75. Shuo Chen - Boards and the future: going plural, encouraging innovation, adding value to entr...

Hello, and welcome to another episode of Enter the Boardroom with Neurol, the business podcast that brings the boardroom to you. I'm your host, Oliver Cummings, CEO of Neurol, the board search specialist and market leader, bringing science to the art of board hiring. Before we get into the interview, I want to let you know about the Neurol board community. One of my favorite elements is the Neurol Mastermind, a safe haven for board members to discuss challenges and opportunities with peers. As an observer, I've been struck by how valuable it is to just listen to these discussions. which often make me more aware of my own blind spots as a board member. It was this realization that catalyzed the launch of the New World Board Community Discussion Forum, where members can seek advice and share experiences on pressing challenges and opportunities openly or anonymously. I always loved the idea of being able to tap into the hive mind of the New World Board Community and get its best thinking, of tapping into its network to open stubbornly closed doors. Well, now, You can. Recent popular discussions include how to reconcile CEO-board differences about a chair candidate, how do I manage conflicts of interest as I go plural, what can I do to get our new CEO up and running as quickly as possible, and how to be a good investor director. If you want to know what's top of mind for your board colleagues, or get help with a challenge you're wrestling with, or open a door for you or one of your boards at the click of a button, you can try the community for free for 30 days. As well as discussion threads, you'll benefit from smart online networking, one-to-one career guidance with our headhunters, third-party board roles, mastermind groups, and Q&As with senior board members. Head to community.neurol.com to find out more. Today's guest, Shuo Chen, is a former entrepreneur who now invests in entrepreneurs and teaches entrepreneurship. She sits on a wide range of boards, which she buckets into 4 key groups: startup boards, As a general partner at IOVC, a Silicon Valley venture capital fund, where she's focused on the future of work and has made 60+ investments. She also sits on the Google Female Founders Steering Committee. Strategic corporate roles at Reed Smith LLP, EY, and Forbes China. Her academic affiliated roles include Decode, the largest tech and entrepreneurship community, and Berkeley Skydeck, the largest accelerator at Berkeley, having been on the faculty of University of California and a lecturer at Stanford. And finally, public service roles. She serves as one of 13 voting members on California's Mental Health Commission, overseeing approximately $10 billion annually in state budget. Shuo is a former Air Cadet, voice actress, and Guinness World Record holder, pipa, the Chinese guitar player. Shuo, a huge welcome, and thank you so much for joining us today.

Thank you so much for hosting, Ollie.

Shuo, that is an amazing portfolio you've built up. I'm really curious to hear about how you've thought about constructing it.

That's incredibly kind of you. I know there was a lot of information that we just threw out there, so I wanna help everyone make a little bit sense of how my career came together. I actually started out my career running a startup out here in Silicon Valley. We were building software and curriculum for some of the largest banks and universities in the world, really focused on personal finance. We created this startup at a point in time where there was really no personal finance or money management information out there. And so, we started building in this space. And we managed to sell into clients, uh, like Goldman Sachs, Bank of America, Wells Fargo, to name a few, and also ended up selling into universities like UC Berkeley and Stanford. And that's how I started to teach. Once our startup exited, I had the opportunity to see a very different perspective because as a founder, I was always an operator and really being in the role of an entrepreneur. And after we exited, I ended up joining Goldman Sachs out of that role, and I was covering technology within our investment banking division. And it was really in that role that I started working with some of the largest companies. in the world and started covering companies like Google, helping them acquire Motorola, $12.5 billion deal, very much a transition between different eras of tech giants. And also started to be involved in conversations like helping Google think about strategic investments into startups and those partnerships. And that's where I really realized that's where some of the biggest opportunities are in terms of bridging the gap between startups and some of the largest companies in the world. At least in Silicon Valley, we always joke, how do we know whether a startup is going to win or an incumbent is going to win? It depends on if the startup gets distribution first or if the larger enterprise gets to innovation first. And oftentimes it's bringing together the two that is the happiest marriage where you have the innovation that the startup brings and you have the distribution of this large corporate. And as I was briefly sharing with you earlier, I feel like ChatGPT is a great example of that where OpenAI, a relatively startup as of a company that was founded in 2016, was able to come together with a much more established player like Microsoft to enable distribution to a much larger user base. So at least the way in which I think about these exciting opportunities, I've dedicated a lot of my careers to really bringing startups and companies together. And that's actually what landed kind of the first half of the buckets of board roles I've been strategically creating. The first being sitting on boards of startups and helping them think about what does go-to-market strategy look like? How do you think about growth and scaling? And of course, most importantly, how do you establish partnerships with some of the largest companies in the world? And then the second bucket that I call strategic or enterprise, this is where I work with large large established companies like EY, like Reed Smith, like Forbes, and help them think through how do we position ourselves strategically for access to innovation and the most cutting-edge technology. And of course, very soon in my kind of Goldman days, I realized I really missed working with startups. Along with my business partner, the two of us decided to actually go back to serving startups, and we started the venture fund that we've been running since. So, for the past decade, we've been investing in the earliest stages of startups, really at that pre-seed stage when it's just a founder or 2 co-founders with an idea that's just starting to build in those early days. And in that role, I've invested in over 60 startups. And out of those 60 across the past decade, we've been very lucky that 11 of them have seen exits. So that means either they've gone public in an IPO or they've been acquired by a larger player. We now have portfolio companies that have been acquired by folks like Goldman Sachs, like Caterpillar, like Ford. And it's also in this venture role where I've had the fortune of being able to learn really as my daily job, and then also be able to summarize that learning and hopefully share some of the stuff that I'm learning through my teaching role. So, been on the faculty at UC Berkeley, as well as been a lecturer at Stanford. And of course, given these academic affiliations, I've been pulled onto academic and nonprofit, as well as public service boards. So, of course, the public service piece is the last piece that I see as giving back. That's really where my heart goes out to. One specific area that I know you called out around mental health that I've been working on Oftentimes when you work with startups and corporates alike, but particularly startups, that's where you have some of the most ambitious people out to build their own company, um, but also have the least structural support. It's not like when you work for the government or for a much larger organization where they have all these existing resources that you can tap into. Oftentimes startups don't even have basic benefits set up yet in those early days, and you're just trying to figure out as a small business, as an entrepreneur, how do I even make it in this world? I can't necessarily tell my family everything 'cause I don't want them to worry. I can't necessarily tell my employees everything, because I don't want them to experience all the ups and downs that I am as the CEO and founder. So, there's got to be better ways to support all the entrepreneurs that are actually driving all the change that we're seeing in the world when they hopefully become the large public company or the large acquisition that they eventually do become.

