# Founder-First Strategy and the Death of Middle Management

**Podcast:** a16z Podcast
**Published:** 2026-03-15

## Transcript

We just have this fundamental view that technology is like on balance and 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 like normal people and let them try to use it.
And you just like learn so much about how much of a bubble that you're in.
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.
So I love caffeine.
So for for a very long time I always said that's 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, I did, I did, I did cut out, or at least for now I've cut out cut out the the four hours of alcohol.
But um, yeah, caffeine is just like one of one of nature's most most marvelous things.
But it turns out you can't overdo it.
And so uh yeah, a while ago, I was drinking uh so much coffee at work that um I was sitting in a meeting a couple years ago, and I started to feel just a little bit something felt off, and I just took my pulse and buttons I was realized I was skipping about every tenth heartbeat.
So I ha I had like an existential crisis because I'm like, all right, you know, 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 out under the table and I Google and I'm like, is this a problem?
And and and go 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.
Uh like I've read your entire blog archive, followed on Twitter forever, listen to every single one of your you know, podcasts that I can uh for going back like a decade.
You said something that I love and I never hear other entrepreneurs think about uh 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 I don't know.
I've just I've found people who dwell in the past, get stuck in the past.
It's it's just it's a real problem, and it's uh it's a problem at work and it's a problem at home.
So I've read obviously 400 and I think now 10 biographies of 50 screen entrepreneurs, yeah.
And that was one of the most surprising things.
Like, what's the most surprising thing that you've learned from this?
And like, oh, they have little or zero introspection.
Yeah, 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 gonna keep building Walmart, I'm gonna make more Walmarts and just kept doing it over and over again.
And you probably know if you go back before hundred years ago, it never it never would have occurred to anybody to be introspective.
Like it's the whole idea of, I mean, just all of the modern conceptions around introspection and therapy and all the things that kind of result from that are you know, kind of a manufactured of the 1910s, 1920s.
Say more about that.
Great men of history didn't sit around doing this stuff at any prior point, right?
It's it's all it's it's it's it's all a new construct.
It was it was good, 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, so several hundred years ago.
And then, you know, for a long time, it was alright, the individual runs, right?
And like does does all these things and builds things and you know builds umpires and builds companies and builds technology and does all these things, and then you know, kind of this kind of guilt-based whammy, you know, kind of showed up uh from your from Europe, uh, a lot of it from Vienna, you know, 1910s, 1920s, Freud and all the all that 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 needs to feel guilt, needs needs to look backwards, needs to, you know, dwell on the past.
It never resonated with me.
Do you find a lot of the greatest founders that you've spent time with and backed and partnered with are have low introspection?
Yeah, generally, although in fairness, um, you know, the the the introspection is probably linked to the the personality trait of neuro neuroticism, right?
Um so you know, a lot of a lot of the best founders are, you know, but I think met like zero percent neuroticism, like they they just don't get emotionally phased by things that happen, which is a superpower when you're an entrepreneur.
But having said that, some of the great entrepreneurs are in fact very neurotic.
Like it it you know, that that that's also the case.
It it it's it's not a you know, it's it's not it's it's uh maybe it's a nice to have to be low neuroticism, but but not necessary.
And so, you know, there are some that kind of get wrapped wrapped around the axle on on kind of personal issues.
Um, you know, as you know, the you know, these days sometimes that then, you know, kind of turns into uh use of uh you know psychedelics, you know, different kinds and leucicinogenic drugs.
And you know, that's like one very interesting kind of trajectory for, you know, kind of the culture of the country, c culture of the world.
And you know, we'll 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.
Yeah.
And they're like, you should try that.
Like, I'm not doing any drugs.
So to be clear, I'm not, I've never happened to revine two.
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 my deepest conversation on this with actually was actually with with Huberman.
And um and I was describing this phenomenon where we see at Silicon Valley where, you know, kind of there these guys get under pressure and you know they kind of feel anxious or whatever and they decide to, you know, somebody tells them it's psychedelics and they try it and and they kind of come out the other end as a changed person and they kind of come out like much more at peace.
But then they also tend to like quit their companies they like move to Indonesia to become a surface doctor.
Like they're they're just like there's just like peace out, right?
They're they're they're just done.
Yeah there's a been a whole bunch of examples of this and I and I was complaining to Huberman about this and in in true Huberman kind of wise Yoda style.
He's like, well, you know, how do you know they're not happier?
Like maybe that was the positive outcome.
Like maybe the thing that was driving them to be a great entrepreneur was a fundamental level of insecurity right and kind of this you know this kind of unsatisfied you know kind of neurotic impulse.
And now they're just now they're just satisfied.
Now they're just you know whatever the serotonin levels or whatever have been recalibrated that they're just kind of satisfied sitting on the beach and being a surface tructor.
And you know, maybe they're better off.
And I'm like, yeah, but their company, it's failing.
And so anyway, yeah.
So I it there's a possibility that there's a better version of you or me on the other side of you know ayahuasca, but I I'm not willing to find out.
I'm not either.
That that brings up something that like I think about a lot.
Um Daniel Ack 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 that's true.
I think it's certainly true for Daniel.
Yeah.
Who's a you know, kind of a great case study of that.
You know, having said that, I, you know, I always kind of wonder is that well, intrinsic versus ext extrinsic motivations.
Impact strikes me a little bit as an extrinsic motivation.
You know, it's like, yeah, impact, money, fame, you know.
And by the way, I think extrinsic motivations are fantastic.
And I think you know, they can be very motivating.
The people who get kind of get the great rewards for building great things, you know, deserve them.
But at least what I found is it's the intrinsic motivations that actually get people up in the morning.
Um and there's where you, you know, you're dangerously close to straying into introspection.
But you know, it's like, okay, like what you know, what what is the thing that causes somebody who's now you know extremely materially wealthy, extremely successful, you know, to get up in the morning and continue to, you know, kind of punch away at the world.
I think those those tend to be interior.
What's that for you?
Oh, I mean that 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 other other people's uh other people's introspections.
But I am curious about you, because like what you have you have a series of quotes that I absolutely love.
I save on my phone, I reread from time to time.
One of them I'll butcher it, but it's just like, you know, the world is a 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 there's a lot that we're actually trying to do.
I'm suspicious that that's my actual underlying motivation.
Right.
I just because I like I 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?
But it's like, all right, what what what is it about you?
The the the story I like to tell myself is that I'm competing with myself, right?
The the story I like to tell myself is I'm getting up in the morning 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 have you know reach better conclusions and you know be and you know be better at what I do um and continue to expand my skills.
But you know, again to to to actually analyze that properly require a level of therapy that I'm not willing to engage in.
So anyway so yes the the much more much more comfortable conversation is the yeah what what are you trying to do in the world?
Which I would love to talk about.
I have almost no introspection either.
So like I understand that.
All right so tell me what you're trying to do in the world then.
Yeah I mean look uh 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 the technology is like on balance an enormously powerful for us in the world and the basically that's the 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.
Um, and then there's this very special, you know, kind of personality type of the entrepreneur who's able to build the product and then and then able to build the company and build a phenomenon and and and really make an impact on things.
And so, you know, what 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.
Um 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, is just it's just stagnant.
Like the, you know, the uh the the overall kind of theme of things is just everything is stagnated.
And we we could, you know, we we could talk a lot about uh about that.
But you know, every once in a while you have somebody that comes along.
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 build a business around that and build a company, build an empire around that.
Um and that, you know, and and and those people, you know, include ourselves in this.
But you know, those of us that are trying to do that, um, you know, we're we're like a rope movement basically against stagnation.
But like, you know, without us, there's nothing but stagnation.
But it's actually really funny.
I always there's always this kind of criticism that you get from, you know, whatever the, you know, kind of the the corporate press or or or a kind of outside critics, which is 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 it, like it it's these are all completely open fields.
And it's just it it's shocking to me how few people actually give it a shot.
And and you know, and and you know, the 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 was I'd say the core thesis is the same.
Um, the the specifics have you know varied have changed enormously.
Um you know, we can talk you know about both parts of that.
But yeah, no, the the the core thesis was kind of the the startup, the entrepreneur, you know, the founder is gonna be the core thing is the core engine of progress in the world.
And I I think that you know, 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 kind.
Well, it was very controversial.
In fact, and 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 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 story.
It's like excessively rare for him not to be replaced once Atari started growing with you know, CEO, like uh an older CEO.
Yeah.
Like, were there other examples that before him?
Well, so Christopher Columbus.
Alexander the Great.
Right.
So so the the the throughout history, most of the, you know, Thomas Jefferson, throughout history, most of the great things that have been built have been built by this kind of super charismatic founder type, you know, will-to-power founder type who, you know, basically built and run something to 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 screen entrepreneurs all day.
Like this is what I do seven days a week.
Like, who are these entrepreneurs from history that you like?
Users are naming country founders.
Yes, sure.
Yeah, 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 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 this is one of those dimensions in which that's true.
It just it never would have occurred to anybody 100, 200, 300 years ago that if somebody was gonna like, you know, start something that they were gonna 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, uh, which is this sort of uh famous book from the 1940s uh by this guy, James Burns, like one of the great geniuses of the 20th century.
And he described 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.
Um there's what he what he calls bourgeois capitalism, which basically is like founder runs the company, name on the door.
And the 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 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 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 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 the the there's this new basically model that basically is an artifact, again, it's an artifact of kind of this weird period of time between the 1880s and 1920s, where kind of the modern world, you know, as we know it today kind of formed.
Um he said there's 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.
Um, you know, therefore the idea of management as a skill set that can be used to run many different kinds of businesses.
Um, 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 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, um, 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, and the 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 the Silicon Valley for 50 years.
The problem with his argument is that assumes the managers are going to do a good job.
Right.
And I think if there's like one dominant theme that we're seeing in the last, you know, 30 years, you know, in the West for sure, is like managers generally, you know, writ large are not doing a great job.
Or another way to put it is the the managers maybe are good at managing something that's going to be status quo for a long time.
Like if it doesn't change, maybe they, you know, maybe they can run the banks for a long time, or they can run the power company for a long time, or the car company.
And as long as the car is the car is the car, you know, or soup soup is soup is soup, it kind of doesn't matter.
But the minute things change, the manager personality type, because it's not the founder personality type, it doesn't know how to deal with change.
Not everything is changing, a lot of things aren't changing, but for the things that are changing, they're changing like really, really quickly.
I mean, SpaceX is like the classic example of this.
Imagine being a professionally trained manager trained at like, you know, a top management school working for a rocket launch company, um, yeah, competing with SpaceX.
And the 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 flying on their butt, and you can't replicate it.
Okay, your management's like what good are your management skills at that point?
And I 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.
Yeah, 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 can just learn how to run things at scale.
Well, that's the theory, and that's that's a big part of our theories.
Yeah, the founders can actually learn how to do this.
And and you know, and look, they're there, they're you know, this is still a controversial topic.
This, you know, this still comes up like because 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, this should 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 the company.
Like they've been, you know, probably working by themselves or in a with a small team, they've been building technology, they haven't been running things, like they haven't been, you know, man managing large organizations, they haven't been, you know, running public companies.
And so there is a missing skill set, right?
And and on day one, they they don't know how to do that.
