We just have this fundamental view that technology is, like on balance, 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 try to be a VC.
These are all completely open fields.
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 than 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 normal people and let them try to use it.
And you just learn so much about how much of a bubble that you're in.
Mark 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 Mark Andreessen on Founders.
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.
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.
Like that's just like the ultimate.
I did cut out, or at least for now, I've cut out the four hours of alcohol.
But yeah, 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 of years ago, and I started to feel just a little bit depressed.
Something felt off and I just took my pulse and I realized I was skipping about every 10th 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?
And so I go under the table and I Google and I'm like, is this a problem?
And before Dr. Google said, no, it's okay, it's fine.
You just might want to cut back a little bit on the caffeine.
We were talking right before we recorded.
I've read your entire blog archive, followed you on Twitter forever, listened to every single one of your podcasts, going back like a decade.
You said something that I love and I never hear other entrepreneurs talk about, but I think it's super important that you don't have any levels of introspection.
Yes, zero.
As little as possible.
Why?
Move forward.
Go.
Yeah, I don't know.
I've just, I've found people who dwell in the past get stuck in the past.
It's just, it's a real problem, and it's a problem at work, and it's a problem at home.
So I've ran obviously 410, I think, now 10 buyer-physicist-based 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.
And you probably know, if you go back like 400 years ago, it never would have occurred to anybody to be introspective.
Like, it's the whole idea.
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?
Say more about that.
A great amount of history didn't sit around doing this stuff. at any prior point right it's all it's it's it's all a new construct it was it was you know well so first western civilization had to kind of invent the concept of the individual right which was like a new concept you know several hundred years ago and then and then you know for a long time it was all right the individual runs right and like does all these things and builds things and you know builds empires and builds companies and builds technology does all these things and then You know, kind of this kind of guilt-based whammy, you know, kind of showed up from Europe, a lot of it from Vienna in the 1910s, 1920s, Freud and all 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.
Do you find a lot of the greatest founders that you've spent time with and backed and partnered with.
Have low introspection.
Generally, although in fairness you know, the introspection is probably linked to the personality trait of neuroticism.
Right,
So, you know, a lot of the best founders are, you know, I think met 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 nice to happen to be 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 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 people you know kind of the culture of the country called culture of the world, and you know we'll see where that goes.
So we've recorded under 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, 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, it's gonna be clear i'm not.
I've never happened or going to like i i have four, 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 was actually with Huberman.
And I was describing 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 that 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 moved to Indonesia and become a surface structure.
It's just like, peace out, right?
They're just done.
There's been a whole bunch of examples of this.
And I was complaining to Huberman about this.
And in true Huberman, kind of wise Yoda style, he's like, well, 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 surface 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.
I'm not either.
That brings up something that like I think about a lot.
Daniel Ek has the greatest way to put this.
Like he thinks the best entrepreneurs are not optimizing for happiness, they're optimizing for impact.
I think that's true.
I think it's true.
I think it's certainly true for Daniel, who's, you know, kind of a great case study of that.
You know, having said that, you know, I always kind of wonder is that well, intrinsic versus extrinsic motivations?
Impact strikes me a little bit as an extrinsic motivation.
You know, it's like impact, money, fame, you know.
And by the way, I think extrinsic motivations are fantastic.
And I think, you know, they can be very motivating.
The people who kind of get the great rewards for building great things, you know, deserve them.
But at least what I found is it's the intrinsic motivations that actually get people up in the morning.
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.
What's that for you?
Oh, I mean, that would require introspection.
I'll let other people speculate.
No, you have to.
It's a lot more fun to speculate about other people's future.
But I am curious about you because you have a series of quotes that I absolutely love.
I save them on my phone and I reread from time to time.
One of them.
I'll butcher it, which is like you know.
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?
Yeah, there's a lot that we're actually trying to do.
I'm suspicious that that's my actual underlying motivation.
Why?
Just because, like I said, I don't think an external impact is enough to keep people going.
Or at least I've 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?
Like 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, right?
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, you know, smarter and better informed and, you know, reach better conclusions and, you know, be better at what I do and continue to expand my skills.
But you know 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.
I have almost no introspection either.
So I understand that.
All right, so tell me what you're trying to do in the world now.
Yeah, I mean, look we just we have had this.
It's actually fairly amazing that it's become a controversial you know kind of thing.
But we just have this like fundamental view of the technology is like on balance and enormously powerful for us in the world.
And basically that's a big problem with the world, is 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 then there's this very special, you know, kind of personality, type of the entrepreneur mentality, who's able to build the product and then able to build the company and build a phenomenon and really make an impact on things.
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, you know, for 17 years at our firm is, you know, build kind of the ideal partner to the founders that are, you know, 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.
Like, you know, the overall kind of theme of things is just everything is stagnated.
And we could, you know, we could talk a lot about that.
But you know, every once in a while you have somebody who comes along and it's just like all right.
No, I actually have an idea of how to make things like fundamentally better.
And I have a way to build a business around that and build a company, build an empire around that.
And 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 ruck 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.
The corporate press or kind of outside critics are just like oh you know, you VCs are finding 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 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, anybody can, you know, start build a product, start a company.
You know, start even trying to be a VC.
Like, these are all completely open fields.
And it's just, it's shocking to me how few people actually give it a shot.
And you know, the fate of the world over the next 1500 years is riding on the people who actually want to give it a shot.
So when you started the firm 17 years ago, was your thesis exactly the same as it is today?
I'd say the core thesis is the same.
The specifics have changed enormously.
We can talk about both parts of that.
But yeah, the core thesis was kind of 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.
Even in 2008, 2009?
Yeah, it was still very controversial.
In fact you know they were high profile companies at the time that were getting heavily criticized for, you know, basically having these little kids running around running these companies.
Okay, so you have this like 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 I have 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.
It's like excessively rare for him not to be replaced once Atari started growing with an older CEO.
Were there other examples before him?
Christopher Columbus.
Alexander the Great.
Right.
So 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.
Okay, hold on.
Henry Ford.
Hold on.
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's greatest entrepreneurs all day.
Like this is what I do seven days a week.
Like who are these entrepreneurs from history that you like?
These are naming country founders.
Yes.
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 is true.
It just never would have occurred to anybody 100 200, 300 years ago that if somebody was going to, like you know, start something, that they were 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 a sort of famous book from the 1940s by this guy, James Byrne, who's like one of the great geniuses of the 20th century.
And the way he describes it basically is, he said, like there have been two like fundamental modes of like business organization over the course of like 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, you know, 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.
You know, it's not Musk Motor Company.
But, you know, everybody knows Tesla and SpaceX, like, you know, these are Elon.
And again, that maps to this historical thing, which is that's also how countries ran.
And that's also how, you know, cities ran and like all these things.
You just religions, by the way, like you know basically everything you know.
Founders led the way.
That's the historical norm.
And then he said what he basically says in this book is he goes through and he says there's this new basically model that basically is a artifact.
Again, it's an artifact of kind of this weird period of time between the 1880s and 1920s, where kind of the modern world you know 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.
