The Dan Primack Interview
Dan Primack and I did a fireside chat at the Upfront Summit this past week. It generated a few news stories that went a bit viral. It is easy to take a few comments out of the context of an overall discussion and turn them into more than they were. I think that is what happened with this interview. But it’s online now and so people can come to their own conclusions about that. Here it is in its entirety. It is about 25mins.
“It is easy to take a few comments out of the context of an overall discussion and turn them into more than they were.” – journalism.
it’s a symbiotic relationship.the smart interviewee knows this and feeds the interviewer with what s/he needs. Fred’s not stupid, and he gets to frame a post around it too. win-win.
Agreed. The Uber part was a really small part of that interview. There was a ton of meat elsewhere. What USV’s next theme was, what they were thinking about succession wise..
If economics is called ‘ the dismal “science” ‘, what should journalism be called? abysmal?
In the movie Lawrence of Arabia, journalist talking to King Faisal: “You want your story told, and I very much want a story to tell.”.In the old movie The Thing, someone says about a potential story, “I bet it would be good” and the journalist says, “If it’s not good, I’ll make it good!”.Journalism: Smelly bait for the ad hook.Main way journalism hooks a reader: Grabs them by the heart, the gut, or below the belt, always below the shoulders, never between the ears.Main technique of journalism: Borrow from what the ancient Greeks discovered about story telling, a sure-fire way to get and keep the attention of an audience, what we now call formula fiction, with a protagonist the audience will identify with, in trouble due to an adversary; the protagonist works their way out of the trouble and achieves success, e.g., at the end gets the girl.Another technique: Raise anxiety in the reader by claiming sin, scandal, etc.Another technique: For a gang; pick a story, maybe not likely true but shocking if true, write it, and hope that other journalists will also. Then form essentially a gang of journalists who write essentially just slightly different versions of the same story. Then the next day, the journalists write a small addition to the first story, and now, with so many journalists writing the same basic story, all of the stories get credibility and interest. Then each day, have an easy story to write. Easy stories, eyeballs, ad revenue. Keep this up until the public has no more interest in the story. E.g., claim that CO2 from sinful, greedy, evil humans is warming and, thus, ruining the planet. It’s not; CO2 has nothing to do with the climate, but with this gang technique can keep such a story going for years.Special case: For a political candidate, build them up until can’t raise them any higher and then tear them down; get easy stories, eyeballs, and ad revenue going both up and down.Some old movies show that most of the public has long had near total contempt for anything from journalists.
For what it’s worth, it was a spectacular fireside chat. Fred’s insight is not only spot on, but he has unparalleled insight and candour. The part about going public and the reference to uBer has been taken out of context. Fred was trying to make the point, and I agree completely, that when you have a great company and a great CEO like uBer, go public. The reasons to stay private are hollow and short-sighted and do not take into consideration the interests of all stakeholders.
Thanks John. Great interviews come from great interviewers. So Dan should get the credit
Agreed, but do you think that UBER could have achieved what they did so far by going public earlier? Maybe Travis is not done fighting the battles he still needs to fight against the established local monopolies. And maybe doing so while being private is easier than while being public? Just asking the question.
Its a good debate William. I do believe going public too early could be damaging to a company, especially when the business has not achieved “stasis” or some level of predictability of revenues and a lack of business infrastructure. Canada is a good example of taking companies too early in the late 90’s and then ending up with orphaned public companies. We are making sure we do not repeat this mistake and going public when the companies can survive (i.e. Shopify). But, when you get unicorns like uBer, with a fantastic team, infrastructure, and revenue model (not to mention stratospheric private valuations), i think the issues not to go public are hollow.
The two complaints I always seem to hear about going public are that the regulatory issues are a pain in the ass and that it can be difficult to train wall street investors to not flip out if you suddenly need to pivot or put more money into capex (see yesterdays video on WMT v. AMZN). I’m told by experts in the utility field that one of the reasons Comcast hasn’t started installing fiber optic Internet everywhere is fiber infrastructure has a 10 year payback period and wall street expects Comcast to have a return on its capex in 5 years.
