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I don't know. I probably reached out to 30 or 40, and there weren't that many firms. And many firms didn't recruit people fresh out of grad school. Some firms would just recruit operating execs. So, I'd say about a third of the firms only recruited operating execs as partners. And I was looking for places that had the capability of bringing on an associate or knew what an associate was. And you know, I lucked out and I got in the industry and I thought, hey, I'm going to stay for a few years and if I don't like it, I'll leave. You know, it's not a big deal. And so I started at the Venture Affiliate of Smith Barney. It was called First Century Partners. And at the time, a lot of financial institutions had venture arms, like commercial banks, investment banks. Actually, GE had a venture arm called GE Ventures, which was kind of, you know, iconic. uh city city city group venture capital which is now known as cvc and you know a lot of the those institutional firms tended to hire associates versus smaller private partnerships which may only have kind of three partners may or may not hire an associate and so it was just kind of pounding the pavement and and and kind of grinding through it but it felt a lot like a door-to-door salesman job but i got my foot in the door and And that was 38 years ago.

1985, right? In 1987, you go to IVP. Right. And then of course, you have the great stock market crash. So without knowing it, you actually are the first person on the program who I think we've had who in this series, who actually lived through four of them. Tell me about the first deal you ever did. Tell me about the first deal that you either sourced research where we're critically involved in. And that resulted in a check. Everybody says you remember your first deal. So tell us about it.

Gosh, so the first deal I was ever point on was at first century and it was it was in this it was in a company it was a communications company called conquered communications and what they did was they did manufacturing. They did manufacturing floor networking, so that different pieces of equipment on the manufacturing floor could all talk to one another. And there was a protocol at the time, which was based on TCPIP called MAP, Manufacturing Automation Protocol, and that's what they did. When I got to IVP, the first one that I really worked on that kind of came to fruition was probably something called Synoptics, which was the first hub, networking hub.

I was about to say, I remember it, like Cisco, and there were a couple of other contemporaries.

Yeah, and then shortly thereafter, I invested in something called Wellfleet Communications, which was a router company. Of course, the router. Yeah, and so Cisco and Wealthfully were the two routing companies kind of in you know, in that in that period of time, which was kind of a late 80s, early 90s. And then, and then they also invested in a seed company that was selling equipment to telcos called my digital access, which ultimately went public and, and then got acquired by somebody else.

So funny. In the early 90s, I was fixing laser printers. And then I was at an IT company. And this is how I paid for college. They said, Hey, I'm you should come work at this company land systems in New York. And Mike Savino, who works with me now as an investor, hired me just because I had gone to a high school and I came in and they were putting in welfare routers. And we're putting in banyan vines, ethernet, all this stuff was just coming out. People forget that before the internet, you had computers where people were just trading floppy disks inside of an office, and then you could connect them and law firms were like, wait a second, we don't have to run this document up 12 floors or down to the office. And Wellfleet would have these $50,000 routers. And we would set them up between the two with the hubs. And you could then have a document from Sherman Sterling's office in another city in that same city being worked on the same day. It was mind blowing to attorneys at the time. listen if you want to crush it this year you're not going to do it alone nobody gets there alone you need to fill your team with the most qualified people and the best way for you to find those candidates is where almost a billion users are hanging out all the time and that's linkedin jobs now with 875 million users and Think about all that talent hanging out at LinkedIn every day, networking, updating their profiles. Everybody coalesces there. They hang out there and they're in that work mindset. Well, here's the best part. You get to post your job for free right now. That's right. Your first job posting is free if you go to linkedin.com slash angel. From my personal firsthand experience, we've hired some of the best people here at launch and inside.com from LinkedIn, and it's amazing how awesome the inbound job applications are since I started putting the purple hiring frame on my profile. When you have that, people know you're hiring, and they're going to give you better candidates, and they're going to do it faster. And that's what you need. You need to get the great candidates, and you need them now. Small businesses rate LinkedIn jobs number one in delivering quality hires versus their leading competitors. So post your job for free, F-R-E-E, can't beat that price, linkedin.com slash angel. has linkedin.com slash angel to post your first job for free terms conditions apply because they give you something for free. That's right. But yeah, then the crash happened. How did the crash did the crash impact the venture scene? Because at that time, man, the the the PC era and the networking era was a boom.

Yeah, it was, it was, I just remembered, you know, it was 80, 87, I think it was Black Monday. Yeah. Yeah. And, and actually, somewhere in my office, I have this little clock that there was this firm, this this technology banking firm called Montgomery Securities. And every year, they would have this headed by this guy, Tom Weisel, who's kind of you know, a legend. And Montgomery Securities would have a big party every year around their Montgomery Security Party. And I remember they had a big party the day the market crashed, you know, on Black Monday. And the giveaway was this little clock. And it said, Montgomery Securities Annual Investment Conference, October 1987. And so I've saved that thing for, you know, whatever, 36 years. And it sits as a reminder, you know, to me, But, you know, it was a big correction. And by big correction, I can't remember how much the market dropped, but the Dow probably dropped 500 points or something like that, you know. And it was this big monumental event. And, you know, by today's standards, on a percentage basis, that was a big, you know, that was a big percentage drop. But by today's standards, you know, that happens on a volatile day, you know. But it didn't Pretty much, you know, I guess I lived through that and then in 1990, there was a small kind of recession. The internet bubble was obviously very impactful and I'm sure we'll talk about that. The GFC in 2007, was a big impact to the financial system and kind of how economies and markets interacted, but we were really on the periphery. And the internet bubble, we were the center of the blast radius, right? And this one is is definitely worse than GFC, but not as bad, I think, as the internet bubble was because, you know, this one feels like a fundamental revaluation. And of course, there's a global downturn. It's not as, we're not as much on the periphery as we were on the GFC, but we're not really the center of the storm like the internet bubble.

When you look at the companies that made it through previous bubbles, what do they have in common? What were the traits that when, hey, venture dollars dry up, public markets close, and IPOs can't happen, and all the venture tourists, which we always experience at the last third of the bubble, when the venture tourists are like, yeah, you know, it was fun to live in Tahoe or it was fun to live in Hawaii for a year, but I'm out, going back to wherever I was. what what are those companies that make it through? What are the qualities of them? And what are the techniques that venture capitalists use? Because, you know, there's a there's a lot of moving parts here. In terms of saving these companies, because that's what we're that's where we're at right now. I assume I'm assuming in your portfolio, you're in Hey, what can we save mode?

Yeah, gosh, I mean, the common trait on all of them is they survived, right? Okay. And there's some attributes about, you know, we can talk a little bit about, well, what do you do when the downturn first starts? to kind of assure or increases your chances of survival. And then we can talk about people who thrive in these types of periods. But let me talk about the differences, if you will, between kind of the internet bubble and the GFC. And the first one, I think, and then I'll come back to your question, I think. Sure, yeah. But the difference was in the internet bubble, and I remember at the time before the bubble burst, I think the market peaked, I think in March 2000. I think it was March 10th of 2000. And I remember beforehand thinking, boy, these things are, you know, like in the year coming up beforehand thinking, boy, these valuations are really kind of out of control and these companies are going public on especially internet advertising businesses and e-commerce businesses on basically no revenue and everyone was spending you know, spending all the public market dollars, because that's what the public market, you know, the public market investors want to do is to get get eyeballs and growth. And I remember thinking, boy, we probably should back away from that space, because it seems right. It seems right for, you know, possible correction. And, and but we'll go is we'll start going in, you know, to internet infrastructure, basically data networking, right? And so we started leaning more into being arms dealers for an arms race. And then I remember I had a lunch with a guy named Dave Dorman who was running BT concert at the time. And they were the fourth backbone internet network. And I was talking to him and he said, yeah, you know, we're building out our network and I'm not really sure the world needs for, you know, backbone networks, but that's what the public is giving us the dollars for. And but there's a ton of capacity out there, right? And there's probably way more capacity than we're ever going to use. And this is the time when, when backbone networks were being built out and fiber, you know, all the fiber optics companies were, you know, selling this incredible equipment. But when you started looking into it, there was so much extra excess capacity. I remember sitting leaving the lunch going, Oh, this is really not good, right? You know, because if there's too much excess capacity, something's going to blow up. And so, we went around and talked to all our companies and said, hey, raise a bunch of money because there could be a correction company and everybody raised money. And the difference between like the GFC and when the internet bubble burst is when it burst, people went on a buyer strike. I mean, there was a buyer strike and there was basically no customers in the market. they were for either consumer or for networking. And that lasted more than two years, almost three years. And I think early stage innovative companies can't really go that long without selling product, right? Because everything starts getting stale and you can't really make it. The difference with GFC was we had a correction, but it was relatively short lived, right? You know, things had corrected, a bunch of companies went out of business and buyers kind of came back into the market because it really wasn't targeted at the technology business, it was kind of targeted around the world. And so the first thing is, you know, surviving, right? And so it feels to me like this is a period of time that's more like the GFC kind of correction than it is like the internet bubble bursting correction where we got a ton of excess capacity and a bunch of business models that really didn't work yet, right? And so, now getting to your question, I think some of the lessons you learn in downturns is, you know, first you got to survive. You got to be there, you know, at the end. And so one of the things you always say, you know, I always say is, you know, always be early in adjusting expenses and burn rate. And it's a little bit frustrating, because I feel like I've been through this movie a few times, I kind of see how it ends. And I can almost have the role play the discussion of how it's going to go with a lot of relatively young management teams, where they're going to say, well, you know, what's going on, you know, you told us that we had to grow and we can't really cut because it'll scare people and there's nothing to cut and all this kind of stuff. And I always say, yeah, but you really want to lean up and you want to do it, you want to do it quickly and do it deep. because you're gonna have to do it at some point, the earlier you do it, the more runway you'll save. And actually, the people around in the company, they'll have more confidence that there's a sustainability, you know, that the company itself can be self-sustaining. and that it's a hard thing to do, but the people who remain will be more motivated and they'll totally get it. And most management teams aren't comfortable with it, right? And they think, well, I've cut all the fat. And the reality is that ends up going a couple cuts. And almost every company can take out their bottom 10% to 15% on any given day on performers and really not feel it and actually probably get better performance. And so that's kind of the magnitude. The death by a thousand cuts is really hard. The second thing that I think people do is they then change their philosophy on how to get expenses. They start layering expenses with revenue, not in advance of it. And so one of the things you really got to do is as a manager in one of these companies is really understand that the world has changed and everything's about risk reward, right? How much risk do you really need to take for what reward? And to the extent that you layer expenses with revenue, that de-risks the plan and gives you a better chance of success. The third is I think you got to focus vigilantly on the core value proposition and cut all the extraneous projects, cut all the stuff that was kind of nice to have. We'll see how in a loose capital environment it's okay to do that. Just go back to what is core, what's your core value proposition. The fourth is spend time with your team, be present. it's a very, it shakes the confidence of everybody when they see what's happening out in, you know, out there in the world. And you really, that's the time when you really, and I think being in person is really important for that, you know, being present and being around and having your door open and checking in with people just to know, just so that you're, the company sees you're not scared, you know, that this is really, this is really important. And then the last is create a sustainable business model. Lots of times, even if you didn't have a sustainable business model because you had a lot of capital and capital was free, well, you got to change that because you're not going to survive if you don't have a sustainable business model.

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No, I think you're exactly right. And that gets a little bit to, you know, who thrives in these kind of periods, right. And, and one of the things you just said, it's, it's people who are, who have the flexibility, and also the intelligence to kind of recognize what's happening, right. And they're rarely straight lines. from A to B, you know, the secret is knowing when to adapt and when to stay the course, right? And you got to be flexible and you got to adjust to the changing environment. And one of the things I have found is one of my lessons is it's really hard to substitute for raw intellect, you know, really smart, you know, backing people who are really smart is an important aspect, not just book smart or subject matter smart, but just people who kind of get it and they kind of see what's happening in the world. And you need perseverance, but people also have to be able to understand when the world has changed, they've got to change or else they're going to get run over.

Yeah. And the change that we're experiencing now, how would you define, if we were to look at this correction, where we are in the correction? And what were the mistakes that we made that need to be corrected?

Well, more generically, I would say, you know, great, great entrepreneurs, are people who really manage, are great managed risk takers. In other words, you kind of see, you know, everybody thinks, oh, entrepreneurs love risk, right? In my experience, the best entrepreneurs are the ones who understand risk, but they also understand reward. And they know when to take what risk for what reward. I mean, nobody really just likes risk just to take risk, right? Yes. I mean, nobody wants to jump off you know, jump out of a building, you know, with a blanket hoping that they build a parachute. But if that's your only choice, then you're going to have to jump off the building, right? And so, you know, when you go from periods of very loose capital, where raising money is easy, you don't have to be as tight with kind of how you spend your money, and you're able to kind of experiment more to get to bigger outcomes. with more speculative models and the market lets you do that, that's great. But as soon as that world has changed, you have to change with it, right? And that's a hard thing to do because it's culturally, you know, kind of very difficult. But I think the best entrepreneurs view is a challenge and they see it's happening and they realize they have to do it, right? You know, greatness comes from understanding risk and reward and when to take risks is as important as understanding kind of what the reward is. And so, it's those types of people who can kind of see those things and adjust that ultimately, you know, really thrive and survive, you know, in these kind of really uncertain times. You know, the other things I'll say is, They're also, I also find that they're very realistic and they're very honest. And, you know, I said this before, but I think you always have to assume that your employees, your customers, your partners are smart and they understand what's going on, right? And I often see people who think, hey, my job is to be the unbridled optimist. And they confuse that with confident leadership, right? And I found that employees are generally really smart. Customers are generally really smart. Partners are generally really smart. They see the same world that you see. And if you're headed down this path of driving off a cliff, it's gonna shake their confidence in you much more than this person is doing kind of what it takes to survive and to thrive. And I think if you use these types of crises as view them as opportunities, And opportunities, I mean, in times of great uncertainty and crisis, I think metal is forged and it's very easy to see who on your team locks up and who goes and solves problems, right? And so, the opportunity is you're gonna, leadership is gonna become evident. And so, promote the people, rally the troops, solve problems and call the herd of the people who lock up, you know?

