The Tim Ferriss Show - #79: Chris Sacca on Being Different and Making Billions

Episode Date: May 31, 2015

"Fuck it... I'm just not going to play this traditionally anymore." - Chris Sacca Chris Sacca was recently the cover story of the "Midas Issue" of Forbes Magazine. The reason: He is a newly-minted billionaire and the proprietor of what will likely be the most successful venture capital fund in history: LOWERCASE I of LOWERCASE Capital. He's an early-stage investor in companies like Twitter, Uber, Instagram, Kickstarter, and many more. In this interview, we discuss unfair advantages, how Chris chooses founders and investments, stories of missed opportunities, the styles that differentiate Wall Street from Silicon Valley investors, and how keg parties can liberate law students from the tyranny of class (Chris completed law school without attending any classes). Enjoy! All show notes, links, and resources from this episode can be found at http://fourhourworkweek.com/podcast This podcast is brought to you by MeUndies. Have you ever wanted to be as powerful as a mullet-wearing ninja from the 1980's, or as sleek as a black panther in the Amazon? Of course you have, and that's where MeUndies comes in. I've spent the last 2-3 weeks wearing underwear from these guys 24/7, and they are the most comfortable and colorful underwear I've ever owned. Their materials are 2x softer than cotton, as evaluated using the Kawabata method. Check out MeUndies.com/Tim to see my current faves (some are awesomely ridiculous) and, while you're at it, don't miss lots of hot ladies wearing MeUndies. This podcast is also brought to you by 99Designs, the world’s largest marketplace of graphic designers. Did you know I used 99Designs to rapid prototype the cover for The 4-Hour Body? Here are some of the impressive results. Click this link and get a free $99 upgrade. Give it a test run.. Thanks for listening!***If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. I also love reading the reviews!For show notes and past guests, please visit tim.blog/podcast.Sign up for Tim’s email newsletter (“5-Bullet Friday”) at tim.blog/friday.For transcripts of episodes, go to tim.blog/transcripts.Interested in sponsoring the podcast? Visit tim.blog/sponsor and fill out the form.Discover Tim’s books: tim.blog/books.Follow Tim:Twitter: twitter.com/tferriss Instagram: instagram.com/timferrissFacebook: facebook.com/timferriss YouTube: youtube.com/timferrissPast guests on The Tim Ferriss Show include Jerry Seinfeld, Hugh Jackman, Dr. Jane Goodall, LeBron James, Kevin Hart, Doris Kearns Goodwin, Jamie Foxx, Matthew McConaughey, Esther Perel, Elizabeth Gilbert, Terry Crews, Sia, Yuval Noah Harari, Malcolm Gladwell, Madeleine Albright, Cheryl Strayed, Jim Collins, Mary Karr, Maria Popova, Sam Harris, Michael Phelps, Bob Iger, Edward Norton, Arnold Schwarzenegger, Neil Strauss, Ken Burns, Maria Sharapova, Marc Andreessen, Neil Gaiman, Neil de Grasse Tyson, Jocko Willink, Daniel Ek, Kelly Slater, Dr. Peter Attia, Seth Godin, Howard Marks, Dr. Brené Brown, Eric Schmidt, Michael Lewis, Joe Gebbia, Michael Pollan, Dr. Jordan Peterson, Vince Vaughn, Brian Koppelman, Ramit Sethi, Dax Shepard, Tony Robbins, Jim Dethmer, Dan Harris, Ray Dalio, Naval Ravikant, Vitalik Buterin, Elizabeth Lesser, Amanda Palmer, Katie Haun, Sir Richard Branson, Chuck Palahniuk, Arianna Huffington, Reid Hoffman, Bill Burr, Whitney Cummings, Rick Rubin, Dr. Vivek Murthy, Darren Aronofsky, and many more.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Why, hello, thrillers, killers, and $100 billers. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. I've had a lot of whey protein. I've had a lot of supplementation, BCAAs, a few other goodies like synthetic ketones, and I'm rearing and roaring to go with this episode. So I don't want to give you too long of a prelude, but if you haven't joined me before on the Tim Ferriss Show, this entire program is about deconstructing excellence. It is about interviewing world-class performers, the best at what they do, to identify the rituals, routines, influences, books, tips, and tools, and so on that you can use. So borrowing best practices

from the best in the world. In this episode, we have a very fun guest. He is widely requested, and now he's here, Chris Saka, or Chris Saka, depending on how you say his name. He was recently on the cover of Forbes magazine, their Midas issue. And the title says, Venture Cowboy, the 39-year-old behind Uber, Twitter, and Instagram might be the best angel ever. So why all the bad blood and burned bridges? And then the article, if you look inside, is titled, How Super Angel Chris Saka Made Billions, Burned Bridges, and Crafted the Best Seed Portfolio Ever. I have known Chris for quite some time, and I've mentioned before that in the game of early stage investing, I've learned a ton from a lot of people, but three people stand

out immediately, Mike Maples Jr., and then Chris Saka and Naval Ravikant. Those are three who've been very, very generous with their time. And this episode is wide ranging. It's not just about investing. It is about life design. It is about career decisions and much, much more. So please enjoy my conversation with Chris Saka. Chris, my fans have demanded it. People have asked far and wide for you to be on the show. So thanks for cutting out some time in this spectacular trip.

Well, I'm psyched you're here. We're on Necker Island in the British Virgin Islands. My first time to the BVI. It is paradise, not too surprisingly. And for people who don't have much context on you, number one, is it Saka or Saka? That's totally regional. I'm from near Buffalo, New York, so it's SACA. It's very nasally. You got to get it right in the SACA. I'm Chris SACA.

Hey, you guys. You guys. So do you introduce yourself as SACA? I don't know. Let's see. What's your name? Chris. You know, I'm more focused on spelling it because everyone's like, what the hell? So I'm like S-A-C-C-A. But I guess it's Saka. Chris Saka. Saka. That's how it comes off my tongue. All right, cool. And you grew up, like you said, on the East Coast.

But let's do a quick, not entire retrospective, but to give people the present tense. What are you best known for? Professionally or personally? Both, aside from that amazing beard. Or with my wife. All three. So professionally I'm known for being a venture capitalist, an angel investor turned venture capitalist.

And I was one of the first investors in Twitter, one of the first investors in Uber, Instagram, Kickstarter, Docker, Optimizely, Lookout, Twilio. Just going down my unicorns. So you have this sort of unicorn radar. And you, of course, had the angel investing experience, and then you had your fund experience. Can you tell people a little bit about how that has gone for you? You, of course, had the angel investing experience, and then you had your fund experience. Can you tell people a little bit about how that has gone for you? In terms of managing my funds?

Just your first fund. I would assume that is one of the reasons why you were just recently on the cover of Forbes magazine in a horrifyingly gaudy shirt. We can talk about the shirt. No, so our first fund is turning out to, it looks like it might be the most successful fund in the history of venture capital. Um, we had Twitter in there. We had Uber in there,

Instagram's in there. Docker's still in there. Optimize is still in there. We had some very cool stuff like Zen coder was in there. Um, so we've had some good deals that have gotten bought along the way, but it's um it's uh it's it's just taken off like there's no like no fund has ever done and and you know

right now it's i don't think uber is done growing and so uh certainly hope not yeah so we're at we're at somewhere around 250x multiple on the fund. That's amazing. And I want to, I'll start off, some people have followed our friendship over the years, the heckling on, the endless heckling on Twitter. I mean, no, I'm very sincere and authentic when I ask when you and Kevin Rose are going to release the podcast episode where you guys make out. And Kevin told me that was behind the paywall.

It's the bonus wrestling coach. It's behind the paywall. And I think we have to wait until there's a slump in our careers. Keep that in your back pocket. We'll pull a Kardashian and reinvent ourselves. But the gratitude I want to express first before we get into things is multifold. So some people who've read The 4-Hour Body might recall that I mentioned you in that book for introducing me to Total Immersion, which was, I think, the first time we ever met, you brought it up. This was at the barbecue that K. Rose actually threw outside his apartment.

And you said something along the lines of when I described how bad I was at swimming and pretty much incapable of swimming, you said, I have the answer to your prayers, which I thought was a great response, which ended up being accurate in this case. And it was total immersion swimming. So I learned to swim for the first time properly in my 30s using that method. So thank you for that. And also since the days, have been a very open book when it came to talking to you about investing and advising. And of course, the legal notepad has been now transcribed into Evernote. So I have many Sokka files that are all very favorable. But what were some of your formative experiences growing up? Well, let me just talk to what you were just saying in terms of being generous with the...

