The a16z Show - Ben Horowitz: Why Hesitation is a CEO’s Worst Enemy

Episode Date: September 12, 2025

In this conversation from Lenny’s Podcast, Ben Horowitz joins Lenny to discuss the psychological muscle every founder needs, why hesitation can be fatal for CEOs, when it’s time to replace a founder, and how to normalize failure while building confidence. They also explore the Databricks founding story, investing in Adam Neumann after WeWork, whether AI is in a bubble, where the real opportunities lie, and Ben’s work with the Paid in Full Foundation supporting hip-hop pioneers. The result is a candid look at leadership, product management, and what it takes to build enduring companies. Timecodes: 00:00 Introduction 00:22 The Psychology of Leadership & Decision-Making02:41 Leadership lessons from Shaka Senghor07.56 Struggle, Pain, and Growth as a CEO 10:15 Running toward fear and why hesitation kills companies19:35 Who shouldn’t start a company22:36 The Databricks story: thinking bigger24:54 Managerial leverage and CEO psychology28:06 When founders should be replaced as CEOs31:20 Normalizing failure for CEOs37:57 Counterintuitive lessons about building companies42:31 “Good Product Manager/Bad Product Manager”48:21 Product managers as leaders51:16 Why a16z invested in Adam Neumann after WeWork56:23 Is AI in a bubble?01:02:43 The biggest opportunities in AI01:12:51 Why U.S. leadership in AI matters01:18:53 The Paid in Full Foundation for hip-hop pioneers01:23:18 Lightning round: book recommendations, products, and life mottos Resources: Find Ben on X: https://x.com/bhorowitzFind Ben on LinkedIn: https://www.linkedin.com/in/behorowitz/Watch more of Lenny’s Podcast: https://www.youtube.com/@LennysPodcastCheck out Lenny’s newsletter here: https://www.lennysnewsletter.com Stay Updated: Find a16z on X: https://x.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Listen to the a16z Podcast on Spotify: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX?si=3E8B3qT9TyiwAHJ7JnaKbgListen to the a16z Podcast on Apple Podcasts: https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711Follow our host: https://twitter.com/eriktorenbergPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Today, we've got a feed drop from Lenny's podcast, a conversation with Ben Horowitz, co-founder of A16Z, and Lenny Richitsky. It's Ben on founder psychology, hesitation as the enemy, how to think about hiring, firing, and managerial leverage, and why PMs are many CEOs. Let's get into it. 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 horrible. 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 a 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 lick 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 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.

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 fundamentally 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. is not the mini-CO, 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 in committed capital. Their investors in OpenAI, Cursor, Andrew, Databricks, Figma, basically every generational tech company. He's also the author of two New York Times best-selling 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. With that, I bring you Ben Horowitz. I want to start with a question that a close, friend of yours suggested I ask you, Shaka Singh Hoare. So Shaka, he's like, we could do an hour just on how interesting this guy is and the face he's done. It's on Joe Rogan. He's very, 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. You 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 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 would 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,

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 to 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 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 pass. 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. But, 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 Ben did this really smart thing and 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 she said to me you know, because he was, most people who are in solitary for seven 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. 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 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 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 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's 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 true. 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 made, 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. hesitation is, you know, 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 harry. 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 thing. It's a great. success. Like, that's not actually, you know, what happens to a 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 and avoid this subject because I don't even want to deal with either of those. And that's the worst thing because 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've got to fix it. And then, you know, like probably one of my bigger ones on that, was, you know, we went public with $2 million in trailing 12 months' revenue at 18 months old, right? Like, that's obviously a bad idea. I mean, people like, 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,

Like, 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 you went, 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 ITO from hell. That was the name of, like, our world. like our idea, the idea of from hell, which is 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 like 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 something people struggle. And it began something, should I fire the head of sale? So I don't want to have that conversation.

Like, 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. Just like, 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 could share? No, no, no, no, no. Like, 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, always like, and when I talk to them, it's like football. Like, you know,

you could 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 the, And 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 help is, you know, they look at it and I look at it. And, you know, and I kind of confirm that 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. I don't know how to have the conversation with your play 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 say, I'd just shut 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, 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 have to deal with this in the firm, too. And, you know, like, you know, people want to be entrepreneur friendly. I'm like, no, it's not friendly. You know, respectful.

