Hunter Walk, co-founder of the venture capital firm Homebrew, is a staple of tech Twitter. Walk worked on Second Life and at YouTube before founding his own venture fund along with Satya Patel.
A month ago, the duo announced that they were dramatically changing their strategy. The firm had previously raised three funds from limited partners — $35 million in 2013, $50 million in 2015, and $90 million in 2018 — and invested in companies like Chime, Plaid, and Honor. Then, late last month, Walk and Patel announced that they had decided to change course and start investing their own money.
That strategy shift will drastically reduce their pool of capital. And it will mean forgoing lucrative management fees that provide a guaranteed income as they wait around for their portfolio companies to mature.
Walk came on Dead Cat to explain the decision to embrace an “evergreen” capital model. We chatted about founder archetypes and what types of founders he’s looking to invest in.
In the second half of the conversation, we talked about how his views on content moderation have developed since his time at YouTube. And he bristled at the idea that I saw his brand as a “good liberal” VC.
Give it a listen.
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00:00:06
Welcome everybody. It's Eric newcomer here with
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dead cat. We've got Tom and Katie and
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we're super excited to have Hunter walk here of Homebrew.
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Venture, capitalists whose now, investing out of Their own
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money. I guess I'm curious to sort of
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get the story and a lively, Twitter presence.
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So a good opportunity to sort of get up to speed on.
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What's, what's going on in Silicon Valley?
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Money World Hunter. How's it going great?
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Hey friends. Thanks for having me.
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Yeah, one question. Is there a dead cat soundboard?
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Like, dude, you sound drunk? Would you like us to have a
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sound for you? Katie specifically.
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I don't know if you remember. But like, when you used to To
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drop big Tech Scoops, when you're at that part of the times
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I think I'd reply with like hashtag better bomb Twitter.
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I was wondering if we could get like a funk Flex bomb, drop for
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you. Here we are as in your can put
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that in. After the fact, it's like how
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Ronan Farrow posts on his Instagram story is like brace
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for impact, right before some other Hollywood, perv gets taken
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down. I feel like our Scruples on a
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copyright paranoia are low. So good with some audience fair
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use is a very gray area, so, right?
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You're an expert in. Yeah, we're going to get any,
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I'm curious tug YouTube and all that stuff from your old days
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to, for sure. For sure.
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The closest thing I think we have do a sound board as my
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fucking cat walking into the room and Writing to starting to
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opine a hedge will happen by the way, my doors, you know.
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Now, to be fair, your cat fucking would be an interesting
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sound or two. Yeah, no.
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She's that's next month. Yeah, that's yeah.
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That's a different audio. Everyone always criticizes are
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dead cat named, but I didn't think about that as the, you
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know, the little deaths that cat and on that note, hello,
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everybody? Yes.
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All right, so Hunter, yeah, why don't you just explain?
00:02:21
Because I'm going to be honest. Eric doesn't want me to be
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honest anymore but things I didn't read Tom.
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Why don't you say? He doesn't know what's going on.
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No, he isn't gonna think I followed, I followed your
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announcement and, you know, Casey Newton's, you know,
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dutiful broadcasting of your announcement when you guys kind
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of changed the structure on Homebrew, why don't you just
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explain to our audience? Aka me what the new the new
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strategy is with Homebrew because I don't actually
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understand it. Absolutely, yeah and look, it's
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a little bit inside baseball, like, basically, we've been
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meaning to announce it this year.
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We were heading to a conference room.
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I knew there'd be a bunch of other VCS and everyone want to
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be like, how are things going, what's up with Homebrew?
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And as opposed to having the same conversation a hundred
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times were like, oh we gotta get this post out, then we realized,
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we didn't have any art for it. So 9:45 p.m. in La Sachin, my
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partner and I always share a hotel room and we travel.
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Its kind of the roommate thing. So we're like searching for
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thirty dollar clip art, which you can see in the post itself
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at home. Brew bring hundred Arena.
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Okay. So look, here's the background
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for people who probably, I don't assume most people have heard of
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Homebrew to begin with. So I'm a former product manager,
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who about 10 years ago with a friend and former colleague
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started in early stage Venture fund called, Homebrew named
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after the Homebrew Computer Club of the 1970s or early eighties.
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A tip backwards, we could talk about that naming.
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If you want later first 10 years, it's kind of very
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standard, right? We make eight to ten core
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Investments a year seed, stage companies, trying to do one to
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two million of their first 0 to 5 and then really sort of, you
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know, long-term investors. But for first three to five
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years, right? Their seats a series be kind of
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leaned in and be helpful. Try to help them build a
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foundation to be the best version of, you know, of what
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they can become. Because it's our business, we
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get to, you know, decide what we want it to be from the
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beginning, you know. Look, we didn't want to be
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Empire Builders. There was no plans for growth
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and no plans for succession right from the beginning.
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You said, you didn't want it to be a generational firm, right?
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Correct. Great multi.
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Yeah, no multi-generational. And look you own your business.
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Like you can always revisit that.
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But but I always think of us as an Operating model with a
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flexible business model. The operating model is the two
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of us working together spending most of our time with the
00:04:29
founders. We back.
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Not going to conferences, not networking, not chasing the next
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hot white see deal. But the answer to the question,
00:04:37
what do we want Homebrew to be for the next 10 years?
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We came up with an answer. That was a little bit different
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than I think a lot of our peers, a lot of our peers have grown
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quite significantly over the time.
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What Founders need has changed over the last, you know, eight
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nine, ten years. And so we said look, we're gonna
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if we don't want to grow, you know, why don't we actually A
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sort of stay the same or maybe even quote unquote, shrink
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right. Let's focus on what matters and
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that's being flexible enough to work with the founders.
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We care about in the easiest way possible that meant no longer,
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you know, having to have like an ownership Target.
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Well, you know, our piece fits so long as you want to sell, its
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15% of your company, it meant no longer like trying to figure out
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in advance how much are fun. Should be 100 million, 200
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million, 30 million, 40 million, like that.
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All when you're when you're building a spreadsheet, you
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know. A sort of manage manage a fund.
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You have to figure that stuff out in advance.
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So, we did two things. We said one, let's start out
00:05:31
this fun for by actually just using our own money.
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I know this is an extremely personal question, but how what,
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how much money is that, or? How, how much money are you
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putting behind in? It's more about sort of saying,
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look, I've got enough where, like, I can forgo the salary, I
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can forego the, you know, the leverage on other people's
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dollars and I'm willing to Make the long-term bet that if we're
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writing checks together and you know taking a hundred percent of
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the risk by keeping 100% of The Upside like that's going to work
00:06:01
out perfectly fine over time. And you know if it doesn't then
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you know whoa I got to figure out, you know what, you know how
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to resolve that. But I think we're basically that
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may be the easiest way to talk about.
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It is traditionally, most VCS are asked to do one percent of
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their fund. That's like the GP commit.
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What we are putting towards this effort, is more than the 1%.
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We used to do, you know of our Venture funds, right?
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So you know, people can sort of run the math and figure that
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out. What is it specifically about
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the Venture model that you were disillusioned by like was it
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going around to the LPS to the endowments?
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No, no I love. In fact they're great.
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We've always been really focused on a small number of endowments
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and Foundations who we, you know, I'm just, I'm sure we're
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going to figure out some way to continue to work with.
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Like there's going to be checks that are, you know, too big, you
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know, for us to write and companies that we've, you know,
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maybe back to We and, you know, SPV he's or that type of stuff.
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Also, a lot of them are actually working with us in screened, or
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a fund of funds that we created to help back emerging Managers
00:07:02
from underrepresented segments. So we can, we can talk about
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that later. So definitely not the LPS.
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I think that the stuff that sort of, we were sort of scratching
00:07:10
our head about was two things. One, there's lots of great
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reasons to use other people's money to build your business.
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If you're going to be multi-generational, I think you
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need to do that. You can't be tied to any one GPS
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Capital so like. You're investing in things where
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you really need to be a, the leader of that round and they
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need a lot of money. Like let's say, if you were
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starting a climate fund right now, I think you'd really want
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outside LPS because the the capital requirements of those
00:07:34
companies might be significant, you know, if you can't afford
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look there's lots of people. Like we started a little bit
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later in our career if you're earlier and you need a fee
00:07:41
structure, right? Like in order to pay the bills,
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in order to be able to bring on, you know, younger employees.
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Like that's a great reason to have outside money.
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If you're risk averse, which I'd say most VCS are and you don't
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want to necessarily put your own Capital At Risk in a meaningful
00:07:55
way like, you know, outside, right?