You know therefore, the idea of management as a skill set that can be used to run many different kinds of businesses, right.
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, you know, 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 a 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.
Like you know, 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 training how to run large scale systems.
And so he said you may or may not same thing with countries.
Large scale countries are going to need 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 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, you know 30 years, you know in the West for sure, it's like managers generally, you know writ large, are not doing a great job.
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 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, like you know, a top management school working for a rocket launch company competing with SpaceX.
And the assumption of the entire rocket industry.
For you know, the last hundred years has been the rockets are used once and then you know, that's it.
And the economics of launch are dominated by having to build a new rocket every time.
And then this like crazy guy in California comes up with this thing where the rockets land on their bunk and you can't replicate it.
Okay, your management, what good are your management skills at that point?
And I think there's like a whole bunch of interesting areas of human activity where, like 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.
And the founder could just learn how to run things at scale.
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, this is still a controversial topic.
This still comes up.
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...
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 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 is a missing skill set, right?
And on day one, they don't know how to do And so they do need to be willing to learn how to do that.
And then, by the way, they do need to 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 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 in some state of fundamental collapse.
They're all collapsing in 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.
You think it's in a vast minority of people agree with you?
Look, it's becoming more common.
I mean, when you get an Elon Musk and a Steve Jobs, when you get these kind of archetypal examples of it, it's a lot easier to you know to sell it.
You know Mark Zuckerberg we were talking about earlier.
Like you know, he's now a great case study of this right.
When Mark started Facebook, 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 started with zero and his learning curve which, by the way, 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 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's that 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.
Which is exactly what Steve Jobs said when he saw Nolan Bushnell.
Exactly.
I can run my company.
I can do that.
Yeah, exactly.
And, by the way you know, it's amazing like how fast this stuff shifted because, like you know, Steve famously had this, you know, short period of time where he worked for Hewlett Packard.
And I think, I don't know if it's true.
The legend is that Jobs pitched his manager at Hewlett Packard.
No, Wozniak pitched him.
Was it Wozniak?
Yeah, Wozniak.
Okay, okay, okay.
Wozniak pitched.
There was some other story where Jobs went into some meeting with some manager trying to pitch the thing and
And the line from the manager was, absolutely not.
This is the dumbest idea I've ever heard.
Get your feet off my desk and get out of here.
Right.
You can just imagine Steve with his, you know.
And they had to be bare feet at that time.
My favorite Apple lore is that the first sale in Apple's history was made barefoot, when he walked into the bite shop.
He was barefoot.
What's amazing about that is, you know so, Wozniak for sure, or 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 for like 50 years.
And by the way, Silicon Valley was built in large part on HP.
HP was the original Silicon Valley company.
Okay, that's the next question.
And it was 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 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.
Do you think HP might have been the most influential company in Silicon Valley history?
It was for sure the most influential company from 1940 to 1980, and then probably after that, Intel.
Well, you go to the founders of Intel and you read biographies of them and they talk about modeling off of HP.
Yeah, that's right.
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.
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 very well-dressed and he's kind of very adult and he's very like.
You know, he's famously the leader of the traitorous eight.
You know, the group that left Shockley to start Fairchild.
And then left Fairchild to start Intel.
And so Bob Noyce was 100, the Steve Jobs of his time, just in a short-sleeved white dress shirt and a skinny black tie.
Yeah.
But it was, again, it's like the exact same thing.
And so I, you know, I never I 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 they, the look and feel was like, completely different.
He was almost like a disciplinarian to Steve because Steve was, you know, wild and reckless.
Like, I was also wild and reckless.
You need to mature.
And I think Bob's wife maybe went to work at Apple early on too.
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 was really successful spending time with young entrepreneurs, he said it was restocking the stream in which he fished from.
He thought it was really important.
He's like, I learned from all the guys before me.
I need to take 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.
It's like hey, I mean, if you my other show founders, the what?
When you click on the podcast description, it's 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 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 in a few hours of your time.
You can always learn more stuff from the accumulated knowledge of history.
And it's a good issue of time.
I was like, that's the why.
So I used your quote as the why to founders.
I'm going to go back to starting the firm though.
This is interesting.
What was occurring in your life, either at that time or before that that you had this observation, that this had to be done.
Oh, so see, you know, we've got all these Lambert theories.
The practical reality of it was Ben, 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, 2004.
It's hard to remember now, but if you go back to like 2003 2004, there weren't like thousands of angel investors.
There were like eight.
It was like Ron Conway and a handful of people.
And then Ben and I were 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 angelos 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 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 working with, or 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.
And the reason was we had been running companies at that point for, you know, whatever, 20 years.
And so, you know, we at least had some idea of what we were doing.
And then the other is we kept getting brought into the conflict resolution between the founders and the VCs.
So that, because you know like, especially because again, much more common at that time, especially at the VC's fundamental point of view, is the founder's not going to run the company and we need to like, replace you the professional manager as fast as possible.
Like the founders are not necessarily going to like that and they might resist that.
And, by the way, even if they're on board with that idea, they might not like the person who the, who the VC wants to bring in.
And so we kept ending up in these kind of basically as arbitrators in this sort of you know, in theory we were kind of trusted intermediaries because we knew the founders, we knew the VCs and we could kind of help bridge between that.
But literally what happened was after a while we were like spending like eight hours a day just doing this.
And we're like, all right.
And it's like weird.
It's like you're writing a $100,000 check and you're like spending all this time doing it.
And then to basically arbitrate 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 founders.
I always.
One of my theories of like the great founders is they tend to be able to operate at kind of a strategic conceptual level and then the practical level at the same time.
And so so we had, we had a whole theory I could take you through for the evolution of the venture business.
Please do.
Yeah, but underneath that was just this actual, you know 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 we in line with your philosophy?
We went back and we studied a lot of other businesses that have similarities to the venture business.
So we studied private equity, hedge funds, investment banks, law firms, management consulting firms, ad agencies, accounting firms, basically anything where the product is fundamentally a relationship, a knowledge, work kind of relationship, as compared to something that gets manufactured.
And what we observed is basically and Hollywood Talent Agency is actually the one we've probably talked publicly about the most
And so that was a great case study.
He was in this studio a few months ago.
And so, and he actually and by the way he gave us you know, we 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 his experience.
So when he started his agency in, was it AD, whatever, no, 75, 75.
In the 70s, I think.
In the 70s, like in the mid-70s.
It was actually very similar.
Structurally it was very similar to when we started H16Z in 2009.
Which was the configuration 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 and 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 100 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, there's no collective thing.
And that was basically the condition of venture capital in 2009, which is you have and 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 sort of legacy venture firms at that point, they were all like that.
They were all just like 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.
Oh, I hear stories like this all the time.
And so it's like you know whatever, there's Joe and Mary, you know, 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 you ask Joe, can Mary introduce me to so-and-so?
And what you don't know is they're having like a brutal fight.
You know, they're like trying to destroy each other, because they're fundamentally economists.
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 of 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, you know, and again, it's the same thing.
They had been founded by Dynamos, and then they were.
You know, the later generation people were not like that.
And so we basically said, oh, this is where the oldest 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.
