Big Technology Podcast - Why Venture Capitalists Are Mad, With Bloomberg Beta Venture Capitalist Roy Bahat

Episode Date: September 23, 2020

Venture capitalists, founders, and others in the tech industry are feeling pretty raw these days. Once admired as upstarts fighting the status quo, they now feel under siege, under attack for the negative things their products do without being appreciated for how they improve our lives. Bloomberg Beta head Roy Bahat, a veteran venture capitalist, joins the Big Technology Podcast for a nuanced conversation about what's going with the tech world, how it's innovation may be connected to its problems, and how it should handle the criticism.

Hello and welcome to the big technology podcast. Great to have you here for another week. Our guest today is an amazing guy. His name is Roy Bahat. He's the head of Bloomberg Beta. It's a venture firm funded by Bloomberg LP that currently has $225 million under management. So no small amount. I think Roy is like the dean of the VCs here in Silicon Valley.

I respect him greatly. I feel like he's one of the more even keeled folks in this world. And I'm really excited to be able to sit down with him for a conversation today, talking about everything in the tech world from the venture capitalist controversies to what's going on with social media and the election. So Roy, a warm welcome to the big technology podcast. That is really kind of you, Alex. I feel myself like I'm more on the outside of the inside,

then, but, you know, Dean's status in this industry, if this industry goes in the right direction, would be an awesome thing. So thank you. And I'm ready to talk about whatever you think would be of interest. Awesome. Yeah. I mean, definitely like, I feel like an important thing in this world is like setting the right tone. And you're like one of the VCs out there that are very public with what you think. And I've always been impressed with it. It's not hyperbolic. It really, you tackle like the important issues in this world, not skirting around them. And I feel like you don't yell at journalists. And that's a good start. So I definitely do not yell at journalists. I mean, look, as a person who once thought I might be a journalist and failed at it, I, um, like, I basically think

journalists are looking for the truth. And if we all want to operate in this world, let's help them find the truth. And then we can figure it out. And I've found, I mean, it's funny, you just mentioned about having a voice, you know, a question I got asked by a founder in our portfolio is like, why is VC Twitter so weird? Like, meaning like, why when people are talking in social media and their venture capitalists are they like just kind of gross? And I think you're getting right into my first question. Yeah. Oh, good. So the national question. No, no, no. I want to hear. I want to hear what you have to say. Well, I mean, I was thinking about it. It's like, look, venture capital is a strange business because what do we do? Like we, people think,

we invest in companies, kind of, we really sell money to companies because the companies have so much leverage when they're doing well and you only want to invest in great companies so you think the ones you're investing in are doing well. And so, you know, in a way, we're all salespeople and what do we sell? Or, you know, in the language of tech, we are customer success people, meaning helping our customers, founders to succeed. And we sell money. And money is a commodity, meaning like literally my product that I sell is legally equivalent. It's debt for all tender for all debts, public, private, whatever it says on the bills to other VCs. And so as a result, as with all commodities, the way you distinguish yourself is with your brand reputation.

And so VCs just have become in a lot of cases these like flat out braggards who just are incredibly annoying. And I've tried for myself to figure out how do you highlight the things you're proud of and the founders you're proud of, while also having something that's very difficult to have in public, which is authentic, genuine engagement. And it can be maddening, like, you know, I'll tell you an Uber story, if you want, about one that was maddening for me a week or two ago. But I'm trying. Well, it's just that Uber came out with this public statement of like their plan for

supporting drivers. And since our fund, Bloomberg Beta, focused on the future work, even though we're not involved in Uber or Lyft or any of those companies in any way, we, I have viewed. on what they should do to better support their drivers. And I've written about those views and some of them are complimentary and some of them are critical. And anyway, they released this plan, which I thought was a step in the right direction. And so literally that's what I said.

It's a step in the right direction. And man, the hate that started pouring at me from all these activists being like, do you realize you've just endorsed a company that blah, blah, blah, blah. I was like, I didn't endorse them overall. I said it was a step in the right direction. Literally the next day, they then threatened to shut off in California. And I said, well, kind of two steps forward, one step back. And then I started getting crap from all my friends in tech.

And then I learned that Uber had included a portion of my tweet in their message. Well, no, not that, in a message to like even more to all of their drivers, like, I don't know, how many hundreds of thousands of drivers. And it just reminded me that one of the reasons I think people are, and I love podcasts for this reason, by the way, one of the reasons I think people who are inauthentic in public is the fear that they could have any piece of what they say excerpted and flattened and mischaracterized. And I've just kind of concluded that that's going to happen sometimes and I'll still just try to be myself. And one reason I like podcasts is, and we've invested in a bunch of podcast companies, is that in a podcast, it's very hard to do that. It's very hard to pull out that little piece and flatten you. And the listener is typically paying close attention. And so that makes for a better conversation. Yeah, I agree. I like them too.

