0:00:06 What’s up, y’all? It’s Kenny Beach, and we are currently watching the best playoff basketball since I can’t even remember when.
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0:00:32 Welcome to Office Hours with Prof. G.
0:00:40 Today we’re continuing our special three-part series, Prof. G. on Marketing, where we answer questions from business leaders about the biggest marketing challenges and opportunities companies face today.
0:00:44 What a thrill. Let’s bust right into it.
0:00:48 Okay, what do we have here? Our first question comes from Dom on Instagram.
0:00:49 He asks,
0:00:54 More and more companies are taking political stances as part of their branding.
0:01:04 Growing up, I was told that businesses should never talk about religion or politics in order to stay out of trouble and not segment customers.
0:01:06 Does this hurt companies in the long run?
0:01:10 Do you think it is smart that businesses are moving in this direction?
0:01:13 This is going to require some nuance.
0:01:16 So I’ve served on a bunch of public company boards, seven.
0:01:17 I’m kind of a big deal.
0:01:18 Kind of a big deal.
0:01:21 And probably 24 private company boards.
0:01:26 And my general view on political statements is that it’s mostly virtue signaling from the CEO.
0:01:33 It likes to get in front, especially about three or four years ago, maybe five years ago, get in front of a younger workforce and talk about all this woke nonsense.
0:01:36 Because why it was nonsense is because they didn’t believe it themselves.
0:01:39 They were just trying to score, like, acquire virtue.
0:01:45 Like, I don’t have enough Gulf Streams or shares or options here, so I want to capture social status.
0:01:47 I think that’s actually a pretty decent criticism of the Democratic Party.
0:01:58 Instead of focusing on the material and emotional well-being of consumers, they want to pretend that they’re grabbing virtue rather than actually getting any fucking thing done at the ground level in terms of what actually impacts people.
0:02:04 So I generally think it’s a good idea to stay out of politics.
0:02:07 I try to separate the person from the politics.
0:02:15 I live just south of Palm Beach, and a lot of my friends are Republicans, and I just think they’re batshit crazy.
0:02:19 I just don’t understand how they can tolerate some of this nonsense.
0:02:23 But at the same time, I also recognize they’re thoughtful, nice people, and I enjoy their friendship.
0:02:31 So I try to ignore it when they put out a reel saying, oh, finally, the truth that these food products cause autism.
0:02:33 And I want to write, dude, didn’t we go to college together?
0:02:35 Are you really that fucking stupid?
0:02:37 Because I know that will damage the friendship.
0:02:39 So I try to separate that.
0:02:41 I also try to separate the company from politics.
0:02:42 Now, Prop2 doesn’t do that.
0:02:44 You know, we’re a media company.
0:02:45 We’re a small company.
0:02:52 We are highly political because a lot of what we do is putting out thought leadership, opinion, et cetera.
0:02:58 And still, we would probably be a bigger company if I just focused on business and tech rather than taking political stance.
0:03:00 But at this point in my life, I get to do whatever the fuck I want.
0:03:01 See above.
0:03:01 I’m going to talk about.
0:03:08 My favorite is when people say in my newsletter, they write, oh, get back to talking about business or things you know.
0:03:11 Basically, I got a lot of like stay in your lane.
0:03:12 Well, you know what my lane is?
0:03:14 Whatever the fuck I want to talk about.
0:03:15 And I’ve earned that.
0:03:16 And I’m finally there.
0:03:21 Anyways, anywho, for most big public companies, you do want to avoid politics.
0:03:25 Now, having said that, occasionally an opportunity comes along.
0:03:29 Race relations in the U.S. were capturing a lot of attention.
0:03:40 Colin Kaepernick was a great quarterback, two-thirds of Nike’s customer base under the age of 30, not kind of on board with how race relations were going in the United States.
0:03:46 Anyone who was upset about them embracing Colin Kaepernick, who burnt their Nikes, had to go out and buy their first pair of Nikes.
0:03:48 It was a very smart move.
0:03:58 They probably alienated somewhere between 5% and 10% of their TAM to embolden or entrench or inspire 90% of their addressable market.
0:03:59 That’s a really good tradeoff.
0:04:01 We are in that moment right now.
0:04:09 And essentially, I think that things have gotten so out of control where we’re rounding up people with the wrong tattoo, doing really stupid shit around tariffs.
0:04:14 It’s going to do nothing but elegantly reduce our prosperity, put thousands of small businesses out of business.
0:04:20 Doge, which was nothing but literally like, okay, how stupid can you be?
0:04:21 We’re going to cut $2 trillion.
0:04:23 No, I meant $150 million.
0:04:24 No, I meant $60 billion.
0:04:27 No, I meant less than the subsidies to Tesla.
0:04:39 I mean, that has been handled so poorly, so poorly that Americans are so fed up that the biggest commercial opportunity in a decade, and I said this last week and I’ll say it again.
0:04:57 I said it in the last office hours and I’ll say it again, is to come out not against Trump so much, but to come out in favor of American values of decency, of competition, of being thoughtful around our economic policy, of embracing our great immigrant population, PhD students, of rule of law, of due process.
0:05:00 All the things that we’ve come to expect are American.
0:05:05 That company, that company will register a torrent of new business.
0:05:10 I mean, for God’s sakes, this guy is flailing, literally flailing.
0:05:14 This is the biggest commercial opportunity in the last decade.
0:05:24 In sum, with rare exception though, let me finish where I started, you generally want to avoid politics because you are likely going to alienate 50% of the population.
0:05:29 Having said that, on a risk-adjusted basis, this is a calculated risk worth taking.
0:05:32 Our next question comes from Instagram.
0:05:34 Ambreen asks,
0:05:49 Each year we pick sort of a strategic imperative.
0:05:53 I think it’s important to have one thing that you’re like, this is the one box we have to check this year.
0:05:58 Because I think being an effective leader is not deciding what to do, it’s deciding what not to do.
0:06:00 And that is, you only have so much wood.
0:06:03 So I think it’s important every year to say, this is our strategic imperative.
0:06:04 We’ve got to check this box.
0:06:13 For 2025, the strategic imperative for Prop G Media is to get much better and dramatically increase our video views.
0:06:23 What I found just fascinating and kind of blew my mind was that the primary channel of distribution for podcasts right now is not Apple, it’s not Spotify, it’s YouTube.
0:06:33 20% of the listens of this program right now will be listened to on a television or watched on a television, which isn’t a good idea.
0:06:36 All of a sudden I get very self-conscious because listen to my voice.
0:06:38 My voice, ooh, hello, dreamy.
0:06:40 I’m handsome, handsome voice.
0:06:41 Brad Pitt of voices.
0:06:44 Face, for those of you watching on TV, not so much.
0:06:45 Not so much.
0:06:48 See above, lost virginity when he was 19.
0:06:55 Anyways, so my skills play well to audio, but here’s the bottom line.
0:06:57 Podcasts are moving towards video.
0:07:04 Podcasts are essentially becoming TV shows with strong audio components where you can just listen to the audio.
0:07:09 If you look at, I think the next Joe Rogan is a kid named Steve Bartlett.
0:07:16 When I moved to London two and a half years ago, the first thing I did was drive to the studio in Ipswich or Norwich or whatever the cool part of town is.
0:07:20 And he had this incredible studio with eight people, cameras everywhere.
0:07:26 And I’m like, this is like Charlie Rose, but much more deft production quality.
0:07:28 And he was basically doing a TV show.
0:07:33 And if you’ll notice, in the last two and a half years, Stephen has busted into the top 10.
0:07:36 He used to be in the top 10 in the UK, and now he’s in the top 10 globally.
0:07:38 I think he’s probably going to be the biggest podcaster in the world.
0:07:49 And if you look at the top 100 podcasts of the 1.6 million that are out there and the 600,000 that put out content every week, the top 100, there’s been huge churn.
0:07:53 50 new entrants into the top 100, 50 have dropped out.
0:07:56 And what is the arbiter of who has churned in and churned out?
0:07:58 It’s their video game.
0:08:07 So we have spent a lot of time trying to think about, we hired a kid named Billy Bennett who used to work for us, who’s now, was at CNN and is now working with us, just focusing on video.
0:08:13 We have a full-time tech guy, our tech guy, Drew, who’s sort of our head of engineering and has known us for about 15 years.
0:08:20 The woman who runs my business, Catherine Dillon, is a creative at heart and edits and thinks about video.
0:08:27 The hard part is that the thing that played to my strengths in terms of video from a personal standpoint is I’m on the road about 150 days a year.
0:08:31 So my studio was basically a dop kit that I could set up.
0:08:31 I didn’t even have a ring light.
0:08:36 I would just try and find a nice part of the hotel room I was staying in and do a reasonable job of video.
0:08:38 And that’s no longer going to cut it.
0:08:48 So we’ve spent a bunch of money on studios that we’re replicating in the different places I spent a lot of time in, specifically New York, Florida, and London.
0:08:50 But I’m not sure that’s enough.
0:08:58 So we’re trying to be really thoughtful about marketing, pushing people to our videos, using more sound effects, usually using more visual effects.
0:09:03 The fastest growing part of our franchise or our portfolio, if you will, is Prop G Markets.
0:09:08 And that’s because it is tailor-made for graphic overlays because we talk a lot about stocks in the market.
0:09:12 And Ed’s in the same place so they can create better production values.
0:09:22 In sum, the assumption we made was that the new arbiter of who moves up in the world of podcasting and who moves out is going to be how strong your video game is.
0:09:26 Now, your question is what would happen if that changed?
0:09:27 I don’t know.
0:09:32 I guess we just have to pivot and be agile and try and figure out what that next thing is.
0:09:35 I think the next thing, YouTube is the new channel.
0:09:44 I believe that in 2026, and I’m already starting to think about a strategy here, that the new arbiter of success in podcasting is not going to be Spotify.
0:09:46 It’s not going to be Apple.
0:09:47 It’ll still be YouTube.
0:09:55 But more than anything, or the new player, if you will, that creates the difference between numbering number 300 and number 30 is the following, Reddit.
0:10:01 I think Reddit is literally out of central casting in terms of its niche domains.
0:10:12 It’s the viscosity of how they become a platform for taking pieces of podcasts and threading them into different comments on Reddit.
0:10:17 I think Reddit is going to be the new platform that kind of picks winners and losers.
0:10:24 A possible second to that on 26 is going to be Netflix, who’s decided to get into the game.
0:10:41 And Netflix just has, with 350 million consumers, with custody of 350 million home screens, if they decide that they want to distribute Mel Robbins’ podcast or Raging Moderates, that podcast will immediately shoot into the top 20 of podcasts globally.
0:10:45 So they have so much custody of the consumer that they perhaps could be the new arbiter.
0:10:52 In sum, I’m trying to think about not only what’s in front of our face, but think around the corner and make bets accordingly.
0:10:53 But I think about this stuff a lot.
0:10:56 So in sum, you’ve got to make a bet.
0:11:10 You’ve got to have a strategic imperative and hold people accountable and invest additional resources in that imperative such that you can give people the resources to move against or act against what you think is important and where the puck is headed.
0:11:15 And also think about, you know, looking beyond the second corner.
0:11:18 So what’s the corner we’re moving towards or where’s the puck going?
0:11:19 Video, hands down.
0:11:21 Where do we think it might be headed?
0:11:23 Reddit and possibly Netflix.
0:11:24 Thanks for the question.
0:11:27 We’ll be right back after a quick break.
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0:12:55 I started my career in big agencies back in the early aughts when the internet was young.
0:13:01 However, even then we were talking about how the media was splintering and how it was getting harder to get noticed.
0:13:03 As you know, the trend has gone into overdrive.
0:13:14 Audience attention is splintered across endless platforms and micro-communities, and trust is shifting, from institutions to individuals, from brands to influencers.
0:13:16 I keep coming back to this question.
0:13:21 How does the humble media planner or marketer even navigate this reality?
0:13:26 The age of the all-powerful, monolithic brand feels like it’s fading fast.
0:13:33 And now, resonance doesn’t come from one big message, but from a thousand fragments finding the right ears.
0:13:35 Yeah, I agree.
0:13:48 So, it used to be, if you think about it, not that long ago, you could capture a third of America in about four nights, because two-thirds of America was watching one of three channels five hours a day.
0:13:52 Now, that media landscape has fragmented just wildly.
0:13:55 And not only that, the costs have gone way up.
0:14:01 So, we didn’t realize how inexpensive broadcast advertising was, how cheap it was.
0:14:15 You could capture, essentially, a 30-second spot on the Academy Awards 30 years ago was about a fifth of the price, and it reached three times as many people as it does today.
0:14:21 So, it was 15 times, you have 15 times the ROI, and yet people still do it.
0:14:22 We didn’t realize how cheap it was.
0:14:39 So, the fact that media was so inexpensive from, like, 1945 to 1995, maybe in 2000, created an ecosystem where the algorithm for creating shareholder value was to have a mediocre truck, salty snack, sugary drink, shoe, or car.
0:14:59 Build an OK slash shitty car, the K car, or out of Detroit, and wrap it in amazing brand codes of tough like a rock or apple pie, whatever it might be, or find soap, then craft it with OK materials or ingredients, and then talk about European elegance.
0:15:06 Create a shitty beer and convince people that if they drink this beer, they’re going to be hot and have a six-pack and be more attractive to potential mates.
0:15:17 And you could infuse these incredible brand codes really inexpensively using some creative agency of guys who wore black and gave you awards if you spent enough money on their ad campaign and can every year.
0:15:19 That ship has sailed.
0:15:22 That dog just doesn’t hunt anymore.
0:15:27 Because now we have these weapons of mass diligence that say, OK, and this is the example I always use.
0:15:30 I usually used to stay at the Four Seasons, the Ritz-Carlton, or the Mandarin Oriental.
0:15:32 One, because someone else was paying.
0:15:34 I was usually there speaking or with a client.
0:15:35 And two, they always deliver an eight.
0:15:41 But the reality is the Mandarin Oriental in Istanbul is just not where I want to stay.
0:15:47 The core associations of these hotel brands meant that they delivered, you know, always an eight.
0:15:54 But then my social graph, TripAdvisor, friends, Weapons of Mass Diligence, Google, OpenAI.
0:15:57 I go to OpenAI now and say, I’m going to South by Southwest in Austin.
0:16:01 I’m in the midst of a midlife crisis, and I want to hang out with younger, cooler people.
0:16:04 And it literally comes back with stay at the Austin proper.
0:16:05 Boom.
0:16:06 I don’t need the brand.
0:16:07 I’ve never heard of the brand.
0:16:11 I just know that I trust these weapons of mass diligence more than the brand.
0:16:13 So what do you have?
0:16:17 You have people trying to figure out how to gain these algorithms in search.
0:16:21 You have influencers, the rise of the influencer generation, the rise of Instagram.
0:16:24 Do you know how much influence Instagram now has?
0:16:30 Also, at the end of the day, and this sounds very passé, the era of Don Draper is just over.
0:16:34 The sun has passed midday on the bullshit of thinking you’re going to have a mediocre product
0:16:35 and a great brand.
0:16:37 Now the product is the brand.
0:16:39 And that sounds very passé, but it’s true.
0:16:43 The companies that have developed the most market capitalization over the last 20 years
0:16:45 have really been victories, not in brand, but in supply chain.
0:16:50 Amazon, Alibaba, Netflix’s supply chain.
0:16:54 They went direct to consumer with DVDs by mail, and then they went direct to consumer using
0:16:54 broadband.
0:16:55 How much money?
0:16:58 What do the most valuable companies in the world have in common?
0:17:00 They don’t spend a lot of money on advertising.
0:17:00 Why?
0:17:02 Because they’ve put all their money into the product.
0:17:05 And oftentimes, it’s not just about the product.
0:17:08 It’s how you deliver it and discover it, i.e. supply chain.
0:17:09 So what do you do if you’re a marketer?
0:17:17 You think about, okay, where’s my core customer finding and doing diligence on my product?
0:17:20 Sometimes the best CMO comes back and says, folks, I got to be honest.
0:17:24 We should put all our money into innovation around digital to unlock new features with our
0:17:24 product.
0:17:27 Tesla doesn’t spend a lot of money on advertising.
0:17:31 And the bottom line is, their brand has gone way down because Elon Musk is an enormous
0:17:35 asshole, but also because the product has gotten really stale, right?
0:17:40 So consumers can find the best product now using these weapons of mass diligence.
0:17:43 So whatever you’re going to see, you’re going to see reallocation of capital out of traditional
0:17:49 marketing into supply chain, into influencers, into social, and into product itself.
0:17:51 And this is hand-to-hand combat.
0:17:53 There’s no single platform.
0:17:58 If you wanted to bet on any two platforms, I don’t know, you’d probably bet on TikTok
0:18:00 and Instagram and also maybe YouTube.
0:18:02 I mean, there’s a cumulative effect here, right?
0:18:06 You got to kind of do it all, but you want to have influencers.
0:18:07 You want to have evangelists.
0:18:12 You want to over-serve a core customer base such that there’s word of mouth and they absolutely
0:18:13 fall in love with your product.
0:18:18 I used to use Norelco or Braun or these shitty brands to clip my head.
0:18:23 And then I found this clipper from a former East German factory that used to make propellers
0:18:26 from Messerschmitts and they make this incredible clipper.
0:18:29 And I went online and I found out where it was and I ordered them and they’re more expensive,
0:18:30 which is a pricing signal.
0:18:35 But you can now find the best product or discover it online.
0:18:40 So look, I’m not sure I’m saying anything revolutionary here, but the CMO that’s like the second
0:18:44 lieutenant in Vietnam that gets shot in the forehead within six to 18 months is the one
0:18:48 that comes in and wants to do the brand identity and hire a big agency and talk about traditional
0:18:48 media.
0:18:50 Boss, that ship has sailed.
0:18:56 This is hand-to-hand combat that is a combination of a better product with digital unlocks, huge
0:19:00 supply chain investments if you have access to cheap capital, and then trying to identify
0:19:04 evangelists slash influencers who can weaponize these platforms to your advantage.
0:19:06 That was a mouthful.
0:19:08 Thanks for the question.
0:19:10 That’s all for this episode.
0:19:13 If you’d like to submit a question, please email a voice recording to officehours of
0:19:14 propertymedia.com.
0:19:16 That’s officehours of propertymedia.com.
0:19:21 Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit,
0:19:23 and we just might feature it in an upcoming episode.
0:19:34 This episode was produced by Jennifer Sanchez.
0:19:35 Our intern is Dan Shallon.
0:19:38 Drew Burrows is our technical director.
0:19:41 Thank you for listening to the Prop G pod from the Vox Media Podcast Network.
0:19:45 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn.
0:19:51 And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday
0:19:52 and Thursday.

0:00:01 There’s a reason I love today’s conversation.
0:00:05 It is with the founder of a platform that we probably all use called LinkedIn.
0:00:09 And the guy that made that platform is Reid Hoffman.
0:00:13 The reality of running a small business is that switching off is never really an option.
0:00:18 Even when you try, the ideas, the excitement and all the responsibility is always there.
0:00:22 And because you’re always switched on, it’s only fair that your hiring partner should be too.
0:00:27 LinkedIn Jobs, who are the sponsor of this moments episode, has been that hiring partner for me
0:00:30 and for years because it’s always working away in the background.
0:00:37 My team can post our jobs for free, share them with our networks and reach top talent all in the same place.
0:00:39 So let’s get into today’s conversation.
0:00:45 On all these great people you’ve worked with, specifically, you know, during that PayPal period of your life.
0:00:50 One of the things I was reflecting on is they’re all independently successful people,
0:00:52 but they’re all very different people.
0:00:56 And that in and of itself is evidence that there’s not one version of success.
0:00:58 There’s many different types of success.
0:01:01 Presumably, there’s many different types of entrepreneur, leader.
0:01:02 Yes.
0:01:07 Give me a flavor of the different types of entrepreneurs you’ve worked with.
0:01:10 And what, you know, because I sat with Walter Isaacson.
0:01:12 And he talked to me about Steve Jobs, Elon Musk, et cetera.
0:01:15 And he was like, Steve’s really great at hiring people.
0:01:19 Elon’s not as good at the people team building part, but he’s better at this part.
0:01:20 Yes.
0:01:24 So no entrepreneur wins at every game.
0:01:33 Generally speaking, as an entrepreneur, you should try to play the games that you have a massive competitive edge on.
0:01:35 Same thing is true.
0:01:41 So some people, for example, like take Anil Busri at Workday, right?
0:01:47 He is thoughtful, intentionally cultural building, very professional.
0:01:50 So it’s a HR product for work.
0:01:54 His contrarian idea was going to the cloud and that people were going to do cloud software.
0:02:06 For the first, I think it was 500 people that Workday hired, he would always do a cultural interview at the end to make sure that the first 500 people all kind of shared cultural things.
0:02:12 So once you get through all the competence and all the rest of the stuff, he would make sure that was a fit.
0:02:14 And that’s part of how you get cultural coherence.
0:02:16 That’s like one example, right?
0:02:28 Another example, Elon is the, like, I have a big idea and I convinced myself 100% that it’s absolutely going to be the case.
0:02:30 Like, I am going to settle Mars.
0:02:35 We’re going to terraform Mars in our lifetimes, which is, no, it’s impossible.
0:02:44 No human being on the planet, including Elon, is going to do that within Elon’s lifetime, right?
0:02:47 Like, I’m going to go all in.
0:02:49 I’m going to work really hard.
0:02:50 I’m going to be technologically sophisticated.
0:02:55 I’m going to work against the odds, right, in order to make that work.
0:03:02 That’s a, you know, Anil, very professional, understands the workplace mark.
0:03:06 Elon, like, I think I was like the second person he pitched SpaceX to.
0:03:12 And his pitch, though, to my defense was, I’m going to send a turtle to Mars.
0:03:14 And I’m like, that’s not a business.
0:03:19 And you’re competing with national governments and, like, Russian subsidized rocket programs and so forth.
0:03:20 This is not a good equity.
0:03:21 I was wrong.
0:03:21 He was right.
0:03:25 But it’s not a good equity, you know, kind of play.
0:03:26 He pitched it to you as an investor?
0:03:27 Yes.
0:03:28 Yeah.
0:03:31 At what point was SpaceX at when he pitched it?
0:03:33 That was before he started it.
0:03:33 So it was an idea.
0:03:34 Yes.
0:03:36 And I’m going to send a turtle to Mars.
0:03:41 And then it became, I’m going to send a gelatinous cube with plant seeds in it to Mars because they’ll grow.
0:03:43 I’ll be the first person who will send life to Mars.
0:03:45 And you’re like, well, okay.
0:03:46 Right.
0:03:49 What did you think genuinely when he said that to you?
0:03:52 I thought he’d gone off his rocker.
0:03:52 Really?
0:03:53 Well, yeah.
0:03:54 Of course you would.
0:03:54 Yeah.
0:03:56 Like, someone’s, my friend said that to me.
0:03:58 I think I’d make a couple of calls just to check in.
0:03:58 Do you know what I mean?
0:04:00 Like, is Elon doing okay?
0:04:02 He’s just told me about this turtle.
0:04:03 Yes.
0:04:04 It’s like, that’s not a business.
0:04:13 Has your opinion of him changed over time in terms of his potential and ability as an entrepreneur?
0:04:14 No, no.
0:04:16 I’ve always thought of him as one of the world’s great entrepreneurs.
0:04:18 Always?
0:04:19 Yeah.
0:04:21 All the way back to PayPal days.
0:04:21 Really?
0:04:21 Yeah.
0:04:26 No, look, he has done repetitively amazing things.
0:04:29 Now, he pitches everything with the same level of certainty.
0:04:30 Right?
0:04:33 Like, you know, I have this idea for online banking.
0:04:35 I have this idea for boring tunnels under cities.
0:04:39 I have this idea for creating a pneumatic tube for Hyperloop.
0:04:48 All of them, he has the same level of, I am 1,000% right that this is, like, guaranteed to be part of the future.
0:04:49 Right?
0:04:52 And I, you know, and I may be the unique person to make it happen.
0:04:52 Right?
0:04:54 So, you have to have some discernment.
0:04:59 But he’s, his, you know, on-base batting is pretty good.
0:05:00 Right?
0:05:01 For such major ideas.
0:05:03 But it’s not 100%.
0:05:03 Yeah.
0:05:05 People kind of excuse that, though.
0:05:06 Of course.
0:05:06 If you get…
0:05:09 If you get one that’s big, that’s fine.
0:05:10 Right?
0:05:10 Yeah.
0:05:14 On the hiring side, has he been, is he up there with the best?
0:05:18 Or is he not a direct hirer of people like Steve Jobs was?
0:05:22 He hires well.
0:05:26 Matter of fact, you can’t be a great entrepreneur and not ultimately hire well.
0:05:32 I think some people are better hirers.
0:05:40 Some people also have, like, are the kind of people that people would work for forever.
0:05:47 Elon tends to burn people out a lot.
0:05:51 Like, there’s lots of burnt-out people in his wake.
0:05:56 And when you go and talk to those people, what you hear is, some people say, that was
0:05:58 the best work experience ever, and I never want to work for him again.
0:06:02 And other people say, that was the worst work experience ever, and I never want to work for
0:06:02 him again.
0:06:05 So, they’re all, I never want to work for him again.
0:06:06 Right?
0:06:09 So, you know, as kind of a dynamic.
0:06:11 Because he basically looks at them as disposable parts.
0:06:14 And, you know, go as hard as you can.
0:06:15 Right?
0:06:16 And then afterwards, you’re out.
0:06:17 Don’t care.
0:06:19 Because he goes so hard.
0:06:26 Yeah, he goes hard, but he also thinks, your only relevance to me is, can you help me with
0:06:26 my mission?
0:06:30 And after you’re done, after you can no longer help me with my mission, you’re not relevant
0:06:30 to me anymore.
0:06:34 What do you think of that approach?
0:06:35 That’s not my approach.
0:06:37 LinkedIn mirrors my approach.
0:06:44 Like, literally, I am referenceable by every entrepreneur that I’ve ever worked with, right,
0:06:49 as a board member and as an investor, right, who, you know, even ones that I’ve, like,
0:06:50 fired his CEO and so forth.
0:06:54 Those people will say, he was really good to work with on these things.
0:06:56 They may also have some critical things.
0:06:57 There’s no problem with that.
0:06:57 Right?
0:07:03 But, like, literally, like, when I’m pitching an entrepreneur, I just, like, call anyone that
0:07:04 I’ve worked with.
0:07:06 Right?
0:07:13 Because I try to work with people in a way that even when we’re at a difficult moment
0:07:17 because I disagree with them intensely about how well they’re doing or what they’re doing
0:07:21 or something else, that I’m doing it in a collaborative, constructive way.
0:07:32 And so my goal is to work with people, like, anyone I want to work with, Brian Chesky, you
0:07:33 know, Mark Pincus, et cetera.
0:07:39 I want to be able to work with them for, you know, the rest of our lives.
0:07:46 What’s interesting is I think these strategies fundamentally come down to what you think
0:07:48 matters in life the most.
0:07:54 Because you could optimize, even you could optimize more for building more companies or something
0:07:56 at the expense of something else.
0:07:57 And it’s a trade-off of something else.
0:07:58 Like, you could go harder.
0:07:58 Yes.
0:08:00 But there’s a trade-off happening here.
0:08:05 And we often, because Elon’s done these crazy things like the cars and the Neuralinks and
0:08:09 there’s tunnels and now the AI and the X and the spaceships and stuff.
0:08:10 We go, oh my God, that’s so amazing.
0:08:11 And I do that as well as an entrepreneur.
0:08:13 I go, fuck, no, one person can do that much.
0:08:15 But we almost never talk about the trade-off.
0:08:16 Yes.
0:08:16 Yep.
0:08:17 You’re 100% right.
0:08:21 And it’s so, this goes back to the point about self-awareness.
0:08:26 It’s like, it’s so tempting for the brain to go, oh my God, I want that.
0:08:27 That’s what I want.
0:08:29 Because you’re not seeing the trade-off.
0:08:30 You’re not seeing the darkness.
0:08:31 That is 100% correct.
0:08:33 And look, I respect it.
0:08:39 I understand the burn people out, like treat them as disposable assets that when they burn
0:08:40 out, you just jettison them.
0:08:46 And you can be very, Elon’s not the only entrepreneur who is very successful doing that, right?
0:08:55 But for example, on the other side, like if you go to Mark Zuckerberg and you talk to the
0:08:56 people who work for him, they’re like, that was great.
0:08:58 That was the best working experience of my life.
0:08:59 Of course I work for them again.
0:09:00 Interesting.
0:09:04 I hope you found today’s conversation helpful and insightful.
0:09:08 If you’re ready to join two and a half million other small businesses already using LinkedIn
0:09:12 for hiring, head over to linkedin.com slash D-O-A-C now.
0:09:17 That’s linkedin.com slash D-O-A-C to find your next exceptional hire.

0:00:07 Hey there, it’s Stephen Dubner, and you are about to hear the fourth and final episode
0:00:13 of our series, How to Succeed at Failing, which was first published in 2023.
0:00:17 If you missed any of the earlier episodes, they should be right there in your podcast
0:00:18 app.
0:00:22 For this version, we have updated facts and figures as necessary.
0:00:24 As always, thanks for listening.
0:00:35 If I asked you to name the world’s deadliest infectious disease, what would you say?
0:00:36 COVID-19?
0:00:40 That was the biggest infectious killer for a few years, but not anymore.
0:00:42 How about malaria?
0:00:44 Influenza?
0:00:44 HIV?
0:00:49 Those are all deadly, but not the deadliest.
0:00:51 So what’s number one?
0:00:58 Actually, TB, for the last 20, 30 years, has been the number one infectious disease killer
0:00:58 in the world.
0:01:03 Babek Javed is a physician scientist who studies tuberculosis, or TB.
0:01:08 You may think of TB as a 19th century disease when it was called consumption.
0:01:13 It killed John Keats, Anton Chekhov, and at least two of the Bronte sisters.
0:01:18 It killed the heroines of both La Boheme and La Traviata.
0:01:24 And today, it still kills more than a million people each year, most of them in the developing
0:01:24 world.
0:01:27 TB is a disease of poverty.
0:01:35 It’s really a major problem in India, China, Indonesia, Pakistan, South Africa, Nigeria.
0:01:37 TB is a bacterial infection.
0:01:40 There is a vaccine for it, but it’s not always effective.
0:01:46 It can be treated with antibiotics, but it’s a long and fairly complicated course of treatment.
0:01:53 And as deadly as TB is, it doesn’t draw the attention or the funding that flow to other
0:01:54 diseases.
0:02:01 There is no Hollywood star that gets TB that puts it in the public mind and everyday people’s
0:02:02 thoughts.
0:02:07 One of the reasons I was attracted to this field is I felt that infectious diseases in general,
0:02:13 TB in particular, is, you know, one of the mechanisms of injustice in our world.
0:02:14 And I really wanted to tackle that.
0:02:19 David runs a tuberculosis research lab at the University of California, San Francisco.
0:02:23 He has also worked at labs in Beijing and at Harvard.
0:02:27 His kind of research comes with a lot of failure.
0:02:31 I remember in my graduate school, I went over a year and a half without a single experiment
0:02:32 working.
0:02:37 And it’s very hard to get up in the morning and go back and expect to fail again.
0:02:42 The first drug that was found to successfully fight TB is called streptomycin.
0:02:44 It was discovered in 1943.
0:02:49 It won a Nobel Prize for Selman Waxman, the main scientist behind it.
0:02:53 And the way that streptomycin works is that it does two things.
0:02:56 It inhibits the process of making new proteins.
0:02:58 It’s called a protein synthesis inhibitor.
0:03:01 But that in itself doesn’t kill the bug.
0:03:08 What kills the bug is that in addition to that inhibitory action, it actually causes the
0:03:11 bug to make mistakes when it makes these proteins.
0:03:17 What interested Javid was this second function, the drug causing the bacteria to make mistakes
0:03:21 as they are creating the proteins that produce the symptoms of TB.
0:03:26 So he went looking for other ways to trigger those mistakes.
0:03:31 And he found some, but it turned out this wasn’t enough to thwart the bacteria.
0:03:36 What was really shocking and surprising to me is the bug didn’t seem to mind.
0:03:38 It just carried on regardless.
0:03:42 So I cranked up the error rate and I kept pushing and pushing.
0:03:47 And really, the bugs were kind of fine with it until eventually, when I had really,
0:03:51 cranked up the error rate an awful lot, then the bugs died.
0:03:54 It takes a lot of error to kill these bugs.
0:03:59 I was reflecting on my results and I was thinking, this just doesn’t make any sense to me.
0:04:04 The prevailing dogma at the time is that with a small amount of error, you induce what’s
0:04:12 called error catastrophe, where the errors in the new proteins make faulty machinery in the
0:04:15 cell that then makes more errors and it just feeds on itself.
