Emil Michael: How I Negotiated the $4B Uber-China Deal, Why DoorDash Caught Up to Uber | 20VC #941

Emil, this is such a joy to do. I've heard so many wonderful things. I've, you know, I've referenced the shit out of you with like, you know, 20 people, but it was incredible to hear the depth of your relationship. So thank you first so much for joining me today.

It's great, great to see you. I've been a fan of your podcast for a long time, and I was wondering when my invite was going to come, but here we are in 2022 and it's come, so I'm here.

I mean, we actually have to thank Raph at GoPuff for this one, but, uh, I'm so excited to make it happen. I want to start with a little bit of context. So we see kind of The OG of negotiations and dealmaking today in Emil. But just walk me through, like, how did you make your way first into tech and then into investing? What were those 2 entry points?

Yeah, so I went to college and graduated in 1994, which, if you remember the time there, that was the very beginning of the internet businesses starting to come out. And so In my same class at Harvard, Ahadi Partovi, Ali Partovi, David Weiden from Coastal Ventures, Alfred Land, Tony Hsieh, I mean, all graduated the same year. And so all of us sort of decided, hey, well, this thing is happening in the economy. We could go do an investment banking job, a consulting job, or figure out what this tech thing was all about. So I moved to California. I went to, unfortunately, Stanford Law School, but at least I was in the middle of what was happening in Silicon Valley. And then Hadi Partovi, if you know, who runs Code.org now, was co-founding a company called TellMe Networks. And Ali Partovi was founding the Internet Link Exchange with Alfred Lin and Tony Hsieh. And so, I was working at both. I was working at TellMe, advising at both. And so, it was at the very beginnings of the new internet entrepreneurs were feeling around for something important.

Yeah.

in the internet in 1994 through 1998. So that's how I got started.

I have to start with actually one from Dave Clark, but Dave Clark highlighted the breadth of your experiences pre really diving into being the OG that you are today. We have Harvard, Stanford, Goldman, lawyer, Department of Defense. And he asked, which of these best contributed to your success today, do you think, on reflection?

I mean, you know, sort of none of them. The best one was the Bill Campbell thing. When I got to the Valley, Bill Campbell was associated with Kleiner Perkins. And Kleiner Perkins back in that day was the VC. They did Amazon, Google. John Doerr was the man. There was no one— what he touched turned to gold. And he was buddies with Bill Campbell, and he invested in TellMe, that first company I was telling you about. And Bill took a liking to me, and I was 25, and he became my mentor. And he's the one who sort of propelled the future startups. He's the one who propelled working at the White House, for Secretary Robert Gates. The education stuff didn't propel me for much of it except meeting the guys— Hadi, Ali, David, Alfred. So those are the 2 sort of influences I'd say that got me there.

So few people actually got to be coached by Bill Campbell. I think a lot of people talk about him, but so few people got the experience that you did. When you think about that time, are there big takeaways from you of how it impacted you and your mindset?

You know, it's the They called him the coach, the trillion-dollar coach, 'cause he would, as you know, coach Steve Jobs, who no one in the world thought was coachable. And then he would coach Larry Page and Eric Schmidt and Sergey at Google, and 2 of the most important companies. And he'd do it at the same time when they were both competing. But he was so good that both of them were okay with that. I mean, think about sort of the character of this man. So he would give you these leadership lessons, less business lessons, And being able to be in that, to learn that early, what was, you know, how to do things 20 years later. So you're fast-forwarding your own future was an amazing asset to have. And so I tried to do that today with my own 20 entrepreneurs I talked to, to at least, you know, do some part of what he did for me. And it's an incredible thing to have a coach early on in your career who cares, who has wisdom, Um, and who has that kind of experience.

I, I totally agree. I've been so lucky with some of the kind of mentors and coaches I've had. You mentioned Tell Me a couple of times. I want to dig in on that because Jared Hex, actually one of, you know, your friends, said it was such a transformational time for you, obviously very early in your career as well. He asked what were some of the biggest lessons or takeaways for you from that experience with Tell Me?

Yeah, I mean, that's— I feel like where I got my first Grit, and you know we had to have a lot of grit for Uber later on. But but we started telling in 1999. So if you think about the timing of that, we were unbeknownst to us 18 months from from the world coming to an end from a from a technology investing standpoint. So we had done the things four rounds in one in twelve months raised $150 million, which was a lot of money in the late in the late '90s. A lot. I think more than Bezos had raised. in his first couple rounds. And then the business model didn't work, and the internet economy blew up, and we had scaled to 300 people. So we went down from 300 back down to 100, tried to refigure the business model. We had to reconfigure it from what was a consumer model to an enterprise model. So you know those phone trees you call now that say, hi, speak your name at American Express? Well, that's still Telme. We built those enterprise systems at Fidelity, American Express, American Airlines, and so on.

So it's you I have to blame.

When you're yelling and it doesn't understand you, yeah, it's me. And so imagine twisting that business around and then spending 7 years building it customer by customer and enterprise by enterprise, trying to get them on the platform. And then we got to $100 million in revenue. Again, in 2007, that was a lot more than it seems like today. And I was able to help get it sold to Microsoft to be the base of their speech recognition technology today. And that's embedded today.

We're going to talk about the acquisition. I just have to ask that listening to you, it was so early in your career, you were so young at that point in 1999. Did you really feel the weight of expectation having raised so much money and really bluntly being a lot less informed than you are obviously today?

Yes, but that's how owners, not renters, feel, right? I was, I was, you know, when I started at Telme, I was still a couple of layers down in the org. It wasn't like I was, you know, out there, uh, as a co-founder who's 25. I was a business guy. And as you know, business guys are not top of the totem pole in Silicon Valley, right, in general. Um, so I had to work my way up, work my way up. But then I think the way I did that is because I cared every day about that company. and the people in it and the mission. And when you care that much, no matter what position you are, you feel the weight. But that weight makes you better, right? It makes you stronger. You put weight on your shoulders, you walk around all day, your legs are gonna get stronger, right? So that weight was real 'cause I'd recruited my friends. My cousin had interned there. Jared Hecht had interned there. Matt Window. A lot of the Silicon Valley Illuminati, so to speak, had spawned from Tell me PayPal, Opsware, which was Ben, where Ben and Mark came from. All these companies were in and around the same time and employee pool.

You know, you mentioned the acquisition. It was actually Hadi that said there was a competing offer on the table at a fire sale price. Drop the mic and ask him what happened then. That was his words. He was like, he didn't give me any more, so I don't know.

So we had gotten this acquisition for, we can call it $300 million, which would've been a fine outcome. But, you know, this was my last shot. And one of the things Bill told me is like, when you're selling the company, you know, it's sort of all bets are off. This is your last chance to create value for shareholders, employees, and so on. So I begged Hadi for 1 hour with Steve Ballmer at Microsoft, 1 hour. And everyone thought I was crazy. You'll never get a deal done. They don't know us. So I flew up to Seattle to see Steve Ballmer, and Hadi went jogging with him once a month or something. So I begged him for this meeting, and I said, every minute you talk to Steve is going to get me $100 million more for the company. He's like, ha ha ha. So he made him talk to Steve, got the meeting, flew up there. I rolled into the meeting with a BlackBerry. Steve Ballmer purposely pours his water on my BlackBerry because it wasn't a Windows OS phone. Kind of as a joke, but my phone was ruined. We, we do this negotiation. He likes us and he says, you know what, you guys stay the weekend. We're going to do this deal over the weekend. By the end of the weekend, 3 days later, had a term sheet for $760 million plus the cash on balance sheet. So just about $800 million. And that was history. That was it. It was sort of like having the gumption to go there. And not relent until we got that deal.