And so they they do need to be willing to learn how to do that.
And then they and then by the way, they do need to be capable of doing that, because you know, some of them can and some of them can't.
But yeah, our so this this maybe is like the core thesis behind our firm, which is it's you're much more likely to build something important in the 21st century if you start with the founder and train them on management than you are to start with the manager and try to train them on being a founder on creating new things.
And I think that this trend is intensifying.
And so you're because what's happening is all the old edifices, all the old incumbent institutions in the last hundred years that are run by managers, they're all in some state of fundamental collapse.
Like they're they're they're all collapsing in like trust and credibility because because they can't adapt.
Um and so the 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 gonna have to be somebody, it's gonna have to be uh Henry Ford, El Him Musk type who actually does it.
You think it's in a vast major minority of people agree with you?
Look, it's becoming more common.
I mean, when you get an Elon Musk and a Steve Job, when you get these kind of archetypal examples of it, it's a lot easier to, you know, to you know, to sell it.
Uh, you know, Mark Bark Zuckerberg, we were talking about earlier.
Like he, you know, he's a now great case study of this, right?
He had when Mark started Facebook, he had never he had never had a job before.
Okay.
Not only had he not managed people, he had not worked for anybody.
Right.
So like he had he started with zero, and his his learning curve, which by the way was happened fully in the public eye, right?
Uh his learning curve was vertical.
And by the way, it's still vertical.
Like he spends like an enormous amount of time learning how to become better at running, running, running this these things at large scale.
He's still the founder, and he's still the innovator, and he's still like a fountain of ideas on what to do.
So he so he's he's he's that double, you know, he's he's like the classic example of the double thread.
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 it 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 Wazniak?
Okay, all right, okay, okay.
Wasnia pitch.
There was some other story where where Jobs went into some meeting with some manager trying to pitch the thing and the line from the manager was absolutely not, this is the dumbest study 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 my favorite uh Apple lore is that the first sale in Apple uh 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, yeah, so Wasn't that for sure were for Hewlett Packard.
Everything I'm describing was Hewlett Packard of the 1950s and 1960s that and 1940s.
That was also Dave, Dave, Dave Packard and Bill Hewlett were that founder type.
And and Dave Packard and Bill Hewlett ran their company for between the two of them for like 50 years.
Do you think that's and by the way, Silicon Valley was built in large part on HP.
HP was the original Silicon Valley company.
Okay, that's the next one.
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 it's like it's one of those things where it's like it's kind of so obvious it was staring everybody in the face.
And so people had to construct kind of elaborate, you know, basically, you know, these these elaborate kind of lattices of like, you know, theories to basically get around the fundamental fact that you need somebody who knows what to do after they're 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.
Um and then probably after that, Intel.
Well, well, and you go to the founders of Intel and you read biographies of them and they talk about modeling aft off of HP.
Yeah, that's right.
That's right.
Yeah, that's right.
And then how many founders modeled off of Bob Noyce and Intel after the fact, including Steve Jobs, who was uh we'd 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, present if you look at photos of Bob Noyce, you're like, wow, this guy's like a pillar of society, like he's you know, he seemed very fair well dressed, and he's kind of very adult and he's very like, you know, he's famously the the the leader of the traderess eight.
Yeah, you know, the the you know, the the other group that left shockly to start Fairchild.
And then left Fairchild to start to start Intel.
So Bob Noyce was 100% the Steve Jobs of his time, just in a short sleeve white dress shirt and the skinny black tie.
Yeah.
But it was, it's again, it's it's like the exact same thing.
And so I I you know, I I never I unfortunately never met Bob Noyce, but I 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 the look and feel is like completely.
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 uh Apple early on too.
So it was he he talked about this um in his biography.
Uh there's a few great biographies of Bob Noyce, but he said that the reason he spent so much time after he's really successful spending time with young entrepreneurs, he said it was uh restocking the stream in which he fished from.
Amazing.
He thought it was really important.
He's like, I learned from all the guys before me.
I need to take the that that knowledge I've built up over multiple decades and push it down the generations.
So when I'm trying to do this show, I'm trying to do my other show founders.
It's like, hey, I mean, if you um my other show founders, the what, uh, when you click on the podcast description, is like learn from history's greatest entrepreneurs.
That is what you're gonna get if you listen to it.
The why is actually comes from you, where you're like, I I was watching one of your talks at Stanford like years ago, and you're like, hey, there's thousands of years of history.
We're all these smart people, like invented new technology, started new companies, and somebody wrote these lessons down in a book.
And he's like, for a few moments of your time or a few dollars and a few, you know, a few hours of your time, you can always learn more stuff from the accumulated knowledge of history.
And like it's a good you should have telling.
I was like, that's the why.
So I used your quote as the why to founders.
I want to go back to starting the firm though.
This is interesting.
What was occurring in your life either at that time or before that that you had this observation that this had to be done?
Oh, so so see, I've you know, we've got all these elaborate theories.
The practical reality of it was Ben Ben, my partner Ben and I had become very active angel investors.
Um, and and I'd been an angel investor since like the mid 90s.
Um, but then Ben and I started doing it kind of as a you know, as a as a as a as a real thing, putting significant time into it, probably starting in, you know, 2003.
Well, I I did it kind of throughout the early 2000s, but 2003, 2004.
It's hard to remember now, but if you go back to like 2003, 2004, there weren't like thousands of Asian investors.
There were like eight.
It was like a sure, you know, it's like Ryan Conway and a you know, handful of people.
And then I 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 intermediated by angels and seed investors who kind of inserted in before the Cs arrived, which was this fundamental change that changed the whole industry.
But you know, we we were part of that.
Um, so but as a consequence, like we were investing in all these new companies, you know, basically at the point of formation.
You know, we were basically playing playing amateur early stage VC.
Um, and we're getting, and we're always like, we're not going on the board, like, you know, you're gonna raise money from a real venture firm later, they're gonna go on your board and whatever and work with you.
And what we just found over and over and over and over again was we ended up getting pulled into these companies, um, either because there were issues that just like the other people that they were, you know, working with or they're you know, they're it either they either hadn't raised venture yet or the the VCs that they'd raised from couldn't couldn't help them with.
And so we we just got pulled in.
And the reason was we we had been running companies at that point for you know, whatever, 20 years.
Um so you know, we kinda we at least had some idea of what we were doing.
Uh and then the other is we kept getting, we kept getting brought into conflict resolution between the founders and the VCs.
So that when because, you know, it's like especially, especially, because again, much more common at that time, especially if the VC's fundamental point of view is the founder's not gonna run the company and we need to like replace you with a professional manager as fast as possible.
Like the founders are not necessarily gonna like that, and they might resist that.
And by the way, even if they're on board with that idea, they might not like the person who the who the VC wants to bring in.
And so we we kept ending up in these kind of basically as our arbitrators in this sort of, you know, and in theory, we were kind of trusted intermediaries because we knew the founders, we knew the VCs, and we could kind of help help bridge between that.
But literally what happened was after a while we were like spending like eight hours a day just doing this.
And we're like, all right, and you know, it's it's like weird.
It's like you're writing a hundred thousand dollar check and you're like spending all this time doing it, and uh, and then to basically arbitrate a dispute with somebody who wrote a 10 million dollar check.
And it's it's just like, all right, like we should probably just write the 10 million dollar check.
And that was that was that so it was it was I always think like the best the the founders I always one of my theories of like the great founders is they they tend to be able to operate at kind of the conceptual level and then the practical level at the same time.
And so we so we had we had a whole theory I could take you through for the evolution of the venture business.
Yeah, but but underneath that was just this actual, you know, the the lived experience of what was actually happening on the ground.
The the big theory of the firm that we that we had at that time was linked to this idea of um uh was linked to this idea of uh of founders running the show, but it was also a structural observation of what was happening in in the venture industry, which was uh we basically what we did was we we sort of in line with your philosophy, we we went back and we studied a lot of other businesses that are are have have similarities to the venture business.
So we study private equity, venture capital, or sorry, private equity hedge funds, investment banks, law firms, um, management consulting firms, ad agencies, accounting firms, you know, basically anything where the the product is fundamentally a relationship, you know, a knowledge work, you know, kind of kind of relationship as as compared to something that gets that gets manufactured.
And what we observed is basically, and and and an example, uh, Hollywood talent agency is actually is the one we've we probably talked publicly about the most.
And so that was that was a great case study.
Oh the old story.
He was in this studio a few months ago.
Fantastic.
And so, and and he actually, and by the way, he he gave us, you know, we make a point crediting, like he gave us a lot, a lot of this theory.
So a lot of this comes from him.
But well, actually, I'll tell it through through through through through his through his his experience.
So when he started his agency um in uh was it 80, whatever, no, 75, 75.
In the 70s, I think.
In the 70s, like in the mid-70s, it was actually a very similar, it was structurally, it was very similar to when we started uh A16Z and in in 2009, which was the configuration of the industry at that point was basically a bunch of essentially service firms, a bunch of talent agencies, none of which were at very high scale.
And then each of them was basically a tribe of of basically so solo operators, kind of kind of lone wolves.
Um so so the so the concept in Hollywood was you had an agent, and that was your guy.
Um, and that agent knew whoever that agent knew and had whatever relationships that agent had, but the other agents at your agency were not available to you.
And there was no collective benefit to the fact that you were at an agency that had not just your guy, but like a hundred other guys.
There was no collective payoff to that.
They ran that in that way for a very specific reason, which is this kind of this eat what you kill professional services mentality where everybody should have to go build build build their own book of business.
But but you you end up you're just dealing with a guy as opposed to a firm.
Like there, there's no firm, there's no no no collective thing.
And that that was basically the condition of venture capital in 2009, which is you you have and at this at this point we knew all the VCs really well.
And we had raised venture, and we had worked with all these other companies um that had that had raised venture.
And and and basically all of the sort of legacy venture firms at that point, they were all like that.
They were all just like try 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.
Right.
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 that you need access to.
And so he asked Joe, can Mary introduce me to the so-and-so?
And what you don't know is they're having like a brutal fight.
You know, they're they're like trying to destroy each other because they're they're because they're fundamentally economics, they're they're going for you know the a greater slice of the of the profit pool.
And so they're really going at it.
And so we we just we saw example after example a venture firm that was basically either two things actually.
One is either melting down due to just internal strife and conflict.
Um, or by the way, the other was generational secession, right?
The other 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 and and you know, and again, it's the same thing.
They they had been founded by dynamos, and then they were, you know, the later generation people were not like that.
So we basically said, oh, the this is where the overst thing comes in, as we said, look, like that that's not gonna last.
So our theory of it was what we call death of the middle, or we sometimes the negative way to frame it is death of the middle, the positive way is the barbell, uh, which is what's happened in all these other industries, which is basically the the industry gets stretched apart like taffy.
Um, and and and what you what you get is you 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 in, like, you know, staying very light on their feet, writing a relatively small check, but like being involved in companies extremely early on, um, you know, taking a lot of risk.
And then on the other side, you get basically scaled platforms, right?
So you you know, you get large scale enterprises that have like a lot of throwaway, a lot of access, very big networks, and then access to a lot of money.
The other comparison we always make is to retail shopping, right?
