Marc Andreessen on the Mindset of Great Founders — with David Senra

We just have this fundamental view that technology is, like, unbalanced, an enormously powerful force in the world. And the big problem with the world is that there's not enough technology, there's not enough information, there's not enough intelligence. And we have this opportunity. We have these special sets of technologies that let us fundamentally improve things. Anybody can build a product, start a company, even trying to be a vc. These are all completely open field, and it's just shocking to me how few people actually give it a shot. And the fate of the world over the next 1500 years is riding on the people who actually want to give it a shot. You're much more likely to build something important in the 21st century. If you start with the founder and train them on management, then you are to start with the manager and try to train them on being a founder, creating new things. Take whatever amazing new thing you have and just put it in a room with, like, normal people and let them try to use it. And you just, like, learn so much about how much of a bubble that you're in.

0:00

Marc Andreessen recently joined David Senra on the Founders podcast for a conversation about entrepreneurship history and what drives the world's most ambitious builders. In this conversation with David, he reflects on patterns he's seen across great founders, why many of them focus relentlessly on building rather than introspection, and how technology and entrepreneurship continue to shape the future. Here's Marc Andreessen on Founders.

0:45

I wasn't expecting to start here. I want to talk about why you were consuming so much caffeine that you noticed that your heart was skipping a beat.

1:14

So I love caffeine. So for a very long time, I always said that the ultimate day, like, the perfect day, was 12 hours of caffeine followed by four hours of alcohol. That's just the ultimate. I did cut out, at least for now. I've cut out the four hours of alcohol. But caffeine is just, like, one of nature's most marvelous things. But it turns out you can't overdo it. And so, yeah, a while ago, I was drinking so much coffee at work that I was sitting in a meeting a couple years ago, and I started to feel just a little bit. Something felt off, and I just took my pulse, and I realized I was skipping about every tenth heartbeat. So I had, like, an existential crisis because I'm like, all right, I need to call 911. It's just like, am I about to have a heart attack? Am I about to die? So I go under the Table and I Google and I'm like, is this a problem? Before Dr. Google said, no, okay, it's fine. You just might want to cut back a little bit on the caffeine.

1:21

We were talking right before we recorded, like, I've read your entire blog archive, followed you on Twitter forever, listened to every single one of your, you know, podcasts that I can for going back like a decade. You said something that I love and I never hear other entrepreneurs think about, talk about. But I think it's super important that you don't have any levels of introspection.

2:08

Yes, zero, as little as possible.

2:24

Why?

2:26

Move forward, go. Yeah, I don't, I don't know. I just, I've found people who dwell on the past get stuck in the past. It's, it's just, it's a real problem and it's a, it's a problem at work and it's a problem at home.

2:27

So I've read obviously 400 and I think now 10 biographies of his use case entrepreneurs. And that was one of the most surprising things. Like what's the most surprising thing that you've learned from this? Like, oh, they have little or zero introspection. Like Sam Walton didn't wake up thinking about his internal self. He just woke up, he's like, I like building Walmart. I'm going to keep building Walmart. I'm going to make more Walmarts. And just kept doing it over and over again.

2:36

And you probably know if you go back 400 years ago, it never, it never would have occurred to anybody to be introspective. Like the whole idea of, I mean, just all of the modern conceptions around introspection and therapy and all the things that kind of result from that are, you know, kind of manufactured in the 1910s, 1920s.

2:53

Say more about that.

3:05

Great men of history didn't sit around doing, doing this stuff at any prior point. Right? It's all a new construct. First Western civilization had to kind of invent the concept of the individual, which was like a new concept several hundred years ago. And then for a long time it was all right, the individual runs and does all these things and builds things and builds empires and builds companies and builds technology and does all these things. And then kind of this kind of guilt based whammy kind of showed up from Europe, a lot of it from Vienna, 1910s, 1920s, Freud and that entire movement and kind of turned all that inward and basically said, okay, now we need to like, you know, basically second guess the individual. We need to criticize the individual. The individual needs to self criticize. Right. The individual needs to feel guilt, needs to look backwards, needs to, you know, dwell on the past. It never resonated with me.

3:06

Do you find a lot of the greatest founders that you've spent time with and backed and partnered with or have low introspection?

3:53

Yeah, generally. Although, in fairness, you know, the, the. The introspection is probably linked to the, the personality trait of neuroticism. Right. So, you know, a lot of, a lot of the best founders are, you know, I think like 0% neuroticism. Like 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, you know, that's also the case. It's not a, you know, it's not. It's. Maybe it's a nice to happen to be a low neuroticism, but not necessary. And so, you know, there are some that kind of get wrapped around the axle on kind of personal issues, 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 see where that goes.

3:59

So we've recorded, I don't know, like a dozen of these so far, most of them with some of the greatest, you know, founders living for the show. I can't believe how many times on almost every episode, psychedelics pops up and they're like, you should try them. Like, I'm not doing any drugs.

4:45

So to be clear, I'm not. I've never have. I'm never going to. Like, I have horror. I have, you know, the problem is I already have like tons of horror stories from people I know or know of that, you know, kind of came out the other side. Like. Well, I actually, I had a. My deepest conversation. This was actually, was actually with Huberman. And, you know, and I was describing having this phenomenon where we see at Silicon Valley where, you know, kind of these guys get under pressure and, you know, they kind of feel anxious or whatever, and they decide to, you know, somebody tells them it's psychedelics and they try it and they kind of come out the other end as a changed person and they kind of come out, like, much more at peace, but then they also tend to, like, quit Their companies, they, like, move to Indonesia and become a surface structure. Like, they're just. It's just like, peace out, right? They're just done. There's been a whole bunch of examples of this. And I. And I was complaining to Huberman about this, and in true Huberman, kind of wise Yoda style, he's like, well, you know, how do you know they're not happier? Like, maybe that was the positive outcome. Like, maybe the thing that was driving them to be a great entrepreneur was a fundamental level of insecurity. Right. And kind of this, you know, this kind of unsatisfied, you know, kind of neurotic impulse. And now they're just. Now they're just satisfied. Now they're just, you know, whatever the serotonin levels or whatever have been recalibrated, that they're just kind of satisfied sitting on the beach and being a surf instructor. And, you know, maybe they're better off. And I'm like, yeah, but their company is failing. And so anyway. Yeah. So there's a possibility that there's a better version of you or me on the other side of, you know, ayahuasca, but I'm not willing to find out.

4:57

I'm not either. That brings up something that I think about a lot. Daniel Ek has the greatest way to put this. He thinks the best entrepreneurs are not optimizing for happiness, they're optimizing for impact.

6:14

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

6:24

What's that for you?

7:06

Oh, I mean, that would require introspection. I'll let other people speculate.

7:07

Oh, you have to.

7:13

It's a lot more fun to Speculate about other people's.

7:13

But I am curious about you because you have a series of quotes that I absolutely love. I save on my phone. I reread from time to time one of them, and I'll butcher it, but it's just like, the world is way more malleable than you think. And if you just pursue something with a lot of maximum effort, drive and energy, the world will recalibrate around you easier than you think. And I actually reread that this morning before I came over here and I was like, what is that for, Mark? Like, today, like, what are you waking up trying to change in the world?

7:17

Yeah, there's a lot that we're actually trying to do. I'm suspicious that that's my actual underlying motivation just because, like I said, I don't think an external impact is enough to keep people going. Or at least I' seen way too many people who had a high level of external impact, and then at some point they just stop. Okay, well, here's the problem with external impact. It's like, okay, it's four in the morning. You're staring at the ceiling. Like, is that enough? External impact is stuff that's happening to other people. Right? It's like, all right, what is it about you? The story I like to tell myself is that I'm competing with myself. The story I like to tell myself is I'm getting up in the morning because I'm trying to become a better version of myself. I'm trying to become smarter and better informed and reach better conclusions and be better at what I do and continue to expand my skills. But again, to actually analyze that properly require a level of therapy that I'm not willing to engage in. So, anyway, so, yes, the much more comfortable conversation is the, yeah, what are you trying to do in the world? Which I would love to talk about.

7:41

I have almost no introspection either, so I understand that. All right, so tell me what you're trying to do in the world then.

8:38

Yeah, I mean, look, we have had this. It's actually fairly amazing that it's become a controversial kind of thing. But we just have this fundamental view that technology is unbalanced, an enormously powerful force in the world. And basically, that's a big problem with the world, that there's, you know, there's not enough technology, there's not enough information, there's not enough intelligence. And, you know, we have this opportunity. We have these special sets of technologies that let us fundamentally improve things. And. And then there's this very special you know, kind of personality type of the entrepreneur who's able to build the product and then. And then able to build the company and build a phenomenon and. And. And really make an impact on things. And. And so, you know, when I look at the world, I'm just like, okay, this is just like, this is a very. The world we live in is just a very primitive and crude place as compared to what it should be and what it could be. And so the whole thing that we've been trying to do for 17 years at our firm is build kind of the ideal partner to the founders that are trying to do that based on our own experiences of having been founders that were trying to do that. Overall, the world, especially the Western world, it's just stagnant. The overall kind of theme of things is just everything is stagnant. And we could talk a lot about that, but every once in a while you have somebody who comes along. It's just like, all right, no, I actually have an idea how to make things fundamentally better. And I have a way to build a business around that and build a company, build an empire around that, you know, and those people, you know, include ourselves in this. But, you know, those of us that are trying to do that, you know, we're like a rope movement basically against stagnation. But, like, you know, without us, there's nothing but stagnation. But it's actually really funny. There's always this kind of criticism that you get from, you know, whatever the, you know, kind of the corporate press or kind of outside critics, which is like, oh, you know, you VCs are funding the wrong things, or you entrepreneurs are building the wrong things. It's like, well, nobody, like, licensed us to do any of this. Like, we didn't, like, apply for a permit, right? Like, get, like, judged by somebody ahead of time and told, yes, you'd get to do this. You don't get to do this. Like, many people could be trying to do this. Anybody can do this. Anybody can build a product, start a company, start trying to be a vc. These are all completely open fields, and it's shocking to me how few people actually give it a shot. And the fate of the world over the next 1500 years is riding on the people who actually want to give it a shot.

8:42

So when you started the firm 17 years ago, was your thesis exactly the same as it is today?

10:46

I'd say the core thesis is the same. The specifics have changed enormously. We can talk about both parts of that. But, yeah, no, the core thesis Was the startup, the entrepreneur, the founder is going to be the core engine of progress in the world. And I think that's more true than ever. In fact, when we started, it was still controversial, the idea that a founder would run their own company.

10:52

Even in 2008, 2009.

11:12

Yeah, it was still very. Well, it was very controversial. In fact, they were high profile companies at the time that were getting heavily criticized for basically having these little kids running around running these companies.

11:13

Okay, so you had this encyclopedic knowledge of the history of Silicon Valley in your head. I probably read, I don't know, 30 to 40 books on it. So at some level, but not that you do. I remember reading a book on Nolan Bushnell, front of Atari. He was like 27 at the time and it was excessively rare. It talks about that in his stories. Like excessively rare for him not to be replaced. Once Atari started growing with an older CEO, were there other examples before him?

11:22

Well, so Christopher Columbus, Alexander the Great. Right. Throughout history, most of the, you know, Thomas Jefferson. Throughout history, most of the great things that have been built have been built by this kind of super charismatic founder type, you know, will to power founder type who, you know, basically built and run something to. Okay, so hold on. Henry Ford. Hold on.

11:47

I love that you went here because you don't remember this, but we had dinner in Miami with Jared Kushner like a year ago or something. And me and you would wrestle because I was so excited to talk to you and I was trying to get out of you, like, you know, because I think about history, space entrepreneurs all day. Like, this is what I do seven days a week. Like, who are these controversial history that you like, you start naming country founders.

