This Week in Startups - E34: “Angel” Podcast: George Zachary, General Partner at CRV shares insights on cancer scare shifting his focus to investing in health-tech, passing on Google at MDV, CRISPR & “designer babies”, coronavirus threat, origins of Sand Hill Road & more!

Episode Date: February 19, 2020

0:50 Jason intros CRV's George Zachary 2:20 Passing on Google at MDV and coming to peace with the anti-portfolio 5:51 Differences between leadership & management, where Steve Jobs, Larry & Sergey fell on that scale 10:27 Why 1990's VC was sales & marketing-driven instead of product-driven as it is now 12:52 What shifted the philosophy to product-driven businesses? 18:00 Meeting Elon Musk in the 1990's and backing Zip2 21:59 What were Seed investors like in the '90s? Origins of Sand Hill Road 25:48 Elon pitching Zip2 to a conglomerate of venture firms & selling Zip2 for cash 28:07 How VCs can be conceptually right and wrong in the outcome, how X.com merged with Confinity and became PayPal 33:27 Why is it harder to 3x the massive venture funds? How is age a limiting factor in VC? 40:28 "It doesn't make a difference what you pass on. It only takes 1 company to make your career." Positive & negative feedback cycles in VC. 42:54 Battling through multiple portfolio companies dying at once 44:15 What was George's biggest investment hit, both economically & personal fulfillment? 52:37 George describes his recent health scares and how they shifted his investment focus 1:04:06 Reasons the life-expectancy in the US has gone sideways in recent years 1:07:39 Potential health-tech advancements in the near future 1:21:58 Thoughts on CRISPR & "designer babies" 1:30:27 Cell-based fish & meat 1:37:32 Potential coronavirus repercussions - what's real and what's not? 1:55:13 Jason calls for eliminating handshakes

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Go to LinkedIn.com slash Angel and get a $50 credit towards your first job. post. And Assure is the leading provider of special purpose vehicles and fund administration, with over 5,000 completed transactions and $2.5 billion under administration. Angel listeners can get 20% off their first SPV at Ashore.com slash Angel. Hey, everybody, welcome to another edition of Angel, the podcast. This is the podcast where we talk to investors about how they make their decisions. And today we have the low key legend George Zachary back on the podcast. He was on episode 237 back in 2012. Again, he was on the pod, uh, episode 631 with, uh, Sebastian Thrun, uh, after I think you invested in Udacity.

Yes. And Sebastian is now doing Kitty Hawk. Yes. I'm right. The flying quadcopters. Uh, George Zachary's a bit of a legend here in, uh, Silicon Valley, but you will not see him on VC brags or on Twitter bragging. Um, no, he just backed, companies like Zip2 and Odeo. If you don't know those companies, you certainly know the founders. Zip2 was the company that came before SpaceX, came before PayPal, and came before Tesla. And Audio was the company that was the precursor to Twitter. Yes, that's right. George Zachary back, Jack and Elon, before they were Jack and Elon, and known by their first names. And he also created and co-founded with Jim Clark, a legend here.

Shutterfly, which became worth over a billion dollars. And before that worked at SGI. Yes. Back in the day. A computer company. Yes. That would make, Cillin graphics made high-end workstations. Correct.

Powerful computers at the time that cost $20,000. And all the first web servers ran on SGI equipment, if I remember correctly. You did a stint at Moore David Al, a venture capital firm that famously passed on investing in Google. at a $48 million post when you would have owned 16% of what is now a trillion dollar company. If you had sold half your shares even, it would still be worth $80 billion. 20% of $80 billion was carry would be $16 billion, five partners, six partners in a fund, $2 or $3 billion each lost. You know, I've never done that math before.

How do you as an investor, thanks for coming back on the pot, by the way, welcome. How do you as an investor deal with the highs and the lows and these gigantic swings? Now, you made it. You were a great founder. You made your, you know, money, I guess, early on with Shutterfly and SGI. So you did okay. You had that edge taken off. But the numbers get so big.

And when the misses get that big, does it mess with your head that you came that close to it? Do you ever think about it or you have peace with it? And how do you get to peace with it? for a friend. I would say at different points in my life, it definitely did mess with me. It messes with you, right? Thanks for being honest about that. Yeah, it did. Because you think I could have placed that bet. I was there at that time. Yeah, I was there at that time. And I asked myself, what would have I, how would have I done this differently? How would have I convinced other people in my partnership to do this? Yeah. Maybe I didn't speak loudly enough about it. Right. You

were passionate. You were part of the group that were passionate about Google. You got voted down. Yeah. You know, in that case, there was one person who basically laid down on the railroad tracks and said, these guys are totally arrogant. Who needs another search engine? Oh, my. These guys won't take coaching.

Literally, there's one person in the room who destroyed the Google bet that you- Completely blocked it. He just blocked it. Yeah. Jumped in front of the train, said, over my dead body. We're not doing this. And the reason given is Larry and Sergey are arrogant. Arrogant, won't take coaching, and who needs yet another search engine?

And that was the period when there were a lot of search engines. 11. Yeah, and most of them didn't work out well. Magellan, Lycos, Excite. Alta Vista. Alta Vista. Yeah, GNN, Global Network Navigator. Yahoo is a directory, a lot of stuff going on at that time.

But the lesson that we all take away from that is there's always room for improvement and for a breakout success, even in a category that's crowded. It's very true. If there's a market in a category, you should not dismiss what could be the ultimate player. But there's some cognitive bias that some people have. I don't know if there's a name for it, but it's almost like we've knocked on that door, nobody answered, therefore there's nothing behind the door. We've looked over that mountain.

We didn't find the oil. We drilled. We didn't find the oil. Therefore, there's no oil. And it might be just that you didn't drill far enough, or the drill bit wasn't sharp enough, right? I think it's two pieces. One is historically most venture investors have mistaken leadership and management. So leadership and management.

Yeah. Explain. So they thought, well, you know, the founder CEO is not a good manager so we should replace them. Oh. Well, that's not really a good idea because you can actually add really good management to a leader. What's an example of that? What's the best example we've seen in Silicon Valley? I can think of two.

I'm probably thinking of the same too. Of like management added to a leader. Let me explain the other piece before we go there. Yeah. So you can have a, if you don't have a great leader for a company, you're kind of toast. Dead in the water. Yeah. I mean, you need the leader for vision, for drive, for persistence, for execution.

That's the person that inspires everyone in the company. Got it. You cannot have a company without a leader. Right. I mean, company is a group of people. Right. You cannot get the group of people to go somewhere. Yeah, you need that leadership.

You get that inspiring person who says, this is where we're going and we're not giving up till we get there. That's right. A lot of times people who are leaders are too busy to deal with management because it looks boring. And it is boring. Yeah. So they need to hire management. Yeah. So they need to hire management.

So some people on the board will needle them about the management. Right. And then they'll be like, oh, this person can't manage stuff. But they don't need to. Yeah. So you'll get comments like, you know, Larry and Sergey, oh, okay, these people aren't really good managers, why don't, why won't they take coaching? Yeah. Well, they're not managers. They don't need to be. They're leaders with an incredible vision. Yes. So, you know, in that case, it was a really good thing that

Larry and Sergey could stay basically running the company. You know, Eric became, Eric became management. He became management. Eric Schmidt, who was adult leadership was brought in. At the time, that's what we called it in the industry. We're going to bring in some adult leadership. Yeah. And they literally made him the CEO. Yes. They gave him the title. So. But the inspiration in leadership still came from Larry and Sergey.

Right. They did the Friday meetings. They said Gmail is going to exist. This is why. This is why we're buying Android. This is why we're buying YouTube. This is why we're making these risks. This is why we're going to do Google Plus.

We're going to spend billions of dollars trying to build a social engine, social network. They had that founder authority. Yeah. So, you know, a very well-known example that set the tone for Silicon Valley's Steve Jobs. Okay. So a notorious bad manager, a great leader, somewhat Machiavellian. Yeah.

No, big swings, a lot of passion. A ton of passion, very user-human-centric. Right. In terms of what he was doing. Cared about that. Cared about that. More than anybody. Obsessed over it.

Obsessed over it. It wasn't like, oh, okay, I'm going to build some features and figure out what the product is. and then like we'll figure out what the company is supposed to do and like who like who are he helping. Right. So jobs fits into that. Yeah. And, you know, I'm close friends with someone who ran engineering there. Fantastic management.

Yeah, he always put great people and he had Johnny Ive heading the design group. He had Tim Cook running operations and the distribution, I guess. Yeah. A supply chain. Then you got Eddie Q. I mean, right on down the line. Who knows who's the better manager there. But at some point, he was smart enough to know, put great management in.

Yeah. So I can just focus on the customer and walk around the neighborhood here where we take a, he would take a lot of walking talks in this neighborhood. We're in Palo Alto right now at CRV's office. Thanks for hosting. With Walt Mossberg on Sunday nights talking about product and customers. Think about that. Yeah.

And I actually think it was the arrival. of and notice of Steve Jobs here, as well as Zuckerberg living here and Larry and Sergey living in Palo Alto that led to the huge influx of people living in Palo Alto. The fact that they were... It all occurred around the same time. It was 2000s, early 2000, late 90s, early 2000s. Larry and Sergey are at Stanford. They come here.

They live in Palo Alto. Zuckerberg comes. He sets up shop here. and he lives in Palo Alto, he sets up shop on university. The guy at Moore, who laid down on the tracks, where is he now? And have you ever talked to him about that moment? Has there ever been a reckoning? Of who?

The person at Moore, Davidow, who laid on the tracks and said no Google. Oh, okay, I know what you're referencing now. Yeah. No, I haven't. I mean, the person comes from a... Is he like old school? guy, like much older than you or your same age? Yeah. Oh, he was part of that earlier generation.

Yeah, I mean, the era of where venture investors basically totally control the show. Explain that. What was it like back then? Because you were part of the transition. I was part of the transition. You know, I got in the business in 95. That was still the era where sales and marketing ruled a company's success. It was all, yeah, it was all about shifting and moving atoms. There was a, there was a no bits in the business. Packaged software. It was packaged software. It was hardware. Right. I'm going to rack some servers. You're going to rack some servers. Buy some licenses and boxes. Rip them open, install them on floppy disks. That's right. There was no internet network web to

distribute. Right. No over-the-air updates. Exactly. You bought $400 a seat, Lotus Notes. You bought $500 a seat, Novell networks, whatever it was. Yeah. So you didn't have, the importance of a sales and marketing group was huge. Right. And venture investors basically said, okay, these are the most important people in the company. Of course, the product and engineering people are important. But if we don't have great sales and marketing people, we're toast. So it all keyed off of that. In fact, a lot of venture investors were former sales and marketing people. Wow. So you had the MBAs coming out of Stanford, Harvard, Wharton, whatever, but then you also had the sales and marketing executives who had run a sales department.

They said, you know, it would make a great venture capital, somebody who could sell. Yeah. And in fact, when you think about it, Oracle was a sales driven culture, still is. Yes. They just ram and jam that. Salesforce also sales driven culture. Yes. Because he came from that world.

Yes. And Steve Bomber, sales driven culture, Microsoft. Intel was that way? Intel was that way. What was it, do you think that changed the, philosophy over the 90s and into the 2000s. What was it that shifted it? Emergence of consumer internet. High bandwidth, end users. So they could have a high quality user experience.

So you had to focus on product experience. So you ended up getting product people into venture. Interesting. A big shift. Like a lot more product people. So because consumers could buy the software. because consumers were now driving it and making the decisions, not the salespeople ramming and jamming some product down a CTO's throat. It changed everything. Yeah.

So it's really the buying cycle changed. The buying cycle completely changed and who got it to the end user and presented to the end user changed. Right. When did the VC start changing and realizing? Do you remember what the moment was? like in those discussions because you went from more and then you wound up

at Charles River right and was there a moment where you remember you know being in one of those Monday meetings of famous Monday meetings where you actually say hey I want to invest in Google

somebody stopping was there a moment in which you felt like maybe this is changing people retired people said you know this is undeniable was there a company that led that in a way

that change you know I think the bust of 2000 which very few venture investors right now were even in business. Wow, think about that. I mean, the average age of people in venture now is about 40. So they were about 20 in the bust. They were in school.

