The middle path is what’s roughly going to play out. Great people will get easier, and easier, access to capital. Those people will have less, and less, preventable disease. Those people will roughly be able to educate themselves easier and easier, in simpler ways. They will not need to be credentialed. They’ll just need skills, and they’ll be able to build things cheaper, and cheaper, and cheaper (good segue for Amazon by the way).

You’ll find that things exist that we didn’t expect, and those things become the sinks of human labor, where the sources are these other job classes that change for the better. You have to kind of be a little bit more strategic in the aperture in which you define the problem.

https://www.youtube.com/watch?v=UZn8MEsQwOg (29:33)

https://www.youtube.com/watch?v=UZn8MEsQwOg (10:20)

Ideally, those people are also as different as possible.

When you’re forced to find commonalities beyond the superficial commonalities, it just creates way better teams.

It doesn’t necessarily mean like, you know, four guys and you need one girl, or four girls and you need one guy… You just have to be different. Different in how you were raised, different in how you think.

Different in religion, if that’s your thing. Just differences. You need differences, but commonalities, like, against those four archetypes. Like, I see those three or four people in any meeting, I get super excited.

https://www.youtube.com/watch?v=1dUbrL8b9l8 (1:03:03)

He’s had diabetes for 30 years. He’s 75, so he’s had it since his mid-40s. 10 years of pills, 10 years of insulin, and now 10 years of dialysis. Now he’s at the end of that, there’s no solution for that, so he’s gonna die. Now, I have all this money, I have all this influence, I have all this notoriety… I can’t do anything about my dad. That’s really fucking frustrating. Like, frustrating.

And so, I started a company around diabetes. Very simple idea. There’s been a lot of literature that says, if you can just understand the data, you can actually control how people’s diabetes changes. Now, does anybody here have a relative, or a mother, father… somebody you care about with diabetes? Look how many fuckin’ people’s hands are raised.

This is an epidemic. It has massive socio-economic ramifications beyond the obvious. If you look at like, inner-city development, no fresh food gets into there. There’s no Whole Foods there, there’s just Chick-fil-A and McDonalds. And so, what happens? Diabetes gets worse, and worse, and worse. We’re talking about whole swaths of populations that are held down. Is that right? It’s not fucking right!

So what do you do? What did I do? Okay, let’s just start by getting the goddam data off the glucometer. You get it off the glucometer, you send it into the cloud, you use some simple machine learning, you apply some heuristics, you save people’s lives. And it’s shown to be effective.

So we do that. It takes us three, four, years. It takes us five or six million dollars. So be it. But at the end of it now, that’s a business that has signed contracts in the last eight weeks, to take care of three million patients in the US, at $100 a patient a year. That’s a $300 million dollar revenue overnight. That’s gonna be a $50 billion company. I own half of it.

So then I was like, “Fuck it. I’m gonna do the same thing in asthma and COPD. I’m gonna do the same thing in chronic heart failure.”

https://www.youtube.com/watch?v=1dUbrL8b9l8 (33:45)

The first is, are they good pickers? And there’s now exceptional data from places like CB Insights and Mattermark. They will go and literally rank every single portfolio of every single venture capitalist to answer the question, “Is this a high-growth portfolio or not?” And I’ll tell you why it matters. But that’s number one.

It matters because, now, success begets more success. You are then surrounded by a portfolio of other great exceptional leaders. As they learn things, they can pass them off to you. It’s better to be within a group of winners. So it’s better to be, you know, the eleventh guy on the Warriors than it is to be the second guy on the 76ers. Always. So that’s the first thing.

What I would say on portfolio quality actually, 7 out of 10 companies are high-growth companies according to [CB Insights and Mattermark]. We’re number 1 in the entire industry. And I think what that means is we’re good pickers. So the diligence that we do and the thoughtfulness that we take to understand people and their businesses… sometimes it takes us a little bit longer than we would like, and maybe you would like, but I think we generally we get to good answers. And even when the answer is it’s not a good fit, we try to give as much feedback back to make it a fit. That’s the first thing.

