Lenny's Podcast: Product | Career | Growth - $46B of hard truths from Ben Horowitz: Why founders fail and why you need to run toward fear (a16z co-founder)

Episode Date: September 11, 2025

Ben Horowitz is the co-founder of Andreessen Horowitz, Silicon Valley’s largest and most influential venture capital firm, with over $46B in committed capital across multiple funds. He took Loudcloud public with just $2 million in revenue (dubbed “the IPO from hell”), sold it for $1.6 billion, and has backed companies from Facebook to Stripe to Airbnb to OpenAI to Databricks (now worth more than $100 billion). His management philosophy—forged through near-death experiences and refined through coaching hundreds of CEOs—contradicts most conventional startup wisdom.In our conversation, Ben shares:1. Why “founder mode” is half right and half dangerously wrong2. The story behind “Good Product Manager/Bad Product Manager” and why it went viral despite being written in anger3. Where the biggest AI startup opportunities remain4. Why you need to run toward fear, never away5. The one trait that predicts that a founder will fail as CEO6. Inside Paid in Full, Ben’s nonprofit awarding pensions to pioneering hip-hop artists—Brought to you by:DX—The developer intelligence platform designed by leading researchers: http://getdx.com/lennyBasecamp—The famously straightforward project management system from 37signals: https://www.basecamp.com/lennyMiro—A collaborative visual platform where your best work comes to life: https://miro.com/lenny—Transcript: https://www.lennysnewsletter.com/p/46b-of-hard-truths-from-ben-horowitz—My biggest takeaways (for paid newsletter subscribers): ⁠https://www.lennysnewsletter.com/i/172439345/my-biggest-takeaways-from-this-conversation—Where to find Ben Horowitz:• X: https://x.com/bhorowitz• LinkedIn: https://www.linkedin.com/in/behorowitz/• Website: https://benhorowitz.com/• Andreessen Horowitz’s website: https://a16z.com/—Where to find Lenny:• Newsletter: https://www.lennysnewsletter.com• X: https://twitter.com/lennysan• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/—In this episode, we cover:(00:00) Introduction to Ben Horowitz(04:09) Important leadership lessons from Shaka Senghor(10:15) Running toward fear and why hesitation kills companies(19:35) Who shouldn’t start a company(22:36) The Databricks story: thinking bigger(24:54) Managerial leverage and CEO psychology(28:06) When founders should be replaced as CEOs(31:20) Normalizing failure for CEOs(37:57) Counterintuitive lessons about building companies(42:31) “Good Product Manager/Bad Product Manager”(48:21) Product managers as leaders(51:16) Why a16z invested in Adam Neumann after WeWork(56:23) Is AI in a bubble?(01:02:43) The biggest opportunities in AI(01:12:51) Why U.S. leadership in AI matters(01:18:53) The Paid in Full Foundation for hip-hop pioneers(01:23:18) Lightning round: book recommendations, products, and life mottos—References: https://www.lennysnewsletter.com/p/46b-of-hard-truths-from-ben-horowitz—Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [e-mail] may be an investor in the companies discussed. To hear more, visit www.lennysnewsletter.com

The worst thing that you do as a leader is you hesitate on the next decision. The thing that causes you to hesitate is both decisions are horribly. Probably one of my bigger ones on that was we went public with $2 million in failing 12 months' revenue at 18 months old. That's obviously a bad idea. But the truth of it was the alternative was going bankrupt, and that's a worst idea. It's very difficult and painful to be a CEO, to be a founder. In spite of that, so many people want to start companies. The psychological muscle you have to build to be a great leader is to be able to look in the abyss and go, okay, that way is slightly better.

We're going to go that way. If everybody agrees with the decision, then you didn't have any value because they would have done that without you. So the only value you ever add is when you make a decision that most people don't like. You are famous for writing one of the most popular pieces of literature for product managers. What I was trying to get out in good product manager, bad product manager was the job is fundamental. a leadership job, and it's a tricky leadership job because nobody is actually reporting to you. There's always this kind of sense that the PM is not the mini CEO. How dare you call yourself that? I actually think that's exactly what the PM is.

It doesn't matter if you write a good spec or you have a good interview or you do this or do that. What matters is that the product wins. Today, my guest is Ben Horowitz. Ben is the Z in A16Z, the world's largest venture capital firm with over 46 billion dollars in committed capital. They're investors in Open AI, Curcer, Andrewl, Databricks, Figma, basically every generational tech company. He's also the author of two New York Times

bestselling books. The Hard Thing about Hard Things and What You Do is who you are. Ben is endlessly fascinating. He started a rap group when he was younger. He started his career as a product manager and wrote the now famous good product manager, bad product manager piece. In our wide-ranging conversation,

we cover a ton of ground and Ben shares stories and insights that he's never shared anywhere else. A huge thank you to Shaka, Senghor, Ali Goetze, and Adam Neumann for suggesting topics for this conversation. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It helps tremendously. And if you become an annual subscriber of my newsletter, you get a year free of 15 incredible products, including a year free of lovable, replet, bolt, n8N, linear, superhuman, Descript, whisperflow, gamma,

perplexity, warp, granola, magic patterns, raycast, chat PRD, and Mobbin. Check it out of Lenny's newsletter.com and click ProductPass. With that, I bring you Ben Horowitz. Today's episode is brought to you by DX, the developer intelligence platform designed by leading researchers. To thrive in the AI era, organizations need to adapt quickly. But many organization leaders struggle to answer pressing questions like, which tools are working? How are they being used?

what's actually driving value. DX provides the data and insights that leaders need to navigate this shift. With DX, companies like Dropbox, booking.com, adion, and intercom, get a deep understanding of how AI is providing value to their developers and what impact AI is having on engineering productivity. To learn more, visit DX's website at getdX.com slash Lenny. That's getdX.com slash Lenny. This episode is brought to you by Basewit.

Basecamp is the famously straightforward project management system from 37 signals. Most project management systems are either inadequate or frustratingly complex, but Basecamp is refreshingly clear. It's simple to get started, easy to organize, and Basecamp's visual tools help you see exactly what everyone is working on and how all work is progressing. Keep all your files and conversations about projects directly connected to the projects themselves so that you always know where stuff is and you're not constantly switching contact. running a business is hard. Managing your projects should be easy. I've been a long-time fan of what 37

signals has been up to you and I'm really excited to be sharing this with you. Sign up for a free account at basecamp.com slash Lenny. Get somewhere with base count. Ben, thank you so much for being here. Welcome to the podcast. All right. Thank you, Lenny. Excited to be here. I'm even more excited to have you here. I'm going to start with a question that a close friend of yours suggested I ask you, Shaka Singh Hoar. So Shaka, he's like, we could do an hour just on how interesting this guy is and the thing he's done. It's three hours on Joe Rogan.

He's very, okay. So we're not going to do that just to give a glimpse. He was in prison for 19 years. He was in solitary for seven years. He led a huge prison gang. He wrote about him in your book as a great exemplar of great culture in the prison gang that he

ran. So interesting. But something that he learned from you that he told me I need to ask you about is about success and how to be successful and how it's not what people think. And he said that you learned this lesson from a pilot. What is that story? What is that lesson? Well, it's kind of, I mean, I'd say it's a long life lesson, but the pilot story is, I actually, you know, I asked people like silly questions sometimes when I meet them. And so, you know, I met this gentleman who was a pilot and, you know, it was right around the time JFK Jr. crashed his airplane and

ultimately died. And I asked him, I was like, you know, like what happened? Because there's always, you know, the story in the press, and I know this from them writing about me or anything, is it's always what's the best narrative, not what's true. So you can never kind of actually find out what happened. You just find the like the best story version of what happened. And, you know, the story in the press was all about, oh, he wasn't trained on instruments. Instrumentation was flying at night, and I wanted to know was that right. And the pilot said, well, he said, really, it's like all plane crashes are a series of bad decisions. And none of the decisions by themselves is that bad, but when you add them up, it's bad.

So the first decision was he needed to get wherever he was going, and that was the priority. and in flying, that can't ever be the priority, you know, because there are conditions, there are things that happen. And then the second one was, well, like his timing of when the sun would go down was wrong. So he thought he'd be flying in sunlight, and he wasn't. And then, you know, once he got up there, it was, you know, when the plane was, you know, going down, kind of making it go up, was a bad. decision because he was upside down. And like, you know, so, so it said, I can't remember all the things, but this guy had like 17 steps, you know, 17 bad decisions in a row. And the big thing for me that that I felt was really true is it's, you know, one decision leads to another. And so, you know,

if you can break, you know, psychologically, you can take the sunk cost, then that gets you out of a lot of bad paths. And then, you know, a little good decision may be difficult, but you have to believe it's going to lead to the next one. And, you know, a lot of successes about that. You know, it's a small thing, a small thing that's hard to do that doesn't seem to have a high impact. But it leads to the next small, hard to do thing.