Amazing, and such an inspiring example as well. I'm really interested in your focus on the future of work. both as an investor and as an academic. I'm curious to hear what you are seeing that you think anyone listening to this sitting on boards should have top of mind.

I want to share this somewhat controversial sentiment coming out of Silicon Valley that the future of work is fractional. Let me explain what I mean by that. So, it's not necessarily referring to the fact that there's gig work or the fact that people are gonna be working from home, but it's really the fact that future of work is really how we think about Solving problems. So, when we think about what we do at work, regardless of what our verb is, whether it's to write, or whether it is to speak, or whether it is to connect with other people and build relationships, whatever that verb might be, fundamentally, at the end of the day, it's all about problem solving. So, when we really talk about future of work, or at least the way that I like to define future of work, is fundamentally, it is about future of problem solving. And if we want some of the best problem solvers in the world, we have to be able to encourage them to be curious and to explore. In fact, one of my favorite quotes in the world is from former Secretary of Education here in the US, Richard Riley, who said that we are currently preparing students for jobs that don't yet exist, using technologies that haven't yet been invented, in order to solve problems we don't even know are problems yet. And so, given that future state of so many things being in the change, the way I think about future of work or future of problem solving is that curiosity has to be stemmed and rooted in what we're already doing. So, whatever our full-time role is, whether we are currently full-time student even, or full-time professional working as an executive, hopefully, we're always curious about exploring some problem that we're coming across in our day-to-day lives that we wanna figure out a solution for. And so, if we're dedicating our full time to just looking at a problem, we might not actually be able to get to the root of it, because most of the problems that we experience Come in the form of a day-to-day pain point, right? So, that's why I think that's where I see merit in that the future of work is fractional, and that our full-time is gonna be in this job, but we're gonna be more acutely aware of the problem that we're stumbling across so that fractionally we can be exploring that problem more and trying to solve that and tackle that. So, right now, I think whether it is in our full-time board role or professional role, it's very easy to get bucketed into being that of a problem solver. So, you have one problem, you solve it, and the end, that's your full-time job, right? But I think the future will be where We're evolving from the role of that of a problem solver into that of a problem explorer.

So, what are the implications that a board member listening to this, in practical terms, what are you doing on your boards?

