00:00welcome to the a 16z podcast I'm Michael
00:02Copeland the nfl's descended upon
00:05Silicon Valley for Super Bowl 50 and a
00:0816 Z was fortunate to have 30 of the
00:10world's best football players post up at
00:13the firm to talk about the intersection
00:14between the world of professional sports
00:16and venture capital Joe Montana yes the
00:21Hall of Fame 49ers quarterback joins a
00:23discussion with a 16 sees Jeff Jordan
00:25and Ben Horowitz about their approaches
00:28to tech investing and the startup
00:30ecosystem how they managed the risk
00:33there's plenty and whether athletes and
00:35other high-profile folks can and indeed
00:38should get involved here's one piece of
00:41common ground the hardest thing for NFL
00:44legends and VC's alike losing Jeff Joe
00:49can I call you Joe what we want to talk
00:52about with you guys is this kind of
00:54intersection between sports investing
00:56and technology and you guys actually
01:00come at sports and Technology investing
01:02from sort of different size of it you
01:04know Jeff you're an investor and a
01:05technologist and Joe obviously you come
01:07from the sports side but I want to know
01:10when and let's start with you Jeff and
01:11then we'll go to you Joe like from your
01:13perspective where is the common ground
01:16like where is there a sort of common
01:17language and a common ideas between you
01:19know the world that these guys inhabit
01:21and that Joe that you inhabited in your
01:24world I mean the other founder of
01:28injuries Horowitz is Marc Andreessen who
01:30was the co-founder of Netscape and he
01:32had coined a phrase a few years back
01:34software eats the world software is
01:37increasingly impacting like every
01:40business in the world and you know it's
01:42obvious ok you know music got impacted
01:45but you know you're getting driverless
01:46cars and you know that the head of Pepsi
01:49was here telling us how digital is
01:50disrupting her business and that's soda
01:52and snacks so you know what we're seeing
01:55is you know that digital revolution is
01:57coming in to all businesses including
02:00the sports business and it's going to
02:01have you know some enormous impacts we
02:03we've seen companies trying to deal help
02:07with the concussion issue we've seen you
02:09know there's enormous disruption in
02:11the TV business and the cutting of the
02:13cord the unplugging of the bundles
02:15ESPN's subscribers have started to go
02:18down but people are still consuming
02:19sports so they're consuming in different
02:21ways so there's virtually no part of any
02:24business that is being impacted right
02:26now by you know by Moore's Law digital
02:29computers and and you know what we call
02:31just disruption Joe what's your
02:34perspective on that and does do you sort
02:36of keep them separate the kind of the
02:37sports world and then your interest in
02:39technology or do they collide and
02:41unfortunately they collide from we
02:45probably see more sports oriented
02:48investments that because of my
02:51background in sports
02:53everyone thinks that we're a sports
02:55focused fund I think and so we're seeing
02:59all kinds of things on the sports world
03:00but the one thing that I think we all
03:02had in common is everybody here when
03:04you're in the locker room and all guys
03:06were always in our locker room we're
03:08always interested in investing and what
03:10can they do and what can they say and we
03:11were in a unique place and early on I
03:14really didn't realize how important it
03:16was the area when I was in my head was
03:19down and I was trying to play a game
03:21I've been I wanted to play for all my
03:23life and so I missed the early part of
03:26that but in the meantime what we did was
03:29start learning a little bit more about
03:31the valley and about the people who are
03:32around us and leveraged our
03:35relationships into the fund of funds and
03:37started learning more about the
03:39technology world and we're always
03:43talking about companies that we liked
03:45and didn't like in the locker room and
03:47then all then you know Ronnie and Harris
03:49and I really hadn't thought about having
03:51another job after football after I
03:55retired I was just taking it easy and
03:56breathing and he can't they came to me
03:58and said hey we want to do this and we
04:01leveraged our relationships like Doug
04:03Leoni who obviously from Sequoia Capital
04:06was coaching my kids in baseball and
04:10better investor than coach I'll say that
04:16but we leverage that and we started
04:19learning about what they do how they do
04:21it and I got started in seed funds with
04:26run through with Ron Conway whatever
04:28legendary wanna do Terry oh yeah and he
04:31is kind of a mentor to me and I and I
04:34think that's the thing the key is in
04:36sports is trying to find someone I love
04:40the industry I'm not the greatest
04:42technology person and the world I still
04:44have to call my son Scoob and fix me up
04:46but I forgot to FaceTime and fix this so
04:50but it's still you you have to find
04:53someone who can really teach you the
04:55as you heard been talking about earlier
04:57it's it's crazy the things that you look
05:00at and how they look at it differently
05:02and especially but earlier you look at a
05:05company the tougher it is to make that
05:08decision because there are there are a
05:10lot of them out there in the same parts
