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[MUSIC] Hey, Manth, welcome to Stanford GSB.
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>> Thank you for having me. I'm excited to be here.
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I've watched so many of these interviews online, so, glad to be part of one.
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>> Well, it is such a pleasure to have you.
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And while reflecting on your journey, I couldn't help but notice some of the commonalities that we share.
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We were both born and brought up in old capital cities of India, we both moved to the US at a young age, you then went on to MIT and I was on the other coast, and we're both in VC.
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But that's pretty much where the commonality stop.
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>> [LAUGH] >> You are the CEO of General Catalyst, you have personally invested in so many revolutionary companies, from Stripe to Snap to Livongo, Samsara, Grammarly, Applied Intuition, and so many others.
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And I, I'm getting there.
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>> [LAUGH] >> But my hope is that this conversation helps us all get a little bit closer. >> Let's do it.
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>> Yeah, now, before we dive into the world of investing, I want to start with your background.
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You moved here at a young age and soon after your family went through some financial hardships.
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In fact you also took a job at the CVS full time, while in high school, to support your family.
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Can you talk to us about how these experiences influenced your internal grounding.
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>> Yeah, so I grew up in a low income household in Delhi, and my parents raised me to be carefree, it was a lot of joy, as long as I got good grades, right?
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It was very, very clear about that.
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And my parents decided to move, which was to Boston at that time in 1989-1990, so we could get a good education.
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That was sort of the core premise.
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And it was interesting, my dad moved a year before us to get a job and then couple days after we moved there, he actually lost that job.
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I'll never forget, we're in the basement of this house that we were living in and we had to sort of think about here, we're going to start figuring this move to this new country together.
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And that was a defining experience.
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And I would say there are two things that have been foundational to my journey, it's been learning and it's been the importance of taking risk.
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My parents took a big risk for us to be here and have a great life, and that paid off.
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And honestly, when I came to Boston to our high school, I would look at this choice that we were given.
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So in India, you had a very fixed curriculum that you had to pursue, here you're like, what glasses do you want to take?
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Like, I have choice, right?
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And that ended up being sort of the beginning of, hey, I can actually run my own race in this world.
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And that was very foundational.
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>> You talked about the importance of learning, you went on to MIT and you got five degrees, engineering, CS, biology, math, and operations research.
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Now, as graduation nears, I know some of us feel this urge to want to stay at Stanford just a little bit longer, but for you, what was it that kept you at MIT for so long and what influenced you to leave?
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>> Yeah, look, my favorite thing to do when I was an undergrad was actually look at the course catalog.
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I would look at it multiple times in the semester, what can I learn?
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And when I was a senior, I sort of had taken all these classes in all these departments, but I wasn't going to be graduating in any one of them.
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So I actually decided to stay a little bit longer to finish the disciplines that I thought I was far enough along in.
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And honestly, my passion was to go into academia, so I would've stayed longer and sort of keep learning.
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But then in 1999, for those of you who would remember that time, there was the beginning of the mobile computing work.
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There was a new protocol that had come out, wireless application protocol, and it was very clear the world was about to change in how we thought about the role of technology in society.
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So, sort of took that moment and dropped out with a few friends and decided to start a company.
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Now, we also know mobile was very early till 2006 when the iPhone came out, so we ended up selling that business couple years later and then that's how I ended up at General Catalyst as entrepreneur residence.
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>> So five degrees and still a dropout, that's pretty impressive.
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>> It's important to be a dropout, right, to have a successful career.
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>> Well, you'll have to be a founder, and then after that experience you joined General Catalyst 23 years ago now.
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And in this period, you've become one of the most sought after investors in the valley, where so many young founders are dying to have you on their capital table.
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I'm curious now as you look at the founders around you, what are the skillsets that distinguish the ones who are actually going to make a difference?
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I'm just asking for a friend.
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>> Yeah, well, first of all, you have to look at what's happening in the world today, right?
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So I would say, at a macro level, we're dealing with two pretty profound shifts.
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So one is something we talk a lot about every day, which is the technological shift around AI.
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But the second is this whole idea of how geopolitics is changing, how every nation is thinking about the evolution of their critical industries.
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And so in that case, this whole idea of global resilience is another big profound theme.
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So when you think about the role of entrepreneurs and what we have to do in the next decades to come, it truly is about transforming these industries.
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So what we're looking for when we think about founders is somebody who has enduring ambition to play the long game on these transformations.
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Somebody who understands the importance of radical collaboration, because if you're going to be an agent of transformation in these industries, you have to bring the world along with you. You can't do it alone.
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It's too big for any given company to go transform the industry that they're in, these are massive industries we're talking about.
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And the third is, somebody who's really keen to become a great leader and think deeply about their role in society as an individual in a business.
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So we always think about, and listen, these are not all trades you have when you're very young, but do you have the raw material, do you have the drive, do you have the desire to be that kind of a person?
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And that's the kind of found we want to invest in building a relationship with.
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>> So we've talked about founders, now I want to talk about the flip side of the coin there, VCs.
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We live in a world where when we think of a lot of global problems we look to technology for the solution.
