The Learning Leader Show With Ryan Hawk - 116: Paul Madera – Why He Invested $10 Million In Facebook In 2005

Starting point is 00:00:00 Having seen a lot of CEOs over the years, the thing that I and my partners do look for in particular is someone who is tremendously ambitious. We invested in a company called Riverbed. The CEO there was a guy named Jerry Canelli. Jerry actually grew up as an accountant, but then came over into the management side. And what I loved about Jerry Connelly is every time he got to talk about Riverbed and where they were headed, he'd literally slam his fist. down on the table and yell world domination. And he really meant it. He was absolutely dead serious. And he did that as a signal to his colleagues that he worked with, with his customers, and to investors, that there was no question where he wanted to take the company. And as an investor,

Starting point is 00:00:50 I love that. Now, you've got to have the smarts. You've got to have the product. You've got to have the team that can literally deliver on that. But it starts with tremendous. tremendous ambition. Are leaders born or are they made? Our host, Ryan Hawk, believes that leaders can be made through determined, focused work on learning the art and science behind the makeup of other successful leaders. Now it's time to inhale knowledge and exhale success. You're listening to The Learning Leader Show with Ryan Hawk. Hey guys, remember episode number 97 with Alejandro Chene. He is the CEO of Ma and Bao. We both promise to continue our our dialogue as we both progressed on our journeys, and we certainly have, just as I have,

Starting point is 00:01:42 with the great people at Mizan and Maine. And Alejandro and his company have decided to sponsor the Learning Leader Show. This episode is brought to you by Motten Bow. I told the story on that episode of why I absolutely love their ridiculously comfortable, handcrafted premium jeans. Also, no ugly back pocket embroidery or weird stitching, just simple, elegant, great-looking jeans. And Motenbao has a free try-on program. You get two sizes to try at home with every purchase. Keep the one that fits and send the other one back for free. These jeans are already priced under market because they cut out all the retail markups. But the deal is even better when you go to Motenbau.com and use promo code Ryan Hawk for 20% off. That's M-O-T-T-A-N-D-B-O-W.com.

Starting point is 00:02:36 promo code Ryan Hawk. Hey and welcome to the learning leader show. I am Ryan Hawk. Absolutely fascinating conversation with tonight's featured leader Paul Madeira. Paul is a former F4 and F-16 pilot in the U.S. Air Force. The leader went on to co-found late-stage venture firm Meritech. Over the past 12 years, he's led Meritech's investments into several of the most successful tech companies of the era, including Facebook and sales.

Starting point is 00:03:10 Salesforce.com. He's also listed regularly on the Forbes Midas list, which is the annual ranking by Forbes magazine of the best dealmakers in high tech and life science venture capital. Paul is literally one of the most intelligent investors in the world. However, you would not know it by listening to him because he is also one of the most modest leaders I've ever spoken to. During this conversation, we spoke about missions. He flew as a fighter pilot, including some of the ones when he dropped bombs on specific targets, and then the dogfighting that would ensue with enemy aircraft, just like the movie Top Gun. These stories will absolutely blow you away. They're incredible. And then the story of sitting in the room with Mark Zuckerberg at Facebook in 2005, when Mark said, our company does $10 million in revenue, yet it's worth $500 million. If you want 2% of the company, you're going to have to invest $10 million.

Starting point is 00:04:08 And Paul said, I'm in and did it. and it turned out to be one of the greatest decisions of this entire life. Ladies and gentlemen, this is a fascinating conversation with Paul Madeira. Paul, so excited to have this conversation with you. You're a little bit different than a lot of the featured leaders I've had on the Learning Leader show, and that's why I have an immense curiosity to learn directly from you. But to get this rolling, I've got a question around leaders who have sustained excellence over an extended period of time. And I'm curious from your perspective, you've been around a lot of these types of people.

Starting point is 00:04:52 You've invested in their companies and you've networked extremely well with them. What are some of the common characteristics that they all seem to share? That's a great question, Ryan. I would tell you that in my experience, great leaders tend to be not necessarily the smartest, but they tend to be the most dedicated, the most focused, the most organized in pursuit. of personal excellence. And I've seen that across three careers. I've been in Air Force pilot.

Starting point is 00:05:25 I've been an investment banker, and now I've been doing venture capital for many years. And that characteristic seems to persist across all of my personal backgrounds. Wow. So you have quite a background. Actually, first of all, who are the first people that come to mind when you think of the word or the phrase sustained excellence? They don't have to be famous people. I'm just curious, who are the first people that are instantly pop in your head when you hear that phrase? Well, I think of the leaders here in the tech world where I exist right now, and many of them you see in the press and so forth.