05:12of the world and sometimes when you see
05:14it and there's so many of them there
05:16you're already probably too late in that
05:18industry so Jeff how do you approach
05:20what's your lens that you come into when
05:23people come through the door how are you
05:25looking at the people and then also the
05:28possibility of the technology and and
05:30the business that they're building okay
05:32so I'm not a deep technologist I was a
05:34liberal arts major at school and so all
05:37the businesses I've been involved in
05:38they're all kind of marketplace and
05:40payment businesses so eBay PayPal
05:41OpenTable as an operator and now Airbnb
05:45Pinterest and Instagram eat wood
05:50typically aren't incredibly deep
05:51technologically so you're trying to
05:53figure out a couple things first and
05:55foremost it's a people business you know
05:57your that you're investing in them
05:59someone who is signing up to take your
06:01money and try to build a business over a
06:03decade or two decades or three decades
06:06and so you really need to know that
06:08person you really need to believe in
06:10their ability their conviction and one
06:13that's really important to us their
06:15courage because things will go wrong in
06:18every single business and you know every
06:20single business faces these potential
06:22fatal periods where the you know all the
06:25effort all the money could just
06:26evaporate and die and you
06:28need someone who powers through that so
06:30the key criteria for us is the person
06:33and their courage and their to talent
06:35and their abilities so when we invested
06:38in Pinterest which is now it's got an
06:40eleven billion dollar value is eleven it
06:42was eight guys Airbnb was about thirty
06:46and so you can't see the fact that
06:48Airbnb now consumers are gonna spend ten
06:51billion dollars this year on Airbnb for
06:54you know that couch and room in the in
06:56your house you have to when you're
06:58looking at 30 people in a dumpy you know
07:01office and you know you have to be able
07:03to say okay this guy this team is gonna
07:07take that it's a it's a interesting idea
07:09it's got a lot of upside and I believe
07:12in their ability to do it so the first
07:13and foremost is that second is probably
07:16the idea kind of the product market fit
07:18is this an idea that's resonating with
07:21at least someone well and we'd rather
07:23have it resonate with a small number of
07:25people incredibly well than a large
07:28number of people modestly well because
07:30you want that passion and engagement the
07:33community the last thing when we kind of
07:35ignore is market because almost all of
07:38the really great new technology
07:41companies created their own market or
07:44they started with the trivial idea and
07:46made it big I mean I was early at eBay
07:48eBay was just creating collectibles I
07:50mean we didn't broadcast this at the
07:52time of the IPO but eight or nine
07:54percent of all the items on trading on
07:56eBay when we went public were beanie
07:58babies you know beanie babies we did not
08:01put that in the document you know just
08:03kinda like good so air B&B yeah rooms in
08:06your house Facebook started hot or not
08:09on college campuses and so all these
08:11businesses if you looked at the market
08:13you'd say there's no market there but
08:15they created it because it was a unique
08:17different disruptive idea right Joe Ben
08:22talked about how you know you need the
08:23best entrepreneurs to come to you and
08:26you need to have the option to invest in
08:27them for you I'm sure there and for
08:30these guys in this room everybody's
08:32coming at you and at them and they want
08:35you to participate so how did you kind
08:37of filter out what you wanted to do and
08:40same way and what you wanted to
08:41participate in and then how has your
08:44role in that participation changed over
08:46time well one of the things I found is
08:49that most of the time when people were
08:51coming to me initially it was like then
08:57said it's the one you'd really didn't
08:58want to invest in and how did you know
09:00that I mean you learn the hard way you
09:04know you make exactly and it's you go oh
09:11my gosh why did I do that
09:13but the one thing that you've found and
09:17you have to kind of you have to earn
09:18that part of it that what people that
09:20you want the people to come to you but
09:22you want the right people to come to you
09:23for the right reason and so in this
09:26investing in the seed round one of the
09:28most important things is can you help
09:32that company progress along the and grow
09:35and what value do do you bring to them
09:38and so when I was assembling the team
09:42that we have there's three members seem
09:45to be a fourth one I looked a little bit
09:48for diversity from my the guys you know
09:51I have one guy who built his soul
09:56started and sold his company to Google
09:58went back the Harvard Business School
10:00finished there but his he basically ran
10:02the Google my business for a while and
10:06his co-founder now is the CEO of a Y
10:09Combinator right the other one is a
10:12molecular physicist and one of the
10:16smartest guys you know I've seen on
10:19especially on the commerce side if
10:21you're you you use anything to do with
10:22IBM's cloud he built that IBM bought his
10:26business and he came out of lockup in
10:302014 and so I tried to build a group of
10:34people that not only understand the