Great question. 2 points. So, there's one takeaway for listeners who are individuals wanting a personal takeaway, and the second is a professional takeaway. So, the personal takeaway is build a portfolio career. What I call portfolio career, regardless of what that term might be, I'm Encouraging people as an individual to always think about how do we expand our role from that of a problem solver into that of a problem explorer. And in being curious about exploring problems means that you're gonna take on extra responsibilities, and sometimes it means serving on additional boards. For example, if you're currently working within a company, I strongly encourage you to consider sitting also on the board of a startup. It's a great way to learn from startups who are working at the cutting edge of the industry, but then in return also offer your expertise and depth of experience in the industry. And then And vice versa, if you're currently working at a startup, think about exploring opportunities to work with a larger corporate or serve on some sort of board of advisor, even for a nonprofit, to expand your world of knowledge. That's my personal takeaway. So, build a portfolio career. In terms of a professional takeaway, in terms of boards, I would certainly ask more questions to encourage executives, fellow board members, to think about how do we dedicate more time to aspiring entrepreneurs within our organization and how can we better support them? And the reason why I strongly believe in that is there are so many examples of people who have started amazing companies out of existing companies, but had only they had the support or even investment from their previous role, then this previous company would've had a huge share in equity in the upside of the future success of this new startup, whether they end up doing this externally to the company or even within the company. So, we actually did some research and it turns out That out of the 7 companies in the world to ever have reached and surpassed the trillion-dollar market cap benchmark, 6 of them were actually started fractionally. So, 6 of those companies, the founders were fractional founders. They didn't just quit their job cold turkey. They actually started exploring a problem and they built it as a part-time project before leaning into it full-time. And when you expand this to Fortune 500 companies, we learned that 1 out of 4, every Fortune 500 company, so that's 25% of them, were all started fractionally. And so, as a board member, my takeaway would be, how do I better support the structures within this company so that one, hopefully I can keep the innovation within the company and have better structural supports to launch new products and services within the scope of the company? Or 2, if it has to be spun out of the company, how do I strategically get exposure to the upside? Do I invest in the alumni of this company? What do I do so that I can continue to stay relevant as alumni leave the company and go start amazing projects of their own?

So, the investor in me is thinking, that makes sense. That's all about diversification. But there's also the extreme of that, which is diworsification. When you spread yourselves too thin, you end up doing nothing. It was Google who had the— I've forgotten what they call it now, but the 10% time where people were given time to go off and do whatever they wanted. And there was a big fanfare around that. And I think it's quietly moved on and didn't quite work. So how do people strike that balance? And where do you see people going wrong with that?

I'm so glad you asked that because that would've been my next Cautionary tale. So Google did famously have the 20% rule where 20% of their employees were allowed to dedicate their time to exploring these new projects. And actually many of Google's biggest products and services like Gmail and Google Maps actually came out of this 20% time initiative. So by no means was it a failure by any stretch, right? When you have some of the most impactful products today still coming out of that 20% rule. Part of the— having covered Google, by the way, at Goldman, I've seen some of this internally. I just wanted to share that it wasn't So much a quiet fading away as there was a structural effort or initiative created to help enable some of these projects. For example, Google X was one of the entities that was created in order to enable this. And, uh, you also see the strategic transition of Google from being Google to Alphabet as a parent company and having all these subsidiaries. So you just had more legal entities that were created to properly govern all these new initiatives that came out. But Google X, the moonshot factory, is a great example of Google's effort to try to institutionalize a lot of these changes where they would structurally explore problems, identify the most promising problem areas, try to build solutions, and try to launch these initiatives. And so, you have Verily, the health company, you have Waymo, the self-driving company, they all spun out of Google X eventually. So, I, I do think it's important to think about structurally how to create a system where you can actually continue to enable innovation. Internally within the company. So there's not actually a lot of companies that are structured like Alphabet in terms of enabling all these portfolio companies. And then of course, you also have GV, like Google Ventures, Google Capital, et cetera, that are investing at different stages of companies. They of course look at companies that their own alumni have started, but they also look at companies that are not Google affiliated from day one. Um, so they make strategic investments there as well. So there is a way to structure things so that You can still stay focused on the core, like Google staying focused at the core on search as a business and advertising as a business model, but then create the legal structure to support a lot of this other innovation that come into place. To answer the broader question that I think you were meaning to ask, within a company, of course, you can create these legal structures to hopefully enable innovation without getting too far distracted from your core product. But I think the broader question may be as an individual, as an executive, or on a personal basis, how do I not stay distracted with my own time and my own mindshare. And I think the way I personally like to think about it is all of us have our own kind of area of focus, like our core job, that problem that we're dedicating our time to solving. I think it's pretty hard to get distracted from that. Oftentimes what I have encouraged folks to do is how to strategically dedicate a portion in their calendar's time to be thinking about other questions. Now, of course, if we're trying to pull back, then do a calendar analysis of how much time are you spending where, and if you're not spending enough time focused on one problem or one industry, one business model one area, definitely focus. That, that, that's step one. But step 2, if you've already done a great job of focusing, then the next step is how do you pick up just one new habit on a daily basis, on a weekly basis, or on a monthly basis that give you some exposure to new information to think about new opportunities? And so maybe that is being a new subscriber to the New World Podcast when they weren't subscribed before. Maybe it is signing up for a new newsletter, following someone new on LinkedIn, subscribing to a new YouTube channel that they've never followed before. Or maybe it is even downloading TikTok when they just have no habit of using TikTok.

One of the trends you've talked about is the automation of work in the context of the future of work. And I know you've lectured and you lecture on AI. I'm really interested to hear about your perspective on how boards should be thinking about AI right now.

