work has the world's largest network of independent professionals. So if you need a U ie designer Ah, full stack developer or a whole team of designers and developers working together. Hey, you've got the full tape here myself. Rachel, out of Stephanie. Hi. Up work has agencies to available for six weeks for six months when you need in demand talent on demand up work is how. Yeah, technology. What is it all about? You think Facebook you to whatever I mean, these air kind of if you're talking about empires and history, yes, these air empires,

Yes. Yes. And thank God for business in that sense, because then otherwise, right, Mark Zuckerberg and Larry Page would be leading armies on, But that would be really rough.

Hello, and welcome to Danny in the Valley. Thank you for tuning in. I am on vacation this week in Hawaii. Aloha. Uh, I'm actually recording this intro from the kitchen of our Airbnb in the wall. Everybody's asleep here. I am working, but you know, once the season starts, it doesn't stop. So on we go. And I'm very excited to bring you this week's guests. Yes, there are two. So two episodes.

First, this episode I sit down with Ben Horowitz, and he is the co founder of and recent Horowitz, the big Silicon Valley venture capital firm behind a whole bunch of companies. You'll know Instagram Slack. Twitter and I sat down with Horowitz in San Francisco just before I jetted off to talk about a whole bunch of stuff company culture. Why they skipped on investing in Uber, his new book, called What You Do is Who You Are at the moment that Silicon Valley now finds itself in, Assailed by governments and the public round the world. He has a lot of really interesting insights. He's the book that he's just written, takes experiences for everybody from Gang is gone to prison inmates and the whole lot of other kind of off the wall examples that you wouldn't think of for your typical corporate book. But it makes for a very interesting discussion. I hope you agree. So without further ado I give you then Horowitz. Um so if you could just say something Hello? Yeah, we're live.

All right, let's go.

So, first of all, thanks for taking the time. Absolutely. I'm excited. I wanted to just commend your courage. Starting point for as a prominent person in 2019 writing a book about company culture that praises Genghis Khan. Yeah, well,

you know, Genghis Khan's underrated. So Hee felt somebody had to speak up

for him. So why'd you

write it? Yeah, so? Well, really, for starters, that, you know, it's a kind of a set of ideas. I've been working on myself for many years because culture, and like how you created in shape, it has been the most difficult kind of thing for me to learn, you know, particularly. And it was one thing that I I felt like I didn't quite get right when I was CEO, and then also, I didn't quite deal with it or I didn't really deal with it all in my last book,

hard thing about hard things. So it just seemed very important from that standpoint. But then, more recently, you know, there's a lot of ah, I would just say criticisms of kind of company cultures, particularly in Silicon Valley. That's all fine and good, but there haven't been any like constructive criticisms like that. The idea is that people have about how they should improve the culture. Always either fire the CEO or like have him get a liberal arts degree or something, Some just like thing that doesn't really take into account how complex it is to get everybody in a large organization to behave the way you want them to when you're not there. Like that's a very difficult problem.

I just did interview with Stuart Wrestle, and he's got a book coming out about a I and basically his ideas around how you basically engineer a eye and has to be kind of fundamentally rethought. Yep, with a different objective, which is it sounds a bit squishy, but basically to help. Humanity

is supposed to Centeon being Is

that the Yeah, So I was just wondering, Do you think there's, you know, that basically the way culture is built here, particularly Silicon Valley, is wrong for lack of a better word?

That's a wrong, you know, like cultures tend to be specific to the task of the organization of the goals and so forth. So you know, wrong is probably too strong. I just think that people don't really have the tools to get what they want. A lot of the time. And so you get a lot of weird, unintended consequences and side effects and so forth. And that was a little, you know, like a big idea behind the book. So if you think about it, it's like and like, here's the thing that I think people not only in the company's miss but people criticize them, Miss Also which is from the Bushido, which is like a culture is not a set of beliefs. It's a set of actions

and the bushido just for people who

don't know. Yeah, the way of the warrior, the kind of code of the ancient samurai. You know, people say, Well, like, these guys believe in the right, they may not even believe in the wrong things. There are things that you don't agree with, but getting the whole company to do to do whatever it is you want them to do is is difficult, like in a white Is somebody work until, like, 5 p.m. rather than a PM Or like, why does somebody return a phone call that day? Or like you're not watching any of that?