12:08

Exactly. There's this like recency bias, right? Which is like the world that we live in today is the normal state of the world. And like everything that happened in the past is like weird and different. And those people were like, dumber than we are and like all screwed up. And it's like, well, maybe, or maybe the world worked a certain way for thousands of years and we're in the weird time. Like maybe we're in a time that's just like really unusual from a historical, you know, from a historical standpoint. And I think this is one of those dimensions in which that's true. It just, it never would have occurred to anybody 100, 200, 300 years ago that if somebody was going to like, like start something, that they weren't going to be the person who ran it. Like, obviously it was just obviously the case. The book that I always recommend on this topic is called the Machiavellians, which is this sort of famous book from the 1940s by this guy James Byrne, who's one of the great geniuses of the 20th century. And the way he describes it basically is he said there have been two fundamental modes of business organization over the course of basically the history of capitalism. There's what he calls bourgeois capitalism, which basically is like founder runs the company, name on the door. The classic archetype for bourgeois capitalism was Henry ford in the 1920s. And today it's Elon Musk, right? It's just like that's you. And by the way, in the old days it was Ford Motor Company, it's not Musk Motor Company, but everybody knows Tesla and SpaceX. Like these are Elon. And again, that maps to this historical thing, which is that's also how countries ran and that's also how cities ran and all these things. Religions, by the way, basically everything founders led the way, that's the historical norm. And then what he basically says in this book is he goes through and he says there's this new basically model that basically is an artifact again, it's an artifact of kind of this weird period of time between the 1880s, 1920s, where kind of the modern world as we know it today kind of formed. And he said there was sort of a new philosophy of sort of leadership and management, which is called managerialism. Sort of the rise of the concept of a manager, and specifically a manager as contrasted to a leader. And so therefore the manager, therefore the idea of a management school, right? Therefore Harvard and Stanford business schools, right? Therefore the idea of the manager who replaces the founder running a company. Therefore the idea of management as a skill set that can be used to run many different kinds of businesses. In the 70s, this then turned into the conglomerate, which was the idea that it doesn't matter what the company does. If you have a good manager, the company should do 30 different things. And so managerialism is this idea that you have this kind of interchangeable management skill and that that can basically run anything. And actually what Burnham says is, he says, look, people are going to try to draw value judgment on this and they're going to try to say this is better or worse than the old name on the door model. But he said the reality of the modern world is everything is big. For the electrical power grid to get big, or the road network to get big, or the car industry to get big, large scale systems need to be run by people who are TR how to run large scale systems. And so he said, you may or may not. And same thing with countries. Large scale countries are going to be run by people who are good at running large scale things, right? And the founding personality type is not the manager personality type. Those are different. And so there's going to be a handoff when things get big and complicated. And so that's the model that Nolan Bushnell talks about, and that's the model that dominated the Silicon Valley for 50 years. The problem with his argument is that assumes the managers are going to do a good job, right? And I think if there's like one dominant theme that we're seeing in the last 30 years in the west, for sure is like managers generally writ large are not doing a great job shop or another way to put it is the managers maybe are good at managing something that's going to be status quo for a long time. Like if it doesn't change, maybe they, you know, maybe they can run the banks for a long time or they can run the power company for a long time or the car company. And as long as the car is the car is the car, you know, or soup. Soup is. Soup is soup, it kind of doesn't matter. But the minute things change, the manager personality type, because it's not the founder personality type, it doesn't know how to deal with change. Not everything is changing. A lot of things aren't changing. But for the things that are changing, they're changing like really, really quickly. I mean, SpaceX is like the classic example of this. Imagine being a professionally trained manager, trained at a top management school, working for a rocket launch company, competing with SpaceX. And the assumption of the entire rocket industry for the last hundred years has been the rockets are used once and then that's it. And the economics of launch are dominated by having to build a new rocket every time. And then this crazy guy in California comes up with this thing where the rockets land in their book and you can't replicate it. Okay, your management skills, what good are your management skills at that point? And I think there's a whole bunch of interesting areas of human activity where that shift is happening. And so I think this is where Burnham's thesis collapses, where it's just like, okay, the managers actually can't do it. Yes, there's a need to run things at scale, but no, the managers actually can't do it because they can't adapt

12:27

and the founder can just learn how to run things at scale.

16:39

Well, that's the theory. And that's a big part of our theories. Yeah, the founders can actually learn how to do this. And, you know, look, they're, you know, this is still a controversial topic. This, you know, this still comes up. Like, is it controversial? Well, it is because founders aren't necessarily, especially founders on day one are not good at doing this. Like, okay, so, so in tech. Let's just 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, be capable of doing that, because some of them can and some of them can't. But. Yeah, so this maybe is like the core thesis behind our firm, which is you're much more likely to build something important in the 21st century if you start with the founder and train them on management than you are to start with the manager and try to train them on being a founder, on creating new things. And I think that this trend is intensifying because what's happening is all the old edifices, all the old incumbent institutions of the last 100 years that are run by managers, they're all at some state of fundamental collapse. Like, they're all collapsing in, like, trust and credibility 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 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, Elon Musk type who actually does it.

16:41

You think it's in a vast major minority of people. Agree with you.

18:08

Look, it's becoming more common. I mean, when you get an Elon Musk and a Steve Job, when you get these kind of archetypal examples of it, it's a lot easier to sell it. Mark Bar Zuckerberg we were talking about earlier, he's now a great case study of this. When Mark started Facebook, he has never, he had never had a job before. Okay. Not only had he not managed people, he had not worked for anybody. Right? 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 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. Double. You know, 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?

18:11

Which is exactly what Steve Jobs said when he saw Nolan Bushnell.

18:58

Exactly.

19:00

I can run my company.

19:01

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.

19:02

No, Wozniak pitched him.

19:13

Was it Wozniak? Okay, okay, okay. Wozniak pitch. There was some other story where Jobs went into some meeting with some manager trying to pitch the thing, and the line from the manager was absolutely not. This is the dumbest thing I've ever heard. Get your feet off my desk and get out of here.

19:14

Right.

19:25

You can just imagine Steve with his,

19:26

you know, and they had to be

19:28

bare feet at that time. My favorite Apple lore is that the first sale in Apple. In Apple's history was made barefoot. When he walked into the bike shop, he was barefoot.

19:28

What's amazing about that is, you know. Yeah. So Wasda for sure were for Hewlett Packard. Everything I'm describing was Hewlett Packard in the 1950s and 1960s and 1940s. That was also Dave. Dave. Dave Packard and Bill Hewlett were that founder type. And Dave Packard and Bill Hewlett ran their company for, between the two of them, like, 50 years. Do you think that's. And by the way, Silicon Valley was built in large part on hp. HP was the original Silicon Valley company.

19:40

Okay, that's the next question.

20:01

Run by its founders for 50 years, and yet people concluded the founders shouldn't run the companies. Right. And so it's like. It's one of those things where it's like, it's kind of so obvious it was staring everybody in the face. And so people had to construct kind of elaborate, you know, basically, you know, these, these elaborate kind of lattices of like, you know, theories to basically get around the fundamental fact that you need somebody who knows what to do actually running the thing.

20:02

Do you think HP might have been the most influential company in Silicon Valley history?

20:20

It was for sure the most influential company from 1940 to 1980. And then probably after that, Intel.

20:24

Well, you go to the founders of intel and you read biographies of them and they talk about modeling off of hp.

20:31

Yeah, that's right, that's right. Yeah, that's right.

20:36

And then how many founders modeled off of Bob Noyce and Intel after the fact, including Steve Jobs, who would go to Bob Noyce's house for dinner?

20:38

Yeah, that's right. By the way, that's another great example because Bob Noyce at least, you know, if you look at photos of Bob Noyce, you're like, wow, this guy's like a pillar of society. Like, he's, you know, he's very well dressed and he's kind of very adult and he's very like, he's famously the leader of the Traitorous Eight, the group that left Shockley to start Fairchild and then we left Fairchild to start to start Intel. And so Bob Noyce was 100% the Steve Jobs of his time. Just in the short sleeve white dress shirt and the skinny black tie, but again, it's like the exact same thing. And so unfortunately, never met Bob Noyce, but I could easily imagine Bob Noyce and Steve Jobs sitting down and being able to talk for three hours and completely understanding each other, despite the fact that the look and feel is completely.

20:45

He was almost like a disciplinarian to Steve because Steve was wild and reckless. Also wilder reckless. You need to mature. And I think Bob's wife maybe went to work at Apple early on too. So it was he, he talked about this in his biography. There's a few great biographies of Bob Noyce, but he said that the reason he spent so much time after he's really successful spending time with young entrepreneurs. He said it was restocking the stream

21:22

in which he fished from amazing.

21:43

He thought it was really important. He's like, I learned from all the guys before me. I need to take that, that knowledge I've built up over multiple decades and push it down the generations. That's what I'm trying to do with this show. I'm trying to do my other show Founders just like, hey, I mean, if you. My other show foundation founders. The what, when you click on the podcast description is like, learn from history's greatest entrepreneurs. That is what you're going to get if you listen to it. The whys actually comes from you, where you're like, I was watching one of your talks at Stanford, like, years ago, and you're like, hey, there's thousands of years of history where all these smart people, like, invented new technology, started new companies, and somebody wrote these lessons down in a book. And he's like, for a few moments of your time, or a few dollars and a few, you know, few hours of your time, you can always learn more stuff from the accumulated knowledge of history. And, like, it's a good. You should. I was like, that's the why. So I used your quote as the why to founders. 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.

21:44

Oh, so we've got all these elaborate theories. The practical reality of it was my partner Ben and I had become very active angel investors, and I'd been an angel investor since, like, the mid-90s. But then Ben and I started doing it kind of as a, you know, as a real thing, putting significant time into it, probably starting in, you know, 2003. Well, I did it kind of throughout the early 2000s, but 2003, 2000, 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 Ryan Conway and a handful of people, and then Ben and I running around doing it. And this was very significant in the evolution of the venture capital industry because this was the point at which the traditional VCs got disintermediated by angels and seed investors who kind of inserted in before the VCS arrived, which was this fundamental change that changed the whole industry. But we were part of that. But as a consequence, we were investing in all these new companies basically at the point of formation. We were basically playing amateur early stage vc. And we're getting. And we were always 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 either because there were Issues that just like the other people that they were, you know, working with or they're, you know, they either hadn't raised venture yet or the VCs that they'd raised from couldn't help them with. And so we just got pulled in. And the reason was we had been running companies at that point for, you know, whatever, 20 years. And so, you know, we kind of, we at least had some idea of what we were doing. And then the other is we kept getting brought into conflict resolution between the founders and the VCs because, especially because again, much more common at that time, especially if the VC's fundamental point of view is the founder's not going to run the company and we need to replace you with a professional manager as fast as possible, 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 VC wants to bring in. And so we kept ending up in these kind of basically as arbitrators in this sort of, in theory we were kind of trusted intermediaries because 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 eight hours a day just, just doing this and, and we're like, all right. And it's like weird. It's like you're writing a hundred thousand dollar check and you're like spending all this time doing it and then to basically arbitrate it to somebody who wrote a $10 million check and it's just like, all right, we should probably just write the $10 million check. 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 like the great founders is they tend to be able to operate at kind of the strategic conceptual level and then the practical level. So we had a whole theory I could take you through for the evolution of the venture business. Yeah. But underneath that was just this actual, the lived experience of what was actually happening on the ground. The big theory of the firm that we had at that time was linked to this idea of founders running the show, but it was also a structural observation of what was happening in the venture industry, which was basically what we did was in line with your philosophy. We went back and we studied a lot of other businesses that have similarities to the venture business. And so we study private equity, venture capital, or sorry, private equity, hedge funds, investment banks, Law firms, firms, management consulting firms, ad agencies, accounting firms, you know, basically anything where the product is fundamentally a relationship, you know, a knowledge work, you know, kind of relationship as compared to something that gets. That gets manufactured. And what we observed is basically an example Hollywood talent agencies actually is the one we've. We've probably talked publicly about the most. And so that was. That was a great case study, the OB story.