Yeah, so they're not, they had no, I mean, the average venture investor being 40 has no scar tissue or experience of a bust, which is kind of scary if you're a limited partner. So back then, it's, started changing. In Monday meetings, I would say at our firm, MDV was primarily a networking firm that started doing some consumer internet, some of it through me. Yeah. Most firms had done consumer internet, but most of the companies just went splat against the wall from the 2000 bust. So everybody got even more cynical about it. Everyone said, yeah, consumer internet, oh, you know, it's stupid.

Oh, Amazon's, you know, it's a perpetual money loser. Oh, look at it. all the other consumer e-commerce things, they are losing money. None of this is going to work out. Amazon will never make money. Amazon will never make money. Yeah. It's a huge money pit.

Yeah. So venture investors, by and large, kind of ditched consumer. Huh. Interesting. All right, when we get back from this quick break, I want to talk a little bit about your experience backing Jack

from audio and then into Twitter. And then even Elon from going from Zip to, I think, skipped PayPal. And then the story, the famous story of when he pitched you, SpaceX, we get back on Angelopocus. Zeus living makes it easy for you to live wherever opportunity takes you. Yes, whether you're connecting with investors on the other side of the country or opening an office in a new city, Zeus offers smart, furnished housing. That's cozy and convenient. And Zeus can accommodate 30-day stays, and they include all the important stuff like cleaning supplies, kitchenware, toiletries, and options like downtown one bedrooms or a single-family home in a neighborhood you want to explore, flexible booking dates, immediate availability, and minimal paperwork.

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Wow, that's very generous. Get the 200, not 100, not a 50, 200. to Hyundai by going to Zeusliving.com slash Angel. That's 200 right now on J-Cal and Zeus. Visit zoosliving.com slash angel and explore all their beautiful homes. Okay, let's get back to this amazing episode. Hey, everybody, welcome back to Angel. This is the sister podcast to this week.

It starts us. We're in our fourth season, and we're looking for wisdom from founders who have a billion dollars under management, which Charles Rivers does, Charles, CRV, originally called. Charles River Ventures in Boston. There's a river there named that for a former king. But it's now just called CRV. Yes. You've been friends with Elon since the 90s?

Yeah. Right when I started an adventure. Wow. December 95. Long before I met him, I met him, I think 2000-ish, 2001. How did you meet Elon? And then how did you wind up backing Zip 2, Kimball and his company? So Elon and Kimball Musk and friend Greg Curry showed up at our office.

Rest in peace. Yes. Died at 50? Yeah, 51. So tragic. Very. They showed up at our office at MDV, pitching a very controversial idea that you could put an address into an Internet page and another address. And it would actually tell you the directions and give you a map.

which a bunch of venture investors thought was a dumb idea because everyone had a map in their glove box. Yeah, why would you do that? So why wouldn't just use the map in the glove box? Yeah. So it was kind of obvious to me that it was a good idea that people needed directions. And, you know, I had heard my parents arguing enough about, you know, where are we? Where are we? Let's pull over to a gas station.

Yeah. And my favorite part of the road trips was you'd have a map and you'd say, okay, the map gets us to Albany, but we'll get a map along the way on the through way so that we can figure out getting from Albany to Niagara Falls. So there were these waypoints where your map ran out

and you would refresh and get the next map at a thing called the guest station, which would have a rack of maps. When you move to L.A., you would get that famous big, Vic book. Yeah, with the maps. Yeah, I've got the name of it.

Somebody will, like 50 people are emailing me right now who are listening to the podcast, but there was a giant book that you would get, like when you got off the plane in L.A., that you could look up any street name, anywhere in L.A. I forgot the name. Yeah, and they'd say, go to page 722, and you go, like, it was a giant Bible.

But you needed it to find the most time efficient method to get through L.A. Right. Which is now called Waze. It's called Ways. Google Maps, Ways, Apple Maps, or anything else. There was that little interim of Tom Tom. Yes. So they pitch you this idea.

They were at Stanford, I guess. Yeah. And this is 96. Elon was working actually at one of my mentors companies. Oh, really? Which company? Rocket science started by Steve Blank. Steve Blank, the measurement guy.

Steve Blank did, yeah, he did the lean startup kind of stuff with. So Steve Blank was running something called rocket science? Yeah. What was it? It was an interactive CD-ROM company. Oh, like Voyager. Trying to combine games and movies. Right.

They were doing multimedia. Back in the day when computers got CD-ROM drives, People are like, wait a second. You could make a game a movie. You could have audio and text and film and a game on the same disc. Yeah, it didn't really work out too well. No. They were just like, what's all the ingredients we have in the shelf?

Let's put it on a CD-ROM. Yeah. Never was cohesive. Not really. No. It wasn't really fun for people who played games and really wasn't that much fun for people watch movies. It was basically like bad games combined with bad web pages.

Yeah. Like it was like a little bit of Spotify, a little bit of the web, and a little bit of an app. Yeah. But people bought them. People would go to Comp USA and buy a $60 CD-ROM, The Beatles, a hard day's night. For a while. Yeah. For a while.

But the game versions were not popular. No. And it was a bust. So Elon worked at Rocket Science for a while, but I didn't meet him that way. Yeah. So he showed up at MDV. A seed investor introduced him to my partner. John Fiber

the seed investor was a former some Microsystems exec as my partner John Fiber was and the seed there were very few seed investors

back in that day like 10 right yeah I mean there were a few right they wrote big checks they were extremely wealthy people

extremely right they would write like $500,000 checks in the 90s this is in the 90s and they were

very well known yeah like who were they Mike Markola was that one of them Yeah, he was one of them. Yeah.

Before Ron Conway. This is before Ron Conway. Yeah. It was the 90s angel investors. Yeah. Somebody had put 100,000 into Google before they raised them, and I forgot who that was. Andy Bechtelcheim. Yeah.

Andy was a co-founder of son and another networking company. He got 1% right? Yeah, he was a billionaire from Google, but he had made so much money beforehand. Right. So he's a former Stanford University professor. In fact, he still might be at Stanford. He put, yeah, he did a couple other companies too. Yeah.

He just hit home run after home run. Yeah, I mean, he was a very successful founder in networking companies. Yeah. Incredibly smart person. And he met them by being at Stanford. Right. Because everything used to just come out of Stanford. That was the well.

That was the well. Be close to Stanford. Right. Which is why Santo Road is next to Stanford? Yeah. Because early venture people lived in Woodside. Stanford was in, was in, was at, at Stanford and Sandhill Road connected them.

Right. And you needed it in an office on Sand Hill Road so people could come from Stanford somewhere and people don't want them coming over their houses because it didn't look professional. Right. So 3,000 Sand Hill got started with people's crappy, dinky offices because there was a golf course there and a crappy place to eat lunch. Right. And everyone had their small offices with small funds.

Everyone had to collaborate together. They would bunk up, yeah. Which is also known as collude. Yeah. Collaborating and colluding. Yeah. And that was the early version of venture as it started to emerge. Really?

And that's why venture investors got the bad rep of colluding on price. Right. And that was a thing back then. Yeah, because everyone's fund was so small that a whole round could not get done. So a round at that time would be a million, two million, three million? Yeah, two to three million. And the fund sizes were 30 or 40? When I joined MDV in 1995, we had $105 million fund.

Median was $120. NEA's fund, NIA was one of the largest funds, and their fund was $220. We were like, whoa, that's a huge fund. That is gigantic. Yeah. Now we're like, I'm doing my first seed fund. It's $300. Yeah.

I'm like, what? What would colluding look like back then? You just, somebody would come pitch everybody and then what would happen? Everybody go get lunch and say, what's a good price that we can? and how much equity and control can we get? It was before me because when I joined MDV, the fund sizes started to get big enough. That you could do the whole thing.

That you could start to do the whole thing, that you only needed two funds. You didn't need like six. So back then you had to get consensus of six funds to back something. So then you'd have this. So you'd have multi-party collusion. Yeah. So people would say, oh, you know,

what do you think the price of this should be? Well, would you do it at $20 million post? no, that's too high. What are you thinking? Yeah. This is Series D. It should be 15. Right.

That's hilarious. And I just said Series D. I know. It's like C. Series D is 15. Back then, the founders would wind up owning less than 10% of their companies. Yeah. Pretty regularly.

Pretty regularly. Except in the cases where there's significant trade secret or IP. Ah. In the founder, right? In the founder. Right. In the founder's head. And any patent that they had beforehand.

Got it. They could use that patent as like their shield to get. get extra leverage. Yes. Fascinating. So Elon comes in pitches. You go to bat and put 500K, a million dollars into ZIP? No, we put in three million dollars.

Wow. And back then that would be 20% of the company or something? It was more than that. Yeah, probably 30. Yeah. You joined the board? No, my partner, John Fiber joined the board because I had just joined, you know, I was a quote unquote partner, which basically meant that was a principal.

Ah. You know, because there was title inflation going on. Yeah. back then in 98. And Zip 2, what did it want to be in being? It went up being like a Yelp kind of? It became the pre-Yelp Yelp Yelp. Right.

Because they needed a business model. And it was, here's a directory of vendors. Yeah, because, okay, you're going from this direction to this direction. Oh, you're going to a restaurant. Oh, restaurant could use an ad here. Got it. Interesting. And that wound up selling to New York Times or something?

No, it ended up getting sold to... I can't remember who bought it at Zip 2. It was supposed to be merged with Alta Vista and spun out as a public offering. Oh, really? But, and it was supposed to be a share for share transaction. Elon was smart enough to take cash. Yes. He made like $100 million off that.

It was like a $300 million sale or something, $50. It was less. Less, yeah. I'll let him tell you. Right. But that was the first, that was where he got his first chunk of cash. And then he started X.com. Yeah.

Which merged with, you know, Peter, Thiel and David Sachs and Max's, Max Leverchins, Confinity. Right. You know, which was their idea about using replacing Fiat money. Right. You know, using kind of funny money on old blackberries. POMs.

On palms. We're going to beam each other. When you think about it, like, they really had the right idea. It's so amazing. Because going back to the Google where the 11 search engine wins, it's like you look at PayPal and now it's like Stripe and Square and cryptocurrency. Yeah, that was like a version of crypto, right? Which is, it was the pre-crypto version, which was.

is how do we replace Fiat money. Right. And we're just going to have people beam it. And it was like, okay, we've just limited the entire market to people who own a $300 Palm Pilot with a green screen that looks like an Army, like Desert Storm device. That's right. Remember those? Yeah.

Remember learning Palm script? Yeah. People listening to this who are like, what are they talking about? I know. It's actually. But that failed. Elon's idea for X, if I remember correctly, it was more like just a bank. It was supposed to be an internet-only retail bank.

Right. We're supposed to compete with Bank of America or Chase or whatever. And I thought it was too early. Yeah. And it was. We didn't invest. Oh, brutal. And this is a case in venture where you can be right and wrong. You can be right conceptually, but absolutely wrong in the financial outcome. So you're right. It's too early for a bank, but they still won because they pivoted and iterated.

Because they merge with Confinity. Right. Sacks came up with the product idea. Let's just email each other. money, as opposed to using a problem. Which is becoming the payment method for eBay. Right. And then they really had something.

That's fascinating. Yeah. When you think about it, you have all these big brains, and it's all these Stanford dudes, a lot of them from South Africa or just not from America, and they just keep iterating until they figure it out. Yes. It's probably just bet on the founder. It's almost like the first idea, you know, sometimes they get it right, but they're triangulating

at that stage, right? Isn't that the lesson? Yeah, for seed in series A. Right. If you're doing Series B or C, they should have it dialed in. It should be about scaling. Yes. By that point.

