E#11 Co-Founder of Siri Reveals What It Really Takes to Build a $100B Venture | Norman Winarsky

How many people thought that Siri would work when we were creating it? Well, Siri actually violated common sense or conventional wisdom. Most people told us no one would ever talk to a computer. Most people told us you'd never make money. So the moral to that story is also very deep, which is you can't listen to what most people tell you because in fact, the word breakthrough means the that you really are breaking through conventional wisdom as well. And people will always tell you you're crazy.

Hi, everyone. Welcome back to MBA Golden Buzzer. Today I'm joined by Norman Winarski. He's a visionary venture creator, co founder of Siri, longtime president of SRI Ventures, Emmy Award winner, and former lecturer at Stanford Graduate School of Business. He he's helped launch more than 70 companies with a combined market value of $100 billion and is the co author of if youf really Want to Change the A Foundational Guide for Anyone Aiming to Build Ventures that Truly Matter. In this conversation, we go beyond buzzwords to explore deep thinking behind Norman's approach to innovation, what it really takes to sustain and build a breakthrough venture, and the kind of leadership that drives lasting change. So, Norman, thank you so much for being here today. It's an incredible pleasure to have you. Do you mind just introducing yourself to everyone?

Thank you so much, Alan. It's a real pleasure to talk to you today. I personally enjoy these kind of conversations and discussions because at this stage of what I've done, I'd really like to convey as much as I can for other young founders and entrepreneurs to be really successful in life. When I was young, my father died when I was 16. I was a junior in high school and middle class Jewish young boy. When he died, the IRS took everything we owned except one storage building. No life insurance. I was a junior in high school. I had to leave high school and go to college and maintain scholarships. With those scholarships, I was able to go to the University of Chicago and actually get in both undergrad and grad. And people who mentored me changed me. And they had no reason to help a young kid. Why should they care about me? In fact, I had no high school degree. I left it my junior year. I couldn't stand living in the storage building anymore. People like Isaac Vercep, who was a Holocaust survivor, said, you know, Norman, we will take care of you. His wife Piera, would stuff sandwiches in my pocket. And then Paul Sally taught me mathematics, taught me how to think more than mathematics. Great professors, great mathematicians, great people. And they had no reason to help me other than to, to help a young kid do well. And that stayed with me forever. And it's my intent to help people who need help. In the same way, helping someone is not, it's, it's not a few words, it's a commitment to, to people with no benefit back to them, but to give a gift, right? A freely given gift. My own career began as an intent, at least to become a mathematician. I graduated with a PhD from the University of Chicago in mathematics and decided that I really wanted to join academia and actually taught for a couple years in academia. But what's different about mathematics is that when you do mathematics in academia, you have no real intent to impact today's world. Your, your intent is to advance mathematics. And so as a result of that, I decided I wanted to join industry, which is actually quite unusual for a mathematician. And my thesis advisor, Paul Sally at the University of Chicago was not as happy as he might have been had I been a full professor at Harvard or Yale or Princeton or others. But I did decide to join industry and worked with an incredible team at RCA Labs. And, and I guess if you had to trace a thorough timeline through all of what I've done, it's really to work on the most important problems I can and to find breakthrough solutions to those problems and to be willing to take the risks in order to meet those, what might be a great opportunity. So that's sort of been my constant as I moved through RCA Labs, which then became part of Stanford Research Institute. I joined sri, ended up, because of my mathematics and background in physics, being able to first be a great, I hope a great researcher, but then joining management and leading management to do many great things. And in fact, when we were at sri, the team that was actually led by Kurt Carlson and Glenn Reitmeier advanced and won the standard for high definition TV in the United States. But what was really important about all that, and this is why it's part of my timeline, was that when we finished that contract, Stanford Research Institute is a research institution, but it's a contract research. So when we finished that contract, there was no money left to do future contracts. And we didn't own any intellectual property from creating hdtv, not one license, not one preventure. And we realized that we didn't no longer believe that a research institute alone was going to be sufficient. We had to be an innovation institute. And so I decided to take over the responsibility to create and use intellectual property to create new ventures and licenses at Stanford Research Institute. And so I took over that responsibility. I'd say that all of my background really led to doing that. The mathematics and physics led me to help create ventures in that space. And I guess the attitude to solve really hard problems, that really meant made a difference.