Starting point is 00:05:59 But I also think about military leaders that I have met in my background in the Air Force. And those you certainly haven't heard of. But my fighter squadron commanders in particular and my flight leads that I worked for over the years, To me, those were really leaders in the most pure sense of the word. They were leading men into battle, in essence, and they were doing it without regard to money or without regard to personal glory. It was solely a mission that they had trained for, and they were really good at. Interesting.

Starting point is 00:06:39 I've been fortunate to speak with a number of leaders in the military space, whether they're Navy SEALs or Army Rangers and I, those are my absolute favorite conversations because I hold them in such high regard, anyone who served our country. So I thank you for that. And it's interesting that those are the first people you mentioned. When it comes to the people in the tech world and maybe some of the ones that we have heard of, who are those few people that maybe separate themselves from the rest of the pack who you deem sustain excellence? Sure. You know, I had the chance to be an earlier investor in Facebook. And I would tell you, Mark Zuckerman is, you know, he's not the classic leader in the sense that he's the persona that will get up in front of a large crowd and be

Starting point is 00:07:29 the charismatic, electrifying personality. But he's a wonderful leader in terms of a technology in a visionary sense. And even at a young age, it was clear he was thinking on a very different level than most around him. And his success is very clear. I would also tell you, Cheryl Sandberg, having watched both pre and post Facebook with Cheryl Sandberg, she is a fantastic business leader. And she in many ways deserves a tremendous amount of credit for Facebook becoming the very successful business in investment that it has turned out to be. So, you know, that's one of the things that I've read a lot about when I was preparing for our time together, Paul, and that's around the fact that you guys were early into Facebook.

Starting point is 00:08:21 Can you describe, so I think just describe that story around, one, what you saw in Facebook and first of all, maybe take us back to that time. When was it? What year was it? Who were you having meetings with? Were you talking directly with Mark Zuckerberg? Was it before Cheryl Sandberg? I'd just love to hear really the order story behind how you were early into Facebook.

Starting point is 00:08:46 Yes, it's a longer story that I'll try to be short with. But the reality was back in 2005, we had seen social networking starting to develop as a technology and investment opportunity. And we're always looking for the new interesting thoughts, ideas. that are that are popping out of the innovation sphere, if you will. And we actually saw MySpace as one that was much more advanced and more interesting than Facebook was at the time. And so we spent a lot of time looking at MySpace, tried very hard to do a deal with them to invest in them, and weren't able to because on the eve of signing a term sheet, they actually sold the company to Fox Interactive. for $500 million.

Starting point is 00:09:37 So we went looking around for the next best company. And literally a block and a half away from us here in Palo Alto was a small company called Facebook. It was only on 30 or so college campuses at the time. But it was getting phenomenal reception there. There's a couple of press articles, but not much. And having seen some of those, we were very impressed with the fact it had wonderful traction. and students seemed to spend an inordinate amount of time on it. And so we went over to talk to him.

Starting point is 00:10:08 And it was run by Mark Zuckerberg and a management team that has, you know, largely a different group now than it was to begin with. And it had a youthful air to it. But there was no denying they were getting great traction with a very valuable demographic. Revenue was early. The actual, what they are. offered was very different in revenue than what it is today. But we spent some time with them, and we said, well, we'd like to invest. And they said, what's the price? And they said, well, it's going to be 500 million, which at the time, they were less than 10 million of revenue.

Starting point is 00:10:46 And we thought, my gosh, that is, that's probably not so high today in 2016, but back in 2005, that was a tremendously high price. And we thought long and hard about it, ultimately decided to do it. And of course, that what was 500 million then is now well over 200 billion in terms of company value today in 2016. Wow. How much did you invest in them? We invested 10 million. We bought literally 2% of the company. We bought some more in the subsequent couple of years, but initially that was 2%.

Starting point is 00:11:23 And was the valuation then when you bought later higher, I assume? Yes. Yes, it was. It went up slowly, actually, slowly for the next couple of years. So a company that's producing $10 million in revenue, how in the world were they able to have a value? I think a lot of people maybe listening are thinking of like Shark Tank. That's our way of seeing how investments work. Some of us that aren't in your space, Paul.

Starting point is 00:11:48 And so for $10 million to say we're worth $500 million is insane, really. Oh, it is. So how are they able to do that? Well, they clearly looked at, there was other interested investors that were circling around. They knew they had some leverage. They looked at the Fox Interactive price. MySpace had more revenue than them, but not that much more. So their view was, hey, that's kind of the base level price that makes sense for good companies in the space.

