Former Amex CEO on What Business Leaders Are Getting Wrong

[00:00:00] [SPEAKER_00] And I remember asking Patrick, I said, Patrick, define the market that you're really interested in, global GDP. I said, wow. What's interesting to me about the venture industry is they tell founders to be innovative, but the industry itself really hasn't changed that much. Do you believe in the principle that all people should have opportunity? Most people would say, yes, I believe in that.

[00:00:29] [SPEAKER_00] Then the question is, do you believe in merit? I absolutely believe in merit.

[00:00:37] [SPEAKER_01] Ken Chenault, former CEO of American Express, chairman of General Catalyst, now author of Equal to the Task. Welcome to the Newcomer Podcast.

[00:00:48] [SPEAKER_00] It's great to be here, Eric.

[00:00:49] [SPEAKER_01] What advice would you have for a college freshman today? In the book, you were late into high school, really finding your ambition. And then even your freshman year of college, you're taking risks that could disrupt your whole life. Talk a little bit about your experience and then whether you'd give the advice to college freshmen to do some of the same things. Good.

[00:01:17] [SPEAKER_00] That's a great question, Eric. You know, one of the things I think that is important in my story is growing up at the time that I grew up. I was born three years before Brown v. Board of Education, which basically said you can't segregate black and white kids in school. If I was born 30 years before Brown v. Board of Education, we wouldn't be sitting here.

[00:01:46] [SPEAKER_00] My life would have been totally different. So I was born in the midst of the beginning and through the civil rights movement, the black power movement, the anti-Vietnam War movement, the hippie movement.

[00:02:03] [SPEAKER_00] And what I think was really important about that time for me is while in my early years, I was a disinterested student, I was a passionate learner. I loved to read a range of subjects.

[00:02:21] [SPEAKER_01] Norse mythology you talk about? That's right.

[00:02:24] [SPEAKER_00] You know, I was obsessed with a book called The Children of Odin, which was just fabulous. I was, I loved Tolkien. But I think what, I love history. I'd read books on biology or botany. I just didn't study a lot in the classes that I took.

[00:02:45] [SPEAKER_00] But I think that what really has made a difference for me is a willingness to explore, to find out what are the things that frankly turned me on, that are really interesting, that I can feel passionate about, and not be defined by my environment.

[00:03:12] [SPEAKER_00] You know, I think, you know, one of the mistakes people make is they're overly rational about their life. And what happens is if you're overly rational, then you're going to be more conventional because you're not going to stretch yourself. What my life has been about in growing up is I wasn't afraid to take chances.

[00:03:40] [SPEAKER_00] I wasn't afraid to step into areas that I didn't know a lot about and I could really learn about it. And my advice to someone finishing college, the first thing I'd say, which I think is critical in giving advice, you got to set the context for people.

[00:04:03] [SPEAKER_00] And part of the context that I would set is, look, hopefully, you're going to live a long life. Starting out, what you want to make sure, and this might be strange to start with, but try to figure out what are three or four things that I really believe in? What are some of my core beliefs and values?

[00:04:30] [SPEAKER_00] Because what I'd say to them is, most people can't tell you that. You know, you know, Eric, you talk to someone and you say, well, talk to me about what you really believe. And people will tell you what they have done or what they're doing. So that's the first piece of advice is you have an advantage if you, at periodic times, step back and say, what do I believe in? What are my core values?

[00:04:58] [SPEAKER_00] Then you can expose yourself to a wide array of opportunities. And very importantly, I would say to someone starting college, find some things that you're really passionate about, that you can get energized about, that will confound you. Some of them may be difficult, but you got to really feel engaged.

[00:05:23] [SPEAKER_00] And then what I would say is, don't focus totally on, is this going to set me up for a career? I think that's a big mistake.

[00:05:35] [SPEAKER_00] But I really believe that, particularly with AI, and we'll talk about the challenges later, this is one of the most exciting periods to be alive and to be 18 years old. It's an incredible set of opportunities.

[00:05:58] [SPEAKER_01] Would you say definitely go into business? I mean, you know, that's sort of the path, you know, you go to law school, but then it's Bain and then you're in industry. Like, would you tell other people, like, go into business?

[00:06:12] [SPEAKER_00] It really depends. You know, I think at the end of the day, I would say don't, unless you're really sure. You know, some people know from the day they're born, I want to go into business or I want to be a musician or I want to be an artist.

[00:06:34] [SPEAKER_00] But I think 18 and on is a time to really learn. Learn about the world. Learn about yourself. Try new things. Try different things. I thought growing up, as I say in the book, that I wanted to be a civil rights leader. I had no idea what it meant to really be in business.

[00:07:03] [SPEAKER_00] And I followed things that I was passionate about. And I was open to the suggestion. But if you had asked me at 18 years old, do you want to go into business? My idea of business were people in suits who got on the Long Island Railroad and went into Manhattan. That just wasn't exciting to me. But I allowed myself to be open to different pathways.

[00:07:31] [SPEAKER_01] In your freshman year at Springfield College, you're involved in this protest, which was a total revelation to me. Can you talk a little bit about that? I mean, that was sort of a taste of civil rights resistance. Did that sort of sour you on that path? Or I'm curious. Yeah, tell the story and then. No, it's great.

[00:07:49] [SPEAKER_00] So I think, Eric, clearly that story is probably going to surprise a lot of people in the book. Because they wouldn't have necessarily associated me with doing something like that. Real rebel. But again. Explain what happened. Yeah. What was important is. So I'm in my freshman year. And again, this is at the height of civil rights, black power movement, Vietnam War protests. Student unrest was really beginning.

[00:08:18] [SPEAKER_00] That period of 69 to 73. That was a period of tumult.

[00:08:24] [SPEAKER_01] Read about it. Crazy time. Right.