So the quote unquote mortality rate at Seed in Series A is pretty high. 80, 90 percent, go to zero. 70, 80, 90. I'd say for the top firms to zero, it's about 40%. For, you know, one X's, it's about another 30%. One X means you got your money back, which is the same as zero. And getting your money back, you know, 80 cents on the dollar,

which is the same as zero as far as we're concerned. Yeah, LPs don't pay us to do one X. Still a zero. Yeah. So you're still at 70%. Yes. Meaning not accretive to the bottom line. That's right.

So then you've got, you know, I would say the media, you know, if you're doing a 3x fund, which 11% of the top quartile funds are doing. 11% of the top quartile, top quartile means 25%. So 11% of 25%, which is 2.5% or so are doing 3x. 3x. That's what I do.

Does that mean I'm good at this? Yeah. I'm doing okay? Yeah. I think I'm at 3x. But remember, it gets more difficult to scale. Right. And that 11% is the median fund that does that is $531 million.

Interesting. By the way, none of this is a solicitation for you to invest in my funds at the end. So as you get bigger, it gets hard. harder to scale. Why? Why is it harder to scale? Think about that for a second. When we get back on Angel the podcast, I want you to explain why the bigger number is harder. Let me get back on Angel. Hiring the right person is the major unlock for you and your startup. You know this. There are two things that you waste way too much time on. One is hiring people. Two is raising money. You can solve this problem by using LinkedIn jobs because they screen candidates with all the hard and soft skills

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Thanks again, LinkedIn. Let's get back to this amazing episode. All right, the low-key legend. He's back on the pod. George Zachary. You're not going to hear about him like pounding his chest, beating some drum on Twitter. He just puts his head down and works, and the work speaks for itself. Why are harder, why is it harder to triple the big funds? And then what does that say about the state of affairs in Sluggan Valley today where these funds are getting ginormous? Why are LPs if they know, it's hard and impossible to triple the billion, $2 billion funds? Why are they doing it? So what's going on? Almost all funds that have a 3x return have at least one company that is a fund returner. So it returns the entire fund. Or it returns at least half the fund. And then they have a significant amount of companies that return a quarter of the fund. Got it. So when you're thinking of fund construction, you're buying typically 20% of a company as a venture capital. So just take

that number. Roughly, plus or minus 5%. Right. So let's pick 20. If you own 20% of a company, in order to return a $500 million fund, you need to have five times that in terms of the value of the company, which means five times 500 is $2.5 billion. Yeah. So you need a company.

And remember, there's dilution from re-uping employees from future rounds. So you might get diluted by half. Yeah, that's the model I use is. If you start off with 20%, you're going to wind up. with 10% by the time there's an IPO. So 10% an IPO means a $5 billion company returns it, and there aren't that many $5 billion companies. Let's be honest.

No, they are not. So that's why this game is so hard if you do big funds, which then leads me to my next question. And that's why there's 11% of the top quartile. Got it. Because the three-exured that fund means you have to have a $15 billion exit. And how many of them are there? Dropbox, Shopify, Uber.

Is Lyft pest? I don't know. Lifts kind of around that area. Slack's kind of around that area. Zoom. Zoom. Yeah, certainly. Airbnb, certainly will be in the 30, 40, 50 or something.

So, yeah, it's really hard to do. Yes. You have to get really lucky. Or you just keep the fun size smaller. Or you keep the size, which is what Fred Wilson does with his. Yes. Is that your strategy at Charles River? Yeah.

Our fund size has been $400 to $600 million. And how many partners in that? Typically. We just up the amount of people we have to 16 up from six over the last four years. So everybody has some... I'm the old guy here. Yeah, which is saying something. See, when do you do...

What do you think the sweet spot is for a venture capitalist to do their best work? Because there's some combination of swinging for the fences but also having wisdom, but then it can work against you. like the more David Dow partner who refused to let you invest in Google and laid on the tracks and blocked the Google, which we got, I got to know that name. I got to go find him. I think, I think it's 30 to 50 years old. 30 to 50. Explain, why is this the sweet spot? What is it, what is the combination of whatever it is, experience, wisdom, risk taking, hunger, personal net worth? What are the factors that make that the sweet spot for fund managers? For consumer internet?

The older you get, the less in touch you are with the need of consumers. If you're doing really well in venture, you have so much money that you are not really paying attention to what consumers need because you can basically get whatever you need. Through money. Yes, you get disconnected from reality. You get disconnected from not reality, but from the reality of most. Yeah, the streets. You're like, you're in a different reality. You're in a different bubble where you own multiple homes, you have a jet, you're.

So you don't know what it's like to be at Southwest in line or at Starbucks in line because somebody went and got your Starbucks. Yeah. So, you know, I'd heard this from not from a friend of ours that's the co-founder of eBay, but from another venture investor who passed on eBay. And he told me, well, we didn't invest because one person in our firm blocked it the most senior person in their firm. Oh, my Lord. And their comment was, who buys stuff that from flea markets? there's no margin in stuff at flea markets. Right.

And by the way, it's like 70% of people in the world are buying new stuff at flea markets because they don't have enough money and they want to get a deal. Yeah. So, you know, so from their perspective, it was, I'm super wealthy, probably. You know, I'm reading into this part. Right. I'm super wealthy. I don't go to flea markets.

Why, you know, there's no, it's chalky stuff. How much money do you make? Yeah. Who needs a baby's back then? When you could buy a new one. Yeah, there's no connection to that. So that's on consumer internet. You should get a boomer.

Every venture capital firm should get a boomer. And when they're doing a deal, they should just look over as a group and say, okay, boomer, what do you think of this? And then if they fight it, they should increase the amount they invest. And if they say we should totally do it, they should say, you know what, we're going to pass, but you can invest personally. Yes. Just get an okay boomer for like the end of the table, like some cramagin who's like,

I don't get it. Like, why would people take a video of themselves and share it on Snap? Crackle and Pop, what do you call it? Snap? Just get an okay boomer. So it's actually, this is the reason why you should absolutely have younger people in a partnership because they're more sensitive towards the consumer market. Yeah.

But you need to encourage them to speak up and not penalize them even though it seems like a stupid idea. Right. Nobody knows. Because the more senior partners who might. have a track record. Yeah. They might say, take the air at the room.

Yeah. While younger people might think, oh, my God, I've got this venture job. I could potentially have a bigger venture job. Do I want to take the risk of saying this? Political capital. They don't want to lose that political capital at the table. And if you fight for something in a world where we just said 70 or 80 percent are basically zeros, you know, one X equals zero.

So if the default case is 80 percent lose, fighting for something is fighting for something with an 80% chance of zero. Yes. So it goes against all logic to fight for something with the majority. It's so much easier to just be cynical and be like, yeah, I think that's going to fail. Yeah. Some VC was dunking on a company that failed on Twitter and they got barbecued because it was like, hey, dip shit, everything fails. So for you to say you passed on it and give yourself credit for a pass, that's like, that's like making a bet.

Like, I bet you this person does not hit that. it doesn't hit a grand slam right now it's like yeah yeah that was a common activity with venture people it still occurs i think which is oh did you pass on that yeah i passed on that so there's kind of a cross reference of like oh i feel good because i can you told me you passed on this and i can say i passed on it okay you know i feel good because another smart person said that they passed on it and i passed on it yeah but the thing that you should be getting credit for is saying yes to something that most people don't understand right Isn't that the skill?

Yeah, the key thing is not the thing you passed on. The key is what you did. Right. Where you placed the bet. Yeah. One of my mentors in the business, the person actually who basically blocked the Google deal. Wow.

Told me, it doesn't make a difference what you're passing on. He says it only takes one company to make your career. Yeah, don't I know it. And if you don't have that, you're, over. It really is what it's about. People's view of me changed dramatically after the Uber investment.

They were just like, here, you want a book deal? Here, can we be LPs? And I'm just like, okay. And it's like, yeah, you're a genius. And it starts to become a positive feedback cycle. That is right. It does. Because then better companies come to you and say,

you're the guy who did Uber, okay. And you're the guy who did Twitter, in fact. Let's go to Odeo. Yeah, and it can be a negative feedback cycle. If you've got a bunch of companies that are not doing well, what happens to the usual investor is there's just a meltdown of I'm not good at this. I'm not sure for this. Psychologically. Yeah.

It's like, oh, my God, this company's doing well. What do I do? Like, I got to talk to the founder. Like, what can I do to fix it? Like, a massive amount of anxiety. And if you have five of those things occurring at the same time, you doubt creeps in. The doubt creeps in. You can't talk to new companies.

Like, you're spending all your time worrying about these companies. it kills a lot of people's careers. And the thing that leads to it is... The bad beats. Yeah. The thing that leads to it is a lot of young people or inexperienced people entering the business, they apply this bad rule of probability.

They think, oh, one out of ten companies will be a huge hit. Well, probability isn't equally distributed to everyone. Right. This is what I try to explain people when I'm like, let's pick a roulette table. Tell me which one has the most reds because we're betting black.

And they're like, that one has eight reds. I'm like, difference. Like there are instances of, there are documented instances of like 50 reds in a row. Like if you look up in the Guinness Book of World's record where people actually are like, look, here's an actual run of 50 in a row. So if you're trying to do the Merringold system or whatever and double your bets, like probability can be really brutal on people. I've had that happen in my career where you get those bad beats and you got three companies dying at once. It is really not fun. You've been there. I've been there. Yeah. Not just not.

the dot-com bus, though. Other games. Yeah. How do you fight through that? It's horrible. It's not fun. It's not fun. How do you fight through it?

What do you tell yourself? Well, I've been through it, so. I've been doing this for 25 years, so it gets easier. Yeah. You're like, this will pass. It's like, yeah, it's like frontline warfare. So it says like, okay, people are going to die. You know, my position's going to get battered.

It's going to happen. But remember, I've done well enough that I don't worry that I'm not going to have a house. Right. I'm not worried that I don't have money for my wife and kids. Right. That takes the edge off. That takes a huge edge off. Right.

You just have to look at it and be like, listen, this is not the risk of ruin we're talking about. This is a fun that underperforms or. Yeah. I can't sit here and say, oh, I'm like super brave. Right. I'm so much better than all these other people. Right. Right.

I'm in a position of good fortune. Right. So, but I'm, you know, I would also say that I took more risks than the average person in the business. What's been the biggest hit for you? I don't even know the answer to that. Which one has paid off? Economically or? Economically and on a personal fulfillment basis.

Both are important. Yeah. I would say there, for me, where I'm close with the founders and they really do great, it's a huge, huge sense of fulfillment. It is. Yeah. I love to see founders who I really like do really well. I can't tell you how important it is to me. So. Interesting. Yeah. And of course, you know, making money in those companies is very important, you know, for my partners. For me, right? I like to make more money. Right. But if I'm making money for my partners, that's great. Yeah. I mean, my partners are super

oil. If I'm making money for my limited partners, I feel super happy about that. But it's the combination of both that make me really happy. And I'd rather make less of an absolute return doing that than a slightly greater return. Now, let me tell you, if there's like a WhatsApp return, and I kind of like the founders, but I don't absolutely love them. Right. I'll take it. I'm good with that. Yeah, I'll take that situation. Yeah. I got a little tiny slice of that. I was an LP in one of the funds that was in it and that was a bizarre outcome. So, you know, looking back, chronologically, pill pack was a huge, huge thing for me. Yeah, Pilpac bought by Amazon for over a billion dollars. Well, I'm not allowed to say how much. Oh, right. I do know that was a,

I was definitely a 10 figures. There was three commas in there for sure. For sure. Commas. Tres camas. Yeah. Not those. So, you know, the founders and I were still friends. That's great. Yeah, it's awesome. I'm so happy for them and their families. And they're just fantastic people. Amazon loved the team. Right.

Before the acquisition, I know that. I have a friend of mine that's on the board who told me afterwards. Right. They feel great about that. Yeah. And one of the most important things that also came out of it is that drug pricing, a huge amount of it is absorbed by all these middle players. Right.

Like the difference, yeah, a lot of people don't know this. The gross to net pricing of drugs is absorbed by people. Like there's a drug called Humelog. It's a biologic. The gross price to consumers is 600 bucks. The net price to pharma manufacturers is 150 bucks. Big spread there. Yeah.