Starting point is 00:12:19 But it was tremendously expensive compared to anything else we had done or seen in surrounding years. Today, actually, it still sounds high, but that is not that uncommon a price for companies that are growing very quickly, have a very catchy app or service that is offered. And it's, you know, there's a Zenefits, Slack. Oh, there's a number of those companies out there that are getting valued very highly. Instagram, was Instagram even making money when they got bought by Facebook? I don't believe they were. I didn't think so either.

Starting point is 00:12:57 and that was over a billion dollars, wasn't it? Yes, it was. It's incredible. It just seems like a much different world now in 2016 to when you guys invested $10 million at a $500 million valuation in 2005 and a social network. What do you think your life would be like if MySpace would have accepted or what you guys would have come to an agreement?

Starting point is 00:13:20 Well, Meritech as a venture capital fund where I work, would have not done nearly so well that it, Facebook really in many ways, put us on the map. We had been in business for seven years before we did that deal, but Facebook did help establish us in the upper echelon of venture capital investment firms, and it has been, you know, been very valuable to our limited partners who invest with us hoping to capture something like Facebook. So I like to, I love that story and I was going to get to it later, but since it just kind of came about naturally, I thought it was better to go there. I want to get into you now, Paul, in your story, you mentioned what you've done over the years. And specifically, I love to learn, I'm going to dive into a couple different areas, but I'd love to learn about what you do on a daily basis and how your company got started initially as well.

Starting point is 00:14:17 Sure. Sure. So I'll do the latter part first. We got started back in 1999, and at the time I was an investment banker working in San Francisco for a group called Montgomery Securities. Montgomery was one of four different groups that were taking tech companies public throughout the 90s, actually in the 80s too. And those were small deals, those IPOs back then, and there were a lot of them. And I was ultimately running the private placement group, helping smaller, younger companies raise money from later stage investment groups. And most of venture capital, in fact, all of venture capital here in Silicon Valley was really early stage focus. So they would help a company get started. They'd give them a little bit of money to get them up and going.

Starting point is 00:15:06 And then they would go, they would hire the likes of a bank to raise a late stage round or they would just go public. And I got a call from a partner over at Oak Investment Partners. And he said, you know, we'd love to have a late stage fund that worked with us and our buddies that excel partners closely. And you have the right experience. We'd love to talk to you about that. So their idea was to have another venture capital fund that invested in companies that were doing their third, fourth round of financing slightly larger checks, higher values, but would help companies that needed another round of capital get ready to go through the IPO process.

Starting point is 00:15:51 And I didn't have to think very long about that. I said, absolutely, would love to do it. And so I spent six months writing up offering memorandums and then going out and raising money from limited partners who were part of those four early stage funds in the investment syndicate. And we raised the first billion dollar venture capital fund back in 1999 to put into late stage companies. And while that was a good time to raise a fund, it turned out in hindsight to have been a terrible time to invest. It was the peak of the tech bubble. And we invested in a number of companies that didn't do so well. Some did okay. But overall,

Starting point is 00:16:36 the performance was pretty middling out of that period. Fortunately, Since that time, we have raised another four funds, and we've had some very good investments along the way, and our investor group is fairly happy with us. So what do I do on a daily basis? Well, you know, my time in a macro sense is more divided into two major parts. One part is managing the companies where I sit on the board or I'm an investor in and participating in. in another way. And the other part of my time is spent looking for new companies that might be good investment opportunities for us here at Meritech. And the board activities probably take up a good 50% of my time. And I, you know, between board calls, between hiring people, between

Starting point is 00:17:31 recruiting, between going to board meetings and helping manage, I do a little bit of travel, not that much. Most of them are here in Silicon Valley. And then the other part is meeting with companies that either reach out to us or more likely we have proactively contacted them because we think they're doing something interesting that they will mature into the kind of company that we'd like to invest in. We only do six, seven, eight sort of investments a year. We invest $10 to $20 million per company. and then we help manage those companies through the IPO process or through an acquisition by another buyer. And, you know, it turns out that between those two pieces of the venture capital formula, that takes up most of my time. I do spend a little bit on some nonprofit things.

Starting point is 00:18:29 I do a lot with the Air Force Academy where I was a graduate of a few years back and with some other local. things. Interesting. I noticed that at Meritech, you guys, and I don't know if this is unique or not, since I don't live and work in that space, but it appears as though you guys have purposely tried to stay pretty small and nimble in as far as the number of people, and that basically everyone's a partner and everyone is making decisions as part of the team. Is that accurate? It is accurate. That's actually really interesting. observation. We have, you know, when we got started, there were three of us who were initially here, and we had a little bit of administrative support, and we managed a lot of money.

