The Exchanges

Q But how did they get in, how did they get on radio or MTV if they were independent?

A This idea, the power of emerging subculture, They were building something on the way up. Remember, man, if you get 200,000 people who love you, the amount of money in that is tremendous, and they grow with you. They didn't need MTV and radio at the time. They may have had a local radio station. They were down in New Orleans. They had a community of people who bought into this idea, and they were building No Limit Records, and that contagion and growth kept going throughout the South. And, and, you know, at some point, MTV had to play it. You couldn't be left out. Right? So it wasn't about you, you, you needed it at some point because it was so popular versus it needing you to break.

AI assessment note: “at some point, MTV had to play it. You couldn't be left out.”

Q Because it couldn't be to him, right? Were people afraid in Pixar to share, like, harsh feedback or, like, fight with Steve?

A No, no, not with Steve. You know, it was, uh, Uh, actually people, they, they, they would talk back with them. I mean, was there a little bit of fear? And it was obviously, you know, so well known that some people, a lot of people nervous. It was, I mean, there are people nervous about me too, just because the position, that's just a reality is when you're a position of either power or perceived power, that people react to you in a different way. And it's critical to be aware that that phenomenon takes place, because nobody will tell you that. They wouldn't admit it, but it happens. So if you're aware of it, then you can just sort of be a little more tuned in. There's another reason why you didn't go to the brain trust meetings, is that in order to get the dynamics right, that the people with power, either real or perceived power, need to shut the hell up for the first 10 to 15 minutes.

AI assessment note: “No, no, not with Steve. You know, it was... actually people, they would talk back”

Q But what are these mechanisms you're saying to, like, get to these other levels that you used?

A Well, one of them is the discussion is always about the topic. It isn't about who's right. So for me, the example would be in a, a healthy brain trust meeting, because you've got people working on a film. So what are the dynamics when you, you come together as a group, In order to discuss something, and you're discussing something that has problems. Just the nature of all these films is, it may be a great idea underneath it, but it's not gelling or it's not working right. The creative team presenting it know that it doesn't work, but it also means they're vulnerable. They feel vulnerable, and they're presenting it to their colleagues and people who are very successful. So if you're aware of that, then you can actually, uh, give them space in order to listen, because that's what we really want is for them to listen. But there are other dynamics that are going on. There are people in the room who may be new to the room, and they may want to demonstrate that they're capable of contributing. So if they put out an idea and it doesn't work, Then they may feel like they've embarrassed themselves or they haven't shown themselves worthy. They're not thinking about their relationship to it rather than about the problem. So that's a psychological thing that happens in the group. I throw out an idea. Is it accepted or rejected? That becomes a personal thing.

AI assessment note: “one of them is the discussion is always about the topic. It isn't about who's right.”

Q So we just remove the silos in Pixar? I don't know if I'm understanding.

A The idea was to remove the silos. I say that because there were three times in the history of Pixar in which a group arose that felt like they were second class and we, and we missed it and we were looking for it. So this is really hard and it's very subtle. As an example, after we're successful, we bring in some young people And they hear the early stories, because in the early stories that, uh, you know, when we're making Toy Story, people are spending a lot of time there in the, in the building, and there's a lot of clowning around, and, um, uh, these little hand scooter races around the building, and, you know, you know, funny things like that, all sorts of gags, and so forth. So you hear those stories, but now for somebody new in the building, What they see, because it's a few years later, is these people who had a lot of fun and were pretty irreverent, were now married and had kids, and at night they went home to their kids. So regardless of what you say, they don't want to look like they're out of place with these people they respect, because they're very successful. It doesn't matter what you say, they're emulating the behaviors that they see, and what they see are people who are going home at night. Meanwhile, The people that are going home at night to their families are saying to each other, what's wrong with these new people you're hiring? They don't have any sense o…

AI assessment note: “The idea was to remove the silos. I say that because there were three times”

Q So tell me how you think Apple's run, then?

