0:00
The best startup ideas are polarizing.
Search this video
0:03
If I asked the customer what they wanted, they wouldn't know how to tell me because they can't visualize the future.
0:08
There's thousands of these tiny companies.
0:10
The problem is most of them are garbage.
0:15
However, there are diamonds in that rock.
0:18
If you can be compared, that means you're too much like what already exists.
0:22
You're trying to force a choice and not a comparison.
0:24
The things that we want to look for are for those pattern breakers as opposed to pattern matchers.
0:33
The present is going to fight back, and it's not going to fight back fair.
0:36
You're sitting out there in the future by yourself.
0:38
And the future of your design isn't going to happen if you're the only guy sitting there.
0:44
You've got to find a way to find your people.
0:46
You don't beat the competition when you're a startup, you transcend the competition. Well, hello everyone.
0:56
It's Jim O'Shaughnessy with another infinite loops.
1:00
I have been looking forward to chatting with today's guest for a long, long time.
1:06
My guest today is Mike Maples Jr.
1:10
, a legendary early-stage investor.
1:14
Actually, one of the first to do seed stage investing.
1:16
But today we're going to focus mostly on his outstanding book, Right Up Front.
1:22
Anyone who wants to be an entrepreneur or a startup or wants to invest in potentially profitable startups, you've got to buy Mike's book, which is called Pattern Breakers: Why Some Startups Change the Future. Mike, welcome. Thanks for having me.
1:41
I've been looking forward to this, too.
1:44
I've been an avid fan of your podcast for quite some time.
1:47
So when you when you DM'd me on Twitter, I was that was a really pleasant surprise.
1:54
Well, I mean, there's just so much, and maybe this is me being guilty of you know, paying too much attention to my priors.
2:00
But it it it seems that we have a really similar vision for how you how to go about not only companies you start I started O'Shaughnessy Ventures after selling O'Shaughnessy Asset Management, but companies that you invest in.
2:16
And I one of the things you said that really resonated with me, and I want you to get your take on it.
2:23
You said it, so I'm sure I'll get a much better take than my own.
2:28
It's if you take one thing from this book, I hope you realize that in different ways all of us unwillingly let our own self-imposed limits govern how we think and act throughout our lives.
2:45
I read that, I was like, holy is Mike ever right.
2:50
Yeah, um it it it's uh it's interesting.
2:53
So and that that that comes from the the observation of uh the book Jonathan Livingston Seagull, right? So there's a great book.
3:00
There's this there's this seagull, you know, the metaphor is you got this seagull named Jonathan, and uh he wants to fly faster than any seagulls ever flown.
3:08
In fact, he wants to achieve perfect flight, and all the other seagulls are like, what are you talking about?
3:14
We're just seagulls, and we're meant to eat the scraps off of the surface of the ocean on a good day, and you know, we're not meant to fly fast, we're meant to be ugly and smell bad and all that other stuff.
3:26
And uh eventually they decide he's so crazy they banish him from the flock, but he does uh achieve perfect flight.
3:33
And I just think that um Richard Bach just has a way with words that's just so compelling, you know, that book and Illusions and a bunch of other things.
3:42
Uh and so uh you Jonathan Livingston Seagull kind of reminded me is it like a a metaphor for the great startup founder, you know, the person who's uh willing to depart from the consensus uh to achieve perfection and mastery.
3:56
And so so yeah, and it it's like most people uh accept the world for kind of how how it is and what the rules as they're framed, and that, you know, creates a limit whether whether we realize it or not.
4:08
Sometimes unwillingly we embrace a bunch of limits that we don't even realize exist all around us.
4:16
Yeah, and that's been a constant theme of mine for a long time.
4:19
I just finished a book by this guy, Dr.
4:21
Bernard Katzler, uh who is a radical self-experimenter.
4:28
And and he had the hypothesis that uh most of us live almost 99% of our lives on autopilot.
4:37
And that autopilot is imposed on us both by ourselves and by others.
4:42
And and so his radical experiment was he literally quit his job, left his relationships, sold his apartment, sold his prized collection of 5,000 books.
4:56
He's a science and math guy.
4:59
And went and lived without any media, with as little contact with other humans as possible, in the Austrian uh Alps.
5:09
And one of one of his takes one of his takeaways was essentially he thought, oh my god, like I'm programmed 99% of the time, and how can I break through that program?
5:26
And that seems to be like one of the themes of your book that essentially these you know, there are lots of good ideas.
5:33
There are lots of good entrepreneurs, etc.
5:36
, but there are very, very few great ideas that really break with past tradition, past playbook.
5:44
You know, one of our themes at OSB is all the old playbooks are collapsing.
5:52
And the the things that we want to look for are for those pattern breakers as opposed to pattern matchers.
6:02
And you had another great quote that I love.
6:03
That allows you to wage asymmetric warfare on the present. Expand, please.
6:10
Yeah, so um and and this might be you know, I imagine that your audience is probably a combination of people who are startup types and but a lot of people who are sort of more into the traditional corporate sort of Fortune 500 or bonds or you know, kind of more mainstream asset classes.
6:31
And what I've come to realize is that um there are different ways to create value in capitalism.
6:37
And so and and maybe we'll get to this in a little bit later that notion of worldly wisdom that you know, people like Munger talked about.
6:45
But but there's a lot of people would think of capitalism the way that Buffett and Munger do, which is you want to create an ongoing, persistently compounding business.
6:57
And when you buy a stock in a company, you're betting that it's going to compound more persistently and have a longer-lasting moat and more durable advantages than the rest of the market than the wisdom of the crowds believes.
7:13
And um and what I realized was that a startup capitalist is a different kind of capitalist.
7:18
So there's nothing to compound when you have a startup cuz you have nothing.
7:22
All you have is founders and an idea.
7:26
And so then you say, okay, how does a startup capitalist add value then?
7:32
They add value by changing the subject.
7:35
And so like if the future is going to be an extension of the present, then the incumbents are going to win more often than not.
7:41
You know, business is never a fair fight.
7:45
The only question is who's going to fight unfair?
7:46
And and the the default assumption is that the present will fight unfair because the present has all the advantages of the incumbency.
7:55
Uh you know, status quo has the word status in it, right?
7:57
And so people fight to protect the status that they've earned sometimes over decades.
8:02
And so if if you decide to play on that playing field where the future will be an extension of the present, you're going to you're you're going to be buying into a context without realizing it, which is that you're going to compete according to the rules of the incumbents.
8:17
And so the argument I try to make in Pattern Breakers is that startups win when the future is can't be reconciled with the present, when it's radically different.
8:27
And that we have to assume rather than forecast, which is a forward projection of the present, that's what the future will be. We need to backcast.
8:35
We need to say, it only makes sense for me to pursue opportunities that will create radically different futures if they work, because then and only then can I wage asymmetric warfare on the present.
8:46
I'm not I'm not interested in negotiating with the present.
8:49
I'm not interested in, you know, accommodating it or meeting it halfway.
8:53
It's either we we go with my vision of what the future is, or we go with the default status quo version of what the future is.
9:01
But like you can't reconcile the two. You have to decide.
9:05
And so therefore you have to decide up front to wage an unfair fight and use asymmetric weapons and asymmetric warfare, right, on the present.
9:15
Yeah, one of my favorite sayings when I was talking about this traditional asset management and successful investors was successful investors do not comply with the present or with nature. They defy it.
9:29
I just wanted to bring good old Bucky Fuller in here uh because in many ways he was like a prophet way before his time in understanding this.
9:36
And he had this great quote, which is you never change things by fighting the existing reality.
9:44
To change something, build a new model that makes the existing model obsolete. That's right.
9:50
You don't you don't beat the competition when you're a startup, you transcend the competition. Right?
9:56
And so you you you you go you you create a different future that compels in the early days your first believers uh to self-actualize by moving to that different future that they can't unsee.
10:12
Uh but they never, you know, a great startup idea defies the comparison trap entirely.
10:16
So, um and you know, it extends, you know, counter-arguing can extend even outside the realm of startups.
10:25
So, like the Tesla Cybertruck is one of my favorite examples, right?
10:29
You know, you may think the Tesla Cybertruck is ridiculous.
10:30
Like when I when I first saw it launched, I thought maybe he was joking.
10:37
Uh but but like nobody after seeing a Cybertruck says, "How does that compare to a Ford F-150?"
10:41
It's like Elon is basically saying, "Come with me to this different future or don't."
10:48
But like, you know, you can't reconcile the two things.
10:50
You're not going to And And the startups I've worked with that have won with, you know, when people first took a ride in a Lyft, they never said, "Oh, well, how does that compare to taxis?"
10:59
Or with Twitter, they never said, "How does that compare to blogging?"
11:02
And so, it's, you know, you're trying to um I like to say you're trying to force a choice and not a comparison.
11:09
Uh and you know, comparison doesn't work because if you can be compared, that means you're too much like what already exists.
11:16
And why would you buy from a startup if you can get, you know, an incrementally similar solution from an established incumbent? You won't.
11:27
You You want to be desperate for the unique empowerment that the startup provides, and you need to feel like there's no other way to get it than to do business with a startup.
11:34
And so, you know, you have to transcend competition, or there's no other way for you to succeed.
11:42
Yeah, could not agree more.
11:42
There's a couple of quotes that I love, uh which the first of which is uh crazy is a numbers game.
11:49
And then the other person says, "Like if enough people do it."
11:51
And then the main speaker says, "Yeah, then it's not crazy anymore."
11:55
But you've got to you've got to find a way to find your people, right?
12:01
And And your your early adopters and uh an author I love who actually wrote a really good book on capitalism called The Genius of the Beast, a radical re-envision uh for capitalism to make it even better than it is.
12:15
He gives this great example that I think you'll love.
12:18
And And he says, "Look, take take a uh beaker, put 12 oz of water in it, boil it.
12:26
Put 5 oz of table salt into it.
12:26
When it cools, it will appear to be clear water.
