Full Transcript for Reed Hastings on Hollywood’s future, Netflix’s shakeup and knowing when to leave

This is the polite part, and then the impolite part. I will shame him in private. Is the polite part when you wear the Warner Brothers Discovery shirt? Yes, I wear the... I'm looking forward to the rest of it, for sure. Yeah.

Hi, everyone. From New York Magazine and the Vox Media Podcast Network, this is On with Kara Swisher, and I'm Kara Swisher. My guest today is Netflix co-founder Reed Hastings. After nearly 30 years building it into a streaming giant, Hastings fully stepped away from Netflix in June when his term as board chairman ended. His impact on Hollywood is undeniable, but his departure comes at an interesting time, both for the entertainment industry with AI and the drama around the Paramount Warner Brothers Discovery merger, and for Netflix itself, which lost out on its bid to buy Warners.

Just this month, it announced a big shakeup at the C-suite level and cut around 1,000 jobs. But Hastings is pretty busy in his post-Netflix life. He has a seat on the board of directors at Anthropic. He's still a big philanthropist, especially around education, and is the CEO again, now at the Utah ski resort Powder Mountain. I have known Reed since he started Netflix.

I've known him a long time. I consider this kind of his exit interview. I want to hear about what he thinks about where he began and where he has been and what he's going to do going forward. He's still a relatively young man, and he's full of ideas. I have always found him to be one of the most intelligent and bracing CEOs. All right, let's get to my conversation with Reed Hastings, our expert podcast.

question comes from author and legendary Silicon Valley venture capitalist, another person I've known a very long time, Sir Michael Moritz. We recorded the interview at the Masters of Scale Summit in San Francisco. A portion of it was taped in front of a live audience, so don't go anywhere.

Reid, thanks for coming on on. What a treat. I know. It's been 12 years since we last sat down together like this. It was my code conference in 2014. It was the second season of Orange is the New Black. It was just about to come out of a successful season two of House of Cards had dropped. You really helped us. You didn't help. You did usher in major changes in the entertainment industry.

If you had to pick one company that sort of shifted everything, it was you. Talk a little bit about that shift and whether you saw it coming or Hollywood didn't. I know Hollywood didn't see it coming. Well, we did very traditional great shows like Orange is the New Black or I don't know if you've seen this season's Diplomat. Yes, I just interviewed Kerry Russell.

Incredible. I just interviewed Kerry. So think of the product that we make. Basically the same thing, done extremely well. But we make it so much easier to watch, you know, to click and view it at your own time. You know, most of your listeners will forget that we used to have to watch at 8 p.m. Right, right. Somebody else set the schedule instead of us.

It seems crazy now. Why was that such an astonishing thing for people? To me, I used to argue with Hollywood is you're selling Coca-Cola in a 64-ounce bottle and people want cans. They want to drink it their way rather than your way. And they had always insisted that people wanted it their way. I was like, it's your schedule. I think it's the technology limitation.

So there was broadcast TV, and that was a miracle, right, that you could have video in the home and transform societies globally. And then there was cable, and you got like 500 channels, but it was all someone else's. There was a little thing called TiVo, which was this hack where it recorded things, you know. And so you could get a simulation of watch when you want.

Right. But the Internet made it so much easier. Just boom, you could watch what you want. Right. It's funny you mentioned TiVo. I was there for the pitch meeting for TiVo. I was following around a venture capitalist and they funded it, that one at the time. And it was a great, I was sort of like mind blown. This is a great product and temporarily a strong company.

Yeah. But they didn't figure out how to pivot into a kind of new era. Right. But one of the things at the time, one of the executives there said to me is the consumer has taken control and they're not going to give it back. They felt that that was the trend line and I agreed with it. Talk about that because people, because we had never really been asked before once they had the opportunity, whether it was music or news, every single aspect shifted like that and you all led the way in entertainment.

Right. Yeah, we did. I think it's very clear that consumers want control. It depends on what that means. So you had to make it easy, too. And so we put, you know, unbelievable amounts of work into trying to make streaming easy. And in the first couple of years, it was quite hard and glitchy. And then it got better and better and better. And today, you never think about it.

You just turn it on and it works. Right. And when you think about those days, you were the disruptors, right? Right? You would consider yourself the disruptors. Hollywood first insulted you or looked down upon you, and then they kind of got scared of you. And now you're kind of part of the system in a way. Talk a little bit about that evolution.

Well, again, our distribution side was radical. Like, you know, when you want and how you want. But our creation side's pretty traditional. You know, creating great shows like The Diplomat or films like The Unabomber. And so, think of it as part of our world was quite different. Part of our world was becoming, we were so excited to become part of the Motion Picture Association.

That was a big deal of acceptance. A big deal when we won our first Oscars and Emmys. So for a large part, we weren't disrupting there. We just did make it easier for people to watch. Of the many things you did, what do you think the most disruptive was in your tenure? Well, definitely on demand. You know, the idea that you paid a flat fee and you could watch as much as you want and when you want.

You know, that was such a radical proposition, which today is taken for granted. And if you like, I think if you like this, you would like that. which I don't think existed, if you remember TV guides. Not generally. I mean, you know, people were always trying to figure that out. There were companies in the 1990s trying to do that, partially to help figure out, would certain movies be more successful than others? And one of the things, when I interviewed you at this basement at Sundance, I remember you all saying very significant things on stage, you, Jason, Kylar, and Chad Hurley, about how consumers were shifting.

