0:00This episode of Vintage and Vintage is brought to you by Northwestern [music] Mutual.
0:06I think it was midnight and my phone rings. Unknown caller. So I'm like, "Oh, it's Kanye." I go, "Yeah, yay. What's up?" And he goes, "Hey, Ben, I heard you're having a barbecue tomorrow." And I was like, "Yeah, yeah, I am. I want to record in your studio." And I'm like, "Yay, I I don't have a studio. Are their strengths world class or are they the best in the world at something?" And then you overlook everything else.
0:30That's what makes a company great and that's what makes an entrepreneur great. Not oh they don't know how to do this or wow they know nothing about finance. There's so many things that are wrong with every entrepreneur. Every great entrepreneur has got something like horribly wrong with them. But that's okay.
0:46You know you it's it's what are they truly great at what they're great at.
0:54I live in the Bay. I came here by [music] way of Detroit. I shroud the worlds of tech and hustle. I'm the CEO of Pilotly, [music] the managing partner of Black Ops. I'm a builder, a father, entrepreneur, [music] and investor. I'm also very blessed to have spent time with some of the coolest and smartest people in the space in which we operate. And these people are of a certain vintage, and they're in limited supply.
1:24I'm [music] here to share these special conversations with you. This is vintage and vintage. [music] Welcome to uh the first episode of Vintage and Vintage.
1:42This is the first one. It's the first one.
1:43All right. Well, that's good. We're getting off with the bang, right? You know, step into the game. Um but to start the conversation is vintage and vintage. You are of a certain vintage of entrepreneur.
1:53We also have a certain vintage old vintage. We have a certain vintage of wine as well. So like and all the wines are connected to like the relationships. This is continuum, right?
2:02But it's actually like Mandavi. So Robert Vandavi, you know, they kind of set the tone for American wine. But by 93 though, there was like this like virus vineyard situation in Napa.
2:11And so they had to go public under duress like, oh, we got to get this money. We got to keep going.
2:16Um didn't turn out that well cuz Wall Street directors came in and like abused the name and now you have the Robert Van Davi wine that people would know today.
2:23But yeah, it kind of fell apart by ' 04 and the family had to pick up the pieces. But the youngest the youngest son came along and uh decided to make continuum and he wanted to shoot for the stars, take all the learnings he had, the inner workings of how they make great wine and make this and so this was born out of struggle and similar to my guest today did the same in Silicon Valley. Set the tone for cloud computing had to sell the heart of the company to keep the thing going.
2:47Even after going public, stock dropped as a result and had to crawl out of that. But like took the knowledge one had in the team and the inner workings of how the thing was managed Opswear and you know clawed your way back from people was like he's they counted them out. Nah, they're not going to make it.
3:02It's com boom bust was like you know got the 1.65 billion exit and so continuum is special and legendary my guest special and legendary but it's great because of the struggle. Mhm.
3:14And so this is the hard thing about hard things in the bottle.
3:18And this is my guest, Ben Horowitz.
3:20All right. That's very nice introduction. Thank you, so I call I call you James. Most people know you James.
3:28I'm talking from the knew me days, right? So uh actually, hold up. Actually, take take a look at the the year in the wine before that.
3:36We we did something pretty funny and crazy. We did something pretty Was that the co barbecue with Kanye?
3:41Oh boy. It was it was it was a day day in the studio was yay.
3:44Yeah, that was uh that was wild. So, for you listeners, uh what happened was [laughter] uh we're having the CEO barbecue which is a big event at my house and so forth and uh it's like I think it was midnight and my phone rings and you know I I heard I guess I didn't turn off the ringer and I look at it unknown caller so I'm like oh it's Kanye. [laughter] And so I answer the phone and uh I go, "Yeah, yay. What's up?" And he goes,
4:14"Hey, Ben, I heard you're having a barbecue tomorrow." And I was like, "Yeah, yeah, I am." He's like, "Can I come?" I was like, "Sure, you can come."
4:22He goes, "Oh, can King Kim come?" And I'm like, "Yeah, Kim can come. Of course he can come." "Well, can Chris come?"
4:27Yeah. I was like, "Yeah, Chris can come." And he goes, "Okay, great. And uh I want to record in your studio." And I'm like, "Yeah, I I don't have a studio." And he goes, "Okay." And so like, "Okay." Then like I wake up 6:30 in the morning, I get a call. Hey, Ben, this is Noah. I'm Kanye's engineer.
4:48[laughter] He's like, "I just calling about the specs on your studio." And I'm like, "I don't have a studio, Noah."
4:55He's like, "What do you mean you don't have a studio? What are we going to do?
4:57Kanye's expecting a studio. We got to have a studio." I'm like, "Oh, shit."
5:01So I call uh Chris and Nate. I'm like, "Who do we know who has a studio?" And they're like, "Howie." [laughter] And I'm like, "Okay, well, let's call him because like Kanye's coming over. We need a studio." And so, uh, we call you like, "What are you doing? How are you?
5:15He's like watching Netflix." [laughter] And I'm like, "Okay." I was like, "Is that studio you have portable?" And he's like, "Yeah, [laughter] yeah, it's portable." And uh, so long story short, uh, you drove the studio down to my house and, uh, we set it up in the room and then a lot more crazy stuff happened. Right. Uh Yay was playing us the Pablo Pablo album.
5:38Yeah, we went through a lot of them. We went through uh we went through Push's album. We went through all basically all the Wyoming stuff. Yeah, basically all of it.