A What I think is interesting about Apple is, when you look at it from the outside, it's, it's a functional org, right? And functional orgs, I used to work at Yahoo for a while. At where? At Yahoo. I sold one of my companies there. And I thought I didn't learn anything there, but I learned a lot about what not to do. It was a completely messed up company back then as well. I think I had four COs in like two and a half years or something. But all the EVPs and SVPs, they fought each other to the death and tried to hide information from each other. So supposedly on paper, I think Apple should not be very well positioned to be able to build that kind of product. I was marveled at why aren't those Functional leads just fighting each other. That's what usually happens. The only answer I've come to as I've spoken to people there is that it actually has to do with tenure of leadership, which is one of the principles I've also tried to internalize Spotify. So they have very long tenure at the, at the senior leadership, which means that these functional leads have found a way to work together to synchronize. So sometimes it's, it's the hardware function that innovates and takes the lead. And then, you know, Software and services follow, and sometimes it's a software function that takes the lead, and they follow. That only works if you have super high trust in the leadership, which I think …

AI assessment note: “it's a functional org... has to do with tenure of leadership”

Q What's the thing that keeps you up at night? Like, what do you think the weakest spot for Spotify is right now?

A I think the thing that keeps me up at night is not surprising What, what AI truly means in the limit. I'm pretty sure that media habits are going to change because of AI. And so I don't think it's an option to just sit still. But the way I think about it is the world moves in macro waves. You get some new technology. It often causes a bunch of havoc. Then there's some new business model that emerges and then things change, right? This was the original Spotify. We kind of rode on the microwave of cheap broadband and PCs, right? And then all of a sudden they were so ubiquitous and the, the broadband was so fast. You didn't actually need to own files anymore. You could just stream them, right? We realized that we built a business model around it that became very disruptive to the, to the, uh, download industry and so forth. And then you wait a few years, everything looked great. Then the smartphone came along, and now everything changes again. You have people that don't have a computer. We only had a free tier on the computers. We had no free tier. Turns out that while the PC and the internet, the desktop was, had such low latency that you could stream it. If you try to stream a song over cellular back in 2008, it wouldn't even start. It was 20 seconds to start. It would chop. So, like, everything changed again, and then we had to adapt to that, and we managed to. We came up with …

AI assessment note: “I think the thing that keeps me up at night is not surprising What, what AI truly means”

Q I know run their business on Ramp. I run my business on Ramp, and you should too. Go to Ramp.com to learn how they can help your business save time, save money, and grow revenue. That is Ramp.com. How did you get to the point where, you know, you're 22, you started your first company, you didn't know yourself. Now, several years later, you do. How did you do this?

A Well, I think, you know, it's, people will say trust your instinct, but I think instinct has to be developed. So my instinct when I was 22 is different from my instinct today because I think instinct is honed and refined over time. I think first and foremost, you have to get started. So you have to try things, and those micro-wins that felt as big as the massive ones today, you start to develop reps and patterns and confidence, which is so important. It's really hard to, like, Trust yourself or trust your gut if you're deeply insecure and you haven't developed a rhythm or you haven't had some successes. And this could be in entry level beginning positions. You know, I started out in real estate working for a developer in Brooklyn, developing shopping malls. But those little, like, wins I had, um, with the construction teams or, you know, times when I felt like I rose to the occasion, they set the foundation for my instincts and, and, and for the confidence that, That would come later. I also think, and, and I think this is increasingly true, especially the more demands there are on you and your time, and all of us have this to some degree with social media and, um, and text messages and emails and, like, the access the world has into, like, the private sanctuary of our homes and our lives just through the devices that we, we carry with us. I think it requires a tremendous amoun…

AI assessment note: “those micro-wins that felt as big as the massive ones today, you start to develop reps”

Q that, but there was something like, ah, the way I would like, ah, still down what you were saying is like, constraints are actually your friend. Yeah. If you don't, like you, you can't do everything. So if you, if you artificially constrain yourself, you can't, you, it forces you to be more creative. Can you talk about this? I feel like you've used this a bunch in your career.

A Yeah. It's like the idea of creating a palette and the albums that speak to me most are ones when you hear them, you know, If an artist has 20 albums, but you hear a song, you know, oh, that has to be on that album, that seventh album, because that's the only album that sounds like that. Even though the band always sounds like the band, This group of songs sounds different than all the rest, and it, and it may be that there's some, it was either recorded in a different way, or all the songs were about a particular thing, or they're using different instrumentation than they used to use. I like it when an album, like, stands alone outside of an artist's career as a defining moment in time. It's not just more of the same.