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In this world and thinking about what VCs have accomplished over the last two decades, what do you think is their role today?
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>> Yeah, so, let's think about what the business was two decades ago when I got into it.
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The role at that time for us was to back founders that were bringing efficiency for different stakeholders, efficiency for doctors, efficiency for supply team managers, you name it.
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Today, sort of post iPhone, Amazon Web Services and all the cloud computing and Facebook, we went down this path of starting to organize content, community, commerce, care, capital, online.
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We're really building a digital society.
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So the role of the companies has fundamentally changed, as we sort of think about building these transformative companies in these new industries.
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Well, then the role of venture capital has to change as well.
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A, because those are much bigger ideas and they need many more complex capital solutions than Traditional venture capital.
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And also, it's a much greater responsibility.
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We have to think about how we're going to set these companies up to minimize unintended consequences, to make sure we're inclusive in how we bring about these innovations and build institutions that can endure for a long time.
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So, we've had to take a step back and think about what is our role as investors in companies where technology is the change agent for this kind of long term transformation purposes. >> That's interesting.
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I also know that general catalyst creates 10 to 20 companies each year and when you think about these transformations, how does the business model of venture capitalists need to change to accommodate these goals?
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>> Yeah, look, the business of VC used to be all about serendipity. You meet great founders.
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You give them capital, you help them build businesses.
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You be thought partners to them.
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The way these transformation of society needs to happen the way we have to think about the evolving industry around defense or healthcare or energy transition, industrials.
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It's very important that we think deeply about how those systems really ought to be set up, and so that requires us to be much more intentional.
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And so part of the reason we create some of these companies is we think a lot about what's missing in the ecosystem.
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What are the kinds of companies that wouldn't self-combust on their own, either because they are very interdisciplinary and that the right teams may not combust, or they're really capital-intense or just complex in general or take a long time.
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And we sort of view it as our role to help catalyze those companies so that that innovation and that transformation of those industries can keep moving forward.
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So we've had to have this flywheel of intentionality and serendipity as we think about the evolution of the venture business.
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>> How do you bring your LPs along to do that.
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>> Well first of all you have to put up great returns.
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You don't have the license to innovate your business.
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I think this industry has been very successful and a lot of them are institutions like Stanford and others, there's a great responsibility to make sure we provide great returns for these institutions. So that's important.
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Then I would say, to bring them along, we have to help them believe that in order to really maximize the potential of these companies and therefore the return that we can generate for them, we have to think differently.
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And if the role of technology is changing and we don't change our own business, then we're not going to be maximizing a potential for them.
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And I think that's the process.
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Our investors have been solidly behind us, which we feel fortunate about.
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But we also have to prove it to them that this way of investing is going to continue to create elite returns and elite, impact in society.
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>> One thing I really admire about you and my super fan might come out a little bit here is that you back your investing philosophy with action.
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As the CEO of General Catalyst, you self-impose certain guidelines that each of your investments must be vetted for responsible innovation.
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The interesting thing is you did it in a way such that now the SEC can find you if you don't meet these criteria that you imposed on yourself.
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So why did you do that and how does it impact your competitiveness?
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>> Yeah, look, talk is cheap.
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We've talked a lot about, we want to build businesses that are doing well and doing good.
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But at the end of the day, the implementation of that's going to come if it actually gets embedded in our processes and in the way we run our firm.
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So we think a lot about it in the way we hire people that become part of the team.
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I actually think a lot of people that want to come work at GC today are inspired by our philosophy and our responsible innovation.
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I would also say it was important to embed it in our processes when it comes to investments.
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We have a role in the organization where every company is reviewed by a head of responsible innovation, Karen Watson, who's sitting here to make sure we're backing founders have the right mindset and knowledge In mechanisms in the way these companies are built, and we impose it upon ourselves to bring that rigor to our investment process.
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And lastly, I'll say we do this because we actually believe it will help us generate better returns for our investors.
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This is not just about being moral in business.
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This truly is because we think the best businesses, the ones that compound for a long time, really do focus on profit and purpose at the same time.
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>> Did you have to fight any internal voices from within the firm and taking what some would say is a very significant measure versus the industry standard?
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>> Change is always messy.
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And when you're used to doing things a certain way for 20 years, you obviously have a lot of inertia, and it's not because we have people that don't believe in responsible innovation.
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I think it's much more about the kinds of questions we got where, is this going to be bureaucratic or is this going to make us less attractive to the most ambitious founders because they think we are being an impact investor versus really trying to focus on the most valuable businesses.
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So we had to work through a lot of those issues and really understand the language in which we can engage with different stakeholders because we don't talk about responsible innovation to our healthcare founders.
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We talk about the evolution of a system that's proactive, affordable, and accessible.
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We don't talk about the language of responsible innovation when we work with Gen Z founders.
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We talk about the issues that are important to them.
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So I think it's about making sure we use the right language, but the core philosophy is we have been able to build consensus in the organization relatively effectively.
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>> You've also publicly stated that ESG does not work for VCs.
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And this to me seems a little counterintuitive with what we've just talked about.
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So can you help clarify this cognitive dissonance?
