Have you ever wondered how venture capitalists in Silicon Valley decide what startups to fund and what ones to skip? I had the opportunity to sit down with one of these “masters of the universe” and explore the secrets of venture capital. Scott Kupor is managing partner at Andreessen Horowitz (AH) – one of the most successful VC firms in the world – and we had a candid and lively discussion about the do’s and don’ts of pitching; lessons from Elon Musk’s entrepreneurial journey; diversity, bias and ethics; future trends; and when it’s OK to move fast and break things. Scott teaches at Stanford and Berkeley and has a new book out – Secrets of Sand Hill Road – that aims to demystify the VC mindset. The conversation took place in front of a live audience at the Commonwealth Club in Silicon Valley on June 10, 2019.
Listen to the Fresh Dialogues podcast:
Here are some highlights of our conversation (edited for length and clarity):
Re. Women in business, diversity and bias
Alison van Diggelen: Let’s talk about diversity: Julian Guthrie’s new book is just out – called Alpha Girls – it’s about four women who took on the Venture Capital “bad boys” and succeeded, despite the odds. There are some good lessons in there. It’s a very tough place to thrive as a woman. Less than 10% of decision makers in the venture capital world are women.
Scott Kupor: The number is about 10 or 12 %, depending how you cut the numbers, and about 2% of the funding going to female founders. It’s a real problem.
There are two types of bias: explicit bias, which clearly the #MeToo Movement exposed in a very horrible way. We have to root that stuff out. We need to shine the light on what was underground for many years. The more challenging problem is implicit bias…Whether I like it or not, I’m implicitly biased by the networks I came from. When I want to hire for a job, it’s more likely I go to people I know from Stanford. What we have to do is reach out to (other) networks. So we proactively send out job recs to MLT a group that works with African Americans who’re trying to get into business and financials; and we also have a Cultural Leadership Fund (at AH).
It’s a network connectivity problem. It’s going to take time, it’s a deep rooted problem.
Alison van Diggelen: How many general partners at Andreessen Horowitz are women?
Scott Kupor: 20%. Three out of fifteen are women. That’s only in the last two years. For the first eight years we did not have any female partners…We changed our criteria and opened up the funnel to have a more diverse talent pool.
Re: Ethics and moving fast and breaking things
Alison van Diggelen: Let’s talk about ethics: lessons learned from Theranos (the blood testing company that imploded). And Facebook: they used to have a mantra: Move fast and break things. They have been cavalier about sharing our personal data. How do you train your entrepreneurs to have ethics front and center?
Scott Kupor: I think there’s a difference between outright fraud – we can’t have behavior like that in this industry – and there is this idea that sometimes you have to push faster than sometimes is comfortable and you do break things sometimes and ask for forgiveness second. I think there are elements of that that are fine in this business. There’s a difference between committing crimes and defrauding people and are you just trying to move the ball quickly? You recognize there’s going to be iteration of products and sometimes you’re going to put stuff out that may not be perfect.
The big difference is: as companies mature it’s a bit of the Elon Musk question (we talked about earlier) – I think different standards of behavior are appropriate depending upon the size and maturity of these companies. Running fast and breaking things – and putting out half baked products – is not as unacceptable in the pure startup world where the scope of the harm potentially is smaller because you’re still dealing with small amounts of customers, but when you get to the scale of a Facebook, you have a different responsibility. Our best bet on our companies is to use our persuasive techniques to make them value these things. Over time, your level of responsibility changes, based upon your success. At some point in time you have to act like the navy – not a pirate – once you conquer the ship.
Alison van Diggelen: Are you saying it’s OK to be a pirate in the early stages of a startup?
Scott Kupor: It depends on what pirate means (audience laughter).
Fraud and misleading people is clearly not right. But the idea that you might enter into a market where you’re not exactly sure what the product should look like, you might have a theory on what your regulatory structure is, but you’re not 100% sure.
I’ll give you a great example: we’re investors in Airbnb and Lyft. These companies probably couldn’t have been successful if they’d asked for permission every time they went into a new market. You could argue that was unethical: They should’ve got permission first. The reality is, they said: we’re going to go into a new market, we believe we have a defensible theory that why what we’re doing is appropriate from a regulatory perspective, but we also know we’re likely to get challenged on that. But over time, if a consumer utility is big enough, there is a way to deal with these issues. So that’s my definition of a pirate: I think that’s reasonable acceptable behavior. Fraud and misleading people is not acceptable behavior.
Deep learning; geek nostalgia; Google’s Pixel phone; and why seeking ‘uncomfortably exciting’ opportunities can bring success.