22:37

He was in this studio a few months ago.

25:54

Fantastic. And so. And he actually. And by the way, he gave us, you know, make a point of crediting, like, he gave us a lot of this theory. So a lot of this comes from him, but. Well, actually, I'll tell it through. Through his experience. So when he started his agency in. Was it 80, whatever? No, 75. 75.

25:56

In the 70s, I think in the 70s.

26:13

Like in the mid-70s. It was actually very similar. It was. Structurally, it was very similar to when we started a 16Z in 2009, which was. The configuration of the industry at that point was basically a bunch of essentially service firms, a bunch of talent agencies, none of which were at very high scale. And then each of them was basically a tribe of basically solo operators, kind of lone wolves. And so the concept in Hollywood was you had an agent and that was your guy, and that agent knew whoever that agent knew and had whatever relationships that agent had. But the other agents at your agency were not available to you. And there was no collective benefit to the fact that you were at an agency that had not just your guy, but like a hundred other guys. There was no collective payoff to that. They ran that in that way for a very specific reason, which is this kind of this eat what you kill professional services mentality where everybody should have to go build their own book of business, but you end up you're just dealing with a guy as opposed to a firm. Like, there's no firm firm. There's no collective thing. And that was basically the condition of venture capital in 2009, which is at this point, we knew all the VCs really well, and we had raised venture, and we had worked with all these other companies that had raised venture. And basically all of the legacy venture firms at that point, they were all like that. They were all just tribes of lone wolves. And then the thing that we knew that was not publicly known was, generally speaking, inside the firms, they didn't even like each other.

26:14

Oh, I hear stories like this all the time.

27:28

Right, right. And so it's like, whatever. There's Joe and Mary, who are partners at a venture firm and you're working with Joe and Mary has like a key connection that you need access to. And so he has Joe, can Mary introduce me to so and so. And what you don't know is they're having like a brutal fight. They're like trying to destroy each other because they're fundamentally economics. They're going for, you know, a greater slice of the profit pool. And so they're really going at it. And so we just, we saw example after example a venture firm that was basically either two things actually. One is either melting down due to just internal strife and conflict, or by the way, the other was generational succession, right? The other issue is a lot of the dominant venture firms in 2009 had been around for 30 or 40 years and they were now on their third generation of partners going to their fourth generation of partners. And again it's the same thing. They had been founded by Dynamos. And then the later generation people were not like that. So we basically said, oh, this is where the Ovus thing comes in. As we said, look, that's not going to last. And so our theory of it was what we call death of the middle or we sometimes the negative way to frame it is death of the metal. The positive way is the barbell, which is what's happened in all these other industries, which is basically the industry gets stretched apart like taff. And what you get is you get this barbell thing and on one side of the barbell you get early stage angel seed investor who are really like first money and like, you know, staying very light on their feet, writing a relatively small check, but like being involved in companies extremely early on and taking a lot of risk. And then on the other side you get basically scaled platforms, right? So you know, you get large scale enterprises that have like a lot of throwaway, a lot of access, very big networks and then access to a lot of money. The other comparison we always make is to retail shopping, which is there used to be department stores like Sears and JCPenney, which basically where the brand promise was pretty good selection of products and pretty good prices, right? And then now those are dead. And what you have instead of boutiques like the Gucci store or the Apple store, and then you've got this super scale e commerce companies like Walmart and Amazon. And we were to the point where it's just like there's no reason to ever go to a department store because it's got less selection than Walmart and Amazon, but it doesn't have the quality tier and the special experience of a Gucci or Apple.

27:30

But you had that thought in mind when you started a six days 1% hundred.

29:27

Yeah, exactly. Yeah. Okay. It was a conceptual leap for venture capital at the time. But the exact same thing had happened to private equity. The exact same thing had happened in hedge funds. The exact same thing had happened in.

29:30

And you knew that by what? Just reading.

29:38

So like investment. Investment Banks is a 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 it was like 20 guys.

29:40

And these are more like merchant bankers.

29:53

Yeah, merchant bank. Merchant bank.

29:54

There's a book I just finished reading because I've been spending time with Dell's Merchant Bank, a lot of them. Greg Lemkow has become a good friend and I was like, well, if I'm going to meet these guys, I need to like read something about their. To understand that. I read this book published in 1965 called the Merchant Bankers and it walks through exactly what you're talking about. And they were almost like family run partnerships.

29:55

That's right, yeah. The classic stories which I love so much. So J.P. morgan's 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 time and had. It was very important. But it was like this tiny little operation. It was fit in a single office. It was, I don't know, probably 20 principals and some office staff or something. It was not large. And actually the hidden secret to J.P. morgan was he was the son. The father was Junius Morgan.

30:13

Okay. I literally, when you were talking, I was like, wait, I was shocking that you would say pick him because I actually found his father more formidable individual than him.

30:41

He was so he was. Which is almost always the case with any famous public figure as the father is almost always a more interesting story, which a lot of examples of that. But however. Yeah, so Junius Morgan and then JP Morgan has 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 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 of the US but again, it was exactly your point. Like it was this little boutique family operation. The other great thing about that area of history is these were, they were all bifurcated by religion. So there were the Protestant investment banks and there were the Jewish investment banks and they did not mix.

30:49

No, not at all.

31:30

Completely different worlds. And as a consequence JP Morgan was the Protestant banks like JP Morgan were able to find like the railroads, which were considered like the real businesses at the time. But then like all the disreputable stuff like movie companies and like department stores like that. Those are all the Jewish investment banks by the way, with Jewish founders, almost entirely Jewish founders with like. And Goldman. JPMorgan is the big survivor of that today in the form of JP Morgan Chase. And then on the Jewish side as well, Goldman Sachs, you know, is the great survivor. But again if you go back there, so that's.

31:31

You consider that the, the barbell in investment banking. You have the, the JP Morgan kind of like family partnership and then you have the complete scale of like Goldman Sachs.

31:58

And so what happened was Both J. Both J.P. morgan and Goldman Sachs started out 100 years ago. They were on the one side of the. A hundred 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 today you call them like mid market, you know, sometimes called bul 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 at shingle in the 1920s, which is Joseph P. Kennedy, banker, private banker. And he just did deals and he was an angel investor of the time. And then you had the big commercial banks, but the big commercial banks had no interest in issuing loans to these speculative crazy 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, the banks became Morgan Stanley were kind of these mid things. Now what's happened sitting here 100 years later, those are now 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 and Company. And there are other boutique investment banks, But Allen Co. Was founded in the 1920s and is uniquely the one that survived in the original model of boutique, 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 and banking, which is Allen Company on the one side and then JP Morgan and Goldman Sachs on the other side.

32:06

So Are you reading about, about this while you're founding the firm before you're founding the firm?

33:19

Like Ben and I spent about a year and a half planning the firm and part of it was he was in, we call industrial servitude. He was working for Hewlett Packard after we sold our company to hp. So he was a, he was running a big part of HP at the time. And so 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 and think and work.

33:24

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 six, seven 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? I think Ovitz calls it like the 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 it was like, oh, my agents coming to the printer? No, it's like 20 agents are coming and I think they redress like the same kind of suit maker and like they were intentionally trying to, to intimidate like their competition.

33:42

Armani suits, Sulka Shirts was a shirt maker in, in Beverly H. Sober, you know, all sober colors, 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 CAA3. And so 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 now that's the Hollywood version. But like just imagine the psychological impact of that if you're just like an old school age and this is sort of, you know, Michael's a very dear friend. He, you know, he became very controversial over the years. And the reason he became so controversial I think is just because 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 and these 20 CA are showing up and like it's just, yeah, it's this force and the clients, if you talk to him, by the way, you know, a lot of his clients are, you know, still, still active today, you know, 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 a guy or do you want to work with a firm? It's just obvious he has, I don't know if he told you all these stories. Did he tell you about his morning schedule thing?

34:13

The getting on the bike, doing the.

35:19

No, no. For the firm. For the firm.

35:22

No, no, no.

35:25

So this is again, something that's specific to Hollywood, but it's a great example of the. Okay, so the agency business at the time he started CA, the agency business is like 90 years old or something, right? It started out doing vaudeville bookings and music halls. And it had been around for decades. And so the people involved in it had had decades to think about the best way to do it. And they had arrived at a set of practices. Practices. 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 9am and they would basically share, you know, whatever information was going to get shared in the agency would get shared at that point. And, oh, you know, this studio head wants a script to do. He wants to do a crime thriller and here's the script and whatever. And then, you know, this is like the point where there would be minimal, you know, whatever minimal handoff existed to the other agency. And so this is where everybody would kind of get updated. And so the staff meeting would go from like 9am to 10am and then at 10am 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 thief 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 7am we'll be done at 8. Between 8 and 9 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 o'. Clock. And it's like, I've got this great role. And you say, oh, the guys at CA call me about that three hours ago. 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 rinse and repeat that a thousand times. And it's just to the client, it's just like completely obvious what to do. And so, yeah, so the reason I go through this, the moral of the story is again, it's sort of this idea, incumbency, you know, incumbency, status quo. Like, you just end up, you end up, 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 founders of the agencies were 90 years ago. They weren't involved anymore. So the people who are running the competitive agencies were managers, not same thing managers, not founders. Right. And so the thing a manager never does, unless they're under duress is reconsider fundamental assumptions. Like, they hate that. 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 go in and reinvent it from scratch. That sounds like a nightmare. But anyway, as a consequence of that, you end up with all these embedded assumptions that are basically just unspoken. Nobody, nobody's questioning. It's 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 do they arrive at that? And what we found in just 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 1970 or 1930 or 1880 that just don't make sense anymore.

35:26

I love that you do 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, right? But there's so many of these principles that I comply to. Venture capital and your blog archive, which I absolutely love. And I told you, I've read like multiple times. I did episodes, done it. You would give advice to like, young people. It's like, my advice is like, go work in an industry that's still. The founders of that industry are still working.

37:58

Right.

38:20

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. It's like, oh, mediocrity is always invisible until passion shows up. And exposes it.

38:21

Oh, interesting. Yes. Right.

38:34

And that's what he did.

38:35

Yeah, that's right.

38:35

He's just like, there's so many things that 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.

38:36

Oh, yeah, yeah, yeah.

38:42

Because that guy was his mentor. I can't remember his name.

38:43

Famously work for the CEO of William Morris. Yeah, yeah. Which was the, the biggest of the talent agencies at the time.

38:45

So were you, were you and Ben essentially just designing what you wish you had when you were founders?

38:49

Yeah, that's right. And, and, and you know, and again, that may be a cheat code, but yeah, if, if you've been the customer, obviously this, this all becomes a lot more obvious.

38:53

And I don't know if you want to answer this question or not, but in Warren Buffett Chance, 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 weak, like that point in time in venture capital history that you were going to be playing against weak or weaker competition?

39:00

I would say not exactly. We didn't view them as weak. We viewed them as basically, we viewed them as running on a status quo set of ideas. And to be clear, part of why we think about it this way, we had raised money from, at the time, in the time, we're probably the two best venture firms. So Clarence Perkins in the 90s and I worked with John Doerr very closely for five years in Netscape and then Cloudcloud. We raised money from Benchmark when they were like king of the Hill and Andy Radcliffe, who was one of the founders of the firm and as legendary, brilliant vc. And so we had worked with, we just had accident of history. We had worked with two of the whatever top five or whatever people in the field for a long time and they were and are by the way, brilliant at running on the model that existed. John was brilliant at that, Andy's brilliant at that. They're still brilliant today. It was less a competition of, oh, these people are soft or these people aren't smart or anything. It was none of that. It was. No, they're really good at executing against this particular, particular playbook. And by the way, that's why it's okay if we're going to do this, we need to be playing by a different playbook.

39:16

There is no such thing as scaled venture capital at the time.