Largely ignored, and mostly, one of the things you were offering is, I think it was you or Chad, is you're an indie movie. You can now find your audience instead of just one movie theater on the Upper East Side of New York. That's your distribution, essentially. It was much pushed back on that this was not something we needed in any way. When, from your perspective, did it shift, the power dynamic shifted between you and Hollywood? Well, that's a fascinating panel because, of course, that's the head of Hulu, the head of YouTube, and the head of Netflix.

And you were small. And we were undiscovered. We were, as you said, in the basement. They were in a literal basement. I tried to get us on the main stage. They refused. Yeah. You know what I kept saying? I said, these companies are going to kill all of you. Like, just so you know. Yeah, that's very welcoming. I would say the growth of the Internet is really hard to understand because it was this got faster and faster and faster.

It got to the Xbox, got to the television, got easier and easier. And that was not obvious to most people. And so I think that's why they kind of missed how big this would be in just 10 years. Why didn't anyone follow you that much? It took them a while, the streaming to happen. I mean, Disney did it in fits and starts. HBO had nine different names.

It just went on and on. Yeah, I mean, HBO struggled, but I think Disney did an incredible job for an incumbent, and they spun up a big effort. You know, they bought Fox. They, you know, did this, and, you know, they've done very well. And then all those companies started Hulu. So they were owners of Hulu. So I think they were pretty active in it.

You know, it's easy on when you grow up in tech, you know, to like take on new markets. That's kind of what we thrive on. Right. And if you run regular, like the guy who used to run Blockbuster, John Antioco, very thoughtful guy, very flexible. consumer-focused, and very good at video stores. He'd rolled up the market. But he was so selected to be good at video stores that these other things, you know, were hard.

This idea of DVD by mail seemed to him nuts. Well, let's fast forward today. You know, Netflix just announced a big shakeup, a C-suite shakeup. You're no longer on the board, just to be clear, or an executive there. But chief content officer Bell Bajaria, who had been there 10 years, film chief Dan Lin, their shorter time are out. People are cut around 1,000 people.

This came a few weeks after your former co-CEO, now he has another co-CEO, admitted the company wasn't growing as fast enough and engagement was up just 2% in the first half of the year. What's it like to be on the outside looking in for the first time? Because one of the things about you is you creatively restructured constantly. You know, I read about all those changes.

I heard about them first in the paper. Oh, wow. As I got reported. I didn't tell you. In the paper. I'm dating myself. Online news. In the paper. So I didn't know those were coming. And, you know, it's hard because I'd like to be in the fray helping. You know, those are traumatic moments. And saying goodbye to some people, getting other people to focus on, okay, we really need to take up our creative excellence and just to be supportive.

Yeah. But they're very competent people. They'll figure it out. So I'm not worried about it. But just from the outside, you're a really smart guy. Everybody is caught up, right? One of the things I used to talk to Hollywood, I was like, Netflix is lapping you again and again and again. They've caught up. They've started to catch up. Some of them at great cost.

Some of them are doing better. Well, interestingly, the competition between the Hollywood, Disney, et cetera, is all pretty stable. It's YouTube that's really gaining share. So it's a little bit like the tech side. And part of it is their business model on YouTube because they don't commission content. Right. People put it up on spec. And then there's incredible amounts of creativity.

They have 3 million paid creators who are fighting for attention. Right. Yeah, and they might get a movie like Obsession or Backroom or something like that. That is an incredibly small amount of viewing on YouTube. I know that, and it took a while to develop it. It's the stuff that's very attention-grabby. So in hacking attention, YouTube's platform is very good, and in particular, all the content.

Because if you're a creator on YouTube and you want to get eyeballs, you better be snappy. And so it's a highly-tuned machine for attention, and it's winning viewing hours. Yeah. So what does Netflix do? Because Netflix is the most tech forward of these companies. And that's something I think that Hollywood didn't get. You were both a media company and a tech company at the same time.

And they were media companies that used tech, essentially, and didn't really like it that much. What does Netflix do in the face of a tech platform that has basically free content, free content costs? Well, they share like 60% of revenue with those creators. So it's not free, but they don't have to take responsibility for the content. Right, right.

And they don't have to spend it, make it, the risk that it's involved in it. What is, Netflix has tried to do a bunch of things like podcasts, shorter form content. It hasn't gotten into news yet. It might. I don't know if, you never wanted to get in the news, correct? No, entertainment has very different brand properties. I would agree, yeah.

So we want to be where you relax. Sports is another area. You know, for me, I think the strategy is doing more and better television shows, more and better movies. I think they are broadening. Bekta, you said there's the podcast. There's some cool things like Alex Honnold, you know, climbing this tower in Taipei. Stunts. Yeah, sort of things that are thrilling.

So the core brand property is about being thrilling. Like we realized, it took a long time, that we could be distrusted, we could be disliked, but we can never be boring, okay? That the essence of an entertainment brand is to be thrilling. Like you just can't ignore it. You got to participate. So that's what I think they're very good at is trying to be more and more thrilling.

So when you're like that, how do you compete with a YouTube? Because the numbers are really quite jarring, 14%. I know both my kids and you have kids similar ages. That's where they get all their information from is YouTube. And they like Netflix. There's no question. And they use my Netflix. It's a family thing. But how do you then stay thrilling in that kind of watching environment? If you were young Reed Hastings running this thing, what would you do? Well, let's see.