And then eventually you get an outcome. So that was kind of the concept. So the lesson there is just success is just a bunch of little things. it's not this like who I got here in a big thing. Yeah, when somebody were to write a story about me, they would be like, then bend to this really smart thing and blah, blah, blah, blah, you know, happy ending. But, you know, it really wasn't like that.

And I don't think it's like that for you or anybody. And, you know, I spent a lot of time with shock on, you know, how, because it's always your own psychology that, you know, gets you. And one of the kind of most insightful things he said to me is, you know, because he was, most people who are in solitary for seven, in years. That's it. You're insane. Like, you're never coming back from that. It's just an impossible thing. But if you, like, study his story, he actually kind of really was massively self-improved coming out of solitary, which is, you know, like, and he wouldn't recommend that for anybody,

just to be clear, it wasn't solitary. But what it was, you know, is he changed in solitary. He was able to change a big set of beliefs that he had about himself that kind of got him out of that. And the thing that his conclusion from it, which I thought was really interesting, he's like, look, I was in prison for 19 years, I was in solitary for seven, I come out, they can't rent an apartment, I can't vote, you know, I can't get a gun, I can't do like, like, like, no rights. None of that was anything compared to what I did to myself. And I think that's very true for CEOs in general and people in general, is that, like, all the things that you perceive that are happening to you that are bad, you know, be it like the systems

against you or somebody undercut you or racism or sexism or this or that or the other is very small compared to, like it means a lot if you believe it. You know, if you believe what people say about you, if you believe what they did to you, then that destroys you. But if you go like, that's not me, you can overcome almost anything. And that's, you know, he's got a new book out on that anyway. That I think. is very good because that's the, you know, I'd say more than anything, that's the key to success. Something you, like if you look at all the writing you've done, it's essentially about the struggle and pain and suffering of being a see how your heart, you know, your first book is the hard thing

about hard things. There's a lot of talk these days about just how important struggle is and how valuable it is to go through struggle. Jensen's big on this, you know, he talks a lot about just you have to go through pain and suffering to be a great leader. Yeah. You don't really have a choice, you know, like that. That's your. There's something that I saw you share that I love, which is running towards fear versus running away from fear, something that you tell all your leaders to work on. Easy to hear, hard to do. We don't like doing things that are scary, running towards things that are scary. Why is this so important?

Why is this something people need to learn to do? Well, so the biggest mistake that you may, the worst thing that you do as a leader, like there's things in your control and there's things like out of your control. And hesitation is, you know, that. that's generally the most destructive. And I go through all the ways that it's destructive, but it's extremely bad. And the thing that causes you to hesitate is, you know, both decisions are horrible, right? Like there is, like, it's not business school where, like, you're going through a case study. And if you had done that, then the company would have gone this way.

But if you had done that, it's a great success. Like, that's not actually, you know, what happens to you. US CEO. What happens to a CEO, it's like, okay, if we rearch, you know, like this product is, the architecture is not actually get us to where we need to go. I kind of know that. But if we re-architect it, like, we're going to probably miss all the features, missed a quarter, have trouble raising money, you know, shudder, et cetera, et cetera. So like, that's really bad. And then not re-architecting is really bad. And so I'm just going to try to, like, can avoid this subject because I don't even want to deal with either of those and that's that's the

worst thing because if we are you know if action is the better choice and you know that's good and then if you don't make an explicit decision then the whole company is going to get nervous because they know that the architecture is whack and you got to fix it and you know like probably one of my bigger ones on that was you know we went public with two million dollars in trailing 12 months revenue at 18 months old, right? Like that's obviously a bad idea. I mean, there's no question that wasn't a bad idea. But the truth of it was the alternative

because where the private markets were was going bankrupt, and that's a worst idea. And if you look at that time, you know, March of 2001 when we went public, you just look at the number of CEOs that hesitated on that and didn't do it and went bankrupt. it's a lot. And so that's, you know, that, getting good at making a decision that everybody's going to go,

wow, that was insane, Ben. Like the Wall Street Journal wrote a whole, like, long story about how stupid I was. And then Business Week wrote a story called the IPO from hell. That was the name of, like, our idea, the IPO from hell, which, like, was accurate in a sense. But so, like, that's really bad. But it wasn't as bad, and this is why it's so scary you make that decision, because you know that's going to happen. I knew those stories would get written. Like there was no question.

And, yeah, and that's the kind of muscle. So, like, if you think about the psychological muscle, you have to build to be a great leader, is to be able to, like, look in the abyss and go, okay, we're going, that way is slightly better. We're going to go that way. and it's very hard to do. I would say it's a thing people struggle with. And it began something, should I fire the head of sale? So I don't want to have that conversation.

And then I'll have to replace them. And then, like, there's going to be a bad PR story. And then, and, and, and, and you can kind of quickly calculate all the bad stuff that's going to happen if you do it. But if you don't do it, that's probably going to be much worse. And, you know, kind of, that's why you have to run towards a pain and darkness. What is the advice you share with founders? Because as you said, it's very hard to do this. What helps them actually get better at this? Is it just bending by their side telling them this is how it is? Is there anything else you can share? No, no, no, no. I would say this is one where, you know, I can't really coach you to be good at this. Like, I can point it out and like so that you recognize that you were slow or whatever. But it's kind of like, I always like it when I talk to them, it's like,

football, like, you know, you have a really fast, great athlete, but if they don't trust their eyes, if they don't run to the ball when they see it, if they think, oh, maybe that was a fake, then they're that step slower and then they're not, they'll never be as good. And CEOs are like that, you know, if you don't trust what you see and you don't run at it, then, like, you're just not going to be good. And it's hard to get CEOs not to hesitate. But, like, one thing, the thing that does out is, you know, they look at it and I look at it. And, you know, and I kind of confirm, know, that is as it appears. And, you know, sometimes they're afraid of the conversation. So that one I can help. So, you know, a CEO might be afraid, like, they want to do something,

but they don't know how to say it. They don't know how to have the conversation with your employee, so I can walk them through that. You know, I had an instance where the CEO said, hey, you know like, I need your help then. My CTO, he's an asshole. And I was like, okay, you know, like, great. I said, but you're not going to fire him because I know he's a good CTO, or are you asking me should you fire him? He said, no, no, I don't want to fire him. And I was like, so you're asking me what to do because you don't know how to have that conversation with him about being an asshole without him quitting. Like, that's what you're saying. And he goes, yeah, that's the problem. And so I go, well, like, why is he an asshole? And he says, well, he's an asshole.

because, you know, the other day, he made, like, a very junior young woman in our finance organization cry. And I was like, oh, that's kind of, yeah, I got you. I said, like, this is what I would say to him. I'd say, I'd just sit him down. And I would say, look, you're a really good director of engineering because you do a great job in managing the team, get the products out, all that. But, like, you're not really a CTO because to be a CTO, you have to be effective with other parts of the organization. You can't just be like effective only with engineering. And so, you know, and making like somebody cry, like she's never going to do anything you want.

You lost all effectiveness with all the findings by doing that. And so if you want to get good at that, I'll help you all work with you on it. But if you don't, I'm going to have to hire a CTO at some point because like obviously I need that. And, you know, and then he's like, oh, okay, I can have that conversation. You know, I can't have the conversation that, hey, you're an asshole. because I don't want them to quit. But I can have the conversation that's more specific. And a lot of kind of getting people not to hesitate is just getting them over that.

And so often, like, and I would say, you know, early in a CEO's career, a lot of it is just not knowing how to have the conversation. There's also, I imagine an element of I just want to be liked. I don't want people to hate me. You have this great line that you want to be liked and respected in the long run, not the short run. Yeah, that's tricky because it's so, by the way, I don't. have to deal with this in the firm too and you know like you know people want to be entrepreneur friendly I'm like that's not friendly you know respectful but you got to be able to tell them the truth in a way that you probably don't tell most of your friends the

truth because your friend you know like look anthropologically we want people to like us like it's just so that you know they don't throw us to the lion or whatever like that that's just kind of a thing so you say tell people what they want to hear but in dealing you know in a company level and a, you know, in a context of you're on the board of somebody's company, you've got to be able to tell them what they don't want to hear. That's the most important thing you're going to say. And yes, they're not going to like it when you say it. There's no question. But over time, like, it could save the company. And maybe, you know, all the most important things I've said are things that I've said to CEOs that they did not want to hear. You know,

And that's what the leadership is about. It's making, if everybody agrees with the decision, then you didn't add any value because they would have done that without you. So the only value you ever add is when you make a decision that most people don't like. And that's where leadership comes in because you know that's where it's got to get to. And, you know, that's the thing that takes practice. I think, you know, when Jensen talks about like you got to get to near death to get yourself to do that, that's true. You know, it's hard, it's hard to build that if everything's going great.

