This Week in Startups - E1035: SoftBank Managing Partner Jeff Housenbold on deploying the $100B Vision Fund, getting recruited by Masayoshi Son, counseling founders to manage massive capital, creating moats, reasons for shift toward profits, lessons from WeWork & more

Episode Date: March 10, 2020

0:40 Jason intros Jeff Housenbold 2:16 What did Jeff do before joining the Vision Fund? How did he help scale eBay & Shutterfly? 4:15 How did he wind up at SoftBank? What was it like being recruited by Masayoshi Son? How did Masa pitch the Vision Fund to Jeff? 13:28 What was the timeframe for deploying the $100B Vision Fund? 18:10 How does SoftBank size their bets and how do they counsel founders to handle massive amounts of capital? 20:07 Coaching founders on using capital to create talent moats & build brand partnerships 22:17 Scaling their diligence alongside their capital deployment, understanding core customers & focusing on positive unit economics 28:30 How did the Uber & Didi deals go down? How close was SoftBank to investing in Lyft instead of Uber? 33:23 How SoftBank looks at investing in adjacent companies and mergers 38:42 Jeff's background & the importance of education in changing your lot in life 46:07 Changing focus from Growth to Profits, the effect of short-term thinking and its impact on Dara and Uber since their 2019 IPO 57:23 Thoughts on VTOL? Will we see VTOL vehicles or self-driving first? 1:02:16 Jeff's take on Coronavirus and its impact on the markets & how founders and CEOs can combat market volatility 1:09:38 Portfolio Review: Zume Pizza 1:11:32 Portfolio Review: Katerra 1:14:03 Jason guesses the toughest 4 industries to penetrate 1:15:03 Portfolio Review: Plenty 1:19:29 Portfolio Review: Memphis Meats 1:23:05 What happened with the WeWork investment? What % does SoftBank now own, and can they turn it around? What are some lessons learned from the entire saga? 1:27:13 Jeff shares some "Jeff-ism's of Business" 1:27:52 How is the Vision Fund II raise coming along? 1:28:36 How the scale of the Vision Fund impacts people's ability to understand their investments 1:32:05 For founders: When is the right time to engage with SoftBank?

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slash twist. Every five or ten years, somebody comes into Silicon Valley with a bold new vision and they change the funding landscape and how we do business here. Venture capital we've heard of, angel investors you've heard of, that's basically the foundation and the fabric of what we do in Silicon Valley. And then about 10, 15 years ago, why combinator started? a new way to fund startups in a very large way. An incubator, but wholly unique in its approach,

and now doing three, four hundred investments a year. Tech stars as well, at the same time, they both deserve equal credit. Then you had Angelist and Sequoia Scout program, taking angel investing and democratizing it, something we've worked on with The Syndicate.com, and many of you read the book. Then Yuri Milner came into town,

and he started putting large bets on the, speculative companies like Facebook and Twitter and everybody thought, well, he's the sucker at the poker table. Sure enough, he made the best bets or some of the best bets in the history of our industry. Three, four years ago, we started to hear about SoftBank creating a Vision Fund, a $100 billion fund, something that has changed the landscape and that people have a lot of questions about. We're very lucky to have Jeff Hausenbold on the program today. He is a managing partner at the SoftBank Vision Fund. And you're nice enough to come on the pod and talk about what you're doing. So welcome to the pod. Thanks for having me, Jason. So before we get started here,

what did you do just in a capsule for folks listening before you joined the SoftBank Vision Fund? Yeah, right before joining the Vision Fund, I was the CEO of Shutterfly for 11 and a half years. And when I joined, we had 103 employees. And when I left, we had more than 9,000. We went from 1% market share to more than 77% market share. And we beat more than a thousand venture back companies, not to mention some small companies you probably never heard of, Walmart, Walgreen, CVS, Costco, Kodak, Fuji, Sony, Apple, Yahoo, Microsoft, and AOL to name a few. And so it was an amazing journey and how to come in as a fourth CEO in three years, turn around a business, find product market fit, find profitability, and scale it and take it public. And before that, I was an

executive and early executive at eBay. Wow. I ran M&A. I ran the business to consumer group, customer retention, acquisition, marketing, charity, international, a number of things. And when you joined eBay, was that,

was it public already? It had just gone public, yes. Wow. So PayPal was after they went public or before? After. It was after. And then Half.com? I think you guys bought that.

Yes. At some point, were you involved in either of those transactions? In half, yes. Oh, wow. So half, was that Josh Coppulman from first round? It was. Josh is amazing and the team there. And I remember when he spent a couple years post-merger integration and decided to go back to Philadelphia. And he said, I'm going to start a venture fund in Philadelphia. And everyone laughed at them. And I think Josh is having a good laugh now. Yeah. For people who don't know, half.com was a really clever idea that the founder or the co-founder of first round capital created, which was buy any CD or book back when people bought physical media for half price. And so it was like a, eBay just for books and CDs and eBay bought it.

What else did eBay buy at that time? We bought Ebizar, which became Europe and Alondo, which was Germany. We ended up investing and buying EchNet, which became China. Those are some of the big ones. And then later on, obviously, PayPal was large and Skype was large. Yeah. So tell me, how did you wind up at SoftBank? Yeah, so after 11.5 great years at Shutterfly, I had no.

never taken any time off. So I grew up on welfare and food stamps and two days after graduating, undergraduates started my job. Two days after graduate school, I would quit a job on a Friday, start on a Monday. Kind of one of my problems is a workaholic. And so after 11 and a half great years, I decided I was going to retire. And since it was a public company, I wanted to do a smooth transition. I gave six months. And my wife's like, take a year, you deserve it. I said, I'm either going to probably start biting my nails or you're going to throw me out of the house if I take a year. Well, the phone starts ringing. And that little voice inside of your head says, well, will they call in six months?

And so, you know, fill in the blank, famous persons call them. They want to chat with you. You go have a bunch of meetings. And I was so fortunate. I ended up looking at 62 companies over the course of 14 months. 62. 62. Some of those was, would you want to be in an angel?

Do you want to be the chairman? You want to be on the board. You want to be the CEO. But most of them were to come run the company. And through that journey, add a number of CEO offers and venture and private equity offers. And everyone is saying there's so few really talented, scaled operating executives, and you're really good at it and I enjoy it. And so I was really focused on that. And then a good friend of mine, Pete Brigger, who was co-founder of Fortress that SoftBank had just bought, I was having lunch with him. And he said, hey, House, what are you going to go do? And so, well, here are the five CEO offers I currently have. And I'm thinking about this one or this one. One was a large public tech company. Another one was a private venture-backed company. He goes, well, those are all really interesting. You should meet Masa. I just sold my company. to him. And I said, I met him in 1999 when I was at CMGI. He wouldn't remember me. But yeah, make an

introduction. I took it as a throwaway. Right. And what he meant was meet Mossa because if you go to some of these companies, you may be able to raise money from this new thing he's starting called the Vision Fund. And so that was Monday at lunch, Tuesday. I got a call from Mossa's office and he says he would like to meet you. Wow. And I was like, oh, well, is he in the city or in Palo Alto? And I said, no, Tokyo. And I was like, well, I can't physically get there by tomorrow because it's a day. Right. And so I said to my wife, Masa Yoshisan wants to meet me, but I have to make a decision

by Friday on these five offers. She's like, well, you could think on a plane. Yeah. So I got on a plane, went to see Masa. We had a lovely discussion. And he said, these are- Did you go to that like top floor office where it's a giant conference room? You got it.

But we were in the living room part of it. The living room part. I mean, I've had lunch with them twice. Like, Masa's a fascinating cat. Like I went to have a meeting with them in a giant conference room that. How many people could fit in that? 50? More.

It's the largest conference him you've ever seen. And then he said, we have this a great meeting. We go for two hours. They said he had half an hour. We talk for two hours. Right.

Then he says, what are you doing tomorrow? How long are you in Tokyo? I said, well, I'm going back like tomorrow, whatever. He goes, oh. And I said, why? I said, well, you want to have lunch tomorrow?

And I said, sure. And so I put my fly back a day. And then I had another two hour lunch with him back to back. He was so engaged. Yes. And that's him. When he finds someone who he can learn from, he wants to get more.

He's a sponge. And he loves to do that. And so we were supposed to have 60 minutes. It turned into a couple hours. He had a dossier on me. And at the end, he said, you're going to be successful no matter what you do. But you're an entrepreneur and you've been an investor. Why don't you come on this journey and help create the vision fund?

So you're not just putting all your eggs in one basket as a CEO. And you're going to see the biggest and best companies in the world. And we could use a guy like you who can be a mentor and a whisperer to the CEOs and also can be an investor. So come help build the vision fund, be an entrepreneur and an investor at the same time. And it was quite attractive. And so flew around the world, met a bunch of people in a week later. I was, I think, the 14th investor at the Vision Fund. We now have 570 people.

570 people work at the Vision Fund. How did he explain it at that time what the Vision Fund would be? And had he raised the money yet or he had raised part of it? Where was he in the process? He had raised part of it. This was February of 17. Of 17, and I started in May of 17. And so it was clear there was a path.

He said, if you think about the asset class of venture capital, there's multiple stages. And there are people who play in late stage. But companies in today's world, and this is me paraphrasing a long conversation, but capital can be a differentiator. Because my sense is in the old days, you could have a business in New Jersey and the people in New York wouldn't know. Right? Like there was not the information flow. With the internet, things happened all time. I was on Groupons board and there was over 400 competitors within a year. So if you can move quick and kind of plant flags on a global basis, you can create brand and barriers to entry. You could attract the best talent. You can pour more money into R&D. And so we're going to raise a very large fund. We're going to focus on mid to late stage. We're going to invest in iconic companies that can build competitive moats. And we're going to be long-term patient capital because it's a 14-year fund. And if you look at my track record, and we talked about his amazing track record, obviously Yahoo Japan and Alibaba and Sprint and a bunch of things that he had invested in, it was quite attractive as a platform. And that was the word he used a lot. We're building a platform. Not building a fund. I'm not, you know, he thinks in kind of generational terms. He also said, look, I'm plenty rich. It's not about money. It's about leaving a legacy. Like if we can invest in companies that make people have more smiles, then we can make money for our L.B. and we could do good for society. What was your take when he told you the number?

