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1:17

hello and welcome everyone i'm patrick or shaughnessy

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not be really vanessa decisions

2:02

find solutions the as a management may maintain

2:04

positions and the securities discuss and as

2:06

possible

2:09

i guess it is catherine boil a general

2:11

partner and andreessen horowitz stats

2:13

and started her career as a reporter for the washington

2:15

post before moving into vc at general

2:18

catalyst she now he to practice at

2:20

a sixties he called american dynamism

2:22

investing in companies that are solving critical issues

2:25

in areas like defense housing and education

2:27

in the past year i've spoken to market recent guy

2:30

schools and a number of founders about this need

2:32

to build societal important businesses so

2:34

excited to store the topic and even more detailed

2:36

stay please enjoy my conversation with

2:38

cancer boil cabin

2:42

, been really excited talk to about this

2:44

theme of where you're calling american

2:46

dynamism of actually explored in our

2:48

other podcasts a couple companies hadrian

2:50

and mandrell that i know you've been really involved west

2:53

and i just think the steam is on everyone's mind

2:55

politics and geopolitics have become

2:57

incredibly important again for the first time in a long

2:59

time and maybe to begin our conversation

3:01

you can just sort of outline for us the overall

3:03

idea here and maybe the origin

3:06

of the idea itself and why did devote

3:08

and investing practice to it and why davao your

3:10

career to at what is american dynamism mean

3:12

and what is it about it motivates you there

3:14

that tipping point that i think happened where

3:16

it became essential that we started investing and these

3:18

categories and it was definitely started with

3:20

marks it's time to build as say wire things

3:22

not working of why is it that we live

3:25

in the best country in the world and we can't five pp

3:27

during how that and york city for

3:29

me personally it started personally it bit before that and

3:31

that i spent ten years in washington my

3:33

early career as a reporter at the washington post

3:36

when i was leaving media understand

3:38

what this technology thing was a move after silicon

3:40

valley and as became sort of shocked

3:42

by the disconnect when the to ecosystems

3:44

and you enter the number of reasons why there's no connection

3:47

between silicon valley and washington and

3:49

why we're trying to bridge that gap the shocking

3:51

point of it was most of the technology

3:53

story and america starts with washington

3:56

come together with technologists the government initiatives

3:58

government dusty and anything the only recently

4:00

in the last season the twenty years were

4:03

that story really became divided and

4:05

where you the technologists the don't necessary

4:07

it's sort of became taboo to even say i would sell

4:09

to government or i would work closely

4:12

with certain government agencies on hard

4:14

cafferty tapper these sorts of things the

4:16

way that we define american dynamism is

4:18

were actively investing in companies that support the

4:20

national interest so that's everything from

4:22

your classical my company's aerospace

4:25

defense national security it's where they're procurement

4:27

requirements firemen from the government that are put

4:29

out to work with various private companies

4:32

but it's the things that aren't working directly with government

4:34

it's housing education highly regulated

4:37

industries were either importance to the

4:39

goods that touch all americans and most

4:41

of the i would say progress that is going to

4:43

com and the sectors are going to come from

4:45

technological improvements not from policy

4:47

improvements in our opinion and so

4:49

the american dynamism practice it's abroad practice

4:52

but it's the issues that are touching and facing all

4:54

americans and the beliefs that technology

4:56

the going to be what solves a lot of these core

4:58

issues are not policy

5:00

i think about what are the most famous phrases

5:02

in technology at a last twenty years it's move fast

5:05

break things and then have investigated dear

5:07

d quite a bit it's sort of seems like it's the opposite

5:09

like move very slow and make sure nothing breaks

5:11

what created this team's you sort

5:13

of reference that early ties between

5:15

government and technology whether that be

5:18

and semiconductors or defense or

5:20

the darpa initiatives a lot of things that were incredibly

5:22

important what happened why did that

5:25

critical linkage change

5:27

during this recent barrett

5:28

there's a number of reasons and i wish points at what

5:30

i recall very non obvious reason why

5:32

i think washington has a hard time working

5:35

with silicon valley and it's because the cultures are so

5:37

desperate so he think about washington

5:39

media or even electoral culture

5:42

it's a zero sum game every two years

5:44

there's an election if you're talking about media

5:46

it's every day at actually i was simply journalists

5:48

actually function more like hedge fund managers nut they have

5:50

their marks every day to day go viral on

5:52

the internet did they get the front page of the newspaper

5:55

and to their plane a repeat game every day

5:57

were only one person can win

5:59

so very

5:59

two zero farm and very

6:01

the used to short time horizons

6:02

silicon valley operates and positive some

6:05

games and long time horizons the abundance

6:07

culture silicon valley is a real thing the

6:09

more companies that exists here is actually good for

6:11

the ecosystem you see the same investors

6:13

investing in multiple companies that's great and

6:15

so i think that there's a fundamental misunderstanding

6:19

between washington silicon valley of how the cultures

6:21

work and so when you actually look at that and

6:23

a bearing micro level in government or

6:25

a video d where the deity is used

6:27

to you said move very slow make

6:30

sure nothing breaks i don't want to lose my job i

6:32

don't want to get fired because i invested in the wrong company

6:34

and now we don't have drums there's this culture

6:36

of let's make sure everything

6:39

is going to have cover that everyone you know

6:41

cross the t's dot the i's and

6:43

meanwhile we are competing against competitors

6:45

that to not have that same

6:47

sort of view of how technology should be built

6:49

russia and china our adversaries a very

6:52

different views of their countries

6:54

and there it's authoritarian regimes that can actually

6:56

tell their innovators their

6:58

engineers exactly what they want them to do

7:01

palmer lucky talks about this and very stark

7:03

terms or it's actually easier if you're

7:05

in it korean regime to get the technology that you watch

7:08

with actually hard i think in some ways to work through procurement

7:10

regime where you're trying to convince people

7:12

that they should work with the government by what i say has changed

7:15

over the last few years that's really dramatic

7:17

his bats silicon valley wants to work with government

7:20

when i moved here almost ten years ago it certainly

7:22

wasn't the case and so i do think there's been a sea

7:24

change where sounders in particular

7:26

are excited

7:27

about these categories in are excited about working

7:29

with the the ot i'm truly tons of nuance

7:31

around the arguments on both sides

7:34

of whether or not america as exceptional in some way

7:36

but in some ways it clearly as historically

7:38

it's go on of cyprus and the world population

7:40

and sixty percent of the enterprise value market cap

7:43

of companies they're just kind of raw data

7:45

points that would suggest something about the american

7:47

system has produced exceptional

7:49

outcomes and innovation where

7:52

do you think that's most broken today

7:54

i would assume the think there are things and need a lot of

7:56

improvement that's why are investing in the space by

7:59

what has become colorado or

8:01

stale or frozen that

8:03

needs unfreezing

8:05

have a very good question is a lot of times people

8:07

are getting the reversible why doesn't venture capital

8:09

work for these categories and i think ours

8:11

the country and you is that a one hundred percent

8:13

well that actually like when you think about whereas

8:16

innovation coming from not only in the us

8:18

oliver the world it is coming from breath capital is

8:20

coming from a very i would say open

8:22

system where a bunch of smart

8:25

people who can tell a story can get capital

8:27

lot from banks from kind of nontraditional mean from this

8:29

but used to be a nice asset class and

8:31

build extraordinary companies doing very specific

8:33

thanks we've seen that works over

8:36

the last fifty years you see network over the last thirty years

8:38

thirty years internet and enterprise but it

8:40

hasn't worked for government and for think the actual question

8:42

is why is it that government hasn't