5:44Yeah. So, he was that that was a was a legendary day.
5:48Crazy thing. That was a legendary day.
5:50No doubt. There were there were a lot of beefs at that barbecue, too. There was conflict uh which we could get into later, but we should take up the whole podcast with that.
5:59Yeah, it would be that would be the hip-hop champ situation. hip-hop's important, like we're both hip-hop heads. When did hiphop become a thing?
6:08When, you know, when did it be like, I can see myself in that and it's motivating me to do things? Like, how did that how did that come how did that come to be?
6:13Yeah. So, it's kind of a slow thing. So, I you know, I was probably like 12 years old when uh Rappers Delight came out.
6:19That was kind of the first one that a lot of us heard. uh you know if you if you weren't in New York. I think the first one where I was really like ooh this is going to be very different was when uh Run DMC Hard Times came out and I was like this has a whole another feel to it than than anything I've heard.
6:40Um so I was like really into it but the thing that made me like locked into hip-hop. So I went to school in New York. I had this friend who I grew up with who um had gotten shot in the face like in like some kind of weird gun accident and he was blind. Um and so, you know, I was very worried about him.
6:57We were super close. Uh and you know, I call I would call home to my mom. I was like, "How's Seth doing? Is he all right? Is he going to be okay?" She's like, "You know, he hasn't spoken to anybody since he's been shot. He's just, you know, sitting in the hospital.
7:09Everybody's worried. He's suicidal. This and that and the other." And so I got the idea being like a dumb 18-year-old kid. Uh I was like, you know, hip-hop is so great. Like it's like the most like you can have nothing and you'll rap about your shoes and like my shoes are the best. And I'm like, you know, he needs that feeling. And so I would record the DJ Red Alert and Chuck Shell.
7:32That's where all the That's where all the good stuff was.
7:34Yeah. Yeah. You know, I'd sit there on Saturday night. Everybody else would be out and I'd be just like recording and I would send him like the the tapes of the show. And then I called home to see how he's doing and they like, "Well, he's talking now, but all he'll talk about is hip-hop, you know, and DJ Red Alert and, you know, Rock the Bells and all that."
7:53And I was like, "Oh, cool." So then when I went out that summer, we started a hip-hop group called the Blind and Deaf Crew. Uh, blind and deaf. Uh, and we wrapped about being blind. I wrote uh most of the lyrics. So I wrote things like uh the blind deaf crew you know where fly three of us but we got four eyes. [laughter] Oh man, you know just talk rapping about being blind. Um and so then I I was very attached to it after that you know and
8:22and it's you know hip-hop is very businessoriented as you know particularly in the early days it was all about business right um strictly business. Yeah. [laughter] And so, you know, when I started writing on business, so many of the ideas came from those old hip-hop songs. And so, I started just uh, you know, putting the lyrics at the top of the post mostly to give credit where credit was due because if like, you know, I hear an idea, this is my inspiration. So, I'm, you know, here.
8:50Yeah. Just put it out there. So, like, you know, it came from I didn't come up with this idea. It came from Rock Kim. It came from Rick Ross or whatever. And so then I got really associated with it and all that kind of thing.
9:01Okay. It's funny though because knowing where I'm coming from, I'm of a different different vintage though, right? Yeah.
9:05So you it would be impossible for you to be growing up on the West Coast and be of your vintage and actually like grow up in hip-hop because it just didn't travel. You there's no DSPs and stuff.
9:17So it's like versus like, you know, I'll be six years old listening to, you know, whatever it's Hammer or whatever. Like I'm nine listening to 36 Chambers. You know what I'm saying?
9:27Um, so it's like it's like a different no actually it's so my friend Roland Frier the economist at uh Harvard just wrote a piece in the Wall Street Journal kind of on you know did influence or did hip-hop had a bad influence in society and the way he did this study which turns out no it had a positive influence was because no radio stations played it.
9:50So you could track the cohorts from the cities that had hip-hop and see how they did versus the cities that didn't have hip-hop. And turns out the cities with hip-hop, [laughter] the inspiration level is just like, you know, their level like that's that's the driver.
10:04[music] You're getting into college, you're doing your thing, and now like you're getting into entrepreneurship. How how did we get into like I'm gonna work at I'm work with Mark and do all these things? I I I wasn't in position to be an entrepreneur very easily and that you know by the time I was 25 I was married I had three kids like so I was just trying to keep the lights right there.
10:27Yeah. Yeah. Yeah. Yeah. You know keep the lights on that was my main thing and and you know it's a little you know starting a company was a much more unusual thing in those days you know it's kind of more systematized now. Um so I started as an engineer at a company called Silicon Graphics. And uh was it Ken was Ken?
10:45Yeah. Ken Coleman. Yeah. Yeah. Ken Ken hired me in there, you know, I kind of learned the ropes, learned how to be an engineer, learn product management and that kind of thing. And I I ended up uh going to Netscape. A lot of XSGI guys were there.
11:01And um that's where I met Mark and you know, I was still just trying to like I was happy to be like making money and you know, Netscape went public. I think I got a million dollars out of that which was crazy. I couldn't even believe it. Um I was so rich. Uh, and so you thought.
11:18Yeah. Yeah. [laughter] Yeah. Yeah. Yeah.
11:19So I thought um and then you know once uh Netscape um kind of got sold, Marcus like hey we should start another company. You know I didn't cross my mind to do something like that. And I was like well who's going to be the CEO?
