0:00

This episode is brought to you by Tiggas, the

0:02

modern research platform for leading investors.

0:05

I'm a longtime user and advocate of Tiggas,

0:07

a company that I've been so consistently impressed

0:09

with that lasts fall my firm positive sum

0:11

invested twenty million dollars to support Tigus'

0:14

mission to expand its product ecosystem to

0:16

unify and streamline investor research

0:18

processes. In addition to the library

0:20

of fifty five thousand transcripts, Tigus

0:23

now combines at cost on demand

0:25

calls with a full suite of financial

0:27

workflows. Whether it's quantitative analysis,

0:29

company disclosures, management presentations,

0:32

earnings calls, Tigus has tools for

0:34

every step of your investment research. They

0:36

even have over four thousand fully drivable

0:38

financial models. Tigus' maniacal

0:41

focus on quality as well as its depth

0:43

breadth and recency of content makes

0:45

it the one stop end to end research platform

0:48

for investors. Move faster, gather

0:50

deep research to build conviction and surface high

0:52

quality alpha driving insights to find

0:54

your differentiated edge with Tigas. As

0:56

a listener, you can take the Tigas platform for

0:59

free test drive by visiting tigas dot

1:01

co slash Patrick. Before

1:03

we transition to the episode, I want to highlight

1:05

the founder's podcast, which is part of our colossus

1:07

network. David Semra, who host founders,

1:10

has devoted his life to learning from history's

1:12

greatest entrepreneurs, and every week

1:14

he distills the lessons of a different founder.

1:16

If you want an entry point, I highly recommend

1:18

starting with episode one thirty six on Estee

1:21

Lauder or episode two eighty eight

1:23

on Ralph Lauren. I hosted David

1:25

on invest like the Best summer and it's hard

1:27

not to walk away insanely energized after

1:29

listening to any episode with him. You can

1:31

find a link to founders and those episodes in the

1:33

show notes of this conversation. You can

1:35

also search all past transcripts on our website,

1:38

join colossus dot com.

1:42

Hello and welcome everyone. I'm Patrick O'Shaughnessy,

1:45

and this is Invest like The Best. This

1:47

show is an open ended exploration of markets,

1:50

ideas, stories and strategies that

1:52

will help you better invest both your time and

1:54

your money. Invest like the best is part

1:56

of the colossus family of podcasts, and

1:58

you can access all our podcasts including

2:00

edited transcripts, show notes, and

2:02

other resources to keep learning at join

2:04

colossus dot com.

2:08

Patrick Shaughnessy is the CEO and

2:10

founding partner of Positive Sum and

2:12

the CEO of O'Shaughnessy Asset Management.

2:14

All opinions expressed by Patrick and

2:16

podcast guests are solely their own

2:18

opinions and do not reflect the opinion

2:20

of positive sum or O'Shaughnessy Asset

2:22

Management. This podcast is

2:24

for informational purpose only and should

2:27

not be relied upon as basis for investment

2:29

decisions. Clients of positive

2:31

sum or O'Shaughnessy asset management may

2:33

maintain positions in the securities discussed.

2:36

In this podcast.

2:39

I guess today is Dan Rose. Dan

2:42

is the chairman of Co2 Ventures and one

2:44

of the most interesting collections of experiences of

2:46

anyone I've talked to. He spent twenty

2:48

years at Amazon and Facebook in their early

2:50

days working closely with Jeff Bezos

2:52

Andy Jassy, Mark Zuckerberg and Sheryl

2:54

Sandberg. He's had a firm receipt to

2:56

the defining products and founders of our era,

2:58

and his lessons from those experiences do not

3:01

disappoint. Please enjoy this great discussion

3:03

with Dan Rose. Dan,

3:06

we have a total embarrassment of riches

3:08

of stuff to talk about Kevin you've just

3:11

been at the center of so many interesting business

3:13

stories in the last twenty five

3:15

years. I really didn't even know where to begin, but

3:17

I have to pick a product, which is Amazon's

3:20

Kindle, mostly because I've spent

3:22

some large chunk of my life as a user

3:24

of it. Me too. Most of my twenties

3:26

effectively, my downtime was spent on Amazon's

3:28

Kindle products in various different forms. So

3:30

I'd love you to begin our conversation today

3:32

by maybe just telling the story

3:34

of that product within obviously

3:37

a much bigger organization with

3:39

an eye towards the lessons that it started

3:41

to teach you about building, launching, distributing

3:44

great technology products.

3:46

Sure. And it's great to be here, Patrick. Thanks for

3:48

having me. The kindle was for me,

3:50

actually, the big break in my career. I was at Amazon

3:52

for four years. I had done a few

3:55

different things. I started out in business development.

3:57

I dropped out of business school after a summer

3:59

internship at Amazon. To stay on

4:01

full time, then I ended up moving over to

4:03

the retail business and got to

4:06

experience buying inventory and

4:08

pricing it and running sales and

4:10

that whole part of the business. And then

4:12

Steve Kessel was asked by

4:14

Jeff Bezos in two thousand

4:16

four to start up this new division. And

4:19

Steve at the time was running the entire

4:21

media business at Amazon. He was running

4:23

the books music and video business,

4:25

which was the largest business by

4:27

revenue. But even more importantly, the books business

4:30

alone was the vast majority of

4:32

Amazon's profits at the time.

4:34

And Jeff had seen the iPod

4:37

come out and decimate our

4:39

physical music business and

4:41

had the recognition that the same

4:43

thing was going to happen to books. And if that was gonna

4:46

happen, we better be the ones to do it, not

4:48

someone else. He said to Steve one day,

4:50

Steve, I need you to come over and run this digital

4:52

business and get this digital book platform

4:54

started so that we don't get I potted out

4:56

of books. And Steve said, great. I'll take one

4:59

of my best people. We'll put them on it, and

5:01

we'll get a team going, and it'll be great. And Jeff

5:03

said, no, you don't understand. I want you to do it.

5:05

And Steve said, but perfect. I'm excited.

5:07

I'm fired up. Let's go build this. I'm gonna put this

5:09

person who I think is the best executive in Oregon,

5:12

and we're gonna have him go build a team, and Jeff goes,

5:14

no, Steve. Let me make is clear. As

5:16

of today, you're fired from your

5:18

job. Your new job

5:21

is to kill your old business.

5:23

I want you to put the physical books business

5:26

out of business by building a digital

5:28

product that's so good that people don't buy physical

5:30

books anymore. If you run

5:33

both, you'll never be motivated

5:35

to do that. So we're gonna bring the head of

5:37

finance for the media business, a guy named

5:39

Greg Greeley at the time. And we're gonna put

5:41

him into your old job, and we're gonna put you into

5:43

this new job. You can bring one person with you,

5:45

but I want you to build a whole new team. Fairly

5:48

early in that process, Steve and I knew each other

5:50

from our time at Amazon, and he recruited

5:52

me over. Interestingly enough, this

5:54

is two thousand four. So keep in mind,

5:57

the company had just emerged from a

5:59

crisis where we literally almost went out of

6:01

business. March of two thousand when the Internet

6:03

bubble popped through two thousand six,

6:05

two thousand seven, was a pretty

6:07

shaky time, and two thousand one, two thousand

6:09

two was very very close

6:12

to the edge for Amazon. And there were

6:14

very smart Wall Street analysts saying that we

6:16

had six months left before we went bankrupt.

6:18

So we had just emerged from that. We were

6:20

still teetering by getting our feet under

6:22

us and Jeff decides that we

6:24

have to go build a product that's gonna

6:26

destroy our biggest profit center for

6:28

the whole company. The interesting thing is

6:31

not only was he fired up and

6:33

committed to that idea, so committed that he

6:35

would take the leader of that business and move

6:37

them over. But at the exact same time,

6:40

he started AWS. And

6:42

he had Andy Jassy, who

6:44

was his shadow or chief of staff

6:47

for a couple years, who really incubated

6:49

that idea with Jeff. Came over and

6:51

spun up the AWS business. And Andy and

6:53

I knew each other as well. Andy was actually the person

6:55

who gave me my break to get in the door

6:57

at Amazon originally. He was a friend of a family

6:59

friend. When I harassed him until he finally gave

7:02

me an interview. And so Andy was

7:04

starting AWS and Steve was starting

7:06

Kendall. And I was interviewing with both

7:08

of them to decide where to go next.

7:10

And Amazon was a great culture where you could kinda

7:12

move around the

7:13

organization. I'd already done that a couple times.

7:15

Ultimately, I decided to go work on Kendall with

7:17

Steve for two reasons. One, just

7:19

thought AWS was too technical, and I

7:21

wouldn't be as effective over there.

7:23

Amazingly, Andy was a marketing

7:26

guy. So the fact that he was able to stretch

7:28

himself into running this

7:30

highly technical platform is actually

7:32

super impressive. But I just didn't know

7:35

if I had same jobs. But more

7:37

importantly for me, I just was passionate

7:39

about books. My grandfather was

7:41

a book file. He used to go into the public

7:43

library and literally hand copy

7:46

by hand books that he loved because he couldn't

7:48

afford to buy him himself. And he taught me

7:50

to to really love books and I loved reading. So

7:52

to me, this was a dream opportunity. I

7:55

joined Steve and our job was to build

7:57

the Kindle and my job specifically was to

7:59

get the book publishers on board with producing

8:01

more books in a digital format. At the

8:03

time, there were about twenty thousand ebooks in

8:06

the world. And Jeff gave us

8:08

a goal of launching the Kindle with a hundred thousand

8:10

books. A digital format. He knew that

8:12

one of the important things to this platform is

8:14

gonna be selection. And there

8:16

had been ebook devices

8:18

before the Kendall that had failed.

8:21

And there were a couple reasons he believed

8:23

that they had failed. One was that there just wasn't enough

8:25

selection that when you take your device out,

8:27

if you can't find the book you're looking for, you're you're not

8:29

gonna pull it out again. And two is the

8:31

the screen wasn't really designed

8:34

for reading a book. LED

8:36

screens are not great on your eyes and most people

8:39

read books and the sun when they're on the beach

8:41

or at bed at night and he just thought, we

8:43

can come up with a better technology for this.

8:45

And so that set us down the path of developing

8:48

this new platform and really journalizing

8:50

the innovator's dilemma, I think, in a perfect

8:52

way that shows that you can think about

8:54

that idea intellectually, but to actually

8:56

do it takes a lot more

8:57

courage. One of the things that Amazon

9:00

is so famous for is this idea of working backwards,

9:03

picturing, even writing the press release

9:05

for the ideal end state for a given product,

9:07

and then solving from that backwards

9:10

versus saying what technologies are available

9:12

today and building forwards from what's possible.

