The Exchanges

Q And what I mean by that is a business like DoorDash, when you're investing early, you have to project out a long way before you see that gross margin, before you see the benefits of scale, and the economies of scale that come with it. But in the beginning, and in the first three to five years, it looks ugly from a margin perspective. How do you think about that?

A You know, a lot of our businesses struggle with unit economics until scale, so I don't mean to diminish that point. So it is critical, though, to have a first principles Ground truth based fundamental model on like, how do you get to the unit economics? How do you get to the LTV to CAC? How do you know that these things can actually be delivered? In DoorDash's case, you can do price testing and you can price elasticity, like how much can our customers actually willing to pay? How much are restaurants willing to pay? And the delivery network may be marginally inefficient today, but at scale, the delivery network gets more efficient. I can believe that. And then based on what people are willing to pay and what restaurants are willing to pay, I can see that the unit economics work out. I actually with the DoorDash founder last night, funny enough, one of the things he mentioned to me was They do not think they would have as successful as they were if Travis was still CEO of Uber. You know, there was an aggressiveness that went out of the market that gave them pricing power and gave them an ability to compete effectively after Travis is ultra aggressive, you know, pushing everyone else out of the way by basically, you know, taking away any margin possibility. So there are also external factors that are going to drive success. And in that case, they had room to expand. They had room…

AI assessment note: “it is critical, though, to have a first principles Ground truth based fundamental model”

Q in the past. My concern is when they stuff so much cash, I call it the VC foie grashing of startups. When they stuff so much cash into companies so early, when they don't have playbooks, when they don't have repeatability, you actually distort the execution plans of those companies. Do you share my concern, actually, of too much cash too soon that changes the plans of otherwise could-be-good companies?

A I have a fundamental rubric for business value creation. It's super simple, but we could spend hours dissecting it. Number one is can you make a product? Technical competency. Number two is do customers want your product? Product market fit. Number three is can you make a positive gross margin selling your product? Number four is can you deploy marketing dollars to acquire customers in a positive way, meaning LTV greater than CAC. The next step is Can you actually increase that LTV to CAC or increase your unit economics as you scale? And this is an important one that gets distorted in a lot of these cases. And finally, it's can you become a platform, meaning can you be multiple product or bring partners on so you get true leverage out of the network you've built between customers and suppliers and in some form. Those step functions really do define value creation. The problem that you point out is that in a lot of cases, the assumption is you're going to get to that next step of value creation with capital, and it's not necessarily true. And then you're stuck where you completely fail on the next Step of value creation, and you actually create negative value for the business by putting too much capital in too fast. So I would argue every business should raise as much capital as they possibly can, provided it meets their dilution or ownership criteria. But at the end of the day,…

AI assessment note: “you actually create negative value for the business by putting too much capital in too fast”

Q You mentioned the production board there. I do want to dive in. I want to start actually a little bit on the structure, because it's a, it's an unusual structure. It's a permanent capital vehicle. For those that don't know, how does that structure differ to a traditional fund, Dave?

A We're a lot like company, so we have a balance sheet. We raised some money from investors. We have shareholders. They all own shares in the company. I own shares in the company, and unlike a fund, it's not just committed capital. We actually take money. We put in a checking account, and we hold it there, and then we can use it to do whatever we want. We run R&D cycles. We start businesses. Occasionally, we'll make minority investments, but that capital is very flexible, and it's primarily used for the building and operating of businesses that we're the majority owner in, but that we do set up as independent C-Corps, so they are a Standalone companies. We are the majority owner in those companies, but we construct a board. The people that work at that company all have options and equity in that company, and in many cases later on, we'll bring in outside investors into those individual companies. So even though we are the original majority owner and holding company that owns those shares, that owns those businesses, we do kind of, you know, sell stakes in those businesses over time as they need additional growth capital.

AI assessment note: “unlike a fund, it's not just committed capital. We actually take money.”

Q But I think that's why success in venture is almost cyclical, because when you look at Sequoia, they don't need money, like, respectfully, and they've earned it and well done to them, but they don't need the marshmallow now. Why would we take it off the table?