I do think that you can talk with a level of nuance here that you cut on Twitter. And it does worrying. Alex, we get to hear your, we get to hear your radio voice. So we're all good. I know. As long as people don't see my, my radio face. Exactly. Mine too. Somebody's like, did you finally shave? Yeah. I haven't worn a belt since lockdown started. I was just thinking like in the quarantine time. Like sometimes I'm just like, okay, now which t-shirt am I going to wear for three days straight? Yeah, for sure. You pick one out and you're like, all right, this is going to be the uniform for the week. But yeah, it is true. Like one of the things that I worry about. these days is that there's a whole segment of the conversation that's left out because any attempt to be nuanced can be rewarded with what you mentioned, picking something out of context and people yelling. People love to yell. And like you mentioned, you talked about the VC brand. One of the things that I'm wondering about is that why do so many who need to find a brand decide that their

brand is one of grievance versus like, can't folks? I just feel. like this sense, you know, among many VCs is they feel very aggrieved right now. And, you know, if you're going to try to have a brand, is that the real, the one that you want? Where's the source of that? There is a lot of victimhood going around. I don't know. It's like you would think if you ended up waking up on the other side of a decade, a billionaire, enjoying your life, that you wouldn't be like whining about the shit that people whine about. And I think it is, so I actually think this is something I've not talked about in public before, but that I've been thinking about. I think that it stems from an entire piece of the ideology of the technology

industry, because I don't think the aggrieved thing is just VCs. I think it is founders of companies and executives and mid-level employees. I think it's like kind of endemic to the tech industry at this point. And so I was thinking about why is that? And I think it is the root cause, zoom out on it a little bit. But I think the root cause is that a bunch of people entered tech with a certain set of beliefs about how the world works. And those beliefs don't align with how the world works now. And I'll give you an example of that. And I call this the tech paradigm. But one example of that is that we in tech are the attackers, right? There was this famous Steve Jobs line about, you know, it's more fun to be a pirate than to be in the Navy. Well, what do you do

when the pirates run the most valuable companies in the world and have more power than the Navy does. Well, then all of a sudden, you're the admiral. And so tech does not know how to wear the crown of criticism that comes with all that responsibility. And, you know, instead, it's like, well, you know, I'm just misunderstood. And if only you got it, I'd be, you know, you'd be happier with me. instead of saying, ah, shit, there actually is something valid about this. Since I have power, maybe I should show a little nuance and responsibility. And as a result, they feel aggrieved because, you know, they've been attacked.

And I mean, I remember there was an article that a journalist wrote about a VC fund, basically saying, like, this VC fund is falling apart. And the VC fund was led by somebody who was really sympathetic. And it's not even important who it was because this could have been many situations. It's like it's not about that person. people who, and all the responses to the journalists were like, well, why didn't you write about all these other things that that fund is doing that are great? It's like, well, because that wasn't, the point of my story was not to grade the fund overall. The point of my story was to talk about

this one thing. And, you know, and like not getting that that is the dynamic is a big part of this ideology to zoom out. I think the ideology explains a lot of tech's kind of bad behavior in the world and also all of its good behavior. So like I'll give you one example of a core tenet of the tech paradigm. Like, if you said to people, actually, let me ask you, if you were to go, I don't know, like down a hall in the hill in Washington or talk to a general business reporter who you've worked with who doesn't have much tech industry familiarity, if there are any of those left, and you said to them, well, what characterizes the culture of the tech industry?

What do you, like, I'm not trying to test. I'm just curious, like, first things that come to mind. And what do you think would be included in that? I mean, I would say brash. Yeah. exciting. I think people generally find that this industry is more exciting and dynamic than, let's say, you know, people trading bonds. And sort of, they would also say that there's a level of immaturity. Yeah. I would think that folks have no idea, even though they talk a big game about,

you know, power and stuff like that, they really have no idea what their tools are doing and tend to view people as numbers versus actual human beings. Numbers versus human beings. Numbers versus human beings and not knowing. Yeah, so I think a lot of those I really feel. And so I've been trying to introspect myself because I'm part of the tech industry, obviously, and think about it as I look around at what are the qualities that drive? Like, how did tech turn out that way? Is that just an accident of like what the personalities were of a few people?

And I think it's not an accident. I think it is actually very much follows the how the tech industry originated and how people in tech got into the industry. And you touched on a bunch of this in your book around sort of the engineer's mentality. And I think that's a big part of it. But let me try to characterize. So one of the things that I think is really important is tech is indifferent to norms. Tech is proudly like the kind of place where it's like, well, if society says we should do X, maybe we should do it, maybe we shouldn't, but we should decide for our own reasons. And so there's this kind of independence of thought that comes with that. And my personal view on that is, why did that happen? Because a lot of the

people in tech historically were outcasts when they were younger. They were the nerd in high school. I certainly was the nerd in high school. And as a result, they had to develop this studied indifference because if they swallowed into the norms, they'd think poorly of themselves. A second one that comes with that is a hyper obsession with focus of like, you know, this is part of the engineer's mentality. It's like, I'm going to stare at this problem and only this problem and decide it's the only thing in the world and everything else shall melt away. Yeah, like if you're in a coder, if you're a coder and you're like in the zone. Yeah. There's that flow experience.