9:14

In the case of Kendall, if you think back on

9:16

technical or business challenges

9:19

of getting that thing to work. What

9:21

stands out in your mind as the most creative

9:23

solutions that you and the team had to come up

9:25

with? And maybe I'll tell one of those stories

9:27

because I just love these several many examples

9:29

of conquering something that everyone says can't be

9:31

done in order to

9:33

achieve, like, some idealized outcome.

9:35

There were three things that Jeff really charged

9:37

the team with. All three were gonna be extraordinarily

9:40

difficult. And, frankly, at the time that

9:42

we got started, it wasn't clear we're gonna able to

9:44

do any of the three, but he was just

9:46

committed to it. So committed to it that he

9:48

delayed the launch date three or four

9:50

times until he felt like we had the

9:52

magic formula. The first was

9:55

selection, and that was my job. And I can't

9:57

overstate how difficult it was to convince

9:59

book publishers to put real energy

10:02

into digital books. And it turns

10:04

out the entire process of publishing

10:06

a book is analog. It seems crazy

10:08

to think that because every book is written

10:10

on a digital device, but it then gets

10:12

convert it into an analog format before

10:15

it goes to printing press. And book publishers

10:17

don't really have an incentive to

10:19

publish digital books because their

10:22

whole cost structure is tied up in

10:24

printing and packaging of physical books.

10:26

We had to go out there and I spent a lot of

10:28

time in New York selling them on why

10:30

this was a good idea. And the other thing I

10:32

had a hand tied behind my back because Jeff

10:35

didn't wanna tell him we were building a ice.

10:38

He was worried it would leak and he wanted to be

10:40

the big Apple type moment when we launched

10:42

the product. That was really hard. The second thing was

10:44

the screen we talked about that. At the time, there

10:47

were no devices with e ink screens.

10:49

We took a big bet on e ink. We thought

10:51

this was a big part of the answer

10:53

to making the digital book

10:55

as comfortable to read as a physical book. And

10:57

we always said and Jeff started the whole thing by

10:59

saying physical books are an incredible

11:02

invention. They've been around for hundreds of years.

11:04

In order to convince people to put them down and

11:06

pick up a new device, it's gonna have to be better.

11:08

It can't be better in some ways, but worse

11:10

in other ways. It has to be better across the board. And

11:12

then the third, which was a total

11:14

stretch. But again, classic

11:16

Jeff Bezos was he wanted it to feel magical

11:19

and magical meant that you

11:22

click the button and the book showed up on

11:24

your device. And that at

11:26

the time, iPads, you plug them

11:28

in your computer to download songs.

11:30

Wanted to happen over the air. He didn't want you to have to

11:32

plug in your Kindle. And so we said, okay, we can

11:34

figure that out and we had a great technology team

11:36

that built that But then he said, no, that's not

11:39

good enough. Because if you're not in a WiFi zone,

11:41

then you can't get your book. And what

11:43

if I'm on the plane and I'm just getting ready to

11:45

take off? And I forgot to download a book, and I

11:47

wanna download it. I wanna be able to get that book.

11:49

And we said, but that doesn't work because to

11:51

do cellular downloads, it's gonna cost

11:53

maybe twenty dollars a month And

11:55

if we charge twenty dollars a month, then nobody's gonna

11:58

buy the device. And he said, well, let's just

12:00

pay the carriers for the cellular coverage,

12:02

but give it away for free to the customer.

12:05

And we said, well, we can't make the math work. There's

12:07

not enough margin on the books and the device

12:09

to do that. And he said, well, why don't

12:11

you go back and make the math work? And we

12:13

came back fifteen times. And

12:15

we just couldn't make it work because we said, okay. We'll

12:17

charge more for the device. And he goes, no. Nobody's gonna buy

12:20

it. We have to charge less. We'll charge more for the

12:22

books. And he said, no. And then they're not gonna buy the books.

12:24

So finally, we model together to

12:26

fairly make the math

12:28

work, and it turned out that he was completely

12:30

right. I think the combination of those things is what

12:32

made the kindle such successful product

12:34

and why everybody who owns one feels like it

12:36

truly is a magical product. I have

12:38

to ask two follow-up questions. The first is what

12:41

you did to convince the publisher's ultimately

12:43

to do this. The selection thing is so

12:45

true. Very quickly, if you didn't

12:47

have the book you wanted on there, you churned fast.

12:49

Well, this thing's useless. I can't get the book I want.

12:52

How do you get a big incumbent like the

12:54

publishers, I've written a book, so I

12:56

know that world decently well,

12:58

and could imagine what hell hole it was try

13:00

to negotiate against at that time

13:02

period. What did you say or do

13:04

or promise that unlocked

13:06

that? It was a combination of

13:08

a couple of things. One, we

13:10

were fortunate because we were already a large customer.

13:13

So they had to listen to us. I would

13:15

go out there and fly to New York and meet

13:17

with them. And they would say no. And then

13:19

I would come back a couple weeks later, and they would

13:21

say no again. And they could keep saying no,

13:23

but they couldn't not take the meeting with me.

13:26

Because Amazon was a really really important

13:28

distribution channel for them. So that was a

13:30

huge advantage that I got to continue to

13:32

build the relationship with them and

13:35

my personal style of partnering

13:37

is to really try to understand the other

13:40

side and understand where they're coming from and

13:42

figure out creative solutions to

13:44

the problem. And they had legitimate reasons

13:47

for not wanting to do this. It wasn't like they would just

13:49

be an obstinate. They had tried and they

13:51

had seen other digital book efforts fail

13:53

and they felt like it was waste of time and energy

13:55

for them. They legitimately had concerns

13:58

about their own business and

14:00

if digital books were successful, what that would mean

14:02

for their cost structure and how they were gonna

14:04

manage through that? There were a lot of reasons why

14:06

they were resistant, and it was gonna take real work for

14:08

them to do it. It wasn't like they just flip a switch and suddenly

14:11

you start generating eBook versions

14:13

of your books. But on the flip side, we

14:15

were making a case to them that look,

14:17

this could be really good for you because it

14:19

costs a lot of money to print a book. And if

14:21

we are able to sell digital books, it could remove

14:23

a lot of costs. And if you think into the

14:26

future, if you're worried about piracy, we're

14:28

gonna take that really seriously and we're gonna do this right

14:30

and we bought a company that was really good

14:32

at DRM and we built that into the Kindle from

14:34

day one. So we had a lot of good arguments, I think,

14:36

for why what we were offering was

14:38

actually something that they should consider.

14:41

But ultimately, there were two

14:43

things that we did, I think, that really made a difference.

14:45

One is we developed

14:47

on our side some technology that allowed

14:50

us to digitize physical

14:52

books. Before we started this effort, we already

14:55

built search inside the book. So we

14:57

were able to actually take that product, which

14:59

wasn't sufficient for reading

15:01

a book. It was good for searching, but not for reading.

15:03

And we were able to refine it and actually

15:05

make it better so that a lot of books that you

15:07

were able to get on your Kindle on day one

15:10

weren't produced by the publishers. They were physical

15:12

books that we had engineered into digital books

15:14

and were good enough to get us over the

15:16

hump. And then two is ultimately

15:19

finally after a lot of

15:21

arm wrestling. I was able to get Jeff to

15:23

let me tell the publishers about the Kindle.

15:26

And when I showed him the device, they

15:28

suddenly went, oh, now I understand

15:30

why you're being so persistent on

15:32

this. We just couldn't understand why

15:35

you kept harassing us about publishing books

15:37

so that people could read them on their palm

15:39

pilots. Nobody's gonna do that or their laptops,

15:41

but now you're showing us that you're making a real investment

15:43

here. And with this e Ink screen,

15:45

maybe it has a better chance of succeeding than the

15:47

last generation, and so they were a little more

15:49

open to it at that

15:50

point. The the third point you made

15:52

about three miracles that you had to have to make

15:54

into work was this cost equation

15:57

that Jeff kept pushing you on. Can you say a bit

15:59

more about just your overall experience of

16:01

the relationship between innovation

16:04

and constraints? This seems like this genius.

16:06

I always have that all thirteen seen in my head where

16:08

it's like, to make these guys live, we gotta make this

16:10

fit into this, using nothing but this, and they

16:12

figure it out, necessity breeds invention.

16:15

But where else have you seen that? Do you think that that

16:17

is just a generally powerful tool that

16:19

entrepreneurs and business people should apply

16:22

more, like, create more constraints to produce

16:24

more innovation? I think it's something

16:26

that the best founders are really exceptional

16:28

at. There's something about a founder CEO

16:30

that they have the right

16:32

to ask for completely unrealistic

16:35

things of their team and

16:37

to be stubborn about those things

16:39

and wait until they get

16:41

to the answer that they like rather than accepting

16:44

the compromise that the team insists is necessary

16:46

in order to deliver the end result.

16:49

And I saw Jeff do that over and over

16:51

again he was just incredibly stubborn

16:53

about his vision for what

16:55

he believed was necessary for something to

16:57

be successful. There's been a lot written about Alexa,

17:00

which I wasn't, therefore, I left before that

17:02

product got started. But there's just great stories

17:04

about him insisting on things

17:06

that the team also insisted

17:08

were impossible. And then ultimately, when you

17:10

put that goal in front of people, they find

17:13

a way through. It takes longer. Sometimes, you

17:15

have to be super creative, but you get there. We certainly

17:17

did that with the Kindle. And I saw Mark Zuckerberg

17:19

do it at Facebook as well, and it was one of the things

17:21

that I really just

17:23

admired Mark for his

17:25

stubbornness and his willingness

17:28

to stick to his vision in

17:30

the face of resistance from executives

17:33

who in his case were usually much

17:35

older than him and had a lot more experience. When

17:37

I joined Facebook, he was twenty

17:39

one years old. Yet,

17:42

he had this in his DNA. And

17:44

I saw this, I pattern matched it with Bezos

17:46

and I thought, gosh. At twenty one, if

17:48

this guy has this level of

17:50

conviction about what he believes

17:52

is gonna work and is willing to push

17:54

through to get to the outcome even if

17:56

it's really hard and is gonna create a

17:58

lot of brain damage along the way. But he

18:01

knows that if we get there, it's gonna be

18:03

magical and transformation imagine

18:05

what he's gonna be able to do when he's thirty,

18:08

which is how old Jeff was when he started

18:10

Amazon. I think great founders are

18:12

able to do that. They trust themselves enough and

18:14

they believe in their conviction. And as

18:16

a founder, you have the right to do

18:18

that. You can tell people, look, we're not gonna ship

18:20

until we get it right.

