20VC: 8VCs Joe Lonsdale on How To Foster Contrarian Thinking Within Venture Partnerships, Why The Best VCs Are Company Builders & Why It Is Not Possible To Build Multi-Billion Dollar Companies and Have Worklife Balance
Welcome back to the twenty minutes with me Harry stubbings, and if you'd like to submit guests all questions for the show you can on instagram and H stubbings, nine, thousand, nine, hundred, six with BS, but to the show stay nausea. I've ever had such an efficient or productive guests on the show before this individual does with one human. Our is insane when you look at all that he's achieved and so with that I'm thrilled to welcome Joe Lonsdale. General partnered ABC the past Joe's invested in many notable companies, including the likes of wish oculus Oscar. Oscar and Garden Health to name a few as a result in both two thousand, sixteen, anti thousand seventeen. Joe Was the youngest member of the four one hundred MIDAS list. I'm proud to ABC. Joe co-founded Pollen Tier One of the world's most impactful multibillion-dollar software companies also co founded and serves as chairman at apart which has over one point, eight trillion dollars manager of its wealth management technology platform, and if that wasn't enough, jobs, also found a affinity and in and aspe- to name a few I. Do have say Houston is to Kimmy Andrew had. Some fantastic questions gestures today I really did sir appreciate that, but before we move into the shows stay I won't take a moment to mention Hallo sign gradings element of a company that found success in building product focused on user experience. Jalazon is an effortless e-signature solution is by millions to security, send an requires legally valid digital signatures and agreements. They raised a total of sixteen million in funding, and recently got acquired by dropbox, an impressive, two hundred and fifty million dollars checkout, Hallo signed dot com slash two zero. To. Join the thousands of companies I'm founders who falls to secure and simple e signatures and speaking credible solutions to complex problems, the team over Pando the product cloud company is expanding rapidly throughout Europe, and recently released a version of that product, which is designed an priced specifically for startups. Whether. You're an operator or investor. In Europe, all the US has you annual portfolios product covered. Show you how you price stacks up against you. Pairs analyzing over thousands of pros in creating benchmarks with startups skate ups in enterprises across different categories, and you can find out more. Stay up, TENDER DOT com slash product dash benchmarks. That's Pendo dot co slash products, dash benchmarks, and finally wants to. Would you about point pointers of premium card? The first debit card with roads from Brown. You actually care about like earn five ice on subscriptions spotify to all dining experiences including food. Food delivery APPs light posts me someone one Exxon everything else. You're rewarded every time you spend on points, redeem for cash instead of during a credit line for awards. That Allen relevant you can use point caught. Install getting a break home. Push with your favorite Brown's, and he's by by the likes of Y, combinator day a friend from the show Jeff Morris. Genius that revolutionizing the way we spend at least is a twenty have the exclusive opportunity to join points invite only launch out of Beta in July had over to get dot point dot, ab four slash to`serve. Early access and a sneak peek at point, but that's enough for me to now. I'm very excited. Tom Rich Joe Lonsdale General Mad, eight VC. You have now arrived at your destination, Joe. It is such a joy. St This I've had so many great things. Many different people from team Kimmy. Brian and traff found on. Say thank you so much for joining me. Stay Jerry. Thanks for having me here. Not Too, but I. do go stay with a little bit on you so benches a wonderful well, but it's also unique wanted to get into. How did you make your way? It's The while defense encounter found ABC as started off both as an investor and as an entrepreneur. Entrepreneur early in my career, I was more an investor kind of supporting somebody I was at pay. Pal Peter Teal's family office, and the age of nineteen or twenty was driving around to meet some of the companies he'd invested in got to know the facebook founders of that time obviously, and he backed me and starting Pailin here and pounds. Here was somewhat similar to pay since. Since we have some the very top engineers value ranked number one for a while the top talent. We were getting and similar pay pal people. There were very entrepreneurial, so what you saw as after being there for five six seven years, some of the best ones will leave and build companies, and so I found myself ten years into my career, having built a couple of companies. Companies having been investing with Peter I found myself surrounded by lots of friends. Building companies is advising them as angel investing in them. I had about fourteen companies. I was helping in some way and I talked to my mentor, and they said Joe basically already running a fine, but you don't have money. You don't have remained people helping you. You should go raise a fund subsidy. Mental is totally right that we talk into the meat of issue there I hit. We have loves a history. And it was actually drew annuity, asked the question of. How did you studying? History and philosophy influence how you think his name bastard. pronounced reminds US backstage. Yes, well, I definitely love history I'm definitely not an expert in even though I have a lot of friends who? Who are famous historians, because it's such a strong interest of mine, a lot of what you see in history is you see these processes of how the world evolves? One of my favorite books along those lines is the shield of Achilles. I Philip Bob at a great constitutional scholar. He shows how the forms of government that emerged over the last thousand years were kind of influence in. In structured by what was possible, in terms of how warfare works, so in order is basically