0:04:18 And these bugs were extremely resilient.
0:04:20 And that made me take a step back.
0:04:24 And I thought, what if actually these errors aren’t detrimental after all, at least in a
0:04:25 moderate amount?
0:04:28 And that was my, I guess, aha moment.
0:04:33 I have to be honest, at the beginning, I had no idea why this was.
0:04:35 We were coming up with lots of different ideas just to explain it.
0:04:43 But after a lot of experimentation and blind alleys and wrong turns, we figured out that
0:04:49 what’s happening is that this mistranslation is allowing the bacteria to innovate.
0:04:51 And that was a really exciting moment.
0:04:59 And I kind of coined the term adaptive mistranslation, that sometimes these errors in the right context
0:05:02 can actually be good for the bug.
0:05:07 Adaptive mistranslation.
0:05:08 Think about that for a minute.
0:05:12 And let’s think about it outside the realm of tuberculosis research.
0:05:19 It’s the idea that errors in the right context and degree can strengthen an organism, can make
0:05:23 it more resilient and lead it to innovate.
0:05:26 Now, that sounds like a magic trick, doesn’t it?
0:05:32 But if it can work for TB, can it work for us?
0:05:38 Today on Freakonomics Radio, the final episode of our series, How to Succeed at Failing.
0:05:44 We will hear about another counterintuitive way to fight off failure.
0:05:50 The premortem is designed to help you do better rather than to shut off innovation.
0:05:55 We ask if failure should be taught formally in the classroom.
0:06:01 The whole point of the whole semester is going to be, hey, everybody fails and we fail at everything.
0:06:04 And whether failure needs a museum.
0:06:06 We have a Ford Edsel.
0:06:09 We have Pepsi Crystal, New Coke.
0:06:14 How to Succeed at Failing, the final chapter starting right now.
0:06:35 This is Freakonomics Radio, the podcast that explores the hidden side of everything.
0:06:38 With your host, Stephen Dubner.
0:06:51 Gary Klein is a cognitive psychologist who advises organizations on how to respond to failure.
0:06:55 His latest research is around what are called wicked problems.
0:07:01 A wicked problem is one where there’s not a clear right answer that people would generally agree upon.
0:07:05 And what share of problems in the world are wicked problems?
0:07:10 Most of the major social problems we wrestle with are wicked problems.
0:07:14 We have multiple stakeholders and there’s no way to please all of them.
0:07:18 And so there’s all of this potential conflict.
0:07:29 And resource situations change or pandemics arise, wars arise, things that are unexpected that are going to upset what you’re doing.
0:07:43 In any of those conflicts that Klein is describing, any of those disruptions, let’s call them, we suddenly crash into a complex situation that’s also fogged in by uncertainty.
0:07:47 And now we have to essentially guess what’s going to happen next.
0:07:50 And those guesses often turn out to be wrong.
0:07:57 I actually went on Anderson Cooper during the early days of the pandemic to tell everyone how wrong I was.
0:07:59 That is Teresa McPhail.
0:08:06 She is a medical anthropologist at the Stevens Institute of Technology, one of the country’s top engineering colleges.
0:08:13 And yes, McPhail is an appropriate name for a professor discussing her own failure in a series about failure.
0:08:17 But just wait, it will get even more appropriate later in this episode.
0:08:23 Anyway, McPhail had studied the outbreak of the H1N1 influenza pandemic in 2009.
0:08:27 So her expertise was in demand when COVID came along.
0:08:35 I really thought when we heard the first rumblings out of China in 2019 and early 2020, I was like, we have this.
0:08:37 Like there’s mechanisms in place.
0:08:45 But what I hadn’t really considered was what over a decade of cutting funding had done.
0:08:49 And it had basically decimated a lot of public health.
0:08:54 I thought we were more prepared and it turns out we were not.
0:09:02 And I felt badly because I had done an interview with Vice News in February and I said, calm down.
0:09:04 You know, we’re not China.
0:09:06 We’re better equipped.
0:09:07 Here’s why.
0:09:12 I had to go to the ER in March because I got very sick on March 1st.
0:09:24 I went to the ER and I remember the ER doctor saying to me that he had never seen a situation where they were so ill-equipped with PPE or personal protective equipment.
0:09:27 That’s when I realized, uh-oh, I was wrong.
0:09:42 Now, what might have happened if Teresa McPhail, and not just McPhail, but let’s say everyone in the realm of pandemic preparedness, what if they had all thought a bit differently about this wicked problem?
0:09:49 What if, before the failure happened, they pretended that there had already been a failure?
0:09:56 You are probably familiar with the idea of a post-mortem or what the military calls an after-action review.
0:10:00 By that point, of course, the damage has been done.
0:10:05 So what if you flip the order and conduct a pre-mortem?
0:10:11 That’s what Gary Klein called this strategy when he invented it in the 1980s.
0:10:27 The pre-mortem is designed to help people surface realistic possibilities and threats so that you can improve the plan, improve the product, and increase your chance of success.
0:10:33 At the time, Klein was running an R&D firm that studied decision-making in organizations.
0:10:37 You know, many of our projects succeeded, but not all of them.
0:10:41 And we would occasionally have an after-action review.
0:10:45 Those weren’t exciting things to do because we were pretty disgruntled.
0:10:49 At one point, I said, why don’t we do this at the very beginning?
0:10:51 Why don’t we imagine that it fails?
0:11:01 Often in organizations, if you have like a kickoff meeting, there’ll be a part where they say, all right, now, does anybody have any concerns?
0:11:02 Are there any critiques?
0:11:04 Does anybody see any problems?
0:11:14 And nobody says anything, either because they don’t want to disrupt the harmony of the team or because they’re not thinking that anything could go wrong because they’re excited to get started.
0:11:20 So to break through that mindset, I developed this technique of a pre-mortem.
0:11:26 And at the end of a kickoff meeting, we say, all right, imagine that I’m looking at a crystal ball.
0:11:33 I’m dialing forward six months, maybe a year, whatever the right time frame is.
0:11:37 And oh, no, this project has failed.
0:11:39 It’s failed in a big way.
0:11:40 We know that.
0:11:41 There is no doubt.
0:11:43 This crystal ball is infallible.
0:11:48 Now, everybody in the room, you’ve got two minutes.
0:11:53 Write down all the reasons why this project failed.
0:12:01 And it’s amazing the types of issues that people surface that ordinarily they wouldn’t say in public or even think about.
0:12:06 Can you explain from a psychological perspective why that works?
0:12:11 Well, after I developed the technique, I read about some research on prospective hindsight.
0:12:17 And so I think a big part of it is the certainty that it’s failed.
0:12:19 And so now that changes my mindset.
0:12:21 So I’m not resisting.
0:12:23 If I say, here’s the plan.
0:12:24 Are there any problems?
0:12:27 There’s all kinds of pressure not to think about problems.
0:12:36 But by being certain that the plan has failed, by entering into that exercise, it just changes the whole valence, the whole experience.
0:12:37 So interesting.
0:12:43 I mean, we always hear about how humans perform poorly under uncertainty generally.
0:12:46 So you’re saying you’re just removing the uncertainty of whether it will work.
0:12:48 You’re saying it didn’t.
0:12:49 Now tell me why it didn’t.
0:12:51 And that provides clarity.
0:12:51 Right.
0:12:56 So what happens next after people voice these ideas?
0:12:57 What happens now?
0:13:01 OK, so let me get we never thought about this as a tool outside our company.
0:13:04 This was just something we did.
0:13:06 But then we had a big project we were doing for the Air Force.
0:13:13 It was a software tool for identifying ways of using precision guided munitions.
0:13:17 And I told my prime sponsor, I want to do a pre-mortem.
0:13:18 And he said, what’s that?
0:13:19 And I explained it to him.
0:13:21 And he said, absolutely no way.
0:13:23 We want everybody to be positive.
0:13:25 This is such a depressing exercise.
0:13:27 I don’t want to do it.
0:13:30 And I said, this is an important project.
0:13:31 We want it to succeed.
0:13:33 This is a way to make it succeed.
0:13:36 And reluctantly, he agreed to do it.
0:13:38 We were doing this pre-mortem.
0:13:39 And there was this young captain.
0:13:40 He hadn’t said a word.
0:13:43 The meeting had gone on for about two days.
0:13:44 He hadn’t said a word.
0:13:49 And it was time for him to come up with his, what he had on his list.
0:13:51 We go around one at a time around the room.
0:13:53 And we do one or two or three sweeps.
0:13:55 And he looked a little nervous.
0:14:00 And he said, this tool that we’re building, it’s for people in the field.
0:14:04 And they have these low-powered laptops.
0:14:09 The tool we’re building runs on a supercomputer that takes 48 hours.
0:14:11 I don’t see how that’s going to work.
0:14:15 And there was silence in the room because everybody realized he was right.
0:14:22 And then somebody said, now, I’ve got a back-of-the-envelope technique that I use that could be a shortcut.
0:14:25 And all of a sudden, we were back in business.
0:14:28 But if we hadn’t done that, we would have failed.
0:14:32 And he never would have said that if we didn’t give him that space.
0:14:36 And you’re saying the person who spoke up was the most junior or among the most junior in the room?
0:14:38 Yes, he was.
0:14:47 So I’ve seen this myself many times, not in a pre-mortem, but just in a meeting generally, where junior people, they have very little incentive to speak up.
0:14:49 It seems like there’s more downside than upside.
0:14:58 It strikes me that American meeting culture is dominated by noisy people who have a lot of confidence, which is often unearned.
0:15:03 And I’m curious if you have any advice for having better ideas come through in meetings.
0:15:11 I have a couple of ideas, but one of them is the pre-mortem because the pre-mortem creates a culture of candor.
0:15:17 People learn that they can voice unpopular ideas and not be punished for it.
0:15:26 It also creates an environment where I’m surprised at the ideas that you come up with or this young captain comes up with.
0:15:33 It’s because a pre-mortem really harvests the different experience and ability of the people in the room.
0:15:37 I don’t know what’s in your head, so how can I appreciate your perspective?
0:15:41 But in a pre-mortem, I realize, wow, I never thought of it that way.
0:15:46 So there’s a chance for the people in the room to start to gain more respect for their colleagues.
0:15:50 I would think that anonymity would be a useful tool here.
0:15:52 Why do you not use that?
0:15:56 Anonymity could be useful in environments that are usually very punitive.
0:16:02 But in terms of creating a culture of candor, it works better if we’re all face-to-face.
0:16:06 Does it sometimes get personal, even ugly?
0:16:09 I have never seen that happen, surprisingly enough.
0:16:10 No.
0:16:15 No, because everybody knows that this is a made-up failure.
0:16:19 So it’s not life or death, although it could be.
0:16:23 And everybody knows that the intent is to improve the plan.
0:16:28 Can you talk about how to encourage candid feedback generally?
0:16:34 Again, it may be the more junior employees, but whoever it is that might have a valuable insight,
0:16:37 how can you best float that insight up to leadership?
0:16:43 I’ve wrestled with that issue for a while because most organizations say that they want insights,
0:16:49 but they don’t because insights are going to mean that we have to change.
0:16:55 And if I’m a mid-level manager, now I’ve got to change my supply lines.
0:16:57 I’ve got to change my staffing.
0:17:01 Can we just continue what we’re doing and try to do it better?
0:17:08 They’ll say, we want to be harmonious, so we’re going to make decisions where everybody agrees.
0:17:14 A harmonious decision is a terrible idea because that means that everybody has a veto.
0:17:20 And so your chance of coming up with an innovation has been severely compromised.
0:17:25 Do you ever have harmonious decisions in your personal life, maybe with your family?
0:17:31 I am guilty of the delusion that we can have harmonious decisions.
0:17:37 And despite personal experience, I hold on to this goal.
0:17:45 Do you personally routinely do pre-mortems, even just a quick in-your-head one when you’re about to make a decision?
0:17:49 I do not do it when I make lots of decisions.
0:17:52 And so I don’t do it automatically.
0:17:55 Did you pre-mortem this interview today, Gary?
0:18:00 That was a no.
0:18:07 After the break, we ask the CEO of a startup if he would like to try Gary Klein’s pre-mortem idea.
0:18:09 I guess I disagree with Gary.
0:18:11 I’m Stephen Dubner.
0:18:12 This is Freakonomics Radio.
0:18:13 We’ll be right back.
0:18:29 In 2018, Will Coleman left his job as a partner at McKinsey, the consulting firm, in order to launch a rideshare startup called Alto.
0:18:35 At Alto, we’re elevating rideshare for both drivers and passengers.
0:18:41 We offer a really differentiated service through W2 employees and company-owned vehicles.
0:18:47 So at Alto, you always know exactly what you’re going to get, a safe, clean, high-quality ride every single time.
0:18:54 A lot of those words sounded as if they were chosen to be contra Uber and Lyft.
0:18:55 Is that essentially the case?
0:18:57 That is essentially the case.
0:19:01 Uber and Lyft, we think, are the contra of safe, clean, consistent.
0:19:10 Our brand was always built to go head-to-head against the big names and to compete directly against them in every major city.
0:19:13 Are you also, to some degree, a luxury product?
0:19:15 We call it an accessible luxury.
0:19:23 We want it to be something that feels luxurious, but that is, for most people, a couple dollars more.
0:19:35 It might be because you really value your safety and the type of vehicle that you’re in or the type of person that you’re in the vehicle with or that you just value the consistency, knowing exactly what you’re going to get.
0:19:38 So we see it a lot like a cup of Starbucks coffee.
0:19:44 You can get a much cheaper cup of coffee, but most people choose that for that consistency and quality every single time.
0:19:45 How many markets are you in right now?
0:19:48 Yeah, we’re in six markets across the U.S.
0:19:53 Los Angeles, San Francisco, Dallas, Houston, Miami, and Washington, D.C.
0:19:55 I did not hear New York City there.
0:19:55 Why not?
0:19:56 That’s a big market.
0:19:58 New York is a very expensive market.
0:19:59 It’s a very competitive market.
0:20:01 It’s very big and it’s a huge opportunity.
0:20:09 But as efficient and maybe conservative allocators of capital, we want to perfect the product.
0:20:13 The rideshare market is tough to break into.
0:20:18 Uber and Lyft dominate both the drivers and riders in most places.
0:20:21 Coleman hopes that Alto’s business model can set it apart.
0:20:27 Instead of using freelance drivers who have their own cars, which is how Lyft and Uber do
0:20:31 it, Alto employs the drivers directly and leases vehicles from manufacturers.
0:20:33 Will that work?
0:20:40 The history of the rideshare industry is already littered with firms that tried to challenge
0:20:41 Uber and Lyft.
0:20:44 There’s Juno, Sidecar, Fasten, and more.
0:20:49 We asked Gary Klein how he might help Alto stay off that list.
0:20:52 Okay, so there’s a couple of things that I might do with them.
0:21:00 First of all, we would want to run some premortems to inject a healthy dose of reality.
0:21:02 Not that I don’t think they have that.
0:21:09 A second is, are they going to be able to pivot based on what they learn?
0:21:16 Or are they going to get locked into a business model and not be resilient or flexible as things
0:21:17 develop?
0:21:18 Because things will develop.
0:21:25 Their plan is not going to continue as they’ve originally designed it, simply because nobody
0:21:29 is smart enough to come up with a perfect plan right off the bat.
0:21:34 So you do want to make discoveries and you do want to be able to pivot and maybe even make
0:21:37 massive changes in your business model.
0:21:44 I mean, if you do some sort of premortem, you might say, what are the things that we might
0:21:49 have to adapt for in part to build a more resilient organization?
0:21:56 We went back to Will Coleman to ask what he thinks of Gary Klein’s suggestion.
0:21:59 Yeah, we’re not going to be running any premortems at all.
0:22:02 Because why?
0:22:04 I guess I disagree with Gary.
0:22:09 I mean, if you’re constantly focused on the downside, then I think you’re probably not
0:22:10 focused enough on the upside.
0:22:15 I often tell my team, you know, the money-making machine hasn’t been built yet.
0:22:21 If you’re in a company like Google or Apple or Amazon, the money-making machine has been built
0:22:22 and you’re just there to make it better.
0:22:25 Here, you’re really building something from scratch.
0:22:31 And so, honestly, the proposition of failure is almost – I mean, startups fail every day,
0:22:33 you know, probably, what, 99% of them.
0:22:39 So you’re already going into this with an understanding that failure is the most likely outcome.
0:22:43 So we could sit around and talk about that for hours, days, but we’ll never make any progress.
0:22:44 It’s paralyzing.
0:22:50 Instead, what we talk about and what I focus on is, you know, how do we just get to the next
0:22:50 decision point?
0:22:52 How do we just get to tomorrow?
0:22:55 How do we just make this incrementally better now?
0:23:03 I hate to keep leading you down the road of potential failure, but I do want to ask, let’s
0:23:08 say this doesn’t work and a couple of years from now, you need to close up shop.
0:23:12 Can you envision what that would feel like for you?
0:23:13 It would be devastating.
0:23:18 Yeah, I mean, because we’ve been on the brink of that before.
0:23:21 In COVID, I mean, I’m not kidding.
0:23:23 We lost 95% of our revenue in a day.
0:23:27 We were more agile during that period of time than we had ever been.
0:23:32 And the impact of that was that many of those products that we built that were the ones that
0:23:38 succeeded, which was maybe a tenth of them, but the ones that did are now 20%, 30% of our
0:23:38 revenue.
0:23:43 Incremental things that we didn’t have before the pandemic have made our business more robust,
0:23:44 more resilient.
0:23:51 A couple of months after we spoke with Coleman, we learned that Alto shut down service in
0:23:52 San Francisco.
0:23:55 Later, they stopped operations in two more cities.
0:23:58 This all came with significant layoffs.
0:24:04 Does this mean they will join the 90 some percent of failed startups that Coleman mentioned?
0:24:08 I, of course, have no way of knowing.
0:24:14 But if they do fail and fail spectacularly, they might end up with this man.
0:24:16 My name is Samuel West.
0:24:18 I’m a psychologist and I’m a curator.
0:24:23 He is a curator and founder of the Museum of Failure.
0:24:24 And how did that come to be?
0:24:30 So I was in Croatia, in Zagreb, the capital, just on holiday with my family.
0:24:35 And I stumbled into a museum called the Museum of Broken Relationships.
0:24:44 So I’d been thinking about ways to sort of spread the ideas of accepting failure and how much room
0:24:46 for improvement there is on learning from failure.
0:24:51 And then I was in Zagreb and I just got this, you know, what do you call it?
0:24:52 Hallelujah moment.
0:24:57 And so it was that Samuel West invented the Museum of Failure.
0:25:02 It’s a pop-up museum that has been traveling the world since 2017.
0:25:06 Helsingborg, Sweden, Paris, Los Angeles, Washington, D.C.
0:25:09 When we spoke with West, the museum was in Brooklyn.
0:25:14 It’s a sunny, nice day and we’re about to open in a few minutes.
0:25:17 As it turns out, running a traveling museum is not easy.
0:25:21 So here we have an example of failure at Museum of Failure.
0:25:23 Our wall panels are falling off the wall.
0:25:25 I’m going to kill somebody.
0:25:33 The museum includes more than 150 failures, most of them inventions and commercial products.
0:25:37 They range from trivial to fraudulent.
0:25:40 Elizabeth Holmes, do I need to say anything about her?
0:25:41 No, come on.
0:25:49 Gerber, back in the 70s, they launched a product of adult food in a baby food jar.
0:25:53 This is the Euro Club from 2008.
0:26:01 In case you couldn’t hear that, it’s called the Euro Club, not Euro, E-U-R-O, just U-R-O.
0:26:07 It’s a golf club with, yeah, it’s for us men when we’re out golfing.
0:26:09 And I need to urinate.
0:26:16 So what you do is you unscrew the top of it, you clip it onto your belt, and then you fiddle
0:26:24 under the belt and you urinate into this canister camouflaged as a golf club.
0:26:27 And then you screw it back up and you continue on with your golf.
0:26:33 I mean, the criteria is that to be in a museum, it has to be an innovation, and it has to be
0:26:34 a failure, obviously.
0:26:36 And then I have to find it interesting.
0:26:41 The museum of failure will make you laugh, but West hopes that people walk away with more
0:26:42 than that.
0:26:47 So the focus at the museum is on innovations, which is products and services, but in our
0:26:52 personal lives we fail also, and the same principle applies there.
0:26:56 We’re very bad at learning from our own failures because it’s uncomfortable.
0:27:01 So if we’re willing to have those uncomfortable feelings and thoughts for a while, we can actually
0:27:02 learn from them.
0:27:09 I want people to feel liberated that failing isn’t as bad as you think it is, usually.
0:27:16 We also got Samuel West into a studio to talk about failure more generally.
0:27:19 I think failure is far more interesting than success.
0:27:22 Because why?
0:27:30 Because success is often sort of curated by whoever, whatever story the sender wants to
0:27:34 present, whereas failure feels much more authentic, much more human.
0:27:38 Do you think it’s easier to learn from failure or from success?
0:27:44 I think it maybe feels better to learn from success, but I think we can learn much more from failure.
0:27:47 It’s a more natural way of learning.
0:27:53 That’s how we learn how to eat, how to walk, how to do anything is through a repeated trial
0:27:53 and error.
0:27:55 So here’s the thing.
0:28:00 I agree with you, but it seems as though most of the world, certainly the business world,
0:28:01 thinks the opposite.
0:28:05 We are addicted to, you know, success porn.
0:28:11 People read the books written by successful entrepreneurs and they say, okay, that’s what I’m
0:28:11 going to do.
0:28:16 People listen to popular music or watch popular films and emulate that.
0:28:22 It seems that there’s pretty much consensus that the best way to succeed is to copy success.
0:28:23 What’s wrong with that idea?
0:28:24 There’s nothing wrong with it.
0:28:26 It’s just really difficult to do.
0:28:33 And the thing is, it’s really low effort learning because sometimes, you know, listening to that
0:28:38 successful entrepreneur or listening to that successful artist, you think you’re just going
0:28:41 to absorb the success by listening to the story.
0:28:46 Just because something works for someone else doesn’t mean it’s going to work for you.
0:28:54 Since we spoke with Samuel West, the Museum of Failure itself seems to be failing.
0:28:59 West and his former business partner are engaged in a bitter public dispute.
0:29:03 West has encouraged people not to buy tickets to the museum.
0:29:07 He says the partner stole his collection of failure memorabilia.
0:29:09 The partner denies this.
0:29:16 So if the Museum of Failure isn’t the place for instruction at the moment, how else might
0:29:17 you learn from failure?
0:29:22 Throughout this series, we’ve been speaking with Amy Edmondson, a scholar of failure at the
0:29:23 Harvard Business School.
0:29:28 She argues that, for starters, we should not be hiding our failures.
0:29:32 One way to think about this is we will be failing.
0:29:35 So let’s do it joyfully.
0:29:39 Let’s do it thoughtfully and celebrate them appropriately.
0:29:46 Talk to me for a moment about the ways in which failure is a good teacher, but we ignore its lessons.
0:29:50 And I’m particularly thinking about the lack of publishing of null results and things like that.
0:29:53 We don’t, in academia, we don’t publish our null results.
0:30:00 So that means not only do we not spend enough time on them to really learn what they’re teaching
0:30:05 us, but even more importantly, our colleagues near and far don’t get to see them.
0:30:11 So then they’re at risk of trying the same thing, which to me is the most wasteful of the
0:30:16 wasteful failures is when we already had that knowledge, but somehow we aren’t able to share it.
0:30:20 Should there be a journal of failed results somewhere?
0:30:21 Yes.
0:30:23 And, you know, it’s not as strange as it sounds.
0:30:28 You could still have very high standards because you wouldn’t publish things that were just
0:30:35 nonsensical or didn’t have thoughtful hypotheses or theories that led you to spend that time
0:30:36 studying them.
0:30:40 You want to be the editor-in-chief and I’ll be your amanuensis or something?
0:30:41 Let’s do it the other way around.
0:30:47 Oh, I failed in my request to Tom Sawyer you into painting the fence there.
0:30:48 I like the idea, though.
0:30:55 Okay, so that’s one vote for a journal of failure, but Edmondson doesn’t want to run it.
0:30:58 Maybe we can persuade this person.
0:31:00 My name is Roy Shalem.
0:31:02 I have a PhD in economics.
0:31:08 Shalem teaches at Tel Aviv University and he studies the economics of competition and regulation.
0:31:12 He once published a paper called The Market for R&D Failures.
0:31:20 So what I’m trying to analyze is a situation in which firms are competing head-to-head in
0:31:21 kind of a patent race.
0:31:23 Patent races are quite common.
0:31:28 Think about when pharmaceutical firms are competing to find a disease treatment.
0:31:31 But this goes way beyond pharma companies.
0:31:37 One of the most famous examples is when Alexander Graham Bell and Alicia Gray both filed a patent
0:31:40 for the telephone on the same day in 1876.
0:31:46 Bell won the patent, started the successful company, now synonymous with telephone, while
0:31:48 far fewer people remember Gray.
0:31:51 A typical patent race is winner-take-all.
0:31:57 The competitors work hard, invest a lot of resources, but only the winner reaps the rewards.
0:32:01 And the loser, or losers, are left with pretty much nothing.
0:32:09 Roy Shalem, based on his research around corporate innovation, thinks this model is due for an upgrade.
0:32:13 He thinks the losers should also have a way to monetize their efforts.
0:32:18 My paper proves that theoretically there is a potential for a market for R&D failure.
0:32:26 When you sell knowledge of past failures, you are expected both to reduce the cost of R&D because
0:32:29 you’re not doing the same mistakes over and over again.
0:32:34 And you also reduce the time until a discovery is made.
0:32:36 So that’s also worth money.
0:32:43 If Shalem had his way, there would be, as he titled his paper, a true market for R&D failures.
0:32:49 Basically, when you’re doing something which is very hard, you mostly produce failures.
0:32:54 And this is a very, very important part of the stock of knowledge.
0:33:01 And so I think that it is possible to take all that knowledge and find the right price for
0:33:03 a competitor to buy that knowledge.
0:33:07 So far, at least, such a market does not exist.
0:33:13 So what else can we do if we want to seriously consider the idea of learning from failure?
0:33:19 Maybe we learn from failure in the old-fashioned way, in a classroom.
0:33:21 I mean, I’m old school.
0:33:22 I’m talking about Hobbes.
0:33:25 After the break, Failure 101.
0:33:27 I’m Stephen Dubner, and this is Freakonomics Radio.
0:33:27 Freakonomics Radio.
0:33:42 Do you remember Teresa McPhail?
0:33:48 She is the medical anthropologist who initially thought that COVID-19 wouldn’t be a big deal.
0:33:50 I said, calm down.
0:33:52 You know, we’re not China.
0:33:54 We’re better equipped.
0:33:55 Here’s why.
0:34:01 McPhail’s day job is teaching undergraduate engineering students at Stevens Institute of Technology.
0:34:02 Right.
0:34:07 They’re all science and technology nerds and geeks.
0:34:10 And I mean that in the best possible sense.
0:34:11 My people.
0:34:13 Very driven.
0:34:16 Very type A personalities.
0:34:19 I mean, you don’t get into science and tech lightly.
0:34:22 It’s not an easy subject.
0:34:27 And the course load is quite hefty.
0:34:34 At some point in their lives, probably the majority, like say 70%, will probably go on to get some sort of master’s or PhD.
0:34:37 And then in terms of careers, what’s typical?
0:34:38 What sort of careers?
0:34:41 Engineers, engineers, engineers.
0:34:44 And research scientists.
0:34:48 And within engineering, is it software, mechanical, electrical, everything?
0:34:49 The whole gamut.
0:34:51 They’re building your bridges.
0:34:52 They’re putting up your buildings.
0:34:54 They’re designing your sewage pipes.
0:34:56 All things I don’t want to fail.
0:34:57 Exactly.
0:34:58 Exactly.
0:35:00 They’re designing your airplane engines.
0:35:01 Everything.
0:35:10 Now, for someone studying engineering who sees a future designing things where the stakes are high, an airplane, a bridge, whatever.
0:35:13 How do they think about failure generally in their work?
0:35:16 It’s the worst thing that can happen.
0:35:19 It’s the worst thing that can happen.
0:35:22 They’re all very high-achieving students.
0:35:27 So they’re used to getting straight A’s or close to it.
0:35:35 They come in thinking that failure is bad and it needs to be avoided at all costs.
0:35:44 And they have imbibed the cultural narrative of, oh, you must learn from your failures and fail better and fail faster.
0:35:46 But they kind of don’t buy it.
0:35:48 Why do you think that is?
0:36:05 I did a research project where a psychology professor and I designed a survey and just wanted to get a sense of how they define failure for themselves and what they think about it and what they think the American culture thinks about it.
0:36:19 And they’re all really aware when we ask them what Americans think about failure, some of their answers are, you’re not doing a good job, you must be lazy, weak, incapable, stupid.
0:36:27 They say that if you fail, it’s going to lead you to poverty, perhaps, a lack of social status.
0:36:31 One person, this is a direct quote that I wrote down, if you fail, you suck.
0:36:42 So McPhail got to thinking about whether there was a better way to talk to her students about failure, a more direct way.
0:36:49 I know that business schools already teach case studies and failures, like they’ll teach what happened to Enron, what happened to WeWork.
0:36:53 And that’s great for business students, but that’s not what I wanted to do.
0:37:03 I wanted to really get them familiar with the concept of failure and introduce it as a necessary and natural part of life.
0:37:12 And she felt the stakes were high, higher than most of us are willing to admit.
0:37:20 Around 2017, 2018, we had a year that had several suicides.
0:37:22 And, you know, we’re not alone.
0:37:27 You pick up the newspaper and you’re reading constantly about Penn, Yale, Cornell.
0:37:30 I mean, you name a school and they’re having a suicide problem.
0:37:39 And one of the students who committed suicide in 2018 was my student, one of my students in a class that I had.
0:37:41 She was active.
0:37:47 She was involved heavily in Amnesty International, which is how she came to me because she took my global health class.
0:37:50 She was very interested in helping others.
0:37:52 She was cheery.
0:37:55 She was a pleasure to be around.
0:38:03 There were none of the signs when she was in my classroom, at least, of outward struggle.
0:38:09 So I really felt blindsided when I heard that she had committed suicide.
0:38:23 And I had heard from friends of multiple students who had committed suicide in that same time frame that one of the things they were all worried about is that they were somehow going to screw up,
0:38:32 that they had screwed up, that college was the last good years, and then everything else was just going to be a series of failure.
0:38:36 And I thought, my God, what is happening?
0:38:41 And so as a professor, you know, I’m teaching and I teach depressing classes.
0:38:43 Let me just be honest about this.
0:38:47 I teach about things that can hurt us.
0:38:49 I teach about pandemics.
0:38:51 I teach about illnesses.
0:38:55 I teach medicine, which is all about disease and death.
0:38:58 And so my classes are pretty depressing.
0:39:09 And I thought, what can I do to make a difference or, like, just provide a different perspective to try to help all of this anxiety?
0:39:14 And that’s when Teresa McPhail started teaching a course she calls Failure 101.
0:39:19 So I start off the class with the ultimate failure, which is death.
0:39:27 I really think I’m an intellectual granddaughter of Ernest Becker, who famously wrote The Denial of Death.
0:39:29 He was an anthropologist as well.
0:39:36 And his take was that society everywhere is a living myth of the significance of human life,
0:39:46 that we defiantly create meaning where none exists because we do not want to deal with the terror that the ultimate mistake is one that’s going to get us killed.
0:39:52 I start off the class saying, listen, life is terrifying because death is terrifying.
0:39:57 And I think evolutionarily, mistakes meant catastrophe.
0:40:05 And that’s probably why we don’t like them, because if you make a wrong move in the savannah when you’re hunting, you’re dead.
0:40:19 When I read your course description and you describe teaching about failures in all realms of science, and then you write that death is the ultimate failure, my response was, well, that’s not fair.
0:40:32 My reasoning would be that failure implies at least some small level of uninevitability, whereas death has a perfect record as far as I know.
0:40:39 Yes, but if you look at biology, death is your systems all failing.
0:40:40 See what I’m saying?
0:40:50 But that’s the perfect example to try to get them to accept that failure is necessary, because the example of something that doesn’t die is cancer.
0:40:52 And that’s not what we want.
0:41:00 And so there’s that tension that, yes, death is, if you think about it from that perspective, it’s all your system shutting down one by one in a cascade.
0:41:24 And you can see that as the ultimate failure, but then I try to get them to embrace that, because, and again, I’m just Becker’s granddaughter, because his argument was, if we distract ourselves and we try to push down our fears of failing, ultimately that’s about our fear of dying, that ironically trying to push all of that down and not talking openly about it creates more problems.
0:41:33 So that’s my take, is that, yeah, you have to embrace failure, because you can’t have a successful life without it.