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>> Well, the spirit of ESG I deeply resonate with the standards, the benchmarks, I don't think they really work effectively.
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Who here would think that Tesla is not an ESG company?
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I mean, they literally moved an entire industry towards electrification, which is core to us being able to address issues around climate change, and yet, Tesla routinely fails the ESG checklist requirements.
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So I think that the system is fundamentally not something I'm fully aligned with.
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And then when you think about what we do, which is building companies from the start, there's literally no data to benchmark either in terms of these checklists.
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So our view has been you have to take a much more of an input-oriented approach rather than sort of this output optimization approach with ESG.
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And there, it comes down to what's the mindset of the founders?
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What are the mechanisms with which they're building the business?
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What business model choices?
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Are they thinking about second and third order impacts of their business on all stakeholders?
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That is way more powerful to get right, so that these companies are foundationally set up to be inclusive, to be sustainable, to respect our democratic values, rather than sort of reverse engineering qualifications against a set of benchmarks.
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>> You talked about Tesla and the automotive industry.
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I'm also curious about defense to bring this to light.
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General Catalyst was one of the first investors in defense with your 2015 investment in Andrew Earl.
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And then even last year, I When you led the $220 million round for Helsing AI, right?
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How do you square up responsible innovation with investing in these, let's call it sensitive areas?
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>> Yeah, we've been investing in defense actually since 2004 when we purchased BBN technology.
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Which was a elite defense contractor in Cambridge, Massachusetts.
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And I'll tell you this area ends up being the most controversial because you are often thinking about, wow, it's weapons and it's killing people, and how do we really think about defense?
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But as the last few years have shown, war is real.
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And every nation does need to figure out how to defend itself.
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And we do need to create capabilities to make sure the democratic nations are secure.
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And you can do that in ineffective ways we can use technology and save tag taxpayer money and build these capabilities in much more precise In effective ways.
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So to abandon investing this would actually be irresponsible to us.
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But every time we make an investment, it ends up being highly contentious and we have to debate a lot.
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So when we did the neural investment, we must have gotten the partnership together several times in a week.
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And we wrote an ethics memo and we discussed is this the right thing to be doing?
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Because it was such a profound shift in terms of what Indra was building and we could not be more proud to be part of that business today.
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And then when our partner Paul Klein, who's sitting here when he worked on housing for the firm, it was actually less than an argument.
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We all know European countries need to be better in defense given what's going, and it is a team that shows up with a mission to protect those nations.
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And with the right mindset about who are the nations, they will sell those technologies too.
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I think that's where the rubber meets the road in terms of responsible innovation in defense.
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Are you building these technologies to have them end up in the right hands, in the right nations or not?
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And we talked a lot about their mindset around that and could not be more proud to be invested in that business as well.
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And how do you see your identity as a venture capital firm?
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Is it a venture capital firm of the US?
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Is it one of the western allied nations?
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And how do you think through that when we're making decisions like where to put defense dollars in?
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>> This is a great question.
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We think think of ourselves as an investment firm.
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I wouldn't even say just a venture capital, but as an investment firm that truly is focused on the democratic nations.
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We don't do business in China but it's not out of morality.
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We just don't know how to go to business in China, so we've never tried to because there's plenty to do and the rest of the world for us.
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But when we do think about these technologies, we think about it as how does each nation build its own resiliency in these areas?
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What are the objectives that the US has in a certain category versus nations in Europe versus India, which is an increasingly of interest for us.
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And we want to be enabling founders to build the important companies in all those areas and bring the knowledge base that we have in these industries and around company building to all of them.
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>> Now let's shift from defense to another really hard to fix industry where you're also a very prominent leader, Healthcare.
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Hey, man, I must say it seems a little bit like a glutton for pain.
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You created HATCO, the Health Assurance Transformation Corporation, with the mission to build the Amazon ecosystem for healthcare, right?
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You've announced that you've acquired a hospital chain.
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You've also announced 20 different partnerships with health systems around the world.
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This seems a little bit unusual for VC, how do you justify that?
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And what is your vision here?
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>> Yeah, look if you close your eyes and you said in 30 years which should the health system of the United States look like?
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You would say it should be proactive, affordable, and accessible.
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You want to keep people healthy, you want to make sure it doesn't bankrupt us as a society, and you want to make sure everybody has access to it.
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That is far from where we are today.
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And that is far greater than what a single company can actually accomplish.
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So our whole philosophy has been that, to the extent that you view Amazon as a company that changed retail, the Amazon of healthcare is not going to be a single company, it's going to be an ecosystem of companies.
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And the journey we've been on for the last, I would say, 12 or 14 years, has been around creating that ecosystem of companies that together can transform the system. And what are our goals?
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Our goals are help these systems become much more profitable by bringing technology and automation to them.
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Help them evolve their workforce as technologies are changing and care models are changing.
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And help change the care models and new revenue streams to keep people healthy versus paying for Stick Care, which is where a lot of the US healthcare costs lie today.
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And the core belief is, we cannot do that by just building a single company and we cannot do that by having a typical Silicon Valley mindset of we're just going to build companies put them in society and it'll just happen.
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It needs to be in collaboration with the health systems themselves.