Agreed, that was one of the densest chats I can think of – no soft questions or answers, everything at 100mph, has more content than most hour long interviews!
I like passion.
Well you got that in spades!
The thing that “undercuts the Googles, Amazons etc & other networks” is unlikely to be Blockchain by itself. The reason is because core to all of them are probability trees (Merkle in the case of Blockchain) so, structurally, Blockchain is an EDGE improvement rather than anything truly transformative, imo.Yes, the argument could be made it’s a different business model because instead of its databases being centrally controlled by SV companies, mining & verification process is globally distributed (and mostly controlled by Chinese miners) and there is more open data.The follow-on argument there is, “Won’t it be amazing when IoT is also blockchained.”However … there is still something else that would disrupt network theory itself at probability tree-level.Now THAT would be innovation in technology and in economics.
I appreciated that he got to questions that aren’t the same 20 questions you seem to always get. I heard some new things today.Fun to see you pound on the table a little bit, even if people did take it out of context and run with it. I’m curious if Uber going public would be advantageous to Lyft in any way?
Q- How do you become a VC? A- If you’re talented and you have a “have a feel” for it, you can.”Have a feel for it”… Goes to prove that investing is more art than science. And you only become good by doing a lot of it yourself.
Well there is also the pesky part about actually raising the capital. Though I did enjoy the Jim Cramer story.
“Principles for the Development of a Complete Mind: Study the science of art. Study the art of science. Develop your senses- especially learn how to see. Realize that everything connects to everything else.” — Da Vinci.And why was he a master craftsman and inventor? He put into practice his philosophy so they became symbiotic and coherent.Thinking+Doing in tandem.
The fact that success is nebulous in itself point to a heavy weight on both luck and art. Noting also that Fred said in the interview with regards to investing in a bucket of billion dollar companies something like “what’s the chance that one of them won’t be successful and have a huge exit” (not exact words but the concept as I remember). That points more to science of course than art. But only in part. There is art.That in a sense is the way the business that I work in (that you know of) works. I have a great deal of things that I invested in that I simply have to wait until the right buyer comes along.  Then I use both art, knowledge, research and gut instinct to maximize my returns on that asset. As a result of my experience my return will be much better than your return given my knowledge and more importantly my negotiation and strategy skills. And that assumes you would even have what I have (which of course you don’t). So an important factor is that I am even in the game to have the opportunity to use those skills. Because of the effort that I put in (which wasn’t trivial or easy..)In Fred’s case he is in the game and further knows what others don’t as well which is how to structure his spray and pray  in order for the science to actually work (something that took over 20 years to hone). That I spent a great deal of time acquiring early on based on what I had learned before that that gave me the skills to recognize the opportunity and exploit it. All of that was a big factor in getting into the right position at the right time. Not said in a negative way either. Just referring to investment over a large amount of assets could be same with land investing or real estate investing as well.
are Uber drivers employees or self employed, or does the jurisdiction determine their status?
Generally self-employed 1099 workers.
The interview we were all waiting for. Somebody had to say it. Be too cool if Uber announced an IPO in the near future.I wasn’t enamoured with Dan’s interview style in this particular case. He was acting a little too much as though he was trying to unearth some dirty secrets for my taste, and there was no need for that approach with Fred. He wasn’t interviewing the Theranos CEO. It should have been a more casual conversation, I think. But then again I could be dead wrong and that’s how he drew out some emotional content out of Fred so well.
Congrats to both of you. He was well prepared. Good questions too.Something will have to negatively impact Uber to get them to back off their valuation.
Let’s separate the “UBER going public” debate into 2 buckets: 1/ Going public, 2/ Offering liquidity.I think offering liquidity to early investors might be more impactful than going public. Travis is doing a good job as a CEO. He doesn’t need the public markets to make him a better CEO (in pill parlance). But allowing liquidity to his early investors would be a good thing. What is vexing is that the later PE investors weren’t allowed to buy shares from the earlier VC/Angel investors.The impact of an UBER liquidity event will be an uber moment in the history of venture capital, because it will create so many millionaires and wealth distribution, much of which will get re-invested in tech startups, and that it will be an amazing thing.
the ‘Taken For a Ride Uber Fund No.1’
You’re absolutely right 10,000 times.