The negative way to frame it is death of the middle.
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 taffy.
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 skilled platforms.
So you get large-scale enterprises that have 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 at 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.
We're 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 store.
But you had that thought in mind when you started ASIC?
Yeah, 100%.
Yeah, exactly.
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 investment.
And you knew that by what?
Just reading?
Reading.
So like investment banks is a classic example.
So 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.
These are more like merchant bankers.
Yeah, Merchant Bank, Merchant Bank.
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 read something to understand them.
And 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.
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 J.P.
Morgan was an example of that.
The J.P.
Morgan Investment Bank was like this basically this time.
It was very important, but it was like this tiny little operation.
It was, you know, fit in a single office.
It was, you know, I don't know, probably 20 principals and some office staff or something.
You know, it's not.
It was not large.
And actually, the hidden secret to J.P.
Morgan was he was the son.
The father was Junius Morgan.
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.
He was.
So he was, which is almost always the case with any famous public figure is the father is almost always a more interesting story, which a lot of examples of that.
But however...
Yeah, so Junius Morgan, and then J.P.
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 era of history is these were, they were all bifurcated by religion.
Yeah.
So...
They were the Protestant investment banks and they were the Jewish investment banks.
And they did not mix.
No, not at all.
Completely different worlds.
And as a consequence, J.P.
Morgan was, the Protestant banks, like J.P.
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 those are all the Jewish investment banks.
By the way, almost entirely Jewish founders.
And J.P.
Morgan is the big survivor of that today in the form of J.P.
Morgan Chase.
And then on the Jewish side is Goldman Sachs, you know, is the great survivor.
But again, if you go back there— So that's—you consider that the barbell in investment banking.
You have the J.P.
Morgan kind of like family partnership, and then you have the complete scale of like Goldman Sachs.
And so what happened was 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 kind of, again, this sort of, you know, they were boutiques.
But they were like of their time.
They were like today you'd call them like mid-market, you know, sometimes called bulge bracket, you know kind of thing.
As opposed to just like a solo operator or something.
Actually, the way JFK's father got started was he literally hung out a shingle in the 1920s which was Joseph P Kennedy Banker yeah, you know, private banker, and he like just did deals and he was like an angel investor at the time and so, and then you had the big commercial banks.
But the big commercial banks had no interest in issuing loans to these speculative crazy, you know, entrepreneurs.
And so in that time jp, morgan and goldman sachs and co, on lobe and drexel and all these other kind of you know mid-market banks, morgan stanley um, the banks became morgan stanley um, were kind of these mid things.
Now what's happened?
You know, sitting here 100 years later, those are now the, the scale players.
The ones who didn't scale are are kind of long forgotten.
Having said that, there's one firm that survives in the old model and that's Allen Company.
And there are other boutique investment banks today, but Allen & Company was founded in the 1920s and is uniquely the one that survived in the original model of boutique and deliberately being a boutique investment bank.
And it stayed that way for 100 years.
And so one way to think about it is that today, that's the barbell in banking, which is Allen Company on the one side, and then JPMorgan and Goldman Sachs on the other side.
So are you reading about this while you're founding the firm, before you're founding the firm?
Ben and I spent about a year and a half planning the firm.
And part of it was he was in what we call industrial servitude.
He was working for Hewlett Packard after we sold our company to HP.
So 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 study and think and work.
And because you had this period from 2003 or 2002, when you're doing angel investing, you know a lot until 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 agent's coming to the prayer.
No, it's like 20 agents are coming.
And I think they'd be dressed in, like, the same kind of suit maker.
And, like, they were intentionally trying to intimidate, like, their competition.
Armani suits, Sulca shirts was a shirt maker in Beverly Hills.
And sober, you know, all sober colors, white shirts.
And then I think he had a bulk purchase deal, I think, with the local Jaguar store, and the legend at least has it is that the license plates all said CA1 CA2, CA3.
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, this is exactly the thing.
It's just like now.
That's the Hollywood version.
But just imagine the psychological impact of that if you're just like an old school agent.
This is sort of the, you know, michael's a very dear friend he's 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 cda are showing up and like it's just yeah it's this force and the clients if you talk to them by the way you know a lot of his clients are you know still still active today you know from the period of talking 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 that I don't know if he told you all these stories.
Did he tell you about his morning schedule thing?
The getting on the bike, doing the karate.
For the firm, for the firm.
No, no, no.
I don't remember this.
So this is, again, something that's specific to Hollywood, but it's a great example of that.
Okay, so the agency business.
At the time he started at CAA, the agency business was 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.
And one of the 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 is going to get shared in the agency would get shared at that point to know.
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 9 a.m. to 10 a.m.
And then at 10 a.m., they would start calling their clients.
And they'd be like oh, you know, we heard there's a, you know whatever, there's going to be a casting call for you know, this great new role, for this professional 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 7 a.m.
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.
Yeah.
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 called 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 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 were running competitive agencies were managers, not, right?
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.
Like that's not the whole point of running something big is?
You don't have to do that right, 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.
Right.
And so, but anyway, as a consequence of that, you end up with, like all these embedded assumptions that are basically just like unspoken.
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 did they arrive at that?
And what we found in just industry, I mean, this is what our founders do every day.
It's 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.
Right.
I love that you did it.
I always say it's like not what you do, it's how you do it.
And if the idea that you could take, I'm like I'm not running a talent agency, but there's so many of these principles that I could apply to venture capital.
In your blog archive, which I absolutely love and I told you I've read like multiple times I did episodes on it you would give advice to like young people.
And it's like.
My advice is like go work in an industry where that's still the founders of that industry are still working right.
When I read Ovitz's book, the way I would summarize his approach, because he is in this big stodgy slow-moving, you know, very bureaucratic organization it's like oh, mediocrity is always invisible until passion shows up and exposes it.
Oh, interesting.
Yes, right.
And that's what he did.
Yeah, that's right.
He's just like, there's so many things that you guys could be doing better here.
I can't do it in there.
And I remember correctly, he took some of these ideas to his boss.
Oh, yeah, yeah, yeah.
Because that guy was his mentor.
I can't remember his name.
He famously worked for the CEO of William Morris.
Yeah.
Yeah, which was the biggest of the talent agencies at the time.
So were you and Ben essentially just designing what you wish you had when you were founders?
Yeah, that's right.
And again, that may be a cheat code.
But yeah, if you've been the customer, obviously, this all becomes a lot more obvious.
I don't know if you want to answer this question or not.
But in Warren Buffett shareholders.
He has this great line where it's like really important to pick to play against weak competition.
Did you feel that there was going to be like that point in time in venture capital history, that you were going to be playing against weak or weaker competition?
I would say not exactly.
We didn't view them as weak.
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 were probably the two best venture firms.
So Clarence Perkins in the 90s and I worked with John Doerr very closely for five years in that scape.
And then we, loud and loud, we raised money from Benchmark when they were like king of the hill.
And Andy Ratcliffe, who was one of the founders of the firm and is a legendary, brilliant VC.
And so we had worked with we just had, for accident of history we had worked with two of the whatever top five or whatever people in the field you know, 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.