Yeah, I mean, I think probably watching what Elon has done at Twitter, watching what Zuckerberg did, at first kind of driving meta off this cliff in terms of spending and just hiring. And then all of a sudden, he was like, Hmm, stocks at $90 a share. Nobody believes in us anymore. I think we're going to get rid of this middle layer of management. And he I don't know if you saw this past week where he said, if you're not building stuff here, please leave. If you're like, if we have too many layers of management, if you're just managing, and you don't actually believe you're actually contributing, you can leave, please leave. I mean, this was like, talk about a 180. Maybe you could talk a little bit about how bloated our industry got in the free money environment. And then this reaction where, hey, it almost seems like people are now saying, well, what's the what's the least amount of resources we need to achieve a goal, as opposed to what's the largest amount of money we can raise and my net my value is how many employees I have and how big this company is.

I think you're I think you're exactly right. I think I think this shakeout, if you will, is going to take a while. I mean, and when I say shakeout, I don't just mean in the venture world. I mean, I think just generally, you know, there's been, for whatever reason, the money supply grew at a very rapid rate, right? And if for a very long time, we got asset bubbles and companies including ours raised kind of too much money, it's going to take a while for that to kind of leave the system. And the mentality is, it's going to take a while for the mentality to leave the system. You know, we've been going on a kind of go big or go home kind of path for pretty much since after the GFC, so kind of 09, something like that, 09, 10, maybe started happening kind of 06, 07. And that's a long time, right? And so, people are going to have to go back to how do I accomplish the most with the least, right? And one of the things I Yeah, you know, I always believe that a lean company ends up producing a better company, right? You know, necessities are the mother of invention. And I've always been in general for raising a little bit less than a lot more. And I understand that when a company is offered a lot of money at low dilution, it's probably the right thing to do to put it on the balance sheet. But my history has been that culturally it leads to more sloppy decisions, right? And management always says, oh, don't worry, we're going to raise it and it'll be a rainy day fund, right? But what ends up happening is, you know, employees go, well, we have all that money, let's just do a parallel project or let's not cut this person, let's just hire another person to kind of do what this person was supposed to do. And you don't have the razor's edge, you know, that makes startups successful, you know, more than that. It gets a little bit sloppy. It gets a little bit more like a bigger company, right? And so, I think ultimately, this will be really positive. And I think the companies that make it will come out better companies. And the new companies that will get started will definitely be better companies. But it's going to take a while for this to, you know, for this to shake itself out. Maybe several years.

Several years. Yeah. Cause this has been a year, 2022 completely down market, brutal 2023. It seems like the dead cat has bounced at least in the public markets and people are saying, oh, maybe this isn't going to be a soft landing. Um, but you say a couple more years of working this out for founders, startups, capital allocators. So two, three, four year cycle, and we're a third of the way through it. Is that kind of where you're thinking?

Yeah. That's kind of what I'm thinking. And part of it is a lot of the bigger companies have raised a lot of money, and they've got a couple years of cash. And, you know, the shakeout won't really occur till everybody's kind of out of cash. Similarly, with capital allocators, a lot of people raise big funds and, you know, they'll try to They'll try to be disciplined, but the fact of the matter is when you're funded and your job is to quote unquote invest, you'll probably invest.

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Gosh, hard to pick. Yeah, I mean, every everyone's a little bit different. Everyone's everyone's kind of really has its own fun, unique story. I guess, you know, if I go if I go way back, you know, when I made an investment in this company, excite, right. And, and that was one of the first internet search engines. And One of the reasons I got interested in the internet was, as you mentioned earlier, high-performance networking came out of work that was done by ARPA and something called the ARPANET. And the ARPANET was the pre-generator of the internet. And because I'd done so much work in high-performance networking, I knew a lot of the original architects of ARPANET. And I start hanging around them and I'm like, wow, this internet thing could be something interesting. And so, I met a bunch of kids at the time who were just still in college or just coming out of college and they had no appreciation for how the internet was built, what you could do with it. And they were, and I put some seed money in a few of these companies, you know, and ended up, they became consumer companies, consumer media companies, right. And what was really fun about that journey was none of us knew what we were, what the business model was. I mean, most of the other kind of data networking things, whether it was Wellfleet, or Juniper, or Calix, or, you know, what have you, you know, they're doing the same thing kind of faster, faster, better, cheaper, right? You know, Arista, when I put some money in, it was because I knew the founder, Jayshree Lall, from a previous company. But you knew they knew how to do it. They were just building, you know, a faster, better, cheaper thing. The ones that are really gratifying is when there's no business model and you're kind of in there trying to figure out, is there something here and are our customers going to do what has never been done or a company is going to use this to get into a world that they've never done before? And those are somewhat the most gratifying, the most fun. you know that's what excite was like you know i did something called nmc networks which is the first network processor company which came to us as a systems company and talk to me being a chip company. You know when we did all the market research to see if there was a market there you know when we did tivo there was this concept of you know how can we. How can we change the way people watch television, right? You know, how can we go from live television into something that's time-delayed and they can watch the shows whenever they want to, what they want to watch whenever they want to watch it. Pause TV. You could pause TV. Pause live television, yeah, exactly.

I think that was their tagline, pause live TV.

It was like, what? Exactly. you know, and when we did do, you know, it's invested in snowflake, it was, well, you know, this data, data is going to be a really important kind of resource in the cloud. And, and, well, is that really going to be true? Right. And, and so it's, it's in these things where The most fun is working with people who have this vision, and they say things like, we're going to do something that people have never been able to do. And whether it's live their lives, or how corporations do their work, or how how people kind of communicate with each other and those frankly are some of the most fun. They're the most nerve-wracking because you're talking about markets that don't really exist, but when it does work, it's incredibly fun.

It's amazing when market pull occurs, like people talk about product market fit, okay, people like this product, they're spending a little bit of money, but then something weird happens when there's market pull. And like, all of a sudden, everybody's got a TiVo, or everybody's taking an Uber, or, you know, using Excite, whatever it happens to be, you're like, whoa, the world recognizes this is brilliant. And they're knocking our doors down. That is kind of the height of entrepreneurship, I think.

Well, you know, what's really funny is, and you've experienced this when, when someone says, Boy, that's, you know, in the beginning when you start a company. You start a company, you have this idea, and typically, either someone brings you the idea or you have the idea, and you kind of noodle over it, you noodle over it, but you know, somebody has to take the initiative to say, you know what, I can't stand the thought that this doesn't exist, or I can't stand the thought that someone else is going to do this, because it's so obvious to me that something like this exists. So, then you go do the work and then at one point, you know, the founders look each other in the eye and they go, okay, do we really believe this? Do we believe this enough to leave our jobs and actually go do this? And you go do it, right? And nobody really believes, nobody knows it's really going to work. And you have this period where you're willing the company into existence, right? You know, you have to believe enough and be able to convince others that this is really going to work in order to raise money or bring in employees or get your first customer, what have you. There's that period where you just will it into existence. And if you stop willing it, the founder stopped willing to existence, it dies, right? And in that period, you're telling everybody what you do and they go, yeah, it sounds like a good idea, but is the market big enough? Or will this really work? Or will this person put you out of business? And then it starts working and people start coming on and you go, and the founders inevitably turn to each other and go, wow, I wasn't really sure this was gonna work. I can't believe it's working, right? We're flying, it's working. We're flying, it's working. And then somebody comes up to you and goes, Oh, I know that company. It was so obvious. I can't believe nobody did it before you. And you go, and you sit there and you go, thanks. But then what you're really thinking is, yeah, it's obvious now, but it wasn't obvious then. And I told you about it then and you didn't jump all over it, right? And it's an incredibly fun process.

it literally is the definition of what's so exhilarating about being a capital allocator and helping place these bets. Literally had Joe Jebbia for one of the three co founders of Airbnb on just yesterday, or two days ago. And the number of VCs who said no, was just unbelievable. You're dozens and dozens of people, and the smartest ones in the room. And he's like, it was crazy. Jay cow. We were like pitching legends and people who we totally respected who had backed YouTube and Google and this and that. And they kept saying no. And we're like, Okay, well, maybe we should pull the plug on this. No, we know this is going to work. We know that we worked. And it really was Paul Graham, who told him like, Hey, keep going, keep talking to your customers. You got 30 people who are hosts, go meet those 30 people. And if Paul Graham hadn't just, you know, as he said, like, wag his finger in there and say, just go meet those customers and talk to them. It would have never have happened. Same thing with Uber, I introduced Uber to maybe 20 people and three of us invested. Everybody else was like, that's a stupid idea. going to get an accident, somebody's gonna get killed in a car. And I'm like, I think 30,000 people get killed every year in a car. Like, that's not a reason not to make a business like, maybe we can make cars safer. Who knows? You've worked with two really interesting people. One I had on the show, Frank Slootman. And then one I've met a couple of times, Zaslav. And I think you're still on the board of WBD. I have been buying their stock. I'm a complete Zaslav fan since I met him when he gave a pitch on Discovery at a investor conference. Tell me about these two individuals because they do seem to be, I call him General Zaslav. He seems like a real hardcore guy and Slootman as well seems like a general. Tell me about working with those two individuals and why they're so absolutely successful at what they do.

Well, you know, I haven't worked directly with Frank, so I can, you know, he just exudes confidence and experience and determination, you know, and he's someone that he just just don't, you know, don't get in the way of because he's just gonna, you know, go through, but I can really talk much more about Zazz. Tell me about that. And, you know, I met Zazz because, originally, because when we had invested, when we, you know, started TiVo, I brought in, I was really worried that the networks were going to try to shut us down because we were potentially, you know, skip commercials and stuff. And so we went to a few networks and asked them to invest in the company and help us kind of define how the DVR was gonna work and how consumer experiences and how to work with content owners and providers and stuff. And so NBC ended up investing and Zazz ended up coming on the board. And so we were on the board of TiVo together for about 10 years. And I just really liked the guy. He was really pragmatic. He said exactly what he thought, and he was kind of a no BS type of person. And I had been on the AT&T board, and when AT&T spun off WarnerMedia with Discovery to create Warner Brothers Discovery, I was asked, would you have an interest in going over to Warner Brothers Discovery? And when Zazz called me about it, I said, yeah, I'd love to work with him. And he is he's kind of a remarkable guy. He is. he's very high EQ. You know, what I like about him is, firstly, he's a great guy. And he's got his head on straight, screwed on straight, and he has very strong principles and morals and understands, you know, he engenders a ton of loyalty from the people around him and the people who work with him. And that doesn't mean he There's something in Hollywood generally where lots of times you can't really tell if someone who commits to you is really committing to you. He's the kind of guy will look you in the eye and he said, you know, we're not, we'll commit to you and he will uphold his commitments. And so he engenders a lot of trust and a lot of loyalty. You know, he took over this company or they took over Warner Brothers or Warner Media and Discovery, put them together. at a, you know, without a ton of due diligence about what the combined entity was going to look like, without a lot of knowledge about what all the different management people were going to go and how the integration was going to work. And he did it into a down market. And, and I got to give him a lot of credit because through this whole experience, they, they jumped in. They solved it in the public eye, if you will. They rationalized expense and made some really hard decisions. They did a bunch of layoffs and they cut some products and shows and they merged different functions that were doing the same thing. But through the whole experience, he had a very strong unifying vision of what Warner Brothers Discovery could be and what the legacy was and why it was really important and what kind of company he and the rest of the management team wanted to build for its employees and for its customers and for its partners. And it hasn't been easy, and I hope we're on the path where a lot of the hard work Yeah, yeah. But he's a remarkable guy too. Yeah.

I'm watching Disney now, like, just the last 48 hours of this taping. They're like, Hey, you know what, this business needs to be profitable. There needs to be a path to profitability here. And everybody's spending money. Everybody's making shows, but we need to make shows that actually fit the brand. And you know, they're cutting their spending and they're getting fit and saying, Hey, you know, how do we make this into a business that can pay a dividend? that that is worthy of people owning large chunks of stock in it. And I, I've been buying Disney and Warner Brothers, just you look at the hits coming out of those two companies. And we were having a conversation of it with the producer of this podcast, and everybody was like White Lotus, uh euphoria last of us what you know just we were going down like the favorite shows of the last couple of years it was like holy cow like these are all like either a disney plus show or it's uh on hulu or it's on hbo max secession house of the dragon and the and the and the ones that actually had the quality that you would watch them live in an era where there's absolutely no need to do that, other than the absolute joy that the show brings you and the excitement that it brings you, was HBO. That was the only one that really had that water cooler factor, which was just extraordinary.

It is extraordinary because in an era where I mean, HBO, it's hard to argue with the success they've had in the hits, many of which you just named. And to kind of, to release something on an episodic basis on a Sunday night in an environment where Netflix is all about binge viewing, but they stuck to it. I remember a friend of mine, David Kelly, is a producer and he was doing, I think he was doing Big Little Lies. And I asked him, why did you do it on HBO? I'm sure you had a lot of other offers. At the end of the day, he said, you know, being Sunday night, being on HBO on Sunday night still mean something, right? And I like the promotion. And I really wanted an audience to see see our work, you know, and I went, Okay, I get it that that makes sense to me.

Yeah, for sure. That's incredible. You know, David Kelly as well. I mean, he's done some of the most amazing shows in the history of all this. So when you look at your career, I know you've kind of, I don't know if you've stepped back from red point a little bit, but you're kind of thinking about retiring, but man, this list of things you're doing seems very long. So, uh, how do you think about a career or not?

Well, I, you know, I'm, um, I'm not as active with red point as, as I have been.

Yeah.

I'm still a huge supporter. I'm kind of an advisor, if you will. I work on deals on a one-off basis. I'm here at the Red Point offices now and I'm still the largest individual investor, I think, in the funds. But part of what I wanted to do is the next step. I really don't have an interest in retiring. But I want to, you know, be able to do, you know, some more things that I really wanted to do. So I've been investing, you know, in my own account. But I also have helped start four companies, and I have an active management role in all four companies. And so I've gotten really involved in a smaller number of companies. And I really, I enjoy it. And I regret it at the same time.

Because it's so all-encompassing, right?