When I think about future of work, again, I'm defining that really as future of problem solving more broadly. So whether it is in terms of the what we do day to day, that's the work, or it is the who does the work, that's It's of course the workforce or where we do the work. Um, and of course that's the workplace. Across all of those components, we see technology coming in all sorts of unexpected ways. Just at a very high level from a jobs perspective, at least the latest data that's now released is telling us that 80% of the jobs available in 2030 weren't even invented just 5 years ago. So that tells us from all these new technologies, whether it's AI, AR/VR, cloud computing, blockchain, et cetera, it's really accelerating these quick changes in job. And that is 100% true in the world of AI and specifically generative AI. And when I think about all of these technologies, not even AI specifically, I strongly believe that at the end of the day, technology is going to augment the way that we do work. And this is again particularly true for AI. And that's because when you think about fundamentally what is AI, AI is really composed of 3 major things. It has 3 main pillars. The first pillar of AI is data. So you're leveraging the data that you're creating in the day-to-day of doing business. to identify patterns for regularities and irregularities. You're trying to identify insights from all this information. The second pillar of AI is hardware, is compute. That's all the hardware that you're using to store all this data that we were just talking about and to process this data in order to identify insights. And the third component of AI is algorithms. So that is how computers learn, how they build up this process to identify insights. And you can see whether it's the data, the compute, or the algorithm, at the end of the day, it's always about identifying insights. So AI is particularly good at congesting a huge amount of data, processing it through compute, putting it through the most efficient algorithms, and identifying these insights for you. However, what it can't necessarily do yet is to implement those insights. That's a uniquely human role. So that's why I see AI as augmenting the way that we do our jobs, where we can actually start to automate And augment parts of our roles that are incredibly repetitive and have AI do all the huge data processing, do all the hardware compute, do all the algorithmic computations to identify the insights. And then we as humans come in to do what we are uniquely great at, which is things like building relationships, managing complex stakeholders, convincing people that this is the right strategic direction to be taking, thoughtfully thinking through whether or not the input and output of that entire AI algorithm even makes sense and it's Flagging the right pieces of insights to us, interpreting those insights to figure out what we actually do with that. At least my takeaway, whether it is an executive role or even a board role, is first of all to understand the exact impact of AI. What parts of the job is it augmenting? And then the second step is figuring out now that more of our time is freed up with AI automating a lot of the boring and tedious tasks, what do we do with all the new time that opens up? What are unique roles, skills that we need to be upskilling towards? And how can we be better designing the work, the workforce, and the workplace to adapt to this new time that opens up so that we can actually build deeper personal relationships with each other, deeper personal relationships with our clients and our customers, and be more deeply involved in understanding how to make complex strategic decisions across a very different stakeholder group.

It strikes me that there's a lot of what I'd call tail wagging the dog, where people are saying, we've got it, we've got this thing, great thing now, AI, how are we going to use it? Rather than starting with the problems and then figuring out what are the solutions, could AI be one of them? I guess across your portfolio, you must be seeing the good, the bad, and the ugly. Curious to hear examples of each of those categories that you could maybe share.