But there's also like focusing on the thing you care about and ignoring, you know, short sellers if you're Elon or critiques. Oh, Elon's not ignoring those short stories. Well, that's fair enough. Fine. He's taunting them now. He's sort of level two on that. Right. But having to be indifferent to their concerns. That's right. Being indifferent to their to their concerns. And out of that comes a similar and related things, which is the focus on optimization, which is to say, give me a problem, you know, Amazon says an objective function, and I will find you the best answer to that. And, you know, consequences kind of be damned on some level. And so the immaturity, I think, is more a consequence of indifference and focus, indifference to norms and focus,

than it is like, oh, they're bad people. They just are not world aware. And I definitely think it's not a bad people thing. And so you've got that optimization, that focus, that indifference to norms. And then the last part is an obsession with speed. because the winning, this is a more matter of like a Darwinian thing, yeah, but of like the faster you went, the more likely you were to survive, therefore all the powerful, you know, entities in tech have a culture of incredible speed. And you add all those things together. And what do you get? You get organizations that can bring an electric car to life or can make a thing that you speak to that speaks back to you and answers your questions or, you know, deliver things to you before you even knew you wanted them and all kinds of stuff. and you get a blindness to, like the way I put is, if you're looking at the screen, you're not looking at the street, and you get this blindness to all of the consequences that in some ways become more pronounced than the core effect. I mean, I remember I was talking to this guy, very quintessential founder, like for better

and for worse, you know, recent Stanford Business School graduate, you know, smart guy had worked at a late stage tech company, blah, blah, blah. And I asked a question that I often ask in pitch meetings, which is, if you are successful, what will the underside be of that success and how will you manage it? And he said he gave a bit of an answer and he said, but those are unintended consequences as if you're not responsible for unintended consequences. If you know they're going to happen, I mean, you should definitely call them unintended consequences. Real leadership is whether or not you know they're going to happen. You're responsible for the consequences of your actions. And I just think that

the leaders in tech, many of them, not all, many of them, believe deeply that they are responsible, they're making the world better, you know, they're not as focused on money and greed or power as people think, but they're just not fully aware and empathetic to all the consequences that they've caused. And as a result, they come off like fucking assholes. And they, I mean, and look, you see this. Like, you know, let me be a billionaire writing a blog post about income inequality and how people shouldn't worry about it too much. It's like, you know, maybe you should have thought to ask somebody who wasn't rich. before you did that, you know, that kind of thing. So you end up with that, that tone deafness

combined with a genuine error of calculation. Now, the problem is, and then I'll shut up and let you go on to whatever. No, that's interesting. But the problem is if you overcorrect for it, you also fail. Like, Uber would not exist. The entire ride share industry would not exist had they said we will strictly follow the law. And I actually think it's a way better world that they didn't. And to admit that we might have a better world for people who selectively ignore norms is a really tough one because, you know, tech is also in the world of optimization, really good at thinking ad infinitum to absolutes. And this, you know, I think once you are big and powerful, you cannot live in a world where it is always right to go 100% left or 100% right. You have to let in

the complexity of actual situations. And tech is terrible at that. Both ways. You don't listen to the experienced consultant just because they're experienced because you might fail. But if you never listen to them, you might fail too. And so that's, to me, the tech paradigm evolving to account for its own power is the kind of like the next generation of tech founders. I think that's one of the things that will distinguish them that the previous generation just doesn't get. Yeah, that's fascinating. So it's almost as if what we see the tech industry produce is also tied up. with all this bad stuff.

100%. And so then is there a hope for it to change? Yes. I think that we are going to have to, I mean, look, you have plenty of examples of industries that changed. The question is to me whether it will be violent change or thoughtful change. Like, violent change would be like tech gets something like the Glass-Steagall Act, where it's like, okay, now you, that must be cast.

Can you tell us a little bit more about what that is? was the act in the financial industry that, I forget how many years ago, 80 years ago, let's say, split apart consumer banking, so banking for humans from wholesale activities, investment banking, all that kind of stuff. That's maybe not a good technical description, but that's my terrible layman's description of it. And it was ultimately 70 years after it was past, so maybe 10 years ago or so, I don't know exactly, overturned or repealed, and not overturned, but repealed by some other law. it created lots of issues. It was a very, it was an arguably good, but very clumsy solution and certainly not optimal. And so if we end up with like, you know, members of Congress who don't know anything about tech, which is not all of them, but it is some of them, you know, and we'll talk about government later, but deciding to break apart the tech industry, but doing it in a stupid way, there

might be smart ways of doing it, it'll be really awful. And tech is not immune from all of this power. I do think there's one way, I see one path for tech to grow up that I'm really hopeful about. To do it on their own? Yeah, I don't think it's hopeless. But I do think it's very much at risk. And I think all of us who care about how the world unfolds and, you know, okay, more parochially, if you just care about how the tech world unfolds, we should want that tech paradigm to both be able to create amazing new things and be able to grow up to the effects of its power.

Right. And then so the way to do that, first of all, I think that if there is any big legislation coming in from the government right now, it will almost certainly have really bad negative unintended, you know, to use our term consequences just given. I mean, I've been in the hearing rooms and seen the questions. And I know like there's a push for people to like cut these folks some slack. But I really can't. I mean, it just, it's a shame that our government is like really falling flat on its face. And it's. responsibility to try to rein some of these companies in or at least among many other government responsibilities i believe in government but i believe in competent government yeah yeah and right now we're not exactly we have one and not the other but at least i don't know at least we have one maybe i don't know it's hard to find bright spots so um so if we if that's not the thing that's going to end up really helping the situation so what's it going to take is it going to be a moment of the tech industry like all of a sudden i'll give you two rates and saying we need to do this on our own or like how does that look? So here's what I think is not going to happen. What I think is not