YES! AirBnB is a USV-type company.Uber is not, though. The philosophy & values of Uber are different. Can they go public when they don’t have a CFO to prepare them for it?
You don’t think they had to be well organized for their latest PE rounds?
There’s no question they’re well-organized and ruthless.Just that the requirements for them to be a public company would include having a CFO.
Great interview. Not seeing any controversy here regarding Uber going public. With their valuation it’s the only option for an exit. Get the financials straight, file for the IPO, pick the right time and do it.
TELEPORTATION! VR, 3D printing, holography and even general transmission of uploading data bits of our brains up into the Internet (text, photos, videos) could be said to be forms of teleportation.The physics of quantum particle teleportation has been done over 143km of the River Danube in 2012:* http://phys.org/news/2012-0…(This is the type of science that fascinates me when not dealing with normal day-to-day to-dos of building startup for general public to use.)The issues with teleportation are to do with decompositionality & reconstruction of physical matter and conscious information. We would literally need to have precisely mapped every human genome, all the fibrous tissues and be able to reproduce consciousness etc so that the person who’s sent in the teleportation machine (very ‘Star Trek’) would map exactly like-for-like between origin and destination points.Funnily enough, I believe by the time I retire we’ll have teleported an apple.
as a VC who rides the subway it seems surprising that you passed on Airbnb
I would have passed Airbnb as well (I am not an investor though to be clear.) Also, importantly, the idea as presented from my memory is not what it has become. Hard for someone of an older age group to also wrap our heads around this type of sharing.Let’s look at a few differences between young people (those who worked for Fred and liked the idea iirc) and old timers.Young people:——————Grow up where everything is plentiful and as a result you don’t feel as possessive of what you have. Plus many of those things aren’t even earned they are given to you. Presents all of the time and most importantly a safety net. As such the idea of having a stranger in your place who might damage your things is no big deal. Ditto for staying in a strangers home.Older people:—————–Grew up when you went to restaurants 1 or 3 times per year and only on special occasions. Mom cooked food for dinner every night. You got a few presents a year. If they broke you were out of luck. Anything else you wanted you had to earn the money to pay for. You broke it you bought it. Parents weren’t your friends (ok I am straying here a bit from my point). Bottom line: Don’t mess with my stuff. Oh yeah also the age of not trusting strangers as opposed to trusting strangers. Think being goofy shows you are immature and not ready for prime time.That said the fact is there are 1000 other investments that Fred passed on that nobody has ever heard from again. Judgement call nothing to beat yourself up over. The gut is important I am sure many of those 1000 investments the younger team members liked as well for one reason or another.
airbnb seems to fit the USV network effect thesis very nicely.i think Fred said that he passed because he couldn’t see himself using the service, which he later acknowledged was a mistake.making mistakes is how we learn. i’ve learned a lot.
Best post ever on missing opportunities from a great fund: https://www.bvp.com/portfol…
yeah, it’s a great post. the Google one always makes me chuckle.
That is really skillful PR on their part. See how nice and human and humble we are?Kind of like some girl turning down a guy on a date and saying “don’t feel bad I also passed on Justin Timberlake”. A great way in a sense to soften the blow when they say no. I’ve seen self deprecating examples of this over time in other areas. Like trying to convince someone you are stupid ‘I’m not the smartest guy I make mistakes’ and ‘Hey I get it wrong many times’ it tends to be a “sacrificial zinc” for the hate they would otherwise have against you. As I have said a hundred times before, the same logic that they used made them pass on 10000 fold more companies that never went anywhere. https://en.wikipedia.org/wi…
Young people aren’t possessive because they do not own their homes, they rent apartments. Plus it’s much easier sell to convince someone to spend the weekend in Cambridge or the Upper East Side than some random Connecticut suburb. Not to mention the fact that the general condition of the regular market rate apartment stock in the city (as opposed to Class A luxury apartments) makes it such that if some guests chip some flooring or drywall it isn’t going to make a material difference in the appearance or marketability of the unit.