Which is there used to be department stores like Cirus and JCPenney, which basically were the the brand promise was pretty good selection of products at pretty good prices, uh 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 like Walmart and Amazon.
We were to the point where it's just like there's no reason to ever go to a department store because it's got less selection than Walmart and Amazon, and it but it doesn't have the quality tier and the special experience of a Gucci or Apple.
But you had that thought in mind when you started A68s.
100%.
Yeah, exactly.
Yeah, okay.
It was a conceptual leap for venture capital at the time, but the exact same thing had happened to private equity, the exact same thing had happened in hedge funds, the exact same thing had happened in investment.
And you knew that by what, just reading?
So, like investment, uh the investment banks are the classic example.
So the if if you read about the sort of in 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 is become a good friend.
And uh I was like, well, if I'm gonna meet these guys, I need to like read something about their to understand that.
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 that which I love so much.
So J JP Morgan's one of my kind of favorite historical figures.
And and and JP Morgan, JP Morgan was an example of that.
The JP Morgan Investment Bank was like this, this basically this in head, it was very important, but it was like this tiny little operation.
It was a you know, fit in a single office, it was, you know, I don't know, probably 20 principles and some office staff or something.
It was, you know, it's not, it was not large.
Um and and and actually the the the hidden secret to to JP Morgan was he was the son.
The father was Junius Morgan.
Okay.
I literally, when you're starting, I was like, wait, you you you I was shocking that you would say pick him, because I actually found his father more formidable individual than him.
He was so he was, which I is almost always the case with any famous public figure.
It's the father is almost always a more interesting story, which a lot of examples of that.
But however, yeah, so Junius Morgan, and then and then JP Morgan has filled a specific economic role that's gotten lost in history, which is basically uh Junius Morgan, the Junius Morgan bank was in London, the JP Morgan bank was in New York, and the 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 these were um they were all bifurcated by religion.
So they were the Protestant investment banks and they were the Jewish investment banks, and they did not mix.
And no, not at all.
Completely different worlds.
And as a consequence, JP Morgan was the Protestant banks, like like JP Morgan were able to find like the railroads, which were considered like the real businesses of the time.
Yeah.
Uh, but then like the all the disreputable stuff, like movie companies and like department stores, like that, those are all the Jewish investment banks.
By the way, but Jewish found almost entirely Jewish founders, uh, with like and then Goldman Sachs and JP Morgan is the big survivor of that today in the form of JP Morgan Chase.
And then, and then on the on the Jewish side is Goldman Sachs, you know, is the great survivor.
But again, if you go back, there were So that's you consider that the the barbell in investment banking.
You have the the JP Morgan kind of like family partnership, and then you have the complete scale of like Goldman Sachs.
And so what happened was both JP both JP Morgan and Goldman Sachs started out a hundred years ago, they were on the one side of the hundreds a hundred years ago, they were actually in the middle.
They were they were kind of again this sort of you know, they were boutiques but they were like of their time.
They were like today you'd call them like mid-market, um, you know, we sometimes call bulge bracket, you know, kind of thing, as opposed to just like a solo operator or something.
Actually, the way um uh uh uh JFK's father got started with Lucy, literally hung out in a shingle in the 1920s, which is uh Joseph P.
Kennedy banker, yeah, you know, private banker, and he like just did deals and is he was like an angel investor of the time.
And so and then you had the big commercial banks, but the big commercial banks had no interest in issuing loans to these speculative crazy, you know, entrepreneurs.
And so in that time, JP Morgan and Goldman Sachs and Kuhn Loeb and Drexel and all these other kind of mid you know mid-market banks, Morgan Stanley, um, the banks that became Morgan Stanley, um, were kind of the these mid things.
Now, what's happened, you know, sitting here a hundred 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 and Company was founded in the 1920s and has, you know, has is uniquely the one that survived in the in the original model of boutique and deliberately being a boutique investment bank, and it stayed that way for a hundred years.
And so one way to think about it is that today that's the barbell in banking, which is Allen Company on the one side, and then JP Morgan and Goldman Sachs on the other side.
So are you reading about this while you're founding the firm, before you're founding the firm?
Like you Ben and I spent about a year and a half planning the firm.
Um and part of it was he was in we call industrial industrial servitude.
He was working for Hewlett Packard after we sold our company to HP.
So he he was a he was running a big part of HP at the time.
And so we we couldn't literally start a new full-time thing until he got free of that.
So we we had a year and a half, you know, to kind of to kind of study and think and work.
And because you had this 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?
Think Ovids 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 they was like, oh, my agent's coming to the premiere.
No, it's like 20 agents are coming, and I think they'd redress in like the same kind of suit maker, and like they were uh intentionally trying to intimidate like their competition.
Our mining suits, uh Sulka shirts was a little uh shirt maker in um uh in Beverly Hills, um, and uh sober, you know, all sober colors, white shirts.
Um, and then I think he had a bulk purchase deal, I think, with the local Jaguar dealer.
And the legend at least has it is that the license plates all said C A one, C A two, C A three, and so late.
You'd go to a premiere, and there would be like 20 Jags lined up, and then 20 guys in identical suits coming out.
And yeah, just this is exactly the thing.
It's just like now that you know that's that's the Hollywood version, but like just imagine the psychological impact of that if you're just like an old school agent.
I mean, this is sort of the you know, Mike Michael's a very dear friend.
He's you know, he 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 in these 20 C motherfuckers are showing up.
And like it's just yeah, it's this force.
And the clients, if you talk to him, but you know, a lot of his clients are you know still still active today, you know, from the period of talk to him, it's just like, yeah, it's just a no brainer.
It's like, do you want to work with a guy or do you want to work with a firm?
It's just obvious.
He has, I don't know if he told you all these stories.
Did he tell you about this his morning schedule thing?
The the like getting on the bike, doing the for the firm, for the firm for the colour.
So this is again something that's specific to Hollywood, but it's a it's a great example of the okay.
So the agency business, at the time he started CAA, the agency business is like 90 years old or something, right?
It like started out doing vaudeville bookings and like music halls, and like it had been around for like decades.
And so the people involved in it had had decades to think about like the best way to do it.
And then they had arrived at a set of practices.
And one of the practices, I think I'm getting this right, one of the practices was at every agency they would have their staff meeting in the morning at 9 a.m.
Um, and they would basically share, you know, whatever information was gonna get shared in the agency would get shared at that point.
And oh, you know, this studio head wants a script to do, he wants to do a crime thriller, and here's the script and whatever.
And then, you know, this is like the point where there would be minimal, you know, whatever minimal handoff existed to the other agency.
And so this is where everybody would kind of get updated.
And so the the staff, 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 gonna 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 eight.
Yeah between eight and nine, we'll call all the clients.
By the way, we won't just call our clients, we'll call their clients, right?
And so imagine you're whatever Paul Newman, and you've got some agent you've been working with for 20 years, and he calls you at your agent calls you at 11 o'clock and is like, I've got this great role.
And you say, Oh, the guys at CA called me about that three hours ago.
And and your agents 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 it to the client, it's just like completely obvious what to do.
Um, and and so yeah, so the the the more the reason I go through this, the the moral of the story is again, it's sort of this this idea of incumbency, you know, incumbency status quo, like you you just end up, you end up with you end up in any business, you just end up with all these embedded assumptions, generally, and then you know, 90 years later, right?
So that the so the founders of the agencies were 90 years ago, they weren't involved anymore.
So the people who are running competitive agencies were managers, not right say thing managers, not founders, right?
And so the and but the thing a manager never does unless they're under duress is is is reconsider fundamental assumptions.
Like they hate that.
Like that, like that's not the whole point of running something big is you don't have to do that.
You get to run the big thing at scale.
You don't have to like go in and like reinvent it from scratch.
Like that sounds like a nightmare.
Right.
And so, but but anyway, as a consequence of that, you end up with like all these embedded um uh 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 do they arrive at that?
And what 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.
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 you could take, I'm like, I'm not running a talent agency, right?
But there's so many of these principles that I could apply to venture capital.
You in your blog archive, which I absolutely love, and I told you I've read like multiple times, I did episodes on it.
Uh, 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?
Um when I read Ovid's book, the way I would summarize his approach, because he is in this big stodgy, slow-moving, you know, very bureaucratic uh 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 the 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 the name.
He famously worked for the CEO of William Morris.
Yeah.
Yeah, which was the 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 and again, you know, I mean again, that may be a cheat code, but yeah, if if you've been the customer, obviously, this this all becomes a lot more obvious.
I I don't know if you want to answer this question or not, but when um Warren Buffett's shareholder letters, he has this great line where it's like really important to uh pick uh to to play against weak competition.
Did you feel that there was gonna be weak like that that point in time in venture capital history that that you were you were gonna be playing against weak or weaker competition?
I would say not exactly.
We didn't view them as weak, we've we viewed them as basically we viewed them as running on a status quo in a on a status quo set of ideas.
And and so and and to be clear, like we we in in part of why we think about this where we had to raise money from at the time in the time we're probably the two best venture firms.
So Claire Perkins in the 90s, and I worked with John Dora very closely for five years uh in Netscape, and then we we raised money from from benchmark when they were like King of the Hill and Andy Rackcliffe who was one of the founders of the firm and as a you know legendary brilliant VC.
And so we we had worked with we just had, you know, accident uh 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 and and and they were and are, by the way, um, brilliant at running on on the model that that that they that that that existed.
Like John was brilliant at that, and Andy's brilliant at that, they're still brilliant today.
It was less a competition of oh, these people are soft or these people aren't smart or any.
It was none of that.
It was no, they're they're really good at executing against this particular playbook.
So by the way, that's why it's okay.
Like if we're gonna do this, we need to be, we need to be playing by a different playbook.
There was no such thing as like scaled venture capital at the time.
No, it's a talk, no.
No.
Because the firms all hit this, they all hit this limit.
They they all fundamentally hit this limit.
They all hit this limit where they just could the the the idea of it of a like partnership of equals or even a even a hierarchical partnership.
Like it just if right it just breaks at some point because there's just too much internal dissension.
It is too hard to coordinate, and then and then everybody's fighting for slices of what it was viewed at the time to be a fixed size pie.
Um and so that none of the none of the other firms could they they they structurally there was just no way to get to scale.
Where else did you take ideas from besides the agent business in Hollywood and like the merchant bank investment banking industry?
Well, I mean, it was just very obvious that it happened in private equity.
Like it, you know, this this was the this was the time when like it was actually really this was around the time when like KKR and firms like it were hitting their stride with they're actually building like a lot of operational capabilities in-house.
Um they were actually building their own actually investment banks in-house.
Um one of the things we've never done, but it's always been on the idea list is to actually just have an in-house bank.
Um and and KKR had had actually done that, just build a captive bank.
Uh and so that the you know, they they had done a bunch of things like that.
And so we so we saw it happening, which is the mid-tier um private equity firms were collapsing.
And you either needed a solo, you know, very light on your feet, kind of solo operator on the one side doing small deals, or you needed to have a scale platform like KKR.
It happened at hedge funds.
Um, it happened in uh but I mean it had long actually the TV show Mad Men.
Uh Mad Men tells the structural story of this happening in the advertising field in the 60s and 70s.