Alison van Diggelen, host of Fresh Dialoguessat down withGoogle’s Dave Burke, an Irishman, who has risen quickly through the ranks. He leads the Android team, with responsibility for the device and developer ecosystem; and Google’s Pixel phone. How did he succeed so fast, and what qualities does he seek when hiring for his growing team?
I interviewed Burke this month for a BBC World Service report exploring Irish identity and success in Silicon Valley. We had a lively and wide ranging conversation full of insights for tech geeks and entrepreneurs alike, so I’m posting the uncut interview for your listening pleasure.
“It’s his ability to intuit a bold vision for the future, and then be comfortable in the abstract and yet push tenaciously forward over multiple years. Successful mathematicians need a similar personality – they have an intuition that a solution exists but initially have no concrete certainty on how to prove it and have to persist, sometimes over decades. Einstein’s story of deriving his theory of general relativity is a good example. This personality trait attracts other smart people… For Elon, the ‘contagious confidence’ extends out to his customers, i.e. many are willing to pay a high premium for a Tesla car and don’t seem to worry about the future viability of this fledgling startup, simply because have confidence in the founder.”Dave Burke, Google
Here’s are some highlights of our conversation:
On the secrets of Burke’s success @00:20
“Seek out challenges that are uncomfortably exciting…there’s always a risk of failure, but if you succeed, you could make a huge impact.”
Why he’s so excited about deep learning @19:23
“The big hot area is deep learning, using neural networks….applying lots of data. You can make machines do incredible things…The potential for deep learning and for AI to make our lives easier is very exciting.”
On Google’s Pixel phone @27:15
“Software pushes the hardware and hardware pushes the software. To advance the operating system, you need to have them working really closely together. It allows Google to have its own product. If you’re a Google user, this is the ideal phone for you.”
On rumors of a new Pixel phone this year @27:54
“I can neither confirm nor deny rumors. Technology moves very fast, the cadence…Typically every year, you try to do something new and exciting…we are very busy, working on a lot of stuff… The reviews have been great…but I see the potential for so much more, in terms of innovation, product quality.”
We also discussed Burke’s “geek nostalgia” for the BBC Micro computer by Acorn (the precursor to ARM); the gravitational pull of Silicon Valley; the three questions you need to ask to discover if someone is “really Irish”; and flying robotic lemonade stands!
Look out for more “Fresh Dialogues Uncut” featuring Elon Musk, Arianna Huffington, Charlie Rose and Patagonia’s Yvon Chouinard.
Fadell learned to say “no” more than “yes” while working at Apple and he found creative ways to “disappear” when Jobs was in “one of his moods.”
But in 10 years of working with Steve Jobs, the Apple cofounder often revealed his softer side. For example, when Fadell became a father for the first time, Jobs took him for a walk and advised him not to over-schedule his child.
“Make sure they’re bored sometimes,” said Jobs.
What did he mean?
Fadell explains: Kids need the time to find themselves…be creative, and solve problems.
Although critics say he micromanages his teams, Fadell sees himself as a mentor (see more below).
On Google Glass
Glass is definitely a side project for Fadell…he checks in with his Glass design team sporadically. He’s still CEO of Nest and that remains his primary focus, since, as he underlines, “it’s actually shipping product.” He’s laser focused on making sure it’s being done right (see Leadership below).
On Tech Security
Fadell reckons people today are obsessed with tech security and that in reality “nothing is secure…people in the security business are stirring up the shit.”
On Moving Meditation
Fadell starts his work day at 5:30 am and does what he calls a “moving meditation,” be that running, or yoga (one hour, three times a week). That gives him time to problem solve and prepare for his “roller coaster” day of “back-to-back” meetings.
I challenged him to demonstrate one of his favorite poses: the Vriksasana, or tree pose and as you can see…he likes a good challenge.
For non-yogis out there, it’s a great pose for increasing balance, focus, and memory. It also strengthens your feet, ankles and knees.
The main event at the salon was an excellent fireside chat between Fadell and Kevin Surace, SVForum board member and serial entrepreneur. I’ll post a link to the video here, when it’s available.
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Here are some of the highlights of that conversation and my observations:
On Leadership
Make sure your projects don’t take over 18 months to ship, otherwise “it’s impossible to keep your team together,” says Fadell.
Although Fadell has lost several key members of Nest recently, he insists that his young team “need mentored to grow into the next leaders in Silicon Valley.” He says that those who walk out the door are examples of “the Tinder generation.”
Like Steve Jobs, Fadell has a reputation for being an intense leader, a micromanager or even a bully.