Like nets to pharma companies has gone, actually went down in the last two years, minus 4%. Retail prices have gone up 5 to 8%. And that's driven by middle players. So, you know, a lot of people say, oh, Amazon not good. Well, Amazon is good here. Yeah, Amazon's great for the consumer. Get rid of all the middle players in pharma, get pharma manufacturers to Amazon reduce prices. Right.

I mean, it's amazing. It's amazing. This is one of the paradoxes of modern day capitalism, which is what's good for consumers in a broad sense, lower prices, more choice, more efficiency, faster, cheaper, better, can sometimes be bad for some number of workers who are also consumers whose either jobs have been eliminated or there's been, you know, a freelance economy that emerges. When we get back from this quick break, I want to know how you met Jack and audio and tell that story and then get into your recent obsession with health and coronavirus and your own personal brushes with a disease and getting hurt when we get back

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Yum Yumski's thanks to Assure for powering my syndicate and for offering this discount to Angel listeners. Okay, let's get back to this amazing episode. All right, the low-key legend, George Zachary, back on the pod. Go watch the horrific interview I did in 2012 where I don't even know how to answer us questions and we're in the Cienet studio. Thanks to shout out to my friends at Cienet

for hosted in the podcast back in the day. Episode 237 back in March of 2012. Let's wrap up the Elon and go to Odeo. Wrap up the Elon. Wrap up the Elon stories. Okay, sounds like a present. Yeah. So Tesla, you pass on X mistake.

Yes. Now you got Tesla SpaceX. And Elon, you knew him before he became like Elon, like famous. 20 million followers on Twitter. I knew him as Elon. I was just Elon. Yeah, I was like, hey, Elon. Has he changed?

Has a human? No. He's always been bold and focused. Yeah, he's same Elon. Same Elon. Yeah. Now he's just surrounded by everyone trying to get to him. Which is bizarre.

Which is, yeah. An annoying. For him, yeah. I would think so. Annoying for me. I mean, how many emails do you get asking for introductions to him? Every day. Literally it's every day in my life.

Yeah. Somebody asked for introduction. I'm like, can you solve your own goddamn problems? Because every time you get that request, it's somebody has a problem. And they're like, Elon's a solution. And it used to happen to be with Mark Cuban.

And before that, it used to happen with Travis and Uber, or in between those two. And now it's starting to happen with the calm guys, where it's like, I have a problem. Can you ask your currently hottest, most famous friend, riches,

whatever, most successful, to solve my problems. And I'm like, yeah, that's your problem that you need a keynote speaker or that you need an angel investor

or you need somebody to come to your benefit dinner. That's not their problem. Yeah. People are weird. Well, it's really, you know,

why is it going to be worth this person's energy and time? And time is the precious. Yeah. Commodity. Yeah. I try to not ask anybody for any help.

Maybe that's a flaw I have. Do you ask people for help with your problems? Not usually, no. What do you do? You just put your head down and work? What else is there to do? I ask doctors for help, right? Yeah, well, that's why they're there.

Yeah. And there's an exchange where you pay them. Yeah. Good segue. You had some health scares. Yeah. Last couple years. It's not been fun.

Not been fun for you. No. Share what you're comfortable sharing. We're friends. Anything, yeah. Yeah. So what happened? I know that.

Wow. So. Because you kind of disappeared for a little bit and you said, I got to take care of myself here. Yeah. And all of our friends were like, what happened to George? Where is he? Yeah. He said, who's used to be at every party?

Did he go to Mars? Did he go to Mars? 2015, I was taking a statin as a test. Staten? Yeah. All the men of my family have died from heart disease. So I figured maybe I'll try to head this thing off. Sure.

So I just did it as a test. My doctor says, hey, if your stomach starts hurting, it's a really bad sign. you need to go to the hospital right away. Okay. My stomach started hurting really badly. I called him, he said, go to the hospital right away. Oh, my Lord. I went to Stanford.

They gave me a CT scan. They said, your stomach looks okay, but we might give you a ring tomorrow. I walked out of there. He was like, oh, good, my stomach's okay. Then I was thinking, why did they say they might give me a ring tomorrow? Yeah. The next morning, my phone rings. I'm here at work.

I'm just about to meet a founder. The radiologist says, you need to have an MRI and I said, why? Yeah. And they said, well, there's a mass that's nine centimeters by seven centimeters by four centimeters that needs to be imaged right away. Nine by seven by four. This feels like a grapefruit or a golf ball?

Well, it's about the size of three quarters of size of my fist. Okay, so somewhere between the two, an apple. Yeah. You got an apple in there. They don't like it. Yeah, and it's like heterogeneous in the imaging, and it's, you know, it's got arteries and veins going. through it. It's not like a ball of fat. Right. And that's like really not good. Got it. So the radiologist on the

radiologist report mistakenly put that it's either, you know, a malformation of arteries and veins or it's sarcoma. A.k.k.a. cancer. Yeah, sarcoma's terminal. So. Wow. Yeah. What goes to your mind at that moment? You're in the phone. I was kind of in shock. You know, and I had like, I was just about to walk into a meeting with the founder. So it was like that scene from like saving private Ryan with Tom Hanks at the beach. It was like this huge bomb sound went off next to my head. And the whole world's ringing and spinning. I walked in this meeting.

I don't even remember who the founder was or anything of what they said. Wow. At all. Yeah. Yeah. So, you know, it was a long period of trying to figure out what was going on. it was really was not clear. No one wanted to do a biopsy and pull potentially sarcoma cells through me.

So I had it taken out of me. It took two or three months of going to various doctors and institutions around the country. What I noticed was that most people in cancer wards were just listening to what any doctor would tell them. Right. As is that doctor was like the voice of God saying, this is what will happen to you. Right. Or you need to do this.

And what I discovered was that there's no set prescription or description of what's going on that is 100% known. Right. In fact, when I really grilled the doctors, they really weren't sure. So I thought to myself, hey, I've got a lot of money. I've got a bunch of education. I have a bunch of time. And you got contacts? And I got contacts.

You can get it to any room? Most people don't know this. Right. They don't have time for this. They can't take time off of work. Right. You can pause everything. Yeah.

And so I decided I wanted to change what I did with my investing time and money. Right. So I decided to start investing because I'm a science and engineering geek. I'm not a political services geek to start investing in bioengineering. biology. I recruited someone here as an expert in biology. So back to health, they take it out and you're good? Yeah. Six months, I went into dial six months after that just thinking that it didn't really happen. Wow.

So, you know, some other things happened after that. Like hurricane destroyed the house I lived in with my wife and kids while we're in it. Yeah, I heard about that. I saw the pictures too. You shared them with me. So, you know, that happened. It was a little traumatic. Then after that, I had a really bad concussion. So, wow, a bunch of bad beats all in the same two or three years. And a really bad GI disease that, you know, is listed with the coronavirus as actually much higher mortality at 20% worldwide. And you got through all the health stuff, pretty good?

Yeah. Knock on wood? Yeah. So it's been, you know, six months of not having anything troubling me. With the, everybody listens to the doctors as gospel, as gods, what is the right way? for us to interface with doctors, what have you learned in that? And I know not everybody has the same resources or time, but just in an ideal world, how should somebody who has to face what you're facing, you know, execute a plan?

I do not know how to solve the issue around how do educate patients. The only thing I know that I can help with is how to create more innovative solutions and products to end users. Yeah. That's the only thing I know of how I can affect things. Right. That's your skill set. Yeah.

Backs and founders to make it better. Yeah. But asking multiple doctors and asking a lot of questions is probably the best technique. Yes. In terms of interfacing. In terms of interfacing. Yeah. So someone will come up with a method of a rapid method of gaining as

much information as possible. Right. Of other solutions that have worked. There's nothing like this for people out there. Why isn't there something where you can say, I'm going to meet with five doctors, I'm going to give them all the data, I'm going to ask all their questions, and they're going to blindly write their own synapsis and treatment plan or whatever it is, and then they all turn it over at the same time and then have a really Socratic, you know, vibrant debate

about why they answered what they did? If they're in different institutions, a lot of it's for account control. Account control. Yeah. So I had like a tissue block for me that was analyzed at Stanford. I disagreed with the pathologist report out of my own research. Right. Which was good.

I had my tissue block transferred to UCSF. It took some work to do that because Stanford really didn't want to kind of give up the tissue block. Literally, your body is in a lab somewhere and you're like, please give. what you cut out of my body to this other institution. And they're like, uh, no, we don't really do that.

Yeah, it takes time. No, they do do it. They have to do it by law. They have to. So. But there might be some process here.

Yeah, it was like, oh, really don't want to, you know, then you gotta pay us a fee. Oh, you got to go to this place

to pay the fee. So. Run around. Yeah. And I wonder why. Because they don't want to have somebody come up with a different answer and that's risk for them.

Yeah. So they're just going to. And I know the people at Stanford, worked hard on this. I don't have any issue with that. It will. It's you want to live. Yeah. I want to live. I know, you know, I want to live. I know, I had urgency about this. The cases with sarcoma, sarcoma, you know, you need to catch it very quickly in order to have some extension in life. Right. This is where Steve Jobs, like, you know, smart people sometimes can talk themselves, you know, into bad places. And he talked himself into trying to solve his own cancer. Yeah.

So cancer treatment and cure, stage four is like 10% cure. Right. Stage one is like 90%. Yeah, it really is. So not acting in time is a huge, huge penalty. So for patients early on in this whole horrific journey, not getting answers and not acting quickly and just listening to the one doctor god or institution god. Yeah.

And kind of being in semi-denial and fear. is a huge, huge risk to your life. You have to take to be your own advocate. Right. You need or you need someone else to be your advocate, but who else is that going to be? Right. I mean, this is part of the healthcare system

that isn't there. Yeah. Which is bizarre. When you think about it, you could hire a real estate broker to negotiate your lease and a real estate lawyer and a consultant

and have five people on that project negotiating your next office lease. Yeah. But where are those five people to negotiate your biopsy and getting it from one place to whether? Does that even exist in the world? The only place it might emerge is with insurance as the payer. Ah.

Which is they are starting to talk about value-based payment. What does it mean? It means they're only going to pay on the solution. Got it. So if there's no improvement. Got it. they're not going to pay as much. So it's not pay for service.

Pay for outcome. It's pay for outcome. Right. Yeah. When you... So it's an incentive-based system. And that's coming. Yeah, it's starting to...

It's working itself in. I always thought that... There's resistance to it. I would think, yeah, because people are like, well, we're gods. You're asking the gods to... Yeah, it's like, okay. We're here to bless you with our lightning bolts. Like, how dare you?

Yeah, it's like, okay. accountable. It's like, well, attorneys charge by the hour. Yeah. They don't get paid by the outcome. Oh, no, those are litigators. Right. Yeah. When we, I mean, Bill Gurley said it to me one time. He's like, there are no consumers in the American health care system. Like, there's nobody actually buying the service. No. Your employer pays for it. Like, if you had to actually look at the menu and they said, here's what your, you know, knee surgery is going to cost you. Here's your. Here's your. insurance premiums, here's what's going to happen to them, you know, and you were actually making decisions. You might actually say, you know what? I'm going to look on a website like kayak. A site like kayak might emerge or a price comparison search engine might come out where it's like, here's what knee surgery costs across the country. And you might say, you know what, I'm going to Arizona for my knee surgery because it's $10,000 in knee surgery in New York and L.A. is 150. This is one of the issues. There's no comparison.

No price comparison. How is that possible? You want to flight to Tokyo. We're You can sit here all day. There's no price comparison. So the only place where there's price comparison is in biopharmar drugs. There is biofarm. If you go to buy Lipitor in Oregon or in Florida or somewhere else, it's all the same price. Whatever. Yeah, or pill pack.

Yeah. It's all the same price. I heard that pill pack idea. And I was like, so you put the pills in a pack? I don't take that many pills. I don't get it. Well, the average person above 50 takes three prescriptions in the U.S. Oh, is that right?