11:32He's like you. And I'm [laughter] like all right [snorts] I'll try. You know I don't know anything about being CEO but that's that's kind of how I got started. I mean that also actually speaks to a lot of you know the the sinosoidal trajectory of say company that finally gets to an opportunity like the first time you really step into something there's going to be downs right always like I don't I don't know anybody's who doesn't have like not just downs but like existential
12:00what we call the the whiffio moment we're it's over like that like you can't build a company without that like that happens. Yeah.
12:09And a lot of look a lot of companies fail just because the founders can't handle that moment. It's it's a tough moment.
12:16Yeah. It's definitely I find it to be like this whole I'm you know I'm new to the investment game over the past five years but like I do find it like the people are is everything. I'm I'm very good at picking a company.
12:27Right. I feel like it's probably a evergoing evolution to like identify great people.
12:32Yeah. Well, it it's really hard because you only know so much about them and it's a little like dating, right?
12:38They're coming. They're putting their best foot forward when they meet you.
12:42So, you really have to get deep into their background. But then like it's also it's one of those things where you're one person in life and you're another person under extreme pressure. Like those are two different people. Your whole chemistry starts working differently.
12:58Yeah. So like how people are going to perform in that situation is um really you know if you haven't seen it you don't know what's going to happen to be honest with you and I mean this is look one of the reasons um you know Elon love him or hate him God bless him that guy is very good under pressure.
13:16Yeah like he is like there's no amount of pressure where he's not going to perform you know that that is what you want and that's you know that's why he's probably the greatest entrepreneur of our time. So when you're when you're all the way down at the extreme down, what is one one bar that comes to mind as you must pop in your mind like I got to keep going?
13:36Well, it's probably from ether. You know what is it left me for dead stiff and rotten the no line, [laughter] you know, like that's like that that's the the feeling like okay when I because you remember Ether came out when Nas was at his lowest. He was way down and Jay-Z was like literally the biggest rapper in the world at that point and he got hit with the takeover where Kanye did the beat. Like it was that
14:06you know, like you're just everybody was like, "Wow." And [clears throat] then Jay-Z wrapped his ass off that great song Takeover and Nas at the bottom bottom bottom that any rapper could possibly be at.
14:22[snorts and laughter] And and he said it, you know, you left me for dead, right?
14:27You know, and so that that's the feeling you want, like now I'm going to come out with ether, right?
14:31When you think I'm dead, I'm going to come out with ether.
14:34I think the same thing. And now like because of Kendrick we have the evolution of not like us which is like Ether 2.0.
14:40It is it is it's a little that's a little different one to me in the way that went down because Kendrick Kendrick's career was also on the down right uh during that battle. But he wasn't as far down as Nas was at the time. Yeah.
14:55Um but Drake was like Jay-Z. There's no question. But that was more you're taking rap in a direction I don't like. Right. Right. [laughter] Right.
15:05You know, so I'm going to have to get out of my room.
15:09Stop talking to myself. You know, I just did a whole album um of introspection. I'm going to come out of that and I'm going to deal with you right now because I don't like you. That was that's a little different feeling for me, but I I um All right. So, we digress. Uh back back to the tech thing that all y'all want to hear about. So, build the company, sell the company.
15:30Yeah. I don't know why. I don't know why nearly immediately after that um you decided to go build a venture firm um and then mess around with new me. But like tell me about this 2008 to 2011 time where like you said I'm going to build a venture capital firm. Yeah.
15:44And when you did it it was nothing like the other stuff really. I mean the way you approached people all these people running around the building. Who's a partner? Who's not a partner? Like what's going on in this building, you know?
15:53Yeah. Yeah. Yeah. Well, so the idea was it kind of came out of um how hard it was to build the company. Uh and I always felt like wow, if you're a founder and you start something, you know, you don't know how to be a CEO, you don't know how to build a company, and you kind of think, at least in those days, um I thought, oh, the venture capital firm would help me with
16:21that. Uh, and they weren't really set up for that idea. They they were kind of like really really good at picking entrepreneurs. Um, they made a lot of money for their LPs. Uh, and they were very smart guys, but you know, to build a company, you need to feel like you can run a company.
16:41Uh, and that means you got to be able to call important people. You've got to be able to kind of have somebody to talk to who really knows what you're going through, who can, you know, help you with things. You need to be able to have like turn on a recruiting army. You've got to uh, you know, these days you got to be able to deal with like policy issues and this kind of stuff. And so, you know, the idea behind Andre and Horowitz was really like, wow, what if we made a better product not for LPs but
17:11for entrepreneurs? you the first thing you have to do is like forego like um a lot of your salary because you had to take the fee monies and build this platform to you know help entrepreneurs kind of build their company. Uh and that was kind of the initial idea with it and then we always thought the thing that we could provide entrepreneurs that they would value most would be this network.
17:34Um and we always thought of the firm as a network. And so how does the you know how can you like if I could call anybody that kind of bleeds into everything you do because now like you feel like somebody this was idea behind the CEO barbecue. Oh if I go to a barbecue and I'm me just like this little entrepreneur and then I see Mark Zuckerberg, Larry Page, Kanye West, okay, I must be important. Like I feel like I have a whole another feeling about myself and that was like a lot of
18:03the idea of of the firm because it was a network. You know, one of the things I thought I was like, you know, like I'm looking at all these venture capital firms and not any of them areworked like literally into any black people. And and I know that's like like a crude way of saying it, but like I was like, "Wow, that's an opportunity for me." Um, I'm going to build that network. I'm going to build the definitive network in Silicon Valley for like black entrepreneurs, black entertainment
18:31people, everything. And that's going to give me a huge advantage because that's a whole like important part of the world. And so that brought me to Numei which was like you know I was looking under every rock. I mean knew N new me was definitely under a rock and that. So this woman Angela ran it and it was an accelerator for black entrepreneurs. There was a lot of talent in Numei. So there was you, there was Chris Bennett, Chris Lions Nate Jones. Um Fred Fred Hudson.