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So everything we've done we've done with the idea and the mission that we're going to make our health system institutions more vibrant.
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And you saw what happened in COVID, how fragile they are.
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Insurance companies were minting money and hospital systems were needing a bailout.
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Talk about the misalignment in the ecosystem that became clear.
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And so what we're working on is how do we help them accomplish this transformation?
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And the reason we bought a health system is because we actually want to work with our founders, that ecosystem of companies that I referenced and others that are not in our portfolio per se, and demonstrate in an actual health system, how that transformation would occur.
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And all the system partners that we have, we work with about 15% of the US Healthcare system as their transformation partner, we can then have a blueprint to bring to them, to bring that same vibrancy to those systems as well.
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This is not a typical venture, you're right.
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It's a very long game and it needs to be done with this mindset of radical collaboration, as I mentioned, because we can we cannot do this alone, just as the technology diaspora or the healthcare diaspora.
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>> Well, you talk about radical collaboration, but it seems like to a large extent, the incumbents would also be incentivized to keep things as they are.
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So, who do you have to fight and what is your plan to win?
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>> I think what you have to fight in this space really is inertia.
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If you go sit and talk with the people that work in these hospitals, or even insurance companies, most people go into healthcare because they think it's a way to serve society.
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It's not their fault that the way the system got developed was fundamentally misaligned with the payer provider system where who pays and who decides are two different people.
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So it's just an irrational system, the way it's set up.
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And so, our belief is that it's not, that you're going and fighting these companies.
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It's more you have to create a path forward for them so they can be part of the future as we envision it.
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And also On its own, that's happening by the way, if you talk to most of the health system leaders, hospital leaders, they would say they need to learn how to take risk.
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If we have Kaiser here in the Bay Area, Kaiser is a system that economically has usually done pretty well because they are their own pair and the provider.
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So, when you have two separate entities, the provider wants to fill up their beds because that's how they get paid with volume, the payer wants your beds to be empty because they don't have to pay for premiums.
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And when you are the same entity, you don't have to be caught in that misalignment, you can focus on just keeping people healthy because you want them to not come into the hospital and have expensive care.
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So, the goal is to figure out how do you help the providers also become payers, to become providers, and the reverse is also true, how do you help the insurance companies also deliver care?
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So if we can just reorient the system to be aligned that way economically, then you will see rational economic behavior in this industry.
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And that is what really we're trying to accomplish with the work that we're doing there.
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>> We talk a lot about AI at Stanford GSB, how does AI play into this vision of healthcare?
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>> Yeah, the AI is going to play an enormous role in healthcare, but we also have to be extremely careful about how we bring this technology into the industry, so I'll give you a few examples.
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And today, we have about 100 plus companies in our portfolio in health care, almost all of them are working on leveraging AI because it makes the economics better and cost effective, so the potential is actually phenomenal.
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Last year we spoke to many health system CEOs when the whole ChatGPT hit the zeitgeist, and everybody was wondering what should they do with AI.
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And we asked them to share their data and collaborate with us, and that we would actually help build a language model that's dedicated to healthcare.
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And that we would give them the agency to help us figure out when that model is going to be okay to use when it comes to clinical use cases versus admin use cases, right?
26:27
Some use cases are reasonably simple and don't impact people's health decisions, and we can use AI more liberally, and in some places we have to be very careful.
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And so there's a continuum of risk, and we want to earn the trust of the healthcare system leaders and workforce in the way we bring that technology in there.
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So, we are working with different departments in these systems on how do you apply for diagnostics?
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How do you apply it for revenue cycle management?
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How do you create an AI agent that can be on the phone checking up on the patients that were discharged last week.
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And for each of those, the safety goals have to be different.
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And again, if we as technologists started to do it on our own we won't get it right, and there's a lot of fear in the health industry around mistakes they could make.
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But we're working together, we're able to create these measurable standards where everywhere AI can do at least as good a job as our human workforce, we will start in introducing it to bring more leverage in the system.
27:34
>> Speaking of AI, I have two very interesting takeaways from things that you've written.
27:41
The first of which is, you've said that while AI is going to be a transformation technology, you see a lot of the value actually accruing to the incumbents.
27:51
I'm curious what the role of AI startups are going to be in this new world.
27:56
>> It's a great question, we've been thinking a lot about how these startups play in this transformation journey.
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But take a step back and think about the fact that with the language model technologies, one of the most valuable use cases that has been commercialized and is being used increasingly is around code generation.
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And who has the lion's share of the market in that area is Microsoft, with GitHub Copilot today, obviously, there's other solutions coming up as well.
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Now, that's backwards, new technology, and you actually have the big company getting there first versus the little companies.
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And we're funding startups to now go compete with an incumbent that took a market leader in a new area.
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So there is this whole idea, or there's an erosion of the startup advantage in core software that we write, because these technology companies have the data, the resources, the cloud compute to be able to get there fast.
28:54
And they're every bit as agile in being able to bring new products now, so I think there's a changing dynamic in terms of where the startup advantage is playing itself out.
29:06
On the other side, I would say what's interesting is the opportunity to help various businesses, especially the ones that are low margin businesses today, to become more profitable and innovative in scale is great with AI.