8:44

received the spoils of this why is that civic

8:47

goods that are highly regulated by government

8:49

where where there's a lot of capital coming out of

8:51

the federal government entity systems why

8:54

are they not receiving the benefits of technology i

8:56

think it has less to do with it out

8:58

a bucket of founders wanting to work any sectors

9:01

i think it has more to do with this question that i always come

9:03

back here which is why are the cultures of washington

9:05

in silicon valley so different when we want

9:07

a country that believe in abundance culture where

9:09

things to happen fast where things are delivered

9:12

on time where roads are paid we want says what

9:14

is the issue that a stopping that from happening

9:16

i would argue that it's much more on sort of the

9:18

regulatory side but also sort of this cultural

9:21

difference where i do think for too long

9:23

a unique feature i think a silicon valley been so

9:25

far away from washington and having developed

9:27

so far away from coast institutions

9:30

they are very different ecosystems that really

9:32

have to learn the same language where

9:34

i've been helpful in the past few years

9:36

is that i do think the deities actually done a very

9:38

good job of learning how silicon valley works silicon

9:41

valley is doing the job of learning how institutions

9:44

in washington work and we just need more of that crossover

9:46

between two different cultures

9:47

i'm just a little bit about your lessons

9:50

from that period as a journalist i guess the

9:52

first question is why did it in the first place

9:54

like what drew you to that career

9:56

at the washington post and then last what

9:58

you learned along the way good and bad

9:59

what rejoinder either

10:01

there's a lot of similarities between investing

10:03

and between journalism truth seeking a sort of

10:05

the cliche obvious thing but if you're someone who's

10:08

deeply carry as deeply passionate about knowing

10:10

things that knowing the truth that i think

10:12

it's sort of the obvious place to land

10:15

i think where i was actually very fortunate i didn't

10:17

see it as fortunate the time but living

10:19

through what i would call one of the most historic

10:22

business stories of the last hundred years

10:24

which is watching an extreme monopoly

10:26

newspapers in america especially like

10:28

for the washington post of a new york times monopolies

10:31

not only and their regions that monopolies

10:33

across the country watching a monopoly

10:35

just the destroy within five years

10:38

by innovation a with all that we talked

10:40

about i saw many many colleagues get fired

10:42

this is before basis but the paper and invested

10:44

a lot capital and inscription really took off but

10:47

little to have their three business models die

10:49

syndication an advertisement when you're watching

10:51

that as someone who's deeply interested in

10:53

the why question i felt like i was

10:55

missing the biggest story of my time not

10:58

intact we knew why this was happening but

11:00

why i'm in washington when all of the innovation

11:02

that's happening that's reading sort of this historic moment

11:04

is happening in silicon valley with these companies

11:06

themselves i was really fortunate i was early

11:08

enough of my career that i said pop over to

11:10

tap and through hail mary pass and

11:12

ended up at stanford business school approach

11:15

moving to silicon valley almost as sort of a research

11:17

subjects of how do i understand what's

11:19

going on and then of course venture capital i think

11:21

it's very similar to that were fewer obsessive been on

11:23

the forefront a cultural shift and

11:25

movement and new ideas there's no

11:27

better career and an early stage investor

11:30

talking to people all day and trying to understand

11:32

what's happening and what will happen in the future

11:34

i would you describe the power landscape

11:36

in media today to someone that was trying

11:39

to understand it for the first time

11:40

it's interesting because i do think that when i was

11:43

the washington post of as the

11:45

story could upon a very different way there's a number

11:47

of reasons why that consolidation happen in the media

11:50

where there used to be probably doesn't regional

11:52

newspapers that mattered now there's a scene

11:54

there's a handful and i would say that they

11:56

are playing a very different game

11:58

than they were and years ago

11:59

i was watching a post there was no sort of twitter culture

12:02

that he ten twelve years ago so now the game

12:05

that are being played in terms of how to use

12:07

when the news cycle or very focused

12:09

on disintegration on the sort

12:11

of distribution through twitter that

12:13

is news the where's the power cycle you could argue that

12:15

it's still the new york times so the washington post

12:17

because they to consolidate their business model and with

12:19

the investment

12:20

they have they can certainly be

12:22

the news cycle but i also think they are plain attack

12:25

game and that was not the case maybe ten fifteen years

12:27

ago

12:27

wonder if you could list for us where you think the major

12:30

categories of interest are in this

12:32

kind of american dynamism umbrella and

12:34

then i'd love to go through moving on all of them but several

12:37

them just can understand the state of play today

12:39

defenses one will def we talk about defense

12:42

what are the other major categories that

12:44

you think matter most in terms of potential impact

12:46

the broad category so i would say aerospace

12:48

and defense or the classical thanks what's changed

12:51

about those categories is that now there are winners

12:53

for ten years ago you could say we've always had a robust

12:55

aerospace industry why some of us defense

12:58

industry but they've been sort of new defense

13:00

coming out of silicon valley like those did not exist

13:02

and so now there are winners and other examples of how

13:04

to work with cod the were really bullish

13:07

they're seen as also sort of an underlying

13:09

sector beyond that which fires

13:11

in this category saying i talked to chris power

13:13

at hadrian's which is innovation on manufacturing

13:16

for those sectors and and for suckers even beyond

13:18

that at a certain point super interested

13:20

in how you bring automation manufacturing

13:22

what sectors going to benefit most they are coming

13:25

out of cove it especially i think they're sort of a

13:27

broadview not only in washington but in technology

13:29

that education is right for transformation

13:31

not only education at the earliest stages

13:34

say k through twelve but education higher

13:36

education where when you go from few years

13:38

of everything moving online and then the parents

13:41

seem what their children are learning and how they're learning

13:43

their becomes a huge push for a while

13:45

maybe the nineteenth century model that we've been using

13:48

is not the best way to educate our children and

13:50

maybe there should be some variants and how we educate

13:52

you seem that not only and the technology sector

13:54

which i think it's always kind of made that argument but you're also

13:57

seen it now and a political said there which is things like

13:59

the state of arizona going to a universal usa

14:01

education savings account where now parents can

14:03

opt out of the public school system and put their kids into

14:06

a variety of alternative education program so

14:08

when you look at states making those decisions

14:11

that leads to just a rebirth of companies

14:13

that will be suppliers because of that

14:15

policy change if not only companies

14:17

that are selling directly government but it's also companies

14:20

that are you could say competing with

14:22

government where they see themselves as an alternative

14:24

to the gutter that solution that has historically

14:27

served most citizens

14:28

how do you think about the lenses through which you have to make

14:30

investment decisions in these categories

14:33

relative to have been a software company that's

14:35

down the fairway for silicon valley these days

14:38

lot of these businesses are old

14:40

school in some sense they're building something physical

14:42

there's the technology innovation behind whatever

14:44

they're building there's complexity

14:46

and cap action cost and the business miles

14:49

of just really different so what matters

14:51

more or less to you as an

14:53

investor relative to maybe

14:55

some your colleagues i was gonna say down the hall but now

14:57

you guys are you had current a cow their around

15:00

the corner of the cloud or whatever what's the difference

15:02

the looking valley has always divided itself

15:05

on business model and i agree with you this is not a category

15:07

where business model the forefront you're either

15:09

consumer business or not business that a government

15:12

business what does that mean i'd say the thing

15:14

that thing have noticed most about the

15:16

