Keith Rabois’s Most Contrarian Takes on Start-Ups

You've had five bosses in your career, is that right?

Peter Taylor, Reed Hoffman, Max Levchin, Jack Dorsey, arguably Vinod. My job is not to let the person I report to make a mistake. Whatever I have to do, the mistake by the leader is in terms of catastrophic, certainly has asymmetric downside. So I always blame myself when the decision, the outcome, isn't what I wanted. It's not Peter's fault or it's not Reed's fault or it's not Max's fault, it's mine, because I didn't persuade them correctly. and so I think taking that with me allows you to pair very well with visionary ambitious founders. I think the most important step early in my career was to implement their ambition and their vision. I didn't have an alternative ambition and vision. It was like make them successful by using the skills, traits, characteristics, levers I knew how to deploy.

Keith, thanks for doing this.

Pleasure to be back.

I'm going to do stuff different than what you normally, I feel like in listening to some of your other podcasts.

You get a lot of like, like.

Politics questions these days, like wokeism and all that. I'm not gonna go down that rabbit hole too much. What I wanna know is, so you created a bunch of interesting, concise, thoughtful frameworks. I went back and listened to your.

YC, which everyone should listen to.

How to operate. How to operate.

2013, three of them that sort of.

Stood out to me, Ammunition and Barrels, two by two matrix of delegating versus consequences, and then growth rate of an employee versus growth rate of a business. I thought those were, you've been the.

CEO seat now at Open Store for how long? Two years. Have you changed any of those or.

Any other frameworks that you've had in the past as you've been back in the operating suite?

Not yet. Those three frameworks were designed to answer like three very common problems, very common questions I received from founders. So I'm adding headcount, why are things not accelerating? Why is our product velocity slowing down in fact? First framework. Second framework, how do I know when to make a decision and when to delegate it? Classic question from a CEO to a board member, to advisor, mentor, consigliere. Third question around how do you know when to replace someone, how do you upgrade? So when you know when to upgrade, when you hire certainly versus internally promote. So I basically tried to address all of the three common questions I get from founders CEOs. So I don't really have a third or fourth, the fourth question, I don't know what the current fourth question is, but when I get a common question, I try to find something I can write as a baseline and then use that with CEOs so they can do a lot of pre-digesting versus custom advice every single time.

Yeah, Dellian also did a really concise post on his blog about a bunch of things related to this updated graphics. I would recommend everyone go look.

Lessons from Keith, I think it's version three. Yeah.

Did you, have there been any new.

If you haven't cultured any of those, any new or different things that you've sort of found in stepping back in after, what, eight years?

Not like, yeah, like almost 10. It's a little bit like, I feel like Michael Jordan has gone to the minor leagues, playing baseball. Yeah, yeah, yeah. Trying to come back with a minor company. So yeah, your muscles atrophy definitely being a venture capitalist. you develop a lot of bad habits. You may get, you may learn some new things, but you also sacrifice a lot of insights, a lot of memories, a lot of skills. And it's taken about a year or two for those muscles to redevelop.

For example, I graded myself for a.

Quarter and first year, best case, I got a B+ in a quarter. Usually it was below that and myself grading. Last Q4, maybe I was at B+, Q1 this year is definitely a minus. And maybe this quarter will finally get paid, but that's a decade of atrophy.

What was like writing a playbook, sort of stepped right back into it and what sort of required redeveloping those muscles?

The easiest things to retain are hiring.

Assessing people, closing candidates.

Because you're essentially doing that as a recruiter. It's very similar. You're assessing entrepreneurs. You're helping them assess executive candidates. Like I interview a lot, 10, 15% of my time. Calendar is interviewing candidates for a portfolio of companies, providing feedback to the founder, sometimes helping close. So that's the skill that they has actually been let even, maybe even accredited. The performance management of getting people to do things at a faster tempo, increasing the quality, working together, even though they have different views, those kind of skills really become difficult when you take your sort of foot off the gas. The tempo setting, the tempo setting the pace, creative problem solving, it took me the first year, to recreate that ability.

At the end of last year or.

Have been pretty good at the creative problem solving. But that also the venture capitalists might use that skill once in a while. But really leading by example, Saffra is completely gone. Like the venture you're not leading by example. You're not working any founder. You're probably underworking every founder. Secondly, you don't have a large team here that you're leading by example. So there's just a lot of differences. Actually watching some of my S founders has reminded me more than actually is probably the best way to rebuild these skills of watching the best 1% of founders of different traits and trying to imagine putting myself back in their shoes rather than trying to recreate myself, you know, back when I was in my prime.

Yeah, that's interesting. A few of the other like operating things that I've heard you talk about, I sort of want to go through some of these points to get you to elaborate on them. One of which is you hate OKRs.

I do hate OKRs. The biggest reason, this is a lot to say, and there are one or two views I've changed since 2013, What is about outputs versus inputs? I used to be more on this side of measuring outputs. I think high output management by Andy Grove, if you watched my wife's and venture, it's mostly focused on outputs. I've shifted to mostly valuing inputs and looking at the outputs as a byproduct.

That's been a 10-year journey. Do you think venture, I mean, because in our job in a lot of ways, it's hard to actually impact the.

Outputs once you decide on the inputs. Do you think venture sort of drove? It didn't drive, but it may have reinforced it subtly and subconsciously. The biggest drive was, A square was more input than output driven. Secondarily, a presentation on launch by Jeff Bezos, where he was explicit on all these events of why you need to drive by inputs, why you need to engage people by inputs, not outputs. And it really locked in my brain that he was basically right. So I had to recreate all my views and then try to harmonize like 13 years of running stuff with Bezos' views and a little bit of square and a little bit of extra.

What was Bezos' point or what's the reason why inputs should be a focus more than outputs?

The biggest reason is that you want people to create fundamental breakthroughs. Value creation in startups is the goal. And that's usually a proverbial 10x breakthrough. If you ask people to drive the roadmap through OKRs, they will only give you and sign up for things that they know how to do. Breakthroughs by definition, when you start, you don't know the answer. And so your best people, if they think they're being measured by outputs, will never raise their hand and say, I'm going to take on this road. where I don't know the answer, I don't know how much time it's going to take, I don't have line of sight to the solution. But that's how you create iconic companies is by the best people, not the worst people, signing up and saying, I'm going to solve this problem whatever it takes. So that was the most insightful comment because it resonated with me instantly. So we used this at PayPal, Peter had a different way of framing this. At PayPal, he had a focus point where everybody was assigned one thing and one thing only. He wouldn't talk to you about anything else you were working on. His way of communicating inputs in Breakthrough Import was, I'm only going to allow you to look at one challenge and don't talk to me until you solve that challenge. So you would bang your head against the wall for days, weeks, months, sometimes longer, until you solve that problem. So even if you used OKRs at the end or outputs at the end to measure the success of the initiative, you weren't allowed to get distracted and.

You didn't have a choice to what.

You raised your hands for. because Peter basically assigned you what he thought the most important problems that the company were. So it kind of works through different mentalities. So I was really combining a little bit of Peter's focus theory with Bezos' theory and then the venture world where you have to drive like, but you don't have a choice.

On the goals point and the focus.

Did you all push back on like only one thing within a company?

Every single executive pushed back. Peter, most things Peter was hyper critical because he of course did more than one thing. Yes, no, we all tried to push back and you know, works. Peter once he makes a decision, it's very difficult to press this reset button. I've probably been successful on it three times in 30 years. So we all adopted it. And then actually over time, I developed a theory of why I believe it's actually a superior way to drive a company, which is this wasn't part of his logic when I ran it by him two years later and he kind of agreed. So everybody has this kind of list they use.