10:36marketplace and are young so they can go
10:39out to those parties thanks Achatz my
10:41wife won't let me go anymore
10:43but so that we could support companies
10:47as we move forward I tried to build a
10:49team that could support the help support
10:51companies moving forward
10:53and help get them to the right places
10:54because you know they're always looking
10:56at some point for the sea they're always
10:57going hey we need introduction to some a
11:00series investors on the venture world so
11:03we reach out to and and try to help them
11:06get further down the line and progress
11:08for it after that part of it usually
11:11when guys like you guys come in
11:14it's our hands are kind of off of off of
11:17it anymore after that because they come
11:20in they come in with a lot more money
11:21and they have a lot more power behind it
11:23but we're able to disperse and try to
11:26help that process and that's when people
11:28start would they start rating you as an
11:30investor and when you start getting
11:32rated as an investor people know whether
11:35you can or can't support them and help
11:39them move to the next step next level
11:41what can a sleet's who are still playing
11:45for that matter but then thinking about
11:46after the the game what can they bring
11:49you know besides their money maybe to
11:52sort of build up an investing track
11:55record which takes time yeah or should
11:58they even for that matter yeah the my
12:00biggest advice to you guys is there's a
12:03not well known fact in venture capital
12:06it's about the best performing funds in
12:08the history of venture capital about
12:10half the companies lost all the money so
12:13if you invest in one company it's 50/50
12:15you're going to lose all your money I
12:16mean it and that they're the best
12:18performing funds in the history of
12:21venture capital so the big thing you
12:23need to do is you have to if you're
12:25going to invest you have to figure out a
12:26way to get diversification invest in
12:28multiple companies because we're not
12:31good enough we're pretty good at what we
12:32do we're not good enough to say if you
12:34made me pick one company ahead of time
12:36and said I'm gonna put all my chips on
12:38that company you know you'll likely lose
12:40your money and so the first thing is you
12:43know it's really risky to try to be the
12:45picker on a small number of deals one of
12:47the reasons we have a hundred
12:49investments and part of that is to get
12:51diversification be really careful
12:53because when they when the one deal
12:55comes to you it's it's usually the
12:57shitty deal that couldn't get money
13:00um but there's a lot you can bring one
13:03is if you can fit now get in if you want
13:05interested in investing in this asset
13:07class get into a fund get into a couple
13:09funds you know just so that gets you
13:11diversification there you're gonna see
13:14Tristan Walker this afternoon I guess of
13:17what we was in one of my investments
13:19Walker and company personal care
13:21business for people of color
13:24Tristan's coming out with a brand-new
13:26pair of trimmers that he's really
13:28psyched about in order to make in order
13:30to get behind in the marketplace he's
13:32signed a deal with Nas to be the
13:34spokesperson for for the trimmers yeah
13:37that that is a perfect example
13:39andre igudala has gotten involved with a
13:41number of our companies particularly in
13:43the fashion area which is a passion of
13:44his and he brings a lot of influence and
13:47contacts in in those businesses that
13:50have been helpful to the entrepreneurs
13:51and to the companies which you know so
13:54the part of the transaction is gonna be
13:57money but part of it can just be
13:58influenced social networks followers you
14:01know endorsers and things like that so
14:03there is a lot of a potential for
14:05involvement like that Joe you know you
14:07and and everyone in this room you know I
14:09myself included have one person one
14:12personal brand how do you think about
14:15how you really expend and/or leverage
14:19that brand mean what what do you need to
14:21be aware of again if people are coming
14:23at you all the time how do you best
14:26leverage your brand and how did you
14:28think about that well I think you it's
14:33it's really a tough situation for all of
14:36her everyone here because you have so
14:39many people coming to you and and all I
14:41can say is usually the worst ones that
14:45when they start talking about money is
14:46the family my family was the worst too
14:49so but you really have to find the right
14:54people it's just like anything else it's
14:56finding the right teammates find the
14:58right guy to have on your team you have
15:00to find the right person that can help
15:02you understand what you bring and how
15:05important that is and how to protect it
15:08because the protecting it is the
15:10toughest part as everybody knows
15:13you know the worst thing to me that have
15:14ever happened for you guys in
15:19and one that wasn't here when I was
15:21around is that phone you don't know me
15:24you know so you always have to be aware
15:26about what's going on and that's why
15:29just like you protect yourself from that
15:30you have to find someone that can help
15:32you protect your image on the financial
15:35side of it because you can find anybody
15:37who who will want to take your money
15:39it's just you want to make sure they're