sounders that sounders the companies

15:18

their unique historian the factor

15:21

while an enterprise or consumer you often see

15:23

young the college dropouts are

15:25

people who are just obsessed with a certain type of technology

15:28

or as technological movement who sort of

15:30

find themselves solving a very unique the themselves

15:32

a group of kids coming out of a university can build

15:35

something consumer and build it i would extraordinary

15:37

company i think it's less so

15:39

in government i think there has to be some

15:41

sort of domain expertise at the same

15:43

time expertise and government can lead

15:45

to sort of neil isn't that can be to sort of this belief that

15:47

like oh you're never going to get it done the where we've

15:50

seen founders really excel and

15:52

these categories as they often

15:54

know the problem cold and a way that

15:56

just other founders don't often know the

15:58

answers they have been studying the history

16:00

of these sectors for a very very long time and

16:02

about comes out in your he recently had a conversation

16:05

with brine shrimp and are all we talk about someone

16:07

he just knows the entire

16:08

three and defence procurement a summer someone who can

16:10

into the problem just knowing all

16:13

of the intricacies of it and all the founders of

16:15

enderle sort of had that knowledge and expertise of

16:17

here's how you have to really push the business model

16:19

in order to build you can make the same case that

16:21

spacex had that intense knowledge

16:23

of not only the technology and what needed to happen

16:26

but also how to work with government i think

16:28

that's what we have noticed is that there just

16:30

has to be a true understanding of the sector

16:32

and what needs to change and then a lot of evangelism

16:35

of what needs change as you probably saw with someone

16:37

like chris power when he was talking about hadrian

16:39

the founders that truly are evangelize in oftentimes

16:42

the business model change or technological change

16:44

are constantly talking about it because they

16:47

are at the forefront of the changed so i think

16:49

that's something that we very much look for his

16:51

sounders you have that capability to

16:53

not only have the historical knowledge of what they need to

16:55

do also it helps with recruiting it helps with

16:57

raising capital all of these companies

16:59

i would say are extremely capital intensive

17:02

and so been able to make the case that

17:04

yes this is how things happen but here's the

17:06

paradigm shift it's happening and been at the forefront

17:08

of that it's almost table six the

17:10

founders you know we often say that about the

17:12

company is where there's a graveyard of companies

17:15

with great technology as he spun out of universities

17:17

where the technology was great but they couldn't make the

17:19

case the couldn't tell the story they couldn't raise enough capital

17:22

to get through the valley death what we've seen

17:24

what the founders you've been successful in the sectors

17:26

is that they are just incredible at convincing

17:28

people that this paradigm shift will happen

17:30

the a bit about again maybe are going back

17:32

your time in washington and understanding of government

17:34

that a deep level both from both angles is

17:37

really think fundamentally broken about government if

17:39

we think about the levers of the variables that would

17:41

most positively impact the odds that we

17:44

developed great technologies that are sort of national

17:46

interest technologies is one of those

17:48

major variables that the government itself is

17:51

the approval rating it's whatever it is crazy

17:53

lao typically lots of extremely

17:56

entrenched congress people would

17:58

have the problems they are that you've seen

17:59

the

18:00

you take that we need to maybe fix some of those

18:02

before we have the best possible outcome on the innovations

18:05

there's a really interesting website called wtf

18:07

happen in nineteen seventy one and it shows all

18:10

of the different charts of how many laws

18:12

ad pages of but added to the federal registrar

18:14

since nineteen seventy one of you could make the argument

18:16

that the fundamental shift with determine why things have

18:18

gotten slower even though government has historically

18:21

been set out to be slow moving and compared to the private

18:23

sector as that we've just gotten so good

18:25

at making laws not only laws just

18:27

making regulations that makes things very very difficult

18:30

to move and that's not necessarily lawmakers

18:32

who are democratically elected those are bureaucrats you

18:34

spend in washington operating and different agencies

18:36

for twenty thirty years so when you just

18:38

let that compound overtime and look at how many

18:41

pages have been added to various regulations

18:43

and he's smart entrepreneur who's looking at

18:45

that is going to say okay i'm not gonna wait thirty six

18:47

months to get something through planning when

18:50

thirty six months and private sector which

18:52

has been accelerating the for nineteen seventies because

18:54

of technology is a crucial thanks

18:56

so i actually think it's because the harder if

18:58

you see that kind of acceleration and the private sector versus

19:01

the sort of lag in the public sector for

19:03

any one truly are looking at

19:05

camp something it's earnings ever met to want to enter

19:07

the public sector and that being said i think

19:09

there has been an educational shift in

19:11

very small pockets of government to deal

19:14

d be one of them where it's become just

19:16

so catastrophic to not move that

19:18

there are changes being made to work with

19:20

i would say enterprising ai companies start

19:22

ups that can move really fast around certain

19:24

pockets you're still fighting against

19:27

that entropy and government and sort of that pain

19:29

of getting through all of the regulatory

19:31

morass that has been kind of piling

19:33

up some sort of this acceleration the seventies

19:35

you remind me of this idea of this guy named

19:37

john gall heritable called systems bible where the

19:40

goal of any system is not the thing it was designed for

19:42

but it's actually to keep itself alive and that congress

19:44

does maybe an inch or governments an interesting example

19:46

of that as you think about these categories

19:49

maybe we can zoom in on aerospace and defense

19:52

what excites you about this what

19:54

this the is guess the end demand that is driving

19:57

so much of this opportunity to create

19:59

innovative new apply going to be

20:01

a d selling the government in around aerospace

20:03

and defense what is the thing in the world that creates

20:05

the opportunity

20:06

the opportunity actually does come from

20:08

people who are working hard and government to

20:11

try to change the current system and who say

20:13

actually we need new technology that we haven't

20:15

been able to acquire so there is a paradigm

20:17

shift is happening in the deity which is that you

20:19

know we used to deed battleships we just need tanks

20:22

be city hardware and we have a procurement

20:24

system that was set up in the sixties the seventies

20:27

to acquire from the industrial based tanks

20:29

battleship now we actually software

20:31

and we have not been able to acquire

20:34

the best talent acquire the best technologies in

20:36

the the software because of the way we are set up, there

20:39

to be a view i'd say maybe 10, 15 years

20:41

ago, that defense crimes were set up to work

20:43

directly with government, would be able to solve that problem i

20:45

think is now an understanding that best does

20:47

not go to work at lockheed martin that they go

20:49

to work exceptional startups and that is obviously

20:52

trend that happened over the last fifteen

20:54

years and the government is aware of that so

20:56

there are smart pockets in the government's some

20:59

of of best technologist that i've met were the government

21:01

or as a deity and they sort of know what's needed

21:03

they know with the warfighter needs and there's is crucial

21:05

moments that have happened in recent years and i would actually

21:08

say ukraine abbas of leading to an acceleration

21:10

here where there's an understanding that

21:12

what we've been talking about for five seven years about

21:14

russia and china actually becoming resurgence

21:17

and becoming true adversaries to the u s like that it's

21:19

happening it's no longer theoretical

21:21

it's no longer something that she talked

21:23

about behind closed doors there's an under standing that

21:25

we have to get our best and brightest you are in silicon

21:28

valley to work directly with the deity so that

21:30

paradigm shift exciting because before it was a lot

21:32

of what started the now it's sort of a how do we do if

21:34

i think the how questions really hard the

21:37

second think that i'd say excites me is

21:39

that you often see this with categories that

21:41

are very difficult to build and as you only really need one