Yes. Hmm. Because people have 40% of the population has diabetes or type 2 or pre-diabetic. Yeah, it's amazing. We're eating too many calories, mostly too much, too many carbs. Isn't it amazing? We literally in the United States became so, there was so much abundance in the United States. We won so big as a country that literally, I think it's the last three years life expectancy

went down because of diabetes? Yeah, we went sideways. Sideways. Yeah. So literally. We went from 79 to 78-ish, 77-ish. So we're literally declining with massive, massive progress on science, cancer, all these healthcare spending is 18% of GDP.

We're spending more than everybody. And now we're starting to go backwards. Yeah. And the reason we're going backwards is two unbelievably self-inflicted wounds. Human behavior. Yes. eating ourselves to death, and actually suicide is going up. Yeah.

Like literally, for young people, it used to be like drunk driving and like a lot of stupid behavior. And then it's like, yeah, no, people aren't driving drunk anymore like or not as much. They're killing themselves because social media, anxiety, whatever is causing themselves. Suicide rates are going up, which is to me, what is the point of having a society is so rich? And it's also going up in the 75 and above age group. Suicide? Yes. significantly.

Wait a second. People are 75. They get to retire and enjoy their grandkids and life. Because they're alone. Oh. So we're literally killing ourselves with carbs and sugar. Because people are... Because families and people are distributed geographically in the U.S.

And people are alone. So we're in this phase and trend of being what I call connected aloneness. Connected aloneness. What does it mean? It means we're all connected digitally, but we're all alone. physically. And this is a bad trend. It's a terrible trend.

Yeah, yeah, has got to live in the guest house, right? Yeah, it goes against, you know, being part of a tribe, being parts of being nomadic.

I mean, it's easy to be cynical about things like Burning Man or whatever, but I think a lot of the reason, like young people are getting into things like Burning Man and a camp at Burning Man then becomes like your tribe when you leave and they do all this stuff is,

they realize the value like this, they get this incredible unlock when they have a tribe of people they hang out with. Like my poker group has become super meaningful to all of us. Like we really love each other in our poker group in a way that none of us expected. It was just degenerate gambling. But I think when Dave Goldberg died, who was a member of our core poker group, we'd have just all cemented our friendships in such a very deep way that we're on text message all day long. And when somebody gets accepted into that group when we become friends, it becomes this otherworldly

friendship. It's very strange. And delightful. I've always believed that. the digital world should be involved with the analog world. You can't exist just in the digital world. You can, but you're not going to be happy. I mean, we didn't evolve as digital beings. It's empty calories. And you can't feed a human through digital methods. There are some people who believe that.

Zuckerberg, I think, was like, this is going to be great for humanity. We connect everybody. And it's like, you know what, connecting everybody? Not as good as like you and I. catching up right now. Like what a great moment for us to be here on this podcast. Part of the reason I have the podcast, I'll be totally honest. I get to see my friends. I get to make new friendships. Like for me, when's the last time you and I sat for an hour? We see each other parties. I don't know. I miss you. I miss you too. I mean, it's just like the podcast for me is a way to spend an hour

with somebody who I love, you know, and you're amongst that group. It's just great to catch up, right? What do you think are the big unlocks in health care? What are the things that we could unlock in, let's say, our lifetime. Hopefully you and I are here for another couple decades. What are we going to see? What are our kids going to see? If you're breaking into those two groups, what could our kids see in the next 50 years? What are we going to see in the next 20 or 30?

What do you hope to see? What do you hope to bet on to make happen? Well, there's been, you know, when I started the biopractice, we talked about using AI machine learning in combination with biology to develop pharma products drugs more quickly because right now it takes an average of well the range is roughly 12 to 15 years to develop a drug why that's so long is it the approval process it's a bunch of different things it starts with an idea in a scientist's mind of what might work they have theory in theory right they have a theory right they have a theory.

They have to screen tens of thousands of compounds. By the way, 50% of pharma products come from natural products. Right. So they have to screen tens of thousands of compounds. And then they have to go through, you know, toxicity scans. Right. On mice, on other, you know, potentially primates. So you're saying if we put AI in machine learning and we say, hey, here's what we've learned

from all the human tests we've done, all the mice tests, we've done. done. Maybe when we find a new plant in the Amazon or some new compound from something from the bottom of the ocean or wherever we find these things, we could just say, hey, what does the model tell us could be the outcome? And let's have the model come up with some theories as well as the humans. Humans can still have theories. That's right. And some people are doing this already. You know, there's- Yeah. Is it working? Promising? It matters what data set you feed it. Ah, right. So, you know, there's one company that takes, 240,000 pictures a second of a cell

and feeds it and they feed different drugs to the cell to see how it responds. So they're continuously testing the cell. There's another company that's a brain organoid company. So they're focused on central nervous system diseases. So they're building little neural tissue groups of neural tissues to basically work on Alzheimer's and others.

And just present stuff to it and see what happens. Yeah, they're testing different drugs on it. I'm like imagining like the matrix, remember the movie The Matrix where everybody was in those like things. And obviously we don't have to do this on like humans. Yes. We can do it on petri dishes of. Yeah, so they take stem cells out of people who have Alzheimer's or some other monogenic disease. You're not going to take the whole brain disease like schizophrenia because it's right now.

Complex. Very complex. Right. But you take might take a monogenic version of autism. or a mono or actually at certain very specific types of Alzheimer's it's Alzheimer's covers a group of diseases um and then basically so we take the stem cells from those people and we basically develop neurons that are wow have Alzheimer's and then we figure out we can see the abnormal firing patterns and then we can feed them existing drugs off label drugs you know natural products right

and then see if it's doing anything. At what scale can we do that? Can we do it with like a hundred drugs a day or a thousand drugs a day or a hundred big robotics? It's literally, that's what I was thinking. Like, is it like a robot feeding this and taking video and then the machine looks at the videos

and tells us which one to dive deeper? You have to use pretty high speed, a high powered microscopy to do it. Wow. And those are expensive? Well, that's expensive. But, you know, then you have to have computers analyze, you know, analyze the pictures.

You still have to have scientists in the process right now. Can we take those, in the case of the stem cells and the neurons that are firing wrong, can we computer model that in the same way we can make a virtual reality environment of the conference room we're in? We make a model of how those behave, then make a model of how these drugs interact and simulate it? Or is it just not? Not yet. Biology is really squishy. Yeah. It's not there even.

It's not, it's, yeah. Not definable in that way. We're not at the point where, I mean, we can model, we can, we can't model the, I mean, we can model the, I mean, we can model it, but it doesn't cover a lot of cases. That's why it's better to have something like an organoid. Oh. I mean, we can build a digital model off of, you know, retroactive data. Right. Because that would be interesting.

Yeah. If you, if you did a thousand of these tests we're talking about here on those Alzheimer's, you know, neurons that are firing incorrectly that you made from the stem cells you'd say okay hey listen we put these thousand compounds into it here's what happened maybe we have an idea for the next 10,000 which ones to at least try next yeah a little bit of a roadmap a path so that's so wow that's fascinating so you can have you know so that in a way is like a virtual that's like a wind tunnel modeling yeah if you think about it right we're going to make this car more efficient Yeah, so that's a test, a CAD-Cam version of what the system will be.

But it's not the real cell. Right, which is great. It's not the real system, right? You still actually have to put it out there and test it and see how it's really responding. Yeah, but you can do better experiments. You can do better experiments. And then you can actually see whether your digital model is matching up with the real world model. Right.

And you can further tune your digital model. Right. So this is a future. That's incredible when you think about it. Yeah. They could figure out, hey, listen, we know this compound has some impact on Alzheimer's. We're now going to get a bunch of Alzheimer's patients to be in a test after, you know, obviously you tested on mice or something to make sure it's not toxic. The different compounds, yeah.

Yeah. So far, there's been no successful drug. There is one drug coming to market. Oh, that could help Alzheimer's. Yeah, from biogen. Really? Do you think it reverses it, stops it, alleviates it? What could we see in our lifetime? Back to that lifetime question. This is where I'm always interested in talking to people who are rolling up their sleeves in this area. In our lifetime, which I'm going to put out a couple of decades, two, three, four, hopefully we get going. What could we see? What could we experience? And then what were our kids experience? What would be the best case scenario of things you would hope to see happen? Cancer eliminated in our lifetime? Mitigated in our lifetime? Alzheimer's and our kids? I think, well, I'm not a believer that immortality is a good thing.

Okay, this is a philosophy question here. So we don't want to live forever. I don't think it's a good thing. I think people being, I think people being immortal is like a cancer cell. Okay. And the reason why I say that is then we run out of resources on the planet and the universe runs out of resources. Also, old people make bad decisions, as we know from the Google investment. More David, I run full circle.

It's true. It's like we need a new set of humans to actually advance society with new With new ideas And if people were accumulating wealth in the 200 year age range Can you imagine like we're already dealing with this generational animosity generational gap where old people are making decisions about Social Security or the planet that are terrible for young people Now imagine we're 200 years divided

That's right and they may be holding on to philosophies ideas that no longer apply. Racism, xenophobia. Like, there's old people. It's like part of society moving forward is not that the paradigm dies. It's the people who believe in the paradigm dies. Yeah. So you slow down the entire innovation of society.

So, so anyway, that's a belief of mine. So coming back to cancer cells. Yeah. I don't, to cancer, I don't know if we'll ever stop cancer. I mean, cancer has to do with mutation. Right. I mean, radiation creates mutation. there's radiation coming out of the ground,

there's radiation coming out everywhere. There's going to be some, but the idea that you would know somebody in their 40s or 50s who died from it. So that to me is what really bothers me. Kids getting cancer dying early. Oh, it's brutal. You know, if someone has a long life that's healthy,

you know, gets to be a grandfather, a grandmother if they want to. Right. Gets to be part of a full family, enjoys their life. That's what I'd love to contribute to, helping founders get there. Yeah. You know, so part of that is early detection of cancer.

I'm focused on investing in that era. Early detection. Early detection. Catching stuff so you can do a 10% cure. Right. 10% detection so you can cure people. Right. Not at the 90% stage where you're basically B-52 bombing them with chemo.

Why do we not know until it's too late or it's hard? Like right now, most people are like, yeah, get checked when you're 50 or something like that. Why aren't people just getting scanned when they're 30? Is it that it wouldn't make a difference? We wouldn't know? For example, like in the case of MRI, if you do MRI imaging, you can see a lot of things that might look like tumors. But they're not. So, yes, but they're not. And to payers, that becomes a very expensive proposition. Ah. So literally we're back to economics. We were back to economic. So cost of MRI machines have to come down. The MRI service has to come down.

MRIs need to be done outside of hospitals out of major medical institutions. Like a major medical institution here wanted to charge me $9,500 for an MRI. I went outside to a third party who did it for $900. See, I talked to my, you know, literally the same thing for $900. That's ridiculous. 10% of the cost. I would talk to my doctor about this and I would like to get some feedback from you

and also the audience. I said, should I do one of these full body scans? He said, okay, here's what's going to happen. You're going to do the full body scan. Using CT or MRI? I don't know which one. I was just talking to him about it in general. I was like, I have some friends who are doing these full body scans.

Assuming money is not the issue for me, at this point, lucky in my life, I don't know if to think about that. Is it worth doing, taking the time to do it? And what would I do? And he said, that's the problem. You're going to get this thing back. It's going to have things. It's going to make you anxious. You're better off not knowing.

And what are you going to cut yourself open to find stuff? And I was like, I don't know if this is actually good feedback or advice. because maybe I want to have the downside protection. What if we do find something? It's true. If there's a one in a hundred chance. I found this bizarre tumor inside of me that was big, and I had no idea it was there,

coincidentally, through taking a statin. And the odds are that... We wouldn't be here if you didn't. The thing could have popped inside of me and I would have bled out. We wouldn't be here if they didn't find that through the statuary. Probably not. It could have bled out.