Starting point is 00:19:17 And for the main reason, that the terms of our fund were that we just didn't have a great amount of capital to invest in office space or in a team here. And so we made do with little and a small team. And it worked actually quite well for us in terms of investment results. And so we have very consciously kept our team quite small relative to other venture capital groups. And we have tried to hire the very best investors in terms of connections, in terms of insight and so forth. So our team consists of six investing partners and one COO who manages, essentially the administration part of Meritech.

Starting point is 00:20:05 And that is small for the capital under consideration, but it continues to work well, at least in my opinion. Yeah, it's obvious. I think you're in the results-oriented business, and the results speak for themselves. So I think a lot of people who aren't in your world might be thinking this, and I know I'm thinking this. How do you personally get paid? How does it work?

Starting point is 00:20:26 I mean, you don't have to say how much money you make per year, but I'm curious as to, you know, from a bonus structure, from a salary perspective, I mean, you're on the Forbes Midas list every year as one of, you know, the best deal makers in high tech and venture capital. So you've done all the incredible things, made the right move when it comes to Facebook. How does it work from a personal getting paid perspective? Good question. So there's two elements to getting paid as a venture capitalist. One is salaries, and those salaries come from a management fee that limited partners pay to be a part of a venture capital fund.

Starting point is 00:21:12 And, you know, most venture funds, you know, it's public, I think. You know, they'll charge between 1% to 2% of the size of the fund on an annual basis. And that amount covers the price of renting office space and maintaining it. It covers the price of headman staff that does financial reporting. It covers meeting expenses and so forth. And it pays some salaries to the investor, investing partners and so forth. So there is a fundamental operations that is covered. The real money in venture capital, though, is made as part of,

Starting point is 00:21:57 carry, carried interest in deals that are profitable. And the way that most funds work, and there are some variations off this, but most follow the formula of that after you return capital to your investors, and by that you return not only the capital you've invested in companies, but you also return that management fee that you take, once you get beyond that, between 20 and 30% of the returns above that return of capital will go to the investing partners. And so therein lies the chance to do very well if you have made a lot of money for your limited partners. We are completely aligned with our limited partners in a sense to try and make that the earnings on the invested capital as high as possible because we share in the returns. So when Facebook went public, was that the day that you got cut a huge check or is it come later?

Starting point is 00:22:59 Ah, good question. It comes later because one of the, the very, the way that IPOs work is all of the inside shareholders in a company. This includes the management team, the investors, anyone else who has stock, signs an agreement with the investment banking. syndicate that takes it public. And they agree, we all agree, not to sell any shares for six months. And that allows the stock to remain stable just being traded by new investors, such that there isn't, I mean, you can imagine a scenario where the company went public on day one at a certain price and then investors were allowed to sell and trade. You know, the stock price could go all over the place. So there's six months of, of, of law.

Starting point is 00:23:51 We call it. And then when you get beyond that six months, then one is free to trade the shares. And so, no, and what happens typically is we don't just cut checks. What we do is we'll take a certain number of shares and we'll just give them to those who invested in our fund. And they can decide to sell or hold on to that stock over time. interesting how it all works i uh sorry i didn't mean to go off on like a tangent there but i think that's a that's a that's a question a lot of people who aren't involved in that industry think about uh because you hear of like well like mark cuban or chris sacca or some of these got peter teal you know we've re-read their books and and followed guys like that i know you're you're right in that world they're right side by side with you as i mentioned on the forbes midas list showing who are the best of the best at this. When you see that list come out every year and you're sitting near the top,

Starting point is 00:24:50 I get the impression just from talking to you. I know we talked before we got on this podcast as well, had a good phone conversation, but you appear to be a very humble, non-ego type of a guy. I feel like I picked that on that quickly. And a lot of people on this list from what I have seen don't seem to share those qualities with you. And I mean that in a good way to you, obviously,

Starting point is 00:25:10 and the fact that there's, there seems to be ego and maybe some of the money could get to these people. So when you see your name side by side with those people, what's going through your mind when you're on that list every year? Well, thanks for saying that, actually. I actually do appreciate you. You see me that way. And I certainly think of myself that way as well.