Like even the little things are difficult to get the way you want them, you know, let alone thes bigger motivational things were their personal incentive might conflict with a company incentive are what not and so kind of creating and changing a culture is really about, Like, how do you get that consistent and cohesive and, you know, for different companies I think it's different things like So you know, at Amazon they are super cheap, and that goes with their strategy. They want to be the low cost leader said, like they're cheap on everything they put in cultural markers like it used to be that you gotta kind of desk that was made out of a door. You know, Apple doesn't have any of that in their culture, their campuses so glorious $5 billion or whatever. I think the door knobs really cost 1000. Always each is a crazy thing,

but that helps them towards their goal because they're trying to build the most perfect, most beautiful products, different cultures for different goals. So, like I try and stay away from like, this culture is right. This culture is wrong. The big thing is, is a culture what you actually want like, are you being who you want to be RU being something else because you just don't know how to control the company like nobody's cultures. 100% cohesive, you know? But, yeah, there's a lot of

variation. And are you confident earlier you optimistic that companies can remake their culture? Oh, yeah. Amazon is really interesting, obviously either. Now that there's 650,000 employees, Yes, on their way to a 1,000,000. Yeah. Yeah, and they're getting a lot Maur different types of employees. Yeah, and a lot of issues around immunization and working conditions in warehouses. And it's Yeah, Bezos's Iseman Super Anti Union and might aggressively so. And then you have about hundreds of thousands of workers the same. We're not being treated well. How do you write that

on the fly? Yes. So this is a great example that so if you like it Amazon, I think people in Silicon Valley, but say Jesus has done maybe the best job of any tech CEO in the last 25 years of building a consistent culture. And then, on the other hand, you have all the things you've talked about, but also David Streitfeld at The New York Times, who's like a really talented, an honest reporter like so you know, like like they're people who don't like tech or just go after him but, like, he's not that guy. And he wrote this piece where, Like, you know,

found however many unhappy people at Amazon, and you go well, like How do you square that circle? Right? And it turns out Amazon's got a culture that worked amazing or had a culture that worked amazing for tech workers, but not as well for likes a retail workers and people would come from other fields, and I kind of had a different life goals in different things. And this kind of gets to when you have a company that size you may have, like not a monoculture. You may have to have subcultures. You may have to have different kinds of things. You may have to have a limited number of common cultural elements and then things that are very specific for that kind of worker type of class, and I think they're running into that more now. But that's something that you know. Even small companies run into were like a little kind of enterprise software company, like the engineering culture is not gonna match the sales culture. And if it does, it's probably a problem. So these are some of the things that you have to consider in this

kind of problem of cultural design. So basically said, should be those be a bit more like Genghis Khan in terms of because, I

mean, you know, and

and and not to be? Yes, in the book itself, you used him as an example of how you kind of integrated lots of different people in religions.

Yeah, No, absolutely. And yes, I do. And I think he is kind of like I think that's the way they're going. I do think they recognized it and then I look, I think the New York Times story helped them recognize it to some degree and and and that's definitely where he's going now, how far they take it and what they do and so forth. You know, uh, is an open question, but yeah, for sure.

And so you also talk about you spent some time on uber and talk about Darcos Russia. He comes in and kind of the new broom and re making some of the cultural shortcomings. Sure. Yeah, well,

and also some of the, you know, cultural

strengths. Yeah, in the book you talk about, you know, there's this new set of principles that he comes out with, one of them being do the right thing, period. And why basically, why is that not enough or what? Why is that a missed opportunity?

Like what is the right thing in business ends up being a pretty not obvious question in every scenario. So, you know, just like a simple one that all startups run into is okay. You went to investors. You promised him you would have this set of numbers, and then you're into the quarter and you're not gonna make them. But you could make them if you maybe told like a little bit of an exaggeration to your next prospect. So, like, is it the right thing to have, like, over promised to investors? Or is it the right thing to over promise to the customer? Like which one is the right thing? Oh, you've got an employee who you're firing,

but, you know, they've got, like, a family. Um, but, you know, you need the money. Should that money that you might give him as extra severance go to the place you have or the employees. It's going like it's not generally obvious. And so, just like do the right thing is a bit of a cop out, and you compare that. The comparison I had in the book was to you, like a two sound overture who led the Haitian Revolution.

I mean, here's a guy who's looked leading slave revolt on and he's built this army quite a remarkable army. It's only successful slave revolt ever in the end and the way you incent your big way, you incent soldiers. In those days, you let him pillage, so they go win something and they get all the stuff. But for him, like even though winning the war was important, it was even more important not to pillage on. And he said, Look, I don't want you to do that, and the reason is we're fighting for liberty and, like, you can't get to liberty by taking people's liberty away.