12:34
If you brought it out, it's a great parlor parlor trick, which I highly recommend.
12:38
Bring it out, set it on the table, ask your friends, 'Hey, what do you see there?'
12:42
And they say, 'I see a pitcher of water.'
12:44
You take one single grain of salt, drop it in, and what you see is all of the other salt molecules are attracted to it, and suddenly the beaker is filled with this massive uh salt uh rock, Wow. right?
13:04
And so, that I think about that a lot with how do you like how do you find your people?
13:09
How do you find your movement?
13:10
And And so, you need some kind of beacon, some kind of seeness, some kind of, you know, attractor, right?
13:16
And that's where your work comes in, I think, really really well, because you you talk us uh and I'm going to ask you to walk us through how you create a movement, but, you know, some of the things you mentioned are substance over style, attack the status quo, don't don't don't say me too.
13:37
It's like, how many pitches did you get that we are the Uber for? Right? Like Right. Right.
13:43
Right in the right in the wastebasket. That wastebasket.
13:45
But creating First off, we know that there are other people, right, who are living in the future like you recommend.
13:55
Um and there are potential fan base, but like the the beaker before you put that single salt in, it looks like there's nobody there, right?
14:04
And yet there's tons of people there.
14:08
Elaborate on the movement if you would.
14:11
Yeah, so so basically, um if if you want to have a breakthrough startup, um if you want to succeed, right, as a startup capitalist, you got to get two things right.
14:21
You got to get the idea right, which, you know, would be a pattern-breaking idea, and that requires you, in the words of Steve Jobs, to think different.
14:30
But then you also have to act different because the status quo the present is going to fight back, and it's not going to fight back fair.
14:35
It's not interested in negotiating with you.
14:37
And so, you need to create a you're sitting out there in the future by yourself, and and the future of your design isn't going to happen if you're the only guy sitting there.
14:49
And so, you've got to attract you've got to move other people to that future with you.
14:53
And there's this paradoxical reality, which is most people aren't ready yet.
14:59
Most people like the present.
15:00
Most people are creatures of habit.
15:02
Uh they they like what's familiar to them, even if it there's flaws.
15:07
People are comfortable in their present pain quite often.
15:08
And so, but there's always a a tiny subset of people who when they see your pattern-breaking idea are like, "Oh my gosh, where have you been all my life? This is incredible."
15:23
And those are the people you care about.
15:26
So, the the paradox in what's challenging for founders is it's tempting to want everybody to like your idea, but human beings are conditioned to like things.
15:36
If everybody likes your idea, it's too similar to other ideas.
15:38
It's too similar to what they already know.
15:43
So, the best startup ideas are polarizing.
15:45
They, you know, it's like we're talking about the Cybertruck earlier.
15:49
The people who like the Cybertruck think it's awesome.
15:53
Uh and and and you know, like people who don't like it are like, "This thing's a joke, you know, I'd never want to drive in one of these things.
15:58
I'd never be caught in one of these things. It's ridiculous."
16:00
But like it it doesn't it doesn't create a neutral opinion in the observer, right?
16:06
And so, like what what you want to do as a founder is you want to spend your time only with those people who are prepared to move to that different future with you.
16:15
And by doing so, by moving them, you create a movement.
16:19
And, you know, this is why you want to you want to create a sense of grievance against the status quo, you know, in the same way that a a um a social movement does.
16:29
You know, you want to find a set of people who believe they've been enlightened by this different future, who believe in in that future with you, who want to move to that different future, and then you with your early um believers become co-conspirators, right?
16:45
And you you co-create a different future.
16:47
And so, it's it's actually not true that founders create the future.
16:51
It's It's more accurate to say that founders co-create the future with their early believers.
16:56
And what starts out as a heretical idea starts to become the conventional wisdom as more and more people embrace the different future of that founder's design.
17:05
But But it's co-created by uh this gathering groundswell of people moving to that different future, and then people watching and noticing a better way to live.
17:17
Yeah, I always say to my teammates at OSV that we are all co-creators, right?
17:24
We We it's a mistake to think, you know, "This is the best idea, and I know it, right?" And then cling to that.
17:30
That's a huge mistake, right?
17:32
And this the the the the need to be right.
17:36
And there's a great quote from a uh thinking philosopher that I like a lot named Jed McKenna, and he who said, "The smartest thing I ever did was stop being smart."
17:48
And literally, when you are willing, and I've had a long enough career to have reality punch me in the face many, many, many times.
17:57
And I think that's fabulous because it shows like, "No, I'm I'm not right."
18:06
And I often I often say, "Like, here's my idea. I'm probably wrong."
18:11
Because by by getting yourself into that mindset, you can pivot. You can change.
18:17
You can say, "Hey, we started with this.
18:24
Thought it was a great idea, but look at what everybody is actually embracing over here."
18:31
The ability to change your mind, right, and move over here is I I just sometimes think vanishingly small among entrepreneurs.
18:42
Yeah, and and then, you know, it sounds like you and I both share uh an affinity for reading a lot of books.
18:48
You know, there's um there's a there's a book I really like that kind of gets to what you're saying called The Beginning of Infinity by David Deutsch.
18:55
And um Oh my god, sorry, I have to interrupt.
18:58
One of my favorite books and foundational, and I've been chasing him to get him on the podcast forever and ever.
19:04
I'll get him, but anyway, I totally interrupt.
19:06
Yeah, yeah, so so I I love the book, and and you know, um this probably maybe you internalized it similar to how I did, which was um the truth is something that we should always seek, but we can never claim to have absolutely the truth.
19:21
But you know, so there's a few things that I think are interesting about his book, right?
19:24
One is you should seek truth more than you should seek validation, because if you like a lot of a lot of founders when they have an idea and they show it to a customer, they're trying to convince the customer that they're right.
19:37
And And yes, you need to convince and persuade people, but in your ongoing interaction with people, you have a choice.
19:44
You can say, "I need to talk this person into validating what I believe."
19:50
But the problem with that is you're not learning anything when you do that.
19:53
You're you're only doubling down on what you already your preconceived idea of what's true.
19:59
Uh what David Deutsch says that I think is inspiring is that just because we don't have absolute truth, we should still seek it.
20:08
But we seek it in a way where we say we're going to honor the best explanation we have to explain things today. That's a theory.
20:17
But there's always a better possible explanation down the road.
20:19
And it's like we're at the beginning of infinity of our knowledge, right?
20:23
All knowable things can be known by us.
20:24
Uh and that, you know, however much we know now, there's a there's an infinite amount more to know, but it can be discovered if we continue down the path of being authentic truth seekers, right?
20:35
All conflict happens because of a lack of knowledge, right?
20:39
And it's like um I think that startups, the great founders I've worked with are very similar that way.
20:46
And I And And then I've read about, too.
20:47
You hear about Steve Jobs.
20:47
He'd be super firm on something, and then somebody would convince him that he was wrong, and he would do a 180 and act as if his original point of view never happened.
20:57
And And that's because he wasn't really attached to being right.
21:01
His, you know, he wants to be right in the sense that he wants to have the right products.
21:05
He wants to get to the right answer.
21:07
But he's not attached to being right as a person, right?
21:10
He's just like he's attached to getting to the best answer he possibly can.
21:14
And if if the facts, the evidence suggests that his way of looking at the world isn't the best way, he'll do a 180.
21:20
And he doesn't even take the time to acknowledge that the the prior way of looking at it was wrong.
21:26
He's like, "Who cares about that?
21:26
I've found a better answer, better explanation.
21:29
That's what we're going with now."
21:30
And And the best founders that I work with, I've noticed that about them that um every time they engage with the world, they're prepared to be surprised by something.
21:42
Because only by being surprised will you ever find the breakthrough.
21:47
Breakthroughs have never happened yet.
21:49
They've never been discovered.
21:49
So if you're trying to discover the undiscovered, you have to be surprised ultimately.
21:54
And so people who show up in the world wanting to be surprised often find that clue in a discussion that the average entrepreneur wouldn't find.
22:05
Yeah, and I loved this passage in there where he says, "What were people saying about the internet and quantum physics in the year 1900?"
22:14
They weren't saying all about it because we hadn't invented it yet.
22:20
so the the I I But it seems a part of our human OS, right?
22:25
We are all operating the same human operating system.
22:29
And And there's this there's this bug in it, in my opinion.
22:32
Which is everything we know as of right now is everything there is to know.
22:38
And we will not And like it just seems to me so bizarre, right?
22:44
Because if you just know anything at all about history, you you just know that that is patently untrue.
22:55
And another point that that you bring up that that slides in here with with Deutsch's thing is the ability to pivot, move onto the newer, better truth, right?
23:06
So the the the old bromide, the customer is always right, you cite it in in your work.
23:15
That's No, the customer is not always right, like Henry Ford's famous "If I'd listened to my customers, I would have made faster horses, right?" Like, no.
23:23
What they they they didn't they couldn't conceive of the idea of this thing being a much, much better version.
23:31
And one of the things that happened with us at our chassis asset management and an earlier company I founded like really illustrates this.
23:38
So in the late 1990s, I started a company called Netfolio.
23:44
Which was going to be the world's first online investment advisor where you could customize your portfolio just for you, right?
23:55
Whole new class of category. We did the ads. Not comparing.
23:58
We did We did compare, but derisively, to mutual funds cuz they were the top of the heat back then.
24:06
But I was too early, right?
24:06
And one of your things that you underline is you really need to get your timing right.
24:15
You got to have the right inflection point.
24:17
So Netfolio didn't didn't work because the tech wasn't ready.
24:22
People It was way too radical for that particular time.
24:25
But we kept it on the shelf.
24:27
And one day, and I don't know, 2017, my son Patrick, you've been on his podcast.
24:32
Patrick is the true podcast king.
24:34
I am I'm the eccentric father.
24:36
Uh but anyway, he walks into my office and then he goes, "Hey, but you know that whole thing like Netfolio and all that?"