I would have died. You would have died. You know, my normal GP doctor said, oh, it's a coincidental oma. That's what they called them. When it gets detected that way. Coincidental oma. That's your word of the day.

Coincidentaloma. It's like, we didn't know about this, but we happened to run into it. Yeah. That could be the ultimate unlock. We might increase life expectancy for a year for everybody. Yeah.

Or longer. Or longer. If we just did coincidental omas. Because I'm just saying if you, if one out of ten people didn't die at 50, you're adding 29 years to the average across 30 people or whatever. Yeah. If you say one out of 30 people with this, you would add one year to everybody's life.

Yeah. So there's a whole bunch of methods with early detection. Then there's different types of therapy. Like immunotherapy is huge and going to get bigger. What is that and why? Immunotherapy basically is teaching, training your immune system to beat cancer. Stronger immune system. Yeah.

So a lot of your immune system won't, I mean, for most people, and for most cancers, your immune system won't recognize those cancer cells. Got it. So you take the cancer cells out. You read the code on the outside of the cancer cell. You take some of your immune cells out. You quote unquote program them to detect those kinds of cancer cells. You're like, look out for this.

You replicate those immune cells. Put them back in. You put them in your body. And then they go out and hunt those cancer cells. You basically take the army out of your body. You train them like, here's Osama bin Laden, and go whack them. Yeah.

You put them back in and say, now you're Navy SEALs. You know what to kill. That's right. So this is called immunotherapy. So, so it's already started. It's early.

Is this the big unlock, you think? This is going to be a huge unlock. It's already starting. There are already, there are people who are saved by it. Really? Yes.

Is this when they say custom cancer treatments, what they mean? Is this immune illness? No, I mean, custom transfer treatments will also include sequencing someone's tumor. Wow. So like we sequenced DNA, you sequence the tumor,

and then you know how to fight it better, you make a custom drug? Yeah. Wow. And all this 20 years out, it's happening now? Immunotherapy is starting to happen now. So 10 years out, wide-scale deployment?

Yeah. I mean, radiation and chemotherapy are also kind of weapons that you can use here. Very blunt. Very blunt. But work, effective. They work.

But at what cost? I mean, that's another issue, which is different types of chemo work for different types of cancer. Some doctors might pick the wrong chemo and kill you. Oh, fuck's sake. Someone might pick a type of chemo that doesn't really help. And this is, you know, this is where, this is part of the issue around patient education and doctor education. Yeah. This is where there are real problems in the healthcare system.

Yeah. Not the right solution this provided. What do you think about this CRISPR and the Lili debate? There was twins. Lili and somebody can't remember. Mimi and Lili. In China, they basically tried to flip the HIV. Yeah.

To make these twins in China, they used CRISPR technology to flip their sequence of their gene that would make them HIV resistant was the concept. It's inevitable. It's inevitable, yeah. Yeah, there will be designer. babies. It will start first with disease

modification. Virtuous. Yeah. Okay. Your baby's going to be born or might not be born and will die. So we have to basically modify the DNA.

The DNA. Wow. Okay. So we did that. Baby lives. Then it's going to be like, your baby might have a problem at age 30 because there's a long-term disease that,

okay. Let's take care of, we'll deal with that. Oh, we can increase the performance of your baby's life. So they're going to run faster, think clearer, be taller. That will take more time because we don't know, you know, flipping bits in the DNA, flipping genes, what's going to happen. Which is why it's against the law in Western countries. It's against all ethical and moral. Yeah.

let's think about that because that's we're back to you know Frankenstein yeah um you know

you create the hell for Frankenstein's monster and then Frankenstein's monster freaks out and attacks everyone in the village yeah so Frankenstein's monster will get created and the Frankenstein's monster

might attack the village right so let's think about this on a this is extremely powerful that's basically what we're looking at here. We could have a lot of pain and suffering and risk by playing with this technology. And there becomes now a moral ethical, should we be playing with this technology,

which is, by the way, the entire arc of the Alien series, and I don't know if you saw the movie Prometheus. No. I think watch this movie this weekend, Prometheus, and let's talk about it. It would be like a good excuse for us to get back together. But Prometheus, I think, is a masterpiece where you're really starting to get into this concept of, Should we be opening up this Pandora's box? Should we be flipping these switches?

And to what ends? Because in this case, in the movie, it's a crazy billionaire who wants to live forever, basically. But the movie's amazing. It's really a thinking man science fiction. For me, this was like the evolution of the alien series. Like, how did the aliens get created? Well, they created engineers who created the engineers.

Oh, the engineers created humans. Okay, you know, why? And you start to figure out. Has the term, should we do this ever stop the creation of anything? Nuclear bomb, no. Yeah. Machine gun, no. Napalm, no, biological weapons, maybe.

Yeah, the deployment of them. But the use of them, I mean, I would say, you know, the Russians are accused of, you know, using specific biologic weapons on specific people in the UK. Yeah, they, you know, pinpoint weapons. Yeah, they did them to, to. to murder people in the most terrific way possible. They haven't been widespread weapons. It's interesting.

So they've all been made. Yeah. Then the question is we've contained them. We have contained nuclear weapons to whatever 10 people or less. We've contained and made treaties about the biological. So it's going to be made. So then the question is... And nuclear weapons are probably not a really good weapon to use because they kind of

screw up the planet for everyone. Right. Mutually short destruction. Which I think is why the biological weapons, everybody was kind of like, Yeah, I think we've watched people die from these. Yeah. And we can't control them, so therefore, let's take these off the table. Yeah, unless, right, you program the weapon to target certain kinds of people.

And now we're really getting into some dark territory. Well, it's not... Well, it's... But if 23 and me and ancestry can tell you where you come from... You could create a weapon that kills anybody who's not North Korean. Yeah. Or... Like, no.

Or is North Korean. Or is North Korean? Like literally some maniac leader could say anybody from North Korea or from the Middle East gets to live. Like Osama bin Laden with this technology could say anybody of Muslim descent from these areas doesn't get the switch flipped and everybody else does. Yeah. Oh my lord. Yeah. Is there a science fiction movie that has that as the premise?

I don't know. But I, you know, I'm just going off of what? exists as facts in these specific areas. You could literally create a weapon. You could. That used a 23ME database that said anybody of this origin dies. Oh my Lord, I just never. I mean, if we know now in 23Mee what your ancestry is based off of your genes.

Yeah. And there's a bio weapon that can target people. Oh, my God. Then why you tell it that it switches on and off based on this DNA pattern that exists in the person? When we get back on this week in dystopian theories, George and I. So you don't want people to live forever. Do you buy the singularity we'll be able to get our consciousness into a computer eventually? I absolutely do not.

Doesn't make sense to me. No. Never has. It's, you know, I believe that people's bodies and brain and mind are kind of all the same. There's something about consciousness that is, yeah. Even if you could download everything, what would the problem? point be, would you be able to have sentient consciousness running in a computer? When I always heard that, I thought that was weird.

What about this blood transfer stuff? You know, transferring... By the way, there was a recent paper that came out that tries to pinpoint consciousness to two brain structures, probably one that's called the thalamus. Yeah. And another one that's in the frontal cortex. They're really trying to figure out where consciousness exists. Yeah.

And then just even bringing up the big C word is really hard because what is, how do you define what consciousness is. Yeah. Is it us having this conversation? Is it us being able to interpret the world? Where does it start and end this consciousness? And, you know, per species, what is consciousness? Yeah, I mean, is this tree conscious, plants out here, conscious?

Like, how do you define their consciousness? Consciousness is probably defined by what creates survival for that species. Oh, that's, I never heard that definition. So the consciousness of that tree is what makes it grow and strong and not, die. Yeah, because probably if something didn't need to live, it probably wouldn't need consciousness. Really, yeah. And that's the evolution, the evolutionary purpose of consciousness is something that people can't seem to figure out. Like, why do we need to be conscious? Why, I mean, are, what consciousness, what is a consciousness level of a shark or of a piece of bacteria, even better, a virus, you know,

coronavirus? What's the, well, it's, you know, to replicate itself? It's, it's, it's, it's, genetic code you know wrapped with a cellular wall and for some reason it got turned on for us bigger brains more consciousness equals longer chance of survival greater probability of survival greater probability of survival is why we

from the baboons or apes or chimpanzees we came from keep increasing the brain size increases chance of survival maybe things that didn't have consciousness just didn't reproduce yeah or just were food for the other ones. That's more likely scenario, right? Like, you're not conscious. You're just food. You're just food.

You're a cow. And you don't have a problem with being, people don't have an ethical problem with eating things that don't have consciousness. Carrots are fine. Yeah. Is it an egg? It's fine. When you start getting to pigs or horses or dogs, we get really squeamish on the consciousness. That is interesting when you think about it.

People are really appalled at people who would eat a dog or a dolphin or a whale or anything more conscious and less conscious go for it. Yeah, which, you know, like impossible burgers are not, you know, are plausible. They're no longer implausible burgers. It is interesting. I've been watching some of these slurry companies that are making like fish. And I think in our lifetime it's going to be, we're going to have sushi that's made in a lab that's better than any sushi from the ocean. I'm invested in one.

Which one? Wild type. Are they doing fish fillets or shrimp or what? They're doing cell-based fish salmon. So we've already developed product and had tastings. And when would consumers taste it? And what did you think of the taste? I think we actually had a tasting here.

With sauce or without? With sauce and without. Because I think the without sauce is the test. It is the test. I had the beyond meats. the chicken, you know, and all that stuff. And when you eat it without sauce, you're like, when you eat it with sauce, you're like, oh, the sauce, you know, like,

oh, this is general sauce chicken, I'm fine, you know. That's why I think the impossible burger really works, as opposed to just a ground beef, because you've got the lettuce, the tomato, the cheese, the onions. The whole package tastes like a burger. You don't have as big of an uncanny valley to cross. Tell me about how it tastes. Sauce, no sauce.

Sauce on side and sauce. I don't think it's ready for the vast populace yet. Not nor are we shipping it yet because we need to get it to a price point that's retail. Is that the problem? These things cost much more than salmon in a fish farm right now. Salmon and a fish farm is really unhealthy to eat. Because? Because it's loaded with antibiotics.

Because? Because they need to get the fish to grow faster. Antibiotics make animals grow faster. Right. And they're living in such close quarters. There's so much fecal material around. They literally dump antibiotics into the tank. Yeah, or they're on the side of the bay or in the side of the ocean.

The fish are just swimming around in a circle. They're a high mortality. Right. Plus they're drinking water from the sea. Yeah. And no one has any interest to clean up the sea. This is a crazy thing. They have interest to clean up the land.

Countries have an interest to clean up the land and make beef and chicken actually cleaner. No one has an interest to clean up the ocean. This is something... Which is full of heavy metals. Plastics. Plastics. Plastics. So we have a collapsing...

you know, fish, sea organism-based source of food, which is a major problem. Yeah. You think we'll solve that with this slurry-based, you know, printing them in labs? Can we get there? You print them as textiles almost. Really? Yeah, because they're cells. Right.

So you have to print them as a textile. Like a pattern. Yeah. So they grow, the cells grow into a textile kind of, basically. It's very interesting because when we had the tasting, we have two people who were vegans here. Yeah. Would they eat it?

They had, they wouldn't eat it, even though they knew it was not a fish. So it wasn't the ethicalness of killing a fish. They couldn't figure out if it was a fish or not. Wow. No man's land. It was no man's land. So it was like, does this fish, does this really have consciousness going back to what we're talking about? The cells do not have consciousness, no.

Well, now we go back. Where does consciousness reside? Now we go back to actually a very highly political thing from before, you know, Roe versus Wade. So actually, I can apply this joke to this, Roe versus Wade. Got it. Yeah. So is it, yeah. So do these things have consciousness?

They don't have, come on. I'm not disagree with you. It's so obvious. It's not conscious. There's no brain stem. There's no brain. Conscious obviously resides somewhere in the brain stem, in the brain. there is no brain.

It's just the fleshy part of the fish. Okay. So, but this will come up. Right. And I think this is Westworld's whole reason for being on HBO. Literally like, can you murder Dolores and does it count as murder? Yes. That's a different way of looking at it.