18:22

With your investor hat on, how do you

18:24

suss that out in someone that has not yet

18:26

successful? It's very easy to imagine

18:29

a lot of other Zuckerberg's at twenty one

18:31

who seem really smart and talented,

18:33

but they're just not gonna have the credibility. Like

18:36

you said, with an older more experienced group of

18:38

executives or teammates or whatever, and

18:40

the line between visionary and genius

18:42

and nutcase is pretty thin.

18:44

How do you think about that? Because obviously,

18:47

you're now in the business of hopefully backing

18:49

people that ultimately have that

18:51

same trait of a Bezos or a

18:52

Zuckerberg. But how do you tell that ahead

18:54

of time? It's hard.

18:57

And I would say, you're right.

18:59

There is a fine line there. Sam Lesson and I

19:01

have laughed about this as well. I think

19:03

you have to do two things to get

19:05

over that line. To emerge

19:07

into the category of credible

19:10

founder who is gonna be able to attract

19:13

the best people around

19:15

them and really build something substantial.

19:17

And the first thing you have to do is you

19:19

have to articulate why

19:21

it is that you're so insistent on

19:24

this thing that you believe is so important.

19:27

And that articulation has to resonate

19:29

with the people who are gonna go build

19:31

it, and it has to resonate with people who

19:33

are smart and thoughtful and

19:35

are ultimately credible enough

19:37

to make that happen. The best

19:39

founders are able to attract the best

19:41

people full stop. When I was

19:43

joining Facebook, I talked

19:46

to a lot of people in my network as it was a

19:48

big decision for me to leave Amazon. I knew

19:50

I was only gonna be able to leave Amazon once, and I

19:52

wanted advice from different people in

19:54

my network about where I should go, and I was talking to

19:56

a lot of startups in Silicon Valley. I ended

19:58

up getting introduced to Peter Teal. And

20:00

I said Peter, I'm interviewing with these

20:02

companies. And by the way, four of them are companies

20:05

that you've invested in. What do you think I should

20:07

do? And he said, you should go to Facebook. And I

20:09

said, why? And he said, simple. They

20:11

have the best people. And the

20:13

companies that have the best people are the ones that

20:15

ultimately went. Mark was able to

20:17

attract incredible people because

20:19

he was able to articulate his vision in a

20:21

way that res made it. The second thing you have to

20:23

do as a founder to emerge in

20:25

that category of credible is you have to

20:28

be right over and over and

20:30

over again. And that just takes

20:32

time. You just have to prove that your

20:34

insistence and stubbornness was actually

20:36

the right answer and not just

20:39

being stubborn for the sake of being stubborn.

20:42

Sometimes that's a little bit of luck. Sometimes

20:44

you just catch a break here and there. But

20:46

if you do it over and over again, eventually,

20:48

you realize it's not luck, it's skill, and

20:51

both Jeff and Mark were so difficult

20:53

to work for we would oftentimes

20:56

sit around complaining about them

20:58

just how impossible it was

21:00

to satisfy them or to work

21:02

for them But at the end of the day,

21:05

I would always say to the people who

21:07

were complaining. Yeah. But

21:11

they've been right a lot more than they've been wrong.

21:13

And the times when I thought they were wrong and they were

21:15

right have been transformational for the company.

21:17

And so I'm willing to give them the benefit of doubt. Now

21:19

that doesn't mean that I'm not disagree when I think

21:21

they're wrong. And I actually think it's really

21:23

important to have culture where you encourage

21:26

disagreement and

21:26

debate, and both of them did that. But

21:29

once the decision's been made, you disagree and

21:31

commit. And you commit because

21:33

you believe in the person and

21:36

you believe in the vision and you trust

21:38

them because they've proven that they're capable

21:40

of doing it. One of the things we were

21:42

chatting about before hitting go today

21:44

was this idea of building the perfect

21:46

Frankenstein of executive talent

21:48

or leadership talent, we'll come back to that. But

21:50

I think if you were to insert yourself into

21:52

that Frankenstein or if I was to build a Frankenstein

21:54

and have you as part of it, Certainly, the idea

21:57

of partnerships would be one thing that

21:59

I would consider you as the canonical

22:01

leader of. If we were building the Dan Rose

22:03

theory of partnerships, a philosophy class,

22:05

a GSP or something. What would that

22:08

course entail? What would be the key points

22:10

of your theory of partnerships?

22:14

I'll give you a simple anecdote that

22:16

to me in a nutshell describes

22:19

what partnerships is all about. In negotiation,

22:22

classes, you'll often hear this

22:24

idea that when two parties are

22:26

negotiating over an orange, over

22:29

time, it might be a long drawn out

22:31

negotiation. But usually the solution they come to

22:33

is they split the orange and a half. That is just

22:35

the most natural outcome of most

22:37

negotiations, but great

22:39

negotiators are able to get

22:41

to a solution where oftentimes it turns

22:43

out one party is looking for the meat

22:46

of the orange and the other party for whatever reason

22:48

actually wants the rind. And so

22:51

if you can get to that insight,

22:54

then one plus one equals much more than two.

22:56

I always go into partnership

22:59

discussions with that attitude. How

23:01

do we get to an outcome where we both get

23:03

not just half of what we want, but all of what

23:05

we want. And we're both perfectly

23:07

happy with the outcome, not partially satisfied

23:10

with the outcome. It's not always possible, but

23:12

a lot of times if you're willing to keep digging,

23:14

And what it takes ultimately is

23:17

just dialogue. It just takes time

23:19

getting to know somebody and getting to really understand

23:22

their motivation, not the surface

23:24

level motivation, but the much deeper level

23:26

motivation to realize that actually,

23:29

you may be much more aligned than you thought,

23:31

and there may be ways for you to each get

23:33

exactly what you're looking for. I'll give

23:36

you the example we talked about in the Kindle,

23:38

which was that the book publishers didn't wanna do

23:40

the work. To publish these digital books,

23:42

but they were certainly willing to give

23:44

us the rights to do it ourselves. And

23:46

what turned out, we had some technology that allowed

23:48

us to do that. And so I went in

23:50

asking them to publish these books digitally,

23:53

and I came out asking them to give us the

23:55

rights to publish the books ourselves. And

23:57

that was a great outcome for them because they didn't have

23:59

to do the work and a great outcome for us because we couldn't

24:01

do it without their

24:02

permission. So that was part of the solution

24:04

to get into hundred thousand titles on the Kindleite

24:06

launch. As you think about advising

24:09

portfolio companies now at Co2 and

24:11

them thinking about engaging in partnerships as

24:13

they start to grow their business, maybe see little

24:16

bit about the appropriate stage where this starts

24:18

to become relevant for a company. I would worry

24:20

a little bit if a company came to be a c

24:22

deck or something and said, we're gonna partner

24:24

with x, y, and z. I'd say, well,

24:27

that's for later. Like, we gotta build something

24:29

unique first. So when does it become relevant

24:31

in a company's life cycle? And then

24:33

I'll ask about the steps to do it

24:35

well. It's one of my favorite parts

24:37

by the way, about ventures. I've gone from player

24:39

to coach and it's been a real blast.

24:42

Honestly, the answer to that question is it's different

24:44

for every company. You're right. For the most

24:46

part, super early stage companies

24:48

aren't thinking about partnerships, but it depends

24:50

on the company and the product that they're building. A lot

24:52

of times, they will need an early partnership

24:55

to get them started in many cases,

24:57

these days, that might look like a partnership with

24:59

one of the cloud companies, for example. Certainly,

25:01

in AI, that's been a very hot

25:03

topic. And a lot of our AI companies

25:06

have been coming to me for advice on how

25:08

do I work with Amazon or Google or Microsoft?

25:10

And how do I navigate this whole landscape?

25:12

And you've seen what OpenAI has done with Microsoft

25:15

and others are now thinking about how to try

25:17

to replicate something like that. And that's great

25:19

example of where partnering can be totally

25:21

transformational. A total win win

25:23

for OpenAI and and Microsoft and

25:25

and lot of other AI companies, I

25:27

think, will be able to strike similar types of arrangements.

25:30

So it depends on the company. It depends

25:32

on the stage. You're right. As they get bigger,

25:34

companies tend to start to need partnerships

25:37

more. Facebook early on didn't

25:39

do a lot of partnerships. I joined when we had

25:41

about a hundred and thirty employees. The company was

25:43

a couple years old, and they were starting

25:46

to think about things like how do we work with media

25:48

companies who are calling us

25:49

saying, hey, we wanna have access to your users

25:51

and we wanna publish content into your system.

25:54

So those are some of the reasons that they ultimately

25:56

brought me on to help with

25:57

that. I

25:58

love this phrase. I think about it all the time. But

26:00

dark arts of building companies, dark

26:02

arts is not in a negative way. Almost feels

26:04

like a secretive formula that once you have it.

26:06

You're like amazed at how effective it is. I'll give

26:08

you an example. Chase and Pudagunta, I

26:10

talk about this all the time, but he gave me this notion

26:12

of the design partnership model and enterprise

26:15

SaaS where you pick very carefully

26:17

five early customers and you

26:19

commit to them that you're gonna build basically just

26:21

for them. You're not gonna take new customers beyond

26:24

them for a really long period of time they're

26:26

really gonna shape the product, and then you emerge with

26:28

this amazing thing. And this little design

26:30

partner playbook is counterintuitive, but

26:32

feels very dark Arty to me because it's

26:34

so damn effective. I've done it myself.

26:37

Is there some equivalent dark Arty concept

26:39

like that in partnerships that comes

26:41

to mind?

26:43

I love that. That's actually something that a lot of

26:45

our companies have done, and it's a great way

26:47

to try to prove some product market fit

26:49

early on. Yeah. I think in partnerships,

26:52

it's less formulaic. One of the things I really

26:54

like about partnerships and typically

26:56

what you find in partnerships are people who

26:58

are business oriented but

27:01

don't like the road movement

27:03

of a sales job. Sales is an

27:05

incredible job for people who are

27:07

amazing at turning the crank, and there are

27:09

people who are just cut out. That was the thing they were

27:12

born in on this planet to do.