And you've also taught@stanford gsb while you were teaching there, what did you most want your students to understand? Not just about startups, but of the responsibility of innovation?

Okay, so in terms of both, in terms, first about startups, they're very risky business. Obviously, 1 in 10 or 20 becomes the true home run you'd like it to be. And they're very hard. And you go through extreme swings of great success and great failure and try again and again. Part of that is belief in yourself. Part of that is your resilience. And by the way, Jensen Wang talked to, I think it was Stanford students about this. He wishes them great failures on occasion because. Because that gives them resilience. You have to get through these things and you have to still maintain and believe in yourself. So I'd say that's one thing I really want them to understand their need to go through success and failures and continue. And also the responsibility of innovation. I have no doubt that what will drive the greatest opportunities in this world and the the entire leadership of the world will come from the innovation, largely from technology, great ventures.

And how has teaching business school impacted your other work, if at all?

When I taught the course, it's on creating breakthrough ventures and particularly focused on technology and breakthroughs in business opportunities. When I taught the course, I told them, this isn't the course. It's a lifelong commitment. If you come to me with a venture concept and want to work together to help make that a success, I'd be happy to help. So on occasion, great students of mine, like Kate Rogers, by the way, at Sprout and others, have come to me and said, hey, Norman, I'd really like help to understand and advance some news startup. And I'm helping them do it on occasion. And that keeps me energized and excited about what I've done in my whole life, which is deep technology breakthrough ventures.

And for those who might not be familiar with your concept of breakthrough ventures, can you explain a little bit more about that concept?

There are ventures that defy common sense and conventional wisdom. And in truth, that's what I most love most, most focus on. And I'm particularly excited about helping people understand what it is to do when you have an idea that will fundamentally transform the world. That's probably why, by the way, I wrote that book for a While there was everybody starting to brief their venture and at the end they'd say and we are going to change the world. Well, that really doesn't quite happen that often. And it became a joke. And by the way, the Silicon Valley Stuff series on TV was a good example of that joke. But what if you really want to do it? What do you have to go through to do it? Henry Cosell and I wrote the book. And by the way, Henry and I were both researchers at RCA Labs and later at Stanford Research.

And your book outlines an eight part framework for creating and building great ventures. Is there one that you feel is most often overlooked?

One thing that particularly defies my ability to be supportive of any venture is when they ignore or leave risks for me. And by the way, I became a venture capitalist as well and worked with Relay Ventures and America's Frontier Fund and others. So I have this two sided brain, one about an investor and one about a founder. And investors seek the great ventures that have mitigated risk that might not be obvious so that it gives the venture capitalists to great more level playing field than others think would be possible. So what does that mean? It means that when you give your venture story, you tell the problem, you tell why it's so important, you tell the solution, you tell how much money you're going to give them and you need to tell the venture capitalist what the actual risks are. You list them and then you give the mitigation of the risk. And if you don't do that, you're leaving it up to them to to figure out what's really wrong in your story and what you didn't say, which.

There'S always something, right?

And if I find something that they didn't tell me and then in the discussion talk about it, that's already a strong negative about that individual and that team. So that's what I would highly recommend that you help them not hide from presenting the risk. Not only giving the positives, but talk about the true risks. I love that and how you're getting.

I think with, with our clients too when we're working with them, a lot of people tend to shy away from that. Right. I don't want to talk about the negative parts, I don't want to talk about the risks. I just want to present an image of strength. But at the end of the day it's not very realistic picture of what's going on.

Well, if they do that, they're depending on a venture capitalist to ignore risks and that's unlikely.

And can you Tell us about a real venture that you've helped build or invested in using this framework.

Yeah. So obviously one of the most successful VENT ventures I've helped co found with Siri. And in terms of building Siri, we started off, actually had decades of experience in artificial intelligence. I happened to also be a mathematician that also went to industry and also went to leading ventures. So it was a natural venture concept. We didn't start Siri until we understood what the clear business opportunity was. AI was everywhere, but it never was. How do you make money? What's the product you're creating? I remember the great insight that we had with the team. Adam Shire, who became the the VP of engineering. Tom Gruber came the head of technology experience. And then Doug Kit was, who came from Motorola, who was the CEO. So we were working together trying to come up with what is the breakthrough, what is the key concepts that would lead to a breakthrough? Siri? Well, first of all, what's the market pain point? And it turns out that was, well, as articulated as at the time this was 2008. People had just started using their phones for texting and accessing web services. And 80% of the time people were dropping out from their phone to access web services. Buy a ticket, find a reservation, do whatever. They'd go back to their laptops or not and try again.