AI assessment note: “It's like the idea of creating a palette and the albums that speak to me”

Q but like, I'm not special. You know, I think that's, there's a lot of wisdom to that. It's like, man, there's Ten million me's and ten million you's all over the world or whatever it is. Do you think Jimmy's perspective on that is like the people that you've seen that were, had talent and had success and then destroyed it. Is there anything else that he's missing from there?

A I think those are all of them. It's like, because the last one takes into account a lot of like, there's both the The mask of overconfidence and ego, which is hiding insecurity, or there's the insecurity, but they're, they're really the same. You know, they're just presenting in two different ways. Two different people have the same overnight success. One of them gets really boastful and I'm the greatest that ever lived. And the other one is like, Oh my God, they're going to find out that I'm not, that I'm really a fake. But those are both the same people. It's the same. They're two sides of the same coin. The, the megalomania is a way of hiding the insecurity. It's a, it's a brave face. They might not know this. They rarely know it, you know. It's different sides of the same imbalance.

AI assessment note: “I think those are all of them. It's like, because the last one takes”

Q But is there anything that you remember, like discussions you had or stuff he told you, like, implicitly that you applied?

A No, I, I just remember the form of the discussion, which was a lot of very robust debate with, um, a lot of heat around it. And I used to say to people, you know, we argue all the time, uh, Barry and I, and he's right. 99% of the time, but one percent of the time I'm actually right. So that's how I learned from him. Uh, and he was, he was patient with me most of the time, but you had to have a strong stomach to, I mean, he was famous and, and fierce in those days. He was not, Like Junior, he was a very senior in the industry already, never mind what he's done since. And he was, he was scary. Oh, and by the way, like, it's not like if this job didn't work out of Fox or other people lining up to hire me. Like, I was young. I was newly married. I had a kid, had a mortgage. Like, I needed to keep my job. But I understood that this was his dialectic. And if you back down, if you didn't argue, you were done. I understood it wasn't personal. Just wasn't personal. Other people took it personally, like personal attack or criticism. I just knew that it wasn't. It's not like it was personal on the good side, either. It's not like if he were sitting here, he'd say, oh, yes, I love Strauss. I thought he was so amazing. He might not even remember I worked for him in those days. Therefore, I knew it wasn't personal. It wasn't about me. It was about the thing itself. It was arriving at the rig…

AI assessment note: “No, I, I just remember the form of the discussion”

Q Over a long period of time, that is an edge. Can you talk about that?

A That was a sort of a nice to have. The must have was we are going to give you the resources, creative and financial, to pursue your passion. We're not going to interfere creatively. We want you to make the best video games on earth. That was the pitch. And we mean it. And we will support you through thick and thin to do so more than any other company. Oh, and by the way, then we'll run a rational business organization. No one's going to scream at you. You're not going to find out that someone's getting indicted. We're not going to get sideways with the FTC. And, um, you know, it, it'll be like a real grownup company. And then over time, I couldn't promise this right away, but But I had to promise it. I said, we'll also have a solid balance sheet so that when we fail, inevitably you fail in the entertainment business, we can live to play another day. That took us a few years.

AI assessment note: “That was a sort of a nice to have. The must have was”

Q And I love what you said about why it might be effective. You said, I'm pretty sure it works because the method requires one to concentrate hard exclusively and frequently on what one wants. Can you say a little bit about that?

A Sure. I mean, I think having not done as much research as you, but having read a billion biographies, I was very focused growing up on success, sort of traditional success. But also political success. And I tried to sort of drill it down to, like, what is the factor that is most common among highly successful people? And the only thing I could come up with was they knew what they wanted. And it's not because you know what you want, like Napoleon Hill, you know, write it on your mirror, like, I want a million dollars on Thursday. It's because I wanted to build a diversified collection of media communications and entertainment assets supercharged by technology. Starting in a one and I've been laser focused on it ever since, which means I make choices that are in service of that. So here's magical thinking is I want to do that, but you know what? It's a very nice day out there. I'm going to the beach today, tomorrow, and the next day. You just told me like you're a reasonably successful guy. I think you just told me you work seven days a week. I have, you know, three jobs. I work really hard. Why? Because I have a set of goals and I'm focused on achieving those goals. Now there's still no guarantee. There's still no guarantee. But by knowing what you want and working in service of what you want, you are much more likely to get what you want than if you don't know what you want or …