going to happen is that Zuck is going to wake up tomorrow and be like, you know, I've been thinking about that free speech thing and how much I am an absolutist about it for all these years. Eh, I'd over did it. I take it back. That's not going to happen. I think that it will take power to shape power. And I think government is a last resort. I prefer that government didn't need to act, but it may need to. I'll give you two other rays of hope, though. One which takes a long time and one which I think could happen faster. The one that takes a long time is, you know, the dominant tech companies 15 years from now might not be Facebook, Amazon, Google, Microsoft, Netflix. You know, they might be new companies that are arising now. And if that's the case,

the new generation of founders, I just think is more aware. And one of the reasons for that, I believe, and Uber is not a good example of this, so maybe it's the exception that proves the rule. But as it, like my like dummies history of the tech industry is first 25 years of the tech industry, they just made tech in the corner like chips and wires and computers and screens and that was all essential infrastructure for what we have now. The next 25 years, with the exception of Amazon, we're really about information industries. You know, Facebook, Google, like they move bits around.

The next generation is about tech expanding. to everything else. And what happens when you expand everything else, like, you know, accommodations in the case of Airbnb or logistics, transportation, you know, we're investors in Flexport, shipping broker is you need to know the real world and how it works much faster than much earlier in the company's life than you did when all you did was move bits because bits become significant, but there are issues around privacy and cybersecurity. But like, you know, the chance of somebody dying with a bad Google search was a rare occurrence. there's a chance of somebody dying with a bad Airbnb stay could happen very early in the

company's journey. They even have happened for all I know. And so I think that next generation of founders, A, out of necessity and be just culture, like not all the founders were outcasts when they were kids. You know, like it's become a more central, normal thing. And as a result, I think they're, I'm not saying it's bad to be an outcast. I was one. But I think that there's a world awareness that the next generation of founders has.

But that's going to take a long time because this current generation is here for a while. The second one, and this is one of the faster one, yeah, the faster one is the rising power, like, is the only constituency, the rise of the only constituency that actually has power over the big tech companies. And that is the employees at those tech companies. And so things like the climate organizers at Amazon or the Google walkout or even more momentary actions, like when a bunch of Uber employees got Travis Kalinick to step off the president's like advisory. because they didn't want him working with Trump, those moments all show that the only constituency that really has leverage over the big tech companies is the employees of those tech companies. And by the way, not all the employees right now. I mean, I think it's really hard to organize Amazon warehouse workers, although it is happening. But I mean the kind of like mid-level software

engineers and product, exactly. And as those folks organize and articulate what their interest is, I think they are an enormous power to be reckoned with. And if I, you know, so I'm very, I'm spending time with folks who are doing that. I'm trying to learn about them, you know, because I think that if you want to be a successful company of the future, you need to anticipate that your employees as an organized collective. I mean, Kickstarter's employees just unionized that they're going to have more power. And I think that power is on balance. Not always.

It won't always be good, but it is on balance a good thing. Yeah, I want to ask you about that because the one kind of argument, to that being a good thing is people might say we're going to move essentially from an unchecked leader to now an unchecked and pardon the expression. But mob, which is the word that people use of employees that are pushing tech policy and which is better and which is worse. So why do you think that this is, you know, I think what's better is a balance of power. Okay. If you, you know, I don't think either one of them is I'm not going to hand the keys to the world car to any constituency. Okay. You know, but I think that a check makes a lot of sense. And I think the same way

not all leaders are made the same, not all groups are made the same. So some groups behave like irrational mobs. And I think especially when you make decision, when one makes a decision based on perceived sentiment on social media, like Twitter is not the world, as much as I enjoy Twitter, you know, it is not the world. Those perceived sentiments can be very volatile. But, you know, the organized behavior of groups of people who have to come together and decide collectively in some mechanism, whether it's a membership association of employees, an informal group, even a union, you know, those tend to behave more reasonably. And, you know, I think it's hard to look at the economic and social history of the United States without crediting unions for an enormous increase in the welfare and happiness of many people. not everybody. They were racist for a long time. I mean, it's, it's bad. I'm not saying it's unambiguous good. But I do think at this moment in time, it's an ingredient that if we add it into the mix, we'll make for a better mix. Yeah. I mean, and more broadly, just like their push for

recognizing worker rights, even if it's in the union or outside of it, has definitely lifted the middle class of the country, although right now that middle class is suffering. So it's an interesting, interesting economic moment. I guess one one group that you haven't mention, which I'd like to ask you about. And this is something I spoke about when Tim Bray was on the show and I think will be a recurring theme is, I wonder why the customers and the users have been, you know, fairly silent about this because these issues do seem like issues of pushing back against big tech policies. Well, silent about what, sorry, let's talk about which issues. Yeah, let me give, let me give one concrete example. One of the things that I think

will eventually happen is there will be a council of Amazon customers. that go to Amazon and say, hey, Amazon, if you're so obsessed with customers, here's something that you should know. I don't think that's going to happen. I don't think that's going to happen. Well, I would say it would probably take some central organization, but I like to hear from you why you think. Yeah, here's why.

So I would love, by the way, for that to happen. I think it'd be great. I'm an advocate for things like, not in the customer context, but in the employee context, for putting an employee representative on the board of these companies, an elected representative. not somebody who the company picks. And the reason I think it won't happen with Amazon customers. It might happen with AWS customers.