15:41the right people and that's it's not an
15:44easy process and I mean we've all been
15:46through it even we think our agents you
15:48know I went through three and you know I
15:51had like everyone else I had one steal
15:54from me and I never thought it would
15:57happen and it was a well-known one so
16:02that trust is you know you have to find
16:05a way inside of you to understand really
16:07what what you bring and then find
16:10someone who has that same type of value
16:11and an understanding that's really a
16:14difficult process for us because you
16:16know you guys see so many people all the
16:18time that it's really hard to find out
16:21someone who's you're just being
16:23introduced to is he for real or is he
16:25just want to take advantage of me so I
16:28think that's a I don't even know how you
16:30get across it because I you know I put
16:33trust in in agents and even even till
16:36today you know you I still have to check
16:38everything that's done because there are
16:41certain things I don't want to do and it
16:42goes into contract and if I don't read
16:44the contract I get stuck doing something
16:48I go how did this wasn't this wasn't
16:50part of the deal he goes yeah it's been
16:51in every piece of paperwork you got to
16:52read it so I think you paying more
16:56attention to anything just like you have
16:58to study your playbook you have to put
17:01forth an effort in studying and trying
17:03to find the right people to where you
17:05want to put your money and I mean you
17:07you in your current venture have two of
17:09the most prominent well-respected early
17:11stage investors in Ron Conway and Paul
17:13Graham yeah yeah that's cause what I
17:18after one of the hardest things to find
17:20like you were saying earlier about this
17:23industry is losing I said I it's hard to
17:28understand that when you and even when
17:29you invest 50% of that portfolio
17:32going to go see yeah and it's gone and
17:36that's really was difficult to get my
17:39arms around because even Ron Conway
17:40who's probably if not the top angel
17:43investor one of them there he's at 60% I
17:47mean so he loses about 40% of his deals
17:49and that's considered great but much as
17:54far as it all player yeah yeah I mean
17:58it's fine okay so one of the differences
18:00in recent Horowitz brought to Silicon
18:02Valley is all of the investing partners
18:03operated technology businesses its scale
18:06and so we're all so used to not losing I
18:09mean you don't want to lose you don't
18:11want to ever lose you're out there
18:13trying to win if you want to get
18:15involved in technology and tech
18:16investing can you do it from any part of
18:19the country do you need does everyone
18:21need to sort of figure out how they're
18:22gonna play for the Raiders and the
18:23Niners and start learning about
18:25technology selfishly put designers
18:27perspective I think that's true
18:29no sorry yeah we need any all the help
18:31we can get the there are great companies
18:35sorry there are great companies being
18:38built everywhere in the country I mean
18:41cuz there's entrepreneurs everywhere the
18:44a lot of them find as they wet as
18:48they're growing they scale out of their
18:50cities so you know a Chicago had Groupon
18:54and you know a Foursquare had it was in
18:57New York and they can only hire so many
18:59engineers particularly engineers but
19:01also the senior executives who've done
19:03digital marketing and done technology
19:05and done all these they they end up a
19:08lot of the company lot of the companies
19:10end up here because there are more good
19:12engineers and there are more good
19:13executives and so looking about it's
19:14kind of an you know it's an the network
19:16here is well developed so there's the
19:18opportunity to get involved anywhere we
19:21made the bet that the opportunity is
19:23more more more robust here and there's
19:26certainly much more deal flow and the
19:28deal flow has been and Joe both said is
19:31is critical you want to see as many
19:33deals as you can because that's you know
19:36that's how you calibrate that's how you
19:37get to you know some of them are going
19:39to be good and so you know be really
19:42a a technology company in Cleveland and
19:46you know because I got one and because
19:48it's you're like okay that's one you
19:50know it's a 50/50 chance you're gonna
19:52lose all your money I know we're gonna
19:53have time for Q&A maybe we should just
19:55open it up now then I will put you back
19:57in the hot seat and you guys have
19:58questions fire away let me just repeat
20:02the question in case you didn't hear it
20:03what are the qualities you are looking
20:05at when people are in there pitching you
20:07and are there common traits among the
20:09best entrepreneurs I'll throw out a
20:12couple there one is product founder fit
20:15you know why is this person in the
20:18standing is sitting in at the table with
20:19this idea at this time and typically
20:22like Brian Chesky they came to their
20:25secret in an interesting way so you're
20:27looking for that you're looking for
20:29someone who can sell because selling is
20:32raising capital selling investors hiring
20:34employees you know getting partners that
20:37they're all sell a big one as I
20:40mentioned before is courage you just
20:41need someone who has resilience
20:43Facebook's growth stopped like four
20:46times before it became a public company