Like when he says it's going to be, did he say it's going to be a hundred billion dollar fund? He says it's going to be a trillion dollar fund. What was his, at that point in time in 2017, his goal for the fund? And then what was when you heard the number? What was your reaction to it? Because you and I have been around the block for a while and we've heard big numbers many times.

But this is a number that dwarf all numbers. It does. So take me to that moment. do you say to him what's the size of the fund or does he just say here's the best part the fund's going to be X dollar amount? Yeah, so it was already out in the press that he was raising a $100 billion fund or a 90 plus billion dollar fund and so I had a general sense of it. And he said, look, we're going to start with $100 billion, but I have a couple hundred billion dollars of other assets on the management and ultimately we'll have trillions of dollars of assets on the management

across different asset classes. But the inaugural vision fund will be roughly $100 billion. And at that time, the largest VC was, I think, N.EA at a billion nine. And now they subsequently have, I think, three, three. Yeah. So now they've raised it three three. Obviously, private equity has $10, $12, $18 billion. But the largest venture capital fund at the time was NEA. And we came on to the scene with a different approach. All right. When we get back, I want to understand what the marching orders were for how to deploy this much capital. We're saying here it's 50 times what had previously existed before. This is a level of deployment that's never been seen before.

So tell me when you all sat in that strategy meeting how you decided how to size the bets when we get back on this week in startups. Blake Barnes, the head of product for LinkedIn Talent Solutions. Welcome to the pod. Thanks for having me. Thanks for that. What's your favorite question? See, for me, favor comes down to what's most functional, what's useful for higher.

What do you think are the clever, functional ones? We find a lot of questions, for example, might be around your experience with technology. Like, how many years of machine learning experiments do you have? Right. Or, you know, tell us more about the languages you use, these sorts of things. So for some of our more technical roles, those are some of the ones that have been most effective or useful for a higher is to find the right candidates. My favorite was somebody put a crypto ad out and they're like, must have 20 years experience. And I was like, could I go ahead and say, you know, five years ago, somebody didn't have 20 years of crypto experience.

This thing's been around for about 18 months. You know, it's really funny, interesting. You say that, you know, one of the things that we, so we build a wide range of products. Another one is talent insights. It's a product that helps companies all over the world understand talent pools. And one of the things they can do is help recruiters work with hiring managers to understand what's really possible, right? You know, saying, hey, I want, you know, I'm looking to hire a product manager, you know,

with 20 years of native development, you know, for $100,000 a year in San Francisco. And they're like, yeah, good luck with that. Yeah, good luck with that. And talent insights can help. hiring managers and recruiters, you know, help them understand what the available talent pools are out there. So basically, you can give them a report, an analysis of, hey, if you need somebody in this field, here's what you can expect to pay for this number of years' experience.

Yeah, or how all these qualifications match together to kind of like, say, here's the possible pool of applicants. Find the right person for your business today with LinkedIn jobs. You pay what you want and you get the first 50 for free. The 50, the $50 bill. just visit LinkedIn.com slash twist again. LinkedIn.com. You got that in your URL already.

Just add slash twist. TWIST and you get that $50 for your first job post. It's $50 for terms and conditions, of course, apply. Thanks, Blake, for coming on the pod. Thank you for having me. It's been a great fun. Let's get back to this amazing episode. All right, welcome back to this week.

And Starz, I've got a big guest this week. The House is in the building. Jeff Hausenbold is here. He's J.T. Bold on the Twitter. And he's a manager partner at the SoftBank Vision Fund. He's been in the industry for a long time. When we left our hero, that's you house. Can you call you house?

Please do. People call you house? All my friends. Really? My friends call me J-Cowell. The house, house and J-Cowl in the building. We're in the building. We're in the building.

So, a hundred billion dollars is a very large amount of money. Some of the largest firms have multi-billion dollars in capital under management across a decade. Now we're talking about a hundred billion dollar fund. What was the deployment period? You said the scope of the fund was 14 years. Most venture capital funds say 10. So you added four to it. So it was a 14-year fund.

The primary investment period was expected to be, what? Three or four years? Yeah, so it's a 12-year fund with two-one-year extensions, right? Typically, it's 10 plus two, so we're two to four years longer. It's $100 billion. The investment period was within five years. We ended up deploying 80-ish-billion in roughly three years, so a little bit of head of schedule. And if you go back and think about where Masa's vision has been, and it has been more

Right. And it's been wrong, right? His returns have been phenomenal and he's one of the richest people in the world. And he was the first when he created soft bank. It was software bank. Yeah. Right. And he created basically productivity software for the IBM 386. And so he caught the PC wave early. Right. And then he saw the internet wave. And at a moment of time, he was the richest man in the world for four days. And his, if you would, his mistake was he didn't sell as the dot-com. bubble was bursting because he was like, I don't understand why would people sell? The internet is fundamentally going to change things and these companies are going to come back. And then the next wave was broadband. And he saw that and he jumped on that. He bought Vodafone. That became soft bank mobile. So broadband into mobile. And that has been a huge business and a success and spits off a ton of free cash flow for soft bank group. And now the next wave, and as you know, major technological waves tend to last seven to 15 years. And so the belief is around, Masa calls it artificial intelligence.

I think about it as data because you need data to do ML or AI. But it's essentially the same thing is how do you collect data to make more informed decisions to create competitive modes to have a better product or service? And so Masa fundamentally believes, and we have a shared vision around the fund, as that data is going to fundamentally change the way we go to work and we go to life. And so the investment thesis is to find amazing entrepreneurs tackling some of the hardest problems in the world that are thinking global, that are not trying to make incremental bets, but truly revolutionary. And if they can be providing positive benefits to society, like my investment in plenty and nutritionally dense leafy greens with less than 1% none of the environmental impact, affordable housing at Katera, Memphis meats, you know, providing proteins without the slaughter of animals. If we can create positive impact on a global basis, make returns for our LPs, and find the best and brightest companies that need capital, connections, and counsel to truly differentiate, then we'll be successful.

So let's talk about the bet sizing. I'm a poker player. You play cards? More than, you know, I used to be on Caesar's board, and we own the World Series of poker. Great. Awesome. I could count eight decks. We'll play later.

Awesome. Have you played much poker or mostly blackjack? Both. Okay. That's too bad. You bring the money and I'll bring the card count. I was hoping you were going to say like I play blackjack but not poker. I'm like I can teach you. Remember if you don't know who the fish at the table. Exactly. Exactly. So let's talk about bet sizing. You have this large amount of money.

You have founders who previously had raised 10, 20 million. Now you come in and you offer 100, 200 million. This, the, the, I was faced with a lot of founders saying, what's going on here? Why can't I raise 200 million? And I said, well, there's this once in a lifetime thing or once in an industry thing that's occurring right now. Their behavior is something new. It's a paradigm shifting approach. If you're lucky enough to get involved in it, great. We'll talk about it then.

But please do not think that that is going to be the default case. The new norm. It's not the new norm. There are not five vision funds. There is only one. And so when you come into this, pick a company like Brandlis, which I had Tina on the program. You and I both know Tina for a long time. That one didn't work out.

but it was a large tech size, I think 200 million in true Toronto is 100 million. What's the approach to picking the amount of money to put into it? And then what is the advice you give to people who've never had that much money at their disposal? Because you worked at a large company, went from 100 to 9,000 employees. You know how to be a steward of that capital. The critique I've heard from some folks is some people just are not ready to handle that much capital coming into a business. So is there some kind of debrief where you go, by the way, you're going to watch your bank account, have nine figures in it, don't lose your shit, like stay focused. How do you counsel a new founder?

Great questions. Yeah. On how to do this. Yeah. So there's no formula in how much money you inject into a company. But I'll give you a little bit of the strategic rationale. And let's talk about how do you make sure you don't get rich and lazy or defocused and silly, right? Yeah.

Defocused and silly. I like it. So when we think about. What are the types of companies that could use a lot of capital? Very fast-growing consumer companies, right? Where a customer acquisition brand building get the viral word of mouth or in some cases, if you're lucky enough, the network effects to be kicking in, companies that can be global overnight that are asset light that you can bring that

business. Bite Dance is a great example with TikTok and others. Alibaba is a great example of that. Then there are companies that are either capital intensive, so they need to build many units or they have to put many trucks on the road or cars on the road. There are companies that are R&D intensive. It takes hundreds of millions of dollars to come up with an autonomous vehicle. It takes hundreds of millions of dollars to find the next therapeutic drug. It takes hundreds of millions of dollars to have a breakthrough and taking traditional field farming and

bring it in-house in a warehouse and make it vertical. So companies that need capital to either overcome the number of units, the R&D, or the fast scale. And so those are candidates for larger quantums of money. Okay, so let me just see if I get that. If you're going to go global, you've got a brand. Going global means you've got to put boots on the ground in a lot of places. That takes capital. If you got R&D, it takes a lot of people and a lot of time. So you've got people times time. That takes a lot of capital. And then if you want, if you're in a competitive space, the capital just gives you the ability to outlast the competitors. Outlast, but to hire better people.

Oh, right? Yeah, that's a big one. Google did this amazing, right? Like, they went and hired every PhD. I was running Alta Vista when Google was a, you know, 40 person company. And what did they do and how did they create a moat is they basically hoovered up every PhD in the country, right? So you could create moats through your human capital, through your ability to outmarket.

your ability to move with speed, your ability to sign larger partnerships. So if you have a lot of money in the bank and you're looking, look at DoorDash, right, they have 80 plus of the top 100 food providers in the U.S. When they didn't have money in the bank, they didn't have nearly as many once we came in and put money in there. It's a lot easier to get somebody like a McDonald's or Burger King, whatever those big brands. I'm not sure which ones they have the partnerships with. So capital matters. Yeah, they feel more comfortable in partnership.