I mean, first of all, the total immersion thing is like a religion. When you get it, you get it. Right. And I went from dragging my ass around the pool, just kicking too hard and paddling too hard, to when total immersion hit me, I could suddenly swim a couple miles and get bored. And so I was just there as an apostle, man, when you were like, I'm struggling with swimming. That was, I was just geeking out in the same way you can get going on lifting techniques and stuff like that. I'm like, you're in my world now. I'm going to, I'm going to talk about

swimming, but the same with the investing stuff. I mean, I was really lucky when it came time for me to get started as an investor. I had many, many guys there paying it forward and teaching me about the game. Guys like Josh Koppelman at First Round, Tony Conrad at True Ventures, really being generous with their time and helping me figure out what was going on. The guys at Industry Ventures were indispensable for me,

Hans Wildens and his team. And so for me, when you came along and started asking questions about that, not only I feel like I was paying it forward again, but in the same way you and I never invest in a simple idea, the execution is everything. I don't feel like I'm really giving any secret away by telling you what the approach is. You still have to go execute on it, right? So I can give you my lens on how I think about this stuff, you know, things other people have taught me, things I think I might have improved upon, et cetera, but I can, I can lay that playbook on you. And if you're not good at this, you can't fake it. Right. And so I don't have any fear in kind of disclosing my secrets

to B teamers, uh, because they're not going to end up competing with me in your case, you're good at it. And so it's become an incredible side business for you in addition to everything you do with media. But there's no fear in putting that stuff out there. And the other lesson they taught me is that if I get to you and teach you some of this stuff, you're going to naturally be an ally of mine in this industry. So if I can get in there and kind of teach you

how do I think about the world, how can I be helpful to companies? And you start using that same method, then we're going to end up doing deals together. And you and I have, and we've made a fair amount of money doing that. And so, um, so I didn't, I don't want to leave that unanswered. Well, I, uh, it's, it's really been fun to watch you sort of evolve and grow and experiment also in investing and just coming back investing. And just coming back, we can rewind the clock back to your upbringing a little bit later on. But just since we're on the topic, what were some of the pieces of advice that you were given by, say, the guys that you mentioned or other people early on that helped you to approach early stage investing in a more intelligent way?

Yeah, I mean, a couple of guys have said things that I've now taken in an amalgam and have codified. So I have rules for investing now that were definitely influenced by a lot of these guys giving me advice and things that I've now put to work. So one is only get involved in deals where I know I can personally impact the outcome. Now, there's no guarantee that I can take it from X to sold or X to IPO,

but I need to know that I can have a material impact to make something more likely to succeed. So the second rule I've developed, and this is, again, influenced by guys along the way who've given me advice, is start with something that's already great that you can make more awesome. But don't start with something shitty that you think you can make good. And that's hard. When you work in a company, and a lot of your listeners I know work in big companies, you have to work on the shit that somebody hands you. So you're dealt the two seven. You're like, well, okay, that's what the boss gave me. I got to play this hand out.

When you get into investing, your default stance should be no, because most deals suck. Most deals won't make money. Most companies will fail. And the temptation always is you see your first deal and you're like, okay, I know I can be helpful to these guys. I know I can make this shitty thing better. And so your first few deals are always the worst. That's how I lost, yeah, 50 grand on my first deal.

And I was just like, oh, it's like 25% of what I had hypothetically allocated after two years. I was just like, oh my God. No, that's because you get in that room and you're like, okay, I know how I can make this thing better, right? And you forget that you need to start from something that's already independently pretty damn good and then make it better. So our third principle is give yourself a chance to get rich.

And that was something that was influenced more by a lot of these fund investors who were like, hey, it's all well and good to throw 25K around into some of these deals. But most of them won't be home runs. Most of them won't turn into unicorns. Most of them are going to require a ton of work. A bunch of those will fail, but a bunch of them will be successful to the tune of doubling that money, but over years and years of work. And so I've sold companies. I sold a company to Amazon where I saw 3X on a $50,000 investment in a fund. By the time my fund got paid back and I got my part back and I was, had been busting my

ass in that company for a couple of years, like I barely had money left to buy the guy's dinner to celebrate the deal. And so, um, so that's another thing is leaving ourselves enough room to benefit from scale, going into prices that are low enough that if the company is as successful as we think it's going to be, we've given ourselves a chance to get rich. And then the fourth thing that I think we evolved, um evolved internally or that I involved was just be proud of every deal. There's stuff that I've passed on that I just don't regret it at all. It seemed like maybe a good way to make money, but I don't want to have to explain to my kids that's how I made money. And so those are kind of the guiding principles I think have been shaped. Categorically, what would some of those be?

Mistyped domains. So that's a great way to make money. People are stupid, and they mistype stuff all the time. And you can put ads on sites that don't really look like ads. Subscription businesses that make it impossible for you to cancel your subscription ever. The forced fulfillment. You can sign up online, but you need to send them a postcard to cancel, like that kind of stuff. I see that stuff, right?

People making unsubstantiated claims about the effectiveness of their stuff. This anonymous content stuff that was just going in bad places. So I just want to be really proud of our deals. And so those, I think, are some principles that have been shaped by a lot of these guys giving me advice along the way. When you meet with founders for the first time, is there anything that disqualifies them quickly? Are there certain sort of red flags that you look for? Yeah, so this has evolved over time. You know, I've now been doing this for a while and I've done over a hundred deals

and have seen a bunch of those work out and I've seen a bunch of them not work out. And I read all the posts that my peers in the industry, right. Other VCs, you know, everyone's constantly stabbing at, hey, what is the rule? How do you get into one of these meetings? So let me first have a couple parameters. One is I almost only invest in things that are already live in production. Just no hypotheticals, no ideas. I think there might be one exception to that,

and it was a particularly gifted entrepreneur that I already worked with before. But other than that, we look for stuff that is, um, that is already actually being, you know, has users that has, um, that, that can demonstrate that the team is capable of building and launching stuff together and getting it out there in the market. Um, but that said, then the one thing that will turn me off right now is if I see that in the pitch, the founder is trying to convince themself. If I can pick up on any hint that they don't, in their marrow, believe in this story, then it's no dice. As I look at all the most successful founders i've backed the thing they have is inevitability of success there are no conditional statements coming out of their mouths

there's no like well if it works it would be rad instead it's just always you talk to kevin system instagram when he was working on it himself he was literally a sole guy working on the product and he's like so when we get to 50 million users we'll roll out this other stuff and you're just working on it himself. He was literally a sole guy working on the product. And he's like, so when we get to 50 million users, we'll roll out this other stuff. And you're just like, wait, he's just peering into the future, kind of looking through you into something in the future. And you're just like, I got to get along for the ride with this guy. The same thing when you talk to Evan Williams, when it comes to talking about the likelihood of success of his products, he just knows. He just knew Twitter would be a big thing. He knows Medium will be a big thing.

He doesn't need to convince you of that right now. He just knows. You talk to Patrick and John Collison at Stripe, and of course they're building for this thing to be a big dominant company. And it just will be. You've spent time with Travis. You're an investor in Uber. Was there any doubt at any time that Uber would dominate the planet? Yeah. No doubt. There's no doubt. Can you just share? There's an anecdote. I think we probably talked about over drinks at some point, but the Wii Tennis.

The Wii Tennis? The Travis Wii Tennis? Yeah. Could you tell this story, please? So it's a few years ago. We're up at my house, and we live up in the mountains in Truckee. And it was over the holidays, so my parents were there. I think it was actually New Year's Day.

So Travis and I had been – we have a tradition up there on New Year's Eve. We go snowshoeing at midnight and drink champagne out in the meadow and stuff. So I think we were pretty, it was a pretty rough morning. But Travis is sitting on the couch, and my dad senses some weakness, and he challenges him to a game of Wii Tennis. So on the Nintendo Wii. My dad's not a bad player. He's pretty good.

So Travis is like, okay, Mr. Sack, sure. And he picks up the controller, and they play the first couple of games and they're tight games but Travis wins them and my dad is there taking like full swings with the paddle you know it's like breaking a little sweat and Travis is still blurry from the night before barely breaking his wrist and he's beating my dad right it's like what the hell is this and then there was that Inigo Montoya moment princess bride style where Travis turns my dad and says I'm sorry but I'm not left-handed or you know I forget if it's left or right but he switches hands with the controller and the next three games my dad never touches the ball there were no points scored on any of Travis's serves and I was like what the hell is going on like what

is this and after the torture got to me too much, Travis just says, well, let me take you to the global leaderboard. I'm sorry. I got, you know, I didn't mean to be holding out. And he goes to the global leaderboard. And Travis Kalanick was ranked number two in the world at Wii Tennis. In his spare time. Now, Uber was already a thing then. Like, literally, he was already building a startup.

But he's just so obsessive so competitive and that's the thing is we look across the portfolio at all the most kick ass companies that's something they just have you know right up front is is that they're not hoping and praying for success they know what's going to happen now on that note though so to pull pull out two two names for instance you have an an Evan Williams blogger, Twitter, medium, et cetera. Then you have Travis. Personality-wise, at least from the outside looking in, very different personality types. And I bump into some investors who say, well, I only invest in merciless, sort of highly offensive, offensive meaning not defensive, CEOs. And other people are like, no, I only invest in people who I would watch my kids or whatever it might be.