[00:08:26] [SPEAKER_00] Crazy time in the Western world. Right. And so I go to Springfield. And again, I was a disinterested student. I picked up and really studied more. But you can imagine what my grades must have been. That by the end of my senior year, I had a C plus average. Right. I go to Springfield. Sort of wake up. My first semester, I get all A's. I'm playing on the soccer team. I'm a goalie.

[00:08:56] [SPEAKER_00] I make a save at practice. And the coach says to me, nice save, Buckwheat. And I throw the ball at him. He apologizes. But you can imagine I never trusted him again. But how I felt.

[00:09:13] [SPEAKER_00] And that was a period where black people and particularly students were saying, we want to be part of the American dream. We want our full rights. And there was a lot of discussion. The previous year, black students had taken over the administration building, which happened at a number of campuses.

[00:09:42] [SPEAKER_00] And then a list of demands were put together. We're going to take over dormitory. And I was asked if I would participate. And I said, yes, I'll participate. You feel sort of the bravado that you're doing something that's really important. And then the morning of the second day, I sort of say to myself, this could mean I could be expelled. And you're like handcuffed to the – is that true?

[00:10:08] [SPEAKER_00] Well, what happened was the police came. We had locked the doors. They got one of those cutters and opened the doors, boarded us into a bus, put us in handcuffs. We went into the court. We got released on bail. And we went on trial.

[00:10:38] [SPEAKER_00] And there were 50 of us. And what ended up happening is we were guilty of trespassing. I think the fine was like $25 or $35. But what ended up happening is that some of the students who were involved in the previous takeover the year before were expelled. We were all on probation.

[00:11:06] [SPEAKER_00] And it was a moment where I didn't regret what we had done. But I also said to myself, this was really an important decision that was affecting my life. And I was not in a position of leadership. And – You were just sort of along for the ride. I was along for the ride. And I was doing it. I was – it was intentional. I was conscious.

[00:11:38] [SPEAKER_00] And I said, if I ever put myself in this situation, I have to be at the forefront for it. But, you know, life sometimes works out. And the headmaster or principal of the high school, who was a real mentor, a guy named Peter Curran, said, I always thought you should think about Bowdoin College, but your grades weren't good enough.

[00:12:08] [SPEAKER_00] I think you may have a chance. And he literally called the director of admissions. It was past the application period. And Hector'd this guy until he said he would grant me an interview. And I remember Peter came up to Springfield, drove me to Brunswick, Maine.

[00:12:34] [SPEAKER_00] And I was very fortunate that the director of admissions was a very nontraditional person. And I was totally transparent. I told him what happened. Here's what I did. While I was someone who tested well, I didn't do well in school. But I sort of awakened a little bit towards the end of high school. I got all A's my first semester. And he gave me a shot.

[00:13:03] [SPEAKER_01] And someone from Springfield anonymously tried to undermine you, right?

[00:13:06] [SPEAKER_00] Well, Eric, yeah. I'm glad you brought that up. After my first year, I got all A's. And Dick Ball, the dean of admissions, came up to me and said, I didn't want to tell you when you started, but someone in the Springfield administration wrote us a letter, basically said you were a troublemaker. We should rescind your acceptance.

[00:13:33] [SPEAKER_00] And I didn't do it because at the end of the day, you told me everything that happened. And I believed you. And I wanted to give you an opportunity. At the same time, I felt terrific about him. But I said, boy, life is really fragile because, you know, this letter, I could have known nothing about it.

[00:14:00] [SPEAKER_00] And if it had been a different type of person, that would have been the end of that opportunity.

[00:14:06] [SPEAKER_01] You've had people really have your back at various points in your life. Yeah. I mean, you know, I think in one point in the book, you talk about somebody seeing like a spark in your eye. Like how much do you feel like, oh, I was sort of somebody who got lucky to have these allies or is something sort of about you that attracted them?

[00:14:23] [SPEAKER_00] You know, it's a combination of both, Eric. You know, at the end of the day, in my view, no one's entitled to success. And I was really fortunate along the way. I had two really terrific parents.

[00:14:44] [SPEAKER_00] But very importantly, as you know, in school and a competitive school, if you're a lackluster student, I don't care who you are, black, white, doesn't matter. It's rare that you will have teachers who will really spend time with you and see something in you. And I think this teacher that I had, her name was Lee LaCraw.

[00:15:13] [SPEAKER_00] She wrote in a report card to my mother. I can feel the fire in this kid. And if he would just become more disciplined, I think he could accomplish incredible things. So I know you're really concerned about him that he's, you know, not performing at the level that he should. But don't lose faith. And fortunately, my parents didn't lose faith.

[00:15:43] [SPEAKER_00] But I have been the beneficiary of different types of people who saw something in me. And more importantly than seeing something in me, they followed through.

[00:16:00] [SPEAKER_01] You talked a little bit earlier, you know, about sort of a key career hack in some ways is knowing, you know, who you are, what you represent. Like when you think about, I'm using hack somewhat flippantly given how these, you know, the normal podcast career advice that people give. But when you think about now at the stage of career you're in, like, you know, what are sort of the driving principles that you think about for yourself?

[00:16:24] [SPEAKER_00] Yeah. So I think what's really important, and I just used the example of my switch, you know, I go to law school. And I really went to law school in retrospect, different time, because I didn't really know what I wanted to do. And what I can see now, I thought I was fine. But I wasn't doing things that I was really passionate about.

[00:16:49] [SPEAKER_00] The way I got into business, into consulting, if you really go back in history, this was when Bain & Company was like five years old. It's like a startup. And I ran into a friend. We had a meal. And he had gotten a law degree and a business degree from Harvard. And he's talking about this consulting firm, Bain & Company. And we come up with these strategies and we advise.