like an evolutionary process in order to be able to have the top type of warfare to survive and defend yourself and grow. You have to have the type of government. That's most awesome for that as there's always really interesting forces in the background that shaped history and if you want to. To think like a great tech investor over time to understand the forces that are shaping companies in how companies evolve, industries evolve, and so for me. The framework to US understanding history are very analogous. The famous can used understanding conceptually how technology industries are evolving as well as I think. You'd be interested in these things if you want to be a really great macro investor Kimmel's. Schedule, but it can be the of history. I mean one thing that I'm always very wary of his market timing. I didn't like state. Mogi timing is a risk because blending as we said history is. Number. and. I'm always concerned by that race county. He thinks about Mulkey Tony Says Nevada Margaret obviously very hard so I did macro with Peter Before I've gotten to know a lot of macro investors like Sandra Miller and others who I really admire, and I do believe people at that elite level. Sometimes. If they're really, an industry can succeed at some of market time. You want to be careful. It shouldn't be your dominant factor. Factor, but twice in my career once in twenty fifteen kind of late, twenty, four, hundred, twenty, fifteen, another time, late, twenty, thousand nineteen. We just have lots of evidence that the prices were just going up way too much on kind of mid to late stage venture, and so we avoided a lot of it. We got to a point. You know our our. Our targets are to get above thirty percent. Irr I know obviously. was even mean, but you have to model things out. You have to say okay. At this price, we can make this kind of return, and there's bigger investors who come into our space of call amount General Atlantic is a great firm I admire it great returns, but there are targets are closer twenty percent, and when they come in to a series. B. In something they're confident. They will sometimes outbid and they have. Have, update new by eighty percent, and so you know dot. Point is not my job to be trying to win that seriously anymore. That's that's too expensive for what we do, and obviously you can't do these things for sure but I. Think you have to use your judgment. They okay right now. This are the market's really popular. There's money moving into it. I'm going to have to find other ways of investing. Returns expecting to schedule I wasn't quite expecting this early, but I'll go with it so that I have early over show. And he said she the influx of later stage. Campbell is the biggest challenge that he faces today. Would you agree with him? Will Not give them what you just said that. While the influx of later stage capital changes what you have to focus on how you have to do things, and it definitely means that for series Bs and Cs and ds you have. Have to have some really special unfair insider advantage for just willing to give you a much better deal or willing to work with you before going to market. If you're going to be doing those type investments or something so esoteric that it's not even being looked at by the really big firms in New York, and China and etcetera say China China was more the influence in two, thousand, fourteen, two, thousand, fifteen now really is more just a later stage. New York type firms absolutely. It impacts entrepreneurial mindset is what is your investing mindset that it was interesting when we spoke before when I went to a lot of your team pretty much, everyone said number one thing we should discuss was kind of build meant that you have, and you said to me before increasingly the best feces that know how to build companies. Can young pack thinking me a little hair? Why is he in? Fum Tax Bill Dorman on well. Obviously, there's a nice advantage when things are getting expensive to be building more, but that's not why we're doing. That's obviously macro is why is even bigger advantage now? But to me the biggest thing if you see, there's always exceptions to every rule, but the vast majority of most famous investors in top investors who've done really well in our space, especially in our generation are people who've built a really big companies. I think a few reasons why one? Obviously, there's maybe silly reason is this culture of celebrity and people wanting to? To hang out with other founders, but there's some truth to that because they want to learn from these people they want to see what they did can learn from them. Especially people who built multiple big companies, obviously because there's definitely some lessons to be learned there, there's also a sense in the network just like every city has the medic desire so in DC you want kind of hang out with and be around the senators, and the usually the president right now in La. You want to hang out and be running actors and actresses and they're kind of. Of run things in Silicon Valley in the tech world, the founders are for whatever reason the center of desire which means they of get to see everything I. They know who their top talented friends. Top talent is just that networks really advantage so having founders around being founders whether we're talking about Vinod Khosla or Peter Thiel are Marc increase in Reid Hoffman, or the list goes on and on even the guys who helped build these big companies is huge advantage to that so I just really key and there's exceptions Mike Morris was a great investor who never? Never built these things, but the key in our generation you've seen eighty ninety percent of the best ones how this background, and then for me the real reason so there's macro reason there's unfair advantages. The real core reason for me is that you learn a lot about companies in about spaces by thinking like a builder. A logistics isn't area right now where there's a lot of things happening where they're taking logistics works and they're upgrading yet. You're actually here's what's possible with modern technology. That