Okay.

So we decided first of all that the breakthrough market problem would be accessing web services with no difficulty. And that's speech. Get me a ticket, buy me a reservation, take me to the zoo, whatever, find the nearest bar. And that was a great breakthrough in itself. The second thing was the answer always came in links. With Google, you know, you'd ask for something, so search, get to a link in Siri. We wanted it, the answer to be doing it for you. Siri was not a search engine, but a do engine was our concept. And so we would buy the ticket, make the reservation, take it to the store. And so that was a breakthrough solution too. So we had a business concept with a breakthrough market problem, a breakthrough solution. So now what were we missing? Well, how do you make money? How do you make money on that? Right. Given that we were intending to be a separate venture, go public, be multiple billion dollar company. Well, that also came to be a breakthrough. The way we were going to make money was lead generation to the applications. If you're going to buy a ticket, we take a percentage of that. The company that got that order from them. If we're going to buy a hotel reservation, we'll take 40 bucks for giving that hotel the reservation. Opportunity, opportunity and so on. So now we had a business strategy, market problem, market solution, breakthrough, clear multi million consumer subscriber opportunity. And then finally we had a real competitive analysis of who's going to go after us. Now, you could guess who that was. Clearly Google. Google was a search engine, but it was not a do things for you, a do engine. So we felt we had six months probably before Google would be able to compete effectively. So our greatest opportunity was to go back and with great speed, get great success with our. With our team and our product. And we had intended, in fact, to go public with Siri until two weeks after we launch the venture, we get a phone call from Steve. Steve calls Dog Kitlis, the CEO, when I'm on the board at the time, says, hi, this is Steve. Dog says, steve who? He says, steve Jobs. And Dog says, right, and hangs up.

Sure, right.

Steve calls back again, talks to Dog, says, I'd like to invite you and Tom and Adam to my home tonight. And Dog says, what do I do to the board? And the board says, go, but don't talk money. Well, after two weeks, there was a lot of talk of money, and the board finally decided to sell to Steve Jobs. We had another contract with Verizon, actually.

Oh, interesting.

Have to be would. Would have put Siri on Android.

Now that would be a different world.

And we never got to do that. Part of the contract. That story is, how do you create a breakthrough venture? And I guess then one more point about that is how many people thought that Siri would work when we were creating it? Well, Siri actually violated common sense or conventional wisdom. Most people told us no one would ever talk to a computer. Most people told us you'd never make money. So the moral to that story is also very deep, which is you can't listen to what most people tell you. You have to have your own belief and what could create a breakthrough venture. Because in fact, the word breakthrough means that you really are breaking through conventional wisdom as well. And people will always tell you you're crazy. And then when you start showing them your progress, the next thing they'll tell you is, well, you may not be crazy, but it's impossible. And then as you keep making your progress, they may be seeing what you're doing, and they're saying, well, it may be not impossible, but it's too much to do, too expensive, too hard. And then as you go further along, they'll finally say, wow, that's great. I'd like to invest in you.

This comes full circle.

Yeah.

And you talked a little bit about speed and you recently published an article on your substack calling speed the oxygen of startups. But you also advocate for discipline and structure. So how do you advise founders to reconcile these two principles, especially in early stage ventures, with speed?

You absolutely need to have strategy, discipline, structure, and major, major capability to advance quickly. You can't be slow, but you can't also move quickly and break things. Not at all. Not at all. The model that I believe in is do what you can as fast as you can with as great a team as you have, and do it really, really well. Right when Syria was first created, we had three people. When, you know, when it was sold, it was probably in 25, 30 people, something like that. But we could create great things. This was a great team. And the article talked about people being slow in ways that they should not have been slow. You know, venture capital is a famous one. Vinod Khosli was asked a question. They got back in three days. They should have gotten back in three hours answering the question, unless they couldn't, but they could have, and that was obvious. Or if people are advancing a product and iterating on the quality of the product every month, you better be asking, why can't I do it every week? Or why can't I do it every hour? Rather than satisfy what they thought was reasonable timing. Nothing is reasonable except as fast as you can possibly go. I'm always surprised. I'll ask a question to someone or talk to them, and I'm talking about a founder or an entrepreneur and they may have been a Friday and I get an answer on Monday. I'm sorry, Weekends don't exist for founders and they still don't really exist for me. I'll look at what I need to look at and if something's urgent, whenever it is. So there's a real story that you're telling about yourself when you're doing that, and you're either showing how you are committed and capable. Commitment is not something that ends every weekend. That's what I meant by that article on speed, and I'm sure it's true. And I'm not. I'm not sure how many people actually really understand.