Anyway to me it’s just creepy to have someone else use your “stuff”. I would feel the same way if I rented an apartment. It’s just the fear of the unknown I guess. Part rational part irrational. Plus, and I guess this is important, I don’t need the money at least that amount of money. So why take any “risk”. If I needed the money I would get over it obviously. Practical. And would take that “risk”.Let me also say that when you are young you have not experienced yet the long tail of unfortunate circumstances.  You know my attorney (who is not young) had a problem collecting from someone that I referred to him. And I even told him (prior to any work being done) that he should get a retainer upfront (which he normally does). Why did he get burned and not listen? He doesn’t handle enough cases and hadn’t been burned yet so he felt he could take the risk. To bad he didn’t listen to me. He ended up having to cut his bill to get paid and I had a good “I told you so” (and I told him like 3 or 4 times). I have done so many transactions over my life (in different businesses and even in different sizes) that I know what can and does happen.When I was in college my girlfriend’s mother told me not to put butter down the drain. That it would clog it. You know why of course? Because she did it for years and then had to call the plumber. Long tail of experience. Of course there is a great upside to knowing so much it kind of restrains you perhaps more than it helps you.
If that is his seat coming into LAX he is flying coach as well.
To look on the bright side, the GREAT thing about Uber, AirBnB and the likes delaying going pubic is that it creates an opportunity for hundreds or thousands of people to finally take advantage of ILLIQUID employees at these companies, by front0running them in the housing market before they get liquid 6 months after IPO lockup.The RE market will likely soften over the next two years. And if Uber or AirBnB go public end of 2017 as probably will happen, the winter of 2017/2018 could definitely be a perfect time.It’s all about taking care of unfair situations or kinks in the system. Founders can sell to hungry VCs, but employees can’t!http://www.financialsamurai…Sam
That was great. When you match Fred up with a great interviewer…you get awesomeness.
How to “undercut” the Internet:In many ways the Internet was not designed very well, specifically not well for what we are doing with it. Leading issues include DRM, agents, archiving, audit trails, authentication, capabilities, client side sandboxes, data rates, e.g., from DDoS, identity, means to enable filtering, monitoring, multi-point, permissions, privacy, reliability, security, sessions, streams, transactions on agents, but there are no doubt more.So, get out a clean sheet of paper and outline what would like instead. Plan to use the current Internet just to carry the data. For a business, get the new thing started with just applications software, say, point to point. Start small, say, with messaging or e-mail and grow from there.
Thanks Fred.I’ll take a moment of passion as a spark of excellence and authenticity any day.
The part I liked best were the first couple of minutes.Focus on Large Networks, then technology to enable those networks, then market specific networks, then things that blow up networks.You have waves, and then something comes about and undercuts those waves.That is the key to success over a long period of time. Look at what destroys your current model, embrace it and be there before anybody else.
It’s good investment advice because the risk is spread among many players. What is good for a VC or angel investor is not necessarily good for the entrepreneur.Because for an entrepreneur the probability is different since you are sinking many years into what only has (in theory) a slim degree of success. The VC is spread over many possibilities. Hence the saying (with regards to hedge funds) “nice work if you can get it”.As such it would seem that for any particular entrepreneur the fact that a VC doesn’t invest in your company is correlated with you actually ending up probability wise in a better place years down the road. If they invest in you then you are a moonshot otherwise why would they invest in you?  Maybe this isn’t the case for every investment but it seems like in theory it is the case for most investments.