24:44
I'm like, "Well, of course.
24:46
Yes, I founded that company.
24:46
It failed spectacularly."
24:48
And he goes, "We can do it now.
24:51
We can do" And then he used a different uh analogy.
24:54
He said, "Just like Amazon with AWS, we have the tools and tech that we've built for ourselves that like we built the Death Star to kill a mouse.
25:09
Why don't we repurpose this and offer it as truly uh innovative new asset class, which he dubbed custom indexing?"
25:20
I love that I love that combination for a variety of reasons because what he did was take a well-known uh way of investing, indexing, right?
25:31
That had a lot of mind share.
25:31
Everyone loved it because indexing had been working so well.
25:35
And then he put the word custom in front of it and created a whole new category.
25:40
And people were like, one of the things that we learned was that people, once they got exposed to it, literally all of the uh clients that we had, which are registered advisors, brokers, et cetera, said, you know, like they won't go back.
25:59
And the interesting thing I I was thinking about it when I was getting ready for our chat because one of the things that I remember is nobody compared us to ETFs, to mutual funds, to any of the other big categories.
26:13
The closest they came was, "Oh, is Isn't that just direct indexing?"
26:17
And that gave us off points today. "Oh, no, not at all."
26:23
But another thing that we learned that you highlight in your book and we did, and much to our benefit, is don't go into something thinking that your priors and your idea about what people are going to love about it is right.
26:38
So what we did was we took an a very small group of advisors. I think we had a dozen.
26:45
And we said we had a list of what we thought they were going to love, the features of what we now call or then it's still called Canvas, which allows for custom portfolio creation.
26:54
We had a long list of what we thought people were going to love. Guess what, Mike?
27:03
None None of the things None of the things we thought people were going to love ended up being at the top of the list.
27:08
But the point is what we learn from that is you've got to listen once you've got a minimal viable product, put it out there, see who the natural customers for that is, and then listen to them because they won't be talking about faster horses.
27:24
Yeah, the other thing, Jim, I think that's kind of profound in what you're saying is that like one way to come at this would be to say um if I if I asked the customer what they wanted, they wouldn't know how to tell me because they can't visualize the future.
27:39
But what The other thing that I learned is that the opposite is true, too.
27:46
That the customers that are actually living in the future will take you to the promised land.
27:50
Like they they know features that should be in your product.
27:55
So like I remember um early in my career, I worked at Silicon Graphics.
28:00
Uh And at the time, we had the the fastest 3D computers on the planet.
28:02
This is before Nvidia took off and stuff.
28:05
In fact, most of Nvidia's execs came from SGI.
28:09
And And um we we we decided that we wanted to sell our computers to Hollywood.
28:15
And so um Industrial Light & Magic did special effects for like the Star Wars movies and Terminator and The Abyss and all this stuff.
28:23
And so um we we sold a bunch of machines to them to model the dinosaurs in Jurassic Park or to model the liquid man in Terminator 2.
28:34
And at the time, you know, film was still on film, you know, you you spliced and cut film.
28:38
Only recently had digital video editing even come out.
28:40
And so we were helping them render these dinosaurs, and then they would splice it you know, they would merge it onto the frames digitally, and then they would break break the film.
28:52
And there's a whole bunch of problems that they had to solve to do that.
28:54
And I realized, as we were working with them, if we solve their problem, they're just going to take us to the promised land, right?
29:04
Like they're like everybody in Hollywood is someday going to want to use computer graphics in film.
29:09
And everybody's going to want to solve the exact set of problems these guys are solving.
29:13
And so like you you learn as a startup, not all customers are equal.
29:16
Uh some customers are um future led in the sense that they believe in the radically different future that they that you believe in.
29:27
And And it's This is the thing I learned is they're not motivated by utility.
29:32
They're animated by belief.
29:32
They They buy because they believe what you believe.
29:36
And so But But the But the other thing is they're facing the corner cases of that future in ways that you don't.
29:44
And it's that facing in corner cases of the future that the details of the new pattern emerge, right?
29:50
So like by those customers are experiencing firsthand the different ways of thinking, feeling, and acting that this radically different future it affords them.
30:01
And they're also encountering the barriers, the limits of where the technology doesn't quite work yet or where it's not performing well enough yet.
30:10
And as a startup founder, that's your opportunity.
30:13
That's where the insights come from.
30:15
It doesn't come from a vision at a distance looking over some mountain.
30:20
It comes by spending time with the innovative customers who are living in the future and encountering difficulties in in what what you end up doing is you build what's missing in the future.
30:30
And then, you know, because you build what's missing in a valid future, a whole bunch of people are about to live in that future and and they're going to show up in the future right as you have the exact right product at the exact right time.
30:42
And that's how startups win, right?
30:44
And and it's like but but like if you build what's missing in the future, your intuition about what to build is much more likely to be right.
30:51
And so you want to be spending time with customers, only if those customers living a valid future.
30:56
You don't want to You don't want to listen to the objections of people living in the present because they'll they'll they'll take you off of your strategic goal.
31:06
You you'll you'll you'll implement features to please them that aren't added in the strategy that are burdened by the present. Yeah.
31:14
And when I was reading your book, the thing that just kept coming back to me was this idea that you know, I I for a long time we've been trying to figure out how to take, you know, the big five, which is the only psychological test that actually replicates, right? Yep.
31:28
Uh I was trying to figure out like how can we do this to kind of identify great investors, great ideas, etc.
31:36
, the people attached to them.
31:39
And one of them was disagreeableness.
31:42
And it's really funny because uh I I had always thought of myself as a very agreeable type person.
31:47
Uh and then I took the big five. And guess what?
31:50
I scored very low on agreeableness, i. e. , disagreeable.
31:57
And I and I was really just like trying to figure that out.
31:59
And so I went to an expert psychologist that I knew.
32:05
And and I'm like I is am do I appear disagreeable to you?
32:10
And she laughed and she's like, we probably could have picked much better language.
32:16
But what we mean by that is like if you see something that you just think is stupid or like, God, there's got to be a better way, you you're you're you're you're not motivated to fit in.
32:28
You're not motivated to say like, oh yeah, of course this is the way we've always done it or and that's why we'll continue doing it that way.
32:38
But talk a little bit about that because I really like that part where you just highlight, hey, you you want to be high on disagreeableness. Yeah, I think so.
32:49
And I and I struggle with this because I'm I probably score pretty high on agreeableness actually.
32:55
And it it led me to believe that I'd be better off investing in disagreeable founders than trying to be something that I wasn't.
33:01
Uh and so maybe I'm an agreeable person but because I I know my own tendencies, I'm able to spot the the opposite tendency and honor it, you know, in others.
33:11
Um so where am I going with that?
33:15
Well, a startup that's going to have a breakthrough is proposing a different future.
33:20
It's proposing a grievance with the status quo.
33:27
So therefore it's a provocative act, right?
33:29
A a great startup idea is a provocative act that disagrees with the present.
33:35
And so um not everybody's going to like that.
33:37
In fact, most people are going to dislike that.
33:39
And and some people are going to dislike it because they just don't like it. Like legitimately.
33:46
Some people are going to dislike it who wish you well, you know, your parents, your mentors, uh advisors, because they're living in the present.
33:52
They don't see the future the way you do.
33:56
And some people aren't going to like it because they're like the taxi lobby, you know, to Lyft.
33:59
And and you know, they're just not interested in whether your future's better.
34:02
It's just their their status is embedded in the status quo.
34:06
They have something to protect and they're not interested in having a honest or fair discussion about how to protect it.
34:12
They just want to see you go away.
34:14
They want to they they want to kill you.
34:16
And so um so therefore, in order to make that different future real, you've got to decide whether you care more about fitting in according to the rules of conventional wisdom, according to the rules of the conventional status dominance hierarchy, or whether you care more about fulfilling the goals of the mission.
34:38
And whenever those two things are in conflict, the best founders choose the latter.
34:42
And that requires them to be disagreeable, right?
34:45
So and and disagreeable can take many forms.
34:47
Like with Lyft, it was, okay, how do we feel about launching a service that we know is illegal in San Francisco?
34:56
Well, um what's your alternative?
34:56
Your alternative is to go to the San Francisco San Francisco local government say, we have this great idea. We'd like to launch it.
35:04
Can we get the laws modified?
35:06
Well, it's never going to happen, right?
35:08
To ask permission in that case would be to seek denial.
35:11
They would just say no, you can't.
35:13
And so you there's no Lyft in that set of circumstances.
35:16
So what you have to do if you care about the mission is you have to launch a service that's illegal.
35:24
And you have to get customers fall in love with it.
35:27
And now when you're talking to the government, it's the question in their mind is, how good do I feel about taking something away that my citizens like?
35:36
And how good is my explanation for taking it away going to look to them?
35:40
Now all of a sudden we can have a a rational dialogue about what the law should be uh and and how to change it.
35:47
And so um in that case they had to be disagreeable enough to launch something illegal.
35:51
Now most people wouldn't do that.
35:52
Most people would say, hey look, I draw the line at breaking the law, but you know, not not all laws are, you know, morally based, right?
36:01
Some laws are arbitrary rules like a lot of other things in this world.
36:07
But like most founders are not willing to take that step.
36:09
Um you know, disagreeable could also be pursuing unconventional tactics that most people would think are unthinkable.
36:17
You know, Brian Chesky selling cereal boxes to find uh air air bed and breakfast, you know, which became Airbnb or um Justin Khan selling his prior company Kiko on eBay for $250,000.
36:26
So part part of disagreeableness is um refusing the premise of the current rules as they're defined, right?
36:36
And to say to say, look, I just deny the premise and um I'm going to I'm going to zig when the rest of the world zags because if that's what it takes to fulfill my mission, that's what I'm going to do. Yeah.
36:49
And it's like I can't remember the name of the mission but where Kirk in Star Trek cheats.