We wake them up the morning, right?

Things to do. And there's a psychological satisfaction of crossing things off. So you usually put the list in order of importance, but then you cross things off that are the least important problems. Company building is about solving the most important problems. And so you want to take away the other things on that list. So you don't have the psychological satisfaction of solving the other challenges. And you can only solve the A-level problem, and that's all you do. And once in a while someone comes through and derives a solution to that A-level problem, and then your company's gonna work.

I call it the-- for me, I've internalized that as the Kanban board problem, which is on a Kanban board, each item shows up the same size, but not each one is proportional in their impact at all. And so it feels equally satisfying pressing the checkbox, but it doesn't mean that.

That'S equally impactful to the actual-- so I'll give you another way of making decisions that Reid Hoffman taught me in 2002 and 2003. that I think most people totally misunderstand, including many people close to me where I spent years trying to communicate this. So, a lot of people make decisions by creating lists, pros and cons. So, Reid convinced me in 2002 that that's a horrible way to make decisions. Because when you make a list, you're assigning implicitly equivalent weight to each of the factors. So, I never make a pros and cons list on any decision, and I hate when people do that. You have to decide, first of all, the different methodology. But it's equal weighting, artificial equal weighting that these typical and common techniques lead to very mediocre results. Interesting.

One of the things I heard you say, I think it was in the YC talk, was actually the quality of office space and food can be a good thing to just get out of the way and focus on the quality that you want it to be.

Why do you think that's the case?

Well, I think basically you're creating a.

Cult, it's an anti-egalitarianism, but basically any good startup is a cult. and a cult has unique ways of doing things versus the external world, unique belief structures. This is like, what do we believe that nobody else believes? A secret and some zero to one vocabulary. And to reinforce that, you want people to enjoy and choose at the margins you spend time in the office. So by making the office better, by making the manifestations reflect the cult, so you're design driven company like Square, you want everything, every detail in the office to be perfect. if you want reflective behavior, for example, let's say a venture capitalist, you might want parks and landscaping out the windows, because there's actually research that fosters creativity. So depending on what you want, you want a different layout. If you want collaboration, then you want an open office. If you want concentrated work, because what you need to do requires concentrated study, you don't want an open office. So this is all very top-down, like what kind of company I try to build. why and then make the physical plant reinforce those behaviors and traits.

And the food side of it isn't that you believe in all the perks associated with an office, but it can be distracting if you don't have what people want.

I think there's two things. One, really good engineers, really good designers are world-class at what they do. They're sort of like athletes. And you want people who are athletes to consume the best possible nutritional content because it leads to performance. So by improving the quality of food, you get better performance. Secondly, there's distraction, just psychological cognitive load of like, what am I going to eat today? Where should I go to eat? Where should we eat? That causes distraction from shipping stuff. You want the velocity of shipping is the most important thing. You're an investor of ramp. The most impressive thing about ramp is the velocity of product. The product velocity is a function of people not getting distracted by artificial things by simplifying decisions so that people don't spend time going to get a sandwich, people don't spend time, hardly how much it will go on DoorDash, but you're providing them food that they can consume quickly, easily, and in a healthy, nutritious way, you're maximizing their performance and that.

Cascades into how would you internalize that.

Stuff for open store? How is your office laid out? Where are some of these things?

Well, we're actually moving finally about a week to our ideal office, one large open floor plan all together, all functions, It's taken a while to get the right off, building doesn't always work at the same velocity and speed of a startup, but we're finally going to be in the proper office. So I'm super excited. I think it's going to reinforce a lot of behaviors, but we've always been moderately conscious within the choices. We work in person, we don't allow remote work. I don't allow resuming into meetings that I attend. So there's a lot of reinforcement learning on either why do we have certain behaviors?

I don't want people to type a.

Laptop sitting in a meeting because I don't want focused, concentrated debating, not like typing. Even a subtle noise from a keyboard is distracting to people's efforts intellectually. So I think you have to design all this stuff from a first principles perspective. What am I trying to create? What culture am I trying to create? What physical principles am I trying to read?

What physical principles am I using to.

Reinforce the behaviors I want?

Do you not believe in remote work?

I don't believe in remote work for our startups. I would not fund a company that's out of our stuff. We would probably not fund a company collectively that's based on remote work. And why is that? Well, I think if you've ever built a company-- I don't actually, I don't know anybody who's ever built a company successfully, but he's ever built a company, first of all. The reason why is another fear ism is you basically have to build a company on undiscovered talent. People early in their career that large companies, think Google, Facebook, whatever, They don't know how to process these people because you don't want to compete on the basis of costs.

You need to find people that they're not going to want to attract and.

They need a little company. When people are early in their career or people are early in their craft in any career, they learn by osmosis. The way you learn by osmosis is you need to be shadowing people for unstructured learning. If you take away the unstructured learning, people cannot advance beyond the wisdom of their years. Secondly, you need to know who to promote. The way you figure out who to promote and give them opportunities by watching very soft silos that don't pop up on a Zoom call. so you need to have, you can't build a company with undiscovered talents and give people internal promotion opportunities if you're using any version of remote work.

And the other thing is there's this element of osmosis, right, that ultimately comes from being able to observe how people interact.

Yes. So as a leader, I used to.

Always try to try to have my.

Desk, the proverbial desk, sit in the.

Middle of the office so I could.

Kind of look to the left and look to the right and pick up on these various little cues and that would give me, Pretty good signal, high potential signal on you to promote, pretty challenged with more complex opportunities. Another reason why their own work kind of is destructive is there is collaboration that leads to Sparks. So we launched Open Store, a new product in February called Drive. We're actually it buys the product on February 1st, we launched it in March, six weeks later, the three puzzle pieces that led to the product One was a conversation at an offsite, sparked one by VP of Engineering. Second was friction from a head of revenue who didn't like the first version of the idea and chewing on his negative feedback. Third was sparked solution was sparked by two other things. A spontaneous lunch I had, or dinner actually I had with one data scientist at night where he asked me a question about were we taking enough asymmetric risk? And then last was an engineering review, deep dive that I did. The four things combined to be the insight that led to a brand new product that's been the focal point of the company for the last two months. That would never have happened. None of those four things probably would have happened on Zoom call.

What do you think about moving individual contributors to managers? Do you take your best ICs either out of sales or engineering or whatever it is in the manager role?

100% of the time. This is another thing I learned from Peter. Peter taught me the first week I was at PayPal. He's like, I don't believe in general managers, which struck me as odd at the time, and this is 23 years ago. He believed in promoting the single best person, designer, engineer, to run whatever the craft is. So that's my philosophy. Whoever's best at X is going to be running X. That allows you to groom undiscovered talent because they know that the person who's leading the function is pretty dedicated to what they do, and they can absorb substantive information. It also leads to better problem solving. because the person who's leading the function can solve the problem with their super hands if they need to. And then third is you avoid demoralization. People hate when they work for someone who doesn't know what the hell they're doing.

So we talked about things that can be distracting within the office. And one that has been on top of mind for a lot of the companies we work with is social issues, broadly speaking. I think some people will characterize it as wokeism. And certain companies have sort of been Further out of the curve on this versus not. Where do you think within OpenSore, the companies you work with, what is a social issue versus when did it start to seep over into a social issue that should stay external to the company versus something that's actually impactful to the business or the people?

I think it's actually very easy to tell. If there's some issue that's going to interfere with some business metric, then it's perfectly appropriate for the company to focus on. If it's not going to interfere with some KPI, then it's totally inappropriate. We like to say at Founders Fund, you bring your work self to work.