[00:17:17] [SPEAKER_00] And I just really got charged up. Now, I didn't know anything about consulting firms, very little bit about business. So I write a letter to five or six consulting firms. Top, you know, McKinsey, Booz Allen, you know. And I say, look, you know, in summary, here are some of the things that demonstrate my intellectual curiosity. I'm a quick learner.

[00:17:46] [SPEAKER_00] I just got excited about this. To detail this conversation I had with this person, I can imagine most people reading the letter say, wastebasket. So everybody rejected me except for Bain.

[00:18:02] [SPEAKER_01] I can't help but represent, like, the younger generation. I feel like there's a certain, like, I'm millennial, but Gen Z, you know, we hear, it's like, oh, not to be snarky about it, but it's like, oh, I had C plus and then I turned it around. Or, like, I wrote letters and I got a job. And I feel like in today's economy, that feels so hard. I mean, you were on the Harvard Corporation. I think you're very involved with Bowdoin. Like, hard to, you know, tell a great story and still get in and overcome, you know, just sort of the numbers and everything.

[00:18:32] [SPEAKER_01] I don't know. What do you make of this sense? You can't just write a letter. No.

[00:18:35] [SPEAKER_00] I think at the end of the day, what was important is, you know, the word entrepreneurial is used too frequently. But I think you got to be entrepreneurial in your career. There are going to be obstacles. There are going to be a lot of people telling you it can't be done. All you need is that one opportunity.

[00:18:59] [SPEAKER_00] I mean, you talk to any really successful entrepreneur, they'll say it's that one thing that happened. You know, there are a lot of things that may have, you know, caused you to be successful. But it's that one opportunity. And were you able to take advantage of it? So clearly, you got to keep at it. And you have to be willing to take some risk. And the risk for me was, I didn't know anything about accounting.

[00:19:29] [SPEAKER_00] I didn't, you know, and I had to, I was thrown into it. And at that time at Bain, everybody had a value on a case team. And you had a budget for the case team. So they were judging your value every month. And it was trial by fire. But the reality is, I was exhilarated.

[00:19:59] [SPEAKER_00] And I wouldn't have called it that then. But it literally was like being at a startup. And we were, at that time, the feeling in Bain was, we're going against the status quo. We're going against the McKinsey's and the Booz Allen, you know. It is funny.

[00:20:15] [SPEAKER_01] I mean, obviously, it was long ago. But Bain & Company is the upstart. That's right.

[00:20:19] [SPEAKER_00] Now it is sort of a pipe flow against a safe. But they were the upstart. And again, in my makeup, back to, so what's the correlation to civil rights, whatever? If you think about it, it was against the status quo. We were going up against the status quo. And so I think part of that deep down appealed to me. And that was one where if I had not had that opportunity, what would I have done?

[00:20:49] [SPEAKER_00] So if I wouldn't have had the opportunity at Bain, I think what was happening with me is that I would have figured out a way to get into business in some way.

[00:21:04] [SPEAKER_00] And I think, you know, the thing that I've learned in my life through every experience is you don't fall victim to the conventional odds. You got to go against the odds.

[00:21:25] [SPEAKER_00] And that's the difference between people who make it. And let me be clear, everyone doesn't get the opportunity. And that's real. But I think you've got to be willing to defy conventional wisdom.

[00:21:52] [SPEAKER_01] You know, obviously, you become CEO of American Express. You're on a board of director for Berkshire. You were formerly on the board of the Harvard Corporation. You've been on the inside sort of American power, you know, one of the most successful African Americans in business. How have you thought about, you know, the obvious sort of tension of I want to represent sort of a community and help people up versus man, like I've done it.

[00:22:21] [SPEAKER_01] I'm doing the thing. You know, in some ways, you know, the Obama presidency had the same problem. Like is the ask to be a great president to set a model versus to really use the power to help a community? How have you tried to balance that?

[00:22:34] [SPEAKER_00] So I think one of the things that I was very fortunate, you know, is this self-realization and this view that I really crystallized when I was 30. And I said, for me, I really do want to make a difference in society.

[00:22:55] [SPEAKER_00] And one of the things I've tried to do in my life in business is to develop a headline that can help guide me. And so for me, it was business exists because society allows it to exist. And that's important because and the way it's filled out for me is part of my strong belief of what I want to do.

[00:23:24] [SPEAKER_00] So I want to build enduring companies. I want to build enduring companies that are impactful, meaningfully impact people's lives. But there's a responsibility that goes with it. And I think some people in business feel that, you know, business is almost an entitlement. You know, it's, you know, it's, it's, it is not, they're not being allowed to do something.

[00:23:55] [SPEAKER_00] They can just do it because they're entitled to be in business. Because I think from a first principle standpoint, if you believe that business exists because society allows it to exist and you really believe that you want to build, doesn't mean the founder is always going to be with the company. But the mindset is, I want to build an enduring company that matters. Then you should care and feel responsible for your impact on society.

[00:24:22] [SPEAKER_00] Second, and, you know, I've really, I've thought about this, Eric. I don't think, certainly as an African American, but I think it doesn't matter who I was. I believe that where I get most energized is when I believe I am serving a higher purpose.

[00:24:49] [SPEAKER_00] And sometimes it can be, if I, if you just look at American Express, what I would always say to people is we're in the service business. We're not in the payments business. Payments is just a form factor to deliver service. But service, wouldn't you really like to be in business where you can serve people, you can build a bond? That to me was the higher purpose for us. People can get energized around that.

[00:25:16] [SPEAKER_00] So I like to understand what's the mission that I'm going to be involved in. And for me, I can't conceive of living a life where I'm not trying to make a meaningful difference in people's lives. I just can't conceive it. And so I think the challenge that we have is, to me, I have to be focused on both profit and purpose.