21:43

winner it opened the floodgates for everyone

21:45

understanding the playbook and one of the things

21:47

and aerospace and defense happened over the last twenty

21:49

years is that you want has been building public

21:52

there are now thousands of people

21:54

who work at spacex you can leave spacex

21:56

and go build a startup switched to playbook

21:58

understanding that the factory is the product understanding

22:00

how to work with government understanding the pace that needs

22:02

to happen and i'd say the same thing as truth

22:04

and url were five year old company has

22:06

really shown by building and public that then

22:08

work with the deity this is how you get contracts

22:11

this is how you have to get through the valley of death

22:13

nap and of one to two years out trying to

22:16

convince the government that you have the best product

22:18

and sell all it really takes i believe

22:20

is one company to really teach others

22:22

who have been in that company and others in the ecosystem

22:25

how to work with these agencies i

22:27

think in some ways we're indebted to the market the new

22:29

categories where spacex talent

22:31

your andrew have really changed

22:33

the game and terms of educating other companies

22:35

in the sector and that's why you're seeing a lot of fast followers

22:38

lot of companies that are making the same mistakes

22:40

that talent your debts that are using the playbook

22:42

that i think it's replicable

22:44

the news by this idea that the factories the product

22:46

i haven't heard that for it's the idea that in some

22:48

ways how you do the process

22:50

the power hadrian talks a lot about like the sure

22:53

process and decisions you make about the system

22:55

are the resulting product if

22:57

you're building a manufacturing plant if you're building

22:59

a machine shop and you're adding automation the

23:01

crew the decisions that you are making inside

23:04

the factory about how you build actually leads

23:06

to greater sale when you met with chris

23:08

before anchored his story of the early

23:10

factory factory one factory to all

23:13

of these sort of things that you're doing which will take a lot

23:15

of capital and order to ensure that

23:17

your building at scale than the way to can be replicated

23:19

quickly the every a third forces

23:22

six seven factory beyond that you

23:24

are benefiting from the early decisions that you have made

23:26

and the products that are coming out of it the quality

23:28

of the product is getting better not just because of

23:30

the decisions about the product fab but about how

23:32

you felt the system that becomes incredibly

23:35

important and something

23:35

like aerospace and defense were at

23:37

these supply chain questions that a lot

23:40

of the prime tabs are really

23:42

about how the systems are architect and engineered

23:44

and less about the underlying product that comes out of the

23:46

factory how big is this market like

23:48

how much spending is happening today

23:50

setting aside what might happen in the future as

23:52

and will grow but what is the state of it today

23:55

i think maybe people might be surprised by just like how

23:57

much money is flowing in

23:59

aerospace

23:59

the fence

24:01

the now

24:01

you can find that entice a different way as pets i

24:04

say like the and da is seven hundred and

24:06

eighty billion dollars i believe in the last and yeah that

24:08

was passed and then you also out on other

24:10

fi my country so the countries that we are allies

24:12

wish that we work very closely with you pay new zealand

24:14

australia you out on those countries where

24:16

their budgets are obviously much smaller but

24:18

that's over on points you one point three trillion

24:21

and stand and then you add on the country sweet is

24:23

this is where the state department so we do as

24:25

a country why a lot of the rest of the world

24:27

that we see it's allies and we see a strategically important

24:30

that's annual span obviously there's a lot of operational

24:32

spend as well the saying that like

24:34

the summit so it's about how you look at the market

24:36

is that something like forty percent of

24:38

that sort of procurement spend it spend

24:40

five companies that supply the deity

24:42

so the big sized the prime so lockheed martin's raytheon

24:45

store what i think is made it very difficult

24:47

for startups to get part of that spanned

24:50

is that a lot of those decisions are

24:52

made based on tailored are appease

24:54

taylor

24:55

firemen to go out specifically for a company

24:57

where a lot of lobbying has happened so

25:00

while

25:00

the market is exceptionally large piece

25:03

that

25:03

a lot of start ups that are going on defense

25:05

have to look as much smaller

25:06

that it easily the money that has not

25:09

it puts forward for

25:11

programs to record which are usually only going

25:13

to go to companies that have been around for many cases

25:16

a hundred years and consolidated over a hundred

25:18

years so the thing that i think companies

25:20

and you space and you to censor done quite well as

25:22

they're going after pockets expand that are seen as almost

25:24

like a political pocket suspend its but

25:26

i mean by that is there's not like a bunch of companies

25:29

trying to get dollars around some of these areas

25:31

the brilliance or something like andra was they were

25:33

focus on a product that's a lot of

25:35

the time says wouldn't make so

25:37

if there sort a key requirements

25:39

that need to be matt where you're not repeated the

25:41

crimes you know for a lot of start ups starting

25:43

with those smaller pockets of money

25:46

that really don't touch the larger players is sort

25:48

of the way that you get an entry point approve points

25:50

many move up the categories of spend

25:52

oftentimes categories that it existed for twenty

25:54

thirty years and not just that emerging technology

25:57

categories of stand where you're just going to be competing

25:59

against other

25:59

that's it's answer like classic disruptive

26:02

innovation are kind of position and you know whichever

26:04

term you want to use using lobbying

26:06

i'm not asking to be but i can really simple version

26:08

of this question which is how slaving works i

26:10

don't really know much about lobbying sounds

26:13

like it's an ingredient that matters for that of sensibility

26:15

of the primes business so like

26:17

what is going on who is doing what

26:19

and why in the world blogging this is

26:21

such a broad question metals i don't realize

26:23

is about it i know and include mean what and why

26:25

it didn't take up on a tangent bet is there

26:28

like this needs to be sad so everything

26:30

that came out of the and yea that instruct

26:32

a provision that would have prevented

26:34

dj i which is a number one chinese

26:36

drone manufacturer from silly the government agencies

26:38

that is something that he only has been worried about and

26:40

has actually stopped from happening for the last

26:42

five to seven years the financial times

26:44

that it was four million dollars over twenty eighteen to twenty

26:47

twenty two that the day i and the ccp

26:49

have been able to successfully lobbied the us government

26:51

said stop that sort of blanket ban

26:53

on gg that means you american law enforcement

26:56

company score tj i as fluffy and very

26:58

sensitive data from the government

27:00

and that's why they'd been banned it

27:01

some twenty sixteen twenty seventeen

27:04

yeah this is something where because of that

27:06

ridiculous of our system a foreign

27:08

company can command and lobby work directly with

27:10

us even though the people on the deity

27:12

are terrified what this company could possibly

27:14

do the hard thing about lobby and is that there

27:16

are so many at going back to our question about federal

27:19

registrar and just like how many laws there are and

27:21

how many different ways you can work with governments for

27:23

so many sort of in road the stop

27:25

legislation from either happening you're not happening

27:27

that original answer to why does lobbying matter

27:30

in the sector is that congress

27:32

authorizes a spending bill and there are line

27:34

items to go for different programs and it is very

27:37

much understood that if you get a line i'm

27:39

in a spending bill that a tailor made for

27:41

you fab ultimately that is sort of saying

27:43

that you will work with that companies in perpetuity

27:46

it's very hard as this has been sort of tailor made

27:48

from legislation perspective it's very hard to like

27:50

actually say okay now we're going to work with the different

27:52

company or redid the saying that

27:54

makes lobbying very important is for a lot of

27:56

these programs companies very much want to become a programmer

27:58

record they want to be institutionalized as

28:01

the supplier them ultimately work with governments

28:03

yes there are times where these contracts are

28:05

we better or we competed ultimately