And I would say, like the CEOs who kind of had an easy run of it for their, like, let's say they just launch a product, that's an instant hit. It's very hard for them to develop that muscle compared to the ones that built a company like Jensen where he like, you know, getting it out for multiple decades before they have big success. Clearly, it's very difficult and painful to be a CEO, to be a founder. In spite of that, so many people want to start companies, so many people dream of having their own company. What do you, who is not right to start a company? Like, what advice do you share with folks that are thinking about starting a company that may not understand just what they're about to get into? Yeah, so it's funny. So there's a couple of things.

You know, John Reed, who is the CEO of Citigroup when I started as CEO, said to me something I never forget. He said, Ben, the only reason to start a company is because you have an irrational desire to do so, because it's not worth the money. And, you know, I was like, wow, he didn't even quantify how much money. And this guy's running city, so he's a very numbers banking guy, and he didn't quantify it. And I remember when we sold LoudCloud for $1.6 billion, I remember thinking, wow, that wasn't worth the money. So I think if you're doing it for the money, that's a very bad reason. And it will be extremely difficult to get to an outcome.

You really have to have an irrational desire to do something larger than yourself to kind of improve the world in some way that, you know, somehow like that is your purpose. And if you don't feel that, then you'll never get through it. It just is too many bad things happen along, right. So then how do you think of founders that are kind of looking around for ideas that kind of brainstorm, that look for, you know, market opportunities versus come from, I have as a mission, I got to do this thing in the world? If you have a, you know, my business partner Mark always talks about that.

So like if you have a product that forces you to build a company, that is a great case of it, right? Like, okay, you built something and the world wants it and you need a company to deliver it, that's going to you know you already have the right product and so that's very helpful. I think there are cases of people. I think Culip Packard was kind of built that way that they're like okay like we got to build technology, you know, it's that abstract. We got built some technology for the world. And then they started with well like what do you need you know, they called it the next bench thing. What does the engineer sitting next to me need? The next engineer on the bench was so kind of how they defined the first sort of problems. So it can work the other way, but like I think the thing that is in common is,

like, it's just a very abstract idea that, like, you have to build something that's going to be important that, like, is going to, you know, people are going to like working there. People are going to benefit from the products. Like, you have to have some, like, weird concept other than, oh, this is going to be successful and I'm going to make a lot of money. I think that's, I think you're way better off taking sucks off for meta and just doing that. Like, that's a way better deal. On these lines, something else, Chaka suggested to ask you about. Apparently there's a story where the CEO of Databricks asked you for $200,000 in the early days. And you said no. And it's not because you didn't want to, you know, invest in it's more about helping him think

bigger. What happened there? So there were six, six of them. They're six HD students. And Well, and Jan Stoika, who is their professor. And Jan, it was a super genius. But, you know, they, you know, when I met with them, they were like, you know, we need to raise $200,000. And I knew, you know, like I knew at the time that what they had was this thing called Spark. And they had, you know, the competitor was something called Hadoot. and Hadoop, you know, had very well-funded companies already running towards it,

and Spark was open source. So, like, the clock was kicking. And, you know, and I think they didn't quite know what they had. But I, and then there's also a thing always, although I wouldn't say Jan has this mentality, but professors in general, like, it's a pretty big win if you start a company and you make $50 million, dollars like you're a hero on campus like that's a that's a pretty cool thing to have done and so i'm always a little nervous about uh kind of a company that comes out of academia thinking too small anyway and uh so i said

like i'm not going to write you check for 200 000 i'll write you check for 10 million of dollars because like this company you need to build a company you need to really go for it if you're going to do this otherwise like you guys should stay in school and they were all right Rad's writing right then. So that was kind of that. And Ali, Ali actually was VP of Engineering at the time. And it was a while, you know, before I made him CEO.

And that was very good luck on my part because I had no idea that they had a guy that good inside the company who could become CEO when I invested. Like that that was just, you know, God smiled on me and gave me that one. So speaking of Ali, actually asked him what to ask you about. And he immediately shared this story. I don't know if you remember this. In your first one-on-one with him after you made him CEO, he was struggling with a bunch of low performers because he was coming in to lead the company. And he was trying to turn things around, trying to coach them, trying to level them up. And your advice to him was, quote,

you don't make people great. You find people that make you great, that make the company great, that you learn from, not the other way around. And there's something that he called managerial leverage? What is that all about? What's the lesson there? Oh yeah. Yeah. So like understand he had just become CEO. So I was teaching him. He had been VP of engineering and CEO is different. And I'll get into why and what I mean by leverage. So I actually wrote a post about this with a little Wayne quote where I think the quote was, the truth is hard to swallow and hard to say too. But I graduated from that bullshit. Now, I hate school. And that was always my feeling about this particular idea was, look, if you're VPA engineering, you can develop people. You can teach them to be better

engineers. You can teach them to be better engineering managers. Like, that's very, like, doable. But if you're a CEO, like, what do you know about being CFO? Like, what do you know about being, you know, DPAHR? Or what do you know about any of these jobs, you know, except maybe VP of engineering, right? And so the idea that you're going to take somebody who doesn't, who isn't world class and make them world class and you don't know anything about marketing is a dumb idea. It just doesn't work. And then the company can't afford for you to be spending time on that because they need you to make very high quality, fast decisions. They need you to set the direction for the company. And they need you to have a world class team. And so like that, and it's a very hard

lesson if you've been VP of engineering because if you're a good VP of engineering you do develop your people but as the CEO like it's not like you don't do any of it but it's very very small you know compared to it so I like to make things just very stark so you you get what I'm saying I don't like to hedge it and then managerial leverage means this is very simple it's okay if I have the ideas about what your department should do next if I you know am kind of of pushing you to kind of move your organization forward, then that's no leverage. What's leverage is if you're telling me what you should do and how you can push the company forward, that's leverage.

Then I'm getting kind of more than I'd have if you weren't there. Otherwise, I could just manage a fucking team. And that's the point when you feel like you're not getting leverage, when you've got to go say, hey, why aren't we doing this? Why aren't we doing that? That's when you've got to make a change. And by the way, he's unbelievable. at that. As good as anybody I've seen, as a guy who's not callous as a CEO, he really cares

about the people who work for him. He really wants him to have great careers and all that, but he does not hesitate. Like if he's losing leverage, he'll make a move. Kind of going back to the origin story of A16C, something you guys were really big on was helping founders stay CEOs, become great CEOs, not replace them with professional CEOs. I want to flip this question on you. When does it actually make sense? to replace SEO? When are people not going to make great CEOs? It really, there's a very consistent thing that happens,

which is, you know, when somebody doesn't make it. And it kind of starts with confidence, is the way I would put it. So, like, if you invent a product, you kind of recruit a team, so forth, all of a sudden you're CEO. But you haven't run a big organization. You don't know how to do that. Like most founders are like that. And so if you don't know what you're doing, you're going to make mistakes.

And they all make a lot of mistakes. And then when you make those mistakes, they're very expensive. You know, like they could cost you to do a down round, or they could cost you to lose a company, or they could cost you a customer or you know, you scrub up the product. Like they're very high impact, and not just on you, but everybody who you talked into joining you. And so that kind of motion can really cause you to lose confidence.

And then if you lose confidence, what happens is you hesitate on the next decision. And, you know, as we talked about, like, hesitation is very dangerous because, one, like, it locks up the company. But even worse, what happens is if you have senior people working for you, they get very nervous. And they feel like they need to jump into that void and make the decision for you. And that's when it gets political, like very, very nervous. political because people are like buying for power inside your little you know screwed up company and so now you've got a political dysfunctional organization and that um you know like that's that's generally where like okay the founder probably can't run this thing anymore is you know that's how it happens so

you know most of what we do as a firm is to try to help people with that confidence problem and there's like a whole series of ideas that we have around that. But that's, you know, you kind of have to somehow climb the confidence and the competency curve together. It's very hard to do. And, you know, particularly, like, if you're an engineer and you're used to getting things right, or if you've been a straight-A student or something like that, it's very disconcerted. My most things is better to have, like, CEOs who are like C-minus students, you know. Why is that? Yeah, the little facetious, just like, well, like, it's just good to be used to filling. So I think I wrote this, but like the median on the CEO kind of test is like 18.