Um and and I I will ruthlessly spoil Mad Men because it's been it's been it's been off the air for like 20 years at this point.
But um, you know, a big part of the arc of Mad Men is those guys who work Sterling Sterling Cooper is a classic mid-market ad agency.
Um right, yeah, and and then and then it's and then then at the end of the whatever the third third season, they said they sell it to McCann, which was the scale player at the time.
And and they show you all the pros and they clearly talk 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 uh Sterling Cooper Draper Price, the that's the second one, which starts out as a as a true startup, as a true boutique startup.
And then they have this whatever year and a half, which is just fucking hell.
Like they can't get anywhere.
They can't get clients, like because they're too small, you know, they're they're subscale.
And so it kind of, and and then I think I think in the end, I forget it's been too long, but I think in the end they end up, I think they end up uh selling that to no, no, no, no, no, no, no.
Sorry, I got it wrong.
They sell the first one to the British ad agency um that just like completely destroys it.
And then they sell the second one at McCann.
So they actually show that process happening twice.
Um and so that that again, if you go back to history, that that is what happened in the ad agencies basically between the 40s and the 70s.
Like basically television catalyzed that.
Like when when television emerged, advertising became a much bigger deal than it had been before, and it just had to be professionalized in a different way.
The other thing that happened is of course the external environment changes, right?
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 he would agree with this part of what made CAA possible is at one point basically Hollywood was just movies, and then there was like whatever a local kind of TV division.
And by the 70s and 80s, the you know, Hollywood was becoming much bigger than just movies, right?
It was movies and TV and advertising and music and sports and you know, ultimate you know, politics and culture and like all kinds of things.
In fairness to the uh kind of our competitors, um, you know, Silicon Valley, between call it 1950 to 2010 was primarily just in the tools business, right?
But 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 build a tool like an operating system or a disk drive or something, and you'd sell it to people and they'd figure out what to do with it.
Um, it was right around the time we started our firm that the valley was going from being primarily tools businesses to actually building um uh 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 running Airbnbs.
It's a tiny little boutique business building basically little spreadsheet software.
But no, Airbnb Brian Chesky decided brilliantly, um, we're just gonna like go into the hospitality business and compete with hotels directly.
Um Uber and Lyft in the old world were just taxi dispatch software.
In the new world, they're full transportation providers.
Uh Tesla in the old world would have just been software for self-driving cars.
Tesla in the new world builds, you know, the entire car.
By the way, face Facebook, same thing.
Prior to Facebook, if you built like online ad, you know, software, you were selling it to the media companies.
Mark's like, no, we're just gonna beat the media company.
Like we're just we're just gonna build the entire thing.
And so this was the other thing that happened was, you know, for us was that that was right around the pivot point when the valley's ambitions went from just building tools to going directly into incumbent industries.
And and then and then this goes back to the scale thing.
It's like, okay, well, why do you need to scale a venture firm?
Was because the companies need to scale, right?
And then, of course, AI now makes that crystal clear, right?
Because right, the winning AI companies are raising, you know, billions, tens of billions, in some cases hundreds of billions of dollars.
Right.
The old world of 10 million or 30 million dollar or 50 million dollar checks, you know, where VCs tap out, it's just not a relevant uh 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, um, you know, basically, uh, you know, informally since inception and then formally on the board since 2007.
And so I saw the when that thing hit the knee in the curve, it was just very clear.
It was to us, it was just like very clear that we didn't know how big it was gonna get, but we it was gonna get much, much bigger than the internet 1.0 uh companies had gotten.
Um, and so there was that.
What else?
It was also around the time Apple was directly entering the cell phone market, which was another great example of this.
Um Silicon Valley didn't used to make cell phones.
And the original cell phones weren't made by Silicon Valley, they were made by these like giant industrial companies like Sony and Nokia and whatever um in Motorola and you know 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 gonna make our phone, right?
There were these signals that it was happening.
And then the other thing was just the the internet itself was maturing, right?
Um, and so you know, at that point, the consumer internet was 15 years in, um, and and we had you know seen every part of that.
And so we, you know, we saw I forget what the number was, but that was probably around the time the global internet penetration was like crossing a billion users on its way to five billion.
Yeah, you have a very interesting lived experience where like you were there at the very beginning of the internet.
One thing that um I'm fascinated by, and that's actually what's going to be the first question um for you, because I've never heard you speak about this, at least on a podcast.
But your partnership and relationship with Jim Clark, you were 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 uh concept these days.
Um, 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 by written by Michael Lewis, Silicon Valley's 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 the the portrait he paints of this very eccentric character is just wildly entertaining to me.
But what's shocking to me is when you talk to young founders, I'm like, this guy started three, I think he was the first person in history just to found three separate billion-dollar technology companies.
I think that's right.
And almost no one knows who he is.
Can you just talk about how you met him?
What was like working with him?
I knew exactly who he was.
And the reason was because uh his company, Silicon Graphics, his first company, they were the company in the valley between like call it 1980, call it 87 to 94 or something.
They they were like whatever, Google or OpenAI or whatever, you know, comp comp you want to make.
Like 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.
The product they built the products that were like the coolest products you could possibly imagine.
They had this incredibly young and vibrant and dynamic culture.
Um, and then they hit this like cultural moment that was just incredible in I think '92, which was uh yeah, which was the turning point in in the movie business when you know computer graphics really kicked in.
And then the two movies back to back were Jurassic Park and Terminator 2.
Run on the machines they made.
We build on the machines they made.
You know, those are still two of the great all-time, you know, movies.
Um, and but at 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, they're 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 uh it was actually the 3D software.
It was actually those, those were actually the the Silicon Graphics, silicographics computers.
Um, and so like they they just that that was like this moment where they were just like that, they're just like the the absolute it company of all time.
But by the way, their legacy lives on in in NVIDIA.
Like the the NVIDIA is Silicon Graphics basically uh uh with with one, it's like a the trader of save thing.
It had to be a new company for races we could describe to to do the GPUs instead of the work instead of the the workstations and servers.
Nvidia fundamentally is based on Jim's ideas.
That's where that stuff all comes from.
And so he he was already legendary.
And again, he was one of these, he was the full deal.
He was legendary as an 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 the original interactive 3D graphics on a chip thing was actually him.
I think it was like his PhD thesis.
Um and then um 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 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, yeah.
So now by the way, there there's two sides of the story.
And and and and and and I wasn't there.
Um and so I I just reflexively side with Jim Clark, but I'll I'll try to at least represent both sides of the story.
So so Jim, I don't I don't even remember what's in Lewis, but but like Jim's like a true Jim is like a true, he's like an Elon, he's like a true Elon Steve Jobs level guy.
Um, and so like incredibly creative, incredibly bright, incredibly charismatic.
But like he's volatile.
Like he's he's he's he's he's exciting.
Like he's exciting.
So it's like being around him is just like incredibly exciting.
There's always something something new, he always has new ideas.
And and again, that was in that time where it's just like, okay, that's the personality tech that clearly can't run the company.
And so the VCs brought in a guy um out of uh Hewlett Packard, um, uh, who had been trained in Hewlett Packard.
Um, and because at the at the time, what happened is you wanted to hire a uh professional CEO, you went and hired a general manager out of either Hewlett Packard or IBM, we're the two training grounds uh for this guy.
So they brought in a really, really sharp guy who by all I don't really know.
I think I met him once.
I don't really know.
By all accounts, he was like very he was like a very good example of this kind of HP general manager type who became a became a CEO.
Uh he took he took over, he took over the company.
And by the way, like in his defense, under him, the company scaled enormously.
Like you know, 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 but anyway, they they they got in this classic fight.
Like, they got in this classic fight.
And the classic fight was, you know, you can just it's the same story every time.
The founder's like, the founder's talking to CEO and the founders like to the CEO of like, we need to do things completely different.
And the CEO's like, no, like what we're doing is working.
Like, stop fucking with stop fucking with things that's working.
And the founder's like, no, it's working now, but it's not gonna 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 gonna 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, and is you see this, and that was exactly the deadlock that they got into.
And Jim Clark basically made two predictions as the founder of Silicon Graphics.
So Silicon Graphics at the time was selling their computers basically started list price at like $50,000 for a desktop workstation and then scaled up into the millions.
And Jim was like, look, two things are gonna happen.
Um it's amazing that he and he figured this out by like 1991 or something.
He said, two things are gonna happen.
He said, number one, everything that we sell today for $50,000 dollars is gonna go on a chip, and that's gonna go on a card and it's gonna go on a PC, and it's cost 300 bucks.
And either we're the company that's gonna make that or we're gonna 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, these this idea of standalone computers is not gonna be the thing.
These computers are all gonna get networked together, and the network is gonna become the important thing.
At the time, there were there were different terms.
There was people were using terms like information superhighway or video on demand or 500 channels.
He had all these kind of concepts kind of coalescing around what became the internet.
Um even before the internet kind of became a mainstream thing, Jim was just like, look, it's just inevitable that this is all gonna become connected.
And then the function of the computer is no longer going to be mainly what just the computer does, it's gonna be the fact that it can talk to all the other computers.
And and and we need to do that.
And to do that, he actually he actually went to Japan.
He actually got this incredible deal.
Nintendo, you know, then and now was like the you know, this giant video game company.
So he actually had this deal with Nintendo, um, where number one, it's he actually and Silicon Graphics actually did this, actually, built the original 3D graphics chip for a for a consumer game player, the Nintendo 64.
So he did that deal.
And then he went to uh Time Warner, which at the time was, you know, this very important uh media company um doing all kinds of things, and 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 like 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, I we just can't, we can't, we have to we have to focus on the thing that we're doing.
We're not gonna do these things.
And so Jim did the classic trader 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 crime of my life.
I know I 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 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 so and he was very sad about this Silicon Graphics is not the company that's gonna be able to do these things.
And so I have to build the the new company that's gonna do it.
I want to hear more about what it was like working with them, but there's a very astute observation you made in your blog archive because you were trying to, you know, essentially this post is 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 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.
Like most famous person, best entrepreneur and he's like he tried to recruit all these other people and like I don't know there's 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 and this again, this is like, I don't know, Zuckerberg or Sergey Brennan 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 was supposed to start a company with you you.
You know, just the obvious thing is you just say yes.
Like it's not happening.
And so the the I don't know if I told the story, but the the my the crystallized memory is uh dinner of 12 of us at Elf, this uh rest famous Italian restaurant in Palo Alto called Elferniso.
It's where a lot a lot of these companies were formed um you know it's 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 of.
Well, this is the thing.
He was he was constrained, he had a non-solicit agreement with Silicon Graphics, and so he couldn't just rip people out.
Um and he didn't want to violate that.
And so he needed, he needed to basically reach out to the technical community and find new collaborators.
So there were like a dozen of us in there.
And I remember that I remember that dinner very, very um uh precisely for for two reasons.
Number one is I was the only one of the dozen to basically to say yes.
And then the other was it's the first time in my life I drank red w red wine.
Um, and I didn't know what to make of it.
Um and so I kept sipping it, um, 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.
Um and so the 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 gonna say yes to this, we're gonna do this.
And I I go to my car in the parking garage in Palo Alto across the street, and um, my my brand new car, my first you know, new car I've ever owned, right?