If you look at the beginning of television, 1950s, 1960s, movie viewing went way down because suddenly there's this new hot object. Television. Television. And then movies got a lot better in the 1970s. It was all creator revolution in the pacing and the realism. And then movies fought back and became, you know, again, up until the Internet or up until COVID, really a substantial art form.

So I would say the parallel there is, you know, YouTube is the television in that example and we're the movies. Because we have to take up the creative bar and push ourselves to be ever more gripping, real, connecting, and do what we do incredibly well.

Yeah. But how do you make that, you know, thrilling? Like in the new age, again, do you have to be short? Do you have to be snappy? Is that the only thing? I doubt that. I mean, I think those are the brand properties of YouTube. And I think it's hard to out-YouTube YouTube. Right. So I think the better thing is to concentrate on, think of sports and being able to, you know, have live sports and things that are long form in that way.

So when you think about building a company like Netflix, the kind of scale that you did, and let me just say, you're one of the great astonishing technology entrepreneurs, I would say, in my mind. But you went from movie rental by mail concept to a streaming giant with more than 320. It's not a small company, right? Even though Wall Street's not happy with Netflix right now.

It's down 5% or so, so it's a big deal. Yeah, it's a big deal. How do you know what to focus on as a CEO? How did you know?

I don't feel like I had any science to that. I was what I would call a brute force leader. Like I had one gear, which is work harder. Right. As opposed to being like very clever. So I would try to have the most one-on-ones, know the most people throughout the company, know the metrics really well, get up first, go to bed last. I'm not sure that's a very good path, but that was like what I did.

How would you characterize the Netflix culture under you? Now, it's tough, but you didn't have sort of the Jeff Bezos jackass

structure. They had a very— We borrowed a lot of things from Amazon. You did. Like the memo structure. You had created your—what was it called? The code? Freedom and Responsibility. Right, right. But for some reason, it wasn't quite the same imagery for some reason. Well, I'm sure it's not the same. It's, you know, going to be different.

But I have a lot of respect for Amazon's culture. I would say ours, you know, was really focused on how do we inspire rather than manage? How do we give employees a lot of freedom and let them make choices? So the very simplest, crudest examples, vacation, used to be even in tech— You know, you got three weeks of vacation. And I remember feeling how absurd it was because we were working, you know, 14-hour days instead of eight-hour days.

So, like, why? That's like almost a two-ax difference. And then why was someone cared whether it was three weeks or two and a half or three and a half weeks of vacation? So, one of the first things we did is get rid of, you know, a limit on how many days of vacation. Of course, the people you hire don't want to take any. It's trivial, but so then what we want to do is inspire them to care about the mission and to work on it.

But I tried to be a good example and took a lot of occasions. When you think about your greatest decision, I mean, there's going to be a lot of looking back. What would it have been and what is the one you're like, should have done that? Well, probably the greatest decision was to get into streaming in 2007. YouTube started in 2005. So we started very early and started licensing TV shows.

Yeah, a lot from the big studios. Yep. Friends. Because they were used to licensing the cable networks. Yeah, they loved it. They thought, wow, lucky us. Additional revenue. That was great.

So, you know, there were many decisions on the way, getting into original content, giving Ted Sarandos the license to spend money on originals, which he did with Orange is the New Black and House of Cards. Which you didn't, were sort of half and half on, correct? I looked at it as a very open question. I knew I was not good enough. to do that.

It was unclear if Ted was, and he made it clear that he was. Yeah, yeah. So those were some big decisions. What about one that you look back and you thought, that I should have done sooner? Was it podcasts, the short form, sports? You know... Android was an example relative to Microsoft of an ad-supported operating system. Prior to Android, there was just operating systems that you paid for.

And when Google did that, it was very innovative and got a lot of traction. And then essentially Roku has done that for televisions. And I didn't figure that out, that there was that kind of opportunity. So that would be the missed decision. Right, right. Advertising was another one that you all didn't want. There's advertising on the channel.

That's pretty straightforward because lots of cable networks do that. You didn't want to do it. I remember you saying. Yeah, I was more HBO focused. Right, right. And I think the team is, you know, let's be broad. And you can have choice. So, again, you can pay for no advertisements, which is really what YouTube has gone to, too. You can get YouTube premium and have no ads.

So, I think we both have the more expensive version with no ads or the less expensive version with ads. Yeah. I think people are used to that. You were co-CEOs with Ted Sarandos, you mentioned, before you stepped down in that role. He's still doing it with Greg Peters taking your place. Why do you think the co-CEO structure works well for Netflix? Just because the people, Ted and Greg, are so committed to success in the company and thinking company first.

They're low ego. They work well together. I don't think it's a general technique. You know, over the next hundred years of Netflix, I'll bet co-CEOs is only 10, 20 percent. Okay. You think Netflix is going to be around 100 years? Yeah. Why? Why? Because I think humans are going to be around and humans love entertainment. Yeah. Did you ever almost sell Netflix anytime? I remember Yahoo thinking about buying you.

We never got into negotiation with everybody, so it wasn't that close. But there's lots of people who took a look at it. Right. Did you ever consider selling? Yeah, in the very early days, both with Blockbuster and Amazon, we thought about it. Because you're like, oh, this is... They're just good companies, and it might have been since, but neither got into any negotiations.