And the payoff was remarkable in that if you kind of fast forward to sent a slave, had the support in the colony of the white women over, like the Spanish or the British or anybody else trying to take the colony to the point where they called him father. And so you go, Wow, that's the power of culture. That's the power of taking a more ethical, amore principled approach. But you can't just say do the right thing, like do the right thing to a soldier would be like pillage. That is the right thing. Like I'm getting paid. There's a lot more to it than just like Okay, the last guy was a bad guy. Now we're good guys.

Where to do Bruce culture go wrong, then?

Yeah. So, like one of things that I think it's under told on uber was just how good, Maybe great is more appropriate word. CEO Travis Kalanick was mother than the thing that he made the mistake on And like, if you kind of asked people like in venture capital or other CEOs, they would say, Yeah, like the last 20 years, like he was in the top two or three. I mean, he was that good Culturally. He was also quite good in that they had a very well defying culture, was unique. It was provocative, was exciting, and then they trained on it,

and then they followed it. The problem was that had some missing elements, and in particular they were. They put a huge emphasis on competitiveness. And there was a lot of party no hashtag winning, you know, toe stomping like the whole thing. Like they were going to be competitive. They were gonna win. There's an issue and culture where, like if you have a very, very strong kind of initiative, and then no constraint on that, then things can get out of control, particularly as the company grow. So if you, you know, and the thing that they definitely did not do and Travis definitely did not do was he didn't make kind of ethics explicit, like, Where is the line

here? It seemed, almost purposely doing. Yeah,

it was. It was all. It was basically a non statement and one of things about kind of ethics and rules in business. If you're not explicit about them, it's often the case that every other goal, objective cultural element can basically stop on that. So we have to make the quarter and we're not saying anything about whether we have to stay in the counting law, you know? Okay, Well, then, what is? That's one way to make The quarter is like we can fudge the numbers or we can do this, that we could do that, but they didn't do anything like that. But the big case, that kind of like,

kind of the biggest incident that really turned kind of everybody on uber was this case of, you know, young woman Susan Fowler comes to work and you know what? First day on the job get sexually harassed in writing and she submits it. HR. I'm sure that's happened at other companies. But what didn't happen at other companies is the HR person breaks the law and says that Manager's a high performer. We're not gonna do anything like Pound Sand. And so how the hell did that happen? Like it wasn't like Travis? Definitely temp. Help that person to do that like there's no way like there's no way he was happy with it. But winning that hyeon emphasis on winning that high. An emphasis on performance in no statement on ethics and like law and all these kinds of things, and by the way the company was known to go around the law because it didn't believe in a lot of the regulatory things just kind of set the stage for that kind of issue. And it's tricky as a CEO,

right? Because it wasn't like the board wasn't aware of how uber worked. Like every reporter knew how overworked everybody in Silicon Valley knew how overworked. And the billboard was just so happy that he was making them so much money. Intel, right? It felt like the feds were moving in and like they were gonna get got. And then all the sudden they became, like, super ethical on doll. That kind of thing, you know, is a little unfair how went down. But But that's that's

how it goes, Yeah, and do you? Because it does feel like Silicon Valley is having a bit of a moment kind of a cultural reckoning. And I think part of that is maybe these companies, especially the platforms, have become so big. So the holes in their culture or the way they built their cos of the way they do business, are much more obvious than much more consequential.

Yeah, well, there is such in the spotlight, right? Yet very young companies. I mean, Facebook, 15 years old, and it's the focus of the world, you know, all the sun. So like there's very few young companies like in the history business that would ever stand up to that and a great way. But yeah, for sure that's going on.

Do you have a sense it, whether it's Zuckerberg or the Google guys are kind of up to the task because it does feel like they're trying to rebuild the plane in the

mid flight? Yes, so look, I think that one of the reasons I used the Haitian Revolution as the first example in the book was It's probably the greatest example in history of proof that you can change a culture because there's never been a successful slave revolt. You go. Why is there never been like in human history? This isn't just a transatlantic slave traders something like nobody not ever kind of rose up and one in like created a new state. And so you go, Why is that? And it really starts with slave culture, which is almost antithetical to military culture because the kind of fundamental underpinning that you need in military culture is trust because, like if I don't trust the command, then like nothing's happening. And as its scales, I literally have the Byzantine generals problem like nobody knows what's what in slave culture, their trust is very difficult because trust is based on this idea of tomorrow. Like I will do something for you today because I trust that I'll get it back tomorrow.