[00:25:46] [SPEAKER_00] I have to have both. But that goes back to core beliefs. And, you know, I'm not saying everyone has to have my belief. But what I am saying is people in business need to understand the responsibility that they have. And let me be very clear. I love to win.

[00:26:16] [SPEAKER_00] It has nothing to do with a lack of resolve to win. But at the same time, there has to be that resolve to carry out your responsibility to make a positive impact.

[00:26:29] [SPEAKER_01] Is part of that still, you know, diversity, equity, and inclusion programs? Yeah. So here's what I would say. I know that's the most fraught three-letter phrase in the world right now.

[00:26:39] [SPEAKER_00] It's become, you know, a club. DEI. So I say up front, everything done under DEI, I'm not going to support everything. But the way I talk about this to people in business, and this in general, not just with diversity, but let's talk about diversity. Do you believe in the principle that all people should have opportunity?

[00:27:07] [SPEAKER_00] Most people would say, yes, I believe in that. Then the question is, do you believe in merit? I absolutely believe in merit, and I believe in outcomes. There are signals that come in, but the signals don't always generate the outcome. And most importantly, we should focus on outcomes.

[00:27:30] [SPEAKER_00] And then one of the ways I talk about diversity with people is I would say, do you have an issue with ideological diversity? If you're running a company, how would you feel if 100% of the people were trained in the company and that the only thing they knew is they were at company A? Do you think it's useful to bring in a few people who have some different perspectives? Oh, yeah, I think that would be a good idea.

[00:27:59] [SPEAKER_00] But when it comes to race and gender, it becomes a more emotionally charged subject. When I talk about in my subtitle some of the realities, we can't deny that racism and discrimination existed. When I entered American Express, the reality is there were- Like on the first day you mentioned somebody- First day. First day. Like, are you supposed to be here?

[00:28:27] [SPEAKER_00] Someone says, you know, are you supposed to be here? That was my greeting. And the reality is there were no blacks in senior management or top management. There were no women. And are we going to say, so there weren't any qualified women.

[00:28:44] [SPEAKER_00] And at the end of the day, knowing the history, and this is where it was helpful, I came from a family where the premium put on education and performance was very strong. There was never, oh, you can perform subpar because you're black. It was, you got to be the best.

[00:29:07] [SPEAKER_01] Right.

[00:29:08] [SPEAKER_00] And so the reality is our country was founded-

[00:29:14] [SPEAKER_01] I just don't understand. Like, I am aligned with you, right? Right. What shocks me, though, is how much there's been a whipsaw in corporate America. Like, people who profess to have sort of first principles thinking that were, you know, feels like 10 seconds ago supporting diversity and now don't even want to say the word literally. Yeah.

[00:29:38] [SPEAKER_00] Yeah, Eric, you know, I was in a meeting and people were trying to talk about diversity without saying diversity. And I said, you know, yeah, your minds, the word is diversity. Are you, what's your principle? And they said, look, Ken, I got to tell you, I'm really for diversity, but I got to be quiet. And I said, look, I don't know people who are, who believe in principles that are silent about the principle.

[00:30:05] [SPEAKER_00] I mean, you got to demonstrate that you're doing it. And the reality is, for me, that has been a disappointment that a number of people in business, not all, but some people in business have backed away, are even scared to use the word diversity. But there are others that have kept at it.

[00:30:30] [SPEAKER_00] I mean, I feel good, my successor still talks about diversity and the importance of diversity. And, you know, he's an Italian kid from Queens and he gets it, you know, but, you know, the reality is, you know, it's, I often say to people, what are your red lines? Because there's certainly red lines I hope you have in business that you don't think you should cross. What are your red lines?

[00:30:59] [SPEAKER_00] And so, obviously, diversity wasn't a red line for you. But yet you're going to tell me, look, I really, I'm there, but I got to, just got to stop doing this stuff. But when the next party gets in, maybe I'll change up there. That's not a good thing. Now, on the other side about America, we have fits and starts, but we do make progress.

[00:31:25] [SPEAKER_00] And so, part of what we have to focus on is the arc of progress. And, you know, it's very interesting. Everything is relative. 75 years old. I feel good. I feel energized. But I didn't look at myself as a pioneer. Because relative to what my parents went through, I said I got it pretty good.

[00:31:54] [SPEAKER_00] And it would have been unimaginable for my parents in the 30s to say, here's where Ken is going to be. Even though my mother, which I have in the story, said to the head of the school that we went to, I want my children to believe that they could be president of the United States, which was crazy.

[00:32:22] [SPEAKER_00] But she had that aspiration.

[00:32:25] [SPEAKER_01] Your father went to the school superintendent, right, of the public school to interrogate him about what you're sufficiently serious about your education, which is pretty amazing.

[00:32:35] [SPEAKER_00] Yeah, my father was, you know, I want my kids to get the best education. He was made to wait for two or three hours and then was sort of dismissively treated and was told, look, we got very good vocational programs. And, you know, your kids could do that.

[00:33:00] [SPEAKER_00] And, you know, it just was infuriating to him, obviously. And, you know, again, the serendipity of life, who would think his sister, who was very eccentric and followed esoteric philosophers and whatever, somehow she reads up on the Waldorf school.

[00:33:26] [SPEAKER_00] This is 1951 and says, you might think about this school. You know, that's the amazing part of life. But I think getting back to the diversity discussion, I believe we'll get back on track.

[00:33:41] [SPEAKER_01] Do you think, I mean, to make it specific, do you think Harvard has a path to, I don't have an emissions process they can be proud of in the current regime? I mean, I think we just saw data, you know, there are way more Asian Americans getting admitted. I mean, that's not necessarily a bad thing, but that's sort of been the outcome. Do you have a sense of whether, yeah, they're allowed to have a process that they can be proud of?