hasn't happened very much in the past is happening a lot right now? Now is a great place for venture investors right now. In my opinion, we have like fifteen things there. When I go and look at logistics and go with a conceptual gaps and I studied them and we figured out what we're going to build. WHO's GonNa help us build them? We talked to all the leaders in the space about what we're trying to build what they think with feedback. We meet people very often. We'll start with an. I'll give you an example. We'll start with the idea. That Amazon shifts, things, fifty or sixty miles in the US on. On average when you order it from a random place Amazon's about forty percent of course, e-commerce, market, non Amazon, players, or sixty percent of the commerce market gets along Nadia's on player ship things on average when you order from them fifteen days well a three to five days, but it's a thousand miles away so Amazon sub fifty miles away, not Amazon. Stuff is sometimes over five days to, but not Amazon's is a thousand miles away, so the question is. How do you help someone? If you can't be Amazon, you can't afford the same warehouse now. What you? You, do so we obviously you know. Let's build a virtual warehouse now we're let's figure out how this works with all the carriers optimize it. There's network of facts if you get it right and we listened to building, we found a guy who built it. An Amazon who really really serious expected he'd left. He had the same ideas us, and so he said you know. Let's just back him in his series eight. That's much better than your show him things. We learned with our network. He knew a lot about ready. That's one of our great investments just. Just raising series, D. Right now, doing really well. I never would have found a series a if we hadn't been thinking ourselves what to build this space, because someone else would have probably met him I and so you really start to see a lot of great deals to understand these spaces better, and then the more our team has this culture of building. The more the people on my team are building more than respected by other entrepreneurs, the more they meet them on terms where they're part of their culture and so frost. It's just a really big advantage. UCD light bill inherently from the ground up from day one businesses within as I mentioned. HOW DOES NOT INCUBATES IN MOBILE? Sit in the structure ABC and how do you think about back could've driving alpha facade within eventually for south? Yes, sure so probably on the order of really winning a fifth of our capital towards it this time, give or take, and that's very high our area. It's hard to say whether or not it's outperforming the rest. It seems both sides. Look like they're. They're in the thirties right now I'd like to keep beating that, but the way it works. We have functional areas, so we're all generalists, but we people seem to go very deep on areas. The five areas were strong. Santa's as a team. Obviously my background with pounds here out of part open Gov. we have very strong government tack very strong fintech built a lot of things there, and then the three I'd say we've done on other than that. In the last decade is logistics. Logistics our just mentioning is healthcare it and there's also bio bio being very different than healthcare. It involves science, and there's a whole renaissance bio conversation love to have so those five areas are all core and each of those areas. We'll explore ideas for building things, and we'll child people MS areas. Let's get to know them better and let us figure it out so every Monday with our meetings. We have the build meeting. We have the investment committee meeting. We have the investment discussions. Discussions and just part of the farm is part of our learning, and ultimately how the final decision off we go ahead with Dell products or not, so it gets rid of any politics there for me anyway I. Think it'd be harder to do this in a partnership because people do get upside of things they help build so if it was a pure partnership where there's no one at all in charge, probably more politics as my guess is probably why a lot of the. The older VC, firms having done this because everyone wants to do their own thing I'm GonNa Work No I. Tell you these days of internal politics of play. If you played, devil's advocate may be too many zone. See through the shirt will say, and they say echo consume it kind of incubation of build mobile, if it takes you away from the cool aspects, direct investments into the best companies in many kind of struggle with it for that reason. How do you respond to them? Them as a distraction from new cool stay till you know in states where you do well for us, part of our DNA, as that we are builders, and if anything I've seen any as a huge unfair advantage, for example, one of our core companies was doing very well, but they had these two product. Guys who are being poached to build something and we really need those guys to be there the next six to nine months for some critical before they replaced themselves they. They left would have been a bit of a disaster, and so I went and sat down with the guys and said listen. This is really important. Here's what we're going to do. You want to build something. We wanted to talk to build things anyone with our program. I'm happy to make you guys. Ers with US starting any of the year, stay through the full year, aced s for this company, and then come on over. We'll work together, and and that's what they did and. And they came over, and they work with us and integrated on a bunch of ideas along something very exciting right now with our network. Because the bill program we were able to help that portfolio company safe people to finding portfolios. We're helping our portfolio companies with these things. It's just a part of our culture and what we do, so it's kind of hard to separate us from building I'm someone who constantly builds things, and that's what gives me the images I have you. Could internal discussions out Monday from mass with many ability in the venture community loves the thought