No, I mean, that is the central premise. If you're torturing or murdering in a simulated environment with printed, 3D printed, entities with no consciousness, did you murder somebody? Yes. Well, you committed the act of murder, but you didn't murder somebody because they're not a somebody. So, you know, this cell-based meat,

you know, Memphis Meets, you know, is doing it on the meat side. Yeah. So we're not involved with Memphis Meets. Yeah. I'm going to go ahead and say, if you're listening, if you eat an impossible burger,

or even the ones that don't come from plants, I think you're in the clear. 3D printed steak? Yeah. It's going to be amazing. They're going to make steak and fish that doesn't exist in the world right now. Like think about it. A lot of the great cuts of meat and fish, I don't know about fish, but I know for meat,

came from hybridization and what do they call it when you crossbreeding? Cross braiding. They did all this like crossbreeding, et cetera, to make things like Kobe or, you know, Wagu and how they nurtured them. We're going to be able to print something like. a foie gras or a toro or a wago or a Kobe beef that is cruelty free that didn't require the murdering of an animal the slaughter of mass slaughter of animals and that tastes better yeah the you know foie gras will probably take a while but I wonder might not because it's more slurish yeah

it might actually be easier it might be easier that's true the texture thing is going to be how is the texture on the fish the texture is good yeah yes but you there's a whole bunch of factors, right? It's just not mouth feel, but there's also like the springiness. Yeah. When you pull your tooth out, you'll bite out, how does, you know, what's the spring load out? That is crazy. You know, what's the temperature throughout the bite?

Wow. Yeah. Yeah. Right. There's like a huge amount of factors that the company tests for. Yeah, that is. Right. And then you have, as you scale a production on different size bioreactors.

You have to be testing how all these different factors work. It is amazing. We can 3D print like valves for hearts now. We can 3D print a lot of interesting things. Not the brain. That's super complex. But like the heart is just like a muscle. Really easy to 3D print muscle.

Complex or easy? Fairly, well, it's on the easier side of mortals. Lunges? Hard. Hard because it's branching with the LBILA. Brain impossible. Brain is not doable. Eyes?

I don't know, but... Yeah. But there's a guy for eyes. I saw Blade Runner. Where they go get the eyes? Yeah. If you could see what I've seen with your eyes was like one of the best lines in Blade Runner ever. If only you could see what I've seen with your eyes.

Because it's the guy who made his eyes. I remember. He's saying to him like, yeah, thanks for the eyes. All right, George. With good glasses. He had good glasses. He did. Oh, coronavirus.

We're sitting here on Valentine's Day. I set it up. way so you can I could have more time. We're here on February 14th. Coronavirus is 30 days out? Something in that range. No, it's actually, thanks for coughing. Yeah.

It's about. I was clearing my throat, not a cough. Yeah. It's about, it's probably two months out from the middle of December. Got it. So we're two months out. The, you know, when the news started to percolate up, it was really the end of January. So it's a 30-day incubation.

period, is that right? Two to four weeks? No, it's really more like a week. Ah. But the news started percolating out about the end of January. We had 10,000 cases at the end of January. Yesterday, we had 65,000. So it's six and a half X in two weeks. So this thing is 10xing in three weeks or something. It's crazy. It's hard to, it's exactly hard to model. You know, my, my modeling was based on New England Journal of Medicine. They modeled about, a doubling every 7.4 days. And that depends on factors like the density of the city and what precautions people are taking. Are people still shaking hands and taking flights or are people quarantining themselves?

That's exactly right. There's a huge amount of factors like that. And by the way, authoritarian regimes are perfect for managing this. Yeah, shut the border. Shut the border. No more fights. Stick people in quarantines and isolation. Absolutely.

Kim Jong-un shot somebody on site. I mean, this is a rumor because we don't know exact information. but supposedly somebody came back from China, he put everybody on a 30-day quarantine. Again, dictators really are effective at building roads and quarantining people. Have an advanced police state with cameras everywhere.

Perfect. You can see people's temperature. See people's temperature? If you cough too much on camera, we'll send somebody out. And now they're sending drones out. Did you see that? They're sending drones out

to read the heat signatures on people, so the drone's going to follow you. And then supposedly, who knows, because it's North Korea, but Kim Jong-un, reportedly some high-level person came back from China and then went to a public bath like two weeks after like he's like I don't have coronavirus I can go to the public baths shot him on site shot on site for doing that this could there'll be if this keeps scaling up

more of this could occur you know and it's going to lead to like remote everything like yeah tella tella everything is going to be the big investment area tell us just please stop shaking tell a health yeah tele education Telleramen. Like literally, I'm putting the ramen on your doorstep, come out. You get it. Boom. So literally they were showing people getting groceries.

Is it Wuhan? Is the name of the city where it's right? So they were showing people Wuhan getting food. They were walking up to a store. A person was putting the bag of food on a stick and putting the stick out the window and handing to somebody. To me, this is Nirvana. This is the world I want to live in.

Please, by all means, stay 10 feet away from me. I'm a germophobe. I'm constantly using the... I wash my hands 10 times a day. I don't shake anybody's hand. For the last five years, I've had a sick kid. Everybody in the office laughs because people come in. They're like, oh my God, I'm like, don't shake my hand.

I got a sick kid. People are like, do you really have a sick kid? Because the people who work for me see me do that 365 days a year. People come into the meetings. This could lead to a new market of what I'm calling fashionable hazmat suits. Love it. Yeah. Right?

Because if this becomes a huge thing, and I don't think coronavirus will go away. It's now a virus that's probably here to stay. You don't think we'll have a vaccine or something for it or a cure? Who knows? What's unique about this virus? Is there something very unique about it? It's faster, it's stronger? It doesn't burn itself out faster than it's transmissible.

Like, Ebola, basically, people would die faster than you can transmit it. Ah. So the ones that are super high fatality, mortality, they tend to kill people really fast before they can transmit it. Got it. So if you're close to them, you like, you die. Right. But the good news is you're dead.

You can't go on a plane or to a restaurant or a bath. Yeah. Public baths. So you put all the people who are probably going to die in this one area. They die. They die. They die. This one, you don't die.

This one, you don't know. The transmission time is, looks like it's shorter than the symptom emergence time. So it transmits quickly, but you don't know you have it until it's too late. So we could be sitting here in San Francisco and there could be 100 people, in fact, they will know in two weeks. We could be sitting here and I have it and all three of you now have it. Holy fuck. Or I've transmitted it to you. Right.

Or this table has coronavirus on it, which lives for five days on a surface on average. Is that what they say now Corona is five days on a surface? I mean, it's not uncommon for coronaviruses. Coronavirus is it includes a class, which includes the common cold or not the common cold, or not the common cold, types of colds. Really? Yeah. On surfaces.

On surfaces. Did you see the video of people blowing some kind of spray like it was the movie Parasite? Yeah. What are they doing? They're trying to disinfect surfaces. Does that work? Well, sure. You can kill it with alcohol.

Got it. So alcohol, chlorax, whatever. Yeah, you have to tear apart the external cellular wall. So alcohol and bleach will kill it. So. UV, UV light. Really? Interesting.

Yeah. You'll want to disinfect your phone. for sure. Yeah, that seems to be a huge killer. Phones are I never touch anybody's phone. You're smart. Never.

Phones are big concentrators of nasty germs and viruses. I had a friend who was like really obnoxious. He would lick people's phones. I was like, are you trying to kill yourself? You freaking maniac. It's like he'd do it as a joke.

He'd lick it and then he'd lick it and hand it back to you like, are you crazy? What do I even taste like? So what's your, what do you think? the outcome here is for coronavirus? The outcome in what way? Is it possible for us to contain it? Are we doing enough? Let's start with that. Well, are we doing enough? You know, it's the, we, if you look back at this, 1918 Spanish flu

killed a lot of people on Earth. This is on that level, potentially? It could be, you know, the fatality rate of Spanish flu was two to three percent, which this has. That's an extraordinary fatality rate, correct? It's very high. It's high. I mean, SARS was like 10%. But you die quick, right? And you got symptoms quick? Yeah. So it was different than this one. Yeah, but, you know, and people thought the swine flu was going to kill a ton of people, but its fatality rate was 0.02%.

Right. But a lot of people got, a billion people got swine flu. So the number of people who died on a relative basis, relative number was high. But it was declared by WHO as a pandemic. People freaked out. This was at 2009. Yeah, I remember. Yeah.

Everyone's like, oh, my God, it's going to. Japan shut their border, right? Like, Japan knows what they're doing. And they're just like, oh, I'm sorry, something happening? Nobody can come back. And this feeds what, you know, it's the new terrorism. I call it, you know, terrorism by microscopic insurgents. Right.

This is the new terrorism. It is terrorizing. People are freaked out right now. You can't see it. You can't stop it. You know, you can't put viruses through X-ray machines. Yeah. You know, you can't stop them at the border and say, hey, are you a, I'm going to profile you.

They did have this thing where I remember when I went to China or Hong Kong last time, they stopped me. And I just blew past it. I didn't realize they were doing this, but you had to take your hat and your sunglasses off and stand for a second at this, like, yeah, they check point. And they were checking the checkpoint. And I just blew past it because I had my AirPods in and like three guys grabbed me. like physically grabbed me like whoa whoa whoa and i was like what Japan's always had

yeah we're either Japan or Hong Kong and they were that's what they were testing for yeah it might have been Japan now they went either Japan or Hong Kong where they did this and I took they said gotta take your hat off you got to take your because I put my hat and sunglasses on so you know the the other kind of issue I'm worried so no one knows whether this is going to go

from the 65,000 cases now to millions the scary cases let's suppose it goes to I mean, the biggest issue is about 18% of the cases look like they're severe to critical when you get coronavirus. Here in the U.S., we've got 100,000 critical care beds and 500,000 acute. And most of them are full now. So let's suppose you have two and a half million cases in the U.S.

Which wouldn't be opening up Chinese. Yeah. And if you have, let's suppose you take the 3% that are considered severe in the cases so far. So 3% of 2.5 million is going to be $50,000, 100,000. Yeah. Right. So we don't have the bets. No.

That's a serious problem. So we're going to have to reconfigure And that's for severe cases That's not just That's not just, you know, people coming in We're talking about people on debt's door Yeah, and those are you don't have enough bets for that. Yeah, and people from acute can go to severe.

And this is what's happening in China From those videos we see of them like walking to the hospital And three people die in like five minutes I don't have you saw that video. Yeah, the fatality rate in Wuhan is like closer to 10%. Yeah, and they don't know if that's true or not Because they don't know the denominator, is that right?

They don't know how many people have it. They don't know how many people have it. Yeah, so that's the, that's the moving Of the people being admitted, it's closer to 10%. As we wrap up here, what's the source of all this stuff? I heard people say the wet markets are this big problem. And I typed in wet marks and I started looking at it and I was like, oh, my God. You know, people eating bats and funky creatures.

That were alive and they're cutting them up in front of people because they want proof that what they're eating is what they paid for. Yeah. Which is, I guess, understandable in. a place where there's a lot of historical starvation. Well, there's that. And then I think because there's so many people doing knockoffs, you know, like,

there's a lot of counterfeiting of bags or whatever. So I think amongst Chinese people, they're like, I don't want to get ripped off that I'm buying a bat or a toad or a shark fin. That's been frozen for two years. And I don't know if it's actually a shark fin. It could be something else. It could give me a dolphin fin or whatever.

So I want to see you cut the fin off a lot of shark or I want you to cut the, you know, whatever out of the, out of the bat. Yeah. And they have these wet markets where there's just, you know what they call them wet markets? I actually don't know why they call them wet markets. I'm assuming. My understanding is not that they're in water. No.

It's the blood. It's the blood, yeah. So when you're walking through them, the floors are covered in blood. So people are walking through. And I'm just thinking, wow, people are walking through blood and then walking into their homes and walking down the street and going on buses and public transportation with blood. with blood on their shoes, they got to ban those. That's step one,

because this is now twice that this has come from the wet markets, I think. It's a long-term cultural issue. I mean, it's, I don't know, we'll see how that gets dealt with.