The second thing then that I think you need to look at is, what is the percentage of that VC’s portfolio that gets follow on financing. And it’s so crucial. So as an example: Sequoia has the single best percentage of getting A’s financed to B’s. The single best. Spark is second, we’re third. And then everybody is a distant also-ran and we are like, two sigma above the industry average. Why is it important?

So, obviously, Sequoia has a fantastic brand. When they pick you, there’s a bunch of folks out there that will give you the benefit of the doubt. Hugely important when you need to raise more capital. But then you have to ask yourself, but what about from B to C? And there, what’s interesting, is Greylock is the best. We’re the second best, and everybody else is a distant also-ran, and Sequoia’s actually right below the industry average.

So what does that say? What it says is:

1. a) you have to construct and be good pickers, and then,
2. b) you have to help the portfolio companies in very specific ways so that you continue to get to that next tier of capital.

It’s not sufficient to just pick somebody because they can get you from the A to the B, if, from the B to the C you’re just as fucked as everybody else. That doesn’t work. And it’s not sufficient to pick the wrong person in the A, and then all of a sudden hope it’s going to work out in the B.

So it’s really important that you’re maximizing both those probabilities. So, again, CB Insights, Mattermark, look at the data, multiply those two things together and rank them. And it’s important for you, because you cannot afford to be in a situation where, in the absence of operational help, you could run out of oxygen accidentally.

And then, you want to have a situation where your venture investors have the benefit of the doubt with other investors. Because over a period of making enough good investments they will say to you, “Alright, I will give you the benefit of the doubt.” So I can call at the eleventh hour and say, “Listen, I know this is on the fence for you, but put in the five million. I’m telling you, we can help make it work.”

It fucking matters. Especially in times like this.

And then the other two things which I think are important to me, personally, is, number one is, are the people that you’re working with mapping to what you are as a person? Whether it’s your gender, race, ethnicity, or whether it’s your perspective and philosophy on how society and life should work? Because if you are going to be successful I think it’s really important that you pick people to bring along that are like you so then that your values are then further reflected.

Because success begets success.

And the last thing you want to do is create a successful person in someone you morally disagree with. And you do that by picking the wrong investor.

Anyway, you put these all together… I think we’re doing well. It wasn’t enough for us, and so we made the decision last year that we were going to migrate into not just being a venture firm but being more of a company. And in building a company, our model looks very similar to what Berkshire has built, or what Alphabet is building… which is basically, in our perspective there’s an opportunity to build a master brand in technology. Someone who has a really huge capital base, but a big vision around building things that create change in ways that we think are important.

And the way that we frame our mission is, what we are trying to do more than anybody else, is to basically advance humanity by solving the world’s hardest problems. And so we work backwards from, “What are those hard problems?”

Energy, healthcare, education, gender equality, whatever it is. And we try to find businesses that do that. We think that will create a lot of capital and wealth, and it’s important that then we control that versus somebody else who doesn’t have that sort of moral persuasion.

Because otherwise, bad things happen. And so we have to basically reallocate that in constructive ways. So over time, we’ll look like that. We’ll look like a company with a huge amount of capital that invests, that builds, that buys, private companies, public companies, minority investments, majority take outs.

https://www.youtube.com/watch?v=Njj6HZvixK8 (29:10)

If you have a 1% chance of success, why aren’t you throwing the Hail Mary on something crazy? By definition it is a Hail Mary. On the off-chance that it works, it’ll be transformational. For you, for the people that work for you, your community, how it inspires other people, the world. All that shit is so much cooler than just working on something small. And right now, what’s happening is we have too much small stuff, not enough big stuff. They all have the same mortality rates. That’s just a waste, it’s a waste of intellectual capital.

I would say too many people building incremental, consumer-focused product features, and not enough people building really ambitious products in any category. In consumer, great. Do it!