process of being in charing guy. You know. I think many would agree that this kind of. Jumps of contrived in his mid Manisha what does Sharon is an contrarian think, he means huge S. Howdy, specific team to really engender at encourage it with eight, so it starts obviously with the people you're bringing to the table. You want people who are non consensus people. Generally people are not politically correct jets. Be careful what they put out in public, so they don't get cancelled in this environment. Thanks, you could say, but I mean generally, and of course it's across the spectrum. People of all sorts of political views that I work with. They want to exercise we have. is We write a lot? We put a lot of theses out. Law only internal because they're things. We don't want to share yet. Yet a law from our externally because you're constantly publishing stuff, one of my rules is of Mackenzie could have written this down beer. Be Plus work. It's not good. Enough Rate V has to be something that's out there enough. The Mackenzie would have been maybe uncomfortable publishing at about so that's another thing is just in general. Whatever's popular right now we have to question. What are they sing? What are they wrong? The whole lean startup movement I thought was bullshit when it was happening in terms of the things I wanted to do, and definitely Wesleyan started movement didn't make sense at all for the areas. I want work on and focus on. You couldn't have done lean startup a pound here out of. Our most are things. I've worked on where Pouncey people in winding web to Plano. WHO said well? There's this whole other areas now becoming possible, it's really important in bio. Is another example think platforms don't work while there's actually? Why with it in with breakthroughs, recently you do need platforms their to own a lot of value, long-sighted Therapeutics. Anyway, there's all these areas in which it's just really important to challenge the status quo and Blah Times you challenged Lasko. You're going to be wrong sometimes when you're right, you're gonNA have very very big breakthroughs, not the goal in venture capital is defined. Those breakthroughs is kind of challenging the status quo ease about kind of your final stay on the decision making in. In terms of consensus, I is known consensus and thinking about internally in the decision making structure. Why didn't you choose the single decision? Making land actually is interesting so on the bill side. I am currently as maker of what we do for Bill I. think that's important building as miles a work with a firm on the investment side I am not the single incision maker. We have a full investment. Committee votes the only rule. There is that if I vote against something. Like a super overwhelming, but in general we go by majority vote. That's actually I think much better. You don't WanNa have to force consensus on these things now I'm totally with you attempted consensus. Lot about actually trading help from the ground up when I way to try. It found this from before. He's into specifically. Ask. How do you think about the importance? Not starting new companies just, but she knew sissies. Well both are investing and entrepreneurship or looking for conceptual gaps in the world, right? We're looking for areas. Where here's what it is now in? Here's what it could be an in very oftentimes these gaps you can think of them as opening up as new technological possibilities emerge right, and so if you want to invest in ridesharing couldn't do it before the mobile phone existed. That doesn't make sense if you did it in the first few years in mobile phones, this thing that's great. This is a new thing. Thing as possible, that treats a lot of value for a Lotta people and you make a lot of money. If you want us to sharing now, the gaps mostly closed. There's not these may, maybe as far as I can see. There's giant gaffes versus how ride sharing works now could be working so simple examples you're looking for conceptual gaps in the world, and the question is where the biggest gaps and you know. A lot of people were trying to do good in the world they tend to focus. Focus on gaffes in healthcare and education and I agree those are very important for the world. They actually like a lot of money. You can make these areas by fixing him to I'm very excited about a lot of people. Don't look as closely the gats in government and finance, but if you really stop and think about it, government and finance are at least as important because a lot of times, Belva, those determined for society, what resources are going to have anyway for healthcare and education and everything else. Else, so these are very kind of things. Well, that are really key. Is You look at government like one of the ways fix government, obviously I've started a bunch of companies to address processes in government to fix a lot of stuff works to make government better. There's just so much wrong with our cities, and there's so much their cities could be doing so much better. It's just a really fine exercise. We should probably don't engage in the whole thing now, but you can kind of look and just. Just see all the ways in which cities is wasting people's time, necessarily all the ways which the at the environment, and necessarily all the ways in which they make the cost of living for the poor way higher than it should be i. mean the old days. If you move to a city and you work your way up, now report. You can't even live within two hours of the city. That's not necessarily. There's ways of making it affordable. There's ways of building a city in permanent regulating city so. So all of these problems are solved so such a big gap. It's a very fun thing. Potentially fix I mean speaking of kind of problems within cities east coast of living. Amaze me thinking about silicon camale stay were under the criticism is right in the of the insane high cost of living the question, and this was from drew I have to admit it was like Silicon Valley driven so much innovation continues to do despite the rising costs. Why do you think that is what