It was none of that.
It was, no, they're really good at executing against this particular playbook.
And by the way, that's why it's okay.
Like, if we're going to do this, we need to be playing by a different playbook.
There was no such thing as, like, scaled venture capital at the time?
No, at the time, no.
No, because the firms all hit this, 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 like 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 a fixed size pie.
And so none of the other firms could, structurally, there was just no way to get to scale.
Where else did you take ideas from, besides the agent business in Hollywood and the merchant bank investment banking industry?
It was just very obvious that it happened in private equity.
This was around the time when KKR and firms like it were hitting their stride.
They were actually building a lot of operational capabilities in-house.
They were actually building their own 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 bank.
And KKR had actually done that, just build a captive bank.
And so, you know, 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 you know very light on your feet kind of solo operator on the one side doing small deals, or you needed to have a scale platform like KKR.
It happened in hedge funds.
It happened in, but I mean, it had long, so actually, 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, you know, 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 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, year and a half, just fucking hell.
Like, they can't get anywhere.
They can't get clients, like, because they're too small.
You know, they're subscale.
And so it kind of, and then 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 to them.
No, no, no, no, no, no, no.
Sorry, I got it wrong.
They sell the first one to the British ad agency that just like completely destroys it.
And then they sell the second one in a can.
So they actually show that process happening twice.
And so that, again to go back to history, that is what happened to the ad agencies, basically between the 40s and the 70s.
Like basically television catalyzed that.
Like when television emerged, advertising became a much bigger deal than it had been before.
And it just, it had to be professionalized. a different way the other thing happened is of course the external environment changes right so so everything we just talked about just has to do with the internal mechanics of how these things run but but the other thing happens is the external environment changes right and so part of what i think what michael would say i think you would agree with this part of what may see a possible is at one point basically hollywood was just boobies and then there was like whatever a low kind of tv division and and by the 70s and 80s the you know hollywood was becoming much bigger than just movies right it was movies and tv and advertising and music and sports and you know you know politics and culture and like all kinds 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 Hewlett 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 it.
It 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 Airbnb.
It's a tiny little boutique business building, basically a little spreadsheet software.
But no, 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 online ad software, you were selling it to the media companies.
Mark's like, no, we're just going to beat the media company.
Like, we're just going to build the entire thing.
And so this was the other thing that happened, was you know, for us was that that was right around the pivot point, when the Valley's ambitions went from just building tools to going directly into incumbent industries.
And then this goes back to the scale thing.
It's like, okay, well, why do you need to scale a venture firm?
It's because the companies need to scale, right?
And then, of course, AI now makes that crystal clear, right?
Because the winning AI companies are raising, you know billions, tens of billions, in some cases hundreds of billions of dollars.
Right, the old world of 10 million or 30 million or 50 million checks.
You know where VCs tap out.
It's just not a relevant thing anymore.
But did you know the scale was changing at the time you founded the firm?
We had a pretty good idea.
So I'd been involved in Facebook, you know basically, you know informally since inception and then formally on the board since 2007.
And so I saw the, when that thing hit the knee on the curb, it was just very clear.
To us it was just like 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 10 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.
The original cell phones weren't made by Silicon Valley.
They were made by these like 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 a 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, you know, at that point, the consumer internet was 15 years in.
And we had, you know, seen every part of that.
And so you know.
I forget what the number was, but that was probably around the time.
The global internet penetration was like crossing a billion users on its way to 5 billion.
Yeah.
Yeah, you have a very interesting lived experience where 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 you're partnership and relationship with Jim Clark.
You were what, 20 when you met him?
How old were you?
I was old fashioned.
I actually graduated from college and got my degree.
It's a very Stone Age concept these days.
So that was in 1994.
So I was probably 20, 22, 22.
So there's this great book.
I don't even think you like the book written by Michael Lewis, Silicon Valley Story.
I've skipped it.
I've read it twice just because I don't know if anything's in there is true, but 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 years.
I think he was the first person in history to found three separate billion-dollar technology companies.
I think that's right.
And almost no one knows who he is.
Can you just talk about how you met him, what it was like working with him?
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, 1987 to 1994 or something.
They were like whatever, Google or OpenAI or whatever, you know, company you want to make.
They were like the 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 like 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.
Run on the machines they made.
Build on the machines they made.
It was the technology they made.
Technology Jim invented.
It was the technology that made that possible.
And those movies, you know, those are still two of the great all-time, you know, movies.
But at the time, I mean, I still remember the chills that you get seeing dinosaurs on screen.
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.
Yeah.
And it was actually the 3D software.
Those were actually the Silicon Graphics computers.
And so that was like this moment where they were just like the absolute it company of all time.
But by the way, their legacy lives on in NVIDIA.
NVIDIA is Silicon Graphics basically with one, it's like a trade or a save thing.
It had to be a new company, for reasons we could describe, to do the GPUs 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, you know, he's a PhD in computer science.
And he actually, he actually, he himself invented the original, I 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 like his PhD thesis.
And then, and then he started the company and then he ran the company.
And then, and then, 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.
No, let's talk about that real quick.
Yeah, yeah, yeah.
Because I don't remember this part of the story.
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, so, so Jim, I don't even remember what's in the Lewis book, 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's volatile.
Like he's, he's, he's, He's exciting.
He's exciting.
It's like being around him is just like incredibly exciting.
There's always 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.
Because at the time what happened is you wanted to hire a professional CEO.
You went and hired a general manager out of either Hewlett-Packard or IBM or the two training grounds.
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.
By all accounts, he was like a very good example of this kind of HP general manager type who 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 88 or something.
And then, you know, by the time I got to the Valley 94, like, this company had become huge.
And, you know, whoever's running the company gets at least some credit for that.
So, but anyway, they got in this classic fight.
Like, they got in this classic fight.
And the classic fight was, you know, it's the same story every time.
The founder's like the founder's talking to the CEO and the founder's like to the CEO like we need to do things completely different.
And the CEO's like, no, like, what we're doing is working.
Like, stop fighting. fucking with, stop fucking with the thing that's 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 CEO's 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's like, why are you in my pants?
I'm like making you all this money.
The company's super successful.
Like get out of my shorts.
Right.
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 50000 for a desktop workstation and then scaled up into the millions.
And Jim was like, look, two 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 50000 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 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.
Like, 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, it 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, it's like, you know, this giant video game company.
So he actually had this deal with Nintendo, where number one and Silicon Graphics actually did this, actually built the original 3D graphics chip for a consumer game player, 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 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 CEO's 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.
I want to hear more about what it was like working with him, 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 a 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, yeah.
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 a hundred 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.
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 would just like say you know, Jim Clark wants to start a company with you.
You know, just the obvious thing is you just say yes.
Like, And so I don't know if I told the story, but the crystallized memory is a dinner of 12 of us at this famous Italian restaurant in Palo Alto called Elfernaio.
That's where a lot of these companies were formed.
It was 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 the technical people who he knew.
Well, this is the thing, he was constrained.
He had a non-solicited agreement with Silicon Graphics.
And so he couldn't just rip people out.
