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00:00:18get started hosting your videos in just minutes at which did out com slash twist our iTunes review of the week is on twenty twenty as a twenty year vet in the business I am still learning something new every time I listen great show with great casts thanks again
00:00:39to the up front team and mark Shuster my good friend running a couple of investments together I just thought to be nice to maybe give the up front in a big round of applause for this amazing two days what a crowd a great crowd particularly good looking crowd
00:00:57this year to Vinod tractive crowd you guys are in for a real treat we have a thirty year fat of venture capital entrepreneur and I think you know I would stare say an American %HESITATION treasure he means I'm thirty years old thirty years old exactly you came here
00:01:18in nineteen seventy six to go to school %HESITATION and you found it a little company in nineteen eighty four I believe eighty to eighty two what was the inspiration for that company in nineteen eighty two I'm I actually founded a company in nineteen eighty eight right out of
00:01:41school called daisy systems which were the CAD system and we had to be too much of the hardware and so I decided a bigger market was starting a company that built the workstations that CAD designers could build their software on so it was pretty obvious there was nothing
00:02:01particularly visionary about once you did it build a CAD application that had to be on the hardware to do what you said but I'd be nice if everybody who's building an application had a hard right to work on tell me about the first meeting with an investor for
00:02:19Sun Microsystems you remember that first meeting where where you who is it I'm he you know that this is that it's actually as story that nobody's ever asked me about when I was starting my first company which was daisy systems or of an idea of reasons one of
00:02:38the venture capitalists what's cut out because Michael found out I had a father in law in Israel who %HESITATION short circuited death of finding the time I get good relations with Bob saxman now and then I decided to start son I meant to happen and literally in the
00:03:00novel are on one paragraph of writing he wrote me a check for three and seventy five thousand dollars on one paragraph and three hundred seventy five dollars thousand dollars back then engineer back then was what twenty five thousand dollars a year something like that but this is a
00:03:17great deal for those of you who are on your nose in the room I tend to Bob and I said Bob this is a great deal nobody would give me this deal in India this is why this is such a great country if we lose we lose EAV
00:03:33VNV man you both when if you lose you lose as the only thing I could lose is my student loans I'd nothing else so right you're starting with zero what was the valuation and how did you negotiate the valuation or was there no negation negotiation because you were
00:03:49how old twenty three twenty four yeah I was very young I was I finished two masters degrees so roughly twenty four or twenty five when I did my first start up of I don't remember the valuation to be honest I know and and this becomes important yeah we
00:04:12sort of split back pretty equally among the founders aborted sign in before and once you do that if you build a big enough company that split actually doesn't matter what matters is how big a company you can bail how big a pie you can bail when you I'm
00:04:31assuming your parents were alive at this time and I hope they were when you called her parents to tell them that you had raised three hundred seventy five thousand dollars to do this company what was their reaction well it's hard and I can you know Frankie not only
00:04:45for my parents in India but everybody here it don't want that many start ups which was pretty unusual to do a start up especially if you went to Stanford business school people talk to a crazy to do a start up and and he said I've starting salaries that
00:05:04I think two thousand dollars a month or something and so it was set up pretty odd when you could get a job a gold mine of mackenzie it's were not pleased I know my parents were quite happy to let me do my paying but they were surprised anybody
00:05:19would give me money and with a still in India yes %HESITATION and so you you build Sun Microsystems it catches fire but at some point you decide you want to be a venture capitalist take me through that thinking yeah I I switch sides John door of Kleiner Perkins
00:05:39was on my board and I've been from sun to plan a book ends and get dad for about twenty years how did he convince you to leave being a founder you know here you are an engineer you know a technical person in your I'm assuming you did you
00:05:57go to business school at that time or were you just I had finished at the school and so I finished a master's and and business schools so how did he added that conversation go how did he convince you to become an investor as opposed to remaining an entrepreneur
00:06:12also daisy was pretty successful and then son was doing very well and I I actually get bored pretty easily that's why I'm always in the new area and I was looking around for new tanks and don't actually first convinced me to join him and I said I don't