And so if there was some discriminatory law in Florida, for example, right on transgender or gay rights or black or whatever it is, something, would that become an open store issue?

Definitely not.

And in fact, I would assume because Florida has a melting pot, people have a refreshing different perspectives, there'd be people at open store who have completely different views on all of those topics. Interesting.

So it's just what's happening outside, even if it impacts you on the inside as a person.

Yes.

It's not going to impact you on the inside.

That's ridiculous. That's an absurd philosophy. We wouldn't fund founders, fund companies, founders that have that philosophy. They can go take money from other people.

Interesting. Switching gears to investing. What do you think of the role of a VC?

Great question. I'm doing it for a decade now. My personal version of it, which is not for everybody, is I think my role is to fuel and propel a founder who has a credible potential to achieve his or her ambitions by giving them capital and serving as their consigliere.

And so how does that manifest itself? What do you actually do in that practice?

Actually, usually it's respond to questions. So really good founders are driving decisions, executing constantly, but they have questions that they want either an intellectual framework on how to resolve, there's trade-offs, there's shark trade-offs, or sometimes there's experiences they haven't had yet in life, like they're hiring their first CFO. What should they be looking for? How do you assess a CFO? They may be an MIT grad who's a brilliant engineer who's never met a CFO before. So helping them triangulate to solve a.

New problem that's pretty important to the.

Business'S success and or how to navigate complex trade-off decisions. Easy questions. they've already resolved my definition. I always clap every time I do a one-on-one with a founder because two or three questions in, it's all the hardest damn questions in the world. And I'm laughing because they're so damn hard because they wouldn't be asking me because they're so good.

They would have decided everything that's easy. How was it hard for you to shift that two-by-two matrix of consequences versus delegating decisioning that you talked about? One of the things I've seen when.

People come in after having success is.

They'Re very opinionated about, well, here's how we did it and laying their exact framework or how past experience sits on top of the company itself. But ultimately, you don't get to make the decision, right? You're sort of an advisor to that. Was that difficult for advising companies or was it kind of natural for you?

I thought it was very natural. I think the benefit of being at a lot of different companies, you know, so helped build PayPal, LinkedIn, Square, all the different companies, had an advantage point of being on two or three other boards, I think Yelp and Zoom, for example, and just seeing how different each of those companies were with different challenges, different people, different different cultures led to me to believe that there's not a one size fits all answer ever. There are trade-offs that can be subtle. The grass isn't always greener. And my job is to communicate those trade-offs so the founder can make a wise decision based upon knowledge and the benefits of history. But I'm never, almost never, I think of one example is really music. I know they have end results out.

There that you have to do X.

I at one time did it's really because it was some of the most subtle in the detail. I think he ever listens to this, he's gonna die laughing. But my conversation is always around, here's.

How I'm gonna think through that problem.

Or here's the subtle things to look for that might be going wrong. You know, if you go ask, like, here's the early warning signals that you might want to reverse course. But I'm very rarely prescriptive. I might be more prescriptive on judging a candidate. They asked me to interview a candidate. I might have a strong allergy or strong enthusiasm and all communicate that. But on the business strategy, execution, the pacing and all of that, it's really, it's their company.

It seems like you think about what can go right. You're a people centric investor that thinks about what can go right in certain situations. Have you, one, is that fair?

And two, have you ever been surprised.

By an outcome, like in your wildest dreams, it out kicked what you expected in your what can go right for him?

So the what go right, create where it was insight I learned either directly or indirectly through my notes of like always reminding yourself to ask that question. Because when you meet an early stage company, particularly, I'm mostly focused on early stage investing, really call it seed series A, maybe series B, there's so many.

Things that can go wrong.

It's not very difficult to actually define.

Things that can go wrong.

That's like a certainty.

Being a venture sounds smart.

Yeah, well it's very easy. There's lots of things that are unproven. There's lots of things that can backfire. so you have to imagine, you have to course correct yourself and retrain your brain to imagine, well, if this were to come together, is this going to be a company of consequence? Because not every company will be a company of consequence. It will not be iconic. It will not be worth 10 billion of plus. So you need to think about what's the upside potential against the risks that something go wrong. And then what is the strategy for.

Minimizing or addressing the risk of the.

Things that go wrong? Does the founder understand the potential problems that fall? do they have a problem, holistic approach that's likely to work? But you want to start with what could this be when it grows up? What's the potential? It's like an athlete. You know, if you look at like an athlete in high school, you want to imagine not just like what are the limits of that athlete, but could they be the next, you know, Michael Jordan or so and so on. It's a lot like that.

Exercise.

Also, being a lawyer is really about training for this because the way you're graded in law school is issue spotting. So when you take an exam, the knowledge and law schools to identify all the things that can go wrong in a scenario and then you have to kind of resolve them and you get massively penalized for missing an issue.

So you don't want to do that.

As a venture capitalist, it's early stage investor. So start with what would this be? Yes, once in a while, by backing iconic founders, when you realize someone has ridiculous potential, sometimes they do surprise you on the upside. But that's when you're, you're making a conscious decision that the linear extrapolation of this business probably only looks like X. But this founder is clearly special. So even if most people would take it to a billion dollar outcome, there's a shot it's gonna be five or ten and that's worth me funding. So we actually did that relatively recently in Miami, Glassdoor. I invested in a friend of mine's company where the natural extrapolation of the business is a 500 million dollar company, which typically would not excite me, but he is exceptional and there's a shot he can Part of that into an outsized success?

How do you pass that along?

Because one of the things when people.

Are early in their career, there's a natural bias to not want to fuck up, right?

Like, hey, I don't want a big.

Zero to go up on my scoreboard. That's my first deal. But it's attention because that's ultimately the venture is the game of the outlaw kind of-- or power law distributions. How do you encourage that with people within Founders Fund to be willing to take that level of risk?

It's really complicated dynamic because I think to be an early stage investor, that's good. You have to be willing to lose money. And that's easy to say, the more success you've had, the easier it is to say. But unless you start with that dynamic, I think it's really hard to have success. And so it's like, which comes first, the confidence to be totally comfortable losing money? Actually, I actually didn't like for a while during the bubble era, let's call it 2019 to 2021, where not enough companies I was funding were failing.

And I felt that that might mean.

I wasn't taking enough risk. Now, I think it was partially propelled by people propping up companies with a lot of money and excess capital at inflated prices, and then that's changed. But I was nervous I wasn't losing money.

Were you far enough on the risk curve?

I wasn't taking enough risk or being too constrained and worried about what other people think derivatively, which is an idea. So one way I, of course, grappled-- I mentioned this on the podcast before is I like to fund things that I run through my algorithm of what half my friends who are VCs laugh at. The laugh test works pretty well because it's pretty intuitive. Like, I imagine you laughing at a company when you read that I just led in the best. Yeah, yeah.

And so I think half of the.

Smartest VCs I know will laugh that.

I know I'm taking some risks. How does that actually play out within Founders Fund, like from a decisioning standpoint, right? You've been here while you're here, have all the credibility in the world.

So I assume not too many people laugh at you. They still do. I mean, I've been here for years, but I still occasionally filter myself and maybe too much. I did a KB. It was my fault, not my partner's fault. But there were times when feedback at a partner's meeting led me to either be less aggressive or more aggressive sometimes. And I still own the decision every time it came to me, but it does affect you, even if you don't want it to and even though you shouldn't. stereo surround is useful, but you can also get con into what stereo surround. Like, so one of my heroes growing.

