Microsoft, OpenAI, and startups, with Neo CEO Ali Partovi

It is the most inspiring moment for new innovation that I've seen maybe in multiple decades. It means a lot of things that people already depend on might be going away or might struggle to compete. So there's potential for disruption, but it also means so many exciting new things can be imagined that weren't possible before.

Technology investor, entrepreneur, and mentor Ali Partovi is the CEO of NIO, a startup accelerator, mentorship community, and investment firm. NEO's accelerator this week announced a new AI track, working in collaboration with OpenAI and Microsoft to help startups build businesses on newly emerging artificial intelligence capabilities. Partovi, who grew up in Tehran during the Iran-Iraq War, sold his startup LinkExchange to Microsoft in 1998. He was an early investor in companies including Airbnb, Dropbox, Facebook, and Uber, and 10 years ago co-founded Code.org with his twin brother Hadi Partovi, who continues to lead the computer science education nonprofit to this day. I'm GeekWire co-founder Todd Bishop. Ali Partovi joins me on this episode of the GeekWire podcast to talk about the role that AI will play in the startups of the future, Microsoft's relationship with OpenAI, his experience at Microsoft reporting to a young Satya Nadella as his manager, Neo's approach to identifying and supporting a diverse group of technical and entrepreneurial leaders, his larger takeaways from the Silicon Valley Bank meltdown, and more. Ali Partovi, thank you very much for joining me.

Thank you so much, Todd. It's great to be here.

You are a longtime technology entrepreneur and investor, and we can get into a little bit of that history later on, but your latest venture, as it were, is Neo. And this is a startup accelerator and mentorship community. Can you give us a little bit of the background on what NEO is and what you do before we dive into this world of AI that you've just jumped into?

Yes, absolutely, Todd. I guess it starts with when I was a startup founder myself at age 24. So one of the most important lessons I learned was it is just incredibly surprising the difference that a single individual can make. At the time, for me, that meant being obsessed about hiring people smarter than myself, hiring oftentimes young people smarter than myself, and giving them a lot of responsibility. And then throughout my career as an investor, some of my biggest successes have been betting on young people smarter than myself. And some of my biggest regrets have been when I didn't bet on somebody who was just an absolutely brilliant technologist, and I had doubts about their business plan or lack thereof. And so Neo is essentially organized— it's a new firm that I started about 5 or 6 years ago around the thesis that you can identify exceptional talent quite young when they're still in college and, and to encourage them and support them towards entrepreneurship. Now each person is different, but our goal is to try to find kind of the top 50 most promising computer science students in America and give them very white glove, very personalized concierge-type support to help them each in their entrepreneurial paths. And we have 2 programs around that: the Neo Scholar Program, which is literally for college students and provides community as well as help with matching them to a great startup to, to intern at or, or to work at, And the NEO Accelerator Program, which is for folks a little bit further along in their career, maybe a couple years out of college, who are starting a company for the first time. And it provides both funding and mentorship, as well as a residential campus for the cohort of startups to really build community with each other.

You talked about identifying promising computer science students, the top 50, when they're still in college. And you have a track record of being able to see companies as an investor and predict Essentially, that they're going to do well. You've been an early investor in companies including Dropbox and Facebook. What do you look for? What are the patterns that you're matching?

That's a great word, patterns. I should start by clarifying when I said top 50, that's shorthand for it's easier to grasp the idea.

Yes.

But we should be clear, there is no such thing as a— it's not like tennis where you have a clear ranking. I think it's a fool's errand to try to pick one single criteria that you're ranking people on. So our approach, you know, when it first started, I personally traveled around the country, personally interviewed more than 100 students, each of whom had been highly recommended as the best intern at Facebook that summer or the best intern at Dropbox or other companies that I was an investor in. And when you personally meet someone as a seasoned interviewer, I can apply a lot of pattern matching and intuition and so on. But as Neo has scaled, we now have more than, you know, more than 1,000 people apply to become Neo Scholars through our website each year. I can't meet every single one of them. And so we have a series of assessments, the core thesis of which is choice. We let people choose how they want to be assessed. So it's a rigorous technical assessment process, but you can choose There's 3 options for the first round technical screen: CodeSignal or Byteboard, which are both different online technical evaluations. And the third option is to opt out by providing whatever you think is justification of your technical excellence. If you have an open source repository, we have 30 volunteer code evaluators who will visit your GitHub link or, you know, visit and read your portfolio and send us an evaluation of your, of your work. If you make it to a second round interview, we have 70 volunteer interviewers and we give you a choice of multiple different interview styles of how would you like to be interviewed. And so it's very thoughtful and I would, I would actually say it might be one of the more sophisticated evaluation mechanisms or, you know, application processes of anything out there. You know, when you apply to college, you don't get to choose how you're going to be evaluated, or when you apply to— a job at most companies. I don't know of anyone offering this much choice, but the result of that is that we let each candidate, um, kind of meet us where they want, where they're strongest, and, you know, give them a chance to put their best foot forward. And my belief is that this will help us find the strongest people. It'll welcome more people, and it'll also welcome more different people rather than people who are all attuned to, you know, one specific type of assessment.