My brand new car, and I put and I and I and I got it and I pull it out and I rip the entire front end of the car off.
It's like just screaming metal.
So, like the whole front of my car is just like hanging on the ground, and I'm like, oh fuck me.
So anyway, I parked the car, get out of the car, walk home.
No Uber this time.
No Uber.
You know, 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?
No problem.
Oh, 2022, yeah, exactly.
22.
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 even 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.
Yeah.
We started the company.
And it we had a long, it was again one of these things where we had a we had long conversations about like what to do.
Well, good.
Okay.
So then the the problem, the problem that he had was there was the idea of doing the graphics chip, but like in and again, that's what NVIDIA did, but Nvidia was a sp essentially a spin-off 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 uh doing that.
And then and then the interactive what did it call the internet, 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.
Um so it like the the the it was gonna be cost prohibitive.
Uh 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 and Oracle.
It's at the time, like all the big companies were.
It's all these Bill Gates ridder fees.
Yeah, exactly.
He talks about that a lot.
But the CapEx per, you know, house was like $50,000 or something, because you had to have like a silicon graphics workstation in the house.
And it just it wasn't gonna work.
And so he couldn't figure that out.
Um and then we we s we cycled through a whole bunch of ideas.
We actually went, he actually went back to Nintendo and we we almost pulled the trigger on basically building what today you'd call like Xbox Live or what is it called?
Place it's a PlayStation Network or Xbox Fly, like an online gaming service for the Nintendo 64 in 1994, which might have been a good idea.
Um we thought it was too early.
Um we almost did that.
And then what happened literally was the internet uh, you know, I I had worked on the internet in in college, and then and then you know, this is you know, fortunately only only a few months later, but the the internet just kept growing.
Like it just hold up, Mark.
Yes.
You had worked on the internet a little bit.
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.
So at the time it was not so this is part of the story.
At the time it was not that big of a deal.
It's not nearly that much of a big of a deal at the time as it is as it's viewed now.
So the internet, I I've told the story many times, so I won't go into huge detail.
But yeah, so we uh you know, a group of us at Illinois did this thing called Mosaic, which was the the first, as I said, the first widely used web browser, then the first one with graphics.
Explain what was different about what you made compared to what it existed before.
Yeah, so the like previous web browsers were like text-based.
And so there was like this nascent concept of the web, but it was like a tech, it was like text-based terminals.
Um, and then it didn't have graphics.
Um, it wasn't point and click.
Um, you know, it didn't, it didn't work in the way that you would like a spec software to work.
Um and then by the way, it didn't also have like you know, no scripting language, no security, you know, none of the actual capabilities that like make make the browser uh a useful thing.
And so there was this like nascent idea, but it but it needed to get built into a full thing.
And so we we built the original kind of full, full thing, full browser uh at at Illinois.
Um and then we also built the first kind of mainstream web server, like the first the first web server again that kind of had everything that people needed.
You know, this had been a project at at college, and and then this was a pro and it's a 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?
Like he had to like lobby and get a law change?
That's right.
What was yeah, the details there?
So the the internet as we know it today, um, in the 1980s was called the NSF Net.
Uh NSF stands for National Science Foundation, which was a branch of the US government that funds research.
Um and uh the National Science Foundation funded funded the internet.
Um the reason I was able to do the work I was able to do it at Illinois is because the NSF had actually dumped a ton of money into four 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 and the function of the NSF net was fundamentally to connect the supercomputers to all the people who were gonna use them.
And so it was 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 gonna use any of this.
Like it was just not not nobody ever thought that this was a thing that the the normies were gonna use.
Um and and and so NSF it's it's tax fair funding.
Uh so the guy the government at least is not supposed to be funding businesses directly, although sometimes they do.
Um, but um there was there was uh there was you know formal legal restrictions on on on funding things with with with commercial applications.
And so what what there was is there was something called the AUP, the acceptable use policy.
And the acceptable use policy said that that basically the internet the internet, the internet, the NSF net turn internet um was for academic and research use and commercial activities were strictly prohibited, like literally not allowed.
And again, it's just like, oh, as a taxpayer, that makes total sense.
Like I'm I'm glad my tax money 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 and and if you if you took the conceptual leap to say to say, no, this is gonna escape the lab and this is gonna be something that normal people are going to use, um, then it just became obvious that it would have to have commercial activities.
Yeah.
And then AOL was one of the early pre-internet online services that wanted to connect to the internet.
I think they famously connected to the internet in 1993.
Do you know you know about the concept of eternal September?
No.
Oh, okay.
So there are two internets.
There are two internets.
There's 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, um, 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 the there was this the old messaging system was called Usenet, and like the discussions on Usenet were just like absolutely spectacular.
It's just like this.
It was like it was amazing.
It was like the most pure, clean intellectual, like vibrant space since like I don't know, Athens in, you know, in 500 BC.
It was just like this amazing phenomenon.
And then AOL connected, uh, AOL, AOL had I don't know whatever, million or two million uh people at that point.
They connected, they connected all the AOL users, which were just normal people, to the internet in September of 1993.
And so that it became eternal September, uh, which is that that's the day that the internet changed.
And by the way, I'm I'm I'm pro that.
I'm glad that happened.
But like the pro and the con of that is that took the internet from this like ivory tower, you know, kind of thing to this basically mainstream consumer ordinary people thing, which is of course is just a fundamentally different thing.
It's you know, obviously, right?
Concept of eternal September literally was it was like when when every uh new wave of college graduates like graduated and got their first job and then went online.
So September is when September is when the new crop of like internet users showed up for a long time.
So it so the September effect didn't just happen once, it like happened 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 gonna get ruined in September.
Yeah.
Right.
And and so the internet that we live in today is is the result of they can only see us now.
30 September, right?
Um, but yeah, that and by the way, there was controversi there was controversy.
Uh there was controversy at the time about whether the internet, whether the acceptable use policy should be revoked.
Um there was controversy over whether normal people should should be on it or not.
Um there was controversy over whether the kind of content normal people wanted to be on it should be allowed to be on it.
Um there was controversy about whether there should be like there was controversy.
We got quite a bit of flight 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 normy content.
Um that would be bad.
Um and then, you know, so say about like e-commerce, by the way, advertising.
Um I remember I remember when the the there was actually a moment there was a guy, there was a guy, there's a guy named Sanford Wallace, and he became known as Spamford, Spanford Wallace.
And and he was literally, he sent out the first spam message on 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, at legal services or something.
Um and he just dropped it on the usernet.
And it was like a thermonuclear explosion, because it was like, you know, get this commercialized crap out of my out of my out of my news feed.
Um, and so so like all all of all of these things were like hot hotly 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 gonna start an actual company on this.
So yeah, so so that's how we got to the conversation Jim and I had, which was basically like, okay, the because that was right at the typic place was like in early 94.
So this is like the AUP had just been revoked, and it was just a and AOL had just done the first September, and it was the whole thing was just about to tip.
Um and I and I knew that, I knew that because um I was tech support for the browser, uh personally.
No, explain that.
Just me.
Uh well, so if you did 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.
Um got all the emails.
Um, there were actually two.
That was one email box, and the other email box was uh Mosaic was actually created under by it was also funded by the National Science Foundation.
Um so it was actually not legal.
The original license said it you couldn't be used for commercial use, it was for academic and research and individual use.
And so we had this thing, we we did a deliberately ambiguous license, and we said if you want uh to use the browser commercially, you need to email us to to arrange terms.
Now we we had no concept at all of what those terms would be, but we just said we we need to you know 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 old PCs had um, you know, the they had CD ROM trays, you press the button, the CD ROM tray comes out, you put the put the disk 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 a that's the CD ROM drive.
Um so there was a lot of that.
So one of the funnier things you can always do, in politics they call this focus groups, but you could you get user testing.
We see this over and over at tech companies.
Take whatever amazing new thing you have and just put it in a row put it in a room with like normal people and let them try to use it.
And you just like learn so much about how much of a bubble that you're in about the kind of things that you're familiar with that like normal people are just like, I don't know what the hell any of this stuff is.
So there was a lot of that.
Um but then I had this other email box, which was all the all the commercial licensing requests.
And so I saw the consumer takeoff on the one side, and then I basically I think that the and then the the commercial request uh hit like 400 messages of people wanting to like pay money for this thing.
And so I basically took those to gym and I was like, There's a business.
Yeah, they're yeah, this is this this is going to happen.
And then we actually went to my underwrite, my old, my old um my old boss and I at uh uh at NCSA actually had gone to um 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 answering all of the emails.
And the National Science Foundation people were very nice, and they were like, yes, the National Science Foundation is not in the business of funding customer support desks uh for your for your software, and so I still have the the denied NSF grant um that would have uh kept the whole thing uh um uh an academic project.
Um but yeah, so like yeah, at that point it was like it did that 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 yeah was yeah, 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 gonna work.
So, you know, even then, what did you think the business model even then it was controversial?
Was just literally licensing it?
It was a combination of things.
So it was it was definitely software licensing.
And when we we did this thing up front where the browser was free, but the server software cost money.
And then we and then we out of the gate started building all these we call applications, server 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, you know, content management system.
We built the first e-commerce system for selling, you know, it's just pre-Amazon.
So we built the first e-commerce system for selling things online.
Um so we we we built and sold a lot of that software.
Um and then um, and then we we owned, you know, the the main website that the browser had as its default homepage.
And so we built the the original internet advertising business was was basically so Netscape was the largest internet advertising company until I think 97.
That's incredible.
I didn't know that.
Yeah.
Um and so yeah, so we we invented a people at the firm invented at the company invented.
I I don't know if we I don't know exactly who gets credit, but like the original ad formats, um, you know, were right around that time and a lot of them rolled out on uh on our site, you know, first.
Um, and um, yeah.
Yeah, and so it was it was literally it was advertising pre-Yahoo, it was um it was uh e-commerce pre-Amazon.
Um, it was uh yeah, content pre, you know, we literally sold, I mean, we put the Wall Street Journal online.
It was our you know, that was our software that did that.
Um, and a lot a lot of other newspapers, uh, magazines, all that, all that stuff.
And so yeah, it was a lot of that.
And then it was the the web operation.
Uh and again, it was again it it it all looks obvious in retrospect, but like again, it was like, okay, when we started it's like I don't know, is that the total number was in like so we started the company in April 94?
There couldn't have been more than two million people total online, right?
And and then almost everybody was coming in over dial up.
This is like pre-broadband, right?
So everybody's coming in at like 14.4 kilobit modems, and we're like hoping that people are gonna upgrade to 56 kilobit modems, like you know, that that would be like super helpful.
Computers at that time did not come with TCPIP installed.
Um, so to get your PC actually on the internet, you needed to you needed to buy a TCP IP stack.
Try explaining to a normal human being what a TCPIP stack is, like it makes no sense at all.
Uh so that they're gonna ask if they could put it next to their cup holder.
Exactly.
Yeah, it's just like it was just like it was just like talking to Martians, right?
It was talking to us is like talking to Martians, and then you know, monitors were you know like three feet deep and just like bathing you in radiation, you know, just you're kind of hoping that the radiation stays up here and not, you know, uh everywhere else.
In retrospect.
It was it was like super early and it was all very and then again, it was just like, okay, e-commerce, like uh are people gonna buy things online?