27:14

If you're not interested in that, if you get bored

27:16

by that, partnerships is great because

27:18

it's super creative and open ended. And

27:20

there are ways to build repeatable

27:23

movements in partnerships. And certainly, a

27:25

lot of the partnerships at Facebook that

27:27

we worked on were very scalable if

27:30

you think about media companies, we worked with millions

27:32

of media companies and you have to build some motion

27:34

into that. But when you think about big strategic

27:37

partnerships or when you think about those

27:40

first early partnerships that you're gonna use

27:42

to build the larger platform behind,

27:44

those tend to be very open ended and you

27:46

have to be very creative about how you approach

27:48

them. And the people who do well

27:50

in partnerships tend to be good at the

27:52

business side, but also have real product

27:55

intuition. A lot of the people in my

27:57

organization at Facebook who worked in partnerships

27:59

ended up graduating into the

28:01

product or they would work closely with their product

28:03

counterparts on an area of the business for

28:05

a while and then the product team would say, hey, we think

28:08

you actually would do really well over here on the product

28:10

org. So you wanna find people who are

28:12

a hybrid of business and product

28:15

and are super creative and love the

28:17

open ended nature of

28:18

it. Why have I seen you say in couple

28:20

of different places that the best technology companies

28:22

drive strategy through product.

28:25

I really believe that. First of all, I

28:27

worked for Jeff Bezos and Mark Zuckerberg,

28:29

two of the greatest product

28:32

visionaries of the last fifty years.

28:34

And so I saw it up close. But I

28:36

also believe if you look across the

28:38

great technology companies that have been

28:41

built in the last fifty years. Most of them were led

28:43

by people who really deeply cared

28:45

about the product. The product in technology

28:48

the roadmap for the product drives the organization.

28:50

It drives the alignment across all

28:53

the people who work there. And you

28:55

don't need to come up with a big strategy

28:58

framework, all you have to do is describe where

29:00

you're trying to take the product and then immediately aligns

29:02

everybody behind what you're trying to do.

29:05

Obviously, those are two phenomenal examples.

29:07

But even beyond those two people,

29:09

what unites the communication layer

29:11

of that in these great leaders, one of

29:13

the most effective ways that you've seen people

29:16

create and disseminate a

29:18

vision like that, especially at a company

29:20

like Amazon where You just said Kendall

29:23

and AWS were being built at the same

29:25

time. Like, those are drastically different

29:27

products. And you could imagine the average person

29:29

in Amazon being like, what are we doing? These

29:31

are very different. So what have you seen

29:33

those great leaders do in terms of how they

29:35

communicate the vision? And I'm interested in strategy

29:37

and tactics. Anything you have to say about it

29:40

because it just seems so important. If that's gonna

29:42

be the way you communicate and it's product centric,

29:44

you gotta communicate unbelievably well.

29:46

What can we learn from those people that have done that

29:48

best?

29:49

Yeah. It gets back a little bit to what I was saying about

29:51

credibility. You have to articulate why

29:53

you're doing something in a way that

29:55

really smart thoughtful people are gonna buy into.

29:58

As an example, when Jeff got up in front

30:00

of the company and explained why we were gonna go

30:02

do AWS. That was very

30:05

nonconsensus at the time. This is a

30:07

retail company that a lot of people didn't even

30:09

think of as technology company, and we're gonna go build

30:11

this cloud technology platform that didn't

30:13

exist in the world. What gave us the

30:15

right to do that? But what he did is and I actually

30:18

still have the video of this all hands talk that

30:20

he gave because it was so I opened he

30:22

described all of the things that had to be

30:24

in place for Amazon to exist. Then there

30:26

needed to be a global fulfillment

30:28

network. There needed to be a credit card system.

30:31

They're needed to be the Internet. All these different

30:33

foundation layer technologies that had

30:35

to exist in order for Amazon

30:37

to be built in the first place in nineteen

30:39

ninety four when he started the company. And then

30:41

he went through all the foundational layers that

30:43

existed in two thousand four

30:46

that he believed made it possible for

30:49

a cloud to finally be built. And

30:51

he made the analogy to the early days of electricity.

30:53

He said, it used to be the case that in order

30:56

to own a store you had to have an electric grid

30:58

built behind your store and that's the equivalent

31:00

today of launching a website, you have to

31:02

build your own electric grid, which we call data

31:04

centers in order launch a website. And

31:07

you can't imagine that being case today, hundred

31:09

years later, because the electric grid exists,

31:11

we're gonna build the electric grid for

31:13

compute. Everybody just opened our eyes

31:15

to this idea that Actually, this does need

31:17

to exist. And why

31:19

not Amazon? Why not take this

31:22

incredible infrastructure that we built our own

31:24

data centers and pivot them into something that can

31:26

be a service to other companies. So you have to be

31:28

able to articulate the vision and the strategy and

31:30

it has to resonate. And then the second thing

31:32

that's really important is what

31:34

I saw with Jeff and Mark and what I've

31:36

heard about Steve Jobs and Bill

31:38

Gates and so many other great

31:41

founder, product, visionaries is

31:43

the level of detail. The

31:45

caring about the details really matters.

31:48

And I saw that with Mark in

31:50

that we would sit in product

31:53

meetings with him. He spent five days a week

31:55

sitting through product reviews. And he would

31:57

ask questions about the tiniest little details.

31:59

Why does this pay picks all over here, belong

32:01

there instead of over here, and challenge

32:03

the team on those

32:04

things. And to be a great product leader,

32:06

you'd have to care about those details.

32:09

It sounds obvious in one sense, but also

32:11

quite counter narrative, especially

32:13

around this idea. The best thing to do is

32:15

hire great people and leave them alone.

32:18

Trust them to do a good job. But what you just

32:20

described is micro management

32:22

of products. How do you resolve

32:25

those two interesting but very different ideas?

32:27

I think when it comes to product, the founder

32:30

has to micromanage. Unless they are not

32:32

a product founder, it's not a hard requirement.

32:34

But I think if you are a product founder, you

32:36

really have to micromanage the product. You have to care enough

32:39

about it that you're gonna get into the weeds. And I have

32:41

this conversation with the founders that I advise

32:43

and sit on the board all the time because they're

32:45

they're asking me, hey, you know, I hired

32:47

a really good product leader and they're asking me

32:50

to give them some space so they can run.

32:52

And my feedback is always, yes, of

32:54

course, you have to empower them. If you demoralize

32:57

them, they're not going to stay. But you

32:59

also have to explain to them that you're the CEO.

33:01

The product is the strategy. And at

33:03

the end of the day, this is something

33:05

that you have to be hands on with that's

33:07

your job. But at the same time,

33:10

You can't do that and do everything else. You can't

33:12

micromanage the whole company. And so you'd have

33:14

to hire great people around you who

33:16

are good at the things that you're not gonna spend as much

33:18

of your time on. Mark famously hired Cheryl

33:21

and let her run with a big part of the business,

33:23

and she was very good at it, and that was a great partnership

33:25

for a long time. So I wouldn't say being a great

33:28

CEO means being a great micromanager. I

33:30

would just say it means knowing where

33:32

to dig in on the things that you're

33:34

especially capable of helping and actually

33:36

matter the most to the company. Hopefully,

33:38

those things are aligned and being

33:40

willing to empower people to do the other things and

33:43

not waste your time on those things where other

33:45

people are actually gonna able to do better

33:47

at that than you

33:48

are, and it frees you up to spend your time on

33:50

the stuff that matters. So is the extractable

33:52

principle just highest and best use?

33:54

That is the advice for even if it's not

33:56

a product CEO, if it's something else,

33:58

be curious who pops to mind as a stunning

34:01

non product CEO. But is that

34:03

the advice that would be more

34:04

universal? Is just know and focus

34:06

on your highest and best use?

34:08

Yeah, I think that's a good way to put it.

34:10

When I posted this concept on

34:12

Twitter, one of the comments said, what about

34:14

Mark Benioff? Mark's actually a good friend of mine,

34:16

and I think the world of him And I would

34:18

argue that Mark is a product leader, but if you

34:20

had to describe him, you'd probably describe him

34:22

more as a sales and marketing genius.

34:25

I mean, he took a product that

34:27

was software product for salespeople and

34:29

elevated it into a company

34:31

that's so much more aspirational and

34:33

the Dreamforce conference and trailblazers

34:36

and all the things that he's built around that. And that's

34:38

just pure marketing genius. Highest

34:40

and best use is a good way to put it. The

34:43

founder, CEO, should focus on the

34:45

things that they are the best in the world at and

34:47

the most capable of doing, if it's a technology

34:49

company, hopefully that's if it's not product

34:51

directly, it's tied very closely to product

34:53

and then empower the people around them

34:56

to fill in the gaps. And it doesn't mean you

34:58

don't hire incredible people under you to do

35:00

the product Chris Cox, to me,

35:02

is the photonic ideal of a

35:04

chief product officer. And he and Mark

35:06

have had an incredible partnership for

35:08

now going on probably fifteen years.

35:11

It's not that Chris is not capable

35:13

of going into the level of detail that Mark goes

35:15

into on product. It's just that Chris

35:18

understands that marks the CEO. Chris's

35:20

job is to make sure that when they are

35:22

reviewing product that they're making the best

35:25

use of Mark's time, which means he's not spending time

35:27

on things that other people could be doing as well

35:29

or better than him, and that the two of them are

35:31

completely aligned and in lockstep. If

35:34

Chris disagrees, he disagrees and commits ultimately

35:36

if Mark decides to go in a different direction. So

35:38

you wanna hire incredible people under you.

35:41

You wanna make sure that they understand your role and

35:43

their role and that there's no space

35:45

between you.

35:46

We've started without me asking to build our

35:48

frankenstein okay deal executives, maybe starting

35:50

with Chris Cox. Where would Harvey Olavon

35:52

fit in that Frankenstein?

35:54

Yeah. So to me, Harvey is the

35:56

platonic ideal of someone

35:59

to really lead growth. He's from the

36:01

early days of Facebook understood

36:04

the data at a deeper level than

36:06

anyone in the company, and was able

36:08

to really, in a

36:10

very, very detailed way, push

36:12

on the different levers that help

36:14

the company grow. And ultimately, for us, growth

36:16

wasn't about growth because that's a good thing.

36:18

Growth actually meant making the product better.