You've been around the technology industry a long time. How would you characterize what's happening right now with AI specific to the opportunity for startups?

It is the most inspiring moment for new innovation that I've seen in more than a decade, maybe in multiple decades. I would say over my lifetime, discovering the computer when I was, you know, 9 years old was perhaps the single most, you know, Mind-opening experience. The internet when I was 21 years old or so, meaning the web browser, the mobile phone. There's like certain moments that I look back to saying, oh my gosh, this changes the technology world, this changes what's possible. And I think we're witnessing a moment like that right now. It means a lot of things that people already depend on might be going away or might struggle to compete. So there's going to be room, potential for disruption, but it also means so many exciting new things can be imagined that weren't possible before. And it's an incredibly exciting time to be a builder. It's a really exciting time to be an investor. And, you know, and it's an exciting time to be a mentor, which is, which is what I consider myself.

If I read correctly, the application deadline for your next cohort at NEO is March 31st. So folks have a clock that's ticking here to get in on this for the next time. And This time you have a really interesting twist. You just announced a new partnership with Microsoft and OpenAI. Can you tell us about that?

Absolutely. I have to give credit where it's due. I think the whole world has been captivated since early November when OpenAI released ChatGPT. And for people everywhere, it was this realization of, oh my gosh, look at what's possible. But in particular for people who are builders, for software engineers, for would-be entrepreneurs, it was this additional realization of what can I build with this? And as impressive as ChatGPT and GPT-4 are on their own, I would say that's the tip of the iceberg. The much greater potential is the things that startup founders can build with them. And We started having that realization in November. We reached out to Microsoft and talked about them potentially being a partner of some sort in creating a new AI-focused track for our accelerator. And at the time, it was just kind of a rough idea, but I just had an instinct that— I guess I would say if I were starting a company today, there's no question that I would be building something with generative AI. using Azure and using OpenAI. And so my obvious thought was, that's where the hockey puck is going. We should be there for those startup founders. And at that time, we weren't even accepting applications. We started that conversation. We opened applications more than a month ago before this relationship was fully, you know, finalized. So we've been accepting applications over the last several weeks. While finalizing the details, but Microsoft has been an incredibly eager collaborator. They were eager to collaborate with OpenAI with us, and we've really enjoyed working with the OpenAI folks. And we pulled together what I think is an incredibly irresistible program for anyone who's starting a company. It's a combination of both technology access, free compute credits, And perhaps most importantly, access to people who are experts in the field who can help people overcome challenges or potentially find new solutions and, you know, learn how to make the most of these new tools. So we're super excited to have announced this, and it's been less than 8 hours, I think, since we announced it, and we've already had a spike in new applications coming in. I feel pretty confident that this package has hit the spot.

I realize that this next cohort hasn't even started yet, but can you give me a sense for the types of things that you can envision startups doing with generative AI tools like GPT-4 that they wouldn't be able to do otherwise?

I mean, I can give you examples of things we have already accepted into our new cohort. There's a company called Cassidy AI. In their case, they're actually trying to build a platform to make it easy for others to build personal assistants or other things with GPT. They're not necessarily the end application themselves, but it's a tool to make all of this more accessible to the non-technical person who has a vision and who wants to be able to kind of quickly hook something up that takes advantage of these tools. So, so that's one example. You know, more broadly, Todd, I think what's unique is that— think about how exciting it was the first time you, you know, used an iPhone and you realized you could just swipe around, move your fingers on a screen, and have it do what you want. And other things that the iPhone had, like knowing where you're located, those combinations then led to something new such as Uber or such as Tinder or all sorts of things that you know, were built taking advantage of those features. And we're now facing a similar kind of major shift where you can just speak to your computer in English and have it understand what you're talking about. When I say speak, of course, right now it's typing, although I feel like it's not very far away for it to just be speaking. It's a little terrifying, but also exciting to imagine that the computers of a few years from now will just be Part of a conversation in natural language rather than something where you have to find the right button or know how to use it. Just incredibly exciting what incredible worlds this opens.