As Ben Austen so eloquently describes in Wired, “Steve Jobs has become a Rorschach test, a screen onto which entrepreneurs and executives can project a justification of their own lives: choices they would have made anyway, difficult traits they already possess.”
Perhaps Fadell needs to do a little more yoga and a little less yelling?
Larry Page vs Steve Jobs
Fadell characterizes his new Google boss, Larry Page as “an incredible scientist” who respects products and likes deep research to push the limits of technology. By contrast, he found Steve Jobs more focused on marketing, “more business, less science” and says he often took, or even “stole ownership of ideas.”
On Failure
Fadell says before joining Apple, he’d had 10 years of failure, at General Magic and other enterprises. In 1998 he was a DJ in his spare time, and founded a hardware startup for music collections. He made about 80 pitches to VCs without success. It was the intense fear of failure that helped him stay strong in negotiations with Steve Jobs. He agreed to work on what would become the iPod, only after Jobs assured him, “if you can build it, we’ll put every marketing dollar into this.” And of course, the rest is history.
Should tech companies build cars?
Fadell gives this question a resounding “YES!” He describes a recent meeting with some members of the board at Ford, “I could see fear in their eyes,” he says.
He views cars – especially self-driving cars – as “lots of computer with a little bit of car,” and says that car companies “need to do a 180 and compete with computers on wheels.”
Last Thursday, I joined a special BBC World Service program hosted by Fergus Nicoll in Ho Chi Minh City, Vietnam. We began by discussing the large community of Vietnamese in Silicon Valley and its connection to Vietnam’s growing tech hub. Listen to the BBC podcast (at 21:00 re. Silicon Valley-Vietnam, and at 31:00 re. The Tech Awards)
We discussed my latest interviews in Silicon Valley on the BBC Business Mattersprogram. Here’s a transcript of our dialogue, edited for length and clarity:
Fergus Nicoll: Alison, you’ve been talking to some of the winners of the Tech Awards in Silicon Valley. What kinds of things are they coming up with and what could Vietnamese developers seek to emulate?
Alison van Diggelen: I spoke with three young entrepreneurs who’re doing incredible things: Tricia Compas-Markman is founder of DayOne Response. What they’ve built is a 10 liter backpack – it’s very low-tech in fact. It provides clean drinking water on day one in a natural disaster. They’ve deployed it in places like Nepal after the earthquake; and what they want to do is pre-position it in places like the Philippines that are subject to natural disasters. It’s a wonderful way for families and individuals to collect and treat and get clean drinking water in disaster areas…
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Fergus Nicoll: We were in the Philippines last week…we could maybe put them in touch with Senator Loren Legarda or the Red Cross in the Philippines? They would be very keen to hear about that kind of initiative. What else have you been hearing about?
Alison van Diggelen: Let’s do that for sure! The other winner is called Open Pediatrics and it’s an online community for pediatricians. It’s almost like a Khan Academy for pediatricians: an online learning community connecting the cutting edge technology of first rate hospitals like Boston’s Children’s Hospital with rural clinics in developing countries, so they get the same expertise. It’s a wonderful, simple idea and there are some top people involved in that. I talked with Traci Wolbrink, one of the key people (pictured at the podium, above).
And the last one I want to mention is a very simple app…It’s called BeeLine Reader, founded by Nick Lum, a corporate lawyer who’s become a tech humanitarian. This BeeLine Reader allows people to read on screens much more easily. If you’re suffering from dyslexia, or vision problems, you can read using a color gradient. So if you can imagine reading a line, and the color of the script changes from blue to red to black but it wraps around, it guides your eye so you can read faster or more clearly. This is available for either a dollar a month or $5 to buy the app.
Alison van Diggelen: All these entrepreneurs were given a good load of money to take it to the next level. It was very inspiring to see that not all techies are out to make a buck. Some of them want to change the world…make the world a better place.
Fergus Nicoll: Brilliant. That sounds fantastic.
Find out more at Fresh Dialogues
What is Tech Award winner Jeff Skoll doing to change the world and make it greener?
Heidi Roizen has been on both sides of the entrepreneur funding divide, so her advice for aspiring entrepreneurs is particularly potent. She’s an operating partner at venture capitalists DFJ, a lecturer in entrepreneurship at Stanford University and a successful Silicon Valley entrepreneur. Last month, I interviewed Roizen at the Commonwealth Club, Silicon Valley. That interview led to many more questions about what it takes to succeed, especially the need to build meaningful relationships. Here’s our deeper exploration:
van Diggelen: You teach entrepreneurship at Stanford University: What are the top 5 lessons for being a successful entrepreneur?