Up was Morgan Thatcher, and she had.

This pithy quote that I always remind myself of. She's like, I don't read the papers. They might deter me. And you gotta be careful in venture.

Talking to too many other people might.

Deter you, and that's not what you want to do. So, for example, I was pretty, I had a very high conviction on DoorDash. It was very controversial at the time. at KD globally. Lots of people like, there's this company that does this, there's this company that does that, the economics are everywhere, blah blah blah, I mean, so many other excuses. I wouldn't have not had enough conviction to pull the trigger and just shut everybody up, other than Tony had worked for me. Like, if I didn't have that little delta of asymmetric information I can just rely on, that early in my career, I would have listened to too many people. There was another time when FAIR was started, everybody was like, oh my God, you're doing retail, blah, blah, blah, real world, Amazon, Amazon, Amazon. And had Max not worked for me, I would not have been able to make that investment. There were so many critics at KDnuggets that said, 'He has a seed round that the Delta, Max and Jeff, two of the four co-founders, not only worked at Square but worked for me, were directly hired for me, were directly reported to me. I was like, no, these people are going to make this work. And you guys were all idiots like, And, you know, so you need to have that conviction sometimes. But there's times when actually I was a little too, let's say nervous about that, right? Bringing to a partner, maybe let's say KB and people would be more enthusiastic than I expected. So it cuts both ways, but you've got to be careful about like not listening to other people.

Have you found it's harder or easier to take that level of risk now that you've seen all these successes along the way?

Because I can imagine in one way.

It'S like, hey, well, my body will speak for itself. regardless if this goes to zero. The other way is like, does this actually live up to those other companies? I don't know. I don't know if this is really going to be a fair or a doordash potentially. And so I could pass on, you know, potentially great outcomes.

I hope not. I think where the real rubber meets the road is you get so consumed with board commitments and other commitments that you don't have time to take these fresh, provocative meetings. So, like, you know, I, I gauge myself by did I make the right decision? with the information that's available all the time, not with evidence on the side, because that doesn't really help. And I think my biggest weakness is in filtering which meetings to take, because you can't take every meeting that you get introduced to. And I've made some mistakes on which meetings to not take in my career, both as an angel and as venture capitalist. But as you get more busy and more established in venture capital, it's harder to take incremental random meetings from some founder on a left field, those are the ones that often pay the best dividends.

Now, one of the things I think you're very conscious of, and this is something I think a lot about as well, is the why you in a potential investment. And it's something that I found people can delude themselves into thinking like, Hey, well, of course me, right? But I think you're very conscious of, Hey, there's other investors out there. Why would I uniquely do that? Can you talk through how you think about that and not delude to yourself?

First thing is, let me say that the reason for the importance is most venture returns are mediocre. So you don't want to act like other venture capitalists because you're going to produce returns like other venture capitalists either.

In your fund or in your portfolio.

It's a shitty asset class except it's not very good. So like being the norm is not what you want to do. So one way is to create alpha is to say like what is special about this or me that's going to lead to the probabilistic distribution being different than the normal distribution. And so I always want an answer to that question. It could be why me or why I had an unfair advantage. So in the fair and door dash cases, both of the founders, you know, it worked with me. I should not make that call better than anybody else in the file. Like if I can, I shouldn't need a VC. Now, when I meet a random founder, like for coffee, how do I have a competitive advantage versus you? That's not so easy to imagine. So I asked myself very seriously, why am I going to make a better call with Logan on this? Because if not, I'm going to produce the same returns as you or collectively the market collectively the market is going to be seas. And so unless I have an answer, I know I'm going to rest in the middle of the velker, which is not my goal. So yes, it can be, I have a personal relationship with this person, so I can make the call on the founders qualities and traits. That's a very good answer. It can be in some vertical perhaps where I have a depth of knowledge, but that us both ways, too. Sometimes you get burned by knowledge in some weird ways. But there should be a really damn.

Good answer or you're going to be.

In the middle of the bell curve.

And that does it all. So I've heard you say you've never done TAM analysis. Is that actually true?

It's actually true. And why is that the case? I think markets are either going to be large or they're going to be small. There's going to be large figuring out.

Whether they're a trillion dollars or two.

Trillion dollars is a use case, especially where you're investing.

Yeah, yeah, yeah.

So especially early, I think as you get later, there's some validity to this, but what I want to do is really stage investing 80% of the time. Secondly, I think you're fooling yourselves because an extraordinary founder will create market opportunities you never imagined. And so the last thing you want to do is constrain yourself, you know, when you're talking to an N of 1 founder. And then third of all, the best investors are often in non-consumption markets where any TAM is like a silly cone like, what's the TAM for Instagram? I wouldn't even know how to do that even if I wanted to do it. But like, for example, when I had some TAM concerns where the team is outperformed any classic, let's say TAM analysis, I was the first investor, first seed investor in Strava. Turned out to be a pretty damn good company. I don't think you could have talked your way to the TAM of Strava with any of your analysis. Maybe you could have said, there's this many bikers, but actually there's the first market that's actually pretty small. Runners pick a market, definitely. So maybe, but then nobody's paying for these things at the time.

So what's your TAM?

Like you really do need to back founders, I think in early stage, and they will take you to places that make sense. Also, it depends on the price you pay. You know, if you're going to max out a billion dollars, you need to make sure there's 10, 200 million, a billion dollars there. Yeah. Oh, let's talk about eventbrite. Actually, people misunderstood the potential of eventbrite. pretty massively when Julian K. had started the company. And basically nobody externally really appreciated the company until they hit $100 million gross ticket sales, which isn't that large. But once they hit $100 million gross ticket sales with about four or five employees, then VCs, at least some VCs, too particularly, appreciated that if there's $100 million in long tail ticket sales, that four or five people could tap into. It must be built in somewhere because otherwise four or five people would not have been able to get to that level of scale. So sometimes you are using like data points, this time to market, four months in market, four people get you to hear, well there must be some afterburners. So it sounds like I'm immune from that data. You can convince me with data that, oh, there's a bear there when my age is strong. So let's talk about bear. People did expect that Amazon was crushing all these independent retailers. And Max had one slide that was incredibly compelling to me, whereas he showed post 2008, actually independent bookstores were actually growing. So I was like, okay, well, bookstores are growing against Amazon and anybody can grow against Amazon. Like totally false narrative. So I needed one data point to unlock in my brain that would happen.

So I was killing everything.

It's just false. So I do want those data points.

But I'm not like doing a top down TAM. In being a people centric investor, I've heard you talk about wanting people that spike in some regard, but they need to be the hero for the story or whatever it is. Are there questions that you actually are able to ask to assess this or is it a total intuitive thing?

How do you think about fitting the founder to the story then in that case? How do you know what they need?

So there's two different comments. One is, I think I'm looking for an extraordinary trait. The reason why is the chance, if you think about what's the likelihood that someone starts a company and reinvents the world or an industry, in the proverbial garage with like their college roommate rounds to basically zero. So unless you have a trait that is so extraordinary that the probabilities shift off rounding to zero, you should not have asked. So that's why I need a top 1%, top 10 basis points, something spike or I'm not going to invest. Then you want to ask the question. The second question is, does what the person spikes on relate to the skills that are required to build this particular company? some of these traits are transferable. Like if you can recruit better than anybody else on the planet, like if you can assess people, close people, that will apply to any company, whether you're building SpaceX or Facebook. Some skills don't translate. Like for example, if you're this, the savviest technologist in the history of the world, there are some companies where you could, like let's say we're doing a database company, a new novel architecture for database. Sure, that's perfect going to fund for that kind of founder. They want to do a photo sharing app.