Yes. You can't stop thinking about it. Yes. And nothing happens unless, you know, I've got much more responsibility for what happens with these companies versus, you know, kind of calling up the CEO and saying, hey, you know, you should do better or, you know, you should sell more or whatever.

just watched, I'm sure as your thoughts on this crypto, you know, this like decade, or, you know, almost a decade of people talking about they were going to change the world. And as far as I can see, yeah, Bitcoin, pretty amazing, radical concept. And after that, it trails off pretty quick, at least for me as an investor. And as you know, somebody who comments on this stuff, and then I watch AI. And in a couple of months, we've watched just an absolute flurry of real products dropping that have real impact on people's careers, etc. Maybe you could little bit about what you think of chat GPT, Google releasing theirs finally, which they seem to have had on ice. They didn't release it for some reason. I wonder what the speculation is there. I have some ideas. But what do you think about this massive generative AI AI moment that we've seen in the last couple months, and then maybe compare comparing it to VR and other things that maybe have fizzled or just not gotten critical mass and certainly crypto, which was a weird one for me.

Right. So, you know, obviously, AI has been something that people have been talking about, you know, since the 70s, right? And I remember being at Stanford, you know, for grad school, I would go for business school and taking some AI courses, you know, back, back in the mid 80s. Right. But to me, this, the, the, and I think to a lot of people, the chat GPT announcement felt a little bit like a seminal event, like a real wow moment. Right. And if you think back on the major discontinuities that have driven kind of technology and as a consequence of venture, the venture business, you know, because it's so closely tied with, with technology. You know, you have the transistor and then you have the mini computer, then you have the desktop PC, then you have kind of IP networking, and then the growth of the internet, you know, the search box, you know, the first time you type something in the search box and return to result, no one's ever going to forget that, you know, the mobile phone, and if you had to put one thing on it is probably the launch of the iPhone, right? Cloud computing. And it feels like you know, AI in its multiple forms, but really as personified by the release of chat GPT, it feels like a kind of a seminal moment that is like a major discontinuity, right? Yeah. And, you know, whether it is in fact, chat GPT, or it's, it's another, you know, conversational AI, or it's other any kind of some other generative AI, it kind of, it took this broad concept that people have been talking about, and it kind of all of a sudden personified it as this is what it is, this is how I use it, boy, I can see all these, you know, extensions of how it's going to change my life.

Yeah.

you know, I think you can take it to obviously to an extreme, which is, which is probably not going to happen. But I happen to think AI is going to improve our lives, not replace them. And I think it's going to allow people to to really add value at kind of higher order stacks, it's undoubtedly going to disenfranchise a lot of jobs and things that can be done by computers. And it'll accelerate what's kind of been happening. But as an example, customer support, you can see, it'd be really easy to kind of train datasets into conversational AI and reduce your customer support staffs by like 90%. or something like that, right? But I choose to think that it'll become a tool so that people can do what people are really great at, which is original thought. And, you know, these systems aren't really systems of original thought. You know, somebody has to program them and then you give them learning sets, data sets to learn from. And what it does is it quickly optimizes kind of known problems with known solutions. And it gets you quicker to, you know, where you would be by doing, you know, multiple iterations. But in terms of thinking out of the box and creating true original thought, I just think it probably raises the bar and helps us do what we do best anyway.

Augmenting human talent and human uniqueness feels like what this is going to do, which is what word processors did. Spellcheck did, right? Every time somebody told me like, that's the end of writers, or whatever it is. And it's like, you know, Grammarly is pretty great, but you still have to think about what you want to communicate, right? Grammarly makes almost everybody, you know, close to perfect writer, right? Amazing piece of software. But I mean, it really is fascinating to think about what will happen to developers and white collar jobs. We were living in a time where we have not enough people to fill blue collar jobs, right, healthcare, etc. And then we're saying, Oh, you know what, you may only need 10% as many customer support people, or maybe you need two developers, not five to get the same output. Really fascinating. Somebody sent me an image of a company where you give it text prompts. And it comes back with UX designs. So it's like, I would like to make a marketplace for dog sitters. And it's like, okay, boom, and it shows you a design. It's like, I want to have a, you know, a change or login, and, you know, reset my email page. And it's like, boop, here it is. And you're like, Oh, well, that's interesting UX design. And then somebody else made the same thing. Autopilot, right, a GitHub where we'll write the code. And I'm like, wait a second, when are they going to put those two things together, where it does the UX design, and then it adds the, you know, reset your password functionality, and boom, the code is there. And then it says, yeah, publish it, go ahead and publish it to the app store. And let's see if anybody uses it. Like, you could literally just be sitting there talking to your computer and make an app.

Right. Well, I mean, when you think about it on web pages, right, before that, you needed a lot of expertise, you know, probably a lot of Java expertise to kind of create a web page. And then all of a sudden, you had HTML editors and, you know, graphical user interface editors and stuff. And now anybody can kind of create web pages. And now all of a sudden, everybody can kind of put stuff up, right? And So, I don't know, to me that moment, it just smells like an important moment, right? It clearly is, yeah. It's to me akin to that first time you see the search box and you type your name in and all of a sudden you go, wow.

Woah, I didn't know you could do that. Nobody told me about these webpages where they mentioned my name. The inside line I got from somebody, listen, it was an anonymous tip anyway, so they said, listen, I work at Google. They told me this months ago in GPT. The previous gtbt came out, which was two or something. Yeah, they're like, Listen, we've had this, we've got better. The point is, like, we don't want to release it, because it's a little bit scary, you're going to just think about all the jobs that are lost. And it's a bad look for Google to be killing jobs, you know, in an environment where we're winning so big kind of situation. And I was like, that tracks for me, like, this is going to be scary for people who have certain jobs. But I don't think it needs to be, you know, you think about the number of people who are creating podcasts today or doing other jobs, creatively, humans find something to do. I just think I am very concerned about is kind of, um,

the AI ethics around it. And that manifests itself in a whole number of ways, including the fact that I think people tend to, when it comes from a computer, they give it a higher authority, exactly, right? And it's got to be accurate when in fact, it's only as good as the code that went into it. And it's only as good as the training set, you know, that leads to the conclusion. But when they're learning models, and you can't trace their black boxes, they just give you answers. You know, I'd hope you'd never put you know, nuclear launches in the hands of machines like this, right? You know, there are certain there's certain decisions that should always have a human, you know, kind of in the middle. But anyway, I think there are a lot of interesting sociological and ethical questions.

This is the one I'm concerned about as a content creator, my whole life blogger, writer, etc. is where'd you get the data? And how do we get paid? And this, there's a search engine, I think it's called Neva. And they showed me an example of them doing citations. So it's like, Oh, okay, you use this chat GPT to give us an answer. But then it was like, this first sentence was constructed from a CNBC article. This next one was from a Financial Times article. This third one was from the Wikipedia. And I was like, Oh, well, Google and chat GPT have the ability to do that. So let's get some citations going here. And then there's a So what you're talking about, it's like really interesting and fascinating. I hadn't even thought about it. Like, if it's trained on a bad data set, and it gives a bad answer, and then people are like, Oh, yeah, that fits my worldview, or you're a computer. So I guess I'll go with that. Like people when they had GPS, some people literally drove off roads. And they were like, you know, you remember those stories? Like, It's like, yeah, you literally drove into a cornfield. You didn't see the cornfield in front of you. You made the left. It's a turn left and you went right into the cornfield. Okay, great. It literally happened. And they were like, I'm going to sue Apple. I'm like, could you turn left into a cornfield? Okay, got it. The one that's going to be actually really scaring for people is this is going to find up find some things that are going to be uncomfortable. And that humans might have correctly or incorrectly use their bias to say, you know what, that's an answer. I don't think I want to publish in the real world. come the bell curve comes to mind, you know, you have this sure scientist who's like, Hey, we're gonna give this IQ test to a bunch of different populations. Oh, it turns out certain populations have slightly ever so slightly scores, and then people are like, gonna run with that. Oh, no, these people are super than these people. It's like, no, the test was made by this group of people, maybe doesn't apply to other places in the world. It's like a million different reasons. But what could this thing thing find when it gets its hand on genetic data? right? What are you gonna tell us about intelligence or genetics or whatever about humans and populations and can be uncomfortable.

Well, I think you're right. And I think a little bit about kind of Facebook, you know, as a precedent, precedent, kind of environment where, you know, I think Facebook was created to connect people of like-minded communities and to find people, reconnect people that you haven't seen in a while or meet new people who want to be in like-minded communities and have discussions to kind of feel a greater sense of community, right? And Yet, what's kind of happened is it's become, on the bad side, it's become these echo chambers for extreme thought, right? Where people just say, you know, I was kidnapped by an alien and someone says, oh yeah, aliens are there all the time and it just kind of reverberates, right? And it was an unintended consequence of kind of the other side of the coin, right? And I'm sure the same thing happened with telephones, you know, no one created a telephone to have spam calls or to defraud people, but it just kind of happens. And so, I think we're a little bit in the romance period right now about, God, look at this universe of opportunities, right? Of all the things that could improve our lives, But soon it's going to be all the downside stuff, right? And if that happened, if you look at Facebook as an example, you know, I feel like Zuck and the team have always been trying to catch up because they were very, in my opinion, they're very positively inclined about all the altruistic things they could do and didn't really spend all this time thinking about all the negative aspects, you know, to it. And I'm worried that there aren't enough people thinking about all the potential negative aspects and cutting those off at the pass, right?

I mean, and if you think about capitalism, you think about entrepreneurship, you know, move fast, break things was literally, you know, Zuck's credo, and he didn't come up with it, but he embraced it. And, you know, like, oh, you broke a democracy here. know, you broke the truth over here, like you really with this technology, this one feels faster and more powerful than right social networking, social networking seems benign by comparison to a computer telling people, here's the canonical answer to your question and go forth and execute based upon it like, Oh, boy. We got to really tread lightly. All right. Listen, I've taken an hour of your time. It's been amazing. Come back on the show, like in a year, let's just chop it up again. Um, and continued success. Um, thanks for sharing all these great war stories and everything. Uh, what a great career and it's just great to get to learn from you and hear all these stories. This is like a great, you know, the audience gets to hear all this. And I'm like, literally, this is how I'm getting better as an investor is just having a series where I'm like, who's done this three times longer than me.

Let's talk for an hour. It's a fun way to get reconnected. So it's nice to see you again. Hopefully, I'll see you in person soon.

Yes, been too long. All right, everybody. We'll see you next time. Bye bye.

Hey, it's good to be back on. I'm glad you're still doing this, man. I remember 2019. Yeah, right before the pandemic. before San Francisco and the world got crazy.

Hey, everybody, welcome back to this week in startups. I am super excited because friend of the pod, who hasn't been on since pre COVID Ryan Smith, the co founder of Qualtrics And now, he's not just a fan of the Utah Jazz, he bought the team. He enjoyed it so much that he bought the team. Welcome back to the program, Ryan Smith.

Yeah, we just sold and we're still kind of rocking and then decided the IPO was a year later. And then It's been it's been crazy for years, been a lot of a lot of transactions.

It was a it's so weird the last I mean, how do you look back on the last four years so much has happened also for you, buying the team, etc. But it is crazy how business has changed. And you also you had done the IPO at that time, I guess, or shortly thereafter, maybe.

Yeah, we're starting our actually our beginning of our third season, we kind of took over half year. You know, it'd be like you with the Knicks. Like, it's your team. I think when Adam called me when we kind of did the announcements that, hey, Ryan, like, if you're lucky, you can be part of the NBA. If you're really lucky, you can work in it or be in a small ownership piece of it. Yeah. And if you won the lottery, you get to be like a majority owner. Yeah. But no one gets their team. And you have the team you grew up watching, sneaking into the arena as a kid. And so it's not lost on me. I mean, it's a huge responsibility, especially with the team who has never won it. We're the second winningest franchise over the last 30 years, which is crazy. And most people know us for being such a prominent figure in the last dance, but not getting over like we peaked during those Jordan years.

I gotta just start with the team. What a dream to buy the team. How's it been? This is you're going into your second year, I think.

Yeah, so we've just got a, we got a lot of opportunity and we're excited. I mean, Utah's grown a lot and it's a huge responsibility, but it's fun, super fun.

And so... Don't I know it. Nicks as well. The Ewing era. There's a whole list of teams and players who, like, they just, they played during the Jordan years and it's just, he's the GOAT, so.

Yeah, so so one of the things Adam said to me when I came in was like, don't take whatever you've learned through Qualtrics and your time in tech and check it at the door, that would be the biggest mistake, we actually want you to bring that here. But it's totally different, right? In tech, we measure ourselves through market share. And if we have a certain amount of market share, we feel good. And there can be multiple winners. And actually, even second place in search is not that bad. And if you look at it within our world, we're actually in a closed marketplace in the NBA. Which means whoever you deal with, you're going to have to deal with again. There's not new entrants. They're all there. So you've got to behave in a way that, you know, you need to go back to the well or back to another team or back to another player. And that really, really matters. You know, in tech, we can just go out and recruit whoever we want at any time and create roles and do this, like that's not the way it works. And then I think some of the things that I've learned, like, we're all super competitive, and we're also super impatient in tech. And that's really, really hard, because tomorrow comes, and you have a finite amount of assets you have to play with. And everyone kind of has the same amount of assets up to a point. And you've got to strategically go through and place these bets and know when to place the bets. And you've got to get lucky. And so if you look at what I came into, I came into my first year, we were the winningest team in the league in the regular season. But we got bounced from the playoffs pretty early. second year, we ran it back didn't really want to mess it up like the team was kind of in the latter half of a pretty good run. We had two all stars and Donovan Mitchell and Rudy Gobert and I really hadn't done anything. I just kind of watched and I got a chance to work with or at least the possibility to work with kind of the person who I idolized in basketball was Danny Ainge who had run the Boston Celtics for 18 years and to kill my My tech background was like, Ryan, surround yourself with the best people you can get. And it felt like I was going out to recruit an executive, like we all have done. Yep. And said, hey, how do we get Danny to come in and like, help run the team? And then who do we put around and we had Justin Sanic and ended up going through a coaching change and

And what's your approach been? I you know, I listened to like, Bill Simmons and a bunch of folks, they talk about new owner syndrome and new owners coming in and getting frisky and, you know, jumping the fence doing crazy stuff. What's your and you must be aware of all that. And you must think about it like a business because I know you're big strategist and you think about it like a chessboard or a business, I'm sure. just involves people, it involves a strategy, it involves a budget, all those things. So what's your approach been? And how do you think about the league and building that winning culture, and then ultimately getting the chip, which is obviously the goal, you want to get the chip for your team?