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And our view is that founders working on, thinking about which industries they want to go be the transformative force in and bring these technologies in, is where most of the value that we will capture as the sort of innovation diaspora verses the big companies.
29:40
>> Got it, the other thing that stood out to me was your Washington Post article where you said that we are in a perilous moment with AI.
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And I'm curious that about how there's these diverging opinions about whether we should accelerate this technology or defend against it.
30:00
And what is your view on how society should move forward with AI?
30:04
>> How many people here think that the technologists will be able to just bring AI into society correctly on their own without making any mistakes? I don't think so.
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And how many of you think the policy makers will write the right regulations for AI to really be accelerated on their own?
30:26
None, none of you think that.
30:27
I think I think this is the issue which is, right now what's happening is the there's a really low trust around AI in society, and with each passing day People worry more and more about what it's going to do, and technologists have this view that leave us alone so we can accelerate progress around this technology.
30:48
And for good reasons in some ways, because it allows us to create market leadership around AI, which is going to be essential to business leadership, and therefore, at last here in America, that allows us to be the superpower that we are.
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However, what's missing in that is that in order to really bring this technology to market at scale, we have to earn the trust of society.
31:17
And so we have to engage with others and figure out how to bring this technology into the different use cases versus going and doing it the way we used to do it all.
31:26
A move fast and brave things mindset, which by the way was an engineering design principle, not a societal design principle.
31:34
And so, a lot of what we've been thinking about is, okay, how do you make sure there's radical collaboration, and we accelerate progress by bringing others along in how AI gets adopted.
31:46
I don't think we'll be able to do it by ourselves just as technologists, and taking that posture to me is going to slow down progress in the long term.
31:56
And so, our belief is that these conversations need to happen. Happen.
31:59
We need to bring the hill to Silicon Valley.
32:03
We need to educate them on how to think about it.
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And then we need to make sure we're actually accelerating progress at the infrastructure layer.
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So this technology gets developed here from a market leadership standpoint.
32:15
And at the same time, we need to figure out how we honor the spirit of regulation and how we have different industries set up from a consumer perspective and from a societal perspective in how we drive these transformations with AI.
32:30
The spirit of regulations in healthcare and financial services and whatnot need to be honored in the way we then build these businesses with AI.
32:38
So I think it's a complex navigation we have to do and we need that collaboration between DC and Silicon Valley to make that happen effectively.
32:49
>> And I want to dive deeper into that.
32:53
We want to bring these people together, but you also have undergrads in their dorms right now, probably building the next dating app with AI, right?
33:02
How do you actually bring those people and these other founders close to where regulation is going to happen?
33:10
And how do you have those conversations?
33:13
>> Yeah, look, I think one of the things that's important for the investor community is to really invest in this whole point around leadership.
33:22
Around teaching our founders to understand that if we're going to be change agents for transforming society, we need to embrace the idea that that transformation happens at the intersection of technology, business, and capital, policy.
33:39
So technology and business, policy and capital.
33:42
And if we're not embracing those, then we're going to build these companies that can go sideways and can have unintended consequences.
33:50
We just lived through that in the last 15 years.
33:54
And I think if we don't make that part of the education for the kids in the dorm room, and I sure hope the American spirit of entrepreneurship is going to continue to be vibrant and we do that.
34:04
I do think it needs to be part of our message as those who are mentoring these startups.
34:08
Good founders always find their way to great mentors.
34:11
I think, as mentors, it is our responsibility to make sure we make them think about the unintended consequences and the way they're building products with AI from an explainability perspective, from an accountability perspective.
34:25
And I mean, I do think it's going to be very optimistic era from an innovation standpoint in the next decade to that end.
34:33
>> Yeah, and you wrote the book, Unintended Consequences, and I really encourage this audience, if you haven't read.
34:40
It's a page turner and so insightful.
34:42
I do want to switch now to geopolitics.
34:44
Living in Silicon Valley, I feel like there's a lot of times where we feel a little bit insulated from geopolitical debate.
34:52
And at the same time, I also realized that 40% of my class is international.
34:57
How do geopolitics makes play a role in venture and in tech investing at large?
35:04
>> Yeah, this is an area that has become increasingly profound and something we've had to learn to be more sophisticated at.
35:12
And think about what's happened in the last few years.
35:15
We had a pandemic, we had wars.
35:18
We have all these energy issues.
35:20
We have great polarization that has happened because of social media.
35:24
All of those are drivers of nationalism, right?
35:28
The political will around nationalism and the need in these critical industries to make sure you have your own vaccines.
35:34
You have your own semiconductors, you have your own energy.
35:37
You have your own food, all the nations are thinking through that.
35:41
And there's this sort of great decoupling between US and China where you're starting to see this evolution from the mindset of globalization to reglobalization.
35:54
Where supply chains are getting reconfigured to where nations feel they can have resilient access to these critical industries and products.
36:02
And so that is changing business pretty profoundly.
36:05
So if you're investing in defense or if you're investing in semiconductors or energy, you have to think about these things.
36:12
We talked about Helsing before.