I'm not sure they can really leverage that trait.

So, you do ask that, but that's usually the second question, not the first.

And when is domain expertise a good thing versus a bad thing?

So, in my view, it's never a good thing. I don't fund people with domain expertise. I do like them to be able to answer the Balaji in the Chris Dixon blog post that summarizes it, intellectual maze question, which is Balaji, when he's teaching startup engineering at Stanford, had this great paragraph that explained how the most amazing founders can walk you through the roadmap from where they are to super success. and know how to avoid the pitfalls, trap doors, and navigate. And when you hear the clarity of a roadmap, it's extremely rare. It happens once a year or so. That's a reason to invest, maybe independent of the traits, but the traits that are exceptional plus the intellectual roadmap is like a home run. It's like instant investment. Here's your money. Do not pass go. You don't have to meet my colleagues. Here's your money. Please, please, please do not take any more meetings. That rarely happens. That can be based upon some experience. so, for example, one of the founders we work with in Miami, before he left Uber to start his company, had been a warehouse supervisor before he went to Uber, and he started a labor Marketplace that connects workers to light industrial warehouses. So the fact that he'd started his career out of college as a warehouse supervisor was insightful, but it's the other traits about this founder. that make him extraordinary and a top 1% founder on the planet?

And if not in the founders, some of these companies, you need domain expertise brought in so that you don't fall in. So you can borrow it. This is the trick.

You can always call up people with domain expertise and ask them questions. Actually, I'm pretty happy to talk to you usually. And then you just say, why can't this work? So the question I always ask when I do diligence, let's say I invest, occasionally I invest in some pretty deeply technical things like autonomous driving or genomic sequencing. So when I call up experts, what I'll ask them is, tell me why this can't work. I don't want to know whether it can work. I want to know metaphysically point to something that will make this impossible to solve. And if they can't articulate a specific blocker, then I'm pretty comfortable backing a world-class founder to try to solve it.

I've heard you say that the most successful founders are trending older than they were in the past.

Yeah, we've observed at Founders Fund that there's about a five-year shift on average. of the most successful founders in the, let's say, median age over the last five years. We have no agreement internally on what the cause of that shift is. Do you have a theory? I actually don't have a great theory. I can walk you through some proposed hypotheses, but I think most of them are confounded by the actual data. So for example, some people think it's cultural, there's different influences, et cetera, et cetera. Some people think it's like this entitlement and wokeism and all this other stuff. I don't think that really drives Some people think that the businesses are more enterprise, which requires more experience than, let's say, maybe a consumer. I don't think that's actually true. I think most of the logical hypotheses are defied by the actual data. So I'm not at all convinced of a theory that works. And so it's more descriptive than prescriptive.

For me right now. Now, you've stepped into more of a firm management, as we touched on earlier, and developing young investors, setting firm strategy, all of that. I think that was, at least Delian said with KV, you were more IC oriented, sort of eat what you kill. And now it seems like you've taken on more of a firm initiative setting.

Is that? No, I wouldn't say that. I don't, I wouldn't agree with that. I think that one of the keys in venture is grooming more and more talent because it's a 10, 20 year journey and you need to replace yourself. I don't think venture capitalists age very well. Like there's a point at which you improve and there's a point which you start decaying. We can talk about why and where. But so I think you're always need to be consciously aware of how do you get more talent into your firm and how do they learn about us most to be world class investors. So at KV, I hired several people, Deloitte included, I recruited Evan Moore to KV like three times to try to add to the talent at KV. So I don't think that's accurate. You know, maybe just because of my profile, I may get more inquiries from other up and coming investors that want to join us and they may route to me more. frequently, so I may interview them or assess them more, but I don't think.

It'S a conscious strategy. How do you think about setting a Founder's Fund strategy for the next whatever it is and influencing where you're headed as a firm?

Well, the way we generally do it is the GPs debate a fair amount. We meet, let's say, every quarter, we do an offsite, but the GPs will debate what do we want to do differently or better, or what do we want to amplify or not.

So that's basically how we work. and decisioning. How do you actually think through making an investment decision as a group?

The historical way we've worked at Founders Fund, which is pretty different than most VCs, including at KV, we have voting thresholds. So for a different size checks, you require a different level of support from different colleagues. So let's say you want a $10 million. I translate to our voting rules and know how many people need to approve that and we'll introduce the founder to the requisite number of people or the people I think are differentially likely to to approve. At the KV, we would do more like a traditional founder, sorry, partner meeting on a Monday. Team would come in and present, and then we'd have a dialogue debate after and decide whether to approve an investment, you know, at what terms.

What characteristics have you found in the good young VCs that you've been around or you've worked with?

Well, there's not that many of them, by the way. I think one of the fictions of the 2019 to 21 era was Ventures Easy. And so people thought that entering venture early in your career was attractive, lucrative, and potentially easy from a lifestyle perspective. And it's none of those things. Venture is a really hard business. To be successful in terms of driving true returns and distributions to the LPs and to yourself and your colleagues is pretty rare. It's about the equivalent of being an NBA All-Star. And to be a consistent NBA All-Star is pretty rare. And so I think it now there's very few people that are young investors, quad investors, that are actually truly driving distributions for their LPs or for themselves. So I don't know what the formula is. I wish I did. It is something we actually discussed. Like what's the formula for a future great VC? But it's a little bit like trying to predict who the next Steph Curry is. Steph Curry didn't look like the Patrick Ewings and Elijah Woods and Moses Malones. nor did Charles Barkley, actually. And so you're trying to figure out where the sport's going and try to project what you want to hire, recruit, train for.

And so when you bring in someone like Sam Blane joined recently, which he was a CRO of Brex and Zenefits before that, right? And so when you're hiring in an operator that hasn't done investor before, are you doing the same assessment of where they spike? Is it more of a holistic, liberal.

Or are you There was a couple.

Of dimensions to hiring Sam. One was he had a pretty significant angel track record. So that is a good proxy. It's not a perfect proxy for venture, but it's relevant. B as a byproduct of that, he also had referenceable CEOs who are in our portfolio that we respect deeply, let's say Parker at Rippling, for example, that worked with him very closely. So that's a good proxy. Like, would you differentially take money from this person? That's the answer you want to hear from founders is, Yes, I would prefer to work with this person versus the rest of the world. So like having a repertoire of people you've served very closely with that are very close to us that we deeply respect is a good proxy. So angel investing plus CEO respect are pretty important predictors.

What do you think about the firm brand, Founders Fund specifically? How much of it is something that is set at a top down versus this totality of the people that work there? Are there elements of both or how do you sort of think about it?

I think we'd like it to be maybe set a little bit more top down, but what it's become is kind of a bottom up evolution. So I think what the brand now stands for being courageous, having conviction, being direct. I think we can add some things on top that are conscious intentional, but right now I think that's the manifestation is people want to work with Founders Fund because when we believe in something, we'll support it. We don't care what other people think. We will fund things that other people might not want to fund. and we will take the proverbial contrarian stance that later becomes a consensus view. Think Anderl also, my partner Trey co-founded the company Anderl to propel the United States forward in defense technology by using the classic tools of technologists and then allow the United States to compete in the world. At the time, nobody else in Silicon Valley would have funded this company, period. Now, because of some of the changes in the world and the success of the company, There's lots of investors that chase after the company, but that's years later. So we're looking for areas where at the time, other investors have blind spots intellectually, ideological, maybe by founder trait, like you can think about Parker that way. And then we'll take a conviction-based courageous investment. And then later the company and the founders become successful in everybody else's view.