But what are the commonalities or are there commonalities when you look across these founders for whom success and massive scale just seems predestined? What are the commonalities? Well, I think something, so we'll take Evan Travis' examples, but across our most successful founders, let's use a Matt Mullenweg of WordPress. That's a billion-dollar company now, a billion-plus. These guys are all incredible, incredible listeners. So when they do open their

mouths, it can be bombastic and offensive and aggressive and in your face, but they're all incredible listeners. And I don't just mean in casual conversation. I mean, these guys go out of their way to interview other people. They really, uh, if you catch Ev, he's got a notebook always. And if you ask him to see the last few pages of the notebook, he's just meeting with other people who's billionaires and kind of leaders whose jobs might not overlap with his at all, but from whom he's learning. Voracious reader. Part of why Medium started was he was really back deep into long-form content

when he took a break from Twitter. And so that guy is just constantly learning, studying, studying. And so when he speaks, it matters. But he's listening more than he speaks. You know that about Mullenweg, one of the most thoughtful people. I've never seen anyone read as many books as that guy does and retain all the knowledge. He's prolific. And he also listens to anyone that he's sitting down with.

It doesn't matter if it's the waitress or a primary school teacher. We've done a lot of traveling together. He was on the podcast also. Very good listener. Yeah. And again, you just look across the board. These guys are learning. They're modeling.

They're constantly researching. They're gathering data. Travis would think it a competitive disadvantage for you to know exactly what's going on in his head sometimes, so he'll listen. And it's an amazing talent. I think Dura is a commonality across those people. With the investing game that you've obviously been a participant in for quite a while now, you have to say no a lot. And I took a close look at poker in the last year with the TV show, and there were a couple of quotes that came up quite a bit.

Along the lines of, you know, I made my money sitting, not playing hands. But that having been said, what are some of the deals, the whales that got away? Yeah. So first of all, I mean, this is a rigged game, right? And I'm just looking to make it even more rigged. So for those who don't know, venture capital, I mean, it's totally unfair. People give me their money. I draw a management fee off it. So they pay me to take their money and invest it for them. If I make money, then I pay them back the management fee. And then after that we split the profits and I get a really big chunk of the

profits. Uh, and if I lose money, that's fine. Uh, I don't know. It doesn't come out of my pocket. I keep my fee and my investors lose money.

That's how this industry works. That's bananas, right? And at some point, it's going to break. You've also incepted me with the term bananas, which I've started using compulsively. Mazio also

has done the same thing. He works with Chris. Yeah, it's just an unforgivably unfair rigged game that's in favor of the venture capitalists. And so the reality is the risk of an investor uh, rigged game that's in favor of the venture capitalists. And so, um, so that the reality is the risk of an investor doesn't begin to compare to the risk of a founder.

And so, you know, that's one thing that kind of drives me crazy sometimes about some investors. And, you know, I love the entrepreneurial spirit that goes into building a firm. I mean, I built my firm from scratch and there's's certainly founder-type lessons in there, but you're cash flow positive from day one when you start a venture fund, and your downside is incredibly limited by the structure of the fund. So that said, what it allows me to do is place some bets on some stuff

that I'd like to think success is inevitable, those things, but I can take, I can look at the risk analysis and say, okay, this is a binary outcome, a one or a zero. And some of those things just don't get there. One of my kind of constant recurring nightmares is about the stuff I passed on. Yeah, exactly. That's what I was trying to ask.

I've done some deals where I thought it was going to be a lot bigger and it ends up going away. But so the Dropbox guys, I met those guys very early on while they're still in my combinator. I got an early look, had an opportunity to do the deal and I pulled those guys aside

and I was like, hey, look, at Google, we're using a version of this called Platypus, which became G-Drive. And they're going to crush you guys, man. So you should probably find some other product to pivot to. That probably cost me hundreds of millions of dollars. Did they give you a pat on the head and walk away?

No. I mean, when I see Drew, the CEO of Dropbox, I bring it up before he can. That's a good self-defense. I just get it out there right away. The Airbnb guys at Y Comer, same thing. Incredible business. An amazing business. And one to be proud of, too.

I mean, I'm really jealous. I'm not in that business, not just for the money, but I love what they do. I really admire them a lot and their culture. But at the time, they were allowing you to rent out a room in somebody's house while the owner was still there. And that just seemed really scary to me. And I pulled the guys aside and I was just like, guys, you know, somebody's going to get raped or murdered in one of these houses and the blood is going to be on your hands. I literally said that out loud to them. What's that worth?

Like 15 or 20 billion? No, in fairness, you're probably not wrong right i mean at a certain scale at scale it has to happen it's gonna happen yeah yeah i mean i like to say sometimes like when you think about scale like someone who works at walmart murdered someone last night right there's just no doubt about it at that scale with a few million employees one of them murdered somebody last night you have to look at it like uh edward norton in fight club like an actuarial analysis yeah for insurance um which is terrifying but that's the reality of big numbers um but but there's a i'll tell you so there's one other famous one um there's a bunch of these but um actually i'll give you two nick because i wasn't i reminded

this until recently nick woodmanman from GoPro came to Google. Now, I wasn't an investor at the time, but I did a lot of Google's investments and partnerships. And so Eric Schmidt, CEO of Google, said, hey, will you come in here and sit with this pitch? You know, he's a friend of a friend, said we got to meet this guy. So Woodman comes in with GoPro. And Eric's like, I don't know. And I was like, we'd be foolish to do this deal. How is this guy from Santa Cruz going to compete with all these asians and building hardware you know you can't you can't

hold a candle like the taiwanese and the koreans was like no dice man let this guy go and i think i introduced him to somebody over youtube just as a consolation i saw that dude this winter skiing he's worth like three or four billion dollars now and he didn't forget that meeting so and then the snapchat guys i gave a talk in la and they came up to me i never met them before they came up after the talk and said we're big fans we'd really like to work with you and i was like yeah sure i mean i know you guys are up to something cool i admire it i took like eight weeks to set up the meeting and by then the benchmark guys had done that deal that's again oh my god i can't imagine how much money we've left on the table as a result of that so um you know i'm i like to say when i'm wrong i'm wrong when i'm right i'm really really right

and the question on being wrong though i'm very curious about this and just coming back to kind of the poker analysis or analogy rather, and I actually heard about this in depth at first when I became friends with some hedge fund managers. And they really try to focus on good process and not conflating, say, bad outcomes with bad process. In other words, did I make the right decision at the time, even if I missed out on a huge opportunity, because you can also say, pick a company for the wrong reasons and have a fantastic outcome. But over time, if you develop bad habits, it can really screw you, right? So do you, do you think that you made the wrong decision with those companies, uh, in terms of the analysis of the process that you followed? Or did you make the right decision based on your rules you've set up for yourself

and you just missed out on a few opportunities but also hit some home runs? The one thing that all those failures to invest, that they all have in common is that I let the negative case dominate my analysis of whether I should invest or not. So in the beginning, as a seed stage investor, you don't really get a lot of data, right? We don't have any financials to look at. The team usually consists of three to five people. There's some users, but not enough at scale. They're usually just the early adopters. So you don't know whether it's going to be a big thing yet. So you don't have a massive diligence process. And so a lot of what you're going on is your gut about this product and about this team. And I think the easiest way to screw this up is to let the negative case dominate your perspective. So Dropbox, I'm thinking about the competitive landscape and I'm thinking,

okay, Google's going to crush them. Well, first of all, we've seen that didn't actually happen and rarely does the incumbent crush anybody. It's just not that common. A startup is going to move much faster than a division of a company where it's not their bread and butter. I mean, G drive spent three years in beta, you know, internal beta, et cetera. It was never really a priority for them. So of course, Dropbox is going to win that. You know, I look at Airbnb. Yes, there's going to be bad things that happen. Like people get their apartments trashed, you know, from time to time. But somehow I let that distract me from the potential for this worldwide marketplace for space that was just going to displace hotels. With Snapchat, I'm thinking about dick pics and how it's being used by...

That was on the pro side. Yeah, exactly. I'm like, hey. But no, I'm thinking about it's lame content. It's being used poorly by junior high girls and stuff like that who are exposing themselves. There are bad examples of how Snapchat wasn't necessarily a helpful thing. Again, I like to be proud of my deals. um, there are bad examples of how Snapchat wasn't necessarily a helpful thing. And again, I like to be proud of my deals.

On the other hand, you see today, it is just the network with hundreds of millions of users who are building incredibly valuable content, you know, with the launch of stories and discover and stuff like that. But I got distracted. I let the,

uh, I let the downside and negative case outweigh the risk. And yet, you know, you like, you look at Uber, Uber could have, it was easy enough to say no to Uber because like, oh, the taxis or the regulation or the lobby or these drivers are going to hurt people at some point. And somehow I was able to look past all that when nobody else in the Valley wanted to and get that deal done.

What I think is really interesting about Uber in particular is, and for those people who don't know, I was an early advisor to Uber, so I'm biased, obviously, in a lot of ways when I talk about it. But I think you actually got there before me. Yeah, I was pre-seed money advisor because I'd been an advisor at StumbleUpon and I'd worked with Garrett and I'm now working again, collaborating with him on Expo, which is super fun. But in the beginning, the way that Uber got dismissed, and I think this is a really common mistake, it seems, that a lot of investors make, is people said, oh my God, really?

Like black cars for one percenters in San Francisco? What's the market for that? And they viewed a very niche activity as by definition constrained to say one percenters in san francisco new york um and the if you look at let's say even recycling it started out that way and uh they kind of confused the first target with the total market and they also looked at just the available market, which they misdefined very early on. And in the case of an Airbnb or an Uber, they can grow the market beyond any comparable that's available. So in any case, a lot of these start off so incredibly niche that the positive scenarios and the potential high multiple outcomes.