[00:34:08] [SPEAKER_00] Yes, I do. I think the black percentage was somewhere in the 9.5 or something like that. It was like 12 to 9. Yeah, yeah, yeah, yeah. So, look, I think a few things I'd say about Harvard, and I purposely did not go into Harvard on the book because I can't talk about confidential issues in the meeting, but I was very proud of my service, and I'll just say a few things.

[00:34:35] [SPEAKER_00] What was important about what Harvard did is we discussed what were our red lines before everything happened. We said, we don't know what's going to happen, but let's have a conversation about what our red lines are. That helped us tremendously because if you develop your red lines, when the shit hits the fan... You can't be in sort of the pot that, you know, the boiling water that slowly heats up and you don't notice.

[00:35:04] [SPEAKER_00] And I'm really proud of what Harvard did. I'm very proud of...

[00:35:10] [SPEAKER_01] Not settling with Trump, even though it seemed at various times that they might. You know, there were all these sort of test stories.

[00:35:16] [SPEAKER_00] What I would say, Eric, is that we made it very clear that we were open to have conversations, but these were our principles, and we were going to adhere to those principles. So, I think it's important for people to understand that because there are people on both sides. You know, people are saying, boy, you guys should just compromise. Right.

[00:35:40] [SPEAKER_01] Even people on the left who are just like, cut a deal, get out from under it, you know.

[00:35:44] [SPEAKER_00] But at the end of the day, here's what was important is we understood that any decision we would make would be with Harvard forever.

[00:35:54] [SPEAKER_01] Right. I think it was vital that Harvard didn't compromise. Right. That's right. It was amazing, especially, you know, all the law firms had just capitulated to be an institution to actually use the sense that, you know, you're the oldest educational institution in America with all this power to actually... Right. ...use it to find a backbone. I mean, it's, you know, pressure from the United States government was impressive. Do you think they're out of the woods? Like, we're talking about this in the past tense, obviously.

[00:36:20] [SPEAKER_00] We're not... You know, at the end of the day for Harvard, what I would say is there's still investigations. You know, we'll see. But I think what's important is that Harvard's clear about what it stands for. And I'm confident that Alan Garber and the corporation will stick to the principles.

[00:36:45] [SPEAKER_01] But there was a... And there was a specific, like, our red line, it's like this thing. Right. Anything you can say sort of...

[00:36:51] [SPEAKER_00] No, no. I think at the end of the day, we were very clear about the importance of academic freedom, the importance that we should decide the hiring of our faculty. We should decide what the curriculum should be. We needed to be clear about how academic freedom is exercised.

[00:37:20] [SPEAKER_00] That was very important. But I think I go back to whether it's a company in crisis, a challenge that you have, you got to be clear about what do you stand for? What's the core? What are the principles? And the reality is that the majority of people don't stand by their principles. But what you need, you don't need everybody to stand up. I'm a pragmatist.

[00:37:49] [SPEAKER_00] But you need a few people. You need a few institutions. You need a few leaders who will say, I'm going to stand up for principle. And you can change the arc of history.

[00:37:58] [SPEAKER_01] The epilogue of the book, I mean, it's clear that we're in sort of a dark time. There is a name that you choose not to use. I mean, you don't say, you know, Donald Trump. You know, I don't mean to be that person. But it speaks to sort of the training off that the leaders have to make of whether to draw his attention or not, I guess.

[00:38:20] [SPEAKER_00] So here are the reasons why is I didn't want this book to just be about the current political environment. I wanted because the current political environment does not define my life. So it was not out of fear that I didn't invoke his name. It was very intentional to say, that doesn't define who we are. That doesn't define my life.

[00:38:49] [SPEAKER_00] Here's what I stand for. Here's how I've lived my life. Here's what I believe. Here are my concerns. And I was very clear about here are my expectations for a leader.

[00:39:06] [SPEAKER_01] You got to support democracy and free elections. That's right. How much confidence do you have that, you know, the Fortune 500s that, you know, you know, the Silicon Valley leadership, that if there was this crisis of American democracy, that when the moment called, they would be there or not. You know, in Germany, you know, business leaders were on the side of fascism. They went along like there is a sort of, you know, I don't want to make you talk about anyone specific.

[00:39:33] [SPEAKER_01] But I look at, you know, Tim Cook, who's a very principled leader at times, but then really played the Trump game when he had to. And it's like, OK, is he doing right by his company and really shepherding them through this tough time by sort of making minor sort of sacrifices his ego or persona while not sacrificing on principle? Or is he has no back? But I don't know. You don't need to talk about him specifically. But when you think about the capitulations that leaders have made.

[00:39:59] [SPEAKER_00] So here's what's important that I would say in these times. And here's what I would advise CEOs. And I want to come back to my view of the future. It's one, I think what I advise CEOs is, number one, you should not speak out on every issue. Here's what I didn't get confused.

[00:40:24] [SPEAKER_00] First, I was CEO of American Express and I needed to subjugate some of my personal opinions in the tradeoff to do what I thought was best for the company. But there were circumstances where I said I need to speak out.

[00:40:47] [SPEAKER_00] One is if I thought that an action or behavior was taking place that was against the core values of our company. Now, what's very interesting of speaking out, business does not have a problem speaking out on a business issue that they think is really going to affect the core business, even in this environment. Data centers. All right. All right. Okay.

[00:41:14] [SPEAKER_00] So the reality is, if you have, goes back to, if you have core values in your company and something happens that is against those core values, I think you have a responsibility to speak out. Irrespective of your fear of what the retaliation could be, because that's such a core value of your company.

[00:41:37] [SPEAKER_00] Second is, there are a few fundamental issues living in our society, to the point you just made, Eric, if you think democracy is being threatened. And that's why I took a position on voting rights. And I said to CEOs, this is something you need to support because voting rights are key to our democracy.