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So none of that applies to us and so in that case it's like
00:08:00
it's just not a tool we need the second is and we can talk more
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about this. I think there's a, you know,
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what do you want to call it a prisoner's dilemma right now
00:08:09
where everybody every manager, every VC is being rewarded for
00:08:15
increasing the velocity of their Capital deployment.
00:08:18
Every firm is Raising faster, bigger management fees.
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I know you're at You're leaving management fees.
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That's really helped. Ease are concerned about this,
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but at the same time, the last few years a venture has been
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Fantastic. Four, Tops of top, endowments
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and Foundations, not just paper, markups, real returns.
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And so their models say, reinvest this, into those VCS
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and in fact, when they're VC's, come back faster, and with
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bigger and Sequoias, like, hey, you gotta, you know, you gotta
00:08:47
come in, you gotta come in in this big way or like, you know,
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by take it or leave it and they're like, okay, we're going
00:08:52
to take it. You've been great for us, right?
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Like the amount of money that just keeps flowing into.
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The Venture ecosystem is larger and larger.
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I think it actually is leading to venture capital, I guess.
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Sort of like funding their own continued commoditization of
00:09:05
capital. Like what does it mean?
00:09:06
When just everybody is like 300 400 500 million dollars, you
00:09:10
know or billion dollar a um it just becomes this like race to
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deploy it, you know? And I think for us it was like
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that is not interesting. Like that is a that is a
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impediment to us being able to Make measured choices to work
00:09:25
with who we want and to be aligned with those Founders,
00:09:28
right? Like look big fun when you say
00:09:30
like, you know was an interesting to you, do you mean
00:09:32
that? It also is not to the benefit of
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the founders as well. Like is there a real net
00:09:37
negative for the industry? Look I think there's lots of
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playbooks, right? I believe that if you have a
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very large fund, hundreds, millions billions of dollars.
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That's going to implicit lie and explicitly Define what a success
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looks like, right? Like, it's just math.
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It's just the physics of Adventure.
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If you have a billion dollar fund, you know, a 400
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million-dollar exit, you know, sucks if you have 50 million
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dollars into that company, I believe that if you were going
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to be a focused early stage investor, you should try to have
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the smallest fund possible to run your strategy because I
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think it's not about, you know, betting on Lower outcomes.
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It's not about playing defense first offense, it's about having
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the patience to give that company.
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The time to figure out what Of company.
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It's going to be and then using Capital to help back it not the
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race to. Well can you get to the next
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round and 12 to 18 months, you know?
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Or you know it looks like you're not an outlier type of stuff.
00:10:35
Look we have you know multiple multi billion dollar companies,
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you know in our fund one, right? Some of those realized some of
00:10:43
those Still on paper you guys are backer and chime Rach.
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I'm plaid Cruz Gusto, you know, honor a few more, every one of
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those companies had a different First one to three years.
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Some were straight and up to the right and exited for more than a
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billion within that time Crews, some of them were up and down,
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you know, chime may be the most valuable of those.
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They almost didn't get, you know, two of their funding
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rounds done. Like it took longer for that
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model to prove itself and work. Neo Banks and fintech wasn't hot
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yet, right? So I just don't think you can
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forecast the eventual success of a company by the slope of the
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curve early on, you have to be prepared to work with.
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Them to figure out who they are then use Capital to accelerate
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it and I think if you the larger your fund, I think the less
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patient you are, the more eager you are for write-ups.
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The more, you're going to be selective, you know, maybe
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adversely selective of companies that are telling you they're
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only up into the right. And I just think Founders need
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more choices. They need more choices of
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different types of capital and so, you know, we want to be one
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of those choices. I think that what you just
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described sounds great. The reality.
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I have a question about though because Once you have a company
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and you start raising money, Founders are going to start
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raising from people in addition to your firm also, when they
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start raising money, say in a series B and they get on that,
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you know, and they're put on that conveyor belt of.
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Okay, now you're expected to raise money in a certain time.
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You're supposed to expect you to have a certain kind of exit and
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a certain kind of growth like your approach.
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Seems to me like it would get snowed under by the reality of
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the rest of the See market. So how do you still provide that
00:12:25
kind of like patience and time for Founders if they're just
00:12:29
going to raise their Series, be from Sequoia, I'm sorry.
00:12:32
Beyond this. Like mad conveyor belt.
00:12:34
Absolutely. Well you picked a very
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interesting moment because I usually tell Founders that up
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until the series be they actually have some optionality
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like depending on who they take money from like they have the
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ability to sort of say, look, we can take one step backwards to
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take to step forward. Hey, this is good, but not
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great, let's try something different.
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I actually sort of, you know, generally say series B is where
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you've given. Yup, most of that optionality
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and you start to move towards something that says we now have
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to both figure out how to keep growing, what we're doing and
00:13:03
what's going to be the next growth driver?
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Write that and hopefully in a quote-unquote, perfect world,
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the series B is coming at a point at, which the company is
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ready for that sort of capital and ready for that sort of
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challenge in the fast-paced world of company announced its
00:13:17
series a and that starts to Leading inbound on the series B.
00:13:20
And the terms are great. And you take Capital early that
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actually in Risk people sometimes like oh I just raise
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fifty million dollars ID risk my company I'm like no way.
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You just re risked it like you just set the bar you have to get
00:13:31
to even higher and the second thing I'll say is like look we
00:13:34
like I said under the old model where we'd beat around.
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I don't want to talk about fun strategy the whole time but like
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I want to make sure like I do understand it.
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Do you think you'll make more money with this one strategy?
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Like it's more an absolute dollars.
00:13:47
Yeah. Then what then like going and
00:13:49
raising a 500 million dollar fund.
00:13:51
Absolutely not right. So I mean maybe You'll have a
00:13:53
better eye are potentially. And who cares?
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What's so for, who cares about Ira?
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It's unclear. If I want, if I want to maximize
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dollars, I might have stayed at Google like, who cares about?
00:14:02
Like look, there's two ways to look at this.
00:14:04
I think stuff like there is the I am above a floor in my, like
00:14:08
personal Comfort, which makes you know, which makes things
00:14:11
that I can add to it, you know, great.
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I can, I can donate more money or like, maybe I can buy a
00:14:19
vacation house, like, that's wonderful.
00:14:20
But those aren't things. I'm going to optimize for You
00:14:23
know, I've been so, you know, lucky fortunate privilege,
00:14:27
whatever that like I'm looking at it as I think if we're good
00:14:30
at it, we can do just fine. And if I'm not good at it, I'm
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not. I do I'm not creating myself a
00:14:35
lifestyle that requires, you know, a seven-figure salary
00:14:39
every year or so and so forth. I think, I think wealth, you can
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look at his, like a floor or ceiling look so long as I'm
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above floor. I'm fine.
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And I'm going to optimize for other things or like, there's
00:14:47
always a next number to get. I also wrote a blog post saying
00:14:50
we don't talk enough about money, real enough, and Silicon
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Valley, right? It's a bunch of hand waving
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esac. You're basically saying you've
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made enough money. That you that you are wealthy
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enough that you don't need to optimize for wealth anymore.
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I can defer salary, I can defer a salary assume that I'm going
00:15:06
to continue to be a relatively good investor and keep that
00:15:09
upside in lieu of a salary but it's like makes true that if I
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make zero money that if I make zero dollars from now on it
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would be bad, right? Like yeah if but but but if it's
00:15:19
lumpy and variable, that's okay. Yeah.
00:15:22
And maybe you're seeing Bet that they're very rich in Silicon
00:15:25
Valley. It's a weird thing.
00:15:26
Like right look, I'm Silicon Valley.
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Middle class, right. Like which I winking lie.
00:15:30
Joke is, you know, only like a multi multi-millionaire.
00:15:33
You're not a cent a millionaire, but like shit.
00:15:36
I mean, look, I was at, I was a Google from 2003 to 2012.
00:15:41
If like, if I wasn't a millionaire from that, like I
00:15:43
did something really wrong, but you're sweet.
00:15:47
I mean, you had a 90 million dollar Fund in 2018, right?
00:15:50
And now, you're saying like you're committing to more that
00:15:53
you're To have more than your 1% stake before.
00:15:55
So like you're going to be investing, like a million
00:15:58
dollars are dating, get them order of magnitude.
00:16:00
Here, it's we'd have wheat. So the way that I sort of
00:16:03
describe it because we literally don't have a number is Sasha.