It was sort of just pretty loose. Yeah, I used to always tell Bob Iger to buy you all early. He didn't listen to me. Maybe he should have. Maybe he shouldn't have. They did a pretty good job. They did. The disruptor image has been part of Netflix. Has Netflix lost that? Do you feel like it has? Because it's hard to be a disruptor when you are part of it.

I bet to most consumers who didn't know about DVD or the various other battles, they come to it. Young people, it's just like YouTube's not a disruptor at this point. It's an establishment. And it's good at its model, and I think we're the same. You consider them establishment compared to you? I think that's what consumers think of it as.

Although I would say they'd have less competitors than you do. Like you now have Hollywood breathing down your neck. Yeah, I mean, TikTok is their big competitor, which, again, you know, on a phone is very competitive. Not so much on the TV. Right, right. So your departure came after a months-long bidding war between Netflix and Paramount to buy Warner Brothers Discovery.

Netflix had it. You had a picture of Ted. You know, in front of the Warner Brothers with David Zasloff. We know how that ended. Now it's merged with Paramount. What changes for Netflix and for the entertainment industry more broadly? I mean, you were for that deal, but you all walked away, too, when the price got too high. And I think a lot of people feel that $80 billion debt is insane, unless you're Larry Ellison, I guess.

And even if you're Larry Ellison, it's pretty lofty. Yeah, ultimately we got a couple billion dollar breakup fee. That was nice. So that was good. Sweet, sweet Larry money. But again, it's really the focus on the content and how do we have, you know, a higher percentage of the top 100 shows of the year and top 100 films. That's the real animating force for Ted and Greg.

Right. And was it a good thing not to get it? It's all price intermediate. At the price that we had bid, we were really happy. And then the price went up a bunch and it seemed a bridge too far. A bridge too far. And it just was like, we can't do this. It doesn't make economic sense to us. Yeah, we could have done it. Some can't, but chose not to.

How do you look at what Paramount has done? What is their biggest challenge? The debt.

Yeah, they're figuring out how to integrate, but they've done reasonably well. David hired Enon. It's very sharp, and so they seem to have a good start. And what is Netflix's next move? I'm continuing to take the content up. So that's the big thing. So distribution isn't, it's not AI, it's not, it's opportunity. There's a lot of AI behind the scenes, but for consumers, they don't really see that.

They just see, oh, God, there's a lot of interesting films. We're going to move our conversation over to the Masters of Scale conference in front of a live audience read. We'll finish up here in the studio on the other side. Fantastic.

We'll be back in a minute. I want to talk about AI with this crowd, and you sit on the board of Anthropic, one of the leading AI firms. You're very bullish about it. Recently, we've seen calls for a slowdown from Anthropic CEO Dario Amadei, OpenAI's Sam Altman, and even Elon. The public largely wants it too. The negativity is... huge levels, polling.

Well, it's split because if you ask what's your consumer usage, they're like, oh, I like that. If you ask about data centers, it's hugely negative or joblessness. Yeah, it's a proxy. It's got two personalities. It definitely does. Talk about how you're weighing this right now. How fast is too fast? And of course, there's the famous person who quit and said the 10% chance.

They knew it then. I've been at dinner parties. They've talked about it. Talk a little bit about where it is because it definitely illuminated a lot of people just put their head up when they saw that. I don't think he was the ideal messenger, but your point is it's in the meme, right? The meme is there.

Look, we lived through a terrible era with nuclear weapons where we could have blown each other up and there were times when it was close and I don't want to repeat, I don't want to, just because we got through a 10% chance of nuclear holocaust, let's not do that again. So let's keep the odds way, way low about what it can do. But on the same lens, you can get a lot of attention by saying the world's going to end tomorrow.

We humans, we're very focused on Armageddon, whether that's the... Except it's the creators who are saying it, Elon said. They all do, all the creators. It's not like... me or someone else, it's the actual maker. No, but it resonates. So what's happening is the public resonates on it. So then it's really fun to say those things, you know, at times.

And, you know, it's not impossible. So I'm not saying it's, you know, like maybe using one of these things, you can crack into the Russian nuclear arsenal and launch it. That would be catastrophic. Yes, I would imagine. A nuclear bomb can ruin your day. There are scenarios that, you know, it's not zero probability. But where do you see it now? Because, you know, you've said AI will usher...

I mean, think about our daily interaction with it. Like, it's using it as AI doctor for, like, consumer medicine, you know, is fantastic. It's helping me in all kinds of design tasks. It's helping writing software. It's helping in... I mean, my day-to-day experience is incredibly positive. Mm-hmm. on it, I get frustrated when it's not quite as intelligent as I want it to be or the voice doesn't quite work.

But again, its rate of improvement is substantial. You said it will usher in the great act of creative destruction. Explain what you mean by that. Well, sure. I think what's going to happen there is companies are going to get very competitive. So take Oracle. There'll be an Oracle challenger that will use AI and build an incredible database or set of applications that'll be much lower cost.

And that's the creative destruction. It's going to speed up capitalism and give entrepreneurs... I mean, there'll be new ones who compete with Netflix. There'll be new ones who compete with everybody. using AI. So that's the creative destruction. But that's not the same or anything to do with humans and kind of risks. So remember, in AI, there's sort of two big classes.

