejected him the recruiting team actually sent him a rejection note this is that square at square and Bob personally overruled the team and so they had to call DeLeon after they sent the rejection and say you know what we didn't really mean that so Bob had this Spike and Spidey Sense for real talent and otherwise you know my life would probably be different if I had that delegates would probably be different so one person going out on a limb because

(1:11:04) they had confidence and conviction about someone totally changes the world very cool well Keith thanks for doing this thanks foreign [Music] [Applause] [Music]