Yeah. I mean, I think he was in a, in a spot where it was a career shift. His kids lived out here in Utah. Um, we have been friends for a really long time. And, um, you know, I think that, you know, creating a role that worked for him at this time of his life. Right. And, you know, a lot of times as CEO, you probably need someone around to make, six or seven hard decisions. And that's kind of what I need Danny for, right? We can keep the trains running on time. But there's the draft that comes up and decision to really when to go all in and how to go all in and have someone who's been through every side of it. You know, you've got someone who's been in the league for 46 years as a player, at a championship level as a coach. as a GM, and now as CEO. It's pretty cool. Then how do you build an organization around that so it all works? We made the decision to kind of take a step backwards, which really isn't popular. And it's definitely unnatural of what the type of splash I would draw up if I was coming in as a new owner. Yeah. Is to say, Hey, we're going to trade two all-stars the year before we actually host the all-star game in Salt Lake City. Right. Which our fans are looking forward to, like you can drop probably a worst strategy But we end up getting Lowry marketing back in the trade, he ends up starting the all star game, we end up kind of getting a the minnesota's draft pick with walker kessler who's now on team usa in year two um it looked like we have um you know we kind of accelerate a little bit on that process and um we have a lot of draft capital going forward which provides that's the crazy part like you guys broke the nba with that gobert trade it was like

How'd you get to any age? Because he was, that's a hard one. I mean, it's not just about money for him. It's got to be about opportunity, I guess.

I mean, there's no, like, I always hate moving on from guys. Yeah, right. Like, like, I like this idea. And it's similar to tech. Like, I like working with people for a really long time. And kind of, I think there's stability and continuity matters a lot. And I think it matters in basketball as well. So there was no deal or idea that made me excited, right? However, if we're going to go down that direction, then, you know, and it makes sense, I understand why other teams are doing you saw this with Phoenix, like Phoenix went all in, because they think it's a chance to push them over to give them that ability to go win a championship. And know in one championship in an organization that hasn't won it like that's worth whatever that's worth maybe even you know yeah taking the next five years and struggling

How did Danny Ainge do that? He got four first round picks and now everybody else who tries to trade for somebody is like... wait, we got four for Rudy Gobert, great player. What does Kevin Durant get? What is, you know, the next person yet? I mean, that when he came to you with that deal, you must have been like, what? How did that How's that possible?

Yeah, the Stockton and Malone days where people are staying in one spot or the Steph Curry, I mean, Steph is such an anomaly, right? It's a joke. It's getting someone who's going to spend possibly their entire career in one spot. Ideally, you could do that, but it's super, super difficult, especially with the new CBA that just came out, that was just signed. I think that's going to increase the player movement. I mean, we had 50 something players move at the trade deadline last year. And so as you go through that, but there's a lot of teams, I think the teams over the next five years are going to be different than the ones that you see now. I mean, you can see Oklahoma City, you can see some of these other teams, you know, with Detroit or Houston or ourselves, like really rise up as some of those who have had a good run, like the Warriors or others. I mean, it's hard to maintain a 20 year run.

is, it does seem like if you do have a window to go for it, that the, you should take a swing, right? Because the, there's no dominance anymore with LeBron at the, you know, end of his career, the Warriors, you know, still dominant, but, you know, certainly beatable, uh, as we've seen, uh, you know, it's, it feels like anybody, it's so wide open right now that everybody's got a shot. I mean, even my Knicks made it to the second round and, you know, we're, we've, we're kind of in a similar situation to you with a lot of young, great draft picks and a ton of, uh, a lot of young talent, a lot of picks, and a lot of reasonable salaries. It does seem like that's the other key is the flexibility you have, right, to wait around for because so many stars move now. It's not like when we were kids where Ewing or Hakeem Olajuwon or whoever is going to stay for 10 years, you know, or 12 years or whatever it is, it seems like the players move around and everybody's kind of accepted that, right? It's like, yeah, it's just the way it is.

Yeah, I mean, essentially, you know, there's always this debate, do you own 3% of the NBA or do you own 100% of the Utah Jazz, right? Right. And I think that as we look out at the end of the day, we are partners. And, you know, you're making decisions together, you want to kill each other on the court, but, you know, you come together in your meetings, and you're saying, hey, how do we benefit the league through a new television deal or a new CBA? And how do you actually come together and work together? And you actually get pretty close and you become friendly. But at the same time, once again, it's a closed market, you have to face them in the playoffs, or you have to face them when you're doing deals. You know, you got to work with these people for a long time. And so, it's a unique process. I remember going through it. And it was actually, it started about the same time we decided to take Qualtrics public in 2020. Or 2019, the summer of 19. And reality was, you know, it closed, the team closed right around the same time as we went public. They were all within like a week or two of each other. And I was like, this has to be the craziest dual track. I've been a part of a couple dual tracks. This was the craziest dual track because the thoroughness of that process was, I would argue, it was way more intense than going public.

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The new, no, no, I didn't see it, but we were just talking about that. I'm going, I haven't downloaded on my iPad actually.

Really? Wow. That's incredible. But when you think about it, like, did you see the Blackberry movie by chance yet?

No, for sure. And they have to know you and like what they're getting and how they're getting it. And, um, I mean, it's a, it's a, it's a process, especially myself, like coming into a team or a family that had owned the team for 30 something years. They basically brought it, we're part of bringing it to Utah. I mean, it's, it's royalty here. And so how do you, how do you come in and like, not screw it up or keep it going and like, but also put your own flavor on it. And so I think when we came into the league, everyone asked me, well, what type of owner or what type of executive, are you going to be in the NBA? And it's like, well, I've been a leader for a long time, and I've run a company, I don't have another persona. It's like, I'm kind of myself, like, that's how it's going to be. I'm Ryan, and that's who I am. And, you know, because they want to, they want to classify you, they want to say, are you going to be like Mark Cuban? Are you going to be Steve Ballmer? Are you going to be over here? Like, how involved are you going to be? And it's like, Well, I'm involved in pretty much anything I'm doing. It's the only way to actually, I haven't seen success otherwise. But I also don't think I have to run or make every decision. And I can provide room where people like Danny or others and really talented people want to work around you. It's an interesting dynamic.

Oh, it is so good. I mean, it's a $4.5 million independent film, but just for tech guys and for guys who like sports, you know, the guy who came in to be, you know, the hired gun, sharky, sharp elbowed CEO of Blackberry. Um, He tries to buy an NHL team. And he basically just doesn't, he, he does, it's pretty well known. He doesn't pass the sort of, you know, the, the sniff test with the, with the other owners. And so you, you basically have to, the other owners wrote on you, essentially, they, they have to want to be partners with you. And then I guess that's nerve wracking, right?

He just wants to be in there. I didn't say that.

Yeah. I I'm just, I'm, I'm so crushed that we didn't trade spider to New York. I just so, I knew this was going to come up. It's like, we're so New Yorkers right now. We, we really do not like Danny age. If he was working for us, we'd love him, but he's an unbelievable kid. That is, that is one special kid. I mean, I mean, we beat him and we beat Cleveland in the playoffs. We trounced them. And you just saw the look on Spider's face. He's like, why can't I be in there?

You got to give it up for Cleveland. They went all in. They went all in. I mean, they traded us a starting all-star. I mean, that's pretty crazy.

He said it. All summer long, he's in New York. He's coming. This is my theory. He's going to do it one more year, then he's going to come. I have faith. I'm really interested where Dame goes.

Wild. It's the play in tournaments working.

It's pretty crazy. Uh, yeah. What a, what a season last year, huh? Wow. It was just incredible to see Miami go from the eighth seed and wind up in the finals.

Yeah. I think, I think one of the things I like about the NBA that I think maybe some other leagues haven't, we're disrupting ourselves. Like we just approved a in season tournament.

I love the play in tournament. You like it too, right?

I know it's part of like, you know, I don't think, I don't think anyone really knew. Yeah. I don't think anyone really knew how the, the plan tournament would go. I think there's enough evidence that we're willing to try new stuff. And I think that, that is, we've all learned in tech, like that is like the first like realization that we've got a bright future is if we're willing to invent. Yeah. and and I look around at other leagues and you know the one that's top of mind for me is like live and golf like why did it have to get to this point right like you should have disrupted yourself and we always have a saying at Qualtrics we need to be our own activists if there was an activist inside our company what would they do oh I like that we should go do it what would they tell us to go do about our own company right Yeah, and run that exercise. And I think the MBA, I like the thought process here, whether it's right or wrong, whether it works or it doesn't work. I feel like we sit around and we get forward thinking around tech, around camera angles, around television, around streaming. We're leaning in hard on these things. And with global expansion, NBA Africa, a lot of these bets aren't clear. And we use the brand well, and we work together to go do it. And I think it's an exciting league to be a part of for that reason.

Yeah. Tell me about that. What, how is this exactly going to work?

You even saw it with the draft. We had an incredible draft this year where there was a lot of hype around Victor and Scoot and everyone. And, you know, everyone, the last four had the same chance. And so I went and sat in the ping pong room because I wanted to experience it once. And like, I had my numbers. It was like playing Keno, right? Where like you're sitting there and the numbers come up. And I was like, whoa, this is fascinating. Like one One number comes up from a ping pong ball and it changes the future of your entire franchise, or it could, right? Yeah. I think it's done that for San Antonio, right? We'll see, but it's real.

I love anything that makes the regular season more important to me is great. And now you're starting to see like teams are not towards the end of the season tanking saying, yeah, you know, we'll just we don't or we don't we don't have to sit, you know, our top players and then getting rid of those back to back to back games, you know, and I actually think maybe even the number of games per season 82 games feels like maybe 7274 keep the players a little healthier or tighter. Maybe that would be good. I don't know. But you even saw it with the draft.

Yeah, so I think it's exactly this, where the games count as regular season games, but there's incentive, there's motivation, there's a lot of television around it. It culminates in Vegas. And I think it's a little bit of, I think we're gonna look at it from a team standpoint to say, hey, where do we stack up? Where are we at? How are we really feeling? Because then that's followed by the trade deadline. Because a lot of times you don't know. You don't know until really like the second half like where are you really at and you know there's injuries and people haven't played together and I think it'll be a good test in the middle of the season which will make the regular season really pop and then people will want to get you know in a rhythm before that coming into that hot So I don't think anyone knows the unintended or the intended consequences of it all. I think just like the play-in tournament, I don't think people had ever seen the Miami Heat, for example, get all the way through to the finals.

really interesting, these tall guys. We had Porzingis for a bit, and then he couldn't stay on the court. And then I think it was probably his best season last year on the Wizards. And there was a whole contingent in New York, like, should we bring him back? Should we try to get him to come back? That was crushing for me when we traded for him. Hey, let's go to, and then this, oh, before we go to Qualtrics, this midseason tournament, what's that going to be like? What do you think that's going to have?

And I was like, Oh, Starship rocket. You got it. You got to come out to Utah. The experience is unique. Like it is. We're really drawn it up. It's the world I come from. And it's a basketball city.

Yeah, I love it. It's just it creates so much drama the week before the playoff start. Those ninth and 10th teams, right? You just now they're got a shot. And you know, getting into a playoff berth. That's what the fans want. They want to come to some playoff games. I mean, I flew to New York to go to the playoff games. Like I literally, I'm like, I'm 52. Now. There's a certain amount of Knicks playoff games left. And I'm going to see him, you know, I'm going to be there in person unless Elon takes, you know, I had to miss the Cleveland Stars because Elon decided to, you know, have the Starship rocket go up.

And it's amazing who comes into Utah. Like, everyone comes through Utah. Like, go talk to anyone. Say, hey, when was the last time you were in Utah? It's like, oh, I just went to Zion or I'm up in Park City. Like, and now we're bringing it all together. And every night people are there and saying, hey, like, whoa, I've always come up here. I come up here to ski. I come up here to hang out. Just didn't know that this was here.

Yeah, man.

Yeah, so we have 3 million people plus in Utah, and then we're uniquely positioned where we're only, you know, 45 minutes, a half hour from Wyoming and, you know, an hour and a half or an hour from Idaho. So if you actually think about our market, you know, I've just gone back to ask the question from the world I come from is like, what type of experience are we providing from a viewership standpoint? And the way the old contract, which was done 10 years ago, we're the first in the league to kind of really come up for renewal. And it was kind of like, hey, you sign us over your rights. You don't worry about the experience. You're getting paid. You've got your money. We're going to handle it. We're going to distribute it to the highest bidder however we do. And I think we had like 15 50 viewership that we were able to access so a million and a half people and then last year a week before the season started dish and This provider kind of were at odds and we lost 20 from do so we were ultimately out of your control providing 30 of our audience you know our games and Hey, it just didn't feel right. So as we walk through this new kind of paradigm shift in all of local media, because it's not just the NBA, it's it's going to be everyone and everything. Yeah, we couldn't view a scenario where in the future, we didn't need to control our own destiny. As we strategized out every possible scenario, we said, hey, wait a minute, we need to be able to control our own content.

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Yeah, so we basically also decided that from an experience standpoint, I remember when I first started working with the NBA at Qualtrics, we were looking at season tickets and we realized that there was like five types of fans for a team. And we also realized that this old model was assuming there was one fan and one fan that would consume data one way. So if you just take your like all-in pod, like how many people are consuming this and how many different varieties and how they want. And so one of the things that we said is like, okay, this is what we're going to do. We are going to control our rights. We're basically going to go partner with someone and we're going to, for all intents and purposes, buy airspace on their channel. We're going to give it away for free, right? So we're going to go into a partnership and then we're going to sand up the sales team and the advertising team, and we're going to produce it similar to what you do for your pods. You produce it, you sell the ads, and so you control your destiny. And when we did that, it was pretty clear that there was a pretty significant revenue hit. which was the gap. And we were one of the teams though. And I don't know how many there are where we had a little bit of a dislocation in the market where our market size was growing bigger than our previous contract. So if we had to back ourselves into, for example, $20 million, we could do it as opposed to someone who legacy contracts were 70 or 80, there's no way they could get there. Yeah. So we said, hey, Utah is the fastest growing state. It has been for like six out of last 10 years. With this growth, we think we can go and provide an experience to everyone. So the first persona was to go and say anyone on over the air TV can watch it. Second persona. For free. 100% of games. For free. Amazing. Second persona. So in one day we go from about a million people to three million. Second persona was we're going to sign a deal to go direct to consumer. And we're going to make it affordable where you can go direct to consumer. You've got to pay, but anytime you go to the utahjazz.com app, you will be able to watch the games. Oh, in your app? In our app. Wow. One seamless experience. And then the third persona is, okay, what if you're a fan in surrounding states? And so in this situation, we feel like we've gone from one million people to 3.2 million people, hypothetically, like whatever it is, plus an online version, which could be another population, let's say a couple hundred thousand, whatever. And now we're saying, hey, well, Idaho, we're kind of the team of Idaho, we're the team of Wyoming. And we actually spread into Washington and some of these areas, like, how do we go get another 2 million people? And if we take a step back, we think we found a way to jump market size. So if you look at, you know, market size, like what's the market size of a team with 5 million people consuming? Yeah, much more. And we're historically branded as a small market team. But there's actually nothing in Salt Lake and Utah that's small market. We have top three tech ecosystem, top four tech ecosystem in the country. We have 7 million people coming in to recreate, to ski, or to do whatever else it is. You can jump on a plane 10 minutes from the arena and get to France and London and

I mean, this is exactly where Bob Iger wound up. He's like, I don't know who's consuming the Star Wars franchise, the Indiana Jones franchise, the pics, I paid all these billions of dollars. I don't even know who's watching it. I don't know at what minute they're turning it off. I don't have their address. I don't even have their email address. And then they're criticizing him over Disney Plus. And it's like, do you realize they have hundreds of millions of people's credit cards now? They never had those credit cards. They never had a direct relationship. That's what you're talking about.