Disagree. I am on the third company of my career and as you know have invested in the fourth.You did printing and now what you are doing, so it applies to you as well. (I think you were pretty involved in your Dad’s business, and then real estate so I think you are on your fourth, no different than Fred)
Can you clarify your point because I am not clear why you are disagreeing with me?you were pretty involved in your Dad’s businessI was never involved in my Dad’s business other than working there in high school and a very small bit in college. (I personally wouldn’t call that “pretty involved”.)
I said I “think” so I was wrong. Just pointing out that about every 10 years you need to reinvent yourself/theme.
Yeah agree between 7 and 10 years things get boring. Everybody thought I was nuts when I sold the first business but I was just bored. It made more money in the last year than it ever did before that.I’ve heard that many marriages get stale at around 7 years (7 year itch) I am sure part of that has to do with when children are born (and how many and how restricting that can be to some people).
I know this to be true. If not sooner.
Yes, sometime between five and ten years. Unless something obviously is not working you need to give it five, that’s when I’ve found things get their legs. After ten, well you are working on borrowed time.
Doing it now.Finding it exciting actually.
Does a founder have a fiduciary responsibility to his venture round investors to create value or create an exit?
Not at all no way.
Of course if they don’t it might impact future investments that’s obvious.
HP and Gretzky
Always make me think of surfing – surf the wave for a while and paddle back out to prepare for the next set.
That was great! The raw emotion that you showed surrounding the Uber issue (and the general idea of manning up and going public) was worth watching the entire video. I am not even going to give others the courtesy of highlighting the clips I am going to require that everyone watch the entire video like I did. Selfish on my part.It’s seems to me though that you are projecting your own frustration with perhaps some of your own companies that are giving you a hard time. That is the way that I read this.As far as Kalanick not wanting to go public (the cause of the frustration)? To that I say “live by the sword die by the sword”. If you are going to try to back strong willed winners (take Jobs as another example) that is going to come with it’s own set of issues that you will have a hard time managing. You want a corporate yes man of course not. There is a yiddish expression “kuni lemel” which means many things but essentially in this context I would say it means they are like “milk toast” and ineffectual. I don’t think those entrepreneurs make good investments. Certainly not the 1 in 20 win that you need.Great video. (Bad production values unfortunately which is obvious…)
Hey LE can I get in touch with you about a domain I’m interested in acquiring?
I have seen a few interviews with Fred and I think this display of passion is a first :). I want to see Albert next, just because he looks like a fortress
Brilliant discussion. Tip o’ the hat to both of you.
So the teleportation discussion caused a few ripples – new technology always does. But otherwise I think it’s a fabulous conversation – informative, passionate and witty. Excellent viewing.
Yep. Didn’t Uber lose $600m last quarter though? Probably could tinker with it a little bit more before i’d say these investors really deserve to get paid…Or I guess you could just build a book and IPO it by telling everyone that you can turn off all of that marketing off at any stage, and that drivers don’t really care that they now only get 70%, and that diminishing service quality isn’t a risk, and government regulation isn’t a risk, and that robot cars are a dead certainty…I guess that’s what people do nowadays…
Fred I thought the interview was terrific and very entertaining! The matchup of you and Dan was magic.
glad i watched this as i fall in the bucket that dan mentioned in the opening of mbas looking to go into vc. insightful watch!
Foursquare and Uber sections were the most interesting for me. Your passion comes through. Do you foresee some sort of investment/governance code defining when a company has to go public?
Q: Does founder of one of the best tech companies have a moral responsibility to IPO to help the ecosystem and for greater good specially in “winter” of 2016 (besides just providing liquidity to early investors)?
Great interview Fred very passionate and I agree with most of what you said.