[00:42:05] [SPEAKER_00] Now, in the environment we're in now, people have asked me, do you think you would have gotten the same support? And it wasn't easy. The reality is, I thought about this like a political campaign. If I can get these three CEOs to do this, if I get someone in the Midwest, if I get someone in this industry, the rest will follow. And that's what happened. Is it after January 6th? No, no. This was in voting rights. Oh, okay.

[00:42:33] [SPEAKER_00] Voting rights, Bill and Georgia, whatever. Oh, okay. And we made a major effort there. And we were- Sorry, what year? This would have been, I think, I may not be right, in 2020, I believe. And what was critical about that is we were able to bring about at least a level of awareness and focus. I think people are more fearful, far more fearful of taking that type of stand.

[00:43:04] [SPEAKER_00] However, if you had said two years ago, what do you think is going to happen in the midterms? You would have gotten a different response.

[00:43:18] [SPEAKER_00] I have a deep-seated faith that as I've looked over my lifetime, sometimes I get frustrated with the rate of progress in America or how we deal with certain issues. And then on the other side, I look at the arc and the progress we've made.

[00:43:47] [SPEAKER_00] That's why I think the Declaration of Independence, our Constitution, the real values of this country give me confidence that we're going to get it right. Doesn't mean we're going to get it right in 90 days.

[00:44:04] [SPEAKER_01] But it sounds like you're hoping, you're more hopeful in some ways about the voters necessarily than, I don't know.

[00:44:10] [SPEAKER_00] You know, I'm hopeful for the voters. I think, as I said, I wanted to be, and this is key for the environment that we're in, I'm not going to go through a simplistic lineup of heroes and villains. Right. But what I am going to say is, and I really do believe it, we are fighting for the soul of America.

[00:44:38] [SPEAKER_00] And one of the questions at the end of the day to the one you raised, Eric, is if our democracy is truly threatened, will people speak up? I believe that we will have some people speak up. Across the spectrum, we'll speak up. And that's why you don't tag people. People will say to me, well, I don't want to get political. And I always say, look, I just want to start with character and values. Right.

[00:45:08] [SPEAKER_00] There's an individual by the name Justice Ludig, who was a Scalia clerk, very conservative. He was the lawyer who advised Pence, you need to move forward with the vote. You got to certify this election. He has been very clear of the importance of adhering to the values of this country.

[00:45:36] [SPEAKER_00] I think one of the things throughout our history is we've had individuals who were willing against conventional wisdom, against the advice of people saying, look, look at what you're going to risk, who will take a stand. And I believe we're going to have people who will take a stand.

[00:45:51] [SPEAKER_01] I want to talk about, obviously, your sort of life now at General Catalyst. I mean, quickly, take us back to the decision to go into venture capital in the first place.

[00:46:03] [SPEAKER_00] So a little bit of background that I think was helpful in building is one of my most seminal business experiences was running a very small unit that we were able to grow that sold merchandise to the mail. This is pre-internet, obviously pre-Amazon. It's a business we grew in three years from $100 million in sales to $800 million in sales.

[00:46:33] [SPEAKER_00] It was – it was a – I had so much fun. It was a great experience. I learned so much. And I think that entrepreneurial feel and experience is something I was able to carry through everything I did at American Express.

[00:46:53] [SPEAKER_01] At first you thought, oh, I'm getting sent off into the wilderness. Yeah. And then it was an opportunity to sort of prove yourself.

[00:46:58] [SPEAKER_00] That's right. That's right. And it was – and then for me, I always made it a point to literally just call up people in business who I thought were doing interesting things and ask if I could come see them. And so early on, I started coming out to Silicon Valley several years before I even became CEO. This was in the 90s. And I just meet people, talk to them. What's going on?

[00:47:27] [SPEAKER_00] I met David Fialco and Joel Cutler, the co-founders of General Catalyst, two years before General Catalyst was formed. General Catalyst, 25 years. And they brought a – It's always good to remember there's a long game. It's a long game. It's a long game. And they brought a travel business to me if I'd be interested in buying it. I didn't like the business, but I liked them.

[00:47:56] [SPEAKER_00] And as I did with a number of people, I said, look, if you're ever in New York, just give me a call. And if I have – I'd love to see you. And if I come up to Boston, I'll stop by. And so we built this very natural, organic – no one was asking anybody for anything. And they tell me what was going on, companies that they were looking at, trends they were seeing. I tell them what I thought was happening in payments and financial services.

[00:48:27] [SPEAKER_00] And then four or five years later, I met Hamad. And we started talking. The CEO today. Who's the CEO of General Catalyst today, Hamad Tanesha. And I developed close relationships, independent relationships with David Joel and Hamad. Hamad said, you might be interested in meeting a guy.

[00:48:56] [SPEAKER_00] This was when – Series A for Stripe. You might be interested in meeting a guy named Patrick Collison. I don't think Patrick may have been 20 at the time. Brought him in my office. I think Stripe at that time maybe had eight or nine, maybe 10 people. And I remember asking Patrick. I said, Patrick, define the market that you're really interested in, global GDP. I said, wow.

[00:49:25] [SPEAKER_00] This guy really thinks big. And we had a 45-minute conversation. And I said, I'd love to invest in your company for Amex. We invested. There's a Series A investment for Amex. Series A investment. Thank you. They still have it. So I developed this relationship. But I really didn't have – I talked to a number of people in the venture capital world. But I didn't really have an interest.

[00:49:53] [SPEAKER_01] When you're about to retire, you were saying? No, no, no.

[00:49:56] [SPEAKER_00] This was literally – two years before I was going to step down, David Fialco was in New York. And he said, could I come by to see you? And I said, sure. Of course, David. And he says, look, we'd really like to talk to you about coming to General Catalyst. And I said, David, look, I'm really heads down.