It's not like 90. And so you've got to be comfortable getting a lot of D minuses because the D minus is fine. You know, as long as you don't get the F, as long as you don't run out of cash, as long as you don't lose all thing, you know, okay. Like, you've got through it. Keep going. you know and that's a lot of the thing that we try to do CEOs yeah it comes back to the

your core I don't know message through your first book is just how much you will fail and how much you will struggle and how much paid you'll go through a CEO yeah yeah and you know like I mean a lot of why I wrote that book was just to analyze it I think what happens is you know particularly you know when I wrote it and I think it's come back and been true now is like the way the narrative gets written on all these successes is like, oh, they came up with a genius idea,

and then they built this company, and they hired all these smart people, and it was all great. But, like, that's not at all how it happens. And, you know, I've spent enough time with, like, everybody from, like, Mark Zuckerberg to Sam Alderman and so forth that, like, they all go through that same thing that you, who has, you know, your struggling company go through. Like, you screw a lot of things up, and they have been massive consequences. consequences. But you have to kind of maintain your confidence. Actually, I was at a storytelling event last night, and I was chatting with someone that I ran

into there and told her, I was chatting with you today. And she said how meaningful your first book was to her as a founder, exactly as you said, normalizing that it's very hard and painful, and this is just the way it is. Yeah. And the feeling, look, I mean, you know, like, if you think about organizational design or, you know, goals and objectives, or, you know, goals and objectives or O-K hours or whatever management technique. Like, you need, like, a basic, like, eighth-grade education to, like, do any of that stuff. It's not that complicated. The difficult part is the feeling that you have when you have to do it.

It's very, like, the hard-king matter, a reorganize, you're redistributing power. So you're going to have people really freaking mad at you because somebody's losing power if you do it correctly. And that person may be, like, a really good employee. Dealing with that is the hard thing. like knowing how the organization should work to make communication better, it's not that complex. Yeah, I think about, I was at Airbnb for a long time and just thinking of Brian, who, I don't even know if he had a job before Airbnb. Oh, yeah, no, no, I spent a lot of time with Brian, and he, uh, after COVID, he, it all kind of

clicked for him. Um, and then he did that, he involved that good talk on founder mode and so forth, but the reason that was so articulate is because he had screwed every one of those things up. and, you know, he hired LT and, you know, all this stuff. And, you know, these are very senior people. And, you know, he wanted to defer to them, but you can't defer as the CEO, you know, because you know what Airbnb should be doing. He may know what fucking finance should do, but you know what Airbnb should do and this kind of thing. And then it gets really wild when you, like, you can't defer decisions as the CEO.

You got to, like, understand what people are saying. and go, now we're going to do this. And this again comes back to the point of you have to go through the struggle and pain and failure to learn those lessons. Yeah, no, like, I mean, they're really hard to learn without kind of doing and often, like, without paying the consequence. And I, you know, like, even I, like, I make mistakes. I was having a conversation with Ali the other day. And I was like, he's like, how's it going, Ben? And I was like, well, you know, like, I'm finally dealing with something that I had put off for, you know, a very long time.

And he said, why did you put it off? I said, because things were going too good. I didn't have to deal with it. And he's like, yeah. He said, I know that. I'd say, L.A. is one of the, if not the kind of best private company CEO out there. And he's making a mistake. And I'm making a mistake.

So it's just tough. You said that one of the, maybe the main reason founders fail CEOs is they lose confidence. And you had some ideas that you guys have to help founders work through that. Are there a couple you can share how you help? Yeah, yeah. So we do a lot of things on that. So the kind of design of the firm is about confidence. So the first thing is, well, what would it do you come?

Well, like if you can get stuff done. So what if I could give you a network that's as good as Bob Iger's network, day one, like the day you step into the job. And so, you know, we have 600 people at the firm. And why is that? Well, most of them are building that network for you. So you can call any CEO. or anybody in Washington or, you know, kind of any executive or that kind of thing,

and get them on the phone and they'll talk to you and you can kind of deal with that thing. And then that just makes you feel like a CEO. And then, you know, we have a lot of people in the firm like myself who you can talk to on like a CEO to CEO basis as opposed to an investor to CEO and just kind of feel that. early in the fringe days we used to do this thing. I think I'm going to bring back in some form this thing called the CEO barbecue. And it was like, you know, a lot of people have these events where, like, you know, they bring in speakers and this and that and the other.

And I always felt like those were one. They were too many days. And then sometimes, you know, what they said wasn't really applicable and that kind of thing. And so I said, why don't we just have a barbecue? And like, I would barbecue. We get everybody in my backyard. I was 500 people at the peak, which is why I had the kind of stuff. I couldn't get much food after that.

And then, you know, we'd have Larry Page in Mark Zuckerberg and Kanye West. And so you're a CEO in there of a portfolio. You're like, wow, like, I must be important. I'm here with all these guys. And we're just hanging out, having a drink, eating barbecue. And so then when I go back to my company, I feel like I am somebody and like, okay, I might not be like perfect at all this, but I am really a CEO. I was at the CEO Barbecue.

We're crying out loud in that kind of thing. And so, yeah, that's, but it's all, the whole idea was always like, okay, do you feel like you can do it? Because that's, yeah, that's half the bad. And look, having been in, and, you know, every CEO has been in a position where they feel like, well, maybe I shouldn't be the one running this thing. maybe it's just too big for me. And that's a bad, you don't want to go there.

And because, as we've said, founders can get to the next product. And that's something that, you know, almost no professional CEO is able to do. Like, there have been rare cases, but very rare. So clearly you've worked with a lot of companies, a lot of founders. Let me kind of zoom out a little bit and ask you this question. What's the most counterintuitive lesson you've learned about building companies? that goes against common startup wisdom? Well, you know, the common startup wisdom keeps changing.

You know, like one of the early ones that, you know, was wrong and kind of Brian articulated it. And then now I think a little bit of what people have gone to is also wrong. So the first idea that was wrong was like, okay, build a team of like senior executives. You know, as soon as you get product market fit as fast as possible and they can scale the thing. And I think that you've got to build that team slowly and deliberately kind of pace to your ability to integrate and then manage them. Because if you bring in a bunch of senior people and you don't know really how they match to your company or how that function works or so forth, then you're going to start deferring.

And once you start deferring, it's going to get out of control very fast because they're going to build empires, they're going to get political, they're going to do it. all that kind of thing. So that was bad advice. You kind of have to do it in a measured way. I think that founder mode, I think a lot of people have taken to never hire anybody with experience. And that's also bad advice in that, look, somebody who knows how to do something can really accelerate your thing. So very early on, one of the founders, great founder, OursaLon, at Databricks, was running sales. And I'm like, Ali, like, you're going to have to hire like somebody who knows sales, because Arsson's PhD in computer science, like, I like that.

Right. That's probably not where you're going to have to start if you're going to catch these guys before they take Spark and, like, use it against you. And, you know, and I sat down with Arsson and I explained why. I said, look, you know, a lot of what sales, there's a lot of knowledge in how to build a worldwide sales representation. and the media knowledge of customers, territories, territory splitting, Rick profiles. There's just like a litany of stuff that you really can only learn by doing trial and error.

And you don't know any. And so, like, you're phenomenal. Like, let's get you, you know, and he's still, he's a very senior executive in the company now, but we need somebody who knows that. And the idea that there are companies that go, okay, we're just not going to hire that because we're in gender mode, that's also a mistake. So there's a lot of, it's more subtle than you think, and it's more complex than you think.

And so you kind of have to get all the way to the truth. And these little snippets of advice that VCs give because they watch some fucking podcast are all fucking stupid. Like it's just, there's a lot of depth to these things. You have to know the answer to the next question, the next question and the next question. And it does drive to be crazy.

Like one of the other things that happened, and along these lines, just to show you how little you know as an investor about what it means to be CEO. One of the, we were at a board dinner, one of the CEOs says to me, he goes, or one of my, one of our CEOs says, hey, you know, Ben, like that thing you told me a while ago about don't be CEO at home, he said, like, I was doing that and I stopped and it really helped me. And then the other kind of VC said, yeah, you know, you got to unplug something. time. And I said, I was like, what the fuck are you talking about? He's CEO. He's not on plugging. Like, he's getting shit all the fucking time. Like, he's got to deal with that. Like,

that was not what I meant. I was like, you can't go home and boss your family around. That's what I meant. You know, like, so it's, you hear something from like somebody who, but if you have been done it, you don't even know what that means. And so then you kind of then trying to transfer the advice to the next guy, that's not going to work. So anyway, so, but it's, you know, like, he was very innocent. I I don't want to kind of speak bad of him. But, like, that's how it sounds, right? But that's not what it is.

That's an amazing story. So the advice partly here is just don't believe everything you see on Twitter and little sound bites of advice. Yeah, I mean, like, and I think actual CEOs know it, and that's kind of how, like, people in my profession are going to get a bad wreck, because, like, giving advice, that's not something that you know, but something that you heard is very dangerous, I think.

So speaking of advice that you've shared, that might be out of date now, you are famous for writing one of the most popular pieces of literature for product managers. There's a lot of PMs that listen to this podcast called Good Product Manager, Bad Product Manager. And if you actually go to that post today, at the top, you say this document was written 15 years ago and it's probably not relevant today for PMs. I present this merely as an example of a useful training document. Still, people link to it. I actually just link to it as just like this is something every PM needs to read. What is it that you think people should maybe not take away from it, and what do you think people still should take away from that piece?