A I think that's true, right? And so, Sequoia Founders Fund, this is where I think Marc Andreessen's point is It's quite fair, which is this bifurcation in the market that's underway, which is the folks that have made it, they've gotten to the top of Mount Everest. At this point, I would argue those funds are post-economic, and now they can operate more rationally over the long run, like Founders Fund, like Sequoia, like Andreessen Horowitz. Whereas, you know, the mid-level funds, the six hundred million dollar third fund or second fund of, you know, four, four or five folks, GPs, they're like, look, if we could take a two hundred million dollar carry check, we'll take it, versus like waiting another seven years Because maybe they haven't had that big payday. They don't own that hundred fifty million dollar home that Marc Andreessen owns in Malibu, right? So there's an incentive for them to want to take the distribution check and exit the position. And I see this a lot with my friends. And it's funny because I see different behavior with friends of mine that are at different economic strata. And there's an infinite number of economic strata. I've come to realize both directions, by the way. And as you move your way up that economic strata to the top level, you have less of an incentive to do those things that are short-sighted, that can give you a huge Payday, because you don't n…

AI assessment note: “At this point, I would argue those funds are post-economic”

Q It has indeed, but I want to start with a little bit from the beginning, really. So take me back. How did you make your way into the world of startups, and then how did you make that transition more recently into the full-on world of investing and kind of pure company building?

A Yeah, I did my undergrad degree in astrophysics at UC Berkeley. I was in the Bay Area during the dot You know, I was working in a government lab getting bored to death doing mathematical models. Meanwhile, I was reading the Wall Street Journal and seeing kids in my dorm make a million dollars on some .com startup they had built, and it seemed like a better place to make an impact in the world was to go across the bay and live in San Francisco and work in tech. So when I graduated in 2001, I interviewed and got a job in technology investment banking. I'd never taken a finance business or accounting class in my life. I'd only been a physics major. I played a lot of poker in college, so I guess that helped me get the A job. And ultimately, the investment banking job led to me being exposed to hundreds of technology companies, and then I started working at Google in early 2004, and left Google at the end of oh six to start my company, the Climate Corporation.

AI assessment note: “left Google at the end of oh six to start my company, the Climate Corporation.”

Q Does the proliferation of capital today, does that pose a competitive threat to you? When you think about partnering with great entrepreneurs, building ambitious products, they can get incredibly high prices with limited dilution from some of the big names that we mentioned earlier. Does that pose a competitive threat to you, or do you think actually it's just a fundamentally different landscape?

A No, so that's not where we participate. We spend a lot of time in markets, the life sciences, Food, agriculture, human health, you know, markets that we start to know very well. We spend a lot of time with scientists and academics and researchers and engineers that are working on emerging technologies, and we read a lot of papers, a lot of scientific papers and journals. What we're trying to do is we're trying to identify scientific and engineering breakthroughs that can be applied to the markets in a non-obvious way. To connect that dot, we try and bring the right people in to help build that business. So there'll be a research paper published, let's say. And some new discovery was made. We'll go find the best scientist we know with our concept on how can we take that discovery and build a new business or create a new business model. And that scientist and research team, we say, guys, can you run an R&D cycle with us? If this works, we're going to start a company. And you can be the chief science officer or the CTO. And then sometimes we'll bring in a CEO on day one. Sometimes the CEO doesn't even show up for three years, depending on kind of, you know, the build cycle on the business. Because a lot of what we do is what people call deep tech. And so sometimes we'll just have R&D. Once the R&D de-risk We start a business, and then after the business kind of builds their first …

AI assessment note: “No, so that's not where we participate.”

Q You mentioned income inequality there. You obviously, Climate Corp, you know, worked on climate for a long time, close to 10 years, nine and a half years. When you look at the different array of problems that we have at our feet today, where do you spend the most of your time worrying?

A I don't worry. So I'm extremely techno-optimistic. I see myriad solutions to all of the problems we face as a species today. So from a fundamental threat perspective, I'm less worried about the long-range outcome for civilization and our species and our planet. We have the opportunity to kind of resolve energy, resolve carbon, resolve human health. I mean, many of these challenges are resolvable based on first principles analysis of science as it sits today. What's going to be challenging is the next couple of decades as our species kind of meanders our way to those outcomes. There's more kind of, I think, social issues than there are technical, technological issues to try and resolve as, you know, we kind of realize that, hey, maybe, you know, the United States doesn't have primacy, right, in the century. What is the right governance Structure for a people. Is it an old school model of democracy or socialism, or maybe a new school model of decentralized governance, right? So what is money going to be? And so these are going to cause, like, really challenging social issues that we're going to resolve. Meanwhile, there's this wonderful substrate of society called science, and science continues to plug away and solve problems, and then all of a sudden, you know, we pop up 40 years later, and we're all living to 200 years old, and we're all flying around in, in cars, and we all ha…

AI assessment note: “I don't worry. So I'm extremely techno-optimistic.”

Q Given the majority owner element, in terms of outcome scenario planning, how do you think about attractive enough exit? Because a two hundred million exit when you own 75% is pretty good if you put in five million. But for a fund, that's not a good exit. But for you with this structure, it is a good exit. How do you think about attractive enough outcome scenario planning?