That you're not going away. You're not going away. And really, if you look at the Google example, I think you gave them the charitable approach to it, which was, hey, you know, they got all the PhDs. The really sharp elbowed part about that from what I heard from a lot of people was they just didn't want entrepreneurs or potential entrepreneurs on the market. So they gave them just absurd salaries. And would say things internally or in private, like, yeah, we're paying that person like a million dollars a year so they don't start a company. Yeah. So one was, eventually compete with us. Right. One was just pay academics a lot more than they're making as a postdoc. Right. The other is do a bunch of acu hires to block out, you know, the blossoming little seedlings that may grow up into oak trees. And then sometimes they would buy them and leverage that platform. Sometimes they bought them and just shut them down. It's not a it. It's not an idiosyncratic to Google. Many large companies have done that, right? Yeah. It's pretty nuts. So how do you go from, okay, so now we make it a determination that this is a company that makes sense for the Vision Fund. the way, we do the same thing that every venture capitalist does, right? We look for amazing

entrepreneurs, large TAMs, we look for business model, positive unit economics. We're looking for ability attract talent. We're looking for product market fit, all the same things that most VCs do. What we do a little different, when you're giving 200 million versus 2 million, you do a lot more diligence, right? And so our diligence level looks more like what a private equity firm would do when they're buying a company than an early stage investor who is largely betting on the idea on the management team. Right. Maybe you're looking at bank statements or something like that as a VC. Maybe you're talking to the management team. What does that private equity deep dive look like? You send in a team to sit there for a month and build models. What does it look like?

Yeah, I'll give you example. It depends on where you are in the stage, right? Our sweet spot is mid to late stage. We've done early stage stuff too, and we've done very late stage stuff like buying stock and invidia that was already public. So if it's mid to late stage, you actually have financial history. But instead of looking at a company, we'll go out and look at, like I just did a deal, where we looked at 27 global competitors and we flew around the world and made sure we understood is their technology better. Do we believe in their novel approach to this innovation? We do background checks. We are looking at business models. We're talking to potential business partners. We're jumping in the company.

And so our process takes, if a typical VC from kind of meat to, you know, sign term sheet at bucks is, you know, call it five weeks, hours might take 12 weeks. Right. And so when you're writing that quantum of capital, you want to make sure you're more thoughtful. How many people are involved in the process of closing, you know, one of those nine-figure deals? Ten, 100? So typically, it's a managing partner and a team of four or five investment professionals. And then we have an amazing team in tax, in audit, and background checks and legal and compliance and risk. and tax, right? And so it takes, it takes a village. And it's not, it's no different than most

private equity firms. So, so we look for the same thing. We make that investment. But I am one of, I have these 25 Jeffisms to business. And if you have me on for part two, three, and four, we'll get to them. But one of them is nail it, then scale it, right? And you know this. If, if you have positive unit economics, then you can play forward and open up more markets and you can sell more things. But if you are, if you're making something for five bucks and you selling it for three, it's going to be hard to scale. Right. And so I try to focus the management team on making sure we understand who our core customer

is and not being distracted by the adjacent markets or incillary businesses at first, understanding who you truly are. So at Shutterfly, it was young moms. We had 83% of our customers were women. And when I took over, Jim Clark was my chairman. Yeah. And, you know, I've heard stories about Jim. Yeah.

He had him on the pot, too. He's great. I heard he's iconoclastic as a board member. He's, he's brilliant. he's, you know, a physics professor. Yeah. But he's not a mom who is coming home with three kids after a full day and she wants to make sure as the chief memory officer, she's preserving the family's history. So he wants the coolest, latest, fastest gadgets, right, as a billionaire.

But the core market was what I coined the CMO, the chief memory officer. By the way, she also is the chief medical officer. She's the chief culinary officer, the chief education officer, right? The women in the household do way more work than they get credit. for. And so understand who your core customer is. What is the product or service? Is it solving a hard enough problem that they want to take out their credit card and pay you for that, right? And so we spend a lot of time on that. And in making sure that you're being smart about where do you spend every dollar. And so there's this balance and that pendulum shifts, right? In the middle of a very

violent shift there between growth and profitability. And for the last 10 years, growth has been winning out every single day in the market until about four or five months ago. Until our favorite company, Uber, went public. And that's when everybody decided, no, growth is an important unit eponymous are. When we get back from this quick break, I want to talk about the Uber deal. Great. And I want to talk about this specific shift. And if it's healthy, if you expected it and if it's the new normal, and are we missing an opportunity to grow these companies bigger? Because it feels to me like Uber post-going public is a less exciting company and a less ambitious company. And to me, I actually have some regret about the shift that occurred. I feel it

occurred too soon. And I want to know if you feel the same way when we get back on this week in startups. Listen, I know you're running a very complicated startup and you got multiple projects going on concurrently. You've got multiple pokers in the fire and you're trying to figure out what is the ground truth. What is actually going on in your organization? Well, unlock your team's potential with Monday.com. Monday.com is an intuitive work

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collaborative workspace. You can customize workflow templates to manage anything your way. Time tracking, to meet important deadlines, dashboards, to gain valuable insights at a glance. Press is using Monday here in our organization when we look at potential accelerator companies to come to the launch accelerator. And he chats with them to see if they're a good fit or not for the accelerates. Sometimes they've made too much progress. Sometimes they have not made enough progress. In both cases, we want to keep in touch with those people and make them feel good about the projects. So he separates them into our Goldilocks zone. He also adds notes in the comments section so the team can easily view what the

next recommended steps are. Join over 100,000 companies that use Monday.com to focus on the work that requires their true talents. Start your 14-day free trial by going to Monday.com slash twist, Monday, like the day of the week.com slash twist. Okay, let's get back to this amazing episode. All right, House is in the building. Jeff House and Bold is here, managed partner, soft bank vision fund. Uber was the biggest bet. You made in Vision Fund one? I think the second bet.

Didi was the biggest bet. Oh, Didi, which was Uber's competitor in China. Right. And we did that deal prior to Uber. Prior to Uber. Yeah. This was quite a chess. There's so much to unpack here.

We're going to spend a segment. Three-dimensional chess. It was a three-dimensional chess game. So you guys had done D-D., Travis is the competitor of all competitors in the world. He's a pit bull. Yeah, I mean, this is not the guy you want to go up against, even if you're Masa. And he decides he's going to compete in China against Masayoshi-san and Didi, which is insane on one level, but shows his ambition. And when I talk to him, he said, listen, we're going for the gold in every market.

If we get the silver, that's okay. But bronze, we're out. Bronze we're out. That's right. And I think that deal wound up being in everybody's best interest. Uber got like 17% of it. then you guys came in and started figuring out you're going to make a bet in America. And this is where the chess board got really interesting.

You said before you looked at all 27 companies in whatever market. So I assume you're doing that in the ride sharing market. Absolutely. He placed bets everywhere. And then you had to negotiate with Travis and the board and try to figure out an Uber deal. But you're also looking at Lyft. But you don't want to invest in Lyft because you said you like the iconic brand. Masa likes number ones.

A lot number one. So Masa has shown what he wants, and then the board is negotiating, they want to get a good price. Take me to that negotiation. How did that all go down? How close were you to investing a lift? Or was that just a staking horse? Because I remember that. And then when I heard that and I got the tender offer, I was like, you know what?

I'm selling 20, 30 percent whatever it takes to get Masa to do this deal. Correct. Because my logic was, if I give Mossa 10% of my shares for free, the other 90% become worth 30% more. Literally gifting Mossa and SoftBank 10% of your shares would have made this worth it. And so I was obviously very bullish on it. But tell me what you can about this. How close were you to lift? Yeah.

So we had a thematic investing idea, which was mobility is going to fundamentally change the movement of people and goods around the world. And we invested in D-D-D-D-D-D-D-D-D, grab, Uber, DoorDash, right? And so we had a big bet in China, and it was doing really well. And Cheng Wei and the team at D-D-D, they're as fiercely competitive as Travis was as a team, and they were taken over. And as we all know, it is almost impossible for an American technology or Internet company to compete by themselves in Asia. It doesn't matter if it's South Korea or Japan or China. China. Well, in South Korea, I mean, just impossible. It's impossible. I mean, Naver and Down are. Right. And where's Google in the mix? And I live through Alta Vista.

And we were in 138 countries. I lived through eBay and our failures in Japan and China. And so I have the scars about that. But yet, Travis had the Kutzpah to say, I'm going to go win in China. And I think in the end, it worked out. So we needed to have a mobility play in the largest market called the United States. And at that point in time, they're really only two players. There was Uber and there was left. And yes, they were. dozens of smaller players, but not Masa style. And if you're the Vision Fund, you don't need to play in second and third tier assets. And so we really wanted to invest in Uber. It was a very unusual dynamic, large board, the transition between Travis and Dara going on in that period of time, regulatory issues at the local level. And it was a complex negotiation. And I will say this, I think Masa was going to make a bet in the U.S.

So while the probability of us doing Lyft, Prima Facy, was low. If we didn't get Uber, we were going to make a mobility play in the United States. And therefore, there's only one left. That's one left. 10% chance, 20% chance. What would you put it at? Yeah, 10 to 30% chance. And, you know, it became what I'll call kind of a meme in the valley and Darv framed

it well publicly. I rather have the cannon pointing behind me than at me, right? Yeah. And so that has become a meme. And some of that, you know, was negotiation strategy, but it was also clear because we had a thematic desire and a strategy to plant flags in this mobility place. And then we also did DoorDash. And we were negotiating DoorDash before the Uber deal, but the Uber deal got done first. And the Uber Eats was a relatively small part of the strategy at that point in time.

And we thought it was not a winner take-all market in food delivery. And so you're explaining there is a little bit of this conflict. In the Valley, you're not supposed to invest in two competitors. It's considered bad form. Yet, I sit on the Door Dashboard with six other investors, five of which are invested in Uber as well. Right. So one of the things that happens to us as investors is a lot of times a company will pivot or add or they just start a new business. They start a new business.