Yeah, so the reason I wrote it when I wrote it was that I had a lot of product managers. And one thing about product management is it's a job that's completely different at every company. And there is no training for it. So, like, everybody kind of figures it out as they go. And depending on what's being emphasized, like, they'll get wrapped around the axle on, you know, like if it's enterprise company, okay, well, like, you know, pitching to customers or like, I need to be like really good with the press or I need to

be really good at writing, you know, the product requirements document or that kind of thing. And none of those are all like these tasks, but none of those were the job. and what I was trying to get out and good product manager, bad product manager, was the job is fundamentally the leadership job, and it's a tricky leadership job because nobody is actually reporting to you. So it's like this influence, how do I get people to do what I want, you know, even though I'm not paying them, I can't fire, I can't promote them, and so forth, and which is kind of the essence of like real leadership, because if you start to rely on promotion and firing and so forth for authority, then you're never going to be good at being CEO or anything. So I wanted them to get into the mindset of, okay, your actual job is to get a product

into market that customers let that's better than anything that anybody else in the world puts in market. Like, that's your job. And so to accomplish that job, you need engineering to understand you with clarity. You need to understand engineering with clarity. You need to have a really good view of the market and the competitors and the technology and so forth. And you need to kind of put that all together and deliver the thing. And all the other things are tasks that you may or may not need to do. I don't know if you need to do them. But, like, the thing is, you know, you have to be the leader. You've got to get the thing done.

And so what I think it's still good on is that, like, the mindset, like, you know, be the leader. I think the details of it, you know, of any kind of thing that was kind of task-specific was, like, really for my group at Netscape in, like, 1996. whenever I wrote it. So as a kind of document, I read out of frustration. But I am glad that the people still like it. And I think leadership in general is undervalued, underestimated. It's the most powerful thing. And most of the great, you know, great companies, Jensen is a great example.

Like what a phenomenal leader he is, not just of NVIDIA, but of the, whole industry. And he doesn't have authority over the industry, but like he drives it for him. And that's, and that's why the good product manager, bad product manager is so important because that thing, if you learn how to do it, that's the thing. I didn't realize he wrote that initially as just an internal document. And then you made it. It was, it was kind of before blogging took off. So it's just an internal thing. And I provost with later. It was, I was just getting so mad, you know, And by the way, my product management team at the time was like very good, very talented people. They just were not getting that concept.

So, you know, like David Wyden said, Coastal Ventures, Raghu, Raggeram, who was the one on to be CEO of VMware. I mean, like the team was like that team. Right. They were driving me crazy. And so I just, I was like, I can't yell at people anymore. I have to, like, explain to myself. And so it's a good thing. If you find yourself yelling at people, like, you probably haven't explained what you want.

It was he had a big take right from that. Did you ever think that piece would be so long-lasting and so, I don't know. I didn't even know, like, I thought it was kind of like aggressive when I wrote it. Like, you could tell I was mad because I called it good product manager, bad product manager. It's like bad dog, you know, bad pride, bad, bad product manager. That was kind of the emotion I had. So, you know, it's kind of shocking. as some of the things that you write.

I would tell you that that's, you know, I'm kind of creative, and you probably know this. Like the ideas that you have, the things that you write in five minutes end up being much better than things you write in five weeks, you know. And I find in talking to, you know, musicians or writers or anybody, everybody has that same experience.

Like the thing that you've already synthesized so much that you just have to write it out is that's the best stuff. There's something that, You mentioned there in your answer about the PM being the leader. There's always this kind of sense that the PM is not the mini CEO. How dare you call yourself that? I actually think that's exactly what the PM is. They're basically the closest to the CEO.

Their kind of job is to think like the CEO within the team. Yeah, people get mad, you know, like, because everybody, you know, like this is the whole challenge of management in general. Like people get jealous over stupid shit. But like from the perspective of the PM, like it doesn't matter if you write a good spec or you have a good interview or you do this or do that. Like what matters is that the product wrench and you have to get all the way to there and kind of work backwards from that. And you can't do that without leadership because it is about, okay, we want to build that.

And you're not necessarily the person comes up with every idea or this or that. I mean, you're just the keeper of the vision. you know, and that's true for CEOs too. Like, you don't want every idea in a company coming from the CEO. Like, I think it's a misunderstanding what a CEO is, is why people don't like that. They don't know what a CEO is. But a CEO isn't the one who has every idea, gives every order, does every, that's not the way it works. The way it works is there's somebody who's got to consolidate, you know, get all the good ideas,

prioritize them, decide which good ideas we're going to do. and then get everybody on the same page so that they have very high-fidelity understanding of what that is. And so that it is a CEO kind of function. Now, it doesn't mean like I'm better than you. It just means that's what I'm doing. This episode is brought to you by Miro.

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Check it out at Miro.com slash Lenny. That's MIRO.com slash Lenny. Let's talk about AI. I'm very proud of us. It's been almost an hour. We haven't even mentioned AI. I think that's a record. Okay, so I asked Adam Newman. We work founder, now Flow founder, someone you work closely with now, what to ask you about. And he said he has some really interesting insights about how AI is impacting hiring. You know, Adam is probably the single most controversial investment that we ever made. Like we got called everything from stupid to sex. to racist to this and that for like literally just funding that. And I think it's going to end up being one of the best investments we ever made. He's doing a phenomenal job there. But there's an important principle in that, which kind of we do as a firm, which I think is not widely done, but I would love it if people copied it, which is, and it's something

I learned, you know, somewhat from Shaka, which is you don't judge a person by the worst thing that ever happened to them. Like, we've all had bad things happen to us. We've all made bad decisions. Most of them, they don't make a mini-series about it, right? And so, like, to judge them on that, you want to judge people on what they do well, not what they screwed up. And, you know, Yeah, because that's where you see the town. If you look at what Adam did well, it's truly spectacular. You know, like, WeWork, everybody doesn't know what we work. It's like it's to name a more important commercial real estate brand than WeWork.

Like, you can't. And so, like, what an accomplishment? And then, yeah, and there were so many things that went into that. And, yeah, so many things he did right. And then if you kind of look at really unravel the things that went wrong, Most of it was like a combination of inexperience and nobody around him that were telling the truth. And so like that, and, you know, maybe he wasn't good at listening to the truth either at the time. But to throw away a guy on that, which is, by the way, the world was so mad at us for not throwing him away, for believing in him.

is just that it's a big mistake and you know I credit Mark because Mark is one who called him up originally and just said hey Adam what are you doing because like you know we watch what you did at we work and we thought it was pretty impressive and so I think that you know that that's probably the biggest secret there it's not really about AI but I think that like looking you know, Judge Al Davis once said, you know, coach players on what they can do. And I think that's very true. You know, judge people on what they can do. You know, coach people on what they can do. Like help them take their strengths and use them as opposed to overfocus on their weaknesses and just, you know, hand ring about the one fucking thing they don't know how to do. Because look, everybody's uneven. What it's out, like, what you're describing essentially, this is the job of an investors to find an underwriting. appreciated asset and invest or before something people don't see. Yeah, and I mean, I think that it's, you know, like venture capital is really about investing in people, right? Like, you know,

that you have ideas as an investor, but like what you really are ultimately getting on as the entrepreneur and the entrepreneur's idea because the initial idea isn't where they end up usually. it changes a lot with everybody reinvest in. So, you know, you kind of have had to make the judgment on the person. And, you know, how you do that is really, really important. And one of the things we emphasize inside the firm is to look, like, we're investing in strength, not lack of weakness. Like, I want to know, like, how good, like, are they world class? Do they have a world class strength?

And, you know, can that be to anybody? and like everybody's flawed and so like let's help him deal with the flaws and surround them with people who can handle that and put the right person on the board who can talk to them like I go to all Adam's board meeting even though Mark's on the board I go to all his board meetings

because I'm the one who's good at like killing a guy who's that confident when he's like okay that's not your best idea like that's a good world for me but that's how you deal with that. You don't, you know, throw them away and go, oh, okay, like, we don't want to be called names, so we're not going to invest in Adam Newman after we built rework. That's crazy. It's also why you guys invested in Klui, I imagine, similar. Yeah, yeah, yeah, that's right.

Like, I mean, like, if you look at what those guys did, that was, like, some, like, high-level marketing genius, too. And, you know, that's really something. Plus, the product is also. I'm going to bring us back to AI. Something that a lot of people are talking about right now while we're recording this is this potential huge bubble we're in with AI. Sam Altman said we're in a big bubble, which is, you know, that's saying a lot. I'm curious just how you think. What is it saying? So you got to, like, first of all, I should qualify this by saying, I'm an investor and Sam's a CEO. So CEOs have to have much more purpose when they talk. Investors just have to be entertained. So you've got to give Sam credit for like, what is it in his interest to say it?