A Yeah, so our objective is not exits. Our objective is business value creation. So I think about absolute value creation across our portfolio of businesses. At any point, if the business value creation rate starts to diminish, meaning like each year or for the next couple of years, we don't think we're going to be able to get the value on this thing up by another 50%, a hundred percent. Maybe we should turn it into cash and reinvest that cash in other projects. So, you know, we can kind of take a different point of view the way that we're structured, right? We're not incentivized to have a liquidity that I don't make any Carried interest, right? I don't take any money out if we sell a company. That money is just recycled. It's got to go into something else. So if a business is continuing to compound value, continuing to grow, continuing to make meaningful, you know, business advances, great. Let's keep owning it. And, you know, eventually maybe it goes public. Maybe it gets acquired when that kind of value accrual stops. But I think you may have noticed recently Sequoia kind of did this restructuring. And I think it's for this very point, you know, a lot of the companies that Sequoia has invested in tremendous, incredible businesses like DoorDash and others, right? They put money in. Thing goes public. The traditional model of distribute your shares But so much of the value is c…

AI assessment note: “our objective is not exits. Our objective is business value creation.”

Q You mentioned the production board there. I do want to dive in. I want to start actually a little bit on the structure, because it's a, it's an unusual structure. It's a permanent capital vehicle. For those that don't know, how does that structure differ to a traditional fund, Dave?

A We're a lot like company, so we have a balance sheet. We raised some money from investors. We have shareholders. They all own shares in the company. I own shares in the company, and unlike a fund, it's not just committed capital. We actually take money. We put in a checking account, and we hold it there, and then we can use it to do whatever we want. We run R&D cycles. We start businesses. Occasionally, we'll make minority investments, but that capital is very flexible, and it's primarily used for the building and operating of businesses that we're the majority owner in, but that we do set up as independent C-Corps, so they are a Standalone companies. We are the majority owner in those companies, but we construct a board. The people that work at that company all have options and equity in that company, and in many cases later on, we'll bring in outside investors into those individual companies. So even though we are the original majority owner and holding company that owns those shares, that owns those businesses, we do kind of, you know, sell stakes in those businesses over time as they need additional growth capital.

AI assessment note: “unlike a fund, it's not just committed capital.”

Q And what I mean by that is a business like DoorDash, when you're investing early, you have to project out a long way before you see that gross margin, before you see the benefits of scale, and the economies of scale that come with it. But in the beginning, and in the first three to five years, it looks ugly from a margin perspective. How do you think about that?

A You know, a lot of our businesses struggle with unit economics until scale, so I don't mean to diminish that point. So it is critical, though, to have a first principles Ground truth based fundamental model on like, how do you get to the unit economics? How do you get to the LTV to CAC? How do you know that these things can actually be delivered? In DoorDash's case, you can do price testing and you can price elasticity, like how much can our customers actually willing to pay? How much are restaurants willing to pay? And the delivery network may be marginally inefficient today, but at scale, the delivery network gets more efficient. I can believe that. And then based on what people are willing to pay and what restaurants are willing to pay, I can see that the unit economics work out. I actually with the DoorDash founder last night, funny enough, one of the things he mentioned to me was They do not think they would have as successful as they were if Travis was still CEO of Uber. You know, there was an aggressiveness that went out of the market that gave them pricing power and gave them an ability to compete effectively after Travis is ultra aggressive, you know, pushing everyone else out of the way by basically, you know, taking away any margin possibility. So there are also external factors that are going to drive success. And in that case, they had room to expand. They had room…

AI assessment note: “it is critical, though, to have a first principles Ground truth based fundamental model”

Q How do you think about a continuous funding model? When you think about projects that you work on and back and start, how do you think about the funding life cycle of that business?

A Yeah, so for each of them, during the R&D phase, we're typically trying to demonstrate what we call a proof of concept or a prototype, which is like, is this technically feasible? You know, going back to that first principle point I made earlier about, like, can you make a product? You know, in the software world, that seems like the simplest thing, and you move right past it. Of course, anyone can write a website or an app or whatever, but in technically difficult businesses, in life sciences, Synthetic biology, you know, the kinds of areas that we're operating in, you need to actually prove that the science or the engineering works. So that's a proof of concept or prototype cycle. During that phase, we're just funding it, and, you know, usually there's a budget against it, so we'll say, here's how long we think it'll take, here's how much we're going to fund against it, here are the things we're trying to prove. Once we prove them, then we're going to start a business. Before we start a business, we build a milestone and budget plan. So we say, like, look, here's how much it's going to take to achieve these outcomes in the business, here's what those outcomes are going to do from a value creation perspective, like if we can do X, This business is going to be worth Y. If we can do, you know, A, this business is going to be worth B. And so we kind of ask ourselves the question,…

AI assessment note: “During that phase, we're just funding it... build a milestone and budget plan.”