Starting point is 00:25:33 You know, to be honest, I'm a little bit odd and I'm very grateful to be on that list. I can tell you that the folks who put that together do a lot of work to together as close to a complete sense for how one invests and what kind of returns are generated. So that that, in my experience, is the most pure of all the venture capitalists. There are a number of them out there. The New York Times has come out with Juan. There are, well, a number of other publications that try to rank order. the Forbes list is the one that does the most work and has the most accuracy in my experience. You know, it's funny, where we sit in terms of the venture capital continuum,

Starting point is 00:26:22 that being very early seed stage all the way up through just prior to initial public offering, because I sit in the late stage world, and because I was an investment banker before we did this, You know, my view has always been, there's very little to be gained from being egotistical or arrogant about how one interacts with others. In fact, if anything, it's a negative in my view. Most people like to work with people who are like them, are easy to work with, are open and decent folks. And that's how my folks raised me, so I'm quite comfortable trying to be that person anyway. and I think it actually helps me in terms of getting access to interesting deals and interesting opportunities. And some of those deals, as we mentioned, we talked about the Facebook deal.

Starting point is 00:27:17 I see on your list here, Salesforce.com, which obviously a very well-known company. So I don't know how that deal came through, but my question now is more from a leadership perspective. So, and again, forgive me since I have not been in a room like you've been in when it comes to this. when you're sitting across the table from Mark Zuckerberg or from Mark Bennyoff at Salesforce, perhaps, or any other CEOs, what are some of the characteristics of the CEOs? What do they possess when you're like, you know what? Those are the people that I'm going to invest in this company because of that CEO. And what are some of the things maybe that the bad ones that have turned you off from investing in their company? because I got to believe you have to invest in the people just as much as you do in the product or the company that they have because they're the ones who are going to be leading it.

Starting point is 00:28:12 Yes, that's a very insightful way to comment on this. You know, I will tell you that having seen a lot of CEOs over the years, the thing that I and my partners do look for in particular is someone who is tremendously ambitious. We invested in a company called Riverbed. The CEO there was a guy named Jerry Canelli. Jerry actually grew up as an accountant, but then came over into the management side. And what I loved about Jerry Canelli is every time he got to talk about Riverbed and where they were headed, he'd literally slam his fist down on the table and yell world domination. And he really meant it.

Starting point is 00:28:55 He was absolutely dead serious. And he did that as a signal to his colleagues that he worked with, with his customers. and to investors, that there was no question where he wanted to take the company. And as an investor, I love that. Now, you've got to have the smarts, you've got to have the product, you've got to have the team that can literally deliver on that. But it starts with tremendous ambition. Some management don't have it.

Starting point is 00:29:24 Most don't really. I mean, many groups are quite happy making a little bit of money on their venture startup. up and selling the business or moving on to another deal. That's something that I as a later stage investor am not that interested in. It's a very valid strategy to have, but it doesn't fit for us because we're looking for companies that want to go public and want to be very big in their particular sector. I will tell you, other elements that I look for are tremendous dedication really to almost to a fault. tell you the story of one of my favorite companies and favorite CEOs. It's a company called Dealer Socket,

Starting point is 00:30:09 it's based down in San Clemente, California. The CEO there was a BYU grad, Brigham Young University grad, who actually was the backup quarterback to a guy named Ty Detmer, who was a Heisman Trophy winner. Anyway, Jonathan Ord, this is his name, and Jonathan Ord, along with one of his colleagues, one of his classmates, from BYU, decided they would start a company to offer software to manage the sales forces of auto dealers. Now, these guys had had mid-level jobs as software guys helping install financial management software. They'd never had senior positions. They had never developed their own product. And they didn't have a lot of money.

Starting point is 00:30:58 And they literally told their wives, listen, we're going to exist on savings. going to live a very lean life, but we have got to go do this. And for a year, they went and worked at a car dealership to learn with the dynamics that the sales force dealt with. And at the end of that year, they had been working on software. They decided to go out and sell an early version of it. They were literally, they'd mortgaged their houses. They were down to fumes in terms of personal existence.

Starting point is 00:31:26 And they managed to sell their software to a Porsche dealer who bought at sight unseen. And that was the beginning of a company that ultimately today that company exists and it's and 30% of the cars sold in the U.S. are sold through dealer socket software. Wow. And they are just remarkable individuals. Brad Perry and Jonathan Nord Brad's a CTO. Jonathan was a CEO and he is a phenomenal leader. I expect those guys to end up running something that's much bigger. than what they're running today and their business is quite sizable today.