Well, like if it's a bubble, then the one thing you should invest in is him and not all these guys chasing after him. So I would say like that's very smart. And then the other thing that's smart about it is there's nothing that you can say to the press that will make them love you more than saying all investors and like entrepreneurs chasing this or idiots. Like they love them because you know the press are generally haters and so it's just like red meat for the haters which is also super clever. So I think whether even he believes that or not that was a super smart thing to say. So I'll just put it there.

Whereas what I'm going to say won't be as smart but it will I don't really have an ax to grind here. I mean, I could have an ax to grind and say, okay, like, let's got all the other investors out. I'll say it's a massive bubble. But what I would say about that is, so the first thing, the one thing about bubbles is anytime everybody thinks it's a bubble, it's not a bubble. Because in order for it to bubble, you need capitulation.

In that you need kind of everybody to believe it's not a bubble, because then the prices really go out of contention. But as long as those people who think it's a bubble, then it's hard for that to happen. And it's funny, I had this debate in the economist, I think, with Steve Blank in like 2011 or 12 when everybody thought it was a tech bubble, if you can imagine that, which it absolutely was not. But because there were like 1,400 articles saying that we were in a tech bubble. And, yeah, I mean, you know where prices were then compared to where they are now.

But I knew, because everybody was saying, it was a bubble, it wasn't a bubble. Like I knew that. The prices were higher, but the reason the prices were higher was we're getting to global market. AI prices are higher than prior prices. But if you look at the revenue growth and memories, we'd not seem anything like it. The products are worked. Chattee Sam's product worked so amazing. We've never seen that before.

Like, not even Google, not anybody. And so, like, that's real. And, you know, we have companies that, you know, went from zero to $800 million in a year and that kind of thing. And so it's not a, I would say there's a basis for the prices going up, first of all. Now, will the, I think the thing that's right about kind of what Sam is saying is, the landscape is early, really early, the technology is very immature, as amazingly as it works. There's a long way to go to improve it.

So it's very possible, you know, when you have that much technological change, that the positions that these companies have achieved with their high revenue isn't sustainable in that, you know, there will be a competitive change that either kind of lowers prices or a knee number one emerges or that kind of thing. And so, yeah, that's possible. But I wouldn't characterize that as being like a financial bubble in that. Like if you go back to the great dot-com bubble that everybody is always waiting for it to happen again, which I was CEO during.

The thing that happened there was very different, which is it was the Internet. And every smart investor knew that the Internet was a big deal. Like how could you not, if I can. know that the internet was, of course, it's a big deal. But, like, if you go back to 1996, at Netscape, we had 90% browser shit, and we had 50 million users. So there were 55 million people on the internet in total, and half of those were on dialogue. So, and then to build a product, like Evite, the greeting card company, had 300 engineers. That's how hard it was to build this stuff. And so the math didn't work. And the math didn't work on any of those ideas. And

but the investors kept pouring money in. And then eventually, you know, everybody went bankrupt because there was no revenue coming in. And like when they figured that out, then nobody would invest in anything. And of course, then everybody realized, well, the Internet was actually real. And Paul Krugman didn't know what he's talking about. And like it was going to be a big thing. and then Facebook and Google and all these things emerged. But the thing that made in a bubble was, like, the unit economics didn't work, the businesses didn't work. Like, these businesses are all working, and they're being priced appropriately for how they're

growing. So that's not an effect. So the thing that you could say is they're not going to keep growing like that, or like, and so forth. And I'm not sure about that. Like the products, like I said, are working so much better than it. any technology product that we've ever built has worked. Like, it's just mind-blower how good this stuff is.

And so, I don't know. If I had to bet, I would bet not a bubble. You know, I think there will be some dislocation. I think companies that, I think always in venture capital, if you've got like a run like this, then the great company and the crap company both get funded. but, you know, that's just venture capital. That's sound of bubble.

Four founders starting companies these days, when you look into the future of the AI industry, say, in five, ten years, how do you think things will play out slash where do you think the biggest opportunities remain? Where are you guys looking to invest most? In infrastructure, I think that, you know, like there is obviously like a real estate power cooling play. I think that's a little outside of, you know, kind of hardcore technology investing that we do. But there's another layer which is like who can run, you know, take a given open source model, who can run the cheapest with the kind of lowest latency?

And that's going to be extremely valuable, like whoever has that. And, you know, Google has been historically very good at that and so forth. And Sam is really trying to build that, now a Stargate. And so I think that's going to be a very important layer value. I think that, you know, on the foundation model side, you'd have to be very selective as an investor. So in order to compete in foundational model world, our basic rule of thumb is you have to be able to, you know, without much product progress, for at least $2 billion. because that's basically what it can cost you to train something that gets you competitive enough to make money. And they're just very few founders like that.

So Ilya is one of those. You know, Mere is one of those. Faye Fah is one of those. But like that's the kind of class of person you need. And there's, you know, whatever. There's certainly less than 10 of those in the world. And so that's kind of like an important area, but a small area. And then I think the application layer is going to be very, very interesting.

And I think that, you know, if you look at Sam, like he's making most of his money off chat GPT, almost all his money off chat QT now. And chat GPT is like, you know, it looks like it's got a real, like it or not, it's got a real moat. It's very hard to knock it off its perch. There's a lot. You know, everybody's taking a shot out of it. that people, great distribution, like Google and, you know, Elon and Suckerberg and everybody, and, like, that thing just keeps going like it is. So I think the applications are both more complex

and kind of stickier than people thought they were originally. Like, so the thing that people got very wrong is this whole thin wrapper around GPT. Like, that's really wrong. In fact, here's how wrong it is. Back in the 80s, that same phrase was used, but it was thin wrapper around an RDMS. The database. Yeah, yeah, yeah.

So it met companies like Salesforce were basically just a kin wrapper. And I think that that's kind of the mistake people made. So like we're at this company cursor, and if you look under the coverage in Perser, they've built like 14 different models to really understand how a developer works, like a high-end, like a real developer.

And they have, those models have tons and tons of interactions with how people talk to their friend, cursory about how they should design their programming and so forth. And that's like real. That's not just a thin layer on a foundation model. And I think there are many, many applications like that. and so I think there's going to be a lot of opportunity at the application layer. There's going to be some opportunity at the foundation model. And, of course, you can invest in Sam.

You can invest in Anthropic and so forth as well. But there will probably be like a very small number of companies at that set. And then an almost unlimited number of companies at the application layer. And then, you know, as the technology advances, well, of course, see more things we can body day I mean already you know autonomous cars are working like really well now after a long long long long time since I think Sebastian when the uh the challenge in 2006 when he drove the self-driving car across the country and we're here we are 20 years later and now they're deployed so that was a long time.

Robots, I think, is a harder problem and self-dupped driving cars. So we'll see how that goes. But, yeah, there's certainly a lot in that world as well. Wow. Okay. There's a lot to this answer. Something that is exactly what I was looking for.

The cursor example, it's something that comes up a lot on this podcast in the application layer specifically. The thought that the way to win in this space and to build a moat is as you said, build your own model slash have proprietary data that you build through people using your product? Thoughts on that? Yeah, I mean, I think that ends up just being what's required. So it turns out that the universe is long-tailed, and is fat-tailed, and humans are very fat-tailed,

in terms of human behavior, human conversation, and so forth. So to get to the real meaning of it, And to get to the kind of essence of the problem, you know, in any domain turns out to be, I think, more complex than we thought. And so, like, the early things and, you know, people were running around saying, okay, there's going to be one big brain to rule them all on these kinds of things. That's kind of not played out yet. and in fact, like, if you look underneath the covers, you have LLMs, which have generalized pretty, you know, like in fascinating ways, but they've kind of also acinoted in that, you know, we have run out of data for the most part. And so if you look at the GPT5 LLM compared to the GPT4 one and how much more it costs to train and so forth,

like it's, you know, it's definitely not going linear anymore. Another hand, the reinforcement learning side has been linear, but it doesn't generalize. So if you build a great programming model, it may be an idiot at math. And so that, I think, is just very different than what people would have said three years ago. And I think that's kind of, you know, that there's not something that's both scaling and generalizing yet. And maybe we'll get there. But that certainly opens the door to something that's more user-friendly, that's more effective in any number of domains than just the basic foundation model infrastructure.

Now, those models are incredibly important in there. And I think Open AI is probably 80% of the revenue in AI or something like that now. Like, it's massive. So that foundation model is really, really important. And then like the basic consumer app is really, really important. That just answers whatever hell you want to know. Like those things are like very, very real. But I do think, you know, particularly, and then if you get into like enterprise stuff,

and then it's no longer internet data, it's their data that becomes very different. Like Databricks is having a lot of success there because, okay, well, once you're inside a company, guess what? Like, you care about access control. And that's hard with an AI world. You know, it gets trained on some stuff. How does it know who has access to that information, who doesn't, and so forth? You have semantic issues.