36:54
Uh the the training exercise is meant to get them to understand that there will be certain situations that they just have no winning formula or no winning uh strategy to win.
37:06
And Kirk wins by cheating.
37:12
So guys, by re Well, that's the not caring that there's a law uh against uh doing what Lyft did.
37:18
And you know, from my own history, I I was thinking back and I've grown much more mellow with age, but like when I started my career with my first company, I was I was kind of a bomb thrower.
37:31
And like uh the one of the one of the key moments I remember was this is in the early '90s, right?
37:42
And so not many people had heard about factor investing.
37:46
I mean, unless they were an academic.
37:47
Uh and and I wrote a book, What Works on Wall Street, uh testing all the various popular strategies.
37:53
And I was on this panel at Morningstar, which was still kind of in its infancy back then.
38:01
And literally uh I uh the uh person seated next to me was a traditional regular uh uh asset manager and, you know, got to do all the research, got to, you know, do everything the way it had always been done on Wall Street.
38:18
And I and I turned to them and said, well, you do know that like if I have access to all of your portfolios, uh I can put them on a computer.
38:27
I can see what your most significant deviation from the general smart stock market is, and then I can basically clone you.
38:36
And my guess is the clone is going to perform better than you because we humans are really at making decisions under emotional uncertainty.
38:45
And like the crowd was kind of like gassed. Yep. Did it go over so well? No, it did not.
38:55
In fact, it did not go over terribly well.
38:57
But it it was I did find that the the people who came up to me afterwards, they're your version of the co-conspirators and true believers. Right.
39:10
Because cuz they were like, hey, we can you got some time to talk some more about this?
39:14
And in fact, many of them became our earliest clients. Yeah.
39:19
And and if you tried too hard to water down your discussion, your speech, it you would have never resonated powerfully enough with those people for them to come approach you later, right?
39:31
They wouldn't have they they wouldn't have understood your difference enough.
39:36
And they wouldn't have understood uh your provocative point of view enough to provoke them to approach you, right?
39:43
And so and who cares about the other guys?
39:45
They weren't going to buy anyway.
39:47
And so it's like, you know, you you got to find some way to get the people who care and who believe what you believe to raise their hand.
39:53
And the the the tragedy I see with some founders is they get a lot of advice like say on their pitch deck or on their just their how to pitch investors and they get it from a whole bunch of different people and they create what I call a Franken deck which is uh you know, a slide that anticipates every possible objection.
40:14
And the best pitches I've seen are more like what you describe where you say, "Look, I have an opinion about how the world is changing and um I'm going to express that to you uh but but like if if you just don't believe that or aren't prepared to believe that, I can just save you a bunch of time cuz nothing else I'm going to say is going to make sense to you for the rest of this discussion.
40:33
But if you're prepared to believe that this different future could happen, here's what flows from that and here's what we're doing.
40:42
Uh I find that to be a lot better than uh you know, you're going to pitch 30 people and you're going to try to get as many hits as you can, right?
40:48
Like there's only going to be a tiny subset of those 30 people who believe what you believe.
40:53
It's way better to not know that going in who they'll be but to pitch in such a way that the people who believe what you believe will understand what you're saying and raise their hand and say, "Yes, I believe that."
41:07
Yeah, and that's a great uh point to to dive into.
41:11
Well, many of our listeners and viewers to the podcast are investors.
41:16
We do have a pretty high amount of founders etc.
41:18
So, if you were if they hired you as a consultant and they were like, "We've got a Franken deck here.
41:29
How how how do we fix this thing?
41:29
How how how would you go about helping them fix it so that it really sang to the group that they're trying to reach?"
41:40
So, if it's a startup and I I should be careful here, right?
41:42
Like I I have a particular set of skills uh and so like my my skills are uh startup that's going to break the pattern, try to be an outlier, create a different future, right?
41:52
That's so that that's that's how I show up in the world and that's who I work with, right?
41:55
So, so what I say to founders is your first slide I'll just say what you do as if I literally know nothing.
42:03
And so like um if you're let's say you're Airbnb, you want to say something like, "We're Airbnb, we let you rent an extra room in your house."
42:13
You you don't want to say, "We're Airbnb, we're a marketplace for unused residential real estate."
42:20
And what you know, what but what happens is, you know, you'll get advisors that they'll look at your slide and they'll say, "VCs love marketplaces because they have network effects, they they attract a business model and you know, residential real estate is a category."
42:35
But the problem is is it is a normal person, I don't know what that is.
42:37
I don't a marketplace for unused residential real estate, I don't know what that is.
42:42
I can't tangibly connect with that.
42:46
But even worse like most VCs will act like they understand.
42:50
You know, they don't want to say, "I don't get it.
42:51
I don't know what you're talking about."
42:52
So, they'll you know, they'll say, "Okay, you're a marketplace for unused residential real estate."
42:57
And and so I still don't know what you do really.
43:02
And now we're on to the next slide.
43:04
Whereas if you just say, "We let you rent an extra room in your house."
43:05
I'm like, "Ah, I know what they do."
43:08
And it's like so I've been in a lot of pitches before where I'm 15 minutes into the meeting, I still don't know what it does.
43:13
If if you'd asked me after meeting in a water cooler, "What did that startup do?"
43:17
I wouldn't be able to describe in a tangible way what it does.
43:20
Then the second slide I recommend is something related to your insight.
43:25
So, um I'm about to tell you something that you might not have heard before about the future.
43:35
And um you might believe it, you might not believe it.
43:39
If you don't believe it, you shouldn't invest.
43:40
But if you're prepared for the possibility that I'm right, we can keep going.
43:46
Um so so that that's what you want in the second slide.
43:49
So like like with with Airbnb it might have been something to the effect of um the the strength in hotels that I either uniform, well-understood experience is the weakness in their strength because people traveling, especially millennials, are going to value living like a local.
44:09
When they're in Paris, they're going to want to live like a Parisian.
44:12
When they're in Austin, Texas, they're going to want to live like they're in Austin.
44:15
But if you're in the Four Seasons, it feels the same way in both places.
44:20
And so we believe that there's going to be a set of people who value this way of getting hospitality in the future and it's only now possible because everybody's online, everybody's connected, you can have ratings and reviews, you can use uh online mechanisms as a alternative to trust which has been created traditionally with brands.
44:40
And so like you could believe that or not believe that, but it's an insight, right?
44:45
It's a it's a point of view about the future that's non-consensus.
44:47
Maybe it's right, maybe it's not, but it's non-consensus.
44:52
So, that's the second slide I recommend.
44:54
So, first slide, what do we do as if I know nothing?
44:55
Second slide, what do we know about future that's not obvious?
45:00
And then the third slide I recommend is if you have any traction at all, explain what it is, right?
45:05
Like if you if you have customers, how many do you have?
45:09
You have revenues, how much?
45:09
If you won awards, what awards did you win?
45:14
If you have celebrity founders, who are they?
45:16
But just anything tangible that normal people would suggest would believe, "Oh, that's tangible progress.
45:23
That's tangible traction."
45:28
Uh and and then after that um there's a lot of variance, but like if you can if you can establish those things up front, you know, what we do, uh what's our insight, uh what's our traction, I find that uh people will listen to the rest.
45:45
Now they're leaning forward at the table.
45:47
Now they're sort of like now they're asking questions with the eye towards learning more about it because they're interested rather than asking questions cuz they don't know what you're talking about.
46:00
Yeah, and I what I like about that too is uh many I mean, if you if you look at the psychological literature and I know a lot of it doesn't replicate, but if you look at the ones that replicate, uh it it seems to be endemic among men especially.
46:16
We certainly learned that in asset management, right?
46:19
We we would have conversations with potential investors that were looking to us to manage their money.
46:27
And in our earliest days, we took direct from high net worth uh individuals. We moved away from that.
46:35
But when we were doing that, one of the things I always noticed was when we had a couple uh generally a husband and a wife um in our offices and we would use terms of art that honestly were jargon and you get so used to using them that you don't even think about the fact that a regular person might not know what a CAGR is, for example. Right. Right.
47:00
And one of the things that I noticed and I'm like a copious note taker as well because I just think that it's really important to be able to go back and and notice a pattern or or find a bad pattern and break it.
47:11
And and one of the bad patterns I found was we used way too much jargon, right?
47:17
Because, you know, when you get used to talking back and forth with your colleagues, you you make CAGR, you you know, you you say, "Well, uh what's the longer term base rate?"
47:29
And they all know exactly what you're talking about.
47:31
But why can I expect this well-to-do couple that might have made their money in a completely different way to know anything about that? But here's the thing.
47:41
I also when I noticed that, I noticed that it was never the man who stopped me and said, "What's a CAGR?" It was always the woman. It was always the woman. Yep.
47:53
And so one of the things that we decided with with And the other thing we did was we offered way too many choices.
47:59
We are quantitative firm, so we offered everything from large cap growth to small cap micro cap value, right?
48:06
Because it's all algorithms that we had tested to select those securities.
48:11
And we would offer in our original brochure, we had separate things on each portfolio, right?
48:14
And when we started it, we would put all 12 in there.
48:19
And like people would like when you offered that many choices, it was like, "Mm I don't know.
48:25
I I just you're confusing me."
48:27
And so we corrected our laziness, did our homework on the couple and realized, "Okay, this one or two portfolios are going to be the ones that are going to be right for them."
48:38
Our assets under management soared.
48:42
But also another thing I did was I told all of my sales people, "We've got to talk to people like they have no idea what investing is all about.
48:55
We've got to purge all of the jargon.
48:57
We've got to purge all of the, you know, like "Well, if you really want to look for a great strategy, what you really want to focus on is the standard deviation below zero because you want a big standard devi- I mean, like holy right?"
49:14
And you change that to "We try to focus on portfolio strategies where most of the surprises that you get are to the upside.
49:23
Doesn't mean there won't be some to the downside.
49:24
There will and in fact, here we'll show you some in the past."