40:13

No, it's a time. No, because the firms, they all hit this limit. They all fundamentally hit this limit. They all hit this limit where they just could. The idea of a partnership of equals or even a hierarchical partnership, it just breaks at some point because there's just too much internal dissension. It is too hard to coordinate. And then everybody's fighting for slices of what was viewed at the time to be effective size pie. And so none of the other firms could. Structurally, there was just no way to get to scale.

40:16

Where else did you take ideas from besides the agent business in Hollywood and like the merchant bank, investment banking industry?

40:42

Oh, I mean it was just very obvious that it happened in private equity. Like, you know, 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're actually building like a lot of operational capabilities in house. They were actually building their own actually investment banks in house. One of the things we've never done, but has always been on the ideal list is to actually just have an in house business bank. And kick here had actually done that, just build a captive bank. And so they had done a bunch of things like that. And so we saw it happening, which was the mid tier private equity firms were collapsing and you either needed a solo, 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. It happened in. But I mean it had long. Actually the TV show Mad Men. Mad Men tells the structural story of this happening in the advertising field in the 60s and 70s. And I will ruthlessly spoil Mad Men because it's been off the air for like 20 years at this point. But a big part of the arc of Mad Men is those guys are working. Sterling Cooper is a classic mid market ad agency, right? And then whatever the third season, they sell it to McCann, which was the scale player at the time. And they show you all the pros. And they clearly talked to people who had been through this because they showed you all the pros and cons of working for McCann. Because 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 and conference room arguing with people until he just like gets up and walks out. But then Don Draper and Roger Sterling start their own startup. They start Sterling Cooper Draper Price, that's the second one which starts out as a true startup, as a true boutique startup. And then they have this whatever a year and a half, just, just fucking hell. Like, they can't get anywhere. They can't get clients, like, because. Because they're too small. You know, they're. They're subscale. And so it kind of. And then I think. I think in the end, I forget it's been too long, but I think in the end they end up. I think they end up selling it. No, no, no, no, no, no. Sorry, I got it wrong. They sell the first one to the British ad agency, that just completely destroys it. And then they sell the second one in the can. So they actually showed that process happening twice. And so again, if you go back in history, that is what happened in the ad agencies. Basically between the 40s and the 70s, basically, television catalyzed that when television emerged, advertising became a much bigger deal than it had been before, and it had to be professionalized in a different way. The other thing that happened is, of course, the external environment changes. So everything we just talked about just has to do with the internal mechanics of how these things run. But the other thing happens is the external environment changes. And so part of what I think, what Michael would say, I think you would agree with this. Part of what made CAA possible is at one point, basically, Hollywood was just movies. And then there was like, whatever, a low kind of TV division. 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, politics and culture and like all kinds of things. In fairness to the kind of our competitors, you know, Silicon Valley, between, call it 1950 to 2010, was primarily just in the tools business, right? Primarily. The companies that, you know, starting with Packard, the companies that we all backed and built were basically just building tools. And 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. Was right around the time we started our firm, that the Valley was going from being primarily tools businesses to actually building 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 any Airbnbs, it's a tiny little boutique business building basically little spreadsheets, software, but no Airbnb. Brian Chesky decided brilliantly, we're just going to go into the hospitality business and compete with hotels directly. Uber and Lyft in the old world were just taxi dispatch software. In the new world, they were full transportation providers. Tesla in the Old world would have just been software for self driving cars. Tesla in the new world builds the entire car. By the way, Facebook, same thing. Prior to Facebook, if you built like online ad software, you were selling it to the media companies. Mark's like, no, we're just going to beat the media company. We're just going to build the entire thing. And so this was the other thing that happened was 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 then this goes back to the scale thing. It's like, okay, why do you need to scale a venture firm Was because the companies need to scale. And then of course, AI now makes that crystal clear. Right, because the winning AI companies are raising 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, where VCs tap out is just not a relevant thing anymore.

40:48

But did you know the scale was changing at the time you founded the firm?

45:04

We had a pretty good idea. So I've been involved in Facebook basically informally since inception and then formally on the board since 2007. And so I saw the, when that thing hit the knee in the curve, it was just very clear to us. It was just very clear that we didn't know how big it was going to get, but it was going to get much, much bigger than the Internet 1.0 companies had gotten. And so there was that. What else? It was also around the time Apple was directly entering the cell phone market, which was another great example of this. Silicon Valley didn't used to make cell phones. And the original cell phones weren't made by Silicon Valley. They were made by these giant industrial companies like Sony and Nokia and whatever 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, no, screw that, we're just going to make that phone, right? There were these signals that it was happening. And then the other thing was just the Internet itself was maturing, right? And so at that point the consumer Internet was. And we had, you know, seen every part of that. And so we, you know, we, 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.

45:06

Yeah, you have a very interesting lived experience where like you were there at the very beginning of the Internet. One thing that I'm fascinated by, and that's Actually, what's going to be the first question for you? Because I've never heard you speak about this, at least on a podcast. But your partnership and relationship with Jim Clark, you were 20 when you met him. How old were you?

46:04

I was old fashioned. I actually graduated from college. I got my degree. Very, very stone age concept these days. So that was in 1994. So I was probably 20. 22. 22.

46:24

So there's this great book. I don't even think you like the book. Written by Michael Lewis. Silicon Valley story.

46:34

I've skipped it.

46:38

I've read it twice. Just because I don't know if anything's

46:39

in there is true.

46:41

But 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.

46:42

I think that's right.

46:57

And almost no one knows who he is. Can you just talk about how you met him, what it was like working with him?

46:58

I knew exactly who he was. And the reason was because his company, Silicon Graphics, his first company, they were the company in the valley between like call it 1980, call it, yeah, 87 to 94 or something. They were like whatever Google or OpenAI or whatever comp you want to make. Like they were like Google company. And by that I mean like they were the company where the smartest people in the industry all wanted to work there. They built the products that were like the coolest products you could possibly imagine. They had this incredibly young and vibrant and dynamic culture. And then they hit this cultural moment that was just incredible In I think 92, which was the turning point in the movie business when computer graphics really kicked in. And the two movies back to back were Jurassic park and Terminator 2.

47:02

Run on the machines they made, build

47:39

on the machines they made. The technology they made. Technology Jim invented was the technology that made that possible. And those movies, those are still two of the great all time movies. But at the time, I mean, I still remember the chills that you get seeing dinosaurs on screen. Great. It's just like this is. And then there's this company that builds the machines that do this. By the way, the Silicon Graphics computers are actually in the movie. There's a scene in Jurassic park where the kids are navigating through unix.

47:40

Yeah.

48:03

And it was actually the, it was actually the 3D software. Those were actually the silicraft computers. And so like they just that was like this moment where they were just like. They're just like the absolute IT company of all time. But by the way, their legacy lives on in Nvidia. Like Nvidia is Silicon Valley and graphics, basically with one, it's like a trader or a save thing. It had to be a new company, for reasons we could describe, to do the GPUs instead of the work, instead of the workstations and servers. Nvidia fundamentally is based on Jim's ideas. That's where that stuff all comes from. And so he was already legendary. And again, he was one of these. He was the full deal. He was legendary as a innovator in technology because he's a PhD in computer science. And actually he himself invented the original. Forget what they call it. I think it was the reality engine, the original interactive 3D graphics on a chip thing was actually him. I think it was his PhD theory thesis. And then he started the company and then he ran the company. And then, by the way. And then the VCs brought in professional manager. And by the way. And the reason we know about Nvidia today and not SGI is because of this founder manager issue, which we could talk about.

48:03

No, let's talk about that real quick.

49:09

Yeah, yeah, yeah.

49:10

Because I don't remember this part of the story.

49:11

Yeah, yeah. So now, by the way, there's two sides to the story and I wasn't there. And so I just reflexively side with Jim Clark. But I'll try to at least represent both sides of the story. So Jim, I don't even remember what's in Lewis, but like, Jim's like a true. Jim's like a true. He's like an Elon. He's like a true Elon, Steve Jobs level guy. And so like incredibly creative, incredibly bright, incredibly charismatic. But like, he volatile. Like, he's, he's, he's, he's exciting. Like, he's exciting. He's like, being around him is just like incredibly exciting. There's always something, something new. He always has new ideas. And again, that was in that time where it's just like, okay, that's the personality type that clearly can't run the company. And so the VCs brought in a guy out of Hewlett Packard who had been trained at Hewlett Packard. And because at the time, what happened is he wanted to hire a professional CEO, he went and hired a general manager out of either Hewlett Packard or IBM or the two training grounds for this guy. So they brought in a really, really Sharp guy who I don't really know. I think I met him once. I don't really know. Biological accounts. He was like, very. He was like a very good example of this kind of HP general manager type who became. Became a CEO. He took over the company. And by the way, like, in his defense, under him, the company scaled enormously. Like, I forget when he took it over, but it was like 87 or 80 or something. And then by the time I got to the Valley 94, this company had become huge. And whoever's running the company gets at least some credit for that. But anyway, they got in this classic fight. They got in this classic fight. And the classic fight was the same story every time. The founder's like. Founder's talking CEO. And the founder's like, to the CEO of we need to do things completely different. And the CEOs like, no, what we're doing is working. Stop fucking with. Stop fucking with things working. And the founder's like, no, it's working now, but it's not going to work in the future. And the manager and the CEOs like, well, then we'll deal with it in the future. And the founder's like, you can't wait to deal with it in the future, because by the time the future arrives, it's going to be too late. And the manager is like, why are you in my pants? I'm making you all this money. The company's super successful. Get out of my shorts. And you get in this. You see this. And that was exactly the deadlock that they got into. And Jim Clark basically made two predictions as the founder of Silicon Graphics. So Silicon Graphics at the time was selling their computers, basically started list price at like $50,000 for a desktop workstation and then scaled up into the millions. And Jim was like, look, 2,000 things are going to happen. It's amazing that he. And he figured this out by, like 1991 or something. He said, two things are going to happen. He said, number one, everything that we sell today for $50,000 is going to go on a chip and that's going to go on a card, and it's going to go on a PC and it's going to cost 300 bucks. And either we're the company that's going to make that or we're going to get destroyed, Right? Which, by the way, is what happened. That's Nvidia. That's what actually happened, right? So he was completely correct about that. The other thing that he had was he's like, look, this idea of standalone computers is not going to be the thing. These computers are all going to get networked together, and the network is going to become the important thing. At the time, there were different terms. People were using terms like information superhighway or video on demand or 500 channels. You had all these kind of concepts kind of coalescing around what became the Internet. And even before the Internet kind of became a mainstream thing, Jim was just like, look, it's just inevitable that this is all going to become connected. And then the function of a computer is no longer going to be mainly what just the computer does. It's going to be the fact that it can talk to all the other computers. And we need to do that. And to do that, he actually went to Japan. He actually got this incredible deal. Nintendo, you know, then and now, was like, you know, this giant video game company. So he actually had this deal with Nintendo where, number one is he actually. And Silicon Graphics actually did this. Actually built the original 3D graphics chip for a. For a consumer game player for the Nintendo 64. So he did that deal, and then he went to Time Warner, which at the time was, you know, this very important media company doing all kinds of things, and he struck a deal with them to do what was called interactive tv, which was basically pre Internet. Basically it was like Netflix was before Netflix in 1991. Right, like amazing foresight. Right, just like amazing foresight. But again, he and the CEO got in this conflict, and the CEOs like, look, we just can't. We have to focus on the thing that we're doing. We're not going to do these things. And so Jim did the classic founder thing and he left. And when I met him, basically that was the state that he was in, which was, okay, like, you know, I, Jim, am like in the prime of my life. I know I have all these ideas. I don't know exactly what to do with my next company, but I know it should be a software company, not a hardware company. I know it needs to be a company that is able to anticipate these changes that are happening in the world. And I know that. And he was very sad about this. Silicon Graphics is not the company that's going to be able to do these things. And so I have to build the new company that's going to do it.