Because for those people who aren't familiar with venture capital, it's a term that comes up a lot in magazines and media coverage. It's very hot right now. So you explained it in brief, but it's fair to say that 2 in 20 is a pretty fair way to think about it in terms of the – I mean, not everybody, but that's how people talk about venture capital and hedge funds and so on. You have this management fee, upside and not on the downside, whereas, say, hedge fund investors can have long, short bets and think more about it. When I hang out with hedge fund guys versus, say, a venture capitalist or VCs, the hedge fund guys are, many of them, much more apocalyptic in their thinking. And it would seem like that is tied to their ability to make money from a lot of those catastrophes. Yeah, I mean, those guys can be short.

And in fact, even if the apocalypse isn't really approaching, they'll still get people to write articles about the impending apocalypse for those companies to make sure that it's a self-fulfilling prophecy. Yeah. So what are the biggest differences in your mind between the top, say, venture capitalists, hedge fund guys, and private equity guys? How do they differ if they do? Or what do they have in common? As we were talking about at lunch, first of all, everyone I know on Wall Street is just jacked on stimulants all day long.

So they're taking ProVigil. They're doing Rails. Those guys are just in such an incredibly competitive environment that they're using every chemical edge they can find. That's definitely not happening in the VC set. The VC life demands kind of a much more steady, reflective state. There's certainly, obviously, moments of negotiation and standoffs, but it's much more of a thought and emotional intelligence exercise.

That said, because the Silicon Valley is so built on positive energy and lovey-dovey, what ends up happening is as the stakes have gotten higher, the funds have gotten bigger, the industry is more flush with capital. It's more competitive than ever. And a friend of mine who I've done some work with who's on the East Coast in the private equity world says the main difference between New York and San Francisco is out here in New York, we stab each other in the eye face-to-face. And out there, you guys just cut the other guy's Achilles and let him bleed out while looking at him.

You know, it's just incredible how I think in the San Francisco world, we really try and maintain these long-term friendships. We try and build these reputations that will scale over time because as a venture capitalist, you're raising money every three years basically, and it's a 10-year fund. And you're hoping to have a long tenure in the industry with great relationships that you can draw on to recruit people in your portfolio companies that you can use to help your portfolio companies raise more money, go public or get sold. And because of the fact that we're big equity holders who only get paid back

upon an ultimate exit, maybe eight, 10 years from now, we tend to act more with that in mind, that long-term perspective. The guys I work with on the East coast have much shorter timeframes, right? They're much more used to quarter-by-quarter analysis of a public company. Hey, do you have any news today? It's very, very near term, and they don't have the stomach for the ups and downs of building this stuff over time. And so it's great. They're living by a different report card than we are.

So that's the biggest thing. There are other businesses like this, like the media business is a cash quarterly business. You go to a media company, you go to a record label or movie studio and say, let's do an equity deal. And they laugh in your face. And like how much revenue are you going to guarantee in year one? Cause that's how they get paid, right? All those executives are on annual contracts and they've got payments. They still owe on their houses in the Hamptons. And they're just like, I'm not going to walk away from that guaranteed cash right now. Sorry, I'm breaking because you're laughing right there. I know it's taking you. No, no, no. This is good. Now, I wonder if that could also be related to the fact that say in Silicon Valley, it's such a small world and you work very hard

to get to a point where you have deal flow, meaning opportunities that come to you that are of a sort of pre-filtered high quality, right? Whereas in a lot of these other spaces, they're going out and using analysts to sort of hunt for opportunities that other people have not exploited. So, I mean, it's humans responding to incentives, right, in a way. Well, in a hedge fund environment, you're working with public stocks, usually at arm's length.

You might try and go activist and get on the board. You might try to, like I alluded to, change the press cycle. But for the most part, you're doing analysis at arm's length of these companies. In the private equity world, there's a business already there. There are products or multiple products. There's financials. There's supply chain. And so you're going in and saying, I can do a better job of this than you can.

And so there's an arm's length, and there's some tension, obviously, with management. Usually, sometimes you're co-opting members of that management team to go get it done. But the venture world is different in that it's much earlier and it's much more where the venture capitalist is a collaborator in determining the product and the strategy and the vector the business is going to take. And so there has to be a much more collaborative approach over the long term to go ahead and actually build this company. So there's nothing, you know, and I think there are certainly venture capitalists who maybe come out of the world of finance or have a different perspective that their job is just to sit on the outside and tell somebody how to run a business. That's the private equity model. But as a real early stage venture capitalist, your job is to sit in the room and actually work at the beck and call of the CEO to get stuff done to help build this company.

Lend advice about product strategy, about go to market, about the design of the front page, how to staff up and bring in the next couple of members of the team, how to go about raising money, how to deal with your first PR cycles. And so that I think brings a much different person in the successful niche, not necessarily the biggest self-promoter, not necessarily the most widely known person, et cetera, but somebody who actually can hustle to go ahead. And as we go back to what we talked to earlier, to tip the balance from something that's good to being totally awesome. Being great. What books or resources outside of personal relationships and these mentors that you've had, the compliments and so on, are there any particular books or resources that have helped you become a better investor? Yeah, I think most of those though are not business books per se. That's perfect. That's great.

Because, so I didn't get a business degree. I didn't do an MBA. I took a couple of classes. It was enough to show me it was a total farce. I did get a law degree, which is an even bigger farce, but that's for another episode. So I never had formal business training. And so I don't really...

And I tried to look at a few of those instant MBA books and stuff like that. I even bought some books on venture capital, and they're just so goofy. And by the way, part of that is because now we have so many great venture capitalist bloggers who are just an open book about the industry, who teach it. So Brad Feld comes to mind first. Fantastic. A longtime friend and mentor, Brad at Feld Thoughts, has done series over the years

where he breaks down each aspect of a term sheet, how to understand it, and the deal documents. And this is what we think is important. And these are things we think could go away. Josh Koppelman, his team have done a lot of work on that. We've now seen Y Combinator and the guys at Fenwick and West and Cooley building templated documents that are really, really watered down and pro entrepreneur and just kind of have taken out a lot of the legacy bullshit that didn't need to be in those documents. And so there's a lot of this learning that can happen now without having to buy books and without having to go to school. And so that's been fantastic. But where I worry about the Valley and about investors as well as our entrepreneurs is in the development of everything off the ball a little bit. So, you know, you and I, I just turned 40 this week. That's why you're here. my age who were computer science majors in college, that was a major just like any other

major. They still had to go get a summer job. They mowed lawns, waited tables. They had time in their curriculum to go study abroad, to volunteer. They had these really well-rounded lives. And so working with people my age and older at Google who are computer scientists was great because they had not just these amazing, amazing math and science skills, but a diversity of experience that informed great product decisions as well as just collegiality. What ended up happening is computer science degrees got so popular and so valuable that those kids didn't have to pay for school much anymore, you know, and their only work experience was like TA-ing a class, not actually getting their ass kicked digging ditches or anything. Um, and the curriculum

was rigorous enough that these guys didn't get to go study abroad and there was no opportunity to go do volunteer work and live in the developing world at all. And so as a result, I actually found we were starting to have a generation of not just entitled, you know, people talk about the entitlement of the millennials and when it comes to work out things and stuff, but they weren't just entitled. Um, but they just had such narrow band perspectives on the world. They were missing empathy. So they weren't able to put themselves in the shoes of the folks. They might be building a product for what the problems of the world might be. And so I am constantly looking for opportunities for myself and for the founders you work with to broaden the scope that they have on the world,

such that they can build something on a more informed basis, an emotionally informed basis. So, I mean, I really think empathy isn't, it's a word that's been kind of reduced to signal like, oh, somebody's, you know, somebody hurt their foot and I feel bad for them. Instead, I think much more poignantly, empathy is about, can I see the world through that person's lens? Can I figure out what matters to them? What are they afraid of? What's bothering them? What do they think is limiting them right now? What's their hope? And if I can do that, then it's a lot easier for me to build something for them and to sell it to them and to help them and to build a longer term partnership with that person.