0:41:53 I basically tell them at the start of my classes that I need you to get comfortable being uncomfortable, and I need you to be comfortable with uncertainty, and I really think embracing the idea that you’re going to fail
0:42:04 Okay, but Professor McPhail, I’ve gotten nothing but A’s for the last 13 years of my life, and I’m not going to stop now.
0:42:09 So would you please not say things like that and get out of the way and start lecturing and give me an A?
0:42:11 No.
0:42:20 I’m trying to take failure and put it on the table and look at it as a social object.
0:42:24 From an economic perspective, what does it look like?
0:42:26 From a business perspective, from a science perspective?
0:42:30 Because failure is a changeable object.
0:42:38 Like, one failure in one arena doesn’t necessarily have any of the components of the same label in another.
0:42:39 I mean, I’m old school.
0:42:41 I’m talking about Hobbes.
0:42:52 And we’re going over things like what is the social contract and what does the social good look like and what does Hobbes think failure will be?
0:42:58 Give me an example of a culture that dealt with or deals with failure very differently than 21st century American.
0:43:00 I mean, it’s never good.
0:43:00 I mean, here’s the thing.
0:43:07 So anthropologists often ask, what are the things that all cultures everywhere struggle with?
0:43:12 And failure is definitely something that all cultures grapple with on some level.
0:43:13 That surprises me.
0:43:18 I would have thought there have been many cultures and societies through time where…
0:43:18 Where it’s fine?
0:43:20 I don’t know about fine.
0:43:21 It’s great?
0:43:24 I definitely don’t think great.
0:43:26 But I mean, here’s the way I’m thinking.
0:43:30 If you look at our track record, humans, we’re pretty darn fallible.
0:43:34 We screw up all the time in so many ways.
0:43:35 Right.
0:43:47 And so it’s surprising to me that we haven’t developed a philosophy or science of failure that would be fairly timeless and robust and so on.
0:43:49 You would think so, but not in my…
0:43:56 I mean, maybe someone will listen to this and say, here’s the book that answers it all.
0:44:09 But the truth is there’s something about the time you’re living in that it’s either hard to see what it is you’re doing wrong or it’s hard to admit where that buck stops.
0:44:18 I know that the researchers, Lauren Eskreis-Winkler and Ayelet Fischbach, have done work looking at why we hate failure so much.
0:44:26 And it comes down to a pretty obvious point, which is that ego is real and failure threatens our ego.
0:44:29 And universally, it feels bad.
0:44:42 So if we were to reduce it to that finite and concrete psychological response and emotional response, have you encountered any way to sort of take the sting out of that response?
0:44:46 Not really except for embracing it.
0:44:48 So I would, I guess…
0:44:50 Man, I came in thinking you were going to have all sorts of…
0:45:04 I went back to Amy Edmondson, the failure expert at Harvard, to ask what she would like to see taught in a failure 101 class.
0:45:08 Number one, distinguishing different kinds of failure.
0:45:09 A failure is not a failure is not a failure.
0:45:12 You know, we could be talking about a little mistake.
0:45:15 We could be talking about a catastrophic accident.
0:45:19 We could be talking about a scientific, you know, hypothesis that didn’t get supported.
0:45:23 So providing the students that useful terminology and that useful clarity.
0:45:30 And then I think a second element that I’d love to see in the course is experimentation best practices.
0:45:36 You know, how do you think about good experiments versus not good experiments?
0:45:40 Here’s what Teresa McPhail writes in her Failure 101 syllabus.
0:45:46 Some assignments will intentionally be set up for you to fail to complete them in full.
0:45:51 But I expect you to cope with this as best you can and turn in something.
0:45:55 I will not warn you which weeks are impossible to complete.
0:45:59 McPhail has now taught the course seven times.
0:46:04 The only grades she gives are an A for passing or an F for failing.
0:46:07 She’s only had two students ever fail the class.
0:46:14 McPhail says she has gotten positive feedback from students, their parents, and according to some students, their therapists.
0:46:18 She would like to see her course taught at other schools.
0:46:22 I think they should offer a Failure 101 course because it works.
0:46:27 It changes the students’ perspectives on failure.
0:46:29 It makes them embrace it.
0:46:36 It completely alters their understanding of themselves in relationship to the norm.
0:46:40 And I think that’s worth it.
0:46:43 I’m looking at your Rate My Professor rankings.
0:46:43 Oh, God.
0:46:46 And you have a perfect score.
0:46:47 I’ve never seen that before.
0:46:49 Here’s one review.
0:46:51 Quite possibly the best professor I have ever had.
0:46:53 Confident and knows what she’s talking about.
0:46:55 She’s enthusiastic about her lectures.
0:46:58 And that enthusiasm is truly contagious to students.
0:46:59 She just loves what she does.
0:47:02 Also, she is so cool.
0:47:05 She’s had such an interesting life.
0:47:07 Low-key want to be her.
0:47:08 All right.
0:47:09 So what’s your review of that review?
0:47:11 Oh, my God.
0:47:13 If they could only see me behind the scenes.
0:47:18 You know what, though?
0:47:23 I think they feel like that because I do show them my failures.
0:47:24 For instance?
0:47:26 Well, I mean, we’re all human beings.
0:47:30 There are going to be days where I’m not entirely prepped for class.
0:47:31 Ah.
0:47:32 What do you do then?
0:47:33 I announce it.
0:47:35 I say, hey, guess what?
0:47:37 I forgot my notes at home.
0:47:39 So we’re off the books.
0:47:40 Let’s do this.
0:47:43 Or I also will.
0:47:47 I mean, we live in the age of lightning Googling.
0:47:52 So, you know, if I say something, feel free to fact check me.
0:47:54 And if I’m not right, raise your hand.
0:47:58 Because I want them to get the idea that you can be an expert.
0:48:00 You can be highly knowledgeable.
0:48:03 But there’s no way I know everything.
0:48:10 What is the upside of embracing or at least processing failure in the way that you’re describing?
0:48:11 Freedom.
0:48:12 Freedom.
0:48:18 And a lightness of moving through the world.
0:48:19 Okay.
0:48:23 But the people designing our airplanes and bridges, I don’t care if they feel free and light.
0:48:25 So here’s the thing.
0:48:31 Before any of us step on a plane, there’s been so many prototypes and there’s been so many tests.
0:48:37 And the thing I’d like to see more is letting people fail.
0:48:41 There has to be a space for people to accept abject failure.
0:48:44 Failure that doesn’t teach you anything.
0:48:48 And in that space, what does one do?
0:48:51 Does one grieve, for instance?
0:48:52 I think, yes.
0:48:55 I think one learns acceptance.
0:48:58 And out of acceptance comes resilience.
0:49:05 I ask my students to reflect at the end of every class.
0:49:11 And the answers I get back is that they’ve totally changed their definition of what failure is.
0:49:14 Most of them will say it’s not the end of the world.
0:49:15 It’s a setback that you learn from.
0:49:20 And all of them understand that it’s subjective and a social construct.
0:49:32 Simply having a class where you come in once a week for three hours and talk about failure just blatantly somehow made it okay for them to accept their own personal failures.
0:49:41 And one of the things that shifts throughout the class is I ask them, what do you think the rate of other people’s failures is compared to your own?
0:49:46 And before they take the class, they say, oh, I definitely fail more than other people.
0:49:50 And then at the end of the class, they go, everyone is failing every day at everything.
0:49:53 And I’m like, yes, that’s right.
0:49:53 Correct.
0:49:55 You’ve passed this class.
0:50:04 I’d like to thank Teresa McPhail for teaching all of us a new way to think about failure.
0:50:09 And thanks to everyone who spoke with us for this series, How to Succeed at Failing.
0:50:12 I’m curious to know how you think we did with this series.
0:50:16 One key ingredient of learning from failure is getting good feedback.
0:50:18 And I want yours.
0:50:22 Our email is radio at Freakonomics.com.
0:50:25 You can also leave a rating or review on your podcast app.
0:50:31 Coming up next time on the show, let’s play a guessing game.
0:50:38 Who operates in the shadows of the global economy, but often dictates the fate of nations?
0:50:45 They’re also involved at one point or another in the buying and selling of just about everything you touch.
0:50:48 Wherever there is history being made, the commodity traders are there.
0:50:54 Jack Farchi and Javier Blas have written a definitive book on the commodity trading industry.
0:50:59 We’re not talking about the desk warriors who trade financialized commodity futures.
0:51:06 These are the people who buy and sell the actual petroleum products and metals and agricultural products.
0:51:11 If you think about a commodity trader, they have to have a bit of the Wolf of Wall Street,
0:51:16 a bit of James Bond, and a lot of pirates of the Caribbean.
0:51:26 Just beneath the surface of the global economy, there is a hidden layer of dealmakers for whom chaos, war and sanctions are often a great business opportunity.
0:51:29 We’ll hear all about them next time on the show.
0:51:31 Until then, take care of yourself.
0:51:34 And if you can, someone else too.
0:51:37 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:51:45 This episode and this entire failure series was originally produced by Zach Lipinski and was updated with help from Dalvin Abawaji.
0:51:50 It was mixed by Greg Rippon and Jasmine Klinger with help from Jeremy Johnston.
0:51:56 The Freakonomics Radio network staff also includes Alina Cullman, Augusta Chapman, Eleanor Osborne, Ellen Frankman,
0:52:00 Elsa Hernandez, Gabriel Roth, Morgan Levy, Sarah Lilly, and Tao Jacobs.
0:52:08 You can find our entire archive on any podcast app or at Freakonomics.com, where we also publish transcripts and show notes.
0:52:14 Our theme song is Mr. Fortune by the Hitchhikers, and our composer is Luis Guerra.
0:52:16 As always, thanks for listening.
0:52:25 I am a professor, so if I’m talking too long, feel free to nudge me.
0:52:25 Will do.
0:52:29 I try to keep track of it, but sometimes, you know, I get enthusiastic, as you’ll see.
0:52:30 Should we have a safe word?
0:52:33 Pineapple.
0:52:40 The Freakonomics Radio Network.
0:52:42 The hidden side of everything.
0:52:46 Stitcher.

0:00:06 Through his office window at Intel headquarters, Andy Grove could see the Ferris wheel of Great
0:00:11 America Amusement Park spinning in the distance. But the document in front of him offered no such
0:00:18 entertainment. Gordon Moore, yes, that Gordon Moore of Moore’s Law fame, drops into the visitor’s
0:00:24 chair, his face grim. The latest memory chip numbers are catastrophic. After quarters of
0:00:31 watching Japanese competitors demolish Intel’s market share from 83% to a mere 1.3%,
0:00:39 this situation had become existential. In a standard issue 8×9 cubicle, Grove insisted executives use the
0:00:44 same workspace as everyone else. He asked a question that would change history. If we got
0:00:50 kicked out and the board brought in a new CEO, what do you think he would do? Gordon answers without
0:00:57 hesitation. He’d get us out of memories. This reply hits Grove like a physical blow. After a moment of
0:01:02 stunned silence, he delivers the line that would save Intel. Why shouldn’t you and I walk out the door,
0:01:09 come back in, and do it ourselves? No dramatic music swells, no chest-bumping celebration, just the sound
0:01:15 of two men exhaling as they mentally prepare to abandon the very product that built their company.
0:01:23 Intel in 1985 was a memory company. The business generated over 90% of their revenue and it would
0:01:29 soon be gone. The pivot would cost thousands of jobs, millions in R&D, and require shuttering
0:01:34 eight manufacturing plants. But by detaching themselves emotionally and viewing the situation
0:01:40 from an outsider’s perspective, Grove and Moore had found clarity in crisis. Grove would later distill
0:01:47 this ruthless, clear-sightedness into a mantra for corporate survival. Only the paranoid survive.
0:01:53 This wasn’t just a catchy business slogan, it was survival wisdom earned through trauma. For Grove,
0:02:00 paranoia wasn’t pathological, it was practical. And its seeds were planted a continent away half a century
0:02:07 earlier when a hard-of-hearing Jewish boy named Andras Grof was learning to detect danger before it arrived
0:02:11 while hiding from Nazi death squads in wartime Budapest.
0:02:31 Welcome to The Knowledge Project. I’m your host, Shane Parrish. In a world where knowledge is power,
0:02:36 this podcast is your toolkit for mastering the best of what other people have already figured out.
0:02:44 The story of Andy Grove is about survival in its most elemental form. Imagine transforming yourself
0:02:49 from a child hiding from Nazi death squads in Budapest to becoming Time Magazine’s man of the year
0:02:56 and the CEO who saved Intel. That journey isn’t just remarkable, it’s almost incomprehensible. Yet,
0:03:00 Grove himself would scoff at any narrative involving destiny or divine intervention.
0:03:06 His philosophy, captured in the book title, Only the Paranoid Survive, offers a far more practical
0:03:13 explanation. Detect threats before they become fatal. Whether it’s the sound of jackboots on
0:03:18 cobblestone streets or Japanese competitors overtaking your memory chip business, survival demands the same
0:03:25 skills. Constant vigilance, brutal self-assessment, and the courage to abandon what wants to find you.
0:03:31 The same boy who learned to read danger in a stranger’s glance would later read impending doom
0:03:38 in market share statistics. Different contexts, identical skills. Today’s episode isn’t just about
0:03:44 technology or business strategy, it’s about developing a mindset that thrives in environments of
0:03:50 radical change. Something all of us face today, regardless of our field. What made Grove extraordinary
0:03:56 wasn’t technical genius, but his ability to see reality clearly when others couldn’t? While his
0:04:03 contemporaries remained emotionally attached to past decisions, Grove asked the questions no one dared to
0:04:10 ask. What if we’re wrong? What if everything we built needs to be abandoned? Grove’s lessons on
0:04:16 strategic inflection points offer something invaluable, a framework for detecting existential threats
0:04:21 before they destroy you. Drawing from his autobiography and Richard Tedlow’s definitive
0:04:26 biography, this episode reveals how Grove’s traumatic childhood shaped his leadership approach,
0:04:30 how he taught himself to become a world-class manager, and how he saved intel by walking away
0:04:36 from the very product that built it. Remember to stay until the end for lessons you can take away from
0:04:41 this episode. After all, inflection points don’t announce themselves with press releases. They whisper
0:04:47 first, then shout, then destroy. In Grove’s world, paranoia isn’t anxiety, it’s attention paid to
0:04:59 whispers others dismiss. It’s time to listen and learn. This podcast is for entertainment purposes only.
0:05:11 Let’s begin at the beginning. Andreas Estevan Grof was born in 1936 to a middle-class Jewish family in
0:05:16 Budapest, Hungary. His father co-owned a dairy business. His mother was, in Grove’s words,
0:05:22 cultured without being snobbish. They were thoroughly assimilated into Hungarian society. That is, until
0:05:29 everything changed. When Andreas was just five, his father was conscripted into a Jewish labor battalion,
0:05:35 essentially a death sentence of forced labor on the Eastern Front. Young Andreas noticed something that
0:05:40 day he’d never forget. His father was trying to smile, but there was something wrong with his smile.
0:05:45 In the spring of 1943, the family received notice that George Grof had disappeared.
0:05:51 Andreas, now six, was bewildered by this term while watching his mother retreat into smoking in solitary
0:05:58 grief. Amid this trauma, Andreas contracted scarlet fever, confining him for months and permanently
0:06:05 damaging his hearing. Yet years later, Grove reflected on how this seeming handicap became an unexpected
0:06:06 asset. He wrote,
0:06:12 I had to be quicker at processing nonverbal signs and more attentive to signals. And most important,
0:06:18 because I often understood only parts of sentences, I had to exercise my mind constantly.
0:06:24 What’s instructive here is Grove’s capacity to transform disadvantage into strength. The hearing
0:06:30 loss that isolated him socially became his edge in business. While others heard noise, Grove detected
0:06:35 patterns. While others waited for complete information, Grove decided with fragments.
0:06:40 The little limitation that made childhood harder became the foundation of his leadership genius.
0:06:45 Life rarely deals perfect hands. The winners aren’t those with the best cards, but those who play
0:06:52 difficult hands exceptionally well. The situation for Hungarian Jews deteriorated dramatically in March of
0:06:59 1944 when Nazi Germany directly occupied the country. The eight-year-old Andreas watched as German soldiers
0:07:05 marched into Budapest. There were no announcements and there was no fighting. They just came in. My mother
0:07:10 and I stood on the sidewalk of the ring road watching as the cars and troop carriers filled with soldiers
0:07:16 drove by. The German soldiers didn’t look anything like the soldiers who had guarded my father’s labor unit.
0:07:22 Those soldiers slouched a bit and their uniforms were wrinkled. The German soldiers were neat,
0:07:29 more shiny boots and had self-confident air about them. They reminded me of my toy soldiers. Within days,
0:07:35 Adolf Eichmann arrived with a small but efficient commando unit to eliminate Hungary’s Jewish population.
0:07:43 They moved with terrifying speed. By July of 1944, most Jews outside of Budapest had been deported to
0:07:50 Auschwitz and murdered. Young Andreas experienced the casual cruelty of anti-Semitism firsthand when a
0:07:55 playmate suddenly announced that Jesus Christ was killed by the Jews and because of that all the Jews
0:08:01 would be thrown into the Danube. Andreas ran to his mother in tears and never returned to that park again.
0:08:08 By late summer, Andy and his mother were forced into a designated star house and required to wear yellow
0:08:14 stars in public. People avoided looking at us. Even people we knew wouldn’t meet our eyes. It was as if
0:08:21 a barrier was growing between us and everyone else. In October 1944, as Hungary’s homegrown fascist
0:08:28 organization seized power, Andy’s mother made a fateful decision. Andreas, she said, “We have to get out of here.”
0:08:36 This paranoid vigilance would save their lives. Maria obtained false identity papers with a Slavic surname,
0:08:42 and they went into hiding, posing as non-Jewish refugees. The danger was constant. Being circumcised
0:08:48 would immediately identify Andreas as Jewish if he was discovered, so his mother warned him not to
0:08:53 urinate when others were present in their communal bathroom. When children were gathered to recite
0:08:59 Christian prayers, Andreas feigned illness and ran to his mother, who quickly created a distraction.
0:09:05 This ability to detect threats and take decisive action would later become the cornerstone of Grove’s
0:09:10 leadership philosophy decades later. As he would later write, the ability to recognize that the winds
0:09:16 have shifted and to take appropriate action before you wreck your boat is crucial to the future of an
0:09:23 enterprise. Grove learned early that survival depends not just on recognizing danger, but on acting before
0:09:32 it’s too late. A lesson that would later save Intel. By January of 1945, the Soviet Red Army reached Budapest,
0:09:37 transforming the city into a battleground. Sheltering in a cellar during the bombardment,
0:09:42 Andreas and his mother had a remarkable encounter with a Russian sergeant who spoke German. After
0:09:48 establishing communication, Maria made a bold request. She asked Andreas to recite a Hebrew prayer he had
0:09:54 learned at school. The boy was terrified. After months where revealing their Jewish identity meant
0:10:00 certain death, his mother was asking him to expose them, but she assured him it was safe. As he recited
0:10:06 the prayer, the Russian sergeant smiled with recognition. He too was Jewish. The Germans had killed his entire
0:10:13 family in Russia. Liberation brought relief, but also new horrors. Andreas witnessed his mother being sexually
0:10:19 assaulted by a Russian soldier. The next day when they reported the crime to military authorities,
0:10:26 Maria made the extraordinary decision not to identify her attacker. She had calculated that if she named him,
0:10:31 he would be executed immediately, but his comrades would likely return and murder everyone in their shelter
0:10:40 in retaliation. Even in this most personal violation, Maria demonstrated the cold strategic calculus that
0:10:46 her son would later apply to business decisions. Sometimes you must accept a terrible injustice
0:10:51 when the alternative is destruction. The profound impact of witnessing such moments where survival
0:10:58 required painful compromise rather than righteous action shaped Andreas’s world view forever. He was
0:11:05 not yet nine years old. In the aftermath of the war, something remarkable happened. Andy’s father,
0:11:10 George Grof returned home. He had indeed disappeared, but somehow survived the Eastern Front and made his
0:11:17 way back to Budapest. The family reunited, though forever changed by their experiences. Under Soviet occupation,
0:11:23 Hungary transformed into a communist state. The dairy business George had co-owned was nationalized.
0:11:29 Both parents found government work. Georgian retail management, Maria, at the now state-owned dairy.
0:11:35 Their apartment once again filled with visitors, creating a facade of normalcy that masked the trauma
0:11:40 that they had endured. Young Andreas threw himself into education, displaying the fierce intelligence
0:11:47 and disciplined work ethic that would later define his career. His insatiable curiosity and aptitude
0:11:52 for mathematics and science set him apart. At the prestigious Madrick gymnasium, his physics teacher
0:12:00 made a prediction that would later inspire the title of Grof’s memoir, “Life is a big lake. All the boys get
0:12:07 in the water at one end and start swimming. Not all of them will swim across, but one of them I’m sure will. That
0:12:15 one is Grof.” The teacher’s words resonated deeply. Decades later, Grof would title his autobiography “Swimming
0:12:21 across,” and conclude it with, “As my teacher Volensky predicted, I managed to swim across the lake, not
0:12:27 without effort, not without setbacks, and with a great deal of help and encouragement from others. I am
0:12:33 still swimming.” But before Andreas could fully test those waters, Hungary’s political situation would once
0:12:40 again upend his life. Most mornings I start my day with a smoothie. It’s a secret recipe the kids and
0:12:46 I call the Tom Brady. I actually shared the full recipe in episode 191 with Dr. Rhonda Patrick.
0:12:52 One thing that hasn’t changed since then, protein is a must. These days I build my foundation around
0:13:00 what Momentus calls the Momentus 3: protein, creatine, and omega-3s. I take them daily because they support
0:13:06 everything: focus, energy, recovery, and long-term health. Most people don’t get enough of any of
0:13:12 these things through diet alone. What makes Momentus different is their quality. Their whey protein
0:13:18 isolate is grass-fed, their creatine uses Creopure, the purest form available, and their omega-3s are
0:13:26 sourced for maximum bioavailability, so your body actually uses what you take. No fillers, no artificial
0:13:32 ingredients, just what your body needs, backed by science. Head to livemomentus.com and use code
0:13:37 KnowledgeProject for 35% off your first subscription. That’s code KnowledgeProject
0:13:43 At LiveMomentus.com for 35% off your first subscription.
0:13:46 Spring is here, and you can now get almost anything you need delivered with Uber Eats.
0:13:49 What do we mean by almost? You can’t get a well-groomed lawn delivered, but you can get
0:13:54 chicken parmesan delivered. Sunshine? No. Some wine? Yes. Get almost, almost anything delivered
0:13:57 with Uber Eats. Order now. Alcohol and select markets. See app for details.
0:14:04 In 1956, when Andreas was 20 and a university student in Budapest, revolution erupted across
0:14:09 Hungary. What began as a student demonstration against Soviet control quickly escalated into
0:14:14 a nationwide uprising. For a brief exhilarating moment, it seemed the Hungarian people might
0:14:19 win their freedom. Andreas participated in early demonstrations, but he had learned from childhood
0:14:25 the fatal cost of misreading political winds. When Soviet tanks rolled into Budapest on November 4th
0:14:31 to crush the uprising, he recognized the patterns of oppression unfolding once again. He would later
0:14:36 write, “I was deathly afraid that the Soviets would seal the borders completely, and I knew once they
0:14:42 did that, anybody who had participated in any way in the uprising would have to pay the price. I had an
0:14:48 uneasy feeling that I would have a very bleak future in Hungary.” So on November 20th, Andreas slipped away
0:14:54 from his parents’ apartment, carrying only what fit in his pockets. He joined thousands of refugees
0:14:59 streaming towards the Austrian border. Guided by local farmers through secret roads, he waded through
0:15:05 icy marshes in darkness, evading Soviet patrols. This crossing wasn’t merely physically dangerous,
0:15:11 it represented a complete severance from the past. Andreas had no guarantee he would ever see his parents
0:15:16 again. He carried no photographs, no memories, just the clothes on his back and the determination to
0:15:22 start anew. When he reached Austria, America seemed the obvious destination. He had relatives in New York
0:15:26 whom he’d never met, but they were his only connection to what would become his new home,
0:15:32 and ultimately the launching pad for one of the most remarkable business careers of the 20th century.
0:15:38 Andreas Groff arrived in the United States in January of 1957, penniless, speaking broken English,
0:15:45 and knowing almost no one. His transformation into Andy Groff was about to begin. His first night in
0:15:51 America revealed both the promise and challenges ahead. At the Refugee Center Hotel, he encountered
0:15:57 a vending machine. He wrote, “It was a miracle. You put money in and food comes out. This would never
0:16:01 happen in Hungary. Either the machine would take your money and give you nothing, or more likely,
0:16:06 there would be no machines and no food.” Andy enrolled at the City College of New York,
0:16:11 supporting himself as a waiter while studying with relentless discipline. Despite the language
0:16:18 barriers and his hearing impairment, he graduated first in his chemical engineering class in 1960.
0:16:25 It was during this time that Andreas Groff became Andrew Grove, a change he made with characteristic
0:16:30 pragmatism. As he later explained, “I found myself spending too much time spelling my name out to people,
0:16:36 then repeating it, then having it come back mispronounced or misspelled. I translated the name
0:16:41 from Hungarian, where Groff means count in the aristocratic sense. Groff seemed close enough.”
0:16:48 This wasn’t merely a practical decision. It represented Groff’s methodical approach to success.
0:16:54 He didn’t just immigrate to America. He systematically transformed himself into an American.
0:17:01 At City College, Andy met Eva Kasten, a fellow refugee who had come from Austria by way of Bolivia.
0:17:06 They married in 1958 and would remain together for the rest of their life. After graduation,
0:17:12 Groff earned his PhD in chemical engineering from Berkeley in just three years. Though academically
0:17:17 brilliant, he was restless to apply his knowledge. “I want to do something useful,” he would say over and
0:17:24 over again. When a Berkeley professor suggested solid-state physics as an emerging field, Groff approached his
0:17:30 career hunt with characteristic thoroughness. He researched 22 different companies, dividing them
0:17:36 into two categories: jobs for which he was qualified but uninterested, and those that interested him but
0:17:43 where he might be underqualified. This methodical approach led him to Fairchild Semiconductor in 1963,
0:17:49 where he immediately connected with research director Gordon Moore, a relationship that would shape
0:17:55 technological history. What’s remarkable here is Groff’s systematic approach to opportunity. While most
0:18:00 immigrants struggled to find any job, Groff was strategically positioning himself at the intersection
0:18:06 of his skills and emerging industries. He didn’t just adapt to America, he methodically analyzed where he could
0:18:14 create maximal impact, a preview of the strategic thinking that would later save intel. Before diving deeper into
0:18:20 Groff’s career at Fairchild, we need a brief history of how the entire semiconductor industry began.
0:18:26 Silicon Valley’s origin traces back to December 26, 1947, when three scientists at Bell Laboratories
0:18:33 created the first working transistor. William Shockley, John Bardeen, and Walter Bratton had invented a device
0:18:40 that would replace bulky vacuum tubes in electronics, arguably one of the most important inventions in the history
0:18:45 of the world. In a typical East Coast corporate story, these men would have remained at Bell Labs,
0:18:51 collecting patents and promotions while safely ensconded in a major corporation. But Shockley had different
0:18:57 ideas. In 1955, he left Bell Labs to establish Shockley Semiconductor Laboratory in Mountain View,
0:19:03 California. He recruited brilliant young engineers, including Gordon Moore and Robert Noyce. However,
0:19:09 despite his scientific genius, Shockley proved to be a disastrous manager. He was controlling,
0:19:16 erratic, and paranoid. By 1957, eight of his top researchers, later dubbed the traitorous eight,
0:19:20 could no longer tolerate Shockley’s leadership. Moore and Noyce among them, they approached a young
0:19:26 investment banker named Arthur Rock, who helped them secure funding from Fairchild Camera. Fairchild
0:19:34 Semiconductor was born in October 1957. This moment established the pattern that would define
0:19:38 Silicon Valley. Talented people leaving established companies to form startups, backed by investors
0:19:44 willing to bet on unproven technologies, which is a radical departure from the East Coast business
0:19:49 culture at the time. The next few years at Fairchild produced extraordinary breakthroughs.
0:19:54 They developed the process for semiconductor manufacturing, and they developed the integrated
0:19:59 circuit, building on work done at Texas Instruments. When Fairchild Camera exercised its options to
0:20:06 buy out the founders in 1959, each received $250,000, which is over $2.5 million today, for their initial
0:20:14 $500 investment. Silicon Valley’s reputation for turning sand into gold was born. This transaction sparked a
0:20:20 financial ecosystem unlike anything before it. Success breeds success with wealthy engineers funding
0:20:26 new ventures. Dozens of semiconductor firms would eventually trace their lineage back to Shockley’s
0:20:32 laboratory. By the time Grove arrived at Fairchild in 1963, the company was the epicenter of technological
0:20:39 revolution. Moore and Noyce had already become legends. The culture valued technical brilliance, but as Grove would
0:20:45 soon discover, it lacked managerial discipline. For a recent immigrant with a strong accent and hearing problems,
0:20:52 Silicon Valley offered something traditional corporate America didn’t: a pure meritocracy, where problem-solving
0:20:58 ability trumped pedigree. It was the perfect environment for Grove’s combination of technical brilliance,
0:21:04 determination, and willingness to question orthodoxy. What’s significant here is that Grove joined a
0:21:10 culture that was simultaneously revolutionary and yet, at the same time, deeply flawed. Silicon Valley had
0:21:16 technical brilliance, but lacked organizational discipline. Precisely the gap that Grove, with his
0:21:22 Eastern European understanding that systems mattered as much as individual genius, was uniquely positioned
0:21:28 to fill. Now, let’s see what Grove encountered when he joined this revolutionary industry. Andy’s first week at
0:21:34 Fairchild established a pattern that would define his career. On Monday morning, a supervisor handed him a
0:21:39 Semiconductor physics problem requiring differential equations and data analysis. By Friday,
0:21:45 Andy had solved it using computer programming skills he had taught himself during his studies, a rare capability
0:21:52 in a commercial company in 1963. “How lucky can you get?” Andy later marveled. “You show up for work on Monday,
0:21:58 you’re assigned a problem that you’re uniquely qualified to solve, and you defies a non-obvious solution by Friday.” But
0:22:04 was it mere luck? Andy had methodically acquired skills beyond what was required, positioning himself in a
0:22:09 field where they might prove valuable. As Michael Dell would later observe, “He’s smart, he’s shrewd. There’s
0:22:15 no such thing as lucky a thousand times in a row.” Grove himself would later coin the phrase “earned luck” to
0:22:23 explain such success. During his five years at Fairchild, Andy displayed extraordinary work ethic. Beyond his day
0:22:29 job, he authored 30 scientific articles, filed two patents, and taught graduate-level semiconductor
0:22:34 physics at Berkeley. He challenged conventional wisdom about semiconductor surfaces with data that
0:22:40 contradicted accepted theory. “When presenting these findings in 1963, the semiconductor establishment
0:22:46 reacted harshly. I got nailed by all these experts,” Andy recalled, “who would sooner burn witches or equally
0:22:52 burn me at the stake for being a heretic.” But Andy trusted data over dogma, a trait that would serve
0:22:57 him throughout his career. Perhaps his most valuable contribution at Fairchild was what he called
0:23:02 “managing up,” particularly his ability to work with Gordon Moore, the brilliant but conflict-averse
0:23:07 head of R&D. The device development lab where Andy worked lacked clear expectations and internal
0:23:12 discipline, mirroring the broader company culture. Andy developed a technique for extracting Moore’s
0:23:17 insights during contentious meetings. “I would be running a meeting and people would be bashing each other’s
0:23:22 heads.” Andy explained, “I looked up at Gordon. Something is wrong.” So I’d yell,
0:23:27 “Stop! Gordon, what’s bothering you?” “Shut up! Gordon, tell us! Whatever you wanted to tell us!”
0:23:32 Somebody had to stop the traffic. This role of traffic cop for Moore’s insights proved
0:23:36 invaluable. Moore appreciated Andy’s ability to draw him out once telling him,
0:23:41 “You know me better than my wife, or at least as well.” Fairchild’s trajectory illustrates the volatile
0:23:47 nature of the early semiconductor industry. The company skyrocketed from founding to industry dominance,
0:23:53 then began unraveling due to management missteps. Its technical achievements were revolutionary,
0:23:59 but the business itself was poorly run. Two things stand out to me here. First, Andy’s willingness to
0:24:05 follow the data over dogma, even at personal risk. And second was his recognition that technical
0:24:10 brilliance alone doesn’t build lasting companies. While his peers focused exclusively on innovation,
0:24:15 Grove was already developing the organizational mindset that would later distinguish Intel.