Starting point is 00:32:06 Wow. It makes me think a little bit of, I have an upcoming conversation. The author of a book called ReWork, he's also the CEO of a company called Basecamp, Jason Freed, and he says you should not have an exit strategy. You should have a commitment strategy. And I just immediately thought of that when you were mentioning it before because I think whether it's in movies or TV shows or things we read, you see in these meetings that go back and forth between maybe the entrepreneur and the venture capitalist, somebody will say, well, what is your exit strategy? And Jason is one who can't stand that question because he's committed to growing his company to be phenomenal.

Starting point is 00:32:52 And I'll worry about the rest of it later. What do you think when you hear the phrase commitment strategy versus exit strategy? That is absolutely, that is very, very well put. As an early stage investor, it's easy to invest at very low prices into companies that have a very low or medium value exit strategy. And you can do very well as an investor in that space. As a later stage investor, I have to pay high prices. Because the risk is commensurately lower. So I need to see that commitment strategy that says we're going to take this as far as it can possibly go.

Starting point is 00:33:36 I love the way they have put that. You know, some other qualities for great leaders, for great company leaders that we look for, is they're able to hire great team members. They hire people who want to come work for them because they can articulate the vision of their company, the reason why it makes sense to be part of that team. That's not easy to do. people commit years of their lives to these startups. And while it's probably easier in Silicon Valley than it might be in the city you're in, that is still a major commitment. And a leader has to be the right persona to do that.

Starting point is 00:34:10 The other thing they've got to do is they've got to have a product roadmap that makes a tremendous amount of sense. The product today is unlikely to be the one that ultimately generates the sizable revenue and the profitability that makes a successful company. So they've got to be thinking ahead, innovating constantly, challenging themselves. These are qualities you don't find in the Fortune 500. These are qualities you find with scrappy, determined, incredibly driven individuals. And frankly, there just aren't that many of them. A lot of us would like to be that way, but it's hard.

Starting point is 00:34:51 You're kind of that way or you're enough. And we're looking for those people. You know, Paul, a lot of people who listen to the show and I base this off of emails I receive are in some form of leadership role in a company or they strive for that. And they also might be leading in their personal lives as a mom or a dad. And I'm curious from your perspective now that you've had some experience doing a few different things and doing them all at a very high level. What are some, like what are some of the biggest mistakes that you see really talented

Starting point is 00:35:23 young managers or leaders making as it relates to their careers? That is something I have thought a lot about. And let me think of the right way to phrase this. I think young people, and I was one at one time, think about how do I go straight from where I am to where I want to be without going through the difficult interim period. And it's natural. We all want to do that.

Starting point is 00:35:58 I wanted to do that. As a young former military pilot, I went to business school. I really thought that I should be at an investment firm with a great position. But, of course, that wasn't open to me. And I had to go do the hard work of learning the financial world on Wall Street and doing a lot of things at a low level, supporting others doing them, and then work my way up to where I am.

Starting point is 00:36:26 And I'm privileged to have a number of the military guys who go to the Stanford Business School here nearby, come and seek me out and chat about things over the years. And I encourage them to pursue what interests them, but go to a place where they can learn a lot and not necessarily think of themselves as more advanced and more equipped, more skilled than they are. And I think that's nothing I say is probably going to change the folks at home

Starting point is 00:36:59 or it's going to change others because we're all the most ambitious, you know, really do want to go pursue it immediately and as quickly as possible. But the reality is if you learn your sector, if you learn your business, if you learn technology from inside a technology company, you're going to be a much better investor. You'll be a better board member. You'll be a better all around equipped to contribute in a way that is more meaningful, more productive looking on.

Starting point is 00:37:30 This makes me think of an email I just recently got from. I didn't plan to go here, but I just thought of it popped in my head because I wasn't sure how to answer this question. So a listener who works in the profession of sales, which is the first role I had out of college that I was fortunate to really excel at. And he said that he's on this track. He works for a bigger company, not around where I live here in Ohio, but works at a big company.

