The Exchanges

Q For that cloud office one, what, what products are you looking at that excite you?

A Yeah, so I'll, I'll kind of give you an example. So, um, one company I'm involved with is called Almanac, and, uh, it allows, uh, teams of people to create documents, but like, if you think about it, um, this has already happened in, uh, code and in design. So in code, you had GitHub, and in the past, you just had code snippets that you shipped around and had some version control, but GitHub made code social, and you could branch and fork and, uh, you know, Collaborate as a team at the center rather than as an afterthought. And then Figma did the same thing with design, right? So Figma. And so, so what, what we believe is that in a world where talent can live anywhere in the world, it's going to matter more that you write things down and get consensus. Uh, and part of how you get consensus is you have a paradigm that's not office centric in documentation, but it's cloud centric. And so, you know, why shouldn't you just like GitHub be able to Branch and merge and fork documents and be able to, within that one document, know every version of that document that every ever existed and everybody's, and you know, if somebody forks it and uses it, let's say it's an employee handbook. If somebody uses it for their next company, why not want to know that as well? And so, uh, but, but that's just one of many examples of where I believe that in the future, you're going to have all these d…

AI assessment note: “one company I'm involved with is called Almanac, and, uh, it allows, uh, teams”

Q So how do you do that? So let's say, let's take you for example. So let's say you, you look at the world this way as it's a giant network and, um, and you're trying to have your comparative competitive advantage. So what's your comparative advantage?

A Yeah, I would say that my job is to be the very best partner for a super ambitious founder in the zero to one phase. So, right. Like if you look at my podcast, people say, Hey, why don't you have this guest? Why don't you have that guest? But starting greatness is all about Zero to one. Awesome startup. Super ambitious. What was it like before they succeeded? And there's power. There's addition and subtraction. You know, like sometimes, uh, by saying what you're not for, but like niching down, you're very powerful to the people who care about your niche because people say, where have you been all my life? And so what you're trying to do is find that set of like-minded co-conspirators For the niche that you've really chosen to be great at and, and not get preoccupied with the fact that you can't do it all, right? You're, you're way better off understanding what you can just stick the landing at and, and, and, and develop your talent so you can do it even better and better through time.

AI assessment note: “to be the very best partner for a super ambitious founder in the zero to one phase.”

Q What, what makes you guys great? What makes you able to spot these interesting opportunities?

A I think that, um, you know, it's funny if you, if you had say, um, Warren Buffett, uh, on your show, or, you know, you've had Stan Druckenmiller before on your show, right? And, um, when they talk about investments, you'll probably notice they talk about a few things. What's the operating history of the organization? What is their competitive moat? Uh, you know, they, they have a set of factors, you know, um, that cause them to think that a company is a good investment or not. Um, What's interesting is, in our world, none of those mental models apply. And so, because a startup's not a company, there is no operating history. There, there's no moat. They don't even have a product yet. They got no customers. And so, what I think we're better at than most is, A, understanding that's true, and B, then asking, okay, so what should the mental models be, right? If, if Charlie Munger and Warren Buffett have 90 mental models, And they don't apply to startup investing. Well, what are the mental models for startup investing then? And so we've spent years, right, just being students of that question. And, you know, we probably got about 30 or so that we've developed. But we try to, we try to evaluate the startup through the lens of those mental models, rather than make the mistake of thinking that a startup is a re-hosted company.

AI assessment note: “we try to evaluate the startup through the lens of those mental models”

Q It's such a big idea that it's hard to, how can I make this more practical for myself and the listeners of someone interested in this field?

A Yeah. And so the way I would say to make it more practical, if you're a listener is the tendency is to say, uh, what's my career path going to be, but through the lens of the 20th century. You know, I'm gonna, I'm gonna make a progressive set of steps, and I'm gonna, uh, you know, I'm gonna get rewarded as I do the things that I seem to need to do in society. But I would argue that it's more important in today's world to figure out, A, what am I awesome at? Or, or maybe not even what am I the best in the world at, but what is my, what am I best at? Among all other things I'm good at, what am I best at? And then what does the world value? And then what am I passionate about? And it's like the intersection of that set of things is where you want to develop your talents, because over time, that's where your comparative advantage will be the highest. And that is where the network will pay you the most for contributing to the network. But I think sometimes it's useful to not think of not just what company do I want to join or what set of companies should I join my career? Instead, you should say, The entire world is a network. Everybody is a node in that network. How can I be the best version of myself as a node on that network? How can I create the most possible value for that network so that I'll get recognized by it and paid paid for the value that I deliver?