[00:50:24] [SPEAKER_00] I'm not ready to have that conversation. But he persisted. Joel then persisted. Hamat persisted. And we had these conversations. Then the summer of 2017, I was coming to Martha's Vineyard. And they said, look, why don't we all meet in Martha's Vineyard? And so we met for like a day. And it was really a freewheeling conversation.

[00:50:55] [SPEAKER_00] And they said, look, we want to figure out how to make this work. And so the first thing we talked to – Was part of you like, I just want to have fun. I've worked all my life. Leave me alone. You got it. And I said, I'm not ready. I don't know if I want to do this. And so – but I had thought about a criteria. And so I said, look, let me tell you my criteria.

[00:51:18] [SPEAKER_00] I don't want to go into an organization at this stage of my life where I don't trust the people a lot. I got to have real trust. And I think I have that with you guys. But that's really paramount for me. Second is I've set a standard. 90% of what I do, and I'm willing to work super hard. 90% of what I do, I have to really enjoy.

[00:51:46] [SPEAKER_00] It doesn't mean it's not challenged, but I said, I got to really be passionate about it. And I will tell you guys, if I do this and I don't hit that standard, no hard feelings, I'm out. Yeah. I'm out. It's just – I'm not going to do that. And third, I want to operate at a scale that is big. And we talked about, well, what does that mean?

[00:52:15] [SPEAKER_00] And I said, well, look, at the end of the day, I would like to figure out a way that we would tackle some of the biggest challenges and opportunities in the world. And that means thinking beyond venture. Because venture – and I'd started an internal venture firm with a company that actually is still doing very well.

[00:52:37] [SPEAKER_00] I said, what's interesting to me about the venture industry is they tell founders to be innovative, but the industry itself really hasn't changed that much. But part of it is the horizon is not high enough. Is how do you want to impact the world? So that gets me to – I was going to ask, what is General Catalyst?

[00:53:02] [SPEAKER_00] So at the end of the day, it's an investment company. It's what we call a transformation company. You know, General Catalyst is this mission that I worked on with Hamad that's very important to us is we want to invest in powerful, positive change that endures.

[00:53:29] [SPEAKER_00] And we want to operate – we don't want to be confined by venture. I want to be very clear, because I talk about this often with companies, the soul of General Catalyst is early stage. Doesn't mean early stage is the largest part of it, but that's something that's really core. I mean, if you're going to be – if you're saying you're going to be an entrepreneur, you got to be good at early stage, right?

[00:53:59] [SPEAKER_00] It's got to be core. And so that was really, really important for us. But we also said is we're going to do some things differently. We need to be at more scale. You know, in the scale of the firm, you know, when I joined nine years ago, we had 4 billion assets under management. Good, good firm.

[00:54:27] [SPEAKER_00] I can't say the real number, but the public number we can say is 43 billion. So tremendous growth there. But more importantly, what we were able to put a strategy together –

[00:54:41] [SPEAKER_01] Sorry, 43 billion represents what?

[00:54:43] [SPEAKER_00] Assets under management. Yeah. Okay. And more important than that is the strategies that we developed. So we said, look, we want to have – and Amant really was the driver, for example, in healthcare.

[00:55:09] [SPEAKER_01] You guys own a hospital, right?

[00:55:10] [SPEAKER_00] Yes, we own a hospital. I'll get to that in a second. Sorry. But what we said was – I just say that to emphasize it's not like, oh, a healthcare investment. It's like, oh, we own a hospital. Yeah. No, that's right. We want to dramatically improve the quality and the efficiency of healthcare. And we want to touch at least 10% of the patient population in the United States. You say, holy shit, how can you do that?

[00:55:38] [SPEAKER_00] Well, one of the things we developed was we said the way we can do it – we can't do that in a venture model alone. What we can do is we can partner with healthcare systems. We can do that in a company. And we can do that in a company. We can do that in a company. We can do that in a company. And so we're partnering now with over 30 healthcare systems in the United States.

[00:56:00] [SPEAKER_00] And that partnership strategy gives us scale that we wouldn't have been able to imagine if we were just stuck in the venture model. Now, the benefit for the venture business is – We're going to have a full circle of value that we're able to generate.

[00:56:26] [SPEAKER_00] Then we said, we're going to have to actually – if we're going to really make a difference, we're going to have to operate some businesses on our own. And so we said, one is we've had a lot of experience in partnering with healthcare systems. We're going to buy a healthcare system. Not out of our venture fund. We raised different money for that.

[00:56:56] [SPEAKER_00] Then we said, second is AI is going to be really important. Things are moving so quickly. The traditional business model that we're just going to identify founders. At the end of the day, we're going to create our own company, applied AI company, Percepta. Again, real benefit for our portfolio. Is that sort of the roll-up strategy or what? No, no, no. The roll-up strategy.

[00:57:25] [SPEAKER_00] You're like, that's another thing. Which is another great company, which is, again, another thing that's the heart and soul of General Catalyst is hatching companies. So we hatched Long Lake with Alex Taubman and Zach Frankel. And that business, it was really compelling that they built a team of incredible people in AI.

[00:57:53] [SPEAKER_00] This is three years ago. And one of the compelling things about them is most people do a roll-up and they do AI, whether it's private equity adventure, it's ring the costs out, rinse and repeat, go on. And what was compelling about what we put together with Alex and Zach was, I remember asking him the question.

[00:58:20] [SPEAKER_00] I said, so is the objective that what you're going to do is you're going to make these companies more productive? You're going to cut costs. What's the end game here? Said, no, Ken, here's what we're going to do. We actually want to achieve top-line growth. If we have to lay off many people, that means we failed at our strategy. They've done now over 30 roll-ups of companies in different industries.

[00:58:52] [SPEAKER_00] And they haven't had to lay off people. Of course, they lay off people for performance and whatever. But they've really dramatically improved the top-line growth of really legacy companies. I mean the HOA industry, property manager industry, who would have said, boy, this is a real terrific opportunity for AI. They were able to do it. And that gave them and us the confidence.