And the best example that nobody ever brings up is, you know, Apple and Google. Eric Schmidt was, I think, on Apple's board. Yes. And Google powered search on Apple. Apple. And then all of a sudden, they start working on Android and Seeker for a couple of years. And then Steve went ballistic. And there's a famous photo of Steve and Eric Schmidt at the Palo-Lah, Stanto Road at that mall, having coffee talking about it. Somebody took a picture of it right as all that was happening. And you get off the board like a week later. You try to avoid these, but it happens. And now it's led to, hey, does Uber buy DoorDash? Obviously, as an investor, you'd rather see them consolidate and you'd rather work that. out, but it's really, is it up to the founders or the board to make that decision? How does that go down? Because the DD one, Uber owning 17% of DD, pretty good idea. Based on valuations, I think DoorDash is worth 10 or something. Last private round was 13. 13. And Uber's worth 60 or 50 or 60,

whatever the coronavirus discount is right now. Probably a good time to buy. That's not investment advice. It's just reality. Probably a good time to buy any of these stocks if you think they're going to be here in 10 years. That makes no sense for me for Uber to give up one-fifth or whatever it is one's six, it would be a great purchase for 10% maybe. How does, how do those deals go down? And how do you navigate that when you got, you know, you're, you got two players at the same poker table. You're back, you stake two players in the same poker game. Yeah. So, so I'll talk more in general terms because store desk has recently filed. Yeah. And we want to be careful. And we want to be careful. You know, in another case with two companies in enterprise software that

decide to compete. And you had bets and what? How do you navigate that? It's almost always the decision of the CEO and the management team, right? Investors will plead their case. They'll share their strategic insight. They might talk about their own desire. Some VCs need an exit, right? They want to raise the next fund or the partner wants to retire or buy a new boat, whatever the case is. But almost always it's up to this seat. It really is like a human. They might have a partner at a venture firm who's on the board who's like, I'm done. Right. I'm trying to get out of here. It's ticking. So you never know what the individual agenda is.

So we generally, like most BCs, we want to be supportive management. As long as they have a strategic rationale for a plan and they're being successful, you're going to continue back the player that you made your initial investment. And so whenever you look at consolidation in industry, you want to make sure you understand both the cost and the revenue synergies. What's the likelihood of achieving that? You want to be thoughtful about the post-merge integration, the cultural. you want to be thoughtful about regulatory environments. You want to make sure that it enhances the value proposition to the customer that you're going to be able. And Sprint and T-Mobile is a great example, right?

You have ATT and Verizon with a lot of market share and be able to provide viable choice to underserved markets. It is a good thing for consumers. It reduces duplicative R&D expenditures so you can focus more on innovation. You can offer lower prices. And so you do the thoughtful analysis. And then as you know, you've been involved in a ton of these. It often comes down to what, ego, right? Does CEO A want to sell the CEO B?

So I was on Groupons board, and we all know how that played out, right, with Andrew Mason and Google. On the flip side, Rose and Swag made a deal with Mark, and they were buying it for a billion, and Sue didn't want to do the deal, and then it was off, and now where is Facebook? I was at eBay, and Yahoo was buying eBay, then eBay was buying Yahoo. I was at Alta Vista. I came home from my honeymoon early to buy Google for less than a billion. and we all know how that turned around and where Altavist is versus Google. How close was that?

It was pretty close, right? Google almost sold several times. You go talk to Michael Dell and he almost sold. You go talk to Apple and he was selling to Sun Microsystems for $4.5 billion. And then the Microsoft settlement happened and Microsoft gave Apple money to stay alive. So everyone gets to- That iconic moment when they are, Steve Jobs, like, phones in Bill Gates and put him on a giant screen. Yes.

You remember that moment? I do. We should cut that video in here. That'd be awesome. It was such a great troll by Jobs, because Jobs had done the 1984 commercial where the person comes swinging the sledgehammer, throws it out the big brother on the screen. And literally, Bill Gates falls for this. He said, no, you don't have to come in person.

Just phone in. It's all good. We'll put you on the screen. And they literally put them up on the screen. It's like Russian catfishers today, right? What does it mean? People are trolling people and making people. Oh, yes, yes, yes.

And he puts Bill Gates like full, full. face on the thing, which is a literal parallel to the 1984 and what he was fighting against was like this. The man, the man, the big brother. And it's just like, can you imagine your Bill Gates and you give, I think he gave him a hundred million dollars lifeline or something like that. And they said we're going to bring office to the Mac. And the whole crowd groans as if Darth Vader, which is put on the screen.

And now they're a trillion plus dollar company. So the amazing thing, you and I, you know, we start out in New York. We've seen the many cycles. Wait, you were from Brooklyn too? I was from Brooklyn. I'm a year older than you. Where in Brooklyn? Flapish Avenue right near Prospect Park.

That is hilarious. Yeah, it was interesting. So we've seen a lot. What did your parents do? My dad was a truck driver. My mom was a homemaker. I was first generation. How are they still alive?

My mom lives a mile away from me, and my dad unfortunately passed about 15 years ago. Sorry about that. He must have been so proud to see you go from Brooklyn to the boardroom. Oh, my Lord. What does mom think? of all this. She must be thrilled. Mom's proud. And you know, you and I share, I think this too, is like, I wish we as a society would focus more in education because I went from the bottom 10% to the top 1% because we don't have a fixed caste system. Right. It's because you get an education.

I tell my three teenage boys that they could take your job. They can't take your education and don't ever let them take your self-worth. Right. Right. And so education, work hard and luck, you could change your lot in life in this country. And we have all this disclosures. course, in this polarizing sense where we used to be, you know, we used to be a common ground called Americans. Now, like, we're more entrenched in these. So tribal. And it's so weird that when you and I came up, the 80s, 90s, 2000s, when we sort of got into our careers. Oh, my God, I just had flashbacks of acid, washed jeans. Exactly. Yeah. Yeah, all this great stuff. But even still, despite the fashion mistakes, there was this hope and dream. And, you know, there was this hope and

dream that you could go from the bottom 10% to the top. Horatio Algar, right? Yeah. And you could just do the work. And back then, it was so hard to find the information. When we were coming out there, the internet was just coming online. It's called Microfiche. Go to the library. Go to the library. And we had to go search for information. You wanted to find a term sheet. You wanted to find out how venture capital work. There was no information. It was books. Maybe you find a magazine article in there. Asymmetric information allowed for a semi-fixed cast system with the flow of information on the internet. Everyone has the same opportunity and possibility to self-learn, to figure it out. And I think it unlocks and it levels the playing field that I think is great. And if you look at,

and a lot of people have written about this, but if you look at the number of immigrants that are running some of the iconic companies of our generation and my kids' generation, it's unbelievable. And that's the beauty of America. Sotia, Elon. I mean, these are all immigrants. Right. They didn't come. Pierre Amidadar, right? Like, it's amazing. And so we should celebrate. You know, adopted son of an immigrant. Right. We should celebrate that America is still a melting pot where we take the best of every culture and you have a level playing field.

But if we want to continue to be competitive on a global basis, we need to invest in education. If you look at the debates on both sides of the aisle, did you hear anything about education except for the forgiveness of student loans, which is a financial decision largely? And they're not talking about making sure our public education system. is robust, that it's self-learning, it's using technology, that we're not just locked in a tenure system, but we're rising up the teachers who are the best and the brightest, and that we're respecting, rewarding the teachers more than we are the people who happen to have a really cool YouTube video. And so I think as a society, we should be talking more about education if we want to remain competitive. It's so clear. And it's so clear today that more of the

information is available online and that skills are more important than credentials is literally some kid who went and took all of the MIT free courses online and he did it in like a year or two. No, he did in a year, I think. And then he wrote a book on it. We got to have this person on the podcast. Let's invest in him. I know. But he basically was like, I don't know what you guys are thinking, but it's all right there. It's free. It's free. And then I'm on the board of Carnegie Mell where I went undergrad and um you know Pittsburgh Pittsburgh Pennsylvania leading AI robotics computer science school it's incredible like what's going on but yeah so when we go back and you think about great companies get to rewrite history right and this is why I was saying like Apple was selling

some was selling Dell was selling Facebook was selling Google was selling and and so sometimes the best deal you do is not to do the deal right it's amazing I was talking to somebody about like these open courseware and I said to a very high profile person like I as high profile as it gets. And I said, let me ask you a hypothetical. You've got this big MLAI thing going on with this very high profile project. If somebody came to you with an MIT degree and another person came to you and with a folder and they said, I did the MIT courseware, here's all of my work from it.

And I did it on nights and weekends. And they handed you the middle folder. And he said, I'll stop you right there. I'm hiring the latter. absolutely 100%. Because, and it's so obvious why. Like, this person had the hustle to take that opportunity. And the other person went through the front door.

This person just hacked it. You want the hacker. You know what I call them? PhDs. I love hiring PhDs, poor, hungry, and desirous. All right. When we get back from this, that's incredible. We got to get the other 24 euphemisms, the houseisms when we get back.

And I didn't ask you about growth versus profit. So let's circle back around with that one because I think it's super important when we get back on this weekend startups. When I'm evaluating startups, I'm evaluating startups, I'm, I always ask, are you recording your NPS score? What is net promoter score? It's very simple. This is when you get a little email after you've purchased something and it says, how likely are you to recommend this product to a friend, one through 10?

The people who score 9 and 10, they're very enthusiastic about your product, aren't they? That's why they pick 9 to 10. People who do 6 and under, they're like the tractors. They don't want to promote your product. They might even say something bad about it. And then there's people in the between who are kind of indifferent, right? They would score 7 or 8. If you track your NPS score with Delighted.com, you are going to understand your consumers really well.

The companies that have high promoters score are companies like Tesla. You've met Tesla owners where they can't shut up about how great the product is like me. That's what you want. That's when a product grows by word of mouth and that is free. Well, in order to do that, you have to track it. If you use Delighted.com, they'll let you segment those users. They'll do analytics on it. And your organization is going to see those reports as they come in.