18:57Oh yeah. Fred Hudson. Yeah. Yeah. From Pigeon. Yeah. a lot of talent and a lot of ambition I would say, you know, out of knew me. So, so that ended up being like a really good idea, at least for me, I think for the firm. We got a lot of value out of it. Um, you know, we're the major investor in Wonders School.
19:14You know, we had Chris and Chris still works here. Uh, has done a lot of things. You know, Nate worked here for a while.
19:21All those kinds of things. So, yeah, it's been uh Yeah, for the small investment.
19:25Yeah. I went I spoke at Numi twice, right? Aaron and Nami do 645. Aaron came out.
19:31Like you know Aaron popped up. They popped up to do like I'm I'm gonna be Ben. I'm see what's going on. Like they you know they start they started their thing.
19:37Good. I should have hired Aaron. That's a one that Chris Lions got. But being a VC is about picking winners. Tell me something about picking winners.
19:44How do you manage emotion? How do you become great at picking winners?
19:48It's a tricky thing because really what ends up mattering is the entrepreneur. Like if you just if you had a perfect rating system and you could exact go like do you want this entrepreneur or this idea? You would takere you take the entrepreneur every time.
20:09The problem is you know as as you were saying like it's hard to evaluate entrepreneurs. You don't know that much about them when they come in. Um and you don't know how they're going to perform under pressure. And so then you need the idea to help you evaluate the entrepreneur like what did they go through in their life to get to that idea. Um and how good an idea is it and like you know how much uh original work did they do to get there and that kind of thing. So like that ends up being the
20:38lens at which you see the entrepreneur. Now the mistake to make is like there's something you don't like about the idea and you pass on a great entrepreneur.
20:47like that's a mistake or you know vice versa you're like this is a great entrepreneur but you don't realize his idea is no good so it's probably not as good as you think. Um so so it is tricky in that sense and then uh yeah you don't know how they're going to perform under pressure and then the other thing that like the other trap that uh you know will get into um from time to time is you know we have all these great
21:15analytical people and they'll be able to figure out everything that's wrong with any idea or any company or any entrepreneur but that's not what matters. What matters is are their strengths world class? So, are they the best in the world at something? And then you overlook everything else. Like kind of going back to Elon, like he's got some personality issues. Uh, you know, like he upsets people from time to time, but like his strength is
21:44so ridiculous that you would put money on that every time. And I think you want to you want to look at the magnitude of the strength. And I think that like every entrepreneur we see who gets to us is pretty good. Um but are they like outstanding? Are they better than everybody else at at this? Uh and that's what makes a company great and that's what makes an entrepreneur great. Not oh they don't know how to do this or wow they know nothing about finance or
22:12they're um you know whatever they're done with marketing or like there's so many things that are wrong with every entrepreneur. Every great entrepreneur has got something like horribly wrong with them. But that's okay.
22:26You know, you it's it's what are they truly great at? What they're great at?
22:36You think about, you know, picking the person and be like, well, those things not so good, but this person's going to make some moves. definitely sent waves through Silicon Valley, but blowback from the culture unlike, you know, the firm kind of getting behind the Trump campaign to some degree, you know. Um, and so when you think about something like that, do you think about it as, well, I know something people don't, so this person's going to, you know, arise as
23:04the winner or this person is the winner and so I'm going to play the game with the winner. Is the former or the latter?
23:10How do you think about the decision?
23:11Oh, with the Trump. So with the Trump thing, you know, like we try to be as a-political as possible, but we had run into massive problem with the Biden administration on kind of two fronts. One was uh crypto and then the other was AI. So on crypto, they basically they didn't outlaw so they didn't they did these extra legal things. So they kicked all the crypto entrepreneurs out of the banking system.
23:38and they hit them with wells notices that were like fake lawsuits um you know on things that were just undefined. Uh and so we were trying to get them to like can we just have some laws? Can we have some regulation and they blocked all of that and they just kind of attacked the industry because they didn't want it. Um and so we were stuck there. But the bigger problem around that was we didn't have a relationship with the administration. I mean, we couldn't get
24:08one and it it drove me crazy uh because like I mean I called everybody I knew to try and like can we get a meeting with with Biden and you people call me arrogant like who are you to ask for a meeting with deserve a meeting with Biden?
24:21Yeah. But you know then I come to find out like so I spoke to Sundar at Google. I spoke to Dave Ricks and Lily.
24:29Tim Cook. Nobody got a meeting with Biden the whole four years. And then the same thing happened to SNI where they they went as far as like the last executive order from the Biden administration was to say it's illegal to sell a GPU without prior government approval for that sale. So like it would have literally taken us out of the AI, you know, competition at the chip level.