But you've got to be able to tell them the truth in a way that you probably don't tell most of your friends of truth. because your friend, you know, 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, at a company level and a, you know, in a context that 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, like, 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 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, gutted 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 like dream of having their own company. What do you, who's not right to start a company? Like, what advice do you share with folks that are thinking about starting 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.

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 doesn't, he didn't even quantify how many. 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 month. So I think if you're doing it for the money, that's a very bad reason. And it'll be extremely difficult to get to an outcome.

You really have to have an irrational desire to do something larger than yourself to kind have improved 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, too many bad things happen along. 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've 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 Cula Packard was kind of built that way that they're like, okay, like we got to build technology, you know, as if that abstract, we got built some technology for the world, you know. And then they started with, well, like, what do you need?

They called it the next bench thing. What does the engineer sitting next to me need? The next engineer on the bench was sort of how they define the first set of products. 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. 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 remember make a lot of money. On these lines, something else, Chaka suggested to ask you about it. 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.

How did, what happened there? So there were six, six of them. They're six HD students. And, well, in Jan Stryka, who is their professor. In Jan, it was his 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 is 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, like you're a hero on campus. Like that's a pretty cool thing to have done. And so I'm always a little nervous about kind of a company that comes out of academia thinking too small anyway. And so I said, like, I'm not going to write you a check for $200,000. I'll write you check for $10 million. 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 graduating 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 a 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,

It got smiled on me and gave you that one. So speaking of Ali, I 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 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 weighing 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 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, a tip may be DP of engineering, right? And so the idea that you're going to take somebody who doesn't, who isn't world class at marketing 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 directions 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 a CEO, like, it's not like, you don't do any of it, but it is very, very small, you know, compared to it. So I like to make things just very stark, so you get what I'm saying. I don't like to hedge it.

And then managerial leverage means, it's very simple. It's, okay, if I have the executive. ideas about what your department you do next. If I, you know, am kind 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 man the fucking team. And that's the point when you feel like you're not getting leverage, when you 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 A16Z, 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 a CEO? When are people not going to make great CEOs? It really, there's a very consistent thing that happens,

which is, you know, then 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 don'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 script a 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 political because people are like vying for power inside your little, you know, screwed up company. And so now you've got a political, dysfunctional organization. And that, you know, like that's generally where like, okay, the founder probably can't run this thing anymore is, you know, that's how it has. happen. 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. Well, most claims is better to have like CEOs who are like C-minus students, you know. Why is that? Yeah, the little facetious, 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 the thing, you know, okay, like you 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 that. 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 massive 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 injectives or OKRs or whatever management technique. Like, you need, like, a, you know, 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 is very, like, the hard thing of matter. A reorg is 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, after COVID, he, it all kind of clicked for him.

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. You know, he hired LT and, you know, all this stuff. And, you know, these are very senior people. And, you know, he wanted us 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 she, 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 without, 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

out 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. Like, I'd say, Ali is, you know, one of the, it's not the kind of best private company CEO out there. And he's making a mistake. And I'm making a mistake. So, like, 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 have? Well, like if you can get stuff done. So what if I could give you a network as good as Bob Igers that were day one, like the day you step into the job? 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 firm 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 got everybody in my backyard. I was 500 people at the peak, which is why I had the kind of stuff.

I couldn't cook that much food after that. And then, you know, we'd have Larry Page in Mark Zuckerberg and Kenya West. And so you're a CEO in there, where 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 of barbecue. We're crying out loud and 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, you know, that's apt about it. 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 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, 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 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, Arsalaun, at Databricks, was running sales. And I'm like, Ali, like, you're going to have to hire, like, somebody who knows sales. Because Arslaon's PhD in computer science, like, I like that.

But 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 Arsala 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 circumstances. You need knowledge of customers, territories, territory exploiting, wreck profiles. Like, there's just like a litany of stuff that you really can only learn by doing trial and error. And you don't know anything. 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 GCs give because they watch some fucking podcast are all fucking stupid. Like it's just, there's a lot of depth that. sense. 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 funnier things that happened 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 some time. And I said, I was like, what the fuck are you talking about? He's CEO, he's not unplugging. Like, he's getting shit all the fucking time. Like, he's got to deal with that.

Like, I 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 he's, you know, like, he was very innocent.

I guess they 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 I think actual CEOs know it. And that's kind of how, like, people,

my profession 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 to 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 nearly 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 management choice.