And he didn't want to violate that.
And so he needed to basically reach out to the tackle 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 how 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 go to my car in the parking garage from Palo Alto across the street and my brand new car, my first new car I've ever owned, right.
My brand new car.
And I gun it and I pull it out and I rip the entire front end of the car off. screaming metal.
So like the whole front of my car is just like hanging on the ground.
And I'm like, oh, fuck.
So anyway, I parked the car, get out of the car, walk home.
No Uber this time.
No Uber.
No, three mile walk at you know whatever 11 o'clock at night with you know six bottles of red wine.
And you're what, 22?
22.
Yeah, exactly.
I'm like, I think I probably won't mention this to Jim.
I don't know.
There's some wild stories in that book.
He might have admired you more.
He might have.
Yes, yes, yes.
How many founders of the companies?
Just you and him?
So originally, yeah, originally it was him and me.
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.
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 the interactive.
What do you call the interactive?
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 yet.
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, and Microsoft was involved.
They were doing a ton at Oracle.
At the time, like all the big companies were.
It's all these Bill Gates biographies.
Yeah, exactly.
He talks about that a lot.
But the capex per house was like 50000 or something because you had to have like a Silicon Graphics station in the house.
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.
We actually went, he actually went back to Nintendo and we almost pulled the trigger on basically building what today you'd call like Xbox Live or what's it called.
It's a PlayStation Network or Xbox Live, like an online gaming service for the Nintendo 64 in 1994, which might've been a good idea.
We thought it was too early.
So we almost did that.
And then what happened literally was the internet.
You know, I had worked on the internet in college and then you know, this is, you know, fortunately only a few months later, but the internet just kept growing.
Hold on, Mark.
Yes.
You'd worked on the internet.
That's a little bit modest.
Yes.
Well, I think a lot of people listening to this will know, but you should probably explain how you're working on the internet.
Yes.
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 this 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, the first one with graphics.
Explain what was different about what you made compared to what existed before.
Yeah, so like previous web browsers were like text-based.
So there was like this nascent concept of the web, but 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 a spec 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 the browser work. a useful thing.
And so there was this like nascent idea, but it needed to get built into a full thing.
And so we built the original kind of 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, again, at the time, the internet was not viewed as a consumer phenomenon.
Wasn't it illegal to commercialize?
Steve Case of AOL tells a story that he had to like lobby and get a law changed.
Yeah, that's right.
What was the details there?
So the internet as we know it today in the 1980s was called the NSF net.
NSF stands for National Science Foundation, which is a branch of the US government that funds research.
And the National Science Foundation 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 NSF net.
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 like very exciting in the technical field, but there was no conception that, like ordinary people, are ever going to use any of this.
Like it was just not, nobody ever thought that this was a thing that the normies were going to use.
And so 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, you know, 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 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.
Like I'm glad my tax money is not going to fund something like that.
But like as a user, you're just like, all right, that's nuts.
Like that's clearly crazy, right?
And if you took the conceptual leap to say no, this is going to escape the lab and this is going to be something 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?
No.
Oh, okay.
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 like, it was amazing.
It was like the most pure clean intellectual, like vibrant space since, like I don't know Athens in you know 500 BC.
It was just like this amazing phenomenon.
And then AOL connected.
AOL had, I don't know, whatever, a million or two million people at that point.
They connected all the AOL users, which were just normal people, to the internet in September of 1993.
And so it became eternal September, which is that's the day 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 ivory tower kind of thing to this basically mainstream consumer, ordinary people thing, which is, Of course, it's just a fundamentally different thing.
Obviously, right?
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.
So 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 like it's all going to get ruined in September.
Yeah.
Right.
And so the internet that we live in today is the result of.
They can only see us now.
30 September.
Right.
But yeah and, by the way, there was controversy.
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, it's just about, like, e-commerce.
By the way, advertising.
I remember when there was actually a moment, There was a guy, there was a guy.
There was a guy named Sanford Wallace and he became known as Spamford Spamford 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, legal services or something.
And he just drops it into Usenet.
And it was like a thermonuclear explosion, because it was like, you know, get this commercialized crap out of my newsfeed. um and so so like all of all of these things were like hot like controversial um i 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 we need these these need to be businesses there needs to be commerce there needs to be advertising like all these things obviously need to happen 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?
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 difficult places 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.
Yeah.
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, three years.
I got all the emails.
How many emails were you getting?
Well, there were actually two.
That was one email box.
And the other email box was Mosaic was actually created under.
It was also funded by the National Science Foundation.
So it was actually not, the original license said you couldn't be used for commercial use.
It was for academic and research and engineering. 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 the same coming 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, you know, the old PCs had, you know, they had CD-ROM trays.
You press the button, the CD-ROM tray comes out, you put the disc in 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 user 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 normal people and let them try to use it.
And you just learn so much about how much of a bubble that you're in, about the kind of things that you're familiar with, that normal people are just like.
I don't know what the hell any of this stuff is.
So there was a lot of that.
But then I had this other email box, which was all the commercial licensing requests.
And so I saw the consumer take off on the one side and then I basically I think that.
And then the commercial request hit, like 400 messages that people wanted to like 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 and I 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 that.
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 software.
And so I still have the denied NSF grant that would have kept the whole thing an academic project.
But yeah, so like at that point it was like, at least to Jim and me it was just obvious that that was gonna 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.
What did you think the business model, though, was just literally licensing it?
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 like publishing system for like running a newspaper or magazine online.
We have 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, you know, the main website that the browser had as its default homepage.
And so we built.
The original internet advertising business was basically So.
Netscape was the largest internet advertising company until, I think, 97.
That's incredible.
I didn't know that.
And Yahoo passed us, yeah.
And so yeah, so we invented, people at the firm invented, at the company invented, I don't think.
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 our site, you know.
First,
And yeah.
Yeah.
And so it was literally, it was advertising pre-Yahoo.
It was, it was e-commerce 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 that stuff.
And so, yeah, it was a lot of that.
And then it was the web operation.
And again it was again.
It all looks obvious in retrospect but like again, it was like okay when we started.
It's like I don't know what the total number was.
And like.
So we started the company April 94th.
There couldn't have been more than 2 million people total online right.
And then almost everybody was coming in over dial-up.
This is like pre-broadband, right?
So everybody's coming in on like 14.4 kilobit modems.
And we're like hoping that people are going to upgrade to 56 kilobit modems.
Like, you know, that that would be like super helpful.
Computers at that time did not come with TCP IP installed.
So to get your PC actually on the internet, you needed to buy a TCP IP stack.
Try explaining to a normal human being what a TCP IP stack is.
Like, it makes no sense at all.
They're going to ask if they can put it next to their cup holder.
Exactly, yeah.
It was just like talking to Martians, right?
Talking to us was 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 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 see it.
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 the internet.
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.
New York 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.
In retrospect it's all like quaint and cute and sweet, but it was the precursor.
It was all the moral panics around technology today.
You could see nascent versions of them back then.
You pick up on something that because me and you have read a bunch of the same books where it's like humans' reaction to something new is just consistent throughout history.