.An excellent interview.Regardless of the size of anything — it’s still jockey, horse, course.Uber’s problem is with their jockey. Not taking a side but if you take someone’s money, you have to respect their objectives unless you tell them upfront as a condition of the investment what your view is going to be.JLMwww.themusingsofthebigredca…
That was fun. I wish I was one of the dudes you were trying so passionately to return money to! The VC fund business is a funding ladder unto itself. If someone had invested early in Flatiron they would have maybe been “in the club” for later rounds. The bigger/badder the VC firm the less likely that small guys will be part of the home runs. (I guess that is why crowd funding is so exciting…)
Passion and intensity… inspiring
Despite all the emotions about Uber, etc, I’m more worried that these huge, capital intensive enterprises are disasters waiting to happen, and what long term cyclical damage they’ll cause. Its not so much the whole “unicorn” silliness, but more about whether this cycle of overinvesting in these enormous endeavors, and the absolute impossibility of them all having a long term positive financial outcome for everyone involved, will cause an entire generation of venture LPs to remove venture from their portfolio mix.Getting public is but one issue, being public is a more problematic issue, especially for later stage investors, who will undoubtedly be seriously burned by these wing and a prayer companies going public with huge losses every quarter, causing the value of their equities to get destroyed.Mr Wilson is prudent to call for liquidity earlier in the cycle. Waiting for some magical IPO moment is mostly a delusional fantasy,that has yielded incredible carnage in the past year. Even companies of the 2011-2012 vintage that did make it public, have turned into horrible albatrosses, with little support as ongoing businesses from the larger equities market makers who change positions overnight and dump massive inventory when they realize that these companies are mostly one trick ponies with no where to go but down.IPOs are a good way to take some money off the table and distribute back to the LPs for sure. But with the likely gigantic floats at bloated public market valuations for some of these companies which need to satisfy their insatiable hunger for capital, the sheer amount of stock that will be issued, and the liquidity of the public markets, means that while early stage investors can actually benefit, everyone else is souring on this whole high wire act.
VC is an asset class often managed by folks who understand at some level that L.P.’s will wake up to the crap shoot that it is.So when a home run shows up, and when the VC’s realize that disintermediation at that scale, often does not last forever, then the scream for liquidation becomes very loud.This is an issue of shareholder rights. It will go when it goes, if at the time, it can go. If you are not comfortable with these rules, deploy your own money, into positions that are only a majority.You know….like Axe does it.
I agree with a lot of what Fred said in this interview. Being public does lead to good management. It’s also the American way. Going public earlier allows normal (not a special IRS class of accredited investors) get the chance to invest in great companies. Wouldn’t it be nice if a working class person could invest money in a basket of 120 unicorns and replicate the Ron Conway strategy?I disagree about becoming a VC or stock trader.If you are in college and you want to trade stocks, it’s virtually impossible unless you are a quant. Hedge funds don’t hire english majors or typical business majors unless they can raise capital. If you can find someone to back you, you might be able to trade stocks but finance is a tech industry now. Go work for a big firm it’s more likely you will be in wealth management than trading. Most “traders” at those firms weren’t really traders anyway, they were salespeople. You can try it, but the odds for success are even longer today than they were 10,30 yrs ago-and then 9/10 failed.I also disagree with Fred on becoming a VC. Typically, VCs today don’t hire people like Brad or Fred. LPs of VC funds typically want to see operating experience. a16z and other funds only hire operators. Hence, if you want to be a VC go start a business and get funded by a VC. Or, get a pile of money and start writing checks.Ironically, some of the best VCs have not operated a company.
Individuals from impoverished backgrounds and in their early 20’s are 100x more likely to build a working time-machine than become VC’s. No one is willing to give you a shot. Period.
I don’t disagree. They don’t give a lot of people shots to be VCs.
This is the video YouTube queued up (algorithmically?) for me to watch after your Primack Q&A (which was fantastic):https://youtu.be/pfLbS2fcvkcSeriously!
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Yup. Tech people also bash on sales, marketing and business types. They think, as a generalization, it’s all about building a better mouse trap and nothing else matters. Reason they think Woz is such a gentle bear hero and Jobs was rude and narcissistic hero who took advantage of him and in some stories cheated him. (They should only be that ‘lucky’).  Same goes for musicians and managers ie stories about how the Beatles were cheated or this or that group (all of them famous enough that we know them) were cheated. As I said to Fred in another comment “this is the life you have chosen be thankful for what you did get that the other guy didn’t”.