So if you look at an enterprise, find 10 enterprises, they all have a different definition of what a customer means. Like, you would think customer is a basic thing. Well, is it a department at AT&T? Is it AT&T? is it like a person at AT&T? It's like what the hell is the customer? And it turns out to be very, very meaningful,

particularly if you're trying to figure out like important games like churn and this and that and third. So like that kind of stuff matters. So I would just say like the problem space is a lot bigger than you can just attack with a basic foundation model. You know, currently, you know, maybe that will change. And like if that changes, then certain prices will have, in retrospect, look way inflated, and others will look, you know, too low.

But, you know, that is TBD. So a big takeaway from this is that there's still tons of opportunity for founders to start companies building AI products. I think so. I mean, you can solve so many, everything that we couldn't solve a software, we can solve now almost. So it's a really big world. and it's funny you know like because we're investors in waymo and one of the things when you get into like what took so long to make waymos so safe like they are now it wasn't the things that everybody reported on the podcast it wasn't sleet and you know heavy rain and it was people it was like the

human who was driving 75 in the 25 zone it was very hard for the AI to anticipate because it was rare but important. And the number of rare, important crazy shit at humans do is very high. And I think that that goes for all of AI. So to make things work really well, you have to understand this very kind of fat tail of human behavior. Along this AI thread, something that is really important to you clearly, something you talk a lot about is the U.S. being successful in AI and leading the world in AI? Why is it so important? Why is something you spent all the time on? It starts with, I think, my view of the U.S. and its role in the world. So my personal view is like it's very, very, very important, not for society to be completely fair, because it's not going to be completely fair

or completely equal, because we've never had one that's been completely equal. But it's important that everybody have a chance at life, you know, and particularly, you know, kind of both culturally, but also just like you can't advance the world if, you know, you can't tap into all of your resources. And so if you kind of take away your motivation and these kinds of things, and you get into trouble. And if you look at the kind of every country today, and this is, by the way, so you want like the right amount of decentralized power. You know, you don't want it to be completely concentrated. Concentrated power makes it very, very difficult for everybody to have a chance.

This is the big kind of lesson of communism over the last hundred years is it turned out, right? And, you know, we saw politicians selling it this way today. It's like, oh, it's power into the people. No, no, no. It's power to you because you're removing all power from the private sector and installing it into the government. and then you're putting yourself in charge of the government. And so I become extremely powerful. And this is why it didn't matter if it was Mao or Pol Pot or Chochescu or Stalin.

Everybody died. Because when you give anybody that much power, nobody has a chance. There is no incentive. There's no carrot. There's only stick. And so you use that stick. And that's just the nature. It's a system's problem.

It's not a person problem. It's not Stalin was evil. Chalchesco is evil. It was like that system is evil. And that's a chick saying with fascism, maybe Hitler or Mussolini, it doesn't matter. Like that level of power is evil. And the U.S. does the best job systematically. It's the best system. It's got all kinds of issues.

It's got problems. People always trying to defeat it. But, you know, one of the things that, you know, if you look at kind of the, you know, Declaration of Independence or the Constitution, like the language is very important. You know, it's we hold these truths to be self-evident. What does that mean? It means it's not my rule. It's not the president's rule. And so those rules are above the president. And then you work in that context and that that distributes power because you're under the law, not under the person.

And we see that, you know, now even with Europe, where Europe is kind of, the leaders are going, well, I have a rule. It's, you can't say certain things, I'll throw you in jail. And the kind of shield they hide behind is, well, like, we have to keep the kids it. But if you say something that I don't agree with, and the kids hear it, they're not safe, right? Like, so the kind of transited property of bullshit, like, is going to override. And so it's really important that we have at least like one society. And as flawed as we are, as flawed as the U.S. is still the best. And you can see it by the number of new company creations, the number of new ideas that

come out of here and so forth. It's really, really important that the U.S. kind of stays important and powerful in the world. And we know from the last century, if you look at the last century, who were the countries that had economic power, military power, cultural power. They were the ones that industrialized. Yeah, and the ones that industrial was first and best, and the ones that did became connings, right? Like, you know, Russia, China, like they were slow on industrialization,

and they fell into this very fucking dangerous system. Looking forward, that's going to happen again, but it's going to be AI. And so it is kind of fundamental. important not just to like America but to humanity that America succeed at that. You know like we don't have to be the

one winner or this or that but we do have to be like in that tier. And you know as I go around the world and travel I can't tell you everybody and everybody was getting by the way very very worried about us earlier

and they say look we need you to succeed you know don't destroy the dollar. Don't like fall behind an AI, don't overregulate it too early. Don't do these things, please, because we need you to win. Like, because we're all like counting on that. And, and I think it's, it's the most important work that we do. It's why we're so involved in policy and, and, and so forth. I think this is also, you know, Jerry going to be Jerry, very true with crypto, which ends up being an incredibly important networking technology that complements AI. And so that's, yeah, and that, you know, that work is, I would say, beyond for the money.

Like, that's, although, like, we will end up making a lot of money with the right policies. Like, so I don't want to, like, seem totally philanthropic on this. But it's more important. It's certainly more important than us succeeding or anything like that, that the country succeed. Speaking of philanthropic and other passions of yours, something that I don't think, most people know about you and I think we'll give them another insight into how interesting you are. You run an organization called Paid in Full, which is incredibly cool. Talk about what that's about why this is so important to you.

We kind of, our ethos as a firm is kind of, well, I'd say it's something from nothing, you know, like this is a greatness of entrepreneurship. You start with nothing and then you make something really important. and that kind of that that is also how hip hop started where you have like a bunch of kids who didn't even have instruments and they kind of created something out of nothing and the people in that world always talk about that and you know one of the really unfortunate things that happens is the people kind of who invent the art form and certainly in the case of hip-hop don't get anywhere near the kind of proportional benefit of their

invention. And a lot of the guys, you know, people have forgotten about or, you know, are kind of struggling to make ends meet and so forth. So what we created was this thing called the Paid and Full Foundation, named after the Rakim, Eric B. Somm, which I did call Rakim and ask him for permission to use the name, so Rita just taken. And what we do is we'd give essentially pensions to the old rappers that enable them to kind of continue their work. And then we have a big event. Go to paid and full foundation.org, free tickets, which is amazing, where they kind of get the award and, you know, and they're celebrated by all their peers and so forth. And it's really phenomenal. But, you know, so some of the awardees

have been Rakken Scarface from the Ghetto Boys, Bracanne Chante, Grandmaster Kaz, Kumodi. This year, honoring George Clinton for being sampled, Kulji Rap, and Gran Puba. And also Jalil from Houdini. And it's just, it's very, I can't even describe how high impact it is on these guys. I mean, I think Rakim was touring close to 200 nights a year, and he got his award and came out with his first album in 15 years

and is doing amazingly well, and all of a sudden, you know, everybody's going, oh, yeah, that's the greatest rapper of all times. like they're finally going back and remembering all the things he did. Roxanne Chante, I mean, nobody had mentioned her in years and years and years. And I think six months after we gave her the award, and the Grammys gave her a lifetime achievement award, which is amazing. So it's super high impact. It's a great thing.

You know, as a hip-hop fan, I see a dream come true. So it's not only good. What's the origin story of you in hip-hop? I imagine many people look at you and wouldn't imagine, you have these records behind you gnaz gifted you you uh you're so deep into the community just how did this all begin well so there's i actually wrote a blog post on it called the legend of the blind emcee uh which i think would be uh if you're really interested

it's worth reading but it's kind of a story of me uh becoming a rapper and um and like how that occurred and how it went and so forth but uh you know like i always said the very short story is you know i was in new york when at the birth of hip-hop and where at the birth when it really became big kind of 84th or 88 and yeah it's just the most exciting thing yeah to see a new art form kind of pop out and the creativity and everything you know much music kind of becomes mainstream i would take it's very shaped by business and like in the early days there's no yeah everybody's just coming out with whatever idea they have and so forth then so there's the early days of rock and roll were like that the early days of jazz were like

that so i see now even more why you guys uh brought on eric torrenberg uh beyond his many talents he's also really big into rap himself yeah yeah yeah i need to that's a good reminder i need to make sure he gets to pay and fall man this was incredible yeah is there anything else that you want leave listeners with or share before we get to a very exciting quick lightning round. Yeah, I mean, I would just say on, you know, like if you're a CEO listening to this, then know that, like, how you feel about yourself is going to end up meaning as much as anything and show, like, take your time on that. Don't, don't, you know, you know, Like self-evaluation is one of my favorite quotes is that when my old manager

sold me a select player's, no, from this day on, no credit will be given for predicting rain, only credit for building an arc. And I think that's more true for CEOs than anybody. You know, you have to build the arc. Like, it doesn't matter, like, if you predict you're going to fail, you still fail. It gets you nothing. So what you have to do is figure your way out of it. and spend all your time on that.