Coming up, what AI means for the future of Microsoft. We'll be right back with Ali Partovi of Neo. You've worked before at Microsoft. You were an intern there back in the day, and then you sold a startup called LinkExchange to the company. And of course, people also will know you from iLike and other companies that you've been involved in and led and founded. Can you reflect on your career there, your multi-stage career with Microsoft, and what this moment means to the company now?

It's interesting. I wouldn't say that I had much of a career there, but I'd say it's incredible how influential the few touchpoints have been. Starting all the way back to when I was, you know, a 10-year-old in Iran, Hadi and I, we had a computer that we, you know, we learned to program on. And this was long before the internet. Iran was under sanctions, so we couldn't buy software. So our one connection to the tech world was this magazine called Compute! magazine that we would receive. You know, we had a subscription to this magazine, and we'd eagerly open it and read about what's going on in, you know, basically in the tech world in the United States. And there would be things about new companies or new technologies. And one of the things I remember yearning for was Microsoft Flight Simulator. It looked like an incredible game. We couldn't buy any games in Iran, but we fantasized about it. And then as I grew a little bit older, by the time I was 18 and a college student, my first summer internship was working at Microsoft. And even before I started working there, just the interview process left such an impression on me. You know, I was a financially insecure immigrant kid. I needed to work for the money. I was, you know, looking for a job. And this company paid to fly me all the way from Boston to Seattle, gave me a rental car. I was, you know, 7 years too young to get insurance for a rental car. But they, you know, they covered the whatever they do to allow a young kid to drive a car. The interview experience alone made me feel this incredible feeling that this company believed in me more than I believed in myself. And I mentioned this because that's still relevant to how Neo as a firm treats college students. And the feeling that someone believes in you can drive you so much to achieve new heights. I think to some extent, because I had a great time interning at Microsoft, This was 1991. 7 years later, when we had multiple people offering to buy our startup, LinkExchange, I had an affinity for Microsoft and a level of good feelings towards them, and we accepted the offer from Microsoft. Little did I know that the person I reported to there, Satya Nadella, would someday become the CEO of the company. But Satya was— I haven't had very many managers in my life because I've generally been in the startup world. Satya is an incredible manager. He was an incredible champion for me. I was a kind of headstrong, stubborn, probably insufferable young guy at the time, and Satya did so much to both teach me and to champion my work at Microsoft. So I have looked up to him. That was, you know, more than 20 years ago. And then I could never have predicted both that he would become the CEO and that my new company 20 years later would have a relationship that's intertwined with Microsoft in this way. And I have to say, it is truly inspiring how Microsoft has gone back to being at the center of the most exciting wellspring of innovation in the tech world. I don't know whether you'd call this their second act or a third act or what, but it is definitely an incredibly powerful act, whatever number it is. And It's stunning for a company as old and as mature as Microsoft to be behaving so young and so innovative. So I'm just very inspired by them and by Satya.

In your opinion, does the partnership with OpenAI give Microsoft Azure an edge with startups over AWS?

Absolutely. As with a lot of these questions, it's hard to say it in black and white. I think AWS is an amazing service as well. From what I can tell, the relationship between Microsoft and OpenAI is really just brilliant. It's a win-win for both sides. It's reenergizing Microsoft and giving them a strategic edge, and it's obviously giving OpenAI an incredible strategic edge as well. And it's, it's just a testament to how brilliant both Sam Altman and Satya Nadella are. I think These 2 leaders deserve enormous credit for what they've already done. And I truly look up to both of them. They're both geniuses, they're both brilliant. And I think this collaboration has truly galvanized both companies to be able to reach heights that would perhaps have been harder for either of them to reach on their own.

After the break, NIO's approach to team building and why it employs a resident magician and puzzle maker. I know that equity and issues of equality in the tech industry are important to you. You and your twin brother, Hadi Partovi, started Code.org, which just celebrated its 10th anniversary, and that's all about making sure that computer science education is available broadly. And Hadi has actually been a guest on the show in the past. Longtime listeners will remember him telling the story of your family escaping the Iranian Revolution and coming to the United States. You've incorporated issues of equality into Neo. Can you explain how you've done that?