It is an amazing, amazing company. and our portfolio company Graviter is doing on-demand marketing and video, and their CEO, Dorian, loves Delighted.com, and she commented actually on their fantastic and personal customer support. So join companies like Instacart, Envision, and rent the runway right now by claiming your lifetime delighted account, complete with a complimentary advisory session with a delighted concierge. They're going to give you that service right now for free.

It's over $1,000 in value. The listeners of the speaking startups get to talk to the Delighted concierge by going to Delighted.com slash twist. You can build all these best practices, get the response rate great, and have all that robust reporting, ball in a very easy-to-use interface. And when I say easy-to-use, it is a beautiful product. You're also beyond NPS. You also get things like CSAT, C-S, and C-E-S and others. Go check out Delighted.com slash twist. Thanks for support in the pond.

All right, houses in the building. let's talk, Jeff, about the switch that SoftBank, not SoftBank, Uber was forced to do because of public markets. Dara takes over for Travis. Well, no, we don't have to get into that. He goes on the apology tour. He tries to clean up some of the mistakes that were made, tries to get people back on their side.

He thinks he does a pretty good job at that. It goes on this worldwide apology tour. And then the public markets say, Uber can never be profitable. and you and I with the inside information, you and I who have been involved with the company for a long time, know exactly how easy it is to make this company profitable. Yes. You're doing $1.7 billion rides in a quarter,

two billion rights in a quarter, you lose a billion dollars, half of it, where you lose a billion in change, and half of that is a self-driving unit. You know, there's an investment, obviously, in the food category, an investment in some other things. Those are called investments.

If you shut down those investments, and you raise prices just 10 cents, 50 cents a ride, now the thing is the money printing machine. and it's got $12, $13 billion in cash in the bank at the time, and everybody is like, it can never be profitable. And it goes to basic math. If you, let's just say you were losing, if you take out all those investments in the core business,

a couple hundred million, you just raise prices. Is anybody's behavior going to change in an Uber if it's... 20 cents, 50 cents more. 20 to 50 cents more, 10, 20, 30 cents on a short ride, a dollar or $2 from the airport, the behavior doesn't change. And even if you did hypothetically change for the bottom 5%, who cares? It just springs to instant profitability.

What are the public markets missing? And is this like the influence of late stage journalists and the press who don't understand how business actually works fundamentally? I mean, I know you can't get into it with the press, but I can. I mean, when I see press not being able to do basic math, it's just mind-boggling that anybody trust what they read anymore. And I don't, I hate Trump. and I hate fake news that he can pin that on journalists,

but journalists need to do a better job at basic effing math in my mind. Yeah, so let's talk about, so I ran a public company for 10 of the 12 years. I was at Shutterfly, and often public investors, they also miss unabsorbed corporate SGNA, right? And that's a great way that, you know, so if you think about as you were talking about the unit economics,

if it costs you five bucks to make something, you sell it for eight, you're making either a gross margin, which is what's left over after you pay the cost of goods sold. Cogs. Cogs, as it's called. And then you're making other investments, marketing. You're hiring more engineers to build more products and services.

You may be entering new markets that are lost leaders in the beginning. And you've hired a staff in accounting and finance and legal and all this to absorb a much bigger business because you want to make sure that you have the right infrastructure. The foundation, the building. Correct. And an easy way to think about it is, If you have a factory, what your capacity utilization is in the early days when you're not making a ton of units, each unit costs more. When you make lots and you're at full scale, you're amortizing the total cost of that manufacturing over the number of units and the per unit price comes down.

So a lot of companies are investing for the future. And that's what we like is venture investors. We want to see people with a solid business plan that have long roads ahead of them in large TAMs and that they know how to be good stewards of capital. Tam, total addressable market. Total addressable market. And that they're smart about their capital allocation. And we want to see that not only their core business will have lots of growth, but that there's other businesses that you can layer on after that.

So eBay's one of the best business models, enterprise software is a good one. But eBay was profitable from day one. And yet we were investing in international. We were investing in fixed price. We were investing in Billpoint, which was the competitor of PayPal. And then before that split off, PayPal is now $140 billion. business and so we had adjacent markets. So when there's unabsorbed corporate SG&A, i.e., the company's not yet big enough to support on a total basis profitability, then you have losses. And that's how

you turn a company in EPS and EBITDA will grow faster than your revenue growth at some point. Earnings per share. Earnings per share. And what has happened over the last few months is a shift from growth to value. And if we're at the late stage is the longest bull market that we've seen. In our lifetimes. In our lifetimes. And people have been chasing yield or returns with interest rates around the world, you know, the 10 years at 80 basis points today. Japan, it's negative.

Europe, it's negative. Which basically means if you were to put money into one of these devices, you're going to get back very little or less. Right. Which means you're voting that the world is going to be worse. Come to an end. And it doesn't make any sense. And Warren Buffett has showed over time, right? it continues to go up and patient long-term capital.

I know what's weird about this, the world is going to end concept. If the world does, in fact, end, well, then it doesn't matter. So who wants to live in that world anyway? Why am I making a bet? I'm totally having deserved for dinner now. Well, it's just like, why am I making a bet on the world ending? It's the most ridiculous dystopian negative bet you can make. If it, in fact, ends, you don't need the money.

And we live through Y2K, remember? We made it through Y2K. We thankfully made it through 9-11. We made it through SARS and mirrors. We made it through the Vietnam War, we made it through World War II. Humanity will continue to innovate. We will carry on. Coronavirus Nazis, 9-11, doesn't matter.

Right. And even why too-caths. We'll continue to marshal on. And if you take a long-term view, right, you get the effect of compounding. And so- Why are people so short-term? I mean, this is why Moss is a genius. He's thinking 30 years.

He's not thinking three. No. And really, his mindset is I'm 60-something years old, 63 years old. I have enough money. I can't spend it all. How do I have an impact on society? How do I bring more smiles to people around the world? How do we let them live better, have more fun, be more productive?

So basically, people are chasing yield, and so that means they're coming into equities. And the U.S. market and the Chinese market is where the vast majority of innovation, not all of it. The vast majority of innovation occurs. And so people have been paying up for growth. And I think there was a belief of a couple things. You have fundamental changes. in politics across the globe. You see more people being more nationalistic and closed in their mindset. You have the Chinese and U.S. trade spat. You have some issues in the Middle East.

You have negative interest rates. You have disinflation. You have this fear of, you know, a socialist president. You have fear of the coronavirus now. But you also have this. Trump having four terms. Right. And then you, people are like, oh, my God, you remember when Andreessen was talking about software. eats the world. What if a robot eats everyone's job, which isn't going to happen, right? So you have all this fear and markets go up and down, but we saw this with Brexit. It plummeting came back. We saw this when the credit markets froze in 16. We saw this in December of 18 when the Fed was raising rates. It'll come back. And if you're long-term patient with your own time and opportunity

costs as an employee as a founding team as investors in public or private markets, time is on your side and the benefit of compounding. And so let's go back to Dara. Yeah. Right. So Dara, great executive, great human, walks into a situation where he has to clean up some perception and cultural things, did a wonderful job about that. But now is living the life, which he was experienced at an expedia and I had it shutterfly was, holy shit, public investors thinking quarters, not in years or decades. And they want to see profitability faster. So he's making smart moves, right? The recent move in India, the swapping of assets with DD and Grab.

These are smart moves. He's making investments in ATG and funded that separately, you know, because autonomous could be a existentialist threat and he needs to have a play that. And he just said this week, hey, we're open to other autonomous on the vehicles on our network, which to me seems like the best play. I think it's like a nice to have your own research and then to just align yourself with two or three of the players and say, listen, we've got three, four, five hundred million credit cards in our system, whatever it winds up being.

We can put thousands of these on the road, or do you want to have to go build an app and then get everybody to download it, put their credit card in, and then have operations and customer support in thousands of cities. Right. Guess what? Google owns Android, but yet other people use that platform and do it successfully, right? Yeah, they don't make, yeah, the pixel is like, you know, like low single digits of all Android phones. And I had the pleasure working for the CEO McDonald's at one point, and we own 30% of the restaurants so you can innovate and understand the complexities of operations so you can improve. it for your franchisees. So there's a lot of different business models, and that's the beauty of having a seasoned executive like Darra in the seat. He has seen lots of pattern recognition.

He's open-minded. He wants to maximize shareholder value. And his balance, like any public CEO, is what is the timeframe? Because you get hedge fund managers, you get activists. All they want is a quick pop. They're in, they're out. And you have to make sure you're balancing for the long term and maximizing the size of the franchise while you're being thoughtful about your burn and the ability to attract

and retain employees. and being responsive to your public shareholders. And it's not easy. It's a, and there's no formula. And so you have to feel through that. But it's, he's on a good path. A plus, B minus. What do you give him?

So I think about different dimensions, right? If you think about him coming into a difficult situation, stabilizing it, I give him an A. Yeah, I give him an A plus on that. And so I think Dar, the world of Darre, he's an amazing human and a great executive. But it's like SoftBank. it's a business that's in the spotlight every day. And when everything you do is under scrutiny, there's always going to be the naysayers. But I think over the long term, Uber is going to be a great return for the public shareholders

and for the folks like you who got to be investor three. It was pretty great. Do you think the public markets have it wrong and that he should be investing at a higher rate and going for growth? Would you rather see them be at 40% growth, rather? than maybe going down to 20% growth, but profitable. If you were making the decisions, better to have a lower stock price and higher growth and take the opportunity or better to work the stock price and cut the difference. What would you do?

Yeah, he has enough armchair quarterback slinging at him. I'll say this. I think you have to strike a balance. You have to make sure that you keep believers in the stock and so that you show progress towards profitability, certain markets, certain segments, and make sure you're not I always thought about what is my midterm, my short term, midterm, and long term, and then I'm laying enough track that I constantly have new things, new growth vectors. And I think Dar is doing exactly that. I'm so long on the stock. I really don't even care what happens for the next five years. I just don't see a world where in five years this company is not three times bigger. And if you continue to think like Buffett, you'll be as rich as him one day.