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, like, what's being emphasized, like, they'll get wrapped around the axel on, you know, like if it's an 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 them, those are, 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 a 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 them, 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 left 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 or may not need you do. I don't know if you need to do it. 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 test. specific was like really for my group at Netscape in like 1996. Or he went in every hell I wrote it. So as a kind of document I read out of frustration. But I am glad that the people so like it. And I think leadership in general is undervalued, underestimated. It's the most powerful thing. And most of the 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 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 he made it felt like that. It was kind of before blogging took off. So it's just an internal thing. And I provost it later.

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's Coastal Ventures, Raghu, Raggeram,

who went on to be CEO of VMware. I mean, like the team was like that team. But 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 have to explain what you want.

It was the other big takeaway from that. Do you ever think that piece would be so long-lasting and so, I don't know. 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 a good product manager, bad product manager. It's like bad dog, you know, bad. Brad, bad, bad, bad Carter manager.

That was kind of the emotion I had. So, you know, it's kind of shocking. Yeah, some of the things that you write. I would say that that's, you know, and kind of creative, and you probably know this, like the idea is 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 rain 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 student 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 at the product wrench. And you have to get all the way to there and kind of work backwards for that. And you can't do that with that leadership because it is about, okay, we want to build that. 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, it 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 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 that's what I'm doing. Let's talk about AI. I'm very proud of us.

It's been almost an hour. We haven't even mentioned AI. Yeah. 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 sexist 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 it's, there's an important principle in,

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 shock, which is you don't judge a person by the worst thing that ever happened to him. 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, because that's where you see to tell them. If you look at what Adam did well, it's truly spectacular. You know, like we work, everybody knows what we work. It's the name a more important commercial real estate brand than we work. 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 would tell him 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 bleeding in him. It's 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 WeWork and we thought it was pretty impressive. And so I think that, you know, that's probably the biggest secret there. It's not really about AI, but I think that, like, looking, yeah, 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-wring 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 investor is to find an underappreciated asset 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 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 beat anybody?

And, like, everybody's flawed. And so, like, let's help them deal with the flaws and, you know, 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 trip meet. 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.

We're not going to invest in Adam Newman after we built rework. That's crazy. It's also why you guys invest in Cluey, I imagine, similar. Yeah, yeah, that's right. Like, I mean, if you look at what those guys did, that was like some, like, high-level marketing genius, too. And that's really something. Plus, the product is awesome. 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 in a, 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 Sam 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 already. It's like they love them because 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 control.

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 economists, 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 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're not seeing anything like it. The products that work, Chatsy Sam's product worked so amazing.

We 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, 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. Yeah, there's a long way to go to improve it. So it's very costable, 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 want to 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 fucking know that the Internet was a 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 it 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 in 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 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. For founders starting companies these days, when you look into the future of the AI industry,

say in five, 10 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 of 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, raise 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 Jerry Chief Founders like that. So Ilya is one of those, you know, Miri is one of those. Faye Faye is one of those. But, like, that's the kind of class of person you need. And there's, you know, whatever, there's something 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 chip PT now. And chat chitpt 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. It's a perch.

There's a lot, you know, everybody's taking a shot out of it. People, great distribution, like Google and, you know, Elon and Suckerberg and everybody. And, like, the 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 RDBMS. The database. Yeah, yeah, yeah.

So it meant 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 in at this company cursor, and if you look under the cameras in Persia, 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 embody day. I mean, already, you know, autonomous cars are working like really well now. After a long, long, long, long times. It's like, I think Sebastian won the challenge in 2006 when he drove the self-driving car across the country. And here we are 20 years later, and now they're deployed.

But that was a long time. Robots, I think, is a harder problem when self-de-up driving cars. So I'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 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, as soon as 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 acentoted 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 GPT4-1 and how much more it costs to train and so forth, like it's, you know, it's definitely not going linear anymore. On the other 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 to 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, and I think Open AI is probably 80% of the revenue in AI or something like that now.

It's just massive. So that foundation model is really, really important. And then 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 is 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 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 the 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 that humans do is very high. And I think that that goes from all of, AI. So to make things work really well, you have to understand this very kind of fat tale 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, 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 100 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 Chooskew. 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 what's the nature. It's a system's problem. It's not a cursing problem. It's not Stalin was evil. Chocheska was 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 are always trying to defeat it. But, you know, one of the things that, you know, if you look at kind of the Declaration

of Independence or the Constitutionally, the language is very important, you know, it's we hold these truths to be self-evident. What does that mean? It means that's not my rule. It's not the president's rule. It's God's rule. And so those rules are but the president. And then you work in that context,

and 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. or I'll throw you in jail. And the kind of shield they hide behind is, well, like, we have to keep the kids sit.