But like you don't own tomorrow. If you're a slave, you don't own your future. You don't on yourself. And so this whole notion of trust is almost nonsensical in the slave culture. And not only did he go from slave culture to military culture, but he did it, a scale that was like almost unprecedented 500,000 people fighting in the slave army for the Haitian Revolution in the end, which is to give you an idea of scale. Largest slave revolt in U. S. History was 500 people. So to Sam had 500,000. Napoleon suffered more casualties in Haiti than in Waterloo. And so if you can take that culture and these guys like his guys didn't even wear clothes when they started to that kind of military vigna Absolutely. Facebook can kind of close the holes that it has.

And I think like Mark Zuckerberg, for all the criticisms he gets, has been quite thoughtful about how to do that. And, you know, he always gets hit with like the Hall. It's Silicon Valley gets hit with, like this, move fast and break things. Which was like an interesting idea he had early on, but he got rid of it when they grew it. It wasn't like, you know, he didn't try to change things, but, you know,

like it's a really kind of challenge for them, for sure. Their current stance is we're not gonna decide what's true and what's not in a political ad, and there's like, incredible fury over that. But then you think about the opposite. What if Mark Zuckerberg said Facebook is going to side what's true and what's not

true? Second, Bergen and say no. Yeah,

and and, oh, by the way, that number one person criticizing him, Elizabeth Warren thinks he's out to get her Theun. So like he's out to get me. I want him to decide what's true and what's not true in a political ad until, like it gets to be a very once you get into the realm of politics. It gets much more complex,

totally. But also, it's really interesting if you think Facebook you to whatever I mean, these air kind of if you're talking about empires and history, yes, these air empires.

Yes, yes. And thank God for business in that sense, because then otherwise, right, Mark Zuckerberg and Larry Page would be leading armies. Andi, that would be really rough. You know,

work has the world's largest network of independent professionals. So if you need a U ie designer Ah, full stack developer or a whole team of designers and developers working together Hey, you've got the full tape here myself. Rachel Adams, Stephanie Hi. Up work has agencies to available for six weeks for six months when you need in demand talent on demand up work is how I'm Danny Fortune from The Sunday Times of London. And this is a podcast about Silicon Valley in eight parts. Can't say something interesting that knows about Sam Cisco. Yes, please. That's a vortex. I think she's a sociopath. A liar. Which CEO? It's more Jesus. Like you're going to run for president.

It's a ride to the past present and look at the terrifying plans for our future. Is it more or less powerful and bioterrorism or a nuclear weapon? What are you waiting for? Subscribe to tales of Silicon Valley right now on apple podcasts. Did your experience you invested in Harmony Company? Does culture kill a company? Can it?

Oh, yeah. I definitely think it can degenerate and let me just kind of So here is the classic way that culture eventually kills, You know, kind of old company. When companies get kind of big and old and this happens often like I'm sure it happened at serious. You know, I've seen it like, kind of degenerate at your record. There's kind of like the court cultural element in business. Is that them? It's going to sound simple, but that people care, like I care about doing a good job. And but there's a lot that goes into that because, okay, if I work really hard,

then like people will recognize that and then more than that, like that project will actually move the company forward is like a big thing, and then if that's going on, then people will care about their work and things will go on But what happened says companies get large often is if you work really hard. The company is so bad at making decisions and so bad at recognizing anything that it actually goes to waste. So your incentive not to care because the person who didn't care and was on Facebook all day, or like, you know, relaxing or whatever they got the same raises you and their work amounted to the exact same thing that yours did. Their zero work amounted to what your hard work amounted to. And and you see that when companies start to lose it like that's probably the first problem in the culture is that is that people are literally incentive for not caring

and in terms of the tech industry, generally the ability to scale so quickly. Do you think these the challenges are more acute? No. And more urgent to address?

Yeah. No, I definitely think so. So scale complicates things a lot, because and this is one of the mistakes I made when I was CEO is like at a small scale lead by example, actually kind of works for a lot of the culture. It's like, Okay, you're the CEO. You're doing this all day, but like if your Facebook size must those employees and I have no idea what Mark Zuckerberg is suing like they don't see him and so forth. So there's all these other kinds of things that will affect your behavior that are accidental. You know, a lot of the challenge is How do you How do you build the mechanics into the culture so that they scale with the company and kind of reach out and get that done? And it's It's very tricky because one of the examples in the book is from prison just to kind of illustrate how difficult this is. So I don't think anybody designed the prison system to be super violent or that wasn't the intent. I think the intent of the U. S. Prison says it wasn't like We want this to be the most violent fucking place in the world and like everybody should kill each other. But shock his first day in prison and he he was in