AI assessment note: “by knowing what you want and working in service of what you want”

Q borrowing? You're, you're down 3.8 billion market cap, right? Explain like how you were thinking, the difference between how you were thinking about inside the company versus, you know, the world telling you about your business, because there had to be a lot of people around you saying, what the hell's wrong with you? You gotta be nuts going into debt. To buy back your stocks of this shitty company.

A I mean, look, a lot of times, like, people like to be conservative when it comes to cash, and so one, to, to lever up is scary to people, but then two, to lever up to buy your own shares, when everyone's telling you your, your company's a piece of shit, that's really scary to do. I never believed in saving cash for a rainy day. I feel like I'm a big believer in what we're building. I believe in where we're going. So if I believe in the future, and we're a really high cash-generated business, We should always be buying back our shares. So at a bottom point where the valuation became that juicy, there's no reason to be afraid of it. And the good news is, I mean, I don't have a lot of experience with boards and we can talk about that in a bit, but our board was very supportive because it's not rocket science. You look at a, a multiple of five times cashflow and you go, okay, why don't we just buy all the shares by as much as you possibly can. And so Because it was so cheap, and we had a lot of conviction on our future growth prospects, we just hit it, and hit it as hard as we could.

AI assessment note: “Because it was so cheap, and we had a lot of conviction on our future”

Q Okay, so what is, taking back to your decisions, you're saying it's like, oh, we're onto something, this is going to work. What's your next thought?

A So then what starts happening is Roblox started a persistently viral mode, um, Like, we could track the growth day by day, week by week. It's like, this is organic growth. This is not paid acquisition. It's just like, we're sitting back and watching that. We then, the fun started being there. It was just like, 10 concurrent, hundred concurrent, thousand concurrent, 10,000 concurrent. Creations are getting better. We know everything we do with Roblox Studio, the better Roblox Studio gets, The more viral it is, the better the game engine is, the more viral it is. Um, very early on, to Eric's credit, I think, literally on week three or week four in the afternoon, when we're, now we're sitting there, we know the names of a lot of these people, there's hundreds of people. Eric said, um, we need to build the first safety moderation system, and And John and Matt and I all look at it and say, you're right. He's right. Oh my gosh. Like we got to get on this thing. So along the way, we build like a moderation system. We have user reporting, all of that. For a long time, Matt and, um, Eric and John and myself, we were the moderators, like we would switch off. So we got to get a vibe of that. And so this keeps marching on. And then Then finally we say, okay, how can we start making some money on this thing? Um, it's growing, we have costs, all of that. Um, interestingly enough, this is ano…

AI assessment note: “Eric said, um, we need to build the first safety moderation system”

Q This is what, one of the things I admire about you. So like, why, how the hell do you make that decision at 22, 23, 24?

A Well, I think we, we loved what we were doing. I mean, Bobby and I just loved working together. We loved making stuff. We saw a huge opportunity for the service and fundamentally the service was so different than what else was out there. And it was very clear that like we would have had to compromise on our vision and values if we sold the company. I mean, you think about almost every choice was the opposite of what was happening at the time, right? It was like permanent public social media on a feed. We were doing like private Messaging private ephemeral messaging, right? Uh, no public likes and comments, right? With like opening into the camera, not a feed, investing in things like augmented reality when everyone was investing in virtual reality, thinking that people were actually going to like wear a TV on their face. Like it's insane. Like it was insane. And I think like, you know, it makes no sense. And I think like we looked at that and we were like, wow, like, you know, if that, like, if that's like the direction people want to go, like that's scary for the world now. It's great in many ways that, like, all of these services have adopted our inventions. I mean, when we talked about, I mean, in 2012, 2013, the importance of privacy, people looked at us like we were insane. I mean, literally, they were like, what are you talking about privacy? Like, what? Like, that, remem…

AI assessment note: “we would have had to compromise on our vision and values if we sold”

Q What do you do when the data and the anecdotes conflict?