49:29
But the the change to real language was another just huge unlock.
49:36
Yeah, and it and it's interesting, right?
49:37
Because the the value of real language is not in dumbing it down, right?
49:42
It's in clarifying your own thinking, right? Like Exactly.
49:45
It turns out people use fancy words and jargon as a substitute for clear thinking.
49:49
Because their own thoughts aren't you know, so I get this a lot, too.
49:53
I'll be in a board meeting and there's a ton of financial slides, but I can't tell if the business is doing that well.
49:59
And I realize that we're getting lost in the numbers, right?
50:03
Where we're getting so lost in the numbers because we're substituting having a bunch of numbers for clarity about what we're really trying to do.
50:12
It it it So, I accidentally got this right when I raised my first fund.
50:14
So, but my first my first slide Well, the first slide was like we're this new thing, it's a seed fund.
50:23
We invest $500,000 at a time to $5 million at a time.
50:27
And and and we want to have better returns than the bigger funds.
50:32
And then the second slide was incredibly simple.
50:34
At the bottom there was a rectangle and it said less than $200,000.
50:39
And at the top was a rectangle that said more than $5 million.
50:41
In the bottom rectangle I said angels and the top rectangle I said series A VC firms.
50:49
And then I had a circle in between them that said gap.
50:53
And I was like, you you know, right now you can't raise a million dollars in Silicon Valley.
50:56
Uh if you if you want to raise money from a VC, you got to go to a $5 million series A.
51:03
Um and why does that matter?
51:05
Because right now there's a whole there's a revolution happening in how startups are being built.
51:10
And so 500,000 is the new 5 million.
51:13
Uh because you can use open source software.
51:16
Yeah, Amazon's coming out with some new things which turned into AWS.
51:21
And so you're going to be able to accomplish in $500,000 what used to take 5 million and you're going to be able to do it faster.
51:29
And the angels aren't going to be able to come up into it because they don't they can't even spell LP, right?
51:32
They don't They don't know how to manage portfolios.
51:36
They they haven't thought about financial strategy.
51:40
And the big VC firms, the only ones who are going to want to come down are the ones who aren't performing very well because like if you're if you're Peter Fenton at Benchmark, why do you want to leave Benchmark and start a seed fund? It doesn't make sense. You're doing great. Life is good.
51:53
And so I'm going to compete against the guys who aren't that good at series A and they're going to be competing on my turf.
52:01
And it was interesting because you know, like I showed that slide to Phil Horsley at Horsley Bridge and I wasn't even trying to raise money from him at the time.
52:10
I was just like, I'm just interested in your feedback on whether I'm making sense or not.
52:16
And and I learned this with LPs that if an LP objects to your strategy, one or two things is true.
52:22
They they know something you don't know, which is valuable, makes you smarter. You learn something.
52:29
Or they they know something that isn't so and you can't convince them.
52:32
In which case you don't want their money because it it's not going to be a good relationship because you're not you don't believe the same things, right?
52:41
And so it's a lot like a startup.
52:41
You want LPs who believe what you believe, right?
52:46
You want you want to start a movement for a new style of investing because ideally if you're really investing, if you're an active investor, you should be doing something different than what the market does.
52:56
And so you should be enlisting the support of people who believe what you believe and together you create that different future, right?
53:04
So, like Horsley Bridge, they funded us, but they also funded Baseline, you know, Steve Anderson.
53:10
Uh they gave Roger Ehrenberg money at IA Ventures.
53:12
And like they they helped create the category of seed funds uh First Round Capital eventually, right?
53:19
They they They helped create this category of seed funds with those managers because they believed what those managers believed.
53:25
But it made no sense to try to get somebody to invest if they just fundamentally disagreed with your assessment of the world because they're you know, you'd always be arguing about the first principles of what you were doing, you know, it wouldn't you you wouldn't be having a sincere discussion uh with with those people.
53:47
Yeah, and there's just so much truth in that.
53:51
Um also true in the world of uh public market investing, right?
53:55
Like one of my loves is microcap stocks, right?
53:57
There's thousands of these tiny companies.
54:01
Now, the the problem is most of them are garbage. Absolute garbage.
54:08
However, there are diamonds in that rough and so it's kind of uniquely uh great for quantitative investors who can take the various factors that we found have high efficacy for identifying those diamonds in the rough and buying them and you know, they don't have analysts, etc. , etc. , etc. And I loved this, right?
54:29
But basically we had a situation where people would ask us, why why do you even have a microcap fund?
54:38
Because don't aren't they limited to the amount of assets that you can take?
54:42
And I went, yes, that's exactly what's brilliant about them.
54:44
That's why they're so incredible.
54:46
That's why BlackRock ain't going to start one, right?
54:51
And yet one of the things that I found was like you.
54:53
What the you would see instantly when you were talking to somebody whether they would like that kind of thing to invest in or not, right?
55:03
And so it was this great clarifying force.
55:06
And and you know, obviously you don't want to be rude and you know, be in 5 minutes into a meeting and say, well, thanks. Thanks for your time. We're just not a fit.
55:16
Um and and so how do you go about deciding which um investors, which founders are worth pursuing, worth investing the time and trying to understand what they are, you know, doing, making, etc.
55:33
Obviously I'm asking for your specific guidance that might help some of our listeners and and viewers.
55:41
pretty different between uh investors and founders.
55:43
And so what what I learned with um I learned a little bit of this with enterprise software.
55:50
So, like what I learned in enterprise software, so enterprise software you're trying to sell crazy expensive software as a startup to people.
55:58
Like and that's that's not easy to do.
56:02
And so what I learned is that you got to find the innovative customers.
56:04
You got to find the Industrial Light & Magic's of the world or that if you're Todd McKinnon at Okta, you find the early adopters of Salesforce cloud software.
56:14
Um and you know, you tell them what you believe and you you decide you want to create this different future together.
56:22
But this is another really important part of it is you do the best you can to tell the truth with no tricks.
56:28
So, like if ever a thought goes in your mind of how am I going to explain this to my LPs, that's a bad sign, right?
56:33
So, like we've we've had funds that have been spectacular.
56:38
We've had some that weren't so good.
56:41
And I you know, I remember visiting Dave Swensen at Yale and saying, hey look, here's why I think we got wrong in this fund.
56:49
Um here's why I think we needed to do different. Um Am I making sense?
56:53
And and you know, if if if you just are honest with them, you know, you're First of all, you're going to get great feedback cuz Dave Swensen.
57:02
Uh but but it's also you're you're having a discussion where you're not trying to sell something.
57:07
It's like we're trying to do this together and I'm not I'm not doing my part the right way in certain ways.
57:14
Is this the right course correction?
57:16
Here's why I think it is.
57:18
Um I I always found is really good.
57:20
So, if you pick the right early believers, you can maintain that truth with no tricks dialogue.
57:25
And it's it's not it's not even about being shrewd.
57:28
It's not like some calculating strategy.
57:31
It's about honesty, right?
57:32
It's about like, hey, we really do believe in this different future.
57:39
Uh we may not be prosecuting it the best way we could all the time, but that's why we're partners, right?
57:43
Is to talk about how how to win this different future, right?
57:48
And so uh and that and I find that's true in entrepreneurship as well.
57:51
Like when when I would work with Industrial Light & Magic and something was really wrong and we screwed up, we were much better off just saying, okay, we screwed up.
58:01
Here's why that happened, you know, what what went on, we made a mistake here.
58:05
Here's what we think the issues are.
58:07
Here's how we think we should fix it. Are we making sense?
58:11
You know, are we smoking crack?
58:13
You know, like But but like if if if you're just like incredibly straightforward because most people are used to are used to businessy sounding jargon.
58:22
You know, they're used to corporate executives or investment managers who don't talk like normal people.
58:28
They talk like a press release.
58:31
And you know, you can persuade people with that kind of talk, but you can't get to that sort of authenticity, right?
58:37
And I just find it the more the more radical your strategy is, the more it diverts from the mean, the more you've got to have that relationship, right?
58:48
Where you're willing to say, look, there's a lot of things I don't know.
58:50
I'm going to make mistakes.
58:52
I'm going to have some wins.
58:53
I'm going to have some losses.
58:53
I'm going to try to be honest with you the whole time.
58:56
I need you to keep me honest.
58:59
I find is a lot better way to show up in the world with these types of people, right?
59:03
Um And so um I'd say that's true for fund managers and for founders.
59:08
Um I'd say that when I'm looking for founders, I'm probably looking for um much more sharp-edged, uneven types of people.
59:19
You know, but most of the LPs that I work with are probably more agreeable than most of the founders that I work with, right?
59:26
Um But but um but I'd say that that that the similarity is that that they're animated by belief more than features and benefits and the normal business jargon that people talk about.
59:40
Yeah, it reminds me of a funny conversation I had with my son Patrick who runs a venture capital firm called Positive Sum.
59:50
And I was telling him about my next next adventure after retiring after we sold OSAM to Franklin Templeton and I what became of TransLink Ventures and that we were going to have a fairly significant venture vertical as well.
1:00:04
He just started laughing and he goes, "You know, Dad, one of the things that I'm really happy about is that by our agreement with Franklin Templeton, you can't have LPs." Stick.
1:00:23
And I just thought that was really funny because he was right.
1:00:25
Like I I I I in in venture especially, it's very different than public market investing in many ways.
1:00:34
And and so I really wanted to be able to do things that LPs would say, "What in God's name are you doing?
1:00:43
Why Why are you putting that money with that particular company?"
1:00:50
And I found it like incredibly freeing because it allowed us to find those types of non-traditional people living in the future and solving the problems of the future.
1:01:03
What What do you look for when you're looking for that kind of person?
1:01:08
And what advice would you have for a youngster who came to you and was like, "I I want to live in the future. Like how do I do that?"
1:01:17
Yeah, so I think that there's a few ways.
1:01:18
Some people are already in it, right?