Speaking of contrarian, you guys hired a crypto partner, right? It's been amazing to me how many people were so dogmatic about crypto investing and then pulled back versus actually leaning in. If you believe this stuff, this should be the best time to invest, right?

That's the internal thesis.

Yeah.

So how did that actually come to be? Because crypto, you guys had held Bitcoin for a while. That was public, but you weren't as.

Involved in other-- We followed the historical view of Founders Fund going back to, I think, 2014 even, was most of the alpha in crypto could be obtained by buying Bitcoin directly and it had the liquidity advantages go in and out, you know, opportunistically versus obviously the company, we don't do that. Even if we wanted to, we probably couldn't. So fundamentally, crypto investing in Bitcoin was a very successful set of investments and maneuvers by really Napoleon and Peter for the most part. Over time, we developed some views that there might be alpha in specific companies and that we weren't perfectly set up to capture that alpha. So we wanted someone who would help us. If there is alpha in crypto oriented companies, how could we make sure that we would capture a disproportionate share of that alpha?

What do you think a lot of money has been raised over the last 2019 to 2021, 2022, whatever you want to call it, a ton of venture Firms popped up, a bunch of people raised a bunch of money. What do you think happens to all those new venture firms that were founded?

I think they're in trouble. There will be some breakthrough. I've looked at the list of what I consider to be the top venture firms. Who do I compete with for real? Who produces returns that are real? About half are new over any decade, about half are the same. There's always been a velocity of change. Half the funds right now that are pretty good, I suspect, were created post 2005 and the other half have been around for 50 years. And so I think there's always some refresh rate in variability in venture, but it's not going to be easy to break through and raising too much money is definitely not the formula. As you know, we announced a year ago a $1.8 billion venture fund and then we decided to cut it in half and make it an $800 million venture fund. So we're voting with our feet that the opportunities are not going to be vast. that too much capital is not a good thing for either founders, companies, LPs or GPs. And so we literally slashed in half a fund that was already raised.

And how did-- I expect more people are going to follow suit with that.

I think they have. I think LPs definitely resonated with LPs.

They were appreciative of it.

Oh, of course. We're going to produce significantly better returns for them because we don't rely upon management fees. at the end of the day, we are very light on the management fees and compensation, and we have significant potential of upside and value creation, just like a healthy startup should. And so LPs like the alignment where we're only going to make real money if we produce real carry, which produces a function of real returns to them.

I want to go through some quick hitters here, so I'm going to transition a little bit. But I think you've had five bosses in your career, is that right?

Yeah.

Here's the list I had. Peter Thiel, Reid Hoffman, Minbach, Levchin, Jack Dorsey, arguably Vinod. I think that's the five.

He wouldn't describe himself that way, but yes. Can we go through each? Well, I guess first, what do you think? I mean, those are all opinionated people, big personalities. What do you think as a compliment to those people? What do you think you do particularly well that's allowed you to sort of.

Resonate with big personalities? I think the most important step early in my career was to implement their ambition and their vision. I didn't have an alternative ambition and vision. It was like make them successful by using the skills, traits, characteristics, levers I knew how to deploy. So I think that's being a compliment to a very strong-willed visionary founder type that's required. I think secondarily is to understand what... absorb the brain as much as possible. So I've learned this actually as a law clerk of all things. My first job out of law school was to work as a law clerk for an appellate court judge in Texas on the Fifth Circuit. And the way she sort of explained the job to me on day one, my first professional job in life, was your job is never to let me make a mistake. And I took that very seriously and I've always taken it very seriously. My job is not to let the person I report to make a mistake, whatever I have to do, however I have to persuade them, I have to go find new data points, marshal different arguments, figure out how to because a mistake by the leader is potentially catastrophic, certainly as asymmetric downside. so I always blame myself when the decision, the outcome, isn't what I wanted. It's not Peter's fault or it's not Reed's fault or it's not Max's fault. It's mine because I didn't persuade them correctly. And so I think taking that with me allows you to pair very well.

With visionary ambitious founders. We've talked about lessons from Peter. I want to go through quickly best lessons you learned from some of these folks.

So Peter, I think we've hit on a few, but anything in particular that we didn't touch on? Yeah, I mean, basically quote Peter every day. And they're often remixes, to be fair now, I've taken a lot of his views and slightly remixed them to make them my own. But just like in music, a remix can be arguably better. Sometimes it's worse, sometimes it's better. So I'm hoping I'm getting the Glantis remix of Kaigo, if not the worst version. So yeah, Peter taught me, you have to find undiscovered talent, that's how you scale companies. B, the weakness of general managing, you want people who are excellent at their craft and you want to promote them, So a lot of philosophies that I apply all the time, the benefits of focus, allocating time, people systematically undervalue their time and happiness is another Peterism from 23 years ago. So I applied those literally daily.

Are those derivatives from some other, I mean, everyone's sort of remixing some concept for standing on the shoulders of giants, but what has allowed him to come up with so many different frameworks and ideologies?

I don't know. I actually think most of them are fairly original. Maybe they're pithy succinct distillations. Peter's really good at taking a lot of data points and describing it, describing a lot of data points in a really succinct, powerful explanatory equation.

Simplifying complex things is one, if someone can't explain it to me, it probably means they don't understand it to the.

Extent that they should.

That is true.

I also learned law school. I had the benefit of taking constitutional law with some really good professors, including Charles Fried. And he basically said, all complicated arguments are wrong. Right arguments are always simple.

Reid Hoffman.

Reid taught me the benefit of two things. The decision making framework that I mentioned of not falsely equivalating using pros and cons.

Don't weight everything equally.

And then in negotiation, specifically the dimension of time. So when you're negotiating, most people focus on economic terms and other, pieces of the puzzle, but time can be your friend or foe. And how do you lever, how do you use time to affect other terms is something that's very subtle but very, very powerful.

What about Max?

Max taught me a couple of things. The bottom up, how do you use metrics and KPIs to really drive outcomes?

Secondly, By the way, maybe talk about dashboards and how that relates to that.

Well, that's another whole topic. I gave a speech on, the first I was invited to present to the Coastal Ventures CEO Summit before I joined as, as like an exact was to talk about dashboards and how to do dashboards properly, which doesn't sound scintillating, but I turned it into a talk that hopefully kept most CEO's attention. But anyway, so I'm a big proponent of dashboards in that you want to orchestrate the dashboards as CEO or COO by yourself. Um, like literally go to whiteboard and write out the business equation and then make the dashboards reflect that and use that to drive decision making across the organization down to every single person, including CS hearts. and if you don't do that, you can't expect them to make wise decisions. You're just gonna get frustrated. Anyway, Max taught me the benefits of tenacity. Max is one of the most tenacious people on the planet. Also subtly taught me the benefits of fitness. Like when I was working at Paychex, we worked really hard, but Max would go for like a three mile run basically every day. And I remember looking up to the co-founder CTO and saying, if he has time to run, I'm gonna run. And I'd also try to shadow him. The problem was, and shadowing Max on a run is, he easily runs like a six minute mile, like very easily. He can run 430 probably. I can't, so it wasn't the best, but it was aspirational. But yeah, Max Dobie also benefits of certain technologies that I didn't have an appreciation for. Once in a while I can spike on, there's a new technology which has certain characteristics that can lead to a breakthrough in business. And I didn't know how to do that kind of analysis in my brain. And he taught me with one specific illustration around Flash in 2003, and then I applied it later to other technologies.

Which led to your investment in YouTube.