A It's a tough one. Um, I think that, um, usually there's always an element of truth in what customers are saying, and, and it usually becomes a trade-off, you know, discussion, uh, you know, for, for different teams. The, the reason why it's a tough decision is because it is so easy to always just veer on the side of the data, because almost always When a customer notices something that is wrong, um, or, or there's an anecdote, um, uh, that may be a quote unquote edge case, it's usually at some tail of a distribution, um, a distribution of the wait times for customer support, a distribution of how friendly we were when we actually took the call, a distribution of how on time we were, or how late we were, or how accurate we were, Or what are the number of items of the types of SKUs you care about in a particular category of lettuce? Just lettuce, not vegetables, but just lettuce, right? So, it's always some tail example. And so, the data is probably always going to win when it comes to some sort of a prioritization discussion. But when you actually think about how to make a product better, It's going to almost always by definition be in improving the edges, you know, and that's why a lot of times what I like to do personally is I love to spend time, um, uh, you know, with a lot of our power users, whether it's, you know, the, the top dashers or, um, uh, the consumers who order th…

AI assessment note: “what I like to do personally is I love to spend time, um, uh, you know, with a lot of our power users”

Q What are some examples of things that customers have asked?

A Okay, so one customer in 2014, I'll never forget, was a farmer, um, who runs one of the largest farms in the state of California. And they run hundreds of trucks every day up and down the state of California, okay, distributing their produce and their meats and other products to a variety of grocers, restaurants, hotels, etc. And they, they've been doing this for three generations as a family. They did not start their farm to drive a bunch of trucks. That is not the business that they aspire to be in or passionate about. And literally, um, in our second year of operation, they called me, or they wrote in actually, and then we had a conversation on the phone about, um, what they were interested in. They were, they were curious whether we could solve that problem for them.

AI assessment note: “They were, they were curious whether we could solve that problem for them.”

Q finance, and they use rapid, relentless iteration to make their product better every day. In the last year, ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and automate as much of your business's finances as possible. Many of the fastest growing and most innovative companies in the world Where did you get this long-term perspective from?

A I think it was from trying a bunch of short-term things and then realizing that I started some companies like in college and, um, I realized that everything is difficult, right? And it doesn't, even if you're running like a sandwich shop or something, like it's, it's difficult. Like you have to find people who, you know, employees don't show up on time and the food and the vendors and the margin compression, because there's like a million other sandwich shops. Like, and so if you're going to do something, you might as well, it's going to take you like a decade or two or three, like to really start to have an impact. Might as well pick something that you care about. That's like the really big thing. You know, I don't, it always bothers me a little bit when I talk to entrepreneurs and they tell me that the thing that they're working on and I'm like, okay, what do you really want to do? Like, well, my big thing is I really want to do this. In their mind, it's like a little too ambitious. It's a little too difficult. They need more capital. Part of me is thinking like, man, you should just go for that now because it's gonna, you could spend the next two decades of your life working on this thing you're just talking about now.

AI assessment note: “I think it was from trying a bunch of short-term things and then realizing”

Q At the time you started Coinbase, did you think if it succeeds, this is something I'm going to dedicate a few decades of my life to doing even at that point?

A I, I remember I did think that, yeah, because I tried a couple of these other ideas that were kind of, um, they were, they were difficult, and I wasn't actually passionate about it, and so you, a lot of entrepreneurship, you're just like moving from one setback to the next with enthusiasm, whatever, there's that Winston Churchill quote. So I was like, okay, if I'm, I realized how hard it was to do those businesses, so I was like, the next thing I try, I need to make sure it's something that I'm like, I'm really into for the, for lifetime, right? And I had been reading a lot of, um, Books like, like Milton Friedman about economics and, um, like Ayn Rand and stuff. And I was like, okay, I was, it was getting kind of into these like free market, like libertarian ideas. And I was also living in Argentina for a year. That was a whole piece of the story where I got to see like a hyperinflation country.

AI assessment note: “I, I remember I did think that, yeah, because I tried a couple”

Q I understand that. But then like, then each post almost like had like its own market cap, but then what happens?