36:14
Here's a company that's focusing on giving Europe resiliency around defense.
36:19
Well, Europe wants resiliency, but then France, Germany and UK want their own resiliency at national level as well.
36:27
So what does it take to build a company that can actually give you that kind of resiliency?
36:33
So it's a new playbook for how you build these businesses.
36:36
And you have to think about supply chains in that context as well.
36:39
AI is another big area, right?
36:42
I mean, Europe doesn't want to be left behind.
36:45
India wants to make sure their cultural norms and societal values are embedded in the AI that ends up becoming a predominant driver of business. The US wants to lead.
36:57
How's all that going to shape up?
36:59
And so being smart about what that means and helping entrepreneurs drive their objectives and building those companies, that's a whole new muscle for us, right?
37:09
because we're just funding programmers, right?
37:12
At the end of the day, that's what tech was.
37:14
And so becoming much more empathetic to understanding that and thinking about it geographically has become a core part of what we do.
37:24
And so we are trying to partner with institutions, whether it's DC, Brussels, Delhi or businesses in these different areas, to talk about how they see these supply chains evolving to make sure we can help build businesses that enable that.
37:43
>> You talked about the decoupling of the US and China.
37:45
Is your vision for the future then that there's kind of these two centers of innovation, and countries need to align themselves to one or the other and kind of what dangers are we opening ourselves up to by doing that?
37:59
>> I think that's naturally happening.
38:00
And the US-China decoupling is real.
38:06
They also need each other.
38:07
And in the midst of all that, India is emerging as a third great power.
38:13
And a lot of focus that we have is around how does the US and India innovation corridor get created.
38:19
That can be much more enduring than what the US-China corridor was.
38:22
So I think we're thinking through a lot of just how does trade really reconfigure, how it's going to impact how these next generation companies, the role and where they can do business, where they should focus versus not.
38:34
And that's a big driver in how we think about some of the evolution of these industries that were heavily globalized before and are kind of retrenching with the national interests.
38:51
>> I have so many more questions here, but I do want to circle back to your leadership.
38:57
And speaking to your employees and some of the founders that you've invested in.
39:03
I've heard that you're spiritual and that they see this in your ability to stay calm under pressure.
39:08
I'd love to hear about how spirituality plays a role in your personal and professional life.
39:14
>> Yeah, so when I was in India, I went to a Vedic school and started Sanskrit for ten years, and that had a profound impact.
39:23
It sort of forces you to think about the fact that this is a long soulful journey and you have to play the long game, and you have to be even keeled as you go through the highs and lows.
39:35
And as I mentor the investors in our firm, I always point to them that we have 600 plus companies in our portfolio.
39:44
So at any given moment, somebody's doing great, and somebody's in a really bad spot, right?
39:50
So if you let emotions get to you, these highs and lows would just ricochet you as a human being.
39:56
And so in this business, and in most business, you just can't let Let that be, and you have to think about, what helps me is I always just think about the worst case scenarios, and the worst case scenarios are never really that bad.
40:07
Then I just shove it out of my mind, and we just sort of keep plowing through.
40:11
And I think it's important to stay even killed, especially because our founders want to see that from us as well.
40:17
That resolve that we're going to be with them through thick and thin.
40:20
If we start reacting to ups and downs, that's not giving them the solid ground that they need to stand on either.
40:28
>> Could you share any examples where spirituality has been your superpower and helped you get through the situation?
40:35
>> I mean, that sounds like there's been an example every six months.
40:38
I mean, you think about COVID, all of a sudden, I mean, we'll just talk about COVID.
40:47
Every company thought the world was ending.
40:50
We went through and ran these leadership seminars with all of our portfolio.
40:53
We talked about, first and foremost, take care of your people, and then figure out how to play defense.
41:00
because the uncertainty is very profound, and you have to think about how you're going to survive for the next couple of years while we deal with this pandemic, completely unprecedented.
41:11
But then also have the courage to play offense.
41:14
So if you're not going to turn a crisis into an opportunity, then you're not being a great business leader as well.
41:21
And we literally went through company by company to make sure they applied that framework in how they thought about running the business.
41:30
I'll give you another example, we have a company in Kiev, and the CEO called me one day and said, 50 of my engineers want to take up arms to go fight, what do I do?
41:42
That's not in our playbook of what to guide them.
41:45
And so, these things happen constantly and you have to be resolute and perseverant in how you guide your founders through these types of issues.
41:57
>> I'm also curious, looking back at the journey of 23 years now as CEO, when did you start learning to be a leader and have to play these roles when you're dealing, say, a crisis like COVID or the one that you talked about in Kyiv.
42:14
>> One of the great blessings in my life has been that Ken Chenault was one of the best business leaders in society, ran American Express.
42:25
Once he retired, he decided to join us as a chairman and managing director.
42:30
So he's had a profound influence in my life in thinking about going from being a good investor to actually running a business and trying to be a leader in society.
42:41
The fact that he joined in 2018 didn't hurt, because all these crises have been in the last five years since he joined.
42:49
So I always had somebody to call to get guidance from.
42:53
And I'll never forget this, when he first joined, we had this long dinner in New York, which is where he lives.