And so I heard a podcast with you.
I thought it was the only one that would tell the story in private about Bicycle Face.
Bicycle Face.
Exactly.
Do you want to say what Bicycle Face is?
Bicycle Face, Bicycle Face, Bicycle Face, yes.
So it basically turns out every new technology is greeted with what they call a moral panic, right?
So 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 going to ruin society.
It's going to ruin morality.
And then especially it's going to ruin the children.
And then back, Bicycle was pre-feminism, so it's also going to ruin the women very specifically.
It's going to ruin the women, which clearly cannot be, because women clearly, in 1880, you know, cannot be trusted to use a bicycle without getting into real trouble.
I'll explain, I'll explain why.
So this is this persistent theme.
And basically you go all the way back.
And this is like you know, this is like this famous thing where Plato and Socrates thought that, like you know, basically they thought that written language was a big mistake, that all information transmission should be oral.
And they had this, you know, whole thing. back in 500 BC.
And then it was just like every, you just have to like imagine.
I always like to hypothesize, like you know, the first guy who brought fire.
You know, it's like down from the mountain.
They probably killed him.
Yeah.
They're like, what the fuck?
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 consistent thing.
And there's this great website called Pessimist Archive where these guys would go back, and they find all these newspaper articles that are contemporaneous to these things.
But 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 headphones, because 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, you know, 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.
You know we're taking kids.
Kids are 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, like, 1870, 1880.
And so the U.S. still at that point was, like, you know, thinly populated, you know, from today.
But the West had been settled, and so you had all these little towns and villages scattered all over the place.
But, you know, to get from one town to the next was, like, you know, 5, 10, 15 miles.
And so people didn't generally walk that.
And so the bicycle comes out, and all of a sudden it's easy to go five miles into the next town.
And then, you know, 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 over and they're like you know, they head out to do it.
To do it.
Yeah.
Well, to do it, yes.
Do everything.
To do whatever it is the young people do.
Yeah, look, it's just the nature.
If you've known the same group of people since you were two, you're going to want, yeah.
What's over that hill.
What's over that hill.
Yes, exactly.
Right.
I grew up in a small town.
I can identify with that.
And then, specifically at that point, young men obviously, but specifically young women, started to do the bicycle.
And this is a big threat.
And so if you're a guy in a town and all the attractive young women are heading over the hill to the next jail 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 gonna end up making like an exertion face.
But the thing was, if you did that too much, your face would freeze. in a bicycle face.
They literally thought it would stay that way permanently.
It would stay that way permanently and then you would never find a husband.
Right?
And so, yeah, so that was that moral panic.
Yeah.
And so these things just like rip through every, I mean, it's just, it's incredible.
Music is always a great one because it's like you know I don't know it's over now, but like in the 90s, 2000s.
You know it was all this moral panic around hip hop.
Dude, Jimmy Iovine, who's your neighbor, he was in here two weeks ago, and he had a deal.
They called him a... Yes.
Like a chemical gas or mustard gas.
Like, they compared him to literally, like, what he's doing is the same as genocide.
Yes, that's right.
Because he's funding hip-hop music, and white kids are starting to listen to hip-hop music.
Hip-hop music in the late 80s, early 90s.
In front of, like... congressional hearings on this.
Like, the media behind him, he was pushed out of a conglomerate.
Like, this wasn't a joke.
Yes, that's right.
That's right.
And it's actually funny because, like I'm not in the music business, but like, hip-hop has become so normalized that today it would just never even occur to you.
It just, like, feels like hip-hop is kind of, you know, is a cultural phenomenon.
It's 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, if Joe was Presley, they wouldn't shoot him.
That's right. because he would shake his hips.
So they're like, no, no, he can't, it's waist up on TV from now on.
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 corrupting the, 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, it's the same story over and over and over and over again.
And I'll just say, by the way, in fairness, it's not that society doesn't change.
Many of the technologies that we just described did cause society to change.
Things are different pre and post the bicycle.
They're different pre and post the car.
They're different pre and post the creation of modern culture, rock and roll or whatever.
But again, this idea of the moral panic, this idea of just outright panic, end of the world.
It's just like this repeated over and, over and over again thing.
And then what's happened is like, this is just, this is the obvious way to sell newspapers, right?
Like this is like the meta story of the press, which is just like whatever's happening is like horrible and awful and it's gonna kill everything.
You know, be sure to buy our newspaper tomorrow.
This originates because I've done a bunch of episodes and read biographies about you.
Know, I'm like 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 misinformed, or you're not misinformed, or 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 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 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 internet.
And now I want to compare like what the lessons from there for like where we're at with AI.
But is there anything that you learned?
Because Jim Clark was what, like two deck, probably 20 years older than you?
Yes, about that probably.
So like, is there anything that you learned working?
What a fucking education you had to be able to work with that guy when you're early 20s.
Yeah, that's right.
So is there anything that you learned by working with him back then that you still use today?
I mean, yeah, a lot.
You know, as you said, it was very formative for me.
So a lot of it.
But yeah, I mean, you mentioned 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.
His ideas were correct almost all the time.
He would just like pound the world into adopting them, into believing them.
Like, you know, the idea of being like a complete force of nature.
One thing that was malleable was himself.
He has this great quote in that book where he calls himself a self-described loser at 38 years old.
I mean, the guy had like two PhDs.
He was a professor, but he just like I think he'd been in a second or third divorce and he just snapped one day, and he's just like I woke up one day with the undeniable urge to achieve something.
And that's when he goes from academic to founder and just rips off company after company for like a few decades.
I was like, oh, he realized that he is malleable too.
He just reinvented himself over and over and over again.
Yeah.
And of course he does that not just by like starting a company, but like inventing interactive computer graphics.
Like completely changing the field. you know, indirectly, like, completely changing Hollywood.
But is there anything about recruiting or managing or any other way that he ran his company?
No, so my two mentors at that time, actually, they were, in some ways, polar opposites.
They always got along, but they were kind of polar opposites.
They were both Jim.
So Jim Clark and Jim Barsdale.
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 then just, and then the idea of just, like you know, try to be a fountain of creativity.
Like, just, like, there are many new ideas out there.
And, like, you just, you need to go find them.
And then I'm gonna say also with 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 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 other 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 manager.
And Jim had run, you know, big parts of IBM and ATT and Federal Express and you know came in to 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 got trained by both of those guys and then kind of both of those guys at the same time, and then was able to, like very clearly, observe Netscape.
One is just the difference between those mentalities, but then the other is of course how those concepts converge, right.
Because just the fountain of creativity, you can't build anything big just with that.
Just the management, you don't do new things.
Who's a great example of that from history?
Would it be like Nikola Tesla?
Founder of creativity.
Oh, that's right.
He needed like a George Westinghouse to commercialize his ideas.
Well, it's a Tesla versus Edison.
Yeah, so Tesla versus Edison.
So I'm an Edison guy.
So Elon's a Tesla guy, obviously.
But Elon, of course, himself has now become like a really outstanding I mean obviously become an outstanding manager, like in his own way.
Back to the point where I think he's actually inventing an entirely new school of management which we could talk about.