Q I do want to talk about kind of distribution to LPs there, but I just, I'm too interested on one element, which is like, you know, venture funds are based on diversification models, 25 lines, 30 lines, commonly the suggestive wisdom. How do you think about diversification on a project basis, given the majority holding in the ownership structures that you have?

A I think in terms of absolute value creation across a portfolio, if I have a business, let's say the business is a golden goose, and I just feed the golden goose capital, and it makes eggs that are worth 10 times as much as the capital I feed it, I should put all my capital into that golden goose. If I have high certainty and high value accrual by applying a concentrated amount of capital into one bet, maybe that's what I should do. Someone you've had on your show, I don't know if he's talked about it publicly, from probably the top performing venture fund or second or third top, probably top performing. I don't know if he's talking about this publicly, but basically their point of view at this venture fund is they should be making one massive bet each fund cycle. Like they should take at least a quarter of the fund. And yeah, and basically making like one big bet on something that you have high conviction on. So, you know, I don't think in terms of like dribbling out dollars across 50 companies and then hoping thousand flowers bloom. We spend a lot of time at the production board, right? We have about 25 people at our holding company level, mostly in operation. So we're mostly helping build these businesses. And so we have to spend our, not just our capital, but also our time. And so we don't want to have lots of little bets sprinkled around where people are making calls to us …

AI assessment note: “I don't think in terms of like dribbling out dollars across 50 companies”

Q I do have to, there's two elements I just want to unpack before we dive into actually what we plan to discuss. You mentioned kind of early stage being very reactive. In terms of price sensitivity, what have been some of your big lessons on your relationship to price, and how price sensitive or not you are?

A You know, I will say there have been a number of examples where I've been offered the opportunity to invest in companies that I turned down based on price. As you've heard, I'm sure time and time again, that's Really not the reason to pass on a company. If you believe in the team, you believe in the market, you believe in the technology competency, you believe they can move up that business value creation framework, you know, let the market set the price. David Sachs does a good job kind of framing this, which is like, look, we're not price makers, we're price takers, like, you know, let the market set the price, and we'll determine if the business is a good business or not, and if we want to back them.

AI assessment note: “that's Really not the reason to pass on a company.”

Q Does the proliferation of capital today, does that pose a competitive threat to you? When you think about partnering with great entrepreneurs, building ambitious products, they can get incredibly high prices with limited dilution from some of the big names that we mentioned earlier. Does that pose a competitive threat to you, or do you think actually it's just a fundamentally different landscape?

A No, so that's not where we participate. We spend a lot of time in markets, the life sciences, Food, agriculture, human health, you know, markets that we start to know very well. We spend a lot of time with scientists and academics and researchers and engineers that are working on emerging technologies, and we read a lot of papers, a lot of scientific papers and journals. What we're trying to do is we're trying to identify scientific and engineering breakthroughs that can be applied to the markets in a non-obvious way. To connect that dot, we try and bring the right people in to help build that business. So there'll be a research paper published, let's say. And some new discovery was made. We'll go find the best scientist we know with our concept on how can we take that discovery and build a new business or create a new business model. And that scientist and research team, we say, guys, can you run an R&D cycle with us? If this works, we're going to start a company. And you can be the chief science officer or the CTO. And then sometimes we'll bring in a CEO on day one. Sometimes the CEO doesn't even show up for three years, depending on kind of, you know, the build cycle on the business. Because a lot of what we do is what people call deep tech. And so sometimes we'll just have R&D. Once the R&D de-risk We start a business, and then after the business kind of builds their first …

AI assessment note: “No, so that's not where we participate. We spend a lot of time in markets”

Q Given the majority owner element, in terms of outcome scenario planning, how do you think about attractive enough exit? Because a two hundred million exit when you own 75% is pretty good if you put in five million. But for a fund, that's not a good exit. But for you with this structure, it is a good exit. How do you think about attractive enough outcome scenario planning?

A Yeah, so our objective is not exits. Our objective is business value creation. So I think about absolute value creation across our portfolio of businesses. At any point, if the business value creation rate starts to diminish, meaning like each year or for the next couple of years, we don't think we're going to be able to get the value on this thing up by another 50%, a hundred percent. Maybe we should turn it into cash and reinvest that cash in other projects. So, you know, we can kind of take a different point of view the way that we're structured, right? We're not incentivized to have a liquidity that I don't make any Carried interest, right? I don't take any money out if we sell a company. That money is just recycled. It's got to go into something else. So if a business is continuing to compound value, continuing to grow, continuing to make meaningful, you know, business advances, great. Let's keep owning it. And, you know, eventually maybe it goes public. Maybe it gets acquired when that kind of value accrual stops. But I think you may have noticed recently Sequoia kind of did this restructuring. And I think it's for this very point, you know, a lot of the companies that Sequoia has invested in tremendous, incredible businesses like DoorDash and others, right? They put money in. Thing goes public. The traditional model of distribute your shares But so much of the value is c…

AI assessment note: “our objective is not exits. Our objective is business value creation.”