Roizen: When we study and meet with successful entrepreneurs, while each has a different path to success, they all exhibit similar mindsets. For one, they seem to go through life looking at problems as things for which there can be a solution — i.e. they do not accept the status quo, no matter how ingrained. Second, they are not afraid to iterate (or ‘fail’, i.e. learn from a mistake, course correct, and move on.) They tend to be tenacious, that is, they view the failures along the way as necessary steps in getting to success — not as indicators that they should stop. They tend to be very good at telling their stories, building a narrative about the problem, the solution, and what it takes to get there. Finally, successful entrepreneurs tend to know the importance of finding and motivating awesome people to join them in their journey.
van Diggelen: Talk about the importance of networks and the do’s and don’ts of finding and being a good mentor.
Roizen: Let me answer this by starting at the 100,000 foot level. I’ve done a lot of reading about human happiness and I boil the answer down to having meaningful work and meaningful relationships. I believe that if you can do meaningful work with others you build even more meaningful relationships. I hate the word “network” as it almost has a negative connotation — none of us want to be cornered by a ‘networker’ at an industry cocktail party! But, instead I think of ‘building a network’ as a lifelong process of forming relationships with people, finding ‘fellow travelers’ who may share a passion for the same problem that needs to be solved, a skillset that is complementary but appreciated, someone with good common sense to bounce ideas off of — whatever brings value and meaning to each of us in a human connection. For me, those people and those relationships — new and old — help me to keep learning and keep finding new opportunities for work, for growth, for meaning.
As for finding and being a mentor, my main piece of advice, for either the mentor or the mentee, is the relationship only works if there are shared values/ethics, and if there is something meaningful to work on together. That is why I personally believe asking someone to simply ‘be my mentor’ is far less productive than finding for example someone to work for who you can also see as becoming your mentor.
van Diggelen: What do you mean by “living a relationship driven life” versus “a transaction driven life”? Can you give some examples?
Roizen: I’m a big believer in leading a relationship-driven life and I’ve blogged about it here. In short, if you believe what I said above about meaningful relationships being the key to happiness (a big ask I know!) then it makes sense that every transaction in which there are one or more others involved becomes an opportunity to build a relationship. From my life experience, I run into the same people working in this industry over and over and over, so the quality of every transaction is important because it builds a relationship that transcends any individual transaction.
In business school, we learned that a negotiation should be viewed as ‘an opportunity to find the maximal intersection of mutual need.’ I love this concept, instead of a transaction being ‘zero sum’, we can actually achieve a better result for both of us by putting our two heads together to solve both our problems.
van Diggelen: What’s been your hardest challenge as an entrepreneur and how did you overcome it?
Roizen: Almost running out of money many times. Microsoft entering our market. Shipping a product with a lot of bugs. Emotional disagreements with cofounders and key contributors. In other words, there really is no hardest challenge in entrepreneurship, rather there are a whole series of ‘near-death’ experiences. They key is to not let them become ‘death’ experiences! There’s no overcoming, just pushing through, getting back up, learning from your mistakes, mending fences, and moving on. And if you fail in the big picture and your company ends up going out of business, do it with empathy and honor and in Silicon Valley, you will usually get another at-bat.
van Diggelen: How do you see Silicon Valley changing in the next 5-10 years?
Roizen: I think what makes Silicon Valley so special will continue to fuel our next 5-10 and many more years. I do think the valley is changing in a few ways. For one, we are spreading our attention from ‘the next cool iPhone app’ to solving some of the world’s bigger problems, which I find very exciting and frankly more fulfilling. We are seeing technology have a far greater impact on those diverse big problems — from health to food to energy. I am really excited to see what the next 20 years brings about!
Scott Kupor: It depends on what pirate means (audience laughter).
On Working with Steve Jobs
On Moving Meditation
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And the last one I want to mention is a very simple app…It’s called 
Roizen: Let me answer this by starting at the 100,000 foot level. I’ve done a lot of reading about human happiness and I boil the answer down to having meaningful work and meaningful relationships. I believe that if you can do meaningful work with others you build even more meaningful relationships. I hate the word “network” as it almost has a negative connotation — none of us want to be cornered by a ‘networker’ at an industry cocktail party! But, instead I think of ‘building a network’ as a lifelong process of forming relationships with people, finding ‘fellow travelers’ who may share a passion for the same problem that needs to be solved, a skillset that is complementary but appreciated, someone with good common sense to bounce ideas off of — whatever brings value and meaning to each of us in a human connection. For me, those people and those relationships — new and old — help me to keep learning and keep finding new opportunities for work, for growth, for meaning. 