00:16:06
And I each like mentally committed, you know, sort of
00:16:09
like a number for the first one or two years and then as we,
00:16:13
which is mostly going to be deployed.
00:16:14
So like I think 80% of our checks are going to be like
00:16:17
hundred K to 500k checks and then I think 20% will be later
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or larger. And so if we do like, let's say
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we do Ten twelve of those a year.
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Like I don't know where it averages out, but you can sort
00:16:26
of like, figure out a low number, right?
00:16:28
A high number, right? Like, that's that's what I
00:16:30
think, you know, that's what I think we've committed.
00:16:32
And then, as we see how that's doing as we hopefully continue
00:16:37
to realize, like we have only seen, you know, we're in the
00:16:39
carry-on fund one, and will continue to hopefully, you know,
00:16:43
be able to return dollars to our investors and ourselves as that
00:16:45
portfolio continue to mature. It's still too early to know how
00:16:48
funds, two and three are going to be.
00:16:49
I mean we're confident in it. But right, you know our goal is
00:16:52
to Cycle recycled dollars, we see from the previous Homebrew
00:16:56
funds into this new model, right?
00:16:58
So like I'm we are dipping into our savings to get it started
00:17:02
and then as money comes back, there may be richer in the
00:17:05
future given our current portfolio and I am right, I am
00:17:09
right. So, like I am going to be poorer
00:17:11
in the near term then richer again.
00:17:13
That's the goal. Well, that's just investing.
00:17:16
Do you think? I mean look, you're obviously
00:17:17
doing this as you're describing it because you feel it is, you
00:17:20
know, fulfilling to your soul as to how you want to.
00:17:23
A raft with these companies, I'd like to stay in the, if there's
00:17:25
a 2 by 2, that's like low happiness, happiness, low
00:17:28
success, High success. I much rather be I much rather
00:17:31
focus on the being in the happiness with higher low
00:17:36
success. Then the success with the higher
00:17:38
low happiness and I believe that we can stay in the upper right
00:17:42
quadrant of high happiness, High success.
00:17:44
In this model, I think if we grew to 500 million, we'd still
00:17:48
have a chance to stay in the success, but I believe we'd be
00:17:51
deprecating the happiness, right?
00:17:53
So but I guess I don't like managing people.
00:17:55
I don't like you know having to do a bunch of internal politics.
00:17:58
I don't like having to, you know, hobnob with other
00:18:01
investors and if we had like 300 500 of those like anybody who's
00:18:04
grown their fund over the last few years from, you know the 50
00:18:07
million hundred million to the 300 million, 40 million, 500
00:18:09
million, lots of wonderful, wonderful people, their lives
00:18:12
changed, so dramatically and will be changing.
00:18:15
So dramatically especially if the markets get choppy.
00:18:18
Like I have no interest in spending my time and energy like
00:18:22
justifying my A half a billion dollar fund, I just want to work
00:18:25
with Founders, do you think the valley would operate more
00:18:29
successfully or you know with a higher happiness quotient if
00:18:32
more funds operated in the same way that you do because like
00:18:35
this rush to increase fun sizes, it seems like it's fulfilling
00:18:39
you know a need which is that there is money to deploy from
00:18:42
the LPS. It tends to pervert the
00:18:45
incentives. A lot of times of helping to
00:18:47
successfully grow these companies.
00:18:48
You know, you can build a reasonably sized company.
00:18:51
Maybe that's profitable that doesn't need to Raised so many
00:18:53
rounds of funding. But once you know, the
00:18:55
incentives get put in there because of the types of
00:18:57
investors. Everything sort of changes, I
00:18:59
guess? What I'm asking is you think
00:19:00
more fun Should operate like you guys are it's hard question.
00:19:03
Because look what I want to be clear is we're not changing the
00:19:07
bar for an investment like I'm still expecting Venture scale
00:19:11
outcomes as part of our you know quote unquote you know Homebrew
00:19:14
Evergreen portfolio. It just it just so means that
00:19:17
like, if something doesn't, you know, get there, it still might
00:19:22
be meaningful to us. Because it's our own money and
00:19:24
we're keeping 100% of the Returns on Silver.
00:19:26
There's also a lot of amazing work being done in, you know,
00:19:28
being done in climate being done in bioscience, you know, nuclear
00:19:31
fusion that like my model is not helpful for, right?
00:19:35
Like you need people For Better or For Worse, you know, throwing
00:19:39
hundreds of millions of dollars against those things and that's
00:19:41
wonderful. People think that, you know,
00:19:43
venture capital is just like fungible fuel, it's not it's
00:19:46
Rocket Fuel, like it's not car fuel, it's not motorcycle fuel,
00:19:51
you know, it's not RV fuel, all Which are like perfectly fine
00:19:54
Vehicles if you wanna if Ike you're piloting that vehicle,
00:19:57
like don't put rocket fuel in your vehicle, like it will
00:20:00
destroy your vehicle, but like if it is a rocket, you know.
00:20:04
It is a great Capital choice but yeah, your repeal that rocket
00:20:08
fuel right? Yeah, yeah, okay.
00:20:11
So, do you think that the types of Founders have changed about a
00:20:15
decade ago, basically up until like probably the pandemic.
00:20:19
What we thought of as a Silicon Valley entrepreneur Was pretty
00:20:24
much a stereotype even if it wasn't a white guy was somebody
00:20:29
who loves to work all the time. And I hate this phrase but who
00:20:33
loves to Rise & Grind and just wants to go, go, go, go.
00:20:35
Go, but what you're saying is that there's sort of an
00:20:38
acceptance of a wider array of funding choices.
00:20:42
You can have different kinds of companies with different kind of
00:20:44
growth speeds. Are we seeing entrepreneurs
00:20:46
change? Are we seeing the number of
00:20:48
entrepreneurs went away? Now, that sort of like we've
00:20:51
seen this first class. This like, you know, the sort of
00:20:55
mid teens companies either succeed or not.
00:20:59
We're seeing them all get sold off, you know.
00:21:00
Yeah, we're kind of seeing the one that didn't succeed, really
00:21:03
not succeed. So like are we seeing a
00:21:04
different kind of founder? I think I'm an optimist in this
00:21:07
scenario because I think you know, early stage Venture is
00:21:11
probably still underfunded on a global basis, right?
00:21:14
Like it's overfunded periodically in a particular,
00:21:16
ZIP code or area code, you know, or like you know, particular
00:21:19
idea but I think as software driven businesses No Marc
00:21:24
Andreessen, says software eats the world.
00:21:25
I sort of flattened that little bit to software enables the
00:21:27
world that feels nicer but the that's why.
00:21:29
And that's why I'm not a billionaire, the nicer side of
00:21:33
Martin exercise. Yeah.
00:21:34
So that leads me to believe that like, wow, maybe what we're
00:21:37
seeing actually is the byproduct of like, you know, industrial
00:21:39
capitalism, becomes technology capitalism, and businesses
00:21:42
everywhere are being built with software and, and, you know, so
00:21:44
and so forth. So I actually think there's tons
00:21:46
of opportunity and that is not just because there's tons of
00:21:49
capital available, like it's because there's tons of people
00:21:52
who want to be entrepreneurs. And and as you know, as there
00:21:55
are even in some cases out of desperation as there are fewer
00:21:59
stable long-term job options, you know, maybe that
00:22:02
incrementally continues to push people towards like, well,
00:22:04
stability is actually building my own thing or, you know, or
00:22:06
now, I can solve, I can use software to solve, you know, a
00:22:09
problem for a business that predates, the PC, you know,
00:22:11
agriculture, you know, construction all these
00:22:14
industries that are really embracing software out of both,
00:22:17
you know, opportunity necessity. I do believe that creates more
00:22:22
and Foreign entrepreneurs. And I think some of the axioms
00:22:25
that are now true, that maybe would have been disputed 10
00:22:29
years ago or just like, you know, sort of cliche, 10 years
00:22:32
ago now, true, or like good businesses.
00:22:34
Can be built anywhere, right? Like, I think that was already
00:22:36
happening in the last few years. Sort of proved that geography
00:22:39
itself, you know, may not be sort of a limiting factor people
00:22:44
used to say things like you know, and entrepreneurs can look
00:22:46
like anybody right? And then you know, flash a
00:22:49
portfolio page and they didn't look like anybody.
00:22:51
You took a particular one type of then put them into a Gann
00:22:54
with a bunch of like, you know, a i generated images that were
00:22:57
all kind of like, oblong versions of the same person and
00:22:59
like, oh look, but I do think that's changing, maybe not fast
00:23:03
enough but like, I mean, I know in our portfolio.