If you were giving a assignment to folks for books or experiences, just kind of a short list for people who want to develop that type of empathy, what would you put on the list? One of my favorite books that we give to most founders is Not Fade Away. I think it's like a belly flop pick on the cover. Yeah, belly flop pick. A short life life well-lived story of peter barton uh that so first of all just on a personal note that guy's trajectory kind of followed mine he was a ski bum who suddenly made it big and tacky he was on the board of yahoo he worked at liberty media and then he hits his 40s and says okay i've accomplished what i want to accomplish i'm

dialing it back i just want to spend time with my family. And at that point, and this isn't a spoiler, it's literally how the book starts. He finds out his incurable stomach cancer. And so the book walks, uh, walks you through his biography as well as the remaining time in his life. Uh, you will cry reading this book. It is inevitable. If you don't, I'm very worried about you, but you'll definitely cry. It'll be cathartic. But it's the kind of thing where you, it's an exercise in, okay, what's on the mind of the person who's dying? And how is he thinking about the impact of his death on his family, on his friends, on his business partners, on his legacy, on the continuing responsibilities as a dad even in the absence of you know even though he's passed on in the next life and it it's an entire exercise in perspectives and i think that book will you know not only leave you feeling incredibly lucky for what we've got here and where we are but at the same time um, um, we'll sharpen that, that, that sense of how do I put myself in

somebody else's shoes? A similar book that I love. Um, it's, I, I'm going to get the title wrong. I think it's how to get filthy rich and rising Asia. I think it's, I remember you told me about this. This book is amazing. So it's written in the second person, which I don't know of another book like that, but it's just you you you like you wake up in this room almost like an old you know like an old role player or something like that online dungeons and dragons you are in a room there's a sarcophagus uh open sarcophagus no it's uh but it says you know you wake up and you basically start the book in a slum in Pakistan. And it's just writing you about how you go through your day

and the things that matter to you. And it turns out you're kind of entrepreneurial and you're willing to take some risks. And so you start working into other stations in life. And I don't want to give anything else about the book away, but you close that book and you feel like you've, you've walked through 15 to 20 different lives in another world. And I just think more of that would be better for all of us. I think it'd be better for our industry, for the depth and the

impact of the products we build. I think it'd just be a lot better for getting along with each other. So, I mean, you and I have traveled to Ethiopia together doing work with Charity Water. It's hard to complain about a day's work back here in the United States when you have been in a village where they walk three to four hours each way to get water, where the kids are dying because they drink the same water that the cow poops into, where the women don't get an opportunity to go to school because they're the same water that the cow poops into, where the women don't get an opportunity to go to school because they're carrying the water, and on the way they might get eaten by a lion or raped.

And it's really hard to find yourself complaining about our privileged U.S. life. And that's something you could just tell working in a big company like Google. There were the people who would bitch and complain. I'm like, really? Really? This is a hard day? Microsoft launched a competitive product, and that's our horrible day. And I just think we'd all be much better off if we were able to find opportunities for our CS students to go study abroad, for our MBAs to actually spend some time around poor people and to start building these more diverse perspectives.

When you look back on, since it's the big 4-0, when you were 30, who came to mind most when you thought of the word successful? And now at 40, who is the person who most comes to mind when you think of the word successful? So 30, that's a really, let me think of where I was. So I guess, oh, I was at Google at the time. Who was most successful? Just when you were like, I want to be successful, and the person in your mind who embodied that most. Yeah.

I always wanted to be at the center of the deal. And so at that point in my life, I still really admired, for instance, I always wanted to be at the center of the deal. And so at that point in my life, I still really admired, for instance, like a John Doerr or Mike Moritz. They were both on the board at Google. Brilliant guys who used their station in life to gather even smarter people to teach them about things. And then they would use their unique talents for storytelling and making composite kind of ideas come true to build companies.

They became billionaires as a result. They had great families. They were just well-respected by folks. I think I still, that was kind of my definition of success at that point. Um, at 40 and what I think my journey from 30 to 40 was about was to stop trying to define or, or, or build some kind of model or have some kind of role model out there and start to stop trying to define myself externally. Cause that's a distraction. So there are times when you're doing a deal with John door, you're across the table or something. You're like, Hey, wait, that was fucked up.

You know, like I don't wait, you're supposed to be my, my hero, my idol. And I don't like that movie just made or something like that. Right. And I think, you know, anyone I've ever put on a pedestal, I've just been disappointed by doing so. Um, I'm sorry about that by the way. Yeah. Oh, you have no far out, no idea how far you've fallen tim but but so i think for me the the exercise has been how much am i going to define that for myself not by looking at somebody else i recently got to have dinner with next to bill gates bill and melinda gates and i had been raised to hate him you know growing up at google you know he's he's a pretty evil person and i was sitting next in there and I got a chance to basically interview him about how

they have structured the foundation, how they think about which causes to take on, which challenges to tackle. And I mean, I walked out of there just deeply admiring their work, but I think I want to limit it to that and not get into like, is he a great family man? Is he, you know, he's still a son of a bitch when it comes to competing with him in software and his default browser and all his antitrust behavior. But, uh, but I really, so I'm trying to look at people and find kind of one aspect of them that I like, but for the most part I've had to decide, okay, what's really important to me. Um, that's my wife and my kids.

And you know, I'm just not that social anymore. I just don't hang out with people that much. I don't go to conferences. I'm just not available for dinner. I would infinitely rather spend that time with them. And so that was a priority choice I had to make internally, not because I saw anybody else killing it that way. I think I reflected back on my own parents who, who opted out of much more accelerated career paths so they could spend way more time with me and my brother.

And, uh, and so that's a choice I had to make, but I will say, do you know about the, the journal I found in my, in my garage? I do. And you should, you should mention that. I have a quick, well, observation is if I could spend more time with Crystal instead of me, I would do the same thing. We actually met before you and I met at Fairtex Kickboxing way back in the day. Well, yeah. I was having a bunch of people down for cocktails. We came down from Truckee into the city, Crystal and I did. I was like, let's get a bunch of people together for cocktails.

I invite Tim, and Tim walks in, and he looks at my girlfriend. He's like, I think I know him. Like, yeah, sure you do, man. Everyone uses that to try and pick up my then girlfriend. Now wife. He's like,

no. And then she says, yeah, I think I know you too. And I'm like, Oh shit, here she goes. Like I'm going to,

where's this going? He's such a hunk. What do I have to offer? But, uh, yeah, you guys used to, you guys used to train in kickboxing.

Yeah. Yeah. She was hardcore. It was, but, um, I want to pause for a second the the i do want to hear about the notebook for sure because i think it's uh amazingly nostradamus like but the um you and your brother so you and your brother have had very different

careers have done very well respectively what did your parents do that you are also trying to do with your kids yeah so my brother brian sacca he's one of the first youtube sketch stars um he parlayed that into he sold some of the first web series ever made a shit ton of money building web series and finding commercial partners for them and stuff uh he's been in movies like yeah wolf Wall Street, Scorsese recently. Um, and then just yesterday, we're allowed to talk about this. Now he, his, his series on TBS got picked up.

So he's going to be a co-star of a comedy series on TBS. Pretty funny. Um, so what did our parents do? Well, first of all, they were just always involved. So my parents took vacations with us.

We always went to national parks together. Uh, we never went to resort type places. We were just always together. And, you know, not only do they read with us like most parents, but my mom would pull us out of school to take us to go see an author read, you know, at a bookstore an hour and a half away. She would literally just pull us out of school to go to a science museum and so she was a college professor and so she had a little flexibility in her schedule to yank us out she would take us to a park called art park up in lewiston new york art park art park it's a state park in new york state and lewiston new york where the whole thing is dedicated to

different uh art media and so you can paint there you can blow glass, you can watch a performing arts troupe, kind of vaudevillian theater and stuff. And in my parents' eyes, that was just as, or even maybe more important than going to the public school. And so I think that kind of enrichment and, and just being shown that people in all these walks of life were important and fascinating. You know, I grew up where by the time I got to college, I had never heard of an investment banker. I didn't know that was a job. You know, I'd been exposed to writers, to artists, to chefs, to musicians, to engineers, to lots of teachers, to lawyers, to doctors. But it was never, you know, it wasn't necessarily driven in any particular way to kind of get us to a particular career at all. I will say there was something else my parents did that

was pretty unique, and it was called, my brother and I refer to it as a sweet and sour summer. So my parents would send us for the... Sounds like a Chinese restaurant. They would, yeah. They would send us for the first half of the summer to an internship with a relative or friend of the family who had an interesting job so at 12 i went interned with a uh my god brother who was a lobbyist in dc so i would go along with him to pitch congressman i had one tie and you know for for work i would i was a pretty good writer so i'd write up one page summaries of the bills we were pitching, and I would literally sit there with these congressmen, with these filthy miles, you know, the Alabama senator and stuff like that, and watch the pitch happen.

And it was awesome. I learned so much. I think I built so much confidence and really honed my storytelling skills. But then from there, I would come home and work in a construction outfit with just a nasty, nasty job. I mean, whether it was hosing off the equipment that had been used to fix septic systems, you know, gas and shit up, dragging shit around the yard, filling propane tanks, just being a junior guy on the podium toll and quite literally getting my ass kicked by whichever parolee was angry at me that day for minimum wage,

I think it was part of their master plan, which is there's a world of cool opportunities out there for you, but let's build within you a sense of not just work ethic, but also a little kick in the ass by why you don't want to end up in one of these real jobs. So let's see if you can find in yourself the drive to go and do whatever it is to and did they choose for instance uh you had the introduction to say the uh the god brother i think

you said for the lobbying did they also help organize the the sour uh part two to each summer yeah so that the guy ran that construction company and equipment rental company is my dad's best friend he was under strict orders to make sure we had the roughest day there was special treatment yeah it was yeah we were treated specially shittily so we were we were hammered there and by the way as a result i know a lot about construction equipment this is this is a superpower of mine uh i can literally from air compressors to ditch witches to anything you need in Milwaukee sawzalls, I literally have incredible amounts of knowledge in that space. It also just reminded me of something you mentioned long ago, and I'm not sure if it's still true, but you said one of the things that you look for, and it's maybe not a disqualifier, but in founders, is a track record of having had at least one shitty job. Yeah.