prison for really explain who shock

shock. It's anger, was imprisoned 19 years for a murder that he did commit when he was a young young man, 19 years old. The story starts when, uh, he comes out of quarantine, which is the kind of place they put you in. You enter prison and into the kind of general population. And so he and the other kind of people coming out of quarantine go into the recreational area and day one. The very first thing they see is one of the prisoners walks up to another prisoner, stabs him in the neck, throws the shank of the trash and goes to the chow hall and has sandwich. I'm listening story, and Shaka says that happens. And we're all looking at each other. Like,

where in the fuck are we at? And I had to ask myself, Could I do that? And I say that I might say, Well, what do you mean shock? Because, like, you murdered a guy to get in here and he goes, No, that was a whole different thing. I was selling drugs. Guy came up to me. He got very hostile with me, jumped out of the car. He wasn't supposed to jump out of the car,

started coming at me. I had a gun in my pocket. I reacted. I shot him. He said this guy took a two liter bottle, filed it into a weapon, decided was he going to stab him in the stomach, are stabbed in the neck, wound him or kill him, and then decides he's gonna kill him, stabs him in the neck and keeps it moving to Chaz Sandwich. I couldn't do that, but I had to ask myself, Could I get myself to do that? Because that's what was required to survive here. When you think about that,

that's new employee orientation. Everywhere people come into your organization, they see how the people who are succeeding are behaving. And they asked themselves, Can I do that? Can I behave like that?

You know Shankar, dude?

Yeah, that's well, not necessarily that a company, but sometimes metaphorically, you know, like

like uber, for example, can shake a regulator or whatever. Well,

yeah, you have to be careful, because that's how the culture moved. If you're not thoughtful about what that experience is going to be, you can end up with something you never intended. And and this is, uh this is why I thought it was just so important to you. Give people some tools that they can use to start to understand what they're dealing with when it comes the culture and behavior at large scale.

And do you have a sense that this is, I mean beyond Silicon Valley, part of, ah moment? Because if you have, I think it was the International Business Roundtable bunch of the biggest corporations saying this. We are no longer about just shareholder returns. We have all these stakeholders. Business is bigger and more important and more global than ever. We have to think more holistically about what it is to quote unquote succeed.

Yes, so it's It's really interesting there because a lot of the law's right, like, say, if you're a company, you know, security's lost and you don't just on the company yourself. If you have outside investors

fiduciary

duty, you have a fiduciary duty to, like generate to maximize their return. I mean, like that you have a legal obligation to it. So I think if you're asking the societal question and saying, Do we want to care about more than shareholder returns, or do we want to somehow redefine shareholder returns to include these other things? You think it's a question for more than just one company has been a little bit of the struggle with it. Where? Yeah, like I mean, generally the I think, the original thought and, you know, like, it's not even necessarily the wrong thought.

But the original thought was okay. Like you generate money for shareholders, you generate jobs for employees and like that, Is this societal good? I think that people have different views on it, and we've gotten with globalization. You've got thes mass of these companies that succeed bigger and faster than any time in history. And so that generates this very intense income inequality. Because you have, at the same time labor getting normalized globally, a supposed toe locally where you know it can keep rising with the companies. And so all those air in motion so get now would be the time to go. Okay. Is that the right way to define a company and

we'll hear means

there were. But it's tricky to redefine in that it's a simple incentive now,

and it's super super incident. It's it's very this is the target to shoot at basically. So do you subscribe to that?

Shareholders get mad and sue you and try and ask you. I mean, this is the re people get mad at the super voting shares. But the kind of reason that Silicon Valley companies have And it started with Google and the reason Google did it is you know, Larry and Sergey did not want to take the company public if they had to be beholden to short term goals and not invest in the future. And, you know, kind of build new technologies and so forth. Which is kind of what the ah lot of the activist shareholders forced you to do. It's like stop doing R and D. Stop playing. You know, stop paying your employees Maur and so forth. They're like, we want to hire the best engineers. We want to pay him whatever we want to build for the future. And so they kept all the voting rights for themselves,

and they get like, everybody's like on Valley gets massive criticism for them. But it was to take a longer view of the business. Then, you know, it wasn't like I want to be all powerful. It was like I'm gonna take a long term view of the business because, like I founded this, I care about more than just the money. Where's the shareholders? Only care about the money. It's a very tricky problem to solve. I would say societally and then, like in business. So I want I'm not even arguing that it doesn't need to be redesigned, but I don't think the redesign is obvious.