ensures that Silicon Valley? Valley maintains its monopoly in your mind despite the shitty condition, sometimes, this is something that a lot of must've been arguing about I. Think you've probably seen the movement that I and many other support trying to change the rules I mean forty percent of the land around the San Francisco. Bay area is zoned for cattle. Use Right now, so you literally have our staff and like people like Nannies. Who have families who are driving home two hours each way past Catalan and like not being able to put. Put their kids to bed at night because he couldn't get home in time, because they can't live with living, and it's just the whole thing is just. It's morally obnoxious, and it's just morally obnoxious as you said economically is going to break this area. We don't rethink about how to dance city and allow us to use land to make it affordable for people to come here and work their way up key issue economic access to do that in for this area to work a lot of my companies. All of them have second offices somewhere else to make it affordable, and I'm very seriously thinking during WanNa be full time in the bay area, or are there other places to build? Do you think he will continue is downloaded I've had like showed before he has absolutely will tribal knowledge. The tight wise will remain here that we will continue to see the dolphins and others say remind Wa tools on financing. Howler is going to democratize entirely. Do you think that it will sustain? They will mockus decentralize I. Think this is one of those dialectic where there's. There's extreme truth on both sides. If you actually look at my best sense of the numbers is that we were kind of completely dominant twenty years ago, like almost dominant ten years ago, and it's been trending down just from our investing, which is probably a reflection of my best judgment, and obviously we're by towards the value, but we spend a lot of time looking elsewhere. I think when I first started the firm almost a decade ago, we were like ninety percent investing around here I think the numbers somewhere around sixty percent now around here. Maybe maybe maybe sixty. Sixty mid sixties and I can very easily see going down to forty or fifty percent five years from now so I do think probably just slightly more than half of a multi-billion-dollar companies being built in America are probably being star in Silicon, valley but I think that number was closer to eighty or ninety percent a decade ago. It is slowly turning away. I think Silicon Valley. Making the right moves could actually turn back up I. Don't think they're going to make the right moves. I think the Political Leaders Shapiro is a joke, and so I think it's GonNa. GonNa keep slowly trending down as a of the whole, but still doing very very important things here and the one thing I'll say Harry is the renaissance in Biology, probably the most important trend going on our space right now and UCSF Berkeley Stanford an ecosystem around here is probably GonNa be really strong in there for the next ten years. It's very hard to replicate that elsewhere. It is pretty good. Obviously university's doing important things, but the core strength here and people have been brought around that I would guess the biggest companies are built here in that way. Cool part of any says he is culture and common criticisms of the monocultures, our inherent uncultured I guess mcrib is back to voice, and this one was trae I believe. How do you believe about the dangers of a work culture? Maybe as relates to free speech yet. You're not supposed to talk too much about, but I have trunk pains on some always getting in trouble here. If I'm not careful, I was on a board. Call this morning. I won't say which board and there was somebody company who had been very prominent company who posted something that some people found offended in the question was. Do we remove him from the board? We rid of them or not, and it is a very interesting question. Would be having that conversation what he said, which wasn't even not offensive to most people, but I don't see how that conversation wasn't in Silicon Valley or wasn't in a blue area at the very least, and what's really happened here is there's like five or ten percent of people core on one political extreme who've really hijack the conversation and who've kind of? Of pushed for this kind of canceled culture who have kind of push for us stuff that really resembles now. Struggle sessions is very much scary like nineteen seventies China where they just really want actually not allow any kind of logical rational pushback on what they're doing, and it's all about. This is the time to listen, not talk, and therefore you have to. To listen to exactly what we're going to implement our policy regardless of any rational discourse, so am very concerned about that culture I anti believe we live in Sandy. Mars issues to my mother about it, because I didn't feel available and free to say actual what I think. Ninety percent of the time because of the public reaction might issue. You know how. How twitter! What's I mean? You have one pass in the nit tons absolute show. Would you agree with me and say hey, we live in not democracy given the lack of freedom of speech well couple of things first of all I think the UK does have like strange online speech laws. Where like the police will visit you for saying things that they? They find offensive. Which I think is just absolutely unacceptable I, think you guys have been huge mistake. There I'm very proud that America still despite everything by law were free, but you're right. There's a lot of groups that you are free by. Law will try to censor you. We'll try to attack you. I feel like part of my role as a leader in. In the ecosystem is stand up and fight against this counterculture in opposing everywhere. Can't I'm not willing to compromise with it I'm not willing to not put forward. Rational discourse strongly believe something that said it does behoove all right now, not to make insensitive jokes, not to purposely provoked the cultural law, because obviously