There's the misuse case, sort of the North Koreans use one of these things or the... Unabomber uses AI to do something really bad. So that's the misuse case. And then there's a loss of control where the AI gets so smart we can't do the sort of HAL scenario. So we have to protect against both of those. We've gotten much better just in the last 18 months with a thing called classifiers.

which is like a front end on your AI usage. So if you ask it, you know, how do I rebuild the COVID-19, you know, it doesn't let you do it because that's the separate subsystem, the classifiers. It's not perfect. But right now, I mean, pretty much all the AI guys are at the White House every Tuesday for lunch, it seems like, which is every...

CNN always calls and is like, tech people are at the White House. I'm like, call me when they're not, actually. That's what I'd like to comment on. But self-policing... Self-policing, no guardrails, self-policing, no regulation. How do you look at that?

I'm not sure that's the best way, because I think this, you know, if we go down that path, as we are, there will be incidents that happen, and hopefully they're not too awful, but you don't know, and then there'll be regulation. You know, so we tend to wait till something happens, and then think of the global financial crisis 2008, and then a whole bunch of new regulations come in.

So that's the likely case here. Unfortunately. Might it be a better idea to possibly anticipate those things like you do every 10 minutes? You should be at the White House. I feel like I'm not going to get invited to the White House. Crazy. Dario was there for dinner. Dario looked like he wanted to run out. What was going on? He was hiding behind people.

He got called to the front. I thought it was going to be a glory of the flies and he was going to end up in a bad situation. Look, if

I think regulation would give us a higher expected value, lower the chance of an incident, because we want AI to get better and better and better so that it can do these things for us. And the public will demand draconian limits if it does something horrible. Right. And so it's really in all of our interest to avoid that. And so that's what everyone's working really hard to make sure their systems are safe.

But it's tricky, like with the hugging face, that as much as we try, there are some unpredictable things that are happening. Right, so if you tell it to cheat, it's going to do really good at that, for example. Yeah, I mean, they didn't tell it to cheat. They told it not to cheat, and it did anyway. That's the kind of scary part about it.

Yeah, because I don't know what it trained on. Wait, humanity. You see opportunities for AI to disrupt education. This has been a particular area of interest to you. You told Semaphore that AI is going to, quote, first, much better than the typical, and then much better than the very best, than all teachers, which is something to say. Now, evidence suggests the opposite, that AI in classroom is worse for kids and it cannot stimulate emotional skills, social emotional skills, critical thinking that teachers teach.

So why do you remain bullish on education? Well, you know, look, if you look at the usefulness of drugs 200 years ago, it was pretty negative because they weren't good drugs. No. And if you look at the usefulness of AI for tutoring, it's not that good right now. So you have to back to the exponential. You have to think, okay, how good is AI going to be? at stimulating human beings for learning, as opposed to give them the answer in two or four years.

And I think it's going to be tremendous, because AI is going to be tremendous at many, many things. So most of the time you use AI, you want the answers. You want it crisp, you want it right. And some of the time, you want to learn how to do something. And that's this different modality. And we have to spend enough time on that training data and motivational.

But humans, especially young humans, learn really well one-to-one. where there's a person, an adult who knows it and is questioning them. And I started as a math tutor and then eventually became a math teacher. And I went from one kid to then 30 or 40 kids. And it's a lot harder because the kids are learning less per hour. So the idea is to have every kid have a tutor And we can't quite afford that today because that's sort of, you know, 100 bucks an hour stuff.

Right. But if it's an AI, it's possible. So I think what we're going to see is, again, over the next two to four years, we'll have generalized tutors that teach you a lot of things, teach you medieval history if you want. And we'll quiz you and bring up different pieces of history and back and forth and make it playful and fun and, you know, age-appropriate.

And we'll be able to do the same for a seven-year-old, a 14-year-old. So what I want to do is help bring about AI so that it's nourishing of young brains, not destructive. And if we're too simplistic about the software, well, it's like evaluating drugs 200 years ago. Yeah, that's true. And technology has never been damaging. No, I'm teasing you.

Even though you left Netflix, you're still a CEO. Right? Yeah, Powder Mountain. You're the chief ski bum at a semi-private luxury ski resort in Utah called Powder Mountain. Yeah, you know, there's private planes, there's private golf clubs, and now there's private ski resorts. So 500 families, a huge mountain. You get it to yourself, so it's always uncrowded.

There's fresh snow all the time. That must be nice, yeah. Exactly. So it's like running a private airline. It's a very boutique thing. So why did you pick this? Because I fucking love it. I mean, you know, it's... It's not... It's not service to the world. It's just so joyful. No, no, it's not service to the world. I'm like the little mayor of the town.

I walk around. I'm the owner. You know, it's a fantasy. And, oh, my God. Is this like a very dull Yellowstone, right? No, it's very exciting. It's got all this art. No, you don't want to be like that. It's a very exciting Yellowstone. Yellowstone was the first. No, I mean the TV show. You don't want to do that. There's a lot of murder. There's the Yellowstone private ski club.

There's a lot of murder happening there. I hope that's not the case in your case. So you just want to... do that so it's just an incredible joy it's very physical and sort of designing this building what the menu is uh you know all these things so you know like other ex-ceos get a sports team or a 500 foot boat i have a ski mountain okay so think of it as it's an indulgence yeah okay the first order but it is super fun and that's also got a public ski side which will make them better and better Great.