No, there does seem to me some need to redesign kind of incentive structure or at least have three or four

targets rather than one. Yeah, you know, and then, like, what does it mean to be like companies and countries, right. Like, Is Google a U. S company or is it an international company? You know, the employees are certainly from all over the world the customers air from all over the world. It was started in the U. S. What's its obligation to the country as a post? Everyone. And that they ran smack into that on this maven project.

We're like there, you know, and they're, like, wealthy internationally. I community doesn't like it. Okay, well, that's something you never heard from a U. S company before and working with the U. S. Government. So, like what? We're into these different issues right now.

We have Brad Smith from Microsoft on a few weeks ago, and he was talking about this notion that people who work for Amazon, sire Microsoft, he's president. Microsoft, they're almost like, feels like they're citizens of Microsoft. And so they expect from the company values that reflect there's statements on big issues kind of take a stand and on that issue of, you know, working with the Pentagon there, like very clearly, we're going to do this because we're US company. We've prospered here and we have a duty to do that. If you don't like that, then you can go

work somewhere, work two miles. I personally agree with that stand, but you can see how Google got two different, completely different,

Stan. But it does feel just like gang go make that issue of scale. These companies, just all of a sudden, being a CEO is a different proposition than it would have been another era.

Yeah, and they're the end. And there's this other question. It's like, Is it good to have companies get to that scale

like Elizabeth? One says

no, Or is that just bad? Well, then, But then the counter is okay if you don't let Facebook have that scale, and you don't let Google have that scale. Who's the likely company to take over that slot? It's tense. Um, it's by do it's Ali Baba and then think about Chinese law and then think about the rain, the control the Chinese government has over the Chinese companies. It's much, much stronger. And so whatever you think about Mark Zuckerberg, they think he's going to respect your privacy farmer than she jingping, you know, particularly as it comes into re Elish use of surveillance and, you know, harvesting your organs and other kinds of things that I shouldn't say

that. But now I'm going to get, like, captured and thrown in jail. Several the kind of the people that you profile in the book as kind of models, gangs con. I can't pronounce the French guy's name to San Louverture in shock. Oh, they're all kind of outsiders, and part of the virtue are One of their strengths is that they are outsiders that came from nothing or came from outside the kind of judicial power structure. So when they got into power, they could rethink you, rethink it and see things that others didn't. So in venture capital. Why's it so white male?

Yes, sir, I mean. And I know it's hard for me to speak for other people's firms because we're not so white male like, I think some of it is kind of break down the kind of the broader issue of inclusion. Like if you look at our firm, Layla and Will and I think it's easiest because it's so easy to criticize other groups like. But if you look at the kind of basic dynamic of hiring wth E average manager, you are the typical manager. Almost any manager, if not trained in some other way, is going to profile to themselves and know what I'm good at. I know how to test for it in an interview, and I valued highly and so I'm gonna hire people who could do what I can do and like. And then I'm in this position cause, like, people like my work.

So it's this very logical. And so if you look at our firm, you know, in the beginning we had Frank Chen and he was running his group, the research group, and everybody in that group was Asian. We had, um, me hiring the GPS and I have been a CEO, and everybody was like a CEO, and we had market running, marketing and everybody's woman. And we had, like, Scott Cooper groaning his stuff and everyone's investment banker. And it was just kind of like people hurrying to themselves And,

you know, we were small, and I kind of ended up asking myself this question. I'm like, Okay, um, I gotta find out why. This is, uh So I went to market for us, and I'm like, Margaret, what is it in your profile? What is the criteria where no men are get the job, like, why don't they qualify in? She said helpfulness.

And I was like, Oh, that's interesting because I don't know any helpful men s like I can totally see how you'd end up with the team of all women, but it was kind of a more striking comment to me because we were a venture capital firm, which is a service is firm. So who in that firm would you not want to have that trait of helpfulness? That skill of how do you anticipate somebody's needs? How do you figure out what they want before they want it. Like we needed everybody to have that. But if you went through our So I go through our profiles and like, nobody is testing for helpfulness other than market. And so you okay? Wow, that is kind of the core of the issue that we couldn't see the talent blind to, like, a very important skill that we needed in the firm.