In enterprise, in storage, in healthcare, in energy. I don’t know. The point is, that we’ve now fallen into this trap where it’s, again, en vogue to be an entrepreneur. You know it’s en vogue to live this lifestyle, run around in jeans and talk the talk. Blah-blah-blah. No socks. All of that is en vogue.

As a result, what happens is you get this long tail of folks who want to be there because of what it represents vs what it really is.

And when that happens, again, people get distracted. It’s about people having funding parties talking about the angel round that they raised. And blah-blah-blah. All these random people coming in, and investing dribbles and drabbles of money, and every random other person starting an incubator.

In my opinion, people do better if you spend a couple of years working around really good people, learning, and then going off and starting something. You can still start something from scratch, but I think you need the influence of some folks around you, and right now I just don’t think that the infrastructure is set up that way.

So for example, if you’re just, “I’m gonna drop out, I’m gonna apply to an incubator, I’m just gonna sit there with my other buddy.” Okay, you’re either gonna have a crappy idea, no offence, because I don’t think your ambition is that big. Maybe you’re like the 1-in-1 million thing where you stumble into something accidentally, but I really think it’s accidental. It’s not even like, “I have a really big vision, let me start with something small.” I think it’s literally accidental.

Okay, and, that’s great, but you could flip a coin and you could just as easily be hit by a car.

To Pinterest, Ben and those guys actually spent time working in places where they saw ambition. They then, themselves, became ambitious. They saw product quality, they saw code quality. Like, you can’t work at Google and land really, really, shit code. You really can’t. Not for a long time, maybe for a little bit.

When you spin out of a place like that, your bar is set here. You just came out of a company that’s worth $100 billion at the time. And so, you’re thinking big. But if it’s all of a sudden it’s cool to drop out of school with my buddy, and all of a sudden go to some stupid incubator, guess what?

You’re gonna work on something stupid, it’s probably not going to be that interesting, and you unfortunately see it, by and large in the results of these things. And so people then get disillusioned, they become acquisition fodder for a bigger company, and that’s a vicious cycle.

So, instead what needs to happen is folks need to say, “Instead of this, what about this other thing?” Or, why don’t you actually go work at Facebook or Google for a year. Find a co-founder there. And then spinout. And then when you land crappy code, he’ll basically say this doesn’t cut it.

So you just want stuff like that to happen more. Otherwise we’ll just be a bunch of really, really smart people working on really, really stupid things. And that is a huge waste of time for the world.

In general, the knock-on effect is pretty bad right now. Meaning: you see a few companies that do something interesting, at a point in time, and then you see n+1 copycats of that thing. That’s not a healthy environment to be an entrepreneur in.

You want to be in an environment where, by and large, you’re doing something that’s relatively unique. By and large, it’s technically challenging, which inherently creates some kind of a moat. By and large, you’re creating something that has a potential to scale, and have massive impact. And as a result it allows you to recruit better, the people that come work for you will do ungodly things on your behalf: they’ll work for zero pay…

It’s because you’re working on things that are ambitious. Ambition for most people trumps all the other superficial shit. Title, salary… none of that stuff matters for most people. And so how do you clarify what you’re doing in a way where you can get those folks? They’re everywhere.

https://www.youtube.com/watch?v=pDVDWNguPs4 (30:10)

And that’s what Microsoft did, right? If you sum up all the folks that live in the Windows world, their economic value is greater than Microsoft’s.

So why do you think Microsoft’s been around for 30 years? There are so many people working to keep it going; the incentives are there. You can debate whether it’s good or bad, that doesn’t matter. Winning is what matters, and those guys figured out how to win. Google is doing that now. Facebook is doing that… I think it needs to do that better, but, you know.

https://www.youtube.com/watch?v=pDVDWNguPs4 (15:33)

https://www.youtube.com/watch?v=6H37iyvEZJ8 (1:07:35)

https://www.youtube.com/watch?v=6H37iyvEZJ8 (1:06:20)

https://www.youtube.com/watch?v=6H37iyvEZJ8 (1:00:00)