100%. So even when we're just looking at board transcripts or even earnings calls, we can see the number of times that AI or generative AI specifically is mentioned has shot through the roof in the last year. Particularly true for news headlines as well. But when I'm thinking about examples of the impact of AI on boardrooms, it, it's fundamentally what problem is this company solving? It's exactly what you mentioned. And is AI a great tool for solving that particular problem? So, the question that we always go to as a board member or as a board chair is always, all right, what is the fundamental problem we're solving? And what technologies can we leverage to solve this problem more efficiently, faster, better, cheaper? And if that technology is not relevant, doesn't offer the best, most efficient solution in this particular case, it's not relevant for us and we don't consider it. So, it's never forcefully trying to bring AI into a conversation, but it's, is it a natural solution to the problem that we're solving? Can we use it to do things cheaper, faster, better? That is uniquely true for a lot of the startup boards because startups are still trying to figure out how are they going to get to product-market fit? How are they going to get to mass distribution? How can they get into the hands of customers? And unless they're offering something faster, better, cheaper, customers aren't really going to consider them. I think you see more of a tail wagging the dog from an enterprise or corporate perspective where the company already has massive distribution, things are going well, there is extra revenue to tap into for strategic research and development. And that's where you have a, can we bring elements of AI? And you see a little bit more of this gap between what is the problem we're solving versus the technology that is the coolest, hottest of the day. I want to just pick one of the 3 to look at. So I think there's a lot of people talking about data. So how do you tap into new innovative sources of data that we didn't look at before? How do we cross data silos? Tons of examples from portfolio companies that have been in that space. And have been doing that for the past decade, by the way. Most of the successful companies tend to be working on something before they're cool, because if you start working on something once they're cool, you're always playing catch-up and you're never at the forefront of things. I'm not going to dive too much into the data piece, but the example I want to share is actually on the hardware compute piece, because this is where most people are not necessarily thinking about the details of what that is. I think the data and the algorithm pieces are just very kind of sexy, and so there's a lot of attention. But hardware compute, I want to share an example. This is actually a portfolio company that we were one of the earliest investors into. This is 9 years ago. Um, when we first met the founder, this is a decade plus ago, he was actually still a hardware engineer working on the wing design of the Boeing 787. And, uh, when we met, we had this conversation around how this engineer was telling us, hey, it's an incredibly inefficient process to design even just the wing design and to even put the whole thing together. Basically, for anyone who has had experience in aviation, um, I'm sure you'll be able to validate this, where in order to design, you sketch out everything. You upload it into software, you submit it for personalized manufacturing, you get all the pieces back, test it in a physical environment, and collect the data, optimize the design, and then you start this process all over again. Takes a very long time just within one team, and just imagine all the teams coming together in this huge physical hangar, say, see, in Seattle, assembling the tail, the wing, the body, all these different components together, doing testing, and then all the teams going back with their data, and then running this process all over again. So, this engineer decided to say, hey, maybe with all the software tools that we have access to, we could possibly automate this process. upload all the designs and virtually simulate what it looks like for them to all come together and test it in a virtually simulated environment. In doing so, he saved his wing design team $180 million and 3 months in research and development time. Of course, massive savings for just one team. And so, he got super excited and said, imagine if we scale this across all the different teams that are working on the Boeing 787, and imagine if we did this for all the models at Boeing, how much faster, better, cheaper we could be developing new plane models. So, he brought this idea up to his boss, and it kept on going up to the C-suite. And 6 months later, you have this meeting where he sits down with C-suite, and of course, he expects this to be like the green light meeting that allows them to kick off this amazing product across all the different plane models. And he sits down, the C-suite tells him, hey, amazing idea. Thanks for walking this through with us and testing for the last 6 months. It's going to be a quick meeting. We're not going to do this. And of course, his first reaction is, I just spent the last 6 months proving to you that time and money savings-wise, it works. And all he managed to squeeze out was, Why, why are we not gonna do this? And it relates back to the earlier conversation we had as well around companies needing to focus. And C-suite had a super straightforward answer for him, and they said, we can't do this because we're not a software company. We need to stay focused on the development, design, and selling of planes, which is our area of expertise. It doesn't make sense for us to go into software. And in the context of the last conversation we had around companies staying focused, of course, Boeing has their own shareholders, they have their own quarterly financial reporting. It makes sense for them to stick to their core business model. But this founder at the time didn't really understand. He was quite frustrated that he had built this project part-time, proved that it worked. So he left to start a company called Rescale. And in the typical American underdog fashion, uh, he hired his boss to work for him as the CTO. Till this day, still his CTO. Um, and, uh, over the last decade, he's finally learned over time why Boeing had told him no. And he's very grateful that he had gotten this no. And that's because after he left his startup Boeing, to no surprise, his first paying customer was Boeing, because he already proved this internally. That was a tool that they needed. But after he had sold Boeing, he realized this probably means that I could tackle other players in aviation so I could sell to competitors that I couldn't have done had I stayed internally to Boeing. So he then was starting to sell into players like Airbus. And once he was able to tackle aviation, he realized that there are other industries like aerospace that involve the same logic of complex hardware manufacturing, design, testing simulations, etc. So he started to get paying customers like NASA and SpaceX. Techs. And then from there, he expanded into other types of hardware like automobiles. So he had paying clients like Toyota, Hyundai, Nissan, sold into advanced manufacturing with suppliers like Siemens out in Europe. And there was a pivotal point where he realized it's really not limited to hardware anymore. It's not just auto companies that need to do crash testing that they want to do the first round in virtual. It's not just rocket launches, high stakes that they need to test. It's actually also other types of intangible research as well. So he started to sell into academic institutions like Harvard and MIT where they run research projects. He started to sell into financial services with Morgan Stanley as one of their largest paying customers, where Morgan Stanley leverages their simulation run through iterations well before they make any big investment decisions so they can iterate through models, investment models, and test different assumptions. So long story short, you actually can start very focused as a company, identify one very specific problem that is not at all AI related, but then realize that actually you need access to a lot better compute and you want to run through these simulations and iterations that now people call AI because you're running through these complex algorithms, you're leveraging data, leveraging the compute that you have access to. And he started with one very specific problem, which is just the wing of a plane, and he was able to expand from that into aerospace, into automobile, into advanced manufacturing, into financial services, and even into biopharma. So, I think being able to start with one very specific problem, leverage technology only as needed, is really the way to go. And we see that time and time again in our portfolio companies where they start with one very specific problem, they start to scale vertically, horizontally. The pattern here is also, if I could call out, that this founder was a fractional founder. He didn't just quit his job cold turkey. He validated that there was a real problem that people really wanted a solution for. He validated that he could either help them make more money or save more money or save more time and resources. Once that's proven out, then he leaned into it full-time to really build out the solution that then scaled.