What did you do that made you so successful in that and get another $500 million in enterprise value? What specifically do you think it was?

I mean, I showed— and Mike McHugh, who was the CEO who was there, obviously, to give him full credit for building the company and collecting this talent and so on. It was just about showing sheer determination that come hell or high water, we were going to win inside of Microsoft. Inside of another company that had made that offer alone, no matter what we were we were going to win. And he asked us, "Are you guys going to stay around?" And without blinking, we said, "Hell yes," because we believe in this vision. So we're going to stay around wherever as long as it takes to make this work. And when you say that as an entrepreneur, a guy like you know Steve Ballmer, and he believes you, you know he's will you know he's like, "Okay, well look if you're going to stay and we're going to do this together, let's do this." And There's other mechanics in between getting the number to that number. But, but that's— that was the sentiment that got us there.

Can I be so bold and ask, was that the first real money that you made? I think when you first have your big hit, it does change a lot mindset-wise. Was that your first and did it impact your mindset?

Yeah, it was my first. So I used that merger proceeds to pay down my student loans. So I was student loan free in 2007. So call it— I was 35, because I'd been with Telme now for, you know, 8 years at that point. And it changed my mindset insofar as like, wow, this is possible, right? I was an immigrant from Egypt. My parents came here, you know, with nothing. It's a classic great immigrant story for America. But it was sort of proof positive. When you see that many zeros in your bank account, you're like, wow, this is actually the land of opportunity. And it really is. So in that way, but But I was sort of still someone who didn't spend the money, was afraid it would go away at any time. So my lifestyle didn't change, but, but my attitude did change.

Can I ask with that, and I hope it's okay, but with the kind of downside protection immigrant mindset that I have the same, my family lost our money when we were younger and I have the same. I worry that it actually makes me not so good investing because you sometimes are too downside protectionist and not upside. Do you ever think about that and how do you prevent that from happening? Yeah.

You know, I've got the opposite. I'm like, if I lose this, I'm going to be okay. Now, now, to be fair, I had the Uber situation on top of that, so now I have a lot more cushion. But, but, but, you know, it didn't, it didn't make me do that. Actually, in some ways it made me invest in people who had similar chips on their shoulder that I did in that, like, they were going to win no matter what. No matter what business and so on, which goes to an investment philosophy of how much do you bet on people versus ideas? And in what order do you bet? How do you weight them? Right.

Well, I mean, Emil, listen, I told you, this is like us having a chat with a bourbon. How do you weigh that? Because I sway between the two. So how do you think about centrality of founder versus market versus product?

Yeah. So I'm founder first. And I do believe, and I will, I will say this and I'll have this argument with anyone, that a mediocre founder with a great idea and a big market might win, but it's also not that fun to be along the ride with because if they're mediocre. So if you're going to work there now, this is working versus investing right now. If you're going to work somewhere, for me, who the founder is and if it's your co-founder is the most important thing by far. Most companies pivot anyway. So what market you start in might not be the market you end in. But product, you know, but but the product, what are they trying to do? Is it a big enough idea? Period. So as an employee, it was it was it was founder, and then it was product, and then it was market. As an investor, it's still founder for me. But then the market matters because the product, I don't know, the product's gonna. You know, it depends on how good the founder is. It depends on how competitive the market is, how much it evolves, how much money is going into it, the macro climate, all those things.

We've spoken about investing. We've spoken about some of your old classmates. We spoke about the acquisition, bringing kind of all those together. I chatted to Alfred Lin before this show and he said that Emil is just the master when it comes to dealmaking. Number one, this was number one question for him. He asked, what is your framework for dealmaking and how has it changed over time?

Framework for dealmaking. So I always tell people all those negotiation books and negotiation classes and the McKinsey BATNA stuff, throw it out for a little bit. Just stay with me in my Emil Michael mini lesson here, which is number one thing in negotiations is outwork whoever you're negotiating with. And that means When I know I'm negotiating with you, I try to know everything about you, Harry, before I get to that meeting. Everything about your company, your industry. If you're having a rough quarter, your org chart, what your financial outcomes are looking to be like. How do you get promoted? How do you get fired? And everything around that, because it brings the human dynamic and the real-world dynamic into a negotiation. So BATNA, your best alternative to a negotiated agreement. is a number or a level. It doesn't account for the ins and outs of how one, you know, defines their own BATNA or even gets something done within their org. I'm an incredible student of, of a negotiating partner before I get in there. So that's framework piece number one.

Okay, can I just ask a question on that? Do you let your, um, not opponent, but do you let the person on the other side of the table know the depth of information that you have? Or do you want to keep it in wealth of reserve?

Framework number 2 is the less information you give and the more you get, the better. And so none of this is sinister. It's just if they haven't done the research, I'm not going to do it for them on me. But if I've done the research and it's just— this is Google stuff, right? This is nothing nefarious. This is just trying to put a picture around someone. If you had to write a chapter on Harry's life, I want to be able to write it before I get in the room with you. Um, and so whether I told you I wrote that or not, uh, you know, is my advantage to, to keep if I can do that. Um, and, and information is power, and people don't, don't, don't realize that enough. Um, that the more you learn, the better you're going to be at these things, even about your own company.

I'm so enjoying this. Um, tell me, what do you do if you have someone who's highly emotional? Where they really let emotion, not rationality, govern their responses and decisions?

Yeah, you know, I— so there's a couple different strategies. One, I'm typically— and this may not work for everyone— a shock absorber, meaning I can absorb the shock of someone else's emotions on my side, on their side, and kind of be okay with it. I'm like, hey, this person's having a moment, and I'm gonna go take a drink, you know, of water, or I'm gonna Say, hey, why don't we, why don't we go get a coffee or something and come back in? Or let them yell and scream. And then I'll say, are you done yet? Because when you're done, we can start again whenever. So depending on the context, I never get emotional back. And that gives me power, right? It gives me power to— because I'm regulated. They're unregulated and uncentered. And that means they make more mistakes than, than I would. And so if you could be a shock absorber to emotion in negotiations, that's a winning strategy in general, in my view.

The hardest thing that I have is I most often, whenever I'm negotiating intense, tough times, and believe it or not, despite my youth, it's happened many times. These people lack self-awareness very often. And so they struggle to see their own weaknesses and my strength and ability to crush them for them. That is annoying because it means I don't have the fucking leverage that I want to get the deal signed because they're too lacking in self-awareness to see it. What do you do when they don't even see or lack such self-awareness that you don't have the leverage?

Um, that they think you don't have the leverage?

Yeah.

Uh, you know, this is where, um, sometimes it helps to use your network to whisper to this person, hey, this person might, might have some leverage here because they can go do this other thing or that, you know. And this is part of the research is bringing every tool to bear. Your network, their network, how is it connected to whom, how deeply, red, yellow, green, how deep the ties are to this person and this company. So that if you can't communicate that in the, in the minute because it'd be awkward to do so, you communicate it after. Um, and that is the whole— I call it a whole-of-deal approach. It's not just a negotiation. You go in for a room and come out as Come out 3 hours with a handshake. This is a whole approach of winning in negotiations.

Can I ask, what are the biggest mistakes that you see people make in deal-making where you're like, ah, great?

Um, I used to joke that, that I could read upside down, so leaving papers on their side that I could read. I'm joking, but I'm joking on that. Um, no, the biggest mistakes people make The emotion thing is is it just a massive tell because it is, and this is why being a shock absorber is better. Even if you are emotion, try not to show it or let it impact your decision making. The emotion thing, and then there is this sort of eagerness you detect in people. Where is it? It is the leverage point. It's like do they think they have leverage? And you were talking about it before, but they show it in different ways. It could be. That they think you don't have leverage and that gives them leverage, or it could be that they actually have leverage and they know they have it and they're going to use it, or they don't know they have it and going to use it. So which of those combos is it, um, is something I look out for for the second I walk in a room. Who stands up to shake my hand versus who sits down? Who offers coffee? Who pours it? Who set up the meeting on whose turf? You know, all the signals will show you or indicate to you who has leverage. And paying attention to those things is sort of like a CIA agent paying attention to a subject. And if you do that over time, you do your 10,000 hours negotiation, it kind of— it becomes sort of innate.