00:23:05
You know, we've always been sort of like, I think 50% or more of
00:23:08
our companies have as at least one female founder, you know,
00:23:11
that type of stuff and so it's happening.
00:23:13
But do you still, you chase archetypes.
00:23:15
I mean, oh, great question. Like these Charles Hudson.
00:23:18
You know, had this tweet, like VC is a weird business if you
00:23:21
look at it as a 2d business check.
00:23:23
Sighs stage, it looks broadly competitive.
00:23:25
If you add a third dimension, preferred founder Ike archetype.
00:23:29
It becomes hyper competitive among small groups of peers and
00:23:33
not competitive at all outside of that group.
00:23:35
And you also wrote sort of about mission-driven Founders and how
00:23:40
that wasn't always a great archetype.
00:23:41
So, I guess how do you think about sort of still chasing or
00:23:45
maybe you don't, but chasing founder archetypes, in a world
00:23:48
where you're trying to have more diverse just just just to
00:23:51
correct. I said, Ed, I love
00:23:53
mission-driven. Founders.
00:23:54
Here are some of the places that they get themselves into trouble
00:23:57
As Leaders, okay? And, and the ways that that they
00:24:00
can avoid or address those because I love mr.
00:24:03
Dhanraj, I also wrote something. That basically talks about
00:24:05
consent is my is my job as an investor, a rocket fuel.
00:24:09
Investor is my job to find and win consensus steals, or is it
00:24:14
to find and bet on non-consensus ones?
00:24:17
And it's funny you ask that question to different people and
00:24:19
some will be like more people than I expected say.
00:24:24
It's a good strategy. It's like what's the hot start
00:24:26
up right corner, keep raising. And what do I mean by consensus?
00:24:29
Consensus is, you know, pattern matching archetypes working in
00:24:32
an area that people understand with some social proof, you
00:24:35
know, on the cap table a little bit of momentum.
00:24:37
Those have traded off the charts, right?
00:24:39
So like that's where prices have gone up.
00:24:41
So dramatically, non-consensus startups, people who don't
00:24:45
pattern match. Some of the archetypes are
00:24:46
talking about working in industries that aren't yet
00:24:49
trendy Adventure or are out of favor in Venture.
00:24:51
Those actually are where the quote unquote.
00:24:53
Deals are still meant, you know, Stu still exists.
00:24:55
If you want to be a smaller fund.
00:24:56
Like, otherwise, if you're if you're underwriting to 2 x, 3 x
00:24:59
returns, you know, and you're just trying to win the consensus
00:25:03
deals and they the the outcomes are bigger than ever then.
00:25:05
Fine go and continue to pattern match.
00:25:07
I guess. I would say that any archetype
00:25:10
that is both well understood and correct is eventually going to
00:25:15
see the prophet? Multiple back to the investor
00:25:19
compressed because that's where the competition occurs.
00:25:23
So, yes, it's sort of reasonable fund strategy to say.
00:25:28
I have an eye of archetypes that are correct, but not yet, widely
00:25:32
understood that I'm going to invest in because that is the
00:25:35
true definition, maybe of contrary it, right?
00:25:37
Like contrarian is not, you know, investing in people who
00:25:40
dropped out of college, right, you know, like maybe it was
00:25:43
when, you know, Peter and others did whatever but like that's not
00:25:46
contrarian. Now like contrarian is not going
00:25:49
into YC like that, you know, that that that's Harvard.
00:25:53
Now, right, like to have it. So do you have an archetype
00:25:56
these sort of this become more consensus?
00:25:59
Since you started or I have personality traits that I care
00:26:02
about? I have, I have found her traits
00:26:05
that I care about maybe more than the average Venture
00:26:07
investor because a, they're matched to the type of people, I
00:26:12
enjoy getting up and, and working on behalf of putting
00:26:14
sweat and and reputation behind and agenda dollars and two.
00:26:18
I think they were sort of the trade-offs that come with those
00:26:21
are things that I think we can help solve.
00:26:23
You know, help them versus, you know, risks that, I'm not that
00:26:27
I'm not good at the risking, right?
00:26:28
And so, what I've always said is like I'm happy to have teams
00:26:32
that don't have a technical founder, but have, you know,
00:26:35
technology awareness. They're going to bring the
00:26:37
technology in house but it's not like the two Founders are
00:26:39
technologists. Now we have plenty that are
00:26:41
right. So it's not a it's not a
00:26:43
bifurcation is just hey I'll look at those.
00:26:45
How about I respond to? I respond to every cold email,
00:26:48
right? Like I don't care about warm
00:26:50
introductions and networks as an archetype.
00:26:53
I think a lot of the best folks, you know, are outside of
00:26:56
networks. Now, that doesn't mean that they
00:26:58
like, you don't have to prove that they can do something
00:27:01
interesting. I, those cold emails are best
00:27:04
when they include, like a link to a demo of something.
00:27:07
They built or product that a customer is ready using rather
00:27:09
than just like, you know, hey fun me and I'll build this,
00:27:12
right? I am perfectly happy to back
00:27:15
people who don't have a traditional educational pedigree
00:27:18
in a so they like one of one of the examples in our first fund
00:27:21
that like will stick with The longest and maybe in some ways,
00:27:25
I'm proudest of was in the construction space, a company
00:27:28
called building connected to Founders again, not part of the
00:27:31
network, not Stanford, not Facebook, cold email, we LED
00:27:34
their seed round. I sat on their board, they
00:27:36
raised up to a b round, they had a growth term sheet on the table
00:27:40
and also a 300 million dollar acquisition from Autodesk for a
00:27:43
bunch of reasons. You know, we were perfectly
00:27:45
happy to support them going on. I think there are scenarios
00:27:48
where it could have been a multibillion-dollar business,
00:27:50
but I think they correctly for themselves decided did that
00:27:53
selling to Autodesk was the right thing because they haven't
00:27:56
because I didn't over capitalize the company and because they
00:27:58
were good investors around the table that was meaningful for
00:28:02
every investor it returned half our fund because you know, got
00:28:05
it got in early concentrate, early stage, it changed the
00:28:08
founders lies multi-generationally.
00:28:10
You know, one of them started a fan of started a foundation.
00:28:13
A scholarship at his high school to send people to college came
00:28:16
from an area where, you know, college wasn't the default.
00:28:19
The Next Step type of stuff he benefited from something like
00:28:21
that prior early. Chloe is all made out, you know,
00:28:24
well because the company had over diluted one of the founders
00:28:26
did a year at Autodesk, handcuffs are off, you know,
00:28:29
went and now a CEO of another thing.
00:28:30
The other one is still there. Leading a thousand people,
00:28:32
right? I am so and, you know, look, I
00:28:35
have a lot of problems with the way, our governments working
00:28:37
different types of things in equality, but like that, for me,
00:28:39
was a heck. Yeah.
00:28:40
Capitalism moment, right? Because where else, can a guy
00:28:43
who worked in construction for a few years and his technical
00:28:46
buddy? You know, decide that they're
00:28:48
going to step away from jobs? Not because they have trust
00:28:50
funds and not but because they like have an urgent problem,
00:28:52
they want to solve. Solve for an industry that, you
00:28:54
know, has been ignored by people, you know, coming out of,
00:28:58
you know, maybe some more traditional colleges
00:28:59
universities or even worse, targeted, just because it's big
00:29:03
and quote-unquote broken. And the sales people can go
00:29:05
interface with the construction folks.
00:29:07
We don't want to like we're not going to get our hands dirty.
00:29:09
Like this is a guy who's like hands, you know, grew up hands
00:29:11
dirty and was able to build something that the industry
00:29:14
wanted that you know was not a hundred billion dollar, actually
00:29:19
a billion dollar acquisition by somebody that was later written
00:29:21
down to zero because it was a The pan.
00:29:23
Like, you know, it's been doing great for Autodesk and were able
00:29:27
to take economics away from it. That like, you know, now like
00:29:30
fundamentally, they would not have been able to do in anything
00:29:33
other than like, entrepreneurs. I'm and by the way, because we
00:29:37
take a concentrated, early-stage reproach.
00:29:38
Like I said, I can actually have it be a home run for us, you
00:29:41
know, not just a single double like, uh, okay.
00:29:45
We got one X our money back, you know, I guess we'll make it
00:29:47
somewhere else, right? Like, I love those, I would
00:29:49
never give up the opportunity ability.
00:29:53
To like support and back, those Founders, you know, you know,
00:29:55
just to sort of, you know, Chase the chase.