36:20

The more people on Facebook, the

36:22

better the product was for the existing users

36:25

because they had more people to connect with. They had better content

36:27

coming into their news feed, etcetera. So that was

36:29

a really, really important part of making

36:31

the product work well, and hobby

36:33

was exceptional at it. And recently,

36:36

he was promoted to COO when Sheryl

36:38

stepped

36:38

down, which I think is a reflection of how talented

36:40

he is. What is it about

36:42

growth that requires its own

36:44

or its own expertise? Everyone

36:46

wants to grow, obviously. What are the underlying

36:49

things that separate wheat from chaff

36:51

in terms of the quality of growth people in

36:53

a company?

36:54

I think it's very, very detailed

36:56

understanding Obviously, not only ran the

36:58

growth word, but he also ran the data science word.

37:01

And growth fundamentally has to be

37:03

data driven. And it's hard. Looking

37:05

at a screen full of numbers, the best

37:07

growth people are able to really hone in

37:09

on the numbers that matter and focus on

37:11

how to move those numbers in the right

37:12

direction. And what about if we added Dave

37:15

Schneider to our Frankenstein as the final component?

37:17

You got partnerships. We've got Chris on

37:19

product. We've got Hobby on growth. We need

37:21

someone to sell everything. Dave Schneider

37:23

is my partner at Co2 who joined us a couple

37:25

years ago. He was the president and

37:27

chief revenue officer at ServiceNow for ten

37:29

years. And before that, a data domain

37:32

to me, Dave is the ideal

37:35

sales leader. She just understands how

37:38

to go to market, how to bring a

37:40

product to a customer, how to serve that

37:42

customer after you sell them the product, how

37:44

to close that loop. And our founders

37:47

who are running products that need to be

37:49

sold. And by the way, even companies

37:51

that start out more product led eventually

37:53

figure out that they have to sell too. Dave

37:56

just has them eating from his hand when he starts

37:58

talking about how to build a sales organization and

38:00

how to build sales DNA into your

38:02

company. It's hard because, again, in technology

38:05

companies, usually the product org

38:07

is the driver. The product org

38:10

drives the strategy. The CEO tends to

38:12

be more product driven. Sometimes in enterprise

38:14

sales companies, it can be more driven by sales. You

38:16

think about a guy like John Chambers at Cisco, but

38:18

for the most part, the sales org oftentimes

38:20

feel like second class citizens. And so you

38:22

need to have sales leader like Dave

38:25

or David Fisher at Facebook did this really

38:27

well. Cheryl and David together, that really

38:29

understands how to empower the sales team

38:32

and make them feel like their jobs are important while

38:34

also recognizing that they may

38:36

not be driving the

38:37

bus. That sometimes the company's gonna go in

38:39

direction that makes their job harder, but

38:41

that's okay. That might be the right decision for

38:43

the company and the sales team needs to figure out how to

38:45

support Do you think back on the time at Facebook?

38:48

What's the story of the most stressful

38:50

period of time for you at Facebook?

38:53

Oh, wow. Well, we went through a lot of those.

38:57

I was actually fortunate to have

38:59

gone through that period at Amazon when the company

39:01

almost went bankrupt. I think that experience

39:03

really served me well because when

39:05

I got to Facebook, we experienced

39:08

a number of existential moments. In fact,

39:10

I joined the company in the summer of

39:12

two thousand six. When I got there,

39:15

I found out that we had plans to

39:17

ship two new products in the coming

39:19

months that we're gonna potentially transform

39:22

the company. One, we were gonna open it

39:24

up to anyone, not just people with college

39:26

email addresses. And two,

39:28

we were gonna launch newsfeed. And at the time, in order

39:30

to see what was going on in your friends, you had to click

39:32

around to their profiles. And so these two

39:34

products were on the road map and were scheduled

39:37

to be released a week apart sometime

39:39

in October. I'd been there a couple months.

39:41

I just moved my family from Seattle to

39:43

Palo Alto. I had three young kids at the time.

39:46

I went to work for this twenty one year old kid.

39:48

My I was in my mid thirties, and

39:50

we shipped newsfeed and famously or infamously

39:52

now, our community revolts. They

39:55

hated it. They felt like it was a privacy

39:57

violation. A lot of the people

39:59

at Facebook at the time were

40:02

trying to convince Mark that we should turn it off.

40:04

We have to roll this back. We're gonna kill

40:06

the company over this. And he was, again,

40:08

just resolute this is the right thing.

40:10

We may not have launched it the right way, but it's

40:12

the right thing long term. We need to hold

40:14

our ground. We can tweak it and make it

40:16

better and explain it better to

40:18

people, but we can't give up on it.

40:20

And sure enough, within few days, the

40:23

storm quieted down, people started to get a

40:25

little more comfortable with it. We did make changes to

40:27

make it better. But more importantly, it

40:29

was completely clear from the data that people

40:31

loved it. Because all of a sudden,

40:33

instead of coming back to Facebook two or three times

40:35

a day, people are coming back to Facebook ten or fifteen

40:37

or twenty times a day. Never in my

40:40

career seen a switch flipped that

40:42

quickly on a product where it just

40:44

went from one thing to something completely different

40:46

the next day and everybody was fully

40:48

engaged with it. The challenge was

40:50

we were now scheduled a couple days later

40:53

to ship what we called open registration,

40:55

which was to open the service up beyond college

40:57

and we knew that that was also gonna be controversial

41:00

because for the first time your mom was gonna be able

41:02

to get on Facebook and if she asked you to

41:04

be friends with her and you and she's gonna be able to see all

41:06

the stuff you're posting. And so I went to Mark

41:08

and I said, hey, really respect you for

41:11

having the courage to see this news

41:13

feed thing through, and I really supported you through that.

41:15

And I believe that that was the right decision, and I'm glad

41:17

we held our ground. But I have to tell you,

41:19

I think it's a mistake to ship open registration

41:21

in two days. Because we just got through this.

41:23

We need to give our community a chance to

41:25

absorb and get comfortable before we

41:27

do the next big shock to the system. And he goes, no,

41:29

you're totally right. Was thinking about this too,

41:31

and I'm really glad you said something. And,

41:34

yeah, we're gonna wait until next week to ship

41:36

open registrations. And

41:39

so, sure enough, we did, and it

41:42

turns out our community loved it. There wasn't

41:44

a lot of pushback. And in fact, all of sudden,

41:46

as I was saying earlier, the more people on a social

41:48

network, the better the product, more people

41:50

you can connect with. When I joined that company,

41:53

we had seven thousand new users a day,

41:55

and we had thirty thousand people a day who

41:57

were trying to sign up for Facebook, who were being

42:00

told that they couldn't use the service. Have you ever

42:02

heard of business that's turning away four

42:05

or five times as many people as their wrapping

42:07

in the door as customers. And the

42:09

day we flipped the switch on open registration,

42:11

all of a sudden, we had thirty seven thousand

42:13

new users a day. But very quickly,

42:15

within a month, we had seventy thousand new users

42:18

a day because of those network effects. And

42:20

within six months, we had hundreds

42:22

of thousands of new users a day, and it

42:24

just continued to grow like that exponentially. It

42:26

was definitely better for the product

42:28

and the people on the service loved

42:30

it. I had a really interesting conversation with

42:32

Myles Grimshaw from Benchmark the other day and

42:34

we're joking about the different business models and tech.

42:36

And he said, if you're really cynical about it, you might

42:38

just say you kinda only wanna back database

42:40

companies and network effects companies. Those are

42:42

two things that really are enduring and indelible.

42:45

What do you think about that? When do you think about the business

42:47

models behind the companies you've been involved

42:49

with? Facebook's is so obvious. It's almost boring

42:51

to talk about everyone gets the network effect

42:53

now. Amazon's is definitely different and more

42:55

nuanced. But in general, how do you

42:57

think about with all your operating

42:59

experience,

43:00

great versus good, guess

43:03

versus bad business models and tech.

43:05

Obviously, network effects are

43:07

super powerful. And if you have one,

43:09

it can create a huge mode, and it's probably

43:12

the best mode you can build around any business.

43:14

Interestingly, in the early days of Amazon,

43:16

eBay had a much better flywheel than

43:18

Amazon. Amazon was more of a straight

43:21

up traditional retail business. EBay

43:23

had this two sided marketplace and that's

43:25

its own version of a network effect. The more

43:27

buyers you get on the platform, the more sellers

43:30

wanna be there, and more sellers there are, the more buyers

43:32

wanna be there. That was the reason why in Actually,

43:34

eBay after Amazon. But

43:36

in the early two thousands, when Amazon was

43:38

really struggling, eBay's market cap was five

43:40

or six times Amazon's market cap. And so

43:42

then you have to ask yourself the question, well, how is Amazon

43:45

able to come back from that and

43:47

ultimately prevail? And

43:49

I think that that comes down to a

43:51

second thing that's undervalued or underestimated

43:54

in startups, which is just perseverance

43:57

and execution. And

43:59

Jeff navigated this very narrow

44:01

path to being able to out

44:03

execute eBay and then ultimately made

44:05

the right set of decisions that allowed

44:08

Amazon to start to incorporate that two sided

44:10

marketplace into the business, even

44:12

at the risk of potentially harming the core

44:14

business. Again, Kendall asking that way,

44:16

by putting third party listings on the same

44:19

page as first party listings, very, very controversial

44:21

decision at the time, especially among the retail

44:23

team. And I was on that retail team when that happened, and

44:25

it was hard. You're telling a buyer. Hey,

44:28

by the way, buy this inventory and

44:30

forecast how much you're gonna need based

44:32

on what price you're gonna sell it at and

44:34

how you're gonna discount it and market it.

44:37

But also, by the way, if someone else comes along

44:39

with a better price than you, they're gonna get the buy button,

44:41

and it's gonna completely blow up your

44:43

inventory plan don't miss your inventory

44:46

plan, your job is to get it right and figure

44:48

it out, and we're gonna hold you to a higher standard

44:50

even though it's totally unrealistic. So

44:52

I think execution matters I

44:54

think network effects help a lot. And

44:56

then the third thing is I just go back

44:58

to this idea that ultimately in

45:00

technology great products win. And

45:02

so even if you don't have

45:04

a perfect network effect. If you

45:06

build a great product and people love

45:09

what you're offering

45:10

them, and you continue to innovate and you

45:12

continue to focus on the little details, you can

45:14

build a great company. If you had

45:16

the two of those guys in a room for a whole day,

45:18

Jeff and Mark, what topics do you think

45:20

they would most

45:21

disagree? Well, they're very different.