It's an amazing story and it ties into a theme that I've been observing recently. And we, we host these masterminds as part of the New World Board community where we groups of chairs and independent directors coming together, sharing challenges they're facing. And there've been a few recently where chairs have shared their concerns about whether their organization is being innovative and ambitious enough. And what struck me has been that the people they had around the table were finance backgrounds, legal backgrounds, big corporate backgrounds, and they haven't got any people with entrepreneurial experience. So I'm really curious to hear how you, as someone who's an expert in innovation and entrepreneurship, thinks about that challenge. For that Boeing board member, should they be beating themselves over the head for having— there was a culture of enablement and value capture, or actually, is that okay that you have these things spinning out?

That is such a spot-on question, Ali. I feel like that's a classic innovator's dilemma question, right? Of you become a success because you're really good at that one area. And so, of course, you double down, you focus on that one area, but that's also precisely the thing that's preventing you from keeping an eye out for the medium to long-term horizon of what else might kill you as a So I think now boards increasingly more so than ever before do care about learning about technologies. But if I were talking to any board, even in the Boeing case, they did an amazing job of staying focused, right? That's what they were supposed to do. And you could argue in some ways they didn't necessarily fail as a board because they not only stayed focused, but eventually they were able to purchase software of an external solution. But where they perhaps missed out on was the upside, the equity upside of strategically investing or partnering with a company like And I think the way that I think about it is twofold. One, it is precisely this partnership model that we were discussing before. How do you create some sort of structure within the company that enable partnerships like this, that either fuel intrapreneurship or empower entrepreneurship? That's the first question of what is the structure that enables partnerships in these models? I think the second question is, when I'm thinking about the makeup of any board, is there an innovation committee? Is there one specific committee that is dedicated to this? You don't necessarily need to have the entire board that is not represented by corporate individuals. Right. But is there a strategic advisory board even that's dedicated to thinking about questions of technology? Or if there is no board-level representation that focuses on this topic, then at least doing some sort of board-level education. So, in my academic roles as faculty at Berkeley and lecturer at Stanford, I teach plenty of executive programs where my job is to come into a board, and I've taught for various public company boards where I come in and I share my experiences as a public company director, but also as a startup private company director. And I share how we think about some of the most cutting-edge technologies and where opportunities are. So, if you don't have a dedicated infrastructure to be thinking about this as a board, at least have the board have some sort of a dedicated learning program where they get exposure to these technologies and see the potential for how this could happen. It could be in the least weight involvement I've seen is I get brought into a board meeting and I teach a 1-hour-long session or workshop. workshop that just talks to the existing board about what is out there. Let's look at some case studies. And then the board sits down and debates among themselves which examples are relevant versus not, if it inspires ideas or not, if it inspires ideas of what they should do versus cautions against what they shouldn't do. That's the least weight of involvement on the spectrum. But the most involved of the spectrum on the board is having some sort of a dedicated entity, whether it's a subcommittee or a separate strategic board of advisors, whatever that structure might be. dedicated to thinking about where innovation and technology fits in.

The way you talk about it there makes me think maybe that Boeing board director shouldn't beat themselves up too much because there's clearly a survivorship bias there, which is for every one great success story, there were probably 1,000 that failed and they couldn't have pursued them all. And so the risk mitigation models you talk about there for making sure you're filtering through and capturing the value are probably the best that you can hope to ensure a As a board member.

I 100% agree. As a VC, our industry is high risk, high returns by definition, right? But it is possible to mitigate risk when you are focused. And so, there is absolutely benefit to focusing. For example, I will really only look at super early-stage companies headquartered in Silicon Valley, focused on building enterprise software for large companies. That's my area of focus. And that's why I get to focus on future of work, because those are the suite of all the solutions that Whereas as a board of director, you might have alumni of the company that does all sorts of different things. They might be going out there and trying to start the next autonomous driving car, and it's just a very different space than what you might already be very familiar with. So, you're spot on in that there's definitely some sort of a risk profile to consider there, but just because it's high risk doesn't mean that you don't have some sort of a dedicated structure to mitigate for that risk. And oftentimes how you mitigate that risk is by building a robust process. Yeah. So, if it passes through these filters, then I've done a good enough job of filtering all the good ones through and enough bad ones out that at the end of the day, probabilistically, I'm going to be able to land a number of returns that more than justify all the companies that I'm investing in, even if majority of them fail. That's really how we as at least venture investors think about that risk mitigation return piece. And I think we can actually leverage that mindset within a corporate board setting as well, which is what is our risk-return profile? And how can we set up a process that allow us to filter enough good things through that then more than justify everything else and that allow us to block out everything that we absolutely do not wanna be associated with? In the case of Rescale, actually, it's a great example where they started a decade ago, but they were just able to raise their latest growth round led by Microsoft and Nvidia, and it's taken them a decade to get to where they are. So absolutely could have been high risk. And then the strategic question here for board members would've been, does the potential return on this risky business justify us potentially proceeding forward? So, I do think it's important to, to ask that question of, do we have the internal process in order to stomach the risk so that we can see the upside returns?

Can we deep dive into your startup board experience? I'm, I'm curious to start with your experience as an entrepreneur and to hear what your experience of boards was as an entrepreneur.