AI assessment note: “the way I would say to make it more practical, if you're a listener”

Q you know, or me, right? I, I've really enjoyed hearing you talk during this hour. Uh, I think you got a bunch of smart ideas. I want to know, You know, what's he eating? Basically, what's your information diet? What are, what are your, sort of, some of your favorite people to follow and learn from that you're getting a bunch of interesting information that's not just like the rest?

A Yeah, so, um, well, I like the, the Farm Street blog a lot, uh, with Shane Parrish, and, and, uh, and, and by the way, just because I don't invest like Buffett and Munger doesn't mean I don't study him like crazy, right? Because I think that when I, when I read how they look at the world, I'll understand what's different about how they look at the world, but I'll also connect dots that will make the difference of my world more clear, um, I, I read a ton. I probably read about one or two books a week, just in general. Um, what, what are some of the ones I've read recently that I liked? One I like a lot is called The Courage to be Disliked, uh, by a couple of Japanese authors. I think it's, it's amazing, and so then I went down this rabbit hole of the, the psychiatrist, uh, Alfred Adler, who, who kind of came of age at the same time as Freud and Jung, but, uh, wasn't as famous, but I think he's, I think that Alfred Adler's ideas about individual agency are perfectly timed for the 21st century. Uh, so I've been liking, uh, everything that I can get my hands on about him. Um, and it's, and it's weird, because although I read a lot of books, there's, there's always a subset that I come back to over and over again, where I try to take notes, and because I try to, I try to make sure I really understand it, so that I could explain it to somebody else in a really clear way. Uh, so I, so…

AI assessment note: “I like the, the Farm Street blog a lot, uh, with Shane Parrish”

Q you, um, so like you're all you're, what we just discussed was far on one end. Do you ever look at the other side or, or for your job, do you only care about one side? And maybe you just like the, for shooting the shit or talking to your friends who want to get wealthy, do you say like, yeah, but this side is actually kind of interesting too.

A Yeah. And it's funny because we alluded to this earlier. Um, I don't try to be for everybody. Uh, I try to be the, the very best at the thing I try to be good at. And so, um, my view is that, uh, I want to go very focused on breakthrough startups and in that zero to one phase and how they, so I like to say I'm a rocket fuel salesman. And I go, I go to founders and I say, don't take my fuel if you don't want to achieve escape velocity with that rocket that's on the launch pad. Because if you're not sure it's a rocket, this fuel isn't going to be good for your vehicle. Right. Don't put this on your scooter. Right. And so, like, I probably don't deserve too much credit when it does escape, but I probably don't deserve too much of the blame when it doesn't. Right. I'm just like, just be clear about what I'm selling here. And, and people say, well, you know, it's not realistic that, um, That everybody should build one of the twenty billion dollar plus exit startups of the year. And I'm like, and you're, you're correct about that. Like, I'm not saying that my advice or my approach is mainstream or even normal. In fact, I would say it's hyper not normal, but like, but in that area, in that area of I sell rocket fuel to people who want to blast their rockets into outer space and get escape velocity, I try to be the very best period. And so like, that's, that's what I'm in it for. So a …

AI assessment note: “I don't try to be for everybody. Uh, I try to be the, the very best”

Q that are like, here's a virtual office. You can literally walk around. You can bump into people. I don't know if any of these work, right? But they're, like, taking stabs at trying to move the, like, physical office into the cloud, too, Sam. So it's not just docs are in the cloud, but hanging out is in the cloud, right? Bumping into co-workers in the hallways in the cloud.

A Yeah, and the, and the problem with most cloud offerings today is that they're basically re-hosted office culture, right? So, like, Zoom, Zoom is a meeting, but it's a meeting online. It's not like it's asynchronous in any way. It's not, it, you're just re-hosting the meeting. Rather than redefining how work happens. Now, with Zoom, you can take advantage of geography arbitrage, I suppose. So that is a good thing, but you're not able to take advantage of time and talent arbitrage as easily. But like, like what I, what I believe ends up happening at the limit is in, in office culture, everybody has a job description. And, uh, and, and what I think in cloud culture, you know, people have already talked about this, but this idea of, uh, jobs to be done theory. And so, like, when you think about it, all of us don't just have one job. All of us do a whole bunch of jobs. Like, if you take even a very simple example, let's say that I work at a flower shop. Uh, I might type things into the computer to manage customer records. I might take reservations and orders. I might some parts of the day arrange the flowers. Well, when you really think about it, the principle of comparative advantage would suggest That any parts of that, any of those jobs to be done that could be done asynchronously or in the cloud, you should try to do that if you can. Because then you could take advantage of lab…

AI assessment note: “the problem with most cloud offerings today is that they're basically re-hosted office culture”

Q invest in a whole bunch of things on the network and, um, and you wouldn't need the structure of, of a fund with employees and with all these different things. So would you, if you didn't have this already set up and you were setting it up for the next 20 years, would you have set up You're investing differently than you did with a kind of traditional VC fund?