It just makes total sense. What do you think of? veto, the vertical takeoff and landing. In China, they're actually like testing these with humans. Self-driving cars feels like, gosh, the edge cases are going to take a long time. If you had to pick which you could take an Uber ride in first, anywhere in the world, a self-driving car without a steering wheel, not a self-driving car with a person, a proctor in it. Forget that. That's not a self-driving car. It's like a 60, 70 percent of a self-driving car. I'm talking fully autonomous, no steering wheel or a veto on a short trip like, you know, in Sydney or something over the harbor. Which one will you be taking Uber in first to bet your entire network on?

Or a flight to Mars. Yeah. So never bet against Elon. I'm taking... Role number one. So I think the autonomous driving is coming first. Okay. And I think that's actually going to be in trucks, not passengers first in the United States

because of regulation and safety. It's already on the road. You see that number... Without a steering wheel, without a driver? No, they still have that, but I... Walmart's doing some interesting things, other folks. How will it manifest itself, you think? Well, so today you have a lead truck with a driver in it, and you have a driverless truck

that is literally just following the movements of the truck in front of it. So we're investors in Full Truck Alliance in China, and we're investors in GM crews. We're investors in Uber and ATG. And so we believe autonomous is going to have fundamental impacts on the movement of goods and people. And so I think autonomous trucks first. I think autonomous cars second, but non-U.S. Then the U.S. China.

Yeah. China. Why? Because you have a, you have essentially controlled government that can see the future and can make things happen quicker than we have 50 states with 50 different regulations. Yes, we have a federal transportation authority and others, but it's just more complex to get things done in a representative democracy than it is in China. So I think it'll be there first.

And then I think we'll have flying cars. And it just strikes me. I remember my high school science teacher saying to me, Jeff, whatever you read in Isaac Asimov will come true someday. And if you just think about the advancements in our life between television and cellular and computers and internet. And now we're talking about flying cars and we're not talking about the Jetsons. I really think flying cars are going to come first.

I'll take the other side because I'll get into flying car, a car anytime. If I don't have to sit on the 101 any day. It's so clear to me that over water with whatever it is, there's like eight rotors and they're doubled up, this is going to be so much more stable. It's like a bungee. Than a car. Being on the ground, there's so many things to hit. There's so many possible problems. But when you're in the air, as long as you're going out on a clear day, this thing's got eight rotors.

And the kid next door is not flying his drone into you. Absolutely. Slight problem. But the videos of these things recovering now, like, I- They're amazing, is it? It's unbelievable. People come up to them with- It's like the minority report.

Everything's coming to- They come up to them with sticks, and they whack them. And they show like 10 years ago, you whack a drone, boom, boom, goes down. Then they show five years ago, you whack it. It stutters. It hits the ground and then kind of, you know, over three or four seconds, stabilizes up. Yeah, now it looks at you and says, give me another. Yeah, you whack it.

And it goes, whiz-ph-o-fiz-wh-wh-em- Unbelievable. And that's going to be so. safe and free and electric. So we're going to live in this world where it's not even polluting anything. But bring that back to startups. What we're talking about is the continued advancement of human imagination and creativity to create things that make our lives better that provide more enjoyment that gives longevity. And so as tech investors, there'll be ups and downs and cycles.

We live through it, right? I graduated coming out in 91 in a recession. We lived, right? We lived it in 9-11. We lived it in the great financial recess. and we lived in the dot-com bust. Today we're living. There's like four or five of these, yeah.

Right, and so it's just another cycle. We even caught in high school to, you know, watch the 87 crash. Oh, how about, yeah, the 87 crash. And then you remember in the Carter, we only got gas on Otter even days, right? So we've seen a lot. I remember that was at 77, 78, something in that range. I remember my parents going to get gas. And for people who are watching and thinking about the coronavirus and maybe having to stay home for a month, imagine there was no gas.

I mean, this is kind of like the walking. dead kind of like early zombie. Chevron was empty. There were people killed each other. There were literal fights and murders online for gas in the United States. They were rationing. Yeah, they were rationing it. And the last digit of your license plate.

Told you what day? What day? Even days, odds is. And my parents would go, and the same way people are stocking up right now. And it was like, hey, everybody, you don't need a car to survive as a human. Right. Humans survive before cars. Humans will survive whatever's going on with Corona right now.

Now, not to take a sidetrack here, but what's your take on this? Where we're at at this? Because it seems like we're getting very mixed messages. We don't know the denominator. We haven't done proper testing here in the United States. And it looks like, for all indications, this thing spreads really well, but it only kills people with lung issues and who are over 70. And that maybe smoking has something to do with it, pollution, compromised lungs, that kind of stuff. Yeah.

What do you think? Is this going to be like a year-long thing, a three-month thing? I mean, obviously nobody knows exactly. But what is your gut telling you? And how do you as an investor look at the market today? Is this yum, yum, we're going to make investments here and plow right through this and get, you know, spectacular deals and take market share? Or do you look at and say, let's pause and freeze up? Yeah. So first, whenever you have something like this, be it AIDS or mirrors or a typhoon, the most important thing is to recognize that, you know, this is affecting people's lives, right? So we want to put that first and foremost. It is a human tragedy. People dying is horrific. Now, society, business. So let's shift to business.

We have shown that modern medicine really is miraculous, right? We haven't fully solved cancer and other things, but we have eradicated many, many diseases. We've certainly allowed people to live with cancer for decades. And AIDS and other things, right? And using big data, again, you look at these therapeutic development companies and they're being able to understand which elements have higher efficacy and probability. And so we're shortening the life cycle to discover new drugs. And the cocktail and the interaction of drugs, so you don't have to do A-B testing. You could do experimental design, which means you test multiple variations

quickly using both computer generation and trials. I think we'll figure something out. But it's unknown today. Is this, you know, do we get a handle on this in three months, 10 months, or 12? we also don't know how many people already had it and that it was just masked as the flu or cold, right? I think there's hundreds of thousands of people in America who have it. I would tend to agree with you and I would actually say millions around the world. It's millions for sure. And the question is how do we make sure we're being smart but not panicked? And right now what I would like to see is more just a balance of sensibility that we don't need to create panic.

Many companies are doing smart things. They're giving employees the ability to work from home. They're providing hand sanitizers. They're doing a bunch of things. Maybe not shaking hands. Right. Fist bombs, elbow bumps, right? And so what we need to do is not getting to panic.

I would like to see our leaders across various organizations be more thoughtful about that, putting it in perspective. More people die in their bathtub a day than they do from coronavirus. And so we've got to be smart and thoughtful. And as business owners, it's obviously going to have a short-term impact. So travel-related companies of which we have some in our portfolio are seeing a rapid decline. And then others are benefiting from it or may benefit. No, DoorDash, Instacart are saying their H.

It's like up 30X or whatever. Bite dance, TikTok. And then things like Netflix has seen it. And then we have certain things like VIR technology and other biotechs that are benefiting. So you saw the Sequoia like, hey, batting down the hatches be prepared for anything. It's good advice. it was there was nothing novel about it but it was a good timely reminder that at the end of the day as CEOs we are stewards of capital and we only really have three or four jobs and one of them

is protecting assets of the company another one is doing good capital allocation so you want to make sure that you're prepared and and i was managing shutterfly through the 0809 like i don't think anyone wishes that on you because we all had friends lose jobs and and you know businesses go under but it creates a sense of discipline and thoughtfulness about how you build a company to last. And I think- Keep 18 months of runway in the bank. And if you're below that, have a plan to get to that. That's how I've always done it. And then have plan B.

That, like, literally, I've always had plan A, B, and C. And I talked to founders, and I was like, let's go into cockroach mode here. We have, we're spending, pick a number, 300,000 a month. We're not able to raise capital. Things are going wrong. What would this business look like with $50,000 in spend? Because when you come to people with a company losing $4 million a year, the chances of getting funded, and it's an operate at the seed stage. It's a different magnitude than what you do. But the chances of getting funded as a company burning $600,000 a year is 10x what a company burning $6 million a year is, let alone a company burning $6 million a month or $60 million a month. So I'm asking all my CEOs, we have a base plan. Let's have a low plan and let's have a disaster plan. And what would we do different? What would we do?

What would we do different in terms of our discretionary spending, in terms of fixed costs, in terms of the way we go to market, how we differentiate against the competitors? And I'll give you a real example. So I joined Shuttlefly in January of 2005, and we were competing with Ophoto, which became Kodak Gallery. We were competing with Snapfish and all these other 1,000-backed venture-backed companies in the space. And 2007, we accelerated growth to 51% above 47 from 06. And then I beat, year over year growth. This year over year growth. Really hard to take a big number and add 50% to it.

It's hard. And I beat my numbers 44 out of 45 quarters, but I missed Q1 of 08 because it was when the recession hit. Sure. Everybody was like, I'm not spending money. And we make quick adjustments. And yet the best form of venture capital, I think, is called free cash flow. And so we were free cash flow positive.

Free cash flow. People know what cash is. They know the word free, but it's kind of confusing for people when you put the two together, free cash. So after you've taken in red, you've taken in red, revenue by selling a product or service. After you've paid everybody you owe. All of it.

Everyone. The people, the marketers for customer acquisition, the people made your product, your inputs, your labor, and everyone. And then you paid taxes. What is left over at the end of the day. So if you're a small business owner, it's what's left over after you pay taxes in the cash register. So that's free cash flow.

So we had money in the bank. We were growing. We were profitable. And so what I said to my management team, I got them all in a room. and then the board, I said, guys, here's where I believe we should be. If we focus on three to four things instead of the five to seven we're doing, we don't have to fire anyone. We're going to put a hiring freeze, but we don't have to fire anyone.