1:01:21
So like when Marc Andreessen was at the University of Illinois, he was writing programs right in a supercomputer lab that the NCSA had funded and they you know, it's one of these buildings where they lower the supercomputer down first and then they put the walls around it.
1:01:36
You know, so lower the supercomputer down this big crane and then they had these really fast networks and you know, people forget this but at the time the internet had just become legal for business to use at all, right?
1:01:48
It had only been used by the military or academics.
1:01:51
And so and the the the technologies of the stairs of the World Wide Web had just come out from Vint Cerf.
1:02:00
And so Mark is like making minimum wage as a programmer and he creates the browser so that people could make use of the internet but he wasn't he wasn't thinking about a market for browsers.
1:02:11
He wasn't you know, he didn't know anything about the digital superhighway that everybody's talking about.
1:02:16
He didn't really know anything about business.
1:02:17
He was just living in the future.
1:02:21
So that's an example of I call it living in a time machine, you know, it's like when um Bob Metcalfe was at Xerox Park and every computer had a WYSIWYG display and a mouse and no other computers in the world had those things outside of the Xerox Park lab and he's trying to make all those computers share a laser printer which nobody had ever seen before.
1:02:44
And he's like, "Well, if if you're going to make all these computers share a laser printer, of course you should have a an architecture for networking that looks like the ethernet."
1:02:51
And so a lot of some of these startup ideas come from living in a time machine.
1:02:57
You know, you're in a research lab.
1:03:01
You're you know, you're somewhere where you have exposure to cutting-edge technologies before the rest of the world but the things that you're exposed to represents what the state of the world will be soon.
1:03:10
And so you build what's missing in that time machine and then that thing that you built becomes valuable more broadly, you know, once the browser came out, it became broadly valuable once more and more people got on the internet, more and more people saw the value of it. So that's one way.
1:03:28
A lot of times people who are living in that kind of future find themselves there, right?
1:03:32
They don't set out to go there, they're just pursuing something that they're just uniquely genuinely passionate about.
1:03:38
You know, in the same way that Picasso liked the smell of paint, right?
1:03:42
They're just they're just doing something just for the love of it and they they like to tinker.
1:03:49
Wozniak did this with the Apple original Apple computer for example.
1:03:51
And then the the the next kind of category would be spending time with innovative customers.
1:03:58
So you know, I've mentioned in the early days of cloud computing most of the innovative customers of cloud computing were using Salesforce and they were using Workday and they were using other early cloud apps.
1:04:08
And so Todd McKinnon at Okta had the insight to talk to those people and only those people when designing identity management for cloud apps and that was the right that was the right move.
1:04:23
I I talked to people like Industrial Light & Magic to sell computers for special effects in in movies.
1:04:32
But I I call those people lighthouse customers.
1:04:35
So when you're living in a time machine you're usually in some kind of a research-oriented lab.
1:04:42
You're tinkering with technologies of the future.
1:04:44
You're solving your own problem for yourself.
1:04:47
When you're spending time with lighthouse customers you're talking to customers who are pushing the edge of what's possible with technology.
1:04:56
Usually they're trying to capture some type of business advantage, right?
1:05:00
So like Lucas Film wanted to have the best special effects in their movies.
1:05:03
They were using ILM to do that.
1:05:07
And then the third way is to catapult yourself there.
1:05:09
So um Maddy Hall at Living Carbon was trying to think of startup ideas and realized that the best thing that she could do is get a job as Sam Altman's chief of staff at OpenAI.
1:05:22
And so she followed him around for a year and a half.
1:05:24
And if you if you follow Sam Altman around, you're going to see a lot of future dwellers.
1:05:30
And so she she saw that Microsoft wanted to spend a lot of money on carbon takeout and she saw that the science was progressing in such a way that it was almost becoming possible to genetically modify trees so that they could grow faster and have harder wood and take more carbon out of the atmosphere.
1:05:46
And so that's what led her to starting Living Carbon.
1:05:51
But the number one advice I give to people is don't try to think of a startup.
1:05:55
Like if you if you try to think of a startup, you'll you'll try to think of problems that exist in the present.
1:06:01
You'll try to think of present pain for present customers in present unserved markets.
1:06:09
And then you'll build a product that meets that unfulfilled need but you'll you'll only carve out a niche within the markets that currently exist.
1:06:15
What you want to do is get out of the present and live in a valid future and then build what's missing in in that valid future.
1:06:25
And by doing that, your intuition about what to build is far more likely to be right.
1:06:30
Yeah, it's resonates with me so deeply.
1:06:34
Um and as you were talking, I was thinking of um I I'm an investor in Stability AI and I was the chairman of the board there and we got a new investor group that included Sean Parker.
1:06:49
And as as I'm listening to you and I got to know Sean pretty well.
1:06:52
And I as you were talking about Mark at you know, with the the Mosaic browser, I I immediately thought of Sean and Napster, right?
1:07:04
Like like he did that because he wanted to do that and he thought it was going to be just a much better way to be able to download music etc.
1:07:15
But I I noticed that that kind of thing carries through because you know, the and and maybe it also helps that I had kind of agreed with the the the different go-to-market strategy for Stability that that Sean and Prayag, the CEO, are going to pursue.
1:07:32
But that type of person is great because they they and a prior CPO that we had at Stability, David Ha, who came to us from Google Brain.
1:07:47
Like David is defined by the fact that he just loves to tinker and solve problems.
1:07:53
And like every time I just love talking to David because I'll say, "What are you working on?"
1:07:59
And you know, and then we'll split it between his new startup and what he's personally vexed by.
1:08:06
I'm very interested in what he's personally vexed by.
1:08:11
Because he's a he's a guy who lives in the future.
1:08:13
Is is that something you do as well? Very much so.
1:08:15
So like what I and this is the part that's tricky to get one's mind around.
1:08:21
It kind of goes back to you'd asked about advice to young person.
1:08:26
Um Breakthroughs happen because you're exploring the unexplored.
1:08:31
And so the the best breakthroughs happen because the founder is obsessed with some type of a new field that usually embodies some technology inflections that could create massive impact environment.
1:08:48
And and they and they are pursuing this technology because they're interested in it for its own sake.
1:08:55
It's the last thing they think about when they go to bed at night, it's the first thing they think about when they wake up in the morning.
1:09:01
I I like to say it reminds me of like those British train spotters, you know, those old British guys with the anorak coats who like they have these journals and they track the comings goings of trains and everybody looks at them and they say, "How could you be so fanatically interested in something so mundane?"
1:09:17
But they can't talk about it.
1:09:19
It's almost like they're too socially inept to be at a party because they can't talk about normal stuff.
1:09:23
They want to talk about train spotting.
1:09:25
And and a lot of the great founders that I've worked with if whatever domain that they're obsessed with, they're that way about.
1:09:33
They're like a train spotter of their domain.
1:09:36
And they're interested in it for its own sake, and they're not necessarily interested in it to do a startup.
1:09:39
They just they just keep exploring and they find breakthroughs because they explore the unexplored.
1:09:47
They open a new fractal of knowledge that and and they're exploring a frontier that most people think is a waste of time because most people explore things because they think there's a return on the time that they spend.
1:10:00
But the problem is that to find a breakthrough you have to explore something where the return is potentially unknown because if you knew that there was a breakthrough there, the breakthrough would have been discovered.
1:10:11
And so you have to have this willingness to do what's interesting for its own sake.
1:10:16
And what what I find so intriguing about that and and this didn't make the cutting room floor of the book, but I studied creativity uh a lot.
1:10:23
You know, like why do these people come up with these breakthrough ideas?
1:10:30
And in almost all cases, you know, if you study great scientists or you study great artists or you study great uh startup founders uh it was an obsession with a new frontier of something that was interesting to that person.
1:10:45
And uh they did it not because it was going to be popular or not cuz it was going to make them money necessarily, but because they couldn't not do it.
1:10:51
And they just kept going.
1:10:53
And so like when someone's a teenager I always encourage them always have a project that you're working on that doesn't make you uh progress in any way in the normal social dominance hierarchy.
1:11:10
Like work on a project that's not going to look good on your college application, that's not going to help you get better grades but that is interesting only because it's interesting to you.
1:11:21
You know, a project of your own by yourself to find on your terms.
1:11:28
And and because that's where the breakthrough ideas come from is people willing to engage that way.
1:11:34
It's a different way of showing up in the world, but um it's a really valuable way of showing up in the world.
1:11:38
I think it's going to be increasingly valuable. Wow, I love that advice.
1:11:45
Um and I'm going to steal that from you and start giving that advice if you don't mind.
1:11:50
Uh because because I I will give you the credit, of course.
1:11:52
But um that is absolutely so true.
1:11:55
And one of the things that uh you said really made my eyes light up, and that is this idea of obsession. Yes.
1:12:02
You know, at the beginning of my career, I was absolutely obsessed with why certain stocks went up and why certain stocks went down, right? Like why? Like Yeah.
1:12:15
And you know, you would talk to old-timers and you would hear the same sort of thing, you know, it's the CEO, it's all about the CEO, and it's all about or or no, you never get fired for buying IBM.
1:12:29
And like I'd be like, well why aren't people trying to invent something that's vastly better than IBM that gets the new people to buy that?
1:12:40
But I was absolutely obsessed by it to the point where literally going to Nantucket with our kids when they were small, we had a Ford Explorer, and you remember how big computers were back in the '90s, right? Yeah. Massive.
1:12:53
So I I I was running the tests for the what would become What Works on Wall Street, and so my wife I had let She said, "Have you loaded your part of the car?" I'm like, "Yeah."
1:13:04
She came back into the house, she looked at me, and she goes, "Jim the only thing in there are three computers and these three huge monitors.
1:13:12
You've got to surely want to bring something more than that."
1:13:14
And I just like I I and I just paused for a minute.
1:13:18
I was like "Oh, yeah, I I guess I probably should."
1:13:21
But I was just so obsessed that even on vacation, I wanted to be able to continue to run these tests.