28:07

the prime to a very good job of making sure

28:09

that they continue to be the supplier and that there's perpetuity

28:12

in that sniffing that i think makes it very hard for

28:14

start of his you go from small

28:16

business grants which are nonrecurring to

28:19

these other types of small dollar grants

28:21

that ultimately hoping to get a program

28:23

that can then be institutionalized by congress if

28:26

you're working with congress on lobbying

28:28

to make sure that your company is ultimately

28:30

so then it does require sort of not only

28:32

does working with procurement officers that's a d o

28:34

t for a lot of the company that making

28:36

the case in front of congress as well and that sort

28:38

of i think unix system as our government

28:41

which is that congress does have a tremendous oversight

28:43

of the deity and said there are positives of

28:45

that word we do have sort of oversight of house

28:47

or bureaucratic institutions or howard's actually to

28:49

branch is functioning but it does

28:51

sort of beads this lobbying has been an important

28:54

part of building a company and these sectors it's

28:56

not just the best technology wins

28:58

and someone who's very smart video the is going

29:00

to choose

29:00

when not is there is a lot of i'd say

29:03

different lovers that exist in washington that

29:05

makes

29:05

stations around which companies are chosen do you

29:07

have to think hard about how

29:09

seemingly warfare is going to change in

29:12

the future or do you rely on more about

29:14

him a message when investing to say

29:16

you're waiting for someone to come to us something that you

29:19

can then underwrite in is compelling are

29:21

you coming outta like we think the world's going into putting

29:23

this way can be more autonomous

29:25

drones are some things organ look for drug companies dissenters

29:28

of going more top down or more bottom up so

29:30

i think it's definitely more bottom up and again it goes back

29:32

to the nature of sounders have a deep

29:34

understanding of sort of what's happening in

29:36

their own sectors

29:37

classical technology if you're talk about

29:39

infrastructure technology or consumers can kind of

29:41

see okay where if things had it since they

29:43

were the pockets were missing i think

29:45

in these categories it's usually the founders

29:48

were the most up to speed on actually this is where

29:50

the deity cares about i know this because i've

29:52

seen inside a company this is something where they are

29:54

looking for if you could argue your on

29:56

the ground in washington talking to lawmakers are going to tell you

29:58

like okay

29:59

really care about

29:59

on account understanding where

30:02

technologies had it but i'd say it's the sounders

30:04

are usually the most educated on what it's going

30:06

to be important in the sectors so we listened to them

30:09

it's not something necessarily were you

30:11

know you can predict geo political strife

30:13

and say okay like this is something that's going to be needed you

30:15

could have made the case that we are moving

30:17

towards a more automated it's potentially

30:20

less kinetic world where rounds are much more

30:22

this area where there are technological advances

30:24

that the government is excited about that

30:26

will allow for that but i'm not necessarily sure that

30:28

it makes no sense for us to be dictating what government

30:31

wants

30:31

researchers deep the deal

30:33

d as the buyer that huge budget as a buyer

30:37

where else you find yourself most commonly

30:40

the whole you mentioned education earlier or something

30:42

that i feel like lots of people feel

30:44

is fundamentally broken in certain ways but

30:47

also incredibly entrenched it seems

30:49

as though the rebel attacks against

30:51

the and trend system have just sailed

30:53

for the most part get it gets true and

30:55

what my change that

30:57

i think it's true that the us if you're calling them rebel

30:59

attacks that they failed that's partially true but

31:01

i do think that cove it was the inevitable

31:03

sea change that worse and particularly

31:05

i'm much more bullish on take your twelve education

31:08

at this point and higher at that covered changed

31:10

how parents view the decision about how

31:12

to educate their children i don't think you can come out

31:14

as two years of school closures

31:17

worried about continued school closures also

31:19

just understanding hey we live in a world that's

31:21

very different nineteenth century and yet these are the types

31:24

of subjects are students are learning there's a number

31:26

it's a cultural factors that have led

31:28

parents to say i want an alternative and

31:30

that sort of pressure that grounds are say

31:32

like state and local pressure hi

31:34

and politicians you are seeing

31:37

states get very excited about the prospect

31:39

of treating education the same way we treat

31:41

healthcare so that usa movement

31:43

education savings account movement is a

31:45

really exciting because it looks a lot like ever say

31:47

that looks a lot like okay we can actually

31:49

give taxpayer dollars to parents to make

31:51

their own decisions but how they want to educate their children

31:54

what's interesting about that she was that there are some states

31:56

that wanna do it as a universal usa where every

31:58

parent can make a decision there's others

31:59

it because of the influx of

32:02

new my friends i'd say texas florida

32:04

arizona states that are growing the people

32:06

from other states you can't build schools fast

32:08

enough to educate kids you have to deregulate

32:11

the okay we need five years and funding

32:13

and we eat five years to build the schoolhouse

32:15

like actually we can do this online we can put

32:17

a sworn a park and allow for alternative

32:19

education

32:20

the those dollars to those parents in order for

32:22

them to make their own decisions there's a lot

32:24

of sort of popular arguments on both

32:26

sides for it

32:27

politicians you are asking themselves how do we educate

32:29

kids in this unique time where maybe things

32:31

will close and maybe with that an influx of two

32:33

hundred thousand let me don't know what to do with that

32:36

led to people rethinking a

32:38

nineteenth century model that everyone knows it's broken

32:40

i also think there's another argument here where

32:43

people opting out of the system often improve

32:45

the system the underlying system at hand that's

32:47

become i think i'm much more popular

32:49

argument among k through twelve advocates

32:52

that actually we've been talking about small hi fi

32:54

for a long time and so if we have more schools

32:56

that are he regulated in many ways that that's actually

32:58

good thing for the underlying public schools where he

33:00

flew from a classic forty two a class of eighteen

33:03

there's a lot of arguments on both sides that have actually

33:05

been chew up

33:05

medical movement that will ultimately lead to a technological

33:09

what are the ways in the nineteenth century model

33:11

what is most broken could you think is the biggest

33:13

or couple biggest fundamental problems with the current

33:15

model in case you're twelve

33:17

we know the best way to educate

33:19

kids in a small environment a tutoring environment

33:21

is always been kids learn a very different race and

33:23

are very different level they have different interests i

33:26

have an eighteen month old son and i didn't see now i

33:28

think once you have a kid you realize wow like also

33:30

than are different and they have different needs and

33:32

so i think parents have always fundamentally known that

33:34

but the ultimate reason why public

33:36

educate it's important to my son consumer

33:39

traditional schools important because it operates

33:41

as a way for oftentimes might become

33:43

the norm to income households in america where

33:46

everyone is working with their needs to be a place where children

33:48

are watched i think people know that that

33:50

fundamental issue with education is that

33:52

you have to do in a way that saleable but

33:54

by deregulating the system in many

33:56

ways to that parents can make the decisions about

33:58

actually i'd like to send my

33:59

into a micro school where i know the teacher

34:02

where i know the other parents are actually i like the

34:04

home schooling model where i can hire a tutor

34:06

among many each the exciting part about

34:08

this movement that happened during cove it

34:10

is that it was sort of an organic movement where

34:12

there was a lot of experimentation led because we were an

34:14

emergency situation where a lot of parents are taken

34:17

into their hands and as we saw

34:19

at the same way with sort of workforce culture where

34:21

we were pleasantly surprised by remote

34:23

work pleasantly surprised by how well it worked

34:25

i think a lot of parents had the same reaction where they were pleasantly

34:28

surprised by hiring one teacher for five

34:30