It did. It specifically led to the investment in YouTube. Max told me to look for something based on Flash in 2003. In May 2005, I found Javed Karim, who co-founded YouTube. And the first question I asked him was, Is it coded in Flash? He said, Yes. I was like, We're off to the races.

Jack Dorsey.

So Jack told me, literally how to do design driven thinking. So I've been an Apple fanboy, you know, for all my life, literally since like eighth grade. But there's a difference between like reading about Steve Jobs and Apple and actually understanding what design driven thinking really means that every deep crafting, every single detail, paying attention to every single detail and how to scale an organization. So that's the most important thing. The thing that makes Jack so powerful is he actually is a first rate designer. a damn good technologist and a first rate business person. And that combination of all three people, maybe it doesn't exist. Max is actually a first rate business strategist and a first rate technologist. Even that Venn diagram is extraordinarily powerful. By the way, this is the other founder answer. The third founder answer for me is combining two things you don't see together. So a first rate salesperson and first rate technologist, I'd invested that. Almost never happens. Like I remember this first rate technologist, first rate business person, description of Max, Reed Hoffman articulated this to me January of 2001. That's what's going to make Max special. He's like, there's five people all of Silicon Valley who have that trait.

And what about Vinod?

So Vinod is a technology visionary. He can immediately see a new technology and feel like almost intuitively all the ways it can be levered to change business equations. And it's extremely powerful. But the most actionable piece for me, because I'm not a technology driven investor, was when he's on the board of Square, he pointed out to me this adage, the team you build is the company you build. And you can get distracted in everything we do around products, technology, but it all comes down to the team. And that adage is the most important sucinct way to communicate it. It's always about the team you build.

Because we talked about Vinod and we talked about YouTube and you would have a unique opinion on this as a former lawyer and IP licensing rights. What do you AI these days? I guess, what is your perspective on AI these days? Also, there's a fair use debate going on about all the training. Do you have an opinion on that? Well, the decomposes actually.

So let's talk about the YouTube example. This is a really good illustration of the question you asked asked me about why me? So I was able to do the IP analysis in my brain for YouTube and then literally walked Sequoia's outside counsel through the analysis on behalf of the company.

Which is what everyone was scared about.

Everybody was scared of YouTube because of IP and I had been partially an IP litigator. And so I knew how to do the analysis and was comfortable like taking risk. It was a probabilistic assessment. I mostly got it right. There's one little thing I screwed up, but there's fortunately, that's background music. Yes, background music. Yes, definitely. The separate licensing scheme that doesn't work like the rest of IP law, which is really annoying, but I sort of forgot about it and that's why YouTube had exposure there. So it seems kind of a cursing, but I had a very specific reason. I also had worked with all three of the co-founders at PayPal, so I had unique people and an intellectual IP background that allowed me to make a diligence assessment without having to call some external counsel that has the wrong sort of risk appetite. So that's a good illustration on AI. My question on AI is not, is it transformative, not is it, you know, revolutionary, blah, blah, blah. It's like, where's the value creation? Because that's what I do for a living, is try to find things that are going to create, going to capture the value. People use metaphors like mobile. Well, you know, most of the mobile value is captured by Apple. So if OpenAI wants to ship a device, or Microsoft, that's powered by AI. I can see that comes from a lot of value. Some people use AWS as a metaphor. Okay, well, all of the large institutions captured value in cloud computing. Well, that may mean that startup funding and AI might not be that great. But the way I approach AI as an investor is I'm looking at products. I'm always looking at products. What's the value proposition to a particular set of customers? AI is the magic wand that enables you to deliver a value proposition that would have been impossible before. And so I want to find founders who want to create unique products and they know how to use the tool of AI to deliver a unique product experience or an economically affordable one that would have been actually impossible. Think your proverbial why now slide. The why now slide is I can use AI to do X, Y or Z, but the X, Y and Z are completely independent of AI in the sense of the customer experience. Customer doesn't know this is AI X, Y or Z. So that's what I'm looking for personally when I invest. From an IP perspective, it depends exactly what you're using for what. You'd have to give me a specific, this company is going to do X.

I guess an interesting one, I mean, certainly we're seeing it play out in real time with Grimes and Drake and all that stuff, which I think is pretty clear. I feel like that's pretty, now the training on top of Reddit data or Twitter data or whatever, a bunch of things that are controlled by a company in some way, but is being to then train on top to answer questions that are abstracted away from the underlying data? I guess, is that a fair use thing?

I think there's a strong argument for fair use there. The weakness in the argument, insofar as there is a piece that's the weakest, is if they're training on the entire corpus, typically fair use works better when you're taking a snippet of something and we're using the entire collection. You can run afoul of some of the ingredients in the analysis. But I think more people would be comfortable on the fair use side because you're obstructed at a waste so much. That said, there is a concept of a derivative work, and you got to be very careful that depending upon how it's used, it could be closer to a derivative work versus a new work. So anyway, it's more complicated. I think you're right. The music stuff is actually pretty easy.

Do you think there's an existential risk that we face as a country with artificial intelligence in China?

Yes, so I knew China would get you. The biggest competitive threat from an existential threat to the United States in my lifetime is with the CCP. The biggest arc of that competition is going to be through AI, both for economic leverage and for military application. It has actually a combination of both. And we are behind in several dimensions. A, they have a bit larger training set, just more people, less privacy. more data, makes things a lot easier. You don't have to have as good a mouth if you have a lot more data, like order of magnitude, two orders of magnitude, more data, trade that for mouth. Secondly, they absolutely have better chips than people realize. So you need compute power, computing capabilities. They have some pretty cutting edge chips that have not been appreciated. I didn't really appreciate until relatively recently. Third is the organizational structure that leads to success in AI may be driven by some brute force, like large organizations with brute force. That's not the typical Silicon Valley style management. So we may be at a competitive disadvantage there, too. Those three things are pretty dangerous, because if we lose this war, the United States is going to be very much in jeopardy.

You said a year ago when we sat here, Miami Tech Week, San Francisco is the next Detroit. We've seen some reinvigoration with artificial intelligence energy in the last few months. Have you changed that opinion at all?

No, San Francisco is next to Detroit. You can look at crime statistics, vacancy statistics, homeless statistics. I see the governor's sending in federal troops or sending in the National Guard or something that actually sounds like Detroit. The only thing that would make it more Detroit is like riots to the National Guard. And then we actually look like 1960, you know, montages. So, no, it's getting worse, not better. I think you can see some trends in the South Bay that might be a little bit better. I think there is a bit of resurrection around energy about company building that's real versus entitlement. versus woke in the pockets like Mountain View and South. So maybe slightly more optimistic there. But of course, that's also a lesson of history. San Francisco, as the epicenter of technology, wasn't really a true story until at least 2010. All of the technology companies that people remember were built in the South Bay, not San Francisco. And it's only the modern square, Twitter, Airbnb that were SF phenoms in that relatively recent error. So I think it's an anomaly anyway that San Francisco is equated with technology.

How is Miami trending these days? I've seen people on Twitter claim that there are certain people moving back to San Francisco.

Every time I see someone tweet that someone moved back from Miami, San Francisco, I'm like, name a single person. And they never cite a name. I'm like, I don't know a single person socially or professionally that moved from the Bay Area. that's what back, single person. I'm happy if anybody tweets a name, that'd be great. I do know people who've come here from New York and been back for whatever set of reasons. It may be some other geos, but I don't know anybody in the Bay Area, which it'd be like, yeah, it's like, do you want to like set for the next 10 years and be in misery or do you want to be happy? When people move to Miami, they are inevitably happy. So for example, 60% of the Thiel Fellows are in Miami this week for their reunion, 10-year reunion. and most of them actually had not been to Miami before. I went to an aggregation, a party sort of thing Saturday night and talked to a lot of teal fellows. Probably talked to 40 teal fellows. My uniform takeaway was, wow, they're being blown away by Miami in the first 24 hours that they're on the ground. And I've already persuaded about five or six to cancel the return flight. That's pretty good for, you know, two days in Miami.