A Well, I, I like the way we're set up because I think that when you're, when you're investing in these crazy, risky startups too early, way too early, or legally, ambiguously too early, uh, it's good to have friends, and it's good to have people to run ideas by, but we have a very, I'm not saying, I'm not sure our point of view works for everybody, so I don't even think a startup is a company, right? So I think a startup is, The, the capabilities and talents of the founders and their insight about the future and what you're, what you're betting is on two things. One is that their insights, right? And two is they're good enough to navigate the idea to a great product someday. But like Lyft started as Zimride and Twitter, they couldn't decide whether to call it voicemail, two point O or TW TTR. Uh, uh, Twitch started as Justin dot TV. Okta started as Sasher, and so, like, what do you do with the fact that 90% of your profits come from things that started out different, and so my, my theory on that is the way to succeed is to realize that a startup isn't a company at all, and that it's, it's the insights and the founders, and you're, you, you, you make fun of your ability to predict what they're going to come up with, that is false precision to even try, but instead where you should be precise is can these people do the job and Uh, is this, is this, uh, powerful enough breakthrough…

AI assessment note: “I like the way we're set up because I think that when you're”

Q entity at this point with, with everything they have going on. Do you think that media companies like that, given what you're saying about, I mean, because Vice is at this point, even though they were new, Vice and Refrigerator, are probably almost like old school at this point. Do you think that those style of media companies are still going to be great companies given what you've just said?

A Well, I think that there's going to be a very rich ecosystem of all types of media companies, but, but to me, the defining new characteristic will be that media is no longer a function of the credential elites telling you what to think. And, uh, that, that was the real problem that we started to get in the media, in my opinion, is that, um, you, you had a set of credential elites running these media companies of which there weren't very many. And, um, These institutions are all inherited now rather than founded, and so the people running these institutions didn't really understand what made them great in the old days, and so they, they started to get worse over time in their effectiveness and legitimacy, and so to me, the real question about media is not so much is there one way it's going to happen versus not. I think that the winners will be those that, um, Niche down, have a comparative advantage in the type of content that they cover and attract, uh, the attention of the people who care about that type of content. And, and the credentials won't define it because, um, the, the old media companies had credential elites running them, but they also had a monopoly on distribution with the newspaper and how they, how they got print magazines out and things like that. So I think that all of that's gonna change.

AI assessment note: “I think that the winners will be those that, um, Niche down”

Q but what we want, I guess we're gonna start with, we could talk about kind of like all the great stuff you've invested in. Um, but I guess I'm more curious about what's get, what's got you excited now? What spaces, what, um, trends are you seeing where you're like, huh, I don't fully, I don't fully know what's there, but, uh, there's enough there for me to be interested.

A Yeah, and it might be kind of a good segue into how I think about what the next big thing will be, because there's this, there's this thing that I say to founders, which is very, it's very counterintuitive. I say, if you want to start a great startup, don't try to think of a startup. And, uh, the reason for that is that, um, great startup founders are like time travelers, and they, they get out of the present, and they visualize different futures that are a breakthrough, that break free from the present, and when you try to think of a startup right now, you tend to orient yourself in the world of the present, and so you tend to come up with incremental conventional ideas rather than Breakthrough ideas that sort of change the arc of the present to a different future. And so, um, and that gets to the areas that I'm interested in. So what I, what I encourage founders to think about are what are the inflections? What are the waves of change? They're going to be so massive that, uh, it's going to allow an entrepreneur to change the subject about the future. Because on some level, these waves are the gathering power It's like all the power of the ocean when you surf. Uh, you, you gotta catch the right wave to have a chance to do great things, and, uh, it's these waves or these inflections, they allow the entrepreneur to wage asymmetric warfare on the present. Uh, only with big inflec…

AI assessment note: “one inflection I'm interested in obviously is, uh, the blockchains, uh, with crypto.”