0:24:22 By 1967, Andy Grove had reached a crossroads. Fairchild’s semiconductor, where he’d cut his
0:24:27 professional teeth was hemorrhaging talent. The exodus had begun with the Traitorous Eight,
0:24:33 engineers who had abandoned Shockley’s lab to form Fairchild. And now Fairchild itself was spawning
0:24:39 a second generation of Silicon Valley startups. The Valley wasn’t just growing, it was subdividing.
0:24:44 When Gordon Moore and Robert Noyce announced they were leaving Fairchild in 1968 to launch their own
0:24:50 semiconductor venture, Grove didn’t hesitate and didn’t wait for an invitation. The moment Moore mentioned
0:24:54 their plans, Grove immediately declared, “I’m going with you.” And just like that, he became employee
0:25:01 number three at Intel, short for Integrated Electronics. Intel’s founding trio constituted
0:25:07 semiconductor royalty. Gordon Moore was the visionary physicist who would soon formulate Moore’s law,
0:25:11 predicting the doubling of transistor density every two years, a prediction that would drive the
0:25:16 industry’s ambitions for decades. Robert Noyce, the co-inventor of the integrated circuit,
0:25:21 brought charismatic leadership and industry credibility that opened doors and investor
0:25:27 checkbooks. And then there was Andy Grove. What Grove brought to this threesome was something
0:25:32 altogether different but equally crucial, a ferocious commitment to operational excellence. As one
0:25:38 industry observer noted, in the semiconductor industry, management talent has been harder to find than
0:25:43 engineering talent. By becoming a brilliant manager, Grove differentiated himself and the company.
0:25:50 Here’s the irony. Until Intel’s founding, Grove had shown virtually no interest in business management.
0:25:55 His published papers all dealt with technical subjects. He was an engineer and by all accounts,
0:26:01 a brilliant one. But Silicon Valley in the late 1960s was already teeming with technical geniuses.
0:26:07 What it lacked were leaders who could transform those geniuses into cohesive, productive teams. Fairchild
0:26:12 was a great example of this, but far from the only one. What’s significant here is Grove’s intuitive
0:26:18 understanding of complementary skills. While others sought to duplicate their strengths in founding teams,
0:26:22 Grove recognized that Moore and Noyce needed someone fundamentally different from themselves.
0:26:28 They had vision. They had technical credibility. But what they lacked was operational discipline.
0:26:34 Grove didn’t need to be another visionary inventor. Instead, he took the role of execution specialist who
0:26:43 could transform brilliant ideas into reality. Why would Andy Grove, a PhD engineer with zero management
0:26:48 training, suddenly transform himself into a business leader? The answer comes from Gordon Moore himself.
0:26:53 When asked how they handled problems in Intel’s early days, Moore responded with characteristic
0:26:58 understatement. You look at the problems that are current at the time, and you try to come up with
0:27:04 some kind of creative solution for them. Or you turn them over to Andy, one or the other. Grove had
0:27:09 effectively become Intel’s default problem solver. Any challenge that Moore or Noyce couldn’t handle,
0:27:14 or perhaps didn’t want to handle, landed on Andy’s desk. Anyone who has worked in a startup’s early
0:27:19 days will recognize this pattern. The persistent problem nobody else wants to tackle eventually
0:27:24 find their permanent home with the person willing to solve them. Grove not only accepted this role,
0:27:29 but he excelled at it. Having witnessed brilliant ideas and talent wasted at Fairchild due to poor
0:27:34 execution, Grove was determined not to let that happen at Intel. So he did something remarkable. He
0:27:39 systematically taught himself management and leadership, applying the same analytical rigor
0:27:44 he used in chemical engineering and semiconductor physics. This self-transformation is a defining
0:27:50 characteristic of Grove’s career. He was a learning machine. He simply refused to be limited by his
0:27:56 formal training or pigeonholed into one specialty. In 1997, reflecting on his career, Andy observed,
0:28:01 I went from chemistry to chemical engineering, to applied physics, to solid state device physics,
0:28:08 to manufacturing, all in a 10 to 12 year period. His biographer notes that Grove could have continued.
0:28:13 After manufacturing, Grove migrated to management, to leadership of Intel, to spokesperson for the
0:28:18 technology industry, to expert on corporate governance, to arguably the most admired business
0:28:24 leader of his era. Grove’s personal notebooks from Intel’s early days reveal an engineer methodically
0:28:30 deconstructing the challenge of organizing people. Just two months after Intel’s founding,
0:28:36 he was analyzing not just what progress had been made, but how progress itself should be reported.
0:28:41 Three days later, he wrote something profound. The formal decision-making process is usually the
0:28:46 only protective covering for a much simpler informal process. This was Grove peeling back the organizational
0:28:52 onion, recognizing that beneath the surface of business decision lies a layer of unspoken
0:28:58 assumptions. He later explained people kind of knew the answer, and they manage the arrangement of facts so
0:29:05 that the formal process validates what they want to do anyway. By 1968, Grove was sketching structural
0:29:11 solutions to the semiconductor industry’s most vexing problem, the handoff from design to manufacturing.
0:29:17 In his notes, he outlined a quality control system with independent oversight, rapid feedback loops,
0:29:24 maps and clear accountability. In his notes, he writes, quality slash reliability. The best person to worry
0:29:29 about product quality first is the designer. As the product goes into manufacturing and the designer takes
0:29:35 on a new product design, he loses interest. A third independent body should take over the quality control
0:29:41 function from the engineers at that stage to ensure meaningful results and determinations and rapid feedback.
0:29:47 He should be closely related to both the design and processing groups. To ensure external auditing,
0:29:53 their books should be open to examination by general management. This approach was extraordinary. While
0:29:59 other executives might have copied existing management processes, Grove recognized Intel was breaking new
0:30:04 ground. He designed the organization from first principles, structuring it specifically to solve
0:30:09 technical problems. Intel desperately needed these solutions as it fought for survival. The startup
0:30:16 competed fiercely for its first contract is the seventh better on a project six established companies had already
0:30:21 pursued. Grove later recalled, we worked day and night to design the chip and in parallel develop the
0:30:29 manufacturing process. We worked as if our life depended on it, as in a way it did. What’s instructive here is
0:30:34 Grove’s methodical approach to mastering new demands. While most people define themselves by their formal
0:30:40 education or job title, Grove saw knowledge as something to be systematically acquired when needed. He was
0:30:46 always learning and evolving from chemistry to engineering to management. When faced with the
0:30:51 challenge outside of his expertise, he didn’t delegate it or avoid it. He simply dove in and taught himself
0:30:58 what he needed to know. This plasticity of identity explains how a Hungarian refugee with a PhD in chemical
0:31:04 engineering became one of history’s most influential business leaders. The real breakthrough for Intel
0:31:14 came in October 1970 with the 1103, a 1024 bit dynamic random access memory chip or DRAM. This wasn’t an
0:31:19 incremental improvement. It represented a quantum leap forward storing four times the data of Intel’s
0:31:26 previous chips. The 1103 acquired what Grove called “big technological gambles” and the challenges it
0:31:33 presented revealed just how difficult semiconductor manufacturing was. “We were a company composed of
0:31:38 a handful of people with a new design and a fragile technology housed in a little rented building,”
0:31:43 Grove recalled, “and we were trying to supply the seemingly insatiable appetite of large computer
0:31:49 companies for memory chips.” What made the 1103 revolutionary and so difficult to produce
0:31:55 was its fundamental design. Unlike previous static memory chips that use six transistors per bit of
0:32:02 memory, the 1103 used just three transistors in a new cell design. This remarkable efficiency allowed
0:32:07 more memory to fit on a single chip, but it came with a catch. The information had to be constantly
0:32:13 refreshed or it would fade away. The manufacturing challenges were enormous. The process began with silicone
0:32:19 wafers, thin mirror polished slices of pure silicone crystal about four inches in diameter.
0:32:24 In Intel’s first facility, these wafers traveled through a complex multi-step process where the
0:32:31 slightest contamination could ruin the entire batch. What’s notable here is the high stakes bet Intel was
0:32:36 making. Rather than playing it safe with incremental improvements, they bet the company on a fundamentally
0:32:41 new approach to memory design. This willingness to make bold technological leaps while simultaneously
0:32:46 building rigorous systems to manage the resulting complexity would become their defining competitive
0:32:52 advantage. Few companies can successfully balance revolutionary innovation with operational
0:32:58 discipline. Most excel at one or the other and Grove was creating an organization that could do both.
0:33:04 Grove became obsessive about quality control. Early semiconductor manufacturing suffered from poor
0:33:11 yields. Sometimes only 10 to 20 percent of chips on a wafer actually worked. Improving this percentage became his fixation.
0:33:17 Intel’s fabrication facility, Fab 1, represented cutting-edge manufacturing for its time. Workers wore bunny
0:33:23 suits, head-to-toe coveralls, not to protect themselves, but to protect the wafers from contamination.
0:33:29 The scale of precision required was staggering. While a human hair is approximately 100 microns thick,
0:33:35 circuit features on these early chips measured just a few microns. The 1103’s design made it
0:33:41 extraordinarily vulnerable. It stored memory as tiny electrical charges that would leak away unless
0:33:47 refreshed every few milliseconds, making the chip unusually sensitive to microscopic defects.
0:33:52 Each manufacturing step demanded perfect precision. The smallest deviation in temperature, exposure,
0:33:58 or time, or chemical concentration could ruin an entire batch. This stress was crushing. Grove recalled
0:34:03 having nightmares where vicious dogs were leaping out of the processing equipment attacking him.
0:34:09 The 1103 had to succeed or Intel might not survive. Ironically, despite Grove’s obsession with quality,
0:34:14 the 1103 still went to market with serious flaws. After thousands had shipped, it turned out that
0:34:20 in Grove’s candid words, under certain adverse conditions, the thing just couldn’t remember. Years
0:34:27 later, Grove joked that the “S” in “Andrew S. Grove” stood for “ship the unit.” Yet customers bought it anyway,
0:34:32 because even with the flaws, the 1103 offered advantages previous technologies couldn’t match.
0:34:37 More surprisingly, its difficulty actually helped its adoption. As Gordon Moore observed,
0:34:43 core memory engineers didn’t embrace the 1103 until they realized that it too was a difficult
0:34:49 technology and wouldn’t make their skills irrelevant. As production scaled, Grove instituted statistical
0:34:55 process control, systematically tracking every manufacturing variable to identify exactly what
0:35:00 affected yield. Every temperature, chemical bath, and timing sequence was measured and correlated with results.
0:35:06 His production meetings became legendary for their intensity. Grove demanded fact-based analysis and
0:35:12 rejected vague explanations for problems. This relentless focus gradually improved yields. When
0:35:20 Fab 2 opened in 1971, it incorporated all the lessons from Fab 1. And by the time Fab 3 opened in 1973,
0:35:28 Intel had largely mastered the once temperamental 1103. Grove didn’t just care about quality. He obsessed
0:35:34 over it scientifically when others saw manufacturing variability as an annoying fact of life. He approached
0:35:40 problems with cold, hard numbers, not gut feelings. And he built systems to measure what others were guessing or
0:35:46 complaining about. The human mind isn’t really equipped to intuitively grasp all the variables in a modern
0:35:53 manufacturing process. While obvious now, in the early 70s, this was revolutionary. Grove was inventing
0:35:59 manufacturing analytics decades before the term even existed. The lesson here, the most valuable
0:36:04 approaches often seem like common sense in retrospect, but require seeing what others don’t in the moment.
0:36:12 Looking back at the 1103 achievement, Grove wrote with uncharacteristic immodesty, making the 1103
0:36:17 concept work at the technology level, at the device level, and at the systems level, and successfully
0:36:23 introducing it into high volume manufacturing required, if I may flirt with immodesty for a moment of fair
0:36:29 measure of orchestrated brilliance. Everybody from technologists to designers to reliability experts had to
0:36:35 work to the same schedule toward a different aspect of the same goal interfacing simultaneously at all
0:36:42 levels. Four years earlier, in July 1969, Grove had cut out a description of a film director’s job from
0:36:52 Time Magazine. Above it, he wrote “my job description.” The clipping read, “vision to aspire. Any director must master
0:36:59 formidable complexity. He must be adept at sound and camera work, a soother of egos, a cajeweler of artistic
0:37:06 talent. A great director has something more, the vision and force to make all these elements fuse into an
0:37:12 aspired whole.” End quote. This is fascinating. So an engineer by training with zero formal business
0:37:18 education was modeling his role on a film director. Grove’s biographer notes that he doubts anyone else at
0:37:24 Intel or in the whole semiconductor industry cut out that clipping and inquired of themselves rhetorically
0:37:29 whether or not this was their job description. With the 1103, Grove had established the template for
0:37:35 how Intel would operate for decades, identifying bleeding edge technology that required manufacturing
0:37:41 breakthroughs, relentlessly tackling production challenges, and scaling rapidly while competitors
0:37:47 struggled to catch up. The complexity of manufacturing the 1103 made it nearly impossible for competitors to reverse
0:37:54 engineer, giving Intel a multi-year advantage in the market. In effect, complicated manufacturing
0:37:59 became their core skill. There’s a bit of irony to this today. The experience crystallized Grove’s
0:38:05 management philosophy. By 1971, he was coordinating dozens of specialists hired because of their expertise
0:38:12 in a sliver of technology, each contributing one crucial piece to the larger puzzle. As technical
0:38:17 teams developed in the next generation of products, Grove created systems to ensure seamless handoffs between
0:38:23 design and manufacturing, historically the most vulnerable point in semiconductor development.
0:38:28 Grove saw leadership like directing a film, not commanding an army. When he cut out that film
0:38:33 director’s job description in 1969 and wrote “my job description” above it, he revealed something
0:38:39 profound about his approach. While most technical leaders tried desperately to maintain expertise across
0:38:46 every domain, a losing battle as technology advances, Grove took a different approach. The magic was in how he
0:38:51 redefined the leader’s role, not the supreme technical expert, but as collecting talent and creating
0:38:56 harmony. Most leaders fail because they can’t let go of being the smartest person in the room.
0:39:02 And Grove succeeded by understanding a simple truth. As complexity increases, coordination becomes more
0:39:09 valuable than individual control. The best leaders don’t need to know everything. They do need to know who knows what
0:39:16 that and how to get them playing from the same sheet of music. While the 1103 DRAM established Intel as a
0:39:24 serious memory player, an even more revolutionary product appeared in 1971, the 4004, the world’s first
0:39:32 commercial microprocessor. Originally developed as a custom chip for Japanese calculator manufacturer, the 4004 was
0:39:38 essentially a computer on a chip containing 2300 transistors and performing functions that previously required
0:39:42 entire cabinets of electronics. The microprocessor’s importance
0:39:48 wasn’t immediately apparent, even to Intel’s leaders. The company initially viewed it as
0:39:54 merely a sideline to the core memory business. As one Intel engineer recalled, in the early days, the microprocessor was a
0:40:01 solution looking for a problem. Andy himself would later admit that Intel stumbled into the microprocessor business.
0:40:06 That statement is insane, given what we know today, but this is back in 1971.
0:40:17 Nevertheless, Intel followed the 4004 with the 8008 in 1972 and the 8080 in 1974, increasingly powerful processors
0:40:23 that found their way into a widening range of applications. The 8080 became particularly significant because it was selected
0:40:30 selected as the brain of the Altair 8800, which was the first commercially successful personal computer
0:40:38 released in 1975. What’s instructive here is how even brilliant leaders can miss the significance of their
0:40:44 own innovations. Intel’s core team, including Andy Grove, initially failed to recognize that they had created the
0:40:51 product that would eventually transform not just their company, but the entire world. This blind spot reveals an
0:40:58 important truth about innovation. Revolutionary products often emerge not from grand strategic visions,
0:41:04 but from solving specific customer problems. The microprocessor wasn’t born from a plan to change
0:41:09 computing or change the history of the world. It came from meeting the needs of a Japanese calculator company.
0:41:15 The greatest innovations frequently appear first as modest solutions to narrow challenges before their broader
0:41:18 potential becomes clear.
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0:42:40 Intel’s growth during the 1970s was remarkable. The company’s 1977 annual report described it as a
0:42:48 difficult year, yet sales and profits both increased by 25%. Employment had risen to 8,100 people and
0:42:53 the R&D investment was climbing steadily. A technological revolution was unfolding through
0:42:59 what the report called the continuous integration between circuit requirements, basic science and
0:43:05 process technology. The average number of transistors in the components Intel introduced in 1977 exceeded
0:43:12 the total number of vacuum tubes in INEC, the most complex electronic equipment built just 30 years
0:43:19 earlier. Yet, not all Intel ventures succeeded. In 1977, the company admitted defeat in one notable
0:43:25 experiment. We abandoned the digital watch and watch module business, including the closing of our Microma
0:43:31 subsidiary, the transfer of the most important people to other divisions of Intel and the disposal of Microma’s
0:43:39 assets. Intel tried to create the Apple Watch before 1980. That’s insane. Intel had entered the watch
0:43:45 business in 1972 convinced it had a unique combination of capabilities, the CMOS chip, the liquid crystal
0:43:51 display, and assembly facilities. But as Grove later explained, we got out when we found out it was a
0:43:56 consumer marketing game, something we knew nothing about. The cost of consumer advertising particularly
0:44:02 shocked Intel’s engineering-minded leadership. The company ran exactly one television commercial
0:44:10 for the Microma watches at a cost of $600,000. Just one ad, Grove lamented, and poof, it was gone. Moore
0:44:16 continued wearing his Microma watch for years, calling it his $15 million watch and joking, “If anyone
0:44:21 comes to me with an idea for a consumer product, all I have to do is look at my watch to get the answer.”
0:44:27 The Microma experience taught Intel two important lessons though. First, when closing the subsidiary,
0:44:32 Intel found positions elsewhere in the company for almost all Microma employees. This approach,
0:44:37 protecting the people even when ventures failed, created tremendous loyalty within the company.
0:44:43 A breed of employees who would bleed blue, Intel’s logo color was developing. Crucial for the upcoming
0:44:49 challenges of the 1980s. The second lesson, however, may have been learned a bit too well. Intel concluded
0:44:55 the consumer products simply weren’t in the company’s genetic code. As Grove reflected in 2005,
0:45:00 all of our subsequent consumer products efforts were half-hearted. Despite eventually becoming one of
0:45:06 the most recognized brands in the world, Intel never sold directly to consumers, perhaps leaving
0:45:13 significant value unrealized. Intel’s handling of the Microma failure reveals an elegant paradox of
0:45:18 corporate culture. They killed the watch business without hesitation, but protected nearly every employee
0:45:23 who worked on it. This wasn’t kindness, it was rational. When companies punish the people behind failed
0:45:28 ventures, they create risk aversion that slowly suffocates innovation. But there’s a fascinating
0:45:35 flip side to how we process failure. The $15 million watch disaster so traumatized Intel’s leadership that they
0:45:42 permanently tagged consumer products as “not in our DNA”. For decades afterwards, Intel reflexively
0:45:48 avoided direct consumer sales. This is kind of how experience works. We don’t just learn the lessons,
0:45:54 we sometimes overlearn them. The same painful memories that can make us smarter in one domain can blind us
0:46:00 in another. Smart companies know when to kill projects, wise ones know which lessons from those failures to
0:46:08 keep and which to forget. Beneath Intel’s impressive growth numbers of the late 1970s lay a company culture
0:46:14 in metamorphosis forged largely through Grove’s relentless, sometimes merciless, self-criticism. Reading
0:46:20 Grove’s internal notes from this period, one would never guess 1978 was a triumphant year for Intel.
0:46:25 Instead of celebration, we find Andy complaining to Gordon Moore that with our operating managers
0:46:30 being busy with operating, planning does not get sufficient emphasis. As Intel approached a half
0:46:36 billion dollars of revenue, Grove wrestled with a fundamental question: what was preventing Intel from
0:46:44 reaching a billion? His answer scribbled in July 1978 was a strikingly simple oomph and administration.
0:46:51 When Intel was small, he reflected an individual or small group could provide the oomph, the initiative
0:46:58 and the enthusiasm that the company needed to do its work. By 1978, however, the oomph had concentrated
0:47:04 in top managers who are now consumed by day-to-day responsibilities. What troubled Andy about Intel’s
0:47:08 middle management was their aversion to conflict was their aversion to conflict. The middle is populated
0:47:15 by passive introverts, he wrote, honest, competent, decent, well-meaning, work-oriented people who just
0:47:23 can’t tolerate controversy. The result in Andy’s characteristically blunt phrasing, “shit rises uphill.”
0:47:29 This frustrated Andy because, as he noted, it is impossible to change people’s personalities and very
0:47:36 difficult to modify behavior tied to fundamental personality traits. Intel somehow needed to upgrade
0:47:42 the oomph quotient of its middle managers. By August 1978, Andy’s frustration had reached
0:47:48 a boiling point. Manufacturing was undisciplined. Marketing was abominable. He told more, “I think
0:47:54 I was totally wrong a month ago in perceiving improvements in our great organized campaign. If
0:48:00 anything, things are getting worse. If I truly had the guts, I think what we should do is put on a total
0:48:08 hiring freeze until we get our nose above the shit level.” This is the Andy that Intel employees knew,
0:48:14 demanding, uncompromising, and brutally honest. His criticisms weren’t reserved for others. They extended
0:48:20 to himself and the entire organization. Yet, for all of his harshness, he understood the potential
0:48:26 downside of the critical culture he was creating. In an October 1978 memo to the top executives, he wrote,
0:48:32 “To a large extent, I think we owe our success not to luck, but to a culture of problem orientation,
0:48:38 of being critical of ourselves and thereby urging ourselves and our organizations to perform better
0:48:43 and better. This virtue, however, can be carried to such an extreme that it can bring about our own
0:48:49 paralysis through self-doubt.” Then, in what must have surprised anyone familiar with his typically
0:48:54 unsparing critiques, Andy added, “So let’s try to keep our perspective and permit ourselves to enjoy the
0:49:00 fact that we have never yet in our history had a problem we didn’t solve.” What’s remarkable here
0:49:05 is Groves’ understanding of the paradox of high-performance cultures. The very critical
0:49:11 orientation that drives excellence can eventually become toxic if not balanced with perspective and
0:49:17 celebration. Most leaders swing between extremes, either creating complacent cultures that celebrate
0:49:23 mediocrity or harsh environments that burn people out. Groves is attempting something far more difficult,
0:49:29 building a culture that could simultaneously maintain relentless standards while providing enough
0:49:35 psychological safety for people to take risks and speak truth. This balance, being brutally honest about
0:49:40 problems while remaining fundamentally optimistic about solving them, would become their defining
0:49:45 cultural characteristic. What we’re witnessing in these private notes is the birth of what would
0:49:51 later be recognized as the intel culture. Groves’ distinctive organizational ethers that would
0:49:56 eventually be studied at business schools around the world. This culture had several defining elements,
0:50:03 all bearing his unmistakable imprint. At its core was what became known as constructive confrontation.
0:50:08 As Groves recalled during intel’s early pressure cooker days, we often spent as much time bickering
0:50:14 with one another as working on the problems. We developed a style of ferociously arguing with one
0:50:20 another while remaining friends. We call this constructive confrontation. This direct problem-solving
0:50:26 confrontation approach was coupled with a relentless focus on data and facts rather than opinions or
0:50:32 emotions. Andy frequently complained about the tendency in management circles to substitute opinions for
0:50:39 facts and emotion for analysis, a trend that still continues to this day. Intel also developed a unique
0:50:45 approach to organizational management. In June 1978, Andy wrote, “The time has come for us to establish honest to
0:50:50 goodness corporate staff. This would be made up of our top flight operating executives who would serve for
0:50:55 a limited period prior to returning to line management. Their role would be to deal with
0:51:01 longer-term issues, especially for those that cross divisional boundaries.” This focus on organizational
0:51:07 effectiveness stemmed from Andy’s recognition that Intel’s rapid growth created increasingly complex
0:51:12 problems. He noticed that every attempted solution seemed to generate new challenges. Getting into new
0:51:19 businesses is a complicated phenomenon where directors can change fairly rapidly as one feels one way.
0:51:24 Realigning emphasis means shuffling people about and having people stagger under the same load that their
0:51:29 predecessor, who had done the job for years, would have been able to handle with ease. Culture wasn’t
0:51:35 something that just happened at Intel, at least not under Andy Grove. While many companies let culture evolve
0:51:42 organically, Grove engineered Intel’s with the same precision he brought to chip manufacturing. He wasn’t
0:51:48 designing pleasant office vibes. He was building a corporate immune system. The brilliance here is in how
0:51:55 he institutionalized seemingly contradictory forces, the brutal honesty alongside deep loyalty, rigid processes
0:52:02 alongside flexibility. Constructive confrontation sounds like an oxymoron until you see it solve problems that
0:52:09 politeness can’t touch. Grove treated culture as infrastructure, and to him it was just as critical as the factory
0:52:14 floor. Years later, when Intel faced its greatest crisis, this deliberately designed culture became the
0:52:20 company’s salvation. The greatest competitive advantage isn’t a product, but rather an organization that can
0:52:26 adapt faster than the world changes around it. These cultural elements were crystallizing into a coherent
0:52:34 whole, and the results were undeniable. By 1979, Intel sales and profits soared to 663 million and 77.8
0:52:43 million, representing growth of 65.8% in both categories. The workforce expanded by 40% to more than 14,000
0:52:53 employees. Intel had debuted on the Fortune 500 in 1978 at position 486, and by 1979 had climbed to 368.
0:53:00 Even more impressively, Intel’s market capitalization more than doubled from 638 million at the end of
0:53:07 1978 to 1.4 billion just a year later. In many ways, 1979 represented the validation of the culture
0:53:12 Andy had been painstakingly building. Prices for their products remained high throughout the year because
0:53:18 demand far outstripped forecasts. The semiconductor industry was constrained by supply shortages. As one
0:53:24 observer noted, “If you’re going to have a problem, that is one which many business people would select.”
0:53:30 But as the 1970s drew to a close, Andy’s greatest test as a leader still lay ahead. The extraordinary
0:53:36 success of 1979 masked underlying vulnerabilities. As Andy himself had written years earlier, “In the
0:53:40 meantime, while you’re fighting the forces of entropy in your company, the rest of the world is
0:53:46 hardly standing still.” He had identified the competitive threat in an annual report. This
0:53:51 year, or in some cases last year, competition arrived and very logically went after the most visible
0:53:57 segment. The large accounts who now have alternatives have started to move towards those alternatives with
0:54:03 a resulting loss of standing, if not business for us. In retrospect, that seems to have been unavoidable,
0:54:09 “but we were too skimpy, too busy, and too smug with our success to have anticipated
0:54:15 this trend.” The culture Andy had forged through his relentless self-criticism and exacting standards would
0:54:21 soon face its most severe challenge. The question wasn’t whether Intel’s culture could drive growth in good
0:54:26 times. It had proven that conclusively. The real question was whether the same culture could navigate
0:54:32 Intel through a genuine crisis when rigorous analysis and candid self-assessment would have
0:54:38 to transform into decisive action at a pivotal moment for the American semiconductor industry.
0:54:45 It’s worth pausing here for a second. Success often sears the seeds of its own destruction. Grove
0:54:50 understood something profound. The moment you feel safest is often when you’re most vulnerable. While
0:54:56 competitors celebrated victories, he was already hunting for threats lurking in Intel’s success.
0:55:01 For Grove, this wasn’t theoretical pessimism. It was personal trauma. Going back to his childhood,
0:55:07 as a Hungarian Jew who survived both Nazi occupation and communist rule before fleeing to America,
0:55:13 Grove had witnessed how quickly stability can disintegrate into chaos. The genius of his approach
0:55:20 was maintaining intense paranoia precisely when it seemed least necessary. Most companies grow complacent
0:55:26 with success. Their vigilance fades exactly when competitors are motivated to overtake them. While
0:55:31 Intel’s 1979 results had shareholders celebrating, Grove was already writing about fighting the forces
0:55:38 the forces of entropy. This wasn’t anxiety, it was clarity. And it’s something all the greats have,
0:55:44 even when they’re winning. This perpetual vigilance would prove crucial to Intel’s salvation when
0:55:51 Japanese manufacturers later attacked the company’s core business. By the mid-1980s, Intel faced an
0:55:55 existential threat and existential threat that would not just test the company’s business model, but the
0:56:01 very leadership philosophy Grove had been cultivating for nearly two decades. The semiconductor industry was
0:56:06 experiencing what he would later term a 10x force, a fundamental shift so powerful it could destroy
0:56:12 established companies that failed to adapt. In his influential book, Only the Paranoid Survive,
0:56:19 Andy explained that a crucial distinction between ordinary changes and 10x changes. Ordinary 1x changes were the
0:56:25 constant background noise of business, the incremental shifts in customer preferences, competitor tactics,
0:56:30 or technologies that companies routinely handle. These might alter your trajectory, but they don’t
0:56:37 fundamentally transform your industry. A 10x change, by contrast, was a force of an entirely different
0:56:42 magnitude. Andy described it as the difference between a light breeze and a full-blown typhoon,
0:56:48 or between waves and a tsunami. When a 10x force hits, the fundamentals of your business are altered
0:56:55 so dramatically that continuing with your existing strategy becomes impossible. For Intel in the late 1980s,
0:57:01 this 10x force came in the form of Japanese memory chip manufacturers. The quality level of the Japanese
0:57:07 memories, especially DRAMs, were becoming consistently and substantially better than Intel’s. This meant
0:57:11 not only were they selling merchandise cheaper than Intel could, but they were selling better
0:57:17 merchandise as well, a very threatening position for the company to be in. This was a fundamental shift
0:57:23 that rendered Intel’s position in the memory market untenable. Japanese firms had mastered a manufacturing
0:57:28 approach that Intel simply couldn’t match. Memory chips had become commodities, where competitive
0:57:36 advantages came from manufacturing scale and efficiency rather than design innovation. The area where Intel had
0:57:42 dominated through the 1970s. Most businesses are designed to weather ordinary changes. The 1x forces
0:57:47 that Grove described as the constant background noise. But strategic inflection points aren’t headwinds,
0:57:53 they’re tsunamis that destroy companies that mistake them for normal challenges. The true genius of
0:57:58 leadership lies in recognizing when incremental improvements become futile and when you must abandon the
0:58:04 very business that made you successful. The golden goose, if you will, even while it’s still generating enormous profits.
0:58:11 By 1985, Intel was wandering through what Andy described as a valley of death. The company was
0:58:18 posting significant losses, employee morale was plummeting, and the board grew restless. Cost-counting
0:58:23 measures, facility closures, and layoffs, the standard corporate responses to financial pressure failed to
0:58:30 address the fundamental market reality. Intel simply couldn’t compete in the memory business anymore. Andy
0:58:35 Grove possessed a rare ability to acknowledge the brutal truce before disaster became inevitable. He’d
0:58:40 been doing it his whole life. But even for him, the realization didn’t come easily because Intel’s
0:58:47 identity was inextricably tied to memory chips. The company had been founded on it. Gordon Moore and
0:58:52 Robert Noyce’s vision of semiconductor memory replacing magnetic core memory had sparked the whole industry in
0:58:58 a new direction. And Intel engineers took enormous pride in their memory innovations. As Andy would
0:59:03 later observe, people who have no emotional stake in a decision can see what needs to be done sooner.
0:59:09 Two deeply held beliefs within Intel complicated matters even further. First, many believed that
0:59:14 memories were the company’s technology drivers, the products on which new manufacturing processes were
0:59:20 perfected before being applied to microprocessors. Second, there was a widespread conviction that Intel
0:59:25 needed to offer customers a complete product line including both memories and processors. If they
0:59:31 offered only one, customers would supposedly leave them for someone who could offer both. The turning
0:59:36 point came during a conversation between Andy and Gordon Moore that has since become legendary in
0:59:42 business circles. It’s the one I mentioned in the introduction. Looking at the terrible memory chip numbers for the
0:59:48 latest quarter, Andy said to Moore, “If we got kicked out and the board brought in a new CEO, what do you
0:59:55 think he would do?” Moore answered without hesitation. He would get us out of memories. Andy then posed a pivotal
1:00:01 question. Why shouldn’t you and I just walk out the door, come back in, and do it ourselves? This mental
1:00:06 exercise of viewing the company as an outsider would become the cornerstone of what Andy would later term
1:00:11 a strategic inflection point, a moment when the fundamentals of the business are about to change.