It's like, I don't know, maybe, but like the the press at that time, it was just like wall to wall.
Like if you put your credit card number online, like hackers are gonna steal it.
I was gonna say, if you read any books or around this time, they're like, There's no way in hell anybody's ever gonna put their credit card on the internet.
But by the way, the other thing you would never ever, ever, ever do is put your real name online because it would be immediate identity theft, your life would be ruined.
So you would never ever do that.
Um, by the way, the other thing was right in the beginning, you had all the panic around, you know, kids, you know, this is gonna destroy children, you know, this is a huge risk to children, so you had all that panic.
Um, and then there was immediate, you know, there was the beginning of the calls for censorship, you know, there's clearly all the 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 the tiny little user base, and we were all like inflating the numbers and committing fraud.
And so it was just this, it was just this in retrospect, it's all like quaint and cute and sweet, but it was like the it was the precursor, it was all all the all the all the moral panics around technology today.
But you could see nascent versions of the back then.
You pick up on something that because me and you've read a bunch of the same books where it's like humans' reaction to something new, it's just consistent throughout history.
And so I heard a uh 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 a what they call a moral panic, right?
So an immoral panic basically is whatever this new technology is or this new form of media is, it's gonna ruin everything.
It's gonna ruin everything.
It's gonna ruin it's gonna ruin society, it's gonna ruin morality, and then especially it's gonna ruin the children.
Um and and then and then back this is the bicycle is pre-feminism, so it also was it's also gonna ruin the women, very specifically.
It's gonna 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 uh and Socrates thought that like the pr, you know, basically that 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 I you just have to like imagine.
It's I always like to hypothesize like what you know, the the first guy who brought fire, you know, it's like down from the mouth.
They're like, what the fuck is you know right exactly?
Like, you know, this thing is horrible.
This thing could burn down the village.
Like, this is awful.
This is gonna destroy everything.
Um and so it's just been this consistent thing.
And and you there's this great website called Pessimus Archive, where he the this these guys would go back and they find all these newspaper articles that are contemporaneous to these things.
But it's it's everything.
And you know, so when I was a kid, you know, it's like heavy metal music, Dungeons and Dragons, you know, it is like all this stuff was awful.
Uh I remember the moral panic around the Walkman, the very first cassette, portable cassette player with the headphones, because it was gonna write it's gonna destroy society because everybody's gonna just be listening to their own, you know, their own music.
Uh I remember the moral panic around the calculator was gonna destroy education because kids were not gonna learn how to do math anymore.
Um and then you go back and it's like in the 50s, it was like comic books, and it was, you know, uh rock and roll music, obviously it was gonna ruin everything.
In the 20s, by the way, jazz music was gonna ruin everything.
Playing cards were gonna ruin everything.
Uh what else?
Uh novels, uh paperback novels, you know, we're taking taking kids kids, kids are gonna sit around and just read novels all day instead of doing any any real work.
So it's just over and over and over again.
It's it's this cost of story.
So the bicycle one is the great one.
So the bicycle rolls out in like 1870, 1880.
And so the the US still at that point was like, you know, thinly populated, you know, from today, and but the West had been settled, and so you had all these little towns and villages scattered all over the place.
And but you know, to get from one town to the next was like, you know, five, 10, 15 miles.
And so people didn't generally walk walk that.
Um, and so the bicycle comes out 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 off to do it.
And and so the specific to do it to do well to do it, yes.
To do everything, to do whatever it is that young people do, they're gonna hit they're gonna head to the yeah, because look, look, look, it's just the nature, you know.
If you've known the same group of people since you were two, like you're you're you're gonna want yeah, it's what's over that hill.
What's over that hill?
Yes, exactly.
Right.
Um, I grew up in a small town.
I I I can identify with that.
Um, and so um so so and and then specifically at that point, you know, you know, young men obviously, but specifically young women started to do the bicycle.
And so, and this is a big threat.
And so, like if you're like a guy in a town and like all the you know attractive young women are like heading over the hill to the next jail on this bicycle thing, like that's a big problem.
Um, and so the press at the time created this thing called bicycle face.
Uh, and the idea of bicycle face was it was a it was a it was part of the moral lecture that was given to young women in the press at the time, uh, which 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 in the bicycle, you're gonna end up making like a you know, an exertion, you know, you know, like an exertion face.
Um, but the thing was if you did that too much, your face would freeze in the bicycle face.
They literally thought it would stay that way.
It would stay that it would stay that way permanently, and then you would never find a husband.
Right.
And so, so yeah, so that was that moral panic.
Yeah.
And so these these things just like rip through every.
I mean, it's just it's in well, it's incredible.
But music is always a great one because it's like, you know, for I don't know, this is it's over now, but like in the in the in the 90s, 2000s, you know, it was all this moral panic around hip hop.
Dude, Jimmy Ivine, who's your neighbor, yeah, he was in here two weeks ago.
Yeah, and he had to deal with it.
They called him a uh yes, like a um chemical gas or mustard gas.
Like they compared him to literally like what he's doing is the same as genocide.
Yes.
Because he's funding hip hop music, and white kids are starting to listen to hip hop music.
In the late 80s, early 90s.
Like congressional hearings on this, like the media behind him.
He was uh 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 we we I'm not in the music business, but like at hip hop has become so normalized that's it today, it would just never even occur to you.
Like, it just like feels like hip hop is kind of you know is a cultural phenomenon, he's been kind of is even kind of fading today.
But yeah, no, that was super intense uh at the time.
And then rock and roll, that was like super intense in the 50s and 60s.
And then the amazing thing is.
That's right, because he would shake his hip.
So they're like, no, no, he can't, it's waste up on TV from now on.
That's right.
But here's the one, here's the one that I like jazz.
They said all the same things about jazz in the 1920s and 1930s.
It was jazz music is corrupting that the and it was the exact same thing.
It's because like kids are gonna get together and they're gonna 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 gonna start smoking.
It was just so it's the same, it's the same story over and over and over and over again.
Um I'll just say, by the way, in fairness, like it's not that society doesn't change.
Like it, you know, the many of the technologies that we just described did did cause society to change.
Like, you know, things are different pre and post the bicycle, they're different pre and post the car.
Um, you know, they're different pre and post, you know, the creation of modern modern culture, rock and roll or whatever.
But like this, like the more again, this idea of the moral panic, this idea of just like outright panic, end of the world, is just like this repeated over and over and over again thing.
And then and then what what's what's happened is like this this is just this is the obvious way to solve newspapers.
Right.
Like the this is like the meta story of the press, which is just like whatever's happening, it's like horrible and awful, and it's gonna kill everything.
You know, you know, be sure be sure to buy our newspaper tomorrow.
Well, this originates because I've done a bunch of uh episodes and read biographies about, you know, uh I 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?
And now uh obviously communicate with LLMs.
Um but you know, like you're you're misinformed or you're not misinformed, uh, 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 Bulitzer?
Okay.
Have you read the biography of William Randolph Hearst?
Like all the these ideas that you think are new, it's just like they were the one, they were the originators and the inventors of essentially yellow journalism.
Go read that stuff and what it was like what media and newspapers were like before and after Pulitzer and Hearst and tell me I should be consuming this stuff nonstop.
Like that's a ridiculous statement.
Yeah.
Something comes to mind.
I want to go back to to uh Jim Clark uh real quick.
Is there any, and then I wanna go to you have this, you've had this very unique seat because you saw the beginning of the um the internet, and now I want to compare like what the lessons from there for like where we're at when AI.
But is there anything that you learned?
Because Jim Clark was what, like two deck, probably 20 years older than you?
Yeah, something 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.
Uh, you know, he's just said it was very formative for me.
So so a lot of it.
But yeah, I mean, you you mentioned that the sort of quote earlier about the world is a malleable place.
Like Jim was like the ultra version of that.
Um so yeah, he would just like, yeah, when he had an idea, and he was right, like his ideas were correct uh almost all the time.
And he he would just like pound the world into adopting them into believing them.
Like he was just, you know, like the 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 he he calls himself a self-described loser at 38 years old.
I mean, the guy had like two PhDs, he was a professor, but he just like I think he'd been in a second or third divorce, and he just snapped one day, and he's just like, I had woke up one day with the undeniable uh urge to achieve something.
And that's when he goes from academic to founder and just rips off company after company for like a few decades.
I was like, oh, he's he realized that he is malleable too.
He just reinvented himself over and over and over again.
Yeah, and of course, he does that not just by like starting a company, but like inventing interaction with computer graphics.
Yeah, and like completely changing the field.
You know, in 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 kind of they were in some ways polar opposite.
They always got along, but they were kind of polar opposites.
They were both Jim.
So Jim Clark and Jim Barksdale.
So the Jim Clark side of my personality is like the like will to power, like I'm just gonna bludgeon the world into doing what I want.
Um, you know, and then just and then the idea of just like, you know, try to be a fountain of creativity, like just like the there are many, there are many new ideas out there, and like you you just you need to go, you need to go find them.
Um and then you know, I'm gonna say also gonna put this like a sense of perpetual dissatisfaction.
Like, okay, like what whatever look, this is the other part of the story.
Like a lot of founders would have had a success like selling selling graphics, and that would have been it, and they would have spent the next whatever.
Whether they were totally happy with how it turned out or not, like they would have spent 30 years just coasting on that, right?
And having a great time and taking credit for it and the whole thing.
Um, but Jim, you know, is always uh, 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.
Um, you know, there's something new that we should do.
So, you know, there's that side of it.
And then Jim Barksdale was the other um uh was the other, just literally was with yesterday, uh in in uh in Jackson, Mississippi.
Um the other side, which was Jim Barksdale's like the the manager of managers.
So Clark is like the ultimate example of that bourgeois capitalist thing I mentioned, so the the Henry Ford, Elon Musk type, and then Jim Barksdale is like the ultimate example of like the super the super manager.
And Jim had run you know big parts of IBM and AT<unk>T and Federal Express, um, and you know, came came into run, you know, came into running Netscape.
And what was interesting was like that that's kind of where I got a lot of this from and a lot of my skills from is I I got trained by both of those guys, and then kind of both of those guys at the same time, and and then was able to like very clearly observe one is just the difference between those mentalities, but then the other is of course how how those concepts converge, right?
Because because just the fountain of creativity can't build anything big just with that.
Um just the management, you don't you you don't do you do it and do things.
Who's a great example of that from history?
So like would it be like Nicola Tesla, found a creativity?
Oh, that's right.
Yeah, yeah.
He needed like a George Westinghouse to commercialize his ideas.
Well, say Tesla versus Edison.
Uh yeah, so Tesla versus Edison.
So Tesla versus Edison.
So I'm an Edison, I'm an Edison guy.
So Elon's a Tesla guy.
Uh is a Tesla guy, obviously.
But but Elon, of course, himself has now become like a the really outstanding, I mean, obviously, become an outstanding manager, like in his own you know, in his own way.
In fact, to the point where I think he's actually inventing an entirely new school of management, which we could talk about.
But like let's go there next.
Yeah.
He's maybe the greatest manager of our era, despite the fact that nobody thinks of him that way.
But um, but yeah, so I actually think Elon's more like Edison than he is like Tesla.
Um and then there was a big war.