00:29:58
What everybody else is doing speechless.
00:30:01
I love it because that's like the such a much.
00:30:11
Oh, I'm sorry for the industry. Oh yeah, let's talk about this,
00:30:14
you know. So I have like I have companies
00:30:17
in the portfolio that thankfully now like are starting to get
00:30:19
coverage, but like any time people want to be like, oh, hey,
00:30:23
Meet. Let me, let me write a takedown
00:30:24
of this, like, halfway interesting company orders.
00:30:27
I get the most feedback on. We're not necessarily negative
00:30:29
stories, you know, I wrote a story about a school, like a
00:30:33
coding Academy, that just very unusually accepted students who
00:30:38
didn't have a lot of money who didn't have any background in
00:30:39
Tech and the story itself. Go, I had tons of incoming.
00:30:45
First of all, people who wanted to fix.
00:30:46
Also, there are also people who were not business, you know, New
00:30:50
York Times, Like business section readers, who are happy P
00:30:53
to hear that. Something was happening in
00:30:54
Silicon Valley, that wasn't atrocious, and then third of
00:30:57
all. I wrote that story years ago and
00:30:59
I just got a note from somebody saying, oh, I remember this
00:31:02
person, you wrote about he was living in his car while he was
00:31:05
going to the school. He went to Hobart and I don't, I
00:31:08
mean, he was homeless, when he went yeah Burton and he was the
00:31:10
leader of the story, he has an extraordinary job.
00:31:13
Now, he works, you know, for so great.
00:31:15
I can't say which three-letter agency, but he's doing very
00:31:18
well. Right?
00:31:19
Look, I love it. That's like I do think we love
00:31:21
those stories. I don't want it.
00:31:23
People think we are look how I'm not a hey Tech doesn't tell
00:31:25
enough Goods you know protect price doesn't do enough.
00:31:27
Good stories you only one but I'm also a whole truth to power
00:31:30
hold true that repair. Right?
00:31:31
Like, you know, I think the biggest challenge our industry
00:31:34
faces, is it sees? Its it continues to see itself
00:31:37
as an underdog when it's actually the railroad Barons,
00:31:40
right? Like kind of goes back to that
00:31:42
idea that like nobody in Silicon Valley wants to admit just how
00:31:44
rich they are. It's like they kind of want to
00:31:46
admit it by being like hey I sit Courtside or I do this or I have
00:31:51
this crazy house but they don't want to like be 0.
00:31:53
Open about the fact that they have basically fuck you money
00:31:56
and they can live almost completely outside of well, even
00:31:58
outside of the democratic support, that it was, or that,
00:32:01
it was somehow, our, it was its Noble, like, it's Noble money.
00:32:04
That's how that money is more noble than, right then other
00:32:07
because well, but if it went to like, you know, a teacher's
00:32:10
right? Well, it's the same way.
00:32:11
I think I'll write founder is getting nostalgic about the
00:32:13
early days or times where they were just hanging out in a small
00:32:17
office, just trying to make it work because you know, obviously
00:32:20
their precarious relatively But you are able to focus more on
00:32:25
the mission, what you think permission is rather than, you
00:32:28
know, trying to please your investors.
00:32:30
And I feel like, you know, the same thing kind of comes up and
00:32:32
criticizing their critical Tech stories.
00:32:34
It just like, weren't we having so much fun when it was all
00:32:37
about, you know, highlighting funding announcements.
00:32:39
Yeah, I'd say the two things I had the two things I do.
00:32:42
Wish when it comes to reporting, is I do wish that and I think
00:32:47
the, I think the longer somebody's in it either, they
00:32:50
understand this or they actually move further away from It, I
00:32:53
wish folks could actually embed within.
00:32:55
I wish folks had done a start-up or could embed in with a
00:32:57
start-up because often what sort of like perceived as a specific
00:33:03
choice. You know, is sort of more like
00:33:04
at at worst an unintended consequence.
00:33:06
I would love by the way. So work out of any New York City
00:33:10
startups office for a month. I work out of my home, so I'm
00:33:13
happy, right? Have you have you asked, have
00:33:15
you put that out there? All right.
00:33:17
Well, I'm throwing this out on the podcast.
00:33:19
Yeah, we were on a start-up with the information, but but I would
00:33:23
Right. And look at it but the people I
00:33:25
would like to do that. Kind of story.
00:33:27
I mean I would love to I would also argue that the three of us
00:33:29
did work out of a startup. I mean we actually do you think
00:33:34
we're going to do two things? This, when this podcast drops we
00:33:37
are going to find Erica started. Yes.
00:33:39
Second. Ya what I'll say about?
00:33:41
Kate about the information is I think Jessica one of Jessica's
00:33:44
early columns was like what? I Now understand, you know,
00:33:49
working at a startup that I didn't understand when I was
00:33:51
covering that right? Look just Something like like
00:33:54
sometimes like, oh I used to take every product, you know,
00:33:56
get a cancelled as like, oh, this is so, you know, this is
00:33:58
smoke. I gotta find the fire.
00:33:59
Something must be really wrong and like, I've had to now, I've
00:34:02
had to cancel products sometimes just because, like, you got to
00:34:04
focus or this or that, it's right.
00:34:06
Not, you know, it's not scanned, you know, like a few things.
00:34:08
And, but obviously also, you know, doesn't mean that like
00:34:11
every sort of perfect and should be treated with kid gloves and
00:34:13
like, you know, that type of stuff, you know, I look back at
00:34:17
work, I don't know if you want to get to the YouTube stuff, but
00:34:18
like, I look back at YouTube and like there were things that I
00:34:23
did not recognize, you know, they were, they were second
00:34:26
order effects that some of the choices we made that were not
00:34:29
obvious to me at the time. I don't know if any sort of
00:34:34
quote unquote process changes would have made them more
00:34:37
apparent to me. I do firmly believe, and we
00:34:39
tried as best. We could to have a product team
00:34:42
that looked more like our user base, then Google demographics,
00:34:45
let's say. But I also believe that like,
00:34:48
actually, the way to sort of, you know, anticipate unintended
00:34:52
consequences would say. Say is in team composition to
00:34:55
demographics that like the more diverse more diversity
00:35:00
Geographic, you know, class-based ethnicity, whatever.
00:35:04
The right the right facing is that you have on your product
00:35:07
team and the more that those people are out to speak and
00:35:11
bring their experience to that. I think the more likely you are
00:35:14
to sort of debate anticipate and properly like you know, judge
00:35:18
how your product is going to be used, right?
00:35:20
Like the everything is gamergate, you know, now, right?
00:35:22
Like it, If you didn't, if you don't know what that is, or you
00:35:24
didn't experience it or so and so forth.
00:35:26
Like you're building a social product.
00:35:27
You should probably understand right as your, as your worldview
00:35:29
evolved or I, you know, I know you some but not I think of you,
00:35:33
you know, from your Twitter presence and like you're like
00:35:36
sort of good liberal in Tech world, right?
00:35:40
Or did you see yourself that way or like?
00:35:42
I feel like there's sort of a lot of night might not my exact
00:35:45
tagline. No, you wouldn't.
00:35:48
Would you yesterday, I sort of like to be.
00:35:52
See. I thought Funniest TV series.
00:35:54
What that's all about that. That was the threat.
00:35:59
I was the Lobos. Yeah.
00:36:00
And you just a great your often, like I feel like, you know,
00:36:03
there's this a lot of these Tech platforms had sort of a very
00:36:07
like sort of, you know, Free Speech was the by word.
00:36:10
It like, read it back in the day.
00:36:12
There was such like that long period where there was like, no,
00:36:15
you know, we don't want to moderate, we want to have an
00:36:17
open platform. I mean, YouTube is still like
00:36:21
pretty loose. But then, you know, I feel like,
00:36:25
yeah, it's been sort of the the mainstream Democrats who have
00:36:29
been much more pronounced but I don't, I don't know how to pull
00:36:31
it. I mean, obviously, I tend to
00:36:33
vote Democrat but like, I don't know how to, I don't know how to
00:36:36
counter. I don't know how to categorize
00:36:37
myself in sort of the same way that you did.
00:36:39
But here's what I'll say about you too, and, and those sort of
00:36:42
close supporter of AOC weren't you.
00:36:45
I remember seeing you sweet positively.
00:36:46
Yeah, I helped. Yeah, I saw China and our spouse
00:36:49
right? Somehow crazy.