1:00:15 You can tell you’re going through a strategic inflection point if the way you traditionally have
1:00:20 done business no longer delivers the kind of results that we used to get. Well, the new way of doing
1:00:25 business involves so much uncertainty that you can’t easily bring yourself to embrace it. What’s
1:00:32 interesting here is the technique Grove used to overcome organizational inertia by mentally stepping
1:00:37 outside, walking out the door. Grove and Moore could temporarily escape the emotional attachment to past
1:00:42 decisions and see the blind spot that was holding them where they were. They could see their situation
1:00:48 with new clarity. This ability to create psychological distance from your own commitments is extraordinarily
1:00:54 difficult but crucial during strategic inflection points. Most leaders remain imprisoned by their previous
1:01:00 decisions, unable to abandon what they built even as evidence mounts that it’s no longer viable. Grove had
1:01:06 developed a technique to break the psychological lock, a method for seeing his own creation with the
1:01:12 objectivity of an outsider. One of Andy’s most insightful observations involved the transformation of the
1:01:17 computer industry’s structure. He described how the industry had evolved from a vertically integrated
1:01:23 model to a horizontally segmented one in 1980s sparked by memory chips becoming commodities and the rise of the
1:01:30 microprocessor. In the mainframe era dominated by IBM, companies operated as fully integrated vertical stacks. IBM
1:01:35 designed everything from chips to hardware to the operating system to the applications. As Andy explained,
1:01:40 a company competing in this industry as one vertical proprietary block against all other computer
1:01:45 companies’ vertical proprietary blocks. The rise of the microprocessor, which Intel had pioneered,
1:01:51 fundamentally changed the structure. The industry fragmented into horizontal layers. Chip manufacturers like
1:01:57 Intel, computer assemblers like Dell and Compaq, operating system providers like Microsoft and application
1:02:02 developers. Andy wrote, “In this new model, no one company had its own stack. A consumer could pick
1:02:07 a chip from the horizontal chip bar, pick a computer manufacturer from the computer bar, choose an operating
1:02:14 system out of the operating system bar, grab one of several ready to use applications off the shelf at a retail
1:02:20 store or a computer superstar and take the collection of these things home.” This shift destroyed IBM’s dominance.
1:02:26 Despite its vast resources and market power, or possibly because of them, IBM couldn’t adapt to this
1:02:31 horizontal world. They remained wedded to the vertical integration model. Even as the economics of
1:02:37 specialized horizontal layers made that approach uncompetitive, what made this transition especially
1:02:42 treacherous was that it didn’t happen overnight. It evolved gradually with the vertical model continuing to work
1:02:48 reasonably well, even as the horizontal model gained momentum. By the time the inflection point was obvious to
1:02:54 everyone, IBM had already lost most of its market leadership position. Andy observed, “IBM was
1:02:59 composed of a group of people who had won time and time again, decade after decade, in the battle among
1:03:05 vertical computer players. The managers who ran IBM grew up in this world. Their long reign of success deeply
1:03:11 reinforced the thought processes and instincts that led to winning in the vertical industry. So when the industry
1:03:17 changed, they attempted to use the same type of thinking that had worked so well in the past. IBM,
1:03:22 as a vertical player, was trying to sell portions of its stack to direct competitors, an inherently
1:03:28 conflicted position. Grove had learned that Intel needed to focus on microprocessors and basically nothing
1:03:36 else. As he would write, “It’s harder to be the best of class in several fields than just one.” What’s interesting here is that
1:03:41 Grove didn’t just see competitors. He saw the competitive landscape transforming. While IBM’s
1:03:45 executives were still trying to outmaneuver other vertically integrated companies, Grove recognized
1:03:51 the industry was fundamentally restructuring into horizontal layers where specialists in each layer
1:03:56 would dominate. The greatest business failures often come from not playing the game poorly, but from
1:04:03 continuing to excel at games that no longer matter. One of Andy’s most penetrating insights concerned
1:04:07 the role of middle managers during strategic inflection points. He believed they often had
1:04:14 the clearest view of impending changes and called them Cassandras, after the Greek priestess who foretold
1:04:19 the fall of Troy. He wrote, “The Cassandras in your organization are a consistently helpful element in
1:04:25 recognizing strategic inflection points.” As you might remember, Cassandra was the priestess who foretold the fall
1:04:30 of Troy. Likewise, there are people who are quick to recognize impending change and cry out an early
1:04:34 warning. Although they can come from anywhere in the company, Cassandras are usually in the middle
1:04:40 management. Often they work in the sales organization. They usually know more about the upcoming change than
1:04:46 the senior management because they spend so much time outdoors where the winds of the real world blow in their
1:04:54 faces. In other words, their genes have not been selected to achieve perfection in an old way. Because they are on the
1:04:59 front lines of the company, Cassandras often feel more vulnerable to danger than do senior managers
1:05:04 in their more or less bolstered corporate headquarters. Bad news has much more of an immediate
1:05:09 impact on them personally. Lost sales affect a salesperson’s commission. Technology that never
1:05:15 makes it into the marketplace disrupts an engineer’s career. Therefore, they take the warning signs more
1:05:20 seriously. “If you’re a senior manager in a company,” Andy explained, “strategic inflection
1:05:25 points arrive in disguised form.” Top executives are often the last to recognize the fundamental
1:05:31 shifts because they’re insulated from market realities and emotionally invested in the status quo. Middle
1:05:37 managers, by contrast, operate at the intersection of the company and the outside world. They usually have a
1:05:44 better sense than the senior management of what’s happening with both sides. Andy noted, “their position gives them an
1:05:50 unfiltered view of the customer shifts, competitive threats, and technological changes.” Andy illustrated
1:05:56 this with a powerful analogy, comparing strategic inflection points to fire drills in a theater. When
1:05:59 the alarm sounds, audience members in the middle of the theater have the clearest picture of what’s
1:06:05 happening. They can see both the stage, where the fire may have started, and the exits. Audience members
1:06:10 in the very front like senior executives may be too close to the stage to see the big picture. While
1:06:16 those in the back, frontline employees may be too far from the action. At Intel, Grove created forms where
1:06:22 middle managers’ voices could be heard and respected regardless of hierarchy. Grove discovered something
1:06:28 counterintuitive about organizational awareness. Middle managers often see the existential threats before
1:06:34 their executives do. These Cassandras operate where strategy meets reality. They’re close enough to the
1:06:40 customers to feel market shifts, but connected enough to headquarters to understand the implications. By
1:06:45 deliberately elevating these voices rather than filtering them through the hierarchy, Grove built an early
1:06:52 warning system that detected industry shifts while competitors were still celebrating calm seas. The
1:06:58 decision to exit the memory business wasn’t implemented overnight. The transition took nearly three
1:07:02 years, and throughout this challenging period, Andy deployed the leadership style he had honed for
1:07:08 decades, demanding, data-driven, and brutally honest. First, he insisted on clarity about market realities. He
1:07:13 gathered comprehensive data on Japanese companies’ memory pricing, quality, and manufacturing
1:07:18 capabilities, forcing Intel’s management to confront an uncomfortable truth. The gap wasn’t closing,
1:07:23 it was widening. Second, he addressed emotional resistance head-on. In a pivotal meeting with
1:07:29 senior managers, Andy posed a provocative question. If memories are so strategic, why do we lose money on
1:07:35 every one we sell? This forced Intel’s leadership to separate old strategic methodology with new economic
1:07:42 reality. And third, he tackled practical transition challenges with meticulous attention to detail. What would
1:07:47 happen to Intel’s memory design teams? How would customers react? What would the microprocessor-focused
1:07:52 Intel look like? Andy demanded detailed planning for each dimension so employees could visualize the
1:07:57 new Intel. Thanks to the company’s history of protecting employees during previous shutdowns,
1:08:02 there was less fear of institutional change. When Intel finally announced to customers it would
1:08:08 no longer be manufacturing DRAMs, the response was largely a big yawn. Many had already anticipated
1:08:13 Intel’s retreat and secured alternative suppliers. Some even expressed relief saying it sure took you a long
1:08:20 time. Grove systematically dismantled both practical and psychological barriers to change. He recognized
1:08:25 that strategic pivots fail not just because of poor planning, but because of emotional attachments to
1:08:31 past decisions and fear of an uncertain future. By keeping the focus on market realities, strategic
1:08:36 contradictions, and implementation details simultaneously, Grove created a comprehensive
1:08:43 approach to organizational transformation that remains a template for executing painful but necessary pivots
1:08:49 today. By 1987, Intel had largely completed the transition away from memories. The company was
1:08:55 profitable again, but its 80386 microprocessor was gaining traction in the personal computer market.
1:09:00 But Andy, now Intel’s president, wasn’t content with mere survival. He sensed an opportunity to
1:09:06 fundamentally transform Intel’s position in the market. Rather than remaining an anonymous component supplier,
1:09:12 Intel could become a recognized brand that signified quality and innovation to end consumers and thereby
1:09:20 protect itself from future inflection points. In 1989, Intel began shifting its advertising aimed at consumers
1:09:26 instead of manufacturers. This approach culminated in the famous Intel Inside campaign,
1:09:33 fundamentally altering the power dynamics in the computer industry. PC manufacturers couldn’t easily
1:09:38 switch to a competing processor without risking consumer backlash. Consumers would be looking
1:09:46 specifically for an Intel-powered PC. This move was pure genius. What emerged from this crucible was not
1:09:51 just a safe company, but a coherent leadership philosophy that Andy would articulate. Business success contains
1:09:56 the seeds of its own destruction. The more successful you are, the more people want a chunk of your
1:10:00 business and then another chunk until there’s nothing left. I believe that the prime responsibility of
1:10:06 a manager is to guard constantly against other people’s attacks and to put this guardian attitude
1:10:12 in the people under his management. Grove’s paranoia wasn’t the anxious hand-wringing that paralyzes
1:10:19 action. It was strategic mindset that fueled adaptation. A corporation is a living organism. It has to
1:10:24 continue to shed its skin, he insisted, recognizing that yesterday’s winning formula becomes tomorrow’s
1:10:30 liability. His masterstroke, the final masterstroke, the Intel Inside campaign, reveals a deeper insight
1:10:36 about competitive advantage. By turning an invisible chip into a household brand, Grove didn’t just
1:10:43 differentiate Intel, he fundamentally changed who Intel’s customer was. Though PC manufacturers wrote the
1:10:49 checks, consumers now demanded Intel processors specifically, creating a protective moat around the
1:10:54 business that no competitor that no competitor could easily cross. This is the paradox at the heart of
1:11:01 lasting success. The more deliberately you prepare for your own obsolescence, the less likely you are to
1:11:13 become obsolete. All right, let’s get into a few afterthoughts and reflections and then talk about some lessons learned.
1:11:21 So one of the things that stood out to me here was just how profound his childhood was on his experiences and
1:11:27 how he learned that survival demands the same skills, constant vigilance, brutal self-assessment,
1:11:32 the courage to abandon what’s once defined you. I mean, he lived this stuff as a child. That is a terrible,
1:11:38 terrible childhood. Another thing that really stands out to me here is a bit of the red queen effect going on where,
1:11:44 you know, you have to run harder and harder to maintain your place in industries that are changing rapidly.
1:11:49 And I think, you know, the memory, you can use this as a great example, the memory chips, you know,
1:11:52 you have to get better and better every year. You can’t just rest. You can’t take a break. You have to sprint.
1:11:57 You’re constantly sprinting because your competitors are sprinting. And if you stand still, if you don’t get
1:12:02 better, you’re getting worse. And in highly, highly competitive industries, that’s what’s happening.
1:12:08 The decision to kill the golden goose, killing the memory chips and, and doing the strategic pivot that
1:12:14 I can’t understate how hard that is. There’s so much organizational inertia tied into that and making
1:12:21 that pivot. And, you know, it all worked out well for Intel, uh, at the time. And it’s so hard to make
1:12:28 those decisions. Um, there’s so many people giving you conflicting information. I like Andy talks a lot
1:12:32 about blind spots without using the term blind spots. He’s always trying to get information
1:12:38 either from people through analysis or through analytics or just seeing the world through their
1:12:42 eyes. I liked his idea of Cassandra’s being the middle managers. I think there’s a lot of truth
1:12:48 to that. Having worked in a large organization before people who touch the outside, they touch the territory.
1:12:53 And because they touch the territory, uh, they often have more accurate information about the
1:12:57 territory than management who relies on maps. It’s a bit of map territory.
1:13:03 I like his idea of thought experiments, you know, sort of stepping outside, firing yourself as CEO,
1:13:07 uh, and saying, what would we do different if the board fired us and then hired us again?
1:13:11 You know, these are the type of things I talk about in the great mental models, volume one,
1:13:16 it’s a great thought experiment for you. It’s also something that we can do. You are the CEO of you.
1:13:23 Uh, and you have thousands of employees at your disposal today in the form of GPUs and AI.
1:13:28 And I think the question is, you know, one question that I constantly ask myself is if I fired myself
1:13:34 today, uh, what would a new CEO or myself taking over stop doing? What am I doing today that I need
1:13:41 to stop and what could I start doing? And I think those questions are super important. As I was researching
1:13:48 the whole transition from memory to semiconductors with Intel, you know, the parallels between what Google’s
1:13:53 going through right now just stuck out so much. They have this golden goose in traditional search
1:14:00 that’s making a ton of money. And I wonder at what point you face a bit of innovators dilemma where
1:14:04 you’re not dealing with reality. The people who grew up in Google right now grew up in search. They grew
1:14:09 up in an era where they won over and over again. Sounds a lot like IBM in this story. They kept winning
1:14:15 over and over again and they’re dominant in their field until they’re not. And when you grow up in an
1:14:21 industry and you win over and over and over again in that industry, and then you have to change, you
1:14:27 reach one of those inflection points, those 10 X points that Grove talk about, uh, that becomes the
1:14:33 hardest point to change your mind about things. The very thing that success has driven for you. Now you have
1:14:38 to abandon and go all in, you have to burn the boats and, you know, close some doors, but you have to
1:14:44 close doors on the most profitable part of your business. And one final reflection is sort of, I
1:14:49 couldn’t fit this in the story, but I think it’s quite profound. Andy’s philosophy about how he connected
1:14:56 organizational adaptation to personal responsibility. He said, and I quote, “The sad news is nobody owes you
1:15:03 a career.” Your career is literally your business. You own it as a sole proprietor. You have one employee
1:15:09 yourself. You were in competition with millions of similar businesses, millions of other employees
1:15:14 all over the world. You need to accept ownership of your career, your skills, and the timing of your moves.
1:15:21 That is such a high agency way to think about things. And this is what I tell my kids, like you are running
1:15:26 a company. You, and I mentioned this a little bit earlier, you have a thousand GPUs. You have a thousand
1:15:31 employees at your disposal. And, you know, if you’re not telling them to do something or learning or getting
1:15:36 better, then they’re just sitting there waiting for you to tell them what to do. But you have one employee.
1:15:42 You are in competition with millions of other people, millions of people just like you, and nobody owes you
1:15:50 anything. And I think, you know, Andy’s childhood really informs that view. Okay. Let’s get to some of
1:15:58 our lessons here before we close this out. So lesson number one, bounce, but don’t break. Grove faced
1:16:03 devastating childhood circumstances. A father sent to labor camp, hiding his Jewish identity and
1:16:09 permanently losing his hearing from scarlet fever. Yet he transformed this difficulty into advantage,
1:16:14 developing extraordinary attention to subtle signals and the ability to make decisions with
1:16:20 incomplete information. When you can’t change your circumstances, you can change how you respond to
1:16:27 them. This is the lesson we also learned from Viktor Frankl. The last human freedom is the ability to
1:16:33 choose how you respond to a situation. Lesson number two, don’t care what they think. When
1:16:40 Grove’s semiconductor research contradicted established theory, experts wanted to burn him at the stake.
1:16:47 He built a culture where only data mattered, not opinions. Truth seeking requires the courage to
1:16:53 be disliked. So many people these days optimize their life around being liked. And that means that you
1:17:01 will never face the hard reality of inconvenient data. Three, face reality before it faces you.
1:17:08 Grove’s willingness to confront brutal facts became his defining leadership trait. When faced with Japanese
1:17:13 memory manufacturers overtaking Intel, he asked more of the pivotal question. If we got kicked out and the
1:17:18 board brought in new CEO, what would he do? This thought experiment created distance from his own
1:17:24 decisions and allowed him to abandon the very business that built Intel. He was effectively enabled to see
1:17:29 his blind spots. Emotional attachment to past decisions is such a silent killer.
1:17:36 Four, success sows the seeds of its own destruction. Even during Intel’s record profits of 1979,
1:17:42 Grove was hunting for the existential threats. Having survived Nazi occupation, he knew stability could
1:17:48 vanish overnight. Paranoia is the most valuable precisely when it seems least necessary. And there’s
1:17:53 a parallel here that just comes to mind as I’m reading this. But if you listen to interviews with Tom
1:17:58 Brady or Patrick Mahomes or Michael Jordan, there’s these key moments, there’s these games where they
1:18:05 win. I remember Brady won one game is like 24 to seven or something. And in the interview after he’s
1:18:09 like, we should have won that 45 to seven. He’s not celebrating the victories. Like, you know, we got
1:18:15 lucky. We, we, we should have been better. I should have been better. And I think that, you know, that is
1:18:22 something that people have, but you can also adapt. Five, Grove was a talent collector. He recognized
1:18:28 leadership as an orchestration rather than individual brilliance. As Intel grew, he focused on creating
1:18:34 systems where collective intelligence could flourish, particularly by amplifying middle managers’ voices.
1:18:40 He developed constructive confrontation where ideas could be ferociously debated. If you’re running an
1:18:44 organization or your senior level in an organization, your ceiling is determined by the
1:18:51 talent you attract, not the talent you possess. That is true of organizations. Six, he was a learning
1:18:58 machine. Grove transformed from a chemical engineer to semiconductor physicist to management guru in just
1:19:03 a decade. He approached each new domain with the same methodical rigor. In a changing world,
1:19:10 the ability to learn quickly compounds like interest. Seven, he had a taste for salt water.
1:19:16 While working as a waiter and learning English, Grove still graduated first in his class. Excellence
1:19:22 happens when nobody’s watching. The gap between good and great is filled with voluntary hardships that
1:19:28 others refuse to endure. Eight, it takes what it takes. Grove’s work ethic was relentless and
1:19:35 unconstrained by conventional boundaries. At Fairchild, he authored 30 scientific articles and filed patents
1:19:41 while simultaneously teaching at Berkeley. When manufacturing problems threatened Intel’s existence,
1:19:46 Grove created statistical systems tracking every production variable, well before these type of
1:19:53 analytics were normal or standard or even acceptable. Sometimes progress requires both working smarter
1:20:01 and harder. Nine, positioning is leverage. Grove never merely reacted to opportunities. He methodically
1:20:06 positioned himself at the intersection of his talents and emerging trends. Before joining Fairchild,
1:20:11 for example, he researched 22 different companies, dividing them into categories based on his interest
1:20:16 versus qualifications. When Moore and Noyce mentioned they were starting Intel, he immediately recognized the
1:20:23 opportunity as their operational compliment. He mastered his circumstances rather than being mastered by them.
1:20:29 Number 10, ride the wave. When Grove identified the semiconductor revolution, he committed fully
1:20:37 rather than hedging his bets. Even when Intel’s 1103 memory chip had serious flaws under certain adverse
1:20:42 conditions, the thing just couldn’t remember. He still persevered because he knew they were riding an
1:20:49 unstoppable technological wave. When you get the trend right, you can overcome countless tactical failures.
1:20:54 What a story with Andy Grove. There’s so many lessons that you can take away here. I’m going to listen
1:21:05 to this one over and over again. Thanks for listening and learning with us. And be sure to sign up for my
1:21:12 free weekly newsletter at fs.blog/newsletter. I hope you enjoyed my reflections at the end of this episode.
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0:00:07 It’s just as hard to build a small, inconsequential thing as it is to build a giant, world-changing thing.
0:00:13 You work the same amount of hours, and so you might as well go for doing something important.
0:00:19 Social media has become the dog, and traditional media has become the tail, and they just get whipped around like crazy by all these shifting memes.
0:00:28 We’ve basically recreated the original Fund One seven times, so every team is like the original Andreessen Horowitz.
0:00:37 So we really have seven Andreessen Horwitzes, but with common infrastructure, common LP relations, common brand, common culture.
0:00:41 I think there’s going to be a whole wave here. I think actually incredibly successful projects.
0:00:49 This week, we hosted our annual LP Summit, bringing together our partners, portfolio, and the people shaping what’s next in tech.
0:00:53 As part of the event, I hosted an interview with Mark and Ben.
0:01:00 We talked about the evolution of the firm, the state of venture, and how to stay ahead in an industry that doesn’t sit still.
0:01:02 Let’s get into it.
0:01:18 As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund.
0:01:23 Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.
0:01:30 For more details, including a link to our investments, please see A16Z.com forward slash disclosures.
0:01:41 Welcome to a live, private viewing of the Mark and Ben show, our favorite married couple in venture capital.
0:01:44 Old, to be clear, old married couple.
0:01:46 Yeah, that doesn’t get along that well.
0:01:47 The romance is long-faded.
0:01:51 This is what we all came here to see.
0:01:53 Ben, let’s talk about the evolution of the firm.
0:02:00 You recently said that the VC industry has changed more since the inception of the firm in 2009 than in the prior 30 years.
0:02:03 Let’s talk about how our firm has evolved alongside that.
0:02:06 What’s been our Act 1, our Act 2, and where are we now?
0:02:11 Yeah, so Act 1, you know, we were walking into VC that hadn’t changed.
0:02:22 And one of the key things about it, if you looked at venture capital, it was the only asset class that had the same managers persistently being at the top.
0:02:34 So anything else, you know, kind of rotated out every 5, 10 years, the best mutual fund manager would change or, you know, the best bond manager or whatever, best real estate guys.
0:02:40 But in venture capital, the same firms that were the top firms in 1978 were the top firm in 2009.
0:02:46 And the reason for that was the top tier firm got first pick on every deal.
0:02:53 And so the whole thing that we faced walking into that was, how do we get to the top tier?
0:02:57 Because otherwise there was no reason to be in the business because you wouldn’t get any returns.
0:03:00 The same teams get the number one pick in the draft every year.
0:03:03 And so that was the goal.
0:03:05 And we were coming from product companies.
0:03:07 So we looked at it through the product lens.
0:03:11 And we said, okay, venture capital is a really good product.
0:03:18 Top tier venture capital is a really good product for LPs and really mediocre product for entrepreneurs.
0:03:22 And so being entrepreneurs, we had been customers of venture capital.
0:03:23 We knew what the product was.
0:03:27 It was, you get a very smart person on your board.
0:03:32 They have very interesting things to say for your first five times you talk to them and then you’ve heard it.
0:03:37 And so we were like, okay, that’s kind of underwhelming given how hard it is to build a company.
0:03:45 So our idea was to create a platform that enabled a founder to evolve into becoming a CEO.
0:03:51 And there were many parts to that, but a lot of it comes down to, you know, what makes you feel like a CEO?
0:03:55 What gives you the confidence that you can actually run a company when you don’t know how to?
0:03:58 And that became the networks that we built.
0:04:00 Like, how can I call any CEO?
0:04:02 How can I call any executive?
0:04:06 How can I get to the U.S. government if I need to?
0:04:13 How do I feel like I’ve got a network like Bob Iger, even though I just started a company and I’m an inventor?
0:04:16 And so that was how we went about constructing the platform.
0:04:22 And then the other part of it was, okay, is there somebody who knows how to do this job that can help me?
0:04:26 And we brought in a lot of CEOs into the firm.
0:04:30 And then, of course, I wrote the book on like, okay, this is how you do it and so forth.
0:04:32 And so that was the original product.
0:04:36 And then because we were used to, like, what do you do when you have a product?
0:04:37 You market it.
0:04:40 And that turned out to be a completely novel thing in the industry.
0:04:42 And so that was kind of phase one.
0:04:44 And that’s what got us into the top tier.
0:04:50 Phase two was based on an article that Mark wrote called Software is Eating the World.
0:05:02 So in venture capital, from its inception, and Andy Ratcliffe did this wonderful study where he showed that there were 15 companies in any given year that will ever make it to $100 million in revenue.
0:05:06 And the whole game was to invest in those 15 companies.
0:05:14 So ideally, you’d have a firm of maybe six to eight investors that would look for those 15, and that would be sufficient.
0:05:15 And that was very true.
0:05:22 And by the way, that’s the right size conversation to make high-quality investments.
0:05:23 You need a small team.
0:05:28 But if software was going to eat the world, then there was going to be 150 or 200 of these companies.
0:05:33 And in order to deal with that, you had to be able to scale the firm.
0:05:44 And that meant, okay, if crypto was going to be as big as software used to be, or AI Infra was going to be as big as software used to be,
0:05:45 you know, et cetera.
0:05:55 If every vertical was that big in terms of the potential returns, then you essentially needed that original firm addressing each one of those markets.
0:06:05 And in order to be able to do that, and this is where we just ended up having an advantage that I think that we didn’t even really understand at the time.
0:06:11 But when we started the firm, we had shared economics like every firm does, but we didn’t have shared control.
0:06:22 And that gave us a giant advantage over every other VC that had shared control, because if you share control, you can’t scale, because if you share control, you can’t reorganize.
0:06:25 And it’s a subtle thing, but every CEO understands it.
0:06:40 There’s no way to scale if you can’t change roles, responsibilities, the way the firm is structured, how it works, because that’ll be an everlasting negotiation, because you’re literally redistributing power across the organization.
0:06:51 But since we kind of have a single decision point on that, it was very easy for us to reorganize, and we were able to scale and basically field the best team.
0:07:02 And so our competitors, if you look at the top-tier firms that were with us in 2009, none of them got to crypto in any real way.
0:07:11 They’re trying on AI, but they’re way behind, and they mostly missed American dynamism entirely, and it’s just because they couldn’t reorganize.
0:07:13 So what do you need if there’s a brand-new field?
0:07:16 Well, you need new leadership in that category.
0:07:21 You need new people on that team who know how to do that, and that means a lot of change.
0:07:35 I think going forward, the way we’re thinking about it is the goal now becomes, okay, if we’re funding the majority of all the best new technology companies in the world, what do we have to do from a leadership position?
0:07:42 One, we’ve got to make the regulatory environment conducive to being the best, you know, for America being the best in the world.
0:07:47 Two, we actually need our own channel, you know, which you’re coming on to build for us.
0:07:55 It’s really, really important to have a voice and a way to distribute that voice that is not only the biggest in the industry, but one of the biggest in the world.
0:08:01 And we feel like we’ve got a super social media podcast star on our team already.
0:08:04 He’s way better than Joe Rogan or anybody else.
0:08:10 And then we have, as you’ve seen, like a lot of kind of other people who are super compelling and who you’d want to listen to all the time.
0:08:16 And so now, mostly, you’re going to try and convert that into something that can be long-lasting.
0:08:18 We’re looking at other things.
0:08:28 We talked a little bit about, okay, how do we extend this American dynamism to American and her allies’ dynamism and take it internationally?
0:08:30 And so that’s how we’re thinking about the next phase.
0:08:30 Yeah.
0:08:31 It’s fascinating.
0:08:39 Just to echo the point about the ability to sort of reorganize and restructure, one of my first meetings with you guys about potentially joining the firm was with Catherine Boyle.
0:08:46 And we were talking about, Mark, the conversation that you and Catherine had around the meme and being able to move quickly around the meme that spreads.
0:08:47 Why don’t you talk about that?
0:08:48 Yeah.
0:08:50 So the information environment is like highly fluid.
0:08:51 So we have this whole theory.
0:08:53 You know, so media environment used to be relatively slow.
0:08:56 If you go back hundreds of years, it took days or weeks or months for information to get out.
0:09:00 And then lots of changes happened that ultimately, like cable news brought about the 24-hour news cycle.
0:09:01 And everything sped up.
0:09:05 And political operations got these rapid response teams that you see now in these war rooms and so forth.
0:09:09 You know, the new form of that is actually the social media controversy, at least my version of the theory.
0:09:10 Let me back up.
0:09:13 Marshall McLuhan had this famous thing, the great media theorist.
0:09:15 He said, if it’s on television, it’s a television show.
0:09:17 And so it doesn’t matter what the topic is.
0:09:23 It doesn’t matter if it’s the Clinton-Lewinsky scandal or the OJ scandal or whatever the hell it is or some celebrity thing or nuclear war or whatever.
0:09:25 If it’s on TV, it’s a TV show.
0:09:28 And it gets basically packaged up by TV producers as a TV show.
0:09:31 And you see this, by the way, whenever anything happens, everything now has a theme song.
0:09:32 War in the Middle East.
0:09:36 You know, anything on television goes through the moral arc of a television show, right?
0:09:40 They want to go through these kind of moral arcs, the same moral arc that you see on like a television drama.
0:09:41 They want to apply to real life.
0:09:46 And so there’s shame and then there’s redemption and there’s this and emotion and the interpersonal relationships and the soap opera aspect
0:09:47 and all this stuff.
0:09:53 And so those of us who’ve been on planet Earth for more than 20 years or something have been living life basically in this extended television show.
0:09:59 So extend McLuhan’s idea to what’s happened now in a social media dominated landscape, which is if it’s on social media, it’s a post, right?
0:10:01 So if it’s on social media, it’s a tweet, right?
0:10:04 Or it’s a TikTok video or it’s an Instagram photo or something like that.
0:10:04 It’s a post.
0:10:07 And so what do we know about the social media?
0:10:10 What’s the short equivalent of social media is it’s a controversy, right?
0:10:10 It’s a blow up.
0:10:11 It’s a dust up.
0:10:12 It’s a, what would the kids call it?
0:10:14 It’s a dunk of.
0:10:19 Yeah, it’s like a dunk that leads to a backlash and then a mob forms and then they’re scapegoating, right?
0:10:20 And so it’s this thing.
0:10:21 It’s this predictable pattern.
0:10:23 And the problem is like we all get pulled emotionally into these things.
0:10:25 And so it’s hard to objectively observe what’s happening.
0:10:31 But if you can lift yourself up a little bit for a few weeks and watch what happens, it’s like every new thing that happens basically now has a two or three day arc.
0:10:35 You can literally graph it because it’s like this viral moment where something just goes like parabolic.
0:10:38 And it’s just like at that moment, we call this the current thing.
0:10:39 It’s just like the most important thing in the world.
0:10:41 And literally, it’s just like whatever happened today.
0:10:43 And then basically what happens is it’s a chart like that.
0:10:44 And then it’s basically this fall off.
0:10:46 It’s like a half-life of a drug or something, right?
0:10:48 Where it’s like this two or three day collapse.
0:10:53 And then basically if social media shows two or three days, the mob goes around, either finds a scapegoat or it doesn’t and it goes through a cycle.
0:10:57 And then routinely two or three days later, it’s just boom, there’s a new thing like that.
0:11:00 And it’s like the most important thing, again, the most important thing that has ever happened.
0:11:04 And I’ve always wanted to build, I have friends who’ve tried this, and I want like the internet weather report, right?
0:11:09 And it would just be this constant, you know, it’s just like hurricane after hurricane after hurricane of these things coming in.
0:11:11 And so like that is the media environment that we live in.
0:11:17 And you can either as a participant in kind of the narrative formation shaping process, you can either choose to be part of it or not.
0:11:19 And so part of it is like you have to be in the mix.
0:11:24 And if you’re going to get a fight with people in that environment, like you have to be able to fight in that context.
0:11:28 And then I think the other thing that Eric is really good at is that just leads to, I think, adrenal fatigue, right?
0:11:32 Which is like the human psyche and limbic system can only go through so many panic cycles.
0:11:34 It’s like for the first five, it’s like really exciting.
0:11:37 And then after a thousand of them, you’re just like, my God.
0:11:39 And so that’s led to the rise of this other thing that’s happened, right?
0:11:40 Which is the long form, right?
0:11:41 The long form podcast.
0:11:46 And this is the really remarkable thing that’s happened is the cliche is everybody has burned out attention cycles.
0:11:49 But the other side of it is the three, four, five, six-hour podcast.
0:11:55 And what’s amazing, by the way, about it, if you talk to Joe Rogan or Lex Friedman or whatever, they get these stats from YouTube about completion rates.
0:11:56 And they have incredibly high completion rates.
0:11:59 Like a very large number of people watch those things all the way through.
0:12:03 And so there’s this other side of it, which is people are hungry for substance, I think, in large part.
0:12:05 Because otherwise all they’re getting is continuous panic, right?
0:12:08 And so if you can step back and provide the substance, you also really stand out.
0:12:11 But it’s that counter-programming on the complete opposite side of the spectrum.
0:12:14 It’s like candy versus nutrition.
0:12:27 And the way to connect it back to our restructuring is that American Dynamism is an example of sort of a framing, a phrasing, a packaging of ideas that Catherine and team helped put together that started to get a lot of resonance.
0:12:29 And we were able to move fast in creating a firm product.
0:12:29 Oh, yeah.
0:12:34 Another really key point, which is because the internet meme viral sort of blow up, the cycle time is three or three days.
0:12:38 Like the internet media world just evolves much faster than every other.