[00:59:19] [SPEAKER_00] And for me, it was a back-to-future moment that they purchased American Express Business Travel. That I had spun out 15 years ago and there was no way you would do that deal without AI. But the focus that we have there is we're going to grow that business. We're going to improve the capability of service. Did you help plant the idea for that one? No, no. I can't take credit for that. I really can't. It was Alex and Zach.

[00:59:46] [SPEAKER_00] And when they first came to me, I said- There's a reason I sold that business. There's a reason why I sold that business. And then I said, you know, back to Zach, you know, for Zach and Alex, I said to them, I said, you know, one of the things I always said is become the company that will put you out of business. You guys are doing that.

[01:00:08] [SPEAKER_00] If you can replicate what you were doing with smaller companies, but some are decent size that they had done, this is going to be incredible. And I think what's really important is this could be a real tangible example of transforming a large company, driving growth, improving service, and not having massive layoffs.

[01:00:38] [SPEAKER_01] Moving away from the roll-up piece of it, are you worried about an AI bubble? Like, I mean, obviously, the roll-up depends on sort of the utility of AI. In some ways, the question is, is the utility so great that people's concerns about a bubble are misguided? Or you too are sort of like, I don't know, the neoclouds, whatever.

[01:00:55] [SPEAKER_00] There's some risk here. It's a mixed answer. Here's what I would say. Having lived through the internet bubble, one of the fundamental differences is the very voracious demand. It's real. I'm not saying the valuations of every company are right.

[01:01:15] [SPEAKER_00] But what I am saying is that the demand is outstripping the supply. That's really important. What I'd also say, Eric, is as we have and I've thought about it, as we've thought about AI, we came up in 2023, which I think was pretty early.

[01:01:46] [SPEAKER_00] And we got some criticism from people when we talked about responsible AI. And people were saying, remember Hamad gave a talk, were saying, Hamad, you're really against innovation. I mean, how can you say responsible AI? You're going to stifle innovation. This is the problem with people because people have a hard time understanding how you can hold two thoughts and have two objectives at the same time that you got to be focused on.

[01:02:13] [SPEAKER_00] And what we said is there are three parts that we need to focus on here. One is to design and build architecture with safety from the beginning. That is really critical.

[01:02:30] [SPEAKER_00] The second, which is really critical, is to have a human who is experienced and knowledgeable in the loop when you're dealing with consequential decisions that need to be made.

[01:02:57] [SPEAKER_00] And the third was you got to have transparency with the public.

[01:03:03] [SPEAKER_01] Is it hard to get that message to resonate with founders when you have a firm like Andreessen Horowitz saying, like, do whatever the hell you want? Or like, we've got your back no matter what. Like, don't worry about scruples seeming. Like, I mean, they literally seem to have a professed negative view at times of things like scruples.

[01:03:20] [SPEAKER_00] Yeah, I won't even comment. I won't comment on Andreessen. They like, they comment on you.

[01:03:25] [SPEAKER_01] Mark is, you know, attacking your ad and everything. But here's what I would say.

[01:03:31] [SPEAKER_00] At the end of the day, I think General Catalyst has offered people a very clear reason to work with us or not. And at the end of the day, we want to work with founders who share our beliefs and values. As I say in the book, I think the era of move fast and break things is over.

[01:03:59] [SPEAKER_00] Trust is really important in any business. Any business, any long-term business doesn't work without trust. And is it challenging to strike a balance between safety and speed? Absolutely. Should you relent or relax on safety because of speed?

[01:04:27] [SPEAKER_00] No, you got to do both. You got to run as fast as possible and you got to focus on safety. Can I prescribe all the steps that need to take place at this point in time? No, but we can talk about some of them. And my view, you know, I think one of the mistakes that technology has made

[01:04:58] [SPEAKER_00] and, you know, I look at countries, I look at America, I look at companies. Where you get the most excitement in the public is you say, here's my aspiration. Here's a higher aspiration. What should the aspiration be for AI for humans? One is to set context. There's unbelievable, a lot going on. It's very confusing. What are some principles?

[01:05:27] [SPEAKER_00] For me, one principle would be, I want to give agency back to you. How can we do that? Second principle is simple. I want you to live a better life than you have. In fact, one of the objectives for me is, as a result of AI, the cost of living your life should be lower. You know, it's defining what is the aspiration.

[01:05:57] [SPEAKER_01] Not just here's my product, but here's what it means for society.

[01:06:00] [SPEAKER_00] Here's what it means to society. And again, it doesn't mean I can't make money. I mean, I'm a proud capitalist. You know, that's crazy. But there's a responsibility there. But also, if you really are focused on building an enduring company, you've got to build trust. And you've got to excite people. What is it? And let me be clear.

[01:06:30] [SPEAKER_00] Here are some of the dangers. You know, have a continuing conversation about here are the category of risk without, you know, being bombarded with this horrible thing is going to happen and this specific thing is going to happen, is to say up front, here are the things we know today. Here are the things we don't know. Here are some of the big risks that we have to figure out a way to deal with that.

[01:06:58] [SPEAKER_00] But let me tell you, here are some unbelievable opportunities that we have. We're not having that type of conversation.

[01:07:08] [SPEAKER_01] We could talk for another hour. Hopefully, you know, Silicon Valley is equal to the task and America is. I really enjoyed your book and this conversation. Thank you so much, Ken, for coming on the podcast. Well, thank you very much.

[01:07:19] [SPEAKER_00] Let me just say, Eric, I really appreciate your ability to cut through the noise. But let me also say that I have real tangible hope about the future despite the challenges. And I think I'm realistic about the challenges, but I also believe in the arc of history. Thank you very much. Thank you.