our duty to our companies and our firm is. Is such that we stand for what we believe in, but we shouldn't pick unnecessary fights with these crazy people at this time. busine I totally agree in terms of selecting, which was you're willing to fight so to speak I. Do want to move into Alabama late I didn't often do on a C. in terms of the structure but that was some. Some questions I really wanted to awesome, and they were fantastic suggestions. Routine numbers found is with end so I'm GonNa Roll with Anna Style so as to stay on your team that he seven years, and he's never waited longer than ten minutes from email. If question was, how do you do it? And how do you think about the two of how? Yeah, I struggle with this because I like to think of myself as somebody who's very proactive and I'm constantly researching these new spaces and taking time to go read history economics and philosophy and thinking a lot and applying my views of the world to build things like one nice vision of myself, but then there's the other visionary myself. That is doing six seven hours of email responses and coordination a day and being a traffic cop in being the leader, everyone comes to to get things and to meet the right people as much as Hannah. Try to replace myself with people around me and underneath me, but there's. There's always stuff that has to come back up to me and it's a sense of duty. I suppose I've hired some of the most talented people in the world back. Some of the most talented people in the world are doing very important things that are changing the world in positive ways, and if they're waiting on me to get something done, that's unacceptable, and it's my job to get back to them, and so I guess it's become a mental hack where I have to get back to people as fast as I can. Actually funny I've responded to a few texts while we were talking right now, so. Hopefully didn't catch but I sometimes. It's probably a little bit unhealthy. Honestly I do probably need to have some more space. Charge this, but he's he's right, but I don't reply to an email for freaks. People out because I'm not used to it. I love that I totally appreciate your. You said about race I. Intelligent numbers just by founders lentils a harm. Best talent is made many friends, and they said there are just so many people way you spoke talent before anyone else has and that question was. How do you tell them presented she? And how do you think about Tom? Development and assessment versus going to grow some potential. You know there's a little secret here, which is probably not what you want to tell. People I was on the Peleton this morning. A couple daughter's. Daughter's usually talk about my family and public too much of a three year. Old Is my eldest, and she was doing this fun thing on one of pieces of equipment where she was jumping pretty far, it was actually quite impressive for three looking. She say Daddy. Other little girls can't do this right and she was very proud of the fact that only she could do this and it was very hard thing to do and I think there's something a nate and people where the best. Best Way to interact with them is to help them discover their true scales inculcate skills, and it makes him very proud of them to the point where they do see themselves as unique, and of course they are unique, but it's fine to overemphasize the extent to which they are unique, and so you have to find great talent and I think a lot. More people have a lot of talent than people generally realize and so as much as we talk about finding the very very top. Top talent, it's not everyone has the ability to do these things, but a lot of people have something inside of them that if it's nurtured and inculcated in the right way, and they are made to feel that confidence, they can do truly great things those one and it releases the cash the needed. It's a tough environment by many tightly develops fos downstream seen. How do you advise finalist? Think Bob Trash burning. Rub `way fussed. Yes, this was all mid. March was like the re plans probably. Like seventy re plans, we all had like a plan B. and a plan B. Minus a plan C., and the had to see where things are going, and most people are either on their plan. B B, minus because the economy has not been as bad as people thought I'm generally really conservative about things, which is funny because you think I've built, all these companies are taking all these risks as far as people see, but if you're going to do something as hard as building a new company, you need to create as many unfair. Unfair advantages in as many backups as you possibly can for yourself is Mine General View from the Entrepreneur's perspective, and there is a conflict between the investor in the entrepreneur investors won't entrepreneurs the a little bit, but a little bit more risk than the entrepreneur probably should want to take just given the trade offs, and I generally say nine to twelve months as yellow yellower and six months red alert, and if you're at three months cash, you have star exploring other alternatives. That's my general framework on these things I think it's extremely irresponsible. Irresponsible like sometimes. Other firms don't even know what's going on in. Someone will come and be like. Oh, we have two months cash left. Let's talk about what do we do now and it's like you should have been planning way ahead of that like I. Only want to be involved in something gets situation of a and that means. We screwed something up so general in this kind of environment I will not where things are building. We've told people as much as you can get eighteen to twenty four months in cash as much as. As you can. is all about survival. Assume the worst. Do Your best survived in twenty twenty and there's a lot of companies that are doing great right now. Digital Economy's really on fire. There's still a lot of companies where we're hoping things. Turn back on by early to mid next year. Tell me what's going to happen to the company's one year. The sacrifice not grazed, not having walked eastbound for gross margins cannot deficiency. There's