00:36:50
That do the first. We'll look, I think Even outside
00:36:53
of whether you agree with all her policies that like she is an
00:36:57
archetype for a type of leader that we need to see unlike you
00:37:01
know, both sides of the aisle and also I grew up in Queens.
00:37:04
718 born 516 raised. So I was at YouTube from 2007 to
00:37:10
end of 2012. These people said, when you
00:37:12
leave Google, I'm like, well, my heart kind of left in middle of
00:37:14
2011, my daughter and a 2012, but but it was great.
00:37:18
I was, so I was the first product lead post-acquisition
00:37:21
working, you know, for Chad and Stuff like that.
00:37:24
I think there were a few things. I believed about YouTube, then
00:37:26
that were atypical. And some of them have become
00:37:31
more normalized. Some of them are still debatable
00:37:34
and I think the things I believed and, and tried to build
00:37:37
it to the product tried to build into the team were, that we are
00:37:41
not quote unquote and agnostic platform, right?
00:37:45
That like the oh, well, we're not immediately.
00:37:47
I wouldn't call some Media company either.
00:37:49
But like if you have terms and conditions and Community
00:37:52
standards, That are anything beyond just what is minimally
00:37:55
legally required? You are already making editorial
00:37:58
decisions, you're making decisions about what sort of
00:38:00
content you want on the platform.
00:38:01
So on so forth to say that like you're neutral is is not true.
00:38:04
And I think that's fine. I also tried to build out with a
00:38:08
great policy team build out policies that were
00:38:12
principle-based and then we could evolve the definitions
00:38:15
because it's very hard to do the reverse.
00:38:18
It's very hard to have enough like case law to where you can
00:38:20
perfectly right. You know what?
00:38:23
There's always gonna be gray area and I think the clearest
00:38:25
thing is like, here is the type of service we are trying to
00:38:28
build. You know, if you do things that
00:38:30
like defaults are these boundaries, like there might be
00:38:33
consequences, here are some examples of that, but people are
00:38:35
going to come up with new examples, right?
00:38:37
And you can't wait a year to then update it, like, you have
00:38:39
to try to address it in the moment.
00:38:41
So I think it's okay to actually like create some expectations of
00:38:45
how people of what's okay. And then, you know, reviewing of
00:38:49
all those over time and sometimes it's okay to be wrong,
00:38:51
like we were wrong, about some stuff like What?
00:38:53
I'll tell you one second and the third that I've always believed
00:38:55
in because I was at Second Life and AdSense before is, I've
00:38:58
always believed and this Chad believe this too.
00:39:00
I mean thankfully because I couldn't have got it done on my
00:39:03
own was that you know, likes and retweets are not payment and
00:39:07
that creators, you know, deserve payment for their creativity and
00:39:10
audience. And that if you are not doing
00:39:13
that, as a platform at the best case scenario, you're leaving a
00:39:17
strategic hole. Open for somebody else to do it.
00:39:19
Worst case scenario. You are exploiting people and I
00:39:22
never Ever wanted to exploit. I never wanted to work for a
00:39:25
company that exploited people. So Katie just real quick.
00:39:28
We always had the question of like, policy made in the Bay
00:39:32
Area. You know, sometimes in the East
00:39:34
Bay, depending upon where we were sitting like is East Bay
00:39:37
policies, you know, like good for the world, right?
00:39:40
And so, for example, there were certainly geographies especially
00:39:44
ones that we didn't operate in, but we're available in that
00:39:46
sometimes asked you to do things to content.
00:39:49
Mostly take down that we did not abide by because we We weren't
00:39:53
commercial operating their, their country, we didn't believe
00:39:55
in those principles, you know, it was more towards the Free
00:39:58
Speech, but when we were operating in a country, we
00:40:00
really did have to understand. Like, okay, we've got people on
00:40:03
the ground, their employees on the ground.
00:40:04
Like, if we're going to be operate, commercially in this
00:40:08
country, what is right, what is wrong?
00:40:10
I'm gonna, I'm probably gonna get a load of this wrong.
00:40:11
Apologies to any Thai people but like it's, it's, it's it's out
00:40:15
of humility. If I remember correctly, like
00:40:17
there was, you know, this thing in Thailand, where the
00:40:20
government asked us to take down some videos that were I'm like
00:40:23
photoshop's of you know like bare feet on the heads of very
00:40:28
influential or maybe even religious you know our political
00:40:31
tie figures to us. That looks like you know, know
00:40:35
where I could take this down. Like that's like free speech and
00:40:38
it's silly but then you'd sort of start to see those videos
00:40:40
getting flagged and they weren't getting flag from like
00:40:43
government IPS like they're getting Flack from actual users
00:40:46
and you'd look for the reasons that are like.
00:40:47
This is actually like this actually is offensive like you
00:40:51
know to us and I don't want to Go vagina was like, well, now we
00:40:54
understand that people but like there was enough Grassroots and
00:40:57
so we didn't take it down but we did put up an interest.
00:40:59
Yeah. We've created a new type of
00:41:00
interstitial that was basically like this complies with our
00:41:03
terms of service but users in your country find it
00:41:05
objectionable for the following like you know category since and
00:41:08
people could click through and so like we want.
00:41:10
But trust me like the first thing you know that we thought
00:41:13
was like skepticism and dismissiveness, right?
00:41:15
And we learned like no like if you're going to have a global
00:41:19
footprint Global responsibilities, you have to
00:41:21
sometimes realize that Your first assumptions or what you're
00:41:25
comfortable with or what you're uncomfortable with does not
00:41:27
match you know, your community where they are.
00:41:31
And so make those tough decisions, right?
00:41:34
Thigh like the 60 philosophically.
00:41:36
I'm so curious about this because I think the biggest tech
00:41:39
companies have decided that in general.
00:41:42
What they'll do is they'll comply with the laws and in some
00:41:46
ways, the Norms of the companies in which they operate.
00:41:49
But at what point does a big tech company have to decide.
00:41:52
Okay. Okay, we cannot really comply
00:41:55
with either of those things, it doesn't work for us.
00:41:57
And does that mean that the idea of a global tech company,
00:42:02
especially consumer-facing is something?
00:42:04
We'll see chipped away out over the next few years.
00:42:08
My answer is like, I don't know, I think that there is a
00:42:11
perfectly viable path that basically says, we are going to
00:42:17
operate on each country's laws and there is a set of red lines.
00:42:21
There's a minimum Set of like yeah of things that need to be
00:42:24
in place for us to operate in that country.
00:42:26
So like some some set of choices if there's a bunch of different
00:42:29
toggles like some combination of those toggles based on Country
00:42:33
law mean, that we are going to forego operating in that
00:42:37
country. And that will be more granular
00:42:39
and broader than just the China issue, right?
00:42:42
Like, historically this has been, like the China issue.
00:42:44
Is it worth trying to operate there because, you know, you can
00:42:47
change from within and it's a big, you know, big Market
00:42:50
opportunity, or is it a quagmire?
00:42:52
Are you have to compromise too many of your stated values
00:42:55
around user privacy or, you know, freedom of expression, you
00:42:59
know, and information to, you know, to spin up your service.
00:43:02
So I do think we're going to, hopefully see you.
00:43:04
No more companies being deliberate about what those
00:43:06
choices are and maybe denying their services to countries that
00:43:13
seem to be not good actors. Right.
00:43:15
But I don't know. Like this is, this is, this was
00:43:17
a tough one. But anyone who builds Global
00:43:19
Services like has to has to think through this obviously,
00:43:22
right? It was like, Wow but it's, you
00:43:24
know. But again, like I don't feel bad
00:43:26
for companies doing with this. Like this is, you have trillion
00:43:29
dollar market caps, like, you have, you know, Executives who,
00:43:32
you know, this is what you signed up for, right?
00:43:34
Like, but that's I mean, that's the thing.
00:43:35
I mean, the negotiation at some point isn't really so much
00:43:38
between the user. You know, the companies and the
00:43:40
government sits between the companies and their investors
00:43:43
because the expectation is that you do operate in all these
00:43:45
countries because you need to continue grow, you know, can you
00:43:48
grow your user base and extracting?
00:43:50
What, you know, this is actually that users I would, I To take a
00:43:53
set of notes on things, I needed to accomplish during this
00:43:55
podcast, and I forgot to do that.
00:43:57
But now you just prompted me because we're audio not video.
00:43:59
Usually, during video podcast, I change my hat and Hoodie a few
00:44:03
times to different to promote different portfolio companies.
00:44:06
Okay, you know, you're supporting so I figure I'm gonna
00:44:08
have to do that audio audio wise.