Can I ask, what's been your— when you look back at the many deals you've done, what's been the best that you've done, or maybe one that you're most proud of, and why that one?

You know, I always talk about this one And it was such— it was the hardest one I've ever done. And it was with, you know, the most fun one I ever did was with Steve Ballmer doing a deal over the weekend where he broke my BlackBerry. But the hardest one was doing the Uber China acquisition with Didi, the Chinese counterpart, because there's a lot of suspicion. Just, we were death competitors. And the woman on the other side who was my counterpart, Jean Liu, was fierce, a fierce operator. And I would go toe to— I would put her toe to toe to me as like anyone I've ever seen from a business and negotiation standpoint. And she'd come to San Francisco and she'd invite to the hotel room with her colleague and one of my colleagues. She didn't trust any of my colleagues to come, so I had to go there alone with 5 Chinese business people. The shades drawn, my phone put in the bathroom so they didn't think I was recording them, and then tried to charm them into buying my company for $7 billion. And all the while, Travis not really wanting to sell the company, but I knew we had to because of the regulatory heat and how much money we were spending in China. So the art of doing that and getting it done.

Take me through that. How do you do that? Is it small talk? Is it, oh, have you had a nice trip?

It was— it's exactly not that. When people go, oh, how was your flight? Where'd you come in from? Where are you staying? The small talk stuff is fine, but it's, it's, it sort of betrays a little naivete like that you care or they care. Because if there's— you're in a serious negotiation, no one cares about that. They just care about like what you're trying to do. It was more about trying to build some trust. And so one of the ways I built trust with Jean Liu was say, hey, I'd be interested to hear your perspective. We were in this competitive battle here. Here's how I saw it. What did you see? Something that wasn't sort of central to the negotiation, but try to establish a rapport about how both of us saw the same incident so differently. And she's like, oh, we didn't shut off all your phones or send spam text messages to your drivers saying they weren't going to get paid. I was like, you didn't? Who did? And then we'd have a joke about like, well, who was trying to sabotage both of us? And it was a little bit of that until— and it took me 4 days of going to that dark hotel room until she allowed me to bring one of my colleagues to at least take notes so that I wasn't overmanned here. It was that kind of rapport that started it. So rapport matters and knowledge of what their problems were matter. Sufficient humility, but sufficient strength projection showed them that they were dealing with dealing with me meant they were dealing with Travis and me, and I had the had sort of that authority. So it was those combo of things.

What do you think got them over the line on that deal?

Besides the industrial logic, I really believe that it was mine and Jean Lou's relationship. We spent a week together in a dark hotel negotiating this, and she trusted me at that point. And then we flew to Macau, and we flew to Macau because she was well known in China. She was family of a politician. And if they saw her with some American, they'd be like, oh, there's this Didi-Uber merger happening. So we flew to this hotel room in Macau for another 4 days with lawyers and the whole thing. We really just pushed it through, she and I. We got our teams on board. We got our CEOs on board. We got our lawyers on board, accounting. This is a cross-border M&A, China-US consumer. It was so complicated. And every day I made sure at the end of the day, say, Jean, how are we doing? Are we— how are you and me? Did I say anything that you didn't like that you thought was wrong? Let's clear it out. Sort of like a marriage. Before you go to bed, you clear your air. We cleared our air every day. And then we closed the deal. And I remember going in, she asked me to go to dinner the day after the deal closed. And she's like, I heard you were such a tough negotiator. I was like, I am tough. She said, no, but you're fair. You told me what you were going to do and you did it every single time, no matter what it was, no matter what clause you said, I'm going to get this done. You did it. And I trusted that. And that allowed me to do the deal. That kind of thing.

How did you get Travis over the line on the flip side? That seems like a tough thing to do as well.

Travis and I worked together so well. The two— the thing that we had lots of discussion about was M&A. Should we buy Lyft? Should we not buy Lyft? Should we merge with Didi? Should we not buy Didi? Should we sell, buy Grab? All the different ridesharing companies around the world. I was always for it before he was for it. But the China thing was so unique, Harry. No, think about what consumer tech companies operate in China. Zero. There was enterprise tech like Hewlett-Packard and IBM and all those guys, but no one else had done that. And we didn't ask for permission. We just did it. We showed up in Hangzhou and in Hunan Province, and we just launched Uber. So there was some amount of risk to that. that, yeah, if you don't sell it, it might just not exist one day, given sort of how the government rolls. And we were spending $100 million a month competing there, 'cause remember, this is the biggest market in the world, 1.3 billion people, and we were gonna win. And I just raised $3.5 billion from the Saudis. And so we were gonna win. So the combo of those things made the industrial— And when I handed the deal on a platter, I was like, this is done. You know, let me start. This is finished 45 days from beginning to end. He agreed. That's how I got him over there.

I'm sorry, I've got to ask one more. But you mentioned, I mean, another insane deal at Brilliant that you did was the $3.5 billion that fueled so much of Uber's trajectory. How did that come about? How was that? Just like, take me there. Story time. I'm loving this. So you've got to write a book, Emil. This would be like the best book ever.

I think I should give away my secrets, or I don't know, maybe, um, or just a story. You think the stories are good. So the Public Investment Fund of Saudi, as you know, when the new crown prince sort of took over in Saudi, his thesis was we're going to modernize this economy. We're going to take fossil fuel revenue. We're going to start investing in tech companies. He'd appointed Yasser Al-Rumayyan, who is a, you know, a friend of mine who was head of the Saudi Stock Exchange, had a deep financial background. He said, you know, go and find some companies to invest in that will put us on the map so that people know If they want money, they could come to the Public Investment Fund. And David Plouffe, who was our head of government relations, met him at a conference. He said, "I heard a lot about Uber. My son uses it. I'd love to come meet them." And from that, we took the meeting. Sixty days later, three and a half billion dollars in the bank. Lots of meetings in New York and in Riyadh. One Travis had to attend one meeting to get it done. So I prided myself by how much money I could raise with. You know, the least of Travis's time. And this guy Fraser Robinson, who I think you might know in the UK, he led that deal. So I credit him with that Saudi deal as much as me. And it was the largest amount ever invested in a startup. That was the biggest round and highest valuation ever done in a startup. It was the next day that I called Jean-Loup at Didi and said, okay, now I'm— now I think I have a lot of ammo. I think now we should negotiate a truce. And that's what kicked off that. So it was— all this happened in the summer of '16, and it was an exciting time.

Just insanely cool to hear. I do want to flip, though. What was the worst deal you've ever done? We've all made mistakes. What was the worst deal you've done, and what did you learn from that?

The worst deal I've done? Well, you know, they have to be material to be bad, right? So I'm not going to tell you about the small— we call them SLDs, small shitty deals. So shitty little deals. So I'm not going to go back to that because every company sort of does deals. They make mistakes. I'll talk about big ones. I'd say that the deal that was under my watch, I didn't like it at the time, but I, you know, it got done, was Uber acquiring Otto, which was the autonomous car division that got started out of Google guys. It was, and I didn't like it for different reasons. It turned out to be a bad deal because of that ended up in that lawsuit with Google. It was so complicated with multiple earnouts and who owned what entity. And I, as a lawyer, I'd come from a little bit start with simple and then complicate if you have to.

Yeah.