It's a huge airport, yeah. And Delta just put $3 billion in there. You have the number one economy. You have the youngest demographic. And so there's really not a lot that's small market outside of television household viewerships. And the reason why that's low is because people move out of San Francisco. I think we're the number one exporter out of California, by the way. And they move there to spread out. That's what they want to do. They want to leave the super city or the urban area to actually spread out. It's actually a fascinating part of the job. The business side of this and working there is like, I want Danny to handle the basketball side. I'm super involved. I want to be part of it. I believe I can add a lot, but the actual consumption side and how that intertwines with what we do in tech right now is fascinating.

Amsterdam direct.

No, we're, we're a media company, man. Exactly. You're a media company. We're a media company. We have content, we have distribution, we have talent. Like this is, this is, this is what it is. And I think that you start to understand. And not only that, our players are now their own brands big time, right? They have their own media. Like, and so that's an interesting dynamic here is like, okay, you know, the bigger we make our brand and our umbrella, the more we can help them, where, you know, I don't think it's great to be in a situation where they necessarily believe that their brand is way bigger than the team, because then we can't help them, right? We want to help them. We can get their stories out there and, and help them. And that's, there's nothing wrong or illegal about that.

just think, you know, when you start auctioning off chunks of the business, then everybody's got a different incentive. And as we know, show me an incentive, I'll show you an outcome. And you know, you have to you can now have a 360 degree incentive. merchandise, season tickets, the sponsorship of the arena can now dovetail with the sponsorship of the actual streams, you can collect the emails in the emails can be the upsell for the local car dealership that is now part of the whole process. So just thinking about marketers and advertisers who want to be involved or fans who want to be involved, you're going to have their email, they sign up for the app, you get their email. Now you can send them a last minute notice, hey, we got some tickets available last minute, same day sales, whatever. This is why when I was looking at Disney, I don't know, 10 years ago, I was like, I think they're gonna catch up to Netflix, because the NBA is just starting to do this in the NBA app, they're just starting to upsell you on merchandise. The end of the game, you know, if I don't know, RJ Barrett has his best game. you know, he scores 50 points, they should say, Hey, congratulations, RJ Barrett. Here's all the RJ Barrett jerseys at the end of the game. 20% off, you know, buy one get whatever it is. And when I watched Star Wars, the first thing my kids wanted to do when they saw the Mandalorian was get grogu. They didn't upsell me that on Disney Plus, they have my address, they have my credit card. At the end of the episode, she's would you like to buy grogu click here, we'll deliver it to this address. Do you know how many grogus that would have sold instead of buying a grogu off Etsy? That's like handcrafted, you know, like, consumers are going to find it. It's, uh, yeah. Wow.

Yeah, pretty close, actually. I mean, I think we, we segment a little bit around if you overlay the games, right? So like families. So like, I would argue that in Utah, you've got Monday night, which is kind of a family night, and then the weekends. And so if you took your weekend games and the families and dates, and you said, okay, then you have the business folks, which are typically Monday through Friday. Yeah. And then you would have kind of the big game goers, like in LA, this would be like the stars are out, like this would always be the marquee matchup, the marquee game. And then if you overlay that with another variable or vector, which would be like, where do they want to sit? So if you look at like, big game, marquee matchup, you know that those floor seats are going to be high premium, right? Or you've got the diehards, they'll sit wherever and they just want to go and they go to every game, this is the way it is. You've got families who are typically going on the weekends, right? Because that's when they can, I mean, those school nights, this and that. And then you've got you know, events or people that are coming in or big groups or large groups or everything else. So I mean, you know, they're pretty good. And so yeah, I think historically, what you've done is you've said, Oh, we've got a $3 million marketing budget, we're just going to attack that group. And it's like, wait, that's not one group. No. So actually divide up your budget and go figure out how to creatively attack all of them. And you will end up a lot further.

Yeah, no, it's great. I mean, Draymond has I've had many conversations with Draymond before he started his pod during his pod. We talk podcast every couple of weeks at the poker game. And I mean, talk about a game changer. And people don't know this. Mark Cuban was investor in my blogging company, and we set up blog Maverick for him. He famously wrote the post about Steve Nash getting traded and why he didn't give him like an extended contract or whatever. That freaked ESPN out. They were like, they wouldn't even link to Cuban's blog. uh and now like folks don't want to link to draymond's podcast but it's like draymond's talking about the game in a very real like tangible way after a playoff game in his hotel it's incredible i thought we were going to see this last year i thought we were going to see the um the in playoff game when he got kicked out of the game i thought we were going to get the in playoff game pod 2000 I set this, uh, my partner, Brian, uh, he came up with the name blog maverick. Oh, yeah. And then this is the post he wrote. And Mark emailed me the post. He wrote it on his BlackBerry or sidekick. And he emails it to me. Hey, post this. And I get it in my thing. And I'm like, Mark, the commas like you putting a space then a comma, like it's always comma then space. And he's like, leave the typos. And I'm like, but you're using like an ellipsis wrong here. He's like, I want people to know it's me. I'm I just I wrote it like stream of conscious. I read it once just post it. And I'm like, Are you sure? He's like, I'm sure go. And this like broke the NBA when he wrote this. Do you remember this? Yeah, I remember it. It's crazy. Yeah, it was just like, go direct. I mean, that is the overall, like, concept of media is consumers want you to go direct. They want to talk to you. You mentioned five personas. I know corporates one. I know the diehard fans who've had season tickets for in their family for like 2030 years. That's the other. I know there's like the tourists who come in, and they just want to catch a game. They're casual, that's three. Then I got to think there's groups that come to the arena, who are like, you know, like a school or something like that. And then I guess there's the people who you don't have, who just casually, maybe get dragged to a game. Did I get all five?

We're a little less than that. I think we're, we're, we're probably bottom mid to bottom half of the league, but we do have a 400 person waiting list to sit courtside. We sold out 250 straight games. So that's amazing.

What are the what are the court side seats go further? You guys at 34,000 as ticket?

And so what goes on or what historically has gone on in Hollywood's not by accident. Yeah, every talent agents trying to get their person up front in Hollywood. Yeah, like for a reason. Yeah. It's a cool, it's a cool experience. You'll have to come out.

We're working, we're working on that. I have a theory. Now, that sitting courtside for playoff nationally, any nationally televised game, because now I got a lot of friends, they have courtside seats, yada, yada, I'm very lucky to have a bunch of friends like that. And I sit courtside once in a while, and I've sat courtside on some very high profile games. it is a marketing expense. For anybody who's a business or an entertainer, and I have like a little bit of an entertainer thing going on with the podcast, for me to spend literally I very rarely buy tickets, but I've spent 10 grand on a ticket, whatever. When I spend that it is so marketing accretive as an investor in companies, or as having a podcast because hundreds of people text me, I see at the game I see at the game. And that's why I think some people do it. I think some people have realized showing up a game and sitting courtside is a marketing expense that makes you seem baller or just build your own brand in the NBA.

Yeah, let's just talk about the product first. I mean, when we started up, we started as a, you know, we started my parents basement, we started as a general survey platform, we were we were head to head with with our friend Dave Goldberg forever company. Yeah. We'd work on just trying to gather data and run analytics on it. To be honest with you, it was about all the market could handle. We were trying to convince organizations that you need a platform to be able to gather data you don't have. and be able to turn it around. And then that evolved. We went really into data management. Like, okay, how are we going to take... You have all these systems that are collecting what we call your operational data, which is what happened. It'll tell you your finance numbers, it'll tell you your shipping numbers, it'll tell you this, but you don't have any systems in place to really manage the hearts, the minds, the sentiment, the feeling. And if you go into an organization, you say, well, where where is that data? How is it run? You see like, just an array of products and groups and, and a lot of money being spent. But reality is, is most of that data was one and done. It was never used again. It was never set up. And so specifically, when it came around customer experience, and the employee experience, they were run on multiple platforms, but we found that they had a lot of similarities between them. So we went through this crazy five-year exercise of saying, hey, we've got the world's number one survey platform. We've got a chance to actually build out what we call an experience platform where we're managing the four core experiences of your businesses all together. And we've been able to do that. So we'll walk into an organization and we'll say, hey, you've got your operational data systems, you're spending billions of dollars trying to get them to talk to each other. But you've got this whole other line of data that's coming into your organization that actually helps you run it from the outside in and really get at what people are thinking and where they're going to go next. This data you're trying to predict where they're going to go next. they'll tell you. So like, let's just actually, like, take this data, and let's present it organizationally. So all the data, first of all, is captured into one single system. So then it could be used again. And we're storing this on our our experience management platform, where all that data lives. And we're actually building profiles around individuals and like what has happened, how they've responded, and you're actually able to see and almost have a dialogue and communicate with your end user, whether that's your employee, whether that's your customer, and it's actually become more and more important over time. Yeah. So it's not like we created something that was a fad. Actually, when we started the business, it wasn't cool. And then as we've aged, it's become actually more and more critical for the way organizations run.

Coming up. Alright, if you're listening to this podcast, you care about innovation, obviously. And one sector that really needed a shake up was design. I'm always on and on and on about the beautiful design about apps we've invested in, but it's hard to do. In the past, either had to hire this expensive old school agency, boom, all your startup funding burned. And then there were freelance marketplaces, it can get messy. Let's just leave it at that. There's got to be a better way, right? Well, let me tell you about that better way. It's called super side super si de. It's a new way to get great design done quickly, and consistently. And at a high level, they call it pass creative as a service. And I want you to remember cast. It's a fully managed end to end service. And it's completely hassle free. What you basically do is you subscribe to super side and then you get an amazing dedicated design team that's built out specifically for you. Brands like Amazon, Meta, Salesforce, and Shopify use SuperSight as well as a bunch of fast-growing startups like mine. And SuperSight only hires the top 1% of designers from around the world. Maybe you want to do a landing page. Maybe you got ads you're putting up. Maybe you want to do motion design or custom illustrations. you get a range of skills and that's all done in super side super fast, super consistent and at a very high level. It is the best way for you to solve this problem and super side has an exclusive offer for twist listeners save 2000 a month with super side startup accelerator package at super side.com slash twist that's super side.com slash twist for two grand off So let's go to Qualtrics. You know, I think people understand business, getting survey data, leveraging that, doing analysis, but a lot has changed since you started the business, specifically, you know, AI, and then there's all the corporate side and the transactions, let's start with the product. how has the product changed and evolved? We know there's been transactions, you got bought, you IPO, and then you just went private. So that's a crazy series of events. So actually, you take it wherever you want. You want to talk about the transaction side or the business side?

It's not an event, the best companies who do this, it's not an event. Like if you look at like Delta Airlines, who just wants free Wi-Fi. Like we're sitting there hooked up with Ed and the management team, with a command center like this room, with everything that's going on as they go free Wi-Fi on every one of their planes, with the data that they're giving and feedback. And it's just, are you good? Are you good? How are you feeling? Oh, wait, we also have their sky miles number. So we know the profile Jason. Yeah, like we can see who you are. And then we start running our machines in the background to say, and all of our prompts like, okay, do we have a problem with this travel group or this travel group or this travel group? And then we're like, wait a minute, we just removed a massive hurdle or obstacle on the flight. And one thing we didn't realize is that flight attendants and the people working for the airline on the flight are seeing a 23% increase in their satisfaction on the flight. Holy cow, this impacted this. Like keep going. And so, so this is actually the opportunity that every organization has is like quit trying to run your business entirely from what you and your organization think. Like We used to not be able to gather this data. We used to not be able to go get it. When I started, we couldn't do it. Now we have the ability to start to, to basically, we always say you can Qualtrics everything. Yeah. And like, if you, if you, if you have the data that exists, you can Google it. If you don't, you can Qualtrics it and like get it out there and start to build this flow. So it's not an event. It's actually another input on how you run your business.

you think about it, when you when you think about what you did, everybody kind of looks at like, there's when you said the market wasn't really ready for the product is sort of what I read into that, like, yeah, people would be like, Oh, tell me about my customers. Okay, do a focus group. Okay, let me just like, stick my finger in the water, put my finger in the air. Okay, the wind's blowing this way. as opposed to saying, every day, we are collecting information about these people, and we're communicating or interacting with them based on that data. So it's like, it's sort of a whole paradigm shift of just taking the temperature of the water, or just always knowing, you just always know what the temperature is of the customer.

killer if you look at their business it's a commodity business every single airline buys the exact same planes yeah they have the same airport that they don't control they don't control TSA how is one airline a top 12 respected brand in the world yeah and the others can't figure it out when they all have the weather they all have this they all have that and it's because experience is the moat Yeah, it's a race to the bottom experience, which I believe all most tech businesses are. Yep, it becomes a race to the bottom. It's a heavyweight fight. You just kind of keep pounding. Your experience mode is the competitive advantage. I mean, that's the problem we're tackling.