00:44:11
So I happen to be a personal investor in a company called
00:44:13
long-term Stock Exchange that are gree started, which is about
00:44:16
giving companies a chance to list in a place where you And
00:44:23
bias towards maybe even create voting struggle, sort of put
00:44:28
proposals together that we reward investors who are going
00:44:32
to be long-term holders and allow you to think long term,
00:44:35
right? Still, very nascent.
00:44:37
There's some companies that have pledged, you know, to be on
00:44:39
their a sauna. So and so forth but like I am
00:44:41
actually hopeful that there is going to be investor structures
00:44:45
that better match against like you know and not just be corpse
00:44:49
that better match against you know sort of the types of
00:44:51
trade-offs. You're talking about Tom I'll
00:44:53
tell you one thing. So I always this is I always say
00:44:55
the sort of jokingly but I also kind of not joking.
00:44:58
So like my solution to this issue of like what Facebook yo
00:45:02
what truth is being discussed on Facebook and like you know, it's
00:45:06
safe in Menlo Park but not great in Sri Lanka.
00:45:08
We're were the sort of you know quote unquote, Facebook me, Adam
00:45:12
are right, wasn't it? Yeah.
00:45:13
So here's my joke, not joke, kind of thing.
00:45:16
Like take the Facebook's executive team or even better
00:45:19
like board of directors, it is going to change, you know,
00:45:21
annually. But like Shirley Jackson The
00:45:23
Lottery like once a year. One of you is going to have to
00:45:27
make your major life choices based upon what the average
00:45:30
Facebook user believes, right? So if the average Facebook user
00:45:33
believes that vaccinations, you know, are fake, because that's
00:45:37
what's been spread, like, you can't get vaccinated or let you
00:45:40
know, basically how do we like, you know, it's obvious joke but
00:45:43
like it's the sort of the question about when, when
00:45:46
leadership of these companies essentially are in an Elysium
00:45:49
that is so distanced from the The downstream impacts and
00:45:54
downstream consequences that their products are are
00:45:59
influencing these. It's almost as if they had to
00:46:01
live under it. They would want a nudge.
00:46:03
These people to have used that they found palatable or not
00:46:06
palatable that lower like the more amenable to their
00:46:10
lifestyle. I mean, you see that three
00:46:11
people to dislike downplay the ideas and not allow them to be
00:46:14
the most prominent ideas, but it's an interesting Twist on.
00:46:18
You're trying to make something that normally is position is
00:46:21
elitist that the I would try to direct how people think and
00:46:26
you're sort of saying well if the elites want to live under a
00:46:28
the world they're creating they should have to have to suffer it
00:46:32
or is that just what you think? That's sort of like the Khan
00:46:35
Academy. Somebody's a writer to me.
00:46:42
It's like the idea that Ben Shapiro and like Dom, Boingo, or
00:46:45
whatever, I don't even know, but like these people are like it.
00:46:49
Is that In the world to me, if you would
00:47:05
agree with this would be is evidence enough that something
00:47:08
is broken with the platform. Why would you want to create a
00:47:11
product where the thing you're building audience for is like
00:47:15
Ben Shapiro? I don't know.
00:47:17
I feel like that's sort of a. Problem.
00:47:20
Like, just the same way, I wouldn't want to run Fox News.
00:47:22
Have Tucker Carlson me by my banner show.
00:47:25
I wouldn't want to own a tech company and have like these
00:47:28
really dumb. Conte, conservative, content,
00:47:31
creators, be sort of the top output at that, I'm putting out,
00:47:35
or do you have what he would unique Jew hate.
00:47:37
You hate 43% of America. Is that what you're saying
00:47:40
there? He does.
00:47:41
Yeah, I grew up in another area so it is right.
00:47:46
Yeah yeah. I mean they're yeah enjoy Rush
00:47:48
Soros dollars Rush Limbaugh is like was terrible.
00:47:52
And you know people are very responsive, you know, they
00:47:55
listen to what what you put out and that's why it matters, what
00:47:58
Elites like pump out to the world.
00:48:00
And I think I just I think the distance between you know the
00:48:04
experience of the quote-unquote average person and the 1% is
00:48:07
like you know the quote the greatest threat to stability,
00:48:09
right. And the fact that I can look, I
00:48:11
don't know the guy but I believe that, you know, there are people
00:48:14
like Peter teal who like, you know, sort of are calculating
00:48:17
enough that like look the chaos ladder is going to benefit me
00:48:21
and if things go to shitty I have Of money to insulate
00:48:23
myself, the chaos, that, you know, Bannon created, right,
00:48:27
like and maybe that's maybe that's really, you know, maybe
00:48:30
he's playing 7D chest for a better brighter, glorious shared
00:48:34
future. But like, that's what I worry
00:48:36
about. Like I worry about when some of
00:48:37
our, some of our billionaires, you know, can sort of insulate
00:48:41
themselves from the challenges of the world, and I have nothing
00:48:44
against billionaires in general. So, I liked, I liked when our
00:48:48
Industries billionaires were just awkward and not assholes,
00:48:51
and they were just kind of like, Nerdy trying to figure out what
00:48:55
to do with their money, going to basketball games and getting
00:48:58
awkwardly video. Dancing around, it's fine.
00:49:01
Yeah, I know. I look, how do I think it's a,
00:49:03
it's a fascinating point in in Agra and I see, you know, I
00:49:07
during that during the back and forth.
00:49:08
I mentioned this. But like, you know, covering
00:49:10
Uber there was always, I don't know if Travis did this Eric
00:49:13
Kidd, you can tell me, but, you know, dhara makes deliveries
00:49:16
from time to time, you know, because he wants to see what the
00:49:18
average user you know. Deliver person.
00:49:21
It's like and you know, maybe at the That kind of changes some of
00:49:24
the benefits that they give them or subsidies or things like
00:49:27
that. But you know, it's do you think
00:49:30
there would be a substantive difference?
00:49:32
If, you know, Susan with Jackie was in a country that has been
00:49:35
overrun by misinformation YouTube's.
00:49:39
And the, I mean, maybe she has been, I don't know.
00:49:42
I used to spend time in the review, the flag video review,
00:49:45
Q, fairly like, I don't remember if I did it.
00:49:48
Monthly or quarterly, I don't like overstate it, but I would
00:49:50
do that because I felt like it. It was unfair to ask, you know,
00:49:56
I don't care if they're in contractors employees.
00:49:58
Would it was unfair to ask you human beings to, you know, look
00:50:02
at flag videos which we know could have some very bad things
00:50:05
in it. If the product managers and if
00:50:08
the leadership only saw it as statistics on a piece of paper
00:50:12
or like, you know, when people are when you get the stuff
00:50:15
that's like, oh well, you know, Facebook says, 99.8% of, you
00:50:18
know of post, didn't contain beheadings, you know, you're
00:50:21
like wait, hold on. Like point two percent like
00:50:23
that, still hundreds of thousands of be Hetty.
00:50:26
Oh, watch that live streams of and not to pick on them because
00:50:29
you know, this was this was a YouTube thing and I saw, you
00:50:32
know, I saw just about everything but child porn and
00:50:34
that's because child porn is actually pretty easy to filter
00:50:38
out algorithmically because it's one of the areas where like
00:50:42
content fingerprinting is shared amongst companies and so on.
00:50:44
So worth it does mean it's probably just means it just
00:50:47
means like it actually didn't get to the, to the but I saw be.
00:50:51
I saw, I saw, you know, I has beheadings.
00:50:53
I saw all different types of graphic poor.
00:50:56
I you know, and like having to watch you having to see the
00:51:01
things you cannot unsee. I do think creates a different
00:51:06
visceral impact upon the leadership of these companies,
00:51:09
than just seeing it in text as a summary report and trying to,
00:51:14
you know, sort of debate. Well, you know, should we put
00:51:16
resources on making that number go up or down, you know, or
00:51:19
should we put more money on Advertising?
00:51:21
You know, right away, that matters.
00:51:22
I'm a social media Elite worried about, you know, having to live
00:51:27
under the ideology that I'm programming into the masses.
00:51:30
Like what, what is the lever that I pull to make sure that I
00:51:34
can still take the vaccine? Or, I don't know.
00:51:37
Do you, what do you think? I mean, there are certain moves
00:51:39
that would seem to bias things just politically versus see more
00:51:44
neutral, or, I don't know. Do you have like a prescription?
00:51:48
The first is diverse teams anticipate, you know, sort of
00:51:52
the outlier use cases, so have diverse teams.