00:06:33really want to do when took apple I pod I might want to do something completely different than high tech actually I I I love design and I want to do furniture design and architecture I was just read my real love %HESITATION A. K. and now is I'd started
00:06:52working with some architects on a house sized eleven %HESITATION by John convinced me to join them and ice sorta nominally said I'd worked part time but it was fifty hours a week kind of part time and then twenty years later to tell me about those early days of
00:07:14venture capital it's the eighties obviously the PC revolution is well under way Microsoft is going public at that time and that was a huge driver of lotus Mitch Kapor bunch of interesting companies bubbling up what was the venture industry like that what was the velocity of companies coming
00:07:31to your office were the founders like well there were a lot your start ups %HESITATION give a more expedient steams in general I think a lot more %HESITATION younger kids are starting companies now %HESITATION that wasn't common and the other thing that wasn't common was being able to
00:07:56have credibility as a start up to attract good management like today it's not unusual for senior executives from large companies to come join a start up effective somebody's at Cisco too long then you probably don't want to hire right now the worst thing you can have your on
00:08:13your resume today is twenty years it's a large company yes kind of the opposite now yeah it's kind of an update the environment wasn't as rich in terms of being able to recruit backtracked people the number of people who wanted to start ups but they'll always enough ideas
00:08:34around tell me about the entrepreneurs you met with in in the eighties and particularly the ones I found just wildly impressive in that cohort how why it's so hard to remember I just remember so little about those days in the people I met obviously in the kind of
00:08:56work for the overnight going Klein that it was so Mitch Kapor because finite funded loaders and rod Canion because by now had funded compact showed there was a call hold off names that was pretty powerful %HESITATION Klein it find a good name tag there's quite a few really
00:09:19great companies there and those CEOs but they're all small companies said they didn't look that imposing back that Hey everybody let me tell you about a product I've been using for over ten years it's wordpress dot com small business owners wordpress dot com is saluting you they know
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00:10:42okay let's get back to this amazing upset and into the nineties the internet happened this created a huge boom when did you realize that the commercial version of the internet because obviously you were aware of arpanet DARPA and all of those things but when did you realize that
00:11:02maybe ale well in prodigy we're not going to be the future and the internet was was there a moment of clarity for you yes %HESITATION I'd say son was one the first companies to use Ethernet and tease the I. P. as protocols are for those who are not
00:11:22familiar with that it's sort of the gods the language of pain and that is these be I. P. we started using it in nineteen a tale and I met Steve case who is also by the way funded by Kleiner in the late eighties I worked out okay that
00:11:41worked out okay but I realized dad dialup wasn't the right way in fact I had an interesting dialogue at the FCC on not yet you write comments letters back and forth I was pretty writing active about writing eighteen he was invest insisting that nobody ever needed more than
00:12:04sixty four kilobytes at home and nobody ever needed more than foreign eighty pixels in a TV sold that if they were pushing for that HDTV standard to be six form eighty pixels of quite generous and and and they tied people like us were revolutionaries who were dreamers and
00:12:26didn't know reality in practicality of anyone at put it in perspective I think every five years or so something major has changed I like to save and I started %HESITATION I put my email address in nineteen eighty two on my business card remember meeting so my business school
00:12:48classmates and they laughed at me all evening over dinner well being a node enough to have an email address let alone put it on your business card and if you said to anybody ape in a few years say nineteen eighty five everybody would have a PC in their
00:13:05home you'd be laughed at you know in nineteen eighty five he said grandma would use email you'd be laughed at nineteen ninety if you said to people Hey they then that would be real and not this phone dialup stuff or eighteen he's view of the world you'd be
00:13:23laughed at nineteen eighty four nineteen ninety five V. started working on %HESITATION juniper to build peace be I peed objects and literally every single customer so baby day this is a really interesting point on why not to listen to your customers every major carrier told me they would
00:13:42never buy a case be I. P. rather for the public network I feel like one of my larger contributions in life as actually being to start your new part which became the only your plate please the I. P. doctor and change the trajectory of pain and that in