students are that was actually much more

34:32

economical for certain family suspect

34:33

these are getting vouchers are getting usa dollars

34:36

and how that was actually something that allowed parents

34:38

have a little

34:39

more control

34:40

over the subjects that they're learning fear

34:42

other question about was changed weaponizing century

34:44

model i think we've moved from thinking

34:46

that grammar and reading and some of these

34:48

other subjects that are so cord to how you

34:51

educate baseline things as the universe

34:53

illiteracy which is an important noble goal in the nineteenth

34:55

century that actually like universal some education

34:57

would be something that is one hundred percent necessary

35:00

going into the twenty first century and that's not

35:02

something that's happening at public schools across

35:04

america if parents are realizing that

35:06

now that the economy is completely changed

35:09

that the subjects kids are going to need to learn are

35:11

very different than the subjects that they needed to learn before

35:13

and if there is culture wars happening in certain

35:16

cities were making mass something

35:18

that kids don't necessarily have to learn or mickey

35:20

mouse a bad word parents are getting upset

35:22

about that i'd say there's a third as you happening where

35:24

parents are realizing that in some way as if they want

35:26

their children to learn higher level math

35:28

of have to take matters into their own hands and a

35:30

lot of states are excited to get them tax dollars to do

35:32

that

35:33

what you learned about how states

35:36

are and in might in the future competing

35:38

for citizens can seems like the

35:40

product of a state is

35:42

becoming higher and higher variants

35:44

some that's imposed through things like roe v wade

35:47

being overturned some of it is optional

35:49

and has been like tax rate it just seems

35:51

like states are positioning themselves

35:53

more and more you think that's gonna happen

35:56

more in the future how does that play in the all

35:58

of what you're trying to deal

36:00

with seem like an interesting trend that matters i believe

36:02

the resurgence of federalism israel

36:04

and it it's technology enabled have made the case

36:06

that star like will enable any type of federalism

36:08

and ways that another technology hasn't because

36:10

if we move to a remote were culture the

36:13

most important thing as internet infrastructure and

36:15

it you can move to a state where you're surrounded

36:17

by people who share your values where you

36:19

are surrounded by policies

36:21

that you prefer it opens up this

36:23

incredible migration that i think

36:25

we've only begun to see through covert so

36:28

i was sorry the party that i left california

36:30

and twenty twenty and move to lord

36:32

i joined the miami movement i think that may

36:34

or francis suarez is a perfect example of this

36:37

as sort of an unknown mayor was able to

36:39

get on twitter and able to evangelize

36:41

is city to and entire demographic

36:43

basically go after entire industry and say hey come

36:45

here not only to be a favorable policies

36:48

but you're actually gonna love it and we're going to embrace yeah

36:50

i think in some ways he started this weekend

36:52

actually differentiate through policy we

36:54

don't need everyone to come here but if we can get one

36:56

industry we're excited about that's actually a good thing

36:59

and so i think you're going to see more and more and that

37:01

that's one of i'd say the benefits the market system

37:03

is federalism and so if someone is really allied

37:05

with the mission of a certain mayor in miami they

37:08

can move there and they can keep their job and many cases

37:10

and they can operate remotely whereas before

37:12

twenty twenty that was not the case there was always the

37:14

question of if i decide to move to another city

37:17

what will i do for living what will my community

37:19

liquid now you see people moving and

37:21

pockets keeping their job living in multiple

37:24

places say spending six months in one place

37:26

six months and another and i think that's actually

37:28

good for states organizing

37:30

themselves around certain values and certain

37:32

things that the care about

37:34

i'm like my question on something about government

37:36

need to change to create the best outcome

37:38

i've a similar crush on immigration i don't

37:40

have the stats exactly handy but certainly some

37:42

crazy percent of that market cap

37:44

i referenced earlier was created by

37:46

first generation immigrants or second generation

37:48

immigrants obviously america story

37:50

is one of immigrants in so deep fundamental

37:52

way in some ways that can and as

37:55

we've seen conflicts for certain people

37:57

with the national interest and who's you're already

38:00

what role do you think this place in

38:02

the range of outcomes that we're gonna see from here

38:05

if national interest is the north star immigration

38:08

fit in your mind

38:09

labor statistics that i've read as bad as unicorn

38:12

cofounders the companies that are valued over a billion or

38:14

more felix fifty percent of companies have

38:16

a foreign born founder that is

38:18

an extraordinary success and think the u s

38:20

is an excellent job over last a few

38:22

years of making sure that the best talent

38:24

from other countries decide to come here and

38:26

birkenfeld that is a feature

38:28

of the system that we've been able to construct and

38:30

in one of the things that i love about my the is that it's mostly

38:33

foreign born as the city the energy and enthusiasm

38:36

and the seriousness that exists in the city

38:38

is people coming from countries that are collapsing

38:41

or have collapsed or authoritarian coming

38:43

to the u s and waving the american flag

38:45

very proudly one of things that i'll say

38:48

about movies in california it's a movie to florida

38:50

is i see more american flags in miami

38:52

than anywhere else that i blow interesting washington d

38:54

c california are

38:57

proud to be in this country and they're proud to build

38:59

in this country and there's hostel culture i would

39:01

say that comes from having left them were that

39:03

is collapsed where you are excited to be

39:05

in a capitalist system and you are excited to be in a place

39:07

where you can build a new life for yourself and your family and

39:09

that is the american story if i think silicon valley

39:12

and bodies that minute always hasn't body that

39:14

and we should celebrate that the people come from all over

39:16

to build as you saw chris power of

39:18

hadrian came from australia few years ago and

39:20

one of the things he says is that like been embraced by

39:22

this country being embraced by entrepreneurs to

39:24

help build for at the defense industrial

39:27

base in this country is something that gets a feature

39:29

of the country and certainly something we should celebrate

39:32

one of the categories that you've posted before

39:34

elsewhere that i just find so interesting today as

39:36

housing the and this is something that it

39:38

all goes well as think it could be a problem

39:41

and it's also seems super new os

39:43

i don't know ton about housing supply and what drives

39:45

that know it's a category the you have some interest

39:47

in we we teach us a little bit about that interest

39:50

wise housing irrelevant sub category

39:52

of american dynamism feel it's an important

39:54

category in that where you live

39:56

and been able to afford housing is probably

39:58

the most fundamental human

39:59

the point the most fundamental thing that people worry

40:02

about

40:02

in the past two years we've seen an influx of

40:04

housing startups mostly related the edu

40:06

legislation or accessory dwelling unit legislation

40:09

in california which was sort of the

40:11

deregulation of you can put a new small

40:13

backyard home in your house on your property

40:16

very easily without have you get sort of extreme

40:18

harmony and set the old news housing something that

40:20

has pre manifest third and ultimately

40:22

it drives incomes up for people who are homeowners

40:25

or maybe you have a child that wants to move back in with

40:27

you and you watch give them a little bit of space

40:29

so we're supposed to be a t regulation

40:32

in california that address affordable housing

40:34

and we seen one hundred companies

40:37

operating in that space and trying to build on that space

40:39

one of the things that i've noticed in that i'm hopeful

40:41

about is that i actually think there are states

40:44

where it's much easier to build housing one

40:46

of things we've seen as that a lot of the companies that are folks

40:48

on a to use or focus on the top of the market like the

40:50

tesla model where if you build very fancy houses

40:52

at the bill very fancy to use you could then from down the

40:54

cost curve i'm actually very bullish

40:56

on one of the new mobile home look like we actually

40:59

have prefabs manufacturing in this country that