And so then you have to start asking yourself what? Okay, like what else is like that? And it turns out there are quite a few things like that. And so we ended up changing our process to have people from different backgrounds look at the job profiles so that we could broaden the criteria to get Thio criteria where we got the skills. Not like, so that we got the colors and the genders we wanted, but the skills we wanted. And if you look at the firm today, you know, whatever we're like 50 I think we're 51% women, and then we're you think 22% black and Hispanic And then, like, if you look at the GPS, we've got like, I think we've got four women now And,

uh, you think four people of Asian background to people of Hispanic background and so forth, and there's three or four Jews, and then there's a bunch of, like, whatever white Protestant and men like kind of thing. And so but, like, that's not really the interesting thing. The interesting thing is, we don't have a diversity department. We don't have quotas or targets or anything like that. That's just the way it went. And, you know, for me,

if we're getting, we're seeing the talent and understanding it and getting the people in who should come in then I don't even care for like, 90% women are like 80% like African American or, you know, 75% Asian or whatever. Like that's all fine with me, too. I just want to make sure that we can see the talent and then we get to the best talent pool. And that was the Genghis Khan approach. I think that what's happened in Silicon Valley is nobody's doing that and white Male is a little like inaccurate because I think that the people who got to Silicon Valley I'll tell you a story on people who got Silicon Valley for us. So when I was a product manager at Netscape in 95 I got a call from Jerry Kaplan, who was a founder. Go and he goes, Ben, I'm worried about the Internet and I'm like, Why are you worried about the Internet,

Jerry? He's like, Well, I've been studying the demographics, and the only people on the Internet are Jews, Chinese and Indians. And if you look at venture capital today, that's actually like who's doing it and kind of who's building these companies and so forth. You know, a lot of it comes down to people. I think the strong forces people profiling to themselves. I think the my belief is almost everybody is. Let me say bias cause racist and sexist start to loaded words. But like people have real biases. But I think the strong force is they can see talent that looks like them and that comes from their background. You know,

you went to Harvard, I went to Harvard. You studied this course. I took that class with that professor did it in a like That's easy to see. I know what that is. I I can deal with that, as opposed to having to do the work, to see things that you don't have. A lot of my point in the book is it's very powerful when you can see things that you don't have. So my friend Steve Stout was president of Sony Urban Music. One day I go, he says. He's been, you know, I was president. Sony Urban Music.

I'm like Esteve. I knew that and he goes now like, But we called it Sony Urban Music cause it would been racist to call it Sony Black Music. And I was like, Okay, it's kind of silly And he's like Not another was really selling is because we called it urban music. I wasn't allowed to market in like rural areas, like there's no black people living in rural areas and I go, Wow, that's stupid! And he goes now you're not even listening to me. Ben, listen to me. I was president of Sony Urban Music. I had Michael Jackson. What white people don't like.

Michael Jackson wasn't fucking black music. It was music. Why are we putting into the category? And you know, he said that to me and I was like, Well, you know, like what we have in Silicon Valley is urban HR, The diversity team is actually urban HR. It's this weird side door that puts people in a category that they don't belong into. And then once they get in, they have to like reprove themselves because they went in this weird side door and not the regular door. And so the bigger problem that we have in Silicon Valley thin the numbers is that if you come from a different background, often times you don't even feel like you belong in the company. And in fact, the way people get to their numbers,

they make it hard after the fact. The epilogue of that story, and why it's so important and why it's so important for competitiveness, is you fast forward to today when streaming. So you get rid of the urban section, the record store in the urban marketing in the Urban department and all those things that music, black music. It's like 92% of the top 100 songs. It's all music like it's dominating, and the only thing that prevented it from doing was the diversity department killed or ex squeeze the category into being dramatically less productive than it would have otherwise.

It was also just people understanding what hip hop was

and it coming up and, well, why don't they understand? Cause it wasn't in their radio station, wasn't in their part of the store, wasn't in like because it wasn't for them. It was only for black people. I mean, that's the core of the issue that we have is that like we try the categories people, rather than try and understand them and like yes to listen, you're right. You have to understand what hip hop is. You have to kind of take the time to understand the art form. But that doesn't mean you can't understand it because you're white. It just means you can't understand because you haven't tried. And I think that's what we do with talent. We don't understand it because we haven't tried to understand it. And so we default to what we do understand and that this is the biggest. This by far the core issue with inclusion. And I think a lot of the solutions just exacerbated because their urban music

bringing it full circle to the kind of culture of Silicon Valley how connected is that funnel of talent to the issues that the industry is facing, that with not being able to see around the corners that if you had a different people, said people in the room would be like, Ooh, this is gonna be a problem. You should think about this differently. Yes, so some

of it, I do think it's tricky, though. I mean, like I I think there's no question that if you have a broader lens on talent, you're going to get broader thinking you're again. They get more and better talent. You're going to get capabilities that you don't have. Having said that, I don't know how much of this was avoidable in that. Just look, let's just talk. Meet new media. The radio came out that got Hitler elected. I think no question that got Hitler