And it was this complex kind of thing where it was a sort of a separate company. And I didn't like the ideas of other employees having different motivations at my company about what they were going to do. I want everyone to be motivated the same way. So, I tussled with Travis on it. He won. We did that deal. We got some great people that are now running Uber Freight. So there was like a great talent migration there, but it ended up destroying our relationship with Google. So the cost to that was quite significant.

That's a tough one. Well, you know, there's good and bad. You can't have them all. We mentioned acquisitions with Telme. We've mentioned M&A. We've mentioned fundraisings. We're in this very kind of weird new world. where most of us actually haven't kind of seen a recession or, you know, downturn like this. So I want to ask you, with your kind of OG status, how do you analyze fundraising and M&A in the current market today? And I'm just going to put the general question there for you to take.

Yeah. So I'm deep in the capital markets now with a lot of the companies I work with. I'm on the board of an advisor and I said, guys and gals, last year was FOMO. You want to create FOMO with investors if you're trying to raise a round or merger partners. This year is JOMO, joy of missing out. They are happy to miss out on whatever deadline you put on them for whatever round. They're happy to not take a look if you've got something in hand. So those— that whole strategy of FOMO and creating pressure and dynamics is over. Don't try it. Stop it. It's going— you are going to be disfavored and people are going to say, thank God I didn't have to look at that company and say no. So the humility factor from entrepreneurs has to come back in terms of what's realistic. And we're getting there because you're starting to see some of these rounds not happen or you're starting to see things creak a little bit. I think we're at the end of the beginning, though, not the end of the end. The next phase is structured rounds, down rounds, like true down rounds. And then sales were unfortunately companies sort of not making it. And I think that'll happen in Q1. You know, Phase 2 will happen in Q4, Q1, and then Q2 to Q3 will be Phase 3.

How do you advise founders? Because I hate changing your fundraising plans to align to markets. We don't know what Q1 or Q2 is going to look like. Raise when you need to. Do you agree with that statement or do you actually think, no, if there are things that you can do to elongate or alter, try and find leverage?

Yeah. So let's talk about it in 3 parts: revenue, cost, and market. And market is where the fund— the dollars are. On the revenue side, where we were valuing a growth market on revenues, I'd say like put that second for a second. It's been first for 10 years. Put that second. Put first Your net burn. So just like you have cash in the bank, what is your net burn? And David Sachs tweets about this a little bit, and it's sort of my derivation of it. But it's make sure that you know what you're burning. And if your revenue has to— if your growth has to come down from 80% to 30%, that is okay in today's market. In 2021, that was not okay, right, in order to reduce your burn. So but it is 30% growth. Versus 80 is okay if you're gonna buy yourself another year of burn, right? So just start there. And unfortunately, that results in some rifts almost certainly. So all the bloat that we built over the years because it was a hot war for talent, war for talents necessarily lead to too many warriors. It just—it's just how it works. So you have to sort of slim down to your fighting weight. You're but you're now a you know a welterweight again, hopefully. And then. Then you go, I have to put out numbers that I'm going to hit for years. And here's the thing, Harry, you know this. Entrepreneurs, we put out numbers that we may or may not hit, and it didn't matter because there was enough money out there. And you're like, whatever, someone's going to take a look at the new numbers and decide. It doesn't matter.

Up is up. And let's be honest, 5% of our companies hit their numbers in '21.

Yeah, right. At all. So this year I'm telling people, Be the company that hits the numbers, even if the numbers are anemic or low, even if it's 15% growth and $10 million burn and you were going to do 80% growth and $30 million burn. Hit your goals because at the end of this year, when all this dry powder is sitting there, they're going to go, where can I put this money? It's been a year. I haven't put anything to work. They're going to put it in somewhere where CEOs hit their goals, that they have growth levers that they've proven, that they know and are smart enough to have. transform their business and meet the market environment. And those are the ones who are going to be the survivors, in my view.

You said there about kind of the down rounds. I think the down rounds come from this kind of value reshuffling of realizing that actually, you know, Twilio is worth $13 billion at $4.5 billion of ARR. Well, fuck me, that's hard to build a decacorn. My question to you is, like, as founders approaching these down rounds, what advice would you have for them specifically? Because it is very Not dehumanizing, but disincentivizing for teams. Yeah, it's tough.

It's super tough. Um, and that's why I say there's the time before down rounds is structured rounds. Same valuation, higher lick preps, you know, more protection for the investors. Optically, it's a— it's, it's sort of close to what you did before, the same. Um, but the investor has better downside protection essentially, right? Employees don't fully get that, but at least It doesn't feel like a bigger loss of momentum as a down round. The problem with the structuring rounds is that it's hard to do the round after the structuring round, because once that investor has protection, well, the next one wants it, and the next one wants it. So, your 2x lick pref starts to eat the whole cap table for every, you know, investor down the line.

And you don't think we'll have pari passu? And for obviously the audience, pari passu is when everyone's equal. In the LIC-pref stack. You don't think we just see the equalization of LIC-pref stacks?

You do when things come back. But if your company thought they needed to raise $100 million this year to keep their growth and they didn't hit their growth and that $100 million went away, so now they need $50 million. But that $50 million investor is going like, well, you got to kind of sweeten it, right? Some warrants or some LIC-pref. They're going to ask for Potentially more, more lick pref, which, which sort of is, is a bastardization of pari passu. Because if I get 2x lick pref and you have 1, even if it's pari passu, I get more, right? Or senior preferences, which are I am senior to you. So that's not pari passu. You will definitely see more of that in the next 2 quarters.

So to me, the people who get fucked honestly is the early funds who have no lick prefs and are not in any way structured to win when they get these down rounds and when liquidation events do happen. Do you think that's how it plays out then? And the later big guys, the ones who get it?

I know. Look, the early round guys and gals, because their basis are so low, unless they want to put up money to help bridge the company, that's the life you picked. As a Series A fund, that's the life you picked is In downtimes, you don't have to pony up because you don't have it. You're smaller funds by definition. You don't do these late-stage rounds. But then in these environments, you get a little crushed. But since your base is so low, you should be fine. But that's them as the breaks. You know, that's kind of how it works.

I think it was Keith Rabois when I had him on the show. He said, pay-to-play rounds, I've never ever made my money back from them. Would you say the same? And how would you approach pay-to-play as an investor?

I don't like pay-to-play either, man. Lime had to do one a couple years ago, the scooter company.

Yeah.

And Uber put in $100 million and I told her, I was like, this is not a good idea. These pay-to-play things never work. It didn't work at Bird, it didn't work at Lime. And those were somewhat sector-specific. I just think, I've never seen them work, but I'm sure there are examples. If you do your homework, Harry, like if we were negotiating and you study this, someone has made these work. I just haven't heard of them myself either. And pay-to-play is different. That is a recap. That's stage 3, you know, you know, category 4 hurricane, you know, a recap, right? Structure, down round, recap. Those are kind of different things in my mind in the spectrum. I'm seeing recaps already.

Oh yeah, yeah, yeah. Um, such exciting times in '22. I remember in '21 I was like, God, there's too much money.

Now I'm like, I miss '21 so much. We all miss '21.

We all miss— the title for this episode: We All Miss '21. There you go. Now we mentioned— you mentioned Dara there. I, I obviously spoke to so many of our friends, uh, about Uber, and I know we've touched on, uh, aspects before. Um, Dave Clark started and he, he said, you've just got to ask him, why were you taken out of Uber and was it fair?

I was taken out with Travis because Benchmark Capital lost their nerve. Bill Gurley, who was on our board, lost their nerve. And the reality is there's another economic principle called loss aversion, right? If you invest $33 million in Uber and it looks like $10 billion, 4 years later, $10 billion on a $33 million investment.

And a $500 million fund.