That makes a lot of sense. Yeah, there's got to be all in.

It's your baby. And you know what, are you going to leave your baby for the weekend?

You know, well, not for many weekends. You also mentioned the lily pond metaphor, which I loved, and how startups can grow unnoticed until they suddenly Dominate the landscape. And so how should founders think about visibility, in your opinion, when competing with larger incumbents, especially if they're feeling maybe a little bit insecure about their visibility?

Yeah. Thank you. So that's a good example again of speed, because lilies grow quickly. And the lily pond phenomenon, as I mentioned, the metaphor is a small startup is a little bit like some lilies in a lily pond, and then people don't notice it. And then before they notice it, it's half the pond. And by the time they try to do something about it, it covers the pond. Right. That's the metaphor. Very good metaphor. So speed is essential, and it's something that big companies don't have, by the way, I've been part of big companies, rca, for example, which went under. So you take advantage of that. A big company doesn't have the ability to move this giant ship this quickly. Plus, big companies have their own points of view. And so getting somebody in a big company to say, hey, look at what they're doing with Siri often has a very difficult time getting their teams involved. Now, I'd rather do my way, you know, than the. Than what that team is doing. So you have a period of time where you can not worry about the giants, but then you better advance quickly. When you do, you also have the, you also have the positive benefit of being new, being exciting, having a growth rate that's extremely fast, a great reputation for doing the. This great new thing like Siri. And they can't compete with that either. They're slower, bigger, more bureaucratic, more difficult to move. And so you take advantage of all of those things. Yes. Eventually they're going to have something similar, and you better be much better and stay much better and much faster.

What's your advice to a young founder who wants to create something ambitious, but maybe feels a little bit overwhelmed by this pace of change?

Well, they better like the pace of change. They're going to depend on it. These founders of these new companies, whether it's OpenAI or whether it's something in, you know, nuclear fusion or new energy sources or new biotech or any of these new technologies. And that, that is what I love. I'm this, I'm this mutant that does both technology and ventures. Right. That, by the way, that's why I was trusted at SRI Labs and Sarnoff was. Researchers don't usually trust business people alone. They don't believe they know what they're talking about. So I had this, I had this ability to talk to both the business and the technology and they trusted, besides a PhD in math. So the young founder shouldn't feel overwhelmed by the pace of change. But so much as saying that is my advantage. My advantage is great breakthroughs that these tectonic plates are opening up and creating new sources of opportunity that these big institutions aren't going to meet. This is, this is why you're here. This is what you're going to create. I guess the other thing I would suggest to a young founder is the first thing you look for is something that breaks conventional wisdom or even common sense. You can't talk to computers. Yeah, yeah, you can. You can't have driverless cars. Yeah, you can. You can't. You rent your home, you, you know, and make money. Yeah, you can. And, and so going against common sense and being crazy is part of what they have to feel. So that's one advice to the founder. And then the second advice is believe in yourself. Take on risk, don't avoid it. Like we talked about earlier, don't avoid risk, take it head on, talk about it and talk about how you're going to mitigate it and tell the investors, this is why you should believe in me and this is why I can do it. Because that's, that's going to be the source of what allows you to move ahead.

And you're also an Emmy award winner, so you've really done it all. What was that experience like?