And it was kind of this thing, because it's it's every everything kind of turns into these little morality morality plays.
And so kind of the this the basic story of Tesla and Edison was Tesla had all these ideas, but could couldn't figure couldn't commercialize them, couldn't turn them into companies, ultimately, you know, couldn't couldn't figure out how to make money on them, couldn't build like big, big, big companies, uh, you know, kind of based on them.
And then Edison, you know, it basically, at least the way the legend goes, is he was more of this grinder.
He was less incandescently brilliant and he was more of a grinder, and he's just like, we're just gonna try a thousand things.
You know, it's like when they invented the filament for the light bulb, but 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, right?
Like he built the like national electric grid, you know, and built these giant companies.
Um and then he, you know, funded by funded, funded by funded by JT Morgan.
There you go.
As a as a uh as a as a venture capitalist in his spare time.
Yes, exactly, 100%.
Um and so uh and then you know, Edison also invented the movie projector and then and then literally spent year years trying to enforce his patents, right?
And so phonograph.
And the photograph and the photograph.
You tell the story, and I knew because I read the book too.
Yeah, we should tell people what he thought the phonograph was going to be used for.
So this this is a bit of a digression, but it gets to the personality type.
So one of the things that people look for is it's like, oh, what are the consequences of a new technology gonna be?
Oh, let's go ask the people who invent them, because obviously they know.
And so this is what happens when like these A when the AI guy, for example, the AI guys get, you know, the AI uh 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 so like he's an actual capital S socialist.
And people ask him, What's the future of AI?
And of course, he says it's gonna be rampant unemployment, and we need to give you UBI to everybody.
It's like, what a coincidence the answer from the socialist is communism.
Like, what an amazing coincidence.
But people think because he's one of the inventors of AI that he must be the guy who knows.
And so the story I always tell is the Edison story.
Thomas Edison was like a he was like a very proper wasp, he was like a wasp, you know, waspy, you know, personality type of that era, extremely proper gentleman, always like impeccably dressed, very, you know, kind of very ethical, uh, you know, upstanding, you know, kind of citizen of of that time, um, and um and very religious, very religiously devout.
And so for him, it's just obvious that the application of the record player was that everybody would buy a record player, and then everybody would buy a cattle a library of discs, it would be the great sermons, uh 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 with your adoring, you know, wife and kids, you know, gather gathered around you, and of course the record player drops, and immediately, of course, like it's just it's music.
It's just like obviously music, and it's like ragtime and swam then it's jazz, and you know, 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 the with bicycle fists.
Exactly, exactly.
And so this is what I was telling this.
If Edison didn't know what the phonograph was gonna get used for, the idea that, you know, I don't know, whatever, Joe, Joe AI entrepreneur is going to be able to forecast the economic implications.
Like, no, no, like that's not gonna happen.
And in fact, the people who invented technology are often like the least qualified people to understand the long-term implications because they're just they're too, they're too buried in the specifics of of of the here and now.
And then and then and then all these other questions, you know, these are all big cultural, social economic questions.
You know, and by the way, I don't know if there's anybody that can predict big cultural or economic or social trends, but it's it's certainly not somebody who's been in the lab for 20 years, including myself.
So, how this started, you think you greatly benefited from the two gyms, essentially like being polar opposites, 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 the story.
So um 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 that I've done.
Um, but um they but you know, it's it's a it's an o 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 ran 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's like this highly compressed nine month period.
And 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 a hundred new things.
It was amazing.
But like we did nothing was being systematized, right?
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, the embed this investedness is great, but we need to like actually start to have systems and like schedules and processes and and actually like run this thing, run this thing like a business.
And and and you know, as founders do, Clark, you know, 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 gonna turn the entire company, you know, to you know, to pursue.
And this was when Clark was still coming to Jim's Barksdale staff meetings.
And so um uh Clark got up, got up, got, got um uh uh he had a negative reaction to Barksdale saying, no, we're not gonna do this new thing, we're gonna we're gonna keep doing this thing.
It's already working, you know, one of those moments.
And Barksdale's like, you know, can I talk to you outside?
And so they you know, they went out back and and um and and uh 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.
Um, if we don't do these new things, we're gonna destroy the company.
And Barstale looks right at him and says, Jim, I hear you.
This is as serious as dick cancer.
The deep Mississippi drawl, right?
And Clark stares him right in the face and bursts out laughing.
And they got along great ever since.
Like they just love they loved each other ever since.
But it was very first step, basically saying, look, we can't, we we're we're not gonna make these decisions in a state of kind of superheated passion.
Like we're not gonna do that.
We need to have the full version of this conversation, but we're gonna we're gonna have it in kind of this this this longer and maybe more dispassionate way.
Uh but it was to it was to it was to puncture the stress of the moment.
And so that I I will say I have used that one a few times.
But I could see Clark.
And Clark thought it was hysterical.
Like nobody had ever talked him that way before.
So 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.
Um but um yeah, yeah.
Um but it but I would say yeah, I don't want to say anything negative about the SGI guy, but um yeah, I mean Clark, like I said, Clark was just like Barstell was just like the was the manager of managers, he was like so advanced on this.
That story notwithstanding, Barstell never took the position of like, no, it's time for the new new ideas to stop.
Like it but it was always like okay, we need to thread the new ideas into a business, which which is kind of the hybrid of the two.
So I just had this thought while sitting here listening to you speak.
Is there something about your partnership with Ben?
Yeah, where like you like he's more Barksdale, you're more Clark?
Yeah.
Although we we do mix it up a little bit more, um, because he does have he does have his own edge.
Um, but um yeah, there is some of that.
Yeah.
So, like, for example, our friend, he runs the firm.
Um, and then I, yeah, I will I tend to come up with new ideas, he comes up with lots of new ideas, but I do tend to come up with new ideas, and then we we do we do have this kind of discussion, you know, frequently.
So if I was to follow you around without you knowing with a camera, what would your day look like then?
Are you just like a fountain of ideas?
Are you 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.
Okay.
So I say you're not as unlike controllable or unmanageable as well.
Yeah, like I I think I believe Ben would tell you, yeah.
I mean, look, Ben's been working with me now for 30 years, and so I think if this is a real issue, I think you know that our 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, I unedited is really fun.
Umedited is very enjoyable.
Um, it it it is very disruptive.
Um and so, yeah, it has to be, yeah, it has to be calibrated.
When do you show the unedited side?
I I don't tend to do it in the spur of the moment.
Again, I mean this is a thing, and I, you know, Elon shows this incredibly well, uh, just incredibly well, as does Zuckerberg.
Um, is like it it is this thing.
And again, this goes back to like the Addison Tesla thing.
When you're responsible for when you're responsible for an organization, when when you're responsible for a team of people that's more than five or ten, if you're gonna have an organization that's like a hundred or a thousand or ten thousand or a hundred thousand people, like it you can't change the plan every day.
Like you just can't.
You'll just you'll destroy every you'll burn everybody out, you'll destroy everybody, there'll just be mass confusion, people will quit.
It's just gonna be like you can't do that.
There has to be some calibrated middle ground.
There are a handful of examples of like great business successes where it's like one or two or three people.
Right.
And so maybe it's like Bitcoin and Minecraft and WhatsApp and Instagram, and and then I start running out of examples.
But like AI, there will probably be more.
There'll probably be more like single person companies, yeah, from from here on out.
Or by the way, artists, you know, and an artist, a novelist.
Let me say this is a difference between like a novelist and a movie maker.
A novelist, let's say you put whatever the fuck you want in your novel.
But like if you're a director of a movie, you can't like change the entire plot like on Tuesday while you're shooting the movie, or you go like there's 300 people who are relying on you to like complete a movie.
Like, so anyway, so the point being it's like in tech, if you're if you're gonna have an organization, or or by the way, in anything, in any in any field of activity, if you're gonna have an organization, you you do need to have some calibration titration process.
Like change does need to happen, but it needs to happen in a measured way.
Um, and so and so you you can't just like blow it up every day.
Um, and so yeah, so so either what you need in that case to 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 and by the way, you could say this is like Steve Jobs and uh Tim Cook, you know, would be a canonical example, or by the way, early on Zuckerberg and Charles Handberg, 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 Jesse Wang would be a single person example of that.
Uh so you know, every now and then you get that.
Um, 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 Barkshell training, I have this additional level of sort of most of the time, you know, sort of self self-governance.
Like I kind of I get it.
Like I'm not, but it's my big thing.
It's like, look, if I'm gonna walk in and I'm gonna like throw a fit and I'm gonna like we have to change everything tomorrow, and Ben's gonna be like, fuck you, like this fucking sucks.
I'm not like that leaves nowhere good, right?
So that that that can't that can't be the thing.
And so I do like, yeah, I I I do do a lot of of self-editing.
You just said something, I think you said you believe Elon is inventing a new way to manage it.
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 fun.
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, so I'll just start by saying, look, uh Elon's method has been described by people, you know, before.
And I and I should say, like, I I work with him, but from the outside.
So I'm not working in one of his companies, so I'm 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.
Um, it's this extreme focus on substance, it's this extreme focus on getting to the truth.
So, one of the things you notice in any organization with multiple layers is that basically there's compounding lies.
Um and and I got this lesson early because I worked for IBM at the at the point of their kind of maximum size and importance in the world.
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.
Um this is my first job.
And um uh when I was in college.
And um, 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 the same thing.
It's not even close, right?
So this is like Google times 10 or something.
It's just like or times or Apple times 10.
It's just like I'm uh it's a level of scale and importance that just nobody had.
And by the way, the the TV show actually that does a great job of this is uh Halton Catch Fire in the first season has this thing, the this point where these guys are basically inventing the PC effectively, and it's a point where IBM shows up, and it gives you a sense of like it's it's like the CAA story you told earlier.
It's like the the phalanx, it's like 20 people in like blue suits are just here to like completely crush you.
Like it was just this overpowering, you know, kind of thing.
And you know, they invented like all kinds of stuff, and the industry wouldn't exist today without them, and they were an incredible company for a very long time.
And the and the whole thing, by the way, run by their founder for 30 years, run by the founder's son for 30 years.
Um, you know, this incredible company.
But then, you know, they're still, you know, they're they're they're not they're not that anymore, but they're still a big and important company today, you know, whatever, 1940 to 80 years later.
Yeah, it's like how many companies survive in tech, you know, 80 years.
My favorite favorite IBM stories.
Thomas Watson Sr.
had been convicted of antitrust um crimes uh before he started IBM.
This is the cash register, the cash register.
So he had previously run a company called NCR, National Cash Register, and he had been convicted by the federal government of monopolizing the cash register business before he even started IBM.
And then at IBM, he monopolized the mainframe business, and then they convicted him again.
He's a double dipper.
He got very used to being uh being an antitrust court.
So um he he was incredible.
By the way, um, there's a uh Kevin Maney at uh old old school tech reporter wrote a book, uh biography of Thomas Watson Sr.
Which you feel like.
It's called the machine in the man or the man of the machine, right?
So it's one of it's one, I'm not sure if it's that one, but it's one of those.
Uh I think it might be that one, yeah.
And he actually went back, and this is like, you know, this is like we're talking about like 1940s, 1950s, 1960s.