probably some areas where people probably should have been thinking a little bit more on the margin about margin. Are. They probably should've with more worried about being a real business than they were. There's a lot of people who haven't built real mature businesses for investing maybe the mind too much for revenue, and don't fully understand what it takes to be cash flowing high-margin real business the end of the day, so yes, this is a healthy exercise for a lot of people at the same time with entrepreneurs weren't. Weren't doing correctly. It puts you back a year not to be able to be as aggressive as you would have been normally and putting you back. A year is expensive because he's hybrid companies, so the question is. How can you really aggressively copper and a lot of this conversation where he's can't cut this through the bone, and then they do cut it, and they're actually doing all just as. As well as they say. Wow I didn't realize I really could have cut those eight people. It wasn't quite as extreme as I thought I really didn't need those ten people for our core business. When cut spending were still fine so i. think a lot of founders are a little too hesitant blase. First of all, they should be in this environment. I don't wonderful the Far East. Anyhow months shit. Shit it's kind of exploring exit. Fos in terms of quizzing is honesty when your team foolish eight. He said you are incredible. When he was known Brian advising him three pivots nine when to quit how even vise founders on the balance that tree revision on that incredible Milstar us is facing the realism of just something's walk. The my perspective on this is probably not entirely healthy because this is something. Something that people need to keep in mind. There's different types of business in the world. There's lots of really great small medium businesses to build, and there's a lot of probably rules you could get from business school, Mckinsey, and all the rest of it really kind of figure out just like here's how you run a big corporation. Here's the Iran business. There's something a little bit different on natural about. About figuring out a way to build these startups that we focus on and for me, when I'm building something, the first question is much more about. Is there really a conceptual gap in the world that needs to be solved? Is there really a gap rate? This stuff is here and then way up. Here is where it could be an if you're confident about that conceptual gap and you should constantly. Constantly checking to make sure it's real in the you're not getting new evidence. It's not but if your confidence there than the right approach is just to be completely obsessed and focused an just sure you're going to win and just do whatever you can to push yourself to get there, and so as law training for gold medal, the Olympics you cannot have healthy life balance and build a multibillion dollar. Dollar Company, just not how it works, and you don't get a gold medal. The have a healthy work life balance. You have to be obsessed and you have to not give up and you actually keep trying to figure out what you're going to do to fill in that gap, and to make it work, and so I think that people who are not one hundred percent. Sure that they're gonNA like. Crush themselves utterly and bitterly to get there and never giving up should probably start a company in. That's my general framework. Lazy I totally agree. The I was actually built guilty. Saying because you'll sawyer like again. We record like being crush bit I always get crushed Xining on him so I'm really pleased Yeah, I think it's important to caveat it. This is not true the entire world overall business, but this is a special type of middle level thing that requires that obsession. Yeah, no, I totally agree I you. WanNa finish it with a quickfire rounds is an issue statement and you give me your immediate about sixty seconds will last year. Are you ready all right? Favorite perfume. Why must we be reading? A couple of minutes she'll it. Achilles is too long. No one's GonNa read it on your podcast? The too I really like red recently. Matt Ridley wanted Asian works really really awful guy one of my favorite writers. It really gives you a sense for how tons of top innovations came about have a lot of same around evolution, and how why combat at the same time thing, it's really useful than investor to think about actually agree with them on everything, but he has such great mind, and really paints pictures of how they came about and then the other one. One I'll say Yuval Levin a time to build talks a lot about the crisis of our society right now and how we need to rebuild institutions, and how why people are abusing institutions whether the president whether it's journalists, or whether it's others, and what that is our culture, and how it fixed that you've eleven and Matt Ridley I would recommend. What's the biggest challenge in skating ABC's day well, these things don't really skill that much. Because the whole point of them is the core set of partners are what you're betting on, so if you just hire lots and. And lots more people eventually, you're doing things that are not with the core, and then I'm not actually doing myself, and so you only really scale this so much that I am the kind of core. People are taught. Talent can be involved in everything, and we found a lot of really great talent. We found amazing principles, and who know healthier better than me and people logistics better than me. A really good job without at the core investment process needs to be tied to a core small team and given that we're doing C. A. and B. and that we. We also have build. I've kept the fund the same size the last few times. Just because it doesn't seem like to have time to do more than we're doing right now, so I think six forty, every two or three years to me is about right for we do. He's you'll biggest mentor, and what's been the biggest takeaway from the relationship, I guess my father has probably been the biggest influence on me overall and I'd say a lot of takeaways from one's father, but