Yeah, right. So you're going to say, well, how do I protect that? Forget about the next $10 to $100 billion, you know, or $10 to $20 or $30 billion in value that I create. That bred some fear that any time something happened or every time something happened, this whole thing was going to come apart. Which was dead wrong. Company's doing fine. Travis went on 6 months later to start a grand new company, Cloud Kitchens. I went on. So it's not like this— like we're incapable as leaders.

Bill's a smart dude. There must have been things that led him to losing that nerve.

Yeah. Yeah. I mean, there's certainly mistakes there. So make no mistake that we didn't make mistakes. And I'm not saying that. But in retrospect, when you look at them, there's no honest person who looks back at them and goes like, oh yeah, there was the driver video thing. And they seem a little quaint in retrospect, not all of them, but they seem mostly quaint. I believe he's a catastrophist. Catastrophists are one who the sky's always falling. And I'll remember, I'll give you 2 examples. In 2014, in the middle of the bubble, we were raising the first round I did at Uber. And I was kind of doing negotiation and Bill called me. He said, Emil, take $8 billion valuation. I've never been more certain of anything in my life that the economy's crashing now in mid, mid-2014. And it's like, Bill, like, I'm going to run this auction one way or the other. And if that happens, it happens. So instead of $8 billion, we got $17 billion 2 weeks later. And then the next 6 months we got $40 billion. and the next year $50 billion, next year $62 billion. So even then in '14, he was predicting, you know, a bear market in '14, which didn't show up till 2022. So I learned that there are people who a bear market is always around the corner, always lurking behind a door. And for an entrepreneur, that's kind of cancer because you're like, ah, every— you can't wake up every day thinking the world's going to end. Because if you do, It actually is going to end like it did for Travis and I, because, well, you know, at one time or another, we're not— you know, there's gonna be enough fires burning that he's gonna convince others that, you know, death is right around the corner.

I'm, I'm going for it, but I'm too interested. I think I've heard other people say it was when Travis lost the support of the team that it, it made it impossible. Is that fair or not fair?

I mean, Benford's a sophisticated organization. You can imagine them asking some subset of the team to tell the board that they weren't satisfied with the team. And but, you know, you could imagine them hiring a PR person and a law firm and a strategy consultant and all the things that come with With the scorched earth tactics they used, and that being the outcome people saw. But the reality is, yes, he's lost some support. But remember, and here's a critical fact: Travis agreed to take a leave of absence after his mom died, and after we had that board meeting, he said, "I'm gone. I need to go take time to do but not leadership, family," and I and and everyone agreed on the board unanimous board vote. 10 days later is when they cornered him in a hotel room in Chicago and gave him the, I'm going to smear you letter or you're going to quit without counsel in an hour letter. So anyone who says that it was the support of the team that caused that, he agreed to take a leave of absence. He was in a hotel in Chicago interviewing a COO candidate to take the job so that he could have some time to go do what he needed to do. So just think about that when people, you know, bring up this—

He then calls you, tells you And you go punch a wall or a punch bag. How do you respond to that?

You know, if I had been there— and so I'd gotten sort of tossed the week before, and that was purposeful because I'm a lawyer. I knew all the investors. All the investors wanted us to stay at that late stage because the investors who invested $40 billion, they just weren't— they weren't looking for it to stay at $40 billion like where it is today. They were looking for it to double, triple, Quadruple. And so we'd made a lot of promises, so they wanted Travis and I to stay. So I was an impediment to Benchmark's strategy here. I was a lawyer, I was in a boardroom, whatever. So I was out on whatever technicality they can find— some expense report that someone else on my team submitted 6 years before to my assistant that I never saw. Total BS.

You're like Al Capone with taxes.

Yeah, right, right. It was just— it wasn't even me, it was someone else. It was, it was totally Totally pretext, and that's part of you know one of the things I really dinged them on that they never apologized for that. They even they knew was unfair. But anyway, so I didn't talk to Travis that day. Had I talked to him that day, I would have said, Travis, walk out of the room if you want to rip up the papers in front of them, and we'll get you know get a lawyer and whatever. This is ridiculous. You know there's this is unfair. This is coercive, and we need to have a negotiated discussion about. What happens to the company in your absence and how we run it and what things we have to improve? And that's not what happened. And then Benchmark sued the company, and just you know all the nastiness of 2017 continued.

Yeah. I need to call Julio just listening to that. Um, I do want to ask though, and Alfred asked this one. Okay, moving on from the Benchmark side. Dara today. What do you honestly think of Dara's management? How do you feel? Good? Bad? What are the thoughts?

I mean, there is no— just let's start at a factual basis. The company's valuation is lower today than it was when Dara took over. And even if you account for the macro environment, the Nasdaq still up 50%. He's down 50%. So it just is. Then you're like, oh, what about ridesharing? Ridesharing is down. Well, What about e-commerce? Amazon up and Wix.com and Overstock are down. So Uber should have been the leader in this category and brought everyone up and showed them how to make an efficient business model. There's been an enormous talent drain. The company is loaded with debt right now. It's one of the only ridesharing companies in the world with net debt. It lost in food delivery to DoorDash big. We went from a 60-point sort of Gap to, you know, being the opposite. And that's a $30 billion mistake if you think that, you know, Uber could have been DoorDash. So, you know, by all objective measures, it hasn't succeeded from a financial standpoint. So, you know, he's a nice guy. He cleaned up the company in terms of things that were sort of excess from a culture standpoint. He was a diplomat. He was able to get the company public. But in terms of hiring talent, innovating, and succeeding from a financial standpoint, you know, it's not— it hasn't happened. It's a—

it's an F, you know. Other than that, he was great.

He was a— look, I will say, look, here's— I'll take self-criticism. We were aggressive barbarians at the gate trying to make ridesharing work because we had to, because of the regulations and all that. That couldn't have gone on forever, right?

Are we going to go back to that time, though, of aggressive barbarians at the gate and not the ping-pong offsite retreats, yoga, and kombucha bullshit we've been living in?

I think there's a reversion to that, yes. But Uber was first. We were first. Remember 2017? Uber's problems started sort of in 2017, right after Trump was elected. And there was a lot of anger in the electorate, especially in California, about what is happening in the world. And it was starting to turn on corporations, you know, who didn't previously want to be in politics at all. And it started with Travis sort of being invited to a business council with President Trump, along with Elon Musk and Mary Barra from GM and whatever. Somehow we got the, you know, tainted with that. And that sort of led to a cascade of events. And then, you know, the whole— for the last 4 years through 2021, kombucha, you know, quinoa, you know, where's the quinoa? There's not enough quinoa in the salad line when I get there. And I think austerity turns us back. I think investors are going to say, look, I need someone who's going to go through the hard times. Their appreciation for an entrepreneur who has to— who has to be bullheaded goes up.

But I think it's also job security. When you see half of your, you know, friendship group lose their jobs, your desire for quinoa goes down a little bit with the realization that you actually have a job. Maybe, maybe, maybe, maybe you really are entitled. Final one on Uber I do just want to ask is, and again, I can't remember who it was, but someone asked this and I liked it. Here you go, Emil. Travis and you, you are back running Uber. You said, you know, before about the lost opportunity in food. You spoke about Uber Freight. What are the opportunities that you would have jumped on? What would you not have jumped on?