Well, I'll start by saying that education is not just near and dear to my heart. It's— I guess I'd say it's in my blood and in my genes. I grew up surrounded by professors and children of professors because my dad, who was a physics professor, had co-founded a university in Iran. So all of my parents' friends and the kids that we played with when we were growing up were academics. And I have grown up with this legacy of my own dad founding a university that today is one of the top universities in the world. It's a university called Sharif University in Iran and is one of the top technical institutions in the world. And so both Code.org and Neo are informed and inspired a little bit by trying to live up to the incredible legacy that Hadi and my father has, and the idea of wanting to build something that creates opportunity for others. You know, and I'd say that at the core of education is the idea of helping others maximize their potential. The mission statement for Neo is that true love is helping another to maximize their potential. And for me, I think the year that I spent helping Hadi launch Code.org will probably, when I look back on my entire career, will probably be the most impactful year of my life. So I'm kind of struggling both to live up to my dad's legacy and to my twin brother's legacy. But I would say I view NEO very much as an educational institution as well. It's different. It's for profit. We hope to make a lot of money helping identify and build the startups of tomorrow. But in a very big way, it's also about empowering people and enabling the next generation of tech leaders to perhaps aim a little bit higher and perhaps, you know, accomplish a bit more than they might have on their own. And with respect to your question about equity, it means so much for someone to get encouragement and to see even a single role model that looks like them. And if, you know, there are definitely people who are underrepresented where they might be discouraged because they don't see anyone who looks like them succeeding. And so they think maybe I don't belong in this industry. And so a huge part of how we help others, you know, is just to introduce them to a single role model who might be 5 years older and successful, or it might be 15 or 20 years older and, you know, much more successful, but somebody to make them feel like, oh my gosh, I do belong here, I'm capable of as much as anyone else. And giving someone that sense of courage and sense of potential and sense of believing in them is a— I would say is a huge part of, of anything related to equity in tech. There are lots of other things we do. For us, it's woven deeply into, into NEO's identity as an emphasis on diversity. Our team is incredibly diverse, not just our full-time team of, you know, 8 or 10 people, but also our team of 20 or so mentors, diverse in age, fairly balanced in terms of men and women, really diverse in ethnicity, but also diverse in their backgrounds, their passions, their, you know, technical views. Some of them have opposite views on things. I don't agree with all of them on everything, but when you bring together really impressive people who are different from each other, I think that creates a better environment for everyone to push themselves to be the best version of themselves. We're not pattern matching for people who look like me or who have the same background as me. Of course, when I meet someone who also went to Harvard or who also worked at the places I worked, I'll feel some kinship with that person. But because we have such a diverse team, any founder that we encounter will find some common ground, some area of connection with at least some member of our team or one of our mentors. You know, investing is a two-sided decision. We need to offer to back a startup and they need to accept our offer. And a big part of it is making them feel like they belong here and making them feel like this is going to be a place where they will feel nurtured and welcome and treated with respect.

I know this isn't necessarily what you were referring to in terms of the diversity of your team, but I have to ask you, I was looking through the list and you have a resident magician on your team. What does he do?

Yeah, well, I have to correct you. He's our resident magician and puzzle maker. That's right. David Kwong, I mean, he is a celebrated world-class magician. and frequent crossword puzzle contributor to the New York Times, Harvard graduate. And he adds an element of magic and mystery to what Neo does. A big part of Neo is about bringing people together. And like everybody during the COVID years, we were kind of confronted with how do you bring people together? How do you have human connection when you're stuck at home, you know, during these lockdowns and quarantines? And so we really embraced trying to figure out how to build community over Zoom, over, you know, over digital interactions. And most people hate doing that. We figured out a way to make experiences that people actually loved. We heard from multiple people in NEO that the Zoom events and, you know, online community events that we organized during 2020 and 2021 were what helped them get through the COVID years. And David Kwong is part of that. David, you know, organizes everything from small, you know, small magic experiences to elaborate, you know, multi-week-long puzzle hunts. And these are things that help bring people together. It helps create shared experiences for people to bond. He's led sessions on how to do magic. To be clear, magic and puzzles are not directly related to building startups, but they are related to creating a sense of shared experience and shared identity and bonding. And, you know, the word community for us is really important. It's, it's a lonely experience to be a startup founder, and to do it with other people makes a huge difference to feel like you have the support. when you're down, or to have people who you trust and who you can call when you need help. And so we take it very seriously. There's a lot of venture firms that have some sense of having community and events as part of what they do, but it's usually kind of an afterthought that's been bolted on, whereas for us, it's at the heartbeat of what we do. And so having a resident magician and puzzle maker as one of our, one of our 8 team members Kind of puts our money where our mouth is.

Taking this full circle back to the beginning of the conversation, you talked about the process that you go through to identify people who can come into the accelerator program and into the mentorship community. Could AI play a role in that at some point?

Absolutely. AI is disrupting everything. And so unfortunately, I can't tell you how exactly it'll disrupt us or where we'll end up. But I can tell you for sure that we're going to have to revisit all our practices, just as everyone else has to, figure out how the world is different. The world is changing around us faster right now than really ever in our lives. I think the best we can try to do is remain agile, remain optimistic, remain open-minded, and keep trying to go where the hockey puck is going.