Absolutely. I think as an entrepreneur, you're very hacky in the early days, right? You're nowhere close to the institutional enterprise corporate boards that we were talking about just now. And in those early days, boards almost seem to be a thing that slow you down. But I think what I've come to appreciate over time is, in my days as an entrepreneur myself, it was, how do I manage the board as this additional group of stakeholders? But I think over time, I've come to appreciate that it actually is strategically intended to help me slow down and reflect so that I can identify problems before they become life-threatening. Lightning problem. And I think for startup boards, the most important piece there is how do you design the structure and reporting mechanisms so that board members have access to the right level of information? They're not too involved in the day-to-days and they're not too high level talking about the overall trend of where AI is going in the next 12 months. They have the right level of information in order to ask the right questions that help get to the best outcomes. So I think at a corporate enterprise level, by that point in time, we've already had many iterations to work through. So we know exactly what kind of information filters up. to the board, what kind of questions get passed back down to the executive team. That is established process. For startup boards, we're figuring that out, and that's why it's incredibly important that you have people who have experience with that, that can grow with your board as you're going from the super early days to growth company to becoming a pre-IPO company. So, your question around, hey, let's dive into startup boards, that would be my starting point of how do we make sure there's the right level of information. And then beyond that, a lot of it in the early tends to be more around distribution risk, right? How do we grow as a company? How do we think about growth and scaling? And then there is a tipping point that once you've hit that place where you are growing faster than you can afford to handle, where you're getting more demand than you have team members to build that supply of product or service, you've reached that tipping point where you're on the other side of then thinking about, great, like I've gotten past that initial traction point. Now how do I think about strategic opportunities? Where do I then focus my time? So, I would say at that tipping point and before, everything is growth and scaling related, all figuring out how do I get the startup to take off? And then, once things take off, then it is how do I strategically delegate my time? What are the important questions to be thinking through, whether it's board-level governance, whether it's risk and compliance, whether it's geographic exposure risk? Those questions can come a little bit later after the startup has obviously reached into the

Can you bring that to life with some examples of where you've seen boards both add most value and destroy most value?

There's so many examples, whether it's from firsthand experience of boards I've sort of done, or portfolio companies we've invested in, or even just public boards that we've seen out there, like the most recent OpenAI board developments that we've followed. Maybe what I would do is take a quick step back and just high level, at least from a Silicon Valley startup perspective. Tech company perspective, just common patterns I've identified in the most effective boards versus the ones where they don't go very well. So, effective boards always have very clear structure. So, the structure oftentimes is dictated by the founder in the early days of what structure is most useful to them. So, I've had founders who say, hey, I'm going to send weekly updates because those are the same updates that I'm going to share with my team members, and I'm going to share that with board members. In fact, I even have founders who say, I will you to my Slack channel. You as a board member don't have to look at anything, but you should have access to this information so you can get to any layer of granularity that you want. You can poke around my Slack channels. You can even search for specific words and see if we're having enough conversations about area that is highly topical that you think is important. And I don't necessarily have time to field all of your questions, but you can just directly look at our internal corporate communications to see if that is being covered as a topic. So, that's the most granular, but I've also had founders say, hey, I don't do well with that kind of intervention. or that much access into what we're building now. But what we're going to do is we're going to do quarterly updates. So, I'm going to send you an update once a quarter. I'm going to highlight, these are the 3 top questions for you. These are the areas where things are going really well as an update. These are the areas that things are not going well, and these are my asks, right? So, my asks are for you to make a specific introduction to a client or a potential hiree, or to give me insight on where the future of one specific industry development is going, or where a regulation is coming along and how that might affect our growth and scaling plan. So, I've seen that entire spectrum happen, but the pattern here is always that the founder dictates that structure. So, founders, I think, or CEOs, or board chairs, they need to come in knowing what they want and set that example to the rest of the board to say, look, this is the structure that we're going to follow. Sometimes these board meetings are synchronous, sometimes they're asynchronous, but whenever people are together, I would always vote for do as much pre-reading as possible and then come prepared and off electronics. That's probably just the best use of everybody's time synchronously. As much as we think we can multitask, we're just not the most amazing if we're on our phones at the same time. We're just not able to be thinking to the same depth and extent as if we were 100% present in here. So, patterns, specific structure, clear incentives, very specific ways for people to async or synchronously add a lot of value in real time. Things that don't work well is the polar opposite of everything that I've shared, but particularly on structure. I think structure is probably the thing that I've seen kill a lot of startup boards where one time they're sending out some updates and then they miss some updates. And other times they expect a completely different meeting structure. They iterate through a lot of different things and incentives are not clear where it's not very clear in OpenAI's case. Is it a nonprofit? How does the for-profit arm come in? A very complex board structure. No one with experience to govern those legal entities. There is a whole world of problems that can happen when you get too creative in the early days. So, for startups, my way of thinking is always in the early days, you are solving a problem. You're focused on solving that core problem. Everything else, just stick with plain vanilla as much as possible and save the complexities for later on when there is a better reason why that more complex structure has to exist. Always keep it plain vanilla in the early days.