Q I do want to talk about kind of distribution to LPs there, but I just, I'm too interested on one element, which is like, you know, venture funds are based on diversification models, 25 lines, 30 lines, commonly the suggestive wisdom. How do you think about diversification on a project basis, given the majority holding in the ownership structures that you have?

A I think in terms of absolute value creation across a portfolio, if I have a business, let's say the business is a golden goose, and I just feed the golden goose capital, and it makes eggs that are worth 10 times as much as the capital I feed it, I should put all my capital into that golden goose. If I have high certainty and high value accrual by applying a concentrated amount of capital into one bet, maybe that's what I should do. Someone you've had on your show, I don't know if he's talked about it publicly, from probably the top performing venture fund or second or third top, probably top performing. I don't know if he's talking about this publicly, but basically their point of view at this venture fund is they should be making one massive bet each fund cycle. Like they should take at least a quarter of the fund. And yeah, and basically making like one big bet on something that you have high conviction on. So, you know, I don't think in terms of like dribbling out dollars across 50 companies and then hoping thousand flowers bloom. We spend a lot of time at the production board, right? We have about 25 people at our holding company level, mostly in operation. So we're mostly helping build these businesses. And so we have to spend our, not just our capital, but also our time. And so we don't want to have lots of little bets sprinkled around where people are making calls to us …

AI assessment note: “I don't think in terms of like dribbling out dollars across 50 companies”

Q You mentioned income inequality there. You obviously, Climate Corp, you know, worked on climate for a long time, close to 10 years, nine and a half years. When you look at the different array of problems that we have at our feet today, where do you spend the most of your time worrying?

A I don't worry. So I'm extremely techno-optimistic. I see myriad solutions to all of the problems we face as a species today. So from a fundamental threat perspective, I'm less worried about the long-range outcome for civilization and our species and our planet. We have the opportunity to kind of resolve energy, resolve carbon, resolve human health. I mean, many of these challenges are resolvable based on first principles analysis of science as it sits today. What's going to be challenging is the next couple of decades as our species kind of meanders our way to those outcomes. There's more kind of, I think, social issues than there are technical, technological issues to try and resolve as, you know, we kind of realize that, hey, maybe, you know, the United States doesn't have primacy, right, in the century. What is the right governance Structure for a people. Is it an old school model of democracy or socialism, or maybe a new school model of decentralized governance, right? So what is money going to be? And so these are going to cause, like, really challenging social issues that we're going to resolve. Meanwhile, there's this wonderful substrate of society called science, and science continues to plug away and solve problems, and then all of a sudden, you know, we pop up 40 years later, and we're all living to 200 years old, and we're all flying around in, in cars, and we all ha…

AI assessment note: “I don't worry. So I'm extremely techno-optimistic.”

Q How do you think about a continuous funding model? When you think about projects that you work on and back and start, how do you think about the funding life cycle of that business?

A Yeah, so for each of them, during the R&D phase, we're typically trying to demonstrate what we call a proof of concept or a prototype, which is like, is this technically feasible? You know, going back to that first principle point I made earlier about, like, can you make a product? You know, in the software world, that seems like the simplest thing, and you move right past it. Of course, anyone can write a website or an app or whatever, but in technically difficult businesses, in life sciences, Synthetic biology, you know, the kinds of areas that we're operating in, you need to actually prove that the science or the engineering works. So that's a proof of concept or prototype cycle. During that phase, we're just funding it, and, you know, usually there's a budget against it, so we'll say, here's how long we think it'll take, here's how much we're going to fund against it, here are the things we're trying to prove. Once we prove them, then we're going to start a business. Before we start a business, we build a milestone and budget plan. So we say, like, look, here's how much it's going to take to achieve these outcomes in the business, here's what those outcomes are going to do from a value creation perspective, like if we can do X, This business is going to be worth Y. If we can do, you know, A, this business is going to be worth B. And so we kind of ask ourselves the question,…

AI assessment note: “Before we start a business, we build a milestone and budget plan.”

Q in the past. My concern is when they stuff so much cash, I call it the VC foie grashing of startups. When they stuff so much cash into companies so early, when they don't have playbooks, when they don't have repeatability, you actually distort the execution plans of those companies. Do you share my concern, actually, of too much cash too soon that changes the plans of otherwise could-be-good companies?