Yeah, I think we, instead of buying Careem in the Middle East, Postmates, Jumpbike, I think all of those will be 100% write-downs. Those are some of the worst acquisitions done in tech. Maybe Postmates may be the worst acquisition done in tech in the last 5 years. It was for a $3 billion company that was like going to be a zero within 3 months. And we got nothing out of it. No market share gain, nothing. So there was just a bunch of just bad ideas, sort of. And I think Dara was trying to repeat the Expedia thing, which is like buy all these random things, like stitch them together and like that's a platform. It's kind of not how it works. So I would have beaten— or we would have beaten DoorDash, guaranteed. We were ahead by 30 points when Travis and I left. So letting that atrophy was not an option. I think we would have had an Instacart competitor way earlier and we would have been, if not ahead of Instacart by now, but neck and neck with them in every continent, just not one continent like Instacart's in. So even if you think Instacart's a $15 billion business, I think we could have built a $60 billion business globally on that. On top of Eats, which was another another sixty to one hundred billion if we'd won DoorDash, and we were going to beat Deliveroo. And then the rides business where Uber to Dara's credits winning in the U.S. against Lyft another sixty billion. So you're talking about a two hundred billion dollar business without any creativity. This is just winning where we should have won and beating Instacart when we should have beat Instacart.

I'm still astounded today. Deliveroo's market. cap, I think, is about $1.5 billion.

Astounding, right?

Unbelievably well-run company. Phenomenal team. Not a bad one. Multinational.

Yeah, I like Will a lot. I think he's, you know, he came up with Cloud Kitchen's ideas, actually create— he was a banker, you know, Morgan Stanley banker, but he's quite good as an entrepreneur.

He's also aggressive, like Travis. But I do want to move to my world, which is obviously venture. Where we sit on the sidelines and do very little, unlike, you know, operators like you. You decided— and you decided to go full-time investing with Coatue, and then you decided to go back to being an operator. What was the thinking behind that move back to being an operator?

You know, the Coatue guys did me a great favor. They said, come in for 6 months and see if you, you know, you like being an investor and we'll see if we like you. And they're some of the best in the business. Philippe Lafont, Thomas Lafont, Daniel Saft, Chris Fredrickson when he was there, Dan Rose, you know, Matt Massio. They're, they are pros and they have built an incredible franchise in China in late stage. They're just, oh, they're, they're just very innovative and I like them a lot. So I love doing the China stuff. So I said, okay, I could do the China stuff, I could do late stage stuff. And, and they're, I just, I am not built to oppose an entrepreneur in a negotiation. I know that sounds crazy, But I can't sit in the investor seat and not empathize with the entrepreneur I'm negotiating with, which is what you do when you're an investor. I'm just— it's hard to— I can help the Gopiv guys go up against Masa, Tiger, you name it. Me bearing down on Raf and Jared Hecht and these guys, it's just not in my DNA.

It's funny, um, I've spoken to a lot of the best investors and they're like, oh, there really should never be investor-founder misalignment in the best relationships. And I think that's just bullshit. Like, there are unavoidable misalignments that even if you're both phenomenally good human beings, there are times and situations where if I have a $100 million fund and you're giving me $10 billion back from Uber, like, it makes more sense for me to have some protection mechanism or whatever that is. Do you know what I mean?

Yes.

Are there any glaring misalignments that you see that you think more founders should be aware of?

Totally. So, so when early-stage investors get to this point where there's just a lot of paper gains, there should be sort of term limits on board seats, like term limit out. If I get to, you know, a 10x return and can get you some liquidity, then you can move on because the early board members who sit on late-stage companies It's fear-based, naturally. There again, the natural incentives are not to do what the company needs to do next to grow the next 10x. And so that natural misalignment, it's not wrong. It just is. You know, it's just how it is. Those things could be, could be jiggered a bit. And so more the thing we— I wish we did more of Uber is give more investors liquidity when they got scared. I would be like, VentureX, sell. Like, I'll find you someone to sell to. Sell. Go get the second G6 and the, you know, the whatever, the Discovery property in Wyoming, and then leave me alone and let me build the business. And I wish I'd done that. So early stage becoming late stage is where there's a real disconnect still.

Yeah, no, I totally agree. It was actually fascinating. I was speaking to someone from one of the best funds and they said, when we invest, the most difficult people are the early-stage investors. I was like, why? And they said because now X brand tiered firm is in, that's their golden goose and they just want to protect it. They don't want to see the upside because it's like Sequoia did it, it's going to be our special one. Do you see what I mean? Yeah, totally. That's exactly— who's the best board member that you've sat on a board with or seen at a board level?

Well, I'm going to brag about my friend David Weiden from Coastal Ventures. Um, have you met him?

Do you know what I mean? We spoke before this, which is really the first day. He was so lovely. He was like, first-time, first-time caller, big fan. I was like, oh, this ego stroke, love this. But no, I hadn't met him before.

So he's an under-the-radar, um, VC in terms of being at Vinod Khosla. It's his firm, and David's been a partner there for about 15 years and has made some of their biggest wins in Okta, um, you know, all the big, uh, the, uh, RingCentral, all these $10 billion enterprise companies that you didn't know that Khosla was a big investor in them. They did Square, and David was a big part of all those. So I'm on a few boards. I'm on a board with him now, and he is just the polite contrarian, which I love. And especially in this environment, he's like, well, what if blank happened? What would we do about it? And it's not in a way to scare It's just to push the thinking to the edges. And if you believe in sort of small liberal, small L liberal thinking and a little bit of Socratic method of what-ifs in scenarios when companies deciding whether to pivot, how to raise money, whether to sell, he has the contrarian polite approach. And I've never seen an entrepreneur not go, huh, I hadn't thought about that. Let me think about that and be better prepared for the future. after that. So he's a sleeper hit in my view.

I love that. And I love the kind of what-if mentality. Can I ask, you know, we mentioned kind of Coatue earlier. We've seen many firms come in, whether it's your Altimeters, D1s, Durables, and then obviously SoftBank slightly before that. But like this explosion of capital, what does that mean for the founders? Is this a great thing? Is this a bad thing? How do you analyze that?

For founders, it's more a good thing than a bad thing. That means that there's more capital out there. So if your business model requires more capital, you can get it. And look, people are going to say, oh my God, loose capital, free money, blah blah blah. Companies like Uber, like Airbnb started in that era for a reason. It's because we could raise a lot of money and like try a bunch of stuff. And if money's too tight, maybe we wouldn't have gone into Uber Eats. We just would have like Lyft stayed in our lane. So There is some value. Loose money cycles, they actually have a purpose. And they're an example of looser money policies, the D1s and Tigers of the world. So having that— is the overvaluing they created great? I don't know. It's not great for other investors who want to get in cheaper, I guess. But it's great for entrepreneurs. I do worry that because many of them are crossover funds, when their public market portfolio goes down, They get fearful of their private market portfolio, so they're not as consistent. But then you have bond capital, who I love— consistent. They're not really in the public markets or in between the late stage. Those kind of companies have been great additions to the ecosystem that didn't exist 10 years ago.

I totally get you. I think also the thing that people forget is just like your tigers as well. They have so many hungry mouths to feed at scale. And that's the challenge. So, I totally agree. Okay. Well, let's analyze which VC brands— I love this question. It's one that I often get asked by LPs and then I trash a couple of names and they go, yeah, we are the anchors in their funds. And I go, oh, no. So, tell me which brands are winning in your mind and why and which are losing their prominence and why?

Yeah. So, I'll give some recognizable names. Obviously, there's a lot of solo or small founder funds that I love. Brian Kimmel's Work-Life Fund. I love Richard Kerber's Equal Fund. I love Lackey Grooms Fund. I love a lot of these little ones that are not institutions yet, in my view. But there's a lot of good stuff. I mean, Lackey's kind of an institution.

He's got more money than the US Treasury.