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 US is, it's 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 industrialist first and best, and the ones that didn't become conninges, right? 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 fundamentally 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 then everybody was getting by the way very very worried about us

earlier and they say look we need you to succeed 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 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 there. 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 than that. 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 you is something from nothing, you know, like this is the greatness of entrepreneurship. You start with nothing and then you make something really important. And, you know, that kind of, 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-Som, which I did call Rakim and ask him for permission to use the name, so Rita just taken. And what we do is we 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 andfulFoundation.org, free tickets, which is amazing, where they kind of get the award and, you know, and they were celebrated by all their peers and so forth, and it's really phenomenal. But, you know, so some of the awardees have been Rakein, Scarface from the Ghetto Boys, Roxanne Chante, Grandmaster Kaz, Kumodi.

This year we're honoring George Clinton for being sampled, Kulji Rapp, and Grand 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 was doing amazingly well. And all of a sudden, you know, everybody's going, oh, yeah, that's the greatest rapper of all time. So, 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 years.

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 guilt. What's the origin story of you in hip-hop?

I imagine many people look at you and wouldn't imagine these records behind you, Naas gifted you. 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 MC, which I think would be, if you're really interested, it's worth reading, but it's kind of a story of me becoming a rapper and, like, how that occurred and how it went and so forth. But, you know, like I always said a very short story is, you know, I was in New York when at the birthday hip-hop

and where I could 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 and so there's the early days of rock and roll were like that the early days of jazz were like that show I see now even more why you guys brought on Eric Tornberg, 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 I guess to pay for.

Ben, this was incredible. Yeah. Is there anything else that you want to leave listeners with or share before we get to a very exciting quick lightning round? Yeah, I mean, I would just say, 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, like self-evaluation is, one of my favorite quotes is that when my old manager sold me a select players, no, there, 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 as 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 doesn't, 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. And it's really fascinating, it's an awful lot about, like, how society works and how little changes in the rules, completely changed the culture. You know, one of the things that he basically endeavors

to explain, okay, why did the West get ahead of 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 marriage. 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 a kin-based culture. At least it's just 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 enforce 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 he gives examples like, you know, 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 Kinbeah's 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.

So it's just a fascinating, fascinating book. So that's one. I take, 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, there maybe is releasing, 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, 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, and they'll ask him to, like, work-life balance. And it's like, what are you talking about? No work-like balance for sheets. Or particularly, like, entrepreneur CEOs. Like, come on. But, like, what do you do? Do you meditate? Do you do this or that? But he kind of knows 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. So 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, just sort of kind of have to, 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 made kind of, like, morality, you know, he had kind of very specific things about, you know, if you, you had to be good to your word

internally and externally. And so normally a gang, you went like, you know, 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 zero, you really have to take a hard line on things that I think people in 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 Shaka's organization, like that's as big a cuttle to you as lying internally. And these things, I think, I know being really important. We're going to link to this book. This is what you do.

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 there a favorite recent movie or TV show you have really enjoyed? Yeah. So on TV, I really like slow voices, which is like the show about the MI6 kind of cast-offs

guys. And then I haven't seen a lot of movies lately, but I watched centers. I went to the theater with 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, is this 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 scared. 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 Technoform Mokermacer,

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 with it is I can't drink coffee that it doesn't make anymore. Which I don't know if that's a good thing or bad thing. Well, that might be. I 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 worker in life? The thing that I would say has had the biggest impact 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 happens 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,

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. 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 followed 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, 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 he was the leader of the entire art form, you know, his band, it is an amazing idea.

And then the way he expressed it was incredible. And then 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 Naz, I mean, that's one with either, that's the one with get yourself a gun, that's 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 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. And, like, it's so musically interesting and kind of getting people to be part of that. That is from, like, I don't know. If you asked me tomorrow,

I'll 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 kind of more advice on it,

let me know. But, look, my job is to help everybody build something great. So if you're an entrepreneur, Tom, 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, Lenny. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcast, 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 lenny'spodcast.com.

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