00:51:55
The second is the senior Executives at social media
00:51:58
companies should be exposed to and occasionally do the job of
00:52:02
the lowest level folks who are often the content reviewers.
00:52:05
If you are just seeing, you know, sort of reports and
00:52:09
statistics and not actually understanding what people are
00:52:11
dealing with. You know, I think you lose
00:52:13
empathy for it. The third is that we have to
00:52:16
maybe come to grips that. In some of these companies that
00:52:18
they're not software. Margin companies, write
00:52:20
software, margin means, high margin He used to make a CD-ROM
00:52:24
of a, you know, of a Excel, you know, whatever.
00:52:27
Distributed in shrink wrap boxes and there are no marginal costs
00:52:30
of, you know, each new each new box outside of the cardboard and
00:52:34
that's what our that's what investors and Wall Street, you
00:52:36
know, sort of demand. And so as a result in these
00:52:39
sorts of services trust and safety is staffed.
00:52:42
As a cost center, it's a drain on margin and so you want to
00:52:45
minimize trust and safety minimize can customer support to
00:52:50
not put your software margins at.
00:52:52
Risk. And so I think it is a vector
00:52:55
for, you know, when we talk about regulatory, you know, I
00:52:57
think there's actually some interesting questions about, are
00:53:00
you Staffing, trust and safety and responsiveness to different
00:53:03
types of flagged content and so on and so forth, you know,
00:53:06
proportionate to your Content Volume.
00:53:08
So that the worst types of things that are occurring, you
00:53:10
know, on the system aren't live for hours days weeks, while they
00:53:16
crawl through multiple tiers of support and so on so forth.
00:53:19
And so like no, I don't want real time.
00:53:22
Evaluation of every YouTube video, right?
00:53:24
It doesn't scale and perpetuity but I think that there's this
00:53:28
question about our we Staffing to the level of public good or
00:53:32
we Staffing to the level of, you know, a margin structure that
00:53:36
we've convinced ourselves, these companies should have even if it
00:53:39
creates more negative externalities you know for the
00:53:42
world. You know what's interesting
00:53:43
about that specifically though is that listening in on Facebook
00:53:46
earnings call Ducks was you know he was signaling for a long time
00:53:51
that they were going to be making Being a multi-billion
00:53:53
dollar investments in their trust and safety teams and it
00:53:56
would have a material impact on profits.
00:53:58
And from my understanding of it, that didn't affect the company's
00:54:01
valuation too much. I mean, the thing that really
00:54:04
tanked, Facebook was when it was a pure business problem, right?
00:54:07
Yeah. When they look and this is, I
00:54:08
think over the last year to this is change a little bit as
00:54:10
because I think I think it's become, you know, I've been.
00:54:13
Yeah. Right.
00:54:14
So like Susan, you know, the Nook, I'm sure there's been more
00:54:17
growth in, you know, over the last few years on these teams
00:54:21
than there were in the first year.
00:54:22
To 15 to 20 and that's a good thing and I think that's frankly
00:54:25
been that that that wasn't internally motivated, right?
00:54:28
I think that came in response to press scrutiny, regulatory
00:54:32
scrutiny, you know, contractor complaints, that type of stuff
00:54:35
and it's great. So maybe like, you know, maybe
00:54:37
we're halfway there already but you know, if you were going to
00:54:40
look and say what's, you know, for the next generation of these
00:54:43
sorts of things for the, for the metaverse, you know, whatever.
00:54:45
Like you know, what are some standards to evaluate whether
00:54:48
they're likely to go you know stay on the rails or go off the
00:54:51
rails. It's you know, Are you
00:54:53
developing trust and safety in a way that scales to an
00:54:57
experienced goal or, you know, or to a to a margin goal.
00:55:01
We have to let you go. But like, I mean one thing the
00:55:04
media companies do is assess, you know, like sources is this
00:55:08
person, generally honest, or if I run an op-ed page, you know,
00:55:12
are they making strong arguments?
00:55:14
You know, there's like this human assessment of the quality
00:55:18
of the product that you're putting out, right?
00:55:21
And so if your ex Expanding and certainly for like the top sort
00:55:26
of traffic generators on a platform, it's not a big enough
00:55:30
set. It's a small enough set that,
00:55:32
you know, it's knowable to those social media platforms.
00:55:34
I mean, do you think they should apply media level standards,
00:55:39
like actual quality filters? I never liked using the word
00:55:43
quality for me, especially say it at YouTube, quality refers to
00:55:47
bitrate not, not contest that cause shows your orientation,
00:55:52
that it Still funny mommy on user-generated.
00:55:54
Yes. An engineering problem rather
00:55:56
than it's like we are a media business and have the main thing
00:55:58
we should care about is second line that sense.
00:56:00
YouTube know. I think that I think that I
00:56:02
think that the classic gatekeeper definitions of media
00:56:05
are a subset of the type of content that deserves to exist
00:56:08
in be seen in the world. And so that trying to, you know,
00:56:11
suggest that those are the, you know, aspirational markers.
00:56:15
In terms of, you know, even subject is is fundamentally
00:56:19
wrong and Miss judges, you know, the question about What people
00:56:22
are interested in the community standards?
00:56:25
The business model, the incentive system does that also
00:56:28
mean that then we should run to sort of like lowest common
00:56:30
denominator in terms of people's, you know, people's
00:56:33
interests. No, I think that we have a
00:56:35
responsibility to think about that.
00:56:37
I'm glad to see for example, that the companies have said you
00:56:40
have sort of re-engineered, hopefully their algorithms to
00:56:42
say like, well, oh stuff that's Rising quickly.
00:56:44
And popularity, you know, end has a bunch of controversy
00:56:47
around it, maybe we should slow that down, you know, until we
00:56:51
have a chance to look at it rather than then accelerate it
00:56:53
to the point where we get a clear enough signal on whether
00:56:56
it's really bad or not, right? Like I think those are the smart
00:56:58
engineering choices, right? I also think by the way quickly
00:57:01
to Eric's point that I also think, you know when we apply
00:57:04
media levers level standards, here we tend to bias towards the
00:57:08
narrative that media finds acceptable and not acceptable.
00:57:12
And for example, when it comes to anti-vaxxer content obviously
00:57:15
and rightfully, we are incensed by the reality that there's so
00:57:18
much anti-vaxxer stuff that gets disseminated through Facebook
00:57:21
and YouTube. Twitter, but like, you know, the
00:57:23
current war in Ukraine right now.
00:57:26
I would bet if we look at this period, maybe five ten years
00:57:28
from now, we were Awash in misinformation, we are Awash in
00:57:32
propaganda, Ukrainian propaganda, telling stories of
00:57:36
heroism and and people surviving and, and, you know, people on an
00:57:40
island. That's hold the Russians to fuck
00:57:42
you. And then, and then apparently
00:57:43
got killed that got wide distribution that had, you know,
00:57:47
was as false as anything to do with anti-vaxxer content, but
00:57:50
because it is, you know, in In the service of a narrative that
00:57:54
we largely agree with which is that the ukrainians are victims
00:57:57
of the Russian, you know, Russian aggression here.
00:57:59
We're okay with. And it's funny to me that we're
00:58:01
not seeing that much anger right now, at Twitter, I mean, I find
00:58:04
Twitter almost unreadable these days when it comes to stuff
00:58:07
about Ukraine because I'm just like, I don't believe this shit.
00:58:10
There's no way I, you know, and I don't think anyone's vetting
00:58:12
it because people don't care because it sounds good to them.
00:58:14
There's a note in your positive crane.
00:58:16
Truther Birds aren't real. I see ya.
00:58:20
Look, I changed the way I use Twitter.
00:58:22
Lately because I don't really have a point here, other than
00:58:24
just like like saying media and standards as some sort of high
00:58:28
level of of truth that we should all adhere to.
00:58:30
We should just acknowledge the fact that like sometimes media
00:58:32
standards or what people want to hear, you're ready for my outro,
00:58:35
you ready for my outro line. Yes, Tech doesn't like to admit
00:58:38
making mistakes and the Press overcorrects on the last one
00:58:41
they made totally amazing. I agree with that.
00:58:46
Thank you. Thank you so much for coming on.
00:58:52
Silicon Valley, goodbye, goodbye.
00:59:02
Goodbye, goodbye. Goodbye, goodbye.
00:59:05
Goodbye. Silicon Valley, goodbye,
00:59:01
goodbye. Goodbye, goodbye.
00:59:03
Goodbye, goodbye. Goodbye.