A Well, it was interesting. So there was also there were every post had its own, um, coin and also every creator had its own coin. Um, it was optional for the creator. Um, but what happened is if you bought a post, some of the economics would flow back to the creator. And we thought maybe each post would have like this up and down, like it would have residual zero value. It turned out Like, many of the posts had, um, a couple thousand dollars of value or something at the, at the terminal end of it, and people were thinking of it as a way to, I guess, reward and thank the creator, but they also own some of the creator coin. Long way of saying, I think something is going to work in this space around, um, they call it social fi, or like, you know, these kind of social media tokens. I don't think that the tokenomics has not quite been figured out yet, where Um, it needs, for, for the people, you know, investing in them, Um, it needs to have some sort of, like, durability to, like, the, you know, they have to believe, okay, David Senra is going to continue to make great content into the future, and he's relatively undiscovered now, but he's going to be much bigger, and it's kind of like, you know, a company or something, and they would want to own your creator token, and there'd be some value, and maybe, like, a revenue stream would accrue to them over time, depending on your ad reven…

AI assessment note: “we tried it as an experiment. Didn't quite work. Um, the app is since pivoted”

Q We were like, actually, Walmart played a huge role in our success, and I didn't even put it together before that. You call venture capitalists hitchhikers with credit cards in the book. You do not hide your disdain for them in general. Can you explain why, like, you call them hitchhikers with credit cards and, like, recount some of the experiences that you had with them in the early days?

A I mean, first of all, I'm glad we got venture capital money. Um, they, I don't know if we could have grown without it. We didn't get very much, but it was enough to get us into Northern California. And then, and then after that, we, we, four years after we got the money from them, we were public. So they, they were important for us to get to where we got to. And once we had the public money, we didn't need those hitchhikers any longer, and they got out of the car. And I tell entrepreneurs this all the time. The VCs are playing a different kind of game. The game VCs are playing is, is that it's kind of a blockbuster model. They're looking for exponential growth, and when they hit, when you get an Apple, or you get a Nvidia, or an Intuitive Surgical, or you get one of these Companies that just compound and compounds and compounds, you can get a hundred extra, your venture capital money, and that's what they're looking for. And so what ends up happening is they oftentimes take good businesses and try to scale them too rapidly because they're trying to get that exponential payoff. Remember, they've usually got these funds where the money is only going to be in that, you know, seven years, they got to start paying back. So the entrepreneurs, they're not evergreen funds where you can keep the money in, you know, for decades. They're pressuring the entrepreneur to try to scale And tha…

AI assessment note: “once we had the public money, we didn't need those hitchhikers any longer”

Q and more experienced and obviously more successful, smarter and everything else. Just like, what, what I have to worry about? Like, what am I not seeing that could like cause me to stop? Like, I like what I'm doing. I love it. What am I doing that would cause it to like, for me to not be able to do that? And there's like interesting, like human questions about this.

A Well, the trap is Before you do the work to figure out the thing that makes you feel alive, there's this great line in the, um, in the Upanishads that it's always referred to abiding joy, like joy that doesn't, doesn't run out. You don't use it up, like you use up so many resources. As you use it, you get more of it. That's abiding joy. The target for most people becomes the traditional money power fame because those are worldly proxies for success that we all recognize and are for sure to some degree true. It's hard to get a lot of those three things without being successful in some way. I think those, those things are huge traps because they be, once you start to get one, it's the thing you start chasing. And it's different than chasing the feeling of being alive, that abiding joy of feeling alive that we talked about earlier, which you'll never run out of. That, that, that will always guide you well, always. And money, power, fame will not. And so I think the answer to your question or your worry is just, like, make sure you're chasing the feeling of being alive. And that, the intuition around that, and you'll be fine. And it's when we, it's when we get sucked, and I've, of course, have, just like everybody else, like, I've been intoxicated by those three things at various points in my life, and that's because they're intoxicating. It feels really good the first time you hav…

AI assessment note: “I think the answer to your question or your worry is just, like, make sure”

Q And you found somebody that also had an obsession with the past, past engineers, past designers, past inventors that you could actually have a, deep conversations with about how they built their products, why they made these certain decisions, and then you used those to inform the work that you guys were doing, correct?