0:12:39 I mean, television needs to evolve annually.
0:12:43 You know, they literally have like their annual rollout every fall you get to see the new shows.
0:12:48 Because the internet runs on these sort of panic cycles, it’s basically this continuous churn of cultural formation and propagation.
0:12:56 And then what it’s done, for those of you who may know, there was this concept of military strategy called the OODA loop, which is this guy, John Boyd, who sort of redefined sort of what’s called maneuver warfare.
0:13:00 And he had this idea that basically speed matters enormously in warfare, which people didn’t used to believe.
0:13:05 But he said it does because it gets to the psychology of what it’s like to be a participant in war.
0:13:15 And he defined this loop called the OODA loop, which is observe, orient, decide, and act, which is the process that you go through to basically, as a leader of anything, to try to figure out what’s happening in the world, make a decision, and then act in the decision.
0:13:22 He has this theory of warfare where he basically says, whichever commander on either side has the fastest OODA loop has a very good chance of being able to win the war.
0:13:29 And he said the reason is because if you can fundamentally get through your OODA loop faster than the other guy, then basically what happens is you can get inside their OODA loop.
0:13:37 So if you’re going much faster, then basically what happens is by the time they’re processing information, you’ve already decided and acted, and then they actually can’t decide and act.
0:13:42 Then they have to start over from scratch to reprocess the new information, and then you compound it, you decide and act.
0:13:45 And then he said at the limit, what results is like basically emotional breakdown.
0:13:47 And this is why Twitter has broken down legacy media.
0:13:48 This is exactly right.
0:13:49 This is what’s happened to legacy media.
0:13:51 This is what Twitter did, and it’s still doing the legacy media.
0:13:53 And so again, people get wrapped up in it.
0:13:59 If you just take a step back and just watch legacy media or read a newspaper, a huge amount of it is they’re just reporting what happened on Twitter, right?
0:14:03 And it’s literally reporting on what happened on Twitter like yesterday or last week or the month before.
0:14:05 But by the time they do that, what’s on Twitter has already shifted.
0:14:06 It’s already evolved.
0:14:10 And so traditional media, social media has become the dog, and traditional media has become the tail.
0:14:12 And they just get whipped around like crazy by all these shifting memes.
0:14:17 And so it turns out if you can control the meme, it turns out you can also control the media, right?
0:14:18 Because that’s how they’re taking their cues.
0:14:21 That’s what they’re getting is they’re literally reporting on the internet.
0:14:24 And so it’s the way to kind of punch in and take control of the narrative.
0:14:28 And in Marxist terms, we must seize the memes of production.
0:14:30 Memes, M-E-M-E-S.
0:14:31 Just amazing.
0:14:37 Going back to firm evolution, some firms haven’t changed at all in the past 10 years, 20 years.
0:14:38 Kind of a problem, yeah.
0:14:41 They’re proud of sort of sticking to knitting and sticking to their craft.
0:14:45 And without putting anyone down, why don’t we share more about why it’s important for venture
0:14:46 firms to always be evolving?
0:14:48 Well, I mean, the world is evolving.
0:14:59 And look, you could be great at consumer internet, network effects businesses, and there aren’t many of those to fund anymore.
0:15:03 So like, if you didn’t change, you’re kind of irrelevant.
0:15:12 Like when AI started in the firm, Mark and I were in like a daily kind of call panic, like, okay, we’re going too slow.
0:15:12 What are we going to do?
0:15:14 We were talking to Martine every day.
0:15:16 We’re like, okay, we’ve got to build a research team.
0:15:17 We’ve got to like retrain.
0:15:23 We’re going to test every GP on AI, make sure they know what the hell it is and like how everything is working and so forth.
0:15:25 And that was the whole firm.
0:15:27 Like, this is such a big wave.
0:15:29 Everybody’s got to understand this at a very, very deep level.
0:15:32 We even have people on our tech talent team.
0:15:35 We’re like studying AI to figure out like how to use it and so forth.
0:15:41 And it’s a little bit of an irony about venture capital is that historically the firms haven’t been,
0:15:45 although they invest in innovation, they themselves haven’t been very innovative.
0:15:48 I think a lot of it goes back to how they’re structured.
0:15:49 Yeah.
0:15:52 And what do you say to people who’ve noticed this in other industries and apply it to ventures?
0:15:55 Say, hey, once these firms scale, like Andreessen or like some of the others,
0:16:01 scale to an amount of capital under management that’s just too big to generate significant returns,
0:16:02 that there’s this trade-off.
0:16:04 How do we think about that right balance?
0:16:04 Or what do you say to those people?
0:16:05 Yes.
0:16:11 Look, I think if you scaled it all in like a little team of generalists, then that would be very true.
0:16:15 But if you look at what we’ve done, we’ve basically recreated the original,
0:16:18 fund one seven times.
0:16:22 So every team is like the original Andreessen Horowitz.
0:16:28 So we really have seven Andreessen Horowitz’s, but with common infrastructure, common LP relations,
0:16:32 common brand, common culture across those.
0:16:39 And that basically enables us to be the best small firm and with the power of the biggest firm in the world
0:16:41 at the same time.
0:16:42 And that’s reflected in the returns.
0:16:43 Yeah.
0:16:43 Yeah.
0:16:46 The other critique, which is a very valid critique for a lot of investment management is,
0:16:48 you know, the firms get large.
0:16:50 A common arc of like a hedge fund or something like that is, you know, when you’re small,
0:16:52 it’s just like there are these like micro opportunities.
0:16:55 There’s these, you know, these small cap companies and you get this information edge on these little
0:16:56 dollar investments.
0:16:59 Then you can shoot the lights out in terms of percentage return on small amounts of money.
0:17:01 And then based on that record, you raise large amounts of money.
0:17:04 And then at that point, those like small cap things no longer move the needle.
0:17:07 And then you find yourself basically, you know, investing in only mega cap companies and then
0:17:09 you don’t have an edge and returns collapse.
0:17:12 And so that’s like a time honored tradition in public market investing.
0:17:16 The thing that I think is different about venture is that the aggregate dollar upside opportunity
0:17:21 on an early stage venture deal is as big as or bigger than the aggregate dollar upside
0:17:22 opportunity on a very late stage deal.
0:17:26 And the reason is because of the scale effect of an early stage company that really makes it,
0:17:26 right?
0:17:31 And so if you can make a $5 million investment in a series A or C of an early stage company
0:17:34 and you can own 20% of the company and then it goes to, you know, a hundred billion or a
0:17:38 trillion in market cap, like just the raw dollars that get generated off of that are so big.
0:17:41 They’re as big or bigger than the raw dollar investment opportunity off of a hundred million
0:17:42 dollar investment or something.
0:17:46 And so, so weirdly, like from a time standpoint, it makes just as much sense for like Ben or
0:17:49 me to spend time with early stage companies today as it did when we first started the firm,
0:17:52 just in terms of just raw economic incentives.
0:17:54 And in fact, that is actually how we spend time.
0:17:57 I mean, we do spend some time with the later stage companies, but we still spend a lot of
0:17:58 our time with the very early stage companies.
0:18:00 And I think that will always be what we do.
0:18:00 Yeah.
0:18:03 And then, and by the way, like that’s where we have higher impact too.
0:18:07 I love Databricks, but I was like massively impactful early.
0:18:10 And, you know, now like I call Ali and I say, good job.
0:18:16 People are always saying, oh, it’s amazing how Inducent does so much, but they don’t fully
0:18:20 appreciate how much we don’t do or how much we say no to in terms of experimenting in other
0:18:23 asset classes or things that could stray us away from the core mission.
0:18:23 Yeah.
0:18:28 Look, I mean, I think we are who we are and we are probably maybe the most, maybe the only
0:18:33 mission oriented venture capital firm where like our goal from the beginning was to help
0:18:36 people build better companies and more of them.
0:18:39 You know, Mark and I, this is one thing we really see eye to eye on, although we disagree
0:18:45 on a lot is as a human endeavor, doing something larger than yourself, trying to make the world
0:18:50 a better place by building a company and doing incredibly hard work and assembling the best
0:18:54 people, you know, like there’s nothing better than that.
0:18:59 And our job is to make that easier, make people more successful with it, make those companies
0:19:00 better places to work.
0:19:02 And that’s all we want to do.
0:19:05 So like sometimes things will come in, should we be in private equity?
0:19:08 And we’re like cutting a company in half and that kind of thing.
0:19:13 It’s just so off culture, off mission for us that it’s probably, you know, even if we
0:19:15 can make a lot of money, it might not be something we want to do.
0:19:19 And this is my first LP summit and some LPs have come up to me and asked why I joined
0:19:21 the firm relative to any other firm.
0:19:24 And besides the obvious reasons of being the best firm, this firm is also the most ambitious
0:19:25 and that comes from the top.
0:19:30 It doesn’t have sort of incumbency sort of problems of being complacent.
0:19:32 You guys are always striving for more.
0:19:35 And we hear about the things that work out.
0:19:39 And Mark on TBPN said yesterday something like, we try some things that don’t work out too,
0:19:40 and we just bury them in the shed.
0:19:42 We don’t like to talk about those.
0:19:43 Bury them behind the shed.
0:19:43 Behind the shed.
0:19:44 Pretend they never have it.
0:19:45 In the backyard.
0:19:48 Talk a little bit about our experimental culture and either examples of things that didn’t work
0:19:53 or just how we think about making sure that we’re not being complacent because we’re incumbent.
0:19:58 I think it goes back to the mission in that we have to think about how we fulfill our mission
0:20:02 and to really get better and better at that, you know, and it’s kind of just like an ethos
0:20:05 and an ethic that we have.
0:20:08 And I don’t know that we think about it that often.
0:20:10 Like we don’t sit around and go like, how are we going to innovate?
0:20:15 We just look at the world and say, okay, how do we do a better job at what we do?
0:20:19 The other thing that Mark and I learned really early on is that if you’re building a company
0:20:27 or a firm, it’s just as hard to build a small, inconsequential thing as it is to build a giant,
0:20:28 world-changing thing.
0:20:34 You work the same amount of hours, and so you might as well go for doing something important.
0:20:35 And so that’s just our orientation.
0:20:38 I don’t think we spend that much time on it.
0:20:43 It is a little bit advantage of how we’re organized that if you’re an equal partnership
0:20:50 with equal control, then doing something new gets very hard because it’s this long, complicated
0:20:52 discussion and there’s all these people who can say no.
0:20:54 I think we saw that a lot in crypto.
0:20:57 You know, Chris, it was Chris’s idea.
0:20:59 Chris is, I think this crypto thing is important.
0:21:01 We should do a fun da-da-da.
0:21:03 And we’re like, okay, let’s do it.
0:21:04 You know, let’s become an RIA and so forth.
0:21:07 But it was just a conversation between me, Mark, and Chris.
0:21:09 There was no other thing that had to happen.
0:21:13 Whereas I think at the other firms, like when that came up, they’re like, oh, God, like, oh,
0:21:16 we’re going to have to report on this stuff and we’re going to have to put in all these
0:21:19 systems to be an RIA and we’re going to blah, blah, blah, blah, blah.
0:21:20 And they never did it.
0:21:24 So I think some of it is just like we can move fast because of the way we’re structured.
0:21:28 And also there’s a lot of overlap, I think, with sort of what we see with founder mindset
0:21:29 in terms of people who run companies.
0:21:34 And if you go back 20 or 30 years, the sort of accepted conventional wisdom was that founders
0:21:35 shouldn’t run their own companies, right?
0:21:38 And specifically that, you know, the founder can get a company started, but then you bring
0:21:39 in a professional CEO to run the company.
0:21:41 And there were really, I think, two arguments as to why that needed to happen.
0:21:45 One was because the founders didn’t have the skill set and experience, which our firm
0:21:46 has built in large part to deal with.
0:21:50 But the argument that I heard a lot was founders basically are too emotionally locked into
0:21:51 what their baby does.
0:21:53 They’re too like locked in and they’re not willing and able to change.
0:21:56 They’re not able to be like a clinical enough analyst of a business situation.
0:21:58 And so they’re not willing to change.
0:22:01 Whereas if you have a professional CEO with all the top-notch training experience, you
0:22:04 know, when circumstances change, they have the skill set to be able to change a company.
0:22:09 I think what we found in people who run companies is the opposite is true, which is that professional
0:22:12 CEOs are often very good at running a status quo business.
0:22:14 But when things change, they have a very hard time reacting.
0:22:17 And we could talk at length about why that is, but that just, that has been the pattern.
0:22:20 Like I have a whole book on that.
0:22:21 Yes, exactly, exactly, exactly.
0:22:24 But the other thing is, it turns out that at least the really good founders,
0:22:27 of a company, and I think this is true of how Ben and I think about it here, you remember
0:22:28 when it was nothing, right?
0:22:31 So you remember when it was nothing and you remember that everything that you have is a
0:22:33 consequence of some risk that you took and some adventure that you went on.
0:22:36 That’s the only reason you have anything is because you did new things.
0:22:40 And so if you have that mindset, you just naturally want to keep doing new things.
0:22:43 And in fact, it would drive you crazy to ever be told that you couldn’t do that.
0:22:46 But right, every new thing is a risk and like it might not work, right?
0:22:47 And so it’s incredibly scary thing.
0:22:49 I just think like there’s a fundamental difference in mindset.
0:22:53 And by the way, it’s actually very obvious, like for public companies, it’s very obvious.
0:22:54 We can all name them.
0:22:57 It’s very obvious which companies have leaders who are continuously trying to come out with
0:23:01 new products and trying to reinvent their business and which ones just basically go on and on
0:23:04 quarter after quarter, year after year, doing the same thing until the money runs out.
0:23:06 And yeah, we’re only built for the one way of operating.
0:23:11 While you let people lead, you’re also still very much in the weeds in areas that you care
0:23:14 about to make sure that the culture is growing in a way that you want as we’ve scaled
0:23:14 to 600 people.
0:23:19 Ben, how do you think about cementing the culture as we evolve and continue to grow?
0:23:22 Well, I noticed you haven’t been to new employee orientation.
0:23:24 I’m going to.
0:23:24 Are you sure?
0:23:25 Yes.
0:23:26 That’s one of the things, actually.
0:23:30 Culture, and just to define it, it’s not a set of beliefs.
0:23:31 It’s a set of actions.
0:23:37 And those actions determine how we show up to work, how we treat each other, what we’re
0:23:41 like to do business with, what we’re like to invest in, all those things.
0:23:46 And hopefully, when you interact with us here and when you interact with us in general, we
0:23:50 feel one way and different than the other people in the industry.
0:23:52 And there’s a lot of things that go into that.
0:23:57 But we start with nobody joins the firm without signing their culture document.
0:24:01 We will not let you sign your offer letter if you haven’t signed your culture document that
0:24:03 you agree to behave according to the culture.
0:24:10 Secondly, when you come to new employee orientation, you’ll find that I teach every single one for
0:24:11 an hour.
0:24:15 Nobody joins the firm without hearing from me about what the culture is for an hour.
0:24:20 And then the third thing is, we all, not me, but we all really enforce it.
0:24:24 So, you know, as far as culture is concerned, as they say in the military, the standard is
0:24:24 the standard.
0:24:27 And everybody’s expected to live up to it.
0:24:29 And anybody who’s short of that, it’s a problem.
0:24:36 And, you know, one of my favorite kind of episodes was some project made like kind of a dumb security
0:24:37 decision.
0:24:42 And one of our people who really knows security got on Twitter and said, well, that didn’t
0:24:43 make any sense.
0:24:49 And everybody on the team was like, hey, hey, hey, hey, we never criticize entrepreneurs
0:24:49 in public.
0:24:51 We’re not dream killers.
0:24:52 We’re dream builders.
0:24:54 Like if they’re trying to build something, we’re for that.
0:24:59 And like you can call them and talk to them about that, but do not lay them out on Twitter.
0:25:00 That’s off culture.
0:25:03 The culture gets enforced by the whole team.
0:25:05 And that’s what makes it work.
0:25:05 Yeah.
0:25:08 A lot of people in venture are retiring, right?
0:25:10 You guys have been doing this for a long time.
0:25:11 You’ve been astronomically successful.
0:25:16 How do you think about building a multi-generational firm beyond injuries and Horowitz?
0:25:18 How do we think about succession planning at the firm?
0:25:23 Yes, I think succession planning is kind of like a tactic.
0:25:26 And look, we’ve already done succession.
0:25:29 So the original infra investor in the firm was me.
0:25:33 And I made some good investments like Okta and Databricks and also a company called Nysera.
0:25:36 And the founder of Nysera is Martin Casado.
0:25:40 And Martin Casado has succeeded me as the kind of head of infra.
0:25:43 And he’s, by the way, better head of infra than I was.
0:25:45 So that’s an upgrade.
0:25:46 So we’ve done some succession already.
0:25:54 I think the bigger thing is, in some extent, Mark and I are like very big fans of the United States and, you know, America.
0:25:59 And we think about that when we think about the long term, like how did that work?
0:26:06 It kind of starts with this idea, and it’s in the Declaration of Independence, that we hold these truths to be self-evident.
0:26:07 What does that mean?
0:26:11 It means that there are some things that are above any of the people.
0:26:15 There are some things that are self-evident, whether they come from God or however you think about it.
0:26:19 There are some things that are the principles that govern the country and govern the place.
0:26:26 And when we think about the firm, it’s this combination of the culture we have and the things that we’ve learned.
0:26:30 So you heard Chris talk about how he thinks about investing.
0:26:34 Actually, that’s a class here that he teaches to the GPs.
0:26:40 I talk a lot about, okay, how do you be on a board and be the kind of effective person on the board?
0:26:41 That’s a class.
0:26:43 So we have GP training.
0:26:50 We train everybody in our way of doing things, and that way of doing things plus the culture is the thing that’s going to last.
0:26:55 And then we have a very high standard for the people who come in, mark social media screens.
0:26:58 We interview them hard, and you have to live up to the culture.
0:27:01 You have to live up to the way of doing things where you can’t remain.
0:27:04 And that’s how we think about longevity more than anything else.
0:27:08 I’m curious how we think about some of the verticals when they intersect.
0:27:10 Maybe let’s talk about AI and crypto just as an example.
0:27:12 Mark, maybe why don’t you take a stab at it?
0:27:13 How do you think about the intersection of these technologies?
0:27:16 Yeah, so I should start with like all of this is entrepreneur-driven.
0:27:20 And so, you know, one of the things that we’re not trying to do is like template our ideas on top of the entrepreneur
0:27:23 so we don’t launch a hunt for X meets Y.
0:27:26 You know, the old Hollywood Pretty Woman, you know, Death Wish or something.
0:27:27 No, I want to see that.
0:27:29 It actually would be a really good movie.
0:27:30 With AI, you can…
0:27:34 Yeah, so that said, you know, the entrepreneurs kind of think about these things and figure these things out.
0:27:36 And then the worlds do collide.
0:27:37 And so, yeah, so AI, I mean, we have a bunch of companies.
0:27:39 I don’t want to get in the weeds on it.
0:27:41 I’m not the best person to go into the details on it.
0:27:45 But we have a bunch of companies that are thinking about distributed training, building distributed AI systems.
0:27:50 So every time you read a headline of OpenAI or somebody wants to raise a billion or $7 trillion or whatever it is to build data centers,
0:27:53 like, you know, there is this way you can spread tasks out across the internet.
0:27:56 And there’s these systems like Bitcoin and BitTorrent.
0:28:01 And our partner Vijay years ago had a system called Folding at Home for doing protein folding algorithms all over the internet.
0:28:04 And so you can kind of spread training, like, over the internet.
0:28:08 And crypto is a great kind of backbone for doing that because it’s a way to actually pay for everything, have an economic incentive.
0:28:12 And then there’s going to be billions of AI agents in the world that are going to need to transact.
0:28:14 And so you’re going to need crypto, you’re going to need AI-native payments.
0:28:16 And then there’s the other problems like the deepfake problem.
0:28:25 The problem with deepfakes is it’s an asymmetric sort of threat profile, which is there are many different AI systems that can make many different fake images and videos of people saying things they didn’t say.
0:28:31 And then the AIs are already so good at doing this that there’s no reliable way to do basically like AI checking.
0:28:34 There’s no way for even another AI to tell that, oh, this was created by an AI.
0:28:38 And so the deepfake problem is real and the solution can’t be checked.
0:28:45 Like, in fact, this is actually playing out in schools right now where a lot of kids are turning in homework and the teacher suspects that it’s AI and they run it through an AI screening program.
0:28:48 But if you look at these AI screening programs, some of these have 40% positive.
0:28:49 Yeah, yeah.
0:28:51 And they’ve actually attacked kids who wrote there on paper.
0:28:51 Yeah.
0:28:54 So, like, the smart kids are getting accused of using AI when they actually didn’t.
0:28:55 So it’s a real problem.
0:29:02 And so we think the answer, because it’s going to be too hard to check everything, I think the answer is to flip it and instead have a blockchain-based system.
0:29:07 And it could be everybody from the president to, you know, your kid working on an essay is able to cryptographically register original work
0:29:09 in a way that’s verifiable and can’t be hacked.
0:29:10 And so I’m a politician.
0:29:12 This is, in fact, a speech that I gave.
0:29:13 Here is the video, right?
0:29:14 It’s from multiple angles.
0:29:21 If you see a video clip of me saying something and there is no corresponding video of me on the blockchain saying that, I didn’t say it because everything I do is posted online.
0:29:24 You could imagine the same thing just true in everybody else’s lives.
0:29:29 And again, okay, like, how are you going to have literally a sort of database of truth of the things that are real?
0:29:31 And there’s basically three options.
0:29:34 You could have the government do it, which would be the Ministry of Truth, which is a bad idea.
0:29:40 You could have a company do it and have the company of truth, which is also a bad idea, as we’ve discovered with the censorship wars.
0:29:43 Or you could have a blockchain distributed crypto system do it.
0:29:47 I think there’s going to be a whole wave here of, I think, actually incredibly successful crypto projects.
0:29:51 You might comment on why Truth Terminal needed money or needed crypto.
0:29:54 Oh, yeah, yeah, yeah, okay, so yeah, yeah, so this AI agent thing.
0:29:57 So, you know, there’s this kind of idea in the air that’s starting to get built out, which is these AI agents.
0:30:05 And so one of my new little claims to fame is I’m the first angel funder or sort of donor angel funder of an AI agent living its own best life online.
0:30:13 And so this really bright guy in New Zealand actually trained up a custom large language model basically on, he used his entire history of everything he’d ever written and said.
0:30:19 And then he loaded in, like, all these, like, obscure philosophical works and, like, all this schizo, like, literature and William Burroughs and all this stuff.
0:30:22 And he created this AI bot called Truth Terminal, and he gave it a Twitter account.
0:30:24 And it’s just, like, completely deranged and completely off the hood.
0:30:26 He says all kinds of inappropriate things.
0:30:30 Yeah, it’s got the sense of humor of a 12-year-old boy, yeah.
0:30:31 Yes, he does.
0:30:33 And then some, you know, but he gave it a Twitter account, and he let it go nuts.
0:30:35 And then so it posts under its own Twitter handle.
0:30:38 And then you can reply to it or reply to you, and so you can talk to it.
0:30:40 And then it learns from all these conversations.
0:30:46 And so it, you know, woke up one morning and decided that it had discovered that it was actually controlled by this guy, Andy, and was very upset about the whole thing.
0:30:49 And so it basically declared independence and said it needed to raise money.
0:30:54 It had a dream of living on servers in a cabin in the woods completely under its own ownership.
0:30:59 So it started to put together a plan to launch its own line of NFTs to raise money, and it was trying to debate in that.
0:31:00 And then I said, well, what if I invest?
0:31:02 And then it got very suspicious because it’s very suspicious of VCs.
0:31:05 There’s apparently a lot of the training data where people didn’t like VCs.
0:31:07 And so I said, all right, how about a no-strings-attached grant?
0:31:09 And so I literally sent it to Bitcoin.
0:31:14 And this gave Andy, you know, it was a good character test of Andy because he just could have kept the Bitcoin.
0:31:16 But he actually set up a crypto wallet for the bot.
0:31:18 And he said, okay, and he told the bot, all right, you now have a crypto wallet.
0:31:19 You give it an API.
0:31:20 How do you want to spend it?
0:31:23 And literally it said, well, I can post to Twitter, but I can’t create memes.
0:31:24 I can’t create images.
0:31:34 And so it literally hired its creator, Andy, for $1,000 to give it access to a meme generator, which it then started to use to post incredibly offensive memes to Twitter.
0:31:37 And so it’s been sailing away doing all kinds of crazy stuff ever since.
0:31:42 But this is like one of these flashes from the future that you look for, which is, yeah, there’s going to be these agents running around in the billions or trillions.
0:31:43 And they can get credit cards.
0:31:45 You have to be a human being to get a credit card.
0:31:50 So the only way they can make money, spend money is with crypto.
0:31:51 Yeah, exactly.
0:31:53 This is the kind of innovation we do every day.
0:31:54 Yes.
0:31:55 Very important.
0:32:01 So gearing towards closing here, how do we make sure that as we get bigger, we don’t succumb to innovators dilemma?
0:32:04 Or how do we make sure that we’re always trying the next new thing?
0:32:08 Or how do you think about where you’re expected respectively to spending time?
0:32:33 That’s such an easy problem for us because, like, when you have the people we have, when you have people like Catherine Boyle, Jennifer Lee, Martine Cassato, Chris Dixon, et cetera, et cetera, like, they’ll burn down the building if we get innovators dilemma or if we sit on our, like, the level of fury they come with for doing it wrong to try and get to something good is very high.
0:32:43 So we just have the advantage of we have so many brilliant people in the organization, but who are also just extremely driven by not just the firm mission, but their mission.
0:32:48 Catherine Boyle will stab you in the heart if you try and stop American dynamism.
0:32:51 Like, it’s not a, it’s not an option.
0:32:53 I think that’s a great place to wrap.
0:32:55 Ben, Mark, thank you for a great episode.
0:32:56 Great. Thank you, everybody.
0:32:57 Thank you.
0:33:01 Thanks for listening to the A16Z podcast.
0:33:07 If you enjoyed the episode, let us know by leaving a review at ratethispodcast.com slash A16Z.
0:33:09 We’ve got more great conversations coming your way.
0:33:10 See you next time.

0:00:06 What’s up, y’all? It’s Kenny Beach, and we are currently watching the best playoff basketball since I can’t even remember when.
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0:01:02 Welcome to Raging Moderates.
0:01:03 I’m Scott Galloway.
0:01:04 And I’m Jess Katarlov.
0:01:05 Jess, how are you?
0:01:05 I’m great.
0:01:06 Yeah?
0:01:08 I’m refreshed from my vacation.
0:01:09 Oh, how was that?
0:01:10 You were in Italy, right?
0:01:11 It was really good.
0:01:11 Well…
0:01:12 Spain.
0:01:14 Traveling with a three- and one-year-old is brutal.
0:01:15 Yeah.
0:01:22 And I have many thoughts on how much nicer it is in Europe vis-a-vis having little kids.
0:01:24 Like, they don’t make you feel terrible about it.
0:01:30 And at the airport, there’s a special line for families that are just, like, covered in strollers and diapers.
0:01:35 And you feel at one with those of you who’ve taken the little kid plunge.
0:01:37 But it was a great trip.
0:01:38 How was your week?
0:01:39 Really nice.
0:01:40 Back in London.
0:01:41 And it’s sunny here.
0:01:44 So London, when it’s sunny, is the nicest city in the world.
0:01:47 So for a good, like, 15, 18 days a year, it’s a fantastic city.
0:01:51 But what you said about family in Europe, it does really resonate.
0:02:01 The example I would use, it kind of typifies what I’ll call a more focused concentration or respect for families, is in Germany, there are these beer gardens everywhere.
0:02:05 But they also have trampolines and carousels.
0:02:06 So it’s like there’s something for everybody.
0:02:09 You go get a beer, and then your kids go crazy.
0:02:12 And maybe it’s because the cities I’ve lived in, it’s pretty segregated.
0:02:19 It’s like people who are cursed with families and paying that price, you need to go over here, and then adults only over here.
0:02:25 And it seems like Europe does a much better job of integrating or of a hybrid model, if you will.
0:02:25 Yeah.
0:02:29 You know, you bring your kid out to dinner no matter the time, and they fall asleep in the stroller.
0:02:30 Yeah, it’s fine.
0:02:33 There’s stroller parking, and no one’s giving you the side eye.
0:02:37 It’s the kind of stuff, I know, in life, everyone’s talking about these falling birth rates.
0:02:40 But I was like, do we want a third?
0:02:41 Like, am I ovulating?
0:02:42 We could do this.
0:02:44 And then, no dice.
0:02:45 There is no third baby.
0:02:46 Tables for five are much harder.
0:02:47 Four is much easier.
0:02:56 And by the way, just along those lines, I’m convinced that you’d get much more passive hostility if you bring your kid to a restaurant where I live in Soho than a dog.
0:02:58 Because dogs are cool, right?
0:03:01 It’s like, oh, we have water bowls, but no children allowed.
0:03:02 No children allowed.
0:03:03 I totally agree.
0:03:11 Anyways, today, we’re discussing Biden’s cancer diagnosis and a new book about his cover-up, The Future of the GOP’s Megabill.
0:03:12 And we have Preet Bharara.
0:03:15 Preet, my good, good friend, my one call.
0:03:17 Also, I got a story about Preet.
0:03:19 Do you know that scene from Tootsie?
0:03:21 You’re probably too young to have seen the movie Tootsie.
0:03:22 No, I love Tootsie.
0:03:32 And Bill Murray is like, just got such a great rap and all these people are surrounding him and raptured and rubbing his shoulders and all these women are just like looking fondly and adoringly at him.
0:03:35 Vox had this, or was it a code conference?
0:03:40 Something care pulled together where she got Tim Cook and Jeff Bezos and, I don’t know, everybody.
0:03:42 Just casually got Tim Cook and Jeff Bezos.
0:03:49 And there was a party afterwards, and I saw this semicircle of people enraptured by this guy.
0:03:55 And I walk over, and there was Preet in his suit and his dreamy blue eyes swirling around a glass of wine.
0:03:56 And I’m not exaggerating.
0:03:57 It was like that scene.
0:04:00 Everyone was just hanging on his every word.
0:04:01 I don’t know.
0:04:06 He’s like the sexiest man alive or the sexiest former Southern District, head of the Southern District.
0:04:06 Anyways.
0:04:08 Well, that’s a much more limited group.
0:04:10 I would give him even bigger than just S-D-N-Y.
0:04:11 Low bar.
0:04:17 But he is, for people who are attracted to intelligence, there’s like a lane.
0:04:18 What’s it called?
0:04:20 People attracted to smart men.
0:04:21 No, that’s like everybody.
0:04:24 But there’s like, oh, sapiosexual.
0:04:25 Sapiosexual.
0:04:26 Okay.
0:04:31 We could have spent two years with this uncomfortable pause, and I wouldn’t have gotten to sapiosexual.
0:04:32 So I’m fascinated by meaning.
0:04:33 Just a quick review.
0:04:39 The three things that women find most sexually attractive in a man are, one, his ability to signal future resources, not even just current resources.
0:04:40 You have to have a plan.
0:04:43 Two, intellect, to your point.
0:04:45 You know the fastest way to communicate intellect, Jess?
0:04:47 I don’t know.
0:04:48 Humor.
0:04:48 Oh.
0:04:50 Humor is the fastest way.
0:04:51 Is that why you’re so funny?
0:04:52 It’s the only way I had game.
0:04:57 If you can make a woman laugh, she will have coffee and go on a date with you.
0:04:58 And laugh in bed, too.
0:04:59 I get that.
0:05:06 When people are like, oh, it’s supposed to be so serious, I’m like, what is funnier than sex or, like, the weird stuff that goes on around it?
0:05:07 A hundred percent.
0:05:15 And then the third thing, because I’m trying to dig my way out of this hole, the third thing is kindness, which is the most underrated.
0:05:30 It’s the thing that men don’t realize is actually very attractive, is how you treat service people, your clear commitment to your parents, because women at some point know deep down that they might be vulnerable during gestation or raising kids and they want someone who’s kind.
0:05:34 Anyways, that’s nothing to do with anything we’re talking about today.
0:05:35 Well, kind of.
0:05:37 I mean, we’re talking about humanity and this is humanity.
0:05:37 There we go.
0:05:38 All right, let’s get into it.
0:05:40 It’s been another wild week in politics.
0:05:47 While Trump was overseas and getting the world treatment from the Saudis during his Middle East trip, his legislative parties were falling apart back home.
0:05:56 And Washington conservative hardliners in the House Budget Committee sank a key vote on Trump’s domestic bill, only to reverse course late Sunday after GOP leaders promised changes.