Yeah, just that that one example is so mind blowing, because you might have some people sitting there, hey, this is a business traveler, wait a second, this is a business traveler with three kids with them now. Oh, and their business traveling, they're in business class. Oh, they're an economy plus right now. Oh my god, the guy's got 500,000 miles sitting there. We need to upsell them on some stuff. And just even knowing that, like, Whoa, where are they going on vacation? And then now you've got some data from them being online, man, it's just

Yeah, if you think about how much unstructured data we are holding, I think we're one of the largest companies in the world to hold unstructured data. And this is feedback that people are giving, whether it's in call center, or this or that, you know, this data, this AI, it's interesting, as I've watched the AI revolution said, Okay, why now? Why now is this happening? Because it's almost like a light switch went on.

you look at something like the Bloomberg terminal, like, that is a commodity should be a commodity business, but the experience, then as you're saying it just experience builds brand, right? Like, if you're staying at an Amman hotel, if anybody's ever been to one of those am and I got to stay in one in Tokyo, like all of a sudden, you're like, Whoa, this is totally different. Like I have a place to stay when I'm in Tokyo. There's a million places for me to stay. But this one has done something completely different than put a roof over my head and four walls and clean sheets. It's kind of crazy. Let's go to the AI side. Are you totally down the AI rabbit hole now? I would think given the fact they have all this data, and data scientists are like, the most amazing demos I've seen of AI right now are here's a CSV file. What question should I ask in chat? You'd be like, Oh, well, here's what's in it. These are the questions I would ask you like, well, what trends do you see in the data? It's like, here's 20 trends. And you're like, well, these 10 are totally irrelevant. These five are obvious. These five I didn't even think of. I mean, it's got to be inspiring for you on a product level, huh?

And it's interesting, because as we've been in talks with some of these hyperscalers, whether it's Google or Amazon, whatever, you know, they've had this technology for a long time. They've been working on it. And The, the, the analogy I use is, you know, I go back to like when Salesforce or Microsoft or other, other organizations, like we're a closed system. And then they said, wait, we're going to create an ecosystem. We're going to allow vendors to build apps on top of it. And it was just like a switch that flip. And what they did is they said, Hey, we've got all this technology, nothing's changed. However, we're actually going to give you a front door to it. Hmm. And Google never had a real good front door until they were forced to or decided, hey, we don't need to be perfect here. Everyone else is doing it, it gives us air cover. We're going to flip. Here's the front door. Here's the open API system that you can go in and, you know, modularize or you can build, you know, different applications on top of that. This is when, like I know in the business-to-business space or in the enterprise space, when that became the norm, innovation around business applications took off. Yeah. We're just seeing this scenario where open AI kind of let out and everyone else has opened up a front door. and built some steps and to be able to access what they only had internally. That's where we're going to see every new startup going, wait, I can grab this and my idea. I've got a business pain. I'll give you a great example. Someone tweeted at me and said, hey, I've got a the new collective bargaining agreement came out. It's a PDF that's like 578 pages and the teams who learn them the best know and fans historically have no idea what the real rules are. It's all in the CBA. And someone built like a GPT on top of that. Wow. And it was like, you could just ask any questions. And it was just like that quick, because they had a front door to be able to go do that and take that equivalent. And so when it comes to our business, and we just held an AI summit, I think there were 60 demos. And it's like, wow, Like, we could take a data set within our own environment and say, similar to the CSV, let's query this, put a table in. What questions should I ask? Like, we could actually, there's a lot that people can do. There's still a little bit of work to get corporations to feel comfortable on what's going on, their data's not being shared. And that's privacy and security. But quick things that I see, I see someone like Microsoft. who's got LinkedIn, who has a CRM product, who's got Word and PowerPoint. If you're a seller working for an enterprise organization, and you're trying to create a proposal for Jason, and you don't know Jason very well, or you're trying to target a company, you can now go and say, hey, give me an org chart of this organization, create a PowerPoint, scrub our CRM and I want this pricing and this and that and all of a sudden you're sitting there going, holy cow. Yep. First of all, this person did a better job. Go tweak it. And it'll probably fundamentally change. First of all, who we go with as an enterprise stack. Yeah. Because of this problem that every organization has when they're managing you sales teams and And it will also change the productivity of all of this.

It's so we're talking about six months, right? This all started in the fall. We're not even on a year.

I think we're early days. I think we're super early days. And I think I think that the fact that all of Wall Street's like, I'm going to have this company stand up and I need to see your AI strategy or we're going to downgrade your stock." And it's like, you don't even know what you're talking about. A flashy demo is like a rendering of a real estate project that has no chance of passing. You actually need to see, this is not probably the first mover advantage I see. I think it's more of who can actually build a moat. around what they're doing to be able to last the time that it's going to require.

And so are you seeing those productivity gains internally already? Or do you got people using it every day?

And I don't think I mean, I worry about job displacement, but I worry about the other macro environments causing more jobs displacement than AI. Hmm.

You worry about job displacement at all. If you look at some of the tasks being done here, the day everybody's we're short data scientists everywhere, every organization you work with is like, do you have any data scientists to help us? Qualtrics this whatever. And then it feels like everybody's going to be able to have like, I don't know, two year degree in data science, abstracted and just put into their toolkit, just like everybody now can type and do basic graphics and graphic design. So what do you think about job displacement?

And there's been a lot of buzz around AI causing job displacement and less about what's going on in Washington and our causes and everything else is having much more of an impact in the broader job tech world. Because I think with displacement, I see change, change in the way we work. Yeah. And if you're thinking that no one's going to want to scale the way people do scale is no matter who says it, like, there's not many hundred person companies that go create, you know, multi hundreds of billions of dollars, like they scale through people.

example.

And so when they nail it, they're going to want to scale whatever it is they nail up. And so when it comes to overall job displacement, it's much more around you know, how how kind of frothy the last 10 year run has been and people often getting surprised.

Yeah.

Yeah, I don't think anyone got too big. There was just a cadence of which everyone has hired for the future. Right? We were hired. I mean, the job market's been so competitive that you had to hire out 18 to 24 months in order to even somewhat hit the possible growth plans. And so I think the lead time has shrunken. I mean, look, we hired 1700 people in the middle of the pandemic in Like, why? Because our models were saying, hey, look, the way we used to do this is we're going to compound in a way and you've got this amount of attrition and this is going to happen. This is how it's going to go. And we can't let off the gas or we're not going to be able to scale. That market has reset entirely on all of those dimensions. And so I think that people are now adjusting to that market. Because I don't think it's like, hey, we're not going to hire at all. We're going to let everyone off and stop. No, it's like, okay. The pace, the market, who you hire, who you can get is different than it was pre-pandemic and post-pandemic. And so the same way that we all had to ramp up our our costs, our equity, everything in 2017, 18, 19, whether we liked it or not, we were in a game, we were in a market.

Did you guys do a riff and get too big during that sort of Zerp environment yourselves and have to resize?

Yeah. And so what's the game on the field right now? Yeah, and I think this is the part that people Yeah, like, like the game on the field. And so I think that if I'm someone working in a corporation and understanding it, you've got to understand the game and the temperature of what's happening on the field. Yeah. And as as a junior employee from my first job, like you're working if you're working in tech, which is most people listening to this, you work in tech, understand tech, Right. It's your responsibility. You just don't work for the company. You need to understand the landscape and the field because the more you understand tech, the more it's going to help you in every job you're doing.

You had to play the game on the field, right? I mean, if you're against Google and Microsoft and Uber and Airbnb, giving huge option grants, you don't really have a choice.

Yeah, I mean, look, if you if you follow the Qualtrics journey, we've got 20 years, right, where we have operated a bunch of different ways. And we've seen the reaction of every market across that, across that, across that time period. So the first 10 years were 100% bootstrapped. We were in Utah, it was me and my dad and my brother in the basement, and no one wanted to raise venture capital because everyone had been burned in 99 and all of that. This was 2002. I think Austin Atlassian, who were the longest bootstrap companies, we raised money in 2011 and shifted our model. I remember operating in 2007, 8 and 9 and trying to go to market and every marketing team we had, everyone we would sell into could not like not only purchase, a lot of them didn't have jobs. And so that was, I would say, an extreme to what we're dealing with now. But even in that extreme, we had to completely change our offering, our messaging and our value proposition for that time. 2011, we raised, you know, what would be between 2012 and 2018, about $400 million of you know, venture capital from Excel, Sequoia, Insight, and none of that went into the company. So that was all secondary outside of the business. Yeah. So essentially, we went from 2002 to 2018, without putting any money on the books, just pure profits, invested in the business. And so one was a profitable model, where we just tried to, like, make it for the first 10 years, the second was we were going to fly the plane really close to the trees. So we weren't going to lose money, but we're going to break even every year, whatever that was, and invest everything back in growth. We're three days before going public. We're on the road show. We're 15 times oversubscribed. The market's in the toilet of October, November of 19. We're the only company on the road. We look great because we had the ability to show high growth and profits. Bill McDermott, who was CEO of SAP calls and says, Hey, Ryan, do you want to be a public CEO? I say the answer is no, no, I would never really wanted to. But this is the next phase. And it's kind of what you're signing up for. Yeah, would you take on that much venture capital? Yeah, for sure. That's in the cards. And so do you want to be a public CEO? He said, Well, let's go public a different way. We love the experience category, we want the experience category, I will put at the tip of our spear at SAP. And I will take you global. We're the largest software company in Europe. We sign up for that. A year and a half later, Bill takes a job at ServiceNow. John Donahoe goes to Nike. He had basically purchased us in an all cash deal, but Qualtrics was too important to the category we were creating, as well as Utah. We said, hey, we want to keep rolling. SAP, during this time pandemic, said, hey, let's go focus on our core, where our strength is, which is ERP and some of these other areas. And we're this growth engine that needs to be fed. And so we said, well, why don't we go public? Well, can we? Have we? Yep. Can you do this? Yeah. And I called Egon Durbin at Silverlake, who had just taken VMware Dell, pulled that one out, and we decided we were going public. And then a year and a half later, They had a 70% stake and we need to figure out a way to go down. And we ran kind of an auction and Silver Lake ends up winning. And we went private a week and a half ago. And so now we're pre IPO again, which is my favorite time running the company.

Yeah. And the customers now are also doing belt tightening, looking at every expense, negotiating contracts, they're not as freewheeling, whether just like, yeah, oh, the SAS product could make us 2% more efficient, and it costs, you know, 1%. Great. That's a great investment. Let's just buy it buy everything. Now everybody's looking at every single bill, they're negotiating them, they're negotiating their cloud bill and negotiating their SAS bills and negotiating their rent. everybody's just in austerity mode. So it's hard to sell, right?

Yeah. And reality is, is like, if you look at that 20 year run between 2016, when you're getting ready to go public to being public, you don't have a lot of time to take the plane down, stop it, refuel, rearrange some seats. Yep. Some folks that were on that part of the journey, you don't have the energy or the time or the ability. And one of those was when we took the plane back up, I wasn't CEO. I wanted to be executive chairman. My number two, Zig Serafin, who I had recruited out of Microsoft, we'd operated two in a box. He ran Skype for Business and Link and helped build Cortana. He was going to be the CEO somewhere. Yeah. I would have rather had him be the CEO with us. He took it through the IPO, and now he's the CEO, and I'm chairman of NuCo. which is a brand new company, and I've sat in front of the whole company and said, hey, look, Zig's the new founder. I'm the old founder. This is a new start. If you're not signed up for that, then you probably shouldn't be here. This is what we're signing up for. By the way, I'm going to invest in Zig because if Zig was starting a new company, I'd be his first check. And so, this is the phase of this as opposed to this revisionist history that's like, hey, what's going on in 2007? It's not the same. It's not the same as 2015. Nothing's the same in the world. We need to go forward and Silver Lake is the biggest check that they've written. Yeah, it's the largest check in their history. And if you look at what they've done with Dell VMware, what they've done with WME and UFC and WWE or fanatics or, you know, even Twitter, like, there's a lot that they seem to not lose very much right now.

And so- Well, when you're private, you get to think not in quarters, you start thinking in years. I mean, you may still have quarterly goals, you still have weekly goals, but you have a different approach to the business. Yeah.

You've got seats right next to me. Oh, during the next game. I love it. I don't think I don't think we'll have you do layup lines. But if that's part of it, maybe you and I could do we could buy a little horse. Maybe maybe you could warm up with maybe the next I'll let you warm up being such a diehard fan with them.

Yeah. I mean, operating a company privately, you get to really start to think long term. And like you're saying, you can reset the culture. And, you know, as long as everybody buys into it, it's kind of like that good to great book, Jim Collins wrote, I don't know if you ever read that one. But yeah, for sure. Back when there were only like, you know, 100 business books, that was one of the ones that always the lesson there, like before you decide your destination, like get the right people on the bus, get the wrong people off the bus. And you guys are driving in the right direction. Listen, I took an hour of your time. Another great episode. Can't wait to come out. I'll look at the schedule when it comes out. And whenever those next games are, I'll come out.

He's a stud. He's a stud like he killed us. He killed us in Dallas like Luca was out and he killed us.

Absolutely. I will wear my I will I will wear my gel and Brunson jersey. What a great acquisition that was, huh?

It's going to escalate quickly, like the Jalem round deal, which is like 300 plus, like you start looking at this or or even Dame or Dame or Steph. And yeah, I mean, it's part of it. But there's a lot of these guys who do a lot like, I mean, there's an argument that some of these some of these dudes are worth a lot more than that.

I mean, he is like so blue collar, hardworking. He had like the lowest turnover percentage and like his stats were so all-star and he didn't make the all-star team was very weird. Um, and then every everybody's like, oh my God, you overpaid $23 million for Jalen Brunson. I'm like, Really? Like we're talking about trading for some people making 40 million a year who are not exactly putting up the same numbers as Jalem Brunson. These max contracts are crazy, huh?

And they've done a great job.

Well, if you look at the increase in the Warriors, when they bought it, it was like a 600 million, I think they bought it for something crazy. And then it became a $3 billion team. I think when Chamath sold his shares to private equity. I mean, that was one of the big ramp ups of all time.

Yeah, talks will start here soon. And that'll that'll be interesting. It'll be an interesting metric to see how new TV, new entrants come in. It'll be really interesting to see what happens because this is a big moment for not only the NBA, but for a lot of these fledging media companies that are out there. I mean, distribution, whether it's Apple, you know, I'm part of MLS with Real Salt Lake and, you know, Apple and Messi and what's happened, it's pretty interesting.

this new television deal? When is that? That's happening for next season? 2424. Yeah. So that's a negotiation. Yeah.