1:13:27
And you know, my wife is very practical in most ways, and she's just like "You know, is this leading anywhere? Is this you know Yeah.
1:13:38
good practical thing will come out of this."
1:13:40
And I had an idea, but absolutely uncertain whether it would work or not.
1:13:44
But I loved that idea, right? Of obsession.
1:13:48
We try to kind of fund those people through our fellowship program at Our Chalice.
1:13:54
Because when you mentioned taking the carbon uh out and and her following uh Sam around at OpenAI uh one of our fellows this year is she she's trying to figure out a way to store digital data in trees. Okay. Okay. Interesting.
1:14:10
And she goes, "Instead of the cloud, we're going to have the forest." Okay.
1:14:15
But I'm naturally drawn to those types of people.
1:14:18
Who Who do you Who do you think is not a good candidate to uh you know, sort of pursue what we're talking about here? In other words Yeah.
1:14:30
Yeah, in other words, if somebody came to you and you asked them a bunch of a bunch of questions, I'd be interested in the questions you'd ask them.
1:14:36
And you were kind of like "Yeah, probably you should like pursue a much more conventional path or career."
1:14:49
Yeah, so I guess um and it's tricky because um the the the right founder that usually uh is also at the right place at the right time for the future they want to pursue, right?
1:15:03
So like like when Justin Kahn did Justin.
1:15:06
tv, it was a terrible idea but it led to Twitch, and it was a good investment because Justin was just ideally suited to do a 24/7 live stream of his life.
1:15:16
You know, he's like 23 years old.
1:15:18
He wanted to be an influencer before there was a word for influencer.
1:15:25
Uh so he was perfectly cast for that job.
1:15:29
Ironically, the second company he started, Atrium uh was not a success.
1:15:32
And everybody when they heard the idea for Atrium, it was like uh streamlining legal services, you know, using technology and AI.
1:15:40
Everybody thought that's a good idea, and Justin Kahn's a great founder. What a great investment.
1:15:47
But Justin doesn't have any interest in the legal field at all.
1:15:50
And uh Justin started Atrium because he wanted to be a higher status founder.
1:15:56
He wanted to be in the echelon of Patrick Collison and uh Brian Chesky and those kind of guys.
1:16:03
And so where where does that come back to in terms of which founders to fund?
1:16:09
A lot of people right now are wanting to do a startup because they want to be a founder.
1:16:14
They they they they think of founder as a role to play that they're excited about, that's glamorized in society, that that is a high status role.
1:16:25
That's not a good reason to do a startup, right?
1:16:27
Um it's not good to say, "Hey, um you know, I've coming off this success here and uh you know, there's a whole bunch of VCs who are interested in me because I'm talented.
1:16:38
Now is my time to do a startup."
1:16:40
That's not a good That's not a good reason to do it.
1:16:42
And so, you know, when I talk to founders I spend a lot of time trying to understand the authenticity of their insight.
1:16:52
You know, do do they come by it honestly?
1:16:54
Is it really from the future?
1:16:57
Uh are they the right person to pursue this future?
1:16:59
Are they intrinsically motivated by it?
1:17:01
You know, like Justin was extrinsically motivated to succeed at Atrium.
1:17:07
He wasn't intrinsically motivated with uh you know, Justin. tv, which became Twitch.
1:17:12
So those are the those are And then there's a lot of stuff that you look for.
1:17:15
I think that um really great founders uh tend to be very original thinkers, high IQ, uh tend to be unconventional in the things that they're willing to do to to make things happen.
1:17:27
Uh and so you try to tease a lot of that out. It's hard though, right?
1:17:31
It's um it's one of the reasons that greatness is so rare.
1:17:34
Uh you know, it's like you got to be spectacularly right when you're right, but um it's hard to hard to spot even when you're very focused on it.
1:17:44
What do you read, watch, listen to that you would recommend others for getting a sense for finding those kinds of people um that are living in the future with those really cool new paradigm-breaking ideas?
1:17:59
Yeah, so I have to confess in in in this regard, I'm a little bit of a train spotter, right?
1:18:04
So um one of the one of the things that I really admire about uh what Buffett and Munger did is um they I call it the the T of knowledge, you know they're very broad.
1:18:16
So they have a lot of worldly wisdom and mental models.
1:18:22
But they're also very deep, right?
1:18:22
They read Fortune 500 reports of every company every year for its own sake.
1:18:29
And so I have um in the in the breadth arena um I study religiously all of these worldly wisdom topics.
1:18:38
But I try to I try to run it through the lens of startup capitalism.
1:18:40
So I I kind of give you an example.
1:18:42
Um Munger and Buffett would talk about margin of safety when you buy a stock, right?
1:18:49
The margin of safety is is the stock trading below its intrinsic value.
1:18:55
Um and and you know, the idea is never lose money, and rule number two is don't forget rule number one.
1:18:59
And you accomplish that in many ways.
1:19:01
One one is margin of safety, one circle competence.
1:19:05
You know, there's a bunch of bunch of things, right?
1:19:07
It turns out in startup capitalism, you don't want a margin of safety.
1:19:11
Um you want a margin of asymmetric upside.
1:19:15
And so the the rule in startup capitalism is not to never lose money.
1:19:21
The rule is never pass on Airbnb because you can make 6,000 times your money if you said yes in the seed round.
1:19:28
And so that what you have to study then is it in the in the 15% case that it's right, how big could it be in that case?
1:19:36
You know, so it's a conditional probability.
1:19:42
So so like it in theory, uh Munger's worldly wisdom is right.
1:19:49
If you're investing in a compounding corporate capitalist entity, you do want a margin of safety because it has to persistently compound and you have to be protected on the downside if its ability to compound is compromised in some way.
1:20:03
But as a startup capitalist, you want to understand the magnitude of how much you're going to change the future if you're right.
1:20:11
And it's the it's the margin of asymmetric upside that you care about.
1:20:15
It's the convexity, you know, what what the Seem to Live would call the convexity of the curve.
1:20:20
And so across all of like um Munger's hundred or so maxims, you know, like if you read Poor Charlie's Almanack or whatever, I'll say is that true for startups?
1:20:33
Or is there a symmetric truth that applies to startups?
1:20:35
So like circle of competency applies pretty much directly to startups.
1:20:40
You got to know where you have an edge and you got to be accurate about the fact that you have an edge there.
1:20:46
Uh and so whenever I look at an investment and before I write the check, is it in my circle of competence? I ask that.
1:20:52
And so so that's the worldly wisdom piece.
1:20:56
But then the the depth piece is I have a database of every startup where you would have made more than a hundred X on your first check.
1:21:04
And I uh get a time capsule for each one.
1:21:07
So like for Shopify, you get like, okay, this is what the deck looked like at the time you had to decide on the seed round.
1:21:13
Air Bed and Breakfast, this is what you know, it's not enough to say here's why they succeeded because that won't tell you whether you should have invested at the time.
1:21:21
You got to know exactly what the facts were at the time you would have had to make the decision.
1:21:28
And then we got to ask, okay, did this company embody inflections? Did it have an insight?
1:21:32
You know, do our frameworks apply to this company or do our frameworks not apply?
1:21:35
Is there ever a world where we would have figured this out and invested or or not?
1:21:39
And and you know, so we do that for all these companies, right?
1:21:45
Zoom, Chime, Shopify, uh Airbnb.
1:21:49
And we do it for the ones we passed on.
1:21:51
We do it for the ones we said yes to.
1:21:53
We do it for the ones we never saw.
1:21:56
And and you know, in the short term, you don't get an advantage doing that.
1:22:01
But if you think about let's say you're doing one of one or two of those a month, if you do that for 10 years, you're going to have a giant advantage, right?
1:22:09
Because you're going to like you're going to know startups in a way that trainspotters know coming and going as a train, right?
1:22:14
And you're going to you're going to have done the work to understand things at a level that no humans ever been willing to do.
1:22:23
And so like at the at the level of depth, what I try to do is I try to understand startup capitalism better than it's ever been understood by anyone alive.
1:22:33
Uh and you know, we're at the beginning of infinity of our knowledge of that, right?
1:22:36
We know we know a lot more about normal business.
1:22:37
Business schools have been around for a hundred years.
1:22:41
But entrepreneurial education really only started with Steve Blank and customer development 15 years ago.
1:22:45
So we're there's a there's a lot more to know.
1:22:51
And there's so much to to to discover going down that rabbit hole of you know, what do these wild capitalist mutations look like when they're just born?
1:23:01
And so that I'd say that that's the depth that I look for.
1:23:05
Um and you know, that requires you to read a certain amount every day in the same way that Buffett Munger describe, but you're just reading about you know, you're optimizing for something different than what they optimize for.
1:23:18
But we kind of come from the same philosophy, I think.
1:23:20
I I I wish I was as successful as they are, but like I think philosophically we're pretty aligned and you want the worldly wisdom, which is wide, and you want the crazy rabbit hole depth in something you're interested in, which is the depth. I love that idea.
1:23:36
Um and uh one it it brings to mind uh you know, the South Sea uh bubble, right?
1:23:46
Where Newton lost all of his money and where they one of the funnier things was an undertaking of great advantage but nobody to know what it is.
1:23:55
Uh that was their first slide in their deck back then.
1:23:57
But but but so people uh often go the conventional route and use the South Sea as here's why you got to be careful about bubbles, you know, Newton lost his fortune, most brilliant man in history.
1:24:12
But one of the things that I always try to do is invert that and think yeah, that's true.
1:24:17
And I myself have used that example many, many times.
1:24:21
But were there a bunch of companies that it were given birth to at that time that ended up being massive companies? And the answer is yes.
1:24:32
Mining companies, canal companies, insurance, new new ways of insurance were born then because of that bubble.
1:24:43
And so you want to try to think uh of the invert I mean back to Charlie, right? Always invert.