24:51The thing that we decided is okay, like we've got to have a relationship with who'sever the next president. and and at the time we endorsed Trump on tech um he was clearly going to beat Biden like there was no question uh then um Kamla came around you know Kamla came around and so it was like okay what if she wins like we knew we weren't going to have a relationship with Biden so there was nothing to lose with Kamla you know I had known Kamla
25:19Kamla came to the CEO barbecue like she'd been to my house many times so forth so I knew her um and I called her up and like I actually uh I wrote a tech policy for the campaign, you know, they they didn't want to take a tech policy position which that made me nervous. I I got to be quite honest with you on but um on that, you know, we made a donation to her just to so that we would have a relationship there. Anytime you're involved in politics, people are going to be mad. You know, they're mad at Nicki Minaj now. They're mad at Kanye.
25:48They're mad. From my position, I have to make the world work for new tech companies like that that is, you know, our responsibility as kind of the the big VC.
26:00I mean, for me, like probably not a decision I could make, but I'm not sitting in your position either. I also don't run a big building as a money machine. You know, there's two different two different sides to that. Let's look at it this way. From your vantage, you come from like real hippie. This is Silicon Valley. People's running around in the streets probably no shoes on.
26:17like that Silicon Valley, right? Um yeah. No, it used to be different. Yeah.
26:22Yeah. And so like that Silicon Valley was like, let's call it performatively inclusive. It was exclusive since is why we did new me and all these things. Like you could be involved, but kind of not because it was a thing. But now we're kind of in the space of performatively exclusive, but it's quite the special it's quite the special time for it to be inclusive because AI has commoditized the ability to build.
26:46You know what I mean? like people who were otherwise not in the game can now be the expert and be the best if you went to MIT.
26:53Okay. So I have a little different version of the history.
26:56So and you got the history. So I'm not going to argue the history. So this is why we here.
26:59Yeah. So I think in the early days the only people who wanted to be in tech in the 80s were like you know Jews, Chinese and Indians men like there there were just very few women who majored in computer science or did anything like that or or anybody else you know and Ken was like super exceptional. Tech wasn't sexy like you know it wasn't built to be exclusive. It was like these are the people who are participating.
27:23I know what I'm good at. I value it highly. I can test for it in an interview. I'm hiring me. Like that's just generally how it goes. So like once you start that way, that's how it that's how it grows. And like not that nobody can get in, but the people that get in are like hyper exceptional like Ken.
27:41Um like it's not that different than hiphop, right? Like Eminem can get in, but that's a very high level. Yeah, that's a very high level to be Eminem. I mean, like Jesus Christ, like that guy is But like if you're a mediocre white guy, like you got no chance. No. Um, and and like some of that is because, you know, you get it's the media, it's the culture, like how how things I always tell people this, like I say, when I'm explaining how people are how people self- select and how the media has shaped our worldview, I'd be like, if I come in the room dressed like this
28:10and the next guy comes in the room with like a pocket protector and glasses and can't talk, well, who's the better developer?
28:15Yeah. Yeah. Right. Exactly.
28:17Right. So, like, you know, Yeah. You have to overcome that for sure. So, so I think that what we did is we said, "Look, you're you know you, but you don't know the skills you don't have and you have no idea how to test for them and you have no idea that they even exist. So, like how do you how do we get around that?" And so, you know, we created this hiring process where we have people from different backgrounds
28:47look at every job profile and go, "Hey, you know, like if I was hiring that, I would look at these things. You know, you need a relationship person."
28:54Actually, how we got Chris was um it was really a relationship job, but the hiring manager had been an investment banker. Um so, he had all these investment banker criteria, right? Um, and if you anybody knows Chris Lions knows he would flunk that test. Uh, but I was like, well, but this is a relationship job.
29:13So, like let's look for people who are like relationship people. And I was like, he is a like worldass relationship guy, like really good. And so, because we hired him on that criteria, which was the right criteria for that job, that meant once he got on board, we knew why we hired. If we had thought that we hired him for financial modeling, yeah, and and he was black, he he would never got promoted.
29:36He's been promoted like eight times.
29:38Um and that's because we know what he is, right? Like we know the special thing that he has. Philosophically, I think the right answer is you really want to widen the bar, not lower the bar, raise the bar. You want to widen the bar so that you can see all the criteria that you would need in that job. Even if you don't have it, you have to get hired on the same criteria, right? I remember when I went to get a job as an engineer. So, like there was a moment I got a job for engineer for like a year.
30:02And I'm the only black person there. I was like, "Cool." I was like, "Oh, these people are talking crazy in here. This person is talking sideways to me at work. Now I understand why this doesn't work." Because if you don't run a process properly, you end up putting you not be able to build a real culture. Like these people actually can't work together. They don't respect each other.
30:20Yeah. Yeah. They don't know why they hired you, you know?
30:21Yeah. It's just crazy. Well, there's a funny story that I uh I had this crazy conversation with Stout and you know, he calls me up. He goes, "Ben, I used to be president of Sony Urban Music." And I was like, "Yeah, Steve, you know it's Steve." You know, he's talking loud.
30:38And and I was like, "I know." And he goes, "Yeah, but it wasn't urban music. It was black music. They made me call it urban music to not sound racist." And I was like, "Oh that's stupid."
30:47And he's like, "No, no, no. That was the stupid part was because we called it urban music. I wasn't allowed to market in rural areas like all black people live in the city. I was like, this is a dumb And he's like, no, I don't even think you're listening very carefully. I was president of Sony urban music. I had Michael Jackson, but white people don't like Michael Jackson.
31:05It wasn't black music. It was music, right?