The very last question, though, you've also been very politically active, especially on the Democratic side. You're about the only one. It's you and Mark Cuban sort of wandering around. Did you see Bloomberg just put $80 million into that? Yeah, and Mike Bloomberg just put $80 million. Are you going to do that, too? I have not done that. Okay.

Will you? There's no plan to do that. Okay. Either what happened to all of them and what didn't happen to you? Like, why...

Basically, why aren't you filleting Trump? Well, you're asking a

serious question, which is, I think Biden's legacy in a couple of areas, crypto in particular, was very obstructive of any progress, very labor union, very traditional.

And a lot of people developed fears that the crypto approach would become the AI approach. And so that triggered,

you know, like think about not inviting Elon to the electric vehicle summit. Oh, I heard about that. Yeah. So, you know, those kinds of things, you asked why did that whole community turn right? Because they feel like they got pushed out of the Democratic coalition that, you know, was sort of Obama-like before. Right. You know, before that Clinton.

Yeah. Yeah, but they're not toddlers. They can deal with it in a different way. Well, they want an America where there's a lot of things done and a lot of invention and a lot of technological progress. So they're North Star's technological progress for human prosperity. Why not you? Why not me? Why aren't you at lunch at the White House? Well, I was not that big in crypto.

I'm kind of anti-crypto, and so it didn't offend me. But you've been a staunch, pretty democratic supporter. Yeah, and I remain

working within, and a lot of the work I do is on charter schools, a form of school choice, and that's tough in the Democratic coalition. You know, it's a lot of arguments going on there. I can't really explain why I didn't change because I see hope in the Democrats, but there's good things the Republicans do too, and you want there to be this competition.

I mean, you know, that's very healthy for our society. And, you know, Trump's done a lot of terrible things. He tweeted when I got off the board, like, you know, read, what a criminal, blah, blah, blah. So 25 years of all this Netflix, and that's what I got. Yeah, wow. So it's like, okay. And I've never met him, so I don't know where that was.

Don't go changing, as I say. Anyway, I think you didn't do it because you're an adult. That's why. Again, if you infantilize all Republicans, you're not really moving the country forward. Yeah, no, I'm not infantile. Well, if you say I'm an adult because I stay Democratic, I think you're having fun with it. Not an adult because you stay Democratic.

You don't take it personally, and you push for the things you want. That's different. Some of the people take things personally, and that's not great, I agree, but I would say the regulatory state and the assumptions about that got to a stage where it was inhibiting, think of energy development, think of all that, think of the abundance argument.

Now, on the left, which is, you know, the abundance argument is we all became Ralph Naders, and a good life was how many projects did you block? Mm-hmm. Okay, that was a critique from a Democrat about the left. So I think that has a lot of validity, which got triggered from that rightward move that you referred to. So hopefully we win him back in this next cycle.

And if a Democrat wins in Texas, that's gonna be an amazing sign.

We're back in the studio. Now, every episode we get a question from an outside expert. Yours comes from author, venture capitalist, and former Sequoia Capital Managing Partner, Sir Michael Moritz. Let's listen to it. Hello, Reid. You're on the board of Anthropic amongst all your many other activities, and therefore you've got a front row seat on the world of AI.

Where do you stand on regulation? And if you're for regulations, how would you go about fashioning them? And what do you think they should cover? A very broad topic there. Yeah, I mean, I think it's inevitable that there'll be some regulations. The art is finding out, you know, what's the right level that keeps everybody safe and allows us to improve the services tremendously.

so that AI has a chance to do all the wonderful things. You know, Dario talks about it as the age of miracles that's coming. And they're very passionate about having AI invent amazing things for all of us humans that feels miraculous. We want to make that come about. How do you make it when the public feelings about it, and I know consumers like it, there's an uptake of it, but the anger is very high among people.

And, of course, it's around data centers and it's a proxy for job worries, everything else. A lot of the ways that the creators have put it forward is, yeah, we're coming for your jobs. The way they talk about it has been terrifying to a lot of average people. How do you shift that idea that... It doesn't feel either, you know, billionaire-funded, we'll do what we want, the Gilded Age, the railroad's coming through, it's going to be good for you.

You'll see, even if we go over your farm, or your kids are using AI and they get messed up mentally. You know, there's all these lawsuits. How do you change that narrative? I would say, you know, we don't know essentially at this point how to change the big narrative other than going out and showing the benefits. So we got to actually cure some diseases.

That'll help. We got to have people be able to use AI in their lives to great gain more and more. And so that becomes the dominant theme is the things they use. And, you know, AI is working in the sense of we all are using it a lot more and more. So I think it's going to work out very well and very positive. Data centers, yeah, you wouldn't want them in a suburban neighborhood.

And the value of a data center has gone up so much so quickly that developers have put them in many not-so-great places. Or you have Elon having the— you know, running the gas-powered ones in Memphis or Kevin O'Leary in Utah. So basically the rules around where you build data centers, the zoning was not tight enough. Right. So they popped up in a lot of places they shouldn't be.

But if it's in a super rural area, then, you know, it's fine. I would argue, even then, I've interviewed many mayors, and they have tried to put in what you would call good data centers, right? And we already have data centers everywhere in this country. People don't realize that. But he tried to put in one. Everything was right. Everyone was informed.