You also mentioned earlier that if you were just starting your own company right now, AI would be a component of it. What kind of advice would you give to startup founders or would-be startup founders who are thinking about ways to take part in this new era of technology in terms of what to look for and ways that they might apply AI that could be valuable to their businesses and to prospective customers and, and the world?

The guiding star in building a business is make something people want. Quoting that's the slogan of Y Combinator, which is first truly great startup accelerator, and in in many ways one of the inspirations for what we do at Neo. And it's a simple sentence: make something people want. That's something you know I could explain to my six-year-old and she would get it. And but you you'd be surprised how easy it is to psych yourself out or to you know for someone who is trying to start a business to either be drawn to incredibly complex, you know, cutting-edge technology or to have trouble finding that. And I'd say simplicity and focusing on what are challenges that haven't been solved, what are things that frustrate people, what are things that people complain about or, you know, wish they could change. We all see complaints and frustrations all around us, but it takes a special mind to kind of then go from a complaint to envisioning a solution to then building it. And that type of thinking of, I guess, empathy for the problems of other people and seeing a way to solve it with technology, that's what I look for in startup founders. And my advice to any, you know, would-be founder is to basically turn on that empathy, look for where others are frustrated with things, or look for where you're frustrated with something and kind of try to find common ground of how many other people share this frustration. Is there a better way to, you know, to do things than whatever the status quo is?

Have the past couple weeks and everything that's been happening with Silicon Valley Bank and the economy made you at all introspective about the tech industry and what's happening out there in the world?

In the backdrop of what happened with Silicon Valley Bank and all the different kind of emotions that have spilled out, It's clear that part of the issue is that a lot of people in America don't like Silicon Valley right now, and it's less to do with the bank and more to do with this sense of dislike for tech. And it's an interesting thing because if you talk to a lot of people in tech, there's confusion of what don't they like about us, you know? And a lot of people in tech are just trying to build something creative and cool that will make the world a better place. And what I think is a big part of this is that for a lot of people in America, they don't feel they have access to be one of the creators. They don't have a pathway to be part of the wealth creation of Silicon Valley. And so they're on the kind of receiving end of technology rather than on the creating end. And so Certainly what I think is an uplifting and motivating thing for what Hadi does with Code.org is bringing more access to way more people. And it's heartbreaking for me. My— I've had the same cleaning lady since I was in my early 20s, so more than 20 years now. And I've watched her child grow up in San Francisco, graduate from college, first person from his entire family to go to college. And then he struggled for a while to get a job because he hadn't been exposed to computer science, and all the jobs in the Bay Area were related to computer science. I think one of the most important things about America is that this is a land of opportunity where a child can do better than their mother or father. And computer science is certainly unlocking that for people, and computer science education. I wish I could say Neo was even a fraction as impactful as Code.org is, but The idea of bringing opportunity to more people is definitely a very motivating part of what we do as well.

When you talk to just everyday people about artificial intelligence, there is a concern that this will go out of control and cause harm to society, either through things like amplifying discrimination or some of our worst human tendencies, or by running amok. How do you think about that as you look at this new era of AI?

First, I'll say I think AI has already caused harm to society in the sense that AI that drives algorithms like Facebook's feed and Twitter's feed influences humans and has influenced elections, has influenced division, and has caused a level of, I think, tribal disagreement in our society that I don't think is making anyone happy and is resulting in more friction and more disagreements and less common ground. I think that's just the tip of the iceberg with what's to come. At the same time, I'd say I'm really happy that with this new, even more powerful generation of AI, there's so much vigilance. You know, there's so much overt conversation about it. You know, with, with social networks and social media, the conversation was only after the damage was done and people were, you know, trying to figure out what happened. Whereas I think with AI, The people working on it are deeply engaged in the conversation about how to make sure it's aligned and how to make sure it does good rather than bad. I'm not going to guarantee that we end up with all good, but at least people are proactively thinking about that. And on the whole, I'm optimistic. On the whole, I think that surely there'll be issues, but I don't think there's going to be a doomsday-type scenario. I think overall this is going to make life better. It's going to be a great time to be alive the next, you know, the next 20 years.

Ali Partovi, thank you very much. This has been great to talk with you.

Thank you so much, Todd. It's really a pleasure to be here.

Ali Partovi is a technology investor, entrepreneur, and mentor. He's the CEO of NEO, a startup accelerator, mentorship community, and investment firm. See the show notes for links to more information about the Neo Accelerator and its new AI track supported by Microsoft and OpenAI. Thanks for listening. I'm GeekWire co-founder Todd Bishop. We'll be back next week with a new episode of the GeekWire Podcast.