Yeah, no, for sure.

I mean, listen, I love coming down. That's my metric for Tech Week, by the way. So what fraction of people here come as the magnet is Techweek and what fraction cancel the return flight?

What's your most contrarian view today?

It's a great question. It's actually, I don't have a good answer and it's very embarrassing. I got asked this at the Thiel Fellow event and I'm super embarrassed by this. All my views that I've had are out there in the public domain and I think most have been validated by history. The idea that remote work was fiction, I think, is more conventional. The idea that the coronavirus was not a byproduct of some bat biting some random person in some wet lab is almost surely true. Which Bloomberg dismissed as a fringe theory only a year ago. The idea that the markets were overinflated, they were on the precipice of 1999-2000 collapse has obviously been true and proven. so I have to come back with new ideas. The more interesting version of this is how do you get these new ideas? Props. And so what I tend to do is I like to read books, like real books. And by reading books that other people don't read, you spark, you, you encounter new anecdotes, new data points and new ideas. And then there's kind of combining your brain, often when I'm sleeping in the middle of the night, to be a spark. And that spark is something that creates the next contrarian idea.

What's the single most impactful book to you over the last, whatever, 30 years?

To me, it's a little bit different than the single most impactful book. I highly recommend the Upside of Stress. It's all about why the benefits of stress, the challenges of stress are good for you physically, emotionally, financially, and from a health perspective. It's very counterintuitive, but I already believe those things. The book is just a manifestation of evidence that I can give to other people. the most impactful to me. That's a really good question. Most books that really resonate with me are manifestations of things I already sort of believed professionally. High output management for the first 15 years of my career in technology. I reread it at least once a year and always learn new things, always wound up underlining new sentences because I appreciated them differently based upon my experiences. So that was probably pretty influential, actually.

Speaking of contrarian views, what's the biggest misconception of open doors business today? What would you say to short investor or people that don't believe in the business?

Well, some people think it's unprofitable, which is ridiculous. If you look at it's live in 52 markets and with the blip of maybe one quarter when interest rates spiked all in the same quarter, the company has been profitable for 22 of the last 23 quarters, I think, or something like that. And in 47 of the 52 markets, the inventory looks pretty good right now. I mean, they're gonna do an earnings on May 3rd, so we'll get the latest update. But I think there's some misinformation actually, truthfully, out there. Secondly is I think that people don't understand, I think it's actually been good to go through kind of a housing crisis. Once the company gets through it and shows that it can navigate it well, I think it'll get disproportionate credit. Square went through something like this. Tesla sort of went through something like this. Amazon went through something like this 23 years ago. A misappreciated business. Eventually, the metrics line up. People have to realize and recognize reality. A top-down perspective on Open Door is simply it is impossible to fathom that in all of the trillions of dollars of residential real estate that goes on in the United States, that the largest market cap company is gonna be at $10 billion, which is roughly where Zillow is. That just doesn't make any sense.

You're a frequent user of Twitter. Are you friends with Elon?

How would you characterize? You used to work with him. Well, I was on the board when I was at PayPal. I've considered working with him at SpaceX back in the day in 2006.

So you've known him for a long time.

Yeah. What's your opinion of Twitter right now? I like Twitter. I use Twitter. I think, as I said on stage recently at a conference, he's making all the right enemies. So I use the Lincoln adage to judge people. You can judge someone by who their enemies are. And since all the people who are most wrong in the world and most evil hate him, he's doing a great job.

How do you use Twitter? Like what is your intent besides, you know, you do a good job of using your platform for companies and whatever.

Sure.

The original use of Twitter for me was just like a custom New York Times. Like I used to read the New York Times on Sundays. and so I created the right people to follow in sports politics and technology, and I would then be able to wake up in the morning and track what was going on in the fields I care about. And so that's how I used it. I didn't actually use it as a broadcast mechanism for a very long time. Then when I joined Square, I started using it for customer feedback, meaning I'd read every single tweet about Square for two and a half years, and I'd retweet some to help the company amplify its message and story, which actually helped raise venture capital, truly. this before it became cool to do this. And like some VCs weren't quite as savvy about this. But that's how I mostly used it. And then I would typically only use it for broadcast around sports because I was a big sports fan. And so I figured that was safe, you know, running companies. I could talk about sports. Let's controversially. It wasn't until I became a VC that I started using it more to proselytize. And I used it to proselytize because I realized I had a platform. I had a lot of followers. I had over 100,000 followers. And I didn't want to wake up at the end of my life and say, I had this platform, I had the ability to influence people remotely that I'll never meet and change the world and impact their views and not have taken advantage of it. And it was actually refreshing at the same Teal Fellow party, I had a couple of Teal Fellows come up to me and say, thank God you treat what you do because it's helped reshape my brain around X, Y, or Z. So that totally justifies the effort to proselytize ideas. But mostly it's because I know I have the potential to impact people and I don't want to regret living my life without having been able to try to influence people.

Have you ever regretted anything you've tweeted?

Yeah, I mean mostly because of the distraction. Meaning like I think most of what I tweeted or all of what I tweeted is accurate, or I wouldn't have tweeted it, but there are times when either you slightly missay something or you step into a landmine and then the rest of the day you kind of have to respond to it. And like, look, I have things to do. I have a company to run, I have inventions to make, meetings to take. And so once in a while I'm like, oh shoot, you know, is it really worth like three hours of distraction? to have done this for whatever upside. You do meet founders this way. Founders are really happy about your willingness to defend their company. Every company struggles at some point. And having VCs, people with presence on Twitter that are willing to defend the company when the company is under pressure. I did this with respect to DoorDash when people are like, oh, DoorDash is never gonna be more successful than UberEats, or DoorDash is never gonna make money. So leaning in and helping crystallize the true story can be very valuable to companies, but the distraction isn't always worth the cost. So I've been more guarded sometimes now about like, oh, this week I'm really busy. I don't have time for two extra hours on Twitter debates.

Yeah.

One that I wanted to ask, and we can answer if you want, but you overlap with Bob Lee at Square?

Yes.

And he had moved to Miami.

He did.

How will you remember, obviously, tragic events and was still sort of unfolding. What would you like people to know about Bob?

Yeah, so I'll give you some unique insights. Obviously, lots of other people will comment that knew him better, but two Bob anecdotes. One in Miami, one is to show you how Miami was really tracking. He literally moved here and texted me after he signed the lease. I had nothing to do with moving him here. He just texted me, I signed the lease in Edgewater. So that's when I knew Miami was really working, was like, Bob moved here proactively without my involvement and texted me after the fact. Okay, second, a kind of better anecdote was Bob Lee actually hired Delian. The engineering team at Delian, when Delian interviewed as an intern, had rejected him. The recruiting team actually sent him a rejection note. This is at Square? At Square. And Bob personally overruled the team and said they had to call Delian after they sent the rejection and say, you know what? We didn't really that. So Bob had this spike and spidey sense for real talent. And otherwise, you know, my life would probably be different if I had met Dolly. Dolly's would probably be different. So one person going out on a limb because they had confidence and conviction about someone totally changes the world.

Very cool. Well, Keith, thanks for doing this.

Thanks.