I don't think it's going to happen with Amazon retail customers because they're too distributed. Like that is basically like equivalent, you know, arguably the most elegant way to organize Amazon customers is the U.S. government. Right. Like that is a representative association of Amazon customers. Yeah.

But just like. Just because it's so distributed. Right. But just like citizens get together and lobby the government. Oh, of course. But I guess what I mean is citizens can get together and lobby the government because a small number of citizens can have an extraordinary influence on the outcome of an election, let's say. But I think it's actually very similar to how many issues get ignored by the government when they are felt by a broad section of the populace. But it's not no pronounced need. So it is like that. And that's the reason I'm more hopeful about AWS customers because you have a smaller number of customers who control more of the business. They have more influence. They're fewer of them. And it's why I'm optimistic about employees organizing. Because I think the employees are more similar to each other. I think they haven't in the main historically, in part because the industry was changing so fast, it was so bewildering.

Employees kind of, you know, it took some time to realize. And one weird thing about tech is that employees often identify with the boss in a way that is very different from other industries, in part because they, this is a good thing, in part because they have ownership through options. And in part, just culturally, they see themselves getting there versus being like a different class. So, you know, I think that that is a very strange thing about the tech industry. Here, I'll give you another example of that strangeness in action, which is, let's say I told you Amazon is really bad for startups because they have too much power over the market. You would think that if you were a startup founder, that would make you unhappy.

But one of the sentiments I found is startup founders in at least venture-backed kind of startups, not like talking about like a small retailer on Amazon who doesn't aspire to get much bigger or doesn't aspire as much to get much bigger. They identify more often with the tech monarch than they do with their own short-term self-interest that that tech monarch may be hurting the behavior of their startup because the possibility that they might end up in that class. You know, like the star power thing, they identify with the. star more than they do with their own kind of in my humble opinion short-term self-interest yeah yeah

they become enamored with someone like bezos and or more than enamored they think they can be that exactly yeah so they really it's an identity thing as much as anything else right and then all of a sudden it becomes more difficult for them and by the way let me get even weirder on it which is okay we love getting weirder here on the show yeah as an investor i want to back the founders who identify with bezos i want to back the founders who want to create something enormous and transformative. So even though it's, I don't think it's rational on some level, that irrationality is central to this search for outliers, this search for the enormous that is in many ways the venture-backed startup quest that we're on. So,

you know, it's weird all around. Yeah. All right. Let's talk a little bit more about that when we come back from the break. We'll be right back here with Roy Bahat. Stay with us. Hey everyone, let me tell you about The Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than 2 million professionals read The Hustle's daily email for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less, and explain why you should

care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the Wustle. one you're using right now. And we've returned here on the big technology podcast with Roy Bahaat. Man, I just ended that last segment, really NPR like. I'm not very happy about that. I like your NPR intonation. It goes up and down.

Very NPR-y. So I want to, let's start the second segment, just with a quick follow-up on what you said in the last part, which is that you want people who think they're going to be the next Bezos. And then one of the, I mean, that's sort of what the venture capital model is. You want to, you know, put investments in people and then have them make 100x the money. And then, you know, you get one of those that worked out and you can make lots more bets for the rest of your career. And I wonder, is that healthy?

Like, do we want, I mean, because you talked a little bit in the first segment about speed. Yeah, yeah, yeah. So important. And is this a healthy model to start funding businesses and doesn't that lead to a lot of downstream effects? Like, what do you think the role of the VC is in all this? Yeah. So yes, it's a healthy model. Otherwise, I wouldn't practice it in the sense that I think it's good.

Yeah, okay. No, it's not healthy if it's the only model. And so I'm really excited about many of these other experiments happening with different forms of capital for early companies. And I can talk about why VC is the way it is because as a founder, I really didn't understand it. I was like, wait, you'd be unhappy if you only made three times your money. Like, how could that be?

But I can explain that now that I've been doing it for almost a decade. I also think it's unhealthy to embrace that model without qualification and reservation and just say, hey, if the company got good, then, you know, then it's great. I remember I was talking to this VC and he said, Bloomberg is a terrible company. I was like, what are you talking about? Like, by any definition, like, what do you mean? He's like, well, I think it wouldn't get a very high multiple in the public markets. And I was like, that is your definition of good company. Okay.

You know, you do you kind of thing. Right. But it just goes to show how people think, by the way, I don't think that's true. But anyway, but there is this way in which VCs and some founders, but not the best of them, have come to accept their model as 100% true in every case without qualification. And that, I think, is nonsense. Almost like anything else is nonsense. So that's my, that's my qualifications to the isn't healthy answer. Yeah.

But let's zoom. in, though, on the actual VC element itself, you know, oftentimes people, oh, yeah, what responsibility do VCs have in all this? Well, they get, they're basically what's happening is if you fund people who feel this pressure to grow 10, 20, you know, 20 X, then sometimes, I mean, you see very often that they'll go and do. Oh, yeah. Does it have a downside? Of course it has a downside. So what role can you play to ensure that that stuff doesn't happen? Excellent question. So I absolutely think VCs are responsible. And it is a is not easy to figure out how to act on that responsibility or else they would have acted on it already. And one of the challenges is no VC really has that much power

over any company. Like we own 10% maybe some VC owns 20% of a company. You know, oftentimes we don't even have voting shares. It's like and that can be that plus the highly competitive nature of the market can be an excuse to let yourself off the hook. I remember I was with one of the top five venture capitalists in Silicon Valley at a private dinner years ago, three, five years ago, I don't know. And he was talking about gender issues in tech and how more companies should be disclosing the gender statistics of their workforce. I was like, yeah, but hey, you're like a super powerful VC. Can't you just make that a requirement when you invest in a company? And he was like, oh, but if we did that, we'd lose every deal to Sequoia.