Yeah. Well, I particularly look for that in hiring. So I want people who've lived, studied, traveled extensively abroad. I want people who've been exposed to poor people. And by the way,

the live study travel works extensively abroad is because you can get away with a very comfortable life in the United States as an English speaker, particularly as a white person. You never really have to ask for anybody's help. You're not being harassed by the police. It's pretty easy pickings. You find yourself overseas, particularly in a place with a non-romance language where you can't make out the signs yourself. And you have to stop and ask for help from complete strangers. You literally have to be entirely vulnerable to people you've never met. Just expose yourself.

And they could send you into a dark alley and beat the high out of you and take your money. Or like most people on the planet, they'll be really nice and try to help you, even if you don't share a word of English in common. And I think there is something incredibly formative about that experience of having the humility that comes from having asked for help. You know, the best managers in the world are people who are great at asking for help and realizing that makes them a more powerful CEO than a less powerful CEO or more powerful manager than a less powerful manager. And so, uh, I look for people for whom athletics is a big part of their life. I don't think it needs to be team sports necessarily.

I think you can be a great individual athlete. Maybe you train with other folks, et cetera. But I think it just shows not only some self-discipline, but also just a value on the introspection that comes with athletics. You actually care about yourself. I think there's a little bit more balance in that life. I think it also teaches you to contend with losing and sort of viewing that as feedback and not some type of failure or death sentence. Sure.

And then seeing, I think, the temporary and how temporary pain is. Pain is temporary, glory is forever. No, it's true. So, I mean, I remember when I did an Ironman and when I was doing that, and I had a fever that day, a 103-degree fever, but my parents had traveled out to watch the race, and so I didn't want to not do it. And the Advil worked for, like, the swim and the first part of the bike,

and then I was just a mess. But I remember thinking, no matter what happens, I will be in my bed tonight. And, you know, this is a very, very temporary moment. In 2009, I rode my bike across the country, and I remember it was 35 days of riding, basically 100 miles a day. I remember multiple days out there, I'm like, I will be in my bed tonight.

And then in the other ear is this voice, and then I have to fucking do it again tomorrow. I'm going to pull out a couple of random ones but uh what historical figure do you most identify with buckminster fuller why and maybe you could give some context for people who don't know who don't recognize bucky so bucky is i mean there i have a feeling if we went to his Wikipedia page, there'd be a paragraph of, of nouns describing this guy. He's a mathematician. He was a philosopher.

He was an engineer. He was a poet. He's a lecturer, a teacher. He's an inventor, a futurist. Uh, he,

he's one of the few people you will find that is willing to write the optimistic case for technology that that all this stuff isn't leading us to dystopia that we actually are busting malthus and the malthusian kind of quandary wide open that we now have the resources to feed everyone clothe everyone, power everything without having to dig holes. I mean, the guys, he passed away 30 years ago now, but, um, but there is an optimism to everything he writes there that these machines aren't here to take over, that humans are good at heart. And there's something really inspiring about that is we wrestle with some of these big scary issues about the power of of the internet too you know we periscope gets launched and in the first week

i'm getting questions from reporters about well can't isis use this to rally people and you're like seriously that's the part you're going to focus on a periscope like all the amazing uses for periscope which i think is absolutely groundbreaking technology and really really cool and people are so focused on that negative case and at the same time i think periscope can be used to inspire educate heal bring people together across so many different planes that it's easy to get distracted by that negative case. But I think Bucky, more than anyone I know, found optimism in the stuff that could otherwise be pretty daunting. He also, didn't he also create, it's not geodesic, that's not the word I'm looking for, the domes. Yeah. The sphere. Geodesic domes. Yeah. They are

geodesic domes that you see people constructing at burning man yeah fascinating guy um and the buckyball and the buckyball really interesting dude also uh uh what was the concept it was really maxian uh there were more there's some type of tensegrity tensegrity which, good man. So this concept of tensegrity, I'm not going to do it justice, but there are some really interesting parallels between his discussion of this concept of tensegrity and the role of your torso cavity and just sit there in a pool of nasty meat. But you have this fascia that holds you together. Super, super interesting guy. Completely agreed. Did you collect anything when you were a kid?

And then we need to talk about your notebook. Yeah, I mean, I collected money. Collected money? I mean, I always wanted to make money. Do the backstroke like Uncle Scrooge in the pool of money? I mean, I was just, I always wanted to make money and just do the backstroke like, like uncle Scrooge in the pool of coins. Yeah. Excuse me. I scratched my monocle swimming through my room full of gold coins. No, I, I was a hustler from day one. I grew up middle class, so we never had want of anything but i always thought you know there would be a certain independence that came with money a certain excitement that came with making money and so

from the earliest days i would you ever seen the like the those pungent walnuts that come out of a tree they've got that green pungent skin on them and if you if you pierce it with a fork it smells like ammonia so i would grab those things out of our front yard put in my wagon pierce it with a fork, it smells like ammonia. So I would grab those things out of our front yard, put them in my wagon, pierce holes in all of them, and I'd build a sign that says, air freshener's 25 cents. And I'd put it on my brother, like a sandwich board, my younger brother, and I'd tow it up and down the street and sell these things door to door. And all the people would call my parents and just be like,

do you know where your son is? But they'd still buy them. So I'd clear like three, four bucks, come home, richest six-year-old in the neighborhood. And I just love that hustle. I was always going after something like that. Was that something you were just pre-programmed to do, or did your parents facilitate that? It's not either my parents' game at all. Like, they were, no.

I mean, my mom is a really accomplished professor and author in the field of education. My dad is an incredible small-town lawyer who, frankly, could have made a lot more money but was constantly doing pro bono work for people in our town. He's an incredibly revered person with so much goodwill. And so neither of them were hustlers like that, but I was always looking for the angle. Was there a movie did you watch like the toy or what was there trading places was there a trigger or trading place is a good movie um no i mean i will say you know i i traded baseball cards despite

not liking baseball at all i never watched any games but like that 86 87 don russier the 85 tops you know with canseco rookies and the roger clemens rookies that mark mcguire olympic card from 84 like i was really into those things because i was good at it and i could make money doing it later i realized i was really good at playing cards too so i played a lot of cards i ran a card room in my high school one of my teachers what type of card games we're talking uh we're playing a lot of bourree which is a game that's only played in New Orleans and Lockport, New York. It's a really high-stakes, geometrically growing pot game. And so you can really get stuck pretty quickly there.

Especially if you're teaching them the rules. A lot of that, a lot of hearts, a lot of bid pitch, a lot of easy-do-see. And just really street games, really. And we had a teacher who took a rake. I had him on the take so he could write passes so people could get to the card room. But I always kind of just had to hustle. How old was that? How old were you? I did that. I started that in junior high. One of our friends... What did this teacher teach? What was their subject?

No, one of our friends' mom was a teacher. And so she had an office. So we got to use the office as the card room. That was more AC-Ducey back then. It wasn't a really cerebral game. But again, it had the progressive pot type stuff. In high school, it was my cross-country coach and an American history teacher, Mr. Main. He was a gem.

That guy, he just knew that I wasn't cut out for public high school, and so he really helped me. You've always had this hustle. I have to ask, and if you want to parry this one, feel free. So I've heard these rumors that you got through law school without going to any classes. Yeah, well, if you go to class, then they've got your name on the seating chart. Yeah. The first day you have to sign the seating chart, it goes around and then you sit in the

same seat every day in law school. But if you don't go to class and your name's not on the seating chart, and so they can't call on you and realize you're not going to class. And so instead you go to the exams. And the exams are just printed off the registrar's roll, right? And the teacher of the class isn't there. So you just sit down for the exam. And if you're a good test taker, you can kill it. And I was amazing.

I had some of the best grades in my law school. How did you orchestrate that? What was the method to the math? Well, the funny thing is, unlike any other college class or MBA class, what's taught in the classroom in law school, A, has nothing to do with being a lawyer, and B, has very little to even do with the exam. It's such a joke, man, the Socratic method and stuff like that. I think there are some people who need to be taught to think linearly, pro-con, pro-con, pro-con. But I think by that point, I and my roommate, Kevin Cody, who you've met, you know, we're already there. Owen Brainerd of Brainerd Capital

was the year ahead of us at Georgetown Law School. And he helped us realize this method. He's like the Tim Ferriss of Georgetown Law School. He helped us understand what was important, what wasn't. And, you know, in my heart of hearts, I wasn't really there to be a lawyer. I think if I'd wanted to be a litigator, if I really wanted to go try things before the Supreme Court, then going to law school and actually attending a class and interacting would have been a great exercise. I went there because I thought it was my fastest path to a seat at the table in Silicon Valley. I wanted to be in the middle of a deal and have people listen to me, even though they probably shouldn't because I

had very limited experience. But I wanted to be in the maelstrom. And I knew that if I went and got a kick-ass law degree with great grades, I could end up at a kick-ass law firm in Silicon Valley and be a guy who at 25, 26, they were going to listen to. Where else does that happen? So that was the path, but yeah, I kicked ass in law school without going to any, I will say this, you might've heard the legend, but, uh, so the, the thing you do need are some notes from some of the classes to understand like which cases the, the professor brought up and what they think is important. And so, uh, I threw a keg party every semester where the only thing you had to bring to get into the party were your notes.