45:23

And I think they're similar in

45:26

the ways that I've described, but they're very,

45:28

very different personalities. I don't know what

45:30

they would disagree about, but can

45:32

describe the differences to you. You, Jeff,

45:34

was extraordinarily short-tempered

45:37

and had a sense

45:40

that he was always frustrated.

45:43

He just wanted to go faster and

45:45

he wanted it to happen sooner and he wanted

45:47

it to be better And if he didn't get

45:49

what he wanted, he would be really upset. And

45:52

he also came from a background where he was

45:54

at a hedge fund before starting Amazon.

45:56

He had technology experience and

45:58

computer science experience, but he also

46:00

much more business oriented. He had this brilliant

46:03

business mind that he

46:05

brought to the discussion and a lot of the conversation

46:07

started with, well, what's the ultimate business here? How do

46:10

we make money from this? Mark is

46:12

much more patient, not to say that he suffers

46:14

fools. He'll end a meeting early if he doesn't

46:16

think it's productive, but he'll do it in the nicest possible

46:18

way. And he's willing to sit

46:20

and work through stuff even if he's not super happy

46:23

with it and just keep grinding on it until he

46:25

feels like we get to a good outcome. And

46:27

he's definitely less business oriented

46:29

in the sense that he just wants to build great products

46:31

and he believes deeply that if we do that over

46:33

time, we'll figure out how to make money from it. And you

46:35

see WhatsApp today, ten years later

46:37

from the acquisition still hasn't

46:39

figured out how to make money, but believe

46:42

me, I'm certain that they're in meetings all the time

46:44

with Mark grinding on that question. And

46:46

he knows, in his mind, that's gonna eventually

46:49

be a huge revenue driver. He just needs to

46:51

figure out the right way to do

46:52

it. Having worked with great

46:54

investors like Yuri Milner and others and

46:56

now having switched team, so to speak, and

46:58

spending your time on the investing side. What do

47:00

you think is the right way

47:02

for investors to interact with these kinds

47:04

of companies. We talked earlier about the platonic

47:07

idea of a great product person or a great this

47:09

or a great that What is the photonic ideal

47:11

in your view of a great investor?

47:14

Well, I think there's three personas here.

47:16

One is I to work for one of the great investors

47:18

of all time, Feliprant, who started co two in

47:20

nineteen ninety nine, is a brilliant,

47:23

very, very big picture visionary type

47:25

of investor. And I will say, running a

47:27

hedge fund, which is what co two was for the first

47:29

ten years, very different

47:31

from venture investing. Every

47:34

day, you are winning or losing

47:36

based on what your performance is. And I think

47:39

the best managers are really, really big thinkers.

47:41

They really understand both the broad

47:43

macro as well as they're

47:46

able to dive in at the detailed

47:48

model level to an individual company and

47:50

unpack it and really try

47:52

to get at? What's the core of what drives

47:54

this business? What happened in the

47:56

early two thousand tens is that a lot of

47:58

these private companies like Facebook were

48:01

staying private for so long that

48:03

they actually look more like a public company even

48:05

though they were not listed. And

48:07

Philippe and his brother Thomas, who's the co founder

48:09

of co2 with him, realized that

48:11

it was important if you're gonna

48:13

be investing in technology companies, it was

48:15

important to also be participating in

48:17

the private market as well. And so Thomas

48:20

moved to California from New York opened

48:22

up the co two West Coast office. That's

48:24

when companies like Facebook and

48:26

Snap and others were starting

48:28

to really mature in the private markets. And

48:30

so I think you can apply a lot of those

48:32

public market insights as an

48:34

investor into late stage growth investing.

48:37

Because a lot of the same drivers are what

48:39

move these companies. You look at a stripe today,

48:41

it's thirteen years old, and it's still a private

48:44

company, but the best people to really evaluate

48:46

what's right is worth are people who

48:48

invest in the public markets. And so I really

48:50

believe that that's an important skill to have

48:52

in order to do late stage growth investing. Then

48:55

I think you have the second persona, which

48:57

is career venture investors. And

48:59

these are people who all

49:01

they wanna do in life is invest in startups.

49:03

They're smart enough and lucky enough

49:06

to be able to do that pretty early

49:08

in their career. And they develop

49:10

an incredible muscle around just that

49:13

understanding of what drives success

49:16

for startups, and how do you pattern match against

49:18

founders and business model, and how

49:20

do you build out the analytical capabilities

49:23

to really help companies succeed because they do need

49:25

that even at the earliest stages. Do

49:27

you see a lot of those people in Silicon Sally,

49:29

who are just incredibly successful and

49:32

have done it their whole lives. And we have some

49:34

of those folks that are to like Michael Gilroy

49:36

and Lucas Swisher, who are just professional

49:38

investors and are really capable

49:40

at identifying and helping startups. And

49:42

then the third, which is my persona,

49:45

is lifelong career operator, turned

49:47

investor who brings to

49:49

the table their experience with

49:52

working at great companies and learning from great

49:54

founders and running these different functional

49:56

areas like partnerships or sales. We

49:58

mentioned Dave Schneider, who's another operator

50:00

turn investor at code two. We have Shri Voswana,

50:03

who was the CTO of Atlassian, Karen Maroney,

50:05

who ran global communications with me at Facebook

50:08

and started outcast before that. One

50:10

of the top agencies and Valley, and

50:12

she works with a lot of our PLG startups

50:14

and open source. And so I think if

50:16

you can bring those three pieces together, I think

50:18

you can really stitch together this full life

50:20

cycle

50:20

strategy, which is what we've done.

50:23

There's an investor named Charlie Songhurst, who used to

50:25

run strategy for Microsoft and has this

50:27

wonderful way of talking about the East

50:29

Coast versus West Coast mentality and

50:32

style of investing as you go

50:34

from east to west. The quantitative bleeds

50:36

into the qualitative and it's interesting

50:38

to have watched in the last couple of years

50:41

the relative power of those two,

50:43

one, the style of investing, but also the style

50:46

of success where

50:48

a couple years ago, I think for sure you

50:50

would have said qualitative is in the clear

50:52

lead. Investors are backing anything

50:54

that's a big idea there's not a lot

50:56

of napkin math going on. There's ideas

50:59

and capital is flowing freely. We're now

51:01

in a very different environment where I would say probably

51:03

the pendulum has swung back towards Wall Street.

51:05

And the East Coast, much sharper pencils,

51:08

much more talk of capital allocation versus

51:10

product. The battle continues here.

51:13

Against that backdrop, how would

51:15

you describe the environment that we're in?

51:17

You've seen a lot. You've existed in both

51:19

sides of the pendulum. If you're talking

51:21

to a group full a hundred founders or something

51:23

in an audience, what would you describe

51:25

to them that is really important for them to know

51:27

about this environment and how it changes or should

51:30

change their

51:30

behavior? Well, certainly,

51:32

things have changed in the last year, obviously. And I

51:34

think founders have really come around to this.

51:37

It's a different environment. I think it's healthier

51:39

environment, frankly. Because everything's

51:41

slowing down a little bit. We have time to process

51:44

and really work with our companies and

51:46

help them build sustainable businesses.

51:48

And I think there's a little more pressure on people to focus

51:50

on that now and understand that at the end

51:52

of the day, what we're trying to do here is

51:54

build for the long term, not the short term. But

51:56

I will say this about qualitative versus quantitative.

51:59

There's no question at co2. We have

52:01

brought a lot of that DNA that

52:04

quantitative analytical DNA

52:07

into early stage investing. When

52:10

I joined the firm, which was four years ago,

52:12

Thomas Laffon had just for

52:14

the first time said, hey, we're gonna start doing seed

52:16

and series a investing here. And

52:18

he and I talked a lot about what the strategy

52:21

was and we were gonna differentiate because

52:23

that's a very crowded market. So how

52:25

do you differentiate in that market? One of the

52:27

ideas was to bring in people like me and now

52:29

we brought in multiple people who have differentiated

52:32

experience, put them together with these professional

52:34

investors. But two was we said, look,

52:37

we have this incredible data science platform

52:39

how do we apply that to early stage investing?

52:41

And what we realized is you might be able

52:43

to use that data science to give you an edge

52:45

and identifying founders who are starting

52:48

companies that might be high probability of success

52:50

for companies that are starting to inflect at the early

52:52

stage. But actually, the best thing you can do

52:54

is hand that data off to your founders

52:56

and let them use it to run their business.

52:59

And so we flipped the screen around, and we said,

53:01

hey, why don't you guys take this data and figure

53:03

out what you can do with it? And it's been hugely

53:05

helpful to our company. So I think

53:07

that sometimes it's a little bit of a myth that,

53:09

like, early stage is all about the

53:11

art of investing and the public company

53:13

is all about the science of investing. I actually

53:15

think our strategy is

53:18

to blend both. And I will tell you in

53:20

conversations that I have with our public company

53:22

team, those conversations are every

53:24

bit as much about how good is the founder,

53:27

how big of a trend are we in, how high of

53:29

a quality is this business model, the

53:31

same kinds of conversations we have at the

53:33

series a. Obviously, there's a lot more data

53:35

to analyze in a public company. So you're

53:38

combining that with the analytical side as well.

53:40

Obviously, I'm a person that loves questions. I

53:42

love collecting them. I love having iPhone Note

53:45

stored with them just as conversation starters.

53:47

I've seen you cite a question and I think it's just totally

53:49

fascinating. think it was one of Bezos's early

53:52

favorite twitches to ask people whether or not they were

53:54

a lucky person. I'd love me to talk a little

53:56

bit about that question. But more generally, I'd love to

53:58

hear other questions that you love

54:00

most, that you love asking people most in different

54:02

contexts? I always thought that was

54:05

just such a great interview question because

54:07

it tells you so much about people. I

54:09

didn't interview with Jeff. I wasn't senior enough

54:11

to be hired into a role that he would interview for,

54:13

but I heard from other people that that was

54:15

something that he would ask. And there's no

54:17

question that that reveals a lot

54:19

about people. And and I think we make our own

54:21

luck. If you believe you're a lucky person,

54:23

then you're more likely to end up being successful

54:26

and he was looking for people who really believed in

54:28

themselves. And frankly, it takes a lot

54:30

of luck to go from being a startup to

54:32

successful company. You gotta catch some breaks.