And I was like, uh, okay. And by the way, on a certain level, he might be right. on an but he might not be especially not now but on another level it's like well why don't you just call sequoia and the five of you get together you you know there's like four or five firms that are the best firms in the valley that if they do something together and it's hard for them because they all compete with each other and blah blah blah but they've done things together if they do something together you know there's then all of a sudden it will change the industry in its entirety in a heartbeat and so you know I think some of it requires a little organization among VCs and some of it requires indirect influence as opposed to direct influence. And I think there are many

cases where many VCs, I don't mean to cast them as like all bad. Of course, like great VCs have led many companies in a great direction. You know, Andresen Horowitz helped Airbnb expand the size of its customer guarantee dramatically. You know, those are just like they're examples we know about. My guess is there are thousands of examples we don't know about. But the question is how do you use that influence? And I think the first way you do it is what's the first contact founders have with VCs is their reputation is you try to set an example yourself. The second thing is you set expectations. And we try at Blumber Beta to be the most transparent venture investors. You can read like so many details on our website of how we work, the valuations of companies we invest in,

blah, blah, blah. You have a time on GitHub. Yeah, thank you. That's where we put it. Because it's a good place to manage it. You can look at our section of our website, which has our diversity, equity, inclusion and justice plans and statistics and you can call us on it. And there's a number to reach HR, you know, if you need to tell somebody that we've got something wrong. And so I think that and by the way, I don't see us as a leader on those issues. I see us as trying to just be a model citizen on those issues. And so I guess the short answer to your question, which is a very good one, is organizing among the VCs. And by the way, we saw this with a diversity rider, a bunch of VC's just added to their term sheet about committing to try to get investors from underrepresented

backgrounds. So organizing is number one. And the second is indirect influence and expectation setting. And that's why I get so pissed off when I see VCs out there, like sort of flaunting the fact that you can ignore the law and people in government are stupid and journalists are stupid. Right. And, you know, because what they're doing is not just oversimplifying what I'm sure or what I really hope is a much more nuanced view that they hold, but they're creating permission, they're creating permission for generations of founders to think that way. And that's not okay with me. Like we should respect journalists. Yeah. I'm with you on that one for sure. I assumed you would be. Do you think we should respect people in government? I think we should respect elected officials in general. Yes,

some of them are stupid. Many of them have bad incentives, but, you know, nonetheless. Yeah. There's a difference between being disrespectful and then, being you know tough on your elected officials and tough on your journalists and I think that like we should definitely be tough on reporters we should definitely be tough on government officials but I think oftentimes it it descends into hate and it descends into you know disdain and you never really get something done if the people on the other side are people you hate or people you disdain so respectful I think it starts with respect and if you actually care about solving the problems you're talking about that's where you begin.

You don't go into campaigns against folks. I mean, you go into political campaign against a politician you don't like, but the idea of just railing against somebody on Twitter, it's not really a great way to get your goals pushed ahead. You were saying it starts with respect, and I agree with that. And I do think you can be respectful and critical. I'll give you an example of another complicated tech and government issue, which I agree with, which is Uber and all of the criticism of how it's,

related to people and Lyft to, when I say Uber, I mean all those companies, would not have had an opportunity to exist or certainly not to exist in the same form had governments not done a better job on things like public transportation, taxi, you know, regulation. And so, you know, in a way, like, I guess my point is there's truth all around and it does start with respect for everybody except for Nazis. No respect for Nazis. No respect for Nazis. No respect for Nazis. Well, whatever. Yeah, no, I'm with you on that.

Okay, let's take another quick break. And then we will come back here to talk a little bit about the election and what's going to happen after it inevitably ends in chaos. November. That's right. Yes, indeed. Okay, we'll be right back. And we're back here for one last segment with Roy Baja from Bloomberg Beta. We've had a great conversation so far.

Let's go to the finish line. with a discussion about finish line indeed the finish line which is the election coming up in November or maybe it's the starting line who knows or maybe it's just a line painted in the sand that everybody as long as the line continues and doesn't come to a stop I'll be happy well what do you think's going to happen because I mean I mean you know of course we're we're only somewhat qualified to talk about this we're you know two guys in the tech world but I also think that we we follow this stuff pretty closely and there's a lot of alarm over what's going to happen when this election comes I have no idea comes forward I mean despite having worked in government and my wife

and I have been really active really with her leadership on raising money and being act you know devoting a lot of time and effort to trying to move the country in a better direction I have no idea so the thing I would say is what I look at is the prediction markets and it looks as far as I can tell like the price to buy Joe Biden is 59 cents and I think it pays off for a dollar and the price to buy Donald Trump is 45 cents and it pays off for a dollar. But, you know, who knows? I literally have no clue whatsoever. Also, Kamala is at 4 cents, which suggests that there's some significant expectation built in there that Joe might die during the campaign.