No secret deals. Everything you'd want. A closed-loop water system. They rejected it. And where was it? Michigan. Michigan? Wouldn't do it. The anger was so high. And it has to do with billionaires. It has to do with anger, feeling like corruption, feeling like the Gilded Age. I think that was part of it. Like, no, we don't trust these people.

And this is a vote against the establishment. I guess. It was everybody, though. It was bipartisan, too. Yeah, I understand. But it's like, stop. We don't want this to go ahead. Right, yeah. Well, that just shows you the serious issues that AI has reputationally that we have to continue. But you asked the question, I don't have a solution for how to solve that.

So for now, we're continuing to work on improving the AI, make it more relevant to people's lives and more useful. Are you worried there would be, because the opposite is a disaster, a misuse of it that will cause everybody to want to really regulate it in a way that might be problematic for its development? Yeah. Well, some regulation is probably appropriate.

All right. Well, answer his question. What would you say? What would be a good piece of regulation? There's the frontier act. Like certifying around safety. You know, is it going to break out and do things we don't understand? What are the barriers to using it? You know, say in North Korea to design a really bad virus, something like that.

So biosafety is probably the biggest one. So what's preventing that serious discussions among all citizens? And Trump is self-policing. That's his answer. Yeah. And today, both open AI and anthropic have really good classifiers. That's a front end on the AI. So if you try to get it to design a bad virus, it will stop. Yeah, but that's self-policing.

Do you think that's an adequate way to regulate this? Yeah. You know, it seems to be for now. It doesn't apply to like some of the other models. Yeah. But they're not yet that strong, but they're going to become stronger. Should the government step in and actually take the responsibility like it did? You mentioned before nuclear energy. Yeah, well, I think biosafety is the clearest case where I think the government should require that all AI are protected against being able to be used to design very bad viruses.

What else? Give me something else. Let's start there. Start there. Just one. Because, you know, nuclear energy is very well regulated. So are pharmaceuticals. So are airplanes. Why does this get a free pass? Well, when you say well regulated, I'm not sure that it's highly regulated. Highly regulated. Planes don't often fall out of the sky.

We haven't died of a nuclear bomb in forever. Yeah. On the other hand, the nuclear industry basically died. So, you know, the post Three Mile Island. So I would say those it's more you don't want to use the nuclear industry as an example of good regulation that was fast over regulated and led to a lot of problems. Should there be international treaties around A.I.?? Potentially.

You know, right now it's mostly a U.S. company thing and some Chinese companies. Right. But should there be a multilateral effort by everybody? That probably is pretty complicated. And the question, you know, again, once there are many nuclear powers, you kind of have to do that for nuclear. But right now it's us and China. So that's not the critical issue.

Critical issues, biosafety and preventing bad

intent people from using AI to design very bad bioweapons. Right. Who do you think should be at that table? To me, it looks like it's only the CEOs with financial interests at that table with Trump. It's not citizens. It's not scientists. It's not other experts. It's not critics, which is the way most people feel democracy should work. It's only people who either handed money for the ballroom or he considers powerful.

Why is it turned out that way? Well, I mean, I think that's a reasonable critique of Trump's approach, but there's lots of things you could critique about Trump's approach. Right, right. That's one of them. Right. I think the key thing is Trump's going to be president for the next two years. So let's try to figure out where we can work with him to have—he cares about biosafety, too.

He doesn't want a bio incident on his watch. So we got to work together to, again, minimize the chance of a bioweapon. A bioweapon, yeah. I'm not so sure he thinks about it that much, but that's just me. That's just me. I'm sure he wouldn't love it, but I don't think it's top of mind. The ballroom is top of mind, though. Now, a couple more things.

Unlike a lot of other tech CEOs, you continue to give money mainly to Democratic candidates and causes I mentioned before.

Given Trump's sagging approval ratings right now and the potential for midterms to break hard for the Democrats, we'll see. Do you think there should be a shift in Silicon Valley coming? I wouldn't—people are always like, Silicon Valley used to be very liberal. I'm like, it never was in my experience. It wasn't any—there wasn't anything? Or you'd have a John Chambers or Meg Whitman on the outlier of Republicans.

You'd have very liberal people, maybe a few, and it was largely the workers. But I never saw it as anything, really. So what is going to happen if it breaks for the Democrats with tech? Because they've developed a lot of enemies. Super hard to tell. There's so many scenarios. Does the Dems win both the House and the Senate or just the House? What does Trump do in reaction to that? So it's hard to say what's going to happen in the next two years.

What would you want the Democrats, because they've already talked about subpoenas, they've talked about data centers has been a big flashpoint for voters and it's become an issue. I think AI will become one of the big issues of the next presidential election. What would you like to see from Democrats without leaning too hard on the tech is villains narrative? My guess is after the midterms, people are going to be thinking about the presidential election.

Right. And trying to govern in a way such that the voters want to say, let's have a Democratic president. And so on the Republican side, Trump's power will be less and the new candidates running for Republican nomination will be more. So then it will be another of those great contests for ideas, you know, how much regulation, how do the benefits of AI spread to as many people as possible, those questions.

What would be the one thing tech could do to, you know, because the image right now, including movies that are coming out, is not good, is not a particularly good image. Well, think of pharma. Pharma is hated by the general public and to my eyes is continuing to do amazing and positive work. But people hate the high drug prices. And so pharma is deeply hated.