49:12

I want to hear more about what it was like working with them. But there was a very astute observation you made in your blog archive because you were trying to, you know, essentially this post was trying to educate founders Just like recruiting is the most important thing you're doing at the very beginning of company, maybe forever. And you're underestimating how difficult it is. And you tell the story of Jim Clark in the blog archive, you're like, this guy was a legend. He was like most famous person, best entrepreneur. And he's like, he tried to recruit all these other people and like, I don't know, it was like 100 people. And you're like, you were one of one of two or three that actually followed through and took the chance and jumped and started working with him.

53:25

Yeah. And this again, this is like, I don't know, Zuckerberg or Sergey Brin or Elon or whatever decides to start a company. Like that was his candle power wattage in the community at that time. And so yeah, you would think that the obvious thing, people just like say, you know, Jim Clark wants to start a company with you. You know, just the obvious thing, know, is you, you just say yes, like it was not happening. And so I don't know if I told the story, but the crystallized memory is dinner of 12 of us at this famous Italian restaurant in Palo Alto called El Fornayo. That's where a lot of these companies were formed, Jim's favorite restaurant at the time. So Jim had like a dozen of us, us being people who were like in existing companies, who were like basically technical people who he knew well. This is the thing, he was constrained. He had a non solicit agreement with Silicon Graphics and so he couldn't just repeat people out and he didn't want to violate that. And so he needed to basically reach out to the technical community and find new collaborators. So there were like a dozen of us in there. And I remember that dinner very precisely for two reasons. Number one is I was the only one of the dozen to say yes. And then the other was, it's the first time in my life I drank red wine and I didn't know what to make of it. And so I kept sipping it, trying to figure out if I liked it or not. And I didn't realize that I was getting completely hammered because I had no idea to calibrate red wine. And so the true version of the story is, you know, I leave the dinner and I'm like, wow, this is amazing. Like, you know, I'm going to say yes to this, we're going to do this. And I, I go to my car in the parking garage in Palo Alto across the street and my brand new car, my first, you know, new car, I'VE ever owned. Right. My brand new car. And I, and I, and I and I gun and I pull it out and I ripped the entire front end of the car off. It's like this screaming metal sound. So like the whole front of my car is just like hanging on the ground and I'm like, oh, fuck me. So anyway, I parked the car, get out of the car, walk home.

54:00

No Uber this time.

55:42

No uber. You know, three mile walk at, you know, whatever, 11 o' clock at night with you know, six bottles of red wine.

55:43

And you're what? 22.

55:50

No problem. 22, yeah, exactly, 22. I'm like, I think I probably won't mention this to Jim. I don't know.

55:51

There's some wild stories in that book. He might have admired you to more.

55:58

He might have. Yes, yes, yes.

56:01

How many founders of the company? Just you and him.

56:03

So originally. Yeah, originally it was him and me. Yeah. We started the company and we had a long. It was again one of these things where we had long conversations about like what to do. Well, okay, so then the problem that he had was there was the idea of doing the graphics chip. But like. And again that's what Nvidia did. But Nvidia was essentially a spinoff of sgi. But like at that time starting a new chip company from scratch would have been tough and he didn't want to compete with SGI doing that. And then, and then the interactive, what you call the Interact, it's lost to history, but this interactive television street, like it wasn't time for that yet. It wasn't actually time for Netflix. Yeah. And so it was going to be cost prohibitive. Time Warner had rolled out this interactive television thing in Orlando, Florida to 500 people. Yeah.

56:05

And Microsoft was involved.

56:43

They were doing a ton. And Oracle at the time, like all the big companies were.

56:45

It's all these Bill Gates therapies.

56:48

Yeah, exactly. He talks about that a lot. But the capex per house was like $50,000 or something because you had to have a Silicon Graphics workstation in the house and it just, it wasn't going to work and so you couldn't figure that out. And then we cycled through a whole bunch of ideas. He actually went back to Nintendo and we almost pulled the trigger on base. We basically building what today you'd call like Xbox Live or what is it called, PlayStation Network or Xbox Live, like an online gaming service for the Nintendo 64 in 1994, which might have been a good idea. We thought it was too early. We almost did that and then what happened literally was the Internet. You know, I had worked on the Internet in college and then, and then, you know, this is, you know, fortunately only a few months later. But the Internet just kept growing. Like it just.

56:49

Hold on, hold on, Mark. Yes, you'd worked on the Internet. That's a little bit modest.

57:28

Yes, well, I think a lot of

57:32

people listening to this will know, but you should probably explain how you're working on the Internet.

57:34

That. 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 big of a deal at the time as it's viewed now. So the Internet, I've told the story many times, so I won't go into huge detail, but yeah, so a group of us at Illinois did this thing called Mosaic, which was the first, as I said, the first widely used web browser. Then the first one was graphics.

57:37

Explain what was different about what you made compared to what it existed before.

57:55

Yeah, so like previous web browsers were like text based. And so there was like this nascent concept of the web, but it was like, it was like text based terminals. And then it didn't have graphics. It wasn't point and click. You know, it didn't work in the way that you would like expect software to work. And then by the way, it didn't also have like, you know, no scripting language, no security, you know, none of the actual capabilities that like make, make the browser a useful thing. And so there was this like nascent idea, but it, but it needed to get built into a full thing. And so 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 first web server again, that kind of had everything that people needed. You know, this had been a project at college and then this was a. And again, at the time the Internet was not viewed as consumer phenomenon.

57:58

Wasn't it illegal to commercialize? Steve Case of AOL tells a story that he had to like lobby and get a law changed.

58:42

Yeah, that's right.

58:48

What was the details there?

58:49

So the, the Internet as we know it today in the 1980s was called the NSF net. NSF stands for National Science foundation, which was a branch of the US Government that funds research. 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 because the NSF had actually dumped a ton of money into four universities around the country. To build what were called the supercomputer centers. And then those were also the main hubs for the nsfnet. And the function of the NSF net was fundamentally to connect the supercomputers to all the people who were going to use them. And so it was this government research academic program and it was very exciting in the technical field. But there was no conception that ordinary people are ever going to use any of this. It was just nobody ever thought that this was the thing that armies were going to use nsf, it's taxpayer funding. So the government at least is not supposed to be funding businesses directly, although sometimes they do. But there was formal legal restrictions on funding things with commercial applications. And so what there was is there was something called the aup, the Acceptable Use Policy. And the Acceptable Use Policy said that basically the Internet, the NSF Net 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. I'm glad my tax money is be. Not to going, going to find something like that. But as a user you're just like, all right, that's nuts. That's clearly crazy. And if you took the conceptual leap to say, no, this is going to escape the lab and this is going to be something that normal people are going to use, 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 about the concept of Eternal September?

58:51

No.

1:00:35

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 was just like this. It was amazing. It was like the most pure, clean, intellectual, vibrant space since, I don't know, Athens in 500 BC. It was just this amazing phenomenon. And then AOL connected. AOL had whatever million or 2 million people@ that point. And they connected all the AOL users, which were just normal people, to the Internet. September 1993. And so it became Eternal September, which is. That's the day that the Internet changed. And by the way, I'm pro that. I'm glad that happened. But the pro and the con of that is that took the Internet from this I every tower kind of thing to this basically mainstream consumer, ordinary people thing, which of course is just a fundamentally different thing, obviously. Right. The concept of Eternal September literally was. It was like when every new wave of college graduates graduated and got their first job and then went online. September is when the new crop of Internet users showed up for a long time. So the September effect didn't just happen once. It 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 it's all going to get ruined in September. Right. And so the Internet that we live in today is the result of they could only see us now the 30th of September. Right. But yeah, and by the way, there was controversy at the time about whether the Internet, whether the acceptable use policy should be revoked. There was controversy over whether normal people should be on it or not. There was controversy over whether the kind of content normal people wanted to be on it should be allowed to be on it. There was controversy about whether there should be like. There was controversy. We got quite a bit of flack at the time for putting images into web pages under the theory that that would, like, fundamentally make everything worse because you'd have, like, normie content that would be bad. And then, you know, like, E commerce, by the way, advertising. I remember when there was actually a moment there was a guy. There was a guy. There's a guy named Sanford Wallace, and he became known as Spamford Spanford Wallace. And he was literally. He sent out the first spam message on the Internet in, like, 1992. And it was like, literally, it was like the first Internet ad. And it was like a spam for, I don't know, whatever, illegal services or something. And he just drops into Usenet. And it was like a thermonuclear explosion because it was like, get this commercialized crap out of my. Out of my. Out of my newsfeed. And so all of these things were hotly controversial. I was generally on the other side of all these arguments because I was like, look, this thing is great. Obviously everybody should have access to this. Obviously we need to Connect everybody to this. Obviously, to do that. These need to be businesses, there needs to be commerce, there needs to be advertising. All these things obviously, obviously need to happen.

1:00:36

So is that the discussions you and Jim were having where you're like, okay, we're going to start an actual company on this?

1:03:36

So, yeah, so that's how we got to the conversation Jim and I had, which was basically like, okay, because that was right at the pivot points. It was like in early 94. So this is like the AUP had just been revoked and it was just. And AOL had just done the first September, and it was. The whole thing was just about to tip. And I knew that. I knew that because I was tech support for the browser personally. No, explain that. Just me. Well, so if you. Mosaic, at the time was the browser everybody used. And so if you use 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, out of three years and got all the emails.

1:03:41

How many emails were you getting?

1:04:24

Well, there are actually two. That was one email box. And the other email box was. Mosaic was actually created under by. It was also funded by the National Science Foundation. So it was actually not the original license that couldn't be used for commercial use. It was for academic and research and individual use. And so we had this thing, we did a deliberately ambiguous license, and we said, if you want to use the browser commercially, you need to email us to arrange terms. Now, we had no concept at all of what those terms would be, but we just said, we need to create this incoming flow. So I was getting bombarded with tech support requests. And by the way, tech support for the Internet means your tech support for everything. So it's like the old PCs had CD ROM trays. You press the button, the CD ROM tray comes out. You put the disk out. The thing. The problem is a lot of people thought that those were cup holders, right? So you press the button, the cup holder comes out, you put your cup of coffee down, and then, you know, 10 seconds later, the cup holder retracts back into the PC, fills your coffee all over the place. You're like, how the fuck do I keep the cup holder out? Right? It's like, man, let me email Mark. Yeah, let me email Mark. You know, it's like, sir, that's the CD ROM drive. So there was a lot of that. One of the funnier things you can always do in politics they call this focus groups. But you use your testing, you see this over and over at tech companies. Take whatever amazing new thing you have and just put it in a room with like normal people and let them try to use it. And you just like learn so much about how much of a bubble that you're in about the kind of things that you're familiar with that like normal people are just like, I don't know what the hell any of this stuff is. So there, there, there was a lot of that. But then I had this other email box which was all the, all the commercial licensing requests. And so, so I saw the consumer take off on the one side and then I basically, I think that. And then the, the commercial requests hit like 400 messages and people wanted to pay money for this thing. And so I basically took those to Jim and I was like, there's a business. Yeah, this is going to happen. And then we actually went to my underwrite. My old boss 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 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 the denied NSF grant that would have kept the whole thing an academic project. But yeah, so like, yeah, at that point it was like, at least to Jim and me, it was just obvious that that was going to be business. By the way, again, very controversial. The original press coverage on Netscape for the first like year was that these people will 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. What did you think? The business model though, even, and it

1:04:25

was controversial, was just literally licensing it.

1:06:58

It was a combination of things. So it was definitely software licensing. And we did this thing up front where the browser was free, but the server software cost money. And then we out of the gate started building all these, we call it applications, server side applications. So we built like the first publishing system. We built the first publishing system for like running a newspaper or magazine online 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. So we built and sold a lot of that software. And then we owned the main website that the browser had. It's Default homepage. And so we built the original Internet advertising business was, was basically so Netscape was the largest Internet advertising company until I think 97.