That's interesting. That echoes the insights that came out of The CEO Next Door, where they identify the 4 behavioral traits common to the highest performing CEOs. And one of them is that reliability. And I think it seems like there's a nice echo there in that structure that you're talking about and the reliability of CEO, founder to deliver. Time has flown by, which means it's time for the lightning round where I say a short statement and ask you for a quick response if you're ready.

That sounds great. Let's do it.

First up, best book every board member should read and why?

The Originals by Adam Grant. It's one of my favorite books for all this innovation, original thinking that we're just talking about.

Boardroom behavior that irritates you most?

Being on phones. If we're all there, we should absolutely have no electronics and be present.

Most valuable board ritual?

One of my favorite things I've seen boards do is build a personal relationship through some sort of an offers and asks structure, where board members come in and say, here's what I'm offering, and here's what I'm asking. And you have board members and executive team members proactively reaching out to each other to offer help and to ask for help. And I think those tend to help build some of the best personal relationships on boards.

Favorite quote?

Former Secretary of Education here in the US, Richard Riley, who said, we're currently preparing students students for jobs that don't yet exist, using technologies that haven't yet been invented in order to solve problems we don't even know are problems yet. I love that because it is so incredibly humbling. It encourages me to always be curious as a board member, to ask more questions and to learn more.

Most significant professional insight?

The power of fractional founders. I didn't realize before that so many companies were actually founded by people who didn't just quit their jobs cold turkey, but actually explored on the side and then turned their part-time projects into their full-time startups. So, I think that was incredibly exciting to stumble across, and it certainly helps me think about how companies are created in different ways now.

Worst professional advice you've ever received?

Work hard. I think the worst professional advice I've gotten on working hard came from Wall Street days where I specifically remember I had multiple people who said, hey, you just need to put your head down and work really hard. And I've realized over time, it's not about working hard, it's about working smart. You can be way more impactful and efficient and effective at what you when you know where is the right area to be spending time.

What have you changed your mind on about boards over time?

Thinking about who is in the room. I think there tends to be conversations now around who do we put together on a board. I have truly realized that when you get the right group of people together where they don't all agree with each other, where they can challenge each other to the right extent and build the right kind of depth of personal relationship where they feel comfortable challenging each other and having real debates, that's where you get the best board meetings and results coming out of those meetings.

When was the last time you got a significant judgment call wrong in the boardroom, and what did you learn?

So many, all the time. So, maybe I'll just cite the latest example. One of the biggest misjudgments I've had is around a specific development of what it's like to receive strategic funding from a larger player. At the time, I just thought that larger players would have over-domineering ways of, you have to follow a specific reporting process as a But what I've realized over time is it really depends on who that corporate or enterprise is. You can receive a huge strategic check and actually receive a ton of support and still have the freedom to operate. So, it doesn't always work out in a poor way. I've had a portfolio company acquired by Ford, truly innovative project at the time, got shut down 3 years after they were acquired. It was amazing exit for all the investors, but for all the founders and for investors who were excited to see that go to market and be implemented in the world, shut down unfortunately due to a lot of other reasons. And so, that was part of the experience that had scarred me from figuring out how these partnerships work. I think that was a recent misjudgment in a couple years before the pandemic that really made me realize, actually, no, I still believe in the power of partnerships between startups and corporates.

How are you better today as a board member than when you started?

Pattern identification that is learned over time. I think it's one thing to theoretically understand, and it's another thing to have the lived experience to be able to tell stories for why it works one way versus when it doesn't work. So, I think it's one thing to go to business school or go to an executive program and identify these patterns, and a very different thing to live and experience through it. So, hopefully, I am a better board member because I have more humility, because I've made mistakes, and now can reflect back on those experiences and empathize with the executive team and the CEO and founder.

And finally, 3 things our listeners should take away from this podcast if they take nothing else.

One, invest in fractional Empower the entrepreneurs that you know in your lives to help promote more of that healthy entrepreneurship and problem solving. 2, spend a lot more time thinking about how exponential technologies would impact future of work within our company. Does it change how we do work? Does it change who does the work within our company? Does it change where we do the work strategically? Are there better digital tools to be using where it allows some type of collaboration in the workplace that wasn't possible before? And lastly, I would think about what is one new daily habit that I would pick up as a board member that would make me more effective? That would enable more learning and depth of understanding over time.

Shuo, that has been absolutely fascinating. Thank you so much for taking the time to share your experience.

Absolutely. Thank you so much for hosting, Ollie. And I would love to offer myself to be a resource to all of our listeners as well. They're welcome to reach out to me either through you or through LinkedIn. Always happy to learn from folks who have listened and disagreed with anything that I've said. I want to learn and also want to learn from people who want to chat more where they said, hey, I've agreed and I want to discuss this topic further. Wanted to say thank you again for hosting and want to be a resource and be helpful.

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