We could pay 100% bonus. But what I'm going to ask all of you to do is make sure that we're communicating and executing flawlessly and that we're focused on customer centricity, that our customers in a world of pain right now. And yet we offer an affordable luxury. And they may not go out and buy a cashmere sweater, but they're still going to have birthday, Sweet 16s, marriages, celebrations of lives. They could do a photo book. What brings you more joy? The cashmere sweater or the photo book. Pretty obvious. What a brilliant insight. And so the thing that happened, Jason, was in 2008, we continued to invest in R&D and execute. And Kodak went like this way down. And we went way up. And when we came out of the recession, that's when it was game over. And I bought Kodak out of bankruptcy for $24 million. All right. We have some mirror portfolio companies. Let's do a little rapid fire here of what attracted us to those spaces, how it's going, and what we think the future is. So we have Cafe X, about a coffee company. You have Zoom Pizza. I met the Zoom Pizza people. I think they got to about 60, 70 percent of the process being automated. There's a very complex one to automate. Coffee a little bit easier. Coffee easier. A lot easier. We've got ours up and running at SFO doing a lot of revenue, complete vendor machine status. us and serving, you know, thousands of orders it works.

But boy, has it been hard. Five years. Hardware you have to get right. Software you have to get right. Food you've got to get right. Yep. And location you've got to get right. You got to.

And then you have to have differentiation. And differentiation, right. I mean, you want to, it's like literally mind boggling hard when compared to enterprise software. Yes. Or like a photo sharing app. All due respect, photo sharing business. Photo sharing is easy.

Try making a physical photo. Try making a physical book. Right. No complex goes up. Tell me about Zoom pizza. How did you guys find that investment? We obviously read the headline that they've contracted. Is that just too hard of a thing to do pizza?

Will they come out of this? Or you think that it's just going to be a zero? Yeah, so I'm not as close to it because it wasn't ideal, but I'll give you a high level. The thesis was not about robotic pizza. It was really about can you automate food processing with pizza being an easy one to start with? And it's harder than you said, right? And so Alex is a very brilliant, visionary and also an amazing sales guy, right?

Like, you be around him, he just fills you with energy. And so the company is pivoting right now and focusing on innovation in one part of that value chain, which is around unique, sustainable, good for the earth packaging right now. Perfect. Yeah. And then you have Quinterra. Cotera. Cotera.

They're making modular prefact. Some type of housing, explain it to us what it is. Yeah, so if you think about construction today, you are building your product outside and you have to deal with weather. You have to deal with changes. You have to have many subcontractors and vendors get it all right and coordinated at the same time. You have to deal with local regulation. And then every single building is bespoke. And so what Michael Marks, the CEO, who is CEO of Tesla and Flextronics, coming out of an industry that was about standardization and consistent.

consistency and high volume said, why aren't people in construction using technology and standardization and global supply chains to lower the cost to increase the speed to market and to provide a better product? And that's what he's doing. And so... Have they actually built any... Has anything in market yet? They're doing billions of dollars of revenue.

Wow. And so the business is scaling quite quickly. And we're in India. We're in the Middle East. We're in the United States. We can do a single-family home, multi-story... garden apartments. We could do mid-rise, high-rise. We're doing hospitals and malls. Construction is the hardest space, isn't it? It is. And what's... Anything harder than construction

and real estate? Can you think of a category that's harder? Not to execute, but like biotech is more hit and miss, right? It's hard to get there, but it's very high execution risk. We did blockable. Yeah. And they're doing modular housing, stackable. And really, the inside is very similar, which is if you build something in a factory, you don't have to deal with the name neighbors complaining about the noise or it raining. That's right. And you unlock the ability to use materials that cannot be used in the field. Exactly.

You can't use some of these new composites and cut them in the field. They have to be cut with a laser water, high pressure cutter. And it's all non-standard. So you build this bespoke house. And then you hire a bunch of people and they're sitting there in the mud in the rain under a tarp, cutting sheet rock. And here's the crazy part about the economics and the value chain is the entire industry, right? And it's the second largest industry in the world after retail.

It's about 16.5% of global GDP is that they push the decision making and the capital down to the subcontractor, which is a guy with two pickup trucks and five other guys, and he's buying his supplies at Home Depot. Literally, that's what's happening in this. I mean, the only thing I can think of that's more backwards right now is the American health care system or the American education system. Like, if you think about what's changed in either of those, nothing has changed. You just did on something that was fascinating. So before I joined SoftBank, about a month before, I was reading this report. And it was the 120 global sectors, industrial sectors. And it was a report about the prevalence and penetration of technology across those 120. So I flipped to the end really quickly.

Give me the bottom four. Hold on, hold on. Guess. I'm going to do it. Obviously, construction health care, construction, healthcare education have to be three and the four. You got it. Now, the fourth is going to be really hard for me. Let me think this through.

Is government a category? No. Because government's a pretty dysfunctional. Travel, no, that's pretty functional. What do you mean? How nuclear codes on Coble is not forward thinking? Yeah. I mean, I would almost think government, but I don't know if it's out of category?

Agriculture. Agriculture. Okay, that means. So if you look at, I've done 15 investments in nearly three years, and most of them have been in those four sectors. But wait, isn't agriculture, like, factory farming incredibly technologically advanced and sophisticated? the food chain supply or no? No, we've been building houses same way for 300 years and we've been

essentially tilling our land. Yes, we use tractors instead of a ox, but it's essentially the same approach. And so Plenty basically brought the farm outside indoors. We use no pesticides because there are no bugs. Oh, yeah, tell me about that company. I'm not aware of this one. It's fascinating. And so what's the name of the company? It's called Plenty. Plenty. And they're providing leafy greens today. And so if you think about a traditional farm as the size of standard soccer field, we are producing the same output in the goalie pitch as in the entire field. And we're doing it indoors and then turning it on its side vertically. Oh, vertical farming, sure. And we're using proprietary lighting so that the plants are getting light for 17 or 18 hours a day. We're using

IOT. 50% more light. More light. And I bet it's more efficient. Much more efficient. We're using IoT senses and big data to understand the exact formula of nutrients and oxygen and nitrients that the plant needs to grow and to produce a fruit or leaves. We each one is independent and then machine learning is taking all that data. We're spitting off petabytes of data every day and week. And then there's no pesticides. It's indoors. And we're using less than 5% of the water that a traditional farm does.

Wow. And so it tastes amazing. robots cut it so it's a robotic thing it is it's unbelievable and we're now we just launched in your local safe way we're in by right we're in whole foods is the vertical farm in those places no the vertical farm right now is in south san francisco but you can buy it next to your organic leafy greens and one of the so isn't the doesn't that mean like it doesn't have to travel as far so it'll be fresher and then you also don't need to burn as much fossil fuel to get it there oh you see this why you're successful um the the the average fruit and vegetable

and America travels 2,600 miles to get to your local supermarket. So imagine we put 400 of these across the United States. And when you talk about farm to table, we're really talking about farm to table. I mean, if you did that, the most, 80 to 90% of the population lives in like 20% of the landmass here. So if you plant them right, you'll be within, I would guess, 30 miles, yeah, 30 miles of 80% of country within 30 miles of one of the things. And guess what? You ever see that ugly green slime in the bottom of your clamshell of lettuce or kale that you buy? Because it travels in the supply chain so long, it degrades.

Well, hours last two to three weeks longer. And you never have to wash it. You never have to wash it. Right. It's not outside. There's no pesticides, no humans touched it. It's an amazing company. Will that ever be in the – because I get pitched on vertical farming constantly? There's a lot of people out there doing it.

And I guess – Elon's brother. Kimball's trying. He's got the micro ones that are very close. Is that the mission eventually to have those in the supermarket in the back so you actually see this occurring? Like you'll go to like a Costco for vegetables and just walk up and down the aisle and watch the robot cut the next one and hand it to you? Yeah, I think we'll have centralized manufacturing, if you will. And you may have displays of this in the store so that people get an experiential.

And one of the cool things today is we harvest daily. harvest daily. Because the farm just moves like this and the robot so it grows. And then we're working on strawberries and other berries. So you know you ever get the white strawberries that tastes like nothing? Imagine if you live back on the East Coast still, you'd get strawberries two months a year. How about amazing, juicy strawberries 12 months a year? That's amazing.

Well, you just, I've always had this theory that we are going to live in our lifetime to the moment where, you know how water is essentially free for your humans in America. Like, it's not. Though we pay for it in a bottle all the time. We've never to buy it. But it's essentially water's free. Yes. Like nobody's ever complaining, like, I can't get a glass of water.

I think produce is going to become so affordable to produce that it's going to be close to free. Because if you succeed in what you're doing, the cost, you're taking out probably 60, 70% of the cost. You're going to be, not only is it going to be better and perfect, it's going to cost at at least 50% less. And you know it touches my heart, so there's 7.2 billion people in the world today

and a billion seven of them are undernourished. So if we could provide nutritionally dense fruits and vegetables and now recent investment in Memphis meats, proteins without the slaughter. Which does Memphis meats do? What's their burger? So you have impossible and beyond that is pee and soy protein. Memphis is actually making from a quarter-sized biopsy of a cow

or a chicken. They're growing in a laboratory. actual meat without the slaughter of Annamoff? Is it in market yet? It is not. It's still in Have you tasted it? I have and it's amazing. Really? You can't tell the difference. You can't see it or tell the difference? It was beyond meat, which was doing another soy-based thing and I saw like the Mark Bittman, the guy from the New York Times, when he put it chicken and sauce, he couldn't tell the difference.

But when you eat that, chicken. That piece of chicken. Taste like chicken because. What's the mouth feel like? Oh, so you hit it. So what their, their expertise is, remember I saying I looked at 27 global competitors? It was that deal. So getting both the taste profile right and the mouth feel so that you feel the sinew and you feel the tissue and stuff, they've figured out how to do that. And so right now, if you look at about 25% of greenhouse gas comes from cows and then the transportation, then the growing of the corn and the use of the water and the pesticides for that. Does this use less or more water? It uses none. None.

And no animals slaughtered and you don't have bacteria because almost 100% of your meat. It has E. coli because it comes from the intestines. And then also you don't have the antibiotics being shot into these things. You have no antibiotics. And so this is the CEO here, Mayo Clinic trained cardiologist. Who's that? His name is Uma Valletti. Can we get him on the pod, Nick?

Let's put that. I just had lunch with him. You've asked him. He's going to wait till it's ready to be produced. No, no, no, no, no, you've got to come on. Give me a little pre-eases. He's an amazing man. I'll come to him.