31:07But the DEI, the the the program for it made it smaller than it was, not bigger than it was. And I was like, you know, that's what we did in Silicon Valley. We had urban HR. It's like, no, it's talent. It's not black talent. It's talent. You just have to be able to see the talent. You got to be able to listen to the music. And then now it's gone the other way as you said, like I agree with that. It's like, well, it's a meritocracy. Well, what does that mean?
31:27Well, I'm going to hire me. And it's like, okay. And I think like it's been a big advantage for us in venture capital. Like I mean, you know this like we get to people that they're never getting to, right? Um because we've got people who can do those things that they won't hire because they can't not because they it's not a racist thing. It's they can't see them. They can't see it. They can't see them.
31:48They're blind. They're talent blind. And you know, like, you know, and we're like, all of us are talent blind. That's why you need like a process and a methodology and stuff.
31:59Yeah. You know, Margaret, the legendary Margaret Wenmark is running marketing for us. And I was like, she's been around forever.
32:06Yeah. She she's here at the beginning, right?
32:07Yeah. Yeah. From the very beginning.
32:09I was I remember I met her. I was like, "Oh, man. I need I need someone like this one day."
32:12Yeah. She had all women working for her. I was like, Margaret, like why can't any men like pass your like what's in your profile they can't they can't qualify for. She's like helpfulness.
32:22[laughter] It's like she's right. And but you know like that think about that as a criteria like how valuable is that in venture capital like everybody wants venture capitalist who's helpful but I you know I know how to interview for that and so forth. And so like by developing that, you know, at the time we were, you know, predominantly men.
32:42Now I think we're like 54% women, but we didn't have any women criteria. We just had like helpfulness as a criteria. And you know, these are the things that change that make you stronger. Um, not like you're not compromising. You're actually getting better by capacity.
32:57If you can see all the talent, like we're all in a talent war. We're all competing for talent. If you can see more talent, you're gonna win. We're getting to the the climax here in terms of like all right now we have AI like I actually I'm actually feeling a little bit of an itch like I'm not building right now like I literally can't make it through a day without generating some code and building something because Yeah. It's crazy.
33:18It's crazy right? I can be on cloud code on my phone and it's like you know now now like for instance but I was by the way I was talking to Deshawn he became an engineer.
33:26Oh yeah. No no but I told you Sean I was like hey man you don't have to hire anybody to build this stuff. He's like all right I'm hopping. And now he's addicted. Yeah, he's addicted. He's out of his mind, right? I I got I got an agent here. I got agent here. I I only got four people, but maybe I can make it two. Like, you know, like he he's almost like a AI fiend.
33:42He's AI fiend. I think there's like literally I think there's going to be AI rehab at some point. Like cuz it's like if you right now if you can't force if you're not like in your bed at night like go to sleep, go to sleep, then you're not on it cuz like there's so much that can be done. It's like it's crazy. But I guess my point is that going back to like the the larger aperture of opportunity here, like now we can like open up the the the stratosphere for like people who would not have been a fit before. Like if if I come to you, I've never built a product
34:12in my life. I've never worked at a tech company. Oh yeah, I worked at this oil and gas company. I really know this process works. I'm going to build this company. It'd be hard to accept that this might work.
34:21Right. Um but now you could be like you can go from idea to company very fast, right? Yeah. without being able to hire all all the barriers that were there before aren't there. I I 100% agree. I mean, like that's why I think it's like it's more important to get people into tech because they're not even getting into tech. They're they're just getting into ideas. It's like, okay, here's and and this is, by the way, it's happening in every like creativity is now the
34:50creativity is the thing like yeah, if you can use the tools, all you need to do is be creative. This opportunity is probably even bigger because right any idea you have you can make you can manifest. [music]
35:06We both were around when the internet began was on BBS boards and prodigy.net and all these things. You mean like computer? [snorts] Yeah. All that. Um you know a million little discs sitting around. Um, yeah. [laughter] You know, AOL used to send a disc to you like you couldn't open your mail without getting a serial box. Oh, it's AOL.
35:27You know, memory was No, I was expecting a toy.
35:30Yeah, memory was hard to come by back then. I used to go to the store. I used to get like a box of them and just like get put tissue in that I can [laughter] I record on that.
35:37Um, but uh the internet was big. Like it was I mean that's how we both got to this conversation right here. But like to me this like this is bigger. This is like the fourth industrial revolution. Like what's your people talk about I think it's clearly bigger than the internet.
35:51People talk about it like it's a sector like we're talking about oh it's a bubble like crypto. I'm like crypto is a thing. It's a conduit but like it ain't AI you know AI is a new computer right?
36:03Like it's a it's it's like the reinvention of the computer. Imagine the entire computer industry got invented but instead of it developing over 80 years it developed over two years and then like that's AI and then it's more powerful on top of that. Anything you think you can solve you can solve. Mhm.
36:24You know, and we've already seen it like people are taking it so for granted because they're so worried about like uh Skynet or whatever, but traffic deaths, huge problem solved with Whimo, you know, cancer. We're solving that for sure. Any idea, any like major problem like is getting figured out with AI right now. Like it it is wild. Um, so like as an entrepreneur, it's like just find a problem, right?
36:53You know, and you can go like solve it and people will be like fired up and willing to pay you and you've got a business. I mean, it is it is like that powerful.
37:02So, you've been through a bubble, like a real bubble. You know, there's money going out here that ain't coming back to people. Like, where where where is the bubble X part of this? I don't be concerned with it, but where is for everybody who's talking about a bubble?