Let's go there next.
Yeah, he's maybe the greatest manager of our era, despite the fact that nobody thinks of him that way.
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 everything kind of turns into these little morality plays.
And so kind of the basic story of Tesla and Edison was Tesla had all these ideas but couldn't commercialize them, couldn't turn them into companies ultimately, couldn't figure out how to make money on them, couldn't build big companies uh, you know, kind of based on them.
And then edison you know it basically, at least the way the legend goes is he was more 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.
So 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, he built these giant companies.
And then, you know, funded by J Tim Morgan,
There you go.
As a venture capitalist in his spare time.
Yes, exactly.
100%.
And so, and then you know, Edison also invented the movie projector and then literally spent years trying to enforce his patents, right.
And the phonograph.
And the phonograph.
You tell the story and I knew because I read the book too.
We should tell people what he thought the phonograph was going to be used for.
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 just like oh, what are the consequences of a new technology going to be?
Oh, let's go ask the people who invent them because obviously they know.
And so this is what happens when like these, when the AI got, 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 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 a 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, as the Edison story.
Thomas Edison was like a very proper wasp.
He was like 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's just obvious that the application of the record player was that everybody would buy a record player and everybody would buy a library of discs.
That would be the 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, 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 slam, then it's jazz.
And Edison's just like completely horrified.
He didn't know that if you put the phonograph in the window and you play good music, then you have all these girls on bicycles coming over with bicycle fists.
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 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 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.
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.
So how this started.
You think you greatly benefited from the two gyms, essentially like being polar opposites.
Yeah, basically.
And showing you... But also working very closely together.
Did they get along?
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 you know, it's different disciplines, different worldviews, you know.
So there's an oil and a water kind of aspect to that and so so you know, clark clark ran the company for the first like nine months, which at the time felt like, you know, just like this was the internet time.
It felt like much longer, but it was.
It was like this highly compressed nine month period and you know, and it was like we were like doing it, we were all these new things, we were doing all these new things, like the company was just doing like a hundred new things.
It was amazing, but like we, nothing was being systematized, right?
No, it was not.
It was not gonna by default, it was not gonna turn into like a large, a large company without the management part.
And so Barksdale comes in and he basically it's like wow, this investment is great, but we need to like actually start to have systems and like schedules and processes and actually like run this thing like a business.
And you know, as founders do Clark, you know originally, you know, found that a little bit frustrating because it's like you know, whatever is the latest idea is not the thing that we're just going to turn the entire company, you know, to pursue.
And this is when Clark was still coming to Jim's Barksdale staff meetings.
And so...
Clark got, he had a negative reaction to Barksdale saying, no, we're not going to do this new thing.
We're going to keep doing the thing that's already working, you know, one of those moments.
And Barksdale's like, you know, can I talk to you outside?
And so, you know, they went back and I heard the story from both of them later.
And you know Clark's like.
You know look, this is the whole reason we're here is because we do these new things.
And, you know, if we don't do these new things, we're going to destroy the company.
And Barksdale looks right at him and says, Jim, I hear you.
This is as serious as cancer.
In the deep Mississippi drawl, right?
And Clark stares him right in the face and bursts out laughing.
And they got along great ever since.
They loved each other ever since.
The first step basically, is 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 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.
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 he was probably afraid of that to a certain extent.
But, yeah, yeah.
And 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 ideas to stop.
But it was always like okay, we need to thread the new ideas into a business which is kind of the hybrid of the two.
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 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, he runs the firm.
And then I yeah, I will.
I tend to come up with.
You know 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, you know, frequently.
So if I was to follow you around, without you knowing, with a camera, what would your day look like then?
Are you just like a fountain of ideas or you're like this uncontrolled energy, like a Jim Clark back in the day?
But I've got both.
This is the thing.
Because they both train me, I've got both parts of it.
So you're not as uncontrollable or unmanageable as...
Yeah, like I think I believe Ben would tell you oh, I mean look, Ben's been working with me now for 30 years.
And so I think if this was a real issue, I think, you know, that partnership would not have lasted.
But I think he would say that I have a pretty strong internal edit function.
I want to see unedited.
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.
When do you show the unedited side?
I don't tend to do it in the spur of the moment.
Again, this is a thing, and Elon threads this incredibly well, just incredibly well, as does Zuckerberg.
It's like it is this thing and again this goes back to the Edison-Tesla thing.
When you're responsible for, When you're responsible for an organization, when you're responsible for a team of people that's more than 5 or 10, if you're going to have an organization that's like 100 or 1000 or 10000 or 100000 people, you can't change the plan every day.
You just can't.
You'll burn everybody out.
You'll destroy everybody.
There'll just be mass confusion.
People will quit.
You can't do that.
There has to be some calibrated middle ground.
There are a handful of examples of great business successes where it's like one or two or three people.
Right.
And so maybe it's like Bitcoin and Minecraft and WhatsApp and Instagram.
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 from here on out.
Or by the way, artists, you know, an artist, a novelist.
This is the difference between a novelist and a movie maker.
A novelist is like, you can 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.
There's 300 people who are relying on you to complete a movie.
So anyway, the point being is, in tech, if you're going to have an organization or, by the way, in anything, in any field of activity, if you're gonna have an organization, you do need to have some calibration titration process.
Like change does need to happen, but it needs to happen in a measured way.
And so you can't just like blow it up every day.
And so yeah.
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.
You know, would be a canonical example.
Or, by the way, early on Zuckerberg and Sheryl Sandberg, or early on Bill Gates and, you know, Steve Ballmer.
So you can have that kind of configuration.
Or every once in a while, you can get that in a single person, right?
Which is very rare, but like Jensen Wang would be a single person 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-governance.
Like I kind of, I get it.
Like I'm not, But it's my big thing.
It's just 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.
Like this fucking sucks.
I'm like, that leaves nowhere good.
Right.
So that, that can't, that can't be the thing.
And so I do like, yeah, I do do a lot of self-editing.
You just said something, I think you said you believe Elon is inventing a new way to manage.
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.
So break down what you've observed with the way that Elon's managing.
Yeah, I should start by saying, look, Elon's method has been described by people, you know, 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, you know, have one layer of indirection, but I, you know, I work with him quite a bit now and I study him, you know very, 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, that'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.
Yeah.
Can you explain?
I don't think people understand just how big and powerful and almost monopolistic IBM was.
Yeah.
So I worked for IBM at the very height of their power, right before they fell.
It was my first job 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 to that.
There's nothing even close, right?
So this is like Google times 10 or something.
It's just like, or 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.
It's the point where IBM shows up and it gives you a sense of like.
It's like the CIA story you told earlier.
It's like the fail ice.
It's like 20 people in like blue suits who 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, 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.
Yeah.
So eight years later, it's like how many companies survive in tech, you know, 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.
Yeah.
So he had previously run a company called NCR, National Cash Registrar.
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 in antitrust court.
So he was incredible.
By the way, there's a Kevin Meaney, old school tech reporter, wrote a book, a biography of Thomas Watson Sr which you've seen.
The Machine and the Man or The Man and the Machine, right?