Right. I don't think anyone's questioning Joe's physical capabilities. Yeah. So I don't know. I think, I guess the way I'm thinking about it is there's real risk and, you know, we have. a lot of work to do. And I am certainly, you know, putting tremendous time and effort between now and the election to try to get things to turn up the right way. One thing I'll say about tech in this is if you go back to 2016, I remember having a conversation with someone, maybe it wasn't

in 2016, but shortly after. Tech used to be much more ignorant about politics than it is. And I remember that there was this tech founder who I was talking to who exited for a lot of money, millions and millions and millions of dollars. And he was complaining about the one of the grillings of Zuck on Capitol Hill. And he said, oh, that guy, and he was talking about Oren Hatch. He said, he like didn't even know what Facebook's business model was. God, how ignorant, right? And by the way, I mean, I had a corporate executive once asked me in 2007.

What is the difference in email and I am? So like, let's not pretend that there's like a deep well of knowledge out there in the world. That was a while back at this point everyone. Yeah, but I mean, it wasn't that long ago. But in any event, fine, fair criticism. And then the meaning that Orrin Hatch didn't know what he was talking about. And then we hosted a fundraiser for a political candidate who we really believe in. And this person came and gave.

And the next day, he asked me, when would I get my tax receipt? And I was like, what do you mean your tax receipt? You know, the tax exemption? I was like, giving to money to elected officials is not tax free. the point is that the same things that were obvious in the tech world, like what is Facebook's business model, like members of Congress didn't know? And the things that are obvious in the political world, which is that giving money to elected officials is not tax exempt, were not clear to this person. And that reminded me of just this, it was just a little moment that reminded

me of this enormous gulf in understanding. And, you know, we at our fund have tried to learn and bring others along in our learning. We organize these trips where we would take VCs around the country with members of Congress before COVID to learn about their startup ecosystems, the comeback cities tours. And we went to places that I'd never been, Flint, Michigan, Tulsa place. I had been like Atlanta. Yeah, you did the Zuckerberg tour without posting every. Without without milking cheap or whatever. Yeah. Yes, something like that. And although privately. And without the fanfare. It wasn't a presidential run as far as we know. It was not a president. I was not even dipping my toe. Zuckerberg did deny to me that he was going to run for president on that one. So can we have a similar denial from you today?

Yes, I deny that I will run for president. I've been around enough elected officials to know. I mean, geez, I keep telling my wife that as a husband, I hope she doesn't run. But as a citizen, I hope she does. But I certainly don't want to. Anyway, the, but that's changing. So after the elections in 16, when people got free. freaked out, we, my wife and I started to have friends coming to us and given where we live, many of our friends are in tech and just saying, we want to do something. We don't know what. And we were like, well, we don't know what either. Let's just compare notes and figure it out together. And I remember in December of 2016, we got a group together. We called it bowling together. And this was a time when like every group of tech was bowling alone. The Putnam book, yes. Every group in tech was getting together. And not every group. Many groups of people were like,

we're going to go rent an Airbnb for the weekend and solve fake news. And I was like, good luck. Is Zuck coming with you? because otherwise you don't, I think, have a chance, but sure. And anyway, the, but the point of this group was just to learn from each other. And what emerged was that many of us wanted to figure it out together. And we have embarked on this really four-year journey with a number of people we care about and trust of learning together about how to give more effectively. And now, you know, there's a community of kind of people in tech who have new access to

resources, you know, maybe they're in a company that's about to IPO or something that's called first principles, where we study together about how to give back philanthropically and socially. And so I think, at least in my perspective, this is changing. And that makes me feel good. It has to change fast or else we're all screwed. Right. Well, you know, let's wrap up here talking about the responsibility of social media companies and what they should do. I'm going to pick up on a few things that you've said over the course of our conversation, seeming that. It seems to to me that you'd like Facebook to step in a little bit more and take some post down from, you know, politicians. And one of the things I, yes, I worry about is that when we have

the social media company step in, we're actually just addressing like the last mile of the problem. It's always the manifestation. It's not the roots. And I feel like there's this tendency to seize onto the fact that like, this is all Facebook's fault. Whereas like, you know, there's 99% of the stuff underneath the surface before that 1% bubbles up. It is not all Facebook's fault. Yeah. It is not all YouTube's fault. It is not all Twitter's fault or anybody's fault.

The New York Times, you know, random blogger X, you know, it is not all anybody's fault. It's all woven together in a fabric. And I think that participation in social media and, you know, look, I teach a media course for the MBA students at Berkeley. And I think about this a bunch. I think it's both cause and manifestation. And so, yeah, I do think that people get radicalized by seeing things on YouTube. And I do think that, you know, that all these companies have a responsibility.