So classmates would bring their notes to the party, throw them in a bin, and then I would go xerox them all and build kind of a composite and use that to study for the exams. That's genius. And the notebook that you found not too long ago, this all tracks together, but we're approaching it in kind of a memento type fashion. Yeah. The notebook, tell people about this notebook. Yeah, it was funny. I was just, just two years ago, I found this in my garage and it's really, it's been weighing on me and particularly this week turning 40. So I was 19 and I was 20 years old. Actually I was 20. I was 20 years old, actually. I was 20.

I was living in Ireland, going to school there. I spent two out of my four years abroad while at the School of Foreign Service at Georgetown. So I'm living in Ireland, and there was an expat girl in one of my classes, and we were basically flirting with each other by taking a notebook and writing in 10 questions for the other person to answer, and then you get it back, and you answer 10 questions and write 10 new questions. We'd pass back and forth while we were supposed to be studying like 20th century Irish film or something like that. And at one point, one of the questions was,

what do you want to be when you grow up? So I'm 20. I'm living in Cork, Ireland. We basically would start drinking stout around 11.30 a.m. every day. It was like second and third meal was stout. And by that point, I'd still never heard of an investment banker. I'd definitely never heard of a venture capitalist. And so I just write in there, I said, I don't know what the job is called, but I know it's going to involve a lot of talking on the phone,

a lot of negotiating, a lot of yelling at people, high risk, high reward, unbelievably high stakes. I'm going to do it part-time from the mountains, part-time from the beach and whatever it is, I'm going to be done with it before I'm 40. And so two years ago, my wife and I are standing in our garage in our mountain house, cleaning it out because we're moving some stuff down to our beach house. And I find this old notebook, and I'm like, hey, look at this, and we're flipping through it, and I find that answer. I just really choked up. It was an incredibly weird self-prophecy that I kind of laid out exactly what my job was.

But I also felt a certain amount of pressure. Like, so what do I do now that I'm 40? Do I keep doing this job or not? Or do I need to, do I need to listen to the scrolls? Right. Like shatter some type of cosmic continuum. If you, if you don't follow the prophecy, the, um, so you do spend a lot of time on the phone or you have historically clearly a very good storyteller. What are the the what are the words or phrases that you overuse the most the words or phrases that i overuse the most amazing bananas cocoa nuts is cocoa nuts a close cousin to bananas yeah that is cocoa nuts um i use the phrase that said a lot as a transition, you know, transition words are really important for me because having, I know you've studied how to learn other languages.

One of the things I always focused on when studying and I speak Spanish was, was transition words like sin embargo, like nevertheless, you know, like I needed needed i needed to have those transition words down because that's how i could tell a good story that's how i lay out we're in a new paragraph even if you haven't been following me i got a new concept coming and and i really think studying it that way and bringing it back i used to live in spain and ecuador el salvador i bring that back to my english and i realize i'm really clear about my transition words now. So hard return that said. Yeah. But I am, I mean, you can ask Matt Mazzeo, my partner, you know, we write updates to our investors that no other fund does. Like we, we write deep, colorful narrative about

all of our investments, the state of our companies, the state of the industry, our own personal states, what we're thinking about. And by the time you see one of those as an investor, I've probably edited that thing, like Mazio's draft, 15 to 20 times. I'm obsessive about writing. It needs to be crisp, original, no repetition of words and phrases. I need to bring it. And that was something I got directly from my parents who are both exceptional writers but i think in in colloquial terms when we're talking with people i try and emulate whatever the language pattern is of the person i'm talking to it makes them

feel better i don't even think i do it consciously like you come to an island like this it's staffed all by brits and you can't help but suddenly find your R's getting a little bit funny and you're like, okay, okay, hold off. Yeah. But, uh, but I think that's something I really try and focus on is speaking in the same speed as the person I'm talking to. And you seem to have had a very clear picture as reflected in the notebook and obviously the early hustle. You had this drive that seemed to point in a very particular direction.

I know that when I was about to graduate from college, I had no idea of what my next move was. And law school hadn't even entered the realm of consideration. What would your advice be to college students who are just about to graduate, who have no idea kind of what they should focus on, what they should do? Do you have any thoughts, kind of general suggestions that you would make to someone in that position? Well, I did give a graduation speech. I think it was two years ago now at the University of Minnesota school. I didn't really have any ties to, and they reached out to an agent who hired me for it. And that was daunting, right? Cause I give speeches all the time and it's usually to a room full of like Conoco executives in Kissimmee, Florida. I'm just

there for the check, but a graduation speech is intense. That's a hopefully memorable, hopefully formative. Hopefully you're talking to people who have incredibly open minds and it's such a meaningful transition point in their lives. So everyone should go watch it. But what I focused on was be interesting. I think, you know, you're here for a week where I've gathered my favorite friends. And one of the reasons why the week is so fun for everybody is that everyone else here is totally interesting, right? Not necessarily a titan of a business, but just interesting, compassionate, adventuresome people who just go for it, who are up for it. And I think as I look around who I've hired, who I like to work with, who I back, they're interesting.

They're people you want to be around. You want to spend time with. You you want to be around. You want to spend time with. You want to hear their answers. You want them to influence your thinking. You want them to push you a little bit to try things that you haven't tried. You want them to teach you. And if I could give advice to someone who feels like they're looking at a maze of opportunities and none of them is particularly presented or they're not sure how they want to get ahead or distinguish themselves. I think pursuing a course of life that embraces interestingness. And by the way, I don't think people are born interesting. I think it's actually something you can accrue. Living abroad, volunteering for a group like Charity Water and going into the field,

taking an actual service job, going in and talking to the people around you and having meaningful conversations, including the homeless people, including your neighbors and people who are actually working for wage, getting involved in politics briefly. I think I campaigned for Obama a couple times, and I was everything from one of his top fundraisers to I actually spent time in the field in Elko, Nevada, which put me into the mobile home living rooms of some of the poorest people in the country

who somehow are supporting the Republican Party in that election. And it was surreal, but it gave me a life perspective that I don't think I would have had otherwise. So I think those kinds of things make for much more compelling people and will start to present career opportunities. So one question that I'd love to ask is when you were sort of in your most recent sweet spot of wealth accumulation, whether that was related to what you did with Twitter or otherwise, were there any particular shifts or routines, habits that helped you maintain that peak output

or achieve what you did? Yeah, so, I mean, you know my personal story. So I've certainly been fortunate to make a bunch of money in the last few years, but in bubble one, I made a bunch of money, levered up, lost it all and a lot more, leaving me millions of dollars in the hole. I was able to work it back out to zero by 2005. And since then, a lot of work, a few ups and downs, but it's worked out pretty well.

And it's looking good for the road ahead too. So that said, I don't think there was any particular like, I don't think I have a calendaring function or an email function or anything like that. That's like a hack as much as I would point to two things that I think shifted the nature of my business. One was that before I had really made any money at all, before I had any business doing this, my then girlfriend is now my wife, Crystal, and I moved out of Silicon Valley up to Truckee. I mean, literally took ourselves out of the game as a, you know, an angel and venture investor. Like how do you, how do you manage a venture practice from up in Lake Tahoe? And yet what I realized was that being in the city, I was just playing defense the whole time. I was taking these coffee meetings,

listening to these poor pitches, you know, being, being friendly and kind of obliging people with their ideas. But I'd spend all day in these meetings and I'd get home and I'd be like, shit, I haven't actually accomplished anything. I would go to the cocktail and dinner parties I was invited to, but they weren't actually the people I wanted to spend the time with. And so I was just reacting to everything rather than actually going out and, and, and playing offense. And so Crystal and I moved up to Tahoe and we quite literally built a list of people we wanted to know better. And we just started inviting them to come up and stay with us in Tahoe. Um, you were definitely one of those people, right? And you came up and spent a lot of time with us there. We, I also started writing lists of the companies that I wanted to get to know better. And I just went in deep with them and asked them to come up to Tahoe.

And so I was playing offense now. And I had a perfect excuse for why I couldn't get coffee with all the randoms. I'm like, hey, I'm sorry. I'm just not in San Francisco. I'm three hours away. There were a couple obsessives who drove all the way up there but for the most part i was able to pick and choose the interactions that i thought were going to be most valuable to me to my wife and to my business and that was a huge shift and it was risky as hell because i i mean i couldn't even

really afford the house we bought up there when we first bought it six hundred thousand dollar three-bedroom house uh and and I certainly didn't have a strong enough brand that I could afford to just walk away from the game, but I made a conscious decision to play offense from up there. And that worked out. I mean, I got to know guys like you really well, Travis spent a lot of time in our house, Evan Williams and Jason Goldman from the Twitter team. Uh, we had teams like, uh, I mean, the Loku guys. It was a great deal. We sold to GoDaddy.