20:48and you know one time when it stopped
20:51Mark Zuckerberg the founder there had an
20:55offer from Yahoo to buy the company at a
20:57billion dollars so that this offer was
21:00worth four or five hundred million to
21:02mark at the time and he looked on all
21:05his board as saying sell sell you know
21:07the gross stuff sell and all the
21:10management team saying sell sell we want
21:12to you know we get we get his money and
21:13Mark said no we're not know this Kobe is
21:16nowhere near done you know we're gonna
21:17keep going he didn't sell he fired his
21:20management team he got mad at his board
21:21and then he grew the company into like a
21:24quarter trillion dollar company and so
21:26that kind of resilience and courage is
21:29what you're trying to get trying to
21:32source boy yeah you got to be really
21:34careful on that one though because there
21:39are like very good people who are
21:43playing out a position or like doing the
21:46wrong thing or what have you and we
21:47always ask ourselves is this person do
21:51we think this person is a very best
21:52person in the world to build this
21:55because the thing about technology
21:56companies is there's no local technology
21:58business like you'd never compete with
22:00the guys in California you're competing
22:02with those people in China India New
22:05York everywhere so this has to be the
22:06very best and and you can easily talk
22:10yourself into investing in the wrong
22:12person for the wrong thing you get a lot
22:15of that kind of thing a lot of really
22:17talented people who can't build the
22:20company that they are trying to build
22:22and you just have to make sure that this
22:26is the person for this company a lot of
22:28it is like what is their background
22:29right so we did we made an investment in
22:32a company called nasarah networks and
22:34this this company the guy the founder
22:38and it was really an interesting idea
22:40because everybody in the networking
22:42field that I knew thought it would never
22:43work because they're like it's
22:46impossible what he's doing is impossible
22:48but this founder had spent ten years
22:50building networks at the NSA understood
22:54where all the technology that these guys
22:57were telling me it was impossible tried
22:59to sell him didn't work for like
23:02building really secure networks and so
23:04he goes and gets a PhD at Stanford and
23:06at Stanford I knew the professor the guy
23:10who was advising - PhD Nick McEwen said
23:13this is the best PhD student we've ever
23:16had in networking at Stanford in the
23:18history of Stanford and so this guy with
23:21that background said I can solve this
23:22problem everybody thinks is impossible I
23:24was like well like I'll bet on that like
23:27even if I'm wrong like I feel good about
23:28that bet because like this guy's got the
23:31credentials he's the guy but like if he
23:35had come and said I want to build a
23:37social networking platform that's not
23:40the same or the exact opposite example
23:44the two founder the two original
23:46founders of Airbnb were classmates at
23:48the Rhode Island School of Design but
23:50they're you know it's kind of like for
23:52what they were doing it's community
23:54based it's you know it was product
23:56founder fit you know you bet on guys who
23:58are completely non-technical I mean
24:00because of a non-technical product and
24:02so a lot of it comes down to the
24:04intangible you know personal
24:06characteristics and the hard part is
24:08to read them in a hour or two the
24:11typical pitch meeting is a one-hour
24:12running and so someone comes in asking
24:15for 20 50 million dollars and the main
24:18interaction is a one-hour pitch meeting
24:20and you're trying to assess do they have
24:22the backbone to be able to drive it we
24:25make a lot of mistakes and some of it's
24:26been and making sure you spend a lot
24:29more time than just one meeting and it
24:32takes a lot a lot to get used to just
24:33like trying to figure out can you trust
24:35the guy playing next to you take some
24:37time right to be able to build that up
24:40between he and whether they can he can
24:42trust you at the same time and that
24:44takes more than one or two meetings so
24:47it takes a while to get used to that and
24:48then some of it you'll find that some of
24:51the guys that come to you are pitching
24:53have done this two or three times I've
24:55been successful and those are the kyeper
24:58like I remember asking Ron Conway one
25:00time ago hey how'd you get in white when
25:03did you see this company now we didn't
25:04at least like the founders we love what
25:06they do we know that whatever they're
25:08gonna do there they can make proper
25:09changes if they need to make a change
25:12and make a switch and and they've a lot
25:14of times in the early side you're
25:16betting on people and it takes time to
25:18learn to trust those people and once you
25:21do it seems like they these guys that's
25:23what they love doing they love starting
25:25companies they like to get out get their
25:26exit and some guys just want to get
25:28right back into it again immediately and
25:30that makes them shortens the process a
25:33little bit but still you want to try to
25:35build that relationship up between the
25:38people you're looking at I want to thank
25:40Joe Jeff and Ben for all your wisdom
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