I mean, Chinese authorities are pretty severe in dealing with things that threaten the long-term stability of China. Yeah, Tiananmen Square and like a million Muslims being re-educated right now.

Like, yeah, they basically take a severe, deep dive into whatever is they consider not copacetic. I think the Chinese people would also opt out of this concept if they saw coronavirus. They're going to just be like, I don't want to ever go to wet markets. And then wet markets won't exist because people will not go to them. Yeah. So the question I ask myself is, is the cost of being in taking action, is the cost of being

wrong and not acting higher or lower than the cost of being right? So if you wait to act, because you think you'll terrorize people with some false notice. Oh, you're inconvenienced them. Yeah. And just terrorize people. Right. Because, oh, my God, you know, I might have coronavirus. Oh, I got to run to my, my, what's going on?

The reward for being cautious is you cost an inconvenience to everybody and you cost society billions of dollars in lost travel and tickets and conferences. Yeah. The cost of being wrong is an exponential rise. 10 million people die. That could overload society. And of course, you know, there's people now said, oh, you know, SARS, avian flu, that didn't really kill a lot of people.

Yeah, because we overreacted. There's no, there's no memory now of the 1918 flu. There's no memory of the plague in China that, in 1855 that killed people. There's no memory of that plague that went from China that wound up in San Francisco, the San Francisco plague of 1900 to 1904. And people don't even remember that. It killed 200 people here. But the governor of California suppressed the news.

The San Francisco Health Commission without notice to anyone, San Francisco, quarantined all of Chinatown and all Chinese people in Chinatown, but not anyone who is non-Chinese. Oh, boy. Yeah, it's crazy. And people don't even remember the doctor. But people don't remember this. They just think, oh, we're okay now. Everything's.

We have modern health systems. Wrong. Flu kills 50,000 people. Yeah, the flu kills 0.07% of people, not 2%. And the people that kills are sometimes people at the end of their life with an immune, a weak immune system, as we talked about earlier. And that's, you know, it's not going to kill a healthy person necessarily. Yeah.

And people don't even remember the dot-com buses to go full circle to a conversation. Like we literally have venture capitalists who don't remember the dot-com bust. How the hell are we going to have anybody remembering? the great San Francisco pandemic from 1900 to 904 that I was not aware of. Yeah, it's, you know, there was two or three hundred cases because they're extreme quarantine. It emerged out of a very unhealthy area of San Francisco. Got it. I'll let my mind wander.

And you know, we have those now. So. Gotcha. I'm thinking bathhouses, brothels or otherwise places where people are, yeah, bodily flirts. Transmitting. Transmitting. I mean, it is, yeah, when you think about it, it's. people have such short-term memories.

And people weren't around. Yeah. And, you know, there's denial. People don't want to, people are terrified by this. You know, but this, there isn't proof yet that this will happen now, but it is inevitable that this will happen. In our lifetime. Unless we have, like, vaccinations for everything.

Which we can't. Because they mutate too much. They mutate too fast. Yes. And global, this is the thing, when you have a global society and you have open borders and you have flights going everywhere. It's great for society. We all get to know each other.

We get to see the world. The problem is we, the humans were isolated and they didn't have containers that we put 300 on from all diverse backgrounds and then shipped them all over the planet after putting them in a plane for six to 15 hours to stew and bake in their own bacteria and viruses. Yeah. This is a new phenomenon. Global aircraft transportation is. going to cause these things to go supernova.

And we haven't even thought it through. It's the same thing with Facebook when you think about it. We never thought what having a billion people on a platform would do. No. And now we've got them. And yeah, it breaks the constitution of the United States and democracy. So that, you know, that went quote unquote viral. Right.

So now it's the other thing. This is now going viral. And we might use social media to spread viral the news about a real virus. Right. And then we have a communication issue with what is real. versus fake news because people can manipulate it to swing elections. Yeah. So I think if this becomes a big deal, you know, it could affect the election.

If people start freaking out. Right. People say, close the borders. I'm getting guns and bullets. You think that this, yeah. I mean, that's an extreme, extreme statement. Low single-ditch chance of that happening. Yes.

It's non-zero. It's non-zero. I think about that. I literally just was talking to my wife this past week, and I always keep two or three weeks of food in the house, much to the chagrin of my wife. It's like, why do we have two cases of canned ravioli and soup? I'm like, if there's an earthquake, you're going to really enjoy those raviolis. Like, trust me, there's a reason for this. The prepper and all of us will come out. I think it's wise. I mean, I think that there's a reason why smart, rich people are buying.

land in Montana, Wyoming and New Zealand. Like, I'm not that crazy, but I mean, this could, this could wreck society, right? If people are dying... I think it could change it. We certainly could have our fashionable hazmat suits, which could actually be an interesting new platform. Why are we not just eliminating... This is what leadership should be.

The people who are in positions of power in communication need to look into cameras and say, stop shaking everybody's hands, fist bumps only. That's it. Step one. Stop shaking hands. I go through conferences for the last 10 years,

holding a cup of coffee and holding my phone on the other hand. Do you know why? Because when somebody comes up and I just want to shake your hand. I go, oh, I'm sorry. Great to meet you.

Tell me about what you're working on. And I just put two things in each hand. So I don't have to be rude. But this barbaric concept of shaking hands, like when you go to Japan, they bow. Yeah. shaking hands, what percentage of diseases are we transferring in that? And I tell people- You know, shaking hands is a long-term cultural thing here in the U.S.

We have to stop it. It has to stop now. Shaking hands is- You know where shaking hands started? Yeah, don't have a gun in your hand in it. It was to see if you had a weapon. Yeah. Yeah.

I don't know when that started. Was that Europe or something? Somebody had a fact-checked on it. It sounds like Europe or something. Like, do you have a sword or a pistol on you? Show me your hands. It might even be medieval. Probably.

It's still medieval, by the way, to shake hands. And then people want to shake my hand at a party or something. And I'm like, by the way, you know, this is, it's a tech conference. So I've literally had a hundred people come up and shake my hand. Do you want to be the hundred first? Because it's a fucking petri dish. And by all means, if you want to, we can go there, but it's not in your best interest. So I just, and it's my advice to everybody.

You could just wear a shirt that says, I've been coughing lately. Yeah. I call it the corona bump. I call it the corona bump. Everybody, let's just learn a lesson now. Fist bump, very hard to transmit it. I think in a fist bump. So can a fashionable hazmat suit be the next platform?

I think the N95, what do they call them, N95 masks or something like that? Yeah. Those are, I've seen very fashionable ones. People make very fashionable ones in, I got Pitchinorne and start making fashionable ones for Shanghai and Beijing because of air quality. Yeah. And I think that's going to become a thing. And I'm rethinking.

You just have to put them on properly. So there isn't air leaks. If there's air leaks, you have to fit them properly, which is what people do in hospitals, they have them fit. They have a suction test of some kind. And that doesn't exist in the real world. But I'm really thinking my travel schedule now. And I was just talking to my sister and I was like, you know what?

I'm only going to fly private now. I just told her, I was like, you know what? I was trying to be, I was like just, I'm going to use my plane more often. I don't have a plan. I'm joking. Well, on my Southwest flight yesterday. Yes. There was plenty of people with masks.

Not plenty. Ten? Three. Three. But there was like half, there was a half full, it was a half full plane. Yeah. A southwest flight that was half full from Burbank to San Jose. That's usually packed.

That's usually packed. That's usually waitlisted. It's usually waitlisted. I take that flight. I think that this is, yeah, I'm, I get speaking gigs. I got some speaking gigs in Asia. I was going to do Japan, Singapore, and Manila. And it's in May or June.

And I said, okay, let's put it on the calendar, fine. but we have to see what's happening. Did you see Mobile World Congress got it? Isn't that like 100,000 people or 50,000 people? It's a giant conference. To cancel that, that's got to be tens of millions of dollars in impact for the sponsors and tickets alone, even if they reschedule for next year.

Yeah. Yeah. So, you know, if this is real, you know, short trade shows, short airlines, short anything with physical gatherings, long, you know, tell, or anything. Yeah. Somewhere, Parker Lucky is like, I told you guys, you should, I can't make fun of Parker Lucky because he's pissed off him. He won't come on the podcast because somebody was ripping him for some reason on the podcast on the news roundtable. But I want to have Palmer Lucky on the podcast. He's doing those digital fences to like. Yeah. I think that's a good idea rather than a regular fence. If you wanted to know how many people are going across the border, like, why would you put a wall? Why not just put towers with cameras and sensors? Yeah, I mean, you need ground penetrating radar as well because they dig underneath it. Yeah. Tunneling, yeah.

But I mean, if you actually knew how many people were going across the board, we have a real logical discussion about this. Yeah. All right. Listen, George, everybody can follow you, George Zachary on the Twitter, but you don't go on that. It's too tough. Yeah, I do. Yeah, once in a while you jump in. See the screaming maniacs?

Yeah, I do. Who you got, Bloomberg? You got Bloomberg? What do you got? Bloomberg. Who you vote for? Who's in your lead right now? Well, I'm definitely not voting for Trump.

No. And there's no one on the Democratic side that I think is remotely interesting. Yeah. It's brutal. There's no chance I would ever vote for Bernie Sanders or Elizabeth Warren. Socialism, crazy. I just think they're completely off their rockers. Yeah.

So basically, that's why I'm going Bloomberg. I'm like, can we have the most experienced person? If I had to pick someone, I would pick him. It's starting to happen. It was like he was less than 1% two months ago. And now in all these polls, he's like him versus Bernie is like 38, 50 something. Yeah. And some people were undecided.

He beats Trump. So it's like it's pretty obvious everybody. Bloomberg and then put somebody underneath them who's a little farther left if you want to have like a sprinkling of the social, democratic socialism. But we got to go Bloomberg. We got to beat this guy. I hate to it for the people who are pro-Trump. Yeah. But I mean, I just think it's like, the world is so dynamic and crazy right now to have somebody who's so... I agree with you. And I see Bernie Sanders as the alter ego of Trump.

They have the same philosophy of the borders, shut them down. They both want to shut the borders. Yeah, and they're the same kind of zealot-like energy. Right. Yeah. It's weird. The extremes are taking over. Yes. Just like on social media, it's really weird. I think this fog is going to clear. I think what's going to happen is social media let the extreme voice. take over, and then people are going to opt out of social media and say, I just don't like people who scream at each other and can't have a reasonable conversation. Can we go back to the middle where Americans used to disagree with each other over dinner and have a vibrant debate? And then...

But do you think people were that way because they knew each other? They knew each other. They saw each other in person, not just digitally when you have no empathy online. And online, my perception is the best way to score points online is to be extreme. So if I write a tweet that says, you know, I really have to think about forgiving college debt and what the solution is because I'm not an expert on it. And it seems to me like trade degrees might be worth the government paying for, but maybe not philosophy degrees. But, you know, I really need to think this through and need more data. You get zero likes. Yeah.

If you say everybody should get free college or why should everybody pay for your college so that you can take some. philosophy degree and global studies, you will get 100 likes from people who are libertarian or hysterical liberals. Either side will just be like, why should I pay for your, forgive your college? You decided to go 100. I didn't. Those people get likes. You get no likes for saying something reasonable.

I know. I don't care. I'll just say whatever I want, people can like it or not. Or not, or not, do not pay attention. I think that the majority of people are reasonable, centrists who want socially liberal policy so people can live their lives and they want a reasonable government that doesn't

overspend and get over at skis which is what we've done now. Both of these people want to spend so much money that our kids are going to be in debt. Trump is spending money like a drunken seller and Bernie Sanders is like, hold my beer. You want to spend money? Wait do you see what I can do.

They just both want to kick the can down the road. Our kids are going to go bankrupt. They'll never be able to pay this debt. All right. Thanks for tuning in to Angel and this week in Dysopia. We will see you all next time. Thanks, George.