Starting point is 00:37:57 On the track has been promoted a few times into some leadership roles. And now he's gotten an opportunity with another company, but it would be at kind of the individual contributor rule. Still pays really well. And he views that company as being much more health. growing, vibrant, really impressive, and he's not sure what to do. Do you leave the leadership track? He's on at a company that maybe he's not in love with anymore because of some of the things

Starting point is 00:38:26 they're doing to go to a company that he views as being in this growth mode, as being extremely healthy, as being great culture, but to take steps back. And I was wondering when people come to you with that type of question looking for advice to say do they maybe need to take steps backwards in order to go forwards? What do you say to that? So every situation is going to be different. But I do think that that can make a lot of sense to go do. If something is growing, if there are opportunities that are going to develop there,

Starting point is 00:39:03 if the team members get along with you, you feel more comfortable there, you believe your personal skill set matches up better. I almost always think being at a place that's more vibrant. It's more, it has bigger goals. It clearly is doing better. That's almost always going to make more sense. Now, we all get to an age where it's more difficult to do that. You know, you have responsibilities at home. You have responsibilities outside. And you may not be able to put in the long extra hours

Starting point is 00:39:40 the extensive travel and so forth that is required. But if you can, and you can when you're young, one should absolutely go for the opportunities where you will learn the most, you will have the most growth opportunities. And, you know, pay matters, but there's a lot of jobs that pay high to begin with that are, you know, just don't offer the promotion

Starting point is 00:40:03 and the opportunities set longer term. And I would encourage you to pursue that. I think that's good advice. I think it was around something similar to what I was going to say. And it's good to hear from a guy like you who's been able to have, as one mentor told me, you've been able to have success in multiple life categories, which shows that track record that's so important. I'm curious about pressure because I have to believe in your world and maybe now that you're so established and so successful on a year to your basis that maybe you're not as under as much pressure. Or maybe you are.

Starting point is 00:40:37 Maybe it's more because of that success. I'm curious as to how you view pressure, because again, you seem to be extremely measured, not easily excitable, which I have to believe is a great quality in your line of work. How do you handle these pressure situations that can come along when it comes to making, you know, million, maybe billion dollar decisions when it comes to your business? Yeah. No, I don't feel a lot of pressure. And I actually have the Air Force Academy, I think, to thank for that.

Starting point is 00:41:11 I mean, at a young age, I was subjected to such tremendous pressure going through the system there that I think it has equipped me for life in a way that gives me an unfair advantage. Nothing gets me too excited. Then, of course, I went on to fly fighter airplanes. And when I was flying at 16s all around the world and responsible for other people in my flying, and getting airplanes back on the ground and making sure that we didn't do crazy things that killed people along the way. That was a lot of pressure, actually. And I, you know, it was challenging, but I felt completely connected, but pressured.

Starting point is 00:41:54 Today, you know, none of the day-to-day challenges I see really sort of match up at the same level. So I can be, at least I think I can be more balanced, more measured, without thinking emotionally about these decisions. I love that you went back to the time in the Air Force because I can't imagine the rush of adrenaline as it would be to fly F-16s. I don't want to ask too broad of a question like, what was that like?

Starting point is 00:42:27 But I am curious as to, I would love for you to take me inside the cockpit what it feels like as you're taking off, flying all over the world, leading others, and what that experience truly feels like. Just the first thing I picture when you said that was the movie Top Gun. Yes. I think a lot of people do, and I've heard that movie actually was a huge reason for people to sign up for both the Navy and the Air Force.

Starting point is 00:42:53 But that's what I envision. So I'd love to hear from a guy who actually did it. Yes, I was actually flying in the Air Force when that movie came out, and we all loved it. We absolutely thought it was the best movie ever. made effect I still do to be honest I love it too it's one of my all-time favorites it was good ironically the F-14

Starting point is 00:43:13 which that movie was built around is really it's a big big heavy lumbering not very maneuverable airplane you wouldn't know that from watching the movie but compared to others for example the F-16 weighs one-third the weight of

Starting point is 00:43:29 the F-14 is much more maneuverable I flew F-4s which was one generation earlier than the F-14 to start with. I flew that for a couple of years. And that was a Vietnam-era fighter that, you know, had older engines, wasn't quite as maneuverable. It was a two-seat airplane, and it had good visibility.

Starting point is 00:43:52 But going from that airplane to the F-16, there's several amazing differences. The first is that there's this wraparound bubble canopy that feels, like it comes down to your waistline, your hips. When you sit in it, you're literally sitting on top of a telephone pole wrapped in a glass bubble. And you can see everywhere. It's fantastic. The F-16, along with the F-15, were the first airplanes that were produced that have greater than one-to-one thrust ratio, which meant you could take off, go down the runway, and literally when you broke around, you had flying airspeed, you could literally

Starting point is 00:44:34 tip the nose up and accelerate straight up away from the runway. You had that much thrust going through the engine. And that, of course, translates to a fantastically maneuverable dogfighting capable airplane that was just a revolutionary step away from, step up from the F4 and a tremendous amount of fun. I was fortunate to be one of the earliest guys to fly in the airplane. So, you know, it was completely new, both to the Air Force, but, uh, but to most of the pilots that I had flown the F-4 with, and it was really fun to see the contrast. Had modestly better systems,

Starting point is 00:45:16 but even back in that day, we didn't have GPS. So, you know, the NAF systems were the same old ones. The radar system was a little bit better. Anyway, all of those systems have gotten a lot better since I left, and I understand it's even better than it once was. What are the typical missions in your, when you were flying? So the F-16, like the F-4, is a multi-mission airplane. And that meant you would fly low altitude and carry bombs to deliver them onto a particular target that would be, oh, two or three hundred miles away from where you're launched out of.