We just had many, many teams as well as many friends. Ted Reingold, who found our Doctrine and Capsule, now COO at one of our hottest companies in venture, was a guy we got to know very well from staying at our house. David Ulovich, CEO and founder of OpenDNS, a guy we got to know really well staying at our place in Truckee. And so these are people we just go deep with. Garrett Camp spent some time there. Just a really, really cool crew that I think we got to know way better and build much more meaningful relationships, breaking bread,

making dinner, hiking, skiing, that kind of stuff. The second thing that I think was different was that after a couple years of trying to explain to people why Twitter was going to be a real business and why, you know, people would look at me like, how are they ever going to make any money? And I'm like, man, if you don't see that. And so I finally just said, fuck it. I'm not here to convince you anymore. I'm just going to buy all your stock. And there was just a, there was a bit that flipped for me as a seed investor. You have to be very collaborative. You're constantly trying to get, you know, basically bring people into your worldview and say, okay, do you see the future of this company? This is why you want to invest in this company in the series A or series B. This is why you want to buy it. This is why you want to work

there. And I got so fed up with doing that on Twitter. I was just like, fuck it. If you, if you can't see it anymore, then you don't deserve to make any money on this company, which is like just unhand the fucking shares.'ll take them and so i just started buying that stock up from early investors who wanted to bail etc and by the time of the ipo my affiliated funds that were doing this owned more of it than anybody else we had about 18 of the company and so that worked and so there's just there's a few times where you know that wasn't necessarily the polite or most political way to go about this thing. It certainly was daunting the amount of money I had to raise to buy that much of the company.

But the bit just flipped for me. I was like, fuck it, I'm just not going to play this traditionally anymore. Just to touch on one aspect of that, I know we have to get ready for dinner and run in a few minutes. So we'll wrap up and maybe do a round two sometime if people like this by the way it's a it's 70s disco night tonight are you ready oh you have no idea how ready i sacrificed luggage space for all of my other stuff so i could get my disco gear here wait so can i just ask a luggage space question yes is is that why you insist on wearing the speedo when you swim here? Is that... Please tell me there's some reason other than... At lunch, we came to the conclusion

that you might actually be aspiring to be a seven-year-old German man at some point. Like, that's the path your life is on. I actually am. Bruce Jenner is on a transition to womanhood, and you're on a path to transition to being a seven-year-old German man. I was thinking more like a Greek man.

Because I saw this photo... Actually, no, it wasn't a photo. there was this guy walking down the beach passing me and a friend and i was in these like really baggy board shorts like cool fucking brazilian surfer style horrible to swim in by the way it's like swimming with a parachute behind you but walking down and this this greek guy wanders by he's got like these blue skivvies on that are just like his guts hanging out like basically covering up 70% of them

covered with obviously like silverback hair massive gold chains glasses could not look fucking happier and he just gave zero fucks about our opinion whatsoever so I was like you know I need to like put on the training bra if I'm going to get to that point.

So I do wear the Speedos. No, but your power move today was you came to the lunch table on the beach with regular trunks on, and everyone commented like, oh, thank God, Tim wore regular trunks. And then as you walked towards the beach, you dropped your regular trunks. Were they tearaways? And revealed the Speedo, and then proceeded to swim. Well, the excuse that I'll use is part of the reason I think I failed to learn to swim properly for a long time was partially a wardrobe malfunction because I'd wear these baggy shorts that would hold me back.

So this is my effort to be more dolphin-like and less drowning monkey-like. Well, it does work in the water. It's just on land. On land, it can be offensive to the more sensitive Americans among us. But, yes. So that also takes up less space. So you can fold it up and put it in a pocket. I really wanted to believe that you weren't wearing those because you liked them as much as it was a luggage efficiency thing.

I think one of the instructors here, one of the guys doing kite surfing or something, was like, is he wearing those seriously or, like, ironically or what? He did ask that. here. One of the guys doing kite surfing or something was like, is he wearing those seriously or like ironically? So on a completely unrelated note, uh, where the fuck was I going to go with that? Who knows? I tell you what, I know we're, we're tight for time. So I will, um, two last questions and then maybe we can revisit a bunch of this, uh, another time. But is there any purchase that you have made could be years ago or recently less than a hundred dollars that had a significant positive impact on your life? Okay. I mean, just right off the top of the head, the first thing that jumped in my head

was there's a Buckminster Fuller book called I seem to be a verb, incredibly, incredibly limited production. You have to buy it vintage if you're going to find it i regret even saying it out loud now because there are so few copies out there they will be hoovered up by your audience they're gone uh but that book and it's special it's actually it's beautiful inside it's not like his other books which are just long long texts it's graphic lettering and photographs and you read it through on the top half first and then you flip the book upside down and you read it through on the bottom half in the other direction it's super compelling there's some great thoughts in there it'll cost you i mean i don't know what

your mark what your viewers are going to do to the market but it's under 100 bucks but it's incredibly special very very treasured. Awesome. Yeah. Those, those will disappear pretty quickly. So get them while they're hot, I guess. Any last pieces of advice or recommendations to leave with the would-be entrepreneurs who are listening to this? People who are thinking about starting a company of some type, think that that's their path. Maybe they're just a shitty employee like I was and are out there hoping to have a head start in somewhere, an advantage. What advice or recommendations would you make? My first recommendation is be honest with yourself. Most people aren't that person.

And I think we are in an environment right now where there's so much venture capital and the tech industry has been shown to be so cool, great perks and a great fast path to wealth that it's very attractive right now to posers. And I think most people aren't cut out to be founders. Most people aren't the entrepreneurs who will have that ultimate success. And it's polluted our industry.

We have way too many shitty companies that are pulling all the great talent away from inevitably great companies. We have way too many people wasting time on competitive ventures that have no hope whatsoever. And so I think you have to be really, really honest. Are you a founder or are you an employee? And one of those things that we touched on earlier is that inevitability of success. If you were, people ask me what went through my head when I lost $12 million in a matter of a week and that was another four million dollars on top of that just a really highly levered public market bet which went upside down in a crash and then four million dollars more from there leaving me deep deep in the hole

and people ask like were you sad were you and i just my brain works in a way where i wasn't sad i was pissed it was a bummer, but I just knew I would always make that money back and get back into a good spot again. I was just going to take longer. I just knew that I would never be the guy who just lived out, you know, declared bankruptcy and lived in the holdup the whole time. I just knew I would make back the millions of dollars and then go from there. Uh, when I went out and branched off and started my own firm, I spent money to do the documents that a big, big firm would do right off the bat.

And even though my lawyer was like, we don't really need to do this, it's a small firm. And I was like, well, this is going to be a huge thing. So I want to do that now. When I set out to raise a billion dollars in the fall of 2010, that was absurd. I didn't even have office space. I had one other employee at the time who managed our back office from a winery in Healdsburg. And so I had no business raising that money. I wore cowboy shirts the whole time and rarely left Truckee, California to do it. I asked everyone to fly their fancy jets into Truckee and get it done at the Greasy Spoon.

And so I just knew there was an inevitability that this thing was going to work out and that I wouldn't fail at it. If you're not the kind of person to think that way, if you really don't have that gene where you know it is going to work out, know, you don't hope, you know, then you shouldn't be a founder. So I hope that doesn't depress anybody, but hopefully I'm saving a bunch of pain. I think there are also many paths to amassing incredible fortunes and being a founder is actually a pretty thin slice of that pie and a very high risk sort of binary way to approach things. What is the, what is the movie that you can quote from most readily?

The big Lebowski. I mean, you start me with the opening scene with Sam and I can, I can recite the whole thing. I go to Lebowski fest every year. I, uh, my,

my division at, at, uh, Google was secret. We were working on secret stuff. Now you're starting to see kind of all the spectrum and wireless system stuff they did. We actually launched the first weather balloons. Cassidy went on to build Loon and stuff like that.

We dug the fiber, et cetera. But that whole division was called Project Lebowski. And if you, anytime we launched something or achieved a milestone, everyone got Achiever shirts. It's, you know, Little Blaski Urban Achievers, inner city children of promise without the necessary means for a higher education. So, Philip Seymour Hoffman,

rest in peace. So yeah, that's a pretty important movie for me. Awesome. Where can people find you on the internets? And I'll give one more book recommendation since the Bucky book is probably going to vanish. The Magic of Thinking Big, I think, is one that I found very helpful.

Other people might as well. Are we giving book recommendations right now? Sure. You know one of my favorite books is The Essential Scratch and Sniff Guide to Becoming a Wine Expert. This is a fantastic book. Co-authored by my fabulous wife. It literally,

you know, the master sommelier, Richard Betts. There's incredible knowledge in that book. So my wife and Wendy McNaughton, the illustrator, combined to make a children's book for adults that'll teach you how to drink wine. That's indispensable for any aspiring entrepreneur. It's super fun. I might have to have Betts on at some point to talk about hacking the master SOM test. He's fascinating, that's exactly what he does. He teaches people how to take that long lunch and talked about it. He's a fascinating dude. So the,

the web, the ever expanding web of soccer. So where am I? I'm at Saka on Twitter. I just don't use the Instagrams very much anymore. I'm also at Saka on Periscope and that I've been using a lot. I think Periscope changes everything. Cool,

man. Speaking of changing everything, I think it's a disco night, so we got to get running. That's right. That's right. All right. Thanks brother. Always fun. Thanks, Sam.