A Yes, I mean, he, he was a friend of Issigonis, so, ah, I'd, I'd never met his againness, but I heard about him from him. They used to do hill racing together, design cars that, very, very light cars that raced up hills very quickly with very little power. So it's sort of very skinny engineering, minimalist engineering. Uh, and so he, he had quite a lot of stories from, from that era. He was 20 years older than me, so, uh, he had seen a bit of life during the war and, uh, um, and had done this racing car thing and established an engineering company. So he, he just removed the barriers, um, that it was okay to be an obsessive engineer, and you, you just do whatever it is you want to do, and then you go out and sell it, and hopefully, like the pied-pepper of Hamelin, people will follow you. Uh, so, you know, to get that advice from someone at that crucial stage in my life was, was, um, I might say mind-blowing. It was It enabled me to carry on and, and do things that everybody said I couldn't do.

AI assessment note: “Yes, I mean, he, he was a friend of Issigonis”

Q Take me in your mindset, then. What do you think was driving you? Were you anger, like, the desire to prove yourself, the love of the product? What was actually happening at that point? That is an unusual decision to make, a decision that your entire empire now rests upon. It's an incredible time in your life.

A Well, uh, I saw a problem with a product that everybody uses every day, a vital product to clean their homes. And I, as a user, I hated it because you have this bag that clogs and then you have to go and buy another bag and so on. But more than anything, it's the performance is lousy. I mean, if you have a hundred watt light bulb, it's supposed to give a hundred watts all the time. But this vacuum cleaner light bulb starts off at a hundred watts and ends up at 20 watts pretty quickly. So it's deeply unsatisfactory. So I thought if I can solve that problem, I thought if I could solve that problem, other people would buy that product. It's no substance. It's just an idea.

AI assessment note: “I saw a problem with a product that everybody uses every day”

Q know, he made all this money for the pension fund that we were on and everything else. And like the stories that I've heard at the party. And then since I released the episode, it was just like, you have a fantastic long-term reputation. Do you have any advice on how you were able to maintain that and how important it was for other people to do the same thing?

A Reputation is really important. Your, your personal brand is extremely important because based on that, people are going to want to do business with you or they're going to want to not do business with you. So every day you're in the office and doing stuff, you're either raising your brand or you're lowering your brand. And that's the main thing you got to work on. You got to make sure that your brand reflects integrity and honesty and dependability and stability and people can count on you. This goes back to Mr. Jesseson. So Philip Brothers, this is before email. This is before, actually it was even before faxes. It was more Twix's and Telex's, so, which took a few days to go through when they went through. So you could do a deal worth hundreds of millions of dollars on a handshake or on a phone call. There's no written confirmation of that for like days. In the meantime, maybe the price of whatever you were trading, oil or copper, had gone up a lot. You still had to have a deal. Otherwise, you know, the whole system doesn't work. So dependability is so, so, trust is so, so important to do.

AI assessment note: “you got to make sure that your brand reflects integrity and honesty and dependability”

Q When did you, you kept repeating that, when did you understand the power of incentives? Because you talk about compensation incentives a lot.

A Very, very early, very early in the oil brokerage days, because I used to have, we had tables, like, 10 brokers at a table, and every month could pay people monthly. I'd meet with everyone and say, look, we made so much this month in the bonus pool. What percent do you think you contributed to it? And then I would add it up. It would always come to like 300%. Never added up to a hundred percent. So I had to have these difficult conversations that people said, look, you know, you think you're inflated with how much of these other than that. But I, I, what I realized very early on is people are coming to work not because they love me, They might love me, I might love them, but that's not their main motivation. The main motivation why they're coming to work is to make money, and make money for themselves, and more often to make money for others, to make money for their families, for their spouses, their kids, or whoever. And that's important to understand the motivation of the other person is really, really important. It's called theory of mind, where you understand, and a child gets that after a few years, they don't have it at first. And there's been a lot of psychological studies done on that. It's important to, to look at things from what's motivating the other person, what's driving the other person, what's important to that other person. That's good at deal making. That's go…

AI assessment note: “Very, very early, very early in the oil brokerage days”

Q Valley is what you're doing over here. You pick your co-founder. You should think long and hard about that. Your co-founder is 50% of the company at that point. Right. And then he goes, and then he goes, but it still goes out. Now you have to pick the 10th person. That person's 10% of your company, and you're saying you don't have time? Like, what else are you doing?