one of the most important things that he taught me. Yeah I was the oldest of. And taught me to really take pleasure in honest pleasure in is what I care about the success and the happiness of my brothers and my friends, and there's no way you could say that if you honestly someone who lives in enjoys the success of those around you and you have that with your teams with your friends I. Think he should such A. A powerful thing, and if it's really going to track the best people t, and it's going to have these really strong relationships that are loyal in their actual, so I think is a really great lesson from my father. What would you change about Lou? alday deduction. Say I think it would be really cool I. Venture Capital was open to a lot more. More types of people from a lot more backgrounds I mean as much as is, the Wo- Cancer I. Actually agree that's something that be much better for the world. Because venture capital is a source that creates a lot of economic opportunity in a lot of ways that people don't fully understand. It's also the sources really evolving and pushing for global economy and. And is so critical for China's eases. There's all these ways we can use venture capital to really address a lot of problems in the world in having everyone be part of it in a more open way and having people, disparate backgrounds be more engaged. That would actually be really kind of Nice if our society award for the most going, so potato agreed. Not by tasting offering both. Very young goes young getting ready to give politics right all right, aol the Brown tell me Kimmy at eight hundred house. Having kids made you think differently about the world of operating in investing well from the story I was telling earlier I have wonderful little girls in little girls can be very emotional at times, and you kinda learn when you're dealing with a time when they're open to being rational in opened interacting versus there's certain times that are purely emotional. It has actually been very helpful for me in the broader world when I'm dealing with people to. To say. Is this like a little kid part of their mind where it's not a good time to try to engage on a difficult thing or a try to push them into rational outcomes, how can I be understanding? And how can I build a relationship here? That will then at the right time allow me influence them properly and such being more awful by the fact, all of us have little kids inside of us is probably pretty useful leader now absolutely and I love that ninety Everett final on. Tell me well summation recent publicly announced investment why? Why did you get so excited? We've done a few Lali actually because you're sitting over there in the UK. I say we're quite excited about beacon you. That was announced. We did that with Jeff Bezos a few other early smart friends and people on an ecosystem, and frankly it was very simple. I guess three things. One is just really top talent. Obviously people involved run over in Europe and just really telling people I really enjoyed meeting attracted really great people to its giant market, and there's really clever approach to giant and freight forwarding clearly better things down. Down there, there's probably gaps and then three our advisers who run a law things and logistics. Who met Dan who learned about him? What really deep on it were very excited and thought it was very logical what they were doing. So you the very top talent, really good approach and a good market, all people. I know respecting the space. Love it and delete around. That sounds great to me. Jay said at the beginning I wanted to see this for a long time. Say Thank you so much joining me stay so enjoyed. How thank you very much? I have APP see love having the show their incredible all he's built with eight, and if you'd like to seem more from us behind the scenes you count on Instagram at age stubbings nineteen ninety-six. Always loved see that. Leads Day I want sing a moment to mention Hallo sign a great example of a company that found success in building product focused on user experience. Gallison is an effortless Solution is by millions to security send I'm request legally valid digital signatures and agreements. They raised a total of sixteen million in funding, and recently got acquired by dropbox for an impressive two hundred and thirty million dollars. CHECK OUT SIGN DOT COM. com slash chooser visa to join the thousands of companies. I'm founders who Vanni falls to secure and simple e signatures and behaving credible solutions to complex problems. The team over Pando. The product cloud company is expanding rapidly throughout Europe and recently released version of that product, which is designed an priced specifically for startups, so no matter whether you're an operator or investor in Europe all the US. PENDER has annual portfolios product. Product covered. Show you how you price stacks up against you. Pairs analyzing over thousands of products in creating moss with startups skate ups and enterprises across five different categories, and you can find out more state pender dot me, slash product dash benchmarks. That's PENDO DOT com slash products, dash benchmarks, and finally wants to what you about point pointers of premium. Cod I debit card with roads from Brown that you actually care. Care about like earn five ice on subscriptions spotify to ice on all dining experiences including food delivery absolute posts maze from one x on everything else. You're rewarded every time you spend on. points are deemed for cash instead of during a line for awards that Allen relevant you can use point caught and start getting a break home. `Push with your favorite Brown's and he's by the likes of why combination and audio. Jack, Morris Genius that revolutionizing the way we spend and listeners of two thousand ABC have the exclusive opportunity to join points. Invite only launch out of Beta in July had over to get dot point dot ab forward slash to`serve E C early access and a sneak peek out point as always I, so appreciate, or he was calm mates bringing a fantastic episode this coming, Friday.