It's one of, I'm not sure if it's that one, but it's one of those.
I think it might be that one, yeah.
And he actually went back.
And this is like you know.
This is 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 and he actually got the archives of the transcripts of the executive staff meetings.
And it's just literally Thomas Watson, just like cursing everybody out and just like a complete tyrannical psychopath, just like screaming at people.
And it's all in the records.
And so it's like, you know, 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 60 years later, you know 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 their intern and I was trying to figure out whether I should work there after college.
And they had a, their internet 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, 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 happen was each layer of management was lying to the one above it, right?
Because each layer wants to look good and wants to, you know whatever put a little spin on the ball.
And, like, 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.
If that happens six times, the lies really compound.
If that happens 12 times, the CEO has no idea what's happening.
Like, absolutely no clue what's going on with the company, which was the state of play that IBM had.
They actually had a term.
It was actually a term.
They had a whole vocabulary.
I mean, this company was like a nation state at the time.
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 incredible thing.
They had this concept called the big gray cloud.
And it was literally the cloud of men and great 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 traveling court.
And so it was a completely impervious bubble 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.
Like, I wake up in the morning and like, everything is great.
And I'm like famous and I am like rich and I am successful.
And like I've got a chauffeur and I've got a jet and I've got these 80 guys in gray suits who are like taking care of everything for me.
And I don't have to ever talk to engineers.
I'm like, this is great.
You know until you know.
It's like the turkey on Thanksgiving you know until things change and there's a problem, and then you have no idea what to do about it, which 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 this.
He goes to whatever.
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 with the engineer and they solve that problem.
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?
It just 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 skillset to be able to do that right.
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 a chip designer right on Thursday night at 2 am in Austin and they can actually figure out like, what's wrong with the chip.
And Elon has that ability and he's like encyclopedic on like 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 has that.
And so, but that's literally what he does.
And then the way that he thinks about it, I think, is basically, you know, he runs whatever six companies at once or something.
And it's like basically any given week.
He thinks about everything as a production, basically production line, you know, sort of 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 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.
Yeah.
I can tell you what the CEO of the legacy automakers are doing.
Like they're not doing that.
That is not what's happening, right?
And so in contrast, like a normal company, it might take six months to solve these problems.
And Elon's like fixing it like right now, tomorrow.
Like let's go fix it right now.
And so he just like runs this loop over and over again.
He's just, he's absolutely indefatigable.
I offered, he famously for a while, he had sold all of his houses and he was literally cop surfing.
You know, it's one of the most successful people on the planet.
Yeah.
And so I, there's a vacation house I offered him.
I said, if you want to take a week and use the vacation house, 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.
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, you know, he turns this into a 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 it with five minutes per engineer, right?
And so he does 60 divided by five.
It's been way too long in this podcast.
How much is that?
12?
12.
He can do 12 design reviews an hour.
Yeah.
And then he does it for 10 hours a day.
So Elon will do 120 design reviews in the course of a day.
At least one-on-one.
I have not actually sat on these.
I suspect there are other people around, including people you know, work for him and you know, 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 like, if it's going great, that's great.
If it's not going, what's the problem?
And then how does that problem rank?
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, eight o'clock till 2 a.m.
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 just, it's hard to even compare the difference.
It's like four hours versus six months.
Like it's just this incredible gap.
And then the other part of it is somebody I know once went for SpaceX and And they asked what it was like.
And he said, it's like being dropped into a zone of shocking competence.
Like everybody is like ultra competent.
And the reason everybody's ultra competent 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, you know, at this point in his, you know, having done this 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.
What would be better as an engineer than being able to design a rocket engine with Elon Musk as your engineering partner, right?
And so he just has this like incredible positive selection where like, the smartest people in the world want to work for him and then anybody who can't cut it gets fired.
The world sees this as like raw aggression, but it's beyond that, right?
It's a very systematic way of optimizing these companies to be able to take on these like profound challenges and then being able to actually solve all the problems and do these things, and at a speed that it's just like completely unmanaged.
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 called the millet Elon.
Right.
And so are you, how many milli-elons are you, right?
Are you 10 milli-elons?
That'd be great.
Are you 100 milli-elons?
You know, that's 10% of an Elon.
That'd be fantastic.
You know, 500 milli-elons, like I'm going to give you all the money, right?
Most people are like one milli-elon or 0.1.
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 clone him.
You can't bottle the essence.
So what out of that can be transplanted to, like, normal human beings?
And how much of it is predictable or knowable when he's much younger?
Because, like, the 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.
Well, 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.
There was like 2,000 of them founded from like 1900 to 1910 and three that survived.
That's right.
And the previous real attempt to start a car company in the US before Tesla in the preceding decades was
Tucker.
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 um, and so, like this, 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 yeah, which is also insane right, and so yeah, so it's like the the, and i wouldn't like, by the way, i didn't see it, i and i did, i was, you know, i'm a software guy and i just i was.
I don't know, whatever he's gonna go, i guess he's gonna go do cars.
I don't know anything about cars um, so it's not like i saw it, but i'm just saying like it, like the, the level of incredulity that he was greeted with at the time was, i think, almost uniform.
And, you know, there's that famous photo.
The most famous Elon photo, I think, or the most powerful one, is the one where he's young Elon, probably 2005 or whatever.
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.
Yes.
Did you ever read Eric Berger's book, Liftoff?
No, I didn't.
Oh, you got to read it.
I'm surprised you haven't.
It only focuses.
I like these company histories that focus on, like the first, like six years, and it just stops.
It's the first six years history of SpaceX.
And it's just nothing good in the book.
It's just reading one failure after another after another, one catastrophe after another after another.
It's a good read.
When my kid was five, he loves rockets.
And so his favorite rocket video was the compilation of all the SpaceX rocket explosions.
Well, Elon talks about this that before his friends, after he sold them to 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 Dale Rossier I forgot the name of the 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 your fortune on fire.
It's going to explode in the sky.
I mean, obviously it's working, right?
So his method obviously is 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.
It's certainly working better than anybody else's method in rockets.
And then in a bunch of other areas also.
So like, it's clearly working.
And so it's like okay, 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 nonstop.
And, you know, we all kind of get sucked into these narratives.
But I think the key thing is just the.
For me it's just like okay, like there is a method there that he has been working on and refining for you know, coming out 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 30 million Elons, but not below or something like that, right?
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.
Everything is scaling.
What is it?
Starlink just hit, what was the number?
Starlink just hit 10, was it 10 million subscribers?
I'm one of them.
Something like that.
Yeah, exactly, right?
You probably have read about Iridium and Teledesign.
No.
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 ATT Mobile.
Those guys teamed up in the early 90s and did this thing called Teledesic, where they put up you know, 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 system that's 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.
We're starting 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.
It's like the side project.
There's clearly a method.
It clearly incorporates invention.
It clearly incorporates scale.
It does a brilliant job, both of those.
It's clearly in part the Henry Ford, whatever, Alexander the Great method, clearly.
But there's also like real scale and heft to it.
SpaceX now is building, you know, they've 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.
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.
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.
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