Let's go, man. I appreciate it.

Yeah, I mean, it, it does seem like Apple and Google and Amazon, there's just a whole new entrance of player who are playing the game at a different level. You know, if you've got people didn't realize this, but Apple slowly has become the majority operating system here in the US. Everybody thinks still thinks iOS is like, Oh, yeah, that's a 20 to 30%. That's just rich people. It's like, Have you been paying attention? Like their market share is now the majority, uh, iOS and they've just run the table. It's such a great product, such a great base of users. All right. Listen, uh, can't wait to see it. Uh, have a great off season. Good luck with everything and congrats on, uh, going private and the team and, uh, stay safe and we'll see you, uh, for the 23, 24 season for the Knicks games. Can't wait, brother.

Including myself.

But you found out recently that your last name is instead of a G, more of a J, Jebbia.

Yeah, we traced the, I had a genealogist go into the history of the family. They found this, this village south of Poem Room in Sicily. And along the way discovered that my ancestors said Jebbia as if with a J.

So, hey, well, there you go. And so we'll start today. Everybody, Joe, you've done this. Now you're starting to say your last name correctly. And we'll, we'll start getting everybody to say it with a J as opposed to a G. Everybody knows Joe is the co-founder of Airbnb, which is guess along with Uber and trying to think of other companies from the last 15 years after Facebook after Google really defined the category. And we're the biggest successes. So congratulations on that. But you've also started a new company, Samara. So we wanted to talk to you about that as well. Maybe looking back on Airbnb as we start here, was there a moment in time, because a lot of entrepreneurs kind of look back at the history of the company and they have a couple of moments that they kind of figured out, yeah, this is going to be big. This is not just a small thing. Everybody knows the history of Airbnb to a certain extent. But maybe you could just tell us a little bit about those early days. And was there that moment where you were like, huh, this could be bigger than a normal startup?

Mm-hmm. Well, first of all, thanks for having me on the show. It's great to be on with you and to recount some of the lessons and the stories of the early days and then parlay those into the latest ventures tomorrow. But really, Airbnb is an impossible idea. It was never meant to happen. There were so many forces against us in the early days that you really look at and you go, how on earth did this idea make its way through the system and actually achieve escape velocity on the other side to become what it is today? And maybe people look and say, oh, it's inevitable, of course. I got to tell you, being there with Brian and Nate in the thick of it all from the point of inception in our living room, there were thousands of reasons why this should not have worked. There were very smart people along the way who told us this would never work. I have to tell you, there's nothing, probably nothing more demoralizing than being a first-time enthusiastic entrepreneur with all of the motivation to want to make something great and to have an idea and put it in front of really smart people in Silicon Valley, the smartest, the ones who backed PayPal and YouTube and Facebook. They had the track records, right? They knew they could spot winners. And to go in front of them, pitch your idea, and to have them, in some cases, literally walk out of the room.

What was the number one reason given for like, this is a terrible idea?

Look, it was 2008 in August when we started pitching investors. And at this time in our young history, We were on the third iteration of our website. At the time, it was called airbedandbreakfast.com. We had relaunched just in time for the Democratic National Convention in Denver, Colorado. Because it was a marketplace, namely a two-sided marketplace, we had to figure out how to get the flywheel going. And we recognized that summer, 2008, that Denver had a problem. And the problem was around housing, because Barack Obama going to speak at the Invesco Stadium of 80,000 seats, in a city with only 20,000 hotel rooms, most of which were already booked by the delegates. And so the mayors, I remember the headlines, where will they stay? Housing crisis hits Denver. The mayor actually opened up the city parks to let people pitch tents so they could stay for the DNC. I'm sure the DNC wanted to fill up the Nabesco Stadium to make it feel like a sold out crowd. And so we said, you know what, this gets given a lot of press attention. Let's ride the coattails of this and help solve this problem. And sure enough, we did. You know, I remember as we're redesigning the site for the third time that summer, we finished in early August and I get on the phone and I call CNN. And I was so excited to tell CNN about a bright, shiny new website. the journalists politely said no thanks and hung up. So we had to change our tack. And we started reaching out to the local bloggers in Denver, and they loved the story. And so they wrote about it. And then what's interesting is we get a phone call the next day from the NBC affiliate in Denver. They said, hey, we heard about your story on this local blog. We'd love to go film one of your hosts in Denver hosting an Obama supporter. So of course we set it up. They run the story next day. We get a phone call from CBS and ABC. They want to do the story. And then suddenly it's like, it's just, it's like a little flywheel of, of, uh, nobody wants to miss the great story. And then, then we get regional calls from Boulder and some other towns. And then after a regional story becomes national, we get a call from CNN. We did a live interview in our, in our, uh, living room, Ryan and I. And so this idea escalated very quickly from three guys in our living room with no hosts in Denver to 800 hosts in Denver, just in time for all the Obama supporters showing up. And the reason I'm giving this context is because our numbers started going from zero up into the right. That's a great time to go talk to investors. Right. As you know.

Yes, you have a chart, right? And a chart is like irrefutable. So now you have the proof. Here's the proof, right? And checks are going to flow.

Checks are going to write just flow sheets are going to be fine. We had, um, you know, our website was actually working. Meaning that people, people were booking, they were paying online, we were making fees. And my phone starts ringing, because I ended up taking on customer service out of the three founders and we didn't have a phone number to use except my cell phone. So, my cell phone's up on the website, people start calling me and I'm like, hello? And they're saying, oh yeah, so I just booked the reservation in Denver, I'm having an issue with this or that. And so, I'm like, wow, our website's actually working. I remember I called my mom and I'm like, mom, this is it, it's happening. The rocket ship to the moon, it's taking off, mom, it's working.

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We go talk to investors. We actually got introduced by Michael Seibel at YC. Oh yeah, YC, yeah. Yeah, so this is like 2008. No, this is like early days. He's still at justin.tv. That's how early this is. Oh right, yeah. He became an informal mentor of ours. And he agreed to introduce us to angels in the valley. And so, we got 20 email introductions, 10 of those introductions replied, five met us for coffee, zero investment. Wow. Brutal.

This is with the chart, with the proof points. With the data, with the bookends. And they still won't write the check. My Lord.

I have to tell you, our very first investor meeting was at University Cafe. in Palo Alto, which at the time, as you remember, was the epicenter of fundraising. Yeah. Every cafe table was some guy in a hoodie and some guy in a business suit.

Right. Some guy in a blazer with a collared shirt and jeans and a pair of black shoes. Yeah.

Right. Black shiny shoes and a laptop with some deck in front of them. Sure. So Brian and I, we hustled down to University Cafe. We set up the laptop. I'm going to do the live demo. Brian's going to do the pitch. We're waiting, we're waiting. This unnamed investor shows up late, gets online, gets online, orders a smoothie with like, you know, the pineapple and the umbrella and the thing. And it was like a giant production, took him like 15 minutes. He finally sits down. He plunks the smoothie down right in front of the laptop. I'm sitting here. Brian's here. And he starts going. And Brian's given the pitch. I start doing the demo. He doesn't stop drinking the smoothie until about there's a quarter of the smoothie left. And he picks his head up and he goes, OK, thanks. And he gets up and he walks out the front door of University Cafe. Okay. Brian, is he paying a parking meter?

What just happened?

He never came back. Wow. We didn't finish the pitch. And I look at Brian, I'm like, this is what it's like to raise money from investors.

It's crazy. Well, I mean, what people don't understand is up until that point in time, all startups, you tell me if I'm right or wrong, were inside of a computer. They didn't exist in the real world. And if you looked at Airbnb, Postmates, and Uber. These were the first group of companies to actually go do something in the real world, obviously, SpaceX and Tesla with Elon. But there were so few startups that actually decided to do anything in the real world to touch consumers in that way. And it was scary for investors, right? I mean, was that the number one reason they said they didn't want to invest or they didn't understand marketplace dynamics?

Well, they understood marketplaces. You know, they just couldn't get over the concept that we've all been taught since we were kids that strangers equal danger. Nobody could overcome this bias that we've all grown up with, that a company could achieve at scale and actually overcome this bias to let people into the most intimate part of their lives, their homes, their bedrooms, and share that with a complete stranger over the internet. That was a fairly crazy proposition.

was pretty radical at the time. But I believe you got the proof point that you had seen people on Craigslist doing it, or, you know, other message boards, Reddit, people were kind of doing this behavior. But there was just no infrastructure around it, right? Correct.

Yeah. I mean, people have been sharing homes since there have been homes. Right. And I've come across these, you know, there's ancient forms of hospitality in almost every country and culture. There's Pashtunwali in Pakistan and parts of Afghanistan, which say that, you know, you have to take somebody in, even if they're your enemy. Wow. And this is thousands of years old. Interestingly enough, there's that movie with Mark Wahlberg called Lone Soldier that shows the four Navy SEALs that gets stranded in Afghanistan, chased by the Taliban. One of them actually survives in real life and it's because he was taken in by a villager because of this ancient code of hospitality, Pashtunwali. Fascinating. I can go on and on. Every country has this going back thousands of years. Greece, India, there's the desert law, which says that you have to let somebody into your tent for a glass of water, even if they're an enemy. Wow. The only difference between that and Pashtunwali is you have to give them a three-hour head start when they leave.

Oh, okay, before you go chase them down. Yeah, good. Yeah. It's crazy. And the success of it, when you look back on it, if you were to point to, obviously not quitting, and that ability to be resilient, from the outside looks like one of the key reasons you succeeded is that you didn't give up, which is kind of obvious. But what do you think the other things were that made it work? Because I have to say, you know, the design of Airbnb always stood out to me as like, Wow, it's so stunning and beautiful. And in Silicon Valley, there's there was for a long time like that doesn't really matter the design Craigslist, eBay, Amazon, all these websites look just completely convoluted and franken sites that were just slapped together and they solved the problem. But you graduated RISD, right? Or your or did both of you Brian also go to RISD?

Brian and I met at the Rhode Island School of Design. We were studying industrial design and I was doing graphic design as well. And at RISD they teach you that design is more than how something looks, it's how it works. So it's not just a surface treatment. It's really understanding full stack through a product, an interface, a company really, you know, how that everything is designed from the UI to the UX to the, you know, the package design, if it's a product. You know, I think there's so many examples in the world of design, like I don't know if I take, I'll just take something that's nearby. Here's this bottle of water. Design is more than the label. Design is more than the shape of this bottle. Design is thinking about what is somebody's first impression when they see this brand? What is the idea that is placed into their mind about what this stands for? What is the sound that it makes when you take the top off for the first time?

Right.

what is the material that this is made out of? Where does this go once I'm done with it? How does it turn back into a circular system of some kind? So design is actually thinking very holistically about all these things, including how it looks.

What did you was there inspirations for you as you became a world class designer, and then actually made this world class product that changed the world where their design moments that were critical or inspirations. And when you look at the world, What do you look for in design at this holistic approach? Yeah. Great. How does that manifest itself in a website, in an app, in a service? Like unpack that for me.

Sure. Well, good design usually incorporates two things. It's the needs of a user or a customer along with the imagination of the designer. And so, combining those two things to me is the formula for something that's new and different that solves a problem but also introduces something new, something different. I was asked recently what's my definition of design for a book and my answer was design satisfies the conscious and tickles the subconscious. It has to solve a problem but if it just solves a problem, it's incomplete. It needs to provide delight. It needs to provide, um, you know, an emotional reaction to really be good design.

And this is why the Airbnb logo, I think is so playful and bright and air and sky. I mean, it's, it's inspiring. It kind of gives you that, uh, wanderlust, I would say even the website feels Like, uh, that feeling when you get to a new location, you're like, wow, I'm in Japan or wow, I'm in Paris. You kind of get a little wanderlust if I was just to pick a word that that's the tingle I get with Airbnb and even browsing it, you know, like just browsing the site gives you that feeling. Was that kind of what you, what was the dialogue? What were the words you were using? What was the emotion you were using fun and fun? Then we'll go. Yeah. Yeah.

In the early days, in the early days, it was two words. It was fun and friendly. Yeah, because the design of the website had to communicate this Olympic-sized trust to get people to feel comfortable to say, yes, I'll stay in their home or yes, I'll let them in my home. And so, we could sit next to people and reassure them, as in the early days, which we did everywhere we went with Starbucks cafe or sitting next to somebody on a plane, like we were evangelizing our service to everybody. And we learned that through a conversation, people could trust us. Then it was like, well, how do we translate that into the interface of our website to invoke trust with people who are considering using our service?

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It's very convincing impactful. Yes. So we get on the website with him in this office hours and looking at these 30 listings and we're like, okay, if we go to New York, like, what are we going to do? And we recognize something, the photos of the listings in New York were trash. You know, they were miserable. And you have to remember, at the time in the internet, 2009, if you displayed a room on a website, it was probably going to be Craigslist. And Craigslist's image quality was terrible. You know, like four little thumbnails, blurry. And that's what people thought they could do on our website. And we go, you know what? I've done photography before, I took classes at RISD. What if we just go solve this problem for our hosts? What if we take great photos of their place for free? And so, that weekend, Brian and I hop on a plane, fly to New York. We email all the hosts, hey, we're coming to New York. We'd love to meet you. And we're bringing, I think we said, you know, we'd love to take some professional photos of your place. I think hosts interpreted that as in we were sending a professional photographer to their place. Right. So, when we knocked on the door, we introduced ourselves. Hey, I'm Joe, co-founder. Oh, great to meet you, Joe. And they're looking over my shoulder. So, where's the photographer?

Here he is. I'm right here too. Check out a camera. Here's my Canon 5D.