A I have a fundamental rubric for business value creation. It's super simple, but we could spend hours dissecting it. Number one is can you make a product? Technical competency. Number two is do customers want your product? Product market fit. Number three is can you make a positive gross margin selling your product? Number four is can you deploy marketing dollars to acquire customers in a positive way, meaning LTV greater than CAC. The next step is Can you actually increase that LTV to CAC or increase your unit economics as you scale? And this is an important one that gets distorted in a lot of these cases. And finally, it's can you become a platform, meaning can you be multiple product or bring partners on so you get true leverage out of the network you've built between customers and suppliers and in some form. Those step functions really do define value creation. The problem that you point out is that in a lot of cases, the assumption is you're going to get to that next step of value creation with capital, and it's not necessarily true. And then you're stuck where you completely fail on the next Step of value creation, and you actually create negative value for the business by putting too much capital in too fast. So I would argue every business should raise as much capital as they possibly can, provided it meets their dilution or ownership criteria. But at the end of the day,…

AI assessment note: “you actually create negative value for the business by putting too much capital in too fast”

Q Can I honestly say, David, it's a bit of a personal one, but like, I get joy from going to the gym and hanging out with my family. Honestly, I would more just want to win. So I guess my question to you is, like, how do you think about your relationship to money, especially kind of having this incredible perspective of the different economic strata's?

A I think you've got to be cognizant of the fundamental driver of human psychology. I think in Sanskrit it's called daka, which is desire. Human happiness, I don't think, is defined by the absolute condition of the human. Human happiness, and I've talked about this in the past before, human happiness is defined by the relative change in one's condition. And so what happens is, over time, there's a Researcher from, I think, UVA. People are happier as their income levels go up until they make about 60 grand a year. This was as of a few years ago, so it's probably higher now. After that, income is no longer a predictor of happiness. It's the change in income from one year to the next. So if your income's going up 10% a year, you're happy. If your income's going up 20% a year, you're happier. If your income's going up 30% a year, you're way happier, and so on. This creates the unhappiness cycle, which is when you look beyond where you are today, you end up seeing that next Strata. You end up seeing that next level, and you're unhappy because you're not there yet, right? This is just how human brains are wired, and it's how we survived as a species and got ourselves, this notion of desire drives us to go and colonize the world and eat everything and kill everything. You know, fundamentally, it also causes, you know, deep-rooted unhappiness without us finding our next line of sight and…

AI assessment note: “I'm much more interested in kind of like solving fundamental problems”

Q You said there about kind of joining technology investment bank in 2001. Seeing the macro volatility that you did, how did that impact how you think about investing in company building stage, you think?

A Well, it's definitely not the rock star glamour show that I think it's made out to be for most People that aren't ever actually building businesses, particularly when I worked in investment banking, we had 11 people in my analyst class. When we started, we were left with two after just two years during the dot com explosion. And then I've just seen it time and time again that, you know, none of these businesses are a straight line to success. And we ended up during that period of time actually selling multiple public companies for less than their cash balance because their business models were so flawed. They were burning so much money. Private equity firm, vulture capital firms were coming in and scooping them up for less than cash. And I worked on fairness opinions for these deals. So, you know, it was a really interesting introduction. And then you go to the greatest monopolistic rocket ship economic engine of all time, Google, and you see how things can and should be done. And you learn a lot in that experience. And then, you know, you try and build things yourself and realize what does and doesn't work. And man, there's a million paths to success and a 1,000,001 paths to failure.

AI assessment note: “none of these businesses are a straight line to success”

Q I mean, with that perspective and kind of mentioning that kind of vulture PE firms buying for less than cash, where do you think we are in the cycle stay? Everyone says impending rate hikes It's all going down. Blood's going to be on the streets. How do you think about it?

A No, I mean, look, things are very different today in the sense that historically technology companies sold technology to other businesses. Today, what we call technology companies are rewriting those other businesses. Across nearly every industry, we are seeing a tech competitor that is technology-led or technology-first kind of reinventing the operational model of traditional businesses, and it's having a dramatic impact. I mean, look at Airbnb and hotels and Uber and DoorDash. I mean, you can go through the category list. These aren't restaurants. These aren't hotel operators. These aren't, you know, taxi cab companies. I think that there is a cycle that is associated with interest rates that asks the question, how far out into the future are you willing to look? So when interest rates are really low, you're forced to look out 1015 years to make a return because you're only making one percent on bonds for the next 10 years. When interest rates go up, you're like, hey, I can make four percent and invest in bonds for the next five years. Why would I want to look out past five years For, you know, whether or not I can make a return. And that's what drove a lot of the inflation and pricing. It doesn't mean that businesses in technology today or technology disrupting older industries are fundamentally flawed. Rather, it's a resetting of the time horizon and the value creation cycl…

AI assessment note: “Rather, it's a resetting of the time horizon and the value creation cycle.”