37:14Where's the bubble component to this?
37:15Well, I mean, you got to remember, right? Oh, the internet bubble. Well, like the internet's here.
37:21It's kind of important. You could have made a lot of money on it. Look, where bubbles come from and the where the internet bubble came from is like there's technology and how that advances and then there's consumer adoption and that's like goes more in fits and starts and then there's uh investor sentiment, right?
37:41And investors are like manic depressive.
37:44Um they get over excited and then they get totally depressed. It's never going to work and they'll actually So there there's a a kind of an opposite of the bubble going on right now, I think, a little bit in uh with investors. But in the internet time, what happened was um investors were like, "The internet, it's the biggest thing ever. I'm putting all my money in and it's never going to go down in price." Okay. The problem was the time they decided to do that, there was like 50 or 60 million people on the internet.
38:13M half of them were on dialup. Um it it was very expensive to build these things. There wasn't a big enough market to make money in selling a lot of the ideas that people had. Um so like the thing crashed down.
38:24I mean right now though like Shutt ain't making no money. These guys are like Gemini they giving away CH they giving away for free. How can we catch up with anthropic? Like just keep running this computer up like well kind of OpenAI went like 0 to$20 billion dollars since November 2022. Yeah. So like that and and by the way that you know the price of a token is dropping like 100fold a year.
38:47Wait for that crossover.
38:49Look consumer adoption is going faster than anything we've ever seen. The technology works and is advancing as fast as everything we've seen.
38:58Um and are people going to get because we're so early in the cycle. There are companies that are in a good position now that there will be a technological change and they'll get wiped out. But that's not really a bubble to me. just like investing. That's just how it goes.
39:13That's part of the times.
39:14People were trying to say, "Oh, the demand for Nvidia chips is artificial.
39:18They, you know, they're just investing in companies and that's where like the demand for Nvidia chips right now is just unlimited. Like they can't make enough chips. Like that is actually true." And so that a lot of the narratives around the AI bubble I just think aren't correct. Now, will we hit a bubble at some point? Yeah, quite possibly. I mean, look, we had a bandwidth bubble. a bandwidth bubble in 2001.
39:41We had too much bandwidth. Like, how could that even be possible? Like, we were at the beginning days of the internet. How could you have too much bandwidth? Well, the bottleneck moved, right? Like, we had a bandwidth bottleneck and then that became like, oh, the servers weren't good enough. We couldn't even put the bits on fast enough, you know, to serve the video. We quite possibly could have a temporary glut in GPUs if we like don't have enough power or like you know or cooling or whatever like that's obviously
40:10possible. So the big thing that's different about AI is in my generation and in every generation you could not throw money at a problem.
40:19Right? Like if I want to catch you in your company and I said I'm gonna hire a thousand engineers tomorrow. Now I have data and I buy enough GPUs like I can solve And the greatest example to me is right like OpenAI got to 10 billion in revenue and Elon started cold.
40:39And he like you know he's almost at product parody with them you know in like couple years.
40:49This is an important position though.
40:50So, how does this change how you choose what you're going to invest in? The world to me, they've seen the change happen, but they're not changing the way they're thinking around like this is the deal I should do. This is a person I should back. You have to reshape how you think about investing.
41:03It's hard to calculate. So, there's ones that you won't expect to sustain that do. So, like one of my favorite examples is uh 11 Labs.
41:12Oh yeah, those guys.
41:1311 Labs. Okay. of all the things if you rewind back to when we made the first investment that you would go okay they're probably vulnerable to the big guys is well the big guys aren't going to be able to make their models talk really they will be able of course they'll be able to make their models talk but it turns out that 11 Labs a very very clever company um one they got in the developer stack they built the better product for developers
41:41so what does that do well they've got a built-in set of customers And then they're in the data feedback loop. Oh, they're getting every, you know, voice case and so forth and they're training their model on better proprietary like real world in use data.
41:58Then they built the product kind of subtleties around it. So, oh, yours can talk, but I can talk in Spanish exactly like I'm talking in English with the exact intonations, laughing in the right way, everything perfectly. Oh, guess what? I get the Netflix deal. I get the Tele Visa deal. Now I got more feedback, you know, like and now I've got more feedback and I'm So I'm kind of building up
42:25a voice product that's very very special and that yeah, you could throw more GPUs at yours, but you may not be able to do the things I do because I've got better data. I've got, you know, like I've got a model that's really tuned to the use cases that have value as opposed to like every damn thing that everybody wants to do.
42:45And so like there there are things like that. on the other hand um you know like every software company SAS company in the world it's like is trading at a very low multiple right now because there's a real belief that hey even as a customer I can rewrite Salesforce no it's real life I was like you know you know what happened I got in cloud code right this must have been a year ago I got in cloud code I was I'd already been cursor you know I'd
43:14already before that I'm copying from JP so I got in cloud code. I was like, "This goes crazy. I'm never going to look at code again." And then the next day I was like, "Cance cancel HubSpot. I'm building my own CRM." Like, I was like, [clears throat] like, "This thing sucks." Like, I want it to work for me.
43:29I could just build my own. One week later, got my own CRM, you know? Affinity cancel. Got my own fundraising platform. Like, like why?
43:37Like, you have to build something that's very special for me to be like, I'm not going to build it myself. And right now obviously that's unique to engineers or like probably people but like the time may come where you're on a website.