A It's all about the people. It's all about the people. You know, systems and tech and budgets and customers and sales, all these things are really, really important But you can't achieve excellence in those things without fantastic people, without fantastic leaders. And I spend a lot of time, especially on the top few dozen people. I want to make sure everybody's in it to win it. Everybody is fully, fully engaged. And I do a mental exercise where I picture the person coming into my office and saying, Brad, I quit. Like, this is not a conversation about you making me a counteroffer. I'm done. I've already moved and it's over with. This is about a conversation about how do we make an orderly transition? Cause I respect you and I don't want to leave you high and dry. And then I try to feel and visualize what would be my reaction if that person came in to me and quit. If my reaction to that is,

AI assessment note: “It's all about the people. You know, systems and tech and budgets”

Q Yeah, Zach told me, he's like, he'll call me at, like, five a.m., and he was like, I have an idea. Like, we should do this product or this acquisition or whatever. He's just like, he just can't help himself. And I asked him, I go, uh, what would get him to stop? He's like, you have to kill him. What made you decide to write the book?

A You know, we, we had, we had gone through a whole lot, uh, with the going private and buying EMC and VMware and, There just been so much that happened. I wanted to kind of document it, and it was during COVID. I had some time to start, started writing the stuff down, and it felt like a logical place to, ah, sort of capture everything that, that had happened. You know, one of the main reasons I wrote it was for our team inside the company, because I, you know, want them to understand, uh, you know, how we think about the business and where it came from, and, you know, as a, as a business grows larger, it's harder to be able to tell the stories directly with, with, with everyone, and so it's just a great Opportunity to encapsulate all that and, uh, share, you know, what happened really, the good and the bad, the, Things that worked well. Things that didn't work well. And, um, you know, I certainly benefited from reading the stories or hearing the stories of other people and thought it'd be a good idea.

AI assessment note: “I wanted to kind of document it, and it was during COVID.”

Q You mentioned earlier that you benefited from studying people that came before you, and this is, you know, you wanted to pass that forward. Like, who are a few of the people that you study, you felt you learned from, or that influenced, like, your thinking about how you're building, how you built your business?

A You know, when I was, when I was a kid, I, I, you would read about entrepreneurs, you know, that were starting companies, Charles Schwab or Fred Smith, certainly Sam Walton, some of the early telecom pioneers, people that were doing it right then, like in the seventies. And those stories were also, were just super interesting to me. I grew up in Houston, which was kind of a boom town. You see these new companies being created, and parents were talking about that. And so, those, those stories were always just interesting and compelling, and you want to understand, well, how did they do that? Why did they do that? And, you know, what happened? And, you know, I never imagined myself doing anything else other than starting a business. You know, the idea just was in my, in my consciousness From, from a very early age.

AI assessment note: “Charles Schwab or Fred Smith, certainly Sam Walton, some of the early telecom pioneers”

Q What was your hypothesis back then? Do you remember?

A Oh, it's pretty simple. It's that it will be possible to dramatically improve the way we do things in all the core processes of the business, from software development to support to sales to every major function, our supply chain. Everything can be improved in a dramatic way. That's what we're doing, and we're finding, you know, as we take our data, as we reimagine the processes and simplify and standardize them, we can make them way more effective. You know, example would be, uh, in support, we have incredible amounts of data. We have telemetry data that the machines are giving us all the time, right, about, uh, you know, soft errors and all these things that are going on, you know, inside the usage patterns from customers. We have warranty data. Uh, you know, we have previous call logs. We have all these knowledge bases. We have JIRA databases. It's like millions and millions of documents. No human could ever interpret all this, and so we created this tool called Next Best Action, which takes all this data and understands what problem the customer's trying to solve, and it helps, uh, either the customer or the agent that's trying to help the customer get to exactly the Best way to solve that problem in the fewest possible steps. And so the person helping them feels like, wow, I'm way better at my job than I used to be, because now I got this genius on my shoulders telling me …

AI assessment note: “It's that it will be possible to dramatically improve the way we do things”