And he went back and he got them at the time that time.
They they had a they had a secretary transcribing in real time all of the executive staff meetings uh every every Monday morning.
And he went back and he actually got the archives of the transcripts of the executive staff meetings, and it's just literally Thomas Watson's just like cursing everybody out and just like just like a complete tyrannical psychopath, just like screaming at people.
And it's all it's all in the records.
And so it's like, you know, 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.
Um but anyway, the point being is like IBM.
So by the time I got involved in IBM was like six years later, you know, anyway, yeah, six fifty years later after that.
And so they they were kind of peaking in their power.
But what happened was I remember this because I was there as intern, and I was trying to figure out whether I should I should work there, I should work there after college, and they had a their intranet was a mainframe, mainframe app, and you one of the functions was a um it was uh was the org chart, and I calculated there were 12 layers of management between me and the CEO, which meant the following.
It meant that my boss's boss's boss's boss's boss had a boss, boss, boss, boss before it got to the CEO.
And then and then really what happened, the story of the thing, really what happened was and I saw that, I saw this happen.
I saw this happen up close.
Uh, what I saw this happened was each layer of management was lying to the one above it, right?
Uh and because each each layer wants to 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 nice layer above it, it's me, maybe that's that's okay.
But it did but when that happens two or three times, the lies compound.
And that happens six times, the lies really compound.
If that happens 12 times, the CEO has no idea what's happening.
Like, like absolutely no clue what's going on in the company, which was the state of play that that IBM had.
They actually had a turn, there's actually a term, they had a whole vocabulary.
I mean, this company was like a nation state at the time.
Um you could like live your whole life like an Austin, Texas, and never meet anybody who didn't work for IBM.
Like it was just like this this incredible, this incredible thing.
But they had this concept they called the big gray cloud.
And it was literally the cloud of men in great business suits who followed the CEO around that 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 the inf it was completely impervious mobile to get information through us.
So, but I I tell that story because that's the polar opposite of the Elon approach, right?
So so 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 who are like this is great, you know, until you know it's like the turkey on Thanksgiving, you know, until things change and there's a problem, and then you have no idea what to do about it, which which is what happened to them.
The Elon approach is the polar opposite of that.
And the polar opposite of the approach is literally like I'm only gonna 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 Eli Elon literally, and I've seen him do this, so he literally does is he he goes to whatever the what when there's an issue on his companies, he goes to whatever is the engineer who's working in that problem, and he sits down to the engineer and they solve that problem.
And like, and I can just tell you like the number of CEOs and 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?
Well, like it just sucks, right?
And so, like, most people won't do it.
Um, and then the other is you you have to, it means the CEO of the company has to have the skill set to be able to do that.
So the CEO has to not just be a great CEO, they also have to be like a great technical technologist, not just that they have memories of having been a programmer at one point or whatever, a chip designer, but where they can actually sit down with the chip designer right on Thursday night at 2 a.m.
in Austin, and they can actually figure out like what's wrong with the chip.
And Elon and Elon has that ability, and he's like encyclopedia 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, and then the way that he thinks, the way that he thinks about it, I think, is basically, you know, he runs whatever six six companies watch or something.
And it's like basically any given week, in any given week, he thinks about everything as a production basic production line, you know, sort of product production process.
It's like he's actually like an old school industrialist.
Um, so everything's like the production process, and then any given week, there's there's in any production process, there's always a bottleneck.
So there's always a 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 the he charts he literally maps out the production process, and I've like he literally has these like monitors where he like has the whole thing laid out.
Um, and then he he basically says, okay, this is the issue that's holding up production this week, and then he goes and 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 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 and 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.
Um, and so he just like runs this, he runs this loop over and over again.
Um he he's just he's absolutely indefatigable.
Um, I offered he famously for a while he had sold all of his houses um and he was literally cuff surfing.
Um, you know, it's one of the most successful people on the planet.
Yeah.
Um and so I uh a vacation house and I offered him, I say if we're gonna take a week and use the vacation house and whatever, take the kids, feel free.
And he's sent back five minutes later, it's like you know, whatever, 11 o'clock at night.
You know, four four four forward response.
I don't take vacations, right?
Like which again, it's like there's no CEO like this.
Yeah.
Um the whole point of being a CEO is you get to you get to go jet around.
Um so so anyway, so he's doing that, and then and then you know, he he and then he he he turns this into routine.
And so, you know, he when he does like he'll he'll 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 um uh with with but the but the way that he does it, he does it with five minutes per engineer, right?
And so he does five five to sixty divided by five.
Um it's been way too long in this podcast.
How much is that?
12.
12.
You can do twelve 12 design reviews an hour.
Yeah.
Uh and then he does 10 hours a day.
So Elon will do 120 designer reviews in the course of a uh in the course of a day at least one on one I have not actually sat in this I I suspect there are other people around okay um including people you know work work for him and you know probably probably some some of the leaders of the companies are involved in different ways um but um it it literally is the thing I noticed it's literally a rotating cat it's it's it's the point engineer on each of the important things coming in and presenting for five minutes and and then and then the question is like how's if it's going great that's great if it's not going what's the problem and then how does that problem rank right it is is that the is that the production bottleneck um and if it is the production bottleneck then that's the thing that he then fixes and then that's when he's there from whatever eight o'clock till two am working with that engineer to fix that problem.
You know one way to think about this is the the velocity like in military affairs it's called maneuver warfare right the um so just the the the the the speed at which he operates is just the the cycle time is just so much faster than anybody learning in a in a traditional method.
It's just you it's hard to even compare the different it's like four hours versus six months.
Like it's it's just this incredible gap.
And then and then the other part of it is uh somebody I know once went went to work for SpaceX and and and they asked what it was like and he said it's it's like being dropped into a into a a zone of shocking uh competence.
Um like it's like everybody is like ultra competent.
And the reason everybody's ultra confident is because number one, if if they're not, Elon sniffs it out and fires them.
But he knows because he's he's talking to the people actually doing the work.
So he and he he, you know, at this point in his, you know, having done this for whatever 25 years he he he can he can sniff this out really quickly now.
And then the other is the best engineers in the world want to work for him because he's he's the one CEO like this who's able to work with them as a peer on whatever the technology is.
And as an engineer, you're just like, this is like what would be better as an engineer than being able to design a rocket engine with Elon Musk as your engineer, right?
And so he just has this like incredible positive selection where like the smartest people in the world want to work for him, and then anybody who can't cut it gets fired.
The world sees this as like raw aggression, but it's beyond that, right?
It's a very systematic way of optimizing these companies to be able to take on these like profound challenges and then being able to actually solve all the problems and do these things and at a speed that is just like completely 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 concept, one of my concepts is um I I think we need a metric um uh for um founders in Silicon Valley call it the millet Elon.
Right.
And so are you how many millions are you, right?
Are you 10 million Elon's?
That would be great.
Are you 100 million Elon?
You know, that's 10% of an Elon.
Like that'd be fantastic.
You know, you know, 500 million Elons, like, I'm gonna give you all the money, right?
Most people are like one million or 0.1 million.
The question that falls out of this, which is a question that you know bedevils us, is like, okay, like huh, you know, you can't can't clone you.
You can't you can't bottle the essence.
So what out of that can be transplanted to like normal human beings?
And how much of it is predictable or knowable when he's much younger?
Because like the the famous example of this and um is Michael Moritz passing, made all his money in PayPal with Elon.
Obviously, there was contention there, he got kicked out and everything else, but then Elon pitched him Tesla and he passed.
Because he's like, there's no way that you're ever gonna 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.
But I will say the idea of the idea of being 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 a hundred years.
For like a hundred years.
There's like 2,000 of them in 1905, 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 in the preceding decades was Tucker or Tucker Automotive.
Yeah, yeah, Tucker.
Which was such a disaster that they made a movie called Tucker, which is about what a disaster it was.
Um 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 it's like the the and I wouldn't like by the way, I didn't see it.
I and I didn't I I was, you know, I'm a software guy, and I just I was like, 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 I it's not like I saw it, but I'm just saying, like it you like the the level of incredulity that he was greeted with at the time was I think almost uniform.
Um and you know, there's that famous photo, the most famous Elon photo, I think, or the the most the most powerful one is the one where he's it'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 partially, like Yes.
Did you ever read Eric Berger's book Lift Off?
No, I didn't.
Oh, you gotta read it.
I'm surprised you haven't.
Um it's the it's only only focuses.
I like these company histories that focus on like the first like six years.
Yeah, and it just stops.
Yeah.
Um, it's the first six years history of SpaceX.
Yeah.
And it's just not nothing good in the book.
It's just reading one failure after another after another, and one catastrophe after another after another.
It's a good read.
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, when after he sold them uh to he had, I think he had like 180, I think it's the story tells like 180 million after taxes.
He's like, I'm gonna do this rocket company.
One of his, I think Deo Rossi, or I forgot with the friend, sat him down and they made him watch all the rocket.
There's a compilation, this is probably pre-U2, 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 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, and certainly working better than everybody else's method in rockets.
Um, and then in a bunch of other areas also.
So like it's clearly working.
And so it's like, okay, there, you know, and then he 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 you all we all kind of get sucked into these these narratives.
But I I think that I think the key thing is just the for me is just like, okay, like there is a method there that he has been working on and refining for you know, coming out 30 years that has worked better better than any of the method.
Like, I don't know, like I said, I don't know how many people can do it.
And maybe there's just like a fundamental limitation, which is you could do it if you're Elon and you can't do it if you're somebody else.
Uh, or maybe you need to be above 30 million Elons, but not below, or something like that, right?
There maybe there's some threshold where you break through on this.
Um, but it it is clearly the best method, like it clearly is generating the best results.
Um, and then and then again, can concept conceptually, I like it because it did it again, it's this bridging of the of the 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've probably have read about um uh Iridium and teledesic.
No.
Oh, okay, okay.
So Elon's not the first guy who said we're gonna do satellite-based like internet access.
Um there, there were there was there was uh there was uh Bill Gates, Craig McCaw, so with my when Microsoft was on the top of the world, and Craig Macaw basically built cellular telephony in the US, built what's now ATT mobile.
Um those guys teamed up in the early 90s and did this thing called teledesic, where they put up you know, satellite-based uh voice, and then it was gonna be internet access, complete catastrophe, total bankruptcy, complete disaster.
And then Motorola, which used to make all the cell phones in the US, uh had the had another one uh system that's actually still up called Iridium.
And again, it's just like this classic business school case study of just completely disaster, capital destruction.
And so Elon's like, I know, I'm gonna do number three of those.
We're starting as a side project at the rocket ship company.
Right?
Because he's like, I we're and you know, in retrospect, it's total genius.
Because he's like, we're gonna be putting up the if the rockets are reusable, we're gonna be launching them all the time.
And then the question becomes, what's gonna 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 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, as like the side project.
There's clearly a method, it clearly incorporates invention, it clearly incorporates scale.
It does a brilliant job with both of those.
Um, it's it's clearly in part the Henry Ford, whatever, um, 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?
Um, and so it it's a formula that cat that captures both sides of it.
And it it it 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 you.
Thank you so much for doing this.
I hope you come back in a few months because there's a million other things we need to talk about.
Good, awesome, fantastic.
Thank you.
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