1:07:00

That's incredible.

1:07:38

I didn't know that when Yahoo passed us.

1:07:38

Yeah.

1:07:39

And so yeah, so we, we invented or people at the firm invented, at the company invented. I, I, I don't know if we, I don't know 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 yeah, yeah. And so it, it was literally, it was advertising for Yahoo. It was, it was E commerce, but pre Amazon, 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 and a lot of other newspapers, magazines, all, all that stuff. And so yeah, it was a lot of that. And then it was the, the, the web operation. And again it was, again, it all looks obvious in retrospect, but like again it was like, okay, when we started this, like, I don't know what the total number was in like. So we started the company in April 94. There couldn't have been more than 2 million people total online, right? And, and then almost everybody was of kind coming in over dial up. This is like pre broadband, right? So everybody's coming in at 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 TCPIP installed. So to get your PC actually on the Internet, you needed to buy a TCPIP stack. Try explaining to a normal human being what a TCPIP stack is. Like, it makes no sense at all.

1:07:41

They're going to ask if they could put it next to their cup holder.

1:08:51

Exactly. Yeah. Just like, it was just like, it was just like talking to Martians, right? Talking to us is like talking to Martians. And then, you know, monitors were, you know, like three feet deep and just like bathing you in radiation. You know, just kind of hoping that the radiation stays up here and you know, everywhere else. In retrospect, it was, it was like super early and it was all very, and then again it was just like, okay, E commerce. Like are people going to buy things online? It's like, I don't know, maybe. But like the press at that time, it was just like wall to wall. Like if you put your credit card number online like, hackers are going to steal it.

1:08:53

I was 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 Internet.

1:09:18

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. 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, 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. Your times kept 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 took. You could see nascent versions of them back then.

1:09:23

You pick up on something that. Because me and you've read a bunch of the same books where it's like humans reaction to something new, it's 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.

1:10:06

Bicycle face, exactly.

1:10:18

Do you want to say what bicycle face is?

1:10:21

Bicycle face. Bicycle face. Bicycle face, yes. So it basically turns out every new technology is greeted with what they call a moral panic. Right? So. And a moral panic basically is whatever this new technology is or this new form of media is, it's going to ruin everything. It's going to ruin everything. It's specifically going to ruin society, it's going to ruin morality, and then especially it's going to ruin the children. And then back. This bicycle was pre feminism. So it also was. It's also going to ruin the women. Very specifically where he's going to ruin the women, which clearly cannot be, because women clearly in 1880 cannot be trusted to use a bicycle without getting into real trouble. I'll explain why. So this is this persistent theme, and basically you go all the way back and this is like this famous thing where Plato and Socrates thought that basically they thought that written language was a big mistake, that all information transmission should be oral. And they had this whole thing back in 500 B.C. and then it was just like every. You just have to imagine. I always like to hypothesize things. The first guy brought fire. You know, it's like, down from the mouth.

1:10:22

Probably killed him.

1:11:17

Yeah, they're like, what the fuck, right? Exactly. Like, you know, this thing is horrible. This thing could burn down the village. Like, this is awful. This is going to destroy everything. And so it's just been this. This consistent thing. And there's this great website called Pessimist Archive where these guys who go back and they find all these newspaper articles that are contemporaneous to these things, but it's. It's everything. And, you know, so when I was a kid, you know, it's like heavy metal music, Dungeons and Dragons, you know, it was like, all this stuff was awful. I remember the moral panic around the Walkman, the very first cassette, portable cassette player with the headphones, because it was going to. It was going to destroy society because everybody's going to just be listening to their own music. I remember the moral panic around the calculator was going to destroy education because kids were not going to learn how to do math anymore. And then you go back and it's like in the 50s, it was like comic books and it was rock and roll music. Obviously it was going to ruin everything. In the 20s, by the way, jazz music was going to ruin everything. Playing cards were going to ruin everything. What else? Novels, paperback novels were taking. Kids were going to sit around and just read novels all day instead of doing any real work. So it's just over and over and over again. It's this constant story. So the bicycle one is the great one. So the bicycle rolls out in 1870. 1880. And so the US still at that point was thinly populated from today, but the west had been settled. And so you had all these little towns and villages scattered all over the place. But to get from one town to the next was like 5, 10, 15 miles. And so people didn't generally walk that. And so the bicycle comes out. All of a sudden it's easy to go five miles into the next town. And then young people discover the bicycle and they discover that there are young people who they didn't grow up with who are in the next town, town over, and they're like, you know, they head off to do it. And so the specific. To do it. Well, to do it, yes, to do everything to do whatever it is the young people do. They're going to. They're going to head to the. Yeah, look, it's just the nature. If you've known the same group of people since you were two, like, you're going to want. Yeah.

1:11:17

What's over that hill?

1:12:59

What's over that hill? Yes, exactly. Right. I grew up in a small town. I can identify with that. And so. And then specifically at that point, 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, a town, and all the attractive young women are heading over the hill to the next hill on this bicycle thing, that's a big problem. And so the press at the time created this thing called bicycle face. And the idea of bicycle face was. It was part of the moral lecture that was given to young women in the press at the time, which was basically, young women should not use bicycles because 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 an exertion face. But the thing was, if you did that too much, your face would be freeze into bicycle face.

1:13:00

They literally thought it would stay that way.

1:13:44

It would stay that way permanently, and then you would never find a husband. Right. And so. So, yeah, so that was that moral panic. Yeah. And so these. These things just, like, rip through every. I mean, it's just. It's what's incredible. Music is always a great one because it's like, you know, I don't know, this is. It's over now. But like, in the, in the. In the 90s, 2000s, you know, it was all this moral panic around hip hop.

1:13:46

Dude, Jimmy Iovine, who's your neighbor. Yeah, he was in here too, weeks ago, and he had to deal with. They called him a.

1:14:04

Yes.

1:14:10

Like a chemical gas or mustard gas. Like, they compared him to literally, like, what he's doing is the same as genocide.

1:14:10

Yes.

1:14:17

Because he's funding hip hop music. And white kids are starting to listen to hip hop music.

1:14:17

Music in the late 80s, early 90s,

1:14:21

like, congressional hearings on this, like, the media behind him. He was. He was pushed out of a conglomerate. Like, this wasn't a joke.

1:14:23

Yes, that's right. That's right. And it's actually funny because, like, we. We. I'm not in the music business, but, like, hip hop has become so normalized that even today it would just never even occur to you. It just like, feels like in fact, hip hop is kind of, you know, is a cultural phenomenon. He's been, is even kind of fading today. But yeah, no, that was super intense at the time. And then rock and roll, that was like super intense in the 50s and 60s. And then the amazing thing is, remember Elvis Presley?

1:14:31

They wouldn't shoot him.

1:14:49

That's right.

1:14:51

Because he would shake his hip. So they're like, no, no, he can't. It's waist up on TV from now on.

1:14:51

That's right. But here's the one, here's the one. I love jazz. They said all the same things about jazz in the 1920s and 1930s. It was jazz music that's corrupting. And it was the exact same thing. It's because like kids are going to get together and they're going to dance to jazz and then who knows what happens? And then it was like, there's a jazz musician that's like smoking pot and that means all the kids are going to start smoking. It was just so it's the same story over and over and over and over again. And I should say, by the way, in fairness, like, it's not that society doesn't change. Like, you know, many of the technologies that we just described did cause society to change. Like, you know, things are different pre and post the bicycle, they're different pre and post the car. You know, they're different pre and post, you know, the creation of modern, modern culture, rock and roll or whatever. But like this, like the more again, this idea of the moral pan, this idea of just like outright panic, end of the world is just like this repeated over and over and over again thing. And then what's happened is this is the obvious way to sell newspapers, right? This is like the meta story of the press, which is just like whatever's happening is horrible and awful and it's going to kill everything. Be sure to buy our newspaper tomorrow.

1:14:56

This originates because I've done a bunch of episodes and read biographies about. I get a lot of shit because I don't pay attention to the news at all. Like I read old books, listen to podcasts, talk to smart people. That's essentially like my media diet right now. Obviously communicate with LLMs. But you know, like you're, you're misinformed or you're not misinformed, you're ill informed or you're not informed. If you don't do this, I'm like, have you read the biography of Joseph Pulitzer? Have you read the biography of William Randolph Hearst? Like, all these ideas that you think are New. It's just like they were the, they were the originators and the inventors of essentially yellow journalism. Go read that stuff and what it was like what media, newspapers were like before and after Pulitzer and Hearst and tell me I should be consuming this stuff nonstop. Like that's a ridiculous statement. Yeah, something comes to mind. I want to go back to, to Jim Clark real quick. Is there any. And then I want to go to. You have this, you've had this very unique seat because you saw the beginning of the, the Internet. And now I want to compare like what the lessons from there for like where we're at in AI. But is there anything that you learned because Jim Clark was what, like two deck, probably 20 years older than you?

1:15:56

Yeah, something about, about that probably.

1:16:56

So like, is there anything that you learned working. What a fucking education. You had to be able to work with that guy in your early 20s.

1:16:57

Yeah, that's right.

1:17:03

So is there anything that you learned by working with him back then that you still use today?

1:17:03

I mean, yeah, a lot. You know, Lisa said it was very formative for me, so. So a lot of it. But yeah, I mean you, you mentioned that the sort of quote earlier about the world is a malleable place. Like Jim was like the ultra version of that. 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, he would just like pound the world into adopting them, into believing them. Like he was, you know, like the idea of being like complete force of nature.

1:17:10

One thing that was malleable was himself. He has this great quote in that book where he, he, 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 a second or third divorce and he just snapped one day and he's just like. I had 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.

1:17:33

And of course he does that not just by like starting a company, but inventing interactive computer graphics and like completely changing the field, you know, indirectly, like completely changing Hollywood.

1:18:01

Was there anything about recruiting or managing or any other way that he ran his company?

1:18:10

No. So my two mentors at that time, actually, they were they were in some ways polar opposite. They always got along, but they were kind of polar opposites. They were both Jim. 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, you know, and 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. And then, you know, I'm going to say also put this like a sense of professional dissatisfaction. Like, okay, like whatever. Look, this 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. But Jim, you know, was always, you know, at least 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, 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, was the. Who I just literally was with yesterday in Jackson, Mississippi. Jim Barksdale's the other side, which was Jim Barksdale's like the manager of managers. So Clark is like the ultimate example of that bourgeois capitalist thing I mentioned. So 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 and you know, came, came in to run, you know, came into run Netscape. And what was interesting was like 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 founders creativity, you can't build anything big just with that. Just the management. You don't, you do it in new things.

1:18:14

Who's a great example of that from history? It's like, would it be like Nikola Tesla found a Creativity.

1:19:59

Oh, that's right. Yeah.

1:20:03

He like a George Westinghouse to commercialize his ideas.

1:20:04

Well, it's a Tesla versus Edison. Yeah. So Tesla versus, so Tesla versus Edison. So I'm an, I'm an Edison guy. This is the thing. So Elon's a Tesla guy. Is a Tesla guy, obviously. But, but Elon, of course himself has now become like the real 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.

1:20:07

But like, let's go there next.

1:20:27

Yeah, he's maybe the greatest manager of our era, despite the fact that nobody thinks of him that way. But, but so I actually think Elon's more like Edison than he is like Tesla. And there was a big war and it was kind of this thing because it's, it's every. Everything kind of turns into these little morality. Morality plays. And so kind of the, this, the basic story of Tesla and Edison was Tesla had all these ideas, but couldn't, couldn't commercialize them, couldn't turn them into companies ultimately. You know, couldn't, couldn't figure out how to money on them, couldn't build like big, big, big companies, 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. And he's just like, we're just going to try a thousand things. You know, it's 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 and you know, sort of this brute force approach. But then he built General Electric, like he built the like National Electric grid, you know, and built these giant companies. And then he know. Funded by, funded by JP Morgan. There you go. As a venture capitalist in his spare time. Yes, exactly 100%. And then Edison also invented the movie projector and then literally spent years trying to enforce his paths. Right.