Q Can I honestly say, David, it's a bit of a personal one, but like, I get joy from going to the gym and hanging out with my family. Honestly, I would more just want to win. So I guess my question to you is, like, how do you think about your relationship to money, especially kind of having this incredible perspective of the different economic strata's?

A I think you've got to be cognizant of the fundamental driver of human psychology. I think in Sanskrit it's called daka, which is desire. Human happiness, I don't think, is defined by the absolute condition of the human. Human happiness, and I've talked about this in the past before, human happiness is defined by the relative change in one's condition. And so what happens is, over time, there's a Researcher from, I think, UVA. People are happier as their income levels go up until they make about 60 grand a year. This was as of a few years ago, so it's probably higher now. After that, income is no longer a predictor of happiness. It's the change in income from one year to the next. So if your income's going up 10% a year, you're happy. If your income's going up 20% a year, you're happier. If your income's going up 30% a year, you're way happier, and so on. This creates the unhappiness cycle, which is when you look beyond where you are today, you end up seeing that next Strata. You end up seeing that next level, and you're unhappy because you're not there yet, right? This is just how human brains are wired, and it's how we survived as a species and got ourselves, this notion of desire drives us to go and colonize the world and eat everything and kill everything. You know, fundamentally, it also causes, you know, deep-rooted unhappiness without us finding our next line of sight and…

AI assessment note: “there are certainly physical manifest things that I care about and want in the world”

Q It has indeed, but I want to start with a little bit from the beginning, really. So take me back. How did you make your way into the world of startups, and then how did you make that transition more recently into the full-on world of investing and kind of pure company building?

A Yeah, I did my undergrad degree in astrophysics at UC Berkeley. I was in the Bay Area during the dot You know, I was working in a government lab getting bored to death doing mathematical models. Meanwhile, I was reading the Wall Street Journal and seeing kids in my dorm make a million dollars on some .com startup they had built, and it seemed like a better place to make an impact in the world was to go across the bay and live in San Francisco and work in tech. So when I graduated in 2001, I interviewed and got a job in technology investment banking. I'd never taken a finance business or accounting class in my life. I'd only been a physics major. I played a lot of poker in college, so I guess that helped me get the A job. And ultimately, the investment banking job led to me being exposed to hundreds of technology companies, and then I started working at Google in early 2004, and left Google at the end of oh six to start my company, the Climate Corporation.

AI assessment note: “left Google at the end of oh six to start my company, the Climate Corporation.”

Q No, it's great, but my final one for you is, project us out 20 years. What does the production board look like then?

A You know, I would hope that we would be a public company. I think that that's important because it would give us access to capital markets to raise additional capital to have equity to a currency we could use, a publicly traded currency to do things with. And, you know, I hope that we have significant stakes in significantly profitable businesses that are compounding value and doing meaningful things that are changing The face of the earth. I care very deeply about advancing systems of production, advancing industries, advancing human health in such a way that we can kind of reduce the impact and the destruction on the planet improves people's lives and livelihoods. And, you know, and it would be great for these businesses for this, not to be kind of a fundamental, like cash in cash out business where we're trading stocks or, you know, trying to make money just to make money. But look for me, profitability and scaling profitability is a reflection of value creation. It means that you've created something of value because the market is willing to pay you every year for it. That's why I love capitalism so much more than nonprofits or governments as ways to solve problems, because if someone's willing to pay you to solve the problem and you can make money doing it, it means that you've created a tremendous amount of value, and it creates an engine that drives that solution exponen…

AI assessment note: “I would hope that we would be a public company.”

Q There are a lot of scientific breakthroughs. From a resource allocation perspective, and from a time allocation perspective, and from a prioritization perspective, how do you think about the breakthroughs which gain your attention, time, and interest Versus those that are lasso. What makes a great one?

A Think about a funnel. The funnel being like, here's all the research that's going on in the world. And I would say that that funnel needs to be a big wide vacuum, and there just needs to be a lot of ingest going on there. Separately, the prioritization needs to arise from kind of understanding where there are big problems that need to be solved. Kind of first principles for me is always, you got to solve problems. What problems do you solve? Well, let's solve the biggest ones. Okay, well, what's the smartest way to solve those biggest problems with no knowns? Okay, well, what's the academic research showing us? You know, what's the technology showing us? What's cutting edge? What are things that other people haven't seen? What's non-obvious? And then that ability to answer that question is drawn from that wide funnel of science and academic research that we take in. And so we can start to answer those, you know, problem solving questions with a fundamental understanding of what's going on in science, a fundamental understanding of what, you know, kind of new emerging technologies might be. And then from a business model perspective, how can we apply them in such a way that can kind of solve the

AI assessment note: “prioritization needs to arise from kind of understanding where there are big problems”

Q No, not at all. I quite enjoyed it, to be honest. Tell me, what's been the biggest challenge so far in building the production board?