elected. It was the Facebook of the Facebook

of the day. TV came out. It got Kennedy elected like almost without question. Nixon would have won if it wasn't for television. And so that's what happens when you have a new media so like toe for me to go well like we could have anticipated, that was hard and, like an interestingly like Facebook got Barack Obama

elected. It also goes, Yeah, it's gotten both got, got us. Both of them gotta

say people only got bad, you know, when it was Trump. Interestingly, but, you know, that's the way it goes. So I think it was hard to anticipate cause, like, Facebook watched Barack Obama get elected. That was the power of Facebook, And everybody wrote about it to like it wasn't like a secret. And so if your facebook I don't care like what color gender you are like, that's gonna be kind of hard to figure out that that thing that's not only OK, but people were like, Hey, Bravo,

Facebook. Amazing. You got this guy elected was gonna flip on you. You know that fast too. You're the devil. You must be broken up into little pieces and shut down. So, yeah, so, like, I mean, you know, like we can go back and say like, maybe But I think some of these issues are very specific to the times and the way people communicate are changing and, like how different it has been generationally from, you know,

went to the next. So yes, some of it is just the speed of technology to I think that's probably the thes stronger thing that's making it challenging and the adoption like we've never had technologies adopted at this rate. No, I'm like in the history of humanity. So it's just a thing we're all dealing with and grappling with. One of the I would say key points in my book or one of things I really tried to do was kind of get out of this good versus evil. Whatever. Elizabeth Warren Good Mark Zuckerberg evil like this and that. The other.

And it's I mean, you call Genghis Khan a master of inclusion, which is not something most people think about when they think about Genghis Khan,

right? Exactly. But I think we have to kind of go back to like the, you know, the great tradition, and it's it's humans against the gods. It's It's the system that we've created that his kind of come to rule us and, like, how do we deal with that as opposed to just trying to pick a bad guy because you can pick a bad guy, but like it doesn't solve anything, toe like string him up. It doesn't the chance of that changing anything I think are very

low. And when you're CIA company and they come to your door and say Andresen Highwoods, we want a bunch of money. How important is culture and how, in other words, how do you see that?

Yeah, looking, that's tricky. I don't want to, you know, act like I'm gonna run out on a lot of the company's most companies be investing are very early on, so they don't have much of a culture.

But I guess my also phrases question differently if they have a great product and clearly shitty culture, or they have a shitty product or it's the same a really great

culture. The probably the decision that cost us the single most amount of money since we've been a firm was we had the uber be round and we passed on it,

which was most of what they were must have been valued it. What

It's about 300 million. Yeah, like you think about that Well, even at today's prices low, low, whatever. $50 billion like that was a lot of money to lose, and you know, it's not the only time we made a decision like that. But it's ah, you

know, what was the decision

or why I was so in the negotiation. Travis kind of Italy stand our perception, and you may think his perception may have been different just, like re traded the deal many times to the point where it like it was really hard to understand. Like, what was true. It was not, And I would you blame this on me as much as anybody is like our kind of one rule. Our one rule on that that the firm is like like if your deceptive with us, we just have to assume that you're going to be deceptive, period. And that's something that we get very nervous about being behind because of the way we work and that, you know, we recruit people into these companies. We connect them to our corporate partners. We do these kinds of things, you know,

we just got uncomfortable and like we had a you know, like it didn't close, definitely got, says a lot of money. You know, it's hard to say, like how much of what we saw was really versus, like, you know, because in retrospect like I don't think the things that cause uber the troubles were that. But we do, you know, like that's the Yeah, that's probably the one cultural thing fete we will like walk from a deal on every time. Just cause it's two different than how we see the world and two incompatible with us.

And that is all the time we have. I want to think, Ben, for setting down to take the time to chat. You will not see any of my work in the Senate Times this weekend because I'm not working, but anyhow, otherwise you can find me on Twitter at Danny Fortune. You find me on the website most weeks at the times that co dot UK, and if you are digging this podcast, please take a moment, go to our podcast, give a rating and review, helps other folks find the show, which is good. So that's it. Until next time. I'm Danny Fortune from The Sunday Times of London,

and this is a podcast about Silicon Valley in eight parts. Can't say something interesting that knows about Sam Cisco. Yes, please. That's a vortex. I think she's a sociopath, A liar which CEO is more Jesus like you're gonna run for president. It's a ride to the past present and look at the terrifying plans for our future. Is it more or less powerful? And bioterrorism or a nuclear weapon? What are you waiting for? Subscribe to tales of Silicon Valley right now on apple podcasts.