41:01

is very robust i think

41:03

there's a marketing challenge around prefab that

41:05

just really isn't discussed presided as

41:07

much more common in other countries around the world

41:09

here it's usually i'd say looked at as

41:11

more of a low income solution can

41:14

there be design sixes for middle class

41:16

populations to do prefab in states

41:18

where there's already kind of a d regulated environment

41:21

to make solutions that aren't exists much more modern

41:23

that's one thing we're thinking through the hard

41:25

thing about housing as of places that

41:27

have the hardest time because they are the

41:29

regulated in terms of permitting are the ones

41:32

with the dire housing shortages obviously

41:34

again it it becomes a government problem the not necessarily

41:36

tech problem but i will say like that kind

41:38

of push on now remote work and

41:41

the federalism points has led a lot of people

41:43

who were trying to make it in places like

41:45

san francisco or new york move out of the cities

41:47

and to x urban environments where it is the regulator

41:49

where you can build a house and afford a home for

41:51

your family and that is going to put political

41:53

pressure on a lot of the city's to

41:56

deregulate the permitting issues that have often

41:58

kept housing out of places like said now

42:00

and so if enough people leave i do

42:02

think that there will be changes their and that technology can

42:04

then move into some factors and actually

42:07

make it much easier to build

42:08

how do you interpret that now very famous chart

42:11

that shows inflation and certain categories

42:13

over time as a blue on the bottom and read on the top

42:15

i'm sure another one i'm talking about and

42:17

a lot of the categories that we've talked about our in that

42:20

read grouping of you know the cost of

42:22

a college education for example has

42:24

ballooned like crazy over the last thirty

42:26

forty years whereas the cost of like a samsung

42:28

tv or something that's like unregulated driven

42:30

by technology has completely plummeted what

42:33

is your interpretation of why that chart

42:35

is so important

42:36

really how good education and healthcare him when you think

42:38

they are the most regulated the actors they're also the

42:40

subsidized by governments nurse elite competition

42:43

we haven't talked about higher education but i think

42:45

one of the most meaningful things could happen

42:47

in one of the things that just isn't discussed enough is that for

42:49

a very long time both republicans and democrats

42:52

in there was kind of a universal placed at

42:54

the way we solve our problems in this country as by sending

42:56

all children to college which has made

42:58

college and times more expensive for

43:00

our generation than our parents generation the

43:02

candidates are subsidized it's also last

43:05

generation of millennials and younger an extreme

43:07

desk which then leads to these other questions healthcare

43:09

and housing that make it almost impossible to the middle

43:11

class exists i think there needs to

43:13

be a broader conversation around why these been

43:15

writing institutions that are failing to

43:17

help get

43:18

jobs for young people which is why they

43:20

are going to college and bringing that

43:22

a culture of manufacturing a culture of working with

43:24

your hands a culture of been a trades

43:26

person which we know our were at

43:28

the most extreme labor shortages are

43:30

in this country which we do not celebrated the

43:32

culture we still have sort of this bias to

43:35

every kid needs to go to college and that show that

43:37

we are successful country

43:38

one of the things that we're excited about as we are seen

43:40

a lot of companies that are focus on how to we bring

43:43

more young people and a trade

43:44

that's sort of a bitch their secondary mission of hater

43:46

well as how do you teach more young people machining

43:49

make it easier for them with updated tools

43:51

and updated technology said that it is

43:53

again a job that people want and they find

43:55

valuable i'd argue that a lot of the

43:57

reasons why that chart is explode

43:59

to for the public goods that

44:02

used to defined middle class life is because they

44:04

happen so regulated subsidized and their husbands

44:06

it's like a competition in those categories

44:09

you could also make the same case for an offense

44:11

that because of the ramp it consolidation

44:13

going from seventeen thousand company is to five

44:15

companies that are getting forty percent of the defense budgets

44:17

that the costs of defense has gone up dramatically

44:20

because there is no competition that

44:22

i think is the sad story of companies that operate

44:24

and government is often times where you need competition

44:27

the really is just sort of monopolistic forces

44:29

that lead to one or two companies been able

44:31

to raise prices the universities

44:33

that certainly the case without having to make

44:35

changes or innovate are truly open

44:37

up their model because the technology

44:39

how different are the investing dynamics

44:41

in all this stuff i'm picturing hadrian

44:44

factory wanted to and how

44:46

much harder and more expensive they must be

44:48

to build than a mobile app or something what

44:50

are the round sizes like compared to

44:52

traditional i saw for investment how

44:54

do you think about valuation in this world

44:57

that founders and a pony less because it's just so

44:59

so much capital required to get

45:01

spacex to where it is today or whatever

45:03

it does it take longer like i'm just curious but the

45:05

nature of the investing side

45:07

and the dynamics even covered so far

45:09

or use a case three we haven't talked about yeah

45:11

which is a company called flock safety and our portfolio

45:14

and they are a company that works with public safety

45:16

around the country that created a license plate reader

45:18

they are hardware software hybrid small license

45:20

plate reader and powered by a i attract

45:23

cars

45:23

not people founded atlanta georgia town

45:26

and twenty seventeen by a terrific second

45:28

time founder and i would say that the tail

45:30

wins for this company or extraordinary there now

45:32

and all fifty states the now operating

45:34

selling to law enforcement they actually started out

45:36

selling to homeowners' associations and

45:38

what's interesting about their story is

45:41

with a lot of these companies that are harbor cipher hybrids

45:44

for that take more capital of sense

45:46

the early sort of stage investing is actually

45:49

very difficult and i would say like this is actually

45:51

one of the things in one the reasons why we're excited

45:53

to create his practice and say that we're investing

45:55

it seed is that for a lot of

45:57

these companies yes they take a little bit more capital knowledge

46:00

a little bit more time for the companies to work not

46:02

only are you building a hardware products that you're

46:04

also selling to government their government of the major

46:06

stakeholder so the up

46:08

and to the right that you expect to see it series

46:10

a and these companies can we go a little bit

46:12

further down the jake her often hundred series and a have

46:14

no revenue oftentimes you're still working on the two

46:17

of the product where it takes a

46:19

sounder who can tell an extraordinary

46:21

story who can rally the troops

46:23

of the company even if the revenue

46:25

numbers do not look like up in the right that

46:27

you would see and sent hack or even see him for software

46:30

but what happens after these companies gets

46:32

the contracts that government or they hit critical

46:34

masses that officers are not competing against

46:36

a wide swath of other startups are usually

46:38

competing against legacy incumbents they can move

46:40

much faster there's a network effect

46:42

that exists and government that i think a lot of people don't talk

46:45

about witches if one county

46:47

doesn't think it it's working all of

46:49

the others you bring counties wants to look great

46:51

seal wants to be a hero for their citizens

46:53

and so they'll move much faster so often

46:55

times these companies accelerate it seriously

46:58

the earth series d and they become explosives

47:01

competed against no one which is very

47:03

different i'd say than sasser sort of pure software

47:05

where it's something assuming well in

47:07

a category often hundred a lot of fast followers

47:09

and because there's no sort of fundraise

47:12

in march or hardware

47:14

match or chemo us

47:16

we do see a lot of fast followers the

47:18

reason why spacex doesn't have as followers

47:20

enderle doesn't have the same sort of fast followers

47:22

competing in the same way flock certainly

47:24

doesn't what you see is that these companies

47:27

are hard to build seeds or series be

47:29

and then the hit escape velocity and

47:31

they look very different than other company but

47:33