Well, with that, we've reached our very exciting lightning round. I've got five questions for you. Are you ready? Yes, sir. First question, what are two or three books that you find yourself recommending most to other people, not including your own books? Yeah, so two got, I learned a lot from, one is the weirdest people in the world, which it's a kind of big history book, but through an anthropological kind of cultural lens.

it's really fascinating, an awful lot about like how society works and how little changes and the rules completely change the culture. You know, one of the things that he basically endeavors to explain, okay, why did the West get ahead

on the rest of the world? And it kind of comes down to like a weird anomaly with the Catholic Church where they kind of enforced monogamous mismarriage. And it turns out that the natural state of humans is polygamy. But the problem with polygamy is there's no cooperation among men, which is a problem. And as a result, and then everything is secret. So there's no sharing of knowledge because it's all kept in the family in what he calls kin-based culture. At least it's something called kin-based culture. And like even recipes won't be shared

if you're in a kin-based culture because it's a secret. So you can't build science, you can't build cities, you can't build big companies. And, you know, so because the West kind of enforced broad monogamous marriage early, it was able to kind of evolve into all these things. And he kind of shows why and how he does these psychological tests today with people from kind of monogamous marriage culture, kind of like Western culture and kin-based culture. And the psychology is completely different.

And it gives examples like, yeah, if a person murders another person, is that still murder if that person who did the murder is your brother? In Western society, yeah, that's a murder. In kin-based culture, it's not a murder. It's just not. And so, like, that's really different. And so, like, morality is different. Like, everything kind of comes off of that.

It's just a fascinating, fascinating book. So that's one. I tell you know, another book that I recommend a lot of Shaka's book, his first book, writing my wrongs. He has a new book that I think is better, which is called How to Be Free. So I'm going to start, it's not quite out either. Or maybe it's releasing like next month, so I recommend it.

So what it does is it goes through, like, how did he work his way out? of prison and solitary confinement to his current psychology. And what are the techniques you used? And it's, they're very powerful, very powerful ideas. So I think that like, you know, CEOs always ask me, like how do you deal with it? Like, how do you deal with it?

You know, they'll ask him to like work-like balance or like that. And it's like, what are you talking about? I don't work-like balance for seats. Or particularly like entrepreneurial CEOs, like, come on. But like, what do you do? Do you meditate? you do this or that, but he kind of goes through the things that you really ought to do.

So that's what I would recommend if somebody's wondering, like, how do you deal with all this pressure? I love this, just the whole idea of Shaka being this help for COs, someone that killed someone, went to prison, led a prison gang. I just love that how valuable his lesson. Prison brings turn out to be really complicated things to manage enough. Sorry for getting into this, but the problem with running a prison gang. is you're just dealing with people who all come from broken culture, right?

So in any organization, like the fundamental thing is trust. And so you're bringing in a bunch of no-trust people. And so you can't. And again, it's kind of like a military organization. It's a gang. And if you think about a military operation, if you don't have trust, people don't trust the order, then you're completely dysfunctional.

how do you build trust from zero is a very interesting problem. And he's a genius at that, by the way. And, you know, I learned a lot from kind of talking to him about it. So like that, from a management standpoint, it's a, I would just say it's an important kind of a boundary case of how you build culture. And so he is very, very smart at that. I mean, like I said, you have to look at people about, you know, their greatness, not the worst thing they ever did. I know this is the lighting ground, but can you just share one example of something he did that was like, wow, that's a really good lesson, someone trying to create a good culture that worked for him. Yeah, so like one of the things that he did that I thought was really smart is, well, I did a couple things.

One is just like a simple thing was he just made everybody. eat lunch together in the game just to kind of build rapport relationship trust like it's all one thing we're all together on that and i think you know like particularly in like remote world and so forth people really underestimate how powerful like just that idea can be and then you know another thing he did is he he made kind of like morality you know he had kind of like he had kind of kind of and very specific things about, you know, if you, you have to be good to your word internally and externally.

And so normally a gang, you went like, like I said, it's kind of a kin-based culture thing. But it made it much more powerful when he said, look, like, you can't do devious, like, shit outside the gang either. And he had a bunch of examples of that that I went through in the book, but it's a very, like I said, because you're building it from Cero,

you really have to take a hard line on things that I think people and companies don't even take a hard line on. Like, you know, is it okay to lie? Internally, probably not. Is it okay to lie to a customer? Well, in some organizations it is. But like in Chaka's organization, like that's as big a cuttle to you as lying internally. And these things, I think, end up being really important.

we're going to link to this book. This is what you do is who you are. This is your second book that fewer people know about. And this is one of the stories you tell and just what the lessons are. Yeah, it's kind of a more advanced book. You know, like, I think people don't, you kind of have to survive to want to care about dealing with the cultural issues. And the survival book has a bigger audience.

Amazing. Okay. We're going to keep going with Lightning Round. Is their favorite recent movie or TV show you have really enjoyed? Yeah. Well, on TV, I really like slow horses, which, which is like the show about the MI6 kind of cast-offs guys. And then, you know, I haven't seen a lot of movies lately,

but I watched centers. I went to the theater for centers, and it's, I mean, just the cinematography is unbelievable, and the story is really original, and the acting is incredible, and the costumes are amazing. So it's just like a great kind of comprehensive piece of work. Like people have, the craftsmanship on that thing is just a lot beyond what most people making movies are doing these days.

So I really enjoyed that. Yeah, I hate scary movies, but I watched it and loved it. Yeah, it wasn't that scary. It wasn't that scary, but still, you know, zombies popping out of corners. Yeah, yeah. Not my jam usually. Yeah. Is there a product you recently discovered that you really love?

It could be a gadget, could be clothes, could be something else. I bought a coffee machine called the TechnoVorm, Mocha, sir, which is freaking incredible. In fact, a friend of mine saw it. I was like, what is that? And I just bought it for him too because it's so awesome. Like, this thing makes coffee that it's just like pressure. Like there's no bitterness.

It's completely clean. It's amazing. The only comment is I can't drink coffee that it doesn't make anymore. I don't know if that's a good thing or bad thing. That might be. That might come out someday in the AI future. Yeah, yeah. Two more questions. One, do you have a, is there like motto that you often come back to find really useful in work or in life? The thing that I would say has had the biggest effect on me is something my father said to me years ago, which is life isn't fair.

And that that seems like really, really simple. But I think that the thing that defeats people, more than any other thing that I've seen just in life is the expectation of some fairness. You know, like it's just not fair. And there are like all kinds of stuff that are going to happen to you that, you know, and it happened to everybody that don't happen to other people that are completely unfair. But it doesn't matter because that's the way it is. and as soon as you get that idea out of your mind, then you can just deal with it.

Like, oh, yeah, of course it's not fair. But I'm going to, what should I do now? Which is the real question, not how do I go back and get people to be fair? Because nobody's going to be fair. It's not fair. It's the nature of it. If you think about it for more than five seconds, you'll realize that. And I think a lot of, you know, and it's as an individual,

like if you want to make the world a better place, whatever. but as an individual, do not expect anything to be fair. It'll only defeat. Final question. This comes from Shaka, actually. You gave me so many great suggestions. I had to save this one for last. Okay, so the question is,

if you had to build a business curriculum from two hip-hop albums and one funk album, what would they be and what? I think probably follow the leader by Rakim. I thought that was so, and the reason is kind of what we had kind of gotten into earlier, which is leadership. So when he came out with that song, which was like, you know, maybe the greatest hip-hop song I never written, you know, he's telling people to, like, follow him, you know, follow

the leader. And just to have the idea that, you know, he was the leader of the entire art form, not just, you know, his band. It is an, like, amazing idea. And then the way he expressed it was incredible. And then he's got, he's got other great concepts in there that would give you, like, it's hard to listen to that record

and have confidence. I think from a, like, competitive, purely competitive standpoint, stillmatic from Nas, I mean, that's one with either, That's the one with Get Yourself a Gun. That's the one with you to man. It's kind of like all of like the idea of competition is kind of encapsulated in that album. So that would be the other one. And then funk.

Oh, for One Nation Under a Group, for sure. One Nation Under Group, because it's kind of like this is how do you initiate people into like a concept or an idea and and you write how do you infuse them like one nation under a groove is all about joining the nation um and like it's so musically interesting and kind of getting people to be part of that that is from like i don't if you asked me tomorrow i probably have three other ones incredible i'm going to go listen to these ben final question where how can listeners be useful to you If you get something that makes you better, please take it. If you need more advice on it, let me know.

But look, my job is to help everybody build something great. So if you're an entrepreneur, thank you for that. Also check out paid and full foundation.org if you want to learn more about that nonprofit. Yeah, definitely. We would love to have you. Amazing. Ben, thank you so much for being here. All right, awesome.

Thank you, Lanny. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lenniespodcast.com. See you in the next episode.