42:59
We were talking about training me to be a CEO and building followership in the organization and the whole idea of servant leadership, something he's very big on.
43:09
And at the end of the dinner, he said, and if you want to be a leader, we should talk.
43:13
I was like, Ken, I thought we just had a three-hour dinner about how to be a leader.
43:17
He said no, in society, and that was sort of a profound comment where, leadership is not just about how you behave in your business but also about who you think about your role in society.
43:30
So that's been tremendously valuable for me, to have somebody by my side who's lived through that and who's been such a great leader to learn from. >> That's so inspiring.
43:42
I want to leave some time for audience questions.
43:44
But before I do that, one thing that we've asked all our leaders this year is, Hemant, as the CEO of General Catalyst, if you could close your eyes and redefine one thing about tomorrow, what would it be?
44:01
>> I think what would be incredible is if in the future, the most valuable businesses that we have are the ones that are known for both profit and purpose.
44:17
because I think that would be something that would inspire us all to strive towards creating value that way.
44:22
>> All right, with that, we will open it up for audience questions.
44:26
If you have one, please raise your hand, stand up, state your name and class clearly, and then proceed to ask your question.
44:34
I think I see a hand there.
44:37
>> Hi, my name's Philip, and I'm an MBA one.
44:40
You talked about the need, especially as we talk about AI and integrating it into society, for more collaboration between business leaders, technologists, and policy makers.
44:48
If you had to grade the job that the Obama administration, the Sunak administration and other Western governments have done so far in engaging with this new technology, what grade would you give them and why?.
45:02
>> I think, In my opinion, we're not doing a great job of it today.
45:10
And I would say, and it's for different reasons in different parts of the world.
45:14
So in Europe, and I've been over to Brussels and I've shared my perspectives there, there's this rush to regulate, and I think that is dangerous, we don't understand this technology.
45:28
In fact, one of the reasons Secretary Raimondo and I announced an AI pledge was, why don't we take some self-responsibility and let this play out with a set of governance standards before we go and regulate this industry.
45:42
So I think that's an issue that's been a challenge in Europe, and it's not the first time this has been an issue there.
45:51
In the US, I would say, the executive order, for example, we have to be careful about losing the ability to create a level playing field.
46:02
And so one of my concerns has been, are we actually creating an environment where new companies can actually also get built and they have they have the ability to innovate versus just the big companies?
46:15
We had that with electricity 100 years ago, and when that got regulated, and regulation stops innovation if you're over regulated.
46:27
And that leads to unintended consequences that you can't address, all the climate change when you think about the energy industry.
46:32
So I think a lot about, if we don't create an open innovation environment, if we regulate too fast, what are the unintended consequences you'll have with AI?
46:42
because that could be quite dangerous.
46:44
And I do think we have to tread carefully in all these parts over the next couple of years.
46:51
>> Hi, my name is Lame, I'm an MBA two.
46:55
My question is, are you worried about misuse of open source LLMs, and if so, how do you reconcile your focus on responsible AI with your investment in Mistral?
47:06
>> That's a great question.
47:09
I do think we have to be careful about how open source gets used.
47:14
It's a tricky problem, if you don't have open source, you will slow down innovation quite a bit.
47:20
So open source is a better arc of the software industry today.
47:23
So we're big believers that AI needs to have an open source strategy.
47:28
Where it can go wrong is that that ends up in the hands of the wrong actors.
47:33
And so we've actually been advocating behind the scenes around thinking through, how do you add friction to the process where the access to open source isn't as easy?
47:45
You need to have some sort of a whitelist model in terms of where it gets in the hands of versus that it's just widely available.
47:53
But you do need to have the open source principles so that the good actors are accelerating to Taking advantages of technology and bringing it to society.
48:02
So I think we have to be careful and handle it, but the answer can't be that we just don't engage in open source. >> Hi, I'm Alexandra. I'm also an MBA too.
48:13
When it comes to educating policymakers appropriately on, for example, AI or other areas that you're investing in, how do you think of your role in that education process, and also the role of venture capital's educational journey with policymakers more broadly?
48:31
>> Yeah, so it's a very important place to spend time for us as investors and technologists with the policymakers.
48:40
And I think it's important to not have it be that we are educating them only.
48:45
It really does need to be a bidirectional dialog, because when you sit and listen to what they're concerned about, those are real issues of what can go wrong as well.
48:54
And so the mindset with which you approach this dialog is very equally important.
49:01
And so from our standpoint, it's about co-creating the role of technology and the policy design around it in the context of how to take care of all the stakeholders.
49:11
And without that mindset, I actually think they will shut off because then there's no trust, and that's the currency that's the most lacking in the evolution of the AI industry today.
49:24
>> Thank you, I'm Adam Starr. I'm an MBA 1 here.
49:27
With the rise of companies kind of staying private longer and the Destiny Tech 100 showing the appetite for retail investors and public investors to have access to these companies, how do you view the role of your fund and other funds in providing access to ordinary people to private companies?
49:51
>> It's a great question.
49:52
I had the leadership of Vanguard once came by the office, and they talked a lot about, how do we make the returns opportunity in venture capital available to everybody?