1:24:50
But but it's very useful to like yeah, so of course everyone in traditional gives the oh, this is the bubble and you got to avoid that etc.
1:24:59
But I do like and I love what you're doing with the what did that deck look like?
1:25:05
What did the first bed uh Airbnb deck look like?
1:25:09
And my guess is not anything like the company it ultimately became. That's right.
1:25:15
And the and the reason you have to do that is you got you got to say what is the signal that could have been possibly divined at the time?
1:25:28
And you've got to be just incredibly truth-seeking and like because the problem is the even the founders misremember how it happened.
1:25:34
You know, like when when when you're successful, you come up with all kinds of reasons you succeeded.
1:25:42
And so like for example, you can't say to like Mark Pincus at Zynga, you know, when you pitched me, this was your game.
1:25:50
But I noticed you know, why why did you succeed?
1:25:52
I mean, he might tell me the truth, he might not.
1:25:54
He he might intend to tell me the truth and not be able to tell me because people remember the truth in certain ways, right?
1:26:00
They they match patterns to the past.
1:26:04
But like what you can ask is something like in your seed pitch deck, you called your product X.
1:26:11
But I noticed that the product that succeeded was called product Y. What happened? Right? How did X become Y? Just tell me that.
1:26:19
What what caused you to change?
1:26:22
And so now you're not asking why were you successful or what did you get right?
1:26:26
You're just saying you know, it went from this to that. What caused the change?
1:26:31
What surprised you that led you to decide to do something different?
1:26:35
And what what was the breakthrough moment, pivotal moment that you figured this out?
1:26:38
Um and so you you're trying to like you said earlier, it's dangerous to try to be too smart.
1:26:45
You're trying to be more like Joe Columbo detective, right?
1:26:48
You that guy with the trench coat, you just kind of walk up to to the person and say, hey, I'm looking at this pitch deck here.
1:26:54
It's not what your product is now. What's up with that?
1:26:56
And like how did you figure this out?
1:26:58
And like how what how did this start to go your way?
1:27:02
And when did you know it was working?
1:27:04
And you know, things like that.
1:27:04
Um because we have to we have to care about the answer to those questions because if the next one walks into the door, our mind has to be ready to to receive the idea.
1:27:16
Uh we have to our mind has to be prepared to recognize the thing that's really hard to recognize cuz I I can tell you what, uh Jim, these things are wild at the time you have to decide.
1:27:26
You know, they look crazy.
1:27:29
Uh and they look very poorly formed and screwed up and you know, a lot of things wrong with it in addition to a lot of things right with it.
1:27:37
And so you know, but you have to you have to be willing to say, okay, how do I get good at figuring out the signal that matters uh when I see one of these?
1:27:46
Uh and and I don't know any other way to do that other than just to study a whole lot of examples.
1:27:53
And and and study them to a degree of fanaticism that most people just won't do.
1:28:00
Yeah, I I absolutely love that.
1:28:00
And I you know, the idea that the that you talk about when you ask somebody after they've had a success.
1:28:15
Like I did a deep dive on our human operating system because you know, you got to understand that if you want to understand other people.
1:28:20
And one of the things that I found which really kind of amazed me was we all overwrite our memories with what our current beliefs to make them consistent with what our current beliefs and thoughts are now. Yes.
1:28:36
And I discovered that in a really fun way in that I thought that I had felt something back a long time ago.
1:28:43
I I'm a journal keeper and have been since 1978 when I was 18.
1:28:49
And so I will all the way back to 18-year-old Jim and see what he was thinking and writing about. Good idea.
1:28:56
And so well, I didn't even start it start the journal keeping with that idea in mind.
1:29:00
It ended up emerging as incredibly important before cuz it let me see in my own handwriting, oh my god, I overwrite memories all the time.
1:29:11
Because I would have sworn in court on this particular thing.
1:29:14
And it happened to be I was at a cocktail party with a bunch of people my age and we were talking about the first Gulf War, you know, the one they joke George Bush senior the good Gulf War where Saddam had gone into Kuwait. Yep.
1:29:28
And everyone was saying, yeah, well, I I certainly supported that one, but I didn't support any other ones.
1:29:33
And I was just like everyone else.
1:29:34
I was like, yeah, I supported that one, too.
1:29:37
And then I had a to look something up from that period in one of my journals.
1:29:43
I came across an entry that I had made right prior to that war.
1:29:49
Like I did not support that war. Yeah.
1:29:51
Well, and it's that's a really good reason to document this stuff, especially if you're investing in things where it's really uncertain. And so I I'm with you.
1:30:01
I think it's really useful to journal the state of your thinking at the time.
1:30:05
Uh because it then you can go back to it.
1:30:10
Uh the other the other thing I think is useful that I've started doing more recently in journaling is um I have an entry on what surprised me today.
1:30:19
And so and the reason the reason I do that is I'm like, okay, well, if I believe that you should savor surprises.
1:30:25
Uh that's an interesting way of showing up in the world of always asking yourself every day what surprised me because to some degree to be surprised is to get closer to the truth.
1:30:35
And so every day that you're surprised you you compound your advantage in reaching the truth sooner.
1:30:42
Or or getting closer to having better explanations for what's happening than other people have.
1:30:46
And so um but but like I find that if you can make it a habit, it it sticks more, right?
1:30:51
It it becomes more embedded in just how you think about stuff and in any given meeting you're in, you're always in the back of your mind looking to be surprised.
1:31:01
And you're like, even if this isn't a good startup idea, I can still show up at that meeting with an eye towards being surprised and that person might teach me something.
1:31:09
And so um so the the other thing I like about journaling is you can model the types of ways that you want to show up in the world as prompts, right?
1:31:18
And every day you can say, you know, what what did I do to get more disciplined?
1:31:24
What did I do to what surprised me?
1:31:26
What whatever the things are, you know, you can you can remind yourself every day.
1:31:32
Um so you can you can go back and know what the state of your thinking was, but you can also prompt yourself to think better in in the moment.
1:31:41
Totally agree and I I love the idea about surprise.
1:31:45
You know, and of course that is central to the initial thesis of information theory that Claude Shannon posited.
1:31:53
Basically, he he had the idea that information which was the unexpected. Right?
1:32:01
And what Shannon said was like if you do an analysis of a political speech, there's zero information in them. Yeah.
1:32:09
Because everything that you're going to hear or read is expected. Yes.
1:32:15
what real information is is the unexpected.
1:32:18
And then he might not have been him, it might have been one of his collaborators, but they said like for example, a poem is filled with information. Yeah.
1:32:28
Because it often times has a lot of unexpected in it.
1:32:34
Well, I'm getting the hook from our producer here.
1:32:35
I keep the phone in front of me and they start flashing me because they know that I would go on forever and ever with someone like you.
1:32:42
Um Our final question on on the podcast is I think it's fun.
1:32:49
Um and I think I I might be able to guess one of the ones you're going to come up with.
1:32:52
But so Mike, we're going to wave a wand and make you the emperor of the world. You can't kill anyone.
1:32:59
You can't put anyone in a re-education camp.
1:33:01
What you can do is we're going to hand you a magical microphone.
1:33:06
And you can say two two things into this magical microphone.
1:33:10
And what it's going to do is it's going to incept all eight billion people on the planet plus or minus however many we're at right now in reality.
1:33:20
They're going to wake up the next day and the two things that you incepted in them, they're going to think was their own idea and they're going to say, you know what?
1:33:29
Unlike all the other times I've woken up with these great ideas, I'm actually going to start acting on both of these. What do you got for me?
1:33:39
I would say uh take tribalism out of your reflexive instincts on viewing the world. I love I love that one. Yeah. Truth over tribalism. I love that. Okay, that's number one.
1:33:58
Number two, what's the second thing you're going to incept?
1:34:02
Number two would be um don't assume you need to imitate anything.
1:34:11
Uh it's so it's you know, kind of don't don't assume that because somebody desires a certain lifestyle, you should desire it.
1:34:19
Don't assume that because somebody's achieved status, you should care about status in that same way.
1:34:26
And so you know, at Pattern Breakers, we talk about how the mind is wired to match patterns and it helps with survival, but it also holds people back.
1:34:34
I think the human mind is also wired to imitate and in early years that helps cuz when you're a baby, you imitate your parents, you learn how to work through the world.
1:34:42
But I think unfortunately, imitation creates rivalry uh for uh the things that we all believe confers status and that's that combined with tribalism is a very toxic mix.
1:34:57
And that is something I think those two things I think is humanity needs to transcend if we're going to get to the place that we want to go someday in future, right?
1:35:06
If we want to if we if we want to achieve a positive sum totally abundant world rather than one where we hurt each other in wars and you know, threaten the destruction of things. Hallelujah.
1:35:20
You are preaching to the choir here, Mike.
1:35:22
Um I highly recommend everyone listening or watching get a copy of Mike's book Pattern Breakers.
1:35:28
If you have any interest in either being a founder or being an investor in new companies, you really have to read this book.
1:35:38
I found it really refreshing and a great look at the right way to do this.
1:35:44
Mike, where where can everyone find you online?
1:35:47
Yeah, probably the best places would be my Substack is patternbreakers. substack.
1:35:50
com and then on Twitter I'm at M2JR. Well, now X.
1:35:59
Those are probably best places.
1:35:59
And then our site website is www. floodgate. com.
1:36:05
But yeah, I appreciate appreciate the time, Jim.
1:36:07
It was a pleasure to spend time with you.
1:36:10
Oh, it's a my the pleasure was entirely mine, Mike.
1:36:13
Uh thank you so so much for coming on.
1:36:16
And and hopefully we'll be able to get you to come on again and maybe we'll look at some uh companies that kind of looked like they were going to be pattern breakers, but didn't be weren't.
1:36:28
Oh yeah, I got a pile of those.
1:36:30
and then maybe do some case studies because I I think that a lot of people could learn a lot from that exercise as well.
1:36:36
So thanks so much for joining me. Happy to.