So the Emmy Award was a team award for developing a technology for HDTV that was actually allowing us to measure what human perception would have measured. Okay. We had to say, if a human saw this picture, would it look perfect at this distance and resolution and so forth? And we needed to know that whether if HDTV would be the same. And by the way, the inventor of that technology was Kirk Kossen, who was afterwards CEO of sri. So I was part of that team. I actually led the team that developed the technology. Watching what happened with HDTV just makes you understand how everything can be done that most people say can't. So at the time there was analog hdtv, Japan was coming out with that and so on. And the FCC had come out, the United States at Federal Communications Commission had come out and said, we want an all digital TV standard, high definition TV standard. And that was considered impossible by almost all the world. It would involve compressing what was normally a signal that was 50 times more signal than we had in our bandwidth with for sharing HDTV to the consumer. And Kurt Carlson, Glenn Reitmeier, and that team invented the approach to solving that Got the funding, led the grand alliance and invented what is now a conventional standard in tv. That was a moment of awe. And it also forevermore brought to me opening up and creating new sources of opportunity that these big institutions aren't going to meet. This is, this is why you're here. This is what you're going to create. I guess the other thing I would suggest to a young founder is the first thing you look for is something that breaks conventional wisdom or even common sense. You can't talk to computers. Yeah, yeah, you can. You can't have driverless cars. Yeah, you can. You can rent your home, you know, and make money. Yeah, you can. And, and so going against common sense and being crazy is part of what they have to feel. So that's one advice to the founder. And then the second advice is believe in yourself. Take on risk, don't avoid it. Like we talked about earlier, don't avoid risk, take it head on, talk about it and talk about how you're going to mitigate it and tell the investors, this is why you should believe in me and this is why I can do it. Because that's going to be the source of what allows you to move ahead.

You're also an Emmy Award winner, so you've really done it all. What was that experience like?

So the Emmy Award was a team award for developing a technology for HDTV that was actually allowing us to measure what human perception would have measured. Okay, we had to say, if a human saw this picture, would it look perfect at this distance and resolution and so forth? And we needed to know that if HDTV would be the same. And by the way, the inventor of that technology was Kurt Kaussen, who was afterwards CEO of sri. So I was part of that team. I actually led the team that developed the technology. Watching what happened with HDTV just makes you understand how everything can be done that most people say can't. So at the time there was analog hdtv, Japan was coming out with that and so on. And the FCC had come out, the United States at Federal Communications Commission had come out and said, we want an all digital TV standard, high definition TV standard. And that was considered impossible by almost all the world. It would involve compressing what was normally a signal that was 50 times more signal than we had in our bandwidth for sharing HDTV to the consumer. And Kurt Carlson, Glenn Reitmeier and that team invented the approach to solving that, got the funding, led the grand alliance and invented what is now a conventional standard in tv. That was, you know, a moment of awe. And it also forevermore brought to me the feeling that what real change will be in this country, in this world, and will come from people taking on important hard problems, tackling them with great breakthroughs, going against conventional wisdom who said you couldn't do a 50 times compression and make the world a better place to really succeed in what you're doing.

What's your Golden Buzzer Insight for entrepreneurs? Something that they won't learn in an accelerator or in business school, but that they absolutely need to know to build something that actually changes the world.

The Golden Buzzer Insight is a child's poem by Shel Silverstein. Let me tell you the poem he says. Listen to the mussons child. Listen to the don'ts, listen to the shouldn'ts, the impossibles, the won'ts, listen to the never haves, then listen close to me. Anything can happen, child. Anything can be. And that is what every, every founder should think about when they hear what can be done and what can't.

I love that. That's great, great advice. Simple Print it out, put it on your mirror, read it every day. And before we wrap up today, Norman, are there any projects, upcoming, talks or places you'd like listeners to follow your work, whether that's substack or something new on the horizon?

First of all, yes, substack Norman winarsky.substack.com I've not posted recently because I'm involved in a project that is still stealth and it's taking a lot of my time and energy. I will share what that is in a couple weeks or less. So that's one thing. I'm also a founder or co founder or investor in multiple startups. One in a company called Next Sense, which is an ear in ear electroencephalograph, some breakthrough idea that helps us understand for the first time the human brain and the signals that come from it day in and day out as opposed to having to go to a doctor's office and get your eeg. I'm working with a farming company led by a four generation sixth generation family called Elemental that is using the AI capability in small robots to analyze fields for weeds for the quality and health of a plant. It uses imagery, it uses uses soil sampling and can fundamentally improve the crops by at least 10 20% but also reduce the costs and the use of chemicals by 90 or more percent. That's another breakthrough venture that I'm working with. There are two more I can't tell you about and I will continue to do this because at my stage of life. That's what keeps me excited, energized. I must be addicted to adrenaline. I'm not sure what it is, but I truly, really want to make a difference to people. And I think that's partly why Kate suggested that I talk to you.

Well, thank you so much again for sharing your insights with us today. It's been such a pleasure to have you. I really appreciate it.

It's a pleasure, Alan.