A There was a lecture that a woman named Elizabeth Gilbert gave at Ted, and she gave a Ted talk years ago about how she had this great book called Eat, Pray, Love that had great success and accolades, and then she felt this extraordinary pressure on success because she had been successful before the expectation was she would be successful again, and her next book would be just as good. I started a business at the end of 2006. I sold it for a little over a billion dollars at the end of 2013, and I was 33 years old at the time, and I think it created an expectation or a belief that I was a great operator, that I was a great business builder, that I had some sort of superpower or some set of superpowers. That allowed me to do that, and I think that that expectation leads to a great degree of pressure and expectation on myself that everything I do, everything I touch has to succeed, because my mentality when I was building my business was I have to win. There is no option for failure. There is no chance this business will die. I'm absolutely going to make sure it wins. I'm going to do everything, and I killed myself, and we got it done, and I think that the pressure that that has to be repeated over and over again is particularly in this model where I'm building new businesses. I've come to the harsh realization over the last few years that you're going to have winners, and you're go…

AI assessment note: “the hardest thing for me has been grappling with the kind”

Q No, not at all. I quite enjoyed it, to be honest. Tell me, what's been the biggest challenge so far in building the production board?

A There was a lecture that a woman named Elizabeth Gilbert gave at Ted, and she gave a Ted talk years ago about how she had this great book called Eat, Pray, Love that had great success and accolades, and then she felt this extraordinary pressure on success because she had been successful before the expectation was she would be successful again, and her next book would be just as good. I started a business at the end of 2006. I sold it for a little over a billion dollars at the end of 2013, and I was 33 years old at the time, and I think it created an expectation or a belief that I was a great operator, that I was a great business builder, that I had some sort of superpower or some set of superpowers. That allowed me to do that, and I think that that expectation leads to a great degree of pressure and expectation on myself that everything I do, everything I touch has to succeed, because my mentality when I was building my business was I have to win. There is no option for failure. There is no chance this business will die. I'm absolutely going to make sure it wins. I'm going to do everything, and I killed myself, and we got it done, and I think that the pressure that that has to be repeated over and over again is particularly in this model where I'm building new businesses. I've come to the harsh realization over the last few years that you're going to have winners, and you're go…

AI assessment note: “hardest thing for me has been grappling with the kind”

Q There are a lot of scientific breakthroughs. From a resource allocation perspective, and from a time allocation perspective, and from a prioritization perspective, how do you think about the breakthroughs which gain your attention, time, and interest Versus those that are lasso. What makes a great one?

A Think about a funnel. The funnel being like, here's all the research that's going on in the world. And I would say that that funnel needs to be a big wide vacuum, and there just needs to be a lot of ingest going on there. Separately, the prioritization needs to arise from kind of understanding where there are big problems that need to be solved. Kind of first principles for me is always, you got to solve problems. What problems do you solve? Well, let's solve the biggest ones. Okay, well, what's the smartest way to solve those biggest problems with no knowns? Okay, well, what's the academic research showing us? You know, what's the technology showing us? What's cutting edge? What are things that other people haven't seen? What's non-obvious? And then that ability to answer that question is drawn from that wide funnel of science and academic research that we take in. And so we can start to answer those, you know, problem solving questions with a fundamental understanding of what's going on in science, a fundamental understanding of what, you know, kind of new emerging technologies might be. And then from a business model perspective, how can we apply them in such a way that can kind of solve the

AI assessment note: “prioritization needs to arise from kind of understanding where there are big problems”

Q You said there about kind of joining technology investment bank in 2001. Seeing the macro volatility that you did, how did that impact how you think about investing in company building stage, you think?

A Well, it's definitely not the rock star glamour show that I think it's made out to be for most People that aren't ever actually building businesses, particularly when I worked in investment banking, we had 11 people in my analyst class. When we started, we were left with two after just two years during the dot com explosion. And then I've just seen it time and time again that, you know, none of these businesses are a straight line to success. And we ended up during that period of time actually selling multiple public companies for less than their cash balance because their business models were so flawed. They were burning so much money. Private equity firm, vulture capital firms were coming in and scooping them up for less than cash. And I worked on fairness opinions for these deals. So, you know, it was a really interesting introduction. And then you go to the greatest monopolistic rocket ship economic engine of all time, Google, and you see how things can and should be done. And you learn a lot in that experience. And then, you know, you try and build things yourself and realize what does and doesn't work. And man, there's a million paths to success and a 1,000,001 paths to failure.

AI assessment note: “none of these businesses are a straight line to success”