oftentimes become the sort of large

47:35

legacy and french company says people

47:38

get excited about these companies a later stage we're excited

47:40

about them early because there is

47:42

a founder profile there's

47:44

a company pro wow that we look for early

47:47

stage and it does with different it's

47:49

not true by looking for a certain

47:51

they are are at here he day where we get excited

47:54

about sort of the progress made

47:55

the expected returns and he different do

47:58

think then like a traditional more

48:00

stage venture investment obviously there's

48:02

example in out the big primes our punter going

48:04

to our plus companies office it's there can be enormous

48:06

companies in this area but they're well entrenched

48:09

have been there forever have been lot of consolidation

48:11

do think differently about the returns risk

48:13

or return is the profile different there's

48:16

a reason why spacex is that

48:18

most valuable american company private company it

48:20

is because once they hit a certain escape

48:22

velocity there are no competitors

48:24

in many ways like these are the companies that were they become

48:27

down and

48:27

the real differences i'd say

48:29

and the earliest stages he taking on

48:31

a little bit more risk

48:32

oftentimes or tweet things that haven't been done

48:34

before their computer

48:35

the weather in combat sure if they get wind of them

48:38

are worried of them they will get squashed but

48:40

if they can get through the earliest stages

48:42

the companies can compound for much longer

48:45

have you seen any success in a company

48:47

like this where the founder isn't

48:49

a great storyteller

48:51

what is question i really and current story

48:53

they are probably some unique cases

48:55

on the edges of they aerospace where someone

48:57

can be topic i do think you can teach someone how

48:59

to find race especially at seed series

49:01

a it is just so important

49:04

from recruiting standpoint from atop

49:06

the ratings and point and my sister and that's fucking

49:08

about like i'd manner hype women i'm going i'm talking about

49:11

really understanding the history really making the

49:13

case that you are going to be able

49:15

to survive the hard years which are the first

49:17

three years that is just so

49:20

important in been able to build the

49:22

company that i've always anchored on

49:24

how well does the founder know the market

49:26

well canvas founder

49:29

explain why the technology is so important

49:31

to the customer i'd say it's not just storytelling

49:33

though at the thing that andrew really got right

49:35

was just as deep empathy for the customer

49:38

and understanding the customer in a way

49:40

that you could if they had not worked in government

49:42

before so i do think there has to historical

49:45

knowledge which might be a different facets

49:47

of storytelling but just like a historical knowledge

49:49

that leads to a deep embassy that can allow

49:52

for a customer to really take about

49:54

on these companies

49:55

you're sir of the ultimate person to ask this

49:57

question given a background in journalism and also

49:59

because andreessen their story telling what do you

50:01

think the anatomy of a great story is

50:04

the thing that i always look for is

50:06

something that costs furious i decided

50:08

of the unique combination of capability and well where

50:11

there is just such ferocity in the founder

50:13

that you know they are going to run through balls that they

50:15

are going to get it done where it's not just

50:17

this is a interesting story or this

50:19

is someone who has a thesis about it

50:22

if someone who you just have one hundred

50:24

percent faith is grinding and

50:26

working a ridiculously hard to move mountains

50:28

that is something that i don't think you can necessarily quantify

50:31

it is that will components that

50:33

exists not just a company is it's a nation

50:36

states just seen the ferocity of someone

50:38

who has a will to get something done that i think

50:40

has to be there for the story to make sense

50:42

because oftentimes the story that's been told is this

50:44

has never been done from for and this is going to be incredibly

50:46

difficult to do but if you don't believe that the person

50:49

has the capacity to not only do that himself

50:51

or herself but also be able to recruit

50:53

just extraordinary talent who are on

50:55

board with that mission oftentimes it will be impossible

50:58

the thing that austin is lacking and founders

51:00

you may want to take on the sword as noble

51:02

missions is have serious are you about

51:04

this mission

51:06

then some i just like the medium not the message that

51:08

matters is how it's delivered by whom

51:10

as much as the content of the thing itself

51:13

the not it's not even how it's delivered to more

51:15

about the grounding it is this person serious

51:17

what is at the heart of this company this is why

51:19

we loved involved early harder to sort

51:22

of assessed that at later stages except

51:24

us to look at their gross but i think early on this

51:26

is something

51:26

they think is so court to buy these

51:28

companies can succeed how did you win

51:31

would say there's a founder that is clearly

51:33

exceptional and there's ten investors the wanna

51:35

be his or her partner early on what

51:38

your story i guess to

51:40

founders at this stage as to why

51:43

you and your from are the best partner this

51:45

category

51:46

one of my favorite quotes is actually a

51:48

margaret thatcher quote that i sort of and ever she

51:50

said europe is built on history america as dot on

51:52

philosophy and all have invested

51:54

but you can't compete on history computer philosophy

51:57

and i used to give this advice to people

51:59

who are starting out

51:59

career the question of winning becomes

52:02

less the obsession early on in a career

52:04

when you're trying to work with companies like and are all

52:06

as sort of junior partner someone who is really

52:08

early in the career philosophy matter city

52:10

sounders the way that perhaps the other

52:13

sectors it doesn't matter as much but i'd say

52:15

either very difficult missions the story of and

52:17

url is one of incredible success

52:19

and people lot in it now but and twenty seventeen

52:21

when a lot of people made that investments there was

52:23

a lot of people who last amount of the

52:25

brown said horrible things about them said they

52:27

were doing terrible things why would you ever dot a defense

52:29

company this is not good for society and

52:32

a lot of investors have the same thing and so you have

52:34

to be mission aligned with these companies and they have to believe

52:36

her mission line my advice that investors

52:39

who were trying to work with these companies as if

52:41

you don't have a true mission alignment with

52:42

they're doing you're likely not the person who should be working

52:44

with

52:45

capita spent so much fun i think the broad

52:48

category is just so fascinating

52:50

an interesting and has had these features like

52:52

this crazy cost inflation or lack of

52:54

progress but i think you've graphic

52:56

went out that there's nothing stopping

52:58

progress here i be there are things impeding at things

53:00

maybe need to change but there's nothing that says it can't

53:02

happen i think will take a lot of investors

53:05

thinking like you are to try so of

53:07

really do it's only for me today i ask everyone the same

53:09

traditional thousand questions and is the kindest

53:12

thing anyone's ever done for

53:13

lenders question because to me at highness

53:15

is really selflessness and the myself

53:17

a thing that anyone has ever done for me is actually happening

53:19

in the other room right now i don't know if you could hear my

53:21

sunscreen in but breast cancer not right

53:24

our my mother is watching my eighteen month old

53:26

son and i am a firm believer and

53:28

multi generational living a nuclear family

53:30

and many ways was actually bad for society

53:33

we used to live in multi generational households

53:35

where grandparents would help take care of children so that

53:37

parents could work and this is sort of a modern

53:39

thing where we've moved away from that i'd say the

53:41

most selfless thing that anyone has ever done for me as

53:43

my mother and getting her twilight years to help

53:45

us raise our child it's one of these

53:47

things were a willing grandpa or grandma

53:49

is necessary in order to live in a multi generational

53:52

household i'm just beyond grateful that

53:54

she sacrificed her twilight years to help us ray

53:56

their child and a

53:57

never be able to repay her and i have to be

53:59

able to

53:59

or would one day

54:01

wonderful answer i don't think i've had that one exactly

54:03

before i always like to add a new ones to

54:05

the list there's been so much fun thank you

54:07

so much for your time really appreciate it thanks so much

54:11

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