Where is he? He's in Oakland. I'll come to him. I'll go there. I want to go there. I want to go see the factory. His vision is really one. I mean, he wants to make money for his investors, but if this works, we fundamentally impact human longevity.

Also, think about just we're going to be judged on the cruelty that this factory farming has in a hundred years. People will look back on this and they'll look at us. Yeah, they're going to look at us and be like, you guys were just horrible. This is just medieval. You put cows into this kind of situation. What people also don't realize is I, but my thesis on this as a person who is just a food eat, I think we're going to make new products. that surpass what exists in nature. So if you love duck, I love peaking duck, they're going to make a peaking duck that's

30% better. And I saw they have a duck. Not only that, so he was a cardiologist. And when you have a heart attack, what's the first thing your doctor says? Okay, exercise and reduce protein. And so we could amp up different components of the protein and the amino acid. So if you're a young athlete, we can make it denser. If you're a recovering heart patient, and it's not genetically modified.

It's just we're expressing the natural genes and the natural build process through the what we call the media. Like when you go get milk and it's like 1% 2% lactate. They give you like eight different kind of variations, extra vitamin D, whatever. We're going to go and buy, instead of buying steak, we're going to buy steak for 50-year-olds. You got it. Steak for 20-year-olds. But so you're going to even go further, I believe, in our society. We're going to have all of our DNA strands will be mapped and we're going to know the appropriate diet for both our historical genetics.

as well as our lifestyle. And so you'll be able to have what I call mass customization of your food that will increase your vitality and your longevity. So your Fitbit and your Apple Watch are going to feed into your 23 and me are going to feed into your Memphis Meets. And you're going to get a custom hamburger. You got it. It's so bonkers. The world's going to be great. All right.

Let's talk about the debacle. We work. Were you involved in that one? We work. What's that? We work. Exactly. I mean, I was in a we work.

It was a brilliant idea. product market fit to a level that is rarely seen. What happened there? Because if it's easy to dunk on you guys before we work because Adam was a little bit, let's just say unique in his approach. Let me ask it a simple way. Do you think there's a save there because you guys put more money in because it was a great product? We absolutely think there's a save. And Masa just used the balance sheet of soft bank group to invest.

We own roughly 80% of the business. And so, as you said, you guys owe 80% of it now. We own 80% of it. And as you said, product market fit. It's a really, really good product. And the core business is a good business. Now, Adam had such vision of taking a core product and turning it into what I'll call a lifestyle brand that he got distracted by going into other ventures. The core business is great.

We just put in Marcelo Clure, who is the CEO of Sprint. Legit CEO. Yeah, he knows what he's doing, right? And so we just attracted a world-class CEO, new management team. And we fundamentally believe that this will be not just a good business, it's going to be a good investment. It's going to take longer than we thought. But we have conviction around that. See, this is what's great, I think. You know, even if you make a mistake, your point earlier was, you know, the capital is an advantage. This will be the example of it. When you guys figure this one out and it gets back up to where it previously hit the high watermark, I know Moss, I know you're like, You guys, if it takes 10 years, you'll make a point of making this one work, and that's going to be the greatest dunk ever. What's the lesson around founder voting shares in governance? Because that existed as a problem long before SoftBank raised division fund. And I am training all my founders. Here's what proper governance looks like.

You don't need super voting shares. You need to start having media. I start having board meetings and have a training program for our accelerator, where I do four board meetings with each of the founders. and we have them sit in on each other's board meetings, so they learn. And this is long before they should even have a board. Wycombinator says don't have any governance. This is a huge mistake. Governance is an absolute advantage.

And you got to get trained before you really needed. And so earlier is better. Or earlier is, of course, better. What are the lessons? What do you do differently now post super voting shares and all this other stuff? Or do you think it's just a one-off? Yeah, as you said, this is not a soft bank issue. This has existed long before.

Evan had it at Snap. Larry and Sergei had it and Mark hasn't. And so the valley goes through cycles where it's investor friendly or entrepreneur friendly. And given the mass amounts of capital chasing yield, as we talked about, people started getting more lax around terms because the deals were hot. And if you wanted a win, you were getting asked to do things that your mind told you you shouldn't do, but your body decided to do anyway, right? It's like me playing basketball at 50.

I'm sore for four days. And so we allowed some governance lapses, but we weren't the only one. There were other institutional VC sitting roundtable, but the lesson learned is to make sure that you have good corporate governance. Second is, we talked about nail it, then scale it. And so you have to make sure your focus. I talked about know who your customer is, who your core product is, has relentless focus. And half of strategy, this is one of Jeff's 25 Jeffisms, is half of strategy is what you're not going to do. Right.

You have to articulate that to the organization or you get scope creep and you know what nothing gets done. So I think relentless focus, nail it, then you scale it, good corporate governance. And in making sure you don't get too swept up in the hype because it's such a hot deal that you're doing, you're making sure that you're thinking about the fundamental valuation and thesis. As I said, we are big believers. We just backed up the truck and used the balance sheet to become owners, essentially a private equity buyout. And I think in the long term, like many things Maas has done, he's going to be proven out to be right. Yeah, it's pretty clear.

Give me another Jeffism while we wrap up here. Give me a couple more. Okay. I got two so far. Yep. So culture matters and you need to put it in place when things are good because when things are bad, it's too late. So that's an important one. I made that mistake.

Another Jeffism is customer centricity, customer centricity, customer centricity, customer centricity. And I think we all learned in business school that a job of CEO is to maximize shareholder value. I think that's true. But the way you get there is you make sure you have an amazing product or service. You treat your customers really well. You treat your employees and your stakeholders well. And if you do that, you'll return for your shareholders. What's going on with Vision Fund too? I know that I hear the headlines in the press, but you're here. So how's it going? So we're continuously having dialogue with our current LPs and new LPs. Masa has recently said on earnings that we have a lot of capital and access to capital.

In the last few months alone, Alibaba is up $40 billion for us, so we have a lot of capital to draw upon. We invested off the balance sheet for about 18 months before Vision Fund 1 got closed. We're still making investments. We just announced Carrius and we announced Alto Pharmacy and we announced Behavox in the last few weeks alone. So we're open for business. We're making deals.

and I am confident that Mase has the ability to continue to attract capital. The thing that's interesting is I think because of the scale, you get that spotlight. If you dropped two zeros off of everything you did and it was just a billion dollar fund making $10 million investments in Brown Liz or 100 million investments in Uber or whatever it wound up being, it wouldn't freak, press out or give people the ability to dunk on you. When they see like a billion dollars or $2 billion, it just gets like, whoa, that's a lot of money. But when I invest in companies, I expect 70% to be a zero, one or two to return what I put in or less, and then one out of every 20 or 30. That will carry the fund. Yeah. But is that the same math for you guys?

Or is how do you look at it? Roughly the same math. It's a little bit. We'll have a few less zeros because we tend to do mid to late stage. So we have a lot that are early. And so it's the same thing. It's a portfolio play for us. And what's interesting is, as you said, you expect some to go to zero.

So brandless, I put in $100 million. I will have lost less than $100 million. And if you took a billion dollar fund, let's say it's bond, right? That would be the equivalent of Mary losing a million bucks. Right. It happens to name the firm every single day. And so I think the zeros magnetizes because it's sensationalist. It gets clicks.

but we are running a portfolio play for our LPs just like any venture fund is. Yeah, so this is why I think the journalism is failing right now is because they don't understand what venture capital and what risk capital is all about. It's about doing a lot of experiments. Obviously, in the later stages, they're much more fully formed visions. But in the early stage, nobody looks at me investing in, you know, 40, 50, 60 accelerator companies a year or Paul Graham doing 300 or the two Davids at TechCStar is doing 450. They don't look at us and see a 70% mortality rate and go, you guys are idiots. Oh my God, you guys are blowing through

capital. But when you guys do much less than that, it's like, oh my God, these guys are just slashing losing billions. But one thing hits, D-D hits, Uber hits, any of the other things hit. These are, you expect 10, 20, 30x. Is that the the rough expectation? Yeah, we'll expect a little lower multiple because of the stage we came in, but the math still works. What's Uber? 3x, 4X would be happy with in 10 years? If you put in seven into something and you take three or four X, I think that will have been a great return. And so, look, we expect media scrutiny, right? When you come on the scene in any industry and you disrupt the established players, you bring a different perspective, you do it on order of magnitude

that we're doing, we expect the scrutiny. But what I would like people to do, which is what I think you're bringing is a balanced perspective that says what we're doing and how it relates to others and having an equal lens in which you look through that. It could be a larger lens, but have it as a balanced approach. We're going to make mistakes. We're going to have setbacks. We're going to have things go to zero. We're going to get one X or two X. We're going to get singles and doubles. We'll have a few home runs. And I think over a long period of time, this is such a unique platform changing the way we do late stage investing. And I'm voting every day with my agency of showing up and being part of this amazing journey. All right, listen, I could talk to you

for another hour, but I've already talked to you for an hour and a half. Jeff, thanks for coming on the pod. Really appreciate you being so candid about everything. For founders, when's the right time for a founder to kind of reach out to SoftBank and ask for an investment or you find them? Yeah, so I'd like to meet them early and watch their journey. and haven't been an entrepreneur. So if it's after they've just raised their series A, I think is a good point time. Come tell me your story. Catch me up.

Let's get lunch three or four times a year. And when you're ready, we now have a relationship. Perfect. And it goes much quicker. So it's been such a pleasure to be on. And just remember, bring the checkbook to the poker game. Absolutely. You're in.

Listen, there is a secret poker game I've heard. And, yeah, maybe if a seat's open, I can give you a little text and let you know. All right. Thanks for coming on the pod Thanks to the partners Thanks to Nick and Sir Charles On the On the Ones And thanks to Matt for keeping the lights on

Jackie for running the accelerator Ashley for crushing it at the syndicate.com Presh doing growth Sunny doing the front line Marine Working it out for the sponsors Just everybody thanks to the team I'm basically the whole company

If I left you out Don't worry Heidi you're doing a good job Mary You're doing a great job And we will see you all next time on this week. It's right. Bye-bye.