54:34

You have to be at the right place at the

54:36

right time. And so if you

54:38

wanna increase your chances of catching those

54:40

breaks, hire a bunch of people who

54:42

are really lucky. And I think

54:44

he was able to do that by asking that question

54:46

to people. I think that you learned a lot

54:49

about people by asking them who

54:51

influence them the most. You get those kinds

54:53

of answers that you're getting from me about the

54:55

people that I worked with and the things that they taught

54:57

me and what I took from that and how I apply that to

54:59

my life or to my

55:01

business. So I spent a lot of time on that question.

55:03

Well speaking of the question, one

55:05

of the things that has always frustrated me is there's

55:07

so much in lore about Suckerberg

55:09

and about Bezos and very little about Sheryl

55:11

Sandberg who obviously drove

55:14

a huge chunk of a massive business

55:16

as success. Obviously, she wrote a book and

55:18

that was instructive, and you can read that.

55:21

But there's much less in the lore out there

55:23

about what made her so effective. So

55:25

it's a great excuse to ask you since you work closely

55:27

with her for a long time. What is it about

55:29

her

55:30

style, her method? I'm sure she

55:32

influenced you that made her so

55:34

effective? Well, I'll just tell quick

55:36

story because it's actually, for me, it's the canonical

55:38

story of my entire career. This was the most

55:40

important moment in my career,

55:42

and the make or break moment in my career. Which

55:45

was right when Sheryl joined Facebook. I had

55:47

already been at the company for a year and a half, and before

55:49

that I had spent six years at Amazon. And

55:51

in that entire time, that was the totality

55:54

of my professional career working for

55:56

big companies. I had never really had a performance

55:58

review. Amazon had sort of a version of it,

56:00

but it wasn't that organized the company was just

56:02

trying to survive. And certainly in the early days of Facebook,

56:05

we didn't have that. And Cheryl was there for about

56:07

a month, and she brought me and she said, I've now

56:09

met everyone at company. There were four hundred people

56:11

when she joined and all the senior team. And

56:13

I really think you're super talented and I wanna

56:15

give you more responsibility, which was to me,

56:17

that was the thing I had been waiting my whole

56:20

career to hear from somebody that they

56:22

really believed in me and that they wanted to promote

56:24

me. And so I was so excited. And she said, before

56:26

I do that, I wanna make sure that I'm seeing

56:28

the same thing that everyone else has seen, so I'm gonna do

56:30

a three sixty performance review. And I

56:32

thought, wow, that's great. I'm excited because

56:35

I'm awesome. And I can't wait to hear about other

56:37

people telling me how awesome I am. So she

56:39

sends out request to everyone who

56:41

works for me and all the people that I worked

56:43

with as peers at the time the senior

56:45

leadership team of the company. And she

56:47

brought me into her office a week later, and she said,

56:50

Dan, we have a huge problem here. This

56:53

is not only a bad review. This

56:55

is one of the worst reviews I've ever seen in my career.

56:57

And it literally felt like

57:00

somebody had kicked me in the gut. I mean, I was

57:02

almost out of wind, out of breath when I

57:04

heard her say that. What she said was, look,

57:06

what I'm seeing is that people really believe

57:09

and respect your ability as a

57:12

negotiator as a business development person.

57:14

You're extremely highly skilled in that

57:16

area, but they don't trust

57:18

you. And they think you're

57:20

political and they think that you are primarily

57:23

focused on yourself and not on others.

57:25

And that's real problem. And she said not only

57:27

can I not promote you, But if you don't

57:29

fix this, I can't have you at Facebook? I

57:32

can't have somebody in a senior leadership of Facebook

57:34

with this kind of reputation. And so

57:36

it was obviously devastating. I'd spent

57:38

a couple days going deep into how

57:40

do I rectify this. And ultimately,

57:43

I realized that the thing I need to do is

57:45

go sit down with everybody and

57:47

ask them to give me that feedback

57:49

directly and to help me not just in

57:51

that meeting. But in the moment when I was doing

57:53

those things, point them out to me so

57:55

that I could start to change the behavior. And

57:57

it did two things. It showed some vulnerability

57:59

with them that was wanting to acknowledge this and that

58:01

I wanted to change. But also more importantly, it

58:03

actually got people to start to give me feedback

58:06

which allowed me to see the bad behavior that

58:08

I was doing. But the reason I tell that story

58:10

is because think about what it took

58:12

for Cheryl to do that. How many

58:14

leaders would do that? Both identify

58:16

my capability and give me a chance, but

58:18

also then give me the really hard feedback

58:21

as uncomfortable as it is. Even

58:24

just to ask for the feedback in the first place and then

58:26

to give it to me. And then, of course, she gave me the

58:28

space. She helped me get a coach. She herself

58:30

coached me through it. Over the next couple

58:32

years, I was able to fix a lot of those things. And

58:34

frankly, I would have never gone on to have the career

58:36

that I had at Facebook over the next ten years if

58:38

it hadn't been for that feedback. That's the thing that makes

58:40

her so exceptional is that she is

58:43

the single best people manager

58:45

I've ever worked with in my career. She

58:47

just cares so much And Karen

58:50

doesn't just mean being a cheerleader.

58:52

Karen means also

58:54

giving the hard feedback when it's necessary

58:56

so that people can grow and change, and she was exceptional

58:58

at that. How did that manifest after

59:00

that initial episode? So I get how

59:02

difficult that was, but assuming she

59:05

continued to have a positive impact on you and

59:07

shape you and get the most out of you, what

59:09

were the other things that she did

59:12

once she had established that baseline which

59:14

sounds brutal? But I'm sure there was more. So

59:16

what else happened that you think highlights that key point

59:18

about her managing talent?

59:21

She was religious about

59:23

her weekly one on ones with every single

59:25

person on her team. In the midst

59:27

of all the chaos and how fast we were

59:29

moving and how busy everyone

59:31

was, she never missed a one on

59:33

one with any single person on her team. And if

59:35

she was in town, we were sitting down in her office

59:38

every single week for a half hour to talk about

59:40

things, which allowed us to stay completely

59:42

synced up she did the same with Mark.

59:44

She was always getting synced up with him.

59:46

And so she just threw her

59:48

exceptional people management skills. She

59:51

kept the company organized, which

59:53

is to say she just kept everyone aligned. She

59:55

was the bridge between the product and the business

59:58

and she was the bridge between Mark and the rest of the

1:00:00

company. She was the bridge between

1:00:02

the senior leadership vision and

1:00:04

direction and the actual operational execution

1:00:07

of that and And she did that by building

1:00:10

relationships and being

1:00:12

disciplined about how to manage those

1:00:14

relationships in a scalable way. She,

1:00:17

by the way, went on after that experience

1:00:19

with me to implement a three sixty

1:00:21

review process for the entire company,

1:00:23

which they still do to this day, and

1:00:26

every single employee has the opportunity to

1:00:28

get that feedback and to grow from

1:00:30

that. We've obviously talked

1:00:32

about extremely famous companies

1:00:34

so far in our conversation, but you began

1:00:36

your career at a company called Life mastery,

1:00:39

which was a company that sold seminars

1:00:42

on, you can imagine, personal growth. What

1:00:44

is the story there? Why did you go there?

1:00:46

Did they teach you about business and storytelling

1:00:49

and I guess personal growth? It just seems like

1:00:51

after so many big tech

1:00:52

companies, I thought I'd throw a wrench in the works

1:00:54

here with discussion of Life Mastery.

1:00:57

I love it. I love talking about Life Mastery. So

1:00:59

you can imagine this as like a Tony Robbins

1:01:01

esque type of company. What

1:01:03

happened was I was at Harvard as

1:01:05

an undergrad, and I was

1:01:07

very successful on the outside, but like

1:01:10

many of us I had a lot of anxiety,

1:01:12

and my parents could see that. And they

1:01:14

offered to send me to one of these seminars. They happen

1:01:17

to know the guy who taught the seminars because

1:01:19

he had run a business prior to that that they

1:01:21

were client of and my dad came to me and

1:01:23

said, hey, if you wanna go do this, I don't wanna do

1:01:25

it because it sounds scary to me, but I'll send you

1:01:28

and you can go check it out for us. So I went and did

1:01:30

this week long seminar and it really opened my

1:01:32

eyes to a lot of things around

1:01:34

what drove me and the group therapy

1:01:36

type of environment. Well, anyway,

1:01:38

I got really into it. I love the ideas

1:01:40

behind it. The guy who led it was very much

1:01:42

a student of Karl Young and Joseph Campbell.

1:01:45

And I was studying sociology at the time, so I started

1:01:47

reading up on them. And a lot of those ideas

1:01:49

really started to resonate for me. So

1:01:51

after four years of college, I was on

1:01:53

a track probably in college to go to law school.

1:01:56

And become a lawyer that seemed like the straight narrow

1:01:58

path for me. But largely

1:02:00

because of the inspiration of this seminar that I

1:02:02

had experienced, decided to not do

1:02:04

that, but I didn't know what I wanted to do. And

1:02:06

so I called the guy who ran the seminars

1:02:08

and I said, hey, can I just come work for you? And I'll

1:02:10

do it for a meager salary, and I don't

1:02:13

know what I can do to help you, but I'll come help you.

1:02:15

I thought that that would be like a graduate school

1:02:17

experience in life and philosophy and

1:02:20

spirituality. And what I found was

1:02:22

after six months, I was actually

1:02:24

much more interested in the business. It was a small

1:02:26

business. There were, like, eight employees,

1:02:29

but I really like how you sell

1:02:31

the product and generate revenue and then what your

1:02:33

costs are and how you generate profit from that.

1:02:35

And that's what put me on the path to going

1:02:37

into business. I ultimately went to business school, and then

1:02:39

I was lucky enough to get an internship at Amazon

1:02:41

where I stayed on and built a career from that.

1:02:43

But those lessons that I learned early

1:02:45

on, both as a student, but

1:02:48

then also working for the company and getting to

1:02:50

help teach these seminars or be

1:02:52

assistant at the seminars. Those lessons

1:02:54

have stayed with me my entire career. And

1:02:57

the lessons are we're all human. We all have

1:02:59

our own issues that we deal with every day.

1:03:01

And how we communicate and how we engage with

1:03:03

each other are driven by a lot of that.

1:03:05

Even if it's not obvious and on the surface,

1:03:07

they're there behind it. And if you can break that

1:03:10

down a little bit and get a little bit closer to

1:03:12

who the other person is, you can build a

1:03:14

bond in a relationship that can really go much

1:03:16

deeper and can allow you to do things together that you

1:03:18

wouldn't have been able to do. So at Facebook,

1:03:20

I actually started training program

1:03:22

called Flow. And we would take

1:03:24

our senior team and my organization

1:03:27

through two days this was a business setting,

1:03:29

so we're not doing hardcore therapy.