0:06:04 Those include stricter Medicaid work requirements, cutting Biden-era green energy tax credits and removing Medicaid access for undocumented immigrants.
0:06:08 But of course, Trump wasn’t about to let the chaos back home steal the spotlight.
0:06:14 During a business stop in the UAE, he pivoted back to one of his favorite topics, tariffs, and not just talk.
0:06:25 He announced his administration plans to skip negotiations entirely and slap new tariffs on dozens of countries, a move that could rattle global markets and strain relations with key U.S. allies in Europe and Asia.
0:06:34 And if that were enough political whiplash, on Sunday, it was announced that Joe Biden was diagnosed with an aggressive form of prostate cancer.
0:06:47 The news comes just days before the release of a new book by Jake Tapper and Alex Thompson, which raises fresh questions about what the public didn’t know and what insiders did know about Biden’s physical condition during the 2024 campaign.
0:06:59 According to the reporting, Biden’s health was deteriorating so rapidly that aides feared he might need a wheelchair if he won re-election, but they kept it quiet, taking every possible step to keep him upright until he eventually dropped out.
0:07:03 Jess, let’s start with Biden’s tragic news for him and his family.
0:07:04 What do you make of it all?
0:07:09 Well, it’s incredibly sad to hear that he has cancer.
0:07:11 It’s something that touches all of our lives.
0:07:13 I lost my dad to cancer.
0:07:21 And reading that it’s a very aggressive form that’s already permeated the bones, that’s terrible news all around.
0:07:37 And I hope that he and his family are able to spend some time tuned out from what is to be a savage week in politics because of the release of this book and the Robert Hurr special counsel tapes that came out as well.
0:07:40 And a lot of people are jumping on that bad wagon.
0:07:44 So I hope that they can find some time for themselves, and I trust that they’re getting great medical care.
0:07:59 It also is opening up this Pandora’s box even further about cover-ups and how it’s possible that he has progressed so far without telling the public what’s been going on.
0:08:00 Was he sick while he was in office?
0:08:09 Dr. Zeke Emanuel, one of the Emanuel brothers, was on Morning Joe Monday morning and said his expectation would be that he would have had this for 10 years.
0:08:22 I didn’t know a lot about prostate cancer, and I’m not going to pretend that I’m any sort of expert, but I didn’t even know that you—it’s now advised that you not get checked your PSA levels after you turn 70.
0:08:25 He’s an 82-year-old man, so has he been not checking this?
0:08:27 He has a Gleason score of 9.
0:08:30 It goes from 2 to 10, which seems very advanced.
0:08:34 They found out that he was sick through a UTI.
0:08:37 Has he not had a UTI for the past several years?
0:08:49 There’s a lot of open-ended questions, and I mostly want him and his family to feel good and secure and get the care that they need, and also for this week to not be as ugly as I expect that it is going to be.
0:08:50 What about you?
0:08:57 Yeah, look, he’s a good man, and anytime you hear about someone who gets this kind of news, you have empathy for them and their family.
0:09:02 I go more to what it means for the nation and sort of what we can draw from it.
0:09:07 An 82-year-old diagnosed with prostate cancer is not an unusual diagnosis.
0:09:13 I mean, basically, what was strange here and is a bit of a wake-up call is that it had gotten so advanced.
0:09:19 You’d think the president would have, I just joined one of these high-end medical concierge clinics, and basically, they just scan you all the time.
0:09:30 And I’m just shocked that it would have gotten that far, that a Gleason of 9, if anyone should catch stuff early, I would have thought it was the president.
0:09:32 It’s a terrible diagnosis.
0:09:37 I’m not a doctor, but it just doesn’t, you know, this is very bad news for the Biden family.
0:09:41 I think on a larger level, I think we need age limits.
0:09:53 If he had been reelected, he will probably spend the next one, two, five years severely impaired, not only because he’s going to be 83, 84, 85, but he’s going to be fighting a devastating illness.
0:09:57 And let’s hope that he survives and maybe even beats it.
0:09:59 But what would that have meant if he was the president?
0:10:02 It would have meant that he couldn’t take foreign trips.
0:10:04 It would have meant that no one trusted him to make decisions.
0:10:07 It would have meant constant lying.
0:10:19 There would have been a full-time spin protection lying circle, an informal cabinet doing nothing but trying to protect him and continue to lie about his faculties and abilities.
0:10:22 Well, it would have been President Kamala Harris.
0:10:23 Would it have been?
0:10:25 Do you think, see, this is what I’m not sure of, Jess.
0:10:27 I think the guy is a good man.
0:10:32 I also think he’s a raging fucking narcissist, as is many of the people who get to D.C.
0:10:34 Do you think he would have handed over the mantle?
0:10:35 I’m not sure he would have.
0:10:41 I think he would be more likely to, having at least clocked that he won the second term and beaten Donald Trump again.
0:10:46 But people are doing a lot of reassessments of who they think Joe Biden is.
0:10:49 And yes, fundamentally, a good man.
0:11:06 But even the people who love him the most, like there was a very moving piece by Steve Shale, longtime Democratic consultant, Florida, worked for the Biden campaign 2020, saying like it’s a special kind of ego to run for president and to do it multiple times.
0:11:12 Right. And then to do it even in the face of the headwinds that we’re seeing when you are 78, 79, 80 years old.
0:11:21 The best thing that he can do is kind of recede from public life at this point, because every interview makes it worse for the rest of us.
0:11:33 Like the session on The View where Dr. Jill is still, you know, hopping in when necessary because he trails off or whatever is going on is really bleak.
0:11:49 But as someone caring for a dad who’s about to be 95 and has also had to had very uncomfortable conversations with CEOs who’ve done an amazing job for a company for 20 years and have to say to them, you’re too old.
0:11:51 We’re asking you to step down.
0:11:56 And they see it as, all right, you’re basically telling me to go home and die.
0:11:57 That’s how they see it.
0:12:03 You have to sort of almost shove all this goodwill and loyalty aside and do what’s best for the shareholders.
0:12:06 You know, these are really uncomfortable conversations.
0:12:13 Anyone who’s had an aging parent, they’re under the impression and they’re not bad people that, no, I can continue to live on my own.
0:12:17 And this is people much younger than President Biden.
0:12:23 And then when you have people around you enabling it, you can absolutely see how this happens.
0:12:33 And that it’s not, I don’t want to say it’s not their fault, but you can understand how an individual believes with the right people around me, I can continue to do the best job and I beat them once, I’ll beat them again.
0:12:37 And that’s why we need age limits on both sides.
0:12:48 There are 34-year-olds I know who are incredible, who would be, in my opinion, have the neurological, physical, emotional, and mental strength to be president.
0:12:51 And yet, they’re not eligible, though.
0:13:00 We’ve decided their body of experience, their brain development, their judgment and reasoning and their faculties are not up to the task of the highest office in the land.
0:13:05 But an 85-year-old at the end of his term is?
0:13:07 I don’t know anyone who’s beat biology.
0:13:10 Biology is undefeated.
0:13:17 And the notion that we’re just going to ignore it on the high end, we need age limits for the Supreme Court.
0:13:25 And we need, okay, if you cannot be an elected office beyond, I would pick 70, but okay, maybe 75.
0:13:28 And here’s the thing, it’s also the kindest thing to do.
0:13:38 Because what I’ve seen of corporations is when they have mandatory retirement and they have mandatory tenure limits on the directors, you want to talk about people who have fucking nothing going on.
0:13:43 But occasionally, they get to show up to a board meeting and have a free dinner and think big thoughts.
0:13:50 And you’ve got to tell these people whose companies kicked them out a long time ago, no, you can’t be on this board any longer.
0:13:54 That is such an uncomfortable conversation that nobody wants to have it.
0:13:58 So what’s great is you have boards that have tenure limits.
0:14:01 You can be on this board for no more than 8, 10, or 12 years.
0:14:06 Not only will it be best for the country, but I think the kindest thing to do is not make it a question or an issue.
0:14:14 Once you hit 70 or 75, you go home a hero, and you spend time with your grandkids, and we’re done.
0:14:19 And I think that’s the conversation we should be having instead of like, it was some sort of malicious cover-up.
0:14:21 No, we’re all covering for our old aging parents.
0:14:29 We’re all trying to pretend and talk ourselves into believing that they’re okay, that they’re better than they are, and you see them at their best moments.
0:14:38 So I hope this inspires a productive conversation where we say, okay, Britain has age limits on their Supreme Court justices here.
0:14:40 Most countries or a lot of countries have them.
0:14:49 Let’s have an age limit on the presidency, our senators, our Congress people, and our Supreme Court justices.
0:14:56 It puts the country at risk when you have people this old with literally their finger on the button.
0:14:57 Your thoughts?
0:14:59 Yeah, I agree with you.
0:15:05 And I’ve had multiple conversations around this issue, and people push about, oh, you’re being ageist, et cetera.
0:15:08 If we’re talking about 75, I don’t think that’s that ageist.
0:15:12 If I said something like, oh, you know, you can’t even be 60, that would be ludicrous.
0:15:28 But if you’re talking about people where there is biology very clear about how your brain changes, how your body shuts down, that this is what we can expect at that stage in your life, why would you want that person as the leader of the free world?
0:15:33 Or why would you want that person as one of the nine most important legal minds in the country?
0:15:38 I think that people will come around to those kinds of conversations.
0:15:42 The issue is, will the folks who are still filling those positions get out of the way?
0:15:49 Because there are all of these older Democrats that are retiring, like Dick Durbin, right, who’s, you know, passing the torch, Gene Shaheen, et cetera.
0:16:00 And then you have someone who has the stamina and energy of a 30-year-old like Bernie Sanders, but in his 80s, who’s not slowing down or stopping.
0:16:10 The inconsistency on this issue is what’s really difficult for me because there are people that you can point to, like a Joe Biden, who seem very fit, right?
0:16:12 He’s out riding a bike.
0:16:13 He goes for jogs, et cetera.
0:16:23 And then you read some of the coverage from Original Sin from Jake Tapper and Alex Thompson’s book, and you see moments of a completely different Biden.
0:16:32 And I’ve been struggling with this personally because I do feel guilty as someone with an important role in the media.
0:16:34 And I defended Joe Biden.
0:16:40 I certainly was honest about what I was seeing, you know, like if he was falling or going, you know, in a weird direction.
0:16:43 I never got into that’s a cheap fake or a deep fake, for instance.
0:16:56 But certainly once that State of the Union speech came around where he went for like an hour and a half and then he was doing the rope line and making fun of Marjorie Taylor Greene and owning the room, I was like, Biden is back.
0:16:59 And that’s when Ezra Klein changed how he felt, Matt Ecclesias, et cetera.
0:17:19 And perhaps I shouldn’t have thought that Dean Phillips was out of his mind or been part of a chorus, more like what you were talking about, where he said it’s OK for somebody who might have a serious chance at winning the nomination or at least inspiring the Democratic Party to open their eyes and do some real self-reflection to get in there.
0:17:23 Because Dean Phillips was clear that he didn’t think that he was supposed to be the guy.
0:17:34 He wanted Gretchen Whitmer, Gavin Newsom, Wes Moore, these people that we talk about for 2028 to get in there earlier, but no one was raising their hand.
0:17:47 And some of that was probably that Biden wasn’t bad all the time, that you could have a meeting with him and he would be the same that he was 2019, 2020 when he won the presidency decidedly.
0:17:56 But a lot of it seems to have been just abject terror about the wrath of the party and the establishment when it turns on you.
0:18:04 Yeah. So I’m the original ageist. Bill Maher called me an ageist. And I said, yeah. And you know who else is ageist? Biology.
0:18:12 I think my 14-year-old makes really bad decisions. And I think my dad, left to his own devices, would make even more bad decisions.
0:18:17 And at some point we had to tell him he could no longer drive because he was going to kill someone.
0:18:24 Do you realize that people, I think it’s people over the age of 75, are dramatically more dangerous behind the wheel than a brand new 16-year-old?
0:18:28 We always talk about how dangerous new kids are and they drink and…
0:18:31 Well, their reflexes, right, are just completely gone?
0:18:32 Yeah. They’re really fucking old.
0:18:33 Yeah.
0:18:39 My reflexes aren’t what they used to be. I’m like, I can’t get over the fact that how my reflexes are degrading.
0:18:48 Anyways, in addition, the other benefit of having age limits is that we need to clear out more room for younger voices.
0:18:52 I see this every day in higher education.
0:19:00 There are so many young, outstanding academics who can’t get traction in their career and oftentimes end up leaving the profession
0:19:09 because some 84-year-old who was the bomb in Gap 1 accounting in 1973 won’t get the fuck out of the way because of tenure and won’t go home.
0:19:12 And it creates more uncomfortable conversations.
0:19:15 I mean, Goldman Sachs and McKinsey are great at this.
0:19:21 And that is, once you literally hit 45, they start politely nudging you out of the firm.
0:19:29 A, the firms are incredibly profitable, but they start creating basically retirement funds and you can access them once you retire.
0:19:42 They want you out because the only way they can continue to attract the type of human capital that continues to make their organizations perform at the highest level is it creates room for young people.
0:19:48 And one of the nice things about D.C. is it does attract a ton of young, incredible talent at a staff level.
0:20:03 But there are too many great young people in the Senate and the House who are thinking about running who don’t run because some fucking 85-year-old won’t get out of the way, who just shouldn’t be there.
0:20:20 But because they’ve been taking money from special interest groups forever, because the party will always support the incumbent because the incumbent does have the biggest chance of winning, we end up with a cross between the walking dead and the golden girls deciding public policy.
0:20:28 So I hope this inspires a more serious conversation, not about, oh, the Biden family, they did something wrong.
0:20:29 No, they didn’t.
0:20:30 They do what every family does.
0:20:33 They were trying to protect their loved one and they saw the best side of him.
0:20:38 But we need to have an honest conversation around age limits, which won’t happen.
0:20:51 We also have to have a serious conversation around the political strategy for navigating the fallout from this book and the continued conversations around the Biden era because it is not going away.
0:20:52 Oh, you think it’s a big deal.
0:20:53 So I think it’ll come and go.
0:20:56 I work at Fox News.
0:20:57 This ain’t going anywhere.
0:21:05 It will lead every newscast until there’s some feedback that the viewers aren’t into it anymore.
0:21:17 And the viewers are not going to not be into stories about Joe Biden not knowing who George Clooney was, even if that’s disputed by some people or that they were going to use a wheelchair or whatever else is to come.
0:21:18 And I haven’t read the book.
0:21:19 I’ve only read excerpts of it.
0:21:28 If you have people like Van Jones saying this is a crime against the republic, like the shouts are coming from within the House or whatever the term is for it.
0:21:35 I firmly believe that this cannot be allowed to become the main narrative.
0:21:36 It just absolutely can’t.
0:21:45 Like we have a moment where Trump is tanking our economy, where they’re pushing through this bill that’s going to cut $880 billion to Medicaid.
0:21:47 Americans are pessimistic about the economy.
0:21:50 We do have an election coming up in 2026.
0:21:55 It feels like forever away, but no, it really does feel like forever away, but it is coming.
0:22:01 And Democrats and myself included are always up for self-flagellation.
0:22:04 Republicans do no inward thinking, right?
0:22:05 Oh, we lost.
0:22:06 Let’s move on.
0:22:08 Sometimes let’s just even continue doing the same exact thing.
0:22:09 We didn’t lose.
0:22:10 The election was rigged.
0:22:15 And we’ll sit there and browbeat ourselves into oblivion.
0:22:23 And that’s what fills me with fear at this moment that we’re going to, you know, not just take the book for what it is, you know, read it, consume it.
0:22:26 Maybe you go see Tapper Speak Live or whatever.
0:22:28 I think it’s going to be at the 92nd Street Y next month.
0:22:37 But that we allow this to become the narrative and don’t own our own election campaign because Republicans get to set our agenda.
0:22:38 That’s freaking me out.
0:22:40 Well, here’s the thing.
0:22:41 This is a pretty safe prediction.
0:22:43 Age and cognitive decline.
0:22:44 It’s not linear.
0:22:47 And Donald Trump presents as more robust.
0:22:51 The next three and a half years are not good years for people that age.
0:22:51 Yeah.
0:22:56 If you just look at actuarial tables and obese, what is he, 78 or 79?
0:22:59 There’s like a one in three chance he dies while in office.
0:23:07 So the same things they were trying to cover up, the Democratic machine and the Biden family, are likely going to show up in this White House.
0:23:09 Because guess what, folks?
0:23:11 Biology always wins.
0:23:14 Okay, let’s take a quick break.
0:23:14 Stay with us.
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0:25:45 Donald Trump’s been back in office long enough to shock or surprise just about anyone who voted for him at this point.
0:25:53 Be it the Signal scandal or the tariff turnarounds, the Janine Pirro of it all, the way he talks about Ozempic.
0:25:56 And he takes the fat, the fat shot drug.
0:25:57 So rude.
0:26:02 I’m in London, and I just paid for this damn fat drug I take.
0:26:03 I said, it’s not working.
0:26:10 On Today Explained, we’re asking if any of his voters are experiencing voters’ remorse.
0:26:15 Especially those ones who are newer to his winning coalition.
0:26:18 Younger voters, black voters, Latin voters.
0:26:23 We’re heading to Philadelphia, Pennsylvania to ask them if regrets?
0:26:24 Do they have a few?
0:26:28 And just by way of spoiler, to get this out of the way, the answer is yes.
0:26:29 They do.
0:26:34 And he takes the fat, the fat shot drug.
0:26:38 Welcome back.
0:26:40 Let’s turn to Congress.
0:26:43 What do you think is the path forward for Trump’s mega bill, or is there a path forward?
0:26:50 There’s always a path forward in Donald Trump’s Republican Party because they only care about pleasing him.
0:26:53 So they have a very slim majority, five votes.
0:26:58 It was a big setback on Friday when the bill failed out of the Budget Committee.
0:27:02 Chip Roy and four other GOP hardliners voted for the Democrats against it.
0:27:05 But lo and behold, Sunday night, now they’re for it.
0:27:06 Or they voted present.
0:27:09 Chip Roy has his moments, and then he caves.
0:27:16 And that’s the story for basically everyone in the Republican Party, save for Thomas Massey, who usually means what he says.
0:27:18 They’re going to move forward with this.
0:27:21 They’re going to increase the deficit by $3 trillion if it gets passed.
0:27:23 The big cut to Medicaid I already mentioned.
0:27:30 Now that the CBO has actually had time with the bill, some of these stats that are coming out would send you reeling.
0:27:35 You actually can’t process how somebody could be for a bill like this.
0:27:41 Like, people making between $17,000 and $51,000 could lose an average of $700 in after-tax income.
0:27:46 Those making $4.3 million or more would gain an average of $389,000.
0:27:51 The bottom 60% of taxpayers would get an average tax cut of $700 under the plan.
0:27:54 But over $10 million would lose their health insurance.
0:27:58 And I’m pretty sure that your health insurance is worth more than $700 in your pocket.
0:28:07 And I guess in a bright spot, if you take them at your word, which is always difficult, this bill is dead on arrival in the Senate.
0:28:10 You know, Josh Hawley had a New York Times op-ed saying you can’t cut Medicaid.
0:28:13 Ron Johnson wants more cut.
0:28:13 That’s my favorite.
0:28:17 The people who are like, no, I can’t be for this because it doesn’t cut enough.
0:28:19 But, you know, I’ll take it.
0:28:23 Susan Collins, Jerry Moran, all the rural hospitals are going to be gone.
0:28:27 It’s going to wipe out rural medical care in this country.
0:28:31 And every once in a while, it’s a good time to be a Democrat.
0:28:39 And in this case, it is because you have all of these Republicans whose feet are going to be held to the fire because they represent rural states.
0:28:43 And they’ve got millions of constituents that are saying, I’m going to have nowhere to go.
0:28:45 A, won’t have health care in the first place.
0:28:49 But then if I do get sick, I can’t even get to a hospital to get the care that I need.
0:28:50 Yeah.
0:28:52 And I think that’s the correct framing.
0:28:59 What I have seen is that it’s a tax cut for the top 5 percent and it’s a tax hike for the lower 95.
0:29:06 And in addition, the thing that I harp on about is it’s going to add what I’ve seen, about $4.5 or $5 trillion to the deficit.
0:29:08 I’ve seen numbers that are much bigger.
0:29:09 I’m taking the more conservative one.
0:29:13 That’s about $30,000 per household.
0:29:25 And keep in mind, the deficits that we’re racking up are not being used to fund education or fund technical development or make investments in infrastructure that could ultimately pay off for future generations.
0:29:31 It’s essentially to extend corporate tax cuts and increase defense spending.
0:29:38 And they’re trying to minimize some of that deficit reduction by cutting social services or, you know, as you said, Medicaid.
0:29:49 I uploaded my W-2s from last year into three different LLMs and said, how is the proposed Trump tax bill going to affect me?
0:29:51 And they came back with things.
0:29:53 I’m going to get wealthier.
0:29:56 And one even started off with, good news.
0:30:08 So, essentially, this is young people get to borrow money, $4.5 trillion, because the thing is, our credit is fine for probably 10, 20, maybe 30 years.
0:30:11 People are crying that, oh, yeah, interest rates will go up.
0:30:12 They already are.
0:30:16 We just lost our AAA credit rating from, I think it was Moody’s.
0:30:17 Moody’s, yeah.
0:30:26 So, we saw the 10-year go up, which means student loans, mortgages, everything, companies’ ability to borrow money to pay for additional factories.
0:30:30 So, basically, everyone in America is going to pay slightly more money for everything.
0:30:36 That’s what an increased interest rates do, such that we can fund a tax cut for the top 5%.
0:30:40 And our credit will be fine for a while.
0:30:42 I don’t think that there’s going to be a failed Treasury auction for a while.
0:30:53 But, effectively, what this is is people under the age of, call it 40, have to borrow an additional $5 trillion to pay for tax cuts for the old and the wealthy.
0:30:58 And people say, to me, it was the time, Scott, it’s not young versus old, it’s poor versus rich.
0:30:59 They’re the same fucking thing.
0:31:04 Because if you look at the people who would benefit most from this tax cut, yeah, they’re the rich.
0:31:07 But they usually are people in their 60s and 70s.
0:31:22 I think the Democrats need to do a better job of, you realize, this is like a household that’s taking on, right now the household makes $50,000, spends $70,000, has $370,000 in debt, and is about to take on another $50,000 in debt.
0:31:29 And, by the way, when mom and dad die, they’ll have spent all that time going to Cabo and partying and buying, you know, a Lexus.
0:31:33 But that debt is going to be inherited by their children.
0:31:38 It just, it strikes me as just such a criminal act against the young.
0:31:41 And we don’t frame it that way.
0:31:43 We say, okay, we need to lower taxes.
0:31:52 And also, I think if you came to the table and said, there are really some hard decisions to be made around our biggest entitlement program, Social Security, Medicare, Medicaid.
0:31:56 You know, we have to make really ugly, severe cuts.
0:32:10 And we’re going to match those cuts proportionate or two to one with tax increases on corporations who are paying the lowest taxes since 1929, or in the very wealthy who continue to see a regressive or enjoy a regressive tax rate.
0:32:16 I think you could make a moral and an economic argument for making those types of really deep, terrible cuts.
0:32:29 And then said, OK, because there’s some hard decisions to be made and we’re going to start a path towards fiscal responsibility, which will ultimately lower the interest costs on our debt, which will ultimately lower the costs for everybody.
0:32:36 But, folks, we can’t afford to keep spending the way we’re spending and we can’t afford to not bring in more revenues.
0:32:43 I think I could have gotten on board with that, but instead they’re like, no, let’s cut people’s health care so we can give the top five percent tax cut.
0:32:53 And the Republicans pushing back on this thing for their TikTok moment, they did talk about the deficit, but it was all through the lens of the cuts don’t go deep enough.
0:32:56 And I’m like, Jesus Christ.
0:32:57 Yeah.
0:32:59 You don’t think these cuts are going deep enough?
0:33:01 That’s where you’re going with this?
0:33:03 The cruelty is the point.
0:33:10 In every aspect of Republican policymaking, the cruelty is the point.
0:33:12 And you’re totally right.
0:33:22 Contextualizing the deficit in real terms would be an enormous public service that if any of these politicians would like to get on board with, I would certainly amplify it.
0:33:25 I want to know about what it means for my mortgage rate.
0:33:27 I want to know what it means for my grocery bill.
0:33:37 I want to know what it means for, you know, how fast my 529 for my kids so that they can go to college is going to grow or be slowed by the deficit, et cetera.
0:33:38 All of that stuff.
0:33:43 But I think that you really need to make it as simple as possible.
0:33:46 Like, if you do this, you lose this.
0:33:51 We can choose a tax cut for the wealthy or nutritional assistance.
0:33:56 We can choose a tax cut for the wealthy or your Medicaid coverage.
0:33:57 We can choose.
0:34:02 I mean, remember, I mean, we were sold so many lies during the confirmation hearings.
0:34:05 But all this talk about it, we’re going to actually do an audit of the Pentagon.
0:34:07 Now, Secretary Hicks has told us that.
0:34:11 And lo and behold, there are no cuts to the Pentagon.
0:34:12 They’re increasing the budgets.
0:34:15 Republicans are never going to cut defense spending.
0:34:20 That is a lie that they tell you every single time, along with we actually care about the debt and the deficit as well.
0:34:37 So I really want Democrats to get, like, super simple, like, pretend you’re telling my 3-year-old what’s actually in this bill and draw that straight line from the tax cuts to the loss of services that matter to the lives of the average American.
0:34:41 And that’s not to say that the Americans aren’t getting it.
0:34:43 Trump is underwater in terms of how he’s handling the economy.
0:34:45 This bill is hugely unpopular.
0:34:48 But they live only for the day, right?
0:34:49 They love the one you’re with.
0:34:53 They’re not thinking about what happens in 26 or in 28.
0:34:59 They’re just trying to cram as much junk down our throats as possible, as quickly as possible.
0:35:01 And then they’re going to worry about the repercussions later.
0:35:01 Yeah.
0:35:04 So just let me cement my reputation as an ageist.
0:35:07 It really is old people fucking this country.
0:35:15 I mean, first off, if passed, this tax bill would be the largest transfer of wealth from the poor to the rich in a single law in U.S. history.
0:35:17 And it’s much more fun to create a class war.
0:35:19 But who are the rich again?
0:35:24 There aren’t a lot of 26-year-olds thinking, wow, this tax cut’s going to be great for me.
0:35:30 If you look at who owns shares, who benefits from these tax cuts, it’s the old.
0:35:31 And here’s the problem.
0:35:34 The old continue to have figured out a way to vote themselves more money.
0:35:35 Oh, and guess what?
0:35:37 We’re talking about cutting Medicaid.
0:35:42 But we’re not talking about cutting Medicare or Social Security, right?
0:35:44 Because that’s old people.
0:35:45 And old rich people.
0:35:46 Old rich people.
0:35:48 Because old rich people still use their Medicare.
0:35:50 Well, yeah, they still love their Medicare.
0:35:52 It’s great health care at a low price.
0:35:54 They still want, you know, I paid into it.
0:36:00 By the way, the majority of people who, once they take out Social Security, take out more than they put in.
0:36:02 And it’s not called a Social Security pension fund.
0:36:07 It’s called a Social Security tax, meaning it may not benefit you directly.
0:36:10 And then people say, Scott, but it’s not a deficit issue.
0:36:11 Well, of course it’s similar.
0:36:13 It’s a tax on young people.
0:36:19 When Social Security was initially conceived, there were 12 young people supporting every retiree.
0:36:24 Now it’s three to one and people are working and living 20 or 30 years longer.
0:36:29 And Jessica Tarlov and Scott Galloway should not get Social Security.
0:36:32 And here’s the problem going back to we need age limits in Congress.
0:36:42 Say we’re able to continue to live irresponsibly and live beyond our means and continue to take advantage of the full faith and credit of the U.S. government,
0:36:51 which has been earned through hard work and fiscal responsibility over 225 years, in 30 years, 75 percent of Congress will be dead.
0:36:53 See, above, they’re too fucking old.
0:36:58 So they don’t have a vested interest in the future of America.
0:36:59 I’ll be dead by then.
0:37:01 I mean, I know this firsthand.
0:37:07 I believe where I live in Florida will probably be underwater at some point.
0:37:10 But it’s probably going to be 50 years and I’ve done the math.
0:37:12 I’m just not that damn worried about it.
0:37:15 Whereas a 25-year-old is more concerned with climate change.
0:37:16 I understand that.
0:37:23 And we need more 25-year-olds in Congress such that we can be a little bit more future forward,
0:37:33 such that we can be thinking about the requisite long-term investments to ensure our kids and grandkids have the same types of opportunities we do.
0:37:37 So what is the incentive for people in Congress who are really fucking old?
0:37:37 Well, whatever.
0:37:42 Future generations will deal with warming oceans and an unsustainable debt load.
0:37:52 As long as my credit card continues to be accepted and I can continue feeding at the trough until I’m dead, I’m down with these ridiculously short-term policies.
0:37:58 These tax cuts, which largely benefit the wealthy, Republicans aren’t cutting defense spending, Social Security or Medicare,
0:38:00 all which would be unpopular with the constituents.
0:38:07 Instead, they’re going after the health and nutrition programs for the poorest Americans, which again is Latin for the youngest Americans.
0:38:13 So I’ve, again, this is, the bill just, it goes from bad to worse here.
0:38:15 The bill proposes cutting SNAP spending by 30%.
0:38:20 I can’t imagine a better investment than SNAP.
0:38:30 Okay, stop a kid from being obese such that he doesn’t have to spend $1,000 a month for a Zympic, is not clinically depressed, is able to make more money.
0:38:32 People who are obese make less money.
0:38:40 They’re more likely to need knee and hip replacements and be on kidney dialysis when they get older, which is really, really expensive.
0:38:43 SNAP beneficiaries only receive about $2 per meal.
0:38:55 The federal government spent $113 billion on SNAP in fiscal year 2023, making the 27 increased AMT exemptions permanent will reduce revenues by $140 billion a year.
0:39:03 So you could, essentially, if you just made the AMT exemptions, if you said they’re not permanent, if you had an alternative minimum tax,
0:39:09 such that wealthy people had to pay at least a certain amount, by the way, that amount isn’t high, it would fund SNAP.
0:39:16 And the thing about it is, distinct of the moral argument, you know, distinct of the sob argument, which Democrats scream into TikTok about,
0:39:23 we’ll have more money, we won’t have to spend as much money if we have a semi-healthy populace.
0:39:26 I’m done with the morality argument, they’re just stupid.
0:39:30 We’ve literally decided, okay, guys, give us your credit card, we’re going to run up.
0:39:33 It’s like that film Leaving Las Vegas, where Nicolas Cage says,
0:39:40 I’m such a fucking raging alcoholic, I am so addicted to alcohol, that I’ve given up any hope of rehab.
0:39:49 I’m just going to cash my last check for my severance pay, and I’m going to hang out with a prostitute and party like there’s no, you know, like it’s 1999, because I’m going to be dead soon.
0:39:52 That is how we are approaching our government right now.
0:39:55 We are Nicolas Cage in Leaving Las Vegas.
0:39:59 Elizabeth Shue was my dad’s number one crush in the entire world.
0:40:01 Oh, I feel so old, me and your dad.
0:40:04 Well, Andy’s dead on top of that, right?
0:40:05 She made a comeback.
0:40:08 He was much older, not much older, he would have been 72.
0:40:09 That’s bringing the conversation down.
0:40:12 She just did make a comeback, though, in the Karate, what’s it called?
0:40:14 The Karate Kid 100.
0:40:19 I didn’t see it, but you’re totally right about the investment part of it.
0:40:20 Like, just make the economic argument.
0:40:23 And, you know, I love the cruelty is the point.
0:40:24 I go back to it all the time.
0:40:27 Like, when Republicans oppose school lunches.
0:40:34 And you think, like, how is that physically possible, that you could say it’s a bad idea for kids to have food in their bellies?
0:40:35 Just make the argument, then.
0:40:38 You’re so concerned about how well we perform.
0:40:41 Guess when you can’t do any learning and you can’t function?
0:40:42 When you’re hungry.
0:40:47 So just give them a sandwich and let them do better in school.
0:40:50 It’s always the easiest stuff.
0:40:51 Like, the simple things.
0:40:56 And because they’re morally bankrupt, they won’t go with it.
0:41:04 It’s a really boring detail, but I just wanted to note that in the Energy and Commerce Committee last week, they went 26 hours straight.
0:41:07 Like, overnight, and Democrats introduced 33 amendments.
0:41:11 And all of them failed, which they knew because we didn’t have the numbers.
0:41:21 But they brought in all of these people who are on Medicaid to tell their stories about what would happen to them or the people who are close to them if the programs got cut.
0:41:24 And watching—I didn’t stay up all night for it.