00:13:59fact Cisco it insisted that never do the I. P. what the public network at high speeds somebody told me juniper was not only your biggest hit in terms of return but perhaps the biggest return in the history of %HESITATION venture investing is that true you know I don't
00:14:16know if it's the biggest because I haven't kept track of every idea but we made about a five million dollar investment in that as distributed returns seven billion dollars that I was nice Matthew twenty seven so it's like I don't really concerned over a thousand next cat yeah
00:14:36that worked out pretty well for you too yes now but but look there's a point there is a point and the point is we did something be believed and it's a sort of a field of dreams the board should have peace be IP every major teddy I was
00:14:51going with a technology called ATM %HESITATION and Cisco it blocking ATM company and we just said the board will be different and all these big guys have no idea what they're talking about and everybody tried to dissuade us from investing because wasn't a reasonable market because the customers
00:15:11were saying it's not a good idea and after you do something on that scared the words are very different place that's why I say go on knows one on Miller came really changed her Jack tricks the deep sendo who is the founder of Jennifer change their to Jack
00:15:27very often and that I believe just like a lawn has checked in on Moscow's change the trajectory of electric cars on those can make a difference Larry and so gave change the trajectory of information and after you hit something that big why do you keep coming to work
00:15:47every day I mean out a lot of people after a hit of that magnitude would have hung it up you seem to double down go harder and you started your own firm you know this should the question is what do you enjoy in life I love working on
00:16:01new ideas high impact low probability of success ideas that had real risks that nobody else will pay I love to do things that generally wouldn't happen otherwise and I love assisting entrepreneurs in building their ideas and companies so whom one things I've never called myself a venture capitalist
00:16:25I always said I was a venture assistant in fact John Deere used to get mad at me because I'd say I'm a winter to system not a venture capitalists guide my job is not the money but to increase the probability of success often aren't note by pushing them
00:16:40getting harder to think about things they're not thinking about ask questions in in and that's a very important function if you've seen enough of it in seen enough mistakes made then you want you want notes to have the benefit of that somebody once asked me like what makes
00:17:00you a better on note I say I've screwed up more often than almost anybody I know in more ways than anybody I now because I made so many stupid mistakes dad I just hope I don't have to repeat it and I can help announced Norroy it somewhat to
00:17:19all right so you opened up the door let's talk about some of the huge mistakes happen no causal has made %HESITATION what when you look back on your career do you have a moment in time you say like wow I was just so wrong and I would have
00:17:32done it differently and what do you think led to those mistakes how much time do you have well let's just go just for like a minute or two on it because I got some of the questions I I'll give you a couple of examples right two very different
00:17:43examples yeah Siskel what that route Radha but he was robbing software that was running on sun motherboards regionally and sons motto if those who remember it was the network is the computer and I considered stupid that we didn't realize I didn't realize that networking would be a huge
00:18:08staying as big as computing and Cisco became at one point a higher market cap and such I mean that's fiord like dell what what what what does what was I thinking so you you assume that the end does the servers would be worth more than the plumbing I
00:18:25I guess I would just plain blind because we were being successful and and so you don't think as hard when you're being successful and and and I always tell people if you really had great success then you are less likely to be successful again because you're less paranoid
00:18:44and NASA have higher confidence that's a piece of advice to all on the nose the more successful you are the less likely you are to repeat it because you'll have to much confidence and paranoia is key to always asking questions you can be blinded by the success of
00:19:01your existing product lines I mean if apple just rested on the PC's they couldn't have seen the iPhone it's very common everybody you know how much I love Listia you know how much I love having control of my videos and how they're presented and the ability to grow
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00:20:07and to get people to sign up with an email and give them that prompt Hey want to get the next episode come to watch vessel free but your email and Hey want to get a white paper they have over three hundred and thirty thousand using whiskey and now