1:03:31

But we would take them through uncomfortable

1:03:34

exercises where they were vulnerable with each

1:03:36

other and show them what was possible

1:03:38

when you were able to really connect with somebody on a

1:03:40

deeper level much deeper than the surface

1:03:42

level day to day that we experienced at

1:03:44

work, and it was very impactful.

1:03:46

What's an example of an exercise like that that

1:03:48

was effective? Well,

1:03:50

we would start off each of these two day

1:03:52

sessions with me being interviewed by

1:03:55

the group that was training us. And

1:03:57

she would sit there in front of ten or fifteen

1:03:59

people in my organization. These are senior

1:04:01

people, manager level people in my organization.

1:04:03

And she would ask me questions like, can you

1:04:05

share with us something right now that's going on in your life

1:04:08

that's really upsetting for you? These are not the kinds

1:04:10

of things that we often talk about at work.

1:04:12

But at the time, my mom had Parkinson's

1:04:15

and was obviously not doing well. And

1:04:17

was worried about her health and how long

1:04:19

she was gonna live, or my sister

1:04:21

was going through a divorce and talked about

1:04:23

that experience person she married would happen to have

1:04:25

been one of my closest friends. My son

1:04:27

had some anxiety issues, and I talked

1:04:29

about that. When you start talking about these things,

1:04:32

with people who you work with every day

1:04:34

and who, by the way, look at you oftentimes

1:04:37

as being on a pedestal. I'm the guy who

1:04:39

stands up on stage and tells the team,

1:04:41

hey, this is the hell we're gonna go take, and this

1:04:43

is the strategy that we have. But to realize

1:04:45

that, yeah, I have those issues too. And by the way,

1:04:47

everybody in that room has them, and then to

1:04:49

be able to connect that that level really builds

1:04:52

a bond. And I had people come to me after

1:04:54

those sessions and say, I was actually on my way

1:04:56

to resigning from the company, but after this experience,

1:04:58

I decided to stay because I just think

1:05:00

I'll be able to have this culture anywhere else.

1:05:02

I've had lots of people after the fact since

1:05:05

I left Facebook, reach out to me and say, hey,

1:05:07

that training you did or that talk you gave was

1:05:09

one of the most impactful of my life. So it's been

1:05:11

really rewarding for me and it's something I really

1:05:13

care a lot about. And that story I told

1:05:15

about the feedback from Cheryl subconsciously,

1:05:19

my response to that was definitely inspired

1:05:22

by my experience in those seminars because what I

1:05:24

knew was that the only way for me to

1:05:26

break through with people who now don't trust me

1:05:28

anymore is to just be vulnerable with

1:05:30

them and to share with them that this

1:05:33

is really hard for me to hear this is not who

1:05:35

I believe I am in my core, but obviously

1:05:37

my behavior is telling them something different.

1:05:39

Those conversations completely turned around

1:05:41

that situation for me.

1:05:43

We take all the lessons we talked about today and

1:05:45

apply them to today, now

1:05:48

the kinds of people you're trying to back at Co2

1:05:50

and work with and support, do you think

1:05:52

we'll define the next generation of

1:05:55

these kinds of leaders like Zuckerberg

1:05:57

or like Bezos, like Sandberg, like all these people

1:05:59

we've talked about Is it anything different

1:06:02

than what define that generation? Is it just

1:06:04

the same principles over and over again? Or do you think

1:06:06

there's something more nuanced to consider?

1:06:10

I personally think it's a lot of the same

1:06:12

principles and that's why

1:06:14

I love what I do because my job is

1:06:16

to find those people

1:06:19

and then coach them and try to help them along the

1:06:21

way. And I tell these stories that I'm sharing with you

1:06:23

today all the time in my one on one with

1:06:26

CEOs where I'm on the board or where we have

1:06:28

investments. I think of my job as trying

1:06:30

to grow them into these next generation leaders.

1:06:32

The fun part is there's so many

1:06:35

more companies being started now. There's so much

1:06:37

more opportunity. The scale of the

1:06:39

market is so much bigger. And

1:06:41

the inspiration are all there. People

1:06:43

grow up now wanting to become the next Mark

1:06:45

Zuckerberg or Jeff Bezos. And so

1:06:47

it's really fun for me. I think it myself is having

1:06:50

gone from play in a position. I was

1:06:52

a position player. Right? I was I think of

1:06:54

like a steep curve who was position player

1:06:56

at the highest level. And now

1:06:59

is a coach at the highest level. And that's

1:07:01

my aspiration. I wanna be a coach at the highest level.

1:07:03

And the fun thing for me is I get to coach our founders,

1:07:05

but I also to coach our team at Co2.

1:07:08

And that was part of explicitly the

1:07:10

arrangement that Thomas and I had when I joined

1:07:12

was hey, I love building things. And

1:07:14

most investment firms don't think of

1:07:16

themselves necessarily as company.

1:07:19

It's an assemblage of humans that

1:07:21

are all individually working on things why it's

1:07:23

called a firm. I thought and Thomas

1:07:25

and Philippe were really aligned with this that

1:07:27

actually there is an opportunity here to

1:07:29

build something that is more of an institution.

1:07:32

Because can't just say, oh, well, let's do all the

1:07:34

things that we did in our corporate environment

1:07:36

here because that wouldn't work and it would smother a lot

1:07:38

of the things that make from, like, GoTo

1:07:41

Great. But there are a lot of building blocks that

1:07:43

we put in place since I joined. And you

1:07:45

can just see how GoTo itself has

1:07:47

grown over last four or five years and

1:07:49

this success that we're having now as a

1:07:50

result. So it's really fun for me to be

1:07:52

able to do that both inside of code two and

1:07:55

outside. If you could build one

1:07:57

product inside of an investment firm,

1:07:59

Côtour, otherwise, that to your knowledge doesn't

1:08:02

currently

1:08:02

exist, what product would you build? That's

1:08:05

an interesting question. Mean, I think we kinda

1:08:07

did this a little bit with our data science platform at

1:08:09

Côté, like I talked about earlier. And the other

1:08:11

thing I think we did, that's very interesting and

1:08:13

is now very much trend, but it wasn't at the time

1:08:16

was we said, why can't we do everything

1:08:18

from seed through public company investing? And

1:08:20

by the way, if founders need help with

1:08:22

other parts of their business. We should be open

1:08:24

minded to that too. We recently started doing structured

1:08:26

equity, which is becoming really important in

1:08:28

this environment, especially why

1:08:31

can't we just think of ourselves as

1:08:33

business builders rather than just investors

1:08:35

and add new products and add new

1:08:37

solutions all in the name of

1:08:40

supporting founders and building great companies

1:08:42

and serving our LPs. I guess

1:08:44

one way to answer your question is to say, I don't

1:08:46

know, but I do know that if

1:08:48

there's a product out there that should exist,

1:08:51

I think there's a good chance that we will

1:08:53

find it and go build

1:08:54

it. Good place to wind

1:08:56

down the conversation. I have to turn to my traditional

1:08:59

closing question. What is the kindest

1:09:01

thing that anyone's ever done for you?

1:09:03

Well, when I was ready to

1:09:05

move on from Facebook and start doing

1:09:07

investing, I was really unsure

1:09:10

about what and how

1:09:12

to do that. And I considered a lot

1:09:14

of different possibilities and talked

1:09:16

to a lot of different people. Thomas

1:09:19

Lefon was one of my friends at the time.

1:09:21

We were close, not as close as we are today.

1:09:23

But he talked me out of

1:09:25

going down a path that I think would have been

1:09:27

a mistake. I was very seriously considering

1:09:30

doing something on my own. And he

1:09:32

reminded me that I'm a people person. I get

1:09:34

energy from people. I love being on teams.

1:09:37

I love bouncing ideas and

1:09:39

winning together and losing together. And

1:09:41

I also really love scale. It worked for two

1:09:43

of the most consequential companies in the world

1:09:46

and I love the opportunity to

1:09:48

work at scale. And he over the course

1:09:50

of a six month period convinced

1:09:53

me to join him and to join

1:09:55

Co2. And I really am grateful for

1:09:57

that because he was a hundred percent right.

1:10:00

It's a total blast. We're operating

1:10:02

at tremendous scale and I love

1:10:04

that part of the job. And we have an incredible

1:10:07

team and I get to work with brilliant people

1:10:09

every day. Is very hard

1:10:11

to go from working with the smartest

1:10:13

and the best people at companies like Amazon and

1:10:15

Facebook to anything less than that.

1:10:17

You're just used to operating

1:10:19

in an environment where everybody is smarter

1:10:22

than you and everybody is debating

1:10:24

at the highest level with intellectual honesty,

1:10:26

the hardest questions and hardest problems.

1:10:29

That's what we've been able to create a code too. I think it's very

1:10:31

unique in that

1:10:31

way. I think we have built something really

1:10:34

special and it's been a total blast.

1:10:35

I'm reminded in our conversation

1:10:38

of greeting Carter who used to run Bannity Fair,

1:10:40

had these rules for great content. And

1:10:42

there were things like narrative and conflict but

1:10:45

the one that stands out was proprietary information,

1:10:47

some data or stories or information that no

1:10:49

one else had that you had. As I think of our

1:10:51

conversation, you've had one of those interesting collections

1:10:54

of experience is at these two companies

1:10:56

and elsewhere of anyone I've talked to. So I

1:10:58

really appreciate you taking the time today to

1:11:00

talk to us about some of those stories and just

1:11:03

so much Even the kindle thing that we started with,

1:11:05

there's so much contained in this set of experiences

1:11:07

that I just think makes for a great learning. So

1:11:09

thank you for your time and for all the

1:11:11

lessons. Thanks, Patrick. It was a blast to be

1:11:13

honest with you. I love to tell all my stories. I appreciate

1:11:15

all the great questions. And I'm big admirer

1:11:17

of you and love the

1:11:18

podcast. So thanks grab me on. If

1:11:21

you enjoyed this episode, check out join colossus

1:11:23

dot com. There you'll find every episode

1:11:25

of this podcast complete with transcripts, show

1:11:28

notes, and resources to keep learning.

1:11:30

You can also sign up for our newsletter, Colossus

1:11:32

Weekly, where we condensed episodes to the big

1:11:34

ideas, quotations, and more as

1:11:36

well as share the best content we find on the

1:11:38

Internet every week.