But I guess they haven't surrounded themselves. The world doesn't know about them yet. I think the world will. But if you want to talk institutional brands, In recent— Horowitz is certainly on the way up despite whatever's happened in crypto. And I'll tell you why. Because they're innovating. They're innovating on how they communicate their PR stuff. They're innovating on the type of funds they do. What Marc and Ben are doing are they're, they're being entrepreneurs in venture and they're trying a bunch of stuff. And all of it may not work. And maybe they overhired or whatever. Some of it's going to work because those guys are good. And they may be going through this period now of having overdone a bunch of stuff, but they are going to be winners. And they look at what Sequoia is doing. Sequoia is doing something similar. They're building multiple products, and they're trying to figure out what venture capital looks like in the world when you have the Lackey Grooms that could raise $1 billion in one month. So there's real competition for Sequoia now. from a guy like Lackey. And how do they win? Well, they're going to build all these other things, and I think they have to. And that's why I think Benchmark ultimately is going to— has no innovation. Forget the reputation, which, which most entrepreneurs, if they do their due diligence, will find out about. But just not innovating, stuck at $435 million for the next 10 years is not going to work.

Is it stuck or is it sticking to your knitting? USV do the same. I mean, Ribbit don't actually. They've scaled up a lot. But there are, you know, Aleph in Israel who I rate a lot. Michael Eisenberg. Is it sticking to your knitting or is it just being behind the times?

I mean, Lyft stuck to their knitting and they're about— they're getting crushed. The word— they're not changing with the world. You got to play the game on the field. And the game on the field is different than it was. And I'll tell you why, Harry. There are going to be fewer tech acquisitions in this antitrust environment. Fewer, much fewer. So your outcomes for mid-middle companies like Telme are going to be farther, you know, fewer and farther between. So they're going to have to be the returns coming from the big winners, the big win. And to win big, you've got to try to invest across multiple stages. And that's what Sequoia can do. That's what AH can do. That's what Rivet can do. That's what DST can do. And I think if you can't, You're just going to have to get lucky because there's going to be fewer and fewer mid-level winners to sort of return the portfolio. So you have to find the ones that are going to 10x it.

Okay. So we have Andreessen on the institutional side as pros. Anyone else that you're like, yeah, really impressed by them?

I like Coatue. Like I said, I like Bond. Like I said, Bond just occupies this non-crossover sort of territory, where they have the patience of private market investors, but they're going to come in at the stage that Coatue and Tiger are in.

I also like their elasticity of mindset. They don't do that often obvious a deal. What do you mean by that? Like On Running. Great deal, great deal, but not that obvious, like weird tech. I totally get you. And so other than Benchmark, which this was not an advert for the show, unsurprisingly, Are there any others where you're like, I would short them?

I— what would I short? It's hard to say. There's so much money floating around. It's sort of like you want to look at the red, yellow, greens is what's happened from investments made in 2021. You're like, okay, well, that's consistent. Who would I short in the VC?

I always think about shorting kind of $1.5 billion and above multi-stage generalist funds that are tier 2, tier 3 with Not great brands and subject decision-making.

Yeah, you know, I don't I don't have a good sense of of who's up and who's down. I mean, I love I think Excel's done very well in Europe in your hood. They just have killed like you know they've done so well. I think Atomico's done well. I like Blossom, you know, you know Blossom. And so I'm thinking about your world a little bit. In my world, I haven't seen. I haven't seen DST, you know, running around the US like they usually do, and they're really smart. So I don't know what they're up to these days. But Yuri is always some of the smartest— one of the smartest investors in the world. But I don't know what he's doing. Yeah, the fintech bubble has burst like big time. So if you were long that— oof, right?

Yeah. I think also emerging markets is just harder than ever now. You see the complete retrenchment away from them for sure. I do have to discuss 2 final elements before we do a quickfire. Number one is Alfred Lin told me about, you know, fatherhood and what a prominent part of your life that is now, which is amazing to hear. How did becoming a father change how you think both as an investor, as an operator? How did it change?

Without being, you know, sort of saccharine about it, it I just turned 50, so I have a 2-and-a-half-year-old daughter. I will say that I don't— it is now, you know, I knew this intellectually, but now I feel it viscerally. I don't know how I could have done the work that I wanted to do at Uber 70 hours a week. And no one was telling me to do it. It wasn't like, you know, hustle culture, blah, blah, blah. This was Emil loving my job, right, at Uber doing 70 hours a week, traveling all over the world trying to build something important. and had a successful marriage and a kid. I don't know how. I just don't know how it's possible. And I don't think it is. So it changed me insofar as now I know why tech, whether I like it or not, is a young man's game, young man and woman's game, in that there is a certain reason that, you know, young people start startups. It's because they have the time and energy to do it. And the risk appetite that you have— don't have as much when you have other important things in your life like I do now.

I have an interesting lesson, though, which is actually that I prefer to back older founders for 2 simple reasons. One, when times are good, younger founders buy the hype, they buy the Gucci, they believe they're God's gift. Older ones go, I've seen this happen before. They hated me before. They'll hate me again. And then on the flip side, when times are really bad, young ones really feel it. The emotion really takes over. Older ones, again, they have children often. They're aware that their children could get sick. That is much worse than my head of sales leaving or something happening. And they have this temperament that's much more calm. Do you agree with that?

I think it's a fair comeback, but I don't think— and maybe the difference is this hypergrowth versus non-hypergrowth. And by non-hypergrowth, I mean great growth, like venture-backable growth, but hypergrowth. What Uber, Airbnb experienced, that kind of situation where we grew faster than any company in the world, both geographically and revenue-wise, including Google. I just didn't think— I just don't think it was humanly possible to do that without that kind of time in your life. For a company that's— that's— that has an industry that doesn't permit that kind of growth, I think you're probably right. But, but there is different times for different, different kinds of companies. If you're building software that's like, you know, going to be a better database and it's not hypergrowth, sure, I mean, I may agree with you, Harry, that like some of it's more mature in the highs and lows when they lose a customer contract or not, that that's better. But, but in some of this hypergrowth stuff, it's a different ballgame.

Emil, one of my biggest winners ever is a compliance management company. Like, I think we have some different perspectives on what we like. Yeah, it sounds like it. Give me a payroll mechanism and I'll be all over you. Why am I single? So strange. Anyway, tell me, final one for you. You've done so many incredible things. You have so many incredible years ahead of you, I'm sure. What do you want the legacy of Emil to be?

Man, if I could have a fraction of of the impact that Bill Campbell had on 20 other people. All right, that's my rule of figure. I'm kind of a rule of 20 to your 2020 VC, right? Which is, you know, he probably mentored about 20 people, including the ones we mentioned, and made such an impact on all of us. And even the people, um, you know, there's a lot of people on the list who are doing great things, you know, not a lot of people know about. If I could do the same After all the experience I've had and have people go when they do, you know, your 20 VC 5 years from now, if you're still doing it and be like, wow, Emil helped me do this and help me grow in this company. I built this company and I made my impression on the world, sort of that would be something I'd be proud of. Second, I went to work at the White House in '09 at the Defense Department. And I was a, you know, worked for Secretary Gates. I spent a lot of time in Afghanistan, Iraq. Guantanamo Bay, Pakistan. So I did a lot of stuff where I got to see the real world, not what the bubble in Silicon Valley or Soho in London is. And bringing a little bit of public service ethic back into business, not ESG, but just— it drives me crazy when the tech companies won't support like the Defense Department software, like we won't rent you our cloud, things like that. Those notions of being patriotic and supporting a country that supported you and your business kind of drives me nuts. So if I can make an impact there, I'd be happy to do it.

Having just come from the hospital where they still used a fax machine, I was like, fax machine? This is so cool. I was like doing a BeReal of the fax machine. But that was when I knew I was a real Gen Z VC. Um, listen, I want to move into a quickfire, my friend. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

Yeah.

What's the favorite book, Emil?