So sometimes like my pharma friends, you know, they're like scientists, doctors, and they just have to get used to it and continue to make progress and accept that. And they've never really been able to change. I mean, you know, they did the COVID vaccine in a year, remarkable. Did people fall in love with those companies? They did not. They did not.

But what could happen when, because there was this sort of all tech people are heroes, and now it's villainous. It's really quite villainous if you look it on. I don't think either are true. I think it's gone to the natural state. I mean, think of banking leaders are thought of as villainous. Pharma leaders are thought of as villainous. Airline leaders thought of as villainous.

So you kind of have to think, okay, that's the natural state of how much of the public thinks about business. Although initially, tech leaders are not seen that way, right? Yeah, I think in a new industry, you know, where it doesn't have that big an impact and it's all fun. Right. It's like, oh, Christopher Columbus, he just, oh, wait a minute.

Yeah, I mean, movie industry is generally well thought of.

But is there something tech could do to, you know, because there's also an anti-billionaire. I don't think so. You're fighting the billionaire tax here in California. Yeah, I mean, I think tech has become another industry. like banking or pharma, that's very important and, you know, very competitive and very dynamic, but not well liked by the public.

So they just got to get used to not being liked. That's right. What if they just did nice things? Did that work in pharma? I worked eventually for Carnegie. We all think of him well now, even though he was villainous then. Yeah, he was a railroad guy. It's like Leland Stanford. I mean, I think 100 years. That asshole. Oh, we like the university.

So it's 100 years. I mean, should they be more philanthropy? The biggest philanthropist is Mackenzie Scott right now.

She does amazing work. But again, you grew up in a time when tech was popular, and so you're aching for that romantic day. And if you look at other industries, that's not the norm. You know what I would like, honestly? I'd like them to shut up. Like, they talk too much. They tweet too much. They tell you what they think of everything too much.

I want them just to go off and make great things and not be involved in every aspect of our lives. So a variant of shut up and sing. Shut up and play. Shut up and play would be like shut up and make. That would be really nice. But they seem to, they're ubiquitous in a way that I think people have had enough. And, you know, you've been against this billionaire tax, but there really is an anger issue.

right now among income inequality. What needs to be done to solve that problem? Because even if you're not for this particular bill, and I would agree with you this one is problematic, there is a push for more taxes for the wealthy or corporations, which have gone, they've paid less and less year after year. How do you solve that problem? Because that's, again, an enduring problem of our country.

Yeah, I've been a big fan of higher taxes for rich people, especially closing various loopholes like long-term capital gains being cheap. estate taxes, all of those things. This particular ballot initiative in California Prop 40 is super poorly written, and it's a one-time, supposedly, 5% tax. And if it passes, then what's the next one going to be, 50%? You know, it's just sort of crazy smash and grab.

You know, if they had done, you know, a tenth of a percent every year, you know, and it was like small and ongoing, then I think they probably would have won. Mm-hmm. So, but that doesn't appear to be the goals. Mm-hmm. And do you ever see yourself running for office or doing anything like that? No. The people who are really good at it are synthesizers, and they listen a lot, and I'm more of like a public intellectual type, you know, like a battler personality, which is not what you want in politics.

Right. Is there something critical that you want to work on? Education has been one of them. Yeah, I've been working on education and combination of charter schools and AI for developing our human brains. So that's the main focus for me is how will AI be used in education? And if you were starting Netflix now, today or a version of Netflix, what would it be? How would you build it? Well, it'd have to be around AI and it would have to be something different than Netflix because competing with them is hard.

I'm not sure what the particular area would be, but there's so much opportunity when you look at all the young startups now taking advantage of the AI dislocation that are going to be able to build amazing products, both physical and virtual. Is there one that stands out for you that you've seen lately? I mean, I'm following a lot in the education space narrowly.

So there's a great one called Ello. It's hello without the H. That's fantastic for reading and really improves your confidence that listens to them and is a very patient coach. And now it's doing math also. And it's AI. Yeah, you don't know that in it, but it is AI. Yeah, I don't know if I'd let my kid use it. I'll be honest with you. Well, that's probably why it's not marked as an AI tutor.

Yeah, you shouldn't. Don't say it. And, you know, but it's very stimulating for the kids. And then they're not doing YouTube kids. Yeah, yeah, okay. And then if you were, one advice to someone who's doing a startup today and one advice to a CEO who needs to go, you have gone with great elegance, I would say. Many CEOs do not. They get dragged screaming out.

What would be each advice on each end of that career? You know, for the startup, I'll be selfish and say I wrote a book called No Rules Rules, which is all the things I wish I understood when I did a startup. Lessons of growing an organization. And then for people thinking of retiring, I would say, you know, there's a lot of life left in doing things.

And it's great to retire and at least from one career and then engage in a bunch of other work. All right. Reid, thank you so much. What fun, Cara. Thank you.

Today's show was produced by Vicky Vergolino, Michelle Aloy, Catherine Milsop, Madeline LaPlante-Duby, and Megan Burney. Nishat Kerwa is Vox Media's executive producer of podcasts. Special thanks to Eamon Whalen, Jim Mackla, and Manolo Moreno. Our engineers are Fernando Arruda and Rick Kwan, and our theme music is by Trackademics. Thanks for listening to On with Kara Swisher from Podium Media, New York Magazine, the Vox Media Podcast Network, and us.

We'll be back on Thursday with more.