Starting point is 00:45:59 And you had to deliver that ordinance exactly on time and exactly on a target. And so we did that. We spent a lot of time practicing to do that while we're being attacked by surface-to-air missiles as well as by enemy air and so forth. The other mission that we flew was air-to-air. So you would, after you dropped your bombs, you literally pop up and you would be ready to dogfight with other airplanes. And we would use missiles or guns. F-16 has a gun on it to maneuver around and try and shoot down the enemy aircraft. I read a fascinating stat the other day. The F-15 and the F-16, which have been deployed by the U.S. and Israel in combat. I don't know. Maybe I guess the Saudis saw some combat with their F-15s as well.

Starting point is 00:46:48 Anyway, the ratio, the kill ratio those airplanes have generated is something like 90 enemy aircraft shot down without a single loss. I mean, they are, and it's been largely in the Middle East, of course. But those are remarkable statistics and speak to the quality of both American manufacturer as well as the training and the development of the pilot force. Wow. So there's legitimate dogfighting going on when you were serving? Yes, yes. It happened in the Iraq. I was not part of the Iraq conflict.

Starting point is 00:47:23 But yes, there was some in the Iraq conflict. You know, there have been various incidents throughout the last 20, 30 years. there isn't any going on today. And I think the chances we face dog fights in the future are diminishing every year. And we have the new remotely piloted vehicles, drones as they're known, are growing in numbers. And they will do most of the Air Force mission in years to come, I suspect. That's incredible. Just to hear the, I can sit here and listen to these stories for hours.

Starting point is 00:47:56 I can tell you that, Paul. And it's interesting because you have such a dynamic. life when it comes to we can go deep when it comes to VC world, all that investment banking, investment banking Stanford. And then we can talk about dogfighting and dropping bombs. It's incredible, man. I really have enjoyed this conversation. I'd like to obviously continue the dialogue, but I also want to be respectful for your

Starting point is 00:48:21 time. I know you got a lot of things going on. I do have one more question, though, before we take off. And that's around, again, I talked to you on the phone. and we spoke briefly before we started recording. And I titled this podcast, The Learning Leader Show, for a reason. I love learning from leaders in all different diverse areas of, whether it's business, military, sports, entertainment, whatever it may be. And you've done that in, like I said, multiple life categories.

Starting point is 00:48:54 I'm curious, when you hear the phrase learning leader, what's the first thing you think of? I think it is something that great leaders are always doing. There is no sort of you've reached it and it's all over. Learning leaders to me is what all great leaders are, which is constantly looking for ways to improve your game, improve the way you interface with others, because that's at the core of what leadership is about. And it means constantly studying other styles of leadership,

Starting point is 00:49:29 other methods of working with people, other ways of communicating, and taking the best of those and constantly trying to improve oneself. Could not have said any better. I love it. That's exactly what I'm trying to do with this podcast. And I really appreciate you being part of it. I absolutely want to continue this dialogue as we both progress on our interesting journeys. I'm curious, if you want to, where would you tell people to go?

Starting point is 00:49:59 go find more about you online? Oh, you know, there isn't a lot about me online, and so I don't really work at that. You know, we have a website at meritekcapitalpartners.com. And I think that's probably the best place to find me. Perfect. Well, again, Paul, I really appreciate you investing your time with me and the great listeners here in a learning leader show, and I look forward to us continuing to talk. great thank you Ryan thanks for having me absolutely pleasure yeah thanks Paul all right talk soon

Starting point is 00:50:34 all right bye bye bye this episode of the learning leader show is over but we have plenty more to keep you locked in until next time head over to learningleadershow.com for more information and to request your favorite entrepreneur CEO world class athlete or anyone else that inspires you you can also talk to Ryan directly by reaching out to him on Twitter at Ryan hawk 12 thanks again and we'll see you Learning Leader Show.

The Learning Leader Show With Ryan Hawk - 116: Paul Madera – Why He Invested $10 Million In Facebook In 2005

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