1:20:28

And phonograph.

1:21:33

And the photograph. The photograph, you tell the story.

1:21:34

And I knew because I read the book too, we should tell people what he thought the phonograph was going to be used for.

1:21:36

So this is a bit of a digression, but it gets to the personality type. So one of the things that people look for is like, oh, what are the consequences of a new technology going to be, oh, let's go ask the, the people who invent that because obviously they know. And so this is what happens when like these, when the AI guy, for example, the AI guys get, you know, the pioneers of AI get interviewed in the press. It's like, well, tell us the future of AI and it's like you get the, like the one I'll pick on is Jeffrey Hinton, who's like an actual self declared socialist. Like he's an actual, 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 rampant unemployment and we need to give UBI to everybody. It's like, what a coincidence. The answer from the socialist is communism. Like, what an amazing coincidence. But people think because 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. He was a WASPy, you know, personality type of that era. Extremely proper gentleman, always like impeccably dressed, very, you know, kind of very ethical, you know, upstanding, you know, kind of citizen of that time. And very religious, very religiously devout. And so for him it was just obvious that the application of the record player was that everybody would buy a record player and that everybody would buy a library of discs that would be the great, great sermons, religious sermons for 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 adoring, you know, wife and kids, you know, getting 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 swam, then it's jazz. And Edison's just like completely horrified.

1:21:41

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 them with pleasure.

1:23:08

Exactly, exactly. And so this is what I always tell, this is always my thing. It's like if Edison didn't know what the phonograph was going to get 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 implications. Like, 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 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 or social trends, but it's certainly not somebody who's been in the lab for 20 years, including myself.

1:23:16

So how this started, you think you greatly benefited from the two gyms, essentially like being polar opposites basically and showing

1:23:49

you, but also working very closely together.

1:23:55

Did they get along?

1:23:57

I don't know if I've told this story publicly, so I should tell this story. So they got along great, became very good friends. They both did great and they're both, you know, very responsible for certainly everything that Netscape did and everything that I've done. But they, but you know, it's a, it's an, it's different disciplines, different worldviews, you know, so there's an oil and a water kind of aspect of that. And so, you know, Clark ran the company for the first like nine months, which at the time felt like, you know, just like this was Internet time. It felt like much longer. But it was like this highly compressed nine month period. And you know, and it was like we were like doing, we were all these new things. We were doing all these new things. Like the company was just doing like 100 new things. It was amazing. But like we. Nothing was being systematized. Right? It was not going to by default, it was not going to turn into like a large, large company without the management part. And so Barstow comes in and he basically is like, wow, this invention is great, but we need to actually start to have systems and schedules and processes and actually run this thing like a business. And as founders do, Clark originally found that a little bit frustrating because it's like whatever is the latest idea is not the thing that we're just going to turn the entire company to pursue. And this is when Clark was still coming to Jim Barstdale staff meetings. And so Clark got up, he had a negative reaction to Barstow saying, no, we're not going to do this new thing. We're going to keep doing this thing that's already working. One of those moments. And Barksdale's like, can I talk to you outside? And so they went back and I heard the story from both of them later. And Clark's like, look, this is the whole Reason we're here is because we do these new things. If we don't do these new things, we're going to destroy the company. And Barstow looks right at him and says, jim, I hear you. This is as serious as dick cancer. What, the deep Mississippi draw, right? And Clark shares him right in the face and bursts off laughing. And they got along great ever since. They loved each other ever since first off, basically saying, look, we're not going to make these decisions in a state of kind of superheated passion. We're not going to do that. We need to have the full version of this conversation, but we're going to have it in kind of this longer and maybe. Maybe more dispassionate way. But it was to puncture the stress of the moment. And so I will say I have used that one a few times. But I could see Clark, and Clark thought it was hysterical. Nobody had ever talked to him that way before.

1:23:58

But I could see Clark like, oh, no, here we go. This is a replay of what happened at Silicon Graphics, though I think probably.

1:26:13

He was probably afraid of that to a certain extent. But, yeah, yeah. But I would say, yeah, I don't want to say anything negative about the SGI guy, but, yeah, I mean, Clark, like I said, Clark was just like. Barstow was just, like, was the manager of managers. He was, like, so advanced on this. That story notwithstanding, Barstow never took the position of, like, no, it's time for the new, new ideas to stop. Like, but it was always like, okay, we need to thread the new ideas into a business which. Which is kind of the hybrid of the two.

1:26:18

So I just had this thought while sitting here listening to you speak. Is there something about your partnership with Ben where, like, you, like, he's more Barksdale, you're more.

1:26:44

More Clark. Yeah. Although we do mix it up a little bit more because he does have his own edge. But, yeah, there is some of that. So, like, for example, our friend, he runs the firm. And then, yeah, I tend to come up with. He comes up with lots of new ideas, but I do tend to come up with new ideas. And then we do have this kind of discussion frequently.

1:26:53

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?

1:27:11

But I've got both. This is the thing, because they both train me. I've got both parts of it. It. So I say, so you're not as

1:27:21

unlike controllable or unmanageable as.

1:27:26

Yeah, I believe Ben would tell you. Yeah, I mean, look, Ben's been working with me now for 30 years. And so I think if this is a real issue, I think our partnership would not have lasted. But I think he would say that I have a pretty strong internal edit function.

1:27:28

I want to see unedited.

1:27:38

Well, unedited is really fun. Unedited is very enjoyable. It is very disruptive. And so, yeah, it has to be. Yeah, it has to be calibrated.

1:27:40

When do you show the unedited side?

1:27:50

I don't tend to do it in the spur. The. Again, this is the thing. And Elon threads this incredibly well. Just incredibly well. As does Zuckerberg. It is this thing. And again, this goes back to the Edison Tesla thing. When you're responsible for an organization, when you're responsible for a team of people, that's more than five or ten. If you're going to have an organization that's like 100 or a thousand or 10,000 or 100,000 people, you can't change the plan every day. You just can't. You'll just, you'll destroy every. You'll burn everybody out. You'll destroy everybody. They'll just hear mass confusion. People will quit. It's just going to be like, you can't do that. There has to be some calibrated middle ground. There are a handful of examples of like great business successes where it's like one or two or three people, right? And so I know maybe it's like Bitcoin and Minecraft and WhatsApp and Instagram and. And then I start running out of examples. But like AI, there will probably be more. There will probably be more like single person companies, you know, from, from here on out or, or by the way, artists, you know, and artists. Artist. A novelist. This is the difference between a novelist and a movie maker. A novelist, it's like you put whatever the fuck you want in your novel, but if you're a director of a movie, you can't change the entire plot on Tuesday while you're shooting the movie. Or you. There's 300 people who are relying on you to complete a movie. So anyway, so the point being is intact. If you're going to have an organization or by the way, in anything, in any field of activity, if you're going to have an organization, you do need to have some calibration, titration process. Change does need to happen, but it needs to happen, happen in a Measured way. And so you can't just blow it up every day. So either what you need in that case to get kind of the holy grail of the large scale organization that's still innovating, either you need two people involved who are able to balance each other. And by the way, you could say this is like Steve Jobs and Tim Cook would be a canonical example. Or by the way, early on Zuckerberg and Sheryl Sandberg, or early on Bill Gates and Steve Ballmer. So you can have that kind of configuration. Or every once in a while you can get that in a single person, which is very rare. But Jensen Wang would be a single person first, an example of that. So, you know, every now and then you get that. And so I would say Ben and I have like a version of the yin and yang kind of aspect to it. But like I said, he's very creative on his own. And I have this because I have the Barksdale training, I have this additional level of sort of most of the time, you know, sort of self. Self governance. Like I kind of. I get it. Like I'm not. But it's my big thing is like, look, if I'm going to walk in and I'm going to like throw a fit and I'm going to like, we have to change everything tomorrow. And Ben's going to be like, fuck you who. Like, this fucking sucks. I'm like, that leaves nowhere good. Right? So that can't be the thing. And so I do I, yeah, I do do a lot of self editing.

1:27:54

You just said something I think you said you believe Elon is inventing a new way to manage.

1:30:24

I think he may have figured out the best way to reconcile the two, the fountain of ideas with the systematic builder. I think he might have figured out a fundamental. I don't know if it's a new way to do it, but I think he might have cracked the code on like how to do that for the next hundred years or something.

1:30:28

So break down what you've observed with the way that Elon's managing.

1:30:39

Yeah. Should I just start by saying, look, Elon's method has been described by people before and I should say, like, I work with him, but from the outside. So I've not worked in one of his companies, so I have one layer of indirection. But I. You. I work with him quite a bit now and I study him very carefully. It's this extreme focus on substance. It's this extreme focus on getting to the truth. So one of the things you notice in Any organization with multiple layers is that basically there's compounding lies. And I got this lesson early because I worked for IBM at the point of their kind of maximum size and importance in the world.

1:30:42

Can you explain? I don't think people understand just how big and powerful and almost monopolistic IBM was.

1:31:10

Yeah. So I work for IBM at the very height of their power right before they fell. It was my first job. And when I was in college and they were in the mid-80s, they were 80% of the market capitalization of the entire tech industry. Right. There's nothing even close. There's not even close. Right. So this is like Google times 10 or something. It's just like Apple times 10. It's just like. It's a level of scale and importance that just nobody had. And by the way, the TV show actually that does a great job of this is Halt and Catch Fire in the first season has this thing, this point where these guys are basically inventing the PC effectively. And it's the point where IBM shows up and it gives you a sense of like, it's like the CAA story you told. It's like the phalanx, it's like 20 people in like blue suits are just here to like completely crush you. Like, it was just this overpowering, you know, kind of thing. And you know, they invented like all kinds of stuff and the industry wouldn't exist today without them. And they were an incredible company for a very long time. And the whole thing and by the way, run by their founder for 30 years. Run by the founder's son for 30 years, you know, this incredible company. But then, you know, they're still, you know, they're not that anymore, but they're still a big and important company today, you know, whatever. 1940. So 80 years later, it's like, how many companies survive in tech? 80 years. My favorite IBM story is Thomas Watson Sr. Had been convicted of antitrust crimes before he started IBM. Is this the cash register? The cash register. So he had previously run a company called NCR National Cash Register. And he had been convicted by the federal government of monopolizing the cash register business before he even started IBM. And then at IBM he monopolized the mainframe business. And then they convicted him again. He's a double dipper. He got very used to being an antitrust court. So he was incredible. By the way, there's a Kevin Meaney, old school tech reporter, wrote a book biography of Thomas Watson Sr. Which you've seen called the Machine and

1:31:17

the man, or the man and the machine. Right.