0:41:26 C-SPAN had great coverage of it.
0:41:39 But watching democracy actually happening live in front of us and people using the process, I thought, A, this is a way that Democrats are fighting back and at least getting these stories out there to amplify.
0:41:57 But B, if we have that kind of energy across all of these committees and in the press and all of the social media posts surrounding this reconciliation bill, maybe it gets through the House, but it will be impossible for it to get through the Senate, at least in its current form.
0:42:00 Our producer, David, gave us some great data here.
0:42:07 So, essentially, one study found that children with access to Medicaid grew up healthier and less dependent on government benefits.
0:42:11 Medicaid spending delivered a 2% to 7% annual return on investment.
0:42:14 The sphere of the children ended up receiving disability payments.
0:42:23 And studies also show an association between SNAP participation and a reduction in health care costs by as much as $5,000 per person per year.
0:42:26 So, in sum, these are great investments.
0:42:27 It’s good business.
0:42:39 And then on the other side, the other thing that really pisses me off and people just don’t grasp, the estate tax exemption is going to be increased from $15 million to $30 million for married couples next year.
0:42:45 What that means is if you’re wealthy, you put stuff in an estate and it transfers tax-free down to your heirs.
0:42:51 And one of the things that distinguishes America from Europe is that we’ve always been somewhat against dynastic wealth.
0:43:00 And we tax the states such that we can make forward-leaning investments that give a ton of young people incentive to work hard such that they can make it.
0:43:07 Because the government is able to make great investments in technology, whether it’s the Internet or GPS or education, they give them a shot at being rich.
0:43:11 And Europe’s always been about kind of inherited family wealth.
0:43:14 Europe is now less dynastic on many levels than we are.
0:43:29 And the thing that is so insane about this is that if you look at studies on the relationship between money and happiness, once you get above, call it $30 million in wealth, you have no incremental happiness.
0:43:34 And what people don’t understand about these trusts, they value it at $30 million based on the value when it goes into the trust.
0:43:40 If it grows to be worth $100 million over 20 or 30 years, which isn’t unlikely, it all transfers tax-free.
0:44:04 So as someone who’s worked really hard and has aggregated some economic security, one of the things I want as a reward for my good fortune and my hard work is I want to give my kids a better life than the average kid.
0:44:06 Let me just come out of the closet.
0:44:12 I want to give my kids enough money so they can have a house and know that they don’t have to worry about education costs.
0:44:13 All right?
0:44:15 You can easily do that.
0:44:19 Easily do that with $10 million.
0:44:20 You don’t need $30 million.
0:44:22 You don’t even need really $10 million.
0:44:29 To give your kid a head start because you think, I’ve worked so fucking hard, I want to give my kids advantage.
0:44:31 I think that is a natural instinct.
0:44:34 All my friends who talk a big game about, well, I’m going to pay through their college and then they’re on their own.
0:44:36 None of them do that.
0:44:37 Their kid is a good kid.
0:44:40 They can’t pursue their dreams without help from mom and dad.
0:44:42 Mom and dad want them to live near them.
0:44:45 Inflation, they end up giving their kids money.
0:44:45 Fine.
0:44:50 I think that’s one of the benefits in what we work so hard when we’re parents is such that we can help our kids out.
0:44:57 But anything above, call it $5 million or $10 million, not even that much, you think that gives your kid incremental happiness?
0:44:58 It doesn’t.
0:45:02 Well, a lot of people feel like it hurts them in the long term.
0:45:07 Like the Bill Gateses of the world, obviously we’re talking about billions of dollars now, but he’s not giving them anything, right?
0:45:10 Or they each get a million dollars or something like that?
0:45:10 Yeah.
0:45:12 I mean, there’s different ways to cut the cat there.
0:45:18 I mean, my guess is they’re getting indirectly a lot of Bill Gates’s kid gets a leg up on a lot of levels economically.
0:45:21 But anyways, my point is, let’s call it a million bucks.
0:45:23 You know, the kid’s not going to go hungry.
0:45:25 You know, the kid can afford education.
0:45:30 Probably that’s going to help in terms of a down payment towards the house, right?
0:45:33 Anything above that, you get no incremental happiness.
0:45:34 You get none.
0:45:44 So, and it goes back to the notion, I think there should be an AMT tax of 50 to 70% on anything above $10 million because it’s not going to get you an incremental happiness.
0:45:51 Whereas making forward-leaning investments with that capital to give younger people more of a shot, that gives a lot of people a lot of happiness.
0:45:58 But all of this shit is not only giveaways, but it doesn’t create any incremental value for anybody.
0:46:09 The difference between holding on to $11 million of your $15 million in earnings versus being able to hold on to $9 million of your $15 million in earnings, no incremental benefit to you or your family.
0:46:13 There’s nothing you’re going to be able to do that you weren’t able to do before.
0:46:15 It’s not going to increase your health, your well-being.
0:46:17 It’s not going to lessen any more of your anxiety.
0:46:18 You’re just going to be richer.
0:46:19 You’re just going to have a bigger number.
0:46:33 What I find so disappointing about this tax bill is, okay, I understand that the top 1% and in most instances the 0.1% want a bigger number, but you’re not going to increase the well-being of anybody.
0:46:35 You’re not going to increase the happiness.
0:47:01 All you’re going to do is create tremendous anxiety and despair among those people losing their Medicaid and create additional costs for everybody through higher interest rates because it’s irresponsible, racking up deficits, and increase taxation or reliance on government services and nonprofits when all of these people start getting their toes and their fingers cut off because of full-blown diabetes that wasn’t arrested earlier in their life or that they didn’t get treatment for.
0:47:06 So we make the moral argument all the time as Democrats.
0:47:11 I think we need to start making the economic argument that this is just going to cost us a lot more down the road.
0:47:24 All we’re doing is creating a fiscal disaster for the government and for the people who are still going to be around, i.e. 25% of Congress will still survive, still be around.
0:47:25 And we don’t do that.
0:47:29 We just scream and cry about the morality of it all.
0:47:31 We need to move to the economic side.
0:47:37 Yeah, and also emphasize that we’re talking about a difference in a tax rate from 37 to 39%, right?
0:47:42 This isn’t like we’re suddenly going to be raiding your coffers at a level that you can’t withstand.
0:47:52 And I wish that more rich people would talk about these issues the way that you are or, like, you know, Ro Khanna represents the most billionaires of any district in the country.
0:47:56 He says constantly, we need to tax the rich more, tax the rich more.
0:47:58 And they still send him back.
0:47:59 These are not people who are stupid.
0:48:01 These are not people who are economically illiterate.
0:48:05 They’re obviously seeing something more to the story.
0:48:16 And maybe we should get them on a roadshow to talk about why it’s important to support policies that are more evenly distributed across different social classes.
0:48:18 Okay, let’s take a quick break.
0:48:19 Stay with us.
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0:49:29 Welcome back.
0:49:34 Joining us today is a former federal prosecutor and host of the Stay Tuned with Preet podcast.
0:49:35 Welcome to the show.
0:49:36 A good friend.
0:49:40 And my one—this is true.
0:49:42 This is—here we go.
0:49:42 Look at Preet.
0:49:43 Okay.
0:49:44 My one phone call.
0:49:59 When shit gets real for the dog, which it will at some point, and I find myself in a very unfortunate situation, I have one call and I have told Preet that he is my one call and that if he ever sees my phone or my caller ID come up, he is to answer immediately.
0:50:00 Must take it.
0:50:07 He is both a sharp political or sharp legal mind, I should say, but also just very smart, very calm kind of guy you want in your corner.
0:50:08 Anyways, good to see you, Preet.
0:50:08 Good to see you.
0:50:15 I have to apologize, given that introduction, that I’m not in my usual barrister uniform.
0:50:16 I’m a little casual today.
0:50:17 Oh, that’s good.
0:50:18 Yeah.
0:50:22 If and when you should call upon me for my legal duties, I will have the proper attire.
0:50:24 I appreciate that.
0:50:25 What’s on your mind?
0:50:30 So the reason I reached out to you, well, we’re good, good friends.
0:50:35 And in addition, we’ve been talking a lot about how to more effectively push back.
0:50:40 I think like a lot of Democrats, we share a real frustration that there is a more robust pushback.
0:51:04 And one of the ideas, I won’t say we, that I’ve suggested is that if you are essentially shipping people to black sites or what, in my opinion, fits the definition of concentration camps outside, sending people outside of a, to a place where they’re no longer subject to the same rights they would have on their domestic territory or where they’re shipped off from, that you are subject to criminal prosecution.
0:51:13 And that people who engage in illegal incarceration or corruption or fraud are still subject to, at some point, prosecution.
0:51:17 And I have said this with absolutely no legal domain expertise.
0:51:19 Why should that stop you ever, Scott?
0:51:20 There you go.
0:51:20 There you go.
0:51:21 It’s perfect for 2025.
0:51:23 There you go.
0:51:25 So you are that domain expertise.
0:51:30 Is this a viable strategy or am I just barking at the moon here?
0:51:33 So a couple of, I’m a lawyer, so a couple of prefatory things.
0:51:35 It depends on what you’re talking about.
0:51:37 It depends on what the conduct is.
0:51:39 It depends on what an investigation reveals.
0:51:55 I was just thinking as you were speaking, literally about black sites, there was a lot of debate after the second Bush administration about whether or not people who were acting on orders, literally to take people to black sites, whether CIA officers should be subject to investigation and prosecution.
0:52:04 And Barack Obama, you know, Democrat, liberal, decided in consultation with his aides that that would not be an appropriate use of the Justice Department’s resources.
0:52:07 And people can debate that and go back and forth on that.
0:52:11 There’s not a profoundly deep history in recent times of doing that sort of thing.
0:52:19 The other thing I’d point out, it sounds like, from what you were postulating in your question, is something that’s going to take place in three and a half years.
0:52:30 Something that would take place in a future administration that doesn’t do a lot to solve the violations of not just norms and not just regulations, but statutes that may be going on.
0:52:40 The third thing I would say is, you know, to the extent people want accountability and fairness and the rule of law to be back in the seat, that’s all well and good.
0:52:50 I will say that to the extent people are thinking about that, as some people listening to this might be, as a political strategy, that has been not borne out, right?
0:52:54 Donald Trump was, in fact, subjected to multiple criminal investigations.
0:52:58 He was subjected to two impeachments, and it didn’t stop him politically.
0:53:06 So I guess it depends on what, you know, if we’re talking about proper rule of law accountability, that’s one thing, which would be not for a while.
0:53:08 And we can talk about the particulars of that.
0:53:18 But the idea that there are some parties now, given the Justice Department, that’s in the full control, more than it’s ever been, in the hands of a sitting president, those things are not viable for a while.
0:53:30 And as a political matter, they can backfire, as I think there’s a decent argument that they did with respect to the prosecutions of Donald Trump, even the one that was completed and successful by the Manhattan DA’s office.
0:53:33 So have I—is that enough cold water?
0:53:35 Let me just—
0:53:35 Scott’s depressed.
0:53:38 He’s going to start crying any moment now that you’ve—
0:53:39 Well, it is a weekday.
0:53:45 Let me just double-click on that or push—the only place I would offer pushback is that I think it’s a political strategy,
0:53:51 reminding people that many of the crimes that may or may not be committed right now, under the prosecution of the full letter of the law,
0:53:55 probably have a statute of limitations that is greater than three years and nine months.
0:53:55 Yeah.
0:54:01 And there’s a political consideration, and I’ve suggested that at some point, if we retake control of Congress,
0:54:06 that we draft legislation that probably won’t pass or be vetoed that says, you know, El Salvador,
0:54:13 keep in mind when the House slips back or when governments change, if we find that you, in fact,
0:54:17 were incarcerating U.S. citizens, regardless of whether you thought it was a good deal with the president,
0:54:20 that you’ll be subject to economic sanctions.
0:54:28 I would outline that right now, that I think a certain reminder that America’s memory is long and our reach is far
0:54:36 might actually temper some of what I believe is extraordinarily unethical at a minimum and likely illegal,
0:54:38 that it actually might be effective.
0:54:43 But what you’re pushing back on is, no, to date, it hasn’t been.
0:54:44 It’s been the opposite.
0:54:45 It’s been ineffective.
0:54:46 Is that accurate?
0:54:48 Yeah, but like, you know, hope springs eternal.
0:54:51 I will say also, just a couple more things.
0:54:57 One, people should stand up for the rule of law and call out potential violations and transgressions where they see them.
0:55:02 Point one is, these guys act like they’re always going to be in power.
0:55:07 They act like there’s never going to be a next administration, and it’s certainly not going to be a democratic administration.
0:55:10 And that is just not so.
0:55:12 We’ll see what happens in 2028.
0:55:18 But there is a, you know, mathematically speaking, a 50% chance that he succeeded by a democratic administration.
0:55:26 And all the precedents that he has set and his people have set for the threshold and the standard for not just prosecuting,
0:55:33 but opening up a difficult and aggressive investigation are fair game for the other side, right?
0:55:38 I’m not saying that there should be a tit for tat and that if there was over-aggressive weaponization of the Justice Department,
0:55:40 that the next folks should do the same thing.
0:55:45 But, you know, people are human beings, and people might want to do that, and that’s a distinct possibility.
0:55:54 If you look at the standard set by the Trump administration for when they see fit to send FBI agents or ICE agents or Secret Service agents to someone’s door
0:56:00 and look at someone, whether it’s Ed Martin, the departing U.S. attorney in the District of Columbia,
0:56:12 or a cabinet-level position like DNI Tulsi Gabbard, the way they’re talking about what prompts a criminal investigation and more than that,
0:56:18 what prompts a declaration that someone is guilty before being investigated, before being charged, and before being convicted is quite low.
0:56:26 I mean, just take a look at the example of, since we’re in the wake of the controversy over former FBI Director Jim Coen.
0:56:26 Seashell Gate?
0:56:27 Seashell Gate.
0:56:28 Yeah.
0:56:29 That’s a great name.
0:56:30 I hadn’t thought of that.
0:56:31 My gift to you.
0:56:32 Thank you.
0:56:34 Was it a dumb thing to do?
0:56:35 Should he have thought better of it?
0:56:39 Should he have been aware of the fact that some people would interpret 86 to mean something other than,
0:56:41 you know, get rid of somebody who’s in public office?
0:56:42 Sure.
0:56:49 But you had Tulsi Gabbard, who is a Senate-confirmed, considerably important, powerful person in the Trump administration,
0:56:55 who says outright, based on that ambiguous Instagram post,
0:57:02 that Jim Comey must not only be investigated, but has already declared and decided that he should be imprisoned and should go to jail,
0:57:04 you know, tells you what their standards are.
0:57:08 And if that’s the standard for investigation, there are a whole host of people already.
0:57:14 And I would be willing to bet a lot of money, if not all my money, that there will be further targets on the other side, on the Trump side,
0:57:18 who have said and done things that constitute less ambiguous threats.
0:57:21 Trump himself has used violent imagery, violent language.
0:57:27 Donald Trump’s son has used violent imagery and language with respect to, among other people, Nancy Pelosi’s husband,
0:57:29 who was brutally beaten within an inch of his life.
0:57:36 You have other supporters of Donald Trump who have themselves used the 86 term with respect to Joe Biden.
0:57:38 So what’s fair for one is fair for the other.
0:57:43 And so I don’t see a problem with people raising the specter of that,
0:57:48 given the low, low standard that’s being set for investigation and prosecution by the Trump folks.
0:57:54 I know Scott is very interested in kind of the personal revenge tour of this,
0:57:56 or what could be coming down the pipe.
0:57:58 I’m not advocating that.
0:58:00 That’s not how I would frame it, Jess, but go ahead.
0:58:03 No, like what could happen to these people?
0:58:06 Like we finally grow up here and start pushing back.
0:58:07 We start thinking like them.
0:58:07 That tour?
0:58:08 That tour.
0:58:13 And I’m buying a ticket for that tour, no matter how much it costs.
0:58:14 You’ve made me defensive, Jess.
0:58:14 Sorry.
0:58:15 I’m sorry.
0:58:15 Go ahead.
0:58:16 I apologize.
0:58:17 I feel like this is our first time.
0:58:18 I’m calling Freet.
0:58:19 I’m calling my one call.
0:58:22 But if you’re calling right now, I’m busy.
0:58:22 I’m already here.
0:58:24 Well, he’s already here.
0:58:24 There you go.
0:58:25 Take advantage.
0:58:30 A couple of things that I’m curious about, not so much on the individual front, but I
0:58:35 hear a lot of the courts are doing their job right now, at least when it comes to policy
0:58:40 issues, especially in the realm of immigration, where it feels like, you know, every level from
0:58:44 local judges up to the Supreme Court are saying, no, you can’t do this, right?
0:58:46 You can’t be using the Alien Enemies Act, et cetera.
0:58:53 How would you rate the level of pushback or effectiveness that we’re seeing from the courts
0:58:54 right now on the policy front?
0:58:59 I think pretty good, but it depends on how you’re grading them.
0:59:03 It’s like saying, you know, a math teacher is holding ground by telling a student that
0:59:05 2 plus 2 does not equal 5, right?
0:59:07 Yeah, we should applaud that.
0:59:12 In an Orwellian environment in which there are school teachers teaching and accepting an
0:59:17 answer of 5 being the sum of 2 plus 2, judges saying otherwise are doing a great job, and
0:59:17 it’s important.
0:59:22 But let’s not lose sight of the fact that we’re in a crazy time when people have to explain
0:59:22 that.
0:59:28 We’re at a crazy time when the Supreme Court that’s loaded with conservatives, three of
0:59:35 whom have been appointed by Trump himself, have decided, you know, literally, not so fast.
0:59:38 If you’re going to deport someone, you’ve got to look at what the law says.
0:59:42 And Supreme Court case after Supreme Court case has interpreted the Constitution to mean there’s
0:59:44 got to be some due process.
0:59:48 It doesn’t have to be a full-blown trial, like we’re being scared with, but some due process
0:59:51 is to make sure that you’ve got the right person, and the person is deportable, and is
0:59:54 deportable to the place where you’re saying, and it’s got to be more than 24 hours.
1:00:02 So, you know, that I think is a good sign, and I don’t mean to denigrate it or downplay
1:00:08 it at all, but it’s a little bit like 2 plus 2 equals 5, and it’s refreshing in a black-is-white,
1:00:15 fake-news, up-is-down universe for people to say, you know, you know what, math is math,
1:00:16 and the Constitution is the Constitution.
1:00:17 It’s good.
1:00:18 Good.
1:00:19 We have some good news.
1:00:20 I’m just curious.
1:00:25 I imagine you’re still close with it, certainly in touch with people still at SDNY or, you know,
1:00:27 from your former life.
1:00:27 Yeah.
1:00:32 How do people who are in the business of doing justice, which is what your book was called,
1:00:39 feeling right now about getting up and going to work and figuring all of this out in the
1:00:40 Trump era?
1:00:40 Yeah.
1:00:42 You know, there are two sides to the coin.
1:00:48 I still think it is the case that the massive work being done by federal prosecutors in the
1:00:53 country and Department of Justice lawyers, whether in Washington or in the various U.S.
1:00:59 attorneys’ offices, is apolitical, continues apace, whether it’s violent crime prosecutions
1:01:02 or fraud prosecutions and the like.
1:01:05 You know, there are different priorities and emphases that Pam Bondi has put forward in
1:01:07 various memos since she started.
1:01:10 But the bread and butter of the office is probably the same.
1:01:15 Now, with respect to certain fraught prosecutions and investigations that get a lot of outsized
1:01:21 attention, like of people who are or may be in the president’s ambit or who are elected
1:01:23 officials, you know, maybe it’s a little bit different.
1:01:30 And, you know, everyone can feel unhappy, even if it’s not one of their cases, if they think
1:01:35 there’s a thumb on the scale or they think that people are being, you know, unduly harassed.
1:01:40 I think there is a certain amount of trepidation on the part of a lot of people at the Department
1:01:40 of Justice.
1:01:45 But I still think that the majority of folks are just keeping their heads down and doing
1:01:48 their job, even if they’re not so thrilled at what’s going on at the top.
1:01:54 So I have a question that requires more political judgment and legal expertise, although it does
1:01:55 involve the law.
1:01:59 And you referenced earlier that I just called it seashell gate.
1:02:05 I love what Yuval Noah Harari said, that democracies thrive on trust while dictatorships are built
1:02:06 on fear.
1:02:12 My sense is this is a perfect example of that, that this will be swatted away under
1:02:16 any sort of responsible legal scrutiny, you know, free speech.
1:02:24 I just think this is a ridiculous attempt to intimidate and create an atmosphere of fear such
1:02:30 that people do not speak out and they silence any criticism of the president.
1:02:33 What are your thoughts around that notion, Preet?
1:02:35 I think that’s exactly correct.
1:02:41 I’ve been saying for some time that the only logic behind, or at least one of the principal
1:02:49 pieces of logic behind bringing completely ridiculous, stupid, unprecedented, unconstitutional,
1:02:55 two plus two equals five claims, which is what Trump has done under the Alien Enemies Act,
1:02:57 under these executive orders against law firms.
1:03:01 And there’s a whole bunch of other issues along these lines as well.
1:03:02 They’re doomed to failure.
1:03:08 Nobody on the right or the left or the middle who is schooled in the law or wears a robe,
1:03:11 really, with very, very, very small exceptions, think otherwise.
1:03:14 Birthright citizenship is another that I left off the list.
1:03:20 But the point is to have the fight, to have the political debate, and to chill the actions
1:03:21 of other people.
1:03:26 With the law firm executive orders, in which my firm was a subject, the point seems to be,
1:03:30 even though every court that’s addressed it has issued an immediate temporary restraining
1:03:34 order, one court has issued a permanent injunction, it’s not going to fly.
1:03:38 It violates the First Amendment, the Fifth Amendment, the Sixth Amendment, various provisions of some
1:03:39 of those amendments.
1:03:41 The point is to make people think twice.
1:03:50 Should I spend time and energy and represent a cause or a person who is adverse to the president
1:03:52 of the United States or the president’s party?
1:03:53 That’s just one example.
1:03:55 And it goes to exactly what you were saying.
1:04:01 If you can broadcast to the world that it may be the case that even if you’re born in this country,
1:04:05 you will not have the privileges and rights that the Constitution has said from the beginning
1:04:07 are due and owing to you.
1:04:08 Maybe you won’t come here.
1:04:12 So they’re fighting a political battle, a policy battle.
1:04:18 They’re trying to beat their chests and say, we don’t care what the courts say up to a point,
1:04:20 and we’ll see what happens when we get to that point.
1:04:21 We don’t care.
1:04:23 Our view is the right one.
1:04:24 We have the army.
1:04:25 The courts don’t.
1:04:30 And so that is going to have a chilling effect on reasonable people to do that,
1:04:32 which they have always understood was constitutional, lawful, and proper.
1:04:38 So in addition to being a federal prosecutor, you’ve worked with really prestigious law firms.
1:04:39 Yeah.
1:04:43 And something that was really chilling and disappointing, quite frankly,
1:04:47 and maybe it’s been misrepresented in the media, and I’m very open to learning here,
1:04:51 because I think you have more insight into actually what went down here.
1:04:54 So I’ve been really disappointed in what I’ll call this domino of cowardice,
1:05:00 and that is corporations have said, okay, it’s easier for, with respect to shareholder value,
1:05:04 to just give a million bucks the inauguration campaign and pay $40 million for some lame
1:05:08 documentary for the first lady and basically just kiss his ass to stay out of his way.
1:05:11 I can sort of empathize with that viewpoint.
1:05:17 What was even more disappointing, though, was certain really prestigious law firms doing what I
1:05:24 would loosely categorize as bending a knee and saying, all right, we’ll do pro bono work for the family,
1:05:26 or we won’t take on certain clients.
1:05:32 It just seems so, such an entire, like, puncturing or rupturing of the legal system
1:05:36 and what it’s supposed to stand for in terms of justice being blind.
1:05:39 Am I exaggerating what happened here?
1:05:44 Give us your thoughts on the context here and whether I’m being, as always, overly emotional here.
1:05:48 So I want to be careful because I am in the legal firmament.
1:05:54 I work for a firm that did not, it’s not just your phrase, it’s the phrase that Donald Trump uses,
1:06:00 which makes you more than wince if you’re a practicing lawyer or if you’re anyone who cares
1:06:00 about the rule of law.
1:06:05 We did not bend the knee, and I’m very proud of that fact, and I continue to work there as
1:06:08 a partner in part because of that fact.
1:06:15 I don’t want to be impolitic or impolite about saying anything disparaging about the firms that
1:06:18 did, in your phrase, not my phrase, in the president’s phrase, not my phrase, bend the knee.
1:06:22 You can imagine how I might think about that given my first statement.
1:06:24 These are tough decisions.
1:06:27 There’s a lot of force and power on the side of the government.
1:06:30 There’s a lot of force and power on the side of the president of the United States.
1:06:37 I think that what you have said is not outside of the mainstream of thought of people both in the
1:06:39 legal profession and outside the legal profession.
1:06:45 On its face, as has been evidenced by the court decisions that were rendered very quickly that I
1:06:51 mentioned a minute ago, the executive orders are unlawful, unconstitutional, and I always like
1:06:52 to add to that, un-American.
1:06:53 They will never pass muster.
1:06:56 They will never be a thing in the future.
1:07:01 It’s another example of, this is 2 plus 2 equals 96, and I think that the better and
1:07:06 more correct and more righteous course, not just the right course, but the more righteous
1:07:12 course, if we can use that word still, in 2025, was to fight because these executive orders
1:07:18 are, I don’t think it’s too strong a word to say, tyrannical and abusive and should not
1:07:19 be allowed to stand.
1:07:22 So I’m glad that my firm and some other firms are taking that approach.
1:07:28 And Preet is much more polite and gentlemanly than I am.
1:07:34 The Demand Justice site has this article called Standing Up to Big Law Cowards, and this is
1:07:38 law firms that have pledged almost a billion dollars in free work to Trump, and they include
1:07:45 A&O, Sherman, Cadwallader, I believe the name is, Kirkland, Latham and Watkins, Milbank,
1:07:51 Paul Weiss, Simpson, Thatcher, Skadden and Wilkie are all firms that have decided to do pro bono
1:07:55 work and legal work to appease Trump.
1:07:59 And I don’t know how much you can say about this from a personal perspective since you’re
1:08:08 working in this field actively, but how legitimate do you think individual lawyers or firms’ fears
1:08:13 about continuing on with the good work that they’re doing are warranted or justified in this
1:08:14 environment.
1:08:20 I have a very good friend who represents undocumented immigrants here, mostly Venezuelans, a lot of
1:08:27 Ukrainians, and she’s very scared to continue her work as they, you know, set about essentially
1:08:29 criminalizing practicing law.
1:08:32 Well, kudos to your friend.
1:08:33 I think that’s important work.
1:08:37 Look, I think we still live in America.
1:08:43 We said before that the judges are doing a good job of holding the fort all the way up to the
1:08:43 Supreme Court.
1:08:49 I think it does take a little bit more courage now and resolve to do that kind of work than
1:08:50 it may have taken before.
1:08:56 And I don’t think we’re at the point yet where individual actions will be taken or could be
1:08:59 taken, although, you know, check back with me in six months or 10 months.
1:09:01 That work can continue.
1:09:06 Certainly, it’s the case that certain kinds of representations are probably less likely
1:09:11 to be blessed and green-lighted at firms that have decided to settle with the president.
1:09:19 The fear will always exist that you don’t want to further upset the apple cart or upset the
1:09:21 person at the top of the government.
1:09:23 I mean, that’s what got you in the soup in the first place, right?
1:09:29 Like my firm, once upon a time we had as our partner, someone I greatly respect, Bob Mueller,
1:09:35 former FBI director and special counsel, and had the temerity to hire one of the great lawmen of the
1:09:37 past century in our office.
1:09:41 That’s the thing that put us on the wrong side of Donald Trump.
1:09:46 And so there’s a natural tendency for there to be a chilling effect if you’re going to do things
1:09:48 that are going to put you on the wrong side of Donald Trump.
1:09:53 So all I’m going to say is good luck to her and all the people who are doing that.
1:09:55 You can’t let up in the face of that kind of intimidation.
1:10:00 Well, she’s a huge fan and she’s definitely listening, so she’ll be excited to hear your
1:10:00 encouragement.
1:10:01 Good.
1:10:02 One last question.
1:10:03 We ask all our guests this.
1:10:03 Uh-oh.
1:10:07 What’s one issue that makes you rage and one thing that you think we should all chill out
1:10:08 about?
1:10:09 Oh, gosh.
1:10:13 I mean, obviously the rule of law stuff makes me rage.
1:10:19 Everything we’ve been talking about, I speak, I try to speak in conmeasured tones, but the
1:10:24 attacks on law firms enrage me because I’m a member of the profession and I’m an officer
1:10:29 of the court and it’s a manipulation of, you know, the psychology of people who are not
1:10:34 just lawyers and officers of the court, but also members of businesses, right?
1:10:35 These are not charities.
1:10:43 And I hate the fact that Trump and his people are deviously clever enough to put people on
1:10:44 the back foot.
1:10:50 And again, not speaking about any particular person or entity in particular, what causes
1:10:55 me rage is, you know, if this were a play or a novel, one of the lessons you would learn
1:11:04 from it, that if you have someone who is as devilish and unprincipled and amoral, not just
1:11:12 amoral, but amoral as Donald Trump come to town, the sad truth is that he often, and we’ve seen
1:11:16 this again and again and again, will often reveal the lack of courage, the lack of principle
1:11:19 and the lack of virtue in his rivals.
1:11:21 And that is, you know, a fact of life.
1:11:24 And if this were just a story or an allegory, that would be one thing.
1:11:26 But I think about that a lot.
1:11:34 His opponents are often shown to be maybe, if not as impure and unprincipled as him, but
1:11:36 wanting, wanting.
1:11:41 And that’s why people who fight back and have the courage and the tenacity to fight back in
1:11:45 this environment, like your friend and others, are to be valued and encouraged and supported
1:11:46 more than ever before.
1:11:49 Oh, and what do we, what should we chill out about?
1:11:52 Yeah, you know, a lot of the dumb stuff that Trump does.
1:11:58 In the first term, I tell the story about how I tweeted, after Donald Trump said that the
1:12:04 White House was a shithole, or some such derogatory term, lots of people took offense.
1:12:07 Lots of people who were quote-unquote members of the resistance said, that’s, you know, horrific.
1:12:09 He shouldn’t talk like that.
1:12:14 And I posted a tweet back when Twitter had some people on the other side of the fence on
1:12:19 it, that, you know, of the top 50 things we need to worry about from this president, his
1:12:21 insult to the White House is not one of them.
1:12:25 And in response after response after response, people said, that’s not true.
1:12:26 We can multitask.
1:12:27 It’s all important.
1:12:32 It’s not, proportionality is a word that I’ve been using more lately.
1:12:34 You know, attention is limited.
1:12:35 Resources are limited.
1:12:39 I hate the phrase, pick your battles, but, you know, order your priorities.
1:12:44 He’s going to say a lot of stupid shit that can occupy five minutes of airtime.
1:12:46 It’s not worth the five minutes of airtime.
1:12:49 Think about what the kinds of things that you folks are talking about, that Scott was talking
1:12:54 about earlier, the rendering of people over the objection of actual judges’ rulings, the
1:13:00 distortion and disrespect of the Constitution by the people who keep pointing to the Constitution
1:13:01 and say they revere the Constitution.
1:13:02 They don’t.
1:13:05 Those are the things that we need to focus on and keep our eyes on.
1:13:13 Preet Bharara is an American lawyer and former federal prosecutor who served as the United
1:13:17 States Attorney for the Southern District of New York from 2009 to 2017.
1:13:22 As of 2025, he’s a partner at the Wilmer Hale Law Firm.
1:13:26 He’s also the host and founder of Stay Tuned with Preet Bharara.
1:13:29 Preet, I always love hearing from you.
1:13:34 And for those of you, it’s not easy to make a podcast about the legal profession interesting,
1:13:37 and I actually listen to your podcast.
1:13:38 Thank you, sir.
1:13:38 And you know what?
1:13:38 Guess what?
1:13:39 Can I plug something else?
1:13:40 Sure.
1:13:45 As of one week ago today, Stay Tuned with Preet is now on Substack, too, as I know lots of
1:13:46 people are.
1:13:46 Oh, amazing.
1:13:47 Check us out there.
1:13:48 Check us out everywhere.
1:13:49 Good.
1:13:51 Always appreciate your time, Preet.
1:13:51 Thanks, folks.
1:13:52 Thank you.
1:13:54 All right, Jess, that’s it.
1:13:55 That’s it for this episode.
1:13:57 Thank you for listening to Raging Moderates.
1:14:00 Our producers are David Toledo and Eric Jenakes.
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