00:20:21when they started on this we can start ups just like two or three years ago they only had fifty thousand so this company is growing amazingly I mean I wish I could be an investor in it they are crushing it and you get great analytics trends viewer streams
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00:21:28and get their guides to build using the right microphones lighting and set up and all that kind of stuff is really great hacks whiskey at dot com slash twist I love this product go use it okay let's get back to the program what do you think %HESITATION and
00:21:45just more topical things were not going to get to trump because I I I kind of feel like it's super toxic at this point but I would like to ask you about a company called apple whenever an investor in apple now I don't believe so which you knew
00:21:59Steve Jobs when you look back on the legacy of Steve Jobs what do you take from it what was so unique about him as an entrepreneur you know I think what is unique about Steve is what makes great on notice they have a passion for a witch hi
00:22:21many on nose start companies to make more money or something like that when they run into trouble they give up they're not pursuing a vision with passion and when things get rough if you have a passion for a region if you had religion you keep going if you
00:22:41don't have that religion you trying to do something else this by big companies don't succeed as soon as the project runs into trouble if you're not no you bang your head against the wall you crashed through and being an underdog sounds glamorous in the press it's really really
00:22:58hard the highs are high but the lows are really low and I think there are more lows than highs yes I have a presentation on my website that I first did in nineteen eighty six with the same title and most of the slides of the same this rent
00:23:14power point first came out I've updated that slide back but it's mostly the same as called the entrepreneurial roller coaster over the highs are high and the lows below I'm in big companies when things run not up for a run into trouble people trying to abandon it find
00:23:32other jobs do not hurt their careers we need don't have an option you make things succeed and that's why I think on knows do so much more than big companies to so this idea of replacing the founder is something you would look at and say that's like a
00:23:49last the last thing you want to do a market that's the last thing you want to do is replace the vision off the founder and that means the founder you need good management and process but if it replaces the vision you will make the same decisions big companies
00:24:06will Mike and you will lose the big upside in the company so it's not always possible but most of the time you work really really hard to preserve that and what you touched on a little bit about the role of the venture assistant formally known as venture capitalist
00:24:24what do you think is the the court to being a great venture capitalist and what are some of the mistakes that you think venture investors angel investors make out when dealing with founders and investing well I would say there's multiple investing stock and there are people who run
00:24:45their spreadsheets and do well at it and there's some pretty good phones with very good rate cuts it depends on what you want to get if you're talking about radical wrists really successful fun to take radical risks I say they take back implausible make it possible plausible and
00:25:13then possible it's sort of this project treat people well good on the nose blocked and good investors realized the uncertainty in that and deal with them ambiguity reasonably well I hate it when people want it on the note to follow the business plan or major against trivial metrics
00:25:38progress instead of the moors more fundamental causal things that make a company successful but not so I'm constantly battling boards on that where people want to see the the twenty sixteen plan and how we're doing on target verses the vision yeah so well planning is important for but
00:25:58missing plans is not the critical pain is it are you doing the right things and maximizing the probability of success sometimes that means making me meeting plaids and sometimes it means adjusting doing other tanks and you sort of have to ask these questions first prints from first principles
00:26:20not what was the plan and did you meet and tell me about some of your Mrs %HESITATION you were big into the energy sector you think this is tremendously important and you were right that energy is probably you know in the top three most important verticals we have
00:26:38along with information maybe biotech life extension on the kind of great stuff what did you get right and wrong in energy in the energy you know reinvested early and when things got hyped the act he didn't make a lot of investments at the later stages so most apart
00:26:59yeah investments for very early there's a few exceptions Phoebe kept investing later and made some mistakes but by and large I feel we'll do okay managing not as great as I'd like but I'm not disappointed be attempted it I think will build some pretty decent companies in energy