1:33:03

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. We're talking about like 1940s, 1950s, 1960s. And he went back and he got them at that time they had a secretary transcribing in real time all of the executive staff meetings every Monday morning. And he went back, back, and I actually got the archives of the transcripts of the executive staff meetings. And it's just literally Thomas Watson's 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, so 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, it's like, oh, no, that guy was. Whatever it is, it's a pale version of what that guy was doing. But anyway, the point being is like, IBM. So by the time I got involved in IBM was like six years later, you know, anyway, yeah, 50 years later after that. And so they were kind of peaking in their power. But what happened was, I remember this because I was there as intern and I was trying to figure out whether should work there after college. And they had a. Their intranet was a mainframe app. And one of the functions was the org chart. And it calculated there were 12 layers of management between me and the CEO, which meant the following. It meant that my boss's boss's boss's boss's boss had a boss, 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 this happen, I saw this happen up close. What I saw this happened was each layer of management was lying to the one above it, right? Because each layer wants to look good and wants to whatever, put a little spin on the ball. And if one layer lies to the next layer above it, maybe that's okay. But when that happens two or three times, the lies compound. That happens six times, the lies really compound. If that happens 12 times, the CEO is idea what's happening. Like, absolutely no clue what's going on in the company. Which was the state of play that IBM had, they actually had a term. There's actually a term, they had a whole vocabulary. I mean, this company was like a nation state at the time. 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 incredibly, this incredible thing. But they had this concept they called the big gray cloud. And it was literally the cloud of men and gray businesses 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 king and the king and the traveling court. And so it was completely impervious. Mobile to get information through. But I tell that story because that's the polar opposite of the Elon approach, right? And by the way, being the CEO of IBM in 1989 was a great way to live, right? Because it's just like, wow, everybody's bringing me good news all the time. I wake up in the morning and everything is great. And I'm famous and I am rich and I am successful and I've got a chauffeur and I've got a jet and I've got these 80 guys in gray suits who are taking care of everything for me. And I don't have to ever talk to engineers. And this is great 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's 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 Elon, literally. And I've seen him do this, so he literally does, is he goes to whatever when, when there's an issue, one of his companies, he goes to whatever, is the engineer who's working on that problem and he sits down to 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 to actually solve all these problems. Like, the whole point of being, like, big and powerful and successful is you pay people to do that. And now you're doing it and you're in there at like two in the morning doing it right. Like it just. This sucks, right? And so like most people won't do it. And then the other is you have to. That 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 at one point or whatever, a chip designer, or they can actually sit down with the chip designer right on Thursday night at 2am in Austin and they can actually figure out what's wrong with the chip. And Elon has that ability and he's encyclopedic on every area of technology and is able to go hands on with rocket designers and AI designers and everything in between. And almost no CEO. CEO has that, but that's literally what he does. And then the way that he thinks, the way that he thinks about it I think is basically he runs whatever six companies he wants or something. And it's like basically in any given week he thinks about everything as a production, basic production line, production process. He's actually like an old school industrialist. So everything's like a production process. And then any given week, in any production process, there's always a bottleneck. So there's always the thing that is slowing down the process the most. And that's always one thing. So what he does for each of his companies is he identifies what he charts, he literally maps out the production process, he literally has these monitors where he has the whole thing laid out. And then he basically says, okay, this is the issue that's holding up production this week. And then he goes and he works with. And that's the thing that he goes to work with the engineer on is he goes to fix that bottleneck. And he does that every week for every company. Right? And so think about what that this is why Tesla is smoking. The is like has been so much dramatically outperforming the rest of the auto industry is because Tesla, he's fixing the critical production bottleneck at Tesla 52 times a year himself. I can tell you what the CEO of the legacy automakers are doing. They're not doing that. That is not what's happening. In contrast, a normal company, it might take six months to solve these problems. And Elon's fixing it right now, tomorrow. Let's go fix it right now. And so he just runs this loop over and over again. He's just, just, he's absolutely indefatigable I offered. He famously, for a while he had sold all of his houses and he was literally cuff surfing. You know, it's one of the most successful people on the planet. And so I have a vacation house. And I offered him, I said if I take a week and use the vacation house and whatever, take the kids, feel free. And he'd sit back five minutes later, it's like, you know, whatever, 11 o' clock at night, forward response. I don't take vacations. Right. Which again, it's like there's no CEO like this. The whole point of being a CEO is you get to go jet around. And so anyway, so he's doing that and then, and then, you know, and then he turns this into routine. And so, you know, when he does like he does like a day a week at each of his companies and he'll basically do like all day, he'll do like a 12, 14 hour stretch where he'll do design reviews with. But the way that he does it, he does with five minutes per engineer, right? And so he does 560 divided by five. It's been way too long in this podcast. How much is that? 12.

1:33:05

12.

1:39:23

He can do 12 design reviews an hour and then he does 10 hours a day. So Elon will do 120 design reviews in the course of a day.

1:39:23

Are these one on one?

1:39:31

I have not actually sat on these. I suspect there are other people around, including people work for him. And probably, probably some of the leaders of the companies are involved in different ways. But it literally is the thing I noticed. It's literally a rotating cat. It's the point engineer on each of the important things coming in and presenting for five minutes. And then the question is if it's going great, that's great. If it's not going, what's the problem? And then how does that problem ran? Right? Is that the production bottleneck? 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 o' clock till 2am Working with that engineer to fix that problem. You know, one way to think about this is the velocity. Like in military affairs it's called maneuver warfare, right? So just the speed at which he operates is just the cycle time is just so much faster than anybody running in a traditional method. It's hard to even compare the different. It's like four hours versus six months. Like it's just this incredible, incredible gap. And then, and then the other part of it is somebody I know, once went for SpaceX and they asked what it was like and he said, it's like being dropped into a, into a zone of shocking competence. Like, everybody is like ultra competent. And the reason everybody's ultra confident is because, number one, if they're not, Elon sniffs it out and fires them. But he knows because he's talking to the people actually doing the work. So he, and he, at this point in his. Having done the. For whatever 25 years, he can sniff this out really quickly now and then. The other is the best engineers in the world want to work for him because 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 like, what would be better as an engineer than being able to design a rocket engine with Elon Musk as your engineering partner? And so he just has this incredible positive selection where 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 raw aggression, but it's beyond that. It's a very systematic way of optimizing these companies to be able to take on these 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 one of my concepts is I think we need a metric for founders in Silicon Valley. I call it the millet Elon. Right. And so how many millit elons are you? Right? Are you 10 millit elons? That would be great. Are you 100 millit elons? That's 10% of an elon. That'd be fantastic. 500 milli elons. I going to give you all the money, right? Most people are like 1 milli Elon or 0.1 milli Elon. The question that falls out of this, which is a question that, you know, bedevils us, is like, okay, like, 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?

1:39:32

And how much of it is predictable or knowable when he's much younger? Because, like, the, the famous example of this 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. Because 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.

1:42:08

I wasn't there for that, so I don't know about that. I will say the idea of having been a software entrepreneur building a car company. Okay, Building a. When Tesla started building, there had been no new successful car companies in the United states for like 100 years. For like 100 years. Yeah.

1:42:37

There was like 2000 of them in 1905. Founded from like 1900 to 1910. And three that survived.

1:42:51

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 Tucker Automotive. Yeah, yeah, Tucker, which was such a disaster that they made a movie called Tucker, which is about what a disaster it was. And so, like, obviously you don't do that. Obviously. This is insane. And for a software guy to do this is insane. And oh, by the way, this is only one of the things he's doing. He also has the rocket company.

1:42:57

Yeah.

1:43:21

Which is also insane. Right. And so, yeah, so it's like the. And I wouldn't like, by the way, I didn't see it and I didn't. I was, you know, I'm a software guy and I just. I was like, I don't know, whatever. He's going to go. I guess he's going to go do cars. I don't know anything about cars. So it's not like I saw it, but I'm just saying, like, the level of incredulity that he was greeted with at the time was, I think, think almost uniform. And, you know, there's that famous photo, the most famous Elon photo, I think, or the most. The most powerful one is the one where he's. It's young Elon, probably 2005 or whatever,

1:43:22

and he's in the shorts and the polo and all, and he's like crouched down and there's nothing but the explosion remains of the third rocket. The second or third rocket, the one he had been funding personally, like.

1:43:46

Yes.

1:43:58

Did you ever read Eric Berger's book Liftoff?

1:43:58

No, I didn't.

1:44:00

Oh, you got to read it. I'm surprised you haven't. It's the. It's only. Only focuses. I like these companies histories that focus on like the first, like six years and just stops. It's the first six years history of SpaceX. And it's there's 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 good read.

1:44:01

When my kid was 5, he loves rockets and so his favorite rocket video was the compilation of all the SpaceX rocket explosions.

1:44:20

Well, Elon talks about this that before his friends, when after he sold them to he had, I think he had like 180, I think the story tells like 180 million after taxes. He's like, I'm going to do this rocket company. One of his, I think D. Rossi or I forgot if it's a friend sat him down and they made him watch all the rocket. There was a compilation, this is probably pre YouTube of just rockets blowing up over and over again. Like no, you're literally going to light

1:44:26

your fortune on fire.

1:44:48

It's going to explode in the sky.

1:44:49

I mean obviously it's working, right? So, so, so, so his method, obviously it's working and it's obviously working like far better than I mean it's certainly working far better than anybody else's method in cars is certainly working better than anybody else of methane rockets. And then in a bunch of other areas also. So like it's clearly working and so it's like okay there, you know, and then he just draws because of just who he is and what he's doing and how he does it. You know, he just, he draws so much heat, you know, there's just so much, the environment is just full of criticism and attacks, you know, just non stop and you know, we all kind of get sucked into these narratives. But I think the key thing is just the for me is just like, okay, like there is a method there that he has been working on and refining for, you know, coming on 30 years that has worked better than any other method. Like I don't know, like I said, I don't know how many people can do it. Maybe there's just like a fundamental limitation which is you can do it if you're Elon and you can't do it if you're somebody else or maybe you need to be above 30mil Elon's but not below or something like that right there. Maybe there's some threshold where you break through on this, but it is clearly the best method. Like it clearly is generating the best results. And then again, conceptually I like it because again it's this bridging of the founder mentality with the manager mentality because he's not just doing these are not just one offs. He's scaling. Everything is scaling. What is it? Starlink just hit. What was the number? StarLink just hit 10. Was it 10 million subscribers?

1:44:51

I'm one of them.

1:46:04

Something like that. Yeah, exactly right. You probably have read about Iridium and Teledesic.

1:46:05

No.

1:46:09

Oh, okay, okay. So Elon's not the first guy who said we're going to do satellite based like Internet access. There was Bill Gates, Craig McCaw. So Microsoft's on top of the world and Craig McCaw basically built cellular telephony in the US built what's now AT&T mobile. Those guys teamed up in the early 90s and did this thing called Teledesic where they put up satellite based voice and then it was going to be Internet access. Complete catastrophe, total bankruptcy, complete disaster. And then Motorola which used to make all the cell phones in the US had another one system that actually still up called Iridium. And again it's just like this classic business school case study of just complete disaster, capital destruction. And so Elon's like, I know I'm going to do number three of those with Starlink as a side project at the rocket ship company, right? Because he's like in retrospect it's total genius because he's like we're going to be putting up, if the rockets are reusable, we're going to be launching them all the time. And then the question becomes what's going to go in the rockets? And he's like I could wait for the customers to come to me with more stuff to put in the rockets or I could just put up my own satellites. What would be the satellite to put up? Oh, it would be consumer grade, you know, consumer priced Internet access. And it's just like okay, anybody who knew anything about the history of flying satellites knew that that was like the great, you know, that's the new craziest idea in the world. And of course it's like this like you know, giant success as like the side project. There's clearly method, it clearly incorporates invention, it clearly incorporates scale. It does a brilliant job both of those. It's, it's clearly in part the Henry Ford whatever, Alexander the Great method clearly. But there's also like real scale and have to it SpaceX now is building, you know, they got their own city like you know, down in Texas, right. And so it's a formula that captures both sides of it and it may be like the least studied and understood thing I know of in the world right now.

1:46:09

It's incredible. Mark, we're running out of time. When I started the show, you were at the top of my list for one of the guests. I want to talk to you. Thank you so much for doing this. I hope you come back in a few months because there's a million other things we need to talk about.

1:47:49

Good. Awesome. Fantastic.

1:47:58

Thank you.

1:47:59

Thanks for listening to this episode of the A16Z podcast. If you like this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X16Z and subscribe to our substack@A16Z substack.com thanks again for listening and I'll see you in the next episode. This information is for educational purposes only and is not a recommendation to buy, hold, or sell any investment or financial product. This podcast has been produced by a third party and may include paid promotional advertisements, other company references, and individuals unaffiliated with a16z. Such advertisements, companies and individuals are not endorsed by AHA Capital Management, LLC, a16z or any of its affiliates. Information is from sources deemed reliable on the date of publication, but A16Z does not guarantee its accuracy.

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