43:50And you're like I don't want it this way. Can I have it this way?
43:53So I think the world or at least Wall Street is anticipating that a lot now.
43:58Look, there are other things that those companies have and you know for you're building something for you like if it's for at the individual level probably a little different than you know American Airlines running whatever SAP or something like that's a little harder to figure out what the hell that is. Um, and then you know they've got data and you know blah blah blah blah blah. But still yet and still like that's a real thing where you can chase you by using
44:26GPUs that you don't even own that Anthropic owns can chase down HubSpot for your use case like that. Oh really?
44:34Like that you wouldn't even consider doing that.
44:37No, it wasn't even consideration. But now I I as reverse when I look at buying some software I'm like is this really worth $400 a month or should I spend 4 days and just have my own you know like there's a reverse consideration you know.
44:57I'm actually bring my paper for my signature question. I want to get my signature questions right. All right. This is about legacy.
45:04Uh, when the next vintage of VCs talk about Ben Horowitz, what do you want them to say? What's your mark on the game?
45:17That's, you know, that's something I really don't think. Mike Tyson had a great question on legacy. He's like, "What are you talking about? I'm just going to be dust dirt." [laughter] It's a crazy question. I don't think about that. Um I you know for me like I hope that uh people feel like I move the culture of investing um to a better place to one that's more about um
45:46helping people build companies than you know just making money. Um so that would be that'd be my hope.
45:52Okay. So before we finish up that question then I was talking about BC. Think about Ben as the human cuz to because because your name's on the firm they made you have your name on the firm.
46:02Like you know you have this direct association at all times. Me as a you know Ben is a human when you leave it's like you what makes you feel accomplished?
46:11What makes you feel like oh I did my thing?
46:15Yeah. Well, you know, I I really feel like it's the, you know, the people who work here. Like I, you know, going back to the NFL analogy, you know, the coaching tree idea and that kind of thing. Like I mean to me you know how many you know who were the great people who worked here and then like did they become better people while they were here and like that's the main thing on the business
46:41front you know I think you know on the personal personal front like paid in full to me is really really important and I intimidate everybody into coming as you know thank you for your uh for your contributions you know if we forget the people who kind of sacrifice their lives to inspire us. Um then you know you get into a very nihilistic existence. We're going to
47:10make those guys feel as important as they should feel and then in return like we just get so much more meaning out of who we are. And so that's uh you know that that's super important to me. [snorts] Yeah. Yeah, I I think, you know, as that can grow, if that can become, you know, the SAG, the pension plan, the the the, you know, the base of, you know, hip-hop continues, I think it's a I think it's a important thing that probably should have done a long
47:40time ago. Um, people were too busy talking about urban radio.
47:43Yeah. You know, like it's it's so funny how many like one of the things that got me to start Peyton Full is so many like podcasts and this and that saying, "Somebody ought to do something about this." And I was like, "Someone should give them their flowers before they're gone." Yeah. Yeah.
47:55Let me go back to my my back.
47:57Yeah. Yeah. Yeah. Exactly. Like so I was just like, "Well, why don't I just do it?" Um and you know, like I said, I get way more out of it, I think, than than everybody. Um so, you know, it's an easy thing to do in that sense.
48:11What's something that, you know, you think is going to happen, you know, in the next say 8 to 12 months as a result of what's you know, the current landscape in technology? So I think the infrastructure for AI is just out ofd is not strong enough. It's ju just like wrong. Um and it is very reminiscent to me of the infrastructure for cloud computing being wrong. Like
48:40everybody in the beginning of cloud computing it's like oh we'll just take you know our software we'll put it in the cloud. We'll put on the other side of the wire and then that'll work. Um but you know it didn't work at all and eventually we rebuilt everything from storage to networking to um you know the way operating systems work and virtualization and you know containers and this and that and the other and like you know the whole thing got reconstructed.
49:04If you look at AI I mean just just start with a workload right so somebody makes a database query you kind of know what that is. Somebody makes a AI query like that thing could run for a week.
49:16[laughter] I mean who knows what like you know so like what is the underlying set of systems that handles those requests that manages that correctly and so forth like it doesn't exist yet if you look at I mean Nvidia god bless them but like you know you want to talk about a power hungry low yield you know chip built for something entirely different for playing video games and and you know is now that we know like a fair amount about the models is that the right answer probably not um than the models
49:45themselves like I mean these models you literally have to suck down all the data on the internet to get them trained right like that seems like a lot of training is that going to be where we end so I think that the you know from the model on down everything's going to change and there's going to be a lot of uh opportunity in that All right man well thanks for joining us all right no great great to be here like great to kick it off yeah for sure man it's gonna be it's gonna be a great series appreciate you kicking off with me yes sir all right
50:16All right, man. Appreciate you.
50:28I brought this thing to open the wine without opening it.
50:31I think I it up. If I do open this one, are you going to try some?
50:34I'm not going to drink now. No, I got to go to work.
50:37You can pour something in those glasses that looks like wine.
50:40I got Diet Coke here.
50:42Looks wineish. Oh, it looks like hard liquor.
50:45I don't want to get the bar right because wrong, but you guys lick it up. You know, I hate when people go, "Oh, so good you're doing this." It's like, "Good. you." Like, "I'm making money, This is a money-making idea. This isn't a charity idea. you." So, you know, that's Sorry, it's too much profanity on your [laughter] podcast. Your first podcast now you can't show it to the kids. That's some sweet [music] wine you got there.