00:27:24and sustainability in general which is sort of what we call it sustainability by the way in the movie cuts many of these companies suffered I'm not having other investors to support that and when that happens you have to go into triage small and we didn't do it we
00:27:47did have to do triage and it hurts a lot and some good ideas had to die in triage mode because you take your fun and ya allocate to find but by and large I think we did the Murrah the best we could and I think our fun me
00:28:05in that category of energy investors would probably be let me ask you as we wrap up here %HESITATION given what you've seen over the past show just one other talk shows and this leads to another paying for investors diversity is important and so even our energy funds had
00:28:26a fairly substantial amount of money in other non energy tank was in fact a principal and you find had square in that so you know one great hits like bad returns the fund to the fine does okay there is a certain randomness to what we do as investors
00:28:48yeah little bit of luck yeah and I would ask you just M. as we wrap up here three decades of investing in another decade of building companies and being an immigrant to this country and see what you see today the challenges the world faces very complex challenges like
00:29:11global warming very complex challenges around migration people closing borders etcetera are you optimistic right now or are you concerned and looking back on the last forty years where we're at the spectrum of optimism just twenty seventeen stand for you versus pessimism you know I am generally always been
00:29:31an optimist I think %HESITATION political things come and go what we are talking about is technology driven fundamental change that's beneficial for humanity there is a large problem not define the problem the following light seven hundred million people on the planet probably Lou Reed live I'd rates lifestyle
00:29:58it's rich in energy it's rich in education it's rich in medical services it's rich in entertainment seven billion people wind %HESITATION if you say how do you get ten acts that resources to get everybody there it's not possible except for technology technologies incredible resource market black a dozen
00:30:26might have a you talking in medicine all our energy or entertain mine are more overlaps a communications and I love the fact that it's such a great multiplier they didn't let such be optimistic about the future %HESITATION in at the same time it gives us a great challenge
00:30:49to go after so back to your question I don't I quit I get bored on the beach what do you do get tied up in the clouds up pretty quick right at this so many interesting things to work on that can really change the Walt I love helping
00:31:10on snows do that now tell me %HESITATION are you concerned about a I robotics and negative job growth this is been a very polarizing issue amongst technologists who have the inside information of sort of how much progress for making on these topics what has been no because the
00:31:32stand on jobs and are they going to grow or they get it contracted some huge meaningful way so I wrote a piece in twenty fourteen long before other people start talking about it informs because great abundance great GDP growth great productivity growth and increasing income disparity it was
00:31:56more of a focus on income disparity but it talk through all the areas in which technology would replace jobs by people who blindly assume that in the past technology has had create more jobs at the same would repeat are fundamentally wrong so I do change we will have
00:32:17an issue %HESITATION and and we may be seeing the beginnings of fat I don't think it's ten years away I think it's thirty forty years away but there is very few areas independent of fairly affects the keys there I see humans being able to do that jobs at
00:32:39least eighty percent of the jobs we have today so I ate in this piece speculated that more than fifty percent the jobs that exist today won't exist in forty years and they won't necessarily be to play Ste that's a good thing and a bad thing the good thing
00:33:00is people will work because they want to work not because they need to look the bad thing is we'll have to address the people who are not working good thing again is will have enough income and income growth in GDP growth tool for that level of luxury I
00:33:20think the larger problem with the how do you keep people motivated to entertain happy guys without a sense of south for people aren't happy dad would be a bigger problem than jobs in the long term because we can redistribute some of the wealth we could have a basic
00:33:37income we could hire more teachers and I'm a big fan and I've come out on the record supporting some form of universal basic income in cutting edge to see last week that India first started talking about it now I I think it's really important I love capitalism capitalism
00:33:56is by permission of democracy and democracy only works if everybody benefits and we've gone the wrong way in that okay on that note let's hear it for no cost thank you our iTunes review of the week is on twenty twenty as a twenty year veteran the business I
00:34:21am still learning something new every time I listen great show with great guests

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