Yeah, we rented the nicest camera we could afford. Yeah. I go through the apartment, I take great photos. I show them on the back of the camera. Hey, what do you think? They're like, oh my God, my apartment looks amazing. Yeah. Why don't you stay for a coffee or tea? Yeah. And so I'm sitting in the living room, having a tea with them, these early hosts. And they began to tell me all the problems with our website. wow, they just started to become this stream of issues that they were facing. And I pull out my sketchbook. I'm taking rabid notes. I'm writing everything down. I come back to California with Brian and Nate. Nate's there coding away. I go, Nate, listen to all these problems that we heard from our hosts. And Nate's like, actually, these aren't hard to fix. I'll code them up tonight. We email the hosts the next day. It was great to meet you. Here's your professional photos. And the idea that you had to fix the calendar or the review system. It's live. Tell us what you think. Wow. wow is right. These early customers, early hosts, they couldn't believe it that a company would fly across the country, take free photos, listen to the problems and fix them in like a matter of days. And something very interesting happened. A lot of things actually happened because of this moment. We saw revenue the next week which was flat at $200. It had been flat for months. We were in, as you know, the trough of sorrow. Yeah. Right.

The trowel of sorrow and pain and suffering, which all founders are in right now, to some degree. Some people were smart enough to raise a ton of money. Some people didn't get too big, but other people got pretty bloated. Yeah. Pretty crazy in Silicon Valley.

Well, we were in it because we didn't have product market fit. And so it was literally just a flat line of metrics. I call it the Midwest of analytics. It was just, as far as you can see, there was no up to the right.

Nebraska. Yes, it was Nebraska. The Nebraska stage of your startup. You just could see forever.

Cornfields for miles. Yeah. So it bumps from 200 to 400 hours in one week. Whoa. Oh, is right. I go, Nate, there's got to be a bug in the system. Go make sure there's not an issue. Yeah, there was no bug. We go to Paul Graham. We show him the numbers and he goes, what are you still doing here? Go back to New York City. Yeah. And so we get on a plane. Get twice as many hosts and take more pictures. Rinse and repeat. Revenue the next week went from $400 to $800. Wow.

What an unlock. Oh my God. Whatever feedback they gave you on the calendar and the review system, and then plus beautiful photos, built trust, and it created that emotional, maybe tickled the unconscious a little bit. built that trust. I mean, so many learnings there. And most founders are afraid to talk to their customers. But from your experience, talking to the customers, is kind of like this incredible shortcut to just solving problems and getting product market fit.

I mean, at the end of the day, here's how I sum it up. And this is the advice I give to every founder that I've ever talked to, who's working on a tech company, is that for many, many, many years, we subscribed to this myth of Silicon Valley. which is that you have to code your way through problems. Because what happens when you, when things start to hit and it starts to scale and the servers aren't ready and the site crashes and the, you know, maybe the Friendster effect back in the day, I can tell you like that got us nowhere. We sat dormant in those cornfields of Nebraska for far too long in the comfort of our desks, in our living room, trying to code our way through problems. And the unlock for us and the piece of advice that I, you know, carry through from, from PG, was go meet your customers. Like do things that don't scale. It's so obvious in retrospect, but at the time, you know, we were like, well, you know, Mark Zuckerberg probably never went out and talked to people. YouTube founders, you know, it's like, we just have to stick to the code because that's how you scale things. Actually, how you scale things in the early days is you go talk to the people that your product is serving. So you can better align it to what their needs actually are. And I have to tell you, an in-person conversation with your, your early adopters is 10 to 100 X more powerful than any online survey or digital communication will ever be.

Yeah. Yeah. They're going to just be more honest with you, right? If you're looking them in the eyes, you're going to just build this rapport and then it's just going to flow out of them, which it seems to have were two distinct moments that I think were absurdly challenging for the company. Now that we've talked about all this incredible learnings, the two near death experiences, I think, or at least PR, somebody is going to trash an apartment, we knew that would happen at some point. And of course, it happens, it becomes like the front page of every news story. I witnessed this firsthand as well happened to Uber as well, there's going to be a car accident, at some point, you're operating in the real world, somebody could get hurt in a car accident, obviously, tragically, And then the pandemic, nobody can travel, and it shut down. Maybe you could tell us about those two moments. And then we'll start talking about the new company. And then what it was like to fight through those, because those are distinctly different than nobody even knows what we're doing. Nobody cares about what we're doing. It's Nebraska's horizon, as far as you can see. I mean, these are everybody's watching what we're doing. And the weight of the world is on our shoulders now.

Yeah. Yeah. So in 2011, we had the first apartment get trashed in San Francisco. And it was a wake up moment for us. I think the company had grown a little bit faster at that point. And We caught up, thankfully. But it really put trust and safety at the forefront for us. And ever since then, trust and safety has been the most important part of Airbnb and our platform. And from that, we implemented a ton of improvements. You know, we implemented, I think, in the course of about two weeks, in August of 2011, we shipped about 40 new features to improve trust on our platform. And a lot of those are still around today, with major improvements, including our host guarantee. Our host guarantee started back in 2011 for $50,000 if anything ever happened to a host apartment or home. It then became a million dollars and it's gone up from there ever since. These are all safeguards that we've put in place to reassure homeowners and also guests.

We had it happen. I had a had an extra had moved houses. We still had a house my wife put into the Airbnb pool. We had a very strict thing. Hey, no parties, no parties. You know, it goes on for a year, no problems. And then one night, the drop cam starts going off at that in the driveway, that a bunch of people there and somebody threw a party after they had said they weren't. And we they you know, like one or two things got damaged, and we just submitted it. And all of a sudden was like, Yeah, we have insurance. Yeah, your carpet, we had a really nice carpet that got trashed. I was like, yep, carpets replaced. I was like, Oh, okay, great. This is like, easy breezy. But now this was many years after that. Okay, imagine this, you got an idea for a great tech startup, and you think it's going to change the world. But you got a problem. You just don't have the engineers that you need to make it come true. Why? Well, it's obvious. It's hard to find engineers, there's a lot of competition. And hey, you're trying to keep your burn rate low. You need to conserve cash. Now, imagine you had a partner who could provide you with more than 1000 on-demand developers, right? As many as you need. And these developers were all vetted, experienced, result-oriented, and they were incredibly passionate about helping you grow your startup. And what if they charged, you know, competitive rates, things that you could afford? Does this sound too good to be true? Well, let me introduce you to Lemon.io. Startups choose Lemon.io because they only offer handpicked developers with three or more years of experience and who have strong portfolios. In fact, only 1% of candidates who apply to work with lemon.io get in a couple of our launch founders have worked with lemon.io and they had an amazing experience. And listen, I have used outsourced full time teams for decades, whether it was way back at weblogs, Inc, Mahalo on to inside.com at launch, this is the way to do it. Go to lemon.io slash twist and find your perfect developer or tech team. And you can do that in 48 hours or less and twist listeners get 15% off for the first four weeks. Stop burning money, hire developer smarter, visit lemon.io slash twist. I you were still at the company full time when COVID hit because that must have been Like, what do we do now? And you guys had gotten ahead of your skis, so to speak, in terms of hiring and gotten very big at that time, and had to do a big riff long before everybody else did. And Uber did a big riff, I think, at that time. Take me back to that and just, what do you do if nobody can rent a home and you don't know how long it's going to last? That's existential.

It was an existential moment for us. And Oh man, my palms are getting sweaty just remembering it. Because that December of 2019, we started the paperwork to go public. We got the wheels in motion to take the company public in 2020. That first or second week in March 2020, we start to get the alerts that everybody started to get of this thing in China, and now it's in the US. I believe it was March 14th, 15th, WHO declares it a pandemic. And suddenly, this massive engine of travel and commerce comes to a screeching halt. And we, of course, went into crisis mode right away, which I think we were pretty good at. And I have to give a lot of credit to our CEO, Brian Jeske, who did an amazing job, my co-founder Brian, really organizing the company and organizing our response in a very, very effective way. And when you look back and you do the case study of how did we actually transcend through the pandemic into eventually successful IPO, a lot of that's through Brian's leadership in a time of crisis. The board was amazing. Leaders in the company were amazing. And we thought through it through a couple of different ways. Actually through the lenses of our five stakeholders. Our guests, our hosts, our employees, our investors, and the communities we operate in. So we did something across each of those. For our investors, we took out a rather sizable loan. to make sure we had money in the bank.

That was very prescient.

Yeah. Well, nobody knew how long this was going to last. And of course, we had runway in the bank, but we didn't know how long travel was going to be shut down for. Some people declared travel was dead. Some people said our company wasn't going to survive through this. I remember that, yeah. And so just as an insurance policy, we took out some sizable debt. On the host front, we provided a payout to hosts that was incredibly sizable. We did everything we could to help get some money in their pockets at a time when they had no income. And so, many, many people rely on our service to pay the rent, to make ends meet, to pay bills, to pay off their student loans and credit card bills. And so, we did everything we could to help get as much money as we could into the pockets of our hosts. For our guests, we refunded everybody in full. We didn't think it was fair for people to feel like they're forced to complete their trips in the middle of a global pandemic, put themselves at a health risk. So we issued full refunds to every guest. Wild. On the employee side, of course, we had to make a very tough decision. It had a very, very difficult riff, our first in our history. Yeah. But we really wanted to make sure that did everything we possibly could to- It was incredibly generous. Send people off with, keep your laptop, full health package for a certain amount of time. And a couple of the bells and whistles, including, I was sitting in my home office on a Zoom with a couple of executives talking to this problem, how are we going to go through this process? And question I was asked is, you know, what more could we do? What can we possibly do to help our people who are going to be let go? And it occurred to me, it was very obvious at the time, let's help people get jobs. If we should do one thing to help them, let's help them get reemployed. And that sparked the idea of the alumni directory, which we created in record time. In about a week, we created a website that If they wanted to, a laid off employee could opt into listing their profile, their contact information. And then we made sure that every article that talked about a RIF also included a link to the directory.

Yeah, I remember. It trended. And then a lot of startups hired folks. And yeah, people had this incredibly long severance, and healthcare, and their laptop, and then everybody found a great landing.

It was crazy. I got hundreds of thousands of page views within a matter of days. wild.

It's now set the standard, by the way. Now, every time this happens, people put out a Google Sheet or an air table or whatever, and share it and say, hey, listen, here's incredible people who are available. The bounce back was extraordinary. As crazy as that moment was, I remember in Q3, I have in my notes, you bounce back to $1.3 billion in revenue, 4x quarter over quarter from the low point in Q2. That must have been incredible. Because then I remember people were like, I can't stay in a hotel. There's too many people walking through the lobby. And Airbnb is the better solution. And I think a lot of people got introduced Airbnb. Was that what happened? You got a lot more new people who are first timers to Airbnb.

It was a number of things, including that. Yeah. It was people saying, you know, I don't want to be in an elevator with people. The elevator. Yeah. traditional accommodations, shut down their restaurants and their gyms and their pools. And so a lot of the extra amenities weren't even on the table for those days. And I think it did open people's minds to say, maybe I'll try Airbnb for the first time, get a whole house, I can stay with my family, we can be safe. But in addition to that, the other trend that happened was people saying, well, international travel is effectively shut down. I'm been quarantined with my family for weeks or months. We've got to get the kids out of the house. Yep. Let's get in the car. Let's drive somewhere nearby. And so we saw this trend started happening. So we created, we created a campaign called Go Near. And, and it actually, we started to see people's behaviors towards booking trips started to change in ways that they haven't gone back. Meaning that people started to say, well, it's more about having a flexible way to look, to search and to book places. It's not, I need to go from this date to this date. It's like, show me any weekend this month within a two hour radius.

I love that feature. My dates are flexible feature.

Yeah. That was born out of the pandemic because people started to search that way. And they said, well, now that I don't have to commute to the office and I am truly flexible from Zoom and my kids are learning on Zoom, honey, where do you want to go?

In June. Yeah. And give us five days in June. Yeah.

Or give us the whole month of June.

Let's go. Yeah.

And we started to see the length of stay go up. And the type of date search that people were making was wildly different. So we introduced flexible dates. And that has actually changed the interface of Airbnb. If you go to our site today, in our app, you'll notice that we present categories at the top, that's more about like, choose your experience. And then you can think about the dates later. It's like sort of people's orientation to travel, it's changed during the pandemic. And it changed the the mental model of how people use our site.

And so the mental model went from, I need to be in this location at these dates, what's available to, I want to have an experience, show me something, inspire me, I want to go to Hokkaido, I think I want to go skiing in Japan. I think I want to go, you know, know, to someplace sunny, but, you know, we'll figure it out. You guys did one thing incredibly well, people kept saying, add cars, add boats, add this, I was getting pitched as an angel, Airbnb of boats, Airbnb of cars, Airbnb of experiences, everything. And you've only really added one major category experiences. What was the thinking there in terms of you really said no to almost everything? And there must have been pressure inside the company, from board members, investors, hey, why don't we have seven different categories? Why can't people Airbnb, a chainsaw, or a bicycle? And, you know, if they're, you know, the rental of things in the world, it would seem like all these things were natural. How did you how did you keep that focus level on just two categories? Really, I think, am I correct? It's just the two right now in terms of major categories?

It's only the two and they're both travel related. And for us, it was very simple. It's travel is such a big category that we didn't want to get distracted with the other many verticals that were emerging over the last decade plus. We just said, you know what? Travel's an insanely big category. We have a ton of market share to grab. Let's just double down and really focus on making great travel experiences. And so Between the accommodations people would tell us hey help me find this amazing place in this cool neighborhood i never been to before and i'm here now what can i do yeah and they didn't want to go to the traditional playbook of you know kind of the big bus tours of the city. this sort of, you know, mass manufactured tourism, they're staying in a local neighborhood, they get an authentic experience. So they want to continue that authentic experience out in the neighborhood. And so that was led to the birth of what we call experiences, which are hosts can host outside the home, they can share their local knowledge, their access their, you know, insights.

What's the most popular thing that people do? Is it tours? Is it like, I'll take you to like on a bar for a restaurant tour? What do people do most?

It's across the board. I mean, walking tours in cities are wildly popular. Yeah. I remember in the early days of the product, we had a host in Paris who told me, he says, you know, I make about, you know, $5,000 a month renting my room out on your website. And I make $15,000 a month giving walking tours of the Murray.

Persons bringing down a quarter milli a year living in Paris. What a life. I mean,

It's amazing what happens when, yeah. It's changed people's lives.

if you make people entrepreneurial, and you give them that opportunity, it's same thing eBay saw was like, Hey, we're we're help or Etsy saw, you help people make a living and you make them independent. And they have agency in their life. Like that's what I'm reading into with that person. Like, they get to now, whatever amount of free time they have, they want to be an artist or a writer or start another company, whatever it is, you know, or ski, they unlock all of that from being entrepreneurial. I mean, there's so many entrepreneurs now who have done this.