50:07
So not just Wall Street, not just institutional investors.
50:09
So we actually looked into it.
50:10
Can you create these 40 Act funds around these private companies?
50:14
And I do think these secondary markets need to evolve to be able to do that because it's entirely possible that a reasonable percentage of companies will choose to just exist in the private markets.
50:28
They have access to capital, private credit is becoming much more scaled asset class over the next few years, and there are these secondary trading opportunities.
50:37
But if we just restrict that to institutions, I think that would be that'd be very problematic.
50:44
So this is a problem that needs to get solved.
50:46
And we are engaged in thinking through, how do we make this available to everybody?
50:52
And you have these accredited investor rules and other things you have to be careful about as well, but I do think this will get solved in the next few years.
51:02
[INAUDIBLE] >> You'd spoken a little about the emergence of an India and US corridor, could you tell me, this has been in conversation for a while, especially with IT and software being based out of India.
51:20
Could you tell me a little bit more about the challenges that you see as to why it hasn't fully emerged the way people expected it to in the last decade?
51:29
>> Yeah, I think, first of all, there's a bunch of trade limitations between US and India.
51:36
This goes back to the 90s nuclear nonproliferation issues that need to be addressed.
51:42
The reason the timing is great now and it hadn't before is because there is this tremendous decoupling happening between US and China as we discussed.
51:52
And India has to align with one of them on the technology side.
51:55
And it's very clear if you think about there is no TikTok in India and there's very little trust between India and China, India is going to align with the Western technological system.
52:04
And the US is very interested in making sure that happens as well, so there's a strong political will on both sides to drive it.
52:12
And the other thing that's happening now is that the Indian market itself, both the IPO market there as well as just the local sort of economic opportunity for businesses, has grown.
52:25
And so the quality of entrepreneurs that are building businesses there and thinking about building them for the world is greatly enhanced now as well.
52:33
because there have been some great proof points, Freshworks and others, that have been built over the last few years.
52:38
So India is, I always call it the sleeping giant of entrepreneurship, and it's waking up because there have been such great winds and the multiples are high there.
52:48
And so the entrepreneurs, they have this sort of sense of fait accompli that the next set of great companies are going to get built there.
52:56
And so we're very excited about investing there as a result of that.
53:03
>> Okay, I'm going to break you from the top rules and ask you one more question.
53:07
You yourself, you are in talks of acquiring a fund in India.
53:11
What is your strategy with investment in India?
53:14
>> I won't comment on that.
53:16
I will say our belief is that if we're going to work effectively in India as investors, one, we have to build technology companies there that act as global markets.
53:31
There's great talent there, and from a software perspective and AI perspective, there's all the resources required to build great companies are there.
53:42
Second thing is we have to think a lot about, what are the opportunities that that need to be addressed in India for India?
53:50
And that applies to the energy needs, the defense needs, all the things, the evolution of the health care system.
53:58
Let's not let the Indian health care system go down the path of the US health care system.
54:02
We just talked about what we're trying to unwind, so can we help shape it to be much more aligned from the beginning?
54:08
And so we're thinking through a lot of those things.
54:10
And our belief is that for a bulk of those ideas, we may have to partner with the local conglomerates.
54:18
India is very entrepreneurial, the big companies there often take advantage of new opportunities much faster than little companies.
54:25
Much like what we just discussed might be happening in the software world in the US.
54:29
And so just collaborating with them, bringing our expertise from the US to help sort of shape these industries is another place where we're going to focus a lot.
54:38
>> Thank you, before I let you go, we have some final rapid fire questions for you in typical View From The Top tradition.
54:46
So I'll read out a question, and I'd love to hear the first thing that comes to your mind. >> Okay.
54:51
>> Okay, what is one thing that you miss most about your time in India? >> Festivals.
54:57
>> What is a company that you could have but didn't invest in and wish you had? >> Coinbase.
55:04
>> [LAUGH] You've written three books, what is the theme of your next one?
55:10
>> Impact principles, it's signals that I've leaned on to see which founders are going to build category defining companies.
55:18
>> Do you know when we can get our hands on it? >> [LAUGH] >> Next year.
55:21
>> Okay, if you could go back to MIT, what is the sixth degree that you would get in?
55:26
>> [LAUGH] >> Philosophy.
55:30
>> [LAUGH] Finally, do you have any parting advice for Stanford GSB students?
55:36
>> Yeah, look, I was actually telling my daughter this yesterday as well, this is a really unique time.
55:42
We're peak ambiguity, we don't know how the world's going to change, how AI is going to be, how these tectonic shifts are going to be around resilience. None of us do.
55:54
So as you think about what to do next, what you kind of have to lean into is your own intuition and what feels right.
55:59
Because all the advice you're going to get is going to be in the context of the world that's not going to be anymore.
56:04
So just follow your instincts, think about what part of the world you want to create change in, and just go have at it.
56:11
I think it's going to be a really exciting time, but you need to just be comfortable with the ambiguity of it.
56:16
>> This has been such a master class, Hemant, thank you for being here.
56:19
>> Thank you for having me. >> [APPLAUSE] [MUSIC]