I think my most profound wish is I wish I believed that they, the leadership of those companies was as deeply worried about where things are going as I believe they ought to be. And it's hard to say, like, I just don't know. Yeah. And, you know, you hear things and it's not clear. if it's lip service, but I mean, a bunch of people who are at Facebook said, well, there goes, who are at Facebook said, well, there goes Zuck again, you know, moving as little as he needs to to address the issue in the moment and then moving on with his vision. And that scares me, you know, I'll

admit, although I think Zuck is a contemplative, I mean, from what tiny interactions I've had and from observing from afar is a contemplative, thoughtful person with deeply held beliefs and courage of his convictions. Yeah. I really respect a lot of that. But. Yeah. So I think the thing I'm trying to say is I don't think it's like an easy answer of like just take down some more posts and then we're done. The way I look at it more is technology has its own wants. And the Kevin Kelly book on this, what technology wants is amazing. Right. And that's your number one recommendation on your Amazon book list. Actually, just check. It is my number one recommendation on my Amazon book list. I just checked your list and bought it this afternoon. So I'm looking

forward to reading it. I hope you like it. We can compare notes. Yeah. Yeah, for sure. But I think that, and, you know, for example, by the way, back on the tech paradigm for a half second before I finish this, because I think it's relevant. One of the things in the tech paradigm is it doesn't matter who you are. You could be sitting anywhere and typing at your computer, you know, sort of on the internet, nobody knows you're a dog. And that's the indifference norms thing. And I think that's why tech has been so blind about sexism and racism and all other forms of discrimination, because it just doesn't compute. It's like, well, aren't that person's fingers typing on the keyboard the same as mine? And so there's this great

complexity when you just open up the aperture and look. And I think that, so I wish that I felt that more from the leadership of the social media companies. And they've created something so big and so complex that it's not like Zup knows the answer. It's not like, it's like, oh, just do X and he can figure it out. It's hard. We don't know as a society how to deal with this new tornado that we've unleashed. And like any force of weather, we can shape it. We can't stop it, I don't think. Like the people who would just want to put it, put the tornado away, like, that isn't going to happen. And so to me, the great quest is the quest of figuring out how to shape the power of these tools that we've created. And that is not the sole provenance of any of those companies.

It is not the sole providence of government. We have to figure it all out together. And by the way, just we'll say one of the thing. Well, why don't you go ahead. I was just going to say it's so strange that like this is like, you know, they're focusing on running a business. The government's focused on, I don't know what they're doing. and then like when it's so rare like yeah exactly it's so rare that we actually have these conversations that detail that go into okay now what is what's the impact on society you know

I know journalists spend a lot of time on it but like what percent of this stuff is actually well I think it's true in all times in history right that those conversations kind of had to be crammed in among doing regular business you know like the treaty of Detroit between the auto companies and UAW that set the template for sort of modern American full-time employment, you know, vacations and health care benefits and that kind of thing, you know, it's not like they could just stop everything for six months and work on that while they did it. They had, you know, that's the nature of, of action is you've got to keep on with the flow. And, you know, as much as I can be a critic of some things, I also use the tools, you know,

like I've got this daily Twitter thing that I'm doing now, like giving tips about work. This is not advice. I've been watching it. It's great. Yeah, exactly. Thank you. This is not advice. Thank you. Shout out. Feedback or if you have questions we should hit or come on as a guest at some point, actually. That would be great. I also had to talk to a journalist. Anyway, but the, like the election project that I was going to say that now I'm going to have to disclose in public before this podcast episode comes out.

Great. We're going to break some news. Yeah, exactly. News, news. I have been working with some folks around the country on a new project that we've been working on for just about a little less than two weeks now to try to get more votes out in this election. And as we've looked at the issues with the U.S. Postal, service and mail delivery and the safety issues around voting in person, we saw some of the

news around ballot drop boxes and how would they work? And could you just bring your vote over? And so we are organizing local, call them voting parades, sort of people in their neighborhoods marching to the polls together. We were calling it walk the vote, hashtag walk the vote. So cool. Yeah. And we could not do that, but for the existence of all of these tools and platforms, including, by the way, no and low code tools and the whole thing spun up. Like, what is that effort? It's like, it's not an organization. It's not incorporated in any way, but it is a Google, you know, drive folder. And so, you know, the way to me to think about it is text like the weather. It has powerful force. You can't stop it, but you can shape it. And you

got to both learn to use it and endure it and all that. And, you know, and the more I think we see it that way, the more the faster our industry grows up and the better an impact we can have. well that's an amazing way to leave it roy i know that you have a hard stop now man i feel like we could keep talking about this stuff let's do it again hours and hours i'd love to have you back on um thank you so much for joining us why don't you let everybody know where they can find you on twitter and and stuff like that just sure well just roy bahad on twitter although i'll just say this as a person who sells money to founders for a living if you're looking for me on the internet and you can't find me that's my fault so please tell me somewhere else i should be

findable everywhere. The only thing I'd say is I only accept LinkedIn requests when I know the person well enough that I could ask them for a reference. So, you know, you can reach you, you can write to me there, but just that's my only thing. But Twitter is like is my poison of choice. Yeah, same here. And you're open to emails and things of that. I am open to emails. In fact, if somebody wants to ask me, what is my, I actually did the session with a company that we invested in called Speak Easy that is like a learning service where you learn at small events. and I joined an event where I learned about poetry and freestyle and rap, and they said, what is your favorite form of writing? And I said, email.

Yeah. Yeah. As a newsletter writer, I would agree. There you go. And I love the newsletter. All right. To be continued. All right, Roy. Thank you, Alex. Thank you for joining. And everyone, thanks for listening. We hope you join us for the next episode and subscribe and rate and all that good stuff. And we'll see you again here next Wednesday. Yeah. Thank you.