I'm sure you've heard of this before, but Sun Tzu's Art of War, and especially one chapter in it where he talks about encircling your enemy. If you encircle, fully encircle your enemy, they fight harder. So like, always leave them an exit path. And I use that in negotiation. I think about that negotiations actually If you think about it as a policy, as it applies to Russia-Ukraine war, it really matters. It's like, where's the off-ramp? How do you get people save face? If you don't let people save face or have an off-ramp, you can have some combustible situations in business and in your personal life and in and in sort of geopolitical conflicts as well.

What would it take for you to go full-time in-house again? That was from Jared. Oof.

Being invited to be the CEO of Uber. I don't know. I don't know if you read the other day that someone mentioned to Elon that I should be up for the CEO of Twitter. Some job where it's an important global mission that, that I really could dig into. Not about the money, but about the global mission. Twitter, as much as I hate it, it's a hellscape and all those things. There's something— there's a globally important asset and someone has to do something with it. And I'm glad Elon's doing what he's doing. I think Uber could be that asset. I think there's probably 3 or 4 other things out there that I'd have to— I have to find so that I can actually choose and say, I'm doing this again.

What happens in the Elon Twitter event? And would you want to be CEO?

I mean, there's only one CEO in Elon companies. And that's Elon Musk. So let's start there. If I could be a part of it because it'd be fun to work for him and, you know, transform what is a hellscape into something that's, that's better, sure. But what I think happens in this situation is I think they have a negotiated— my number one, 60% chance they have a negotiated settlement at a lower price in the next 30 to 60 days. Scenario 2, which is sort of 30% likely, Elon's forced to buy it. And I think only a 10% chance that Elon wins and he doesn't have to buy it.

Got you. Tell me, what's the best investment advice you've ever received?

It's sort of the first question you asked is what is your ordering of priorities when you're operating and investing? And for me, for both, it's been the connection with the founder. So I don't do investments Where you know it's like hey drop a check here I've edited it I need to meet the founder it could be for twenty minutes on a Zoom I need to look them in the eye and see if they have that thing my biggest mistakes have always been when I relied on someone else even if they're amazing never do that um tell me what mistake have you made in hindsight you wish you hadn't made you know I I'd wished One of the things that, you know, besides like wish we'd never had Benchmark as an investor at Uber, I wished that one of the things that happened with these hypergrowth companies is we should have turned the corner earlier. Because what I describe companies when they're startups as tribes, and as your tribe gets bigger, you start to intersect with other tribes and you better become a civilization or the tribes are going to be at war. So you build these companies, they're actually really civilizations, they're not tribes, and you can't run them like tribes anymore. You have constituencies, you have politics, you have to have governance, you have to have clear, transparent rules that everyone can follow. And Uber, Airbnb, Lyft all became those things. And it's hard to turn. And Reid Hoffman talks about the pirate versus whatever matrix that he's got. I have something similar. It's like you got to turn from a tribe to a civilization. Had Uber done that a little earlier, I think we could have, you know, potentially avoided some of this chaos.

When do you think that is? Is that like 500 people to— like, that's the turning point? 200? 1,000?

It's the right question for— you know, we went from 250 people to 20,000 in 3 years. So you're like, I don't know when we were at 500 or 1,000, somewhere in there. But, but it was so— it was so extraordinary. Probably, probably just to give you an answer, just so you have an answer, Probably no later than 5,000 employees, because what happens at that point is you have you have no names for a while. But at that point, if you're not training managers on how to manage, having plans about how people get promoted and all the all the bureaucratic things that you hate as an entrepreneur, but you're that big, you know you're going to make mistakes.

Tell me, tell me why do you no longer go for dinner with business contacts or friends? I mean, I told you I did my research. I stalked.

Yeah, you did. I mean, you know, so it's, it's dinner at home with the fam. And I moved my parents from, you know, you know, my immigrant parents who were living in New York in the cold weather. I was like, come on, you have your only grandchild down here, come move to Miami with me. And so they live a couple miles away. So it's dinner with that fam that I haven't had because I was busting my butt at a startup from 1999 to 2017 and in the White House and all these places. So now I'm catching up a little bit. And so I try not to do business dinners if at all possible. I'll do coffees, I'll do all the other things, but try not to do dinners.

Dave Clark asked me a question to ask you, and I thought it was— and he did a crying laughter emoji face. And I was like, well, that tells me that I should probably adapt it slightly. Are SPACs over? And what did you learn from yours?

SPACs are over. What I learned from mine is that I relearned a lesson that I am not a financial engineer. I'm a dealmaker. And SPAC— the SPAC world is not dealmaking. It's financial engineering. It's moving money around from one part of the ecosystem to another and trying to get the IPO out fast and about disclosures and what you're allowed to say in this situation versus not. It is just, and this is, I think, unfortunately what Dara does at Uber, what a company like Verizon does. They're all financially engineered. They're not innovating. And so when there's a market collapse, all these financially engineered Frankenstein products like a SPAC collapse. And that's what's happened. And it used to be a backwater financial product, and Chamath brought it to be mainstream. And I think it's just going to retreat back to being a backwater financial product.

Sorry, I'm naive here. Does Chamath not just make out like a bandit from it, though? Like, I'm not saying he's right or wrong, but like, does he not— like, does everyone not just make a load of cash from it? And then—

I think you did from 2019 to 2021. But like everything else since 2022, that product is not a moneymaker. And all the people who started SPACs in '21 who didn't find a target— because these SPACs have to find a company to merge with— are dead. So the next 18 months, you're going to see dead SPACs. Literally, they're going to disband and give the money back to investors, maybe 90% of them.

We missed '21.

That should be the title.

It will be. Tell me, next 5 years for you— actually, I want to ask one more. You've known Shaq, and you've known Shaq for a long time. He's been one of the most important figures in my career. What do you think makes him so special? I have my own answer, but I'm intrigued.

You know, I've never met anyone who's as loyal as that guy was to Daniel, and as sort of humble, and, and works harder than him. I, you know, I met him, and I'll tell you the story of how I met him. I met him because I was interviewing to be the COO of Spotify, and I remember I had the TUT with Shaq because it's tea with Shaq at near Soho House in London. And I said, "Hey, you have this great partnership with Daniel. Is there room for a third person to sort of do that? Because I'm looking for a team to work with." And and he was so thoughtful. He's like, "With me, there's always room for someone who wants to be you know part of this team." Because we're trying to build something special, and it was just you know he's a killer on one side, but then a you know a teddy bear on the other. So that's how I describe him, and I pick up the phone; he's there any hour of the day, and he's on a plane whenever you remember when he was on a plane all the time.

We were both remember he used to sleep with his BlackBerry on his chest. Oh, I want to finish on final one. What are the next five years hold? For you, Emil? 2027, where are we at? Yeah.

So I think that I'm going to be— I need to be doing something important and singularly focused again. So I'm looking for that starting now. The SPAC is done as of last month, and now I am looking for the next challenge I could spend 5 to 10 years on. And that's taking a lot of forms. I'm talking to a lot of people. Is it starting something? Is it buying something? Is it taking something private? And running it, all those things. But I need to be running something because, you know, if we're— I'm 50. If we're going to live till we're 100, I may be on the back 9, but just right, you know, the 10th hole, not the 17th. So I got a lot of time to go.

And you wouldn't do venture again?

I just— it's just not, you know, it's just not my thing, man. I can— I will always angel invest and I will advise venture firms, but I just don't know if I could sit around a table in a partner meeting on a Monday and be one of equal ten other equals. It just doesn't. It's not the leadership framework I operate in.

I'll tell Bill Gurley he's missed his chance on hiring. Yeah, exactly. Listen, Emil, this has been so much fun. I cannot thank